To illustrate this, I will use a true story of 2006. A well established professional services firm with 3 offices was run by three very dominant, autocratic Directors. Department Managers had limited management responsibility, deferred decisions to the Directors; and were managers in name only. They sold: “pile it high, sell it cheap” professional services. With a budgeted turnover of £37.5 million, an actual of £24 million, and 280 staff, they required help to improve their People Management systems, including recruiting a new HR Director.
By reviewing the standard Key Performance Indicators (KPIs) such as staff turnover, sickness, absence costs, cost of recruitment we quickly realized we should look further afield at other KPIs reflecting management efficiency rather than the systems themselves. The result showed they were loosing @£13.5 million each year through poor people management, achieving just 67% staff utilisation.
As any good detective knows, if you ask the right questions and know who to ask, you get answers that lead you to the truth. It became very evident that the more senior staff were being left to ‘self-manage’, but the lower paid staff were being over managed: too much McGregor’s Motivation Theory of ‘X’ and ‘Y’ on their minds! To illustrate this here are some examples:
- Managers controlled lower paid staff punitively, whose absence accounted for 61%. However, the more senior staff’s absence was costing 64% (in salary/temps);
- Due to management ignorance, information on utilisation was completely ignored. Several departments’ utilisation was as low as 25% of budget, further impacted by new recruits taking 3 - 6 months to get up to full speed, and then hit again by 35% of new staff leaving in the first 6 months;
- Finally, because the Managers were busy, but not managing their teams effectively, they were not managing a) the cost of the work done and so what to charge Clients, b) nor were they managing debt, so debtor days were running at an average of 124 days
The issues facing many organisations will fall outside the more traditional KPIs, and so may warrant a shift in focus. If your organisation has been hit by redundancies, loss of orders / clients and maybe stagnation of products or services, then maybe you could look at a variety of hard and soft KPIs, such as:
- Leadership and sound management: have you the right leaders in place? Are you/they inspiring staff, clients and suppliers about your vision and direction?
- Clarity of job roles and responsibilities: balanced by the need to have ‘all hands to the pump’, are your managers and staff comfortable and clear?
- Core Values have a habit of flying out of the door, can you still live the brand? Are you:Trustworthy, have Integrity, behave Professionally, are Passionate, etc.?
- Performance Management (including objectives): are you implementing your performance management processes regularly (e.g. quarterly) to track successes, and address any shortfalls?
- Learning and development: how are you going to keep imbuing your staff with energy and enquiry to do an even better job if you cut off learning interventions?
- Staff morale: this often shows itself by sickness and absence but more likely by an apathy and hopelessness of spirit – what is happening?
- Stress: this becomes endemic amongst managers and staff who are working hard to stay in employment, to keep the business going and demonstrate their value and worth (and so avoid the redundancy axe), but are they over doing it?;
What and who will Make It Happen?
Using Pareto’s 80:20 principle, understand what and who will make the greatest difference to your business and focus your management time and energy there. Resist the temptation to keep tracking KPIs that right now are not relevant or tell little about what is really happening. This requires intelligent management and Executive time, and cannot be delegated, it is too risky.
Focus on what you and your Executive team are doing when you are together. Encourage and energise, taking time out to re-group, draw breath and plan, share responsibility and keep your business trading with a future. Essential to this will be gaining staff and manager buy-in too, because achieving a shift in culture requires letting go of old habits and welcoming new approaches, intelligently and willingly.