Moving to a Management By Fact Culture
Bradley Savoy October 7, 2007
McKinsey recently released results of a study of practices of 230 companies across the globe. The firm’s primary goal was simple – what makes companies perform well? For the sake of this post, I’ll hone in on one key point:
Executives, in their search for ways to make organizations function more successfully, frequently adopt simplistic solutions. A new analysis of more than 230 global businesses shows that combinations of carefully selected actions can be far more effective than one-dimensional interventions.
McKinsey makes an interesting point here. In some cases adopting the simple – or easy – solution is not always the best approach. Unfortunately in many instances the decisions are made through a high degree of subjectivity and then tempered with a small depth of objective criteria (data).
Over the last 20 years, management concepts such as the balanced scorecard, process management, key performance indicators (KPI’s) and strategy deployment have prompted many executives to revisit their measurement systems. Practices such as Management by Objective (MBO) and Management by Fact (MBF) have become increasingly adopted.
Successful companies strive to combine real world management experience with the objectivity of data. This is not to negate the subjective experience of a tenured executive, but to aid in their arsenal of decision making.
As a result, many companies are adopting objective based measurement systems. These systems ensure the lense of objective data measurement is added to uncover the missing elements, or facts, needed to make key decisions.
So if you’re aiming to launch a new measurement system to shift your culture to one of Management by Fact, here are my top three best practices to consider:
- Tie your measurement criteria to the goals of the business. Each business unit or department of your company must provide input related to their specific business goals, and the needs of their customers. During this exercise the synergies of various departments will come to light. For example, customer loyalty could exist across multiple departments, and the overall company strategy. If that is the case, customer loyalty then becomes a key indicator of performance across the various departmental stakeholders. In this example, an overarching measurement criteria may be customer retention or customer satisfaction.
- Ensure adoption and accountability at the right levels. Those parties responsible for this new way of thinking must have the knowledge and authority to manage the performance of new processes. Establishment of a core team of metrics and process owners representing crtical functions of the organization is critical to ensure the mind shift is successful.
- Communication is key. Development of a comprehensive communication strategy should be developed to ensure broad understanding and acceptance. All employees need to understand the importance of the new philosophy and their roles within this process. Care should be taken to ensure that needs such as “What’s in it for me?” are outlined. Each employee needs a clear understanding of how they, as an individual, can impact key metrics. Creating communication aids such as learning maps, and utilizing executives to act as personal communication channels can increase acceptance of the goals and strategies of the organization are achieved.
Companies will achieve success by ensuring that the management measurement solution they create ties to core business objectives, and is accepted, adopted, and communicated effectively by all stakeholders of the process.
Posted in Human Resources Analytics, HR Metrics, HR Benchmarking, HR Scorecards, Six Sigma and HR, Workforce Management
