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When 85% of your troops are in the rear, it’s time to rethink ‘rear’

October 27, 2010

Some 85 percent of the troops in the US army are not warriors but essential (OK, and some not so essential) specialists and support personnel, often doing complex and demanding jobs. In business, what is the right mix of Line to Staff, ‘tooth to tail’?

The answer is: everyone is Line.  High Performing Organizations erase silos, implementing horizontal processes, end to end, spanning and describing the organization. For example, for a manufacturing organization, we described the entire company as Forecast to Procure, Procure to Ship and Ship to Pay.  To put it another way, how much should we build?  Getting the raw materials here in time to meet customer OTIF requirements (see a previous post for the definition of OTIF) and finally, Shipping it to the customer and receiving cash, which is both an obvious but not so obvious quality KPI.  Notice we didn’t use the ERP standard terms of ‘Procure to Pay’ or ‘Cash to Cash’ and such – the brand name consultancies love these exoteric terms, but most people understand and relish simplicity. Think of what it would be like if the army had 1 major process to describe to each soldier – ‘enlistment to victory parade’.

Each process incorporates participants and assets representing every touchpoint.  No, people are not assets. A doorknob is an asset; a person is a person, which is why I preferred it when Human Resources was called Personnel. Now, give each process an owner, whose job it is to keep their process at peak performance and you have an integrated, tightly knit, highly focused organization.  You have a High Performance Organization, except for one last item – execution.

Many former Staff people are not used to having P/L pressure, of effect based KPIs. Feeling task overloaded, they can turn passive aggressive, or simply decide not to play career whack-a-mole and not speak up when something is going wrong.  This is particularly true in organizations with long tenured employees and where a culture of entitlement has flourished.  In today’s economy where many companies have streamlined and eliminated jobs but are making record profits, there’s a natural human tendency to cut costs and take ‘acceptable’ shortcuts.  What’s ‘acceptable’? Apparently, to BP, ‘acceptable’ meant not replacing the dead battery in the backup blowout valve actuator.  Thus, to get people to execute while protecting the company and ensuring a good chance of successful strategy fulfillment, you need to provide them with ‘GRC’.

GRC is the acronym for Governance, Risk [management] and Compliance and this function, today, is typically found in the offices of the Chief Risk Officer, CFO or Corporate Counsel. It should be distributed across each process, linked to strategy so everyone knows how their job relates to the corporate strategy, which policies affect their ability to achieve the strategy, what can go wrong and what controls provide early warning that indeed, something is going wrong.  It stirs execution by clearly communicating to someone the what, why, how and oops on a daily basis. It also gives the process owners boundaries between which they can maintain, refresh and operate their cross-silo processes.  In our experience, virtually everyone wants to make a difference in their organizations, but don’t understand how and most certainly do not understand why and so they’re afraid to act at all or will do only the barest bones activities by rote.

GRC today is typically relegated to reporting, taking care of the here and now at the expense of connecting the dots and making sense of it all for predictive purposes.  As such, it’s often handled via spreadsheets and FTP uploads to the GRC Dept., whoever they may be, reinforcing the image of GRC as a speedbump and added layer of cost, when fully integrated and automated GRC is an execution accelerant.  In Organizational Development terms, GRC is more about Situational Awareness disclosure (often as expressed on some regulatory required form) when it should be a 50/50 mix with Sensemaking to fuel execution. It’s still a Staff role when it should be core Line.  You can even perform complete heresy and assign an EBIDTA affect goal to GRC, like any other cross-silo process component, rather than absorb the cost into some form of HQ support function, in effect declaring it a necessary evil.

We’ve heard from multiple CEOs who say their people are excellent planners and have plans to go offsite and plan.  Somehow, no one ever executes on same.  While most organizations have to keep their hierarchical structures (hopefully with as few levels as possible), the matrix implementation of a clearly defined GRC capability baked into cross-silo descriptive processes forces  execution and is the cleanest, cheapest and fastest way to ensure the company remains ‘fresh’ over time and becomes that rare High Performance Organization who focuses on execution.

Rich Eichen is the Founder and Managing Principal of Return on Efficiency, LLC, who’s website is http://www.growroe.com and is one of their senior turnaround leaders/CROs, Program and Interim Executives with over 25 years’ experience reshaping companies, Operations, IT and key initiatives. He can be reached at richard.eichen@growroe.com

 

 

 

 

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