An organization is of a large group of individuals who are together for the sake of achieving a task. There are many moving pieces and many ways to see the essential task. The real challenge is figuring out how each individual can know where to put their time and energy to create the optimal synergy to achieve the organization’s results.
Employees are always making choices about what they should do, using tools that are often faulty. Too often, these individual choices lead many well-intentioned people to pull the organization in different directions. How does an individual employee or team base their choices on what to do?
Behavioral finance theory suggests that people usually respond to their immediate situation and have no immediate way to take larger organizational realities into account. We know that people tend to do what they are rewarded for. In a classic essay, Steven Kerr observed that people in organizations are rewarded for individual behavior that often bears no relation to the organization’s goals. Compensation has become a fine science with experts trying to create incentives for what is needed, like sales commissions. But any individual reward system leads to people gaming the system and this often has unintended consequences. For example, in a school, a bonus for enrolling students leads to many drop-outs further down the line.
The problem of individual self-interest and personal agendas being at odds with, or unrelated, to the organization’s goals is another alignment challenge. We think of good leaders as having the ability to focus the work of many people on the right things. They motivate individuals to want what the organization needs and help them find the right tasks for their energy. But what if there are multiple goals? What if the connection between an individual or team activity and these goals is not clear?
If you are an individual organism, there are inner experiences that allow you to make decisions about health and behavior. There are internal sense organs and the warning system of pain. There are also vital signs, like temperature or blood pressure, which can be read quickly, as well as others that require laboratory or professional examination. We read them closely for warnings about hidden dangers or upcoming threats. What is the analogue of such signs in the workplace?
How does an individual employee “read” the organization’s vital signs so that he or she can align individual actions to make a real difference to the organization? Each day, people with complex jobs come to work and have to decide what to do from too many choices. Should they put out a fire or take time to work on a longer-term project? They often have little guidance. Some people do what is immediate or easy, getting things done whether or not it is the right or optimal thing to do. They are reactive and visceral about what to do. They are also the majority.
What are the sources of organization vital signs? In The Balanced Scorecard, Robert S. Kaplan and David P. Norton offer a practical and useful way to approach this question of finding the right thing to do in a complex organization. The authors note that most organization outcome data comes so long after an event that it is not of any immediate ability to make a difference. They point to financial data as coming in long after the actions that produced it and also as being so global as to have little use for individual teams. They advocate that an organization devise several more immediate measures that are easy to obtain and that furnish information about processes that matter in time to do something about it. They suggest that there must be data about inner states like employee morale, and about inner signals that relate to sales and production and service quality. They suggest that every organization create a “scorecard”, a small easily reported set of measures in key areas that can be collected quickly and accurately, that help each person see how the organization is doing. So, something like customer service phone calls, or visits to clients may be a better indicator than sales, which are further down the line.
I’ve worked with many organizations who want such scorecards and they are not so easy to design. Designing a scorecard means that the organization’s major players have to understand not just what results they want, but something about what sorts of efforts lead to that result. They need a process of view of the organization. Then they have to test the measures by making sure that the process measures are accurate and in fact lead to the desired outcome measures. In one company, 13 division leaders each came up with pages of measures, but they could not agree on a small number that was most salient. If there are many measures, then the person can always find some good news amid the neutral and dismiss the bad news as a faulty measure.
One novel approach and powerful measure to an organization dashboard comes from Theresa Welborn’s epulse. Her technology uses a daily survey that pops up on every employee’s computer screen and asks one or two questions concerning their general feeling about the organization and their work. She aggregates the responses according to teams and work groups and offers instant daily readings of the vital signs of every part of a company. By charting this “pulse” over time, you can see trouble spots quickly.
To align the work of the organization, employees must go beyond their individual choices concerning what to do in order to be guided by real-time information that offers feedback (and reinforcement) for actions that have the right outcomes. Rather than rely on good intentions and positive motivation, an organization has to design process measures and report them to everyone to help focus and clarify what is needed and move the organization forward.
Read other posts by Dennis Jaffe
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