Despite all the rage of the balanced scorecard, management by objectives (MBO), and the lip service paid to alignment, many CEOs still struggle to know the extent of their employees’ commitment to corporate objectives. Putting the number on the power point slide, the scorecard, or getting the “yes” nod, doesn’t necessarily ensure appropriate action.
Whatever the strategy or objective, it is crucial to pay close attention to exactly what your executives are committed to and for what they are willing to be held accountable.
Results Management Group was hired by a publicly held global manufacturer of electronic equipment to assist in executing a multi-year $150 million dollar cost cutting initiative. Through initial investigation, we found that this company lacked some crucial elements for success that are commonly missed: 1) a clear mandate from the board, 2) aligned commitments from executives, and 3) structures to keep executives accountable for execution and results.
The board set the target, but the management related to it like an objective that would be “nice to have” rather than a goal that “must be accomplished.” The lack of alignment between the board of directors, CEO, and other executives responsible for the initiative, created a situation that put the cost cutting initiative, net profit, and the competitive position of the firm at risk.
I found it both interesting and concerning that it was a vice president, two levels down from the CEO, rather than the CEO himself or the business unit president, who recognized that the firm needed our assistance.
What followed was a series of interventions. Through dozens of meetings and critical conversations, the executive championing the initiative (the aforementioned VP) was able to align the board and other critical executives. As a result, what was expected in March of 2007 to be only $35 million dollars in cost savings resulted in more than $43 million by the year’s end.
Although the client ended the year successfully, the process of alignment and implementation was far more difficult than it would have been, had the CEO ensured executive commitment to the board’s targets at the beginning of the year.
In this uncertain year, CEOs must be able to count on absolute commitment to objectives and be able to ensure structures that keep everyone accountable for achieving those results. When commitments or plans go awry, quick and decisive action is crucial.
Shoot us a note to start a conversation today and let’s explore what next-level results look like for your company.
