20140218 – Sustainable Performance Improvement

It can be very tempting to look for easy, quick, and “cheap” (EQC) solutions to cutting costs and improving revenues. Too often the result is a temporary cost reduction, but a long term negative impact to the business.

Take the example of cutting staff. This is a solution that organizations large and small use every day to try to achieve improved performance. If we cut the most expensive members of our team and try to make do with a smaller staff we can save direct and indirect payroll costs and see an immediate improvement to the company’s bottom line. And it works, for a while.

But then processes start to break down and the expertise necessary to fix them is no longer available. Or people become stressed and leave because they’re being asked to do not just more, but too much more. And their replacements expect higher wages, and require training from a training budget that itself has just been cut along with staff. Your results are not sustainable; slowly they deteriorate and you’re back to where you were before the staff cuts, or even worse.

How about the example of automation? Oh, we can automate this system and that process (and cut staff) and get things done faster. This EQC solution looks great on its face, but did you evaluate the process itself first to make sure that its manual incarnation was effective and efficient; i.e., it’s already doing the right things right, but just not fast enough? If you didn’t evaluate it and it’s actually a bad or even unnecessary process that you automate, then all you get is a very fast bad process. You cause more performance problems than you solve.

When you’re focused too much on the numbers and not enough on the mission it’s a short hop to an unsustainable or EQC performance improvement solution.

You’ll get better and more sustainable performance improvement if you let your purpose and your people drive your effort. Is your purpose clear? Do your people get it? Do they buy in? Are they committed? Are they all on the same page? Do they know what you expect and do you know what they expect? Are they equipped with expertise and proficiency in the core competencies necessary to carry out the mission?

If you’re a publicly held corporation do your shareholders get it? Does your board get it? This is not a sprint, it’s a marathon and they’re in it for the long haul, not the quarterly results. If your board and shareholders only care about the next ninety days they don’t have your organization’s best interests at heart. Your challenge is to get them to see past the quarterly report and buy in to the long range goal. It’s a big challenge for you as a CEO; but change is hard and real change is real hard. It may be the toughest change you’ve ever tackled, but if you don’t achieve that shift in perception your board and shareholders will always fall for the EQC solution.

If you haven’t dealt with purpose and people issues you can’t begin to effectively deal with process issues, and you will not get sustainable performance improvement. Organizational performance improvement starts with your people; and not with letting them go, but with freeing them to achieve their full potential. If you care about your company and its team members, customers, and vendors and particularly about sustainable performance improvement, then you’ll want to focus on fulfilling your purpose the best way possible and avoiding EQC solutions.

Remember, real performance improvement is not about quick tweaks to the bottom line. If you get sustainable performance improvement right, the bottom line will take care of itself.