Observation #18
Properly integrated management systems are the most important tool that a CEO has for aligning an organization and creating a culture of accountability and continuous improvement. Management systems help all management levels plan, execute, report and improve their area of responsibility in accordance with the CEO’s strategic direction. Unfortunately, almost all management systems suffer from one or more of the following fundamental problems:
1. Planning doesn’t directly integrate with execution.
Key planning tools include budgets, forecasts, production plans and work schedules. For them to be effectively integrated, you need good work-to-time planning standards and reasonable mathematical relationships between revenue dollars, functional volumes and activities. Links between these elements are often weak or nonexistent.
2. Execution tools are missing.
Execution tools are “in the day, for the day” elements that help a manager know whether the individual or department is on schedule or not. Production areas are better than office environments for this, but both areas often lack accurate schedules, which makes follow-up activity less meaningful. Manager follow-up on the plan and real-time performance feedback during the day is noticeably absent in many work areas.
3. Reports are disconnected from front-line activity.
There is never a shortage of reports, but it’s often hard to find reports that are truly useful for front-line managers. Most reporting is too “after the fact” to be much good for day-to-day management.
4. There is no systematic way to improve performance.
To improve performance, managers need to be able to identify variances (off-schedule conditions), problem solve in order to figure out how to improve the process, and then make sure that the new methods and work-to-time relationships are built into future planning. Variance identification requires accurate planning parameters, which unfortunately are often inaccurate. Without a formal method and feedback loop for improvement, problem solving tends to become temporary firefighting — and problems may simply become an accepted part of the process.
