I’ve written another post for the Trisotech blog on end-to-end processes, and how Conway’s Law can prevent good horizontal integration across your organization’s processes. Conway’s Law is an adage that states that organizations design systems that mirror their own communication structure: basically, if your interdepartmental communications is not that great, the underlying systems are unlikely to do a good job of it either.
I go into some detail of the problems that occur when an organization is functionality siloed with poor communication between areas, and how you can start to find your way out of it.
You can find all of the posts that I’m creating for them here.
I’ll be writing a few guest posts over on the Trisotech blog, starting with this one on goal alignment through the hierarchy of your orgnization to make sure that you’re not only doing the right thing, but doing the thing right. As I mention over there, I have this conversation with almost every enterprise client that I talk to, and thought it would be good to put down some thoughts around a goal alignment structure like this:
This is (techinically) sponsored content, although I don’t discuss Trisotech products at all, so I’m not reprinting it here but encourage you to head over there and give it a read.
I’ve been spending some time recently helping a few companies think about how their corporate goals are aligned with key performance indicators (KPIs) at all levels of their organization, like this:
Top-level goals, or what keeps the corporate executives awake at night, usually fall into the following categories:
As we move down the hierarchy, different levels of business managers are also concerned with operating margin/profitability, service time, compliance, and operational scalability; you can see a pretty direct line between these KPIs and the top-level corporate goals. For example, improved profitability is likely going to improve (net) revenue, while better service time means happier customers. When we reach the level of front-line workers, their KPIs are usually based on individual performance and skills advancement.
The problem arises when those worker-level KPIs are not aligned with the corporate goals; I’ve written about this in several presentations and papers in the past, in particular about how we need to change worker metrics in more collaborative work environments so that they’re rewarded for more than just personal performance. In doing some research on this, I came across Goodhart’s Law (via the book The Tyranny of Metrics), which is basically about how people will game measurement systems to their own benefit, particularly when goals are complex and the metrics are crude. That’s so true. In other words, given the choice between maximizing a poorly-designed metric that will benefit them personally, or doing the right thing for the customer/company, people will almost always choose the former.
An organization has a “same day” SLA for incoming customer inquiries, except if the inquiry needs to be reviewed by the legal or accounting departments. Business units are measured on how well they meet the SLA, so everyone forwards all of their unfinished work to legal or accounting at the end of the day in order to they meet their SLA, even if the inquiry does not require it. This decreases productivity and increases customer service time, but maximizes the departmental time-based SLA.
An HR department is measured by the number of candidates that are hired, but not on the quality of the candidates. I don’t need to explain how that goes wrong, but suffice it to say that it has a big impact on customer satisfaction as well as productivity.
Any metric that is based on individual (or departmental) performance but can’t be aligned up the hierarchy to a corporate goal is probably going to be detrimental to overall performance, or at least neutral. If you can’t show how a task is contributing to the good of the enterprise, then why are you doing it?