Published on Human Resource Executive Online in July 2009 this article explores who differentiating and strategically balancing the effectiveness and efficiency of work activities can be difficult for many organizations — often because leaders lack a framework with which to analyze the way various activities affect the value proposition to customers. Here are some best practices HR executives can use to help their organizations find efficiencies without jeopardizing strategic differentiation.
This article will compare two recent redesign efforts, within two different companies to paint a picture of how to drive successful organisational design and change. Both of these businesses had been the player in their respective industries, both had always achieved very nice profits for their owners and traditionally both had always been able to exert their size and dominance in the market to such an extent that competitors were few and far between.
We’ve all heard many times the idea that “people will do what they’re measured on.” Is it really true? If I told you that the defect rate for this company’s premier product dropped from 12% to 1% in only three weeks and then further declined to 0.5% in just three more weeks, you’d probably think I was making it up. Well, that is exactly the result that occurred—and it occurred solely from beginning to measure quality in parallel with measuring productivity (in this case, speed). Perhaps what is even more revealing is that there was no incentive linked to quality improvement. All the while, workers were being paid a bonus for speed—which, incidentally, did not suffer when quality improved. That they were not being equally rewarded for quality made no difference. The metrics alone changed their behavior.
One vicious reality facing organizations today is the need to have a clear strategy. With the unlimited opportunities and choices out there, the challenge is making choices that support, reinforce, and align with your organization’s strategy. Without a strategy, the only chance for success is winning the ‘operational efficiency rat-race,’ which is the zero-sum game of cutting costs and enhancing productivity at a pace faster than competitors. More than one company has found itself drowning in the noise of ‘strategic static’—lowering costs and attempting to survive the rat race.