Part II of Leadership’s Role: Define and Communicate the Three Clarities
Editor’s Note: The following article is part two of a three-part series by special guest contributor Chuck Udell, a senior partner at Essential Action Design Group. The article, inspired by a popular presentation Udell has given to numerous aftermarket professionals, addresses the importance of building a sense of ownership among all employees from top brass, to floor staff. As we witness dramatic changes in the North American aftermarket, a sense of ownership and loyalty among all employees may play a critical role in the future success of our industry, says Udell.
By Chuck Udell
In Part I of this series, we started to talk about what I like to call the "three Cs:" Clarity of Direction, Clarity of Structure and Clarity of Measurement. The three clarities are not independent elements, they are rather, inter-dependent elements of the whole company and are essential to the company’s advancement.
In the previous article, we looked at Clarity of Direction (focus) and the importance of communicating the 3 Cs throughout your company, to every employee. This time, we move to Clarity of Structure.
Simply put, Clarity of Direction and Clarity of Structure define where the business is going and who is responsible for ensuring that it gets there.
Clarity of Structure is so much more than an organizational chart or job descriptions. Structure includes the company’s structure as represented by the organizational chart as well as the mechanisms by which company initiatives are approved. Sales and marketing, which are closely related to channel structure and influenced by corporate initiatives, are also addressed in this article.
To understand structure you should begin by asking the following questions: “How do things get done around here?” and “Who does what?” Then, ask every person the two most important questions: “How do your efforts and the efforts of your department/team contribute to the profit goals of our company?”
Define Your Key Result Areas
Each job/position can be broken down into about five to seven key result areas, seldom more. These are the results that absolutely, positively must get done to fulfill responsibilities and make maximum contribution to the company. Failure to perform in a critical result area of work can lead to failure in that position or job.
There is essential knowledge and skills that a person must have for a job. There are core competencies that all employees have developed that make it possible for them to do their jobs in the first place. However, there are always key results that are central to their work and output, which determine their success or failure in the position or job.
Does everyone in your company understand what they are responsible for and what is expected of them? Do they all know how they contribute to your goal – greater profitability? Every employee needs to understand how he or she impacts profitability.
Every employee must have a well-defined “position results” description. This is similar to job description but with one very important difference — each position results description must state the results expected from that position. And if this result does not contribute to profitability, you must ask why does that result exist?
All positions within a company contribute to profitability and every person in every position must know and understand how they contribute. One manufacturer states in its position results description for a market analyst, that the person in this position is responsible for identifying growth opportunities that will maximize profitability and marketshare while minimizing expenses.
Why are position results descriptions so important? In the largest study ever conducted on workplace satisfaction (Buckingham & Coffman), employees ranked “Knowing what is expected of them” above compensation or benefits. Employees want to know what is expected of them, how they contribute to the whole, and how they will be measured for their contributions and performance. Clarity of Structure helps employees understand how their tasks and processes support or contribute to the “whole.”
Structure Does Not Mean Rigidity
Every company has several core processes that, ideally, cut across product lines, divisions, business units, departments and allow the company to excel in delivering its total offerings. Every company’s core processes differ, and it is critical that strategic leaders are able to identify and understand their company’s particular processes.
What are your company’s core processes? If they are difficult to identify, then you most likely have activities that are fragmented, dispersed among corporate silos, protected by sacred boundaries and operating sub-optimally.
To test the quality and existence of your “structure” and core processes, consider how your company thinks about and plans for change. Are discussions about change centered on divisions, channels, business units, departments or are the discussions about solutions and processes from the customers’ viewpoint with an “end-to-beginning” structure?
The lack of Clarity of Structure results in projects being behind schedule. Operations that were to be reorganized remain the same. A culture and workplace environment of complacency, frustration and resistance competes and defeats enthusiasm. Margins erode and marketshare shrinks.
For a company to thrive, each part of the company must be connected by not only the relationships represented in its organizational chart but also through a strong network of relationships, collaboration and processes immersed in a culture of getting things done.
Questions to Ask About your Present Structure
What are the criteria and processes for approving company and channel initiatives? Which aspects of the company’s structure hinder efforts to manage the complete processes across business units, divisions, departments and teams? Do your current reporting and matrix relationships provide for attentive management of your core processes for maximum customer focus, effectiveness and efficiency? Does the current company structure foster collaboration between business units, divisions, departments, teams and channel partners? Do all departments collectively solve problems and make improvements?
Evaluating your People
People manage processes, perform tasks, implement strategy, drive improvement and create profits. In evaluating your people you must first explore the status quo, beginning with the most essential question: “Do the members of this company exhibit an unfailing commitment to execution?”
I have learned that anything less than a resounding “Yes!” to this question signals that a company has some work to do.
Leaders have to make tough decisions to have clear structure. This means having the right people in the right jobs with the right responsibilities. Jim Collins calls it the “Brutal Truth” and Jack Welch calls it “candor." In his book, “Winning,” Jack Welch indicates that lack of candor is a huge problem in business. People are not frank; they do not “tell like it is;” they do not communicate straightforwardly; they “sugar coat” results, decisions and the reason for decisions. Why does this happen in many businesses? People want to avoid conflict. They do not want to make other people feel bad. This is, as Welch says, human nature.
Candor is unnerving. It is very difficult to instill candor in an organization. You as a leader must take the first step. Are your people regularly evaluated and offered accurate, candid feedback? Are the right skills in place to operate your core processes? Are people in the right roles? Who needs to move out of the company? Are people working effectively in cross-functional teams? Are people being developed for the future? What skills will people need? What new behaviors will be required in the future?
In evaluating the gap between your current workforces’ skills and behaviors you must determine: What will be needed to create a dynamic new structure that destroys silos and turf wars, and empowers everyone to respond quickly to a changing environment? With a clarity of purpose (direction) and a spirit of working together for success and profits, you must decide how to alter the gap. Will you close the gap through training, hiring or moving people, or some combination of these three?
Here’s a hypothetical scenario to consider: A manufacturer with excellent R&D capabilities, quality manufacturing disciplines and lean manufacturing processes has designed and built a full line of high-quality parts that are differentiated by their fit-form-performance and supported with a complete arsenal of value-added services and attributes. After years of successfully positioning and protecting their brand, they are losing market share. They hear from their channel partners (resellers) that their brand/products are now only a “commodity” and only worth commodity pricing.
How did this happen? Where was the structure? Who is responsible? The easiest answers are found in the “Blame Game.” Blame some external force, the consumer, the competition.
The consumer (market) sets the price. Right! And I can’t wait for the Ruth’s Chris $9.95 all-you-can-eat buffet. Or the Starbucks double espresso for a dollar.
Perception is reality. Allow the consumer’s perception to change and the new reality is lower prices and lower margins.
The “Blame Game” is always played without candor. Why? Because internal diagnosis requires candor. Collaboration with channel partners also requires candor.
How does a high-quality differentiated product become a commodity? Effective internal diagnosis might reveal no “one” culprit or singular event. Perhaps marketing, sales, agents, representatives, value-added resellers, retailers and installation experts each contributed to the brand value drift and price erosion.
Clarity of structure within a company and within a channel can only be achieved through open, honest, candid dialogue and collaboration.
In one diagnosis, we learned that a channel partner with a significant number of stores across a large geographical area had made the decision to change the number (structure) of sales calls per week by their outside salesmen. They changed from 60 calls per week to 40 face-to-face calls per week, with the outside sales person assuming new in-store duties. These outside sales people are the value communicators and value creators. However, the channel partner inadvertently forgot to inform their channel partner (the manufacturer) that they were reducing their face-to-face value added sales and service by 33 percent. Eighteen months after this structure change, the manufacturer found that sales in four of their product categories were stagnant, and sales in three of their product categories were declining.
In a complex, interdependent distribution channel, Clarity of Structure reaches beyond your own organizational chart or the position results descriptions of your employees. Clarity of Structure (responsibility) extends throughout the channel.
Selecting a change-in-structure before intensely analyzing your company’s capabilities places the success of even the best strategy for change-in-structure at risk. You can minimize this risk by looking closely at your company and channel’s existing structure, processes, people and technology. Identify the disparity between the current state and the desired future state. This allows you to assess your company’s ability to close the gap within time and cost constraints. Once you have assessed the time, effort, costs and disruption associated with closing the gaps, you can formulate the detailed strategy and implementation plan for changing the existing structures within your company and within your channel.
Changing structure will be a work in progress. You will not come to work one morning and find your structure transformation work is done. Successfully changing structure will also require clarity of measurement, which is the topic of the final article in this series. (Ed: Part III will be published next month.)
About the author:
Chuck Udell, MAAP, is a senior partner with Essential Action Design Group, a Charlotte, NC-based consultancy that provides research, needs analysis, design and deployment of performance improvement training programs for retail and B2B sales organizations. Udell is a veteran officer of the U.S. Air Force. He received his MBA in finance and marketing from the University of Rochester and his BS from the University of Virginia. For 10 years, Udell served as a consumer products analyst for over-the-counter products with Marion Merrill Dow pharmaceuticals. He served for more than five years with Mobil Chemicals’ Hefty Trash Bags division as its product specific financial analyst for all channels. Udell is an active member in AAIA and AASA. He is the former president of the University of the Aftermarket and is also an active member of the American Society of Trainers and Developers, and continues his research initiatives in cataloging performance best practices and maximized employee effectiveness.
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