Tuesday, September 29, 2009

Collaboration and Measurement, the best enemies

We started this journey on collaboration in large enterprises discussing how organizational structures can stand in the way as far as collaboration is concerned. Today I would like to focus on a second aspect and this is measurement. To make it simple and to quote Dave Packard, a great west coast entrepreneur, “Tell me how you are measured and I will tell you how you behave”. And he is so right.

Indeed, people are willing to work together, naturally they have a helpful attitude. But in the end, the “what’s in it for me” question comes up. And frankly, if the measurement do not line up, bad luck. When times are good and the measures easy to achieve, there is not too much of an issue, but in the current environment, where the recession (officially ended though) is making achieving numbers difficult, it often is lonely out there.

IMG_7471 I have seen companies giving sales people numbers by product lines, resulting in those numbers being achieved at the detriment of what is right for the customer. In particular, when the business units are strong, when they are the profit centers, developing an integrated approach to customers may be difficult. Top management should spend valuable time engineering a simple, but at the same time compelling measurement system to ensure they achieve the behaviors they want their company to portray. And it is that behavior that will foster collaboration.

Calculating bonuses on the success of the company (e.g. achieving objectives, profitability) may be seen as a way to foster this integrated approach, but it is important to think about how the individual contributor can influence the numbers he is measured on. If he is one of 300.000 employees to take a number, can he really influence the objective he is given? And so, will he act to improve this measure?

For sales people in particular, it is key to balance the measures that are part of the variable pay and the ones that provide bonuses. variable pay ones have the tendency to be the first ones to focus on, while the bonus ones are nice to have.

In a nutshell, developing a measurement framework fostering collaboration is feasible. However it requires a good dose of sound judgment and engineering at top management level, which ids often unfortunately forgotten.

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