Up to 37% is Lost from Strategy to Execution

This is a common scenario: Company leadership spends weeks or even months coming up with the perfect game plan to propel their company to never-before-seen heights, only to see it fall way short of the targets a year or two later. Some CEOs have even included it in their planning. "To hit the trees, aim for the stars," they say.

 This chart shows the average performance loss implied by the importance ratings that managers gave to specific breakdowns in the planning and execution process, in a survey conducted by the Harvard Business Review.

This chart shows the average performance loss implied by the importance ratings that managers gave to specific breakdowns in the planning and execution process, in a survey conducted by the Harvard Business Review.

Granted, many things are easier said than done, but we don't have to be resigned to accepting as gospel truth that targets are never meant to be met. According to a study done by the Harvard Business Review, an average of 37% in potential financial performance is lost due to improper planning and execution (see chart on the right).

The sources of the performance loss are actionable, and are therefore correctable. Meaning, you don't have to expect your company to regularly fall short of targets. When you aim for the stars, you should be able to hit quite close to it, if you plan and execute well.

Establish an Optimum Performance Framework

The Optimum Performance Framework is the minimum set of habits to get things done within an organisation. It includes proper goal-setting, and a regular schedule of logging, sharing and comparing tasks and progress. With the framework in place, the performance loss can be minimised.

Step 1: Proper goal-setting

What typically happens in most companies is that by continuing to aim for the stars when you intend to hit the trees (or over-projecting), there are multiple repercussions that hurt your company in the long run.

Establish a performance framework in your company and see your business performance improve.

One is that inflated forecasts would tie-up excessive capital spending to a certain area of the business, when it could have been better spent on another area (or help ease cash flows, at the very least).

Another is that it fosters a culture of mediocrity and underperformance. When managers are used to always being short with targets, there will be little incentive to perform. Targets will not be taken seriously, and managers will work instead to protect their jobs rather than to strive for better performance.

To conduct proper goal-setting, establish SMART (Specific, Measurable, Assignable, Realistic, Time-Bound) goals (read more about it here) with accurate information and insights from your key people/managers. Ensure each key person has buy-in with the goals. Identify goals in terms of priority, going with high-return, quick wins first, before going into the goals that will require more resources (an excellent way of identifying projects and priorities is the GE Work-Out, which you can download here).

Step 2: Develop action plans

Once targets are identified (i.e. "lower food costs to 30%" for a restaurant business), there are a number of ways it can be achieved, and the inputs of company frontliners usually present themselves as the most valuable.

As detailed in the GE Work-Out mentioned above, involve key frontliners in the development of goals and in the corresponding solutions from the beginning. Allow them too to take ownership and accountability in the execution and progress of the initiatives.

Step 3: Regularly monitor performance

This is a commonly-ignored step in execution. What typically happens is that after the planning stage, tasks assigned to personnel are forgotten. Months later, much to the surprise of managers, these tasks will be discovered to have little or no progress at all. This accounts for most of the performance loss indicated in the chart above.

Business leaders have two options here: Either they can be extremely organised and ask for regular updates with staff (which can be time-consuming), or they can have real-time monitoring with the use of technology.

 My EmployeeLife is a performance management solution that allows users to log, share, and compare work with colleagues.

My EmployeeLife is a performance management solution that allows users to log, share, and compare work with colleagues.

With the Optimum Performance Framework, we use Optimum's proprietary performance management software called My EmployeeLife, which allows the real-time logging, sharing, comparing and monitoring of tasks, goals and progress from the convenience of your desktop, tablet or mobile phone.

At any time, you can view each goal and tasks of your direct reports, and even comment on each. Work logs can be posted by each team member, describing the highlights of the week, which you can then compare and align with the priorities of the team.

Want to put a framework in place?

Drop us a line, and we can give you free consultation on how you can put a performance framework in your team.

 

About the author:

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Dondi Alentajan is the Principal Consultant for Alentajan Business Consulting and serves as a consultant for Optimum Direct, a web portal for the best HR tools and software for small business. He was recognised as a “Marketing Maverick” by Business World in 2012, and he headed the Marketing Team nominated “Best Marketing Company” by the PMA for two consecutive years (2010 & 2011). His primary work mission is to help companies and their customers be happier together.