We're seeing a large number of companies who've set corporate and leadership goals that are out of sync with their business strategies. They drag performance down or produce unintended consequences. Take a look at your goals. Do they communicate what you intend them to?
Here are a few examples.
" Damage done: A large company is trying to eliminate damage from its supply chain, namely in its warehouse and distribution centers. When we examined the goals and incentives for the warehouse facility managers and their teams we found 80% of the performance weighting on productivity, 10% on safety and 10% on quality. The leaders' goals were telling them to move product in and out rather than move product in and out without damage.
" Case in point: WellPoint, the nation's largest health care benefits company in terms of medical membership, got a lot of media attention earlier this year when they announced that their 42,000 employees will have 5% of the annual bonuses they already receive tied to whether the company meets specific screening and treatment goals for its policyholders. The company claimed this was a nod to the employees' responsibility to the health status of members. The other 95% of the bonuses will be determined by "other operating and financial issues." according to the company's public relations folks. Well intentioned, I'm sure. But of the 42,000 employees, who doesn't know that 95% is bigger than 5%? When people in an organization have choices, 95% speaks a whole lot louder and drives more behavior than 5%.
" Why no team? One of the world's largest technology companies was implementing a business strategy whose success required marketing the company as an integrated portfolio of products and services. It wasn't working. The chairman asked us what was amiss. We examined the goals of the business unit heads and discovered that 40% of their incentive was weighted to the company portfolio, while 60% remained focused on their specific business unit.
It takes less than an hour to carefully inspect your goals and incentives to see if they're facilitating or impeding your ability to hit your targets.
