What does it truly mean? Does time equal money in my project?

If I lose time, I waste money? or If I delay, I get the money later?

If it’s the first definition, you are saying, money is like time. If I waste it, it’s gone forever.

If it’s the latter, you are saying that the delay causes a loss or missing opportunity (during the delay), never to be recovered.

Which is it?

As a practical matter, for a manager delivering a project or results, the main issues are waste and opportunity.

Is all time “wasted” truly lost? How do you know?

Managing Time

Most managers break their projects down into individual tasks with individual deadlines. Like this

Straightforward, isn’t it? Make a list of tasks, estimate durations, link them together and you have your sequence and completion dates. Day to day, your job is to keep those tasks completing on time. To deliver on time, meet all your dates. Don’t be late, each task is important, each resource is important.

Opportunity Time

The problem is that not all task sequences are the same. So, you manage the critical path; if you’re sophisticated, you’ll manage the critical chain. Certain sequences will dictate the overall duration of the project. You’ll give higher priority to one sequence over another.

Here’s the thing about time. By declaring one sequence of tasks more important than another, you are choosing some time to be more crucial than others. Losing time on a non-critical sequence is less important than on the critical sequence. Therefore, in some cases, time is not money. In other cases, time lost is a loss of a LOT of money; the value of the entire project!

During the life of a project, the manager makes tradeoffs between time now and time later. Completing the project delivers a certain value; the value of rental income for a building, the value of a new capability, the value of entering a new market, the value of a new feature, etc. Every project worth doing, is worth doing sooner.

When you’re the project manager, to make an educated decision, you must determine the value of a day. What’s a day worth? And, is the task on the critical chain (which is the shortest time to complete the project)? IF your task is on the critical chain your decisions could be very different than if your task decision is off the critical chain.

Time is Expensive?

You could argue that wasting time on the non-critical tasks costs money. Maybe.

Let’s pick a resource. Let’s say your engineer completes 2 tasks this week, but she can’t do more because she’s waiting for some information. The week before, she was much more productive, she completed 4 tasks. Does that mean that the week where 4 tasks were completed your expenses were lower? Your expenses change only when her pay changes. Only if she was paid less the week 2 tasks were completed. Time equals money only if the expense varies in direct proportion to the work delivered.

For most of us and for most resources, time lost does not equal money lost. People are not paid to produce work; they are paid to show up. The view of the enterprise is that expenses are a function of the number of people on the payroll, not the amount of work that is done. Payroll costs are fixed costs, not variable. Expenses are related to hiring decisions, not production. We can never say time = money when it relates to work, because expenses don’t vary with production. Time = money when look at how many people are on hire per day, week, month, etc.

So, time equals money, sometimes. Not all time is equal. Not all time is costly. Some time is worth a great deal. The cost of time is not the same as the value of time.

Most lost time is simply lost, because most resources are not on the critical chain. And that’s ok. Some lost time affects the critical chain and it’s not ok. What matters is the effect of lost time on the completion of the project, not the completion of an individual task.

The skilled manager must know the difference.

The post Is Time Equal to Money? Part 1 appeared first on Projects in Less Time - Mark Woeppel.

You don’t see it coming until it’s too late. Everything was “green” until it wasn’t. All parts of the project were close to being on time. At least until they weren’t.
If you knew earlier, you could have made changes that wouldn’t be as costly and damaging to your customer relationships as the choices you’re making now.

That light at the end of the tunnel? Definitely a train.

So what to do?

Most project managers and executives assume that since the schedule showed the project was on time, it must have been a bad schedule that caused it. If we had planned better, we would have finished on time!

Well, maybe.

Projects are not abstract things, lived out in spreadsheets or software.

There is no such thing as a perfect plan, no such thing as a 100% accurate forecast. After all, who can predict the weather?

Here’s the thing. Uncertainty is What Makes a Project a Project. When we start the projects, we know many things we will encounter on the way to completion, but not every thing. That means surprises are a way of life in the project world. Any plan is made up of educated guesses about what will happen in the future. How accurate could they be?

Experienced project managers develop coping strategies: negotiating for more resources, disguising contingency, stakeholder management, risk management processes, increasing the amount of detail, frequent re-planning, and more. All of these are good to have, but they don’t get at the root of schedule variation; they’re coping strategies for the surprises that plague every project.

No matter how good you are at planning, you will never have a perfect schedule. You can make them better, but they will never be perfect. Improving your planning is not where you’re going to find the biggest opportunity. You be nimble during execution. If you’re not, your great plan will not matter anyway.

Let’s agree that your schedule will not be very good. How do you know if you’re in trouble? How can you quantify your nimbleness? How do you pull out of a bad situation?

The Early Warning Signs of a Project in Trouble

Project planning is a bit like time travel. Who knows what we’ll find there?

So rather than be the best forecaster, build the best time machine, the project delivery process. Your execution behaviors are the best predictors of project success.

While we can find opportunity in every plan (I started my career as a scheduler), look first at what the project team is doing.

• How they’re managing the project.
• How flexible are they?
• Do they respond quickly?
• Decisively?
• How are they responding to the day to day surprises that are presented to them?

There are behavioral indicators of whether your project will be on time. They can be observed, measured, and improved.

1. Focus on the future; what needs to be done, not what has been done
2. One team, one goal; the team members’ functional objectives are subordinated to project objectives
3. Task priorities are stable; they do not change from day to day so resources are able to work on each project task until completion
4. We know where the leverage points to accelerate progress; bottlenecks are clearly identified and communicated
5. All leading to rapid resolution of the unexpected

So let’s look at your team. Are they doing any of the following?

Living in the Past

In many projects, reporting progress is a substitute for moving forward. True, you must understand where you are relative to where you’re going, but reporting completions is not a substitute for managing the future.

If your team is living in the past, they’ll be spending a great deal of time reporting “progress”; percent completed and giving the reasons why things are not done. They’re a little stuck; working to understand where they are in the project. Project meetings are spent sorting out what has been done and negotiating priorities. They’re not looking forward and project progress reflects it.

You won’t get to your destination looking through the rear view mirror.

Check out this video to learn more of this symptom and you can do about it.

Conflicting Goals

Many times, the only person who is actually on the project is the project manager. He then spends his time on enrollment and buy in activities, rather than the core task of moving the project ahead. It happens so frequently, there is a section of the body of knowledge devoted just to stakeholder management.

If any team member has conflicting goals, they will not be fully engaged with work of the project, they may even make decisions that make completing the project more difficult. They don’t respond to questions quickly, don’t come to meetings, are not working with the rest of the team to move the project forward.

In order to win, everyone on the team must have the same goal.

Check out this video to learn more of this symptom and you can do about it.

Shifting Priorities

The project team members are spending their time sorting through the work to determine which tasks should have the highest priority. They’ll respond to the latest communication from a customer or a friend, or a boss. They’ll be switching – changing priorities for the resources (people) doing the work of the project.

When priorities are changing, more work is added to the project, time and productivity are lost, and the project is delayed.

Priority shifting breeds multitasking; the number one killer of productivity.

Check out this video to learn more of this symptom and you can do about it.

Wandering Bottlenecks.

The project never has enough resources to complete the work at hand. Finding more resources is a constant battle. There’s never enough time or budget. It just seems that the right resources are not available when you need them. The team may feel a little like they’re playing project “Whack-A-Mole”.

There is always a constraint that limits the rate at which the project can be completed, but if it’s always moving from week to week or day to day, it indicates a poor grasp of the resource requirements to complete the project.

The bottleneck is where you get leverage to go faster. If you don’t recognize it, you’re just spinning your wheels.

Check out this video to learn more of this symptom and you can do about it

Slow Response to Problems

Many projects are riddled with the “I sent an email, but have not gotten a response.” kinds of problems. Yes, the different time zones are an issue. Yes, we get hundreds of emails a day, but a delayed response to a critical problem slows the entire project down.

A slow response to problems indicates a team that is not engaged. They have a poor understanding of what the important issues are, who owns them, and what is needed to resolve them.

The single largest aspect of project duration is wait time. The more you wait, the longer it takes.

Diagnose Your Project. Will You Be Late?

Take a free project execution maturity assessment and see how you’re doing.

Experienced project managers and executives may still point to the plan as the biggest cause for troubled projects.  Or the assumptions behind the plan. They have a point, I have never worked in a recovery project where the plan was acceptable or was even being used to drive the day to day behavior. I’m talking about leverage. In a recovery situation, you must focus on the most critical elements that will get your project back on track as quickly as possible. You can’t fix everything that’s wrong, you have to fix the things that will give you the biggest results as fast as possible. Re-planning your project is an excuse to delay taking the necessary medicine to get things moving. Focus on execution. that’s where your leverage is.

Next up, a project recovery strategy. If you’re in a hurry, you can watch the webinar on this topic here

The post Five Early Warning Signs of a Troubled Project appeared first on Projects in Less Time - Mark Woeppel.

1. They Avoid Multi-tasking

Even though many people think multitasking is good, research shows just the opposite. It shows that dividing attention across multiple activities is taxing on the brain and often comes at the expense of real productivity. As much as a 40% loss. And it can also increase stress for the people multitasking.

In another way, multi-tasking adds work to your project because of task switching. For any task, there is a certain amount of time to setup – to begin doing the real work. For example, to re-start a task, I have to review the work I’ve done, determine where I left off, and then decide what to do next. The more complex the task, the longer this set up time takes.

The more complex a task, the longer the set up time is, causing even more delays. The more switching I do, the more additional work I must do, and the longer every project takes.

The successful project manager guards himself and his team from multitasking.

2. They Communicate Visually

At the ground level of the project, communicating information such as status, obstacles, priorities, and risk are a constant and never-ending challenge.

At the governance levels, program and portfolio owners are often faced with situations where they have either too little or too much information. The quality and timing of the information provided can be subjective, and is usually dependent on the person delivering it. So, if better execution is a goal, and effective communication is the top challenge in execution, it follows that improving communication will lead to improved execution and better business results.

By providing a visual representation of the work, the team develops a shared understanding of where they are and what needs to be done. This improves communication, because they share the same objective viewpoint. People spend less time reporting information like status, obstacles, priorities, and risk and more time on action.

Good project managers give the entire team a view of the playing field so they can act.

3. They Collaborate Intentionally

We know that in under-performing projects, issues are identified very late, and important communication is delayed. The right problem solvers are brought in too late to prevent the problems, and additional work—putting out fires—is then added to the workflow. Capacity runs short, the project is delayed, and costs go up.

Focus on face-to-face accountability – emphasizing what will be done, rather than what has been done.

Create a few simple rules to focus your team on what is to be done, not what has been done. History debates are for analysis, not collaborative execution. Establish guidelines and structure to bring the right people and good communication to the forefront to create action.

4. They Build a One Team, One Goal Approach

Most project teams consist of multiple disciplines from a variety of sources. Each of these team members are placed on the team to accomplish the project’s objective, yet, they bring with them the objective for their functional disciplines as well. Delivering the project is important, but not their main goal. In which case, we have people on the team whose goals do not match.

When functional goals are aligned, each member of the team is free to act in the best interest of the project, without being hindered by conflicting goals from other areas. This eliminates a major source of internal conflict, and speeds decision-making and action.

The savvy project manager pays attention to conflicting objectives among the team members and resolves conflicts between them.

5. They Control the Work in Progress

It seems like common sense: start sooner, you’ll finish sooner. The problem is that everyone starts sooner! Increasing volumes of work in progress increases confusion and conflict—and decreases real productivity. Having a lot of work does accomplish the objective of keeping people busy. However, while everyone is busy, the true picture of the overall project is obscured until deadlines approach, when the failure to complete the right tasks becomes all too visible.

To control work in process, managers establish and enforce pre-release criteria to match work releases with the rate of work completion and ensure no work is started that cannot be finished.

Keep the volume of work under control. Don’t overload the team with too much. Don’t start on projects just for the sake of starting. Successful project managers are focused on finishing.

Successful project managers don’t try to do everything, they focus on the few critical elements that make the difference between doing the work and delivering the work.

Learn more about what is working and what isn’t working in delivering projects. Read The State of Project Management Practice Research

The post 5 Surprising Habits of Successful Project Managers appeared first on Projects in Less Time - Mark Woeppel.

When our consultants find something blocking the process, we use a simple technique to find the hidden assumption(s).  We’re not challenging every assumption, just the ones that create situations that block us from where we’re going.  It does involve asking the question, “Why?”.  Sometimes we ask it 5 times.  But asking “why?” just tells us the “reasons”, not always the assumptions.

A couple of words about assumptions – we’re all familiar with the word game played when someone says “assume” (for those that aren’t aware of that, when you make an assumption, it makes an ass|u|me), but that’s not what I’m talking about here (although I do agree with that statement).  I think of assumptions as a person’s basic understandings of how things work.  This is useful for thinking in terms of cause and effect.  For example, the cause, “I kick you in the shins” will likely result in an effect like, “you will be angry”.  Not very hard, but the assumptions I make in this situation could be, “you don’t like being kicked in the shins” or “your feelings will be hurt by an attack on your person” (actually, this latter statement has another assumption, “when people’s feelings are hurt, they react with anger”.  Each of our processes has causes to create effects.  Sometimes, we don’t like the effects, so, if we want to change them, we should dig into the assumptions around these cause and effect relationships.

In a process, assumptions take the form of management rules (Why are we doing that?  We’ve always done it that way!), understanding of technical process (we have to put a 15 degree radius to allow for a subsequent step), quality requirements (inspection steps), or product specification requirements (dimensions or features).  These are baseline parameters of how the process functions and its boundary conditions.  Most of these are important and needed.  However, over time, these rules and requirements can become like barnacles on our process, no longer needed and slowing down the process.

Our goal is to find the assumptions that are erroneous.  An erroneous assumption is the rule, requirement, or boundary condition that is no longer required. (Why are we doing that?  I don’t know! We’ve always done it that way!).  The only way to find those assumptions is to zero in on the blockages and ask why certain requirements (the ones that are slowing you down) are necessary.

The process we use to find and challenge assumptions is to simply ask why and identify the assumptions that are no longer valid or could be made invalid.  Meaning, not every assumption is a fixed thing.  We can change things around.  Some are not valid in every situation – do we need to take this step for every product or just for specific customers?  Do those policies still apply in this situation?  Can I get the policy changed?  Can I find a different way to satisfy the requirement other than the one in place?

Take, for example, Pinnacle Strategies’ work during the Gulf Oil spill.  When we were working with boom manufacturers, our consultants went to several boom manufacturers to find more capacity.  The companies usually had rigorous specifications from their customers, as the quality requirements were support usage for many years.  However, we wanted as much boom as possible, in as short of time as possible, for a short burst of intensive work.  The companies were building heavy duty products designed to meet a wide variety of situations.  The boom that was needed was for a specific environment, with specific requirements, for a short period of time.  Some features could be left out, thus reducing the time to manufacture and thus releasing extra capacity to make more.

This is our experience over and over.  There is ALWAYS more capacity than you think.  You just have to do a little digging and challenge your assumptions.

Read more about how we achieved great results by challenging the assumptions in lesson 4 in my eBook, Achieving Top Performance Under the Worst Conditions: 7 Lessons Learned from a Disaster.

As always if, you have questions or comments please feel free to contact me by emailing me.

The post Challenge Your Assumptions about the Process appeared first on Projects in Less Time - Mark Woeppel.

In a more practical sense, if I’m a leader of an organization, how do I know my team is doing the right things?  If I’m a team member, how do I know what actions to take?

Every organization is formed for a purpose.  In order to achieve its purpose and goals, organizations develop around sub-organizations (functions) and processes that accomplish them.  These sub-organizations then have their own purpose and goals, for example; accounts payable’s goal is to ensure the bills get paid.  Presumably, each of these sub-organizations is in alignment with overall goals and objectives of the global organization.

As the organization becomes more complex, it becomes more challenging to maintain this alignment, so the organization establishes performance management systems to maintain alignment of purpose and activity among the constituent (local) organizations.  These systems are often referred to colloquially as “the measurement system” or “the metrics”.  Managers seek the relevant measurements to make decisions and drive appropriate behavior in the enterprise; whether to correct a course of action, direct a new course, or even stop.

The performance management system is the formal and informal process of measuring and responding to the organizational process to achieve its goal(s).   It creates and applies uniform standards, quantifying and managing process performance.

Here are a few things to think about.

Establish the standards.  Create a common benchmark of performance.  This can take the form of a database of work to be done, a common set of objectives, or even an agreed upon set of goals. If you don’t know what the objective is, anything will be acceptable.  So be purposeful and deliberate about determining your direction.  Essentially, the standard are the “why” of what is to be performed.

Know the process.  The process is the “what” of your process – the details that determine your progress towards success.  If you have never mapped the process or supply chain, now is the time to do it!   It’s essential to know the behaviors required and the results of those behaviors – you can’t measure what you can’t quantify.

Create decision gates. Now that you have the process mapped and can clearly articulate the steps towards the goal, you can identify where decisions need to be made.  Quantify the decision process – who can make what decisions and when escalation is required.

Identify the constraint. Now that the process is mapped and all steps are clear, you can see where the bottlenecks are and what is holding up the process or supply chain from moving faster – you can focus on the areas that are most critical.

During the oil spill in the Gulf of Mexico, BP built the largest civilian maritime fleet ever seen (over 14,000 vessels). In the haste of containing the spill, keeping detailed records were not a priority.  Equipment was rented and used with no documentation and boats were commissioned to clean oil with no record of their model or serial number.  This lack of communication and documentation became a big problem when it was time to decontaminate the cleanup vessels.  We employed these lessons to drive the process and completed a task in less than six months that was originally estimated to take years. These lessons worked in the worst conditions, imagine how they could help you now.

Read how we achieved great results by applying uniformed standards in lesson 6 in our eBook, Achieving Top Performance Under the Worst Conditions: 7 Lessons Learned from a Disaster.

Also, have a look at some of our thought leadership on performance management here.

As always if, you have questions or comments please feel free to contact me by emailing me.

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In any project, coordinating the workflow among your resources is almost always difficult. When multiple teams are involved, that challenge is multiplied; if those teams are distributed across various campuses, countries or even continents, the effect on complexity is exponential, escalating the challenge in three dimensions:

Poor communications: When you collaborate across distances, bringing everyone together for meetings or calls may be difficult or impossible, compromising the decision-making process.

Distance adds delays: Every mile adds minutes (or hours, days and weeks) to the workflow. Working across multiple locations means additional wait
times for parts, information, decisions, responses, plans and more.

Too many variables: For managers, there are simply too many moving pieces, too many parts (tasks, supplies, locations and resources) and too much data to manage project information effectively among all the players.<

For distributed team management, the ugly truth is that traditional tools (such as spreadsheets, groupware, SharePoint^TM, and ad hoc meetings) fail to master the project execution complexities imposed by multiple tasks, resource groups, and locations. The combination of data profusion and location confusion makes it difficult for managers to balance load and capacity: the resources available for the work at hand.

There are any number of tools that might help, but a truly effective solution must give you the power to control the four most urgent challenges faced by managers of distributed teams:

Synchronization of work and resources
Managing deadlines –commitments and delivery of internal and external task completion dates dictated by the project
Reconciliation of resource capacity with work load
Managing risk – understanding the level of uncertainty in the project plan to effectively manage execution

I will expand upon each area further in the coming weeks, but if you want to jump right to the solution and learn how to get control of your distributed teams, read our newest eBook, Remote Control: How to Get Productive Teamwork from Distributed Project Teams.

The post How to Get Productive Project Teamwork from Distributed Teams appeared first on Projects in Less Time - Mark Woeppel.

I’ve written on the topic of measurements and their impact on the behaviors that drive performance here.  I’ve discussed the dilemma between managing the expenses of an organization and achieving the goal of the organization. In a project management context, there is tension between holding down costs, maintaining the schedule, and achieving the project scope; the classic project management triangle.  The conventional thinking is that you can have two, but not all three.

In many projects (particularly in matrix organizations), these objectives are divided into separate entities.  For example, the expenses of the project are borne by the resource owners and they control the labor costs.  It is similar for other projects as well, the resources are not owned by the project, but are allocated – on a planned budget.  Yet another group – the customer team or engineering team, determines the scope or deliverables of the project but they do not have the resources or the budget to achieve them.  The schedule is the only aspect wholly owned by the project manager, “ownership” is to be taken with a grain of salt, as often there is a due date dictated by an outside party (customer, market, management, etc.) that the project must achieve.

The resource manager’s main objective is to hold down costs – spend as little as possible.

The customer team’s objective is to get every feature or aspect of the design they want.

The project manager’s main objective is to deliver on time (or as quickly as possible) while somehow resolving the inherent conflict present in the organizational structure.

Most managers are not even aware they’re dealing with a systemic conflict.  How does it play out in project execution?  The conflict shows up as a sacrifice then a compromise.

The resources aren’t present when they’re needed
There aren’t enough resources
The scope is changing (emerging?)
Poor choices in suppliers (low reliability or quality)
Reshuffling of task priorities
Compromises on scope, budget, and delivery

The project manager is unable to resolve the conflict; all he or she can do is try to make the best of things.  This is why I claim that in a conventionally managed organization, the best project managers are the best negotiators.  The best negotiators are able to get others to act against their own self-interest in order to meet the demands of the project!

But what to do?  The real solution, the permanent solution, is to change the measurement system of the company.  However, most project managers are unable to address a problem of this scope.  They’re too busy slaying the dragon before them to get to the dragon’s lair.  Everyone is locked into a no-win situation.

The conflict can be broken if we recognize that there are two types of objectives in a project:

1.  Satisfying the necessary conditions
2.  Achieving the goal

Therefore, for example, we do not need to reduce costs to the lowest possible level, only the lowest acceptable level.  In other words, as long as the overall budget has not been jeopardized, there is no additional benefit to reducing expenses or costs.  We do not need to add more features or additional quality checks, as long as we have satisfied the requirements of the project; better quality does not necessarily result in improvement to the project results.  What is left, is schedule.  Does it make sense to get the project done faster?  In many cases it does, in others, it does not.

Thus, project champions must be clear about the purpose of the project.  What is the “goal”?  This is foundation of the performance management system around.  We check to make sure we have not violated any necessary conditions, but we work towards the goal.

We ask the members of the project teams we work with to live by one common objective.  This sometimes means there is a temporary suspension of the “normal” local performance measures during the project duration.  This is where the negotiation takes place; at the start of the project, when you decide its purpose and write its charter.  You must identify the measurement conflicts and resolve them early or you will have problems in execution.

Read more about the measurement conflicts in our eBook Blindsided! Five Invisible Project Threats Successful Managers Must See.

The post Blind Spot 5 – Misleading Metrics appeared first on Projects in Less Time - Mark Woeppel.

In a perfect world, all resources would have one project to work on and one project manager.  But of course, that is not reality.  Most people are tasked to several projects, many with different project “managers” who all think that their project is obviously the most important one.  They cannot see other projects or other priorities.

This means that the resource is forced to choose, with limited insight, what priority task to work on.  The most frequent result is that rather than working on project tasks that are a true priority, they choose projects to work on based on which manager asks the most, yells the loudest, or flatters the most.  Even worse, some people will work on whatever is asked of them at the moment, immediately switching to the most urgent.  The result of both is that there are many tasks started, but few are being finished.   The workflow becomes filled with unfinished work, slowing progress for ALL projects.

As a further result, the work of managers is reduced to expediting and negotiating resource availability.  And of course, they are quite creative!  However, this creativeness is not fun or particularly productive if you want to accelerate all of your projects.

The solution is to create a single priority system for all resources.  This significantly reduces multitasking and increases resource productivity and project velocity.

As you set up your single priority system keep the following in mind:

Choose priorities that are determined by the overall goals and deadlines of the organization, not for a specific department.  As you create one priority, focus on what is best for the whole company, focusing on the big picture.  This may mean a renegotiation of service level agreements or other local measurements.

Centralize assignment of priorities.  Establish one gate to the workflow where the priorities are designated.  This is a single manager or analyst who manages work priorities for the resource group.  This person becomes both the voice of the organization to its customers and a voice of the customer to the organization; the “conductor” to your organization.

Focus on one priority task at a time.  The single priority system must be managed by the task managers to ensure resources are not multitasking.  Do not allow outsiders (you know who they are!) to “help” with task assignment.

Use a priority system that everyone understands.  The key to an effective system is transparency and simplicity.  The goal of the system is to understand the most important work and engage people to work on it continuously.  Don’t be concerned about precision, a simple scale of 1-4 is simple enough.

Creating a single priority system is critical for effective project execution and is at the heart of our visual project management approach, ViewPoint.  Learn more about the ViewPoint approach here.

To read more about the conflicting priorities and other invisible threats to managers, read our new eBook Blindsided! Five Invisible Project Threats Successful Managers Must See.

The post Blindsided! Conflicting Priorities in Projects appeared first on Projects in Less Time - Mark Woeppel.

I’m continuing my series on the Achieving Top Performance: 7 lessons learned in a Disaster, an elaboration on the work we did during the Gulf oil spill.  This week covers the final lesson, communications.  In my last blog post, I wrote a little about the performance standards.  This post continues that discussion and I’ll get into the communication and feedback process of those standards.

As an organization grows or changes, so does the complexity of managing the performance and processes. Unfortunately many organizations’ communication and performance management processes suffer from one of two conditions as a consequence: underdeveloped and fragmented or bloated and burdensome. Either way, the result is ineffective and misaligned performance systems and processes that do not support – and frequently work against – your ability to diagnose and direct performance towards your goals.

Often, the performance management systems are focused on functional performance (reflecting the organizational structure).  The problem with this approach is that “functions” do not equal “processes” and fail to account for the interdependence among functions.  The result is that one function can do well while other functions’ (and the organization’s) performance suffers.

We can validate what we know intuitively by a small experiment.  Add up all the performance indicators in various functions.  Do they sum up to the organization’s global numbers?  Of course they do not.  We know this intuitively, as we are witnesses to mangers gaming the system to make their numbers.  The implication is that managers at various levels know the performance management numbers are at best, an approximation of organizational performance and at worst, making the numbers actually harms the business.

It’s in this environment of mistrust of the numbers that we expect managers to perform well and deliver bottom line results.

The challenge in managing organizational performance is to have local managers align their functionally oriented behaviors and decisions with organization’s goals.  For example, in a for-profit entity, managers must make decisions that will produce favorable outcomes based on the same measurements to which the stockholders and customers hold the organization accountable for.

Additionally, managers and system owners must be able to predict and accurately measure the effect of decisions that are made deep in the organizational structure and see their effect upon the goals of the organization as whole.  With the current processes, they are simply unable to get an accurate picture of how well the processes that lead to the results are operating.

There is also the issue of timing.  Having the right information in the hands of the right people at the right time enables managers to capitalize on opportunities and be prompt in remedial actions.

Budgets Offer an Incomplete Picture of the Business

In most organizations, the main performance management system is linked to the financial aspects of the organization – local budgets.  I am not arguing against budgets, they just offer an incomplete picture.  The main driver of budget behavior is based on dividing the organization into functional areas.  They measure the financial effect of the decisions made in the past, but do not make a decision model.

Good for allocating expenses, but difficult to judge a particular decisions’ impact.  Especially when a manager has accountability for process decisions that affect expenses in other silos (For example, the sales function could make promises to customers that cause operations to spend excessively to meet them.).  Most importantly, budget management assumes a fixed revenue source, over which local managers have little or no control.  The reality is, that local managers, being part of the system, have a significant impact on the revenues of an enterprise.

Additionally, revenue is not a fixed thing; it’s a projection – a forecast.  The result is that local management decisions become one dimensional – based on expenses and local optimization of a revenue level that may or may not reflect the current state.  The result is often a sacrifice of revenue and market opportunities so the budget will be right.

The solution is not a balanced scorecard, but a focused set of process–based measurements and diagnostics that illuminates process behavior – the predecessor to results.  These measurements, carefully calibrated to system and process behavior are then linked to reinforcement mechanisms to ensure alignment at all levels of the organization and across process boundaries.

These measures must then have a communication process that ensures the rapid response organizations require.

This was the problem we faced during our work with the vessel cleanup operation. BP had contracted thousands (yes!) of different teams of vessels and crews.  We worked with them to create a process to manage the cleanup operation and the performance of the many remote vessel cleaning operations. Without coordinated communication between the clean up sites and the command center, the constraint of the entire operation – the dock space – often stood idle or full of vessels waiting to be decontaminated.  Each morning, there was a meeting to discuss progress, but there were there were as many communication methods as there were contractors (and there were plenty).

Mistrust and confusion was common.  More importantly, the command was unable to understand the status of the project and the decontamination sites were operating independently, out of sync with the global objectives.

Managing the Performance

We implemented the following principles to accelerate the performance management communications of the teams.  They weren’t the ONLY things that were done, but the most critical:

Have the right information.  Focus on the constraint.  Since the constraint determines the overall process capability, it becomes central to the communication strategy.  We reported things like dock utilization, lost time, vessels waiting to assess the health of the process.  These weren’t the only things that were reported, as we were concerned about safety, too.  But the constraint performance information was central to knowing the progress and developing action plans.

Have timely information.  This is a discipline for the reporters of the information in terms of accuracy and for the managers using the data; regular (daily!) reporting and regular (daily!) cross functional reviews.  Having the all reporting on a common time front helps decision makers assess the quality of the information.  Having it as recent as possible gives a clear view into the process at the moment.  We had daily reports and weekly reviews of the aggregated performance.  These performance reviews were active – where are we, what do we need to do and short – less than a half hour a day.

Have templates for communication.   Making consistent, standardized communications helps everyone understand the information and the process.  By having a prepared template, meeting preparation time is reduced as everyone knows what is needed, how to present it, and with repetition, where to find the required information and what is critical to the process.  Standardized communications greatly increased the effectiveness of the management process.  The meetings themselves improved in terms of focus and quality of information discussed.  The process became more transparent, so everyone involved remained informed and could make better decisions.

Read how these changes to accelerate communication greatly impacted the results in lesson 7 in our eBook, Achieving Top Performance Under the Worst Conditions: 7 Lessons Learned from a Disaster.

Also, have a look at some of our thought leadership on performance management here.

As always if, you have questions or comments please feel free to contact me by emailing me.

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