Reflecting on the businesses we’ve been a part of (large or small), or have been involved with either directly or through an acquisition as well as the many businesses we’ve served over the years with our advisory services, we often times find that many businesses have not optimized a fundamental framework to support the achievement of business outcomes. We refer to the framework as organizational maturity (OM), which we will define here, as well critical components of an OM framework.
Broadly, a business organizational maturity framework is the eco-system of methods, processes, and technology that support the businesses most cherished asset, its employees. More importantly, the OM framework is the method in which employee engagement, employee achievement, and business objectives achievement combine to produce positive results for the business, and all stakeholders. Many investment firms consider the need to enhance the managerial talent of an investment as a key fundamental action in the early days of owning the business. Often time, the investor is really saying through its pre-acquisition review of the business (i.e., diligence), supported by previous pattern recognition, it perceives a low organizational maturity. The evaluation may or may not be supported by facts. However, it’s clear that the “owner” of the business believes in order to accelerate the business defined either as growth in EBITDA, sales (new bookings) or revenues, it must first invest in senior talent to “professionalize” the organization.
In other words, the business must take A.I.M. on developing or advancing its organizational maturity.
A. – Alignment. How many times have you experienced in an organization you have worked, the lack of understanding of the corporate strategy (often defined as the mission), offering strategy (solutions to be delivered to end customers), marketing strategy (the markets to serve) and finally the go-to-market strategy (defined as both the sales and delivery strategy)? Often times, the lack of understanding leads to a lack of alignment between departments in the organization, usually without declared and well documented (i.e., written) goals and objectives that are connected to other parts of the business.
I. – Incentives. From an employee performance point of view, businesses measure (or should) both how an employee gets their work accomplished (i.e., the competencies such as communication, ownership, or collaboration to name a few that I often times see), as well as what work gets accomplished (the goals and objectives for the individual, department, and organization). There usually is a modest attempt to record these goals and objectives, but if you are lucky enough to have written goals supporting the above strategic concepts, many times those goals have little or no connection or dependency on other parts of the business (see definition for alignment above). Pushing aside for a moment the employees goals and objectives, there is more often than not, an obtuse/hard to understand connection to achieving a business outcome and achievement (read payout) of an employee variable compensation plan (read – incentive). Businesses must take great care in both defining the interrelated goals and objectives, but simplifying how achievement translates to individual incentives. The more unclear that connection is, the more apt an employee will struggle to understand the importance of their individual goals and objectives.
M. – Measure. The final piece of the organizational maturity framework. The lack of inspection in businesses is both shocking and scary. After you invest in a stock, mutual fund, or bond, do you not periodically review the performance of the financial investment to both understand how the investment is doing, but also to determine if you need to course correct? Related closely to defining individual, department, or business goals/objectives, the measure must clearly be articulated to allow both the person performing the work and the organization to be able to accurately understand the success and possible failure in achieving the stated business outcome. Whether it’s a customer project, internal project, marketing program, sales promotion, or a development project, defined outcomes and measuring periodically the performance is fundamental, yet often times ignored in a OM framework.
Each component of A.I.M., developed soundly and maintained as part of the normal course of the business, will support the healthy and successful advancement of a businesses organizational maturity; it will provide an environment for employees to both understand and align their personal goals to the business, and provide an opportunity for both business and employee success.