Despite the hype around the balanced scorecard, management by objectives (MBO), and lip service paid to alignment, many CEOs still struggle to understand the extent of their employees’ commitment to corporate objectives. Putting the number on the PowerPoint slide, the scorecard, or getting the “yes” nod doesn’t necessarily ensure appropriate action.
Whatever the strategy or objective, it is crucial to pay close attention to precisely what your executives are committed to and what they are willing to be held accountable for.
Results Management Group was hired by a publicly held global manufacturer of electronic equipment to assist in executing a multi-year $150 million cost-cutting initiative. Through initial investigation, we found that this company lacked some crucial elements for success that are commonly missed: 1) a clear mandate from the board, 2) aligned commitments from executives, and 3) structures to keep executives accountable for execution and results.
The board set the target, but management treated it as an objective that would be “nice to have” rather than a goal that “must be accomplished.” The lack of alignment among the board of directors, the CEO, and other executives responsible for the initiative put the cost-cutting initiative, net profit, and the firm’s competitive position at risk.
I found it both interesting and concerning that it was a vice president, two levels down from the CEO, rather than the CEO himself or the business unit president, who recognized that the firm needed our assistance.
What followed was a series of interventions. Through dozens of meetings and critical conversations, the executive championing the initiative (the aforementioned VP) aligned the board and other key executives. As a result, the expected March cost savings of only $35 million grew to more than $43 million by year-end.
Although the client ended the year successfully, the alignment and implementation process was far more difficult than it would have been if the CEO had ensured executive commitment to the board’s targets at the beginning of the year.
In this uncertain year, CEOs must be able to count on absolute commitment to objectives and ensure structures that keep everyone accountable for achieving those results. When commitments or plans go awry, quick and decisive action is crucial.
Shoot us a note to start a conversation today, and let’s explore what next-level results look like for your company.
