Now that you’re beginning to see positive results, you’re becoming very enthusiastic about the value habits. Passionate, even. You enjoy the confidence that comes with having a flexible plan for creating value. You find that selecting projects based on how well they fit that plan actually helps streamline decision-making. Focusing on the interests that unite stakeholders makes it easier to get your point across. And, some of your most dynamic people share your enthusiasm for the value habits. They’re digging right in, talking the talk, helping you orchestrate and reward everyone for value-creating behavior, and getting your message out to the world. But, how many of your people are really on board? Who’s doing what, exactly? How does it all fit together? How do they manage to fit it in with their other responsibilities? Is it possible that they don’t fit it in? That what they are doing doesn’t exactly fit together very well? Or that value-creation isn’t getting done at all? Value-inhibiting behavior #8: You manage value-creation off the side of too many desks. The sad fact is that when no single person is in charge of something, it usually doesn’t get done. And if what isn’t getting done happens to be value-creation, that’s a problem. A big one. How can you tell if that’s happening at your company? Here are a few telltale signs: - Strategy is developed in a vacuum or even outsourced.
- Projects get the green light (or don’t) depending on the person pushing them, not on what they’re likely to contribute.
- Each business unit does its own planning and budgeting; finance just slaps it together.
- Each business unit uses different definitions in performance measures and management reporting.
- Each business unit uses its own unique performance assessment practices to set compensation.
- Management systems are custom-built for each process by people who don't understand the necessary interconnections.
- Things become disjointed because of the number of different functions involved
Does any of that sound familiar? You know you can’t go on that way. You’ve got to get every part of your business working together. How? Try putting a single person in charge of value-creation. Value-creating behavior #8: Put a single person in charge of aligning strategies, actions, and performance management. Call that person your Chief Value Officer (CVO). Charge the CVO with developing and executing an integrated performance-management process that is focused on creating long-term value by aligning objectives and strategy to project portfolio, performance metrics, and rewards in every aspect of your company – from finance and operations to information technology and human resources. What about the CEO? Isn’t he/she the one who is ultimately accountable for creating value? Sure. But many CEOs are far too busy to give this job the time it deserves, and some others find that designing, implementing, and enhancing the performance management process just isn’t their strong suit. Either way, they need someone to take on the day-to-day work of defining, tuning, and governing the value-creation process, just as they delegate day-to-day responsibility for finance, operations, and other matters for which they’re ultimately responsible. A full-time CVO can devote all his/her energies to confirming that all elements of your management process are aligned. He/she can establish, review, and maintain a consistent, integrated performance management process— including time lines, outputs, and systems. The CVO can review and approve all your compensation and reward programs for consistency and alignment with your company’s goals. A high-level CVO – one who reports to the CEO and the board – can leap across boundaries to handle performance management across your entire company. He/she can review and vet all of your plans, projects, investments, measurements, targets, and performance assessments for completeness and consistency with your overall value-creation strategies, goals, and objectives. With a good CVO on your team, you won’t have to worry so much about being blindsided by the effects of misalignments. If critical elements are missing or broken, the CVO can take the lead in getting the process fixed. For instance, he/she can confirm you’re not unwittingly encouraging your sales force to undermine your customer loyalty strategy by paying a straight commission on each deal they close. The CVO can monitor that you’re not singing one song to customers and another one to Wall Street. And, next time one of your big stars starts pushing a pet project that runs counter to your overall strategy, your CVO can send him/her back to the drawing board before wasting too much money on it. Sound like a big job? Sure is. So choose the right person: someone who knows economics, shareholder value, management accounting, and finance, who has experience managing an enterprise-wide portfolio, has a knack for leading cross-functional teams, and has a passion for holistic thinking. Sound like a rare individual? Probably. But pay the CVO at least partially on the value he/she creates and you may have more candidates than you think. Related Content: The Value Habit Newsletter Archive
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