Feb 16, 2010

The Tower of Babel

As you build organization bigger and bigger, one thing that is bound to happen is, people start speaking different languages. They use words that mean different things to different people. This is something similar to the Tower of Babel and it can stifle the growth of the organization.

I have seen some organizations that do not have a common vocabulary about key measures. Otherwise how can HR, Finance, and Delivery functions report ‘Employee Attrition’ to the CEO three different figures using different ways of calculation. Similar is the case with ‘Manpower Utilization’ or ‘Residual Defect Density’ in IT Industry - different ways of computing the same metrics by different groups, functions or locations. For an organization to become aligned people should start speaking the same language, they should understand a few key measurements in the same way; what it means, how it is collected and how it is related to the business and their roles. Then the employees can co-relate the impact of their actions on the organization goals. It will also make the communication from the top management easier to understand.

Lack of holistic view of the business processes is causing a lot of harm to the organizations. Even today, the processes for managing the most critical resources – people and their competencies - are very ad-hoc, fragmented and ineffective in several organizations.

One of the best ways to get this alignment and energy to move forward in one direction is to implement a business performance measurement system. Balanced Scorecard is the most effective methodology today for doing that.

With Balanced Scorecard approach, you start with your vision, mission, objectives, values, strategies, goals, and you arrive at the organization level metrics to be tracked. Then you cascade it to down to various functions and roles. Then every employee understands what they are accountable for and how their activities contribute to the overall business purpose. Balanced Scorecard methodology insists on developing a dictionary of all metrics definitions, and this is the foundation on which the dashboards are built.

Try to build a dictionary of metrics applicable for each role in your organization; that will be a major step towards business alignment. To know more about how you can get business alignment fast using Balanced Scorecard approach, click on CXO Dashboards.

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