Wednesday, December 17, 2008

Matching behaviours and systems

A lot of people talk about changing attitudes, or wanting to have certain attitudes in the workplace. As far as I know, there is no real way to measure attitude on an ongoing basis. Nor can we be sure that attitude will translate into high performance. So, what do we measure? What does translate into performance?

We measure behaviour. For behaviour, we can set some very specific standards and measures that will indicate performance. As an example, measuring the number of calls, appointments, proposals and sales for a salesperson (and even more specific behaviours related to each of these) can give us a pretty good indication of that salesperson's effectiveness (and may indicate attitude).

But there is a problem. Many companies have systems in place that encourage behaviour that is the opposite of what they want. If you want to have salespeople share information, co-operate with each other, work as a team, you need systems that encourage those behaviours, not systems that encourage people to compete with each other.

If you want managers to take responsibility for projects - or for mistakes - the systems in place must not punish them for doing so. If your organisation crucifies managers who make mistakes, managers won't take responsibility and will avoid situations where they might be blamed. They will avoid ownership of projects in case they turns bad. They won't be leaders.

If you want employees to share ideas, to help the company improve, there must be systems to encourage them to share those ideas (maybe reward them for their ideas). A few years ago, I provided some presentations training to Philips Lighting for employees who had come up with new ideas. Philips has a process in which ideas are shared and presented at various levels (local, regional and world) with the best ideas adopted. I don't remember if the employees who come up with the adopted ideas get a flat cash payment or a percentage of the savings/earnings for the first year, but I do remember that the process was an exciting one for the employees, one that they actively want to take part in.

Back when Adams was Warner-Lambert, it had a system that encouraged employees to share ideas and a percentage of the earnings/savings went to the employees. A few employees in Thailand came up with a better way to pack pallets, which saved the company a lot of money - and earned them a lot as well.

Let me give you another example. A company I am very familiar with pays all of its bonuses, commissions, etc, based on gross sales (not profit). So, what behaviour does that encourage? If you answered discounting, cutting prices to make the sale, and a focus on sales to the exclusion of everything else, you are absolutely correct. Even though it would prefer to encourage behaviour that includes constant improvement, focus on the customer's needs, profitability, and selling at consistent prices, the company's systems don't encourage those behaviours, so those behaviours don't generally happen. You may ask: "Why doesn't it change its systems?" It's a good question.

Most organisations that have these "system disconnects" (and many organisations have them) don't change their systems for some pretty basic and easily understood reasons.

The first and most prevalent in my opinion is that they simply don't realise that the systems they have encourage behaviours other than the behaviours they want.

Years ago, I ran a negotiating workshop and we were discussing "walk-away" positions. One of the participants asked what to do when you can't afford to walk away. I pointed out that every company has a cost involved in a job, and to walk away when the return was less than the cost was only sensible.

He then explained to me that he was negotiating an 800-million-baht deal for his company, and although it would cost 780 million to deliver, he'd still make the deal at 750 or 700 or even 600 million baht.

When I asked why, he explained that he got a 2% commission on the gross sale and he needed that commission, even if it cost his company hundreds of millions of baht. His boss was completely unaware that the commission system the company had in place encouraged such behaviour.

Another reason companies don't change is the "we've always done it this way" mentality. A few years ago, I was working at a company that used an invoicing system consisting of multiple carbon copies of a form that had to be delivered by messenger, signed and a copy returned to us. When I asked why we were still using such an antiquated system while dealing with multinationals, many of which were actively switching to paperless invoicing, the answer was: "We've always done it this way", and they weren't willing to change, possibly because of fear of change, or fear that of mistakes under the new system.

And that leads to one more reason for companies not changing their systems. Laziness. Often companies don't make changes because it is easier to stick with the systems they have, even when those systems may be costing them productivity, money and even customers.

Interested in attitude? Measure behaviour. But make sure that your systems encourage the behaviour you want, not the opposite.

Do you have a training question or issue that you would like to see addressed here? Please e-mail me and I'll see what we can do.

Al Lock is the Business Development and Marketing Consultant for t+b solutions ltd. (http://www.tandbsolutions.com) He can be contacted at al@tandbsolutions.com


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