FAST CYCLE TIME: How to Align Purpose, Strategy, and Structure for Speed by Christopher Meyer

Author:Christopher Meyer
Language: eng
Format: epub
Publisher: SIMON & SCHUSTER PAPERBACKS
Published: 2003-07-15T00:00:00+00:00

EXHIBIT 6.10

The basis for functional performance also changes. The functional manager continues to reward increases in technical capability, but functional contribution now also includes keeping the function informed about the team’s learning, its needs, and how well the individual leverages the functions resources into the teams. The functional leader’s role is to create a stockpile of expertise that enables the teams to maximize their value added while reducing cycle time.

The team-based component of compensation is split between two elements. The first is how successfully the team achieves its objectives. Every member of the team shares the same rating on this factor; the rating is determined by a team self-assessment with concurrence by senior management. Senior management should also ensure that there is parity across teams regarding how hard they grade themselves. Rating the teams’ achievements mandates that the team and management agree to clear and measurable objectives well in advance of the rating session. A system of overall program objectives augmented by quarterly objectives works well and is familiar to most organizations.

The second element of the team component is an assessment of each individual’s contribution to achieving the team objectives. This component varies from person to person and is increasingly done using peer review Each team member rates other team members, including the team leader and often the sponsor, on their contribution to achieving team objectives. At first mention, most executives and team members are anxious if not skeptical, about the integrity of this process. It works easily and effectively, however, if the review process is well thought out and conscientiously implemented.

Requirements for a good peer review include the following:

Impartial facilitation

Data-based feedback and judgments

Quarterly mini-feedback sessions for personal feedback; annually for compensation

Performance criteria agreed to in advance and based on observable behavior

Results are rewarded, as well as team process skills.

The quarterly mini-feedback sessions provide midterm corrections and, over time, reduce the anxiety regarding peer review. Teams that use quarterly mini-reviews rarely encounter surprises when the annual peer review, which defines compensation, is conducted. It is also easier to recall specific examples within the shorter review periods.

Let’s leave the formal reward system and turn to the recognition system. The primary advantage of the recognition system is that it has the greatest impact on day-to-day performance and is relatively free of policy constraints when compared to the formal system. That advantage is also the primary reason recognition is vastly underutilized.

Corporate policy mandates annual performance reviews and personnel managers monitor compliance, but there are not similar policies or measurements for recognition. Recognition is left to the individual manager’s predisposition and skill in using it. Most managers learn the value and use of recognition only by working for others who do it well. Because there are few superb recognition role models, combined with no policy or measurements, recognition remains underutilized. Although we read about corporate success stories such as Wal-Mart that speak to the power of recognition, on balance it has little impact on our operating practices.

Therefore, the question is not about the power of recognition, but how one can increase its use.

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