Client Situation
The CEO of a beverage manufacturer had a loosely formalized and communicated strategic plan to achieve $1 billion in revenues and a defined EBITDA target within three years through introduction of new products and further penetration of its existing product line. Fairly early on, however, it became clear that the company was not growing sales at a fast enough rate to meet the goal, and profitability also was lagging expectations. Missed deadlines were a constant concern, as when, for example, the sales department would promise to fill dedicated shelf space with the new products by a certain date, but operations would not take the deadline as seriously and fail to deliver. There was a lack of buy-in on the strategy down the line and confusion as to how departments and managers were to contribute to meeting strategic targets.
Solution
The human resources leader on the executive team, now a E78 principal, was chosen to fix these problems of communication and collaboration. After studying the types of errors that were costing time and money and reviewing the processes and practices of the various departments, she held formal strategy sessions with the executive team, gaining input from the leaders of each department along the way. This led to adoption of Key Performance Indicators (KPIs) and each department head was asked to develop his or her own departmental plan for holding up its end of delivering the KPIs. After input and approval of these plans by the executive team, the department heads could then present metrics targets to their managers and explain more precisely how these were necessary to feed into KPIs and to achieve company goals. She then led the executive team into decisions about resources, accountability processes (such as performance reviews), and incentives (bonuses for achieving targets) to back up the system of metrics to achieve the plan.
With these formalized structures in place, the HR department head set to work on the more qualitative side of her challenge: steering the company culture in the right direction. As an HR professional, she was ideally suited for this phase of the solution, addressing it in the following ways:
- Developing a presentation to showcase the complexity of the business and the reasons why it is important to understand how the company culture needed to change.
- Training the entire organization on the keys to alignment and the importance of communication for optimal results.
- Establishing weekly meetings and processes for key managers and leaders to align on important topics affecting the KPIs.
- Working with leadership at all levels to raise their standards and ensure that communication and collaboration became top of mind for all department heads.
Results
In a very short time, the efforts on metrics and communication allowed the organization to introduce two new products to the market, serving as a springboard for greater revenue growth. In short order, the enhanced culture of collaboration also saved upwards of $1 million by avoiding certain types of errors that had been traceable to ineffective communication. Although it was still early days in reporting the full effects of these efforts, the company was well on its way to achieving the strategic goals of reaching the revenue and EBITDA targets within the three-year timeframe. The effect on company culture was perhaps best demonstrated by the fact that a measurement of company engagement, known as the “engagement rate”, developed by Professor William Kahn, grew to 86 percent of employees, when high standards for most companies are in the range of 40-60 percent.
