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StrategyDriven Resource Management Best Practice Article

Resource Management Best Practice 4 – Ongoing Assessment of the Market Availability of Strategic Resources

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Market changes can make once plentiful resources scarce. The recent retirement eligibility of Baby Boomer generation workers and the relatively small size of the follow-on Generation X workforce represents one example of a market change that is creating a shortage of experienced workers in many industries. While this change could be readily anticipated, others such as government sponsored large scale infrastructure projects which consume significant quantities of materials, heavy equipment, and personnel are less predictable. Thus, it is important for organizations to identify needed strategic resources and assess their market availability on an ongoing basis.[wcm_restrict plans=”40873, 25542, 25653″]

Ongoing assessment of resource availability should be performed for those personnel, material, equipment, and financial resources required to perform operationally significant activities and achieve strategic goals. Some examples include:

Operationally Significant Activities

  • major facility overhauls
  • peek production periods

Strategic Goals

  • asset construction
  • new product development
  • service line or offering expansion

Some market factors to consider for each resource type include:

Personnel

  • number of individuals available within the workforce possessing the required knowledge and skills
  • pipeline health including:
    • projected number of workforce entrants
    • availability of uniquely skilled recent military veterans
    • training availability including internal training programs, trade schools, and colleges and universities
    • entrant interest and fit with the organization and industry
  • market opportunities enticing existing worker attrition
  • demand for critical personnel resources by other organizations and industries in both the near and long-term

Material

  • existing and projected material demand within the local, regional, and global marketplace
  • existing and projected material supply within the local, regional, and global marketplace
  • lead times for strategic materials and trends
  • pricing of strategic materials and trends

Equipment

  • existing and projected equipment demand within the local, regional, and global marketplace
  • existing and projected equipment availability within the local, regional, and global marketplace
  • pricing of strategic equipment (purchase and lease) and trends

Financial

  • existing and projected competition for capital resources
  • existing and projected credit availability
  • cost of credit and trends

Final Thought…

It is often helpful to first identify potential sources of competing resource demand. Be creative. Demand for your company’s needed resources will originate from other companies in other industries and in today’s global marketplace, from other countries as well. Likewise, don’t forget to include global sourcing when assessing the resource supply.

Availability of critical resources often dictates an initiative’s viability. As such, consider creating externally focused performance measures to monitor supply and demand of strategic resources with action triggers defined to initiate further analysis or other decision-making.[/wcm_restrict][wcm_nonmember plans=”40873, 25542, 25653″]

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Additional Resources

Trade associations and industry groups are often a good source of refined information regarding resource availability. Many provide Congressional testimony and make other public presentations; making this valuable information publicly available. Remember, other industries competing for like resources may be supported by similar organizations providing a view on these resources also. Consider these data sources especially if no industry specific studies are available.

Absent this refined information, a wealth of raw data can be obtained from government sources such as:

StrategyDriven Strategic Analysis Best Practice Article

Strategic Analysis Best Practice 9 – Comparing Organizational Goals to Resource Assignments

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Want to know what the organization is focused on; what it values? Simply follow the money.

The purpose of every organization is to maximize value creation as defined by its mission goals. To do so, executives and managers must employ the organization’s resources such that they are focused on the activities most directly supporting achievement of the organization’s mission goals. One method of assessing the degree of goal focus is to evaluate the alignment between organizational goals and resource assignment.[wcm_restrict plans=”40672, 25542, 25653″]

All organizations are faced with the challenge of limited resources. Every day, executives, managers, and individual contributors make decisions as to where to apply these limited resources in order to maximize the company’s value generation. While executives and managers want to believe their organizations to be strategy driven, the question is: Are we really? Answering this question is the job of the strategic assessor.

While any number of circumstances will require something other than an exact correlation between resources applied and value created, evaluating overall resource allocation will serve to identify the degree to which the organization is focused on achieving its goals. Because resources vary by type, it is often helpful to quantify all resources in terms of dollars. Likewise, value creation should also be express in monetary terms. Once this translation is performed and a resource cost and value generation applied to the organization’s activities, assessors can evaluate the effectiveness of resource use in value creation by answering questions such as:

  1. What resources contribute to the greatest/least amount of organizational value creation?
  2. Are resources applied to activities that do not directly support achievement of mission goals?
  3. Are the resources applied to a given activity producing a proportionate/appropriate level of value for the organization relative to that created by the performance of other organizational activities and top performing organization benchmarks?
  4. What value driving processes consume an inordinate amount of resources relative to other organizational processes and top performing organization benchmarks? Could these processes be improved through process reengineering? Would greater value be realized by outsourcing these functions? Could these activities be eliminated altogether?

Having answered questions like these, assessors will gain insights not only to the organization’s resource use effectiveness but also to what the organization, its leaders and employees, truly value. With this knowledge, leaders can adjust the organization’s resource allocations to improve value creation thereby becoming more strategy driven. In less common instances, leaders may also choose to update organizational goals to be more reflective of resource allocations. Regardless, failing to take either action will result in suboptimal organizational performance; depriving stakeholders of value they are rightfully due.

Final Note

Periodic/Annual performance of this best practice helps minimize two naturally occurring phenomenon that tend to disproportionately expand an organization’s resource expenditures relative to the value created.

Outdated Traditions

Over time, some activities come to be unintentionally over valued by an organization’s leaders and workforce. These activities take on a tradition-like aura and tend to be defended by organization members without fact-based justification. Changing marketplace conditions often reduce the value of these activities and make available technologies and/or techniques that render the amount of resources applied unnecessarily high. Only through sound cost-benefit analysis and tenacious, diplomatic pressure can these low or no value adding tradition-like activities be reengineered, outsourced, or otherwise discontinued.

Denial of Poor Performance Results

It is difficult for anyone to admit to poor performance. Some are incapable of such a confession. Subsequently, there occur instances when an inappropriately high level of resources are applied to a process or initiative in an effort to secure success. Such occurrences are often easily uncovered and subsequently resolved when discovered by an independently performed resource-value analysis.[/wcm_restrict][wcm_nonmember plans=”40672, 25542, 25653″]

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Additional Resources

The following StrategyDriven recommended best practices are designed to help quantify an organization’s mission goals in terms of value and importance as well as creating consistency in the derivation of quantifiable goal values:

Strategic Planning Best Practice 10 – Future Focus

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Today’s rapidly changing business environment presents a daunting challenge to executives and managers. Gone are the days when a company’s competitive advantage could be leveraged to bring it untold riches year after year. Technology and the phenomenon of the flattening world have created a new market environment in which a company innovates one day only to see its unique creations commoditized the next.

To remain competitive in this new, flatter world, organization leaders must remain focused on the future. While crystal balls do not exist, corporate leaders must serve as the ultimate futurists; anticipating changes in both market demands as well as the availability of human, technological, and material resources. Strategic planning should incorporate these predictions while allowing for flexibility and adjustments to be made during tactical execution.

Additional information

Strategic Planning Warning Flag 2 – Near-Term Focus, highlights the process and behavioral signs of an organization that lacks a future focus. This article serves as a resource to those assessing their organization’s ability to maintain a future focus, thereby, enabling it to more easily adapt and excel in the ever increasingly competitive marketplace.

About the Author

Nathan Ives, StrategyDriven Principal is a StrategyDriven Principal and Host of the StrategyDriven Podcast. For over twenty years, he has served as trusted advisor to executives and managers at dozens of Fortune 500 and smaller companies in the areas of management effectiveness, organizational development, and process improvement. To read Nathan’s complete biography, click here.

StrategyDriven Strategic Analysis Best Practice

Strategic Analysis Best Practice 3 – Identify the Hidden Drivers (Continued)

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StrategyDriven Strategic Analysis Best PracticeSimply put, people tend to behave in the manner for which they receive reinforcement. There often exists both documented and undocumented performance drivers that exert unintended pressure on individuals to act in ways counter to achieving the organization’s mission goals. As a continuation of Strategic Analysis Best Practice 3 – Identify the Hidden Drivers, this article expounds on several common hidden performance drivers and how they may adversely impact mission achievement.[wcm_restrict plans=”25541, 25542, 25653″]

Documented Drivers

  • Compensation and Incentive Plans: By design, compensation and incentive plans reward individuals for specific behaviors. If the behaviors specified and rewarded are not aligned to the organization’s goals, it is likely the individual will behave in a manner that diminishes mission achievement. The impact of misaligned compensation and incentive rewards is more significant at higher levels of the organization because of the greater influence and span of control these individuals possess.
  • Incentive Plan Time Frames: In the case of executive incentives, payouts often occur at some future time in order to promote increased accountability for sustained organizational performance. However, these time frames may limit the duration of projects executives will endorse. The elevated risk associated with long-term projects represents a near-term risk to the executive incentive payout in order to realize a long-range gain for which the executive is not incentivized.
  • Workgroup Performance Measures: Performance measures provide periodic, public reinforcement; driving individuals to behave in a manner that results in a positive measurement outcome. Like compensation and incentive plans, if workgroup performance measures are not aligned with higher level and mission goals they will tend to drive behavior in a manner that diminishes mission achievement.
  • Policies, Procedures, and Standards: People also behave in the manner which they are specifically directed, such as by policies, procedures, and standards. On occasion, these documents become misaligned with the organization’s goals through a series of revisions in response to various events. When this occurs, performance unintentionally deviates from that which most directly supports mission accomplishment.

Undocumented Drivers

  • Undocumented Reasons for the Organization’s Founding: Beyond the organization’s mission statement, the reason for the organization’s creation is usually understood and acted upon by the Board of Directors and/or a small select group of the senior leadership team. Rooted in the organization’s history, this undocumented purpose guides decision-making at the top of the organization even when apparently counter to the stated mission. When this occurs, not only is the mission’s achievement diminished by the direction set but there exists a risk of creating conflicting priorities for managers and individual contributors further limiting personnel effectiveness.
  • Organizational Legacy: Organizations with a history rich in tradition and heroes may attempt to live up to or remain faithful to the legacy. Holding on to these past methodologies and philosophies may reduce the organization’s efficiency in achieving its goals in today’s rapidly changing, technologically driven marketplace.
  • Success Driven Complacency: Organizations experiencing long periods of continuous success may over time question the need to seek improvements or change; believing that they represent the industry benchmark or standard. Today’s highly competitive marketplace often leaves those who rest on their laurels struggling to remain viable.
  • Personal Relationships (or the lack thereof): People tend to identify and form relationships with those they perceive are like themselves. This may result in the endorsement of the actions and recommendations of one individual over another for relationship reasons rather than as a result of an objective assessment. On occasion, the relationship-based selection will result in the lower value option being pursued.
  • Defer to Perceived Important Groups or Individuals: Whether real or not, some groups and/or individuals are often perceived as being critically important to the organization. Abdication of decision-making to these individuals, especially on topics outside of their area of responsibility or knowledge and experience base, can result missed opportunities or increased adverse impacts. (See Decision-Making Best Practice 4 – Identify the Target.)
  • Personal Agendas: Hidden personal agendas often seek to enhance one’s prestige and influence or protect one’s position and expand one’s span of control regardless of the overall organizational impact. Ego-driven power struggles of this nature can irreparably damage an organization and often result in missed opportunities because of the roadblocks erected by those who don’t stand to significantly benefit from taking the action.
  • Unspoken Values: Valuing certain behaviors or personnel characteristics may personally benefit a majority of organization members. Subsequently, these behaviors and personnel characteristics become part of the corporate value system even if these values are socially unacceptable and counter to optimal mission achievement.

Remember, hidden drivers are not necessarily detrimental to the organization’s performance. It is important, however, that they are understood and assessed to ensure business planning and execution efforts are not diminished or undermined by these influencers of behavior.[/wcm_restrict][wcm_nonmember plans=”25541, 25541, 25653″]

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About the Author

Nathan Ives, StrategyDriven Principal is a StrategyDriven Principal and Host of the StrategyDriven Podcast. For over twenty years, he has served as trusted advisor to executives and managers at dozens of Fortune 500 and smaller companies in the areas of management effectiveness, organizational development, and process improvement. To read Nathan’s complete biography, click here.

StrategyDriven Resource Projection Article

Resource Projection Best Practice 3 – Controlling Assumption Changes

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StrategyDriven Resource Projection ArticleStandardized activity resource assumptions enable decision-makers to anticipate the quantity and type of resources needed to perform approved work; facilitating selection between competing alternatives, long-term resource planning, day-to-day scheduling, and performance measurement. Over time however, personnel, process, and business environment changes will necessitate reevaluation and alteration of the organization’s standardized activity assumptions. To accommodate these changes and maintain the benefits of using standardized assumptions requires establishment and use of a change control process.[wcm_restrict plans=”40922, 25542, 25653″]

Standardized activity resource assumption change control processes vary in complexity depending on the risk associated with the activities involved. Regardless of their complexity, all change control processes tend to share the following characteristics:

  • single approval authority
  • documentation of the new assumption and its change justification including application of appropriate records filing and retention
  • application of the new assumption to all vertically and horizontally impacted activities
  • reassessment of the organization’s activity portfolio and action plans based on the updated activity resource needs
  • communication of the new assumption and its change justification to impacted stakeholders

Revisions to standard activity resource assumptions should not be taken lightly because of the profound impact these changes can have on the organization. Initially, assumption changes may alter the organization’s perception of its ability and/or the desirability to execute previously developed plans and decisions. These changes will similarly impact the organization’s future decision-making.

Assumption changes have a less observable potential to adversely affect individual and organizational accountability especially if employees perceive the assumption changes as a reduction in performance expectations. To avoid this perception, the following principles should be considered when making standardized activity resource assumption changes:

  • changes are made in response to physically observable and measurable changes to process activities
  • changes reflect data gathered during the performance of several like activities, analyzed in aggregate, to ensure estimate updates reflect efficient work performance and not a single, inefficient effort
  • changes increase performance standards and are communicated as such
  • changes are infrequent

Standardized activity assumptions help decision-makers be both effective and efficient. A well conceived change management process will ensure the assumptions remain credible and protect the organization’s high performance standards.[/wcm_restrict][wcm_nonmember plans=”40922, 25542, 25653″]

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About the Author

Nathan Ives, StrategyDriven Principal is a StrategyDriven Principal and Host of the StrategyDriven Podcast. For over twenty years, he has served as trusted advisor to executives and managers at dozens of Fortune 500 and smaller companies in the areas of management effectiveness, organizational development, and process improvement. To read Nathan’s complete biography, click here.