Implementing a SaaS based employee appraisal system will enable achieving your strategic goals and tactical objectives.
During the famous Apollo 13 space mission in 1970, the astronauts on board the ship and Mission Control personnel on the ground at NASA were faced with one of their worst nightmares. An explosion had left the crew with a dwindling oxygen supply and failing power, making it not only impossible for the crew to complete their mission to walk on the moon, but also very unlikely they would survive the trip back home on their crippled spacecraft.
When astronaut Jim Lovell spoke the famous words, “Houston, we have a problem,” the scientists and engineers at Mission Control did not form committees, hire outside consultants or schedule off-site meetings to discuss the situation. The team knew that it had one goal – bring back the astronauts alive. This goal guided every action the Mission Control team took, and ultimately they were successful (even if the space craft was a little worse for wear).
While today’s business environment is usually not as dramatic as this, many organizations struggle to practically align their strategic objectives with tactical elements to meet their overarching mission. They may have several distinct and unrelated goals that create organizational confusion, or they may have one goal but no clear idea of the types of initiatives and projects they need to get them to their destination. One way that some organizations are resolving challenges such as these is through the implementation of a Business Alignment Model (BAM) combined with a tool to provided each and every employee with feedback on how the activities they perform aid in the overall goal or mission of the company.
Business Alignment Model
A BAM is a performance measurement system that provides a pragmatic and actionable way to translate an organization’s strategy into operational terms, improving upon some of the basic concepts of a balanced scorecard model.
A BAM serves as a tool to convert the strategy of the organization into a form that everyone understands. It provides a method of setting goals and measuring and tracking performance, as well as a report card for the organization. A BAM is a flexible tool designed for adjustment and growth as organizational learning, strategic feedback, and communication improves.
Similar to a balanced scorecard model, a BAM tracks financial metrics as well as the intangible factors that create value within an organization. Where the two models differ is in how the components work together. A BAM is not predicated entirely on several components that may have their own distinct goals, objectives and measurements. Rather, a BAM is built upon a single, financial goal that each component in the system feeds up to.
A BAM does not place equal emphasis on measurement of intangible elements of a business and financial objectives. Rather, intangible measures are implicitly reflected through the success in meeting the overall goal of the organization.
The relationships between a company’s core mission/vision and other components of the model are shown in the attached BAM PDF.
BAM Process
A BAM process begins with executive management taking the steps to set the organization’s agenda. From a broad sense, those steps include:
- Engaging leadership to describe the high-level business strategy for each of their areas.
- Identifying the financial gap between the organization’s current position and targeted goal.
- Setting the target for what is possible.
- Identifying initiatives that can be launched today to improve operations.
- Understanding and synchronizing interrelationships between initiatives.
- Prioritizing initiatives and pulling the trigger when appropriate.
As shown in the attachment, the plan developed from these steps is structured in a rough pyramid format, creating a top-down, linear relationship between the overall vision of the organization and tactical projects. Every action within the organization is designed to play a part in achieving the mission of the company – from the high-level strategic objectives down to each employee’s annual performance goals.
The goals are reviewed from the strategic items to the tactical projects quarterly. This is where Halogen is a perfect fit for enabling strategic and tactical success. It will allows a company to quickly provide feedback down to the individual level, determine if goals and objectives are attained, or if continued focus is necessary or in the case where additional objectives need to be added it can be done in a very structured, concise and efficient manner. So “Everyone” in the organization knows how they are doing on an individual basis as well as how their actions are helping or in some cases hindering the Company’s ability to achieve its mission.
Each component in a BAM includes a qualitative definition, such as “Our mission is to be the industry leader in widgets,” combined with a quantitative metric, such as “Improve operating profit 8% by end of fiscal year,” that will help leadership understand if the goal has been achieved or not.
Structurally, the model consists of four basic layers — the organization’s vision, strategic objectives, broad initiatives and projects – enabling a management team to view their organization’s performance in a holistic way.
Vision
Like the Apollo 13 example, every company must have a vision or overarching goal that guides their actions. Without a vision, a company is wandering aimlessly through the marketplace, waiting for something to happen to it instead of taking a proactive stance to create its own path. Again, vision drives all of the metrics in a BAM system.
Strategic Objectives
Strategic objectives set by the management team center around three core business areas: business processes (such as financial operations), learning and growth (focusing on employees), and customer experience. Each of these core areas help executives prioritize what key issues need to be addressed to achieve the organization’s primary goal.
Strategic objectives in a BAM should be set based on a long-term timeframe, such as three to five years. Doing so helps the organization approach a BAM initiative as a process, not a quick fix to larger business issues.
Broad Initiatives
Broad initiatives serve as the framework for tactical elements, that as a whole, help to meet the goal of each strategic objective. The measurements of success for these components are generally set on a shorter timeframe, such as one year.
Projects
Projects are the base components within a BAM that feed into the broad initiative level of the hierarchy. For any particular broad initiative, there may be one major project designed to achieve the goal set forth in the broad initiative, or several depending on the complexity of the goal.
Development Feedback
As part of a BAM process, employees visit with their managers each quarter and review goals set at an individual level. These individual goals, the most basic building blocks in the BAM hierarchy, are designed to collectively strengthen the organization’s efforts in achieving its mission. Whether it is a janitor’s goal to decrease the cost of cleaning supplies used in the facility, or a marketing manager’s goal to consolidate its outside advertising and public relations agency relationships, the objectives set at the individual level allow the employees to understand how they fit into the larger BAM picture.
BAM Benefits
To be clear, there is no such thing as a perfect BAM. Business conditions change, and businesses must change with them to survive. But a well-executed BAM will help a company realize several benefits.
Clarifies a company’s vision and ensures strategies are aligned with one another. A BAM allows an organization to understand what it is trying to achieve, how and when it will do it, and how it will measure success. A BAM maintains an end-to-end holistic business view that will synchronize projects and initiatives with business strategy.
Ensures critical business goals are clear. A BAM provides explicit “key operating criteria” to the organization, giving context to project prioritization.
Establishes a broad framework for performance improvement. With the guidance of leadership’s strategic directions for the business, a BAM helps define a vision for “how we will operate in the future.”
Combines long-term, strategic objectives with short-term improvement projects. Projects can address their specific issues as well as create new opportunity and enhance the overall infrastructure.
Conclusion
Without an actionable, strategic plan with a single goal, the Mission Control team at NASA would not have been successful in their objective to safely bring the Apollo 13 crew home. The same general principle applies to any company wrestling with issues such as addressing internal inefficiencies, enhancing the organization’s employee development process, or winning market share.
A BAM is a powerful tool that translates the strategy of the organization into a form that everyone understands. A BAM is a report card for the company, giving management a flexible tool to set goals and measure and track performance at every level of the organization. While similar concepts exist between a BAM and balanced scorecard model, the main difference lies in a BAM’s focus on a single, overarching goal that each component in the system feeds up to.
By Tom Kelly, CFO/CIO of 2nd Wind Exercise
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