It is striking to observe how asymmetrically set up reward systems can be.  In spite of the deep impact they have on how management teams acknowledge risks and adjust for them, the remuneration systems seem to be only designed to capture the upside of business performance.  Anything deviating from a full set of objectives will create winners and losers within the management team.


In a way, executives know that being in charge is a lonely and transient job.  In the race to the top, people see each chapter of their corporate life as another opportunity to assert their claim for higher responsibilities.  If personal interests are best served with decisions that favour their part of the organisation at the expenses of the whole, some might see such steps as a convenient option, even if it weakens the cohesion of the management team. 


Yet, a lack of cohesion at the management team level will produce all sorts of strains across the organisation.  Who has not seen a centralised procurement control identifying low-cost global outsourcing partners at the expense of operational flexibility at the plants, cost cutting in repair and maintenance driving high levels of customer dissatisfaction, finance keeping costs under control by starving product development initiatives, or sales contracts impossible to deliver at profit?  Quite soon, these diverging agendas will clash and members of staff in the different functions will lose the goodwill towards colleagues from the opposite faction.  Where processes worked through common sense approach, things will start to grip and productivity to drop.


Developing a team from a set of direct reports is therefore a stern challenge for a CEO.  It entails managing the tensions between the different functions to avoid situations where zero-sum games are at play.  For that purpose, the members of the management team must be aware of the impact their function has on others, what their interfaces and interdependencies are, and how these can be worked at together rather than in isolation.  Risks linked to these interdependencies can then be factored into what the management team wants to focus on, and how it will achieve it.  Only then will a reward system align agendas and better support a meritocracy across the organisation.


So, when you think about how your organisation deals with conflicting internal objectives, it might be worth asking yourself the following questions:

1. Are friction points between functions discussed and resolved at the management team level?
2. How well documented are the trade-offs behind decisions to follow a given direction?
3. Are these trade-offs explained to staff as part of their objective setting?

The difference between corporate intent and implementation often boils down to capability gaps.  Many strategies are stillborn because the distance between blue sky thinking and tangible achievements is too big.  It is not that leadership teams are not aware of these gaps; more that they choose to ignore them.  Yet, when asking staff in an organisation with a poor track record of implementing its strategy, what will come out is a sober analysis of what was required to get over the line with these aborted initiatives.  So, why is it that organisations tend not to tap into this pool of talent to achieve success?

There are many ways to influence people and get things done, and they all boil down to four capabilities: the ability to create a vision, to convince and mobilise others, to control how they effectively deliver on their commitment, and to trust people.  Of these four, trust is the most powerful, and the most difficult to unleash.  It is possible to hone visionary skills, to fine tune ways to beat the drum, or to develop unintrusive checks and controls.  All the focus there is on improving personal leadership skills.  The major hurdle to trusting people is that it brings uncertainty about the response staff would have to unexpected problems.

Yet, it is through the test of difficult decisions that people can develop their judgment and adjust their thinking.  The amount of preparation required to coach staff cannot be underestimated, and the temptations to revert to command and control have to be resisted many times over.  Give your staff enough time to make mistakes and you will develop sooner than you think capabilities that were only latent.  From that point on, the nature of information exchange will evolve profoundly.  As staff become autonomous decision makers, line managers need to shift from giving instructions and checking their execution to sharing wider corporate information and provide their staff with the context in which their prospective decisions need to be taken.  With teams made of thinkers and decision makers, expect more challenging discussions about objectives and the art of the possible, instead of relying on the input of a manager effectively acting as a bottleneck.
 
So, when you assess the ability of your organisation to embark on new challenges, it might be worth asking yourself the following questions:

1. How do you take decisions?  Are there bottlenecks caused by excessive controls?
2. What is your tolerance to failure?  Is management meddling with people's work?
3. What is the level of engagement of staff?  Do leaders surround themselves with cheerleaders? Are there pockets of high attrition?

Despite huge efforts to improve operational processes over the past 20 years, critically important management processes are left at the discretion of individual managers, who are expected to define them themselves. Without consistent management practices, an organisation will evolve sub-optimal methods for making and executing decisions in operational processes like sales, finance and operations. Often, this results in an increased number of meetings that onerously consolidate information for upward consumption, with little useful direction or feedback in return.
 
Perversely, more meetings often weaken the speed and quality of decision-making, and therefore operational process performance. As more ad-hoc meetings are called in reaction to problems, decisions are no longer taken at the right level in the organisation. Executives call all-hands gatherings to understand the underlying issues and take quick action. In doing so, they are likely to instigate decisions for which they lack the required expertise. Conversely, people with the right expertise will feel demoted and will duck their responsibilities by systematically delegating decisions upward.
 
Ad-hoc meetings are also inefficient. Without proper structure, they produce decisions of inferior quality. Meeting notes are unlikely to be captured, causing a loss of the decisions’ rationale and eliminating a mean to hold people accountable for agreed actions in subsequent meetings.
 
Few firms or leaders anticipate emerging complexity and new management requirements, to put the right management control processes in place and avoid the upward delegation trap. This is precisely what a management control cycle (MCC) brings, through a precisely designed hierarchy of meetings with clearly understood frequencies, structured agendas and carefully selected attendees. During MCC meetings, issues are discussed by those closest to them, with the skills, competence and authority to make the right decisions. KPIs supporting the meetings allow participants to quickly spot issues, identify problem root causes, and timely implement fixes.
 
A Management Control Cycle is built on three principles. First, meetings have a scope such that attendees are accountable for all items discussed and resulting actions are logically allocated. Second, the MCC allows escalation of decisions only for justified exceptions, when remedial actions are not delivering the expected results. Third, the MCC’s rhythm of regular follow-up prevents issues from festering or going undetected. Meetings on operational issues are the most frequent. Quick feedback loops validate actions and demonstrate control on issues before they need to be escalated.
 
Management Control Cycles are often set-up with three distinct layers, each with a remit of increasing scope. In this way, the mid-level MCC acts as a buffer between operationally driven meetings involving front-line managers and strategically oriented meetings involving executives. Adding more layers slows down decision-making, while reducing to two levels risks micro-management and excessive escalation.
 
Putting efficient management processes in place is not easy. In the absence of established standards, managers will typically resist change. Yet, best practice management processes exist in each function, and they are best implemented with a bottom-up approach, combining agreed procedures, KPIs, templates and rituals to shift management behaviour. For those organisations ready to rise to the challenge, and transform their management processes, the MCC is a powerful lever to shift performance and anchor one of the last sustainable competitive advantages: the ability to collectively execute and move fast.

So, when you begin to have the sense that your business lacks traction in taking and implementing decisions, it might be worth asking yourself the following questions:

1. How many members of the management team are working under their paygrade?
2. How often are all-hands-on-deck meetings organised to address crises?
3. How many internal meetings do members of the management team attend?  What is the quality of these meetings’ outcome?