Product Managers are responsible for defining the features or functions of a Product and for overseeing the development of the Product.  The role of Product Managers spans many activities from developing Product Strategy to tactical plan and can vary based on the organizational structure of the organization.

Typically, Product Leaders are involved with the entire Product Lifecycle.  However, the Product Management's primary focus is on driving New Product Development.  To successfully execute these roles, it’s important for Product Management to collect and synthesize proper, relevant data to make informed Product decisions.

Product Managers need to evaluate 10 categories of Key Performance Indicators (KPIs) to determine the most appropriate KPIs relevant to their work:

1. Product Stickiness
2. Product Usage
3. Feature Adoption
4. Feature Retention
5. Net Promoter Score (NPS)
6. Leading Indicators
7. Top Feature Requests
8. Product Delivery Predictability
9. Product Bugs
10. Product Speed and Reliability

Let's discuss these Product Management KPIs in a bit detail.

Product Stickiness

KPIs around Product Stickiness determine whether users are re-engaging with our product.  If a product is successful, it exhibit “stickiness.”  That means users don’t just sign up and forget about it.  They continuously live inside the product, such that it becomes part of their daily routine.  A good product should not long attract new users, but to also continuously re-engage with its users.

Product Stickiness is often measured by taking the ratio of our Daily Active Users (DAU) to Monthly Active Users (MAU): i.e., DAU/MAU.  This metric calculates the percentage of our monthly users who engage with our product on a daily basis.

Product Usage

It is inevitable that not all features of a product will be utilized the same.  Some features are more heavily used, whereas others are not.  The only way to know what product features are important to users is by measuring how our product is being used.  Measuring user engagement across the product allows us to answer what features should we enhance, which ones to eliminate, and which features to promote to increase users awareness of the product functionality.

Product usage is measured by using 3 key metrics—Breadth: refers to the number of active users for a given client within the last 90 days.  Depth: Captures whether users are using key features that make the product sticky.  Frequency: e.g., number of logins across all devices within the last 90 days.

Feature Adoption

These KPIs seek to understand and set feature adoption goals.  Key question to clarify these KPIs is whether users are adopting the newly released features.  Feature adoption data of recent feature launches is critical to determine appropriate feature adoption goals.  It is important to look at feature adoption at both the user level and account level.  For instance, different customer groups with an account may exhibit different levels of adoption for different feature sets.

The key metric to measure feature adoption is the percentage of users using the feature.  This should be evaluated across multiple features on a timescale (typically for at least 30 days following the feature release).

Feature Retention

Feature retention KPIs reveal true adoption of features vs. the initial promotion-driven adoption.  Feature Adoption seeks to measure initial use of a feature, whereas Feature Retention seeks to measure the long-term, persistent usage of a feature.  Measuring feature retention helps us identify at-risk users who have started to disengage from the product after the initial promotion is over.  We can then take action to re-engage these users.

Feature retention can be measured across different customer segments, e.g., by pricing (Free vs. Paid), by organization size (Startups vs. Enterprises), by position (Analyst vs. Manager).

Interested in learning more about the other KPIs critical to manage and develop a Product Portfolio?  You can download an editable PowerPoint presentation on Product Management KPIs here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant’s toolbox.”

– Michael Duff, Managing Director at Change Strategy (UK)

The global COVID-19 pandemic has forced organizations to rapidly adopt virtual work environments, making it the new norm in the Digital Transformation process.  Digital Collaboration Platforms have been pivotal in the current scenario and have forever changed the work environment to include Virtual Work and Digital Facilitation.

Digital Collaboration Platforms provide a combination of activities in one place, making meetings almost trouble-free.  These platforms take leverage of tools to help perform activities, such as:

• Create agendas and conduct pre-engagement communication
• Documentation and note-taking
• File storage and documents sharing (videos, images)
• Administer surveys / polls
• Chat with facilitator-specific features (anonymize, voting, hide comments)
• Conduct assignments and exams
• Booking system and timer
• Post-engagement discussions and follow-up tasks

However, Digital Facilitation has its own set of challenges, principles, and methods that are to be managed for the future work environment to run smoothly.  Digital Facilitation Methods vary from simple to very complex and there is an abundance of them.  The following 3 methods are quite popular in facilitating asynchronous and synchronous Digital Collaboration:

1. Double Diamond
2. Open Space
3. Sociocracy 3.0

Let us examine the 3 Digital Facilitation Methods more deeply.

Double Diamond

It is a structured method to Digital Facilitation that is useful in problem solving and idea generation.  The method tackles challenges in 4 key phases—Discover, Define, Develop, and Deliver.  The Double Diamond method employs the divergent thinking first—to open up the participants to share as much as possible without limiting ideas.  The method then utilizes convergent thinking to focus on narrowing down the problems, finding potential solutions to the problem, and implementing the most viable solution(s).

Potential solutions and ideas can be prioritized and filtered using Digital Collaboration Platforms’ features, i.e., polls, likes, or assigning scores.  All project phases can be documented on the go, in a single Digital Facilitation workspace and the same workspace can be used to continue the delivery phase.

Open Space

The Open Space Digital Facilitation method is designed for self-organization, inclusivity, and emergent agendas.  The method focuses on finding important elements through discussions facilitated by Digital Collaboration Platforms in order to improve further.  The Open Space method is governed by the “Law of Two Feet,” which states that if at any time you find yourself in a situation where you are neither learning nor contributing, use your two feet and go somewhere else where you can.

In this method, a collaboration session starts without an agenda, but the process is designed to ensure that the issues that are most important to the people involved will surface and become part of the agenda.  This is done by inviting participants to propose topics as chat comments utilizing Digital Facilitation Platforms.  Other participants ‘like’ a comment (topic) to show their interest or prioritize by using voting or polling features.  The facilitator then organizes the topics by likes or votes and decide how many topics will be covered in a given session.  A loose agenda is then created and host of each topic is assigned.  Booking feature of the Digital Facilitation Platforms can be utilized for choosing which topic participants will start with.  A separate page within a Digital Facilitation Platform workspace can be dedicated to each topic, to document everything and add instructions, videos, or any other files.  Video conferencing tool of the Platform can be used side-by-side.

Sociocracy 3.0

This Digital Facilitation method goes a step further in problem-solving than other approaches.  As the name suggest, Sociocracy 3.0 method puts everyone really behind an idea and necessitates consent of all the participants for it to work.

Interested in learning more about Sociocracy 3.0 and the other Digital Facilitation Methods and Digital Collaboration tools?  You can download an editable PowerPoint on Digital Facilitation Methods here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Warehousing costs at most firms are extraordinarily higher than they ought to be.  Across the world, organizations spend around €300 billion annually on Warehouse Management.  With the boom in online retail stores and the increasing complexity of Supply Chain Management, this spending is going to surge further.

The leadership at these organizations understands that they should spend less on Warehousing operations, but is not aware of the real costs associated with it.  Most leaders are unable to tell how much is their human resources cost per facility.

Lack of appreciation of true Warehousing operations costs is one of the main reasons for failure of most Business Transformation programs.  Without this knowledge, the leadership is unable to comprehend where the improvement areas lie and how much value creation can be achieved from those.

Ascertaining these costs warrants a clear approach, which many organizations lack.  Most firms inquire about their operational costs from 3^rd party Logistics (3PL) providers—by soliciting requests for quotations (RFQs).  However, this does not give an idea of what these principal activities really cost.  The most common approaches to Warehouse costing include:

• Benchmarking
• Cleansheet Analysis

Benchmarking

The Benchmarking method uses a top-down approach to analyze costs based on industry benchmarks.  However, accessibility of benchmarks at lower levels is hard to access, since benchmarks available for comparison are predominantly at high levels—e.g., Total Warehouse Cost as a proportion of Cost of Goods Sold.  Industry Benchmarking fails to take into consideration distinct product or service offerings.

Cleansheet Analysis

Cleansheet (or a Bottom-up Analysis) is a more comprehensive method to estimate Warehousing costs.  It is a numerical approach to ascertain precise costs of critical components of Warehousing operations, including facility spread out, workforce, and equipment.  This method facilitates in understanding where the cost exceeds and how it can be eliminated.

The focus of the Cleansheet Analysis is on determining the lowest possible cost of each major element, and comparing it with the actual cost being paid.  Identifying the lowest costs of major elements allows the organization to determine the most problematic areas and confront major cost inconsistencies.

The Cleansheet Analysis comprises of 3 main steps:

1. Ascertain Critical Parameters
2. Perform Bottom-up Calculations
3. Determine Ideal Throughput Metrics

Let’s dig a bit deeper into the initial step.

Ascertain Critical Parameters

The first step of the Cleansheet Analysis entails scoping the Warehousing facility’s configuration, work, team, volumes, and orders.  Specifically, this includes evaluating:

• The workforce, accountability distribution, workloads.
• The actual warehouse activity levels.
• The volumes.
• The volume drivers—number of SKUs, order patterns, order lines.

Interested in learning more about the steps to using a Cleansheet Analysis?  You can download an editable PowerPoint presentation on Warehouse Costing: Cleansheet Analysis here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant’s toolbox.”

– Michael Duff, Managing Director at Change Strategy (UK)

The introduction of emerging, digital technologies has ushered in the Fourth Industrial Revolution.  To keep the competitive advantage in this era of Digital Transformation, leveraging contemporary technology is an absolute necessity.  Using cutting-edge technology means not just augmenting, but in fact, revamping the whole Quality outlook.

Quality 4.0 is the complimentary Quality approach to the Industry 4.0 era.  Quality 4.0 is about transforming and improving Organizational Culture, collaboration, competency, and Leadership Development among other things through the application of technology.

Quality 4.0 is characterized by:

• Transforming and improving culture, collaboration, competency, and leadership through the application of technology.
• Digital Transformation of Management Systems and compliance.
• Enabling technology and processes necessary to maximize value, resolve customary Quality impediments, and provide innovative solutions.

Quality 4.0 is not just about Digitalization, but more importantly about the impact of that Digitalization on Quality technology, processes, and people.

Companies can use the 11 pillars of Quality 4.0 Framework to identify how the existing capabilities and initiatives can be transformed and then educate, plan, and act accordingly.  The framework uses the traditional Quality methods to build upon and improve them.  The 11 pillars of Quality 4.0 include:

1. Data
2. Analytics
3. Connectivity
4. Collaboration
5. App Development
6. Scalability
7. Management Systems
8. Compliance
9. Culture
10. Leadership
11. Competency

The majority of the companies are still not in a position to take leverage of Quality 4.0.  This warrants making investments in improving traditional Quality and bringing themselves in a position where they can spring up to use Quality 4.0 to prepare for the future.

There are strong interrelationships between the pillars of Quality 4.0, and adding new capabilities to certain pillars facilitates new applications on other pillars.  Let us delve a little deeper into a few of these pillars.

1. Data and 2. Analytics

Data and Analytics form the first 2 pillars.  Data is key to informed decision making.  Most companies are still using fragmented data while the innovating market leaders have progressed to taking leverage of Big Data.  Data can be better understood by understanding its 5 components:  Volume, Variety, Velocity, Veracity, and Transparency.

Analytics help reveal the insights contained within raw data.  Correct metrics are key to uncovering correlations and patterns—meaningful information.  Big Data Analytics using Machine Learning and Artificial Intelligence is beneficial if the Analytics Framework—comprising Descriptive, Diagnostic, Predictive, and Prescriptive Analytics—is understood clearly.

3. Connectivity

Connectivity encompasses the link between Business Information Technology—e.g., Enterprise Quality Management Systems (EQMS), Product Life-cycle Management (PLM), Enterprise Resource Planning—and Operational Technology that is used in Manufacturing, Labs, and Services.  Connectivity is achieved through abundant and inexpensive sensors providing real-time feedback from Connected People, products, edge devices, and processes.

4. Scalability

Scalability creates uniformity in Quality.  It is the ability to harmonize processes, best practices, competencies, and lessons learnt across the organization, be it global.  Cloud Computing has played a pivotal role in harnessing scalability by providing Software as a Service (SaaS), Infrastructure as a Service (IaaS), Platform as a Solution (PaaS), and connection of databases.

The reality of the future is Quality 4.0.  It is being adopted very swiftly.  Those who remain unfamiliar with it or are slow to adopt run the risk of being marginalized very quickly.

Interested in learning more about Quality 4.0? You can download an editable PowerPoint on Quality 4.0 here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Restructuring becomes essential at some stage in the lifecycle of any organization.  In order to emerge triumphant through this tumultuous challenge, it is necessary that the focus remains on the challenges impeding the organization, Strategy Development  to tackle the challenges, and prioritizing Strategic Initiatives to deliver radical results that lead the organization to Operational Excellence.

Redeployment is the most significant phase in the Restructuring process.  Within Redeployment, the Assessment phase is critical as the revitalization of the whole organization is dependent on correct Assessments and right placement of employees based on those Assessments.

Proper Redeployment Assessment Management is of utmost importance in Restructuring, and it should follow a structured approach, which means managing 5 core areas:

1. Manage Assessment Team
2. Manage Anxiety Level of Candidates
3. Manage Amount of “Deviant Behavior” in the Assessments
4. Manage Level of Duplicity, Wild Guessing, and Other Forms of Distortion
5. Manage Amount of Feedback and Its Timing after the Event

Managing 5 core areas ensures smooth implementation of the Redeployment Assessment process, which is a major milestone of the Restructuring project.

The Redeployment Assessment process has to be detailed, accurate, and prompt.  Due Diligence in documenting the process, verifying particulars, and balance between Rapidity and Accurateness is essential because:

• Organizational requirement to concentrate on post-restructuring environment is intense.
• Employees’ urge to swiftly find out about their future is deep-seated.
• Objections by employee stakeholders, as a consequence of large-scale retrenchment is high.
• Probability of legal recourse by employees is also distinct.
• Future Employee Engagement is dependent on fair Assessment and correct placements.

Assessments are based on Data Integration which involves a complex set of Data Points.  Therefore, Data Integration has to follow a strict process for it to be productive.  Following guiding principles will help in comprehensive and unbiased Data Integration:

• Behavioral evidence, gathered throughout the assessment, should form the basis of discussion.
• Weightage given to certain competencies should be based on the evidence gathered in assessments.
• Decisions should be derived solely on the basis of evidence.
• Facilitator, who is experienced in integrating assessment data and challenging assessors to support their assessment ratings with behavioral evidence, should be engaged.
• Standards of performance should be very clearly defined against which individuals are assessed and assessment information is integrated.
• To increase consistency, the chair of integration should present at each assessment session.

Grounded on these guiding principles, strict adherence to the following 8 Key Steps can steer the Data Integration phase in the right direction and make it productive:

1. List all measures
2. Weight all measures
3. Identify minimum qualifications
4. Create an overall score
5. Quality and reality check
6. Enter real data
7. Review results
8. Pool the candidates

Let us look at the first 3 steps in further depth.

1. List all measures

This list includes both qualitative and quantitative aspects, i.e., job performance data as well as the performance measures.

2. Weight all measures

Relevant weightage should be assigned to each measure.  Job performance measures normally have more weightage than the potential measures.

3. Identify minimum qualifications

It is important to build checks into the system for anomalies, such as someone scoring overall high while failing to meet the essential criteria.  For such eventualities a minimum qualification criterion has to be set.

Interested in learning more about the 8 key steps for Data Integration during Redeployment Assessment Management?  You can download an editable PowerPoint on Restructuring: Redeployment Assessment Management here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Most of us have experienced a uniqueness in some organizations.  These organizations stand out, exude fervor and zeal.  Their customers are pleased with the Customer Centric Design of the company, Employee Engagement is high, and investors and shareholders take pride in being part of it.  It is not their exceptional product or service that is the base of Value Creation rather the Purpose that makes organizations unique—their reason for existence and the resulting impact it makes on the world.

Stakeholders identify with organizations that genuinely follow their Purpose.  Leadership allocates resources in-line with the Purpose.  Employees keep the Purpose front and center while making decisions for the company.  On the other hand, in-genuine Purpose may harm the reputation of the company by turning away the stakeholders.

In order to be genuine, Purpose has to be embedded in the company’s DNA, which is no mean task.  The “5 Ps of Purpose Framework” shows how this can be successfully achieved.  The 5 Ps Framework identifies 5 areas of focus:

1. Product Portfolio Strategy
2. People & Culture
3. Processes & Systems
4. Performance Metrics
5. Positions & Engagement

There are numerous benefits to transforming into a Purpose-driven Organization.  The 5 Ps Framework contributes to unlocking the sources of value for the company and detect points of weakness.  Purpose can pay lots of dividends, but it has to be authentic and imbued in the organization’s business model.

Let us delve a little deeper into the first P of the 5 Ps of Purpose.

Product Portfolio Strategy

An organization’s Product / Service offerings and the associated modalities of market and position planning that best cater to the target market ought to imbibe the Purpose of the company in order to appeal to the stakeholders.

The 1^st step for achieving this objective has to be the alignment of business portfolio with the company’s Purpose–i.e. we need to integrate Purpose with our Portfolio Strategy.  Companies already in existence may not be able to start afresh but they can surely reshape their business mix in a dynamic and resolute manner.

In step 2, the business portfolios are filled out with Products or Services that match the Purpose, and the ones that do not are rooted out.  Certain key actions are needed to embed Purpose into the Product or Service offering, they include:

• Rethinking product portfolio — for example pulling out certain products, launching new products.
• Modifying pricing in line with Purpose.
• Re-evaluating portfolio and testing rationale of individual assets in light of common criteria.

A case example is an energy company in the extractive industries, founded 85 years ago, which has proved successfully that Purpose can be reinvented.  Being in the extractive business for such a long time has not restricted the company from reexploring what an energy company may look like in the transforming environment of the future.

The company has significantly transformed its Purpose — “reimagining energy for people and planet.”  In line with its Purpose, the company has divested from its petrochemicals businesses and plans to reduce its legacy oil and gas business by 40% by the year 2030.  The company will instead augment its low-carbon energy businesses such as bioenergy, hydrogen, electric vehicle charging businesses, and aims to be a net-zero carbon emitter by the year 2050.

Interested in learning more about 5 Ps of Purpose Framework?  You can download an editable PowerPoint on 5 Ps of Purpose here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Restructuring is a turbulent process that shakes the foundations of the organization.  The goal of Operational Excellence cannot be realized merely by the surgical removal of human resource during Redeployment after Restructuring.

Keeping focus on moving the organization forward with vitality means boosting the sagging morale of the employees who survive this storm.  It is the attention to the surviving employees that is going to kick-start the Revitalization process and usher in a new Organizational Culture.

Employee Engagement is an absolutely vital aspect of the revitalized organization.  Re-engagement of the remaining employees after Redeployment is important because:

• It is a given that engagement levels will be abysmally low.
• Motivation to work is not the top priority for most after Restructuring chaos.
• Insecurity is high and employees may be thinking about leaving the organizations on the first opportunity they get.
• The Revitalization of the organization depends on how the survivors are handled.

To handle such state of affairs, management must do the following:

• Develop a concrete plan for Re-engagement during the Organizational Design.
• Allocate appropriate time, effort, and budget for boosting motivation levels.
• Implement Re-engagement plans that address the diverse Motivational Drivers.
• Communicate consistently on an organizational level as well as individual level to reassure employees regarding their future.
• Train line managers on how to handle surviving team members.
• Push line managers to spend time with individual employees to learn:
  • How team members have handled the Redeployment process.
  • How employees sense the challenges moving forward.
  • What primarily motivates them as individuals.
• Use motivational assessment methods and integrate the survivors into existing development discussions to align them with organizational processes.

Poor management of the Employee Re-engagement process is bound to have repercussions, such as:

• Absenteeism
• Low productivity levels.
• Substandard customer service quality levels resulting in tarnished image of the organization.
• Dwindling employees’ commitment to the organizations.
• Increased risk of switch overs.

Active Employee Re-engagement ensures that the employees are:

• Clear on the next steps.
• Clear about their new roles.
• Can effectively deliver against the new roles.
• Keen to work in the evolving scenario.

Redeployment in the Restructuring process affects all employees regardless of whether they stay or leave. 

Employees typically showcase 4 types of reactions during this transition:

1. Departure Grief
2. Survivor Relief
3. Survivor Irritation
4. Departure Happiness

Typically, the organizational focus is more on the employees who are leaving, assuming that those who get to stay are happy employees.  This may not be the case.  Care must be taken to address the motivational drivers of all employees in this transitory process.

Let us examine the Employee State, their Motivational Drivers, and appropriate Actions to take during Restructuring, a little more deeply.

Departure Grief

The motivational drivers that induce the state of “departure grief” in employees include:

• Loss of earnings and benefits such as pension plan and health insurance can be stressful.
• Loss of daily routine can be upsetting and takes some time to cope with.
• Forced shift in lifestyle upsets not only the person but the family too which may take a psychological toll.
• Feeling of rejection crops up as a result of being let go, lowering self-esteem.
• Loss of financial empowerment puts the person, especially the head of the household, in a vulnerable position.

To help employees cope with Departure Grief, the organizational leadership should take some key actions, such as:

• Help the ex-employees through counselling sessions.
• Guide the employees in preparing job applications and CVs.
• Assist the ex-employees get placed in alternative jobs.
• Guide the ex-employees in putting the compensated amount to good use.

Interested in learning more about Re-engagement after Restructuring?  You can download an editable PowerPoint on Re-engagement after Restructuring here on the Flevy documents marketplace.

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"If you don't transform your company, you're stuck." - Ursula Burns, Chairperson and CEO of VEON; former Chairperson and CEO of Xerox

Business Transformation is the process of fundamentally changing the systems, processes, people, and technology across an entire organization, business unit, or corporate function with the intention of achieving significant improvements in Revenue Growth, Cost Reduction, and/or Customer Satisfaction.

Transformation is pervasive across industries, particularly during times of disruption, as we are witnessing now as a result of COVID-19. However, despite how common these large scale efforts are, research shows that about 75% of these initiatives fail.

Leverage our frameworks to increase your chances of a successful Transformation by following best practices and avoiding failure-causing "Transformation Traps."

Learn about our Business Transformation Best Practice Frameworks here.

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You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Organizations that have survived over time have had to reinvent themselves over and over with the changes in the environment.  These Business Transformations almost always include Cost Reduction that tend to lean towards Headcount Reduction.  Headcount Reduction is typically achieved using 2 approaches:

1. Downsizing
2. Restructuring

Downsizing keeps the fundamentals of the roles same with only fewer people performing those roles.  Whereas, Restructuring creates new roles, as well as modify existing roles, requiring a new mix of skills or altogether new resources to perform them.

Restructuring presents a more challenging task in that a new mix of skills has to be identified for each role, an Assessment Process has to be set up to assess existing employees against new competencies, and Redeployment after Restructuring (or new recruitment) done.

The important question in both scenarios is:  Who should we eliminate and who should stay?

The question can be answered by devising and using key criteria to evaluate and then choose the most relevant assessment method.

Assessment of employees is key in both Downsizing as well as Restructuring.  The Assessment Process has to be vigorous enough to identify the right employees to keep and lay off.  A broader assessment process ensures coverage of more aspects of a new role which in turn makes the assessment process fairer.  Measures, in this regard, may include:

• Covering a broad range of competencies in the interview process rather than concentrating on a few specific competencies.
• Using a mix of relevant performance data from the last role as well as some elements of future-oriented assessment, such as role plays or OPQs.
• Taking input from Line managers.

Linkage of the entire assessment process to the requirements of the job is the crucial part of this phase.

As with any assessment system, the content and design will be settled through consideration of various factors, some practical like cost, logistics and some more about safeguarding the output like instrument validity.  When taking into account assessment tools for incorporation in the process it is beneficial to examine them against following criteria:

• Coverage of range
• Accuracy
• Relevance
• Freedom from bias
• Acceptability
• Practicality

The tools, based on the above criteria, help in various assessment methods that gather information on different aspects pertaining to the elements of the new roles.  The most widely used Assessment methods include:

1. Existing Performance Management Data
2. Line Manager Performance Ratings
3. Competency Based / Behavioral Interviews
4. Personality Measures (OPQ) Linked to Competencies
5. Simulation Exercises
6. Pertinent Employee Data

Let us examine the methods in a little more detail.

Existing Performance Management Data

There are various benefits of using this employee assessment method, such as:

• No additional data gathering is required since the data is already in place.
• Such existing data can be obtained speedily and effortlessly.
• Existing performance data is perceived as pertinent.

There are some drawbacks associated with the existing Performance Management data method that executives should be mindful of:

• The data is often inconsistent and may vary in quality.
• Does not provide clear distinction between people.
• Does not reflect behavior therefore difficult to base decisions on.
• Usefulness depends on extent of overlap with the new role.

Such data although convenient and easy to obtain, has to be augmented from other sources—and through other assessment methods—for a complete picture to base the employee selection decision on.

Interested in learning more about Redeployment Assessment Process & Methods?  You can download an editable PowerPoint on Restructuring: Redeployment Assessment Process & Methods here on the Flevy documents marketplace.

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"If you don't transform your company, you're stuck." - Ursula Burns, Chairperson and CEO of VEON; former Chairperson and CEO of Xerox

 Business Transformation is the process of fundamentally changing the systems, processes, people, and technology across an entire organization, business unit, or corporate function with the intention of achieving significant improvements in Revenue Growth, Cost Reduction, and/or Customer Satisfaction.

 Transformation is pervasive across industries, particularly during times of disruption, as we are witnessing now as a result of COVID-19. However, despite how common these large scale efforts are, research shows that about 75% of these initiatives fail.

Leverage our frameworks to increase your chances of a successful Transformation by following best practices and avoiding failure-causing "Transformation Traps."

Learn about our Business Transformation Best Practice Frameworks here.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

 Business Transformation is a given in the lifecycle of organizations.  If an organization or business desires to continue growing gainfully, it has to keep Restructuring and Innovating with time.  Successful Restructuring can be achieved by pursuing a robust 4-phase approach.  Each incremental phase paves the way for shaping the next phase:

1. Strategic Analysis
2. Structural Redesign
3. Redeployment
4. Renewal

Redeployment is the most critical phase in the Restructuring process.  It presents an opportunity to progress towards strategically directed performance goals and establish the foundation for a new Organizational Culture.

Carrying out an efficacious Redeployment, however, necessitates navigating around the pitfalls that threaten the process.  These snags include:

• Lack of detailed planning on how Redeployment will be handled

“If you fail to plan, you plan to fail” is an oft repeated adage that has wisdom based on experience of many failures throughout history.  The Redeployment plan should be thoroughly discussed and developed at the Redesign stage, giving out details of all aspects of Redeployment.

• Restricted access to information approach

Organizational leadership often try to avoid sharing information due the fear of losing control.  During the tumultuous phase of Redeployment, leadership should be communicating with the employees quite frequently to alleviate any concerns and build their trust.

• Failure in immediate and full disclosure of information

Timely and full disclosure of information is absolutely essential for the process to run smoothly.

A robust communications system has to be put in place for dissemination of timely information predominantly in the Redeployment phase as employee apprehensions are at the highest level in this stage.

You can learn more about the pitfalls during Redeployment here in the editable PowerPoint on Redeployment after Restructuring.

Redeployment, in order to be successful, has to go through 7 steps that need careful planning and execution with precise timing.  These 7 steps include:

1. Continuously maintaining a robust Communications Plan.
2. Developing an employee assessment system based on the newly-defined business needs and goals.
3. Creating a system of reviews and appeals.
4. Deploying an internal placement group.
5. Launching a severance plan for those who decide to leave the organization.
6. Providing training to employees at all levels for them to be able to develop competencies required to assume the responsibilities in a transformed organization.
7. Planning for the renewal phase following redeployment.

Let us delve a little deeper into this second step:

2. Develop an Employee Assessment System based on the newly defined business needs and goals.

The system should assess potential employees against required competencies for the position.  A matrix should be created to serve as an assessment tool to structure the selectors’ thinking. Each competency should be assigned a weight and the cumulative score should be the sum of weighted scores of each competency.  Input should be based on interviews with candidates, feedback from managers and supervisors.  The matrix should be used as a tool only and selection decision should not be predetermined rather based on all aspects, i.e. qualitative as well as quantitative.

The selectors should be trained to ask targeted questions to assess competencies and document them properly.  Assessment should be divided into 3 sections:

• Go/No-Go section to assess the candidates’ ability to meet the minimum requirements.
• Evaluation of each candidate against the competencies mentioned for each position.
• Document modification in decision due to absenteeism, affirmative action concerns, etc.

Interested in learning more about the Redeployment Steps?  You can download an editable PowerPoint on Redeployment after Restructuring here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

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– Michael Duff, Managing Director at Change Strategy (UK)

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

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– Omar Hernán Montes Parra, CEO at Quantum SFE

Supply chain management across industries is being revolutionized at a rapid pace by technology.  By implementing technology systems, supply chain organizations aspire to eliminate waste, meet customers’ needs at reasonable costs, and ensure profitability.   Enterprise Resource Planning systems facilitate in processing unstructured data at an aggregated level.  However, at workflow or micro level the data produced through ERPs needs to be further refined to understand costs.

Supply chain experts need to look at their unstructured data and understand the cost of offering a product; know which product mix they should promote; and gauge the impact of service levels on transportation costs, profits, and pricing strategy.

Supply Chain Executives can use the Cost-to-Serve (CTS) Analysis approach to control distribution costs, identify negative-margin products, and prevent profit leakages.  CTS Analysis affords the organizations the means to identify the total cost of serving customers—including all the costs in a product’s value chain (from raw material to delivery)—at the product as well as customer levels.  The approach helps leaders split and evaluate individual customers, geographies, products, product families, or combinations of products / customers.

The Cost-to-Serve Analysis can be undertaken to identify costs related to Supply Chains, Logistics, Distribution, Warehousing, or Transportation.  CTSA allocates indirect cost to products—overhead or fixed costs that are not easily and directly attributable to a single order, shipment, or activity.

The CTS model for costing entails detailed modeling of all the value and non-value added activities in the process.  The approach is more precise than other methods in determining “what-if” budgets, as it accounts for all the activities and link them with their relevant cost pools.  CTS employs an activity-based modelling algorithm—which segregates the entire supply chain into multiple tasks while calculating the costs at every task—to help the supply chain practitioners calculate costs at various levels.

The CTS Framework entails 5 fundamental steps:

1. Obtain Buy-in from Key Stakeholders
2. Conduct Cost Categorization
3. Determine per Unit Cost Breakdown
4. Develop Classification Matrices
5. Make Joint Decisions

Let’s delve deeper into the first 2 steps of the CTS Framework.

1. Obtain Buy-in from Key Stakeholders

The first step to implement Cost-to-Serve Framework involves getting across-the-board agreement and stakeholder buy-in.  The decision to calculate the impact of cost to serve on revenue entails engagement and collaboration from multiple departments in a company.  Multiple cost centers work in partnership across a value chain and thus profit and loss responsibility cannot be attached to a specific unit.

For instance, a decision to trim down the costs to serve a customer (or various customers) has to be agreed upon by stakeholders from the:

• Sales and marketing department to calculate the impact of service level agreements.
• Logistics function to calculate the cost impact.
• Go-to-market Strategy to ensure alignment with Corporate Strategy
• Warehousing unit to ensure resource planning and allocation.

2. Conduct Cost Categorization

The 2^nd step of the Cost-to-Serve Framework involves categorization of costs associated with the entire supply chain.  Supply chains typically have various cost centers (or functions): e.g., Procurement, Manufacturing, Warehousing, and Logistics.  These cost centers further have multiple processes with costs associated with all of them.  CTS requires top-down estimation of costs at the process and activity level and then aggregate those back to the cost center level.

This categorization of costs across the various functions of the supply chain and their associated processes facilitates in accurate calculation and obtaining estimates at the micro level.

Interested in learning more about the other steps of the Cost-to-Serve Framework?  You can download an editable PowerPoint presentation on Cost-to-Serve Analysis here on the Flevy documents marketplace.

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Product managers, marketers, and designers are often confused as to what they should do to increase the chances of customers’ engagement and uptake of their offering.  Changing individuals’ behavior to enhance engagement, productivity, innovation, and happiness isn’t straightforward.

It takes a lot of effort, time, and resources to execute initiatives aimed at transforming behaviors and Organizational Culture.  However, most people aren’t interested in changing and like the status quo to prevail.  This is where Behavioral Economics can help to know how customers behave, interpret their decision-making methods, and create solutions targeting those behaviors.

Product designers and marketers aspiring to drive acceptance of their products can make use of the 3 Bs of Behavioral Change to change understand consumer behavior. The 3 Bs of Behavioral Change classify the 3 elements essential to change behaviors, i.e.:

1. Behavior
2. Barriers
3. Benefits

Understanding and employing these 3 Bs helps the designers and product managers instill change, inspire design and strategy-related decisions, increase the acceptance of new products / features and product engagement levels, and build new behaviors in people.

Let’s discuss the first 2 elements in detail.

Behavior

People have an inherent tendency to maintain the status quo.  Behavioral change necessitates:

• Identifying individuals’ existing attitudes.
• Assessing and tackling psychological biases affecting individuals’ decisions.
• Carefully tracking behaviors that need to be changed.
• Ascertaining the most important desired behavior and exact action that is imperative to drive results.
• Getting the buy-in from all stakeholders on the key behavior.
• Deciding if the behavior should be permanent or transient.

Examples of key actions to change behaviors include spending 30 minutes thrice weekly doing cardio exercises and consuming salad at lunch daily to stay healthy.

Barriers

Understanding the barriers in behavior adoption assists in creating effective solutions to improve uptake of key behavior.  The second step to induce behavioral change is to reduce barriers in its adoption.

• Every decision that a product user has to make, no matter how negligible, increases resistance in the likelihood of completing a specific behavior.
• These actions and decisions an individual has to take in order to achieve the desired behavior create points of friction in embracing key behaviors.  For instance, people often find it difficult to decide when presented with complex choices. They tend to procrastinate or become a victim of decision paralysis.
• Removing the points of friction and resistance from any key behavior necessitates documenting and streamlining all decisions. The path of least resistance leads to desired key behaviors.

Examples of barriers include the thought process involved in the decision to select where to have dinner.  This thought process is, in fact, a psychological barrier in actually going out and having dinner.  Likewise, the decision to walk or drive to a restaurant is a logistical barrier and a point of friction that warrants making a decision.

To eliminate these barriers, we can either remove barriers entirely or just simplify the decision.  For instance, elimination of a non-critical, open text field from a sign-up form—that probed the users about their business, which requires significant time to think and answer—can increase page-over-page conversion.  In case choices are helpful for the users and cannot be eliminated, then it is best to simplify the decision process by giving fewer options instead of many, or by suggesting “recommended option” to the users.

Interested in learning more about the details of the 3 Bs of Behavioral Change?  You can download an editable PowerPoint presentation on 3 Bs of Behavioral Change here on the Flevy documents marketplace.

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The single most pressing challenge for an organization in this knowledge economy is attracting and retaining talented people.  This can be a make or break challenge for the organization and warrants careful consideration during Strategic Planning.

Starting on the right foot is absolutely essential to overcoming this challenge.  Organizations, particularly HR, need to have an  Organizational Culture that boasts of an effective Employee Onboarding process.  In order to accomplish this, present-day HR needs to be clear regarding the challenges of modern-day Onboarding and develop a strategy to establish an onboarding process that yields a rewarding experience for the employees.

At many organizations the Employee Onboarding process follows a customary theme—a run down on “how things are done here”—with the traditional HR view that if the employee can be made to commit to the Organizational Culture from the get-go, they are easier to retain.

Such an Onboarding process does not help the new employee adjust to the company or the role, become an Engaged Employee, and meet the expectations of the organization.  Experts have identified various challenges with this conventional Onboarding approach.  Here is a list of 8 most frequent challenges:

1. Poor Socialization of Organizational Values
2. Lack of Role Clarity
3. Challenges with Expectations and Results
4. Managing Change
5. Issues with Time Management
6. Issues with the Manager
7. Navigating the Culture
8. Handling Personal Transition and Relocation

By addressing these challenges appropriately, organizations can establish a rewarding Employee Onboarding experience that results in Employee Retention, quality output in the short-term, and enhanced productivity in the longer run.

Let us delve a little deeper into the challenges.

1. Poor Socialization of Organizational Values

It is presumed that Organizational Values are a thing to be imparted and accepted by the new employee.  This is, indeed, essential knowledge, but it is not sacrosanct.  Studies suggest acceptance of organizational values in contravention of one’s own identity may be counter-productive in that it may exhaust the employee psychologically, restrict full engagement, hinder creativity, and create work dissatisfaction.  This can be overcome by allowing employee to express their unique perspective on the job from the beginning and welcoming them to incorporate what they do best in their work.

2. Lack of Role Clarity

Lack of clear understanding of one’s role is a widespread problem in organizations.  After spending some time in the new organization, the employee realizes that the expectation of the role is conflicting with what the employee thought he/she accepted.  Encouraging the new employee to identify the gaps in the expectation / perception and discussing it with their managers enables the employees to have a clear perspective and understanding of their roles and responsibilities, enhances employee satisfaction levels, and improves their efficiency and productivity.

3. Challenges with Expectations and Results

New employees are often unable to realize their workload.  In order to meet the perceived expectation of managers or peers, they take on too much of work resulting in overload, which diminishes their performance.  Informal discussions of new employees with managers and peers regarding their expectations eases the pressure and enables them to take on what is manageable and deliver quality results.

Interested in learning more about various aspects of Employee Onboarding, guiding principles, challenges, and approaches?  You can download an editable PowerPoint on Employee Onboarding here on the Flevy documents marketplace.

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Mediocre people occupying senior leadership positions is one of the chief reasons for the fiasco and humiliation that organizations like Enron and WorldCom faced.  The practice of recruiting average people at the top is omnipresent and often goes unnoticed until the results begin to surface, which is typically too late for any intervention.

Smart people decisions matter a lot in achieving profitability.  Research indicates that a return on average human asset of 5% is typical in many industries.  However, a senior executive selection of 2 standard deviations below the average yields -15% return on asset.  An executive selection with 2 standard deviations above average causes +25% return, which is 5 times the average.  Increased investment in finding and hiring the best senior executives fetches returns to the magnitude of 1000%.

Attracting and selecting the best people for senior leadership positions isn’t a small feat.  The future of organizations depend on it.  However, the Human Resource Management function at most organizations fail in getting the right people at the top.  The decision to hire at the senior positions necessitates deliberate effort and commitment.  Identification and onboarding of right people at these levels can create a substantial competitive advantage and profitability for the organizations.  Leading companies invest a lot of time in these decisions and conduct careful assessment of a pool of candidates.  They evaluate the opportunity costs associated with onboarding wrong people at critical senior positions and those associated with performance that could not get delivered due to selection of incompetent individual(s).

To prevent the disasters caused by psychological barriers and biases and to onboard competent executives, organizations need to religiously follow these 8 guiding principles:

1. Outline requirements
2. Prepare a large candidate pool
3. Benchmark rationally
4. Appraise systematically
5. Overcome resistance in decision making
6. Keep the evaluation team small
7. Finalize the deal in time
8. Support assimilation of new hires

Let’s discuss the 4 guiding principles in detail, for now.

Outline requirements

Defining the job requirements clearly before initiating the executive search process is an imperative for finding and appointing the right persons at senior positions.  The board should take out time to hold meetings to sift through the organizational strategic objectives and prioritized initiatives.  The outcome of these sessions help the recruiters develop a list of critical skills and behavioral competencies.

Prepare a large candidate pool

Restricting executive search to specific geographies or industries limits the chances of finding the most suitable candidate(s).  For instance, to hire the country head for a computer hardware firm in Asia, a company may identify all C-level executives at specific large hardware and software providers in the region; target former top executives of all relevant companies; consider senior executives outside the hardware sector; and shortlist about 10-12 top candidates to be interviewed.

Benchmark rationally

Having a fair comparison of shortlisted candidates is possible by creating consistent benchmarks.  This helps all the appraisers to follow a defined approach and rating criteria.  External and internal candidates should be assessed without any biasness.  Likewise, comparison of soft skills—which are obvious to internal candidates but unknown to outsiders—should be done on equal footing.

Appraise systematically

After shortlisting potential candidates, it’s time to evaluate their suitability on the required competencies through rigorous interviews using behavioral-based questions.  The evaluation should constitute in-depth reference checking—through the nominees as well as those who have worked with the candidates in the past—internally or through executive search firms.

Interested in learning more about the other guiding principles critical for selection of competent senior executives?  You can download an editable PowerPoint presentation on Executive Selection here on the Flevy documents marketplace.

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You can download this and hundreds of other consulting frameworks and consulting training guides from the FlevyPro library.