Joel Trammell, CEO, Khorus
Every organization of significant size struggles with alignment. When I talk with CEOs, alignment is often the number one issue on their plate. Even organizations with as few as 25 employees often struggle with what seems like a simple problem: How do I get everyone on the same page?
While it seems like a simple problem, the complex nature of most modern organizations makes alignment quite challenging. To be successful and deliver the best possible product to the customer, most businesses require specialists in every area of the company to interact with each other. Unfortunately, because of the complexity in each specialized area, employees tend to have trouble seeing the bigger picture and working as a smoothly functioning team.
Consider the complexity of aligning an organization as small as 50 people. While it is possible for the CEO of this company to communicate a clear set of objectives directly to all 50 employees, it would take a significant amount of time. However, the numbers escalate dramatically if most of those 50 employees need to communicate their key objectives and projects directly to each other. If every person were to meet with every other person in a 50-person company and have a conversation, it would require 1,225 meetings! While everyone may not need to directly interact, the idea that an organization of any significant size can be run by simple verbal direction is foolish. This type of problem calls for a system of record that reflects the objectives that each member of the team is pursuing.
I have found that a quarterly cascading goals system can provide such a system of record that aligns employees and formalizes each person’s contribution to the whole. The first step is for the CEO to work with his executive team and create a set of five to eight corporate goals that capture the key initiatives as well as the sustaining activities of the organization for the coming quarter.
Then, each executive will create appropriate goals for their department that relate to the CEO’s goals. This cascading approach goes all the way to the bottom of the organization as each employee works with his or her manager to document individual goals that align to the department and corporate goals. Simply breaking down the intent of the CEO down to the level of each employee is a valuable exercise that ensures alignment from the top to the bottom of the organization.
The next step makes this a true management system for CEOs: Each week, require employees to disclose how likely they are to meet each goal during the quarter. Instead of eliciting backwards-looking status updates, this question ensures that the CEO gets forward looking data about what goals are in danger of not being completed. In addition, the employees, who already understand how their individual goals contribute to the corporate strategy, are focused on achieving those goals in a timely and high-quality manner.
Aligning every employee and his or her role with the corporate direction is a critical role for the CEO and the only way to deliver consistent performance. Measuring everyone’s goals on a quarterly basis while keeping weekly tabs on employee progress helps reinforce the goals as well as provide the CEO valuable insight in time to make a difference – not at the end of the quarter or year when it’s too late. Unlike the typical use of a goals system, employing goals as a CEO management system puts the chief executive in a better position to more actively manage the company and have more influence.
About the Author
Joel Trammell is author of The CEO Tightrope (September 2014), and CEO of Khorus, which provides business management software for executives. He is chair emeritus of the Austin Technology Council and managing partner of private equity firm Lone Rock Technology Group. His leadership as a CEO has resulted in successful nine-figure acquisitions by two Fortune 500 companies. Joel blogs at TheAmericanCEO.com.