"Strategic Sourcing from Periphery to the Core"

M. Gottfredson, R. Puryear, and S. Phillips

Harvard Business Review

February 2005, pp. 132-139

The authors of this article argue that globalization has changed the basis of competition. Ownership of capabilities is no longer what matters, and the key factor is the company's ability to control and make the most of critical capabilities. The question companies must now ask themselves is how best to source each activity in the value chain. This new discipline is called "capability sourcing." Some of the premier practitioners of this approach are Microsoft, Wal-Mart, American Express, and Chrysler.

The authors advise that in order to make sourcing more strategic (as opposed to tactical), "You need to stop focusing on incremental cost improvement targets, step back, and reevaluate your strategy and your capabilities."

A three-step process is recommended as a framework for developing capability sourcing:

1. Identify the components of the business that represent the core of the core for your enterprise. The "core of the core" is the activities that your company can do better and less expensively than your competitors. Consider whether a capability is proprietary and whether it is common enough to provide advantages for a supplier to provide it to multiple companies.
2. Plot each of your required capabilities on a sourcing opportunities map. One axis of this type of map measures how proprietary a process or function is. The other axis assesses the degree of commonality within and outside your industry. The article provides an example and indicates how you determine which capabilities are candidates for outsourcing through this method.
3. Use a capabilities assessment map to plot each capability according to its cost and quality, related to your top competitors or suppliers. This type of map helps determine both which key capability gaps your company needs to fill and current activities that could be performed otherwise with no strategic penalty.

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"Getting New Hires Up to Speed Quickly"

K. Rollag, S. Parise, and R. Cross

MIT Sloan Management Review

Winter 2005, pp. 35-42

This article identifies three challenges that organizations face with newcomers:

• Jumpstarting newcomers' productivity—The average time it takes new hires to achieve full productivity ranges from 8 weeks for clerical jobs to 26 weeks for executives.
• Tapping into the creativity of new hires—The challenge is to "capture the fresh ideas and insights of the newcomers before they are either socialized into old ways of thinking or simply give up trying to change the system."
• Keeping newcomers in the company long enough to justify the costs of recruiting, hiring, and training them—Many companies estimate turnover costs to replace and train an employee at more than $10,000. The highest probability of quitting is at 1.5 years, though it declines steeply after that.

The core of the discussion in this article revolves around the "Five Myths of Rapid On-Boarding":

• The best newcomers can fend for themselves—The authors of this article argue that newcomers often feel a lot of pressure to prove themselves quickly. Therefore, they are reluctant to show their ignorance and get the help needed to progress. The recommendation for managers is to "continually encourage new hires to ask questions while also reminding others to expect and respond to such requests on a timely basis".
• A massive information dump allows newcomers to obtain what they need—While providing information is important, managers should place even more emphasis on relationship development as a means of facilitating information transfer. There are several ways to do this: Emphasize roles and responsibilities rather than company work processes; Intentionally withhold information so people will seek out in-house resources; Periodically ask new hires to list their "network" members, and look for missing gaps; Include structured socializing activities; invite newcomers to meetings to observe key people; do not over-emphasize on-line training at the expense of classroom interaction.
• Cursory introductions are all that is needed—Only one third of newcomers are satisfied with the quantity and quality of their introductions. Introductions should provide the opportunities for each to learn about the other's role and responsibilities. Newcomers should be introduced sufficiently to all key resources.
• First assignments should be small, compact and quickly achievable—The authors found in their own research that the first assignment of rapid on-boarders required them to build relationships with many different people in order to get their work done. They recommend that "Managers can provide valuable initial experiences for new hires in several ways: Specifically, they can (1) design the first project so it can't be completed without assistance from co-workers, (2) assign newcomers to cross-functional project teams that expose them to a broad network of resources, (3) give new hires the opportunity to develop a unique expertise that others must access to complete their own work, and (4) review progress on the first assignment by asking not only, "What have you accomplished?" but also "Who have you talked to?"
• Mentors are best for getting newcomers integrated—Buddies are initially more important than mentors. Managers should help new hires build either a formal or an informal buddy relationship with at least one other co-worker.

Overall, the authors of this article strongly argue for changing from an informational approach to a relational approach in order to increase the probability of rapid on-boarding.

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"Integrated Pay for Performance: The High-Tech Marriage of Compensation and Performance Management"

Lynn Summers

Compensation & Benefits Review

January/February 2005, pp. 18-25

This article emphasizes that effective pay for performance relies on the interdependence of the performance management system (where work is aligned to achieve corporate success; skills and competencies are applied and developed; and performance is assessed consistently and reliably) and the compensation management system (where incentives are in place to drive performance; incentives are tied to the right performance timeframes; and rewards are distributed consistently and reliably).

The author emphasizes that the following need to be in place and smoothly integrated:

• Employees need to understand the relationship between their performance and goals, and their potential rewards. The measurements of a performance plan need to consider both results and competencies.
• There needs to be continuous communication for effective ongoing management of performance. Progress must be tracked and adjustments need to be made quickly. Skills needed are applied and developed. Managers serve as coaches.
• Performance is evaluated based on rich and relevant data. Assessment determines whether criteria for effective performance have been met.
• The individual assessments need to be quickly and fairly linked to financial rewards.

The last part of this article discusses the role internet technology plays in making compensation and performance management processes more integrated and effective.

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"Leadership Group Coaching in Action: The Zen of Creating High Performance Teams"

Manfred Kets de Vries

Academy of Management Executive

February 2005, pp. 61-76

Although this interesting article primarily focuses on the advantages of Executive Coaching in a group context (and provides a detailed case study of how it can work), it also addresses a number of concerns the author has about the burgeoning business of Executive Coaching. Among these concerns are:

• In order to be truly effective, the author feels that real leadership coaching requires a solid base of psychological understanding and practice. There is often more to the behavior of an executive than meets the eye.
• Leadership coaches do not always know their limits, and therefore anyone professing to be in this position should hold regular discussions with a supervisor or a colleague.
• Leadership coaches often have dual roles in an organization, and therefore they should be clear with all parties concerned about how the information they acquire will be used or shared.
• There should also be confidentiality agreements regarding other sorts of organization information besides the personal information in coaching relationships.
• Some clients are participating for various reasons, and the issue of consent should be made clear early on.
• There are financial issues if the company is paying for the coaching, but the work is beyond what is originally planned.

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"Learning Versus Performance Goals: When Should Each Be Used?"

Gerard Sejits and Gary Latham

Academy of Management Executive

February 2005, pp. 124-131

Though co-author Gary Latham is one of the best-known proponents of goal-setting as a motivational technique, this article makes the argument that "The assignment of ambitious goals without any guidance on ways to attain them often leads to stress, pressures on personal time, burnout, and in some instances unethical behavior. It is both foolish and immoral for organizations to assign 'stretch goals' and then fail to give employees the means to succeed, yet punish them when they fail to attain the goals."

Performance goals are framed so that the employee focuses on task performance and results. A learning goal focuses on the discovery of effective task processes. The performance goal primarily increases one's motivation, while the learning goal increases one's knowledge or ability. The research of the authors of this article indicates that a performance goal should not be set until the employee has the knowledge to attain it. Therefore, it is often more effective to first focus on goals that increase task ability instead of focusing directly on task performance.

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A System to Bridge From Ability to Performance

John McNeil, GP Deltapoint
 

Many excellent companies focus famously on results. GE, Emerson, and others have been brutal proponents of "perform or out" for people and business units alike. A downside: sometimes such a focus on results alone has driven managers to manipulate results to ill effect. But some organizations (Toyota is a proponent) derive excellent results from their ability to discover and implement effective task processes, as outlined in the Sejits and Latham review above.

GP Deltapoint is working with clients to implement systems to increase task ability, with the goal of driving performance steadily but solidly upwards.

The first step in this is similar to a standard Goal Deployment whereby overall organizational goals are translated down annually to individual actions that are numerically linked to those top measures. Then comes a translation of key processes throughout the company to lower level processes at the individual or small-team level of responsibility. This is done using simple scoring matrices in a team environment, backed up by analysis and data. Those few lower level processes that are tightly linked to top level goals and are not currently steady and predictable, are deemed critical and thus worthy of special attention.

The second and crucial step is to manage and monitor the standard work that is done in each of the lower level critical processes. If performance falls behind in a minor process, its routine steps and guidances are reviewed and revised as is the learning that has taken place around those steps.

These two steps taken in an annual systematic cycle link top goals to the ability to complete tasks in the most appropriate ways and then link the task performance in turn back to aggregated performance via the micro measures of each critical step. This gives us what Latham seeks: "The assignment of ambitious goals with the means to succeed".

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