Strategy? Shouldn’t you be asking top management about this?

Every company director will maintain that his company has a well thought-out strategy. But what is this strategy exactly? Is every member of staff aware of this strategy? Does everyone understand the strategy in the same way? Has the strategy been properly implemented? What can a company do to increase the chances of successful implementation and how important is the famous Balanced Scorecard for such implementation? Kurt Verweire, Professor at the Entrepreneurship, Governance and Strategy Competence Centre of Vlerick Leuven Gent Management School, leads the panel discussion in the right direction.

Agreement at the discussion table is a rather rare phenomenon but not if it concerns the need to explain the concept of strategy. Werner Bruggeman, Professor at the Competence Centre Accounting and Finance of Vlerick Leuven Gent Management School gets the discussion going. “Every organisation has some sort of strategy. There is something going on but it is often not made explicit. This implies that a clear and inspiring vision is being developed. Clear means that the strategy is given a specific structure with a clear terminology and a clear framework. The methodology needed to formulate a structure is non-existent in many companies. Often a
strategy only contains nothing more than a few trendy management concepts such as innovation, customer orientation, efficiency or stakeholder orientation. If you ask a management team what customer orientation actually means to them, they are often at a loss for words.

“All too often strategy remains locked up in the brains of a few managers.”

Moreover, a strategy must be inspiring. It must be alive and come from the heart. It must be genuine and not copied from someone else. An important aspect of this is the visioning process, a brainstorming about the long-term strategy of the entity to be implemented at all levels. Often too few people are involved and management tends to operate from an ivory tower.” Hein Heuvelmans, Director of the Dutch consultancy Oasis1, supports Werner Bruggeman in this. “The strategy remains locked in the brain of a few managers. There is no consensus and the management teams do not explain the strategy to each other. In this way, everyone is busy with
his own little world and the strategy can never be implemented.” According to Werner Bruggeman, training is extremely important. “What are strategies? What are objectives and how should they be formulated? These are all things that can be learnt. It is not always obvious but in practice we see that values are propounded which are not understood by everyone in the same way. And if you don’t understand something then it is difficult to believe in it. The strategy therefore has to be structured, preferably with a wide basis and an understandable terminology developed. If names and terms are defined, they can be understood by everyone.”

Carel Boers, Director of the Rabobank in The Hague, believes that passion is a major catalyst for a strategy to be a success. “What I sometimes miss with managers is passion. If the management of a company does not exude passion, it won’t be found in the lower divisions. Passion also means that you must be prepared to communicate in a certain way. As a leader, you must dare to appear vulnerable.

“I see egos at the top actively engaged in many things except in motivating people.”

Wrong strategic choices must be analysed and discussed with the people with whom they were developed. And this is where it often goes wrong. I see egos at the top actively engaged in many things except in motivating people.” Werner Bruggeman recognises the importance of impassioned management. “If you are passionate as a leader due to a particular vision and you organise a visioning process for your managers in the form of a brainstorming or a strategic workshop where you try to pour in all your passion, then you almost automatically end up with a group that has become inspired. And this is needed, otherwise you are on your own with your vision. The ‘microbe’ must spread to ensure that a vision is passed on and implemented in other processes.” According to Hein Heuvelmans, not only the top but also middle management and even the work floor should be involved in the strategy process. “In order to run your business well and to implement your strategy, you should involve your best salesperson in the field. I also believe that management should ask a great deal of critical questions and give people from middle management or from the field the chance to help come up with an answer. Carel and his management team are a good example of this. They were, and still are, an ideal catalyst for the company because they are close to the work floor and are capable of dealing with specific problems quickly. They are always asking critical questions about how they are dealing with things. It is useful to ask these questions as the answers often come from people who should be passionately inspired by the strategy and who have to work with it on a daily basis.” Carel Boers discovered the importance of passion when implementing the strategy at Rabobank. “In the Private customer department, everything that emerged from the various strategic discussions filtered down to a lower level and was re-examined with much enthusiasm. At a given moment I came into contact with a customer who complimented the company on its nononsense attitude. This was exactly what we had discussed in the sessions a few months before. It is great if you see that a particular strategic decision is spot on and due to the enthusiasm and commitment of staff filters down to all employees. In the Companies department, there was no filtering down to the lower levels and therefore no lasting power. In this department, managers were so honoured that they were allowed to participate in the discussions and felt therefore so exclusive that they did not want to share information with the lower orders.”

The success of strategic implementation depends in many cases on the extent to which staff are given the opportunity to assume responsibility in the process. However, this implies an adjusted type of evaluation and control. Carel Boers introduced a new evaluation method at Rabobank. Carel Boers – “The sales department was divided into small units with considerable social control. The sales people evaluate themselves on a weekly basis and then tell me how it went. At the end of every week, they send me a report with details about what they have sold and why they think it is good or bad. By measuring achievements over very small periods, not only does management realise in time whether things are going well or not but this also applies to the employees themselves. If there is a crisis, then staff see much earlier that a crisis exists and they are more motivated to help solving it.”

“I regard this as a large construction site with various pits. You can either concentrate on the construction work or on the litter scattered around the site.”

Hein Heuvelmans has had the same experience. “It starts with raising awareness, people on the work floor signalling that things are not going well. As they write it down themselves, something happens to them mentally. They will be more motivated because they have an obligation with regard to what they have written.” Carel Boers, “I see this as a large construction site with various pits. If you are busy working then you can do one of two things. You can concentrate on the construction work or on the litter scattered around the site. Many people come no further than seeing the litter. You must therefore make sure that things collate properly and that everyone can see the building work. While we were busy constructing, there were some people who saw the work grow and grew along with it. We tried to give them the opportunity to grow and, where necessary, to assume responsibility. And yet there were others who could not seem to get further than the building site. In such a case, you must help them and help them constantly.”

The Kaplan Balanced Scorecard is presented as the ultimate miracle cure when implementing a strategy whether or not it is suitable. It is a tool which is all too often misunderstood or used wrongly with the result that it bypasses its goal. Werner Bruggeman is an expert in problems related to the Balanced Scorecard.

“If you see strategy as a project and not as a process that has to be dealt with on a daily basis, if it remains a one-off action of a few people, then you can have a good Balanced Scorecard till kingdom come but nothing will change in the organisation.”

“The main aim of the Balanced Scorecard is the extent of being able to follow strategy implementation in measurable terms, i.e. measuring what has been set out to be achieved. The Balanced Scorecard is not about little boxes. Kaplan himself was disappointed because his creation was parodied. He never stated that the world had to be divided into four segments. He made this division due to practical considerations because managers wanted a structure to their reporting in order to remember achievement scales better. Whatever structure is given is not so important. In principle, everyone should be able to work with it. Strategy is everybody’s job. The Balanced Scorecard concerns the contents of a strategy and the contents of measurements and action. It is a means that must be fitted into an integrated strategic management process. You need the Balanced Scorecard to be able to continue the strategy process.” Hein Heuvelmans regards this continuation as very important. “Many strategy processes are projects that come back every year. If you regard your strategy as a project and not as a process that must be dealt with every day, if it remains a one-off action of a few people, you can have a good Balanced Scorecard till kingdom come but nothing will change in the organisation. The idea that strategy is a project must therefore be discarded. The Balanced Scorecard is only useful if it is seen as part of a continuous process.” Carel Boers used the Balanced Scorecard to introduce radical change at Rabobank, “Rabobank in The Hague was not operating well. I knew that everything had to be changed and that I would have to use new means to achieve this. In order to create a shock effect, I opted for the Balanced Scorecard. Some people could not accept this change and left the company. Others were pleased that finally some-thing was going to be changed. In this way, I lost a third of my managers and yet I knew there was no other way forward. A lot had to do with the immaturity of some of the leaders and managers at the time. If you have a high level of selfreflection and you dare to discuss your own functioning, then you have to be prepared to tread on ground which is normally off limits. The impossibility for some leaders to create this transformation in themselves, leaders who were stuck in childish behaviour, made it some-times impossible to bring a project to a successful conclusion.”

What should you do with strategy and its implementation? Werner Bruggeman swears by a complete visioning process. Nevertheless, in economically difficult times the strategy process is disturbed. Werner Bruggeman: “Most of the time the cause is with the organisation of the company. Little can be done by people locally. The company is taken over by a company with a completely different vision. Another cause could be the economic situation collapsing. The occupancy rate goes down and the strategy process stagnates completely. The emphasis is temporarily more on the short term and less on the long term.” According to Hein Heuvelmans, companies react in three ways to a crisis. Hein Heuvelmans, “You have a group that sticks to the strategy, does a bit of adjustment and carries on reasonably well. Then you have a group that
is fixated on the Balanced Scorecard and doesn’t understand that they should lower the sail or run up an extra sail. Lastly, you have a group that runs along and plays. The whole strategy is abandoned as if it had never existed and a climate of panic is created.” According to Carel Boers, it is important that a company adheres to the strategy even in difficult times. Carel Boers: “We are experiencing economically difficult times. At least that’s what they say. However, the bank for which I work is doing better than ever. If managers keep their head cool and their heart warm, there is every likelihood that the damage won’t be as bad as we thought. You mustn’t let the market drive you crazy. For example, the mortgage market went bottom up but our market share rose by 25% this year. We didn’t distance ourselves from our strategy. On the contrary, we finetuned
everything even more and concentrated on workable solutions. Most companies go berserk and start doing crazy things.” It is clear that good strategy implementation depends on various factors such as a valid visioning process, adjusted control systems, and the right employees and managers. According to Kurt Verweire, the success of the Rabobank in The Hague is also due to the fact that managers have a very good idea of the state of play of processes. Is there any kind of process control?

“We are living through economically difficult times. At least, that’s what they say. If managers keep their head cool and their heart warm, there is every chance that the damage will be limited.”

How can this be improved? How can processes of a particular department be linked to processes of other departments? All these matters taken together determine whether or not a company will be successful. For this reason, a more integrated approach is needed for strategy implementation. Vision and strategy must be linked to specific processes and an adjusted control system must be available that enables the company to see if it is going in the right direction. At the same time, attention must be given to behaviour. Are my employees and managers convinced of the direction in which we want the organisation to go? In the spring of 2004, a new book by Vlerick Leuven Gent Management School will be published in which an explanation will be given of what the strategy implementation process means exactly. The book provides some innovative insights into what implementation means, not only for very mature organisations but also for organisations that still have a long way to go.

Article from the book ‘? In Management – The Art and Science of Management’ published because of the 50th anniversary of the autonomous Management School of Ghent University
and Katholieke Universiteit Leuven, in 2003.

Hein Heuvelmans is managementconsultant en oprichter van Mercator Management Advies. Hein is ruim zeventien jaar actief als managementconsultant, manager en docent op het gebied van besturingsvraagstukken. Mercator Management Advies helpt managers met de implementatie van Strategiegedreven Performance Management op alle niveaus in de organisatie, op maat toegesneden Coaching&Training, diverse Top en Master Classprogramma’s en bijzondere netwerken: Genietschappen. Daarnaast geeft Hein lezingen en workshops over resultaatgericht(er) sturen en de vitaliteit van managers en organisaties. Voor meer informatie: www.mercatorma.nl.

Personnel Management Information System at the Ministry of Defence of the Czech Republic

The Armed Forces of the Czech Republic have been in existence since the formation of the Czech Republic on the 1st January 1993. The general process of the (personnel) transformation started immediately in this year. The main objectives of the transformation was to create an Armed Force, based on professionalism and a distinct separation of the administrative branches from the command and executive branches. The transformation is not only based upon structural changes in the quantity and quality of personnel and changes in personnel management but also upon changes in logistics, finance and planning. The time frame takes into consideration the short term, intermediate and long term development programs. An important role in the process of transformation of the Czech Armed Forces is the new concept of personnel management.

The Armed Forces of the Czech Republic have been in existence since the formation of the Czech Republic on the 1st January 1993. The general process of the (personnel) transformation started immediately in this year. The main objectives of the transformation was to create an Armed Force, based on professionalism and a distinct separation of the administrative branches from the command and executive branches. The transformation is not only based upon structural changes in the quantity and quality of personnel and changes in personnel management but also upon changes in logistics, finance and planning. The time frame takes into consideration the
short term, intermediate and long term development programs. An important role in the process of transformation of the Czech Armed Forces is the new concept of personnel management. Its realisation is connected with increased requirements on collection and evaluation of personnel information and social support. Therefore a Personnel Information System is to be realised during the years 1995 -1998. The Personnel Management Information System is a part of this system and will be developed and implemented during 1995 and 1996. The main idea of its introduction is based upon the fact that the level of knowledge of the state of affairs of personnel in the Armed Forces and Military Reserves is crucial for the decision making processes in all management fields. In other words, the information about the dynamics of all categories of personnel throughout the organisation will only be useful if it is able to support the decision making processes with respect to the development and carry out of personnel policy throughout the whole organisation.

1. Personnel management at the Ministry of Defence 1
2. Management Information Systems 2
3. Used development methodologies 3
4. The Personnel Decision Support System ‘LIBUŠE’ 4
5. Conclusion

1. Personnel management at the Ministry of Defence

One of the primary tasks of the newly re-oriented personnel management team is to find solutions to all main problems regarding the transformation of personnel. This involves, for example, the reactions to changes of the state military doctrine, the step by step abandoning of conscript service, and the reduction, restructuring and professionalisation of the Armed Forces. The search for satisfying solutions is restricted by criteria like budget burdens, combat readiness, the qualitative and functional structure of the Armed Forces etc. Furthermore, the aspect of urgency and the political necessity to find a satisfactory solution are critical factors for success.

The basic tasks of personnel management in the process of transforming the Armed Forces are:

• The reduction of personnel of the Czech Armed Forces;
• The re-structuring of the Czech Armed Forces;
• The strategic development and control of career patterns;
• The design and execution out of an integral policy of planning and control of human resources;
• The development and execution of an effective policy for personnel marketing;
• The development of a personnel diagnostic system and a method of personnel selection and redistribution;
• The development and implementation of a policy for professional training and education during and following a professional career.

The aim of the transformation is to achieve such a organisation in which it will be possible to execute standard personnel policy with respect to the planning and control of human resources during an entire
career life cycle. This includes the beginning of a career (recruitment), the stage of professional training and education (control of service execution), up until the conclusion of a career (transfer to reserves and
retirement).

2. Management Information Systems

Management activities can be characterised in terms of ‘planning’ and ‘control’. The main objective of planning is the development of strategy plans which can be implemented into organisation policy. The control aspects of management focus on the confrontation and analysis of (budget) targets with reality. The concepts of planning and control can be made operational within the layout of a Management Information System (MIS). Management Information Systems (MIS), in general, are being designed and implemented to support management in fulfilling their role of planning and control. During the summer of 1995 a start was made on the development of a Personnel Management Information System at the Ministry of Defence. The final Personnel Management Information System will consist of two main systems: a Personnel Decision Support System (P-DSS) for planning purposes and a Personnel Executive Information System (P-EIS)for control purposes.

The Personnel Executive Information System (P-EIS) is primarily a reporting and monitoring system to control the implemented personnel policy. For this reason, this system depends on the available data in the different personnel databases which will be used to produce the necessary reports. During 1995-1998 a separate Personnel Information System (PIS) will be designed, developed and implemented at the Department of Personnel of the Ministry of Defence. This system contains components which will be used to develop and support the Personnel Executive Information System (P-EIS). In 1996, the first results of this Personnel Information System (PIS) can be expected. Therefore, the Personnel Executive Information System (P-EIS) will be developed and implemented in the second half of 1996, following the Personnel Information System.

During 1995 a start was made on the development of the Personnel Decision Support System (P-DSS). As opposed to the Personnel Executive Information System (P-EIS), this system depends not so much on the detailed personnel data, but is more focused on aggregate levels of personnel information. The development of strategic personnel policy can be supported by different decision support models. These models can be characterised as global, aggregated representations of ‘reality’. With the aid of these models this ‘reality’ can be simulated and forecasted into the nearby future (for example over a period of 10 years). The outcomes of such scenario-analyses are a representation of future results given a specified set of management decisions, hypotheses and assumptions. To ‘capture’ these decisions, hypotheses and assumptions into a decision support model is one of the main activities of the development of the Personnel Decision Support System (P-DSS). The outcomes of the different models are being used to create the important plan document “Plan of Human Resources 1997-2006”.

3. Used development methodologies

The identification of Critical Success Factors for the organisation can help in the design of the Personnel Decision Support System (P-DSS). The Critical Success Factors can be identified by translating the strategic management plans into some ‘key-factors’ or ’target-areas’. These can be factors which focus either on the internal organisation or on the direct environment of the organisation. These Critical Success Factors can be further translated into so called ‘Performance-Indicators’ which measure the activities, developments and outcomes of the realisation of management policy. Outcomes which differ from pre-defined targets can be located and analysed through exception monitoring. With the aid of information technology and the use of ‘mental modelling’ concepts, we can investigate the relation between these Performance-Indicators and the decision variables which are controlled by management. Different scenarios can be calculated to evaluate the effects of different policies or to specify the impact of uncertain external developments. The aim of the underlying decision support model is not to predict the uncertain future, but to gain more insight in reality and to sharpen the knowledge and beliefs about reality through experimentation. Our knowledge, experiences, beliefs and paradigms about reality are represented by our ‘mental models’. By capturing and sharing the individual mental models of the people within the organisation (management, staff etc.) we learn more about reality and gain a higher level of consensus about the problem areas. This ongoing process of surfacing, testing and restructuring of mental models helps improve our own mental model. The different decision support models embedded in the technology are representations of these mental models, which ultimately leads to “ownership” of the models by the people themselves.

The process of mental modelling
 
A problem situation, for example in the field of personnel management, is viewed by different observers (management, staff etc.). The experiences of the observers can be shared by making one consensus map of the different mental maps of the observers. This map can be adjusted many times (step 1). From this consensus map a computer model can be developed by a model expert. This computer model is a translation of the consensus mental map into a mathematical model which can be simulated with the help of a computer. Changes in the mental map will change the computer model (step 2). This computer model can be used for scenario-analyses and the outcomes will influence the existing mental maps of each observer (‘learning’). The design, development and use of the decision model can be viewed as an ongoing incremental process with can have many feedback loops. To control the activities in an organisation, management needs instruments which at all times monitors the outcomes of policy. By gathering and representing information about the Performance-Indicators, management will have up-to-date information about the success or failure of a given policy.

With this information, management can decide to adjust policy to meet pre-defined goals. To report this information, access to different data sources, internal and external, is necessary. The collection, aggregation and representation of this data from different sources will be the major goal of the Personnel Executive Information System (P-EIS).