It can be frustrating and time-consuming, but in the end, it’s a key to any successful company. The “it” he’s talking about is setting up a plan and establishing goals.
More importantly, communicating the plan and those goals from the top of the organization all the way down to the bottom.
“What we find is there is a lot of benefit to articulating what we’re doing and why to as many people as possible,” he says. “I spend a good deal of my time trying to translate the goals of the company at a high level into something that makes sense to people who are working in plants or working in marketing or sales and so forth.”
The CEO of Chromalox Inc. wants his employees to be able to take those top-level goals and tie them into their department’s specific goals at the manufacturer of industrial heating applications, which posted almost $200 million in 2008 revenue.
“When we set high-level objectives for the company, we work very hard to say, ‘OK, how do these top-level goals and objectives translate in a way that makes sense to sort of the vice-president level of the company,’” he says. “Then, how does that translate in a way that makes sense in terms of projects or activities to sort of different levels in the company.”
That includes finding a way to measure your business with objective and realistic goals that employees can relate to and then involving employees in the process of establishing a plan to reach those goals.
At the same time, you have to give direction and monitor progress, without micromanaging the organization.
“That takes a lot of work and a lot of repetition, but it pays off in the long run, because if you’re able to align the activities and the goals of the people down in the organization to what you are trying to do, your chance of success goes up,” he says.
According to Dysert the foundation you have to build off of is having the right measurements in place that will give you objective data.
“If you have a good measurement system in your business, then that should drive the conversations in whatever planning sessions or review sessions you are doing,” he says.
“If you don’t have a really good measurement system, you can have sort of a parade of interesting factoids that kind of go through a meeting and you really don’t accomplish anything.”
Dysert tries to align his measurement systems as close to financials as possible. Even if it’s not a financial measure, he tries to get it as close to a financial source as possible, so managers or supervisors aren’t adjusting numbers to make themselves look good.
“The closer your measurement system is to financials the better, because a pure financial measurement typically has a higher standard than any other measurement in the company because it’s audited,” he says.
“The closer it is to an auditable financial result, the more likely it is to be objective. What I find is even the most honest, forthright manager, if they are left to develop a measurement system to evaluate themselves or their department, over time, they’ll tweak that measurement system in a way that under the guise of fairness, they are taking out things that don’t count and they’ll just adjust it until it looks good.”
You should also look at the difference to the company a measurement would make if you completed it at its highest level. If you measure something and it’s really good but doesn’t move the bottom line much, then it should be lower on your priority list.
For example, you have measurements that revolve around the absentee rate for your company. If 100 percent of your workers are at work every day and the direct results on the bottom line are insignificant, you might not want to pay as much attention to that measurement.
“When you are talking with the team, you say, ‘What would this do if we got this to world-class numbers? What would it do to the bottom line?’ You realize, not a whole lot,” he says.
In addition, when setting plans and goals, you have to be careful not to set the bar too high. While you want your employees to aim high, you don’t want to set unrealistic goals.
“There should be some sort of a relative component to goal setting — relative to other parts of your company, other plants, other product lines … relative to last year,” he says. “There should be a component of your thinking where you can explain the logic, ‘On a relative basis, we did X last year; we’re going to do X plus whatever this year.’”
For example, if the economy has gotten worse since last year, you may want to scale back your financial goals based on the market conditions.
“If you try to stretch your people too much, you demoralize them because they realize that’s just an arbitrary goal,” he says. “It’s beyond aspirational. It’s delusional and you lose credibility.”
To create an effective plan, you also need to involve people outside of the executive suite.
At Chromalox, there is a four-year growth plan and a four-year operational plan that the company refreshes every year. It goes over what worked, what didn’t work and what needs to change due to internal or external forces.
Dysert involves the top couple of layers of management in the process to get their input and to spread the word down throughout the organization.
“We try not to do the work ourselves,” he says. “We try to build consensus and buy-in by asking a larger group of people to develop those plans.
“What you get when you develop a plan that way — it takes longer and it’s harder to do it like that, but when you’re done, you have a plan that has a richer perspective and it has more buy-in from people who actually are going to do the work.”
The manager can explain that part of the process and why the company is taking a certain action or why a goal is set at a certain level.
When managers become involved in the planning, they have to show how their department is doing to help reach the company’s goals.
“We say, ‘If we’re going to accomplish these four-year plans, what do we need to get done this year? Let’s put these objectives together in a way that is specific, that is measurable, it’s actionable and it has a time frame to it.’ That’s what we use to develop the objectives for our various departments throughout the company,” he says.
For example, if the company wants to take cost out of their products, the engineering department has to give input on how they are going to contribute.
“We can find $500,000 worth of savings by re-engineering these two products to use less steel in a particular application,” he says. “So, that engineering department would have that goal to save $500,000, and then an individual who’s in that engineering group would have a goal because he is working on one of those products and that product has to save $200,000. So, that is in his objective to save $200,000 for that product, but it ties all the way back to the four-year plan.”
It’s vital to get others involved in the planning and goal-setting process, because it now empowers your managers t
o help the front-line workers understand why the company is doing something.
“That goes a long way toward helping the broader population understand what you are trying to accomplish because, chances are, there’s a manager who’s been part of this process who down the road encounters questions from people who are doing the day-to-day work,” he says.
Direct and monitor
As much as Dysert wants to give freedom to his managers and his employees in the planning process, he still has to give them direction and monitor their progress.
About three months before the plans are due, Dysert and his vice presidents have a planning session on who’s going to research different aspects of the plan. It’s there that he can give them a nudge in the direction he wants them to go.
“I just don’t sort of surprise them at the end and tell them that I don’t like the plan,” he says. “Three months beforehand, I start to plant some seeds. I don’t tell them how to do it; I try to articulate sort of a vision where I think they need to head.
“It’s not giving them the plan. They need to think for themselves. But, it’s giving them sort of the CEO perspective on how things have gone and, directionally, do we need to steer the ship slightly left or slightly right.”
The vice presidents start to develop plans and they start to get feedback from the next level of managers about developing their individual plans. He then can get updates once or twice a month from the vice presidents about how the process is going.
“Informally along the way, they come back to me and say, ‘Hey, we had a good meeting yesterday,’ or, ‘Man, everybody is down. They can’t figure out how we’re going to do this,’ or, ‘This just seems unrealistic,’” Dysert says.
When you are having these discussions, you can adjust based on the new information that you now have. When the final plan is due, you don’t want people’s ideas coming from left field and having no chance of success when they present their ideas to the executive managers.
“It’s an informal way of aligning our thinking along the way so that we’re not getting into a two-day report out session where people are presenting just what I think are ridiculous ideas,” he says. “Or, I’m not standing firm with what they think is a ridiculous goal.
“We’ve done some sort of calibrating along the way so that when we have the plan together there, we’re not as likely to say, ‘This is totally wrong. Go redo it.’”
Dysert bases his involvement in various aspects of the planning process on the experience and capability level of the staff members involved and the risk associated with their task.
If someone is involved in a process for the first time, he will do a lot more coaching than if he or she is more experienced.
On the extreme end, if it’s an activity that can put the entire company’s financial well-being at risk and it’s in an area with a manager whom he doesn’t have a lot of experience with, then he will micromanage.
“I try to back off as much as I can because the more involved a CEO is, the more a CEO says, ‘This is where we need to go,’ people will go that way just because the CEO said it,” he says. “As opposed to a CEO saying, ‘Well, these are the areas I want you to research and I want you to come to the conclusion yourself.’ You are giving them the leeway to think for themselves.”
While checking in once or twice a month, or maybe more frequently, might keep you busy, it will save you time down the road.”
“It can be time-consuming, but if you don’t have that planning process, you can waste a lot more time backtracking and trying to figure why you didn’t accomplish your goals or why things aren’t going as well as you hoped.”
How to reach: Chromalox Inc., (412) 967-3800 or www.chromalox.com