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Developing management capability, part 3


The third part of this feature by Simon Court of Value Partnership looks at developing management capability for sustained business performance.

Here we will explore using an Organisation and Management Review (OMR) as the basis for quality decisions about developing management capability for sustained business performance. We advise you on how to lead the OMR process in your organisation.

Making the strategic management process a deliverer of value.
The quality of the connection between the business strategy, organisation and management depends on the quality of the strategic management process in an organisation. A "quality" strategic management process would result in strategies that:
- Enable people to take appropriate initiatives with confidence
- Clarify when to turn business down
- Can be articulated by people throughout the organisation
- Customers and competitors see in action

EasyJet and IKEA are both examples of organisations that approach such clarity. Marks & Spencer and BT are not.

In truth, most strategic management processes are better at identifying value opportunities than they are at ensuring they can be delivered. One key reason for this is that the business models that are developed do not specify the organisation and management capabilities required, or how these capabilities will be developed. BP Amoco has a strategy and business model that makes the connection between the development of the organisation, managers and business success clear. But they are more the exception than the rule.

In many organisations, the business model is mostly externally focused, and organisation and management development are "overlooked" by senior managers. The senior management team may have little understanding or apparent interest in the connection between people's capability and commitment, the creation of value and business performance. They might be heavily driven by deal making or acquisitions, or focus only on costs and short term measures. They may be setting out a strategy that stands little chance of being delivered. For example, claiming innovation as the basis for securing higher levels of growth when there is no track record of innovation and no plan for developing an organisational context or capability for innovation. The challenge is to broaden the business model to clarify how managers are expected to deliver business success. This is why there is a role for an Organisation and Management Review process.

Learning to make the connections between success and capability
The OMR process aims to develop the understanding of senior people of the organisation and management preconditions for business success and to help them to use these insights to plan for change. This involves making clear the assumptions that are built into the business plan and creating opportunities for people to test these assumptions out. It should be part of the strategic management process of a company. An effective OMR is tailored to the situation and context of the business. It is also designed for the people who will be expected to participate in it. For example, if there are strong linkages between business units, the OMR process should be designed in such a way that those linkages are fully explored.

The key output from the perspective of developing management capability is a clear view of the contribution expected from managers to today's and tomorrow's business models, and a business-centred brief for managers and developers to work from.

Leading the organisation and management review for your business
So, how do you lead the development of an OMR process in your business? An effective OMR process would have a number of characteristics:

- An emphasis on quality of dialogue rather than the mechanics of the process, with a minimum of paperwork and bureaucracy. It should be exploratory and relatively "loose", as the aim is to cause managers to think laterally about factors that often cannot be directly connected.

- Is likely to be "bottom-up" - that is, initiated at the business unit rather than corporate level - but to a framework of questioning and thinking which may be corporately provided.

- Will be forward looking, anticipating short or medium-term business threats and opportunities and the capabilities these might test and require.

- It needs an appropriate balance in its focus between sustaining the current business model and developing future business models. Both are important, and the relative balance between the two will change dynamically over time.

- Works best when repeated over several cycles, as practise, dialogue and learning seem to enable managers to see more and more connections between performance and organisation. Involvement becomes a developmental experience for the senior management group

- CEO involvement and a clear specification of the other roles required if the process is to be a success. Works well when supported by HR staff who are trusted and highly business-literate.

- Not allowing politics and personalities to cloud the real issues e.g. the value of certain linkages between businesses.

Before getting into the OMR itself, a word about preparation. Information will need to be collected and people briefed, otherwise the process will be mostly interesting conversation.

What might the content of a review process look like?


1. Overall aims of the review process
To encourage managers, especially General Managers, to explore:
- The connections between the business model(s) that will enable the enterprise to succeed in its competitive environment and the distinctive competencies which will support them.
- The gap between performance goals and actual performance and the required characteristics and capabilities of the organisation.

2. Typical Content
Overall, can be broken down into two parts:
Part One aims to help managers think about the relationships between the business of the enterprise and its organisation. The output is likely to be a series of actions that will affect strategy, operations, organisation and people (not just organisation and people).
Part Two will focus more directly on the range of HR actions, programmes and processes which will be needed to support the effective functioning of the particular enterprise. This would include activities to develop managers.

Part One -Typical Content
Review and discussion of:

- The challenges facing the business in it's competitive markets.

- The key strategies which will enable the enterprise to succeed, and the specific targets and goals for the planning period.

- The current and future business model(s) for the particular business, and the organisational and management capabilities that will enable the business to deliver the strategies/respond to the challenges.

- The actual performance of the business, and any major performance shortfalls/gaps.

- The organisation and how well it is working, including a review of business and management processes, roles, responsibilities and relationships.

From the definitions of the strategies, performance goals and the actual performance:

- Identify the "gaps" forecast in longer-term performance or strategy delivery, and which of them are likely to have their roots in the capabilities and characteristics of the organisation.

- Identify any shortfalls in short-term performance, which have organisational roots.

Then, identify all important groups of change actions which will need to be taken to achieve the best "fit" between the strategies, goals and performance of the enterprise and the design and capabilities of the organisation. Plan these organisational changes and define who is responsible for these actions and the follow-up process. Such actions should identify what can be done from within the organisation and what will require external intervention or support. This requires an objective assessment of the change management capabilities of the organisation.

Part Two - Typical Content
The content of Part 2 should be directly informed by the business and organisation review covered in Part 1.

Review and discussion of:

- The appropriateness and effectiveness of key teams and business functions.

- Key managers - performance, problems, potential and development needs.

- Identification of key manpower needs, currently and for the next period, and what will be done to meet them through recruitment and development.

- Definition of key development and training needs, and their links to business strategies.

- The major HR processes, and the degree to which they contribute to the performance of the organisation. Identification of needs for development, modification or enhancement.

- Definition of HR resourcing needs and what skills, manning and investment in major HR programmes will be needed to support the business.

Then, summarise all the goals and actions identified, and prioritise them. Make sure the agenda is deliverable and responsibilities are clearly identified for the next planning period. General Managers should track the progress of this agenda, and it's impact on the business.

The OMR is only the first stage in the process of managing the development of managers and leaders. What else do you need to do? And how well is your company managing management development? In the next item in this series, we will scope out how to manage management development and equip you to audit your own organisation's approach.


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