Welcome CEO Sponsor Community and guests · Welcome CEO Sponsor Community and guests Alec Levenson,...

© 2016 University of Southern California Presentation only. Not for distribution.

Welcome CEO Sponsor Community and guests

Alec Levenson, Senior Research Scientist Center for Effective OrganizationsMarshall School of BusinessUniversity of Southern California

Webinar: Analytics for Driving High Performance

March 22, 2016



Optimizing work design for high performance

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Compensation and capability analytics

Strategy is based on very strong assumptions about how much it costs to get productivity

• What is the right amount to pay for a job?

• When is it not enough?

• When is it too much?

• What is the best way to support the strategy?

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1. What is the current state? What if we had more/higher performing org/work

design, capability, or culture/attitudes? What if we had less? Nordstrom vs. 7-11

2. What does strategy say we can afford? What is practical, reasonable? Where should we invest?

Construct Scenarios to Guide Decision Making

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Work Design Drives Compensation Design

Two main choices for strategy and work design

1. High / higher Performance Margins Quality Competencies & capabilities

2. Lower Performance Margins Quality Competencies & capabilities

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Organization/Work Choices:

High performance vs. execution

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• Higher margins• Fewer direct competitors• Greater agility

• Current margins• Same direct competitors• Same agility

• Lower margins• More direct competitors• Less agility

Higher

Current

Lower

Organization Design

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• More responsibility and autonomy

• Fewer routine tasks

• Current responsibility and autonomy

• Same work design

• Less responsibility and autonomy

• More routine tasks

Higher

Current

Lower

Work / Job Design

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Align Work and Compensation Designs

Work design and compensation design have to

be aligned for maximum effectiveness

Work Design

Lower Higher

CompensationDesign

Higher Not aligned Aligned

Lower Aligned Not aligned

Implications for change:• How to increase org capabilities effectively?• How do you know where to invest vs. cut back?

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Branded Pharmaceuticals Example• Strategy : develop and sell high margin drugs

– Sources of competitive advantage / org design focus:• R&D function• Sales function• M&A: strategy, finance

• Capabilities– Org: innovation (R&D); market share (sales; M&A)– Role: scientific competencies; sales competencies

• Compensation design– If we pay less for capabilities in the less strategically important

areas, will that hurt performance?– If we pay more for capabilities in the more strategically important

areas, will that improve performance?

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Work Design is Not Universal Across an Org

• Organizations use high performance principles in some parts, not all

– High performance work design and compensation: Areas of core competitive advantage

– Execution-focused work design and compensation: Areas that require executional excellence, but not necessarily high investment

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High Performance vs. Execution Work Design

Organization process

Industry

Pharma Tech Food Aerospace Temp Agency

R&D High performance

High performance Execution High

performanceNot applicable

Quality / operations

Highperformance Execution Execution Product

dependent

Market segment dependent

Branding / marketing

Highperformance

Productdependent

High performance Execution Execution

Distribution Execution Product dependent

Highperformance

Not applicable

High performance

GovernmentRelations

High performance

Execution (except for new market access)


High performance


Customer service Execution Product

dependent Execution Execution High performance

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Strategic Value of Work Design

• Within-industry differences– Tech: Apple vs. Google vs. Microsoft vs. Oracle– Aerospace: Boeing / Airbus vs. Embraer

• Across business units– Disney

• Theme parks vs. ESPN vs. Pixar

– GE• Financial services vs. aircraft engines vs. refrigerators

Within industry & across business unit differences

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Example: Pharmaceuticals

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High Performance vs. Execution Work Design

Organization processIndustry: Pharmaceuticals

Branded pharmaceutical company Generic pharmaceutical company

R&D High performance Execution

Quality High performance High performance

Operations Execution High performance

Branding / Marketing High performance Execution

Go To Market

Distribution Execution High performance

Sales High performance Execution

Government Relations High performance High performance

Customer service Execution Execution(16)


• How are our products and services created and delivered?

• What is our strategy? Where are we investing more?

• What org design / work design options support the strategy?– Current state vs. more vs. less

• How does the current design align with the options?– Where are things well aligned and where not?– Choose the right level of analysis: enterprise, (cross)business unit,

(cross)function, site, work group/team/process, role/occupation– What is the cause of the non-alignment?

• Are roles and responsibilities properly defined?– If no, focus on work design– If not allowed to change work design, look for sub-optimization points,

workarounds, incompatible systems & processes, inconsistent logic

Diagnose the System

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Organization & Work Design Analytics

• Evaluate org & work design using logic models– What is the strategy? Is the org design aligned with it?– Is business unit design consistent with the strategy? Are BUs

integrated effectively?

• There is only one organization, only one set of BUs, only a few integration points that can be measured the same way

• Very simple statistics, or even no statistics, may be sufficient– Univariate: How much do we have? What does it look like?

• Single data points measuring strategy execution, BU performance, etc.

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Questions to help guide the analytics

• Intended and unintended consequences of past decisions– What are the implications for org effectiveness?

• Organization level– Why are our business units and functions set up the way they are?– What kinds of compromise decisions were made in the past?

• Is decision making responsibility distributed appropriately?

• Team/unit level– Why are our teams/units staffed and resourced the way they are?

• Role level/individual capability– Why are roles staffed and compensated the way they are?– What are the labor cost business model assumptions being used?

• Are they applied as the strategy, Finance and HR assume they should be?

– Leadership: what compromises have been made to keep someone in the organization or give them special opportunities?

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Interdependencies and Competitive Advantage

• Certain roles and functions can be critical for helping to deliver competitive advantage

• If taken for granted, the organization may neglect or underinvest in critical support processes and functions

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Optimize Design Based on Role in High Performance

• Interdependencies: Role-based view– Janitors at Intel / AMD in manufacturing vs. office support

– Call center reps at Citibank / UBS in credit card marketing vs. wealth management

• Interdependencies: Process-based view– Quality processes in manufacturing vs. office operations

• Six Sigma’s ability to contribute to execution vs. strategy

– Go to market systems at companies like PepsiCo and Nestlé: direct store vs. warehouse delivery

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Optimizing org design:

How do we know if things are working the right way?

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• Sunrise and traffic jams

• Engagement and performance

• Causation• Temporal dimension• The causal variables have to be immune to

influence from what they are supposed to cause

• Causal?• Leadership/360 behaviors?• Performance ratings?

Correlation vs. Causation

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Story telling about business results

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• People construct narratives about the way things happen by starting with individual jobs– Sales issues are viewed as originating from sales roles– Innovation issues come from R&D roles– Supply chain issues come from logistics roles– Etc.

• But that simple picture is not the way that business results actually are achieved– Roles are interdependent: success depends on multiple people

doing aligned actions– Not everything matters: you have to focus on the specific tasks

and behaviors needed to execute the strategy• The tasks and behaviors that do not directly contribute to improved

strategy execution overwhelming outnumber the ones that do


Causal model of business results

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Individual capability

Attitudes / motivation

Job design Role / job task execution

Human Capital Performance

Businessresults

Culture

Group / orgtask execution

Org capability

Org design

Enterprise Performance

Strategy Execution / Competitive Advantage


• The causation runs from individual level actions to group / team level then to business results

• But running the analysis that way is boiling the ocean– There are 1000 things that can be improved at the

individual level, so you need to start at the group level:

The Performance Model order of operations

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Competitive Advantage Analytics

Human Capital

Analytics

Enterprise Analytics

Strategy execution

Human capital performance

Enterprise performance


Human capital analyticsStep #3: Diagnostics at the role, individual and/or HR

process levels

Enterprise analyticsStep #2: Diagnostics at the enterprise, business unit

and/or business process level

Competitive advantage analyticsStep #1: Identify organization capability strengths &

weaknesses, and gaps in strategy execution


Strategic Analytics: Leverage Analytics to Improve

Business Results and Organization Effectiveness

Los Angeles (Capital Group)May 17-19, 2016

withAlec Levenson (Senior Research Scientist, CEO)

and guest speakerBernard Bedon (Vice President, HR, Amgen)

http://ceo.usc.edu

http://ceo.usc.edu/


For more information

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Dr. Alec LevensonSenior Research Scientist

Center for Effective OrganizationsMarshall School of Business

University of Southern California

(213) 740-9814 - Main [email protected]

https://www.linkedin.com/pub/alec-levenson/5/547/891

http://ceo.usc.edu

https://www.linkedin.com/pub/alec-levenson/5/547/891

http://ceo.usc.edu/

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