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Quality Management

It’s Time for Climate Change

By Peter Young

This article is from the Q1 2017 issue of Fi|r|st: The CEB Journal of Finance|Risk|Strategy


Most leaders probably have an idea of the types of behaviors they’d like their staff to exhibit. But getting employees to take action isn’t always a simple task. Typically, department heads focus on hiring and training to develop the skill sets they believe will help the function achieve its goals. But this approach—while still valuable—isn’t the most effective means to translate desired employee behaviors into action.

Leaders are frustrated in their attempts to change mind-sets and behaviors, and they point to the broader organizational culture as an impediment to change. But cultural change is, of course, outside the scope and timeline of any one functional leader.

In fact, CEB analysis of staff in Audit, Quality, IT, Customer Service, Procurement, and Marketing shows that cultivating a team climate that supports and enables staff influences employee behavioral competencies more than training programs or attempts to accrue expertise through hiring do. Climate is a group’s shared perceptions of the nature of its work environment—the permissions that managers grant, the signals that leaders convey, and the processes and practices in local departments or functions. Climate requires less time to take hold and is easier to assess, influence, and control than the deeply held assumptions, beliefs, and values that define an organizational culture.

The message is simple: if executives want staff to exhibit certain behaviors, the onus is on leadership to make that happen. Whatever you want your staff to do more (or less) of, you must make your wishes clear, explain how that translates into practice, and provide support to remove barriers to execution.

In essence, achieving your functional goals isn’t about hiring the perfect employee; it’s about creating the conditions for talented staff to thrive. The good news is that changing the climate, unlike shifting the culture, is something that executives have the power to do faster and something that is more directly within leadership’s control (figure 1).

Subpar functional climates are holding many departments back. Too often, employees are given mixed messages or high-level strategic guidance that doesn’t connect to daily tasks, objectives, or support processes. In this kind of environment, employees aren’t clear on what it is they actually should be doing, and they often revert to doing what’s easiest to get by without rocking the boat. In other cases, staff simply lack the tools and resources they need to exhibit the behaviors that functional leaders desire—leaving everyone dissatisfied and wanting more. Luckily, taking steps to improve climate is something that any department leader can do. Our research shows that doing so involves two main components: 1) sending consistent signals and messages, and 2) providing support via tools and processes.

Provide Clear Signals and Consistent Messaging

Make the function’s priorities clear. This means not just talking the talk but also walking the walk by aligning messages to employees’ work and incentives.

Take the Quality function for example. Many Quality executives want their workforce to be more business minded, which means they want staff to focus on identifying and communicating solutions that the business will actually implement as opposed to being bogged down by process.

To combat this issue, the Quality leaders at one company use signal coordination exercises with business leaders to avoid sending mixed messages to functional staff. Working with the business to define desired behaviors and develop a shared messaging plan provides guidance to staff that reinforces the behaviors that leaders want them to exhibit (figure 2).

As part of this exercise, the Quality team proactively identifies events (e.g., a quality incident, a missed milestone) that could trigger divergent signals from leadership. If those preidentified events occur, Quality meets with the business to take preventive action—identifying where divergent signals are likely to come from and agreeing on the right response to staff. Since the firm began synchronizing with the business, it has noticed improved alignment on behavioral priorities in the function, lower instances of conflicting communication from leadership, and higher concentrations of behaviors on the team that contribute to high-level objectives.

Creating peer groups is another way leaders can help staff interpret signals and take action based on those messages. One Quality team asks staff with similar workflows to collaborate and discuss how new leadership expectations can be realized in their daily work. An analyst on the team, inspired by information learned in a peer group session, worked with Operations quickly to rectify a packaging defect rather than disposing of the product or shutting down the production line. This is just one example of how this forum for coworkers has helped reinforce management’s desired shift toward a more business-savvy mind-set among its employees, helping them effectively digest top-down messages from the bottom up.

In essence, all corporate leaders should make sure internal communication and employee workflows don’t innately undermine the very behaviors they want to promote.

Provide Tools and Support to Eliminate Execution Barriers

Leaders need to provide resources that staff can use to more effectively exhibit the behaviors and perform the activities that management desire. This means being clear about when to do something and what exactly to do.

For example, heads of Procurement want their staff to actively investigate cost drivers for more buys. This would reduce the number of risky purchases and help Procurement deliver its true internal comparative advantage: bringing unique information to buys.

One chief procurement officer (CPO) provides clear guidance on when, why, and how to use data based on its overall level of accuracy (e.g., fact, estimate, best guess). Doing so helps employees feel more comfortable building cost models using imperfect datasets. This support from leadership enables staff members to apply more of their market knowledge to analyze cost drivers as opposed to being afraid to conduct the analysis at all.

Another CPO gives employees a cost driver assessment template to help them identify and target the organizational processes or behaviors that influence cost (figure 3). This tool is an easy way to help employees do what the organization desires while also signaling the activity’s importance.

Case in Point: Striving for High-Impact Audits

Focusing on a climate that provides clear signals and support that employees need to get their jobs done is effective. Our research not only finds that climate-based factors have a higher impact on employee behavior, but it also uncovers that departments with high-quality climates are more likely to contain desired staff behaviors than those that don’t. For example, Internal Audit departments with top-quartile functional climates are more likely to contain auditors that display behaviors that chief audit executives (CAEs) seek (figure 4).

The context: Many Internal Audit departments strive to deliver more business-relevant and actionable findings. Audit leaders must focus on building three core behavioral competencies: business partnership, professional judgment, and business acumen.

When we tested the existence of these kinds of behaviors among more than 340 auditors, those in departments with supportive and enabling climates were much more likely to exhibit the aforementioned behaviors than those that weren’t in that type of climate. This means that these Audit departments set clear expectations, equip employees with the right tools, and reinforce priorities through public recognition to cultivate the skills the CAE desires.

For CAEs, creating the right climate can be as simple as real-time coaching during engagements to ensure employees get the feedback they need when they need it most. One Audit team publicly displays scorecards around the office on which auditors document the business value they created during each engagement. Openly tracking predefined value metrics helps reinforce departmental priorities.

Each corporate function has its own prerogatives, and each leader has his or her own set of strings to pull to achieve functional goals. Regardless of different priorities, it is increasingly clear that success occurs when leaders take steps that let employees reach their full potential. These findings are great news for leaders trying to drive change in their teams.

Next Steps

Visit your program website or call your account manager to access research and case studies about functional climates.


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