By John Barrington
Last week I wrote about Return On Capital (ROC) being more about a mindset and a management philosophy than simply the numbers. While I chose ROC (or Return on Capital Employed (ROCE)) as the metric, the point is relevant whatever the chosen performance indicator may be. For some corporate enterprises it may be Shareholder Value Added (SVA) or for non-profit organisations it might be Results Based Accountability (RBA) or Social Return On Investment (SROI). It doesn’t matter; the point is that whatever measure of performance is chosen to best reflect the beneficiaries’ perspective, hard decisions must be taken that will drive organisational performance in terms of that key indicator.These are difficult and often demanding decisions that will go to the very core of the organisation, be it a corporate or a community benefit enterprise.
In this respect we think of three pillars of conception, translation and enablement. The first pillar of strategy conception includes defining the Purpose and Vision for the organisation, followed by identifying the true strategic issues that must be addressed through strategies and tactics.
The second pillar is about translating those strategies into clear, short-term actions that will deliver results. It is about assigning accountabilities and, importantly, resourcing the actions with people who can implement and the necessary funds to make a difference.
Just as the allocation of human and capital resources is critical to gain “traction on the action”, the softer elements of creating an enabling culture are critical to success. This third pillar includes the style of leadership, management decision-making, internal communications and the supporting systems and processes. The latter area includes infrastructures to support: objective setting; corporate planning; management accounting; human resources; remuneration and incentives and cash and capital management.
It is only when each of the 3 pillars are aligned to support the Beneficiary Performance Indicator that true strategic success can be achieved.
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