Every organization exists for a purpose. The purpose is derived from a vision… something the organization strives to bring to fruition. Defining a mission aimed at realizing the vision provides a guidance system for its functioning. An example of a vision for a water utility is “every citizen with safe, reliable and affordable water.”The mission would be to do what is required to realize that end state. The mission is critical in strategy formulation. In some cases the mission is relegated to a manual or even a wallet card and then virtually forgotten. But if executive management is not navigating to the appropriate “magnetic north” the organizational and workforce management strategies may fail in mission fulfilment. It is also imperative for all employees to understand and accept the mission if their efforts are to be aligned and appropriately focused. George Odiorne once advised “if your people are headed in the wrong direction don’t motivate them.”
The workforce management strategy must be aligned with the organizational strategy, which in turn must be consistent with the mission. The mission is the basis upon which organizational objectives should be formulated and it should help establish the relative priorities associated with the objectives. Using a water utility as an example I asked graduate students in a DePaul U class what the performance measures should be for the organization. Since utilities are for the most part municipal or county owned it is clear that profit was not in the picture. So with a little direction they settled on operating costs vs. the established budget. This certainly deserves consideration since there is accountability to the citizens who fund the organization through their taxes and/or utility bills. But when one narrows possible objectives down to one the result must be safety. Make sure they reliably deliver water that is safe.
The recent Flint, Michigan disaster resulting from the flawed operations of the water utility is not unique… there have been instances of public welfare being harmed by inappropriate management of utilities. There are very restrictive regulations mandating who must staff a water treatment plant. A qualified Class D (or 4) Operator must be on duty at all times, to ensure actions taken are monitored by a highly qualified person. But if all aspects of a treatment plant’s operations are not under the control of appropriately qualified people disaster looms. And the same holds true for the field crews who build and maintain the water distribution system. If management were to focus on costs in order to meet the operating budget in a manner that resulted in shortcuts the risk of mission failure skyrockets. Sacrificing quality to meet cost objectives is the “third rail”in a utility.
Every organization must balance its focus on the objectives it strives to meet. The Balanced Scorecard approach to managing organizational performance makes it clear that tradeoffs between operational, financial, customer and workforce results must be decided on. Reducing expenditures on training that can compromise competence of the workforce may result in a lower payroll but may endanger the organization’s ability to meet its other objectives. The financial condition of Flint pressured decision makers into allowing operations to proceed even though all the pieces were not in place to maintain public safety. Here public safety was not a desirable objective… it was a mandatory requirement. And its nature precluded tradeoffs.
If the staffing, development, performance management and rewards management strategies of an organization do not result in adherence to mandatory requirements they must be changed. It may be appropriate for a for-profit private sector organization to cut corners in one area in order to meet other objectives but it is incumbent on management to ensure they understand the risks and find them acceptable. The ill-conceived incentive plans used by many major financial institutions contributed to the recent financial crisis. “What you measure and reward you will surely get more of” is a sound principle of motivation. Paying for performance is a sound strategy if performance is appropriately defined and measured. To repeat Odiorne’s advice “if your people are headed in the wrong direction, don’t motivate them.” In the financial industry example the primary motivation was money. In the Flint example the motivation was to continue operations even though the resources were not in available to adequately manage risk. These are disastrous failures of management.
The book “A Short Introduction to Strategic Human Resource Management”(Boudreau & Cascio) focuses on the risk management responsibility of the Human Resources function. But risk management is everyone’s responsibility. If a single water treatment plant operator is not competent to deal with issues in the plant the potential risk to the public is unacceptable. For that reason the strategies used to staff and operate the facility must result in adherence to the primary mission… protect the well-being of the public. Although the results of failure may be less dramatic for a private sector organization investors will still find that inadequate risk management is unacceptable, since it endangers their financial well-being. Every organization must consistently assess its workforce management strategies to ensure they produce a workforce that is qualified and motivated to do what is necessary for mission fulfillment.
Robert J. Greene | Reward $ystems, Inc. 