Strategic planning generally follows a familiar scenario: manufacturers gather their executive management together to review the company’s historic results, forecast the upcoming year’s financial goals, document initiatives to achieve the new goals, and then place the plan on a shelf.
But adding value planning to your strategy will add new life to this routine by making the strategic plan more than a stagnant document. Value planning focuses the goals of the company and each employee on building value for the company’s customers, which in turn improves the company’s financial performance. This seemingly ambitious process, however, can be started by answering two simple questions: “What is needed to build customer and stakeholder value?” and “How do we achieve our desired results?” The answers to these questions become your company’s new value- based strategic intentions and initiatives.
But the process does not end with the answers to those questions. The key is to integrate your value plan with the performance measurement and compensation systems for your employees.
Create an organization of owners
Implementing your value plan should start by instilling a sense of ownership in your employees. It is human nature to have one’s own best interest in mind. Individuals respond to measurements and rewards that directly benefit them. The problem is that many manufacturing companies don’t take the time to tie employees’ goals, metrics, and compensation to the goals of the company. This disconnect between employee activities and organizational objectives becomes an ongoing challenge and deterrent to success. Everyone in the organization needs to feel that they have a stake in the business and that success and loss alike are shared among all employees. Creating an organization of owners can be achieved with the following elements:
Accountability
Everyone must clearly understand what is expected of them, what results they are accountable for, and how their success will be measured. If these tenets are not clearly established, employees will become frustrated with the system and one of two outcomes will occur. Employees will abandon the effort, or their energy will become misdirected.
When employees fully comprehend their objectives and what they need to do to be successful, their activities will be aimed at meeting their individual goals. In turn, if their individual goals are linked to the value plan, every daily activity will bring the company closer to meeting its desired results.
Motivation
Establish a compensation and/or a rewards program that is based on achieving measurable results. As mentioned above, employee behavior can be modified by rewards, so if personal financial success is dictated by meeting established objectives, your employees will work to achieve the goals that you have set for them.
Empowerment
If you ask employees to take a stake in the success of your business, you will need to provide them with the tools and decision-making powers to do this. In other words, to properly achieve set goals, employees will need the training and information necessary to accomplish their daily tasks. In addition, they will need the power to make improvements and changes within their routine or process so that they can continue to operate effectively and efficiently. Given that you have properly aligned their goals, measurements, and compensation to the company’s value plan, each employee should be making decisions with the company’s best interest in mind.
Knowledge and decision-making power are essential. Without these two elements, you are putting both the success of the employee and the organization at risk.
Education and Communication
Employees need to fully understand the company’s goals as well as the “what’s in it for me” factor. Education and communication from your management team are critical for the success of your value plan and achieving an organization of owners.
As stated above, employees at all levels will work to achieve what is best for them. Without solid communication regarding company direction and individual goals, expectations, accountability, and measurement systems, employees may not understand their roles.
Strong leadership is essential
Employees need to see that your management team buys into the company value plan. Without strong support from the top, employees may ignore the importance of the new system and continue operating as they had before. Your management team will need to be strong, supportive, and dedicated to the value plan.
Also, recognize that implementing a value plan may make employees uneasy. Whenever you visibly enforce accountability for results and bring people into the spotlight, you may face a challenge. Your management team will continually need to communicate and support employees so that they know how they can be successful.
In conclusion, value planning breathes new life into the traditional strategic plan by structuring stakeholder intentions around value and linking them to the goals and rewards of every employee. Your management team will be critical as you implement a value plan. The communication, education, direction, and support they provide to employees will be the key to your value plan’s success.