Editor’s Note:  If you are interested in becoming an expert on Strategy Development, take a look at Flevy’s Strategy Development Frameworks offering here.  This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can stay ahead of the curve.  Full details here.

* * * *

A question faced by many business leaders in today’s dynamic, uncertain, and changing business environment is:  Is our organization “Fit for Growth?”  In most cases, unfortunately, the answer to this question is “no.”  Reasons include the manner in which costs are managed and resources deployed.

The fundamental question needed to be asked is: how to assess whether the organization is Fit for Growth?  Such an assessment is effortlessly possible through answering the following 3 questions:

1. Does the company have well-defined Strategic Priorities that concentrate on strategic growth and which direct its investments?
2. Do the company costs align with the Strategic Priorities? i.e., efficient and effective employment of resources toward the Priorities.
3. Does the Organizational Structure enable achievement of those Strategic Priorities?

Imagining the converse side of these queries makes the picture clearer.  That is, what are the consequences of: Not having clear Priorities, Inappropriate deployment of Costs, Not having a well-designed organization.

Positioning the company to be Fit for Growth requires basing it on the following 3 pillars of Growth:

1. Set clear Strategic Priorities.
2. Transform Cost Structure.
3. Reorganize for Growth.

Setting the company on the 3 pillars enables it to direct investments towards the Capabilities that are most crucial and reduce—or eradicate—other costs.

Let us delve a little deeper into the details of these 3 pillars.

Strategic Priorities

Numerous warning indicators are apparent if the Strategic Growth Priorities of a company are not crystalized.

Warning signs such as being unable to keep track of the numerous initiatives that the company has going at the same time.

Senior executives of the company attending lots of unrelated meetings in a day.  Executives being divergent on the most important capabilities of the company and how they relate to the strategic objectives.

Areas that can distinguish the company from its competitors not being properly invested in.

Research has established an important correlation between Capabilities and Strategy.  Capabilities require lots of attention and investment because of their cross-functional effect and limited number.

It is therefore, needed to have clear Priority regarding which Capabilities to invest in.

Cost Structure

Inappropriate Costs Structure is also an indicator of incorrect priorities, particularly the amount spent on non-essentials. 

Organizations aiming to be Fit for Growth make themselves lean and expend money purposefully.  They can maintain their commanding position in such Cost Transformations by pursuing the 12 principles.

Costs are managed for efficiency as well as effectiveness using tools and practices that are usually grouped into 3 categories.

Growth

Organizations, over time, become slow in reacting to opportunities and do not move quickly enough, or are not in-line enough to work in unison.  These are common manifestations, even in organizations that are run and managed well.

Interested in learning more about Fit for Growth?  You can download an editable PowerPoint on Fit for Growth here on the Flevy documents marketplace.

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“Strategy without Tactics is the slowest route to victory. Tactics without Strategy is the noise before defeat.” – Sun Tzu 

For effective Strategy Development and Strategic Planning, we must master both Strategy and Tactics.  Our frameworks cover all phases of Strategy, from Strategy Design and Formulation to Strategy Deployment and Execution; as well as all levels of Strategy, from Corporate Strategy to Business Strategy to “Tactical” Strategy.  Many of these methodologies are authored by global strategy consulting firms and have been successfully implemented at their Fortune 100 client organizations. 

These frameworks include Porter’s Five Forces, BCG Growth-Share Matrix, Greiner’s Growth Model, Capabilities-driven Strategy (CDS), Business Model Innovation (BMI), Value Chain Analysis (VCA), Endgame Niche Strategies, Value Patterns, Integrated Strategy Model for Value Creation, Scenario Planning, to name a few.

Learn about our Strategy Development Best Practice Frameworks here.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Editor’s Note:  If you are interested in becoming an expert on Post-merger Integration (PMI), take a look at Flevy’s Post-merger Integration (PMI) Frameworks offering here.  This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts.  By learning and applying these concepts, you can stay ahead of the curve.  Full details here.

* * * *

Mergers and Acquisitions (M&A) generally do not produce the outstanding results that they are envisioned and purported to provide.  Some companies in certain industries, however, demonstrate consistent success when it comes to M&A.

A constant question across all industries, as far as M&As are concerned, pertains to the factors that differentiate organizations with successful histories.  The magic ingredient in the success of these companies is their Corporate Strategy that utilizes Capabilities as the source for inorganic Growth.  Capabilities-driven M&A have managed to raise shareholder value for the acquirer despite the tough years since the economic crisis of the 2000s.  The majority of other inorganic Growth attempts produced a loss of value.

Companies employing the Capabilities-driven Strategy were recompensed with deals that had a Compound Annual Growth Rate (CAGR) average of 12 percentage points greater in shareholder return compared to M&A deals by other acquirers in that very industry and region.

Particular industries, for instance Information Technology and Retail, demonstrated a bigger effect. However, all industries displayed a steady, noticeable, Capabilities Premium in M&A.  Capabilities-driven Strategy is exceptionally beneficial in M&A transactions where, frequently, time window is narrow and the risks elevated.

Capabilities Systems are defined as 3 to 6 reciprocally strengthening, distinguished Capabilities that are structured to hold up and drive Organizational Strategy, integrating people, processes, and technologies to create something of value for customers.

Setting apart likely M&A success factors is accomplished more easily by separating successful deals by their declared Intent consequently, capturing the dominant view regarding purpose of each deal.

Intent can be classified into 5 categories: Capability Access Deals, Product and Category Adjacency Deals, Geographic Adjacency Deals, Consolidation Deals, and Diversification Deals.

There is a lot of talk about Fit during M&A discussions.  Fit does not mean introducing an ostensibly linked product or service, plugging a gap in a category, or moving in a new geography—such sorts of acquisitions are frequently unsuccessful.

Fit relates to unity, the benefit that ensues when Capabilities of a company fit mutually into a system, lining up to its market position, and employed to its complete array of products and services.

Deals when cross-categorized by their Capabilities System Fit, fall into following 3 categories:

1. Enhancement Deals
2. Leverage Deals
3. Limited-Fit Deals

Let us delve a little deeper into the 3 categories.

Enhancement Deals

Enhancement deals enable the acquiring company to include new Capabilities so as to close gaps in its present Capabilities System or counter an alteration in its market.

Nearly 2/3^rd of the deals studied—in a 2011 study spanning 8 sectors—used Capabilities to good effect, either by way of Enhancement or Leverage.

Leverage Deals

Leverage deals are where the acquirer makes use of prevailing Capabilities System in their company to handle incoming products and services, customarily augmenting the acquired company’s performance.

Leverage deal are frequently low-risk deals that may not require the acquirer to alter anything concerning its inhouse Capabilities System to make it work.

Limited Fit Deals

Limited-fit deals are deals where the purchasing company generally ignores Capabilities.  Normally such deals provide a purchaser with product or service that need new Capabilities.

Interested in learning more about Capabilities-driven M&A?  You can download an editable PowerPoint on Capabilities-driven M&A here on the Flevy documents marketplace. 

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M&A is an extremely common strategy for growth.  M&A transactions always look great on paper.  This is why the buyer typically pays a 10-35% premium over the of the target company’s market value. 

However, when it comes time for the Post-merger Integration (PMI), are we really able to capture the expected value?  Studies show only 20% of organizations capture projected revenue synergies and only 40% capture cost synergies.  Not to mention, the PMI process is typically very painful, drawn out, and politically charged, often resulting in the loss of key personnel.

Learn about our Post-merger Integration (PMI) Best Practice Frameworks here.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Editor’s Note: If you are interested in becoming an expert on Strategy Development, take a look at Flevy’s Strategy Development Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can stay ahead of the curve.  Full details here.

What makes companies great in their industries is sustained above-average Growth.

Conventional approach to Organic Growth has business leaders extending their existing product lines and brands, as well as entering new geographic regions.  This conventional Growth Strategy at some point in time starts failing to provide the results required to hold market leadership positions.

Focus-driven Growth is an approach that provides results regardless of the economic environment.  The approach demands that the leadership team keep a methodical approach that covers the entirety of the business cycle i.e., from Strategic Planning and Strategic Vision to Strategy Execution and Performance Management.

Outwardly mature businesses can be reinvigorated by making a small number of—but larger—bets and by concentrating unremittingly on implementing a straightforward but forceful vision.

This approach has been successfully tested and has proven its mettle in at least 3 well-known companies, on 3 continents, over a span of 10 years.

Focus-driven Growth demands that the organization progress sequentially through a set of 7 steps.

1. Discovery—Through a Discovery process, determine what works and what does not for the organization.
2. Strategy—Through the Strategy step, group and prioritize what works for the organization.
3. Vision—By outlining a Vision statement, line up organizational efforts behind an unmistakably comprehended goal.
4. People—Through this step, place the right people in all functions and give them their required resources.
5. Execution—Through Execution, elucidate who does what and transfer decision making closer to customers and consumers.
6. Organization—Through the Organization process, manage the Growth initiative by establishing communities and networks throughout the organization.
7. Metrics—Through this step, keep a track of Growth with objective yet uncomplicated scorecards.

When taken collectively in the right order, these steps embody a formidable prescription for generating profitable Growth.

Let us delve a little deeper into some of the steps.

Discovery

Every organization has segments of Growth areas.  This step entails discovering those areas for further processing.  Leadership of the organization should gather in a series of workshops and identify which areas of the business are performing far better than the others.  Identified segments become the focus areas of Growth because it is easier to refine and enlarge the successful areas rather than remedy what is not working.

Strategy

Focus areas discovered in the 1^st step need to be grouped and prioritized in order to delineate the focused bets that the company ought to make.  Focus areas may be categories, brands, geographies, platforms, that are doing well.

A single page preliminary strategy roadmap giving priority for each area results from the above process.

Vision

Outcomes of Step 2 have to be summarized into a forceful yet uncomplicated Vision which serves to align efforts behind a clearly grasped goal.

Interested in learning more about Focus-driven Growth?  You can download an editable PowerPoint on Focus-driven Growth here on the Flevy documents marketplace. 

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“Strategy without Tactics is the slowest route to victory. Tactics without Strategy is the noise before defeat.” – Sun Tzu 

For effective Strategy Development and Strategic Planning, we must master both Strategy and Tactics. Our frameworks cover all phases of Strategy, from Strategy Design and Formulation to Strategy Deployment and Execution; as well as all levels of Strategy, from Corporate Strategy to Business Strategy to “Tactical” Strategy. Many of these methodologies are authored by global strategy consulting firms and have been successfully implemented at their Fortune 100 client organizations. 

These frameworks include Porter’s Five Forces, BCG Growth-Share Matrix, Greiner’s Growth Model, Capabilities-driven Strategy (CDS), Business Model Innovation (BMI), Value Chain Analysis (VCA), Endgame Niche Strategies, Value Patterns, Integrated Strategy Model for Value Creation, Scenario Planning, to name a few.

Learn about our Strategy Development Best Practice Frameworks here.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Employee Engagement has emerged as one of the significant pillars on which the Competitive Advantage, Productivity, and Growth Strategy of an organization rests.  Employee Engagement has many facets.  To assess an organization’s current status of Employee Engagement, executives need to devise a measurement system.  Measuring Employee Engagement is vital in shaping Employee Engagement Strategies that help propel the organization towards growth.

A framework that is quite effective in measuring the existing levels of Employee Engagement and devising strategies based on the individuals’ requirements is the “Employee Engagement Scorecard.”

The Employee Engagement Scorecard comprises of:

• Metrics for each component of Employee Engagement.
• A scale for scoring metrics in each component.
• A comprehensive scorecard that pulls everything together.

The Employee Engagement Scorecard is composed of a number of metrics used to measure the individual employee engagement components.  Each metric is based on a 1 to 5 scale, with 1 being lowest and 5 being highest.  The scorecard was developed through an extensive research process involving academic literature reviews and managerial interviews across the world.

The Employee Engagement Scorecard categorizes engagement scores into 4 groups:

Score of 20 to 39 – Low Engagement Level

Indicates that individual components—e.g., Employee Satisfaction, Employee Identification, Employee Commitment—should be addressed.

Score of 40 to 59 – Somewhat more Engaged

Implies that some Employee Engagement factors require immediate attention.

Score of 60 to 79 – High Level Engagement

Shows that generally the company would operate smoothly and achieve good results but further improvement is needed for growth.

Score of 80 to 100 – Adherence

Signifies that the company observes Employee Engagement Best Practices and the Employee Engagement is at a very high level giving the company an advantage in growth.

The Employee Engagement Scorecard encompasses 5 guiding principles (or dimensions):

1. Enhance Employee Satisfaction
2. Promote Employee Identification
3. Enhance Employee Commitment
4. Ensure Employee Loyalty
5. Manage Employee Performance

The 5-dimension Employee Engagement Scorecard has been implemented in 7 countries across the Asian, European and American continents in more than 75 companies.  Let us delve a little deeper into the first 2 dimensions of measurement and key actions needed for Strategy Development.

1. Enhance Employee Satisfaction

Valuable time and resources of the organization may be lost because of dissatisfied employees. Dissatisfied employees tend to be unenthusiastic about work, which negatively affects the quality of work.

Various measures by the management can enhance Employee Satisfaction once the metrics are analyzed, i.e.:

• Rearranging roles and responsibilities to correspond effectively with employee skill sets and interests.
• Mentoring employees more actively.
• Developing effective rewards and benefits systems in line with performance.
• Offering flexible work hours.

2. Promote Employee Identification

Identifying with the organization is as vital for growth as is employee satisfaction.  A satisfied employee who does not identify with the organization will not be able to embody the organization’s culture and values, and thus will stand out from the ones who do.  This creates dissonance in team building activities which are a necessary part of generating new ideas for employee development.  In such a scenario, the leadership can encourage employee identification by:

• Offering mentorship programs
• Creating Idea development platforms
• Reinforcing the organizational culture and values, to connect the employees with the organizational culture and nurture growth.

Interested in learning more about the Employee Engagement Measurement & Improvement and the results of its implementation in 75 companies? You can download an editable PowerPoint on Employee Engagement Measurement & Improvement here on the Flevy documents marketplace.

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The purpose of Human Resources (HR) is to ensure our organization achieves success through our people.  Without the right people in place—at all levels of the organization—we will never be able to execute our Strategy effectively.

This begs the question: Does your organization view HR as a support function or a strategic one? Research shows leading organizations leverage HR as a strategic function, one that both supports and drives the organization’s Strategy.  In fact, having strong HRM capabilities is a source of Competitive Advantage.

This has never been more true than right now in the Digital Age, as organizations must compete for specialized talent to drive forward their Digital Transformation Strategies.  Beyond just hiring and selection, HR also plays the critical role in retaining talent—by keeping people engaged, motivated, and happy.

Learn about our Human Resource Management (HRM) Best Practice Frameworks here.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Today’s information-based, knowledge intensive, and service-driven economy has forced organizations to make substantial changes to the way they compete.  Changing perspective and responsibility of top management amidst rapid Business and Digital Transformation and the shifting role of HR from being an auxiliary function to that of a driver are some of the dynamics of the evolved competition.

This evolution of Competition has been reached by passing through 3 phases:

1. Competition for Products & Markets
2. Competition for Resources & Competencies
3. Competition for Talent & Dreams

Throughout the evolutionary phases of competition, the focus of Growth Strategy, the tools used, and the key strategic resources have been shifting.  The strategic objective of front-running organizations is on continuous evolution and Transformation, and motivated Human Capital is their key resource.  This realization is now at the forefront of Strategy Development as competition for scarce Talented Human Resources becomes more intense.  However, modern-day managers are still using old tools to deal with an emerging reality.

Dexterity in leadership and management is a prerequisite for leaders now.  Research suggests that the 3 important changes that the CEOs must make in terms of their strategic perspective are in:

1. Strategic Resources
2. Value Creation and Distribution
3. Role of Senior Leadership

More on this topic in our editable PowerPoint presentation on Strategic Human Resources.

With the fast-changing focus in Strategy, Human Resource Managers are finding themselves leading the strategic charge.  However, a large majority is ill prepared for the role.  With Human Capital becoming key strategic resource and basis of Competitive Advantage, HR must adopt 3 core processes to evolve into the strategic HR function that has become their new realm:

1. Building
2. Linking
3. Bonding

Let us delve into the first 2 core processes to strategic HR function in a little more detail.

1. Building

The first core process of Building is all about creating human resource systems, processes, and culture to counter the deep-rooted bias towards financial assets and recognize the value of Human Capital.  For instance, Microsoft annually scans the entire pool of 25,000 U.S. computer science graduates for the best 500 to be given offers, of which 400 – top 2% of that year’s graduates – accept.  This only fills 20% of the positions.  For the rest, Microsoft maintains industry linkages with 300 recruiting experts who scour the industry for the best and the brightest individuals, often wooing them for years.

2. Linking

Developing Knowledge Sharing Networks is core to leveraging Human Capital.  Converting individual expertise into embedded intellectual capital is what linking is all about.  For example, British Petroleum in the 1990s introduced the Knowledge Management and Organizational Learning program.  The main feature of the program was the “Peer Assist” where frontline workers in one location would help solve a problem for workers in another location without the usual hierarchy intervening.  Peer Assist was augmented by the “Peer Groups” of business units—i.e. business units engaged in the same assisting activities as frontline individuals.  This way managers of decentralized operations compare experiences and share ideas.  Once this Information Sharing Network took root it was supported by setting up information-sharing infrastructure – e.g., video conferencing, chat rooms, video clip encoders etc.

Interested in learning more about the details of the 3 Core Processes required to evolve your HR into a strategic HR function and Key Actions needed to implement these?  You can download an editable PowerPoint presentation on Strategic Human Resources here on the Flevy documents marketplace.

Want to Achieve Excellence in Human Resource Management (HRM)?

Gain the knowledge and develop the expertise to become an expert in Human Resource Management (HRM). Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.

The purpose of Human Resources (HR) is to ensure our organization achieves success through our people. Without the right people in place—at all levels of the organization—we will never be able to execute our Strategy effectively.

This begs the question: Does your organization view HR as a support function or a strategic one? Research shows leading organizations leverage HR as a strategic function, one that both supports and drives the organization’s Strategy. In fact, having strong HRM capabilities is a source of Competitive Advantage.

This has never been more true than right now in the Digital Age, as organizations must compete for specialized talent to drive forward their Digital Transformation Strategies. Beyond just hiring and selection, HR also plays the critical role in retaining talent—by keeping people engaged, motivated, and happy.

Learn about our Human Resource Management (HRM) Best Practice Frameworks here.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Organizations typically focus on Customer-centric Design in their Strategic Planning and overlook the critical driver of Performance, Growth, and Operational Excellence—their employees.  With cut-throat competition now the norm the realization has become clearer that employees are:

• The face of the business and create lasting—or perishing—brand impression.
• Sources of innovation and organizational knowledge.
• Representation of the company’s service philosophy.
• Expected to live by its Organizational Culture and values.

Employee Engagement has emerged as one of the significant pillars on which the Competitive Advantage, Productivity, and Growth of an organization rests.  What, exactly, does it mean when an employee is engaged?  Employee Engagement, over the years, has been thought of in terms of:

• Personal engagement with the organization.
• Focus on performance of assigned work.
• Worker burnout.
• Basic needs (meaningful work, safe workplace, abundant resources).
• Attention on Cognitive, Emotional and Behavioral components related to an individual’s performance.

Although Employee Engagement is widely seen as an important concept, there has been little consensus on its definition or its components either in business or in the academic literature.

Kumar and Pansari’s 2015 study define Employee Engagement as:

“a multidimensional construct that comprises all of the different facets of the attitudes and behaviors of employees towards the organization”.

The multidimensional construct of Employee Engagement has been synthesized into the following 5 components (or dimensions).

1. Employee Satisfaction
2. Employee Identification
3. Employee Commitment
4. Employee Loyalty
5. Employee Performance

The 5 dimensions of Employee Engagement have been found to have a direct correlation with high profitability, as substantiated by a number of research studies:

For instance, a study of 30 companies in the airline, telecom and hotel industries shows a close relationship between Employee Engagement and growth in profits.  After controlling other relevant factors—i.e., GDP level, marketing costs, nature of business, and type of goods, the study found:

• Highest profitability growth—10% to 15%—in companies with highly engaged employees.
• Lowest level of profitability growth—0% to 1%—in companies with disengaged employees.

Research reveals that Employee Engagement affects 9 performance outcomes; including Customer Ratings, Profitability, Productivity, Safety Incidents, Shrinkage (theft), Absenteeism, Patient Safety Incidents, Quality (Defects), and Turnover.

The differences in performance between engaged and actively disengaged work units revealed:

• Top half Employee Engagement scores nearly doubled the odds of success compared with those in the bottom half.
• Companies with engaged workforces have higher earnings per share (EPS).

These 5 dimensions become the base for measuring Employee Engagement in a meaningful manner that permits managers to identify areas of improvement.  To assess an organization’s current status of Employee Engagement, a measurement system is needed that includes:

• Metrics for each component of Employee Engagement.
• A scale for scoring metrics in each component.
• A comprehensive scorecard that pulls everything together.

Let us delve a little deeper into the first 2 dimensions of Employee Engagement.

Employee Satisfaction

Definition

Employee Satisfaction is the positive reaction employees have to their overall job circumstances, including their supervisors, pay and coworkers.

Details

When employees are satisfied, they tend to be:

• Committed to their work.
• Less absent and more productive in terms of quality of goods and services.
• Connected with the organization’s values and goals.
• Perceptive about being a part of the organization.

Metrics

The 5 metrics that gauge Employee Engagement in terms of Employee Satisfaction include:

1. Receiving recognition for a job.
2. Feeling close to people at work.
3. Feeling good about working at the organization.
4. Feeling secure about the job.
5. Believing that the management is concerned about employees.

We take a look at another dimension central in significance.

Employee Commitment

Definition

Signifies what motivates the employees to do more than what’s in their job descriptions.

Details

Employee Commitment is much higher for the employees who identify with the organization.  This element:

• Develops over time and is an outcome of shared experiences.
• Is often an antecedent of loyalty.
• Induces employees to guard the organization’s secrets.
• Pushes employees to work for organization’s best interests.

Research has found that employees with the highest levels of commitment:

• Perform 20% better.
• Are 87% less likely to leave the organization.

Metrics

The 3 metrics that gauge the Employee Commitment dimension of Employee Engagement include:

1. Commitment to deliver the brand promise along with knowledge of the brand.
2. Very committed to delivering the brand promise.
3. Feels like the organization has a great deal of personal meaning.

Interested in learning more about these foundational pillars to Employee Engagement? You can download an editable PowerPoint on 5 Dimensions of Employee Engagement here on the Flevy documents marketplace.

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Companies face increasing pressure from governments, competitors, and employees to play a leading role in addressing a wide array of environmental, social, and governance issues in a company’s supply chain. It could range from climate change to obesity to human rights.

For the past 30 years, companies have responded by developing corporate social responsibility or sustainability initiatives to fulfill their contract with society by addressing these issues.

However, gathering the data needed to justify sustained, strategic investment in programs can be difficult.  Yet, without this information, executives and investors often see programs as separate from a company’s core business or unrelated to its shareholder value. While there are companies that have made progress tracking operational metrics or social indicators, they have difficulty linking such metrics and indicators to a real financial impact.

Needless to say, there are companies that are creating great value through environmental, social, and governance activities.  Increased sales, decreased costs, and reduced risks are being achieved.  Environmental, social, and governance programs can create value in many other ways. We just need to know where and how.

What is Corporate Social Responsibility

Corporate Social Responsibility (CSR) or sustainability initiatives are undertaken to fulfill contracts with society to respond to environmental issues. Environmental, social, and governance refer to a broader set of CSR Programs.

Sustaining strategic investments in CSR Programs can be a challenge but there are already leading companies that are generating real value through environmental, social, and governance activities.

The Dynamic Ways of Creating Value

CSR Programs can create shareholder value. It is just important that companies must broaden their legitimacy in societies where they operate.

1. Growth. As a source of value, Growth can be expressed in terms of New Markets, New Products, New Customers, Market Share, and Innovation. When this is created, it can deliver higher brand loyalty, reputation, and goodwill with stakeholders.
2. Return on Invested Capital (ROIC). ROIC is generated when there is operational efficiency and workforce efficiency. When this is achieved, it can result in better workforce skills and increased productivity through participation in ESG activities.
3. Risk Management. Risk Management is a source of value. It can be achieved when risk is lowered when compliance with regulatory requirements are achieved.  Public support is achieved and the ability of your company to secure consistent, long-term, and sustainable access to safe, high-quality raw materials and products are established.
4. Management Excellence. Management Excellence can have an impact on leadership development, adaptability, and long-term strategic view. These are 3 key areas that investors consider most important when evaluating potential partnerships.  With Management Excellence, a value can be generated from these areas.

A Look at IBM: A Clear Example of CSR as a Source of Value

IBM has been recognized globally as one of the leading companies when it comes to Information Technology.  In creating new markets, IBM used Small and Medium Enterprise (SME) Toolkit to develop a track record with local stakeholders, including local governments and NGOs.  Free web-based resources on business management were provided to SMEs in developing economies. A total of 30 SME Toolkit sites were developed in 16 languages.

As a result of this initiative, IBM’s reputation and relationships in new markets improved.   Likewise, the relationship with companies that are potential customers was developed.  The strategic approach of IBM in creating markets through its CSR has provided IBM much value in creating and developing relationships which are essential in new markets.

Interested in gaining more understanding of sources of value to CSR programs? You can learn more and download an editable PowerPoint about Corporate Social Responsibility (CSR): Sources of Value here on the Flevy documents marketplace.

Are you a management consultant?

You can download this and hundreds of other consulting frameworks and consulting training guides from the FlevyPro library.