Organisations use different management systems to provide the required foundation to direct and control their activities to achieve their objectives.
When the organisational structure is complex, the organisation needs to develop a robust, practical, yet simplified, integrated management system. This strategy-focused integrated management system will fully integrate all relevant management practices and common touchpoints of the business into one coherent and synchronised management system. In doing so, it enables and drives the achievement of its corporate strategy and improve or drives performance.
The integrated management system for effective strategy execution and improved organisational performance will bring together the following management practices:
- Governance
- Planning and stakeholder management
- Objective and key performance indicator setting
- Portfolio, programme, and project management
- Resource management and budgeting
- Enterprise risk management
- Human capital management
- Knowledge management
- Assurance, audits, and independent evaluations
- Performance monitoring, review, and reporting
- Performance management
- Compensation, benefits, and rewards
- Change management
- Compliance management
- Quality management and continuous improvement.
The workings of the key elements of a strategy-focused integrated management system are shown below:
The power of simplicity
An integrated approach that demonstrates the power of simplicity can effectively support the organisation’s decision-making processes, reduce uncertainties and risks, and seize opportunities that are associated with the achievement of strategic objectives.
It takes and makes all parts of an organisation more cohesive, integrated and aligned with one thing in mind – that is to be successful by achieving its objectives, mission, and vision.
All organisational objectives and performance targets must be clearly understood, transparent and committed by everyone in the organisation.
It is all about communication
A strategy-focused integrated management system enables more effective and efficient communication of information in the following directions:
- Vertically, either top-down or bottom-up, throughout organisational levels or layers. Each strategic objective should be translated, ‘broken down’, and cascaded vertically throughout all levels of the organisation for everyone. This ensures that individual performance and all organisational activities and processes are visibly aligned and fully supports the achievement of strategic objectives and meet performance targets.
- Horizontally with other business units, departments, sections, projects, and across value-chains and organisational boundaries. Strategic objectives are also allocated horizontally across organisational boundaries, functions, and value chain in a systematic distribution and alignment process. This enables cross-collaboration for value creation.
- Holistically, from an enterprise-wide or portfolio perspective (across the organisation). Projects, programmes, and portfolios are vehicles to effectively execute the corporate strategy and improve organisational performance. Project-based organisations are organising their delivery of projects in the most effective manner, resulting in the emergence of programme and portfolio management.
Benefits of an integrated management system
The benefits of implementing a strategy-focused integrated management system include:
- Ability to create unified objectives and to focus on achieving them.
- Reduced cost through reduced duplication and maximisation of effort and resources.
- A greater understanding of common control and regulatory requirements.
- Defined boundaries and accountabilities around unique roles, responsibilities, and accountabilities.
- Increased effectiveness of timely decision-making.
- Enhanced levels of organisational harmonisation, alignment, and synchronisation, leading to increased productivity, quality outcomes, and improved performance
- Enhanced stakeholder satisfaction through more effective communication, interaction, and confidence in the strategy execution process and organisational performance.
The key role for risk management
Once the strategic objectives and performance measures are cascaded and aligned vertically throughout the organisational layers and horizontally across organisational boundaries and value chain, effective risk management practices can assist everyone in the organisation make informed decisions about:
- Objectives they want to achieve and succeed in.
- Level, nature, and amount of opportunity-seeking and risk-taking they are embarking on in pursuit of those objectives.
- Type and extent of controls, treatments, and independent assurance that they require to increase the likelihood and extent of their success.
Risk management is like brakes in a car. The brakes need to work correctly to allow you to reach your destination safely by following the speed limits and road rules.
The risk management process identifies:
- Opportunities, uncertainties, and risks that affect the achievement of objectives and performance measures.
- The state of the control environment and compliance against obligations that could enable and support the achievement of objectives.
- Cost-effective and appropriate controls and treatments to increase the likelihood and extent of organisational success.
Cost-effective controls and treatment plans that are linked to risks, opportunities and the achievement of objectives provide reasonable assurances to the Board and management that objectives can be achieved within an acceptable degree of residual risk and risk tolerance.
The progress of implementing treatment plans and agreed management actions to internal audit recommendations should be religiously tracked, reported, and followed-up.
Everyone in the organisation must be responsible for identifying and managing their opportunities, uncertainties, risks, and controls since every employee has objectives to meet.
Strategy execution must be adequately resourced to make a difference
Strategies are executed through appropriate planning, resource allocation, and implementation.
All business plans linked to the achievement of strategic objectives must be fully resourced. They are funded in the budgeting process through the alignment of operational (OPEX) and capital (CAPEX) expenditure budgets and chart of accounts.
Non-value-adding activities should be terminated.
Create a strategic initiatives (STRATEX) budget that is associated with the achievement of cross-boundary strategic objectives. This is isolated from the OPEX and CAPEX budgets to ensure that specific strategies can be adequately funded and executed.
Allocate money to where the strategy execution matters by dynamically adjusting resource allocations based on each unit’s relative competitive market opportunities, and strategic value creation and contribution to the overall strategy.
Integrated reporting that drives continuous improvements
Organisations need regular information or feedback about their performance (or non-performance). It requires measurement, monitoring and review systems and processes that provide timely information for decision-making.
Create a knowledge bank of vital performance information. Data should be available on demand especially with the help of technology.
An integrated report should provide insights into the implementation status of the organisation’s strategy; strategy-linked budgets, HR, IT and compliance; and objective-focused risks, opportunities and controls.
It includes how they collectively integrate as an integrated management system to create value in the short, medium, and long term.
Positively exploit the rules of the game for your competitive advantage
Compliance, quality, and ethical management ensure that the appropriate laws, regulations, standards, better practices, policies, and procedures (collectively known as the ‘rules-of-the game’) are adequately followed by the organisation in meeting its objectives.
Beyond mere compliance, positively exploit the rules-of-the-game to your competitive advantage!
There are opportunities to excel through a strategy-focused approach to compliance.
Using sports as an analogy, teams must push the boundaries and take risks to win their games within the given set of rules. Likewise, organisations can ‘win’ the corporate game by creating a competitive edge over others in pushing the boundaries of internal and external compliance positively and strategically.
Treating compliance, quality and ethics as a strategic differentiator will not only simplify and streamline your compliance processes, but it can put the organisation ahead of the competition in terms of its overall efficiencies and reputation, and even time to market with new products and services.
Always bring your people along the performance journey
Strategy-focused performance management, training and development plan for each employee is established and maintained through the cascading and alignment process.
This ensures that all individuals’ actions are closely aligned to the achievement of strategic objectives and organisational strategy through:
- A clear line-of-sight of personal measurable objectives and performance indicators.
- Appropriate and adequate resourcing, training and development that will enable everyone to do their work effectively.
- Cost-effective strategy-focused plans, activities, controls, treatments, and compliance.
The implementation of all these management practices can be further enhanced with the appropriate strategy-linked:
- Performance evaluation, recognition, and reward systems.
- Change management initiatives.
- Compliance management system.
- Core competencies and organisational capabilities.
In summary, everything we do must bring us closer to success
All organisational activities must be closely aligned to implement the organisational strategy most effectively and efficiently.
Over time, it is easy to add-on layers and layers of non-value adding activities to the employees’ workload and organisational processes.
Just because this is how others have done it in the past, does not mean that it will be appropriate for you in the future.
Always ask, “Why am I doing this? Is this activity going to bring me closer to my objectives?”
In an exercise of reducing the number of reports produced, I found that up to 60% of employees’ time was spent on gathering and reporting on information that no one requires or read!
Here’s a classic response I got from the finance manager at that time, “I just continued reporting the information that my predecessors started without ever asking why.”
Only 5% of the report content was used for actual decision-making!
The rest was wasted time for those involved in preparing that report.
This is an opportune time to question whether your management practices and processes are adding real value to the overall achievement of your organisational strategy.
Ask yourself these questions:
- Is there an alignment of personal effort toward the achievement of strategic objectives?
- Are all employees productive at work, putting effort and talent on the activities that matter most for organisational survival?
- Are the organisational systems and processes helping employees to be productive and strategically succeed?
Various studies have found that the average employee is only productive for three hours a day, or an average of 12.5 hours per week!
Even so, being productive and busy at work does not equate to value creation or the achievement of objectives.
This is where a strategy-focused integrated management system can be an answer to many problems currently experienced by many organisations.
Here’s a final thought.
Nintex’s The Definitive Guide to America’s Most Broken Processes found that 67 per cent of respondents say their organisation’s broken processes have prevented them from maximising their potential.
So, are your organisational processes and systems preventing your employees from doing their best for you to achieve your strategic objectives?
For more information, go to the CEOs’ Practical Guide.
Professional bio
Patrick Ow is a personal coach and master trainer at Practicalrisktraining.com.
As a Chartered Accountant with over 25 years of international risk management experience, he helps individuals and organisations succeed by making better-informed decisions under uncertainty and risk, seeking greater opportunities, and taking the right risks. He has developed PrOACT 31000, a practical yet simple framework based on the world-class PrOACT decision-making framework and the international risk management standard, ISO 31000.
Patrick has authored several eBooks including When Strategy Execution Marries Risk Management – A Practical Guide to Manage Strategy-to-Execution Risk (available in Amazon).
In addition to his professional work, Patrick has a personal passion for preparing individuals for the future of work.