What's the most useful assistance CIOs can give their employees in 2012 -- besides a raise, that is? How about the gift of sight?
On the conference circuit and out of the mouths of IT executives, the talk these days is not so much about IT and business alignment
Employees who possess a clear line of sight to the strategic goals of the larger organization are potentially a company's biggest competitive advantage, according to some management experts.
For Patricia Coffey, senior vice president of technology at Allstate Insurance Co., line of sight translates into educating the company's 6,000 IT staff members about their connection to Allstate's business goals.
That doesn't mean she's gone over to HR or hung up a consulting shingle -- Coffey has a full plate of IT projects. Last year, she helped drive the completion of a new data center -- virtualized and LEED Gold-certified to boot. Big Data is on her radar this year, as are legacy systems. IT just replaced the company's huge customer information file using a flexible service-oriented architecture that allows IT to add or remove apps as the business changes "like beads on a string," or so she hopes. In other words, IT and business alignment is a longstanding imperative at the Northbrook, Ill.-based insurance giant.
The flip side is taking the guy who is screwing the server in the rack and helping him understand how that impacts Allstate's customers.
"The role of the CIO has always been to help organizations learn about technology and become tech savvy," Coffey said. "The flip side is taking the guy who is screwing the server in the rack and helping him understand how that impacts Allstate's customers."
The education begins with understanding who that customer is, she said. While many IT shops refer to the business as their customer, "at Allstate, we serve one customer, and it is the one who pays the bills."
Coffey sees her job "as helping literally every individual understand how their job impacts the customer and developing metrics that help them see that." For the server guy, that requires making the connection between that server going down and the 15 or 150 customers who didn't get their policies that day as a result.
Line of sight is also a familiar concept to Heidi Nyland, director of global services operational communications at Whitehouse Station, N.J.-based Merck & Co. Nyland said that employees at Merck, including IT, are required to articulate the connection between their job and the pharmaceutical manufacturer's ultimate business objectives, which the company refers to as having "line of sight to business value," she said.
To ensure IT and business alignment, that means connecting the dots from the individual job "all the way down to the patient who is receiving the prescription," Nyland said. "That is difficult in IT, but it can be done."
Employee line of sight alignment rests on "discretionary effort"
Companies as varied as Harley Davidson Inc., IBM, and Jet Blue Airways Corp. have seen the benefits of getting employees focused around strategic goals. But, in general, businesses and academics alike fail to understand how LOS is created, enhanced or stifled, and do not grasp its impact on profitability, experts say.
Companies certainly grasp the importance of finding the right fit between top executives and strategic goals. Most companies also pay considerable attention to hiring the right employees with the right skills for the job at hand. But the emphasis misses the mark on two counts. First, organizations can't afford to disregard nonexecutive employees as a source of strategic success. Second, "finding the right employee with the right capabilities to fill a position does not directly affect the realization of the organizational strategy," Wendy Boswell and co-authors John Bingham and Alexander Colvin write in their article, "Aligning employees through 'line of sight.'"
Many of the behaviors that contribute to a firm's strategic objectives are not assigned tasks but discretionary efforts, the authors argue, and it is these very actions that are "not easily specified or monitored that often hold the greatest potential for sustainable competitive advantage. Having LOS helps employees "engage more effectively in those actions that are not readily controlled by management or defined in a formal job description."
Allstate's Coffey gets that. "People work to certain level of energy. You are always going to do the minimum required because you don't want to get fired. If you are self-motivated, you will do more than that, and if you're working on something you're really interested in, you get all kinds of energy," she said.
"I want that discretionary energy. And the only way you can get that and get it in the right direction, is to have people get connected to what the business really does. I want people to sit at their desks and be able to make decisions every day, without hesitation, because they have a clear understanding where we are going," she said.
The literature backs that up. At Southwest Airlines, for example, Boswell et al found that, to meet the goal of improving aircraft turnaround times, pilots sometimes carried passengers' bags and cleaned the planes. Pilots also came up with alternative take-off and landing protocols to meet the objective of cutting fuel costs.
Personalized approach to strategic alignment
Not having LOS can have a big downside. In the absence of understanding the organization's strategic objectives, employees may create their own objectives that undermine a company's goals or glom on to less important objectives. The authors of "Aligning employees through 'line of sight'" point to their research on a high-tech manufacturing company where customer service was a high priority and for whom certain customers were imperative to success. The latter part of that mission was clear to management, but it was never conveyed to employees. Employees were told to do whatever was necessary to satisfy the customer, and this resulted in actions that were consistent with making customer satisfaction a high priority but failed to deliver the extraordinary service required to keep those key customers happy.
Informing employees of strategic goals and the actions that matter most is more difficult than it appears. Company-wide information sessions, in particular, "may fall short of truly aligning employees," the authors said. Parroting back objectives is also not the same as understanding them; a "personalized approach" by a direct supervisor is more effective. Ironically, they also found that the biggest bottleneck to communicating strategic goals is mid-level managers "unwilling to share critical information regarding strategic direction" for fear of losing control.
To help ensure that IT staff is in line with Merck's business objectives, Nyland said the IT department has hired "client relationship managers." These are people, often embedded in the business, whose job is to translate where the business wants to go so that IT can act accordingly.
Risks and rewards of line of sight
Developing the metrics and incentives that reward LOS can be difficult. Direct compensation for discretionary behavior that aligns with strategic business objectives could reinforce that single action and limit an employee's LOS to the business. On the risk side, Boswell et al point to the danger of having everyone marching to the same beat, citing companies like Enron Corp., where groupthink led to unethical behavior.
More on business and IT alignment
Finally, the authors' research showed that while developing LOS takes time to develop in employees, entrenched employees can also be prone to overlook new information that might be related to the company's strategic objectives.
Coffey agrees that metrics for LOS are hard to come by, but she's pretty sure she'll know LOS when she sees it. "When my team says, 'I figured out how to self-fund this innovation to help the business because I got more efficient in this part of my job', then I know they have line of sight. They're engaged."
Let us know what you think about the story; email Linda Tucci, Senior News Writer.