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Str Games2Organizational leadership can draw on 3 Strategic Thinking Games to master Business Strategy and apply in varied scenarios and organizational structures.  The Strategic Thinking Games provide Decision Making models for senior executives to choose from and use as per the situation.

The Strategic Thinking Games are based on mathematics and statistics, particularly Probability Theory, and exhaustive research into the Business Strategy realm.  Probability Theory is actually a branch of mathematics that deals with analysis of random phenomena.  The basic element of Probability Theory is an experiment that can be at least hypothetically repeated under identical conditions, but may lead to different outcomes on different trials.

Each of the Strategic Thinking Games warrants employing a different mindset and decision-making approach to confront the challenges presented by a particular problem.  Executives can apply these Strategic Thinking Models to control their future:

  1. Planning as Positioning
  2. Organization Learning
  3. Constructive Transformation

Let’s discuss these Strategic Thinking Models in detail.

Planning as Positioning

The 1st Strategy game allows the players to make 40 blind draws from a pot holding 25 black and 75 red balls.  It costs $10 per draw—which has to be paid beforehand—and it allows the players the opportunity to win $20 on drawing a red ball but naught on drawing a black ball.  The game imitates a scenario where managers make informed bets about the future based on data and insights into the level of uncertainty encountered.

The Planning as Positioning Model enables the executives to learn about their industry and competition, gauge ambiguities and uncertainties, and select markets that have the potential to generate a positive Return on Investment (ROI).

A classic example of a company operating on the Planning & Positioning Model was the International Telephone and Telegraph Corporation (ITT).  For 17 years, the company was led by Harold Geneen (from 1960 to 1977).   Harold Geneen was unrestricted by any company mission.  He expanded in multiple industries, acquired around 350 enterprises from varied industries, including auto parts, cosmetics, hospitality, insurance, and technology.  As a formal accountant, Harold considered facts as indisputable, final, and a foundation for making strategic decisions.  He would travel to far-flung regions to meet his business unit managers, who were free to make their own strategic decisions but were responsible for their unit’s performance and objectives’ achievement.

Organization Learning

The 2nd Strategy game allows the players to blind draw from a pot containing an unknown mix of red and black balls.  This time it costs $5 per draw.  Players have to bet on either color before each draw.  They can draw up to 50 times, or stop whenever they want, and win $20 if they draw the right ball.  This game imitates a scenario for training managers to dynamically respond to upcoming events with unpredictable degree of uncertainty.

Through the pot filled with balls experiment, it was revealed that when people are given complicated choices, they behave in manners conflicting with their beliefs.  In his famous Ellsberg Paradox, Ellsberg hypothesized that people make illogical preferences in order to avoid ambiguity.  The Organizational Learning Model underlines that in a world full of uncertainties instead of spending too much time predicting the future, planning and positioning, organizations should devise and implement an evolving strategy, take one step at a time, search for viable patterns, and then adjust the course based on results.

An example of successful implementation of the 2nd Strategic Thinking Model is Corning Inc. that embraced Organizational Learning to develop a healthy product pipeline.  The company developed Pyrex, TV tubes…..

Interested in learning more about the 3 Strategic Thinking Games?  You can download an editable PowerPoint on Strategic Thinking Games here on the Flevy documents marketplace.

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– 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

org culture 1Employee behaviors are critical for the success of Business Transformation endeavors.  However, transforming the ingrained behaviors and mindsets of the workforce isn’t straightforward, and when tackled cause the enterprise’s emotional state to go down.

Leaders need to identify the components of Culture that are in line with their Corporate Strategy.  They have to ascertain and harness the positive elements of culture that can drive the desired Transformation and suppress those that obstruct it.

For the desired Organizational Culture to sustain, leaders should work on gaining acceptance of the transformed behaviors.  Leaders who do not give culture its due importance risk ruining their strategic endeavors, as they lack the commitment required from the employees to achieve success.

The real question is why senior leaders fail to use the positive elements of Organizational Culture constructively in the first place.  The answer is simple; there are 4 common yet wrong assumptions—or myths—regarding culture change that are deeply established in most businesses that are anything but facts.  Paying heed to—and acting on—these 4 myths results in grave consequences:

  1. Culture is the root cause of all our failures
  2. Changing our Organizational Culture is beyond us, forget about it
  3. Let Human Resources deal with Organizational Culture
  4. Culture is the responsibility of top management

When senior executives devise a strategy to transform the deeply entrenched organizational culture—by putting in place new policies, practices, reward structures, and performance management systems—there is strong resistance that outplays the strategy.

This is primarily due to employees’ reservations and uncertainties regarding the impact of these changes on their work, colleagues, atmosphere, routines, family, and their enterprise’s reputation.  Transforming the Organizational Culture using the individual’s actions and conduct necessitates seeking assistance from 7 guiding principles:

  1. Be Practical
  2. Reinforce New Behaviors
  3. Seek Out Role Models
  4. Identify Cultural Carriers
  5. Leverage Existing Culture
  6. Be a Role Model
  7. Explain Impact of New Behavior

Application of these guiding principles facilitates in transpiring successful culture change.  Let’s dive deeper into a few of these guiding principles.

Be Practical

The first guiding principle to changing the culture involves starting rationally and pragmatically.  It is not feasible to strive to change every behavior at once.  Leaders need to concentrate on the behaviors most critical for the organization.   The ones that reverberate with the existing company culture and have a key role in improving the organizational performance.  This entails ascertaining groups of employees whose behaviors should be transformed immediately.  A clear demonstration of the requisite changes goes a long way in reinforcing the desired behaviors and culture in the organization.

Reinforce New Behaviors

The 2nd principle to changing culture involves emphasizing new behaviors.  The desired behaviors should be reinforced using formal and informal mechanisms.  Formal reinforcement mechanisms include metrics, processes, appraisals, salary reviews, training, and incentives to reward new behaviors.  These formal mechanisms allow people to practice new behaviors repetitively, until they begin to realize their value.  Informal reinforcement mechanisms include support networks and associations to nurture sensitivity and devotion needed to cope with uncertainties.

Seek out Role Models

Organizational Culture Transformation necessitates distinguishing role models to demonstrate the desired behaviors.  Culture change begins when change practitioners act by modeling the new behaviors.  These change practitioners are pride builders for an organization.  The examples set by these practitioners assist in inculcating pride in others about embracing the desired behaviors.  This action is referred to as “positive deviance” or constructive non-conformity.  These pride builders in turn identify and develop more exemplars.

Interested in learning more about the other guiding principles of culture change?  You can download an editable PowerPoint on 7 Guiding Principles of Culture Change here on the Flevy documents marketplace.

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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

9209039874?profile=RESIZE_400xEnterprise Architecture (EA) denotes management best practices for lining up business and technology resources to realize strategic results, expand upon Organizational Performance, achieve Cost Optimization, and steer departments to achieve their core missions through Operational Excellence.

Federal Enterprise Architecture Framework (FEAF) was first introduced in September 1999 by the Federal CIO Council for evolving an EA within any U.S. federal agency.  FEAF assists through documentation and information that conveys a summarized outlook of an enterprise at various tiers of scope and detail.

FEAF offers a shared approach for the consolidation of strategic, business, and technology management as a component of Organization Design and Performance Management.  FEAF introduced a methodology for an Enterprise Architecture that transcended several interagency boundaries.

The Collaborative Planning Methodology suggested along with FEAF is envisioned as a complete planning and implementation lifecycle, for employment down all tiers of scope defined in the Common Approach to Federal Enterprise Architecture—i.e., International, National, Federal, Sector, Agency, Segment, System, and Application.

May 2012 saw a full new guide, called the “Common Approach to Federal Enterprise Architecture.”  The guide offers an overall approach to establishing and employing Enterprise Architecture in the Federal Government for expanding joint approaches to IT service delivery.  The Common Approach homogenizes the expansion and employment of architectures within and between Federal Agencies.

A 2nd version of FEAF was published in January 2013, meeting the criteria set forth by the Common Approach.  It underscores the importance of Strategic Planning and Strategic Goals as the source for driving business services, which consequentially provides the requirements for enabling technologies.  At the heart of it is the Consolidated Reference Model (CRM), which links 6 reference models and equips all departments with a shared language and framework to explain and evaluate investments.

The FEAF comprises of 6 interconnected Reference Models, linked through Consolidated Reference Model (CRM), each relating to a sub-architectural domain of the framework.

These Reference Models convey word-based abstractions of original architectural data and deliver a structure for relating significant elements of the FEA in a collective and uniform manner:

  1. Strategy Domain -> Performance Reference Model (PRM)
  2. Business Domain -> Business Reference Model (BRM)
  3. Data Domain -> Data Reference Model (DRM)
  4. Applications Domain -> Application Reference Model (ARM)
  5. Infrastructure Domain -> Infrastructure Reference Model (IRM)
  6. Security Domain -> Security Reference Model (SRM)

CRM is intended to permit inter-agency evaluation and detection of overlapping investments, disparities and prospects for cooperation within and across agencies.

By means of the collection of reference models a common nomenclature and system is cultivated for describing IT resources.  Making use of this standard framework and terminology, IT portfolios can be managed more suitably and taken advantage of throughout the Federal Government.

A brief description of the reference models is as follows:

Performance Reference Model (PRM)

PRM relates agency strategy, internal business factors, and investments, presenting a way to measure the influence of those investments on strategic outcomes.

Business Reference Model (BRM)

BRM depicts an organization through arrangement of common mission and support service segments rather than through vertical lines of control, thus encouraging cooperation within and across agencies.

Data Reference Model (DRM)

DRM assists in detection of existing data assets located in solitary storages and aids in comprehending the meaning of that data, ways of accessing it, and means for leveraging it for supporting performance outcomes.

Application Reference Model (ARM)

ARM classifies the standards and technologies involving systems and applications that support the delivery of service capabilities, allowing agencies to share and reuse common solutions and benefit from economies of scale.

The Infrastructure Reference Model (IRM)

IRM sorts the standards and technologies relating to network/cloud to aid and facilitate the provision of voice, data, video, and mobile service components and facilities.

The Security Reference Model (SRM)

SRM offers a mutual language and approach for deliberating on security and privacy in connection with Federal agencies’ business and performance goals.

Interested in learning more about Federal Enterprise Architecture Framework (FEAF) and its reference models?”  “You can download an editable PowerPoint on Federal Enterprise Architecture Framework (FEAF) Primer here and FEAF associated PowerPoint series presentations on the Flevy documents marketplace.

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

pscyho sessions2Understanding others has a lot to do with collaboration, performance management, and building effective teams.

Developed by Taibi Kahler in the 1970s, Process Communication Model (PCM) is a prominent psychometric tool for individual and team development.  The main utility of the PCM model is in understanding others’ personality types, discovering one’s own personality, and personifying others’ personality types to have better relationships.

PCM allows the executives to understand others’ needs, influence others, find practical solutions to problems, and manage conflict.  The model has found its utilization in a number of Fortune 500 organizations.  NASA has used PCM for the training and selection of its astronauts for over 20 years.

As per the PCM model, each individual embodies an assortment of behaviors, each with its own set of psychological requirements, strengths, weaknesses, communication style, and motivations.  The Process Communication Model describes that each of us exemplify a combination of 6 personality types—each of personality type has its strengths and weaknesses—but one personality dominates the others in an individual.  The 6 personality types are:

  1. Harmonizer
  2. Rebel
  3. Thinker
  4. Persister
  5. Imaginer
  6. Promoter

Let’s discuss these personality types in a bit detail.

Harmonizer

Individuals with a dominating Harmonizer personality type are humble, quiet, and naturally gifted at forming relationships with others.  The Harmonizers care for their family and friends, are compassionate, and use their feelings to judge the world around them.  They treat others cordially, make them feel comfortable, listen to them attentively, and do not shy away from making physical contact.

Recognition of their personality and others’ amiable communication style motivate the Harmonizers.  Under difficult circumstances, these individuals tend to become apprehensive, lack firmness, act irrationally, and make grave mistakes / incoherent decisions.

Rebel

The individuals possessing a Rebel personality are generally creative, fun loving, and radiate positive energy for others.  These individuals respond promptly, reciprocate righteousness with virtue, and enjoy the present.  The Rebels are valued for their extemporaneous humor, interest in others, energy, and problem-solving ability.  They are a bit impulsive and judge the world around them through their likes and dislikes.

Others upbeat communication style and stimulation through playful contact motivate the Rebels.  Under stress, the Rebels tend to get confused, whine, irritate others, leave complex situations, and bounce responsibility to others.

Thinker

Individuals with a dominating Thinker personality believe in data, logic, and perfectionism.  They take on a methodical approach to doing things, ask too many queries, and only attend meetings when there is a formal agenda set in advance.  The Thinker personality likes to evaluate detailed information before drawing any conclusions.  These people are valued for their planning and organization ability, dependability, structuring ideas logically, and clear expression.

Recognition of their thoughts and accomplishments motivates the Thinkers.  Under stress, they reverse delegate tasks and start doing those themselves, try to gather as much detail as possible to understand the situation, and may start arguments or even attack others.  These people need time and assurance of their abilities to return to their organized selves.

Interested in learning more about PCM and its other personality profiles?  You can download an editable PowerPoint presentation on Process Communication Model: Personality Types here on the Flevy documents marketplace.

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You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro LibraryFlevyPro 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

“As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant’s toolbox.”

– Michael Duff, Managing Director at Change Strategy (UK)

M&A Turnaround Strategy 1The impact of the global pandemic, volatile stock markets, and slowed economic outlook across the globe has hurt the performance of enterprises across the world.  The scenario has forced leaders to consider undertaking Transformation of their strategy and operations significantly.

The strategy to buy out troubled businesses and determining to fix the issues that upset the target companies has been a focus of Buyers’ senior leadership for the past 2 decades.  In the year 2017 alone, 36,000 M&A (Mergers & Acquisitions) transactions were announced globally.  Acquisition of troubled businesses hoping to have a Turnaround account for around 50% of all M&A deals.

A Turnaround can be defined as the financial recovery of an economy or an organization after a period of inertia or Downturn.  Several issues trigger a Downturn—issues pertaining to technological disruption, regulations, processes, organization’s financial health, management, business model, hierarchy, or competition.

The ratio of success for M&As is, however, not very healthy.  Historical data of 61% of M&A deals based on a BCG’s study, carried out on 1400 M&A deals globally between 2005 and 2018, shows a high failure rate (61%), where they remained unsuccessful to show any improvement in financial performance.

The ones that do succeed offer significant revenue growth and profit margins—around 25% positive variance in TSR than unsuccessful M&As.  However, buying and fixing a business under the weather isn’t an easy job.  This necessitates a meticulous strategy.

In order to materialize a Turnaround, the leadership needs to thoroughly understand the root cause(s) of the Downturn, have a willingness and plan to reform or transform, and rigorously implement the strategy to rectify the situation (Transformation Execution).

Empirical Research demonstrates that the triumph of M&A Turnaround deals is attributable to 6 Critical Success Factors:

  • Investment in R&D
  • Long-term Horizon
  • Clear Purpose
  • Investment in Transformation
  • Synergy Targets
  • Quickness to Action

Deployment of a combination of these CSFs bring about more pronounced outcomes—in terms of positive 3-year TSR and overall Organizational Performance.

A robust M&A Turnaround Strategy—based on lessons learnt from empirical research—revolves around 4 key M&A Deal Characteristics.  These M&A deal characteristics have a profound impact on the outcome of the transaction:

  1. Level of Performance
  2. Sector Alignment
  3. ESG Factors
  4. Deal Size

Knowledge of these key Deal Characteristics allow the senior leadership to ascertain the factors liable to affect the deal outcomes.  Now, let’s discuss the first 2 deal characteristics in a bit detail.

Level of Performance

The performance of the Target company during 2 years pre-deal is a key point to consider for a M&A, as it is directly proportional to the deal success rate and Total Shareholder Return.  BCG’s research demonstrates that M&A transactions where the target entity had a 2-year TSR decline of lower than 10% were liable to be more successful than deals where target companies were in more distress (a decline of ~30% or more).

Sector Alignment

Senior leaders should not ignore the significance of uniformity of sectors of the target and acquiring company.  Based on research, the rate of success for an acquisition transaction involving the buyer and the target operating in the same industry is 5% superior to the rate for transactions involving the companies from different sectors.  The reason for this higher success rate is attributed predominantly to similar business models, customers, vendors, and processes in firms of the same sector, which make the Post-merger Integration of the buyer and target a lot easier.

Interested in learning more about the other characteristics influencing the outcome of an M&A deal?  You can download an editable PowerPoint presentation on M&A Turnaround Strategy here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro LibraryFlevyPro 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

“As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant’s toolbox.”

– Michael Duff, Managing Director at Change Strategy (UK)

8760904287?profile=RESIZE_400xThe concept of Return on Investment (ROI) was formed as part of the concept of Value Creation.  The origins of ROI were in the Manufacturing sector, where it’s simple to measure time and output.  Next, to adopt the concept was the Banking industry where intense competition necessitated Innovation Management and with that the need to calculate ROI.  ROI calculation is now a common feature in every industry and business function.

Employee Training is part and parcel of workforce development.  It necessitates spending a lot of effort and resources.  Deliberating if the Training Program is going to be worth all the costs is a valid concern.

Return on Training Investment (ROTI) is the comparison between financial benefits obtained from a training program and the total cost of running that training program.  The objective of ROTI analysis is to see whether the benefits outweigh the costs i.e., to establish if the investment was worthwhile.

ROTI calculation and analysis is significant when:

  • Investment in a training program is viewed as a substantial outlay.
  • Attainment of explicit strategic or operational objectives is associated with the training program.
  • Financial benefits and their amount from the training program is ambiguous.

ROTI can be calculated dependably so long as:

  • Measurement data on changes in business performance, pertinent to training, is reliable or can be rationally estimated by those who matter.
  • Financial values can be assigned to the applicable performance measures.
  • Cost related to developing, delivering, and handling the training program can be classified.

ROTI calculation involves selecting performance measures, gathering data on those measures as well as data on costs—both direct and indirect—related to training, and lastly calculating the Return On Training Investments.

Key steps in the ROTI calculation are:

  1. Choose the performance measures to use.
  2. Gather data on changes.
  3. Gather data on costs.
  4. Calculate ROTI.

There are 3 types of calculations that are relevant in ROTI analysis.

  1. ROTI as a percentage
  2. Benefit to Cost Ratio (BCR)
  3. Payback Period

Let us delve a little deeper into the calculation methods.

1. ROTI as a percentage

This calculation shows Net Training Benefits as a percentage of Training Cost.  An outcome of 100% or more denotes that the Program has a Net Benefit after accounting for all the costs connected with running the program.

2. Benefit : Cost Ratio (BCR)

This ratio divides Total Training Benefits by Total Training Costs.  When BCR is greater than 1, the benefits exceed the costs and the program is judged a success.  When BCR is less than 1, the costs surpass the benefits and signify that enhancements or alterations are needed to warrant the continuation of the program.

3. Payback Period

This calculation exhibits the time in which the Training Investment will be paid back i.e., when the costs equal the benefits.  The calculation is usually done in terms of months.

Monthly Training Benefits are calculated by dividing Total Training Benefits over 12 months.

It is pertinent to note that although ROTI analysis is important in evaluating a training program, merely a ROTI calculation will not typically be adequate to make the business case for a Training Program or influence top management to act.  Sometimes we have to consider non-monetary benefits of training, such as a change in attitude.  When monetary and non-monetary benefits are combined, these supplement Performance Management resulting in benefits such as reduced absenteeism, lower turnover rates, and more promotions from within.

Interested in learning more about Return on Training Investment?  You can download an editable PowerPoint on Return On Training Investment (ROTI) here on the Flevy documents marketplace.

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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

8662133692?profile=RESIZE_400xA significant number of Mergers remain unsuccessful, because companies do not employ a thorough and disciplined approach to realizing Post-Merger Integration Synergies.  In reasons for failure, we hear remarks like:

  • Targets were set several months earlier by the top management without consulting the line managers, or taking ground realities into consideration.
  • Assumption base for setting targets was untested.
  • Targets were met but the timeframe for achieving them made them ineffective—in terms of diminished returns, shareholder disappointment, or depressed share value.
  • Desired Synergies were achieved but at a very high cost or fairly weakened morale.

A disciplined and rational approach to pursuing Merger Synergies is key to successful Post-Merger Integration (PMI).  Companies that authenticate and set pragmatic yet ambitious Post-Merger Integration Synergy targets do the following to exceed targets and achieve substantial share price premium and a significant Competitive Advantage:

  • Advise Integration Leaders on how to aim high.
  • Give managers—responsible for achieving targets—a say in target-setting process.
  • Create detailed plans with built-in accountabilities.
  • Pursue their targets aggressively.

Successful PMI Synergies—be it in Cost OptimizationStrategic Sourcing, Greater Revenues or any other Cost or Revenue realm—have the common characteristic of leaders pursuing synergies with speed, rigor, discipline, and pragmatism with lots of analysis, planning, preparation, and fine-tuning before the close.

Success can be ensured time and again if the 6 Strategies for Post-Merger Integration Synergies are followed to the letter:

  1. Link Due Diligence (DD) and Post-Merger Integration (PMI)
  2. Leverage Clean Teams
  3. Establish Stretch Targets
  4. Rapidly Iterate to Targets
  5. Pursue Both Revenue and Cost Synergies
  6. Institute Performance Management

Implementation of the 6 Synergy Strategies involves adopting High-Engagement and Rapid Iteration approach which yields effective Stretch Target Validation and High Level of Line Accountability.

Let us delve a little deeper into 2 of these PMI Synergy Strategies.

Link Due Diligence (DD) and Post-Merger Integration (PMI)

Linking DD to PMI ensures realistic estimates on part of the DD team thus avoiding formulation of broad-brushed and imprecise Synergies.  Linking also guarantees greater amount of ownership and accountability at the same time enabling more compelling Stretch Targets.  Linking of DD to PMI is necessary because:

  • Under pressure to complete the M&A, Due Diligence teams frame assumptions with little knowledge of the levers influencing Synergies or the challenges involved in achieving them.
  • Due Diligence teams typically project more value in Cost Reduction and enhanced Revenues based on erroneous assumptions—without taking into account either the Operating Model (of the former entities and the freshly created one) or the difference / overlap in Customer Base.

Successful Mergers ensure a harmonized hand-off from Due Diligence teams to Integration Planning teams by ensuring the following:

  • Placing members of the Mergers and Acquisition team on the Post-Merger Integration (PMI) team to produce a greater degree of ownership and continuity.
  • Involving Business Unit Heads in target setting at the Due Diligence stage and ensuring ownership and accountability.
  • Linking of Due Diligence and PMI to enable setting of more profound Stretch Targets.
  • Analyzing and detailing drivers of saving at a high-level for creating Synergy Targets and Ranges which make later improvements possible based on subsequent information. These targets and ranges enable evaluation of potential gains from new company’s Operating Model. 

Leverage Clean Teams

Clean team is an independent group that is tasked with the collection and analysis of sensitive company data—pre-closure—with the guidance of management.  Clean team may comprise of third-party members or employees who can be reassigned out of business in case of deal failure eradicating the risk of compromising confidential information.  Clean team is formed by legal contract based on protocols agreed to by both company’s legal departments.  Clean teams help by:

  • Accelerating PMI planning.
  • Enabling the acquiring company to have a clearer picture of the target company without violating anti-trust regulation or confidentiality agreements.
  • Assessing risks and enabling companies to achieve Synergies faster.
  • Keeping sensitive information of both sides safe—pre-closure—yet embark on planning and preparation even before close in order to save precious time and keep customer confidence high.
  • Aiding companies accomplish 3 core integration activities before closing—compiling wide-range baseline data, vetting Synergy targets, and preparing options for key decisions.
  • Empowering companies to avoid / diminish confusion caused by overlap in client assignments and sales people.
  • Assisting provision of clear information to customers regarding products and services thus avoiding drop in sales.

Interested in learning more about the 6 Strategies for Post-Merger Integration Synergies?  You can download an editable PowerPoint on Post-Merger Integration (PMI): 6 Strategies for Synergies 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?

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– Roderick Cameron, Founding Partner at SGFE Ltd

8591481276?profile=RESIZE_400xCut-throat competition in industries has driven companies to find ways to reduce costs while increasing efficiency.  To accomplish this, most companies have skillfully endeavored to streamline Sales, Operations Planning, Forecasting, Inventory Management, and Logistics.

One area that has still not grabbed industry’s attention is out-bound Supply Chain Management–from packaging to final delivery.  Companies generally neglect Supply Chain simply because they do not consider it their core competency.

Significant Cost Reduction in the Supply Chain can be achieved by focusing on 2 main cost categories:

  1. Warehousing Costs
  2. Transportation Costs

Warehousing and Transportation represent a significant portion of the total Logistics costs.  Implementing improvement programs, without any significant capital investments, can enable 20-50% cost saving in Warehousing, 40% in Transportation costs, flexibility, and better service.

Supply Chain Cost Reduction in Transportation and Warehousing has vast potential, not only in terms of costs, but also Process Improvement using Lean Six Sigma (LSS) techniques.

The approach to Supply Chain Cost Reduction in Warehousing encompasses 3 phases:

  1. Set the Baseline
  2. Determine the Gap
  3. Implement Lean Six Sigma (LSS)

Meticulous and persistent application of Lean Management and Six Sigma techniques is at the core of reshaping Warehousing Operations and eradicating sources of waste, variability, and inflexibility.  This article is an overview of the 6 building blocks used in Implementing Lean Six Sigma (LSS)—the 3rd phase of the approach to Supply Chain Cost Reduction in Warehousing:

  1. Business Processes
  2. People
  3. Performance Management
  4. Third Party Interactions
  5. Layout
  6. Ownership

Let us dive a little deeper into some of the building blocks.

Business Processes

Business Processes present a huge opportunity for improvement by eliminating redundancies and sources of waste in Warehouse operations (e.g., unnecessary motion or double-handling in Manufacturing).  Each source of waste represents extra costs and inflexibility that can be reduced or eliminated.

 Business Process Improvement can help reduce:

  • Handling steps
  • Motion
  • Transportation
  • Space requirements
  • Effort
  • Time spent

People

This building block of Implementing Lean Six Sigma aims at avoiding overstaffing of full-time employees and at the same time maintaining a well-trained, efficient workforce.

Streamlining this building block leverages the following benefits to organizations:

  • Refined Recruitment process reduces Employee Turnover.
  • Facilities can more closely match on-site staffing to demand by reducing notice periods.
  • Efficiency can be raised by about 15% through regular training.
  • Overstaffing of full-time employees can be avoided.
  • Productivity can be improved by 5-10% by focusing on appropriate facets of Performance during training.

Performance Management

This building block aims at using existing Performance Management levers to improve Employee Performance through morale boosting and awareness exercises.  A laser-focus on the performance element helps the leadership achieve the following benefits: 

  • Constant reminders and display of current performance give employees a sense of competition and drive.
  • Quick daily discussions highlight the significance of good performance and helps employees focus on essential aspects of their work.
  • Productivity is improved up to 20% by linking pay to performance.
  • Real-time feedback supports pay-related performance.
  • Measuring and rewarding the “softer” elements has long-term benefits.
  • Recognizing employee of the month can increase staff satisfaction.

Given the existing industry cost and performance demands, wasteful or unpredictable Warehouse operations lose more than money.  This can do rapid and permanent harm to a company’s reputation with customers since distribution is the logistical interface with the customer.

Improving Warehouse Operations is a significant area not only for Cost Reduction, but also a source of refining Customer Value Proposition.

Interested in learning more about Supply Chain Cost Reduction in Warehousing and Lean Six Sigma?  You can download an editable PowerPoint on Supply Chain Cost Reduction: Warehousing here on the Flevy documents marketplace.

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Supply Chain Management (SCM) is the design, planning, execution, control, and monitoring of Supply Chain activities.  It also captures the management of the flow of goods and services.

In February of 2020, COVID-19 disrupted—and in many cases halted—global Supply Chains, revealing just how fragile they have become.  By April, many countries experienced declines of over 40% in domestic and international trade.

COVID-19 has likewise changed how Supply Chain Executives approach and think about SCM.  In the pre-COVID-19 era of globalization, the objective was to be Lean and Cost-effective. In the post-COVID-19 world, companies must now focus on making their Supply Chains Resilient, Agile, and Smart.  Additional trends include Digitization, Sustainability, and Manufacturing Reshoring.

Learn about our Supply Chain Management (SCM) 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

TM4Traditional Talent Management practices fail to meet the high-potential talent requirements imperative to compete in the digital world today.  In fact, they disappoint the key talent available in the market.

A 2016 Digital Business research by MIT Sloan Management Review and Deloitte on 3700+ executives reveals attracting and retaining talent as the most pressing concern for organizations large or small.  The study indicates that organizations that are still using traditional approaches to manage Talent face a number of pressing challenges, including:

  • Building new competencies within limited resources.
  • Alignment of culture, strategic initiatives, human capital, and hierarchies with organizational objectives.
  • Attracting, selecting, and retaining key talent.
  • Creating robust Performance Management, compensation, and benefits systems.
  • Finding and developing talent with critical capabilities—such as forward thinking, transformative vision, and change focus—alongside technical skills.
  • Providing opportunities that require digital skills, to attract and keep critical Talent engaged in the organization.

One of the findings of the 2016 digital business study demonstrate that it’s both the younger as well as middle management people who tend to look elsewhere in case they don’t find opportunities to develop digital skills in their existing organizations.  Such results call for senior management to identify, evaluate, and implement more immediate and appropriate digital technologies methods to attract and retain key talent.  Leading organizations are now incorporating these Talent Transformation efforts into their Digital Transformation programs.

Research on 3700 plus Digital-native respondents further reveals leading organizations to be using a combination of 2 distinct models to manage their Talent:

  1. Talent Markets for Contractors
  2. Digital Tools for Employees

Let’s discuss the first approach to Talent Management in detail, for now.

Talent Markets for Contractors

Acquisition of right talent necessitates fostering linkages with on-demand talent markets for the timely availability of required talent.  Many organizations seek help from on-demand Talent Markets to attract and sustain talent in the digital business environment.  These organizations pursue a flexible recruitment model using digital platforms to attract skilled contractors and consultants.  Digital talent markets can be expanded or contracted depending on the quantity of work and skillsets required.

Digital talent markets can coordinate the work of full-time employees as well as cover live activities of contractors more nimbly and reliably.  Digital platforms offer superior talent markets to assess and manage large talent pool of contractors.  A few organizations are experimenting with developing their own on-demand talent markets while some have cooperated with other organizations to share talent markets.  It’s up to senior management to decide if they want to leverage existing on-demand talent markets or cultivate their own to ensure availability of required skills when needed.  Talent markets can be nurtured using 3 best practices:

  1. Manage on-demand talent markets as a community
  2. Strike a balance between full-time and part-time talent
  3. Create an environment where the best people want to work

Manage on-demand talent markets as a community

To make the availability of required key talent certain:

  • On-demand talent markets should be considered strategic resources and cultivated carefully with future talent requirements in mind.
  • Companies should devote resources and efforts to develop their own talent pool.

Strike a balance between full-time and part-time talent

Talent markets are meant to manage freelancers.  However, a few organizations have also begun collaborating with them and deploying their full-time employees to project work that is critical to build new competences.  A few considerations in this regard include:

  • Companies need to strike an equilibrium between full-time and part-time talent.
  • Some people prefer full-time employment while others fancy flexibility or work from home options.
  • Some workforce providers even offer services of retired people with expert skills, who have proved to be a valuable asset.
  • Firms can choose on-demand workforce providers to have full-time employees to maintain a steady employee base, or pick part-time contractors to handle workload surges.

Create an environment where the best people want to work

Setting up the right environment is central to attracting and retaining the best flexible, on-demand talent.  A majority of companies consider freelancers or independent contractors inferior to their permanent employees.  Organizations that want to attract great talent should think of contractors as valuable resources and treat them as such.  To get top talent, organizations need to:

  • Nurture an Organizational Culture conducive to support on-demand workers.
  • Devise remuneration and reward systems that value contractors and full-time employees equally.
  • Create an atmosphere that offers attractive work experiences for the employees.
  • Deploy people on interesting projects and allow them to experience job rotations to improve their skills sets, problem solving abilities, cross-departmental team collaboration, and improve their engagement levels.

Interested in learning more about the 2 distinct approaches to Talent Management through Digital Transformation? You can download an editable PowerPoint on Digital Transformation: Talent Management here on the Flevy documents marketplace.

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Performance chartsPerformance evaluation serves as a health check on operations and individuals’ work.  The organizational maturity notion signifies the progress of an organization in terms of developing its people, processes, technology, and capability by implementing quality practices.  Organizations aiming to achieve the highest maturity levels in performance need to take care of the intricacies involved in deploying a Performance Management system and the relationships it has with the other key organizational activities.

Performance Management processes in organizations can be assessed using maturity levels, by measuring the implementation of Performance Management tools, analyzing the availability of internal Performance Management processes in place, assessing the structures, procedures, and interactions utilized to direct Performance Management systems.

An organization’s performance maturity is assessed on 5 levels of progressive growth.  These 5 stages present a valuable dashboard to gauge the implementation of the corresponding levels of the Performance Management Maturity Model.

  1. Initial 
  2. Emergent
  3. Structured
  4. Integrated
  5. Optimized

To achieve maturity in performance management, organizations need to build capabilities in 5 core elements—referred to as “Operational Levers”—Tools, Processes, Governance, Architecture, and Integration.

Initial Stage

The organizations at the first performance maturity level are not acquainted with—or totally unfamiliar of—the tools necessary to implement the Performance Management system.  The Performance Management processes are typically inconsistent.  Organizations at this maturity level do not practice employee empowerment, development, and innovation.  There is a dearth of appropriate KPI calculation approach and the performance architecture is in its budding stage.  Roles and responsibilities, importance of KPIs, and individual/organizational indicators are unclear to employees.

The level is characterized by casual strategic planning practices—dependent on top management experience—with ill-structured communication mechanisms.  The initiatives lack alignment with organizational goals.  Leadership involvement in mentoring and developing employees is at sub-optimal levels.  Staff motivation and increasing their engagement levels is not given due importance.

Emergent Stage

The organizations at the second level of Performance Maturity have a strong desire to improve performance.  At this stage, organizations begin exploring Performance Management tools, but have uncoordinated and un-standardized internal processes and systems.  Initiatives to integrate performance management procedures are planned with clearly defined objectives and expectations.

However, at this level, strategy does not deliver value and is not more than formal documentation.  Managers are assessed based on performance results, but not the lower hierarchical levels.  There is unclear articulation of company goals, misalignment at various organizational hierarchical levels, and incompetent communication.  A few basic performance measurement methods—e.g., KPI selection and documentation are embraced by the organization.  The KPI selection process, however, lacks appropriate yardsticks, tools, standardized forms/templates, and approaches.  Performance evaluation and reporting processes exist but are deficient in clear communication by the leadership.  Leadership possesses a basic understanding of performance measurement processes.  Measuring performance at the individual level is uncommon at this maturity level.  Performance review meetings are short of delivering the insights required to make critical decisions.

Structured Stage

The “Structured” stage of the Performance Management Maturity Model is characterized by well-coordinated and carefully regulated Performance Management processes.  Organizations at this stage have a defined set of Performance Management tools.  There are standardized Performance Management practices with well-defined and improved process flows.  There is typically an inconsistent approach towards adopting an aligned Performance Management architecture though.

Organizations at this level employ strategy monitoring tools—e.g., scorecards and dashboards—but do not cascade these at the lower ranks and files.  KPIs are selected based on a clear-cut criteria, established tools and methods, and agreement across the board.  Standardized forms are used to document and report KPIs.  The KPI targets are established utilizing data, benchmarking, and comparing market figures.  Organization-wide performance evaluation data is gathered and disseminated at all levels.  People, largely, have a fair understanding of their personal and organizational performance goals.  A well-defined Performance Management system is in place with appropriate templates, procedures, and governance structures ready for each Performance Management cycle.  Incentives and training and development opportunities help improve performance.

Interested in learning more about the other stages of the Performance Management Maturity Model?  You can download an editable PowerPoint on the Performance Management Maturity Model here on the Flevy documents marketplace.

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