Денис Дубовцев – The Role of a CFO: motivating people, managing assets and hedging risks (страница 8)
In a world where «black swans» have become increasingly common in recent years, accurately forecasting the future becomes exceedingly difficult, as does constructing reliable forecasts.
This holds true, but only to an extent. We are indeed navigating periods of economic and geopolitical instability, alongside technological advancements that were unimaginable fifty years ago, accompanied by the rapid accumulation of information and methods for its processing.
At this juncture, to avoid potential disasters, our new pilots must swiftly orient themselves in the turbulent environment with limited visibility. They need to grasp which data is essential at the present moment, swiftly filtering the incoming stream of information, utilizing only the necessary instruments without being distracted by secondary tasks and data. Additionally, they must analyze the situation, pinpoint its primary threat, and ascertain which tasks should be genuinely prioritized.
In this evolving world, planning, forecasting, budgeting, and laying the groundwork for the future remain imperative. Without a systematic approach, filtering information overload, determining priorities, setting objectives, and fostering motivation within the team is impossible to achieve. A rational, systematic approach to forecasting and planning is crucial for building and developing a business, as well as navigating the challenges of growth. That is precisely the financial leader’s mission.
Here, we embrace the concept of future planning, organizing team motivation around a healthy desire for accomplishments and self-improvement, innovating, and overcoming external and internal constraints.
This concept of self-motivation, organizational goal setting, flexible planning and budgeting is precisely what interests me, and I’m eager to share it with you. In the forthcoming chapters, we will explore fundamental principles, techniques, and mechanisms for preparing oneself, the organization, and its processes, alongside key stakeholders, for adaptable goal setting, planning, and budgeting.
Need for Self-Realization
Prior to any action, there lies the determination and establishment of goals, the selection of paths, and methods for achieving these aims. To effectively plan outcomes, establish goals for employees, and choose motivating tools for organizational leaders, it’s imperative to identify individual responses to questions like, «How do we establish and achieve goals?» and «What motivates us?».
For effective responses, it’s crucial to initially pinpoint deep-seated goals and motivators: what holds significance for the organization; why the company exists, what issues it addresses for customers; why employees come to work, what they aspire to (aside from financial rewards); what stakeholder groups exist within the company and how their goals intersect. Ultimately, the goal is to seamlessly integrate all motivators and goals into a unified goal tree for the organization.
In the era of rapid technological advancement and the creative economy, a company’s primary competitive advantage is its well-motivated, efficient, and loyal employees. In this context, «appropriate» motivation entails fostering an environment in the company that fosters creativity, self-expression, continuous self-development of employees and, consequently, the organization’s advancement. Such an environment is unattainable within the strict hierarchical corporate structure of large 20th-century companies.
Many leaders hold the belief that streamlining decision-making processes, eliminating intermediate management layers, incorporating elements of discussion into decision-making, abandoning strict dress codes, and transitioning to flexible working hours all dampen employee morale, undermine discipline in the team, and ultimately lead to reduced manageability, anarchy, and the organization’s downfall. In reality, these traditionalists primarily fear losing authority and diminishing their own significance within the company, and perhaps even losing their jobs.
In contemporary science, the prevailing view is that what drives us in work, business and creative endeavors is the desire for self-realization, predominantly fueled by our own attitudes and internal aspirations. We often do this subconsciously, striving to engage in activities that bring us satisfaction. If we don’t find satisfaction in our daily work and goal fulfillment, achieving high-quality results becomes not just challenging, but potentially highly detrimental to mental and physical well-being.
Drawing from my experience, studying management practices of successful companies, insights from international consultants and researchers in the field of management and motivation, all indications suggest that a modern organization striving to remain effective must align its strategy and goals with those of its employees. Only content employees who are in suitable roles and engage in fulfilling work every day will enable a company to develop rapidly and adapt flexibly to rapidly changing external factors and the competitive landscape. Initially, this may appear utopian, but it’s the only viable approach to building a successful long-term business.
It’s crucial to underscore that our strategic orientation in life must align with the company and its values. If you favor traditional authoritarian-hierarchical approaches, the laid-back atmosphere of a youthful startup will seem frivolous and incongruent with your work values and you, in turn, will be detrimental to the team. Conversely, a democratic leader who embraces flexible management and planning approaches won’t fare well in a company with aggressive management practices. Such mismatches, akin to personal relationships, result in suffering for both parties.
There’s an approach that meets the demands of our time. It’s called Objectives and Key Results (OKR) – a goal-setting framework utilized for systematic execution of strategy, increasing motivation, and directing employees towards what’s most crucial and valuable for the company. OKR didn’t materialize out of thin air – it’s a contemporary iteration and successor of goal-setting systems from the past century like MBOs, SMART goals, BSCs, KPIs, but with a modern emphasis on people, decentralization, and adaptability.
The methodology was initially developed and implemented at Intel and later introduced by John Doerr to Google’s leadership in 1999, when Google was in its first year of operation and there were only 60 employees. As those Google employees migrated from one company to another, the OKR methodology gained traction and spread among technology corporations such as Oracle, Netscape, Amazon, Flipboard, Twitter, and Spotify. Now, even small (yet forward-thinking) companies and startups are integrating OKR into their management systems. The significant surge in the approach’s popularity was also bolstered by the renowned consultant Felipe Castro, the author of the book «The Beginner’s Guide to OKR».
In subsequent chapters, we will explore the practice of applying OKR with its primary techniques and approaches. I’ll delve into common mistakes made during its implementation. Furthermore, I’ll demonstrate how to implement goal-oriented management in the financial department and throughout the company, how to formulate individual goals and integrate them into the organization’s goal tree, and how to monitor progress and make adjustments. Ultimately, it’s imperative to connect individual goals, group plans, product metrics, development plans and budgeting into a cohesive system, facilitating long-term planning of quantitative and qualitative aspects, and the fulfillment of the company’s and its shareholders’ strategic objectives.
Company Culture and Decision-Making
When contemplating effective strategies for motivation and goal-setting within a company, it’s crucial to emphasize the role of management culture as pivotal in establishing regular business procedures. This aspect should be addressed early on in the business development phase.
It’s analogous to nurturing a child. If you believe you can neglect someone for ten years and then compensate for it a couple of years later, you’re mistaken. The same principle applies to an organization, its collective, and the processes within.
An organization, a business, is essentially a social construct – a community of individuals with ingrained patterns of behavior, internal cultural norms, rituals, and regulations. Failure to instill the correct culture of working with data, documents, assets, and people in the company from the outset, along with establishing necessary rituals for business development and encouraging (sometimes through negative reinforcement such as reprimands, fines or public dismissals) the right and responsible adult behavior among employees, then your organization, like a child, will grow up as it grows up, and changing its culture and business processes in the future becomes more difficult, sometimes rendering it impossible.