Very few organisations have identified which success factors are critical for their well-being. If so the Critical Success Factors (CSFs) would be identified and communicated to all staff. Everybody in the organisation would be planning each and every day to maximize their contribution within the CSFs – the El Dorado of management.
The El Dorado of management
“It is the CSFs, and the performance measures within them, that link daily activities to the organization’s strategies. This, I believe, is the El Dorado of management.”
Whilst the importance of an organization knowing its critical success factors appears so obvious it has largely bypassed management’s focus. Ask any CEO “What are you critical success factors” and out will pour a list, ask the next day and the list will be different, as will the list from any other senior management team member. In other words while management know what their organization’s success factors are they have not yet determined which ones are critical.
The secret of aligning staff to the organisations strategic objectives, mission and strategy through the CSFs has been known for years by Toyota, that is why they
Whilst most organizations know their success factors, few organizations have:
worded their success factors appropriately
segregated out success factors from their strategic objectives
sifted through the success factors to find their critical ones – their critical success factors
communicated the critical success factors to staff
In these trying times knowing your CSFs maybe the deciding factor in survival. If your organization has not completed a thorough exercise to know its critical success factors (CSFs) performance management cannot possibly function. Performance measurement, monitoring and reporting will be a random process creating an army of measurers producing numerous numbing reports, full of measures which monitor progress in a direction very remote from the organization’s strategy.
As Exhibit 1.1 shows even though an organisation has a strategy teams are often working in directions very different to the intended course.
The process outlined in this paper will crystallize and communicate the organization’s CSFs. Staff will now be able to align their daily activities closer to the strategic direction of the organisation as shown in Exhibit 1.2. The beauty of the method, like all great methods, is that it is a simple methodical process, which can be run by in-house staff.
|Exhibit 1.1 Discord with strategy
||Exhibit 1.2 Alignment with strategy
The benefits of understanding your organisation’s CSFs
Knowing, communicating and measuring progress in an organisation’s CSFs is the El Dorado of management, the ‘Holy Grail’. There are some profound benefits of knowing your CSFs including:
it leads to the discovery of an organisations ‘winning KPIs’
measures that do not relate to your CSFs, or impact them cannot, by definition be important and thus can often be eliminated
staff know what should be done as a priority and thus their daily actions are now linked to the organisation’s strategies
Staff meetings, reports and tasks will be challenged for their validity. All activities that have no direct link to the critical success factors will be seen as non critical. Over time meetings and reports that occurred because we did it last week/month will disappear.
Report layout will be more concise as many extraneous issues will be removed.
The CEO’s linkage to the workforce will be a daily activity through the phone calls and walkabouts amongst front line staff.
I will explain the importance of critical success factors on the emergence of KPIs through two stories.
An airline CSF
My favourite KPI story is about Lord King who set about turning British Airways (BA) around in the 1980s by reportedly concentrating on one critical success factor and one KPI within it.
Lord King appointed some consultants to investigate and report on the key measures he should concentrate on to turnaround the ailing airline. They came back and told Lord King that he needed to focus on one critical success factor (CSF), the ‘timely arrival and departure of aeroplanes’. Finding the CSFs and narrowing them down to no more than five to eight is a vital step in any KPI exercise, and one seldom performed! Lord King was not impressed as everybody in the industry knows the importance of timely planes. However, the consultants then pointed out that while he knew ‘timely arrival and departure of aeroplanes’ was a success factor this had not be separated out from all the other success factors and thus staff were trying to juggle too many things.
Once the consultant’s analysis proved that ‘Timely arrival and departure of planes’ was at the top, see exhibit 1.3, all they needed to do was to ascertain what measure to focus on. Was it timely planes or late planes? Analysis would have pointed them quickly to selecting late planes over a certain time, and this led to the establishment of the late planes screen which would have resembled something like Exhibit 1.4
Exhibit 1.3 showing the hierarchy of success factors
This late plane measure was later credited to turning the company around. Lord King would have needed some contextual information so that the manager in question could not simply say, “it is an isolated incident”.
Exhibit 1.4 intranet 24/7 report showing late planes with some historic context
For a continuation and expansion of this please purchase my white paper.
Determining the Critical Success Factors in a Workshop
From my experience in this area, most organizations will need to run a two day workshop attended by experienced staff from around the organization, as much of the senior management team as possible, and the chief executive officer (CEO).