Pruning for growth – how to optimise performance and productivity

Delivering more for less, the definition of increased productivity, should be the goal of all organisations. Unfortunately, immediate cost-out targets mean the focus on long-term performance often gets lost in the haste to meet short-term budget constraints.

Reviewing focus and sharpening how resources are prioritised to achieve organisational strategy and outcomes should be a regular discipline. Instead, many organisations tend to wait for the next external shock to force hasty cost- out programmes under pressure.

I was contemplating organisational effectiveness while harvesting avocados recently and thought of ‘pruning for growth’. Neglecting pruning results in a tangled mess, and fruit up high and difficult to harvest, with the bulk of the tree fruitless in the following year as buds form in direct light. This leads to the need for drastic cutting down the track.

Because the buds for next year’s fruit form on the new wood above this year’s fruit, if you cut too much or the wrong branches, you risk decimating next year’s crop. The best approach is continuous and tactical pruning, sacrificing some higher branches to let light onto those below, and sometimes removing what seem likes strong healthy branches, which on close inspection are not yielding much fruit.

Likewise, in organisations, continuous and targeted pruning of activity (projects, initiatives, committees, forums and working groups) allows resource to be focused more sharply on key priorities and increases productivity.

To use the avocado metaphor, branches that are sucking resource but not delivering are removed, complexity is untangled, and light let in to stimulate productive growth. Done poorly, all that is achieved is improvement in this year’s bottom line at the expense of future growth and productivity.

This is particularly evident in the way that restructures, if handled poorly, can have a detrimental impact on culture and capability.

Who among us hasn’t seen great people exited alongside poorer performers in the dance to fill a reduced number of seats?

How often have you seen good people paid off at great expense who are hired back at higher rates as contractors?

Who else has noticed how often the organisations that restructure frequently end up with an increasingly toxic culture of self-preserving middle and upper management whose key skill is political positioning to protect their own interests?

When uncertainty persists, or engagement is destroyed in the way cuts and restructures are handled, it is the most talented people who take flight.

These negative impacts on our people and culture are analogous to cutting next year’s fruit-bearing wood during pruning.

So, what are the essential elements of more effective organisational pruning? And what are the ‘do’s’ and ‘don’ts’?

• STRATEGY RESET

The board has a key role in ensuring this year’s pruning doesn’t compromise growth towards future strategic goals. Without laser-focused clarity around key strategic priorities there is huge risk of ‘death by a thousand cuts’ in any across- the-board cost-out programme.

This is the process where bits are snipped (sometimes fat, sometimes muscle needed for future growth). Initiatives that make the boat go faster – and may need additional investment – are no more likely to be saved than pet projects, or those that justify the existence of a senior manager’s department. Without sufficient direction around what activity needs to stop, the tendency is to try to keep everything going as before, rather than prioritise focus.

Further down the organisation this tends to lead to unrealistic expectations (smaller teams trying to do the same amount of work in the same way), and longer hours, stress and disengagement (‘silent resignation’ as it is now called). In this situation, it is the most talented who head for the job market.

With real clarity around strategic goals, honesty around tough decisions and ruthless focus on prioritising for long- term success, it is possible to prune for growth in a way that optimises future performance and productivity. Some priorities will have to give, some projects paused or shelved, and ways of working to achieve key outcomes will need to be reviewed.

• TOP TEAM ALIGNMENT

It can be hard for boards to get a line of sight on how the top team is truly operating. Executives will be on their best behaviour and often only see the board to present a paper relevant to their area. An astute observer of the chief executive and executive leadership team (ELT) working through the strategy reset, combined with a little diagnostic digging, will quite quickly identity whether the top team is firing on all cylinders or needs a reset.

For example, there are usually a number of indicators which show whether the team is operating as an “all-of-enterprise team” or creating competing silos. The interactions between inherent structural tensions in the organisation’s design and the relationships between the responsible ELT members are invariably at play in how efficiently the organisation is operating.

The first step for the CEO is to be clear they have the right capability, composition and structure in their top team, given the efficiency gains required. When the pressure is applied to do more with less there is no room for passengers – or ‘terrorists’. If the CEO (or board) has doubts about whether they have the right team to move forward, this needs to be tackled up front.

Difficult conversations put off at the front end of a big restructure or cost-out process inevitably come back to bite. Allowing senior executives to stay in place who do not meet the bar can lead to expensive and time-consuming unpicking of many decisions or actions. Worse still, they will frequently tend to be the leaders who will lose, rather than retain, the talent required to take the organisation forward.

Once the CEO is clear about team composition, alignment around the key strategic objectives is critical. It is important to dust off the team’s ways of working, often described in a teamcharter or team operating model. Boards should review this team charter. If the team has never discussed its ways of working, and how ELT behaviour supports the organisation’s values and desired culture, then the board might suggest now is the time.

Many CEOs/ELTs make the mistake of waiting until after the next wave of change to focus on how their top team operates. The best time to work on top team effectiveness is when it is under pressure to make key decisions and drive necessary change.

• IDENTIFY, RETAIN & ENGAGE KEY TALENT

The critical thing in any efficiency- driven reorganisation is to ensure your best people and future leaders end up in the key roles, and are motivated to play to their strengths. Unfortunately, many organisations trying to get costs down through restructuring processes disengage their key talent in a number of ways.

The first is uncertainty. If you have waited until launching your change ‘consultation’ before auditing your talent you are stuck, unable to give anycertainty while the process drags on. Your highest potential people will often feel undervalued and many will be at lunch with headhunters before the ink has dried on your new structure.

The second is there is a risk you don’t get the best players in the right positions to accelerate performance.The best time to identify your key talent is now, not in the thick of a restructure with the fear of redundancies in the air.

Without an objective view of who has the best experience, capabilities or potential to carry out critical roles in your new leaner structure, your restructure will turn into a game of musical chairs. The most political will be the first to position themselves to get a chair. In the absence of an objective assessment, personal biases will come into play, leading to favourites keeping key roles while the more challenging, often diverse characters, often miss out.

The best way to engage your key talent is to identify them early, make sure they know they have career opportunities and then to invest in their development, including giving them broadening experiences. All restructures destroy value when they fail to lock in key talent. When people know they are valued heading into a change process, they are more likely to stay engaged and optimistic about their prospects than become ‘terrorists’ or take flight.

As a board you should regularly review strategy and ask your management team to focus resource on achieving key goals. Ensuring alignment of the top team is then critical to effective execution of strategy. Prioritising the retention and growth of key talent through this pruning process will support future performance. 

Mark Hutchinson MInstD is managing director of organisational change consultancy Divergent & Co and a director at Airways NZ. He has worked with organisations as diverse as Barclays and Sainsbury’s in the UK and Fletcher Building, NZ Post and Waka Kotahi New Zealand Transport Agency.

The do’s and don’ts