Last in the Leadership-via-4th-generation-objectives series are two items; (e) mid-course learning corrections and (f) event or decision driven reprioritization. Both of these help create a living, breathing business Bible. You and your organization will become better informed about your business, your decisions will become more intelligent and correct, and your organization will recognize that you are a leader crisply dedicated to making the organization's performance improve.
Regarding (e) a simple example: If the initial judgment in the cash-by-working-capital objective was that $3M could be achieved by changing payment terms, but 60 days later the new judgment is a bona fide but only $2M, change it.
If the initial judgment that $4M could be achieved by better collection procedures and the current judgment is $5M, change it.
Rearding (f) another simple example: If creating a certain cash balance had been the #1 priority but through cash collections, good operating performance, and bank leniency it is still important but not as critical, reassess. Maybe its time to reprioritize, put investments into the European market ahead of cash collection in the priority stack.
When these types of decisions are made with your team, they clearly all share in the decision process and they'll be buying into these substantially better informed objectives and the amended results on their bonus calculations. At bonus time your payout calculations will be both consistent with their expectations and most importantly with the current (not 15 months' ago) view of what is important.
Comments