Effective IT organizations rely on these foundations: well-defined, -designed, and -implemented integration with the enterprise; sophisticated process and practice oversight; and a robust, up-to-date technical architecture.
But without the right people, pointed in the right direction, your IT efforts will be futile, no matter how good these look in the documentation. A CIO’s success, that is, depends more on human performance than all other factors combined.
Nor is the question whether individual humans in your IT department are performing. It’s about the factors within the CIO’s control or influence that foster strong employee performance if handled well, or inhibit it if handled poorly.
CIOs have three tools at their disposal to encourage employees to perform at their best: compensation, organizational structure, and leadership. One of them even works reliably.
Compensation
Let’s get this out of the way: Paying people more won’t result in better performance.
Imagine you’re interviewing a software quality assurance analyst. In the interview you ask, “What would you need from me to minimize the number of defects at each stage of our software development lifecycle?”
The applicant’s response: “125,000.”
“I beg your pardon?” you say, nonplussed.
“If you pay me $125,000, I’ll minimize the number of defects,” the applicant explains. “For $100,000, I’ll keep the number small. $75,000 buys you software that won’t crash your production environment.”
You wouldn’t hire an applicant who pegs their promised performance to the amount you pay them. Employee effectiveness can’t, that is, be obtained through bribery. And yet, many managers think they can effectively use compensation as a performance incentive. They’re wrong. Paying too little can be a powerful disincentive, but that’s a different matter.
Compensation is a terrible incentive, due to the phenomenon ethologists call “habituation.” Habituation is getting used to something so its impact declines with repetition.
Give someone a raise or bonus today, and from here on in, getting another one is expected. Additional compensation stops being an incentive and instead becomes an entitlement, which, if it fails to show up next time, becomes a disincentive.
You avoid the incentive habituation trap by recognizing compensation’s proper role: It puts the company’s money where its metaphorical mouth is.
Compensation, that is, is the company’s loudest voice for making what it values clear.
In the human performance context, compensation falls into three buckets: base compensation, spot bonuses, and the annual bonus.
Base compensation: Set this so no employee has a financial incentive to leave for greener pastures. Annual raises, in consequence, communicate how much more you think each employee is worth in the labor marketplace now than they were a year ago.
Don’t change base compensation based on an employee’s performance over the past year. That would make a raise an annuity, which you’d pay out in the future whether or not the employee continues to perform.
Annual bonus: This is how you provide compensation for performance — for contributing exceptional value to the organization over the past year.
The annual bonus is a very loud voice. It clearly explains what constitutes exceptional performance, and the extent to which an employee exhibited it over the past year. It’s loud because you can, in round numbers, break even financially if an employee’s annual bonus is three times as big as their annual raise would be if you used that to reward performance. This works because unlike an increase in base compensation, the annual bonus isn’t an annuity.
Employees have to earn it all over again next year.
Spot bonus: When an employee does something that’s clearly above and beyond the norm, a spot bonus is in order. But don’t give them the money as a reward. Also don’t give them money as an incentive to everyone else to go above and beyond. That will trigger the habituation trap.
No, from the loudest-voice perspective spot bonuses handled properly deliver a simple and sincere message: “Thank you!”
That’s a good message to deliver.
At the end of it all, what’s most important about how you handle compensation is that employees perceive it to be fair. Fairness won’t lead to their working harder and with more dedication, but perceived unfairness will definitely dissuade them.
Structure
“It must be April,” a friend observed. “IT is reorganizing again.”
Reorganizations rarely improve an organization’s performance. Quite the opposite — they impair it. They’re popular because they buy time when the executive leadership team calls IT’s performance into question while avoiding the risks associated with deep and fundamental change.
A reorganization is an exemplar of Titanic Deck Chair Rearrangement Syndrome. It keeps the same work groups in place and makes them responsible for the same work, altering only which work groups report to which managers.
So far as how work gets done, nothing changes. Meanwhile, employees and managers who knew how to work together no longer work together.
The most frequently claimed benefit from reorganizing is that it can reduce the height of barriers to getting decisions made and work done by reducing the “organizational distance” between groups that have to work together. But the benefit is temporary, as reorgs raise as many barriers as they lower.
Often, the purpose of an IT reorg is to “flatten the organization” — to reduce the number of layers separating the CIO from the people who do the actual work. Fewer management layers means less of what staff know that the CIO needs to know gets filtered out.
Flattening can and does work. But it’s not an unmixed blessing. For every layer that’s eliminated, the manager at the next layer up has that many more direct reports, and therefore has that much less one-on-one time to spend with any of them.
When the goal is to improve a CIO’s ability to know what’s really going on in the IT organization there are other, better tools at their disposal — tools like “skip lunches,” anonymous employee surveys, open door policies, along with metrics and performance reporting — that are far less disruptive, and usually provide better and more unfiltered information.
Changing the organizational structure rarely fixes anything that’s broken, but it has a lot of potential for breaking what’s currently fixed.
Leadership
The word “leadership” has a mystique to it. It’s shrouded in the biographies of great historical figures, compounded by our experience of charismatic presences in our lives, and further obscured by the occasional snappy management guru quote.
Then there’s the discouraging assertion that “you can’t teach people to be great leaders.” This truism is an excuse that obscures the more useful perspective: While being a great leader is beyond the reach of most people, becoming a better leader depends on entirely learnable skills.
But this starts with understanding what leadership is — its definition. Leadership is the art of getting others to follow. If they’re doing that then you’re leading; otherwise, you aren’t.
Elsewhere I’ve enumerated the “eight tasks of leadership” (Leading IT: <Still> the Toughest Job in the World) — specific techniques anyone can learn that can make them better leaders. From the perspective of improving the performance of the IT organization you lead, what’s most important is recognizing the single most important fact of effective leadership: that effective leaders don’t get anything done. They build organizations that get things done.
The best organizations, that is, follow from in front.
The best leaders, in their turn, make sure everyone in the organization they lead knows where “in front” is, agrees that moving in that direction matters, understands the role (or roles) they have to play in moving the organization forward, and commits to that role.
The best leaders also encourage everyone in their organization to think of themselves as leaders regardless of their title, providing leadership to those around them so they also know where “in front” is, understanding and committing to their role in getting there.
And in conclusion
Everything you have to do to improve human performance takes time — time you probably don’t have. Fix this first.
Analyze your calendar. Tally how many hours you spend in meetings and undertaking tasks someone else put on it, compared to how much of your time is self-directed. If you don’t spend at least four hours a week in self-directed activities you have little chance of improving your organization’s human performance dimension.
So the first step in improving your organization is getting control of your calendar. This will be hard, because most of us, most of the time, spend more time working on what’s urgent than on what’s most important, relying on others to let us know what’s urgent.
On any given day your human performance responsibilities probably won’t be what’s most urgent.
But to lead a highly effective IT organization, nothing is more important.
