Throughout the series of articles on the Care and Growth™ Company model (or the value-added model), I hope that I have been able to demonstrate the model’s appropriateness as an instrument of involving all of the stakeholders in a common fate understanding of a company.

In this article, I will deal with the alignment of activities at team and individual level to the overall mission and strategy of the company not only to forge the common fate understanding in practice but also to create clear line of sight between an individual’s day-to-day routine and the ultimate strategic purpose of the company.

To begin with we need to re-examine some of the key tenets of the Care and Growth™ organisational model and how it establishes the framework for common fate alignment.

The first is that the model is based on benevolent motive. In other words it defines the purpose of the organisation as being there to serve (its market). Material rewards are seen to be the consequence of contribution and not the converse. Indeed at a higher philosophical level, rewards are defined as merely an instrument of encouraging continued and enhanced contribution, or, in an organisational sense, creating capacity to serve. This is important in a practical sense, because it gives one a very clear guideline on defining a company’s mission, vision and strategy.

But more importantly, it is the only way of aligning all behaviour, from MD to sweeper, towards a common goal based on what each is giving rather than taking. It is simple logic that it is far easier to ensure commitment and loyalty to a common focus on contribution than it is to encourage loyalty to a divisive focus such as reward. The latter is even more difficult if rewards are viewed as being competitive and partially mutually exclusive, as they tend to be in a modern profit driven organisation.

A further strength of the service driven, value-added model is that the value-added measurement, which simply means wealth creation, reflects not only contribution by the company as a whole, but also the reward due to the primary stakeholders of labour, capital and state. Nothing in accounting or performance measurement more adequately reflects the performance of the company that commonly and equally affects all of the stakeholders.

Its usefulness as a focal point for performance and as a trigger for flexible rewards is therefore obvious. Add to that the easy to comprehend formula to calculate wealth creation (sales less outside costs), as well as the supporting full value-added statement (again easy to understand at any level of comprehension) then it arguably is by far the best accounting convention to use to establish market driven behaviour, service and operational excellence and encouraging loyalty and commitment to a common purpose throughout the organisation.

In working with the statement for the past two decades or so, I am still constantly amazed at the extent to which the model as a whole, and the value-added statement as a reflection of the model’s performance, can affect and is affected by the smallest detail in all three of the main activities of a company – behavioural, organisational and measurable. I have also found that the model accommodates and acts as a comprehensive umbrella to all of the new practices of modern organisational theory, such as Theory of Constraints, Balanced Scorecard, and the Covey approach.

On their own these do not, and nor do they claim to offer a fully comprehensive answer to organisational transformation and excellence. The Care and Growth™ model does give this comprehensiveness, although admittedly, it still needs development in some of the finer detail in some areas. The Care and Growth™ model also has no difficulty in accommodating best practices unless these openly contradict the overall philosophy of benevolent intent.

It was in line with the belief that benevolent motive can cascade from the mission statement down to the day to day activities in the workplace, as well as create an operational excellence methodology at any level in the organisation, that we forged direct links between components of the company value-added statement to a set of measurements at operational level. The latter are called “sub-scores”.

As a reminder, a typical value-added statement looks like this:

Working from the top down, the first measurement one deals with at executive level is indeed value-added or wealth creation. This figure is a direct measurement of the extent to which one is meeting or failing to meet one’s mission, or making a contribution as a whole. The components of value-added are sales and outside costs, and remember maximum wealth is the result of selling the most one can, getting the best price one can, and containing outside costs to a minimum.

I need not go into the detail of how these three conditions act as excellent headings for a detailed strategy with all of its trimmings such as SWOT analyses, goal setting, action plans, timelines etc. Actions at this level would require diagnoses and remedial action of things such as customer base, suitability of products, positioning, marketing, market share, pricing, suppliers, sensitivity to exchange rates, customer feedback etc., etc.

Accountability for delivery may have to cascade one step down to senior management, or divisional leadership level. For example, if quality or short supplies are issues, then testing performances against clear standards within an Accountability Format© will quickly identify at which point accountability rests. It may go right down to operator level as the source of the problem, but no doubt some accountability will linger at each step down the line.

The lower half of the value-added statement (wealth distribution) offers as many and as important challenges as the top half (wealth creation) does. Remember we argued in a previous article that sensible wealth distribution means meeting the legitimate expectations of all of the stakeholders, and encouraging continued contribution. The first issue to deal with would obviously be an imbalance in distribution, or unfair distribution. This contradicts one or both of the conditions of sensible wealth distribution.

The two options in restoring balance are simply to create a cake big enough to accommodate a more equitable distribution, or forcibly restoring the balance by adjustments such as retrenchments etc. (The way companies are set up it would be highly unlikely that there is an imbalance favouring the shareholder. Invariably an imbalance “favours” labour, which in turn makes it vulnerable to any exercise aimed at restoring a balance.)

As with wealth creation, some of the decisions on wealth distribution will be strategic and part of an appropriate strategy at executive level. But many may also require cascading down to the next level, and the next.

Where these strategic outputs, based on diagnostics and remedial action emanating out of the value-added statement, are cascaded down to the next level in the line, they will automatically become part of the strategic goals for this level. Similarly, while some accountability may rest at this particular level, many will go down further, until eventually they become the operational goals at the workplace.

By now these goals would have been translated into specific measurements or “sub-scores” of the value-added statement. For example, if quality was one of the strategic issues of “sales” at company executive level, then it would be highly surprising not to find some or other quality measurement such as OTIF (On Time in Full) at most operational units. Another example would be if containment of outside costs is a company strategic issue then a waste reduction programme and suitable measurements will have to be implemented at operator level.

The above is of course, standard procedure within strategy design and implementation. The difference, however, is that at all levels the outcomes are designed, measured and spoken about within the context of common fate and linked to the understandable value-added accounting format. Aided by visual tools such as picture-illustrated scoreboards, one has a communication medium that has proved highly effective in maintaining line of sight and changing behaviour.

Perhaps I have also given standard strategy design and implementation too much credit. It has been my experience that these seldom end up with coherent, line of sight and understood standards and measurements at operational level.

At one site we discovered no less than 50 “sub-scores” that were being measured and communicated to workers on a routine basis. Not only were some of them highly complex, but also the average operator was punch drunk from numbers. The fewer the sub-scores, the better. One can always replace a sub-score or two, even on a routine basis.

It is perhaps obvious that the sub-scores, their targets and standards, should become the template of all operational meetings, and should feature strongly in one-on-one discussions, particularly where the latter is focused on the growth of the subordinate and his or her performance against standards. The defining of standards linked to operational sub-scores, linked to the value-added statement which ultimately reflects the health and performance of the company, gives one the base for defining appropriate accountabilities designed on the Accountability Format©.

Earlier, I used the term “spoken about” perhaps a bit too lightly. The Care and Growth™ model and its emphasis on contributory behaviour, demands from leadership not only a different set of strategic values, but also a different language. For one thing, virtually every activity should consistently be spoken about or debated within the context of what is good for the customer. But it should reach out much further. For example, there is a big difference between telling an employee that the company is not making enough profit, and telling him or her that shareholder expectations are not being met and wealth is not being shared fairly.

A common fate understanding of the company, and accounting for the company at micro and macro level from a common fate point of view, is the ultimate weapon in forging loyalty and commitment. It has to be encouraged by word and deed.