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Monday, June 30, 2014

Why You Need a Project Management Office (PMO)


Why You Need a Project Management Office (PMO)

– Megan Santosus, CIO
July 01, 2003 

For years, IT departments have struggled to deliver projects on time and within budget. But with today's emphasis on getting more bang for the buck, IT has to rein in projects more closely than ever. That challenge has led many to turn to project management offices (PMOs) as a way to boost IT efficiency, cut costs, and improve on project delivery in terms of time and budget.
While not a new solution, the trend toward implementing PMOs to instill much-needed project management discipline in IT departments is spreading fast. "More people lately have been talking to me about PMOs than they have in the last 10 years," says Don Christian, a partner atPricewaterhouseCoopers. PMOs can help CIOs by providing the structure needed to both standardize project management practices and facilitate IT project portfolio management, as well as determine methodologies for repeatable processes. The Sarbanes-Oxley Act—which requires companies to disclose investments, such as large projects, that may affect a company's operating performance—is also a driver, since it forces companies to keep closer watch on project expenses and progress. W.W. Grainger, an industrial products distributor, has a PMO that "enables us to complete more projects on time and on budget with fewer resources," says Tim Ferrarell, senior vice president of enterprise systems.
But PMOs are no panacea for project challenges, including battling today's tepid business climate. For one thing, there is no uniform recipe for success—it's important that the PMO structure closely hews to a company's corporate culture. PMOs also won't give organizations a quick fix or deliver immediate, quantifiable savings. And companies with PMOs report that they don't necessarily yield easy to use cost-saving benchmarks and performance metrics. In a survey conducted by CIO and the Project Management Institute (PMI), 74 percent of respondents said that lower cost was not a benefit of their PMOs.
However, survey respondents still reported positive benefits from the formation of a PMO, even if quantifiable ROI is elusive. Out of 450 people surveyed, 303, or 67 percent, said their companies have a PMO. Of those with a PMO, half said the PMO has improved project success rates, while 22 percent didn't know or don't track that metric, and 16 percent said success rates stayed the same. There is also a strong link between the length of time a PMO has been operating and project success rates: The longer the better. While 37 percent of those who have had a PMO for less than one year reported increased success rates, those with a PMO operating for more than four years reported a 65 percent success rate increase. The top two reasons for establishing a PMO, according to the survey: improving project success rates and implementing standard practices. In a finding that indicates PMOs' importance, a survey-leading 39 percent of respondents said the PMO is a strategic entity employed at the corporate level, meaning it sets project standards across the enterprise and is supported by upper managers.
There are two basic models of PMOs: one that acts in a consulting capacity, providing project managers in business units with training, guidance and best practices; and a centralized version, with project managers on staff who are loaned out to business units to work on projects. How a PMO is organized and staffed depends on a myriad of organizational factors, including targeted goals, traditional strengths and cultural imperatives. When deployed in line with an organization's culture, PMOs will help CIOs deliver strategic IT projects that satisfy both the CFO and internal customers. Over time—and CIOs should allow three years to derive benefits—PMOs can save organizations money by enabling better resource management, reducing project failures and supporting those projects that offer the biggest payback.

What a PMO Can Do

At transportation company Schneider National, a PMO provides the foundation for eventually doing portfolio management, according to Mark Mullins, vice president of finance for IT. And at Oregon Health & Science University (OHSU), CIO John Kenagy launched a PMO to help his 350-member IT department improve its project management acumen. "Doing a large project takes a village of people, and we don't want to approach each project as if starting from scratch," Kenagy says.
But while PMOs vary in terms of size, structure and responsibilities, Curtis Cook, president and CEO of consulting company Novations Project Management in Atlanta, says CIOs can expect PMOs to function in the following seven areas.
¿ Project support: Provide project management guidance to project managers in business units.
¿ Project management process/methodology: Develop and implement a consistent and standardized process.
¿ Training: Conduct training programs or collect requirements for an outside company.
¿ Home for project managers: Maintain a centralized office from which project managers are loaned out to work on projects.
¿ Internal consulting and mentoring: Advise employees about best practices.
¿ Project management software tools: Select and maintain project management tools for use by employees.
¿ Portfolio management: Establish a staff of program managers who can manage multiple projects that are related, such as infrastructure technologies, desktop applications and so on, and allocate resources accordingly.
Notice that Cook doesn't mention cost savings. While companies entertain a variety of factors for starting a PMO, most proponents agree that cutting IT costs or reducing the number of projects by a set amount should not be among them. PMOs can certainly lead to reduced expenses and fewer projects, but the first motive for creating a PMO is to deliver strategic IT projects with more consistency and efficiency. At Sun Life Financial's American subsidiary, CIO Jim Smith says his company's PMO was launched five years ago primarily "to implement the kind of discipline and project management processes required by the Y2K crisis." The PMO relies on three metrics to determine its effectiveness: accuracy of cost estimates, accuracy of schedule estimates and project stakeholder satisfaction. By all measures, it is a success; from 2001 to 2002, those metrics improved 25 percent, 31 percent and 9 percent, respectively.
Darrel Raynor, managing director at project management company Data Analysis & Results, says PMOs that take on responsibility for resource allocation can improve employee productivity. "By having oversight to all projects and personnel, a PMO can assign the best people to priority projects and keep their attention focused on that project," he says. Multitasking on several IT projects doesn't work, Raynor says, adding that productivity drops every time an employee switches from one task to another. By eliminating multiple assignments, PMOs can boost productivity while ensuring that priority projects get the most attention. That's the case at Grainger. "We have about 400 people in a centralized IT department, and one of the key benefits is that we're allocating the majority of our resources to the highest priority projects," says Ferrarell.
PMOs can nevertheless deliver a return in three to six months by providing the visibility needed to cancel, postpone, or scale back unnecessary or less strategic projects, says Raynor. At diversified technology services company Schlumberger, Project Office Manager Vincent de Montmollin says the PMO saved more than $3 million by reducing the number of small projects from 233 to 13.

It's Hard to Measure Success

But Schlumberger's results aren't typical. For survey respondents, improving project success rates is a top goal, yet getting metrics that prove that PMOs are working takes time. In the CIO/PMI survey, 42 percent of companies with PMOs less than 1 year old didn't know or do not track success rates. Only 22 percent of companies with PMOs older than five years said the same. It's inherently difficult to pinpoint project success rates for PMOs less than 3 years old simply because there's no track record of completed projects. Even if CIOs can determine cost savings or success rates, benchmarking results against other organizations isn't a reliable gauge of progress because so many variables factor into the success of a PMO. "To justify the existence of a PMO, companies can build a business case with relative ease," says Robert Handler, vice president of Meta Group's enterprise planning and architecture strategy service. "Yet people want a good quantitative number, and it's difficult to have that silver-bullet ROI that's applicable in all cases." For Schlumberger's de Montmollin, the biggest benefit of the PMO—giving the CIO the status and financial details of all the company's IT projects—isn't something he can quantify.
One relatively quick metric to come by is customer satisfaction among internal end users. Burlington Northern Santa Fe Railway (BNSF) scores customer satisfaction numbers on completed projects and tracks ongoing activities quarterly. Since the PMO was instituted, these customer satisfaction scores have been consistently improving. Jeff McIntyre, BNSF's assistant vice president of technology services, says the company is struggling with other metrics that could peg project improvements directly to the PMO. "No two projects are alike, so it's difficult to do comparisons," he says. In addition, BNSF sent about 40 percent of its development work offshore, so it's hard to attribute specific results solely to the PMO, says McIntyre. Yet BNSF is pursuing harder metrics; technology services is working on a Balanced Scorecard that will try to nail down measurements during the next year that paint an accurate picture of the PMO's effect on the bottom line as well as on processes and learning.
To create a PMO that is a good cultural fit, Handler and others recommend starting out with well-defined pilot projects that rely heavily on input from project managers in the business units. At OHSU, Project Management Officer John Kocon concurs. "You have to really understand the culture, look at industry standards and best practices, and tailor them to the organization," he says. "There's some give and take with project stakeholders who may resist doing things in a prescribed way."
To overcome such resistance, Kocon enlists support among senior managers. Others involved with PMOs say that senior management must be involved—either in terms of sponsorship or a direct reporting relationship—if PMOs are to be effective.

The Lines of Authority

To improve the chances of delivering quantifiable results, CIOs might be tempted to create strict PMOs that wield unwavering power over project management. People who have experience with PMOs caution against the tendency to create an entity that is primarily administrative, with roles centered around either approving and rejecting projects, or auditing projects for compliance to processes and metrics. "A PMO has to be instituted in a way that doesn't fly in the face of the culture," says Handler. A PMO that is too bureaucratic or rigid in terms of time tracking and the use of project management tools may reek of Big Brother. At The New York Times Co., a PMO founded to tackle IT issues surrounding Y2K was disbanded in January 2000 once it completed its mission. In mid-2000, the publishing company launched a virtual PMO with a decidedly different approach. The first PMO was "centralized with an iron fist," says Vice President and CIO Michael Williams. "Every task was reported, which was fine for that exercise, but it really wouldn't work in our culture. After Y2K, we adapted a new PMO to our collaborative culture." The current virtual PMO offers project management guidelines via an intranet.
The history of the PMO at The New York Times demonstrates how important it is to decide up front what kind of PMO best suits your organization, whether consultative or centralized (see "How to Start a Project Management Office," this page). Raynor of Data Analysis & Results says the consulting model—where the PMO provides ongoing support for project managers in business units—works well for organizations seeking either small gains in efficiency, minimal startup risks or both. "The consulting model fits into an organization's continuous improvement plans," he says. At The New York Times, Project Management Director Janet Burns is the sole full-time employee of the project management office; her role is to provide project managers with all the information they need to run a project without contacting her personally.
That's the case at OHSU, where the PMO's role as a facilitator lends itself to incremental improvements. "We're not looking for dramatic changes because they take too long," says Kocon.
The centralized approach, typically marked by hands-on control over projects, is most effective at organizations where the PMO regularly interacts with senior executives and has the power to cancel and prioritize projects. At risk management company Assurant Group, 20 project managers work in the PMO under the ultimate direction of former CIO John Owen (who is now the COO). Using well-defined software development and project management methodologies, the PMO works with business units on every aspect of project management—from defining initial requirements to post-implementation audits. Maintaining consistent processes across the organization enables Owen to break down projects into manageable components and thereby minimize failures. Centralized PMOs have a higher risk but also promise bigger benefits. In four years, Assurant's PMO has resulted in a 97 percent success rate based on projects meeting schedules and budgets.
Responsibilities of PMOs range widely, from providing a clearinghouse of project management best practices to conducting formal portfolio management reviews. A PMO's oversight need not be limited to project development or even IT. At Burlington Resources, a Houston-based oil and gas company, Vice President and CIO Rick Diaz gave the PMO responsibility for coordinating and tracking both projects and services. The PMO monitors IT's performance on service-level agreements. "This is unusual, but it gives me a single point of control and coordination that works for us," Diaz says.
Coming up with a PMO that works for any given organization is an exercise in both customization and patience. When it comes to establishing a PMO, there are no road maps to follow, benchmarks to shoot for or metrics against which to measure. The most effective PMOs are those that reap improvements over time and continuously push the IT department to improve on its performance.

© 2013 CXO Media Inc.

How poor Steering Committees cause projects to fail

Read more:

Performance Measurement

Performance Measurement

Measuring performance consist in defining and exploiting management tools to measure the achievement of defined objectives.
It implies that measurement is fully integrated in the whole performance management process, being but one step in this iterative process, often referred to as the PDCA cycle or Deming cycle:
  • from the definition of objectives (Plan),
  • to their concrete implementation (Do),
  • Measurement (Check), and
  • Corrective actions (Act) for the interpretation of the measures.
 The tool for measuring performance is a dashboard or a scorecard: It is a system of indicators, which should be made shortly after the master plan's formulation.
Concrete actions:
  • Define organizational goals and objectives in clear, tangible, and quantified terms,
  • Develop project / activity plans designed to attain the goals and objectives,
  • Routinely monitor actual performance vs. plans,
  • Analyze significant performance deviations,
  • Advise (via routine performance reports) key managers of situations requiring attention,
  • Formulate corrective action plans, and
  • Implement corrective actions to remedy performance deviations or modify plans.

Role of the CIO in the definition of a Performance measurement system

"You cannot manage what you cannot measure!"
In other words: organizations with existing IT performance measurement programs can discover ways to improve and extend their programs.
CIOs are being challenged to assure that their projects, activities, investments:
  • Are aligned with overall strategic goals and business objectives.
  • Deliver promised results on time and within budget,
These issues are far beyond measuring and managing technical performance. The CIO has to measure and report the value contribution of IT, in order to assure that the organization links strategic goals and business objectives, makes funding decisions based on expected project benefits and outcomes that support those goals and objectives. This clearly requires an active management of the projects to assure that the planned benefits are realized.
 In a concrete way, measuring performance should provide the CIO with information to:
  • Manage the information systems with regards to the business lines' needs.
  • Manage the information systems to support the organization's strategy. The business strategy has to be linked to the IT objectives.
  • Manage the IT department as an IT executive.
  • Communicate on a cross-sectional way. The information is used to demonstrate the value-added of both information system (IS) and IT department within an organization. Such a communication provides therefore credibility to both IS and IT department.
  • Communicate on a top-down way. The information is used to communicate objectives and feedbacks to the IT employees.

Best practices for the design and exploitation of a performance measurement system

The following steps present best practices to be considered by the CIO when implementing a performance measurement system:
  1. Gather performance data on those variables of interest to IT and senior management.
  2. Analyze the data to determine normal (baseline) levels.
  3. Determine appropriate performance thresholds for each important variable; exceeding the threshold that indicates a problem in need of immediate attention (e.g., achievement of a major project milestone is 30 days, or more, behind schedule) and possibly remediating actions.
  4. Periodically (often monthly) monitor performance variables for deviations from established thresholds (a.k.a., variances). When a performance threshold is exceeded (e.g., vacant PC support staff positions increases to 10% when the acceptable vacancy threshold is 3%), analysts identify a variance and determine its significance.
    Depending on a number of factors (e.g., severity or risk), analysts may take one of several actions, including:
  • Identifying the projects and concerned activities as "at risk" and more closely analyzing performance during the next reporting period.
  • Contacting the project / functional manager for a verbal variance explanation
  • Investigate the cause of the variance and formulate corrective action recommendations.
  1. Report on performance to senior management (at least annually), and functional management (at least quarterly).
  2. Initiate corrective action.
- See more at: Performance Measurement

Ten Disciplines to Measure IT Performance

Ten Disciplines to Measure IT Performance

6:42 PM  Pearl Zhu  No comments
"You can only manage what you measure."     Peter Drucker

In today's rapidly changing environment, information & technology becomes more invaluable asset for business to survive and thrive, on the other hand, many IT organizations are struggling with the image as cost center,  intend to improve reputation as service center and value center through high IT performance.

When you think of "IT performance," what comes to mind? Operational excellence such as customer satisfaction, IT effectiveness or efficiency, or strategic value such as competitive advantage, leadership edge, cultural agility

How to measure IT performance more effectively may base on the audience, the nature and size of your business, here are some new year resolutions and  general evaluation and principles.

IT Mantra: Running IT as Business; Doing More with Less

IT Performance Motto: Measure what Matters.

IT Performance Principle: SMART which stand for specific, measurable, actionable, relevant, and time-bound.

IT Performance Disciplines: IT Operational Excellence, IT Strategic Value

1. Reliability & Security - infrastructure running 24/7

Keep business light on with reliability and security, which is still the fundamental of IT operation, availability is a reasonable measure of infrastructure performance, IT scoreboard need measure internal customer satisfaction, the IT operational excellence need leverage the business growth, the goal is to satisfy customers with low cost.

2. IT Capacity & Capability

IT need expand the capacity and capability by improving operation efficiency & effectiveness with the KPIs to resolve incidents and problems, increase in number of problems successfully resolved and an increase in # of development projects handled without increased staff. IT's scalability and change capability will directly impact business growth. 

3. Customer/Vendor Relationship Management

IT must contribute or facilitate and accelerate organizational performance. and IT need performs from a customer perspective. The efficiency and effectiveness of the end user is crucial in this. How IT manage customer and vendor relationship has become the key to deliver the right solution at the right time, it includes the enhanced communication with business customers, iterative interaction with end users, and strategic relationship with vendors. The set of questions or measurement such as:
--Does IT create a revenue opportunity?
--Does IT create competitive advantage?
--Does IT solve a business need?
--Is IT priority and business priority consistent?

4.  IT Fiscal Health

IT mantra "run IT like a business" means to manage IT with financial transparency, governance, cost management, and business agility.  IT has to deliver the projects that provide the business an edge in the marketplace with minimum cost and on time. IT also need to be innovative and provide business solutions that has a direct impact on the bottom line. The IT Fiscal health dashboard may include such as Balanced Budget, Variance, Charge back., etc

 5. IT Application Portfolio Management

It's important for IT to deliver project on time and budget, but more critically on quality or value, the business value of IT project is priority for any forward-look organization now.

There are no IT projects, only business projects, IT application portfolio management need reflect the business priority, also through the more effective methodology such as AGILE via iterative interaction and continuous communication. Before a project begins, create a common dashboard that will display the metrics both business and IT teams will use to measure progress against milestones and deliverables.

6. Innovation Capability with Revenue Generating Initiative

The innovation capability will enable IT as a strategic asset and value center, the more sophisticated questions or measures need be initialized:
 --What efficiencies and revenue generation opportunities are supported/delivered by IT?
 --How does IT impact customer retention?
--How can IT have a "P&L" even if it's only for communication purposes.
--How can IT impact business metrics like RONA., depend on the nature of business

  7. Talent Competency

Talent is still the most competitive asset in any business, the total quantity and depth of competency of all are your people.  The more people you have with useful skills, the better your IT Performance. The leverage point is also to embrace the latest technology and methodology trend, the right measurement may help improve talent competency and  increase IT performance without increasing the numbers of IT resources beyond the budget.

8. Optimize business processes

The philosophy of running IT as business also means to expand IT lens for process driven, IT is just at such a unique position with helicopter view of business processes, since information and data are permeating into every corner of business, IT performance may also dependent on the value created  by optimizing processes, breakdown the silo, and improve customer experience by instilling the process thinking, via taking advantage of the latest technology trend such as cloud/social/mobile/analytics., etc.

9.  IT Agility

IT agility is the IT's ability to serve business needs quickly, the decision points include such as Build vs. Purchase; On-premise vs. Cloud; Public Cloud vs. Private Cloud,  it may also help determine the 80/20 rule: Does 80% of your IT resources spend on maintenance or innovation & growth. The KPIs may include such as:
- time to access : timeliness to access updated information
- time to value/market : how much time before value realization
- time to change : how much time does it take to change to happen
- time to recover : how much time to resume normal operation
- time to compliance : how much time required to achieve compliance
- time to detect : how much time before detection of risk
- time to resolve : how much time before awareness turns into resolution

IT agility may also directly decide IT maturity, from lower level of business & IT alignment into high-level growth engine and game changer which are the goal for high performance IT.

10. IT Sustainability

Sustainability is no longer just corporate social responsibility any more, IT as the biggest energy consumer in the enterprise, now has the opportunity to make green as the new gold, IT performance may also need include the capability for IT to achieve high energy efficiency, reduce carbon footprint by taking advantage of cloud and virtualization technology.

In summary,  IT has the power to affect not only break-fix day-to-day technical operations, but also directly impact the bottom line of business activities & efficiency and top line of business growth and competitive edge. The characteristics of good measurement are consistent and calibrated (will you get the same responses each time you undertake the measurement),  validity (does it measure what you want it to) and the purpose--measurement should involve an appreciation of what good (and bad) looks like, as well as a clear understanding of what actions you will take in each situation.

"To raise new questions, new possibilities, to regard old problems from a new angle, requires creative imagination and marks real advance in science."   — Albert Einstein

Measuring CIO performance

Measuring CIO performance

By James Thompson
August 26, 2005

Evaluating how well CIOs do their jobs is no easy task for a company. James Thompson investigates how to gauge whether IT is delivering what it should
Organisations have always found measuring the performance of CIOs a tricky business and most business executives have never really understood the 'black art' of IT.
One consequence of this lack of understanding is that often as long as CIOs meet their SLAs, keep a tight rein on the purse strings and talk a good game about 'aligning IT with the business', they pick up their performance-related bonus - regardless of how much true value they add to the business.
This is a big deal because large companies have multi-million pound IT budgets and sometimes pay top drawer CIOs combined annual salary and bonuses of more than £1 million.
Neil Ward-Dutton, formerly with Ovum and co-founder of IT advisory company Macehiter Ward-Dutton, says: "I think it is very likely that some CIOs will pick up their performance-related pay regardless of how they perform because there is so little clarity about what IT success actually is from a business perspective. Both IT and the business are at fault."
The IT effect
But CIOs at some of Europe's biggest companies strenuously deny that their performance targets are any less rigorous than other executives. John Worth, CIO at insurer Prudential, says: "I do not think it is difficult for companies to measure the performance of IT. I do not think it is any more or less difficult to measure the performance of a sales or IT executive or another executive."
In particular, CIOs cite the impact that IT can have on the bottom-line and reputation of a company. Gordon Lovell-Read, CIO of manufacturing and electronics giant Siemens, says of all his key performance indicators (KPIs): "The one I get most often reviewed on is the contribution to the bottom-line, such as cost savings or delivering process improvement."
The cost of technology "IT is always the one that spends the most money. If we save one per cent it is a big deal, while if corporate communications saves one or two per cent it is not so big," says Lovell-Read.
He adds that cost savings have always to be balanced with innovation. "We have to make sure we do not just cut costs." Worth agrees. "Pretty much everything we do is tied into the bottom-line. Some of it is very direct. For example, if I meet some technical cost savings it will impact the bottom-line."
Asked which specific projects had delivered a financial return, Worth says: "For example, introducing an enterprise data warehouse. We now have a single repository, which means marketing run much more efficient marketing campaigns and target customers with the sort of information that they are interested in and the cost of getting to customers is reduced."
Certainly the failed IT strategies of companies, such as supermarket chain J Sainsbury, Wm Morrision Supermarkets and furniture retailer MFI, along with public sector woes at the Child Support Agency, illustrate the impact CIOs can have on the share price, revenues or reputation.
"Increasingly it is becoming more easy to draw a straight line between IT issues and share price," says Ward-Dutton.
Hitting targets
That said, CIOs still have to hit their technical targets. Royal Mail CIO David Burden says: "A very large part of the CIO's job is to make sure that the technology services are invisible in that they only get noticed if things go wrong. If you are successful then you do not actually get any applause. I worry about 99.9 versus 99.3 for SLAs."
The same scrutiny is applied to bringing in projects on budget and time. Burden adds: "The reality is that very few CIOs would survive more than a couple of projects coming in late or massively over budget." But Burden and other CIOs agree that technical KPIs now carry less weight than other targets that add tangible benefits to companies.
Steering the ship Rob Fraser, CIO of healthcare company Boots Group, agrees. "Expert IT stewardship of IT has always been important".
But he adds, "increasingly running the function efficiently is a commodity thing." One of Fraser's key performance criteria, delivering the IT programme milestones, illustrates the shift in measuring CIO performance away from technology to adding value to the business.
Boots is currently in the throes of a major transformation programme, the seeds of which were sown in a 10-year £710m outsourcing deal with IBM, signed in 2002. "I think my targets will keep on changing and increasingly they will get targeted on the benefits of that change. At Boots we are having quite a transformation and we are coming to the end of the technology part of the programme. The conversations are now around how do we drive the business value from that."
One example of this change is Boots' implementation of new pharmacy systems in its stores.
"We have a very clear idea of how this improves our ability to dispense more quickly and what productivity improvements we can expect when stores go live," says Fraser. The systems are currently live in 1,000 Boots stores and it will finish the roll out this year.
Performance pay Further recognising the contribution of IT to the bottom line is the way many large UK companies now pay performance-related bonuses to CIOs. Many CIO bonuses are now inextricably tied to a company's overall performance, meaning if a company hits its profit target they get paid, and if it does not they don't.
"Nearly all the CIOs I know, who hold a similar position, have bonuses based on the performance of the company. A very big part of my package is performance-related pay. It is not more than half but it is big. If the company does well we all do well. It would annoy me if I did not get my bonus," says Lovell-Read.
Of course, the danger in tying salaries to company performance is that when profit targets are not achieved, it can demotivate employees who performed above expectations.
Royal Mail CIO David Burden says another risk of linking pay to personal performance is "getting into turf battles such as who pays for what, such as a business unit paying another and how much they charge."
Overall accomplishment
Boots is one company that did not pay bonuses to employees this year after reporting an 11 per cent drop in annual pre-tax profits to £481m. Fraser says: "My bonus depends on how the company does as a whole. Boots will not pay a bonus to employees this year. Our company performance was not good enough to trigger a bonus. There are some folk in the organisation who have had a good year and if we had a mix of individual performance and company performance then they would have had a bonus."
It currently has four grades to measure the individual performance of employees, of which the top one is 'exceed'.
"If you get exceed you get a better pay increment and potentially a higher bonus," says Fraser. Boots is currently reviewing its policy on individual performance bonuses.
Balanced objectives Arguably, Prudential's policy is more balanced. Worth says his bonus is linked to both the company's and his personal performance, although he adds, 'it is mainly company performance". His personal performance is measured on business objectives, such as keeping up with Prudential's change programme, and behaviour.
Worth says: "The main benefit is that you are focused on individual objectives and on behaviour, which may not have a direct consequence on the overall profitability of the business.
"The way I treat my people does not have a direct impact on this year's performance. But we think it is important enough that if the company performance is not there we still remunerate people on how they treat others. It is board members and my team. Your direct reports and how you interact with people."
Company perception Other less concrete measurements of a CIO's performance are office politics and the company's overall perception of IT, according to CIO head hunters.
Simon La Fosse, director at IT executive search company Harvey Nash, says: "A lot of it is based on corridor conversations and how well they are engaging with the business. How well the key people in the business believe IT is performing. The good CIOs have a feeling for managing expectations and how the business perceives them. Some of it is tangible and some of it is political."
But Siemen's Lovell-Read scoffs at the notion that CIO performance is partly measured by the business' perception of IT. "The concept of the business perception of IT only comes into play if IT is not regarded as an equal player. If a CIO is fighting the perception of IT then the company has bigger problems than it imagines," he says.
"Anyone who says they cannot affect the company performance is barking. I can stop the business by buying the wrong solution."
You are what you earn
One of the biggest perks of being a top CIO is the pay package. Simon La Fosse, a director at headhunters Harvey Nash, says that the average base salary of a FTSE 100 CIO is between £200,000 and £300,000. In addition, bonuses of more than 50 per cent of salary are not unusual, although a very small percentage receive bonuses of 100 per cent or more.
Alan Mumby, partner and head of the CIO/CTO group at Odgers Ray & Berndtson, says the total compensation package of high-performing FTSE 100 CIOs is between £400,000 and £600,000, but it can be significantly more for top dogs in financial services.
"Even a high-street bank CIO will typically pick up between £500,00 and £600,000 in a good year, while a top investment bank CIO will be earning a package of £1 million-plus."
La Fosse says CIOs are measured on three overall performance targets: project delivery, including hitting deadline and budget; systems delivery; and the overall perception the business has of IT.
Although much harder to measure, the perception measurement carries a great deal of clout.
"It is what the business thinks of you and of IT. If someone is on the way out it is not because they missed this and that, it is the groundswell of opinion that IS is just not getting it. Whenever I am called in to replace a CIO that is what they are looking for - someone who can deliver the leadership and keep the business happy," says La Fosse.
Of course, top CIOs have performance targets that extend way beyond technical KPIs and reducing costs. Technical KPIs are becoming more about the day-to-day running of IT and this would be covered by the technical director who reports to the CIO, says Mumby.
He adds: "The bigger CIO roles have a more strategic set of KPIs. This could be forging a partnership between the operations such as the profitability of a new product line and improved processes from the implementation. CIOs can get sucked into fixing problems when increasingly they should be creating opportunities."
Many also lack the necessary communications skills to become top performers. "One of the things that CIOs and IT directors are not very good at is articulating the value they provide," says Mumby.
Often their lack of selling skills is visible on their own CV. "They typically put on their CV what they have done, such as putting in SAP. What they rarely say is they put it in on time and to budget and the financial and productivity benefits of the implementation."
Performance bonuses all round at Royal Mail Royal Mail had a great year in 2004 and so did CIO David Burden. According to the annual report, he earned more than £1 million in salary and bonuses as reward for the mail operator delivering bumper profits of £537m for the year to 31 March 2005.
Burden, who joined the company in November 2002 and was appointed to the board last summer, received a salary and bonus of £255,000, excluding pension and long-term incentive plan (LTIP). He was also awarded £750,000 as part of Royal Mail's LTIP, which links executive bonuses and pensions to the organisation's performance.
He oversaw the transfer of 1,735 Royal Mail IT employees to supplier CSC in 2003 as part of a 10-year outsourcing contract.
In fact the company awarded performance-related bonuses to all employees, triggered by it exceeding its 2004/05-profit target of £400m.
Even low-paid employees received a bonus of £1,074, while chief executive Adam Crozier earned more than £2m, including his salary plus performance and bonus awards, held under the LTIP.
Burden's performance is measured on three main criteria: managing expenditure, the operational delivery of IT, and the incremental contribution made to the business by the effective use of IT.
"You are expected to make total expenditure go down each year." Of operational IT delivery, he says: "This is about being invisible," meaning no one notices IT because it is working.
"If you do not have invisibility, you are in trouble. Everyone is very happy at the end of year if they have barely noticed that you exist. This is an operational measure."
Of the three criteria, the most important is the contribution made to the business. "You have to do the first two right just to get a seat at the table and get a job," says Burden.
"The real reason we are here is that we believe IT can make a huge difference to the business both on the cost and revenue side. And to do it right brings a major positive benefit to the business."

Friday, June 27, 2014

Are you a dud in meetings? | LinkedIn

Alex Malley
Chief executive at CPA Australia

Are you a dud in meetings?

June 24, 2014

For too many years to be proud of I just didn't know how to perform in the strange beast known as 'the meeting'. What I did notice, though, whether right or wrong, fair or not, was that performance in meetings appeared to be a proxy for career progression. Even at the very least, it was a factor relevant to promotion. 

It makes sense when you think about it. Meetings are a common stage where, more often than not, you are on show in front of colleagues from multiple departments and seniorities. Your ability to effectively communicate is judged. You can either fill your colleagues with confidence in you, or drain it. So, leaving a consistent positive impression in meetings is a key factor in building and maintaining a positive reputation. 

I understood this as a young professional, but it still took me many years and mistakes to master it. Ironically, now as the most senior person in my organisation's meetings, I see younger colleagues trying as hard as I once did to make that positive mark. It reinforces that I should discuss the five core behaviours I have come to understand make people more effective in meetings. 

1. Key messages 
Work on the principle that time is limited. All too often, hard-working people deliver a level of detail that ultimately requires the Chair to abruptly cut them off mid-stream. 

Remember, in the first instance, less is more. 

In preparation, define the key messages you wish to deliver and aim to provide just enough detail at the meeting to prompt reasonable questions – that is your opportunity to then provide that little bit more information to showcase your knowledge. 

2. Certainty and confidence 
As a senior leader, or as a Chair of a meeting, you don't value surprises. As a participant always be direct and certain in your commentary. The minute colleagues sense doubt they will begin to second-guess even the issues you are confident about. 

If asked a question that you have no capacity to answer at the time, take it on notice and assure the relevant colleagues that your response will follow soon after the meeting. 

Certainty and confidence stem from your preparation. Too often great operators neglect their homework, creating the perception of uncertainty in a meeting.

3. Don't compete 
All too often colleagues enter an unofficial competition to outdo the other. Do not enter this game. Focus on your key messages, enter appropriate debates on issues and rise above any obvious petty competitiveness or politics. While competing might be tempting, your capacity to stay professional and objective during those moments will win you the long game – the only game worth winning. 

4. Timing 
If you speak too early on particular topics, the whole tone of the conversation may change and you may feel a need to re-enter to clarify your comments. Avoid this. It will damage your credibility. 

I am going to repeat what I know you will have heard many times before: timing is everything. You know the situation: everyone in the meeting is offering their opinion on a particular issue, each focused on being heard – there is a lot of noise but little substance. 

This is why timing what you have to say towards the end of the dialogue is a smart move. By doing so you will have a clearer understanding of all the issues and perspectives, placing you in the best position to either provide a better informed contribution or formulate a potentially useful closing to the matter. 

Remember, if you have nothing to say on a particular matter, say nothing. It will set you apart from the serial over-talker. 

5. Body language 
There has been much written about the multiple impacts body language can have. From my experience, the most effective body language is the positive type.

Never underestimate the power of the nod. 

Here's the situation: someone in the meeting is delivering an important message that you agree with. Try this, wait for eye contact, nod in agreement, and study that person throughout the ensuing conversation. They will more than likely keep looking back at you for reassurance. Others in the meeting will notice and likely presume this is a measure of your influence. In spite of the competitive world we have created for each other, most human beings seek recognition and reassurance – you can count on that. Don't overdo it, though - colleagues may question your authenticity. Express it when you mean it.

I hope these tips will help you take a little less time than I did to work out how to make the right impression in meetings!


Alex Malley FCPA is the chief executive ofCPA Australia and the host of the Nine Network television series The Bottom Line. Alex is also a regular contributor to The Huffington Post and he is a regular business commentator on the nationally syndicated programs The Money News on 2GB and Sky News Business.

The Westerner Expatriates Cycle of Integration in Asia and Middle-East

Marie Renee Ouellet
Managing Partner & Senior Consultant / Training Solutions & Programs Design

The Westerner Expatriates Cycle of Integration in Asia and Middle-East

June 26, 2014 

I am Canadian and I have been living outside my home country for over 14 years now. It might have taken me some firm convincing to join my husband in Saudi Arabia and leaving behind (what I thought at the time) so much and now with time, realizing how intense and fulfilling our adventure has been and still is. Saudi Arabia was just the beginning of a fantastic journey that lead us to reside in Oman, in Qatar and now in Malaysia, working all over the world and visiting for pleasure as many exotic cities as possible.

Expatriation becomes for many, addictive. Although we miss many aspects of our country of origin, it is hard for those who had a good time abroad to go back to a sedentary life.

Living in a foreign country means going through a variety of phases leading, hopefully, to a positive experience for all parties involved. The reasons for becoming an expatriate are various, ranging from "making money", "running away from stagnation and weak employment in country of origin", "career move", "personal development experience", "adventure and facing new challenges", etc..

The following stages of integration are to be expected and depending on your aptitude and your willingness to adapt, you will progress through this cycle:

1. THE COMPARATIVE STAGE: at the beginning, you will have a tendency to compare your new environment with everything you might have experienced previously. You will analyze prices and convert them into a more familiar currency; you will compare the traditions, the culture and the lifestyle to your own. Many times during a conversation you will say: "In my home country, we do this like that…" or "Where I come from, we do this like this…" Consciously and unconsciously, all your experiences are in relation and connected to your previous references.

2. THE INTEGRATION STAGE: once the differences become more familiar and integrated into your life routine, and when your expectations are being leveled with the reality of your environment and host country, you will feel less and less the need for comparison and you will "live in the moment" in serenity. This is the stage where you are creating a new system of references.

3. THE FULL IMMERSION STATE: this is the stage where you become fully adapted and integrated; your surroundings are familiar and what might have been surprising or chocking at first is now part of your reality. For example, you will no longer use your holidays as point of reference but the local national holidays; you might even forget some of your own traditions or celebrations if not reminded by your family members and friends back in your home country. You might even hesitate on your reply when asked "where is your home?" or "where are you from?". This is also the stage where you fully understand, respect and appreciate your host country.

Sadly, not all expatriates reach this final state of the cycle. The individuals that succeed at their expatriation have a tendency to want to explore and discover their host country, while adopting an attitude of "wanting to contribute" more than "wanting to change things and doing it my way". Those expatriates looking at replicating their home country in their new environment usually find their stay uncomfortable and have a hard time fitting in.

Expatriation is not for all, however, with a good dose of flexibility, it could very well be the adventure of a lifetime! My most useful tip: having a great partner to accompany you or a good network of people who have adopted the same lifestyle (work connections, expatriates associations, embassies, etc…) to share all you new adventures.

Marie Renee Ouellet is the founder of RSVP Consulting & Training and has been designing and delivering Cultural awareness programs for Westerners employees working in the Middle-East.

Thursday, June 26, 2014

Getting IT experts out of the server room and into the boardroom | Enterprise Innovation

June 26, 2014

Getting IT experts out of the server room and into the boardroom

By Patrick Hubbard, Head Geek, SolarWinds | 2014-06-23

The skills and guidance of IT professionals is more critical to effective business decision-making than ever before. But it's not just sitcoms like The IT Crowd that put technology experts in a world of their own: IT managers need to break out of the perception that their place is in the server room but not the board room.

To do so, they'll need to translate their deep knowledge of technical systems and processes into insights that businesspeople can understand; they'll also have the power (and responsibility) to defuse technology hype and define targets for their co-workers that are most relevant to business success.

That sounds like a big ask of the humble IT manager, but the majority of them already feel up to the task. In SolarWinds' New IT Survey released earlier this year, 96 percent of IT professionals surveyed said they feel at least quite confident in providing advice on critical business decisions – and almost half said they were completely confident that they could do so. Yet although we found that almost every IT professional has delivered this guidance and counsel at one time or another, 7 in 10 only get the chance to do so occasionally or rarely.

This suggests that businesses have yet to fully tap into the diverse technical expertise that their IT managers can bring to the boardroom table. IT professionals, however, can quite easily make their potential decision-making value known – all they have to do is align what they know with what the business wants and needs. Here are five tips which can help the typical tech professional stand out from the Roys and Mosses of their own IT crowd:

Speak the language

Those who live outside the server room often have a pathological fear of the jargon and technical terms that IT managers are known to bandy around. Popular culture probably hasn't helped this misperception, but IT professionals can help make their own case by working on how they translate the technical implications of a system into laypersons' terms. Being able to succinctly and patiently explain how a system works will give executives and business leads greater buy-in to the technology that's powering their operations. IT managers can further boost their business-lingo skills by talking to their counterparts in sales, marketing, and PR – they're the best placed to gain effective communications tips and help better explain a piece of complex technology.

Remember: there's no way you'll be trusted with major business decisions if you talk like Moss.

Focus on actions, not features

IT managers have a tendency to emphasise the specs and features of solutions, rather than what they can do to help meet the business' overarching goals. Instead of just describing the capabilities of technology, they should frame them in terms of business actions: "what can we do (better) with this?" rather than "what does this widget do?" This hammers home the relevance of the platform or solution in a manner that executives can not only understand, but support as actionable for the business. To do this most effectively, IT managers need to cultivate knowledge of what the board is aiming to do: around 44 percent of those we surveyed said they could do with a better understanding of their company's overall business. By clearly highlighting the correlations between technology and ROI, IT pros can forge stronger partnerships with executives and build up that understanding over time.

Up-skill to manage (lofty) expectations

Hard technical evidence is the perfect antidote to hype. More than 50 percent of the IT professionals we surveyed said that cloud computing and information security would grow most in demand of any skillsets in the next 3 to 5 years. No surprises there, given the constant spotlight on the cloud's transformative potential and the high-profile nature of threats to organisational data.

IT managers should definitely focus on developing skills in these fast-growing areas; more importantly, however, they should use the resultant expertise to both meet and manage expectations from business leaders. IT managers' technical nous gives them the credibility to rein in overzealous technology adoption, by highlighting the potential risks that this "me too" approach can pose if it isn't informed by thorough requirements-gathering and planning. They should also take the initiative to suggest more appropriate solutions based on the underlying business needs that are driving enthusiasm or fear: a hybrid cloud, for example, may balance the security fears of a finance executive and the campaign vision of a marketing leader.

Use data to set better metrics

IT managers have access to vast amounts of organisational data, much of which can be used to optimise broader business processes and product/service delivery. By developing a decent overview of this data, and putting in place tools that can effectively track it, they can define new KPIs and metrics that are not just quantifiable, but also directly correlated with business performance. Tracking network traffic, for example, makes sense for both marketing campaigns (external browsers) and flexible work initiatives (employees' devices). Once IT professionals identify the core business imperatives at play, they can use that knowledge to better inform the targets that the business sets itself, and how these targets are measured.

Send word from the coal-face

Finally, IT professionals often interact with a broad range of employees and customers far more than board-level executives get to do. And while isolated reports of "my computer isn't turning on" may not have relevance to enterprise strategy, the attentive IT pro is likely to get wind of mission-critical trends – like poor quality-of-service, increasing outages, or malfunctioning hardware fleets – that do. By transmitting these issues and their related counsel to other business leaders, IT managers can do a lot to stop them escalating or identify new opportunities for organisational growth.

With technology playing such a defining role in business and the workplace today, IT professionals are more relevant than ever to the big decisions that organisations make. To be heard, they simply need to translate their technical prowess into insights and advice that directly impact the wellbeing of their companies, from the adoption of new technologies to the basic processes of product development and sales. The server room may always feel like home, but for many businesses the boardroom's where the IT leader is needed the most.

Why Most CEOs Are Cowards

Jullien Gordon

Helping Workaholics Like Me Recover & Redesign How They Work

Why Most CEOs Are Cowards

June 23, 2014

When I speak to the top executives at Fortune 500 companies nationwide about "work-life balance" or what I call "our life's work," I start off by doing a quick exercise where they anonymously write down:
  1. the things they thought they had to sacrifice in their lives for work...
  2. that they wish they didn't have to sacrifice...
  3. in order to get where they are professionally
Their responses will bring tears to your eyes:
  • grandparents' last days
  • childrens' births and birthdays
  • sports games and recitals
  • friend's weddings
  • family vacations and reunions
  • anniversaries
  • graduations
  • first-this and first-that
  • last-this and last-that.
The conversation that follows is usually one filled with regret, frustration over have-tos and hate-tos, and powerlessness against their employer despite the position they have with their employer.
Most executives in Corporate America think they got there because they were the hardest working people. But ironically, that's not true. It's not survival of the fittest. It's survival of the follower. The truth is that usually it is the second hardest working person that rises to the top.
There are misperceptions about and by those who made it, want to make it, and those who didn't and I want to take moment to clarify and stet the record straight.

1. What those who are at the top (aka CEOs) think:

They think they are the strongest. They survived the hazing of Corporate America. They leaned in and they are the workaholics now. Work came first just like the word "work-life" balance suggests. They sacrificed their marriage, kids, friends, and life beyond work and therefore they are deserving of the title, power, high-pay, and early retirement. Look what they gave up for the sake of the company. For them, life is on the other side of retirement. I'll get there soon enough and have more than enough money to enjoy it. Instead, they end up spending their retirement trying to earn and buy back the love, life, and people they put second. Their strength is really an illusion because they never had the strength to say "No" and choose their life. Instead, life happened to them. They made tough choices for the company, but they didn't make tough choices in their own life. Just ask their spouses and kids what they think. They allowed the company to take over their weekends and weeknight, move them from this state to that country and back, and they compromise what they said they valued. They put the company first.

2. What those who didn't (aka The Invisible Leaders) make it think:

They think they are the smartest. They actually worked harder than the those who are currently at the top. They were the workaholics, but one of two things happened to them. Either their own workaholism consumed them and they burned out. They may have got divorced or they recognized the negative impact it was having in other areas of their life, and they made an intentional choice to stop racing or to choose another career track. Once they realized that their corporate ladder was leaned up against the wrong wall or that it would never reach their full potential whether they became CEO or not, the decided to bow out gracefully. Now, they have a job that pays well-enough in a smaller company where they have more autonomy over when, where, and how they work. They put their family first and their happiness above the company.

3. What those who want to be at the top (aka You & I) think:

They think they want to be #1, but they really want to be #2. They hope that magically they will be able to have both. The beauty about time is that it is limited and it forces us to make choices. We can't fit everything in. It's a juggling act and a lot of people drop the ball. The best way to avoid the rat race is to get out. Inside, we know that there is a higher form of competition. Rather than competing against others to see who can climb the pyramid the fastest, the real game of life is a competition against our highest selves. We are torn between wanted to be recognized by others and recognizing our full potential.
We all want to D.R.E.A.M. awake, which means having our Desired Relationships, Employment, And Money. Each of us values those three things in a different order and with a different weight. And they also change throughout life. Instead of leaning in, I've checked out. And I've found a way to use my unique gifts, talents, strengths, and skills to have my own combination of #1 and #2.
Don't be fooled by what "successful" people say. They will make their story and life sound great in order to justify the choices they made. Success in the eyes of others doesn't guarantee that you feel successful inside. Instead, create value and hold true to your values and you will have success on your own terms.
Cowards die many times before their deaths; The valiant never taste of death but once. - William Shakespeare
Discussion Question: Do you respect today's archetype of the Fortune 500 CEO?
Wishing you the courage to live life as you choose,
Jullien Gordon
Work-Life Balance & Millennial Expert
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