Evolution of the IT Organization Part 2: When to Carrot and When to Stick

(By Mike Raftery) 

Motivation is a tricky thing. Mission statements and company values help, but in the end, people are motivated by monetary incentives more than anything else. That is why you have to be careful what you incentivize. The case study world is littered with examples of unintended consequences, motivating one behavior while taking away from the overall organizational goals. In the evolving world of corporate IT organizations, it is not sufficient to reward project deadlines and technical accomplishments. If the IT organization is truly to be viewed as a partner to the core business team, then they need to be incentivized and rewarded just the same as a core business team.

In this ongoing series of blog posts, we are exploring what a new and effective corporate IT organization looks and feels like. In part 1, we reviewed the overview of the organizational change. In this part of our series, we will cover just how to motivate the troops and how to ensure their behavior synchs up with the other business teams.

Common Organizational Goals

If the IT organization is to be seen as a true partner to the business teams, then they need to share the pain and the successes as the business units do. That means sharing common operational goals such as EBIT targets, revenue goals and cost savings targets. At first, the IT team that’s used to more direct goals might not understand the connection, but this integration to business goals should drive an understanding and more importantly, an overall understanding of what success means to a corporation at large.

Done right, this direct link to business results should manifest itself in new project ideas, productivity initiatives and roadmaps that enable better business performance. It should take away the motivation for “technology for technology’s sake” projects and allow for more relevant projects that actually help improve business performance. If IT is truly incorporated as a business function with baseline funding, it will take away the fear that without projects, the jobs will disappear. Once that fear is removed and organizational goals are aligned, the result is projects and tasks that actually drive productivity and help the organization meet its goals as a whole.

Less Focused on Project Milestones

When corporate IT organizations had massive cash burn rates for contractors, tight timelines to meet the project milestones were everything. In fact, the high cash burn rates would actually impact overall company performance if deadlines were missed and milestone drifted. In today’s smaller tactical project environment, the deadlines matter less than the deliverable. If a smaller discrete project is delivered on time, but misses the mark in functionality, then you just got to the wrong place on time. But you’re still in the wrong place. Today’s integrated IT organization places a higher value on deliverable quality than on time performance. There are still instances where deadlines matter to an overall integrated project or business initiative. However, the priority is on quality and relevance rather than deadlines.

This is a large shift from previous corporate IT incentives that rewarded deadlines over all else. It is a necessary shift to stay relevant as an integrated partner with the business organizations that IT supports. To be seen as a valuable partner, the IT organization needs to produce quality and relevant deliverables that matter to the business. Timelines are still important but they are not the end-all-be-all that they used to be. In the new incentive scheme, the IT team members need to be measured on quality and relevance to the project once live. That means defects post-go live and usability measurements from the business team as a post-mortem. Deadlines are important but not as important as hitting the target the first time.

Customer Focus

Since corporate IT organizations are providing a supportive service to supply chain, finance, sales, etc., they need to be customer focused. As a service organization, the value you provide is only as good as your customers perceive it is. Therefore input from the business teams as it relates to performance metrics is key. This can be captured in many ways. Direct feedback, surveys or informal conversations. Any way you do it, the customer’s point of view needs to be captured in the overall performance of the IT organization.

Corporate IT does not exist to serve its own means in this environment. It exists to enable higher performance from the business functions it supports. Therefore if the value, or perceived value, is not there from the business side, then the value is not there, period. This is a hard transition for IT organizations that are used to being evaluated on their own deliverables, but a necessary one to truly change direction of the team to add value to the functions that drive the business forward. This is a case of “Perception is reality.” Whether or not your IT organization thinks it is adding value is irrelevant. The only thing that matters is if the organization you support thinks you are adding value. Anything else is wasted effort.

Incorporating a corporate IT organization into the overall business is a hard transition. Gone are the days of stand-alone projects with huge cash burn rates and massive infrastructure. Today’s projects are shorter, tactically focused and integrated to the overall business plan. The value is now squarely placed on flexibility, quality and timeliness. If the corporate IT organization cannot hit these new targets then they risk drifting into irrelevancy.

In our last segment later this week, we will focus on what to keep in house and what to outsource as you consider the talent base required for the new IT reality.

Read the rest of the series here:

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