There’s that big internal project (think ERP, CRM, HCM/Payroll, Core Banking/Insurance) that has the potential to stop the whole organization in its tracks and will cost the organization millions of hard-earned cash to implement.
And somehow, the best people in the organization aren’t involved in the project.
How stupid is that?
Depending on your margins, you may have to earn many more millions to pay for the project. So, if you can prevent costs from doubling and extract some benefits from it, this would seem a smart investment, right?
Profit margins vary considerably by industry, but as a general rule of thumb, a 10% net profit margin is considered average, a 20% margin is considered high (or “good”), and a 5% margin is low.
Let’s stick with the middle and take 10%. This means that for every million you spend on your internal project, you have to generate 10 million in additional revenue to make up for it.
Considering that most technology projects will cost twice what is budgeted – without taking losses in revenue and productivity into account – I think it’s worthwhile to have your best people spend some time on the project.
But you know what?
Nobody wants that.
Not your executives. Not your line managers. And not your staff.
Why is that?
The answer is simple. Nobody makes a career with such a project. You can only lose.
If you’re staffed on the project, nine out of ten times you’ll still have to do your regular job as well. This means double the work and more stress. Your goals, bonus, and promotion probabilities are tied to your normal job, not to the project. But you have less time to achieve them.
This is not conducive to career advancement.
Your line managers can try to fill the gaps in their teams but they will have additional work because their people are working on the project. This will affect their goals, chances for promotion, and bonus payments. So they will do anything to prevent their best people working on that critical project.
And you, as an executive involved in the project, can only work on spending and damage control, as everybody expects the project will be a success and within budget. The probabilities that one or the other will happen are very small. And the chances of them both happening at the same time are close to zero.
And when you’re not a COO, CFO, or CIO, you’re expected to work on client-facing tasks, not internal projects, even when you and your teams will have to work every day with the result of that project.
There’s a massive misalignment of incentives here.
You have to fix this misalignment, because with critical projects it is very simple: If you want to have a higher probability of success, you need to involve your best people.
If possible, put them on it full time, and relieve them from their day jobs.
It should be made clear across the organization that the project has priority and that day-to-day things may take a little longer.
Bonus payments and possible promotions should be tied to the project goals. Career goals and project goals should be aligned. If this doesn’t happen, your best people will focus on the things that improve their careers, which may not always be in your organization’s best interests.
In a nutshell: If you want to have a higher probability of success with your critical internal project, involve your best people.
Posted on Sunday, August 07, 2022 by Henrico Dolfing