Organization Debt
Tucked away in the office files, deep in the annals of an organization’s machinations, helping drive strategy lies a financial spreadsheet. This spreadsheet outlines the financial operations, expenses, revenue streams and debt that enable the organization to do the work, create the value and drive the impact they hope to see in the world. Whether the organization is a non-profit, foundation, a government agency, private or public business, their financial health can be viewed and contextualized by delving into the financial statements.
While financials are an integral component of managing an organization, they only tell part of the story. The good and bad debt visible on financial statements enable organizations to better allocate and manage their financial resources. Here’s the rub: the most important resources organizations have cannot be adequately understood, allocated or addressed by viewing financial statements.
Much like an organization's financial resources, an organization's most important resource (see: people), carry good and bad debt that impact the organization in positive and negative ways; and most times, far less visibly.
This organizational debt can’t be found in the traditional documents, dictums or quarterly reports. Organizational debt is embedded in the structures, authority and flow of information within organizations. What I mean by “Organizational Debt” is the people, processes and patterns that are weighing you down. Like financial debt, there is good and bad organizational debt, and oftentimes, when it is operating in the shadows, we find it holds organizations back, constraining impact and ossifying momentum. Here are three arenas where I find many clients being impeded by unaddressed organizational debt:
Decision making: How are an organization's decision making processes aligned with the realities of the current work? Who has decision making authority? Who has the responsibility? Different decisions require different decision making processes, and too often, in the constant deluge of to-dos, organizations default to the HIPPO (highest paid person's opinion) decision making rut. By reverting to this archaic, extremely limited decision making practice, organizations find themselves repeating stale strategies and driving inequitable outcomes. By becoming aware of the organizational debt inherent in your decision making processes, you can better engage, inform, align and drive impact. To begin culling your decision-debt, at your next leadership meeting, review the best and worst decisions of the last quarter, and ask: what conditions made these decisions possible?
Available Perspective: Organizations rely on their people to innovate, inform and implement solutions. Many organizations are blessed with executive teams with long tenures; with some employees who have been there since “the beginning;” and with well established boards and founders. These are typically understood to be organization’s strength, and as is typically true, can also act as an organization’s weakness. Given the accelerating pace of change, operating with the established set of available perspectives is not likely going to lead organizations towards a healthy, sustainable future. By becoming aware of the blindspots in your organization’s perspective, you can begin to take focused steps to ensure you have a broader view and more nuanced understanding of the complexities you and your teams face. To get the ball rolling, at your next leadership meeting, ask: what additional perspectives will enable us to better serve and/or deliver in 2020?
Engagement/Fit/Performance: Given the historically low unemployment numbers and the immense difficulties of firing people, many organizations tolerate employees who are disengaged, underperforming and/or bad fits for the position or culture. Months and years later, we see toxic team dynamics festering, poor performance becoming acceptable and collateral damage stacking up. When organizations take the time to honestly identify where they are tolerating sub-par engagement, fit and/or performance, they can begin to remedy the situation. To begin to identify where personnel debt may be hindering your organization, identify who the best performers are and ask: what can we do in 2020 to grow this list?
The above are three of the most common areas I observe unaddressed organizational debt piling up and stifling. All of this debt can weigh heavily on an organization's ability to achieve its laudable goals. As the year comes to a close, and another rolls forth, I encourage you to spend as much time analyzing your financial debt as your organizational debt. There are many tools and methods to support your organization in conducting an audit of your most valuable resources that hold the key to excellence. Connect with me if you are interested in exploring how an audit can support your vision of success in 2020.