August 11, 2022

Article 5.10



High performance distribution is not possible with conventional, top-down, financial management. Instead, we need systems that spark bottom-up, adaptive, service value creation and even better total control. What follows is a "high performance environment" (HPE) prescription that outlines six "boundary systems."


In the '50s, the big cats at the zoo were in small cages where they were minimally active except at feeding time. Zoos have since found that animal activity increases with the size of the captivity area. Employees respond similarly; motivation increases in proportion to responsibility and autonomy. But, what about quality erosion of - delegated decisions, financial efficiency and cooperation?

The diagram below outlines an "expanded cage" solution in which employees are "free to roam." Each boundary system prompts, however, both increased performance and control.


The #1 boundary is "SHARED STRATEGIC BELIEFS." We must teach all employees the current strategic success guidelines that work for most distribution channels. These rules are built upon "service quality" economics targeted at customer niche(s) instead of traditional financial, product, and volume thinking.

The #2 boundary, "TARGET NICHE SERVICE STANDARDS", is an everyday set of standards that will be met, do or die, to keep faith with the customer. Universal measures include: highest targeted fill-rates (a niche at a time); zero errors and on-time delivery guaranteed; and same-day, aren't you impressed, heroic recoveries for infrequent service failures. Individual niches will have unique, important service standards that must be added for niche domination.

The #3 boundary is a hierarchy of "PERFORMANCE STANDARDS." Every employee should be able to monitor 4 to 8 measurables that surround their job performance at the micro level. Then, they should be able to link their micro numbers to 4 to 8 key macro numbers for the entire firm. If all other boundaries are attended to, then these performance numbers will improve as a byproduct. These standards will often be a secondary set of guidelines. For example, someone asks - "what should I do?" The answer might be - "Whatever you have to with whomever to first meet the service standards, then worry about cost efficiency."

The #4 boundary is the "ABCs OF CAPITALISM or WHAT'S IN IT FOR ME." After being educated about the first three boundaries, most employees will be asking themselves "why should I invest myself into this new approach to make others rich?" This boundary reminds everyone that "what you give you get" in the form of:

1) job security and growth that comes from satisfied, repeat customers who sell us to others;

2) pride that comes from having the best measurable service around;

3) premium wages for each job category supported by our high performance effectiveness;

4) and, fun playing the game of business, because we know - the rules, the score, how we can individually matter, and the spoils of winning.


The #5 boundary is "MASTERY EXPECTATIONS." How do we as managers systematically expect that everyone can and will pursue job improvement along the path towards becoming a "black belt 10th degree" for their job? How do we begin to define what a "10" performance is for each job? How and why should all employees pursue this? Do we have the in-house measurements and coaching to support this cause?

For support measurements, generate and share internal benchmark ranking reports. For example, imagine that all outside sales reps were scored monthly on 4 to 6 performance factors. These factors were in turn weighted by importance, so an overall effectiveness score could be calculated - like the NFL Quarterback efficiency score. Who are the reps in the top decile? What are they doing differently to be there? Couldn't they be models and flattered teachers for the rest? With good coaching couldn't we expect all reps to achieve at least what the 75th percentile is doing today?

This type of ranking report should be done for profit centers and as many groups of employees as possible. These reports will be confrontational to the bottom half. They can choose to be inspired and improve or work elsewhere. The choice of staying and being cross-subsidized by all other stakeholders should not be an option; it would demoralize the best.

Managers now don't have to be the tough guys making subjective calls. The standards from the boundaries numbered 2,3 and 5 will be the constant, hard-hearted voice of measurable, objective reality. Managers can now be the coaches who help all to improve or to find a new spot perhaps on another firm's payroll.

Although most managers may have gotten to their positions by being high-energy achievers, how many are prepared to teach the philosophy, the joy and the how to of mastery in a compelling way. We will probably have to educate the educators.

The #6 boundary constraint, "PARTNERS", requires the elimination of boss-subordinate, parent-child relationships. Everyone must act like adults in a HPE. Authoritarian, over-managing or paternalistic managers have emotional needs for thinking that: they are in control; they are always right and experts; and they are special and do not have to be accountable. Passive dependent, subordinates, on the other hand, need to be free of making any decisions that might fail. They like to reverse delegate to the boss who needs to rescue them; these two are inter-dependent.

We all have these defer-up and dump-down tendencies, because we learned them while growing up in families. This behavior on the job, however, freezes both individual and company progress. And, if both aren't learning and changing as fast as the environment, then the end is in sight.


Start the transformation to the HPE with a re-writing of a strategic plans/beliefs statement - 2 pages or less. Have others help critique it - outside advisors; trusted customers; and a sampling of employees. All other boundary systems will be shaped by this statement.

Assess the current leadership. Accountability starts with us! We are the folks who will not only have to teach, preach and expect "mastery", but we must walk the talk. Consider hiring an outside firm to conduct "360 degree evaluation studies" for key managers. This will impress the troops and see if current managers want to improve and lead by example.

Then, start to share general financial numbers with all employees(#3) and to educate them on what is in it for all of them (#4), but only if distinctive service (#2) is achieved. Some employees will take many teachings to truly grasp the financial and capitalistic dynamics of which they are a part, but the immediate take will be - "I am on the team; they trust me; this company is less profitable and secure than I had imagined; and I'm important in helping."

The gathering, crunching, sharing and team-analysis of trendline numbers associated with service, finance and internal benchmarking can evolve. To have comprehensive, real-time numbers requires a PC, spreadsheet skills, and lots of different inputs. A best solution might be an executive information system that feeds off of the general information system.


This HPE prescription will take work and cause some discomfort. But, arenít the pains of change preferable to dying. To survive and thrive we need to dominate niches with low-cost, high quality, high morale service created by can-do employees. Look past the recession of 1996. We will need excessive cash-flow, confidence and credibility to re-invent ourselves in time for and in synch with "electronic commerce" which will hit distribution channels hard starting in 1997. Will top-down, conventional, financial management see us though or is it time to re-think our operational methods?

Merrifield Consulting Group, Inc., Article 5.10