A question that is fundamental to the design of a function is whether the primary task of the function is simple to perform (in which case, it must be repetitive, or else there will not be enough work for an entire team – and neither will there be value-addition to justify the expense or complexity).
Task Complexity and Unevenness Avoidance
Let’s say we are in a financial services firm, and we are selling equipment financing to doctors. A Sales person has to continuously look at equipment that clinic-owning doctors of different specialisations, and small hospitals (the larger ones would likely be handled either by the manager, or by a colleague from a different vertical) are purchasing. They need to mention this to the doctors they speak with. They need to stay in touch with them. Eventually, the Sales person receives an occasional phone call back from one of the doctors, confirming their interest in purchasing a specific piece of equipment. Often, they do not receive a call, and yet, the next time they visit the doctor, they discover that the equipment has been purchased. They then learn that the doctor took equipment financing from a competitor.
But, suppose they receive the call, they then need to go through a process of obtaining required documents from the doctor confirming their cash flows and existing assets. They present the doctor’s case to internal Operations and Risk team members and have to convince them of the safety of the loan. After this, if they get the go-ahead from those teams, they declare the good news to the doctor. Thereafter, the process of disbursement starts. If the EMI of the next month comes in on schedule, the Sales person feels at ease, and stops thinking of the doctor and the loan. In the course of a single month, such a Sales person might end up triggering and facilitating the giving out of a dozen such loans.
Contrast this with a firm that supplies capital equipment. A Site Engineer is at the customer site for several days already, supervising the process of getting the site ready for the equipment installation. A truck containing the piece of equipment has arrived late last night. This morning, our Engineer takes an envelope containing some papers from the driver. They confirm that legal formalities (such as those of GST) have been correctly handled. Then our Engineer arranges for the crane at site. Much earlier, s/he had already worked out exactly where and in which direction the equipment would be placed. The crane carries out the transfer of the container over two hours, carefully. There are 500-odd components of the equipment. The Engineer confirms that all of them have arrived. The equipment is then assembled over the next few days by the Engineer and some mechanics. It is then tested (the Engineer’s manager has also come in, to be present for this) – which means everyone stands back, and with great anxiety, electrical power is switched on. Let’s say, it does not work (and there might be a sound or a smell, too!). They will now need to open up the equipment and diagnose what went wrong.
There is a difference in the complexity of the two primary tasks of equipment financing and site erection-commissioning, isn’t there? Let’s take the parameter of time-lengths of tasks. For the loan sales person, the unit task of getting a loan processed does not take more than a week, and the entire matter is closed in her mind soon thereafter. Also, this time of a week is only elapsed time, not the time needed to perform the task. She might process three files during the same week, in addition to several business development calls. For the site engineer, the unit task can run into several weeks, and there is no question of attending to multiple customers and sites during those weeks.
Both, the Sales person and the Engineer, are reviewed daily by their respective managers. But there are significant differences in those review processes. One gets reviewed for the number of doctors spoken with, the progress on past exchanges with doctors, etc. There are no natural crucial moments to build up to. Hence the month-end is the conjured pressure point. Anxiety is built by setting large targets for each month, necessitating that a certain number of doctors are met each day. The site engineer gets reviewed in a much more non-specific way initially. As the equipment comes up for commissioning, the reviews become tighter, and include smartphone-clicked pictures exchanged on WhatsApp, of exact connections and readings, several times in a day. For the last bits, seniors turn up at site to confirm correct assembly. There is a natural build up of anxiety.
One of the insightful findings (with many important implications) of the research of the great Robert Zajonc, to put it simply, is that when task is simple, increasing performance anxiety improves performance. But when the task is complex, increasing performance anxiety worsens performance (and what is simple or complex depends on the task performer). Managers seem to have known this intuitively all along. Factories have always been noisier than R&D labs.
There are other factors at play too. The sale and the revenue assurance for the equipment supplier was settled months earlier, for that particular piece of equipment, supplied at the customer site. For the financial services business, it is a month-on-month anxiety throughout the business.
Even for the Sales function of the capital equipment supplier, sale is recognised by the seniors to be a ‘long-cycle’ process – it typically takes weeks and months to close a sale. Hence, there is no follow-up by the manager thrice a day on orders closed. The manager might still speak thrice during the day, but these conversations will be problem-solving conversations regarding preparing a bid, carrying out specific ‘pre-sales’ activities, preparing for sale-related negotiations, etc.
One of the findings of the research of Robert Zajonc, to put it simply, is that when task is simple, increasing performance anxiety improves performance.
The sheer capability of maintaining tight business-wide reviews, with quick day-to-day course corrections, is a capability of a business such as financial services. It is not uncommon to see managers checking on how many doctors have been spoken with by a Sales person by lunch time, or for Regional and National Managers speaking with field staff on specific targets, transactions and business development opportunities. The installation-commissioning function of a capital equipment maker typically does not have such a capability – and perhaps it does not need it. Instead, they have this far more uncertain process to live with, as to where their next order might come from. Sensing that business might be slowing down or surging is difficult, but vital, so that relevant actions can be taken in time.
The shareholder and the bank expect a certain steady financial performance of any business. But the business itself could have very different cycles of cash generation. Maintaining the predictability and equanimity at the level of financials, despite those different and fluctuating cash generation processes is a necessary capability of all good businesses. This is a definite marker of any “blue chip” company.
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