In the last post Jim Kennedy, Asset Management Council, looked at what it took to construct a ‘defensible budget’. He argued that stakeholders (customers, community, government, employees) are everything but he wondered whether organisations really understood what they were promising. In other words were they really clear about the consequences of their decisions and promises made?
Capability to deliver
For example, had they turned these promises into the capability to deliver (technology, plans, people, facilities, information systems, logistics, support systems).
This has two aspects: there is an ‘enabling or inherent capability’ and an ‘organisational design, or organisational capability’. In other words, the equipment may be able to deliver, but has the organisation the right people in place?
Studies have shown that where someone was sent in to fix a problem who did not know what needed to be done, was not familiar with the asset or problem, or was not fully competent to do it, the level of competence was only 50% . This led to the job needing to be done 5 (!) times more often than if a competent knowledgeable person had done the job initially with 100% competence.
But what is the organisational implication of this? To ensure that you have the right level of competence ready when needed, you have to have highly competent (and thus well rewarded) people under-occupied so as to be available when needed. As we cut back on training because it is expensive, and aim to have everyone fully engaged all the time in order to ‘achieve efficiencies’ – what is the real cost? If we cannot demonstrate the benefits of organisational capability in a ‘defensible budget’, costs will increase and quality decline.