Introduction to the V Model

Where do objectives come from? A distinct link between objectives and needs should exist for each consulting project. Chapter 6 focuses on the five levels of evaluation and explains how they are critical to providing an overall assessment of the impact of a consulting project—particularly when a solution is implemented as part of the consulting project. Chapter 7 shows the importance of setting objectives for the consulting project at different levels. This chapter makes a further connection to the original needs assessment. Figure 8.1 shows the connection between evaluation and needs assessment for consulting projects. This figure shows the important links from the initial problem or opportunity that created the need for consulting to the evaluation of the project. Level 5 defines the potential payoff and examines the possibility for a return on investment before the project is even pursued. Level 4 analysis focuses directly on the business needs that precipitated the need for consulting. At Level 3, the specific performance or action is defined that must change to meet the business needs. At Level 2, the specific information, knowledge, or skills that are needed to address the performance needs are identified. Finally, the preferences for the project implementation define the Level 1 needs. This connection is very important to understand how alignment is achieved with consulting projects.

An example will help illustrate this linkage. Figure 8.2 shows an example of linking needs assessment with the evaluation for a consulting project. This particular project is designed to create a work-at-home solution for an organization. In this project, several business input measures, such as productivity, office expenses, and employee turnover are identified. Also there are many intangibles that should be connected to this solution. These include reduction of carbon emissions as employees drive less, job satisfaction and stress reduction, as well as increased physical well-being and other benefits. As the figure shows, the first step is to see if this is a problem worth solving or an opportunity worth pursuing. This usually validates the problem using Level 4 data. In this example, the payoff need is based on the problem of employees having to travel long distances that generate costs to them and damage to the environment. The average commuting time for the team is almost two hours. At Level 4, the problem unfolds with more detail, and it is obvious that this is worth solving. Office expenses are very high and increasing as staff additions are made. Turnover, which is expensive, is extremely high, averaging 22 percent, while benchmark data suggests that it should be about 12 percent or lower. Productivity needs to improve; it has not increased in the past two years. Absenteeism is excessive, and stress is high. When all these measures are considered, this presents a serious problem, and to a certain extent it is also a great opportunity for improvement.

With the confirmation in Level 4 that there is a problem, a potential payoff can be estimated. This involves estimating the cost of the measures of office expenses, turnover, and lost productivity, and estimating the reduction that can come from the consulting project. This develops a profile of potential payoff to see if the problem is worth solving.

At Level 3, the causes of the problem are explored using a variety of techniques.

Ideally, each measure should be analyzed to see what is causing it to be where it is (i.e., why is productivity not improving, what is the cause of the excessive turnover, etc.?). For this project, the consultants conducted interviews and focus groups, examined exit interview data, and administered surveys to understand why business measures are at the current level. Some causes of the problem were obvious, for example, office expenses are incurred due to growth and the increasing costs of real estate and leasing.

The key issue is to identify the solution to the problem. The commuting time will not get better unless the office space is either moved to the people, the people are moved closer to the office, or they're allowed to work from home. The turnover issue has many components, but having an alternative work schedule, such as working at home, would reduce turnover significantly according to an analysis of exit interviews. Some employees have left to work either closer to home or at home. The productivity issue is a little more confusing. It could be better, but it is not clear as to how this should be addressed. Interviews and focus groups hint that working at home might raise the productivity. Absenteeism is traced to problems that could be solved if there were some flexibility in work arrangements. Flexibility in their work arrangements may help avoid this stress, and it appears that it could be resolved with a work-at-home situation as well.

At the next level, Level 2, the learning issue is explored. Do employees understand what's necessary to make this work? Are employees confident that they can work at home? Are they fully aware of all the issues and the ramifications of working at home? Do the managers understand what's involved in this arrangement, and can they adapt to a work-at-home arrangement? These issues involve the content of the project, detailing what people must know to work successfully at home.

At Level 1, the desired reaction must be detailed. At first, a realistic picture of the work-at-home environment must be presented so that individuals may understand this choice may not be for everyone. Also, when the ground rules are fully understood, employees must see this as helpful, necessary, and, for some, even motivational. Managers must see this as a tool to help them and the organization, not as a process that's going to cause them to lose control. These perceptions are very important and must be approached very deliberately.

These five levels provide an overall profile for determining if the problem is worth solving, align the project solution with key measures, and identify the issues necessary to develop the objectives. The consulting project objectives for each level are shown in the figure as well, along with the evaluation method to verify that the objectives were met. This process is important to the development and implementation of a consulting project. Many consulting projects are involved in developing a solution and implementing the solution, as in this particular example. When this occurs, the above linkage connects the needs to objectives and then to evaluation.

The solution to the problem or opportunity to pursue is an important part of this linkage. Some consulting projects may be involved in uncovering needs with the initial analysis to determine the causes of the problem and then recommend solutions. In those situations, it is up to the client to then implement the solution, or implementation becomes part of another consulting project. In either case, the solutions are ultimately developed for a complete consulting project. If this has not been accomplished, multiple levels of analysis may be necessary for the project. While there are other references that focus more specifically on the performance analysis to uncover different levels of needs, a brief summary is presented here.

Payoff Needs

The first part of the process is to determine if the problem is worth solving or the opportunity warrants serious consideration. In some cases, this is obvious when there are serious problems that are affecting the organization's operations and strategy. Still others may not be so obvious.

The following list shows some requests for consulting that represent obvious payoff opportunities, and thus, have business value written all over them. These payoff opportunities make it clear that this is a problem that needs to be solved or an opportunity that should be pursued with a clearly identified business need.

Obvious Payoff Opportunities

• System downtime is at its highest level, up to 36 percent from last year.
• Carbon footprint is excessive for this type of organization, and increasing rapidly.
• Excessive turnover of critical talent: 35 percent above benchmark data
• Very low market share in a market with few players
• Inadequate customer service: 3.89 on a 10-point customer satisfaction scale
• Safety record is among the worst in the industry.
• This year's out-of-compliance fines total $1.2 million, up 82 percent from last year.
• Excessive product returns: 30 percent higher than previous year.
• Excessive absenteeism in call centers is 12.3 percent, compared to the 5.4 percent industry average
• Revenue is declining for top two projects, although the overall market is growing.
• Sexual harassment complaints per 1,000 employees are the highest in the industry.
• Grievances are up 38 percent from last year.
• The health care, legal, administrative, and incarceration costs for each homeless person are averaging $78,000 per year.

Some requests represent not-so-obvious payoff opportunities, such as those presented in the following list. In each of the situations, it is not clear what business measures will actually change as a result of this project. The focus moves to the next level in order to clearly define the business measure or variety of measures. In the previous project of converting employees from a work to work-at-home arrangement, the initial request was not so obvious: to reduce employee travel time, to lower costs, and to have a positive impact on the environment. A work-at-home solution was anticipated. Additional detail was needed, and this need led to the connection of several measures. These requests may be difficult to address because the not-so-obvious opportunities may raise concerns. The project may not be connected to business needs, and if so, the client should be made aware of this.

Not-So-Obvious Payoff Opportunities

• Become a technology leader.
• Create an efficient supply chain.
• Organize a business development conference.
• Establish a project management office.
• Launch a new product.
• Provide job training for unemployed workers.
• Create a green company.
• Create a conservative risk management system.
• Develop highly effective employees.
• Provide shelter for the homeless.
• Implement a sexual harassment project for all associates.
• Develop an “open-book” company.
• Implement the same workout process that GE has used.
• Improve leadership competencies for all managers.
• Create a great place to work.
• Implement a transformation program involving all employees.
• Implement a career advancement program.
• Create a wellness and fitness center.
• Build capability for future growth.

At this level, it is important not only to identify business measures that need to improve, but to also convert them into monetary values, so the anticipated improvement can be converted to money. The company requirement to “show me the money” is occurring more often. The second part of the process is to develop an approximate cost for the entire consulting project. This could come from a detailed proposal or may be a rough estimate. At this stage only an estimate is needed. The projected cost of the project is then compared to the potential monetary benefits to show the ROI forecast. A forecast of ROI is important in very expensive, strategic, or critical projects. This step may be omitted in situations when the problem must be solved regardless of the cost, or if it becomes obvious that it is a high-payoff activity. Still, other projects may be initiated, and the potential payoff is not desired. For example, as an organization strives to be a technology leader, it may be difficult to place a value on that goal for executives.

Business Needs

At Level 4, business data are examined to determine which measures need to improve. This involves a review of organizational records and reports, examining all types of hard and soft data. It is usually the performance of one of the data items that triggers the consulting project. For example, when market share is not as much as it should be, operating costs are excessive, product quality is deteriorating, or productivity is low, the business measure is easily pinpointed. These are the key issues that come directly from the data in the organization and are often found in the operating reports or records.

Table 8.1 shows examples of business needs ranged in categories of hard data to include output, quality, cost, and time. These measures exist in any type of organization, even in the public sector and in nonprofits and nongovernmental organizations (NGOs). These measures often attract the attention of executives, as they represent the effects on business. An important goal is to connect the consulting project to one or more of these issues.

Table 8.2 shows measures with softer effects, including some of the more common measures, such as those involving customer service, image, and work climate. Although these may be perceived as not as important as hard data, they are important, and in some cases, a consulting project will be connected to one of these soft data items. This book defines a soft measure that can be converted to money as a tangible. If it cannot be converted to money credibility with a minimum amount of resources, it is left as an intangible. This definition means that most of the hard data categories are usually converted to money and are thus tangible.

The supporting data may come not only from the operating reports, but from annual reports, marketing data, industry data, major planning documents, or other important information sources that clearly indicate operating performance.

Performance Needs

The Level 3 analysis involves determining performance needs. The task is to determine what is causing the problem (or creating the opportunity) identified at Level 4 (i.e., what is causing the business measure to not be at the desired level). Something in the system is not performing as it should, and this may be caused by one or more of the following:

• Inappropriate behavior
• Dysfunctional behavior
• Ineffective systems
• Improper process flow
• Ineffective procedures
• Unsupported processes
• Inappropriate technology
• Inaction of stakeholders

The analysis usually reveals that a group of people are not performing as they should. The reason for this inadequate performance is the basis for the solution, the consulting project. For example, if employee health-care costs are increasing more than they should, and sick leave usage is increasing, this may be caused by the unhealthy habits of employees. A wellness and fitness project may be needed.

Performance needs will have to be uncovered using a variety of problem-solving or analysis techniques, such as those listed in the following list. This may involve the use of data collection techniques discussed in this book, such as surveys, questionnaires, focus groups, or interviews. It may involve a variety of problem-solving or analysis techniques such as root-cause analysis, fishbone diagrams, and other analysis techniques. Whatever is used, the key is to determine all of the causes of the problem so that solutions can be developed. Often, multiple solutions are appropriate.

Diagnostic Tools

• Statistical process control
• Brainstorming
• Problem analysis
• Cause-and-effect diagram
• Force-field analysis
• Mind mapping
• Affinity diagrams
• Simulations
• Diagnostic instruments
• Focus groups
• Probing interviews
• Job satisfaction surveys
• Engagement surveys
• Exit interviews
• Exit surveys
• Nominal group technique

Learning Needs

The analysis at Level 3 usually uncovers specific learning needs with the people who would be involved in the project. It may be that learning deficiencies, in terms of knowledge and skills, may contribute to the problem if they are not the major cause of it. In other situations, the solution will need a learning component as participants learn how to implement a new process, procedure, or technology. The learning would typically involve acquisition of knowledge or the development of skills necessary to improve performance. In some cases, perceptions or attitudes may need to be altered to make the process successful in the future. The extent of learning required will determine whether formalized training is needed or if more informal, on-the-job methods can be utilized to build the necessary skills and knowledge to make the project successful.

Preference Needs

The final level is to consider the preference for the project solution. This involves determining the preferred way in which those involved in the process will need or want it to be implemented. A fundamental issue at this level is the perceived value of the project. Typical questions that surface are, “Is this important?” “Is this necessary?” and “Is it relevant to me?” Preference needs may involve implementation and/or learning issues. Learning issues may involve decisions such as when learning is expected and in what amounts, how it is presented, and the overall time frame. Implementation issues may involve issues such as timing, support, expectation, and other key factors. The important issue is to try to determine the specific preferences to the extent possible so that the complete profile of the solution can be developed based on all of the needs.

Final Thoughts

This chapter describes the initial analysis needed for proper alignment. The initial analysis includes five levels of needs, beginning with payoff needs and progressing to preference needs. When these needs are complete, a project is aligned to the business need at the beginning, which is a critical element in the initial success of the project. The alignment continues when the project is implemented with impact objectives described in previous chapter. Alignment is validated with follow-up evaluation as described in later chapters. The next chapter describes the tools needed for planning an ROI study.