Effective performance management

How does an organisation become performance-driven?

To start with, performance management must be defined in terms of the big picture. Though everyone else in the organisation may (and apparently does) view performance management from their own perspective, the executive team must come together and agree on a single, integrated, unified approach to performance management.

Creating a performance-driven organisation is ultimately about culture, and culture change is a major undertaking that requires commitment, advocacy, and leadership at the top level of the enterprise. The top management must be committed to the concepts of performance management and execution and must support it at every turn. This commitment must involve frequent communication and reinforcement of the concepts to employees, stakeholders, process-owners, customers, suppliers and partners.

Although performance management is defined in terms of strategy and the big picture, it is also about the tactics for driving performance.

How much will a great strategy add to your bottomline?

Nothing, unless someone bothers to tell the workforce how to execute it. Whether or not the workforce succeeds depends on a variety of factors, but at a minimum, all employees need to know what is expected of them.

Be aware that the top management often invests everything in the front-end process of defining strategy and declares victory simply because the strategy, on its surface, combines creativity, insight, and eloquence—something that everyone associated with the enterprise can embrace. The messier work of breaking down the strategy into executable steps, each associated with specific personnel and budgetary requirements, and then communicating everything to the people in the trenches who are assigned to make it happen—takes a lot more effort. I feel no hesitation in suggesting that most executives would prefer to focus on the development of a high-level strategy than the details of its execution.

Bringing organisational and individual performance together

The concepts embodied in the unified approach to performance management that I’m about to introduce you to have been put into practice by me over the past 15 years as a founder, president and CEO.

Under this unified approach, the five core components of performance management are

• Align the objectives, resources, and budgets of different parts of the organisation and the goals, opportunities, and quotas of individuals.
• Measure organisational and individual performance.
• Reward individuals for performance.
• Report organisational and individual performance.
• Analyse organisational and individual strategy execution using models and analytics.

Each of these except for the reward component has two parts—one associated with the organisation and other with the individuals who make up the organisation.

By combining all the key pieces of organisational and individual performance into a single model, you can visualise how the two concepts—largely treated as separate and unrelated by most enterprises—come together to create a unified view of performance management.

An excerpt from Performance: Creating the Performance-Driven Organization by Mark A Stiffler. Price: $28.35 at amazon.com. Reproduced with permission. © 2006, John Wiley & Sons