- May 15, 2011
- Posted by: andreag
Performance management is one of the most frequently used Internet searches that finds its way to our web-site. So, I’d like to lay out our view on what it is, what the key elements are, and then give you tools to be able to assess where you might direct your own performance management efforts.
Performance management defined
Performance management is often defined as “the process of achieving the goals of the organization.” Wikipedia extends that to say “performance management includes activities which ensure that goals are consistently being met in an effective and efficient manner. Performance management can focus on the performance of an organization, a department, employee, or even the processes to build a product or service.”
But there is a missing piece to that definition. How do we know we have the right goals that will lead to improved performance? The definition I think encapsulates true performance management? Making continual progress in positively impacting the key indicators of your business. As with Wikipedia, this can encompass the organization as a whole, a department or an individual, the key is that you are measuring impact, not just goal attainment.
What are examples of the key indicators that should be impacted? Common indicators for most businesses include revenue, profitability, overhead or cost of goods sold, rate of attracting new customers, customer retention, employee performance, process performance.
Elements of a performance management program
In our experience, the following elements are essential to achieving continuous improvement in organizational performance:
- Strategy: An effective strategy embodied in a strategic plan that sets clear direction and priorities. Effective would mean that the opportunities for and threats to growth and success are identified and confronted, with sound ways to handle them developed. Also, that internal issues are identified (blind spots overcome) and plans to solve them defined.
- Accountability: There is a system for holding members of the management team accountable for performance on the strategic plan outcomes/targets. Though having a sound plan is critical, it must be executed to have any impact upon performance.
- Culture: The organizational culture (def. what it feels like to work here) promotes continuous improvement and striving for excellence. This would include ongoing efforts to improve processes in the organization as well as ongoing competency development for staff.
- Key Stats: The organization employs a “Balanced Scorecard” or instrument panel of key data to determine the need to change course or policy. Data elements would measure the current condition and success/failure of change strategies on a monthly basis.
- Managing Change: Leadership is capable of effectively managing change. This includes project plans for complex initiatives as well as identifying staff members who are having difficulty moving to the new way of doing business and deploying actions to aid those staff members in making transitions.
- Structure: The organizational structure supports efficient production, leaves no key functions unaccounted for and defines for each staff member the results (not merely effort) they are accountable to produce. In our experience, this is often a critical missing element.
- Performance: Performance of staff on their key results is measured through statistics, preferably gathered monthly.
- Coaching: There is a sound employee evaluation and coaching system in place to improve the performance of all staff.
Assess your own organization
Are all eight of these key elements accounted for in your organization? Ready to move forward to find out which areas are strongest and which are weakest? We have designed an assessment that will answer those questions. Simply click on this link, and your browser will open to a short questionnaire. Once you have answered the questions, we will analyze your responses and send you feedback to help you strengthen those areas that score poorly.
Not quite ready?
If you aren’t quite ready for what the questionnaire might show you, we encourage you to spend some time on our website. Our intent as we designed the site was to provide information you can use now to positively impact your organization. As always, if you have a specific question we can answer right away, e-mail us. We look forward to hearing from you!