Though vital for any organisation or entrepreneur, performance management is a loaded term and not one that appeals to most people as it has an air of ‘discipline and punishment’ around it. I’ve seen it done right and I’ve seen it go wrong; let’s first take a look at what it is.
Simply said, performance management is done by business owners and managers to ensure that an organisation is doing the right things right.
When the ‘wrong’ things are done or when things are done in the ‘wrong’ way these managers will then steer the processes or people involved in the right direction again. Performance management thus gives them the tools to define vision and goals and to communicate, measure, report and steer processes and people. Usually the management processes to do this are supported by information technology but it is always about the quality of the actual decisions made that determine the success of the performance and thus the company.
Benefits of successful performance management are:
- More grip on daily operations
- Know if what you’re doing right now benefits the long-term desired outcome
- Be able to pro-actively manage potential risks and issues
- Get the team/organisation actively involved in company plans & goals and obtaining results
Performance management is an integrated approach that should be woven into the entire organisation and its processes.
Plan Do Check Act
The PDCA Cycle (Plan Do Check Act) by Deming provides for a really handy red thread through organisational performance management. The cycle is often used for controlling and improving products and processes within organisations and is applicable in this case as well.
- Plan. Every organisation, no matter how big or small, needs to start with a plan. Moreover, it needs to start with a vision which will then be translated to strategy and a plan!
The vision is that what ‘things’ will look like in the future if all goes right. It is about how you will feel when you get out of bed and get to work each morning, it is about how you interact with your customers and employees. Vision is about the emotion that drives you to pursue your bright new business idea or to be part of that organisation.
The Business Plan and Strategy stem from this vision and are obviously vital for any business. Strategy needs to be translated into practical goals and actions and forms the focal point around which every decision has to be made. When for example given the choice to work together with a befriended entrepreneur to create product Y. When you’ve set your strategy to focus all your time and energy on selling product X then your answer should be no. Unless of course you wish to reconsider your strategy… It’s always a balancing act between focus and flexibility!
- Do. Simply the daily execution of that what is planned.
- Check. This is where you actively measure and steer on KPI’s (Key Performance Indicators) to make sure everything indeed goes according to plan. There is a whole science around KPI’s but most important though is that your metrics are relevant and meaningful and not just easy to measure. Reading the numbers should immediately tell you if you and your organisation are doing good or not and immediately call to action when required.
- Act. When you see your company or process performing under the targets you have set (gotten from your strategy, translated to your KPI’s) action is required. Practically, every time you see a KPI under performing someone needs to ask the question WHY this is. Perhaps your ambitions are set too high in which case you might want to lower the target but perhaps an issue exists somewhere in the process and needs to be dealt with. This is where the continuous improvement cycle kicks in.
Essentially, managing the performance of people can also be done with the PDCA cycle. You will plan together with the person what their vision is on their role and function and from there define KPI’s or more qualitative pointers that will enable a continuous dialogue and improvement on performance. Part of this type of performance management are employee evaluations, reviews, rewards and recognition.
When done right both people and processes will continue to reinforce one another leading to optimal performance!
As is the case with so many other management theories and methodologies out there, every organisation will need to use and adapt the method in such a way that it is perfectly shaped for them. Just implementing KPI’s for the sake for implementing KPI’s is not a business wise decision; you’ll run the risk of trying to capture a people driven environment into facts and figures! Even though there is quite a lot to it and there are many pitfalls as well, performance management is one of the pillars on which an organisation is build so definitely make sure it works FOR you!
I’d love to hear from you
Are you in the field of Performance Management? How is this done in your business if at all? What works really well for you and what doesn’t? Share your experiences in the comments below!