Performance Management is a critical capability for every organization, yet it is often not well defined or integrated. In a digitally mature organization it becomes a sophisticated and powerful tool. How do we achieve a state where the performance of individuals, teams, and processes and the management of machines, information, and materials all contribute to the organization’s strategic goals and KPIs. This series of short papers provides a guide for enhancing an organization’s Performance Management capabilities and improving its systems overall.
Performance Management is fundamentally about having a clear understanding of current performance levels, target levels, and the gap that separates them. It also requires a process that enables the organization’s systems to identify and execute actions that move towards the target levels, in line with available resources, and in doing so achieving the target performance levels in the shortest possible time frame. Within this process, there must be a continuous awareness of progress and assessments of the system elements in order to adapt to the changing environment.
Some fundamental elements of any Performance Management system are:
– Having a clear strategy and a Performance Management process that is understood by all members of the system.
– Having a culture in which there is individual and group ownership of driving the full life cycle of performance improvement, from setting targets, through review and adjustment, to achievement.
– Having a process whereby individuals and groups within the system have the ability to set goals and targets, and performance standards that contribute to the overall organization’s goals and strategies.
– Having effective performance measurement at all levels to assess key deliverables and KPIs.
– Setting SMART2 Goals where deliverables and performance standards are clear and communicated universally.
– Assuring that there is a top down-bottom up element to setting targets, to assure engagement and commitment to delivering performance improvements.
– Having a process aimed at addressing poor performance in a constructive manner designed to improve that performance.
– Having regular and proactive review, support and feedback from key stakeholders that are impacted by the specific performance outcomes.
– Having a ubiquitous focus on Performance Management. Though the individual is a central CSF, Performance Management applies to processes, systems, assets, resources, tools, methods, teams, groups, projects, programs, tasks, activities, materials, etc.
– Inclusion of budgeting and financial Performance Management.
– Career progression, recognition and rewards linked to delivery of performance improvement.
Proven Approaches to Performance Management
From human resources perspective Management by Objectives (MBO) is the most commonly used process. It is fundamentally a sequential and hierarchical approach, but it has evolved and been refined to introduce some agility to its features.
The organization’s leadership normally set the Global Objectives and KPIs with input from key stakeholders. These Global Objectives set the context and scope for putting detailed performance plans and targets together (top down). The process is not necessarily linear or sequential when it comes to the bottom up approach, as there are high degrees of interaction to align each level’s objectives and KPIs, to take into account interdependencies and to validate assumptions.
Tip: Set a small number of SMART2 Objectives for the year, the next 90 days, and the next 30 days, with increasing levels of detail for closer horizons.
Declan Kavanagh is an international advisor and entrepreneur with over 37 years’ experience in technology-related business. He graduated in Engineering in 1979 and worked with several multinational ICT-related organizations, rising to CEO level and acquiring an ACCA & MBA along the way. He jumped into the entrepreneurial world as a consultant in 2000 and founded his own successful software services company in 2003, which was acquired by Capgemini in 2008. His work today involves advising and supporting technology and technology-enabled organizations with strategy development and execution.
Over his career, he has had significant experience in change management as it relates to the organization and individuals, including starting, scaling, merging, demerging, right-sizing, turnaround and transformation of organizations and their performance. Much of his current work relates to “Digital Business & Workplace” performance transformation and improvement.
His home base is Dublin, Ireland, but his client base spans the globe. He is also author of “Advantage – A Roadmap for Entrepreneurs and Leaders in the Digital Age”.