Many organisations today are experiencing an unusual confluence of events –change in market conditions, the rise of a younger generation that expects more coaching and development, and the globalisation of much of the workforce. The combination of these trends has changed performance management. A performance management strategy is a company-wide view of the purpose, values and objectives of managing performance. Unfortunately, while most companies convert their business strategies into detailed and actionable plans, the same degree of insight and rigor is rarely given to the organisational implications of the strategy. Furthermore, the stated reasons for managing performance, for example to assess performance, are different from the benefits HR expects from it, such as, improved understanding of the organisation’s goals. In short, there is a lack of clarity on why organisations manage performance and how to do it well. In search for superior performance, many organisations have implemented a wide variety of performance management practices, with varying degrees of success. This has caused some to question whether or not a strong performance management approach has sufficient payback to merit a significant degree of management focus.
In order to answer such issues, the Foundation for Human Resources Development (FHRD) is organising a conference on 5 October, which includes a workshop where I will discuss some very fundamental questions, including:
• Do effective performance management practices play a significant role in driving superior performance?
• What aspects of performance management practices contribute the most value to organisational performance?
• Do performance management practices contribute equally in both good times and economic downturns?
• Do performance management practices reap the same results for all organisations, or do they need to respond to unique issues in different sectors or sizes of organisations?
• What practical, pragmatic roadmaps would organisations adopt to implement an effective performance management framework?
• When should organisations start expecting fruition of implemented performance management structures?
Making it real −
a call for action
In order to ensure that a performance management structure reaps the desired results, it needs to pivot on key performance management practices. For starters, performance management practices should serve as an extremely useful lens to examine whether the organisation is using the right key when benchmarking performance indicators. It needs to take on a broad, holistic approach, placing greater focus on issues such as employee brand loyalty, talent management and customer retention. Upon clarifying its overall objectives and how it plans to measure the accomplishment of each of those objectives, a high performance company would constantly strive at sourcing more effective performance indicators in the process of aligning measurements and reporting systems, with the key business drivers most relevant to the organisation. This is coupled with ingraining a culture of ‘cascading’ accountability for these business drivers through the use of relevant and controllable performance metrics at all levels of the organisation. These metrics serve as warning systems when significant variances between actual and targeted performance levels occur.
Focused leadership is required to overcome cultural resistance and fear of change, and break down internal silos to achieve agreement on what needs to be done. Without a broad base of company-wide support, counterproductive ‘pockets of resistance’ can easily form. Organisations should always opt for a clear, easy to understand performance management framework. While high performing organisations employ a wide variety of advanced practices and tools, part of the reason they are successful is that they avoid the potential pitfall of overcomplicating issues.
Adopting high value
planning practices
In a world of rapid change characterised by ‘disruptors’ such as technology breakthroughs, demographic shifts and macroeconomic events such as major currency and commodity price fluctuations, high performance organisations rope in their performance management practices, value stream mapping, a clear vision and value statements complemented by robust environmental or social responsibility plans. Organisations with weaker performance management practices may be more inwardly focused and concerned about yesterday’s results than on the future direction of the organisation. As a result, they are less likely to identify emerging opportunities or threats and may be less able to react in a sound fact-based manner. In addition, they may be more likely to react to market situations with a ‘knee-jerk’ approach to slashing costs, which may compromise future success during thriving times. Moreover, organisations with value-adding performance management practices may be better equipped to manage costs strategically, and when required, make difficult choices in a way that minimizes the impact on the long term.
Effective performance
management practices are
similar (but not the same)
across multiple industries
and size of organisation
Certain key business drivers will vary in relative importance across different industries. However, the need to effectively measure these drivers and to cascade accountability via relevant and controllable metrics is a ‘consistent hallmark’ of high performing organisations in all industries. Notwithstanding, larger organisations face much greater challenges than smaller ones in maintaining overall effectiveness of their performance management frameworks. This is due to the fact that measurable capabilities improve with size, but not fast enough to keep pace with the increasing complexity of the business, and large size creates greater challenges in building a broad-based consensus, as ‘silos’ begin to appear across the organisation. Besides, as organisations grow and evolve, they reach ‘tipping points’ where significant overhauls of the performance management structures would be required to keep them relevant and in-line with leading practices. Often, these organisations experience profound transition as they grow and mature from a small organisation that can be effectively managed by a close-knit group of individuals to a larger, more complex business model requiring wholesale changes in their approach to performance management.
Performance management
in the public and private
sector − not as different
as you might think
The public sector organisations have strategies and plans, they measure and report on performance and they need to attract and retain good people to help them achieve their goals. The same formula applies to the private sector! High performance public sector entities effectively use high value planning practices such as vision, mission and value statements and environmental or social responsibility plans. They also embark on advanced analytical techniques such as data-mining and driver-based forecasting, linking tactical actions to the overall objectives of the entity. There are still considerable opportunities for both public and private high performing entities to improve overall performance through further improvements in their performance management structures.
Pragmatic roadmap
Effective organisational strategy takes a holistic and integrative view of organisational needs over contiguous time horizons and maps out a portfolio of initiatives to transform the organisation from its current state to a desired state. Consideration and definition is given to different organisational elements such as design and structure, operating standards and culture, competencies and skill mix, performance capabilities and requirements and talent management systems and practices. Diligent gap analysis and strategic organisational design expertise combine to forge an integrative transformation path forward for the enterprise; rigorous implementation discipline makes sure that strategic intent converts to desired and sustainable results.
A systematic step-by-step approach to implementation delivers short-term value and clearly establishes the return on investment (ROI). In addition, it builds momentum and consensus across the organisation, and makes it easier as each step is taken. Organisations that attempt to do it all with a single ‘mega’ project ending in a ‘big-bang’ of change, often end up with a costly and ineffective result.
Turning analytics
into a competitive advantage
Without clarity on these fundamental decision points, performance management is prone to be a series of loosely related and time-consuming events that provide little lasting impact for the organisation. High-impact organisations are effective at developing a clear performance management strategy that weaves together all the elements of performance management into a self-reinforcing web of activities. Furthermore, most of these activities are ongoing, not event-driven. The result is continuous, relevant and focused performance management. Finally, today’s organisation is rarely fully equipped to deliver tomorrow’s desired business results and varying degrees of transformation will be required to assure that strategic intent is fully realised.
Dr Borg will be one of the speakers at the FHRD National Annual HR conference to be held on 5 October. She was recently named the National Finalist in the 2012/2013 RSM Entrepreneur of the Year Award. Dr Borg will now be participating in the National Champion RSM Entrepreneur of the Year Award. Cast your votes by clicking on www.acumencentre.com‘s homepage.