Optimize the performance improvement system through efficient decision-making and project implementation. Develop and change based on current results to improve performance. Watch this short descriptive video to learn more.
WHY PERFORMANCE MANAGEMENT?
RECOMMENDED FOR
RECOMMENDED FOR
Any organization, regardless of industry or size.
WHY YOU NEED IT
WHY YOU NEED IT
To align day-to-day actions with strategic objectives, to effectively manage initiatives, and to enhance reporting.
EXPECTED RESULTS
EXPECTED RESULTS
Advanced data analysis, increased accountability, and improved performance.
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SELF ASSESSMENT
Start with the self-assessment to determine how well your organization manages performance improvement.
The most challenging aspects of improving performance are building the right culture and implementing improvement initiatives.
After implementing KPIs, 80% of professionals have noticed a positive effect in their organizations.
29% of professionals interviewed claim that their organization has at least one data analyst responsible for processing performance data.
34% of professionals state that data modeling and predictive analytics are commonly used to generate valuable information from data oceans. However, most professionals (62%) rely on traditional root-cause analysis performed by upper management.
63% of organizations have quarterly or monthly meetings to review performance results.
27% of professionals feel that decisions rely more on instinct than on data in their organizations. (The KPI Institute, State of Performance Improvement and KPIs, 2016)
36% of organizations practice unilateral decision-making, meaning decisions are taken top-down – the leader makes decisions alone, without consultations. (Harvard Business Review, 2017)
Most performance improvements professionals suggested about their current performance management systems relate to employee performance measurement and evaluations and optimizing the performance management software used. (The KPI Institute, State of Performance Improvement and KPIs, 2016)
Performance management is among the most recent disciplines developed in business management, even though measurement is a process as old as time for humanity. Performance management has evolved side by side with strategy and quality management. Critics may even argue the necessity to consider performance management a self-standing discipline when, in fact, many of its methods and tools are part of other related disciplines. Given the increased complexity of business environments and the transition from a manufacturing-based economy to a knowledge and experience-based economy, specialization has become no longer an exception but the norm. Regardless of the domain, it can be noticed that niche subject matter experts arise continually. Similarly, as competition becomes more aggressive, clients become more sophisticated, and information and technology become more accessible, managing a business goes beyond the traditional management capabilities (finance, human resources, procurement, sales, etc.). The Performance Management Office stands nowadays, side by side with other critical functional areas.
One perspective is to claim that performance management should be, without doubt, everyone's job in the organization, but when no clear accountability is assigned, not much progress takes place. Another point of view is to emphasize that performance management is included in the responsibilities of every top management member and the CEO. Nevertheless, managing performance is part of the C-suite job, but developing a dedicated performance management capability, which doesn't necessarily have to be represented by an entire department but one single person, can ensure more qualitative process management. Moreover, it can impose a particular approach towards performance management and its tools' usage.
In practice, "performance management" is commonly used to define employee performance management, whereas "strategy management" also includes organizational performance measurement. From The KPI Institute's perspective, performance management refers to measuring and improving both strategic and operational results. Managing individual performance is treated as a different practice domain, given the particularities associated with evaluating the employees' contribution to the organization. Moreover, performance measurement is also addressed as a self-standing practice domain to address the topic adequately. Therefore, the following presentation will refer to performance improvement through reliable data analysis, more effective performance review meetings and decision-making, better project management, and organizational learning.
1. Performance improvement through reliable data analysis
Most organizations struggle with converting data into knowledge nowadays. Technology has enabled us to capture significant data volumes about almost everything in the organization. However, few companies have managed to generate the expected value from the technology investment made, as they are facing difficulties in distinguishing between "not important," "nice to know," and "critical" data. The proper usage of KPIs should enable managers to bring more clarity into this matter and ensure the correct data enters their executive reports.
The advantage of capturing large data volumes is that it enables data mining and predictive analytics. Reliable data analysis should provide high-quality data (on-time, complete, accurate, and consistent) for decision-making. Performance management software solutions focus predominantly on the reporting feature, not necessarily on processing raw data and data mining. Everyday IT performance solutions may require additional software that data analysts can use for statistical measurements. Nevertheless, Microsoft Excel remains among the most common tools for capturing, analyzing, and reporting performance results.
2. Performance improvement through effective performance review meetings and decision-making
Executives spend thousands of hours trapped in meetings – but how much of this time is effectively used? How many of the discussions are directed toward finding solutions? How much time is spent on root cause analysis of past events compared to the time dedicated to planning and discussing future opportunities? How much time do we waste on solving operational matters compared to developing strategic initiatives?
A key element to ensure all critical aspects are captured in our performance review meetings is to create a clear calendar of conferences and to define the specificity of each meeting. Each meeting should be determined by 3 characteristics: frequency, audience, and discussion focus. Once the focus of the discussion is clarified, the other two components can be quickly established. For example, short-term strategic matters can be approached during a quarterly top-management meeting. Annually, medium- and long-term perspectives can be discussed among top management and the board (if at an upper hierarchical level). Moreover, monthly performance review meetings should be held to address operational issues at the departmental level.
Agile organizations must create reliable and fast decision-making to respond to market challenges and take advantage of opportunities as they arise. The effectiveness of performance reporting can significantly optimize the decision-making process. If data is accurate, complete, and available in due time, it is more likely to be able to make fast decisions regarding the next right moves. A simple consideration, such as the format of the performance report, can facilitate the usage and understanding of data. Proactive decisions can prevent difficult situations when data can be accessed in real-time.
Furthermore, decision-making is a social process. In most organizations, decision-making at the strategic level is a team effort. However, it is commonly approached as a voting process instead of a collective brainstorming and analysis of potential solutions. The challenge of thinking together is to make people put aside their egos, bring everyone on the same page, and ask tough questions.
Effective decision-making should harmoniously combine fact-based decisions with the urgency to act, using the collective knowledge and experience of the top management team.
3. Performance improvement through better project management and organizational learning
Project management is one of the disciplines that cuts through performance management, as it reflects the organization’s ability to get things done. Companies can be very skilled at planning and measuring, but it is all for nothing if they cannot transform ideas into reality and generate the expected outputs. Large or small, cross-functional or independent, all initiatives deployed in an organization are experiences of planning and implementing decisions. “Better” project management, in this context, has two meanings. On the one hand, project management should effectively deliver what is expected; on the other hand, project management should be relevant for the organization. A sound initiative management framework should standardize the implementation process as much as possible, using standardized templates for Initiative Documentation Forms, Business Cases, Project Plans, and Project Report Status.
Isolated from the organizational context, all projects can be significant and valuable, but when analyzed in correlation with the rest of the organizational initiatives, the perspective may be different. Relevant project management should ensure that initiatives are handled similarly to an investment portfolio to maximize the overall return, not on each investment or project itself. Developing the Portfolio of Initiatives for the organization can provide an executive summary of the status of each critical project. Moreover, this tool can prioritize each project, considering its impact on strategic objectives. According to a Harvard Business Review research (2015), 51% of executives admitted to investing too much in non-strategic projects. The lack of visibility over what projects are on roll at a specific time in the organization and their overall impact on strategy leads to wasted resources on initiatives that would not be a priority.
Organizational learning takes place as a natural process in businesses. However, when properly guided, it can maximize the non-tangible assets of the organization, such as intellectual capital. Every performance reporting cycle is a learning experience, an opportunity to assess the resources used, the actions taken, and the actual results obtained. The usage of KPIs provides continuous feedback on the quality of the processes, interactions with the organization, and interactions with external stakeholders. Capturing the lessons learned, building Communities of Practice, stimulating innovation, and employee engagement can become competitive advantages that position the organization as a market leader. Better organization learning implies conscious actions to nurture learning and improvement in the company and embedding it into the organizational culture.
Performance management is partly art, mainly the art of building the proper context in which performance measurement and improvement can flourish, and partly science, where methods, tools, and techniques are rigorously and systematically applied.
