Performance
Management
It’s easy to get confused, if not lost, in the topic of Performance
Management. That’s because everyone understands different things
when discussing about performance management: performance, management, appraisals,coaching, goals, incentives etc. For us, there are two components that should be treated separately:
- Build / enhance a Performance-Driven Organization (PDO), ensuring the
achievement of higher level of performance within the organizations - Build / enhance an employees’ appraisal process, so that they know where
they stand, facilitating the improvement of their individual performance
through a mix of formal and informal methods and techniques
Build a Performance-Driven Organization. Helping companies to set up a
system that enable tracking, measuring, and analysing the overall
performance is essential in building a PDO. Giving executives well-developed
tools for measuring operational and financial performance is a critical enabler
for achieving that.
You might ask how a PDO looks like. We have this image in mind:
When you walk into a performance-driven organisation, you can feel the difference. Instead of just going through
the day and finishing tasks that are asked, the people are energised and engaged. They are confident about the
business strategy and upcoming changes, rather than confused and frustrated. When difficulties arise, they take
it as a new challenge to overcome them and they know what they are supposed to be doing and how this relates
to the tasks of their colleagues. Results can only be achieved as a team and these are visible in sustained
financial earnings, as well as social impact and engagement.
Enhance employees’ appraisal process. At the same time, we know that most employees are not aware of or do
not understand the strategy. Their objectives and incentives focus on tactical performance, not on strategic
objectives. There is a break between the organization’s strategic objectives and the day-to-day activity of most of
the employees.
How do we motivate employees to help us execute the strategy? This is one of the toughest questions the
organizations are facing today. And no wonder that the employee engagement is so low all around the world!
We follow six steps to align the business strategy across all business units while keeping the employees motivated:
- Create the Strategy Map: every organization should start by defining the
critical focus areas. The Strategy Map describes the way the organization
intends to create value for its stakeholders - Set up strategic objectives for each critical area: once the organization
knows where it wants to play and how it wants to win, clear objectives are set,
and they become the reference for the entire organization - Select measures and targets: every objective should be measured, and a
portfolio of initiatives needed to close each of the performance gaps is
developed - Develop tools to measure both operational and financial performance:
(scorecards, at strategic level, and dashboards, at operational level), by using
business analytics capabilities. A reporting process should be implemented
to sustain a fact-based decision-making process - Align Business Units: Cascade and embed corporate strategy into business
unit strategies - Align employees: objectives are aligned both vertically and horizontally, so
that all employees understand the strategy and are motivated to help
execute the strategy. Only by following this approach, your organization will
have a clear alignment among strategic areas, objectives, measures, targets,
initiatives and budget