Performance Management

We all know that...

..if we review the right data and do the right analysis, then we will make the right decision and we will take the right action.

Unfortunately, life is not that easy.

Defining a performance management system

In many ways, management is about helping people behave in a way that enables them to achieve defined goals.

Often this means breaking down specific targets into individual steps and measuring progress at appropriate intervals, for example:

• If we’re to be a more customer-focussed organisation then what do our people need to do every day, including today?
• If we need to reduce our costs then how do we eliminate wasted time in our production facility?
• What impact do our internal processes have on our OTIF measure – specifically?

For an individual with a particular goal, or for a manager with a specific accountability, performance can be managed by focussing on a single indicator, or suite of indicators presented on a single report.

In an organisation performance management becomes complex. In many cases a network of unfocussed meetings, meaningless and indecipherable reports and ill-conceived initiatives takes the place of a robust performance management system.

The purpose of a performance management system is simply to measure, control and manage the operation so that performance improves and the improvement process is sustained.

In effect, the aim is to link company strategy, operational strategy and day to day activity.

In this way, company goals are translated into day to day activities and relevant Key Performance Indicators can be cascaded to ‘front line’ teams so that purposeful activities can be undertaken.

It is important to note that performance management systems are more than reports:

• they are the continuous improvement loops defined by the relationship between goals, forecasts and results.
• they are about controlling the implementation of plans.

Effective performance management systems comprise some common building blocks:

• Forecasts

• Projections and targets focused on specific business objectives normally over a 3-12 month timeframe

• Plans

• The road maps by which we aim to achieve the business objectives
• Often a series of detailed actions which will enable us to achieve the required performance levels
• Normally a daily / weekly / monthly timeframe

• Controls

• By constantly reviewing the achieved level of performance against plan and the understanding the root cause reasons for variances we can positively influence performance

• Report

• Effective reports deliver key management information to the relevant decision makers in a timely manner.
• They facilitate informed decision making and allow managers to understand the effectiveness of actions taken in a previous period
• Problems are highlighted and remedial actions are initiated

Click here for templates that you can immediately use

By implementing a performance management system we effectively close the ‘DADA’ loop.

Data: A conscious decision is made regarding what data is required to form a firm base for the system

Analysis: Data is converted into meaningful KPI’s and reviewed at an appropriate interval.

Decision: True root cause of problems are identified, potential solutions are considered, a potential solution is agreed tested.

Action: Detailed actions are assigned and progress is reviewed

Implementing a Performance Management System

There are several well defined steps involved in implementing an effective performance management system. It is time consuming and requires a particular set of skills and will be done in different ways by different consultants, however, there are certain components that will always be in place:

• Mapped processes with associated improvement plan
• Agreed improvement opportunities complete with results plans
• A cascaded suite of performance indicators
• Job descriptions and known accountabilities
• Short Interval Controls
• Accurate and timely KPI reports
• Effective meetings
• Known meeting structure with published terms of reference

Click here for memory jogger on the implementation of performance management systems or go to the download area for a more detailed ebook on full implementation and the skills of a change agent.