How to Achieve Exceptional Organisational Performance: 12 critical activities to get the best performance out of your people, teams and organisation
Copyright 2011 by Joel De Messan
Published by Light Bearer Publishing
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“Achieving outstanding performance outcomes is the result of multiple activities that go beyond measuring performance, the balanced scorecard or improving processes”
HOW TO ACHIEVE EXCEPTIONAL ORGANISATIONAL PERFORMANCE
12 critical activities to get the best performance out of your people, teams and organisation
Joel De Messan
LightBearer
Publishing
© Copyright Joel de Messan
Published Sept 2011
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Page Content
Forewords: On organisational performance
Introduction: About this book
Chapter 1: Manage expectations when implementing a performance management system
Chapter 2: Refresh your performance management system regularly
Chapter 3: Take your vision to the frontline
Chapter 4: Pay close attention to the culture within
Chapter 5: Focus on improving your services not your processes
Chapter 6: Turn your performance outcomes into action
Chapter 7: Recruit and nurture your leaders with care
Chapter 8: Ground executives and senior managers’ in the reality of your frontline
Chapter 9: Focus your organisation on your customers
Chapter 10: Make your employees the eyes and ears of your company
Chapter 11: Set your people free to shine
Chapter 12: Manage your company’s risks and performance in tandem
Conclusions: Finally…
FOREWORDS
On Organisational Performance
Some believe that managing performance is a guarantee for success. Organisational performance and organisational success are very distinct. Good performance outcomes can contribute to organisational success but does not guarantee long-term success.
Furthermore, organisations often confuse performance management with performance measurement. Organisational performance measurement is very different from organisational performance management. Good performance measurement is an essential contributor to performance management, but again, does not guarantee successful performance management. So, what are the differences and relationships between these four concepts?
Organisational success
I define organisational success as the ability of the company to create and sustain competitive value in the long term.
This requires that the organisation achieves a reasonable understanding of the evolving trends and risks in the business environment, and uses this insight astutely in acquiring skills, building capacity and developing the capability to continue to adapt its offerings to satisfy the changing needs of its customers.
Organisational performance
I define organisational performance as a snapshot of how the company has fared over the last measurement cycle, in relation to its objectives.
Great performance therefore requires that organisations manage short-term business conditions in ways, which allow them to best leverage their resources to achieve the goals they have set for themselves.
Executives involved with managing performance need to clarify in their minds what success means for their organisation as well as communicate this unambiguously to staff at all levels of the company.
There are many confusing fads and buzzwords flying about in the domain of performance management. With experts interchangeably using performance management and performance measurement, it is worth exploring the relationship between the two.
To do this, we start by clarifying the distinct limitations and contributions of performance measurement and management to organisational success.
Performance measurement
I define performance measurement as the process of gathering information on the extent to which a system, in this case the organisation is achieving the goals it has set itself or the purpose for which it has been designed or built. Gao, (2005) offers a useful definition of performance measurement.
“Performance measurement is the ongoing monitoring and reporting of program accomplishments, particularly progress toward pre-established goals”.
Performance management
Whether you subscribe to the balanced scorecard, the performance prism, or any of the twenty or so frameworks in circulation, managing organisational performance requires more than a dashboard and a collection of measures. This observation is fundamental in getting the best out of your performance management efforts.
The true purpose of performance measurement systems is to enable performance management: i.e. to enable decision-making and action as summarised in Neely’s (1998) definition:
“… enables informed decisions to be made and actions to be taken because it quantifies the efficiency and effectiveness of past actions through the acquisition, collation, sorting, interpretation, and dissemination of data”.
Performance management is the process of acting upon the information provided by the measurement of performance to fine-tune operations, with the view to enhancing the organisation’s chances of achieving the goals or objectives it pursues.
In this sense, performance measurement is information-oriented whilst performance management is action-oriented. It is through the successful integration of these two interdependent components that organisations can realise the full benefits of their efforts.
Performance management system
In this book, the term performance management system refers to the process through which performance measurement and performance management are combined synergistically to enhance the performance of the organisation. This means that harnessing the benefits of performance measurement systems requires information (measurement) and actions (management).
The next two definitions accurately capture the essence of performance management systems.
Maisel, (2001)
“A business performance measurement system enables an enterprise to plan, measure, and control its performance and helps ensure that sales and marketing initiatives, operating practices, information technology resources, business decisions, and people's activities are aligned with business strategies to achieve desired business results and create shareholder value”.
Otley, (1999)
“A Performance Measurement System (PMS) is a system that provides the information that is intended to be useful to managers in performing their jobs and to assist organisations in developing and maintaining viable patterns of behaviour.”
The main components of a PMS are:
Objectives
Strategy
Targets
Rewards
Information flows (feedback and forward).
When organisations invest in their performance management systems, it is with the view that it will help them become more competitive and deliver higher value to their shareholders. Yet, it has been estimated that up to 70% of all performance management initiatives fail. One of the reasons for this failure is the lack of clarity about what it takes to harness the benefits of the performance management system, and how this fits within the larger equation of long-term organisational success management. Fig 1.1 summarises this relationship.
Fig 1.1: Relationship between performance measurement, management and organisational success.
Organisational success requires more than just performance measurement and management. This broader requirement will persist irrespective of which performance management framework your company uses. In addition to having an adequate performance management system, organisational success requires a context that allows people, systems, processes, technology and machinery to interact synergistically to deliver competitive value as measured by long-term customer satisfaction.
It also requires a culture and an atmosphere that motivate people and allow them to fulfill some fundamental needs: not least the need for “self-esteem” – a genuine respect for oneself based on our sense of our own capacity, achievement and respect from others - and the need for “self-actualisation” - to feel that one’s talent and capabilities are being used, tapped into and depended upon within the company.
The remainder of this book will address some of the fundamental reasons for the failures of performance management and share lessons from some of the most successful organisations in the world.
REFERENCES
Gao J. 2005. Performance Measurement and Evaluation: Definitions and Relationship. US Government Accountability Office.
Neely A. D., 1998. Performance Measurement: Why, What and How. Economist Books, London. Pp 5-6.
McCunn, P. (1998). “The balanced scorecard: the eleventh commandment’’, Management Accounting, December, pp. 34-36.
Otley D. (1999), “Performance management: a framework for management control systems research”, Management Accounting Research Vol. 10, Issue 4, pp 363-382.
Maisel L. S., 2001. Performance measurement practices survey results, (US: AICPA).
INTRODUCTION
About this book
Managers faced with using limited resources and relying on an increasingly disillusioned workforce to meet their demanding targets know that it takes more than performance measurement tools to achieve great results. There are countless books on the subject, covering performance management, strategy, learning organisations, performance measurement techniques, data mining etc. These concepts evolve by analysing the successes and failures of management in organisations. This book will not focus on the concepts listed above. Instead, this book is about what lies behind the concepts: the positive behaviours and habits that explain the winning spirit that seem to characterise successful companies and the actions that lead to positive performance outcomes in practice. It will show you the practical steps for implementing them in your company.
Unlike what may be implied by some authors, there is not a single organisational element that can account for the outstanding performance of companies that are the envy of our time. Rather, it is the synergistic attention to multiple factors that have the power to greatly enhance or erode your company’s performance that determine your success. It is these success factors that this book is about.
This book details a number of critical activities that distinguish and help sustain the most successful organisations of our time, from Apple and Google to smaller yet outstanding companies that you may or may not have heard of. It also presents proven approaches I have refined by applying deep insight drawn from management research to performance issues faced by global companies I have worked with. I hope you will find the help on how to adapt and implement these techniques practical and useful. I am also hopeful, that this book will go some way towards helping your team achieve outstanding operational efficiency.
I have paid a great deal of attention to techniques that will allow you to tap into the motivation, resilience, creativity and capability of your people in ways that will differentiate you from your competitors. This is because I believe that an organisation’s success is ultimately a reflection of its ability to help its employees achieve greatness with the singular purpose of exceeding it’s customer’s expectations.
Today, organisations spend countless hours and money recruiting the best talent available to them and yet make little use of their full potential. It is my belief that with the right approach to managing and sustaining your workforce’s motivation, you can greatly improve the performance of your company.
My experience and the history of management have convinced me that organisations can achieve exceptional results with perfectly ordinary people, provided they find ways to let their people shine in an environment that dignifies people and honours their potential. I hope that after reading this book, you will come to share the same conviction. That you will feel empowered to help even the most ordinary of your people achieve great things in business. Having said that, I leave what you can really do with the gifted people you have gone to so much length to recruit up to your imagination.
This book will address some of the pitfalls of performance management as an activity undertaken by organisations, and highlight some essential dos and don’ts in a sequence that builds an incremental picture of the organisational success management chain, based on proven successes from global best-in-class organisations and practice-oriented management research. It will also explore other seemingly un-related activities, mindsets or beliefs that deeply affect performance.
To better explain the relationship between the key principles of effective performance management, and to emphasise its key tenets, various illustrations will be used to condense all the relevant components of an effective performance chain: a process that otherwise takes a long time to unravel in organisations.
The lessons in this book are relevant regardless of the performance management framework in use in your organisation. Each lesson is independent, and can be delved into in any order the reader chooses.
Finally, I am sure you have experienced the frustration of trying to remember passages you may have read in a book, or the thoughts that went through your mind at the time of reading it. Each chapter in this book ends with a two-page learning and action diary. I encourage you to use it to capture your thoughts and create an action plan to apply ideas you may find useful. If after reading this book, you find even one idea compelling to the point of applying it and reaping the benefits for yourself, your team or your company, then I would have achieved my goal.
CHAPTER 1
Manage expectations when implementing a performance management system
Why?
Performance management can be a burdensome activity that stacks up on top of your peoples’ day-to-day responsibilities and as such, can be met with resistance if not handled properly.
Several case-study researches have revealed several reasons that can bring your performance management initiative to its knees. These include:
Process burden, resulting in additional work for staff
Capacity constraints due to the lack of in-house capability and expertise to support the performance management initiative
Credibility anxiety, due to an overload of management techniques
The “Georgia Giant Syndrome”, a situation where management techniques are not adopted unless the workforce is closely and rigorously supervised.
Furthermore, the legacy of past initiatives can undermine your efforts if not dealt with appropriately. This will happen regardless of whether or not your organisation has carried out performance management initiatives in the past. Employees rightly recognise that often, initiatives run out of steam and enthusiasm. Instead of adopting the initiative, they “ride” it out. They know from experience that once the challenges and efforts required to make it work become apparent, organisational leaders who are often ill-informed tend to consign the initiative to the long list of failed programmes.
Performance management initiatives are not any different. In fact, they have a failure rate roughly similar to that of projects, at approximately 68-70%. In the case of performance management, one of the difficulties organisational leaders often underestimate is the practical challenges of integrating it into the normal business planning and management process.
The first duty of an executive or a manager who believes performance management can be of value to their company is to manage the burden of performance management.
How?
Firstly, start by clearly articulating and communicating the value of performance management to your organisation, irrespective of whether you are starting a new initiative or breathing new life into an existing one. This should include:
The reasons for initiating performance measurement
The manner in which the organisation intends to use the system
How the benefits and value of performance management will be realised in your organisation
The expected contribution of various units, groups, and individuals to the process.
There are roughly nine fundamental reasons why we engage in performance management. Each of these reasons is driven by a different need.
Evaluate - Are we achieving our objectives?
Control - Are our people doing the right thing?
Allocation - How should we apportion our resources to our objectives?
Motivate - How do we keep people committed to our goals?
Advocate - How do I demonstrate that my team is performing?
Celebrate - Which accomplishments most contribute to our success?
Learn - How do we build on success and avoid repeating mistakes?
Improve - How should we change the things we do for the better?
Strategise - How do we know if our strategy needs to be revisited?
What does your company want out of performance management?
Secondly, be honest about the amount of effort and time required to implement the performance management system. This is paramount. It is generally better to ere on the side of caution, than to promise quick wins that may not materialise. On average it takes between 18 and 24 months to implement a performance management system. In addition, an effective performance measurement system requires regular updates in line with the changing environment and needs of the business.
Thirdly, be clear about the phases of your delivery and manage them with care. There are four key phases to a performance management initiative:
The design phase
The implementation phase
The ongoing data collection phase and
The maintenance phase.
The design and implementation phases are often intensive and can suffer from lack of resource, support and attention. It does help to set up the performance management system implementation as a project from the start. This helps secure the resources and commitment required to deliver it. I recommend you involve individuals and managers whose resources are required early, so give them ample time to make the necessary adjustments to accommodate the project.
The success of the data collection and maintenance stages depends on a number of factors:
The relevance of the measures being collected to the needs of the organisation. People stop supporting the performance management initiative as soon as they realise that the information collected by the performance management system does not help them with their job or decision-making.
The flexibility of your performance management system to accommodate the changing needs of the business. It does help to give some thought to how the business may change in the future; and to determine whether the technologies you are adopting to support the performance management initiative are flexible and adaptable enough to change as required. This requirement must be complemented by a plan to manage the evolution of your performance management system.
Fourthly, deal with the negative legacy of past initiatives and particularly performance management initiatives if this is the case. One of the key ways of doing this is to demonstrate in your communications that you are candid about the successes and failures of your own initiatives and are also drawing on the lessons learnt from the failures of the past initiatives. Also, putting some effort into designing and running an initiative that is visibly different from past ones, by focusing, amongst other things, on:
Securing support amongst executives and managers within the organisation and making this support obvious for all those involved to see
Adopting an inclusive approach to choosing the measures and working out the targets
Actively seeking and including feed-backs from the frontline staff into the program
Engaging with individuals honestly
Communicating with clarity both the successes and the difficulties of the program
Enlisting the help of your staff for solving the challenges you face during the life-time of the program
Doing your utmost best to honour the contract between your organisation and your people. This means keeping the promises made as part of the program from day one.
REFERENCES
Bourne, M., Mills, J., Wilcox, M., Neely, A. and Platts, K. (2000), “Designing, implementing and updating performance measurement systems”, International Journal of Operations and Production Management, Vol. 20 No. 7, pp. 754-771.
Gabris, G.T. (1986), ``Recognising management techniques dysfunctions: how management tools often create more problems than they solve’’, in Halachmi, A. and Holzer, M. (Eds), Competent Government: Theory and Practice, Chatelaine Press, Burk, VA, pp. 3-19.