How you frame performance management discussions

Do be aware how you frame a performance management discussion

I often encounter clients whose experience of performance management discussions is that they are a game of scoring the maximum amount and justifying a high score or protecting against the potential consequences of a low score.

The conversation is dominated by the consequences.

In contrast, when working with a recent client implementing fourth generation balanced scorecards, at this stage, we encouraged the teams to score their performance and discuss why they had scored them as they did. Not so much justify - as explain. In doing so they learnt about what each other were thinking and also how they were doing relative to others, given the contexts they were each in. As a result some moved scores up – others down and others were pleased to find their judgement confirmed by others.

It was about quality of conversation and learning. The teams were doing this in “learning sets” rather than “performance reviews” which created a different frame around the discussion. Of course they later used it to explain their performance to themselves, the people they supported, their staff and the management and the board. However by then they were confident that they knew how they were performing relative to peers and why, so these explanations were much more that-an explanation – rather than a justification which is what many can become.

So as much as anything it is how you “Frame” the discussions that influences what goes on within them.

So do think about how you frame performance management discussions. What hidden agenda or even explicit consequence is sitting behind the meeting?

Even if you do not have it, others may perceive you have it from past experience. So be aware of these and explicitly mark out ways in which you are breaking this thinking and encouraging conversation and learning, rather than evaluation and game playing.

Phil Jones
Excitant Ltd
Where balanced scorecards work properly and make a difference

Rapidly evolving and changing strategy

How do you handle rapidly evolving and changing strategy with a balanced scorecard?

Today I opened my email and found out that my "BT yahoo search is now powered by the nations favourite search engine - Google!". Yes Yahoo uses Google. It is hard to believe that these rivals from only a few years ago are now in such close cooperation. But that is the nature of Internet technology.

The environment and the strategy are changing rapidly and you need an approach to strategy planning, communication and implementation that can accommodate this rate of change.

Likewise with the credit shortage (I refuse to call it a crisis). Again it came upon us quickly and probably more severely that we expected. We also still have the uncertainty of when it will recover and how it will recover. Again thick business plans will be hard to change.

This is why I like strategy maps. They describe the strategy in short (1 page) documents. You can easily put a business plan behind them that sets out the details of the financials, markets, competitions, competitors and what you are going to do.

When I was on the management team of a dot.com the strategy completely flipped inside six months. We moved from a net market providing auctions for commodities in an industry, to a collaborative supply chain solution in the same industry. The strategy map could see that coming: On the main strategy map for the net market auction model, we introduced the supply chain capability, initially as a small theme to the right. Over six months the auctions business slid into a thin sliver of a theme on the left as the collaborative supply chain solution took hold with the customers and became the focus of attention (and the source of money).

The business plans, finances, resources, staff all followed behind as the organisation rotated through 90 degrees to provide a completely different solution to the same customers.

Strategy mapping helps you explain startegy as it evolves. It provides a quick and effective way to describe the strategy, that is rich and powerful in its description yet at the same time can also change and evolve far more easily than a written document.

That is why strategy maps are often used to describe alternative strategies when they are being tested and thought through. It is also useful to develop a strategy map when acquisitions are on teh horizon. It means thatyou concentrate on the main business whilst developing your startegy for the acquisitions and can then feed the integration often two businesses into the strategy map.

Having the staretgy map allows you to then develop the measures, targets, projects, actions and responsibilities (The balanced scorecard) beneath the startegy map. That way as the strategy map evolved you can more easily refine the balanced scorecard with reference to the strategy map.

For more on strategy maps and balanced scorecards, read our introduction to strategy maps on the main website http://www.excitant.co.uk/pages/strategy_mapping.htm

Phil Jones

The failure of single point targets: A tragic NHS story

A tragic story of targets and "Incentives"

When explaining how poor targets and measures destroy common sense, I often cite the case of Accident and Emergency (A&E) times in UK NHS hospitals.

The government (through the Department of Health & Social Services DHSS) were concerned that patients were having long waits within A&E. So, to reduce the time, they imposed a target of 4 hours waiting on all hospital A&E waiting times. Hospitals that failed to meet this target were to be penalised.

Now you can see the logic: We want to reduce waiting times for patients, so lets create a target and incentivise the hospitals to achieve it (or threaten them with punishment for not achieving it.

However, what happened? Well arrivals at A&E are very volatile. Sunday lunchtime is a lot quieter than Saturday night. Its in the nature of A&E that emergencies happen. Demand and supply don't fit well together. So, to avoid punishments and to achieve the targets with the limited resources they had available, the highly rational doctors, managers, nurses in A&E resorted to ways to achieve the targets (and avoid the punishments).

I am sure there were many rational moves to achieve the targets which were not reported. (The BMJ reports on some short term actions in this article). To avoid the punishments some seemingly irrational behaviours occurred. One solution was to cancel operations to ensure beds were available for A&E patients. Another was to have a patient to stay on the ambulance instead of being admitted. That meant that the clock did not start counting. Of course, it tied up a valuable ambulance, but someone judged that penalty was less that the penalty from the DHSS.

Another solution was to address the discharge end of the problem . You see you need to discharge a patient from A&E (either sending them home or being admitted into a bed) to stop the clock. If beds are not available the patient waits in A&E and the (arbitrary) clock keeps ticking. The solution: Put the patient on a trolley but take the wheels off it and designate it a bed. They are still in A&E but effectively not according to the target. Creative yes. Bizarre no.

I have told these stories many times,. They are rational people trying to do their best in a ridiculous situation that does not consider the whole problem - that of patient care.

However last week I was chatting to an ex-nurse. I asked why she left the NHS and she told me a story that make this even worse.

She said that whilst on a ward she had two critical patients who needed a Doctor's (Consultant's) attention. They were critical. Life threatening. However, the doctor choose to serve a non-critical patient in A&E, instead of seeing to the critical ones on the ward, because he was driven by the Governments A&E targets (and punishments) to save a target rather than save a life. She was so appalled by this that she left the NHS.

There are some important things to realise about this story:

a) All the actors in this story are rational and have good intentions.

Yes. I know it sounds daft, but they are. The problem is that the context and situation they have been put in has forced them to act irrationally when the bigger context is considered.

b) Each is trying to improve the piece of the picture that is in their control.

Each player has limited resources, influence and control. The DHSS believe that all they can do is impose targets and penalties. It is all they have in their control and influence. They also believe targets work and change behaviour - and they are right!

The Doctors can only work within the context of A&E and can't magic beds up. The hospital has only so much time and resource available.

c) They all care desperatly about the patients.

Yes, they all care about the patients. It might not seem it, but they do. Think of the dilemma that that Doctor was in: The hospital loses a large amount of its funding if a target is not met which will affect many patients, for a long period, (and that Doctor gets the blame as it was on his shift) or two patients wait for 45 mins whilst a person is A&E gets attention. Think about it.

Again he is acting rationally in the context in which he has been put.

It is not the hospital that has created this situation, it is the DHSS and to some extent the Hospital management. Perhaps the hospital management could have addressed the problem more effectively earlier - we don't know.

The others players in this story are doing the same

So what is going wrong and what are the solutions?

Have athink while you wait for a later posting, where I will reveal my analysis.

Phil Jones, Excitant
Balanced Scorecards that work

Strategy maps are about cause and effect

Strategy is about change and improvement, so Strategy maps have to reflect that change and balanced scorecards have to be able to track that change to manage performance. Modern, third and fourth generation, balanced scorecards have strategy maps. These contain the objectives from which balanced scorecards can develop their measures, targets, actions, responsibilities.

Strategy is fundamentally about change. So it is vital to describe what will bring about that change. The strategy map’s cause and effect model teases out and describes how these changes will occur. How will the market and competition change in the future? How will we influence and affect that market and customers? How will we change in the future? How can we profit from these changes to improve our finances and overall value? These are all questions that are explored and answered during the strategic thinking and planning process and are embodied in the cause and effect model.

The great advantage of strategy maps is that they explain how the strategy will come about; what will be different by the end of the strategy and where the focus of attention should be to achieve it. They explain how the organisation will be different from various perspectives and how the change will come about. Failure to explain how change will come about is called “Strategy by hope and magic” The strategy map helps to avoid this.

The cause and effect model provides a predictive model of business performance. Rather than tracking whether you have achieved the result, eventual results, the cause and effect model tells you whether you are making progress towards the end result. It moves the emphasis of tracking strategy from, how will we know we have succeeded, to how will we know we are succeeding? This cause and effect model is fundamental to strategy and strategy mapping, so we build it into the design from the start.

Phil Jones, Fourth Generation Balanced Scorecard specialist
Excitant Ltd
www.excitant.co.uk