Excitant > Articles > Performance Management: Levers of Control

To improve your Organisational Performance Management approach,
it helps to understand which management problems
you are trying to solve.

Are you wrestling with the complexity of managing performance in organisations? You are not alone - many are.

Performance management is often over simplified: There are many out there who take a very simplistic approach to performance management. They assume performance management is about measures, targets and KPIs. That it is a simple, closed-loop, feedback model. Even that basic scorecards are adequate. You and I both know this is far too simplistic (and the cause of many performance management problems in organisations).

Organisations are far more complex than mere measures and targets. If it as that simple, then we could manage organisations with basic computers monitoring the measures (and we know that is a nonsense). Instead we need experienced Human Beings that use evidence and exercise judgement. People and organisations are far more complex to manage than mere measures and targets.

We must remember that we are dealing with Human Beings in complex social organisations. Too often we see performance management approaches designed in closed rooms, focused on simplistic models of influence and change, dealing with "normal populations" that ignore that our organisations are full of individual Human beings - real people. Managing performance requires both left and right brain thinking.

So we need a rich understanding: In the real world, performance is managed using a combination of ways of thinking and working. There are demands from a large variety of sources with quite different reasons for looking at performance. So, we need a rich full picture of these different ways and how they fit together, to manage performance overall. We need a clearer view of the different types of performance management and how they work as a set.

OK Phil, but what is the benefit of looking at types of performance management?

There are some very good reason to understand the differing types of performance management in use in an organisation: Any attempt to change just one part, alone, will be doomed to failure. And you don't want to waste your time, money and effort do you? What happens if you ignore the complexity?

You won't improve performance. Given the whole point of performance management is to improve performance, if you mess up the system it will make performance worse.

You set yourself (or others) up for failure: Try it without the wider picture and you will clash against the existing practices, norms, behaviours, expectations and culture. If you try to make changes to how performance is managed, (perhaps you are implementing a balanced scorecard) and do not understand the wider picture of how performance is being managed in the organisation, you are setting yourself up for failure.

You could make performance management even more confusing or difficult. In one example we encountered recently the aspects of strategy management from the client's Lean methodology were clashing with the balanced scorecards that they used for more operational and day to day management. The poor people in Finance and Planning people had a difficult time making creating measures and KPIs, that worked as a set. The operational people were struggling as well. Our understanding of the bigger picture, and historic context of both these systems, helped us untangle the knot they had created for themselves. The links and changes we proposed meant that their performance management approach was far easier to design, implement and manage with.

So, give me some examples of different ways of looking at Performance Management?

As a taster here are some of the contrasting ways in which performance is managed in organisations.

• Strategic vs operational performance management: How an executive team drive strategy and change through the organisation is quite different from the day-to-day management of operational performance. Though strategic change will of course influence how operational performance is being managed. Many organisations operate their balanced scorecards as simple sets of operational measures in perspectives. Yet Norton & Kaplan devised the system to manage strategy and organisational change. Both are useful but serve quite different performance management needs and should complement one another.


• Organisational performance vs individual performance management: How individuals (or teams) are incentivised, developed and managed is often left to the HR performance management system, yet this is a major influence on operational performance and strategic change. Change how people are developed and managed, and you change how the organisation is managed. It seems easy to manage operations and teams yet the changes here can clash with the individual appraisal, development and reward systems. Beware of tackling any aspect in isolation.


• External Governance vs internal management. How you report externally is often quite different to the tools for managing performance internally. Externally a much narrower subset of information is reported, though there are exceptions where regulation is concerned. Internally a wider set of information is needed to manage the drivers of performance rather than merely the consequences of those actions. What is needed externally is not adequate to manage internally. Recognise that different stakeholders have different needs.


• Measures and targets vs knowledge and facts: One common mistake with performance management systems is to say that every measure must have a target. We call it "the tyranny of targets". Yet it can be as appropriate to merely have facts that you can examine and evaluate. You might want to be gathering information without evaluation yet. This compulsive target setting often creates dysfunctional behaviours which can be avoided with a more practical approach to where and how targets are used.


• Control vs empowerment: An organisation approaching performance management with a mind-set to to "get a grip on" activities and performance is primarily interested in control. This mind-set is quite different to one that seeks to empower the front-line staff. One that says, "We want this information to be useful to the people who produce it, otherwise why would we want it?" Imagine a situation where you look at performance combined with an analysis of the situations and actions that were already being taken. You no longer asking, "How do I manage this performance?", but rather, "Is this performance being managed appropriately?" Quite a different mind-set.


• Judgement and evidence: Neuroscientists say that purely fact based decision making is a myth - in fact we are always using emotion and judgement, often backed up with evidence. In reality we employ experienced people and give them information with which to make decisions, establish whether it made a difference, and improve their judgement. Judgement and evidence work together, when we manage performance, despite what the sellers of analytical software believe.


• The Culture and the Discipline of performance: Measures and scorecards and targets are not the whole picture. Consider the messages that managers give out, the permission they give, the subtle communication of what is important and what they pay attention to. Consider how performance is discussed, the latitude people have, what limits they have on their behaviours. Consider the autonomous units and the ones under tight control. Consider the conversations that occur and those that do not. These cultural elements exert far more influence over behaviours than mere measures or targets. The scorecards, measures and reports that represent the discipline of performance. In reality, it is this culture of performance that makes the real difference to performance.


• "Employees in an organisation" vs "Human Beings in a business". One dramatic contrast in the way managers think about performance is highlighted by the contrast between these two phrases. In the first the people in the organisation are thought of or treated as "employees": a commodity. Management might not talk like that (they rarely do) but that is how management act and behave. In the second, people as treated as Human Beings. People feel as if they are individuls and are treated as such. In an organisation you are part of the system. In a business you have a role in serving customers and creating wealth (or serving customers most cost effectively). So "in a business", people are exposed to the working of the finances and the business, and how they can affect it. "In an organisation" they are only shown "what they need to know for their job". These two phrases create a dramatic contrast in how performance is managed that we have seen in a variety of organisations - both commercial and public/third sector.
  
  Perhaps, pause for a moment and consider.... How are your people treated?


• Managing, and managing performance, costs money! I want to be really clear here. We spend ages looking at the costs of our operations, products and services. Yet, how we manage also costs the organisation money. Excessive strategic management and performance management, especially if we are doing it, costs excessive amounts. We work with clients to introduce ways where the whole organisation can be managed better, but that does not increase the amount of management, and therefore the cost of management.
  
  

  Improve how you manage performance, call: 08456 809 209 or email us

• Don't think merely "business process re-engineering"...
  
  ...Think "Management Process Re-engineering".
  
  Interested? Then get in touch...

We have just touched the surface

We use this knowledge in our diagnostic tool when we engage with clients. We find this diagnostic they provoke deeper thinking about how performance is really being managed and a richer discussion that has usually happened previously. A discussion that opens up issues about governance, strategy and how performance is managed as a whole.

We offer diagnostic services, training and briefings on the approach.

So, if you want to genuinly want to improve how you manage performance and deliver results, get in touch.

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