To improve your Organisational Performance Management
approach it helps to understand which management problems you
are trying to solve.
Different levels of control require different types of organisational
performance management
Making strategy happen involves management using a variety of
different levers of control. So your performance management approach
needs to be flexible enough to handle all of these situations.
(Unfortunately many aren't). The diagram below shows some of the
different levers of control and performance that organisations
typically employ. Below we explore what these mean for performance
management.
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Risks and controls
Of course you need to ensure you have financial system compliance,
the place is safe to work, people are treated with respect and
codes of conduct are followed. These are important. and you need
to ensure compliance. If you are failing in some of these they
need attention and fixing, but they do not represent "a strategy".
They can lead to the organisation failing. Implementing Sarbannes-Oxley
or improving health and safety at work are examples of these.
(For more see our case studies)
Beliefs and values
Likewise, organisations have chosen rules, beliefs and values
by which you make judgments and decisions. There will be a purpose
or mission for the organisation. People need to sign up to these
and follow them. You will look for behaviour and evidence that
indicate this. It represents where you want to be and the principles
for getting there.
Organisational performance management approaches tend not to
address this area. It is often left to individual appraisals and
cultural surveys. However, the beliefs and values are expressed
as behaviours and these can be observed, experienced, measures
and managed. Performance management approaches that include these
are far more sensitive to understanding how change and whether
change is occuring in the organisation. To find out more simply
talk to us. (For more see our case
studies)
Operational performance
Much performance management is focused on operational detail.
You will have many measures of performance at different levels
of the organisation that tell you how it is performing. Measuring
this on a day to day basis is operational control and management.
This is like the heart rate of your organisation. You weren't
monitoring your heart rate before we started talking about it.
Your body has delegated it to your sub-conscious (autonomic) systems
to look after. If there is a problem it will warn you. Others
will also notice pretty quickly that something is wrong.
Someone needs to be monitor these things, but do you need
to? There are many operational details like this in the body and
in the organisation. Operations whose day to day functions, measurement
and management can and should be delegated to lower level functions
to look after. You should be able to trust that they are being
managed properly and that exceptions will be reported if they
occur.
Of course if there are problems they will need special attention.
You can always drill down into the detail if you need it. Likewise,
should you need to check what is going on, you can always do some
diagnosis (like a doctor checking your pulse) and explore the
detail.
If this information is not available, you will need to get control
of the organisation. This will enable you to find out what is
happening and put the organisation on an even keel. Getting reliable
and consistent information will enable you to manage the situation
better. Then you can understand the problems, diagnose issues
and fix them.
Standard sets of data and measures, gathered and presented consistently,
will help this The standard sets of performance measures will
save you time and effort rather than re-inventing the wheel. Standard
performance reporting tools will help you collect and present
systematically. We have standard sets of measures and tools that
will help you get a grip quickly. We have standard scorecards
we can help you implement that will save you time and effort so
that you get control quicker.
However, there is usually an large volume of this sort of detail
in organisations already. Once they are in place, if you pay attention
to this level of detail all the time, you will have no capacity
to concentrate on the few things that really matter. Moreover
your middle managers won't be managing, but will merely be passing
information through for for you to manage. In worse cases they
may not being trusted much or allowed to use their judgment, so
they will be underutilized and you won't get the best from them.
At the same time you will be snowed under with measures, targets
and information.
The dilemma of performance measurement is that more measurement
does not necessarily mean better performance.
Many performance management systems and scorecards operate at
this level. They fulfil the role of collect and reporting every
measure they can get find. This is useful, at some level, but
not all will be strategic. Overall this can lead to "Managing
what you can measure", rather than "Measuring what you
want to manage".
Worse still, some organisations insist that every measure need
a target. So, targets are applied to everything as well. When
this happens if becomes difficult to work out which are actually
important. When the culture of measurement and target setting
goes this wrong it can lead to dysfunctional behaviour.
Of course if you get it right you develop a
culture of performance. Get it wrong and you get measurement
mania. (For more see our case studies)
Strategic levers
When you have sufficient control, are collecting reliable information
and understand the key problems, you can focus attention on the
strategy and changes you want to make.
Management attention will have more focus. You will know which
levers of change you want to pull and communicate. You are more
likely to concentrate on objectives (rather than measures). You
may draw attention to behaviours (how things are done), rather
than what is done. You wiull also focus on end results and external
objectives (financial and for the customers).
You may have a clear understanding of how the culture, behaviours
and activities of the organisation affects your customers and
delivers financial results. You will also be aligning the organisational
resources and effort to the strategy. Your focus may be on getting
the organisation to work together better.
You should be able to read the strategy from your objectives,
measures and targets.
Strategy maps come into their own at this stage.
They help you communicate the strategy, focus on what matters, explain
the levers of change, and people can carry the strategy around in
their pockets.
Public sector: In the public sector, externally
(nationally) imposed measures and targets can often dominate local
management.
Implications
Implications for software:
To maximize the potential of your investment, choose software
that allows you to move between these various uses. If you are
looking for new software, or to get more from you existing software,
we provide or independent software software selection
and implementation advice: We help you get the best from your
technology and your provider. Save money, with the right
choice of software, well implemented, that allows most flexibility.
Implications for performance management
Performance management is about making
informed decisions to influence people's behaviour. To get people
behind the strategy and deliver results. To gather feedback for
management so you can refine the direction and message. Ultimately,
to deliver results.
Likewise, the sort of performance management approach, and the
design of your balanced scorecard will vary with these.
This is what we do. We help you develop the performance management
system that supports your strategy. Talk
to us to find out more
Evidence that Strategic Performance
Management makes improvements
Research shows that world class organisations are
three times more likely to use a Mature Balanced Scorecard
approach: It is more than measurement. It is about measuring
what you want to manage and influence. It is not measures in four
perspectives, but one that drives and links to your strategy.
(See "Making the case" in our case
studies)
Clients are still using our approach over 5 years
after we worked with them, which demonstrates the effectiveness
and persistency of our consultancy approach. Having worked
with the originators of the Balanced Scorecard, Norton & Kaplan,
for over 4 years, and being implementing Strategic Balanced
Scorecards for another ten years, we have unique, and
extensive, experience of how
to use it effectively, to execute strategy successfully and to
improve the performance of your organisation. We know what was
not put in the books and how to make it work. If you are
after some guidelines, for what makes a good performance management
system and the mistakes to avoid then talk to us.
What next
For more information take a look at:
The dilemma of performance
management
On Balanced Scorecards:
Please don't
use old style Balanced Scorecards
Use a Strategy Map
and Balanced Scorecard
10 principles for a successful
Balanced Scorecard
You could explore our
range of Balanced Scorecard services, but it is far better
to talk to us, so we can develop what
you need.
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