Volume No. 10

The "Holy Grail" of Performance Management

There are many different views of what performance management really means inside of the organizations we manage. Some view performance management as simply the tracking and reporting of corporate performance. Others view it as a formalized process for benchmarking and best practice identification. Some even view it in its broadest context, extending PM well into the implementation of best practices and operational improvements.

While there are no “right” or “wrong” answers on the charter of the performance management function, there are some clear advantages to looking at the function more holistically…from the identification of current performance, all the way to tracking the impact of implementing key changes on the business. By looking at performance management this way, companies can begin building the PM discipline into the very culture of their business.

When we work with clients on their Performance Management process, we try and look at it as a key ingredient to each part of the management cycle – Plan, Do, Check, Adjust. Performance management plays an essential role in each part as illustrated in the examples below.

In planning, the role of performance management is to inform the process. We think of this as a periodic inventory of performance. How are we doing against internal targets AND external benchmarks? What gaps exist? What do the gaps mean? What practices could we/must we implement to close these gaps? These answers form the basis for the strategic and operating plans of the business. A good analogy for this phase of PM would be the kind of preparation done in the two or three weeks preceding a Superbowl or similar championship event. During this phase, the team pours over statistics, films, historical performance in similar situations, and other information necessary in helping it prepare its plan of attack. It’s the performance management function that provides the data and analysis necessary in building that kind of comprehensive and bulletproofed game plan.

In the “DO” part of the management cycle, the role of performance management takes a back seat to the daily tasks of operating management who are ultimately responsible for implementing the plans of the business. During this phase, the role of performance management is to provide support to operating management in terms of routine performance reporting vis a vis the control limits established in the operating plans. The purpose of these reports is to enable deviations to be quickly detected and resolved. The analogy here is what happens on the field during the big game. Teams are always making small mid course adjustments, often between plays, but frequently during the key plays themselves. Even though they work within the construct of the overall game plan, the quarterback is always processing information, and making slight corrections to keep the ball moving downfield. Performance management provides the information necessary for operating management to identify and execute these mid course corrections.

In the CHECK phase of the cycle, Performance Management takes center stage once again. It’s the equivalent of the halftime briefing. Management looks at performance versus plan. They analyze key gaps and variances. Why did they occur and what could have been done differently? They use this data to make adjustments to the plan, and inform the team of what aspects of the overall plan must change in order to achieve success. It is a critical analysis activity that is driven by those who are constantly looking at the data and trends, and culling the insights necessary in making effective halftime decisions.

The last part of the cycle, ADJUST, puts management back in the drivers seat to implement the adjustments and changes identified during the halftime briefing. Once again, performance management moves back into a support role, continuing to provide critical indicators that allow management to keep the plan on track without disrupting execution.

While the realities of business are not always this simple, the above analogies are useful in illustrating how the role of performance management changes as the process of management is implemented. At times, performance management takes a very strong leadership role by providing a framework for understanding strengths and weaknesses, and providing the data to support that learning. At other times, they must step out of the way, allowing management to implement their plan, while continuing to provide the information necessary in helping management identify those small but important mid course adjustments.

When viewed from this type of holistic perspective, performance management is more likely to be seen as an integral part of the business process, rather than a distraction or periodic activity that management must endure. It becomes a part of the business culture, rather than another staff activity whose value is questionable to bottom line results.

From one performance manager to another, that’s what we’d call the Holy Grail of PM.

Author: Bob Champagne is a Vice President of Performance Management Solutions with UMS Group, Inc., a privately held international management consulting organization specializing in Performance Management tools, systems, and solutions. Included in UMS Group's product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions, as well as customized performance assessments and diagnostic services. UMS Group has consulted with hundreds of companies across numerous industries and geographies. Visit UMS Group at http://www.umsgroup.com or contact us directly at 973-335-3555.