Volume No. 33

The Role of Independence in Performance Management

Most of us Performance Managers have varied and colorful backgrounds as far as our careers go. Let's face it, Performance Management is not exactly something you study in college, at least not yet. Perhaps one day that will change, but for now we're all stuck with our pasts.

For me, that past involves more than a few roles in the auditing profession as an Operational Auditor. It's where I first learned the skills of organizational assessment, process control, and performance measurement, among others. As an internal auditor, there are three basic tracks you can take- Financial (the basic accounting related auditing), EDP (Data Processing and IT related Auditing), and Operational Auditing (basically a mix of the other two, plus a healthy dose of work in organizational efficiency and effectiveness). I personally chose the latter, and in retrospect, found it to be an excellent training ground for a career in Performance Management (although, I must admit that I'm more than a little biased).

Nevertheless (all bias aside), I feel very strongly and favorable about the Auditing Profession, particularly Operational Auditing, in terms of its ability to teach its practitioners some of the most valuable lessons in business assessment and performance management. And I believe it is these skills that prepared me well for a career in performance management. That, combined with a great mentor, Glenn Sumners (The quintessential Internal Auditing Icon/ Guru, for those of you who do not know him) who not only taught me the essential skills and building blocks I would later need, but also guided me through my early years as an operational auditor.

While I owe most of my early career success to all of Glenn's teachings and advice, it was a very specific principle of auditing that I am most grateful to have had drilled into my head at an early age. And that is the principle of INDEPENDENCE and OBJECTIVITY. For those of you who have served in auditing roles, internal or external, you know that this is THE most important part of auditing. Without it, you become PART OF operating management itself, and lose your ability to make the kind of unbiased assessments that good auditing depends on. It is common belief among many in the auditing profession, that many of the corporate disasters (Enron, WorldCom, AIG, etc) in recent years can be linked, in part, to a breakdown in objectivity, and the inability of internal and external auditors to act independent of operating management. Clearly, not all of these corporate scandals were the auditor's doings, but most would agree that it was a lack of good auditing (not enough of it... and not independent enough) that helped enable and precipitate the "meltdowns" that ensued.

No doubt, independence is a tough attribute to hone, both externally (where audit fees and long term contracts hinge on management relationships), and internally (where more than a little of your career success depends upon an administrative reporting relationship to corporate management). Independence is perhaps the hardest thing for an auditor to achieve, while at the same time being the most important attribute of success. The ultimate paradox.

So what does this all mean to Performance Managers?

The performance management discipline is very much like the auditing profession in many respects. While it may not be as compliance focused as Financial or EDP Auditing, it's similarity to operational auditing is quite significant. As performance managers, we often work for executive management, but live in the reality of having operational management as some of our most important internal customers. We often wear two hats much like the auditor does. We measure and report as independently as we can, but we all draw our pay check from the same coffers. Quite a balancing act, to say the least.

As performance managers we must strive for the same level of independence and objectivity as the auditor does. And for answers on how to achieve that, all we need to do is look closely at the auditing profession. Do our internal reporting relationships support us being objective and independent of the processes we measure and evaluate? Does the level and stature of our PM executive command the organizational respect of the Board and Executive management? Is our PM charter and mission built on the principle of objectivity? Do we undertake projects (like benchmarking, for example) "on the fly" through our internal staff, or do we use an unbiased third party who will view the information and comparisons as neutral and objective? Are we trained to tell it like it is, or do we conform our measures and recommendations to win the support of our internal customers?

I am not suggesting that we become auditors, or transform ourselves into compliance officers. But there is a big benefit to embracing their principles of independence and objectivity. These skills can be a very powerful addition to your toolbox, if you use them effectively. Over time, your value to the organization will increase in the eyes of your board and executive management...and yes, ultimately those internal customers as well!

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.