How to avoid performance management tying you up in knots

2005

Business performance management should be led by vision and strategy, not bogged down in processes and systems, argues consultant Nigel Shepherd.

Measuring improvement in an organisation is not easy. In a recent survey, 25 per cent of people polled said they had experienced problems with the extra time and expense that was required to implement a business measurement system.

The UK Government's "Best Value" programme, which involves constant reporting against key performance indicators, is purportedly to have added £29 million a year to the cost of running the police force.

Business performance management (BPM) is supposed to be a discipline by which an organisation measures and so improves its performance.

But what organisations are finding is that to improve performance there must be a clear vision and strategy for the future.

It's not just the role of the leadership, it needs to be developed wider in the enterprise, creating a guiding coalition.

A sense of dissatisfaction of the current position needs to be clearly understood, otherwise, why should people behave and perform different in this vision of the future?

With no sense of urgency, the pace of change will be slow and in the worst case, won't happen. Issues must be communicated well, widely and continuously and then move to staff involvement to achieve and maintain the momentum.

BPM consists of 10 elements. These need to be intertwined and should start (ideally) with the strategy/vision piece.

If done in a collegiate way, the coalition is already developing nicely. From here flow the development of key objectives about which the strategy and achievement of the vision are based.

Good objectives are more likely to be developed near to the area (function, division, department or individual) accountable for its delivery, additionally creating a coalition of ideas and people and sending strong signals.

The objectives should be balanced and include a range of external items such as customers, suppliers, financial and competitors, amongst others. Internally, the key business processes are vital as well as key assets such as people, systems, property and plant.

Notice much has been created before measurement is addressed. Building measures near to the appropriate action area in the organisation, rather than at the senior team, builds the momentum for people being involved, creating the culture that will deliver.

It also builds accountability, ensuring alignment across strategy and people. Only now are targets, the actual measurement value considered and set.

I'd advocate sliding scales for a target, as we've all seen what single point targets do to create perverse behaviour in people – striving for profit like Enron, WorldCom, Parmelat?

With targets set, the focus shifts to monitoring what actually happens in these targeted areas. This is the feedback around which the initiatives and actions to drive performance can be formulated, implemented and checked to see if they are working (ie a test of the strategy and it's implementation – organisational learning).

All of the above is the cycle of continuous process improvement and is multilevel - the business process level, people and assets or the external areas mentioned above.

The last element to mention is Reference Frameworks. It's not imperative in BPM, but many organisations might be driven (by convention, by the corporate HQ above or the Government) to adopt a framework such as Best Value, Balanced Scorecard, The Business Excellence Model (EFQM) or a certain Quality System.

The good news is that all of these are compatible with the ten elements above.

There are also a number of flexible entry points to this flavour of BPM. The strategy is an initial entry point, but objectives, processes, reference frameworks and continuous process improvement are also valid, depending on your position in this evolutionary discipline.

So, the whole game of performance improvement and measurement takes on a multitude of angles to achieve that ultimate goal of business success.

Understanding this will give you a head start among the rest, who just believe it's a matter of "cascading SMART objectives to staff during performance appraisals". Yes, this is part of the game, but not the panacea that some might believe.

You should view change and BPM as the context by which the appraisal system can be much more meaningful and enabling – rather than performance draining.