Performance Management: 7 Steps to Hitting the Same Target
At any given time, in any office around the world, you can find a boardroom packed with different employees discussing how to improve the business. The scene will go something like this:
The Controller is convinced “the company needs to improve its Enterprise Performance Management process.”
However, the Vice President of Human Resources replies, “No, we do not need to focus on EPM. Our Corporate Performance Management system is what needs improvement.”
To which the Vice President of Finance responds, “Our CPM is fine. It just needs to be integrated. What we need is an Integrated Performance Management system.”
But that is not enough for the IT Manager who says, “You are all wrong. We need something even better. We need an Integrated Enterprise Performance Management Corporate Environment.”
The funny thing about the scenario above is that each person is basically requesting the same thing, except for the IT manager. He recently participated in a software demonstration where the consultant performing the demonstration made up a new type of Performance Management on the spot, which the IT manager repeats, because he thinks it sounds trendy.
Though the term “Performance Management” is used often, its full meaning is not typically understood. The meaning is only exacerbated by consultants who seem to frequently create a new “type” of Performance Management (e.g. corporate, enterprise, integrated).
It is logical to think that each of the references made about Performance Management efforts are all related to the same project, right? Not necessarily. Here are how the uses of the term Performance Management overheard in the boardroom actually translate:
Which translation of Performance Management is correct? Actually, none of them is exactly right or wrong. Each translation is partially correct, because each department, or source, uses the term Performance Management to mean what is specific to their function. Each translation is only a portion of what Performance Management really stands for. What exactly is Performance Management then?
Stated simply: Performance Management is the action of measuring actual results against specific targets or goals.
The Performance Management process for a company consists of the following key steps:
- Visioning: defines the direction for the company
- Goal Setting: establishes performance targets to track and measure progress
- Strategic Planning: creates long-term plans tied to the company’s vision
- Business Planning: consists of the tactical planning required at a business unit level
- Analysis: identifies progress toward goals and changes business drivers
- Forecasting: provides an ongoing outlook of expectations versus goals
- Measuring Success: measures toward strategic objectives and peers
- Rewarding People: recognizes and rewards employee performance based on performance incentives
The overall Performance Management process can be an integrated, continuous process as depicted by this lifecycle diagram.
Looking back at the various ways the different functions of a company use the term Performance Management, it is clear each translation is only part of the story. Too often Performance Management is used to describe goal setting or rewarding people. These are only two components of the entire cycle.
It might help to describe not only what Performance Management is, but also what it is not…
To better understand how the Performance Management process is used, let’s assess a non-business related application: winning a race. For someone with sights on winning a 5k, the performance management process would look something like this:
- Vision: Winning the annual Turkey Trot 5k
- Goal Setting Targets: Week 1: 5 Miles, Week 2: 7 Miles, Week 3: 10 Miles, finish 5k in 21 minutes or less
- Strategic Planning: Monthly mileage plan, monthly time/mile avg. plan
- Tactical Planning: Daily calendar marking long-runs, track work, and rest days
- Analysis: Comparison of training times to targets, comparison of total training mileage logged to targets
- Forecasting: Modifying monthly/daily plans based on analysis
- Measuring Success: Comparison of training targets to actual results, comparison of race results to target and peers
- Rewards: Pumpkin pie with whipped cream for achieving training targets, non-stop boasting to annoy family members for winning the 5k
The individual training for the 5k did a good job of using the Performance Management process to drive actions toward a desired result. Driving actions toward a desired result should be the objective of every company.
Performance Management is a crucial process for effectively managing and guiding a business. However, it is important to think of the process in its entirety. Maybe the IT Manager was right from the beginning: Performance Management should be an “integrated enterprise performance management corporate environment (IEPMCE).” Trademark filed.
This article has been adapted from a chapter from Trenegy’s book: Jar(gone)
Trenegy is a non-traditional consulting firm, dedicated to helping companies evaluate the efficiencies of their business processes and align their actions toward defined KPIs. We translate business jargon into useful terms and solutions that actually benefit your company.
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