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Performance management is about aligning the business around a key set of metrics or KPIs, distributing the metrics through the organisation and putting in place a process for reviewing and managing the metrics.
Alignment is crucial in delivering great business performance. Without alignment an organisation can be likened to an octopus on roller skates – plenty of activity, but you’re not quite sure where it is going. A performance management system aligns all the skates, and gets everything pushing together in the same direction.
Performance management really consists of two key components – a management framework which incorporates the design of the process, the metrics and indicators to be used and how they should be dispersed through the organisation; and an IT system for collecting, distributing and analysing the performance management information.
The best known framework is probably the balanced scorecard, although there are others which can be suitable for a business. Scorecards will be devolved throughout an organisation with appropriate sections and metrics for each level of the organisation.
What is critical in the design is to ensure that the metrics at each level align with the authority and responsibility of the person or group that they are delivered to. This means that the performance management framework, to be effective, needs to be deployed throughout an organisation. There is little point in a manager berating an employee about the results on a particular scorecard if the employee doesn’t have access to the same data, and the information that drives a particular metric.
IT processes that underlie the performance management framework need to be robust, and is one area where a specialist tool like Microsoft PerformancePoint Server can help. Also the collection of information from the myriad of source systems requires careful design and implementation and this is one of the key skill sets which means that we treat Performance Management as one of the facets of the wider Business Intelligence industry.
When a framework and an IT system are correctly integrated, then Performance Management and fact-based decision making can become part of the DNA of the organisation. Regular reviews of business performance become part of the culture and open up discussions where everyone is sharing the same information.
Properly deployed the performance management framework allows employees at all levels to contribute to each point in the cycle:
With appropriate reviews in place metrics from throughout the organisation can roll up into higher level metrics; and higher level metrics can be decomposed into lower levels in the planning stage. Monitoring is simplified because employees then have ownership and understanding of the planned metrics and are thus motivated to use analytic tools to discover the reasons for variations and to act upon them. This may be to rectify poor performance or share good practice around enhanced performance.
What is critical is that the information derived from the performance management framework needs to be used for decision making and lead to action. If the management framework doesn’t promote this it will die and the considerable benefits of performance management and alignment will be lost.
To find out more about Performance Management and how it can benefit you, call Altimus on 0800 804 6442 and speak to one of our experts, or contact us through Information Request
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