Getting the Performance Equation Right

christinapd
HR Consultant
People Development Magazine
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 Performance Management is an Art!

If you want to be cutting edge you need to measure your results and performance manage your team.

Getting the best out your people can sometimes be a stressful business. In my many years of managing and subsequently as an HR professional, one of the biggest barriers to great performance management is that people have different perceptions of what performance management is about.

Even terminology around performance management can be misconstrued. For a business to succeed you need to make sure that when planning, developing and communicating your performance framework you get it right.  Your performance framework sits underneath your overall  organisational purpose and mission.  It is not the end the result: a performance framework is the  examination and monitoring of the factors which will make you profitable, or successful;  or not.

Businesses who get their performance framework right have a huge advantage. I know of some organisations who don’t actually have a performance framework in place, and frankly they are missing a trick.  Because performance can contain a myriad of factors; the first hurdle is to decide on the unique framework for your business.

Measuring and managing performance are two different processes. They are frequently confused. Depending on style and culture of an organisation, these two simple elements can be approached in different ways. A good organisation will have no doubt at all about all of the elements of their performance measurement and their performance management regimes.

Performance Measurement

There are six basic performance measurement equations: These are:

  • Productivity. – You can measure productivity individually or by team. Basically this measurement is about the quantity being produced in a given time. You can measure productivity across most outcome based processes, which could be a product, a service or an administrative task.
  • Performance. – This measurement is a little more sophisticated. It is the measurement of productivity for all of your team. It will include the team members who are perhaps not involved in the productive process. For example, managers or specialist advisors. The purpose is to see how effective the structure of the organisation is against outcomes.
  • Effectiveness – This is about throughput. Or in other words the length of time it takes to reach an outcome. Effectiveness links to productivity, and encourages businesses to examine the process to see if better results/profits can be achieved, or if customer expectations are met.
  • Efficiency – This is about the cost of the outcome. You can have great productivity and effectiveness, but if profit margins are too low, then you have to understand this.
  • Standards: The standards that you set. These can include for example standards about quality, quantity, impact or timing.
  • Service: – The impact made on your customer. You may have service level agreements or targeted customer satisfaction levels. The way you measure impact on your customer must be relevant and result in your business improving and increasing positive impacts.

The six components all work best when they work in a balanced scorecard framework comparing each equation against each other. So for example, you might be the most efficient team, but if your customers aren’t happy then that could affect profits. Likewise if your productivity is top end, but your costs are high then you haven’t got the right balance.

Performance measurements can be introduced at organisational or team level. They can include outcomes, targets and results, both quantitative and qualitative.

Once you have decided on the most impactful performance measurements, then your next task is to have a sound framework of performance management. This is the golden thread that runs throughout your business, and links your outcomes, standards and processes to your people and how well they perform.

Performance Management

Performance management is all about how your individual employees work. What makes performance management different from performance measurement is that it is about individual contribution. Performance Measurement is about the collective organisational and team results of individual contribution. It is a subtle distinction.

Obviously the elements of performance that you decide to manage should link into the measurements on your balanced scorecard;  but they are about the specific elements of that person’s job, and ability to do that job. So for example, the performance requirements of an office junior will be very different from an MD. For that reason it is essential that your business has the right job roles to get the right results!

The elements of individual performance can vary greatly. A way to keep this simple is to break down the components of what an individual needs to bring to the party to help your business be successful. The four most common components are:

  • Capability – This includes, knowledge, skills, competence any specialist knowledge as well as physical ability to do the work.
  • Impact – This is about individual objectives productivity, efficiency, effectiveness in relation to their specific job, their team and the organisational results.
  • Behaviour – This can be about attitude, buy in or engagement, contribution to the desired culture and values of your business.
  • Talent – this can be about how the contribution and potential of the employee impacts or can benefit the organisation. It can be about suitability for progression either across or up the organisational career path.

A good business will have aligned the overall desired measurements or results, with the elements of managed performance. I have seen literally hundreds of performance frameworks, and if you are intending to or in the throes of developing a performance framework, I would contend that there are only two rules:

1. Keep it simple. If your 13 year old can’t understand it, then it won’t work
2. Make it relevant. If the golden thread, connection or link isn’t made, then it won’t work.

What do you think? Do you have a great performance management system? Have you different views or essential elements you would include?

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