What is Strategic Performance Management?

Performance, Strategy | 0 comments | by Simon Ricketts

Getting everything aligned to performThe word performance implies a feeling of how well something is working, how efficiently it uses its resources and how well it accomplishes the task for which it was designed.  However this takes no account over whether it is the right tool being applied in the right way for the right purpose.

To take an analogy, a performance car may be able to travel at high speeds through different weather conditions but the primary objective is to arrive in the right place, therefore there needs to be a combination on the car being driven in the right direction to the right place and then using the car’s innate performance capabilities to get there quickly.

It is this concept of knowing where we are going which is important in strategic performance management, which begs the question “where are we heading” and “how can we best get there”?

In an organisational sense we have resources and capabilities that we can deploy, use and enable to perform however success will only be determined as to whether we arrive at our destination, i.e. whether the organisation fulfils its primary purpose or not.  An accountancy firm that is not making both its partners and its clients richer cannot be deemed to be successful however efficiently it may be operating.

So this concept of strategic performance management, it can be seen, can therefore be applied to the organisational level, divisional level, team level and consequently to the individual, and it is the dovetailing and linkage between these different levels that enables an organisation and all of its constituent parts to perform in a more coherent, cohesive way to achieve the organisation’s purpose.

Both clarity and understanding throughout the organisation are what enable us to ensure that we are doing the right things and also doing them well.

But how can this happen?

There are three primary causes of organisations not performing to enable their strategic purpose to be fulfilled and these are in priority order:

–    Clarity and focus – all of the constituent parts and people within the organisation understanding the purpose and their fit and contribution towards it, i.e. what they have to do to fit into the overall plan. 56% of strategic performance failure is as a result of insufficient attention paid at this level.

–    Total commitment from individuals to the organisational purpose.  33% (approximately) of strategic performance management failures are because the organisation has not engaged and committed its individuals to deliver on the strategy.

–    Action – doing the right things in the right order in the right way to achieve the end result.  Errors in this category account for less than 10% of strategic performance failures.

The issues of gaining widespread clarity and focus over what we are supposed to be delivering on and then engaging and committing employees at all levels into this are clearly the core requisites for success in strategic performance.  The strategy mapping approach delivers on these two pre-requisites in the following ways:

–    By providing a common channel, format and language across the organisation and making it easily communicative.  This enables people to easily and quickly access plans of in other areas and a total corporate plan in a way that cannot be done with traditional value systems.  This gives rise to opportunities for departments, people and projects to be linking up together to deliver more value and where there are opportunities for inter-division integration of working.

–    It makes explicit the links that are necessary between various parts of the organisation to ensure the strategy is delivered on.  Giving visibility to these links means that the activities or project teams can more effectively be managed and we can have more confidence that we are using all of our resources across the organisation in a more effective way rather than sitting in our own silos and simply taking care of our own back yards.

–    As a consequence to all of this we gain more effective alignment of corporate, divisional, team and individual objectives, efforts and energies towards delivering on the corporate strategy.  This means we are less likely to get projects occurring that are peripheral to the core purpose of the organisation.

How do we make it live and breathe in our organisation?

All of these plans being created in an intuitive, visual and accessible way is all very well but we need to be able to integrate these plans into life in our own business so that they do not gather dust on a top or bottom shelf.  The key way in which this is done is that we create between six and twelve measures for each map (corporate, divisional or team) that represent the degree to which we are achieving and delivering on our plans.

These measures may be quantitative, qualitative or simply observational; the important point is that we are tracking our progress and taking appropriate action to rectify where necessary.

The common mistake made when developing performance measures is that we try to represent, in the most accurate way, the characteristic or criterion that we are measuring.  This is missing the point about what measures are for.

The fundamental is that measures are there to guide, check and modify our behaviour – i.e. if a measure is a low target we must make sure that the measure is designed in a way that will then cause us to behave in a way or make decisions in a way that will result in a positive uplift in that measure.  This may sound obvious but because of the unpredictable way in which human beings react and behave this is one of the more difficult aspects of the mapping approach.

Clearly measures must also be developed that do indeed represent the aspect that we are measuring, but as we can see this is not the sole requirement and arguably not the most important one.

Ok we now have measures but so what?

Simply measuring things is not enough.  Measurement gives us data, not necessarily information, from which we can make better decisions.  This is why we then represent those measures through a document called the dashboard.  This is a visual representation of our performance and progress against our strategy, be it corporate, divisional or team level.

The main aim of the dashboard is to be able to very quickly and very visually identify which areas of our performance are good, which are under control and which are unsatisfactory, both on an immediate basis and on a trend basis; to ensure we understand what these measures link to, and therefore what we can do about them, and track our progress in taking actions and making decisions to effect these measures.

Visually the dashboard is usually one sheet of A3 per team and is composed of a combination of numbers, graphs, symbols and very short, succinct statements of action or progress made.  However this then becomes the document which enables the strategy and our performance to live and breathe within the organisation and will guide all of our actions.

The dashboard may be composed of a mixture of the following elements;

–    The definition of the measure

–    Graphs representing that measure

–    An indication as to whether the three or six-month trend in that measure is upwards, static or downwards; a visual representation of whether they are on target or not.  Perhaps an indication of some of the “leaders” that we can pull or use to influence the measure.

–    Progress made since the last meeting and actions taken

–    Actions to be taken as a result of the meeting

 What about the individual?

Clearly organisations do not change, individuals do and to this extent the most fundamental and important step is that objectives are cascaded to the individual into an effective and well-designed performance management system.  Through this the individual will understand what is expected of them personally in terms of performance, how it links to their team’s performance, which therefore ultimately links all the way up to the corporate strategy plan.  One of the key complaints from individuals in organisations is “I do not see where I fit in”.  This integrated strategy mapping approach neatly and elegantly resolves this problem and gives the individual this ability of exactly what they are required to do and why.

 

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>