Friday, February 24, 2012

Koliso Perspective: Is a Simple Performance Management System Possible?

One of our client CEOs recently came to us with a novel issue. They are a mid-size entrepreneurial organization that is just starting to formalize some of their internal processes. How do they set up a system to manage performance and planning without becoming too bureaucratic?

First, we worked out what a full system would look like. From what we know about how change works, we have to present a compelling picture of a better future, show people their role in getting there, and then coach and reward them thoughtfully along the way.

We outlined a five-step approach, and we kept each step simple. There is no fancy software or large administrative overhead. Just a thoughtful approach to planning and performance.

The first step is to establish the big foundational issues that drive the business. The CEO wasn’t too interested in doing the “vision and mission” stuff. It sounded too fluffy. There are too many organizations and consultants that get bogged down in definitions and models.

We showed how the mission, at its simplest, is just an easy way of helping everyone understand what the business is in the business of doing. The vision is communicating to everyone a picture of what success looks like when the mission is accomplished. We also recommended outlining some clear values so that everyone understood the kinds of behaviors important to their success.

The next step we set up was a principled scorecard to help focus everyone on what was most important to accomplish the mission and vision. We kept it simple, using Kaplan and Norton’s Balanced Scorecard approach (See our last newsletter where we recommended their book). This helped us find a principled balance between customer, operational, employee and financial perspectives on the business.

We also made sure that these perspectives were reflected in clear objectives with measurables and targets.

Our third step was to help the managers convert each of these objectives into one page plans that outlined the high-level initiatives needed. We use a simple model called SORTIES so that each manager can give clear directions on how to achieve the goals, and another simple model called SMARTER Objectives to make sure that the goals are achievable and engaging.

The fourth step involved setting up a review process. Businesses get too hung up on performance reviews as report cards. It’s as if the purpose of reviewing progress is to make sure the employee knows what “score” they’ve got, like a school report.

Instead we set up two kinds of simple on time/on track meetings. One had a standard agenda to check in on key actions to ensure things were indeed on time and on track. The other used a standard agenda to move into problem solving mode when things weren’t on time and on track.

Because the business still wanted to have a standardized annual performance appraisal, we suggested keeping records of these meetings so that managers could refer to them at the end of the year. Employees could also use them to populate their self-assessments at the end of the year, and they helped both managers and employees keep focused on goal achievement and coaching outcomes during the appraisal.

The fifth and final step was strategy development. Again, this could be as complex and intense as the business was prepared to be. However, this CEO and senior leadership team knew their business pretty well; what they wanted was a way to focus their end-of-year thinking so that they looked at the big picture before deciding on the following year’s goals.

We recommended using a strategic SWOT approach. This involves thinking of the business in terms of internal strengths and weaknesses as well as external opportunities and threats. We then worked through how to exploit the strengths and confront the weaknesses where the environment presented opportunities. Where there were threats in the environment, we planned how to use the business’s strengths to adapt and determined the actions needed to avoid the threats where the business was weak.

That’s it. Five steps:

  1. Establish the foundation
  2. Manage and measure what’s most important
  3. Give clear directions and plans
  4. Review, coach and revise
  5. Strategically look to the future

In keeping it simple we helped the business make sure this year’s performance is well planned, they are ready for changes that may happen, and they are already planning for next year. Interested in learning more about this topic for your organization? Contact us.

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