There are certain executive-level challenges that are routinely experienced across all companies. Among these challenges are the need to:
- Operate more efficiently;
- Improve collaboration;
- Execute better and more consistently;
- Attract the best people;
- Fully engage the employee team;
- Create greater momentum;
- Be more forward-thinking (have
- a vision);
- Accelerate profitable growth.
Business leaders often put off addressing these challenges or won’t commit to an improvement process because they either don’t know where to start, don’t know what to do or they think developing or refining their existing management process will be too complex.
Your company’s performance management process should include five key elements:
- Goals – for measuring performance (financial and operational).
- Controls – to verify performance toward specific goals.
- Visibility – to ensure performance transparency throughout the organization.
- Communication – to ensure critical dialog occurs about performance issues.
- Executive commitment – commitment, discipline ensuring the process is embraced.
The strength of a well-developed performance management process is that it ensures clarity regarding performance goals and it creates visibility about performance accomplishments and/or performance shortfalls. This ensures that problems, obstacles and opportunities are identified and addressed with an appropriate sense of urgency – this supports the achievement of accelerating profitable growth.
Goals – ensure clarity about performance expectations
Goals are the critical first step. Clearly articulated, measurable financial and operational goals enable business leaders to objectively assess performance. Only with clearly stated and agreed upon goals can performance throughout the company be measured.
Controls – tools that create visibility around performance
Controls create visibility about performance. A control is simply a performance reporting tool and/or event. It can be a document, a meeting, or both. Any tool that provides performance information for review/evaluation is a control. Controls are the tools within a management process that enable us to evaluate financial/operational performance. Controls enable performance reporting, which is critical in driving the financial performance of a company. Performance reporting is a key part of a performance management process that:
- Encourages a culture of continuous performance evaluation, improvement and learning.
- Improves visibility and accountability throughout the organization.
- Encourages employees to act as in-house consultants regarding performance.
- Focuses on improving execution and operating performance.
Visibility – gives us permission to communicate about performance
Visibility is critical because you can’t fix what you don’t acknowledge. Further, a lack of visibility screws up one’s sense of urgency as it relates to addressing problems, obstacles and opportunities. Creating visibility about performance is really the secret sauce to a well designed performance management process. And in fact, visibility actually brings out the best in people because it:
- Ensures clarity regarding performance expectations.
- Enables data and fact-driven management.
- Enables proactive management (action with the appropriate sense of urgency).
Communication – ensures critical dialog occurs around performance
Proper communication processes give us permission to talk about performance – both good and bad. The best-performing companies create cultures in which processes exist to ensure predictable, consistent and meaningful performance-related communications exist at all of the correct intervals. Because performance reporting is primarily data and fact-driven, this type of communication reduces the emotion that often comes into play when reviewing performance. A properly developed/executed performance management process highlights the cause-and-effect relationship between the things that affect performance and the financial results produced.
Business leaders must be committed to the performance management process in order for it to work. Implementing an effective management process that drives financial performance requires executive level participation, commitment and discipline to ensure that the process is embraced and used consistently throughout the organization.
This process is powerful, and when implemented effectively and executed consistently, it enables companies to achieve accelerated profitable growth, as well as a high level of employee engagement and satisfaction. If you’d like to learn more about the performance management process, contact me at (262) 662-4646 or visit my Web site at mydlachmanagement.com.