monthJune 2013

5 Reasons Why Performance Measurement Fails

For most employees, performance measurement is viewed, at best, as a “necessary evil.”  Instead of helping employees evaluate their performance against targets and improve, most employees view measurement at work as a means through which management watch, time and appraise them.

It only takes a single snakebite to make someone afraid of snakes for the rest of their lives. Unfortunately, many people have been bitten more than once by measurement at work.

For measurement to deliver the hoped-for results and improvements, management should create an environment and provide structures that facilitate conversations around the topic. The performance environment has a greater influence on how employees perceive and respond emotionally to measurement.

If the environment does not empower or involve employees in measurement conversations and only measures people against goals imposed upon them, the result will be employee frustration and this negative use of measurement will deeply be engrained in the organization’s culture.

Instead of being instrumental to the success of the organization, negative measurement becomes the keys to its downfall.

In order to reduce employee frustration and drive performance improvements, managers must first identify the causes of these employee frustrations, evaluate the causes, monitor the causes, apply remedies and continuously improve.

The following are five reasons that explain why most organizational performance measurement goes bad.

  1. Purpose of measurement: How performance measurement is used in the organization will determine employee reaction to it. Measurement at work should provide managers with high-quality information to assist in learning and improvement. Contrary, if measurement is used to justify, judge, control or reward and people are made accountable for hitting or missing targets, this creates less focus on learning and improving but more compliance because of the command-and-control orientation. When rewards and threats of punishment are added to the measurement system and are too great, people will tend to do what it takes to obtain the reward or to avoid the punishment even if it means applying poor judgement and risk management.
  2. Lack of empowerment: When employees are not empowered to succeed, perceive measurement as non-productive and are less confident about the importance of measurement because measurement data is not relevant, understood and timely; they become discourage and will not seek any opportunities to keep score. They will very likely feel quite negative about measurement. Contrary, empowering employees in different change situations will make them feel positive about measurement
  3. Lack of trust: Trust is essential for performance measurement to succeed. If leaders are trustworthy about measurement and not manipulating metrics, then employees will trust measurement. In order to win people’s trust, leaders should avoid using measurement against them. When people lack trust and do not respect measures, they will not be afraid to manipulate measures. It is important to note measurement doesn’t have to be perfect to be trusted. There must be honesty and integrity.
  4. Lack of accountability: This is also called “negative accountability” and arises when measurement is used to force performance and punish non-performance. When employees are not prepared, lack support from senior management, organizational structures and systems or view measurement as threatening, they become naturally afraid to accept measurement accountability.
  5. Resistance to measurement: People will resist if they feel that measurement will be used against them to find fault or blame them. Too often measurement is used to determine who went wrong, rather than what went wrong; to find fault rather than to provide useful feedback or trigger positive improvements. This leads to employees feeling judged and humiliated hence their dislike for performance measurement.

In addition to the above, people resist measurement because they perceive it as too difficult, time-consuming and tedious and as someone else’s job. Lack of data understanding, lack of resources, bad experiences, lack of data accuracy and lack of senior leadership involvement also lead to measurement resistance.

Concluding Thoughts: Most people think that, without measurement, there is no failure. Actually, the opposite holds true. Lack of good measurement approach, systems and structures will definitely lead to bad measurement. In order to have positive attitudes towards measurement, the context must be right. People should feel that measurement is not being used against them, but rather, to learn and improve.

7 Keys to Achieving Transformational Organizational Learning

Nothing is more important for transforming performance measurement than learning. Organizations are always defining performance measures and reporting actuals against targets. For many, the process of performance measurement ends here. There is no further probing on why variances exist and how the organization can actually learn and improve from this. Learning is about acquiring knowledge, establishing why certain things happened and determining how to do things better.

With regards to organizational learning, there are two types: single-loop and double-loop. The former involves identifying variances in performance and continuously correcting the errors until an acceptable level of knowledge or action is achieved. With single-loop learning, the idea is increasing competence in an already-acquired skill, until a satisfactory level of competence is attained. The later involves employees and the senior management team questioning current beliefs that have previously been taken for granted, and challenge the expectations, values and assumptions that led them to adapt the knowledge in the first place. It also involves question existing measures and adopting new transformational and emergent measures.

This distinction between single-loop and double-loop learning is significantly important for transforming organizational performance measurement and management. Increasing proficiency of current performance measurement and management methods is single-loop learning.  Questioning and challenging existing methods is double-loop learning.  No matter how well the organization’s KPIs are measured, constantly using the same KPIs repeatedly leads to achieving the same results over-and-over again.

Today’s competitive pressures require not only more skilled players, but also better strategies for winning the game. At its best, performance measurement and management should be a continual interplay of double-loop and single-loop learning. As explained above, double-loop learning is essential for questioning existing measures and measurement frameworks and experimenting with new ones, followed by single-loop learning to fine-tune new strategies.

For learning to be transformational, the environment within the environment should be able to provide such support. The organization must be focused on measures that are critical for creating value, the measurement approach must foster organizational integration and alignment and measurement must be done socially and interactively. If all these factors are present, the organization is bound to experience a positive increase in organizational learning. In order to achieve transformational learning, the organizational environment should facilitate:

  • Inquiry instead of advocacy: People should have the ability to inquire, not just dictate or advocate. Inquiry is the ability to ask questions that have never been asked before and come up with informed solutions.
  • Freedom to question:  A perfect learning environment allows people to willingly and openly share and test their perceptions, intentions and theories with reality and learn from mistakes. People are not scared to question the numbers or the theories and assumptions that gave rise to the numbers.
  • Freedom to experiment:  Enormous learning occurs through the use of subjective assessments and self-assessments. Challenging conventional wisdom through bringing forth new ideas can be a transformational learning opportunity.  For example, there is need for someone to simply step forward and start discussion on new approaches of measuring performance without being afraid to suggest that a qualitative or subjective approach be implemented.
  • Measurement conversations: If people are used to constantly being told what to do, they will lack ownership of current measures. This is because they are not interactively involved or given the opportunity to converse about and question the current approach.
  • Conversations around measurement frameworks: Measurement frameworks assist people see and understand the “big picture” view of the organization and make connections between elements that are not apparent in everyday work. Management must create an environment that fosters discussion on existing measurement frameworks and how they can be improved.
  • Greater understanding of value creation and destruction: Performance measurement should give visibility of the organization’s critical success factors. Most managers and employees don’t really know if their actions are really creating or destroying value. As a result, it is important to actively involve people in discussions about how more value can be created, and less value can be destroyed.
  • Scenario analysis and management:  Managers should be able to interactively perform cause-and-effect analysis of actions and evaluate how these planned actions can lead to certain outcomes. In other words, they should be able to perform improvement experiments, test the logic of their management systems and learn from mistakes. Without good evidence-based predictive measurement and learning, it becomes difficult for managers to determine what is working, or not working, and why and this normally leads to wastage of resources.

Concluding Thoughts: It is critical that organizations empower people to transform the work they do, not just learn how to do the same work better. By combining single-loop learning and double-loop learning capabilities, the organization is best positioned to transform its performance measurement, improve its competitive advantage and drive performance improvements

7 Steps to Creating a Knowledge-to-Action Culture

In one of my previous posts Evidenced-Based Management: Using Business Intelligence/Analytics to Drive Value, I wrote on how organizations can successfully utilize Evidence -Based Management (EbM) to turn information into actionable knowledge and make informed decisions that drive performance improvements.

With the advent of big data, the challenge on organizations is to collect, analyze and interpret the right data which is then converted into insightful information and used for critical decision making. They need to ensure that the available evidence is used to make the best decisions, avoid relying on a narrow information set, create powerful knowledge by thinking outside the ‘information box’ and base their decisions on well-researched evidence.

According to Bernard Marr in his book, The Intelligent Company: Five Steps to Success with Evidenced-Based Management, one of the reasons organizations experience strategic failure and even catastrophe collapse is making decisions based on what seemed to have worked in the past or gut reaction without considering changes in the customer, market or competitive dynamics. This belief that ‘It worked before, so it will work again’ has proved to be the death-knell for many leaders and organizations.

In order to improve performance, organizations must implement the knowledge they possess. They must substitute talk with action and make decisions that result in significant change. This means moving from ‘knowing’ to ‘applying’ knowledge. However, to make this applying happen, there is need to have the right context or environment whereby appropriate structures, incentives and frameworks are in place to help you turn that knowledge into action.

It should be noted that if the culture is inappropriate or misaligned, becoming an EbM organization will become a challenge. To avoid failure or sidelining of implementing an EbM programme, management must address the cultural challenges inherent within the organization. If you want to build a knowledge-to-action culture, Bernard Marr suggests the following seven steps:

  1. Have passion for learning and improvement. Leaders must encourage employees to form the mindset that ‘work is learning’ and ‘learning is work’. They must also provide the space and tools to make this mindset a practical reality. Organizational learning is at the centre of a performance-driven culture and this takes place when individuals and teams engage in dialogue, reflect, ask questions and identify and challenge values, beliefs and assumptions. An enabled-learning environment should allow people and teams to challenge strategic assumptions, refine strategic thinking, learn and make better evidenced-based decisions with which to improve future performance.
  2. Ensure leadership buy in. This is critical to make EbM a reality. Organizational leaders have to show visible commitment to EbM and analytics, and need to explain the importance and role of evidence-based management in their organization-wide communications.
  3. Develop widespread analytical capabilities throughout the organization. This is critical for systematically turning data analysis into insights and actions that lead to significant competitive advantage.
  4. Use judgement. In making analytics work, employees at all levels must balance facts and judgement. Many organizations fall into the information paralysis trap whereby they are forever searching for new information and never making any decisions. Organizations must work out when to stop collecting and analysing, and start doing.
  5. Share information. A knowledge-to-action or EbM culture can only be successfully developed if there is a willingness to share information across the organization. Everybody should feel responsible for performance. This means staff work together and are allowed to come up with new ideas, challenge and improve performance without them being afraid of getting punished for being wrong.
  6. Reward EbM. In order to create an EbM culture, organizations must learn to celebrate success, reward effort not just success, reward straight away and balance rewards for individual and corporate performance. Linking reward and recognition to performance sends a clear and unambiguous message to the organization that EbM matters.
  7. Build an appropriate IT infrastructure. IT is simply an enabler of EbM. The right IT infrastructure compromises of:
    • Databases, data warehouses, data marts etc. to store the data
    • Networks and connections to share the information and to make it accessible
    • The software to analyze and share the data.

Concluding Thoughts: Implementing EbM involves many challenges; structural, process, technological and cultural. Not addressing these challenges will lead to EbM programme failures. It is therefore important to create a culture in which performance is recognized as a priority. Doing so can have a significant and tangible impact on success.

Source: The Intelligent Company: Five Steps to Success with Evidenced-Based Management

Defining Results that Guide Change

Every company or organization has a culture, which either works for you or against you and it can make the difference between success and failure. Simply put, organizational culture is the way people think and act. Either you will manage your culture to deliver the desired results, or it will manage you and undermine your attempts to get the results (customer focus, diversity, regulatory compliance, growth, quality, productivity and profitability) you want. When the culture is not working, it poses a formidable obstacle to achieving results.

Initiating any culture building activity or process begins with clearly stating the key results to be achieved. In today’s volatile and uncertain economic environment, current business models might not continue to deliver the desired business results and need to change. There is need to get alignment around key results in several areas of performance and then consciously maintain it throughout the organization. Alignment will avoid senior management sending their organization mixed messages and start communicating the same key results to everyone in a compelling way. If there is alignment, employees are able to connect the dots between their daily work and the key results they need to achieve.

Clear results lead to clear action. However, many senior managers often fail to communicate what they really mean in terms of key results. Achieving key results requires a culture change. By definition, a result is key if the current culture cannot produce the thoughts and actions throughout the organization critical to achieving it. It is therefore crucial for management to determine in advance if the desired results are really key or just mere results.  To help them do this, they can use the following four criteria

  • Difficulty: If the desired result utilizes more effort to achieve compared to previous results, then the result is key and will require you to make significant changes to some parts of your organizational culture. Difficulty may arise as a result of tougher objectives, similar objectives in a tougher business environment or tougher objectives in a tougher environment.
  • Direction: If the desired results signal a significant change in the direction for the organization (introducing new products, new markets entry, exiting old markets, applying new technology, acquiring new companies and new strategies implementation), this also indicates key results which may also necessitate a major cultural shift.
  • Deployment: If the desired results require a large-scale deployment or redeployment of people or other resources, this requires a significant cultural change and a new way of thinking about how to get things done to ensure the success of the organization, triggering key results.
  • Development: If the desired result demands the organization to develop new capabilities or core competencies, then the result is of a key nature. Developing new competencies requires significant changes in mind-sets that justify major cultural shifts.

Closing Thoughts: In order to speed up culture change, everyone in the organization must focus on achieving key results. This means getting each and every person in the culture loop aligned with the desired results. When there is clear communication top-down about the results to be achieved, employees will be able to align their beliefs and actions and ultimately drive performance improvements. Without alignment of experiences, beliefs, actions and results; strategy implementations will fail, cross-functional teams will not get along and always compete, communication becomes less effective and the desired results seem a huge mountain to climb. A more powerfully aligned culture will more effectively, efficiently and consistently focus on results. The more consistently people do focus on results; the more likely they will be able to create the desired or needed culture capable of producing those results.

Integrating Performance Measurement Across The Organization

While most organizations realize that measurement is essential for managing, they don’t realize how important the selection and integration of their measures is. What gets measured gets managed and what gets managed gets done. Clearly it is critical to focus measurement efforts on the right things.

The right measures will provide right focus and clarity to management. What a company or a functional unit measures, to a large extent determines how its people behave. It is therefore important for leaders to be able to differentiate the critical few measures that will have the greatest impact and the trivial many.

Both focus and integration are essential to organization performance measurement success. Although having individual game-changing measures helps the company to create value, care must be taken to ensure that they are integrated across the organization.

If these measures are not integrated into a performance measurement framework that reflects the interconnectedness and holism of the entire system, they soon become ineffective.

The starting point in integrating your organization’s performance measurement is clearly understanding the different forms of measurement integration – vertical and horizontal. You might be asking, “What is vertical and horizontal integration?”

Vertical integration looks at the alignment between your corporate strategy and measures up and down through the organization. In other words, vertical integration looks at financial measures, customer measures, internal process measures and employee measures.

On the other hand, horizontal integration focuses on the alignment of measures across organizational functions and processes. For example, it looks at procurement measures, marketing measures, sales measures, customer service measures, logistics measures, production measures, finance and accounting measures etc.

In order to achieve any set goals, organizations should ensure there is coordination and the parts are working in synch. If integration is lacking, organizations are bound to operate at cross-purposes and waste resources that could be mutually invested to create real value.

Having many scorecards across the organization that are disconnected from each other is a sure sign that you are running a disintegrated performance measurement system. Individuals and functions might be achieving good scores but the truth of the matter is that nobody really understands what these scores mean in terms of the success of the organization as a whole.

Most companies are disintegrated because they are composed of individual functions vying for scarce resources, operating more like competitors than collaborators. These individual functions are making a gravely mistake of seeing the world through their own functional lenses (functions, roles and measures) resulting in waste.

Having a common perspective across the organization improves communication and helps the company to make use of the valuable synergies that are any organization’s greatest resource. This common perspective can only be achieved if the organization aligns its strategy with the business model.

Collecting largely unrelated and unmanageable measures can also lead to disintegrated measurement. Often the result is measurement gridlock because managers are forced into a state of paralysis as everyone seems to be pulling in different directions.

When managers fail to agree on which measures are strategically important because of poorly integrated measures, these managers end up pursuing their own or departmental interests ahead of those of the company and other stakeholders.

Just as real teams are the ones that succeed best in sports, in business, the entire organization must be aligned. People in different functions and units must be continually reminded to look beyond their silos.

If the quality of the data in use by the organization is poor or disintegrated, this will also impede integrative performance measurement. Today, organizations store a lot of data because IT systems are allowing them to do so.

To ensure that the data under storage is of high quality to support informed decision making when processed into information and knowledge, organizations must be able to adequately connect disparate data repositories.

The available data must be connected, consistent and easily accessible. Organizations whose functions are not very well coordinated mostly suffer from problems of data scatter, data disorder, data fragmentation, data hoarding, data ownership, dormant data or legacy data (data gathered because at one time management asked for it, but now might be obsolete).

Keeping the organization focused on the right targets and moving together in the right direction is key to achieving sustainable continuous performance improvement.

Management must strive to break down the traditional functional silos, drive more cross-functional integration and consequently more collaboration.

Performance Measurement Must Be Socially Interactive

Keeping the organization focused on the right targets and moving in the right direction is no easy job. Over the years, many organizations have invested heavily in Business Intelligence, Analytic, CRM and ERP technological systems to drive performance improvements.

Although there is no harm in investing in these techinical components, no scorecard or dashboard is going to overcome the performance measurement challenge without looking at the social and organizational side of the equation.

Organizations that want to transform their performance measurement must establish a strong social component or context that is capable of fully supporting the technical measurement system components. Establishing a positive context for measurement is crucial for encouraging or discouraging interactivity around measurement.

Transformational measurement requires individuals within the organization to view measurement differently. Lagging organizations still view measurement as a routine numbers game whereas high-performing organizations clearly understand the social parts of performance measurement which are the social interactions.

Performance measurement will never be transformational unless there is clear communication across people and functions in the organization. Through communication, individuals and functions are best positioned to gain informed enterprise performance insights which eventually result in them learning throughout the measurement process.

One way of making performance measurement socially interactive is creating a culture that promotes and supports highly interactive and ongoing discussions or dialogues about performance measurement and improvement. For these discussions to achieve the hoped-for results, a positive foundation for measurement; focus and integration must be present. These elements are key to breaking down any silos that might be stopping the organization from experiencing performance measurement’s positive transformational power.

Where there is no integration and individuals are allowed to operate in silos, the challenge becomes one of dealing with “blinkered perception”. This is mainly so because the individuals bring only their own functional perspective on an issue. It is therefore imperative that interaction, both within functions and across functions is enhanced.

This integrated approach will allow people with different perspectives to come on board and present their multiple views which will eventually lead to obtaining a bigger picture of any subject. As a result, decision-making is greatly improved. It is therefore important to note that the way people talk to each other absolutely determines how well the organization will function.

Leaders need to understand the transformational potential of creating synergy within the organization. Without a systematic, integrated approach, great advantages for synergy are missed. Interaction across the organization between functions and people is crucial for turning operational and strategic plans into a changed reality and dialogue thrives on openness, candour and inviting multiple viewpoints.

When measurement is not dealt with interactively, it becomes difficult to efficiently and effectively convert data into useful information which needs to be transformed into knowledge which ultimately is the basis for real wisdom. Furthermore, when there is rarely any meaningful discussion or education on performance measures, very few employees will understand the meaning of most performance measures being used by the organization. The key to interactivity around measurement is performance conversations that start with an invitation to dialogue. For example, the dialogue could be somewhere along these lines:

• “Let’s look at our measures and evaluate how we are performing?”
• What insights are we getting from our data collection about customer needs and wants, customer satisfaction, profitability, quality etc?”
• Let’s discuss why we are starting to experience some improvements in this area, but not there.”

Creating social interactions through dialogues like the ones above is crucial for identifying and selecting the right measures, for making the right cross-functional decisions on an ongoing basis, and most importantly, for the alignment of strategy, operations, performance, leaders and functions across the organization.

Closing Thoughts: Real solutions to organizational problems are predominantly social, not technical. The technical aspects of measurement will only take performance measurement to a minimal level of effectiveness. True transformational performance measurement requires extensive social interactivity. Upgrading the technical performance measurement capabilities will also help, but don’t do it without upgrading the social capabilities.

Performance Management vs.Driving vs. Dolphins

Performance Management is like driving. Before embarking on an unfamiliar long-distance journey, the driver needs a road map or a GPS system which will guide him from the onset till he reaches his final destination.

The road map or GPS system will show the places that the drive has to drive through. There is an option of taking the longest or shortest route.

The driver requires a fully functional vehicle with all the features and attributes necessary to see him through his entire journey. For example the brakes must be working properly, the view mirrors dependable, enough petrol must be filled in to last the entire journey, wipers must be working effectively just in case it rains, oil and water levels must be checked before the journey. On the way to his point of destination, the driver will also rely on road signs, traffic lights and traffic control officers to arrive safely.

Relating this to performance management, the road map or GPS is the organization’s mission and strategic execution plan which helps identify where the organization wants to be in one, three or five year’s time and the strategies necessary to achieve the desired outcomes. The water level, oil level, speedometer and petrol level are the KPIs that require regular monitoring and improvement. Once these reach a certain level, the driver is alerted and takes corrective action where necessary.

In a way we could also say that the external road signs act as the dashboard which provides performance visibility. For example, a road sign might depict a steep curve ahead. This implies danger ahead and that the driver needs to reduce speed and be cautious. Operational dashboards which are colour coded help organisations monitor their performance in terms of urgency required to make changes.

The driver represents the champions of performance management within the organization. It could be change agents or managers responsible for implementing the cause. They act as sponsors of the project and sell the idea across the organization. The other parts within the vehicle represent the personnel who might be working from the background but at the same time contributing towards the achievement of the business strategy despite the size of their tasks.

Using the Dolphins of Florida Bay as living organisms to best describe the term performance, we also learn that performance management is not an individual exercise but rather team work. It also involves implementing smart strategies to outperform your competitors and improve business performance.

These dolphins depend on fish for their food and survival. Because they need quick access to air in the surface, they have to stay in shallow waters and close to the surface where there is no fish. If they don’t get the fish they die.

Instead of focusing on their limitations, these dolphins have managed to identify their strengths or capabilities and use them for their benefit. Despite their mere physical powers to give them an edge over their prey, the dolphins have learned a unique hunting pattern. They send ultrasounds into the water and once food is identified, the ultrasounds bounce back to the body of the dolphins and the message transmitted to other dolphins.

The dolphins then approach their hunting ground and beat the seabeds with their tails stirring up rings of mud and forcing the fish to leap into the air as they struggle to swim in the mud and ultimately into the mouth of the dolphins.

Organizations that have implemented performance management techniques and successfully driven performance improvements have managed to so because they have clearly defined their goals and objectives using scorecards, mapped their strategies using strategy maps, identified their unique capabilities through capability analysis , created a performance-driven culture by fostering experiences, beliefs and actions that improve performance. This has made it difficult for their competitors to imitate them, operate in the same environment and become high performing organizations too.

Mapping the Organization’s Operational Processes

Mapping operational processes creates a foundation for organizational performance improvements. It creates a common language and understanding for team members and workers, and it helps identify processes needing improvement as well as the critical performance measures. Created properly, process maps can bring clarity to diverse ideas, create a shared vision across the organization and help identify where the organization can best focus its resources.

Before leaders start work on any operational or process improvement work, they must clearly and fully understand why the changes are required and how the organization will benefit. If the leaders fail to identify targets that have a greater impact, or fail to prove the impact itself, the resulting performance improvements will not be satisfactory. The consequence is low return on investment and lack of sustainability.

For process mapping to be successful and deliver the desired performance improvement results, the identified areas or processes for improvement must be aligned to the organization’s strategic initiatives normally defined by its balanced scorecard. Alignment of business process initiatives with business strategy is key to ensuring senior management  commitment and buy-in and support in the form of resource and capital investment. Furthermore, in order to experience little resistance to change across the organization, leaders must build a solid case for change and have an influential implementation team in place to lead the change project.

The choice of the process map to be created depends on the organization. Different types of process maps that can be drawn and modeled include; Supplier, Input, Output, Process, Customer (SIPOC), Value Stream Map (VSM), Supply Chain Operations Reference Model (SCOR®), Program/Project Evaluation and Review Technique (PERT) and Program Logic Model (PLM). Having aligned the goals of the process improvement with the goals of the organization, regardless of which type of map you are creating, the next step would be to create a first pass map. This map captures the big picture of the process and documents the larger processes, their metrics and interrelationships.

Creating the first pass map requires walking through the process to each person involved and each work area.  The best way to walk through the process is have a knowledgeable person interview participants and record process steps, metrics, choke-points and waste. It is therefore important that the person tasked with performing the walk through possesses great interviewing and communication skills. To ensure you get the desired big picture of the processes, it is crucial that you review the first pass map with people who are familiar with the process. This will help identify and normalize any areas or metrics you may have missed. In other words, the first pass map provides a foundation on which more detail can be added and performance improved.

Once you have reviewed the first pass map with the people familiar with the process, you should then create a second-level map. This map gives you additional detail for sub-processes, detailed metrics, target values and ranges, additional areas of waste and employee’s ideas of where improvements can deliver the greatest impact. It is important that you involve a large group of knowledgeable and influential people when creating these maps. Having their contribution can help influence their buy-in and ultimately your success.

Concluding Thoughts: Process mapping is key to maintaining and delivering process improvements. In order to improve or maintain your organization’s processes, identify the tasks that are most critical, have the greatest return, where their choke-points are and where their risks are greatest and map them accordingly. For the process improvement process to be a success, you must view it as an organizational change process with all the people and cultural issues present.

 

Consistency: Key to Driving Enterprise Performance

A key challenge with driving performance across an organization is the ability to deliver consistent information. Companies worldwide are spending huge amounts of time and money on data collection and storage capabilities just to get the truth about their enterprise operations and performance but still they cannot get one version of the truth.

Management are struggling to find a common ground to communicate performance metrics in a consistent manner. For example, if organizational leaders are to ask their employees to define the term Key Performance Indicator, chances are high that different definitions will come forth.

In order to effectively monitor their performance and ensure sustainable improvements, leaders must ensure there is consistency, both in terms of data and information and including the effective use of KPIs to drive consistency across the organization. They have to make sure that people are speaking the same language of performance measurement, management and improvement. People must use common and consistent data and grammar. When effectively used, both consistent data and grammar will lead to information consistency, better execution and ultimately better competitive advantage. Information consistency is therefore the crux of performance management.

High performing organizations have learnt that having consistent data leads to reporting reliably valid numbers and/or performance. Today, one of the greatest challenges leaders have to repeatedly deal with is information inconsistency. Many at times, leaders are being bombarded by different numbers or information from their reporting staff which then questions the credibility of the reported information and the authenticity of that information’s source. For example, one report from one analyst may report DSO of 30 days and another 50 days. Leaders are then faced with the challenge of choosing which report to trust.

How can you ensure that there is information consistency across the organization? Information consistency is reached when data can be trusted, when business logic reflects the definition and approach of the organization and when both data and business logic are shared across the organization. You might be wondering, what is business logic? Business logic is what defines your data, what people do with the data and how they use it to measure performance in their own business terms. For example, a general manager, based on his data collection and analysis, will have his definition of high-growth stores and will have this shared across the organization rather than keep it to himself/herself.

Trusted data alone is necessary but not sufficient to drive better performance. The equation is complete when business logic is brought into the picture. Developing both assets will help organizations focus their employees to work toward the same goals and objectives, reliably across the organization. As information overload continues to increase, today’s managers will continue to get swamped by useless information. As a result, organizations must learn to communicate information in a format that is quickly and easily understandable to make it more easily consumable. One way of doing so is making use of visual dashboards and scorecards. These provide greater visual indicators to quickly communicate the information of what is happening in the business.

When done well, Key Performance Indicators, also known as KPIs deliver organizational consistency because they can be trusted and shared across groups. KPIs help the organization express its strategy and objectives, define success, and hold individuals and teams accountable. With the ability to monitor KPIs and compare actual results with pre-defined targets, decision makers can take immediate actions to correct problems.

Leading organizations focus on only a few summary metrics that accurately represent their strategy, the performance against which determines their success. The right KPIs rest on trusted data and business logic and are linked across all levels of the organization to drive consistent execution. Rushing to develop dashboards and scorecards without taking into consideration information consistency requirements often results in resources and money being spent chasing wrong goals and objectives.

Concluding Thoughts: Even though organizations can more effectively monitor their business by implementing consistency in their data and information and in their use of KPIs, leaders need to understand that decisions are not based on structured data alone but also on unstructured data. They need to trust that their data and information, despite the source from which it comes or its form is trustworthy and consistent. Bear in mind that empowering employees with additional information that is not system generated but very useful in enabling them to execute better decisions is key to consistent execution. They will gain better context of the business situation and develop confidence in their decisions and the information that supports them which will ultimately lead to performance improvements.

 

 

Building a Culture that is Aligned

Success in speeding up the culture change will only come when everyone’s actions, beliefs and experiences are aligned from person to person and across the various functions of the company. The more completely aligned the culture, the more everyone will concentrate on achieving the key results the organization wants to achieve.

In order to achieve the desired results, leaders must become effective at saying and doing things that foster the experiences that create or reinforce the beliefs that motivate the desired actions that produce performance improvements.

They must avoid saying or doing things that shifts the culture out of alignment, for example, praising and promoting an employee who does not demonstrate the organization’s cultural beliefs in his or her everyday work.

Leaders should understand that employment promotions create a lasting experience on employees at the same time instill different beliefs on them. Promoting people who do not live your organization’s cultural beliefs is likened to a company travelling hundred miles per hour on an icy road, headed toward a cliff. Effective leaders of culture change manage in a way that gets a culture aligned with results, and then they work to keep it aligned.

Transforming from one culture of unsatisfactory performance delivery to one of highly satisfactory performance delivery requires paying close attention to all the adjusting parts of your organization’s culture and making sure that they are accurately aligned to one another.

Neither meaningful nor rapid culture change will occur unless the experiences, beliefs and actions are aligned with and reinforce the key results or performance to be achieved.

If the culture (experiences, beliefs, actions and results) is out of alignment, employees will pursue their own agendas at the expense of organizational goals and objectives, stress levels run high, decisions are made based on gut feeling rather than on facts and information and enterprise performance is painfully poor.

The opposite holds true, if the culture is aligned and there is goal congruence, there will be accelerated positive culture change, everyone stays on the same page, people feel less stressed, decisions are intelligently made using analytic-based information and facts and enterprise performance is positive.

Like managing culture, maintaining alignment is a process, not an event. You may gain complete alignment around key performance improvements and cultural beliefs, but at some point, there is need to continuously improve from these performance levels for long-term success. If you have successfully delivered the desired results before, you must be confident that you can do it again.

Culture management is not something you can do once and then leave alone. Culture always needs to be managed relative to the results or performance you are working to achieve. Your company’s culture will not stay in alignment by itself.

There will always be constant forces threatening to push you, your team, your organization etc out of alignment. As a leader, you must remain on the guard, identifying any lack of alignment and striking quickly to correct the problem.

As research has shown that most change initiatives often face resistance and fail to deliver the hoped-for results, in order to get buy-in from the entire organization, leaders need to get key people on board who will take ownership for the change process, produce enough alignment and positive momentum to keep the change effort energized and moving forward.

Additionally, leaders must be able to built a positive case for change by clearly clarifying why the culture needs changing and also why the organization needs to do it now.

They can do this by making the case for change real, applicable to the audience, simple and repeatable, convincing and making it a dialogue.

To ensure alignment around key decisions with individuals, teams or the entire organization, leaders must get the appropriate people involved, create accountability by identifying who will make the decision, foster discussion to ensure that people speak up and are heard, support ownership by promoting decision-making at every organizational level, be consistent with the message of culture change and follow-up to check in and test for alignment.

Closing Thoughts: The more effectively management teams align themselves and their entire organization around the cultural transition, the faster the organization will move toward a game-changing cultural transition.

Nothing more powerfully affects a successful cultural transition outcome than a management team fully aligned around results, the case for change, the cultural beliefs and the culture the methodology for changing culture. Either you will manage culture or it will manage you.

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