13th March 2014
Business Planning – A chance to review performance management
As you enter the annual business planning cycle, it’s worth recalling the old adage that ‘what gets measured gets done’, making it critically important that a performance management framework tangibly connects individual, team and organisational objectives.
The best business plans will fail without a performance framework that is simple and clearly understood, particularly where the performance process is new to the organisation.
Achieving an organisation’s vision needs a coherent framework around performance management that attracts and retains people by providing clear accountability for business objectives. For teamwork to thrive, individuals need a sound understanding of their singular role in meeting those objectives. Moreover, for sustained performance, evaluation of the values and behaviours that people are expected to demonstrate along the way needs to form part of the process.
The best performance management frameworks align the following components:
- an annual process cadence that sequentially deals with business planning, business unit strategies, then individual KPIs
- an appropriate weighting blend of what people need to deliver and how they go about it
- an articulated and understood set of values and behaviours that drive the how outcomes
- a performance rating scale that recognises that it takes courage to have honest discussions about outcomes and behaviours that foster accountability and respect for each other
- a coherent framework for career planning and performance development
Commonly, Performance Management Frameworks include a Performance Development process, as a logical and efficient link to the performance planning, performance review and assessment process.
Of course, performance assessment is a critical element of any performance development framework, particularly where the aim is to drive improved organisational outcomes. Where goal setting, performance appraisal and development are new, assessing individual performance can be contentious.
We know from experience that assessing individuals against an understandable, well defined and fair rating scale is a key factor in ensuring that performance and development conversations are constructive and motivating for individuals.
Rating scales should therefore:
- describe achievement levels in an easy to understand way
- ensure performance can be differentiated (accepting that in the first few years there will be a strong central tendency)
- allow managers to maintain the commitment and motivation of most staff
- provide an option for dealing with new appointees.
While assessing the ‘what’ is arguably easier than assessing the ‘how’ it is important that managers are required to make an assessment of both elements, and do so using the same rating scale (to prevent confusion). To underpin the standard setting process, support conversations, and enable a fair assessment, the Performance Development Framework should include a Behaviour or Competency Matrix.
For organisations new to performance development, a “walk before you run” approach is wise. While there are a lot of more sophisticated elements which could be introduced to your Performance Development Framework, establishing a sound, simple and pragmatic approach will provide a great foundation for you to do more into the future.
Experience tells us that embedding a strategic performance development process generally takes two to three years even with good change management and a committed leadership team.
It is worth noting the process can be adapted where things aren’t working as planned, or you wish to change the emphasis of what is being measured. The design approach should contemplate this, for instance where a strong early emphasis on the how is being applied, in the knowledge that once a new organisational value set has become embedded in the ‘DNA‘ of the organisation, this weighting can be decreased.
If you are looking at your Performance Management Processes, or engaging in business planning where you think you have an opportunity to start to look at it, Generator Consulting (part of the Generator Talent Group) has significant experience. Get in touch.
Joint Managing Director