We've all been in situations where a division or functional group within an organization points fingers at other divisions when a process failure occurs. Or part of a team that had little idea of how their function fits into other functions within the organization. This article discusses an issue that affects almost every organization, and that's breaking down functional or departmentalized thinking and creating streams of information that flow across multiple functional or departmental boundaries.
Most organizations use departments and business units in order to differentiate the various functions and services which drive their business. For example, personnel related matters are managed in HR departments, payroll is handled in accounting departments and computer and systems related incidents are resolved in IT departments, and so on. In addition most business intelligence systems are built to support decision making in those specific functional areas rather than being built around core processes that span the enterprise and govern how a business operates. For instance, marketing collects only the information it needs to put products and services before the public eye. Sales departments pay attention to leads, and conversions, and customer buying patterns. And customer service tracks only those customers who call in with questions and complaints, and how the issue was resolved.
In reality, business processes are streams of activity that flow across functional boundaries, and not contained within a single department. As a result business processes are often fragmented across "functional silos". A silo in this case is a division or management system that is not integrated with the operations of other, related divisions or management systems.
The problem with organizations that are trapped in this siloed mentality is employees rarely study how their function contributes to the larger business process in which their function supports. As a result, these organizations have limited knowledge on their processes and often do not properly identify their core processes. This is a major pain point in many performance management initiatives, because most major processes require support from multiple functional support groups. In order to break down these silos, each functional group and individual must understand how their primary process fits into the core function of their business.
In order to successfully measure the performance and efficiency of these major processes, we must first understand which groups are responsible for handling these processes and what their responsibilities are. Second, we must understand the handoffs of responsibility, that is, when and how the process gets transferred from one group to the next. Thirdly, we must develop requirements for each responsibility within the process. And if we're really serious about eliminating functional thinking within our organizations, we must cross-train employees so that they fully understand the entire processes, which they support.
For example, when a purchase request comes in, an approval committee or governance team must approve or reject that request within 24 hours. Then the purchasing department must place the order within 24 hours. Then, the warehouse must send the order within 24 hours. Once we understand this, we can say that the purchasing order process, if approved, will be completed within 72 hours. If the purchase is not sent within 72 hours, we now understand where the bottleneck occurred. Ultimately, if this happens on multiple occasions, the responsible group will have to revisit their sub-processes.
Success breaking down functional thinking depends largely on how well the performance management team involves functional support group management and key team members, and how well these sub-processes are identified. Breaking down functional thinking is critical for organizational growth. The important aspect is developing the proper communication channels throughout the entire organization so that when dependencies and cross functional processes are identified, points of contacts will be established and each group will be responsible for ensuring that their staff understand their contribution to larger, multi-functional processes and organization goals.
If you are looking for a performance management solution that focuses on applying the best practices and key processes that drive organizational success, check out my Free Performance Management Kit.
To learn about the 35 performance management best practices, the 48 key processes, 82 decision support techniques and more, go to The Peformance Portal.
Friday, October 16, 2009
How to Turbo Charge Organizational Success by Implementing Performance Management Best Practices
In this global fiscal crisis, many business owners and executives are looking for ways to maximize organizational performance and cut costs at the same time. While this is a very difficult task for most CEOs, the truth is these goals can be accomplished with relative ease once we stop relying on technology and start focusing on our internal processes and leveraging existing assets. According to business intelligence software vendor SAS, the number two reason why performance programs fail is failure to adopt best practices. But what are performance management best practices and why are they so valuable? By definition, they are techniques or methodologies that, through experience and research, have been proven to reliably lead to desired performance results. This article discusses the value of applying performance management best practices and leveraging your existing assets for maximum performance.
Most companies have some form of performance management processes in place. It's common to baseline performance, apply a set of performance metrics, identify goals and create a plan to reach them. But where most companies fail are in the intangible processes, such as gaining employee acceptance and buy-in, aligning performance to organizational objectives, choosing the right business intelligence tools, and so forth. It's these intangibles that can bring performance initiatives to a halt. If you simply address these intangible processes while implementing your existing performance initiatives, you can significantly increase your performance success through these tough financial times.
It has become our business culture to invest large sums of money on business intelligence tools and high priced consulting for managing data and key processes that drive organizational success. We have become so reliant on these products and services as solutions that we have failed to understand the true cause of organizational breakdown, and that is our internal processes, most specifically, how we approach managing performance within our organization.
You've probably heard the saying 'what gets measured, gets done'. Well, that's true. But equally true is HOW it's measured determines HOW WELL it gets done. You can use all the industry standard metrics you can find, but if internal processes aren't in place to educate and motivate those being measured, or if different departments are executing the same functions differently, the systems you have in place will not drive peak performance. Metrics quantify high performance, but it's the best practices and processes that get you to that level.
So how are organizations supposed to adopt performance management best practices when there is not a comprehensive set documented and integrated into a logical, effective framework? I've identified 35 best practices that greatly impact the success of any performance initiative, and has an excellent, low cost tool that evaluates an organization's approach to performance management and measures how well they utilize performance management best practices throughout the entire organization. It is called the Organizational Performance and Best Practices Analysis and it maps these best practices to people, processes and systems and provides a custom step-by-step roadmap detailing your critical path to success. By fully understanding where your organization utilizes best practice processes well, you can leverage those strengths and resources to departments that need them the most.
If you are looking for a performance management solution that focuses on applying the best practices and key processes that drive organizational success, check out my Free Performance Management Kit.
To learn about the 35 performance management best practices, the 48 key processes, 82 decision support techniques and more, go to The Peformance Portal.
Most companies have some form of performance management processes in place. It's common to baseline performance, apply a set of performance metrics, identify goals and create a plan to reach them. But where most companies fail are in the intangible processes, such as gaining employee acceptance and buy-in, aligning performance to organizational objectives, choosing the right business intelligence tools, and so forth. It's these intangibles that can bring performance initiatives to a halt. If you simply address these intangible processes while implementing your existing performance initiatives, you can significantly increase your performance success through these tough financial times.
It has become our business culture to invest large sums of money on business intelligence tools and high priced consulting for managing data and key processes that drive organizational success. We have become so reliant on these products and services as solutions that we have failed to understand the true cause of organizational breakdown, and that is our internal processes, most specifically, how we approach managing performance within our organization.
You've probably heard the saying 'what gets measured, gets done'. Well, that's true. But equally true is HOW it's measured determines HOW WELL it gets done. You can use all the industry standard metrics you can find, but if internal processes aren't in place to educate and motivate those being measured, or if different departments are executing the same functions differently, the systems you have in place will not drive peak performance. Metrics quantify high performance, but it's the best practices and processes that get you to that level.
So how are organizations supposed to adopt performance management best practices when there is not a comprehensive set documented and integrated into a logical, effective framework? I've identified 35 best practices that greatly impact the success of any performance initiative, and has an excellent, low cost tool that evaluates an organization's approach to performance management and measures how well they utilize performance management best practices throughout the entire organization. It is called the Organizational Performance and Best Practices Analysis and it maps these best practices to people, processes and systems and provides a custom step-by-step roadmap detailing your critical path to success. By fully understanding where your organization utilizes best practice processes well, you can leverage those strengths and resources to departments that need them the most.
If you are looking for a performance management solution that focuses on applying the best practices and key processes that drive organizational success, check out my Free Performance Management Kit.
To learn about the 35 performance management best practices, the 48 key processes, 82 decision support techniques and more, go to The Peformance Portal.
How to Evaluate Organizational Performance in Economic Hard Times
We've all made the decision to improve our appearance at some point in our lives. Maybe we've decided we were going to lose weight by dieting and exercise. Or maybe we've decided to gain strength by lifting weights. The first thing we did was stepped on that scale and said "Wow, I need to lose a few pounds". Or we ran to the gym and measured our strength and endurance at various exercises.
What we were actually doing was creating a baseline. We were creating a snapshot of our current selves. Let's just pretend that we didn't baseline our current self, we didn't have our measurements, and based personal goals based on Miss America, or Mr. Universe's appearance. We wouldn't capitalize on the available data (our current selves) and set realistic goals. Shortly, we'd become frustrated, lose motivation, and eventually fail.
Likewise, businesses often don't capitalize on available data to get them through difficult times. With a new year beginning and growing concerns of our economic future, now is a good time to evaluate our current environments and identify our organizational strengths, weaknesses and areas for improvements and cost savings. This article discusses the value of baselining organizational performance, different baselining approaches your organization can, and overcoming variables that add complexity to your performance baselines.
Baselining involves using historical performance data to calculate averages and standard deviations. The average establishes the baseline and the standard deviation is a percentage change in the baseline deemed acceptable. When performance exceeds the standard deviation, some specified action is usually required.
If your organization has clear, specific goals and objectives, the data to be used in the baseline is easier to determine. And of course, if goals and objectives are vague or unclear, it can be difficult to identify important baseline data. But given these tough financial times, it is probably most beneficial to focus on financial performance and key processes.
A performance baseline is performance information gathered to evaluate your current state and measure variations to gauge successes and failures within the organization. Baselines may also be used to establish goals and standards, to set SLA metrics and performance thresholds, and to make important decisions. But perhaps the most important, but overlooked reason we do performance baselines is to refocus our organizations on what's important. You may have done a baseline a couple of years ago, but chances are you are still measuring the same things you measured back then. Performance a new baseline forces us to re-evaluate what's important to organization as it endures the constant changes brought on by this dynamic economy.
Types of Performance Baselines
There are three types of baselines:
Rolling baselines compare current performance metrics with a period of time preceeding the current period. An example would be comparing last month's performance to the average performance of the previous 12 months.
Recurring time-based baselines compare current performance metrics with performance baselines calculated for the same length of periods. Daily or weekly baselines are good examples of recurring time-based baselines.
Specific date baselines compare current performance metrics with the metrics from a specific date. For example, gathering baseline sales metrics for the day after Christmas.
Complexitites of Baselining Performance
Historical baselines often answer the question "how many?" such as "how many tickets were created over a given period of time?" The historical baseline data are the averages of such counts over that specified period. Baselines can be relative to any arbitrary point in time.
While this seems simple, it gets more complex when you take into effect some of the following variables: processes that take several days to complete, business hours calculations (e.g. M-F, 9-5, excluding holidays or specific dates), calculations involving multiple time zones, and calculation involving phased implementations.
When processes extend for multiple days, counting and time calculations become considerably more difficult, especially when a reporting tool is not utilized. Processes executed on business days and during business hours are also more difficult. In this case the proper divisor at the Day level is the number of business days in the last 365 calendar days, taking into account weekends and holidays. The divisor at the Hours level is the number of business hours in the last 24 hour period. Calculations with Multiple Time Zones can span across multiple cities around the world, reflecting different holidays and work norms. The baseline divisor thus becomes a function not only of Time but also of Location, thus further complicating the process. Projects utilizing phased implementations where new locations or divisions go "live" as the enterprise expands (such as in a phased Enterprise Resource Planning implementation). In this case, the baseline calculation must take into account how long a particular location has been live in order to obtain an accurate baseline.
Understanding Variables and Standard Deviations
Variance and Standard Deviation are measures of how spread out a distribution is. In other words, they are measures of variability. The spread is the degree to which scores on the variable differ from each other. If every score on the variable were about equal, the variable would have very little spread. Standard Deviation is the square root of the variance. It is the most commonly used measure of spread. An important attribute of the standard deviation as a measure of spread is that if the mean and standard deviation of a normal distribution are known, it is possible to compute the percentile rank associated with any given score. In a normal distribution, about 68% of the scores are within one standard deviation of the mean and about 95% of the scores are within two standard deviations of the mean.
Identifying the Right Data to Baseline
There's a basic rule to identifying the right data to baseline:
1) measure what your customers say is important,
2) measure areas where there are problems you'd like to solve, and
3) measure the business objectives you are aiming to achieve.
If your organization has clear, specific goals and objectives, the data to be used in the baseline is easier to determine. However, if goals and objectives are vague or unclear, it is difficult to identify important baseline data. Measurements should be aligned to your organization's objectives and should be SMART (Specific, Measurable, Actionable, Relevant, and Timely).
If you are looking for a performance management solution that focuses on applying the best practices and key processes that drive organizational success, check out my Free Performance Management Kit.
To learn about the 35 performance management best practices, the 48 key processes, 82 decision support techniques and more, go to The Peformance Portal.
What we were actually doing was creating a baseline. We were creating a snapshot of our current selves. Let's just pretend that we didn't baseline our current self, we didn't have our measurements, and based personal goals based on Miss America, or Mr. Universe's appearance. We wouldn't capitalize on the available data (our current selves) and set realistic goals. Shortly, we'd become frustrated, lose motivation, and eventually fail.
Likewise, businesses often don't capitalize on available data to get them through difficult times. With a new year beginning and growing concerns of our economic future, now is a good time to evaluate our current environments and identify our organizational strengths, weaknesses and areas for improvements and cost savings. This article discusses the value of baselining organizational performance, different baselining approaches your organization can, and overcoming variables that add complexity to your performance baselines.
Baselining involves using historical performance data to calculate averages and standard deviations. The average establishes the baseline and the standard deviation is a percentage change in the baseline deemed acceptable. When performance exceeds the standard deviation, some specified action is usually required.
If your organization has clear, specific goals and objectives, the data to be used in the baseline is easier to determine. And of course, if goals and objectives are vague or unclear, it can be difficult to identify important baseline data. But given these tough financial times, it is probably most beneficial to focus on financial performance and key processes.
A performance baseline is performance information gathered to evaluate your current state and measure variations to gauge successes and failures within the organization. Baselines may also be used to establish goals and standards, to set SLA metrics and performance thresholds, and to make important decisions. But perhaps the most important, but overlooked reason we do performance baselines is to refocus our organizations on what's important. You may have done a baseline a couple of years ago, but chances are you are still measuring the same things you measured back then. Performance a new baseline forces us to re-evaluate what's important to organization as it endures the constant changes brought on by this dynamic economy.
Types of Performance Baselines
There are three types of baselines:
- rolling baselines
- recurring time-based baselines
- and specific date baselines.
Rolling baselines compare current performance metrics with a period of time preceeding the current period. An example would be comparing last month's performance to the average performance of the previous 12 months.
Recurring time-based baselines compare current performance metrics with performance baselines calculated for the same length of periods. Daily or weekly baselines are good examples of recurring time-based baselines.
Specific date baselines compare current performance metrics with the metrics from a specific date. For example, gathering baseline sales metrics for the day after Christmas.
Complexitites of Baselining Performance
Historical baselines often answer the question "how many?" such as "how many tickets were created over a given period of time?" The historical baseline data are the averages of such counts over that specified period. Baselines can be relative to any arbitrary point in time.
While this seems simple, it gets more complex when you take into effect some of the following variables: processes that take several days to complete, business hours calculations (e.g. M-F, 9-5, excluding holidays or specific dates), calculations involving multiple time zones, and calculation involving phased implementations.
When processes extend for multiple days, counting and time calculations become considerably more difficult, especially when a reporting tool is not utilized. Processes executed on business days and during business hours are also more difficult. In this case the proper divisor at the Day level is the number of business days in the last 365 calendar days, taking into account weekends and holidays. The divisor at the Hours level is the number of business hours in the last 24 hour period. Calculations with Multiple Time Zones can span across multiple cities around the world, reflecting different holidays and work norms. The baseline divisor thus becomes a function not only of Time but also of Location, thus further complicating the process. Projects utilizing phased implementations where new locations or divisions go "live" as the enterprise expands (such as in a phased Enterprise Resource Planning implementation). In this case, the baseline calculation must take into account how long a particular location has been live in order to obtain an accurate baseline.
Understanding Variables and Standard Deviations
Variance and Standard Deviation are measures of how spread out a distribution is. In other words, they are measures of variability. The spread is the degree to which scores on the variable differ from each other. If every score on the variable were about equal, the variable would have very little spread. Standard Deviation is the square root of the variance. It is the most commonly used measure of spread. An important attribute of the standard deviation as a measure of spread is that if the mean and standard deviation of a normal distribution are known, it is possible to compute the percentile rank associated with any given score. In a normal distribution, about 68% of the scores are within one standard deviation of the mean and about 95% of the scores are within two standard deviations of the mean.
Identifying the Right Data to Baseline
There's a basic rule to identifying the right data to baseline:
1) measure what your customers say is important,
2) measure areas where there are problems you'd like to solve, and
3) measure the business objectives you are aiming to achieve.
If your organization has clear, specific goals and objectives, the data to be used in the baseline is easier to determine. However, if goals and objectives are vague or unclear, it is difficult to identify important baseline data. Measurements should be aligned to your organization's objectives and should be SMART (Specific, Measurable, Actionable, Relevant, and Timely).
If you are looking for a performance management solution that focuses on applying the best practices and key processes that drive organizational success, check out my Free Performance Management Kit.
To learn about the 35 performance management best practices, the 48 key processes, 82 decision support techniques and more, go to The Peformance Portal.
How to Develop a Performance Metrics Repository That Drives Organizational Success
So, you've documented your organizational objectives and you've identified performance metrics. Now, where do you store these metrics? You store them in a performance metrics repository. A performance metrics repository is more than a list of metrics, it is a documented resource that explains to stakeholders everything they need to know about the metrics, such as what they are, how they support organizational objectives, how data is collected, who collects it, and so forth.
In small organizations there are normally fewer metrics, and they tend to be maintained centrally. In larger organizations with multiple business units, metrics are often maintained at the business unit level. Business units may have a number of metrics that they monitor, from systems performance to processes to employee performance. The key purpose of the performance metrics repository is to serve as the central point for viewing key performance measures across the organization. The magic word is key performance measures. While an organization may monitor hundreds of metrics enterprise-wide, the goal of the performance management team is to capture, collect and analyze the key measures that drive business and align to organizational objectives.
In your performance metrics repository, it is probably best that you include the following fields:
In small organizations there are normally fewer metrics, and they tend to be maintained centrally. In larger organizations with multiple business units, metrics are often maintained at the business unit level. Business units may have a number of metrics that they monitor, from systems performance to processes to employee performance. The key purpose of the performance metrics repository is to serve as the central point for viewing key performance measures across the organization. The magic word is key performance measures. While an organization may monitor hundreds of metrics enterprise-wide, the goal of the performance management team is to capture, collect and analyze the key measures that drive business and align to organizational objectives.
In your performance metrics repository, it is probably best that you include the following fields:
- The business unit performing the service
- The name of the performance measurement
- Description of the measurement
- Explanation of measurement formula
- Resource and location of the data
- Organization Objectives which the metric supports
- Type of report
- Frequency of Report
- Who is responsible for providing data
- Baseline performance (optional)
- Rolling average (optional)
- Variance
- Target Audience (Stakeholders most interested in this metric)
By including these fields you are achieving several key factors that contribute to performance success such as:
- Identifying key stakeholders / addressing stakeholder needs
- Creating organizational awareness of the metrics
- Gaining buy in on how performance is being measured
- Centralizing performance measurement
- Aligning performance to objectives
- Creating an environment of accountability
- Providing high level trend analysis
There are a rules of thumb to remember when setting up your metrics repository:
- Ensure database can be accessed by key stakeholders
- Develop a process for approving, populating and updating the database (similar to a change management process)
- Train performance management team and key stakeholders how to use database
- Enforce standards for providing complete and accurate entries
- Limit the number of performance measures by business unit (remember, your focus is to measure key performance measures that drive organizational success)
7 Steps to Developing a Successful Strategic Plan
Yesterday a client of mine asked me what I thought was the best way to execute a strategic plan and apply performance metrics to ensure success of the plan. This is a two part question which will be answered in two entries. Today, I'm going to discuss the best way to execute your business strategy, and tomorrow I'll get into how to integrate the performance plan into your strategy to ensure performance success.
A performance initiative cannot succeed unless executives have defined the organizational goals. Organizational goals must be defined and a strategic plan must address how these goals are going to be achieved in order for a performance initiative to be successful. There is no compromising here. Performance management depends on organizational goals being distributed and measured throughout the entire organization, originating from the executive board and communicated all the way down the line. Today's tip is going to discuss how to develop a plan that lays the foundation for your performance plan. Because without a solid plan, your performance initiative is setup for failure.
It's not uncommon for a smaller organization to have partially developed business objectives or a rough strategic plan, but still have a critical need to implement a performance management process. These seven steps will help guide you through the strategic planning process.
1. Organize a Leadership Team
2. Articulate Mission and Vision
3. Assess the Current Environment
4. Agree on priorities
5. Write the Strategic plan
6. Implement the strategic plan
7. Monitor and Evaluate
1. Organize a Leadership Team
The strategic planning phase requires a team of leaders, normally the executive board or a team of key management with CEO oversight. The strategic plan should identify this team and the wider community of present and potential stakeholders. If a decision is made to involve other stakeholders in the process, at which point will they be involved? Will an outside consultant or facilitator be necessary to assist with some or all of the process? Who will keep the planning on track, and what are the best ways to make the strategic plan most useful? How will questions be addressed and decisions made? These questions should be answered at the start of the planning phase.
2. Articulate Mission and Vision
Your mission statement will define the what, how and why of your organization's services. It should explain why your organization exists and what its objectives are. It should explain how your organization works to fulfill its objectives and its values. When wording the mission statement, consider your organization's products, services, markets, values, and concern for public image. The vision statement includes a vivid description of the organization as it effectively carries out its operations.
3. Assess the Current Environment
Now that you've answered why your organization exists, what it does and what it hopes to achieve, you are ready to assess your past and current state and begin identifying your future state. This activity is most effective when key personnel throughout the entire organization are involved. Outreach to employees can be achieved through town hall meetings, focal groups, surveys, emails, etc. Review services and performance against the mission and vision. At this point your organization may not have the proper data or tools to quantifiably measure this. That's ok, as qualitative analysis can provide you with a high level baseline assessment. Perform a SWOT Analysis; which is a look at the internal Strengths and Weaknesses, and the external Opportunities and Threats of your organization, for your current and future state.
4. Agree on priorities
Now that the mission is affirmed and critical issues are identified, the next step is to figure out goals, objectives and the strategy for attaining them. Goals are simply a clearer statement of the visions, specifying the accomplishments to be achieved when the vision becomes real. Objectives are clearer statements of the specific activities required to achieve the goals, starting from the current status. This is where the strategic planning process develops ideas and action steps, which are most effectively generated when delegated throughout management.
5. Write the Strategic plan
Once the mission has been communicated, strengths and weaknesses identified, and the strategies and goals agreed upon, the strategic plan is ready to be developed. This is where it all comes together. This is where the planning committee drafts the plan, and all key decision makers review it to ensure that the plan answers the key questions about objectives and can serve as a guide for the entire organization. A strategic plan will enable your organization to achieve optimal performance and embark upon a meaningful process of ongoing improvement.
6. Implement the strategic plan
The implementation phase begins with the development of the operating plan. The operating plan defines the short-term objectives that determine success and is tied to the operating budget and reporting cycles. Following the fiscal calendar, your organization can measure progress toward annual goals, and finance can offer feedback to guide other business areas. This is where the budget is established.
7. Monitor and Evaluate
In addition to implementing goals, objectives and strategies, an operating plan should be created to address how goals will be monitored and evaluated. The plan should be resourced at each board meeting. This will help keep the board and staff focused on the operational goals, and will maintain a culture of valued planning. The plan should be a living document enabling the flexibility to adapt to change.
If you apply these seven steps, your organization will no doubt be able to plan and execute organizational objectives and goals.
If you are looking for a performance management solution that focuses on applying the best practices and key processes that drive organizational success, check out my Free Performance Management Kit.
To learn about the 35 performance management best practices, the 48 key processes, 82 decision support techniques and more, go to The Peformance Portal.
A performance initiative cannot succeed unless executives have defined the organizational goals. Organizational goals must be defined and a strategic plan must address how these goals are going to be achieved in order for a performance initiative to be successful. There is no compromising here. Performance management depends on organizational goals being distributed and measured throughout the entire organization, originating from the executive board and communicated all the way down the line. Today's tip is going to discuss how to develop a plan that lays the foundation for your performance plan. Because without a solid plan, your performance initiative is setup for failure.
It's not uncommon for a smaller organization to have partially developed business objectives or a rough strategic plan, but still have a critical need to implement a performance management process. These seven steps will help guide you through the strategic planning process.
1. Organize a Leadership Team
2. Articulate Mission and Vision
3. Assess the Current Environment
4. Agree on priorities
5. Write the Strategic plan
6. Implement the strategic plan
7. Monitor and Evaluate
1. Organize a Leadership Team
The strategic planning phase requires a team of leaders, normally the executive board or a team of key management with CEO oversight. The strategic plan should identify this team and the wider community of present and potential stakeholders. If a decision is made to involve other stakeholders in the process, at which point will they be involved? Will an outside consultant or facilitator be necessary to assist with some or all of the process? Who will keep the planning on track, and what are the best ways to make the strategic plan most useful? How will questions be addressed and decisions made? These questions should be answered at the start of the planning phase.
2. Articulate Mission and Vision
Your mission statement will define the what, how and why of your organization's services. It should explain why your organization exists and what its objectives are. It should explain how your organization works to fulfill its objectives and its values. When wording the mission statement, consider your organization's products, services, markets, values, and concern for public image. The vision statement includes a vivid description of the organization as it effectively carries out its operations.
3. Assess the Current Environment
Now that you've answered why your organization exists, what it does and what it hopes to achieve, you are ready to assess your past and current state and begin identifying your future state. This activity is most effective when key personnel throughout the entire organization are involved. Outreach to employees can be achieved through town hall meetings, focal groups, surveys, emails, etc. Review services and performance against the mission and vision. At this point your organization may not have the proper data or tools to quantifiably measure this. That's ok, as qualitative analysis can provide you with a high level baseline assessment. Perform a SWOT Analysis; which is a look at the internal Strengths and Weaknesses, and the external Opportunities and Threats of your organization, for your current and future state.
4. Agree on priorities
Now that the mission is affirmed and critical issues are identified, the next step is to figure out goals, objectives and the strategy for attaining them. Goals are simply a clearer statement of the visions, specifying the accomplishments to be achieved when the vision becomes real. Objectives are clearer statements of the specific activities required to achieve the goals, starting from the current status. This is where the strategic planning process develops ideas and action steps, which are most effectively generated when delegated throughout management.
5. Write the Strategic plan
Once the mission has been communicated, strengths and weaknesses identified, and the strategies and goals agreed upon, the strategic plan is ready to be developed. This is where it all comes together. This is where the planning committee drafts the plan, and all key decision makers review it to ensure that the plan answers the key questions about objectives and can serve as a guide for the entire organization. A strategic plan will enable your organization to achieve optimal performance and embark upon a meaningful process of ongoing improvement.
6. Implement the strategic plan
The implementation phase begins with the development of the operating plan. The operating plan defines the short-term objectives that determine success and is tied to the operating budget and reporting cycles. Following the fiscal calendar, your organization can measure progress toward annual goals, and finance can offer feedback to guide other business areas. This is where the budget is established.
7. Monitor and Evaluate
In addition to implementing goals, objectives and strategies, an operating plan should be created to address how goals will be monitored and evaluated. The plan should be resourced at each board meeting. This will help keep the board and staff focused on the operational goals, and will maintain a culture of valued planning. The plan should be a living document enabling the flexibility to adapt to change.
If you apply these seven steps, your organization will no doubt be able to plan and execute organizational objectives and goals.
If you are looking for a performance management solution that focuses on applying the best practices and key processes that drive organizational success, check out my Free Performance Management Kit.
To learn about the 35 performance management best practices, the 48 key processes, 82 decision support techniques and more, go to The Peformance Portal.
8 Steps For Developing the Scope For a Winning Performance Initiative
Imagine trying to get 10 people that speak 10 different languages to work together and achieve a complex task. It would be extremely difficult no matter how intelligent the people were. This is how we have to think of our organizations...of intelligent people who aren't accustomed to speaking the language of business, or more specifically, the language of performance management.
If you've ever had to managed a project you know the importance of eliminating assumptions and making sure that all key stakeholders are looking through the same lens as to how the project will be carried out. In order to achieve this the first thing you did was document the project scope. Well, a performance initiative shouldn't be any different. Before you even think about implementing a performance program, you must first define the scope of your performance initiative.
The performance scope sets the boundaries for the performance management team. The performance scope defines the high level processes for how the performance management team will approach divisions, support teams and individuals to begin aligning performance to business objectives. Many times there is confusion about what falls inside the boundary of the performance initiative and what does not. Who all will be involved? What groups will be affected? Which groups will be excluded? The project scope ensures that everyone is viewing the initiative the same. Defining a solid scope and socializing it with the performance team, various project managers and key stakeholders is critical. Research has shown that defining scope and objectives are among the most important start-up activities to a successful performance initiative.
A common mistake made by organizations is not defining and communicating the scope of the performance initiative or only defining the initiative in general terms. This lack of definition causes managers and key stakeholders throughout the organization to make assumptions related to their own involvement to the initiative. As performance experts, our goal is to alleviate assumptions by clarifying roles, processes, and expectations. On large scale performance initiatives there is often push back from teams and individuals within the organization. Some even feel threatened (this is discussed in more detail in the 'Gaining Employee Acceptance' blog tip). A well communicated performance scope will help alleviate the politics that could slow down progress.
Performance management scopes are not a common process yet; therefore it may be a good idea for a consultant or a performance manager in charge of the performance implementation to put together a scope on their own to increase the odds of cooperation from the parties being evaluated.
Here are 8 high level steps for establishing your performance scope in a way that will minimize problems:
1. Define the outcome
2. Document assumptions
3. Define the scope of your performance initiative
4. Define deliverables
5. Define functionality
6. Define data
7. Define technical structure definition
8. Define enterprise/organizational structure
If you are looking for a performance management solution that focuses on applying the best practices and key processes that drive organizational success, check out my Free Performance Management Kit.
To learn about the 35 performance management best practices, the 48 key processes, 82 decision support techniques and more, go to The Peformance Portal.
If you've ever had to managed a project you know the importance of eliminating assumptions and making sure that all key stakeholders are looking through the same lens as to how the project will be carried out. In order to achieve this the first thing you did was document the project scope. Well, a performance initiative shouldn't be any different. Before you even think about implementing a performance program, you must first define the scope of your performance initiative.
The performance scope sets the boundaries for the performance management team. The performance scope defines the high level processes for how the performance management team will approach divisions, support teams and individuals to begin aligning performance to business objectives. Many times there is confusion about what falls inside the boundary of the performance initiative and what does not. Who all will be involved? What groups will be affected? Which groups will be excluded? The project scope ensures that everyone is viewing the initiative the same. Defining a solid scope and socializing it with the performance team, various project managers and key stakeholders is critical. Research has shown that defining scope and objectives are among the most important start-up activities to a successful performance initiative.
A common mistake made by organizations is not defining and communicating the scope of the performance initiative or only defining the initiative in general terms. This lack of definition causes managers and key stakeholders throughout the organization to make assumptions related to their own involvement to the initiative. As performance experts, our goal is to alleviate assumptions by clarifying roles, processes, and expectations. On large scale performance initiatives there is often push back from teams and individuals within the organization. Some even feel threatened (this is discussed in more detail in the 'Gaining Employee Acceptance' blog tip). A well communicated performance scope will help alleviate the politics that could slow down progress.
Performance management scopes are not a common process yet; therefore it may be a good idea for a consultant or a performance manager in charge of the performance implementation to put together a scope on their own to increase the odds of cooperation from the parties being evaluated.
Here are 8 high level steps for establishing your performance scope in a way that will minimize problems:
1. Define the outcome
2. Document assumptions
3. Define the scope of your performance initiative
4. Define deliverables
5. Define functionality
6. Define data
7. Define technical structure definition
8. Define enterprise/organizational structure
If you are looking for a performance management solution that focuses on applying the best practices and key processes that drive organizational success, check out my Free Performance Management Kit.
To learn about the 35 performance management best practices, the 48 key processes, 82 decision support techniques and more, go to The Peformance Portal.
Secrets of Developing Simple, Powerful Performance Measures That Drive Organizational Success
In this economic, fiscal crisis it is critical that organizations understand what drives their success and how to measure it. Performance metrics tell us how good we are at doing what we do and help us reach goals on time and on budget. But in order for them to be truly effective; they must be fully understood and properly applied.
For example, server availability is a very common measurement for IT departments. But what does 99.999% server uptime mean? If you have multiple servers running in a redundant cluster or server farm, chances are your servers will be available 100% of the time.
But what good is an email server that is up 100% of the time if the email application itself is sporadic or if a customer is not receiving all of their mail or if transactions are taking too long to process? In this example, the metric is not set up from a customer point of view, but instead from a technical point of view. And thus that metric is not fully understood and adds little value. This article discusses the different types of measurements and how to develop simple, unique metrics that drive organizational success.
A performance metric is a type of measurement used to quantify the performance of some component of an organization. There are three types of performance measures: key result indicators, performance indicators, and key performance indicators. Key result indicators (KRIs) are typically long term measures (monthly, quarterly, yearly) which represent how your organization is doing, and are the results of your organization's actions. They are often used by executive management. Performance indicators (PIs) are the most common measurements, which are measured more frequently (weekly, daily or hourly), and often tell you what needs to be done. They are often used by middle management and staff, because they give valuable information of operations and give business unit management and staff an understanding of what actions need to be taken. Key performance indicators (KPIs) are the measures that focus on the most critical performance areas within your organization. KPIs reflect strategic value drivers and dictate the success of your organization, while metrics represent anything that is measurable. A KPI is a metric, but a metric is not always a KPI. An organization will typically have many result indicators and performance indicators, but few KPIs.
A question many people have when developing metrics is simply "How do I know what to measure?" A good place to begin is by researching industry standard metrics. Industry standard metrics are valuable measurements that are common within an industry. They allow organizations to compare their performance to other organizations with similar service offerings. While industry standard metrics are a good place to begin, every organization is different. Sometimes organizations get too focused on industry standard metrics and fail to focus on the things that make their service unique to their industry.
Other ways to know what to measure are to:
1) measure what your customers say is important
2) measure areas where there are problems you'd like to solve, and
3) measure the business objectives you are aiming to achieve.
Another effective method for creating effective metrics is the SMART test (Specific, Measurable, Actionable, Relevant, and Timely). Your metrics should be specific and assign ownership, accountability and parameters for the performance of the metric. They should be easy to measure and calculate. They should guide actionable steps to be taken if they are not met.
Metrics should guide performance into the direction of the organizational mission and goals. And they should be up to date and measured on time.
A way to test if your metrics are SMART is to create a SMART table. Your first column will document the function or skill area. Next, you want to a column listing which objectives each metric supports. If the metric does not support an organizational objective it will be much less valuable and may be costly in terms of labor and focusing on the wrong things. The next column should document standards and parameters for the metrics. Other columns should document whether the metrics are agreed upon by all stakeholders, how the metric will be calculated, whether the metric is validated, realistic and easy to gather, and how often the metric will be reported? If all of these questions can be answered and documented, the metric passes the SMART test.
One major challenge organizations face is identifying valuable financial metrics that are meaningful to those responsible for carrying out the work. For example, net cash flow is a critical performance measure for executives; but it probably means very little to the accounts receivable clerk who has no idea of how their contribution improves net cash flow performance.
Instead the CEO might focus on net cash flow while the CFO looks at the debt-to-equity ratio. The controller might focus on the liquidity ratio, while the accounts receivable manager looks at days sales outstanding, and the accounts receivable clerk worries about percent of collections over 30/60/90 days. By ensuring that the proper metrics are assigned to the key people measuring and driving financial performance your organization will greatly increase its chances of achieving constant growth and success.
If you are looking for a performance management solution that focuses on applying the best practices and key processes that drive organizational success, check out my Free Performance Management Kit.
To learn about the 35 performance management best practices, the 48 key processes, 82 decision support techniques and more, go to The Peformance Portal.
For example, server availability is a very common measurement for IT departments. But what does 99.999% server uptime mean? If you have multiple servers running in a redundant cluster or server farm, chances are your servers will be available 100% of the time.
But what good is an email server that is up 100% of the time if the email application itself is sporadic or if a customer is not receiving all of their mail or if transactions are taking too long to process? In this example, the metric is not set up from a customer point of view, but instead from a technical point of view. And thus that metric is not fully understood and adds little value. This article discusses the different types of measurements and how to develop simple, unique metrics that drive organizational success.
A performance metric is a type of measurement used to quantify the performance of some component of an organization. There are three types of performance measures: key result indicators, performance indicators, and key performance indicators. Key result indicators (KRIs) are typically long term measures (monthly, quarterly, yearly) which represent how your organization is doing, and are the results of your organization's actions. They are often used by executive management. Performance indicators (PIs) are the most common measurements, which are measured more frequently (weekly, daily or hourly), and often tell you what needs to be done. They are often used by middle management and staff, because they give valuable information of operations and give business unit management and staff an understanding of what actions need to be taken. Key performance indicators (KPIs) are the measures that focus on the most critical performance areas within your organization. KPIs reflect strategic value drivers and dictate the success of your organization, while metrics represent anything that is measurable. A KPI is a metric, but a metric is not always a KPI. An organization will typically have many result indicators and performance indicators, but few KPIs.
A question many people have when developing metrics is simply "How do I know what to measure?" A good place to begin is by researching industry standard metrics. Industry standard metrics are valuable measurements that are common within an industry. They allow organizations to compare their performance to other organizations with similar service offerings. While industry standard metrics are a good place to begin, every organization is different. Sometimes organizations get too focused on industry standard metrics and fail to focus on the things that make their service unique to their industry.
Other ways to know what to measure are to:
1) measure what your customers say is important
2) measure areas where there are problems you'd like to solve, and
3) measure the business objectives you are aiming to achieve.
Another effective method for creating effective metrics is the SMART test (Specific, Measurable, Actionable, Relevant, and Timely). Your metrics should be specific and assign ownership, accountability and parameters for the performance of the metric. They should be easy to measure and calculate. They should guide actionable steps to be taken if they are not met.
Metrics should guide performance into the direction of the organizational mission and goals. And they should be up to date and measured on time.
A way to test if your metrics are SMART is to create a SMART table. Your first column will document the function or skill area. Next, you want to a column listing which objectives each metric supports. If the metric does not support an organizational objective it will be much less valuable and may be costly in terms of labor and focusing on the wrong things. The next column should document standards and parameters for the metrics. Other columns should document whether the metrics are agreed upon by all stakeholders, how the metric will be calculated, whether the metric is validated, realistic and easy to gather, and how often the metric will be reported? If all of these questions can be answered and documented, the metric passes the SMART test.
One major challenge organizations face is identifying valuable financial metrics that are meaningful to those responsible for carrying out the work. For example, net cash flow is a critical performance measure for executives; but it probably means very little to the accounts receivable clerk who has no idea of how their contribution improves net cash flow performance.
Instead the CEO might focus on net cash flow while the CFO looks at the debt-to-equity ratio. The controller might focus on the liquidity ratio, while the accounts receivable manager looks at days sales outstanding, and the accounts receivable clerk worries about percent of collections over 30/60/90 days. By ensuring that the proper metrics are assigned to the key people measuring and driving financial performance your organization will greatly increase its chances of achieving constant growth and success.
If you are looking for a performance management solution that focuses on applying the best practices and key processes that drive organizational success, check out my Free Performance Management Kit.
To learn about the 35 performance management best practices, the 48 key processes, 82 decision support techniques and more, go to The Peformance Portal.
How to Align Performance to Corporate Strategy and Goals
It used to be that performance management was managed in one department. Today, performance management has spread throughout the entire organization, where almost every division must focus on performance management to some degree in order to be successful. Despite this wider range of performance management, enterprise-wide performance initiatives are not widely practiced. And without an enterprise approach, it is extremely difficult to align your performance to organizational goals and objectives.
According to software vendor SAS, a recent survey of 1100 businesses revealed that performance alignment was the PRIMARY benefit companies hoped to receive from their performance management efforts. Aligning performance to your organization's goals and objectives is critical to your organization's success. On the other side, lack of alignment increases inefficiencies and risks and prevents optimal execution of the organizational strategy.
Think of this scenario as a model for linking corporate strategy to business objectives:
The executive board collaborates high-level strategic planning and identifies goals for the CEO and organization. The CEO then meets with his/her senior executives who in turn develop objectives derived from the CEOs goals and integrates those goals into the strategic plan. In turn, those executives meet with their managers who develop objectives derived from the strategic plan, and so on. Then, each subordinate goal is tied to one or more goals of their manager. Ideally, the final result is that every tracked goal in the entire company can map back to a corporate objective developed by the board.
Chances of organizational success are greatly increased by translating each high-level objective into a cascading series of focused performance measures. Using our previous example, the CEO may focus on net cash flow while the CFO looks at debt-to-equity ratio. The controller may focus on liquidity ratio, while the accounts receivable manager looks at days sales outstanding, and the accounts receivable clerk worries about percent of collections over 30/60/90 days.
This article discusses aligning corporate strategy to four key areas: departments/ divisions, workforce, finance, and systems.
Departmental Performance Alignment
Departmental performance alignment can be difficult when business processes within an organization span across multiple business units and functional support groups. To avoid bottlenecks, finger-pointing, and redundancy of work, shared performance measures that align people across organizational boundaries must be identified and responsibilities accounted for. For instance, a performance measure that includes percent of collections over 30/60/90 days might be applied both to accounts receivables clerks and sales representatives, thus sharing and integrating performance measures, encouraging collaboration and boosting overall performance.
Workforce Performance Alignment
When workforce performance is aligned with corporate objectives individuals in an organization develop a stake in that organization's performance. Employees at every level are measured by something they understand and control, and that same measure is clearly linked to the goals of their direct supervisor and the organization as a whole.
Financial Performance Alignment
In an economy where results need to be achieved fast and investor confidence is low, CFOs and finance organizations are implementing integrated performance management to improve information quality and visibility. One challenge organizations face aligning performance is finding financial measures that are meaningful to those responsible for carrying out the work. Using the previous example net cash flow is a critical performance measure for executives, but it probably means very little to the accounts receivable clerk who has no idea of how their contribution improves net cash flow performance. Stick with simple financial metrics that employees can understand and control.
System Performance Alignment
The IT/IS department's role is to provide technical support for the entire organization. While we know that this alone is a complex task, today's business model requires systems to not only support users, but to align technology to meet the business needs of the organization. Understanding business unit objectives and translating them quickly and accurately into IT priorities is essential today. So how does an organization measure how well their systems are aligned to organizational objectives? By implementing vehicles for aligning and measuring IT performance, such as service level agreements, performance-based contracts, and products and services catalogs to generate reports that illustrate how well they are measuring up to business objectives.
If you can move closer to aligning performance in these areas your organization will be well on it's way to surpassing all of it's goals and objectives. While the goal of a performance initiative is to align performance to organizational strategy, it is most important to maintain flexibility and adapt to organizational changes quickly.
If you are looking for a performance management solution that focuses on applying the best practices and key processes that drive organizational success, check out my Free Performance Management Kit.
To learn about the 35 performance management best practices, the 48 key processes, 82 decision support techniques and more, go to The Peformance Portal.
According to software vendor SAS, a recent survey of 1100 businesses revealed that performance alignment was the PRIMARY benefit companies hoped to receive from their performance management efforts. Aligning performance to your organization's goals and objectives is critical to your organization's success. On the other side, lack of alignment increases inefficiencies and risks and prevents optimal execution of the organizational strategy.
Think of this scenario as a model for linking corporate strategy to business objectives:
The executive board collaborates high-level strategic planning and identifies goals for the CEO and organization. The CEO then meets with his/her senior executives who in turn develop objectives derived from the CEOs goals and integrates those goals into the strategic plan. In turn, those executives meet with their managers who develop objectives derived from the strategic plan, and so on. Then, each subordinate goal is tied to one or more goals of their manager. Ideally, the final result is that every tracked goal in the entire company can map back to a corporate objective developed by the board.
Chances of organizational success are greatly increased by translating each high-level objective into a cascading series of focused performance measures. Using our previous example, the CEO may focus on net cash flow while the CFO looks at debt-to-equity ratio. The controller may focus on liquidity ratio, while the accounts receivable manager looks at days sales outstanding, and the accounts receivable clerk worries about percent of collections over 30/60/90 days.
This article discusses aligning corporate strategy to four key areas: departments/ divisions, workforce, finance, and systems.
Departmental Performance Alignment
Departmental performance alignment can be difficult when business processes within an organization span across multiple business units and functional support groups. To avoid bottlenecks, finger-pointing, and redundancy of work, shared performance measures that align people across organizational boundaries must be identified and responsibilities accounted for. For instance, a performance measure that includes percent of collections over 30/60/90 days might be applied both to accounts receivables clerks and sales representatives, thus sharing and integrating performance measures, encouraging collaboration and boosting overall performance.
Workforce Performance Alignment
When workforce performance is aligned with corporate objectives individuals in an organization develop a stake in that organization's performance. Employees at every level are measured by something they understand and control, and that same measure is clearly linked to the goals of their direct supervisor and the organization as a whole.
Financial Performance Alignment
In an economy where results need to be achieved fast and investor confidence is low, CFOs and finance organizations are implementing integrated performance management to improve information quality and visibility. One challenge organizations face aligning performance is finding financial measures that are meaningful to those responsible for carrying out the work. Using the previous example net cash flow is a critical performance measure for executives, but it probably means very little to the accounts receivable clerk who has no idea of how their contribution improves net cash flow performance. Stick with simple financial metrics that employees can understand and control.
System Performance Alignment
The IT/IS department's role is to provide technical support for the entire organization. While we know that this alone is a complex task, today's business model requires systems to not only support users, but to align technology to meet the business needs of the organization. Understanding business unit objectives and translating them quickly and accurately into IT priorities is essential today. So how does an organization measure how well their systems are aligned to organizational objectives? By implementing vehicles for aligning and measuring IT performance, such as service level agreements, performance-based contracts, and products and services catalogs to generate reports that illustrate how well they are measuring up to business objectives.
If you can move closer to aligning performance in these areas your organization will be well on it's way to surpassing all of it's goals and objectives. While the goal of a performance initiative is to align performance to organizational strategy, it is most important to maintain flexibility and adapt to organizational changes quickly.
If you are looking for a performance management solution that focuses on applying the best practices and key processes that drive organizational success, check out my Free Performance Management Kit.
To learn about the 35 performance management best practices, the 48 key processes, 82 decision support techniques and more, go to The Peformance Portal.
How to Gain Employee Acceptance and Get Them Into a High Performance Mindset
The other day a colleague asked me what the most important factor to a successful performance program. While many of my tips will entail improving processes and systems, there is no question that people are the driving force behind successful organizations. Implementing a successful performance program involves numerous requirements, perhaps none more important than gaining employee acceptance. While most will agree that managing performance is crucial to the success of a business, strong resistance is often met when it comes to an initiative which entails scrutinizing the productivity of business units and employees. Often times, in the employees’ eyes, a performance improvement initiative is a negative reflection of their current performance. In their minds it comes across as if their performance is bad and that others know how to do their job better than they do. As a result, morale is diminished and the performance initiative is halted before it gets off the ground.
We all know that this isn't the reality. In reality, we engage in performance initiatives to expand on our organization's current capabilities by introducing techniques that are proven to produce greater results. In return, employee morale skyrockets and internal processes are more efficient.
So, what can we do to get employees to accept new performance initiatives and perform at a high level? Here are six tips that will guarantee that your performance initiative starts with a bang:
1. Involve employees at all levels
2. Make sure employees understand objectives
3. Strive for improvement instead of judging past performance
4. Get visible support from executives and senior management
5. Challenge employees to act immediately
6. Enable them to monitor results
To get better acceptance of the performance initiative, as with any change initiative, it is best to involve employees at all levels. Any new performance management or evaluation system is not likely to gain acceptance if it's used to rate, rank or single out people or their services. An initiative is much more accepted if it's shown to lead to individual growth and development. And employees are much more likely to have buy-in if they are offered the opportunity to participate and share their opinions and be part of the process.
Another way to improve employee acceptance and performance is to make sure they understand corporate, team and personal objectives. Once this understanding is established employees won't ask why they have to change the way they do things, because they will know what the objectives are and how they will contribute to reaching them.
The most important aspect of implementing a performance initiative and gaining employee acceptance is to encourage improvement. One of the main reasons employees resist performance management initiatives is because they are afraid they may look bad once they are measured on specific objectives. The goal of the performance initiative is to baseline your current service delivery and measure performance, and base success on improvement.
One of the most overlooked, but most effective methods of gaining employee acceptance is to demonstrate support from executives and senior management. Many performance initiatives fail simply for the fact that it doesn't appear to be a priority from executives. When employees see these objectives being communicated from the executive office, whether it be emails, newsletters, town hall meetings, or morality speeches they know that their performance is being monitored outside of their business unit or the consultants who come in and manage the project. Some organizations do not perform well simply for the fact that the employees do not believe it is very important, or is being monitored by executives.
Another effective method for getting employees to buy into the performance initiative and get into the mindset of peak performance is to challenge them. This can be done by identifying an area of improvement, providing a process that can help them do it better than the status quo, and getting them to commit to improving in those areas, starting one area at a time.
When it comes to monitoring results, the most effective way to get employees to perform at a high level is to make sure they know exactly what they will be measured against and to give them the ability to monitor the performance in which an independent reporting team reports on. When employees have access to these results and understand why and how they are being measured, they shift their focus to achieving those metrics. If the metrics are truly aligned with the organizational objectives, then individuals within your organization will be fine tuned for peak performance.
If you are looking for a performance management solution that focuses on applying the best practices and key processes that drive organizational success, check out my Free Performance Management Kit.
To learn about the 35 performance management best practices, the 48 key processes, 82 decision support techniques and more, go to The Peformance Portal .
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