Once the organization’s vision has been translated into strategic goals, and then into outputs, performance measures and targets, people will know what is required of them to achieve the organization’s vision. Systematic communication on how people are performing against their targets is critical, and this is the role performance feedback plays.
We define performance feedback as official information from the organization that tells people how they are performing against targets. Performance feedback is the foundation of what we call the performance - linked communication system.
Effective management teams recognise the importance of feeding back performance information to all levels of the organization, particularly to the workforce level.
Failure to do this can be one of the most costly errors in organizational management. While resources are invested to ensure the financial director has all the information he needs to make decisions and perform in his role, little is invested in providing the sort of information workers need to perform their role – yet these are the people that are immediately adding value to the products or services delivered by the organization.
When performance feedback is systematically established in the organization, a performance culture inevitably results. Because performance feedback brings relevant performance information to everyone, ownership and accountability of performance targets can be transferred directly to the various teams doing the work. When teams take responsibility for their targets and get visible performance feedback on how they are doing, they are motivated to improve. A culture of performance improvement develops and grows.
An organization’s performance information has to be communicated to all those who work in the organiz-ation in terms that are relevant to each work group. The performance measurement system must feedback company financial budgets against actual to the financial director, and also local team targets against actual to each local work team. The strategic planning system must feedback strategic goal achievement to the directors of the company, and also targets against actual to each local team. The team performance system must communicate company-wide performance to the management team, production performance to the production team and marketing performance to the marketing team.
In the same way, the performance feedback system communicates information about organizational performance in terms relevant to every team doing each job within the organization.
The most common pitfall in performance management is failing to provide performance feedback to all those who can improve the organization’s performance. While most performance feedback systems provide information to senior management, and workers dealing with customers receive feedback from those customers, about 80% of the employees who are adding value are missing out on necessary feedback. This is not good management. The managing director, looking at historical data, cannot do anything directly to change the result, whereas the worker, when informed, can do so.
Yet in business too often only the senior management know what is going on.
No sports coach in his or her right mind would contemplate restricting information about the game plan to the captain.
Common sense tells us what has been confirmed by experts: the shop floor is where performance feedback is most valuable.
Performance feedback truly is the breakfast of champions.
Detailed references and additional information can be provided on request, and questions are welcome.
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Empowerment is the creation of an organizational culture in which all employees use as much of their ability as possible, in a unified and synergistic way, so as to produce the results required by internal and external customers and stakeholders.
In order to clarify the notion of empowerment we need to draw a distinction between what has to be done and how it is to be achieved.
What has to be done is determined in consultation with the stakeholders and customers, who may be internal or external. This is done by clarifying exactly what outputs are required, how those outputs are to be measured, and what targets or standards are acceptable.
How best to achieve these outputs should be left to the experts, who we define as ‘the people doing the job’. As the old saying suggests, If you want to know the road up a mountain, ask the man who walks it every day.
If outputs, measures and targets are clarified at all levels of the organization, if each individual and the team to which she/he belongs knows exactly what is expected, then, and only then, is everyone empowered.
Empowerment exists because the targets and standards form parameters within which people can exercise authority, make decisions, solve problems, communicate, utilise resources and generally implement solutions.
This is exactly the way organizations are run at the upper management levels. Similar systems, including systems of measurement, should be created with the same degree of empowerment for workers and workforce teams, for those who are in the front lines dealing with customers, for those who are adding value in the manufacturing plant. Doing so will create an environment in which the energy released from unlocking human potential can be harnessed and focused.
The result will be increased productivity and quality of working life.
Detailed references and additional information can be provided on request, and questions are welcome.
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Many companies have strategic plans but they often do not work well because they are not implemented. As Fortune discovered, Less than 10% of strategies effectively formulated are effectively executed.
The workforces of many companies go about their daily business totally unaware of the fact that their companies have strategic plans. As a result, there is no relationship between company plans and the workers’ activities.
The key to success lies in translating the vision and the strategic business plans into the everyday activities of the people who are actually doing the work, adding the value, providing the service, so that everybody knows exactly what they have to do on Monday morning in order to achieve results.
The building industry, for example, has mechanisms in place designed to move a project from an architect’s vision of a four-bedroom house to the creation of that house exactly as planned. Everyone involved in the project knows how their contribution fits into the big picture.
Unfortunately, many businesses are lacking a mechanism or system to translate their abstract visions plans and strategies into measurable outputs so that every person in the organization knows exactly what outputs they are expected to produce, and how those outputs are to be measured. You need to disseminate your goals amongst your workers, translating your strategic plan into their everyday activities.
In other words, you need a process to implement strategy. The objective is to implement a performance system that is hierarchically and mathematically connected to the organization’s vision and that will focus all levels of the organization on achieving its vision.
You also need to measure the degree to which this occurs. That measurement is vital, for it tells you whether or not you have successfully transplanted your ideas from paper to the hearts and minds of the workers.
Most performance management systems fail because they do not make the crucial link between strategy and daily actions and operations. They focus attention on tactical feedback and control of short-term operations.
A good performance management system provides a comprehensive framework that translates an organization’s vision and strategy into a coherent set of outputs, performance measures and targets.
By developing a set of outputs, measures, targets and feedback systems for the leadership team, and then cascading these down the organization in such a way that they are localised, meaningful, understood, owned and aligned, the link between the organization’s strategic goals and the daily actions of the people doing the work can be made.
Resource allocations, annual budgets and strategic decisions can be driven by the strategy. Performance reviews can be used to monitor individual performance which in turn monitors organizational performance. Reward systems can be designed to reward organizational performance achievement. The vital link between what people are doing on a daily basis, and strategic goals can be made.
A good performance management system must mobilise the people in the organization in such a way that their daily activities bring them closer and closer to strategic goal achievement. The performance management system must be a systematic process to implement strategy.
Detailed references and additional information can be provided on request, and questions are welcome.
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Last month I wrote about the importance of a unified sense of direction, vision and business planning.The next essential component of team performance is organization strategy.
Strategy formulation is the selection of the best course of action in order to achieve the organization’s vision. Basically, strategy formulation defines how the organization is going to achieve its vision, or how to close the gap between where it is now and where it wants to be. In other words, it identifies the correct road map to follow in order to arrive at the desired destination.
General Robert E. Wood said that; Business is like war in one respect; if its grand strategy is correct, any number of tactical errors can be made and yet the enterprise proves successful.
An understanding of the concept of competitive advantage is crucial to the strategy formulation process. An organization’s competitive advantage refers to what the organization does or has that is better than its competitors.
There are two general rules which need to be applied when formulating strategy:
Rule Number 1: Always lead from your position of strength. Competitive advantage should be exploited as much as possible.
Rule Number 2: The basic strategy for all companies should be to concentrate resources where the company presently has, or can readily develop, a meaningful competitive advantage.
Andrea Dunham and Barry Marcus in their book: Unique value: The secret of all great business strategies, Macmillan Publishing Company (1993) talk about the three principles that Seagram applied to the development of a winning strategy to enter the wine cooler business:
Never stop analyzing the business
Never stop leveraging what you do uniquely well
Never stop learning.
These are all principles that successful businesses must implement if they want to survive.
Thomas Clarke and Stewart Clegg writing in their book: Changing Paradigms: The transformation of management knowledge for the 21st century, Harper Collins Business (1998) p.240 summed it up well:
As the business environment becomes increasingly turbulent and technological change becomes more rapid it will pay companies to think more about whether they have the right strategic intent before they set about implementing it. If the preconceived strategic plans of the past are no longer appropriate, strategic thinking should not simply be abandoned. Creative and responsive strategic thought is stimulated by developing the capabilities and knowledge that allow proactive approaches to change, based on transferable skills, even if this involves the rethinking of whole businesses and industries.
Detailed references and additional information can be provided on request, and questions are welcome.
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Of all the things I’ve done, the most vital is coordinating the talents of those who work for us and pointing them toward a certain goal.
Walt Disney
The first essential component of team performance is a unified sense of direction.
A unified sense of direction can best be summed up in the phrase one team, one direction. A unified sense of direction means that all the departments, teams and individuals that make up an organization are pulling in the same direction. Or to put it another way, everyone is singing from the same song sheet and is working harmoniously together to achieve common goals.
To achieve a unified sense of direction there needs to be agreement at all levels on what the organization values, what it does, where it is headed and how it plans to get there.
Individual human potential is limitless and, as organizations are made up of human beings, the potential for any organization to achieve its goals is also limitless. An enormous opportunity to improve productivity and quality of working life, almost without exception, exists in striving for greater degrees of clarity and focus on what is important, where an organization wants to be, and how it gets there.
There is much research to show that one of the major contributory factors to business failure is lack of planning.
Business planning is important because the future is unpredictable. However carefully we lay out plans, certain things will undoubtedly come along that weren’t anticipated. Responsible business leaders however, cannot sit back and wait for the future to control them. They need to take charge of their future. Many business leaders think planning is a waste of time and effort. They feel that their time is far better spent on present business activities, rather than planning for an inaccurately forecasted future. Usually, an organization with this kind of leadership doesn’t survive in the long term – the market place has become too aggressive and competitive. The organization whose leadership has clearly considered its future, and who have developed plans to get there, is the organization most likely to succeed.
Business planning requires that the leadership clearly define what they are trying to achieve, what obstacles they will face, how they will achieve their goals, what resources they will need, and how to make it all happen. Business planning is a way of becoming master of your own destiny.
Most importantly, developing a business plan will help you compete more effectively in the market place, both today and tomorrow. It will provide you with the road map to becoming a healthy, thinking and profitable business. It will help you create the organization of your dreams.
Yet business leaders continue to avoid one of their most important obligations – developing and implementing a business plan.
The leader who views planning as a system, (in this case the strategic planning system) will realise that any plan will have repercussions on the entire organization: that plans need to be coordinated in every department; and that one department cannot be optimised at the expense of the total organization. In short, the leader who views planning as a system will be planning for total success, rather than isolated victories at the expense of the overall organization.
Our goals can only be reached through a vehicle of a plan, in which we must fervently believe, and upon which we must vigorously act. There is no other route to success.
Stephen A. Brennen
Detailed references and additional information can be provided on request, and questions are welcome.
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The question has been asked: as a manager, you come to your office to find that you have all your plant and equipment, but no people, what would it cost to do what was necessary to develop a new group of people to a point where they were functioning with the same degree of effectiveness as the original organization? Estimates range from 20 to 30 times the annual earnings of those people and suggest that a 4% deterioration in the value of the human organization will completely offset normal profits. Similarly, a 4% improvement in human effectiveness will double normal profits.
Our bottom line offering to our large clients in technical environments, is measurable and sustainable - step improvement around 3 to 6% on a balanced scorecard of their key measures. Over the years we have published numerous case studies across a variety of industries to support this claim, and they are available on request.
Many a consultant is ready to promise that their approach, aimed at solving part of the problem, will provide a total solution. However, total and continuous performance improvement relies on more than just measuring performance or developing goals or putting in a new system. If you are to achieve sustained performance improvement, nothing short of a purposeful, total and systematic approach will suffice.
Sacher Associates has identified the following ten essential components of team performance that are strongly evident in all high-performance teams and to quote a Hyundai advert: The secret to greater productivity is getting the basics right.
The ten essential components of team performance
• A unified sense of direction will be covered in my February 2013 blog.
• Strategy or long-term goals will be covered in my March 2013 blog.
• Outputs and performance measures will be covered in my April 2013 blog.
• Targets will be covered in my May 2013 blog.
• Performance feedback will be covered in my June 2013 blog.
• Communication will be covered in my July 2013 blog.
• Training (skills/knowledge) will be covered in my August 2013 blog.
• Systems and processes will be covered in my September 2013 blog.
• Structure and job design will be covered in my October 2013 blog.
• Reward systems will be covered in my November 2013 blog.
The better an organisation develops these components, the better its performance. By developing the ones that need improvement in your organisation, you are able to get on with creating a high-performance environment and culture for your organization. When these ten components are systematically built into everyday activities, performance always continuously improves and overall productivity gains of around 3 to 6% become viable.
Many people believe that their organisations have ‘been there, done that’ or are ‘currently doing all of this stuff’. However, many of them are yet to anchor these ten components even minimally, let alone at best practice levels, especially at the workforce and team leader/supervisor levels.
In other organizations, although managers attend in some way to these ten components of team performance, they do not go the distance in ensuring that these components become successfully and permanently entrenched in the work environment or culture – the stage that is directly correlated with the highest levels of employee performance and job satisfaction.
As we are human beings, the potential to improve our performance is limitless, and the competition intense. Our business focus should be on achieving continuous improvement through increasingly more thorough implementation of these ten essential components.
Detailed references and additional information can be provided on request, and questions are welcome. Contact us now
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