Effective Performance Management

Aviation and steering a company can be viewed as somehow alike. At least this is the starting point for the article by Srinivas (2009) reviewed today.

Aviation Analogy

But unlike companies a pilot has some advantages: a clear starting point, a given destination, he knows on which path to get there, he knows anytime if he is off course and he also knows how to get back on track.

Company as a staggering Airplane

On the other hand within a company you have a hard time defining those parameters:

• Starting Point
  There is a distorted view on the company, enhanced by a myopic financial view, financial reporting that draws a misleading picture and reward systems that drive people to overstate the current status


• Destination
  Often there are more goals than employees and the missing alignment of reward system with goals leads to further problems


• Path to get there
  The goals seldomly translate into a clear path that provides the employess with guidance to reach the destination safely, and most of all: nobobdy is expecting variation to the path!


• Agile Course Correction
  Is this difference because of poor strategy and planning or poor execution, furthermore there is usually a (unknown) delay between cause and effect

Solution

So the solution seems straightforward:

• Starting Point
  It is very important to understand the current reality, else you cannot know what direction to go
• Destination
  It is recommended, that you take current reality into account when setting the destination, keep a long term view and select appropriate indicators for evaluating the performance
• Path
  Set a clear path (or strategy), eg. deeper market penetration or extending market reach
• Variations
  Compare the performance over a longer time horizon, use the variation as a means to improve the underlying process/system and use them as an input for an agile course correction
• Agile Course Corrections
  Increase the frequency of tracking performance against plan and compare performance against the 5 to 7 year goal and not quarter to quarter or year-to-year as this tends to give a myopic view of performance. Furthermore, keep the focus on the few key performance indicators and integrate agile course correction into the organization’s culture.
• Alignment
  To align the goals of the company to the goals of the employees use the following strategies: Clarity, Communication, Resource Allocation, Reinforcement

Conclusion

Of course there is no easy solution for the problem of steering a company, but the Srinivas (2009) provides categories to analyze your own performance and make adjustments to arrive at your selected destination.