Effective Performance Management

Daniel Dumke — Mon, 03 Jan 2011 15:05:00 +0000

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.

Reference:

Srinivas, S. (2009). Effective Performance Management Journal of Business Logistics, 30 (2), 85-100

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Tags:

performance

strategy

performance management

Srikanth Srinivas

Effective Performance Management

Aviation Analogy

Company as a staggering Airplane

Solution

Conclusion