April 15, 2013


Posted by Fifth Ring

Creating and sustaining a performance culture throughout a company is something many senior executives want and need, but find almost impossible to achieve. So how do you make it happen?

All of the following are important:

A clear business direction

Can you answer the question “what am I trying to achieve?” Without a well-defined and communicated vision, there is nothing to aspire to at a corporate or individual level.

A series of objectives or linked key performance indicators (KPIs)

KPIs are necessary at each operating level. Start at the top and focus on what drives value in the company over the long term – this relates directly to your Vision. Then cascade a series of causal measures throughout the value chain.

Don’t measure everything

Resist the temptation of creating lists of measures – success or failure in corporate life usually relies on getting only a few things right or wrong. Conversely, don’t rely too much on one measure – this can be counter-productive and although ‘soft’ measures can be hard to measure, this does not mean they should be excluded – far from it.

Don’t reinvent the wheel

Achievable objectives that reflect external benchmarks, but adjusted trends, are a good starting point. Some objectives are hard to determine, but be clear about where the gaps are and what you are doing to fill them.

Use a dashboard – regularly updated

A simple, one-page report with all of the above on it, which will work at each level of the company – with the same headline value drivers that continually reinforce the message from the top. A regular monitoring process that has teeth linked to the 12-month tactical plan and budget. Traffic lights are effective – the visual impact is immediate and hard to ignore.

Let it run

Be confident in the framework you have developed and let the system run for at least 12 months before reviewing any of the measures. It takes time to get the system up and running, to communicate what the outcomes are and to create enough trend data that can be used to forecast performance.

Have an effective internal communication strategy

Never assume anything – keep the messages simple, but give the detail and be prepared to be challenged. Going through the process creates visibility and can secure a small group of ‘champions’ who can deal with questions on an informal basis working in parallel with any written material.

Offer well-structured incentives

Good performance is a prerequisite of business success whatever the company does. Having a transparent performance culture leaves no doubt about the relationship between effort and reward. Those who are uncomfortable with this approach need to be able to raise their concerns and there is a good way of doing this.

Use an appraisal system

A company will not get the performance it needs unless staff are able to deliver it. So let staff raise concerns about development needs, forthcoming objectives and to secure the support they need from their line manager.

Finally, to turn a performance framework into part of the way we do things, that delivers on your objectives, you have to have clear leadership. If the CEO or MD doesn’t care deeply about the performance of their business, why should anyone else?

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