Performance management is about comparing the actual results against
desired results and if needed, takes corrective actions. All managers
are responsible for managing performance, depending on their roles and
responsibilities they may have different perspectives. For example, an
executive is concerned with the performance of the company measured by
profits and growth. A director is concerned with the performance of a
major business function in alignment with the company objectives as it
may impact revenue and profit. A project manager is more concerned with
the performance of the project to make sure that it meets the quality,
cost, and time expectations.
Performance is achieved by develop a plan, execute activities, measure these activities to collect actual performance against the plan and take corrective actions to ensure the execution achieve the desire results. For the executive, achieving profits and growth involves managing performance in several areas such as improving sales, streamline company process, reducing cost, and creating a strategy to deal with competitors. For the CIO and directors, achieving company objectives involves managing performance in areas such as automation, improve skills of employees, standardize organizational processes for consistency, ensure that IT systems are providing value to the business, and make sure that internal communication and collaboration are encouraged to improve efficiency etc.
In theory, most text books defines performance management approach as: Plan the work and set expect desired results; Monitor the actual work performance by metrics; Develop the ability of workers to perform; Ensure that they follow the process; Measure workers performance; Compare actual results and desired results; Reward top performance; Take corrective actions when needed.
However, in specific implementation, performance management requires all levels of management to clearly explain what is to be achieved to workers. They must develop vision, direction, and objectives in a plan that consists of specific goals for each level to be achieved and communicate it to all workers. It is important to set achievable goals that can be measured. A goal that cannot be measured cannot be achieved. For example: “Improve quality of company products” is an unachievable goal. A better goal should be specific such as “Improve quality of company products by reducing numbers of defect by 10% against the average numbers of defect last year.”
Managers have to make detailed steps of what is involved in achieving the level of desired performance and explain to their workers. An executive can do it through memo but middle level or lower level managers should do it in person to make sure that everybody understands what they must do to support the achievement of the goal. For example a broad goal such as “Improve company profits by 10%” may seems irrelevant to most workers. They may think: “I am just a worker and have nothing to do with the profit of the company so that goal has nothing to do with me.” If they do not believe it, nothing will change. That is why it is important to have several discussions where manager can explain to workers about their contribution to the overall goal. For example a director may explain the important of a major product that company is developing and planning to sell at the end of the year. He may say: “If we complete this product on time with quality and be able to sell it during the end of the year, we can achieve the 10% profit goal.” A project manager may say: “Our software is a major function of the company’s key product, if we are successful, we will be able to help our company to achieve the 10% profit improvement”.
It is easy to set goals and communicate to workers but without assigning people to implement it, nothing will be done. This is the common mistake that managers often made. They set good target but rarely pay attention to the implementation or assign workers to implement it. The common term in the industry is “wishful thinking” or “slogan illusion” as it is easy to say something but poorly execute it. I have seen many companies set goals such as “Being the best companies in the industry”, “Being the best software company” but never put anyone in charge or assign workers to do something about it. In that case nothing will change. In that case their managers fail the performance management responsibility.
Every action needs skilled people, tools and budget to execute. An important factor of performance management is about the skills of workers. It is workers that execute the task so managers must select the most skilled workers to perform each task, and develop their competence by additional trainings to help them perform effectively. One of the questions that I often ask company about performance management is their training plan and data on how many people are trained to do the job. Without skilled workers to do the work, nothing can be achieved.
Managers are often busy with their day-to-day routines and it is important that they take the time to develop performance plans and then review actual results against the plans. The main elements of the plan are measurements and metrics. Depending on the levels of management, different metrics may be used. For example at the project level, metrics could be the actual results against the plan on quality, cost and schedule; at director level, metrics could be the actual results of business functions against the plan on productivity, costs, outputs, quality; at the executive level, metrics could be actual results against the plan on profits, revenues, costs and market shares etc. Although measurements are the core of performance management but another important element is the follow-up on actions based on the review and provides rewards for good performance. In working environment, rewards play important part in motivating and sustaining good performance. Top performance companies often have good rewarding system such as stock options, bonus incentives for highly performance workers.
Implementing performance management is not easy. Smaller company typically lacks the skills to do it. Larger companies tend to become bureaucratic with many layers of managers to implement a cohesive approach. That is why even everybody recognizes that performance management is a responsibility of today’s management but few would do it. Most are still focus on managing people instead of managing process or managing performance. That is why so many companies failed in today’s competitive environment.
To be effective, strong leaderships are needed to ensure that these important responsibilities are not ignored. Performance management and process management are major responsibilities of all managers. They must not be allowed to become another routine with no clear results to show. According to several studies, performance management can provide benefits such as increasing revenues and growth; high customer satisfaction; reduce costs; efficient business processes; effective management; higher skilled workers but the most important is the flexibility and faster to change in the fast changing business world.
----------------------------------------
Prof. Vu
Carnegie Mellon University
Performance is achieved by develop a plan, execute activities, measure these activities to collect actual performance against the plan and take corrective actions to ensure the execution achieve the desire results. For the executive, achieving profits and growth involves managing performance in several areas such as improving sales, streamline company process, reducing cost, and creating a strategy to deal with competitors. For the CIO and directors, achieving company objectives involves managing performance in areas such as automation, improve skills of employees, standardize organizational processes for consistency, ensure that IT systems are providing value to the business, and make sure that internal communication and collaboration are encouraged to improve efficiency etc.
In theory, most text books defines performance management approach as: Plan the work and set expect desired results; Monitor the actual work performance by metrics; Develop the ability of workers to perform; Ensure that they follow the process; Measure workers performance; Compare actual results and desired results; Reward top performance; Take corrective actions when needed.
However, in specific implementation, performance management requires all levels of management to clearly explain what is to be achieved to workers. They must develop vision, direction, and objectives in a plan that consists of specific goals for each level to be achieved and communicate it to all workers. It is important to set achievable goals that can be measured. A goal that cannot be measured cannot be achieved. For example: “Improve quality of company products” is an unachievable goal. A better goal should be specific such as “Improve quality of company products by reducing numbers of defect by 10% against the average numbers of defect last year.”
Managers have to make detailed steps of what is involved in achieving the level of desired performance and explain to their workers. An executive can do it through memo but middle level or lower level managers should do it in person to make sure that everybody understands what they must do to support the achievement of the goal. For example a broad goal such as “Improve company profits by 10%” may seems irrelevant to most workers. They may think: “I am just a worker and have nothing to do with the profit of the company so that goal has nothing to do with me.” If they do not believe it, nothing will change. That is why it is important to have several discussions where manager can explain to workers about their contribution to the overall goal. For example a director may explain the important of a major product that company is developing and planning to sell at the end of the year. He may say: “If we complete this product on time with quality and be able to sell it during the end of the year, we can achieve the 10% profit goal.” A project manager may say: “Our software is a major function of the company’s key product, if we are successful, we will be able to help our company to achieve the 10% profit improvement”.
It is easy to set goals and communicate to workers but without assigning people to implement it, nothing will be done. This is the common mistake that managers often made. They set good target but rarely pay attention to the implementation or assign workers to implement it. The common term in the industry is “wishful thinking” or “slogan illusion” as it is easy to say something but poorly execute it. I have seen many companies set goals such as “Being the best companies in the industry”, “Being the best software company” but never put anyone in charge or assign workers to do something about it. In that case nothing will change. In that case their managers fail the performance management responsibility.
Every action needs skilled people, tools and budget to execute. An important factor of performance management is about the skills of workers. It is workers that execute the task so managers must select the most skilled workers to perform each task, and develop their competence by additional trainings to help them perform effectively. One of the questions that I often ask company about performance management is their training plan and data on how many people are trained to do the job. Without skilled workers to do the work, nothing can be achieved.
Managers are often busy with their day-to-day routines and it is important that they take the time to develop performance plans and then review actual results against the plans. The main elements of the plan are measurements and metrics. Depending on the levels of management, different metrics may be used. For example at the project level, metrics could be the actual results against the plan on quality, cost and schedule; at director level, metrics could be the actual results of business functions against the plan on productivity, costs, outputs, quality; at the executive level, metrics could be actual results against the plan on profits, revenues, costs and market shares etc. Although measurements are the core of performance management but another important element is the follow-up on actions based on the review and provides rewards for good performance. In working environment, rewards play important part in motivating and sustaining good performance. Top performance companies often have good rewarding system such as stock options, bonus incentives for highly performance workers.
Implementing performance management is not easy. Smaller company typically lacks the skills to do it. Larger companies tend to become bureaucratic with many layers of managers to implement a cohesive approach. That is why even everybody recognizes that performance management is a responsibility of today’s management but few would do it. Most are still focus on managing people instead of managing process or managing performance. That is why so many companies failed in today’s competitive environment.
To be effective, strong leaderships are needed to ensure that these important responsibilities are not ignored. Performance management and process management are major responsibilities of all managers. They must not be allowed to become another routine with no clear results to show. According to several studies, performance management can provide benefits such as increasing revenues and growth; high customer satisfaction; reduce costs; efficient business processes; effective management; higher skilled workers but the most important is the flexibility and faster to change in the fast changing business world.
----------------------------------------
Prof. Vu
Carnegie Mellon University
Original source: http://www.segvn.org/forum/mvnforum/viewthread_thread,1448
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