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Managing Performance - What You Count is What Counts
Bruce Griffiths M.S.
When we recently reintroduced an abbreviated version of our popular Paper Nation (Overview) business simulation we primarily set, and fed back financial goals (i.e., top line, bottom line, and economic value metrics) as these were a headline learning objective. The simulation software did allow for feedback on softer objectives (customer and employee satisfaction, plus clarity of strategy), but these were ratings assigned to teams by facilitators. They were not front-and-center on feedback forms, so we allowed a neutral score to persist across the game and ignored them in favor of money metrics.
Once comfortable with our accelerated simulation format, we reintroduced these variables. We briefly announced up front that teams would be held accountable for what activities and investments they dedicated to improving (1) customer relationships, (2) enhancing employee engagement, and (3) clarity and communication of strategy. We put together scoring criteria and began to rate the teams on each factor. Being alerted to the criteria and then seeing ratings fluctuate, immediately, and dramatically changed team focus and behavior. Just putting these small gauges on team dash boards drove instant attention and behavior change. They now considered employees, customers, and strategy much more important!
This should not surprise us. The efficacy of goal setting as performance management technique is well documented. But we were once again reminded that simply identifying and communicating metrics is a powerful way to focus and excite performance.
Still many organizations, in our experience, are lax about setting up standards or goals for teams. In the private sector, especially in publicly traded companies, the default option for feedback is the annual financial statement. And while money matters, a default to this singular meter can have unintended consequences.
We have seen many successful performance management systems over the decades, and here are a few lessons learned presented as best practices:
- Use team (versus individual) incentives. Team goals invite team collaboration and synergy toward realizing objectives. Ask yourself, are you incenting a golf team (a focus on individual performance), or a soccer team (team play results in better scores).
- Use a balanced score card that not only includes finance, but also employee, customer, and operational metrics. Provide a complete set of measures across all key organizational contributors.
- Recognize that added resources will be needed to manage your scorecard. It is not enough to just set up the measures; you will have to provide feedback throughout the year. For finance the infrastructure is typically the place, but the other measures need to be similarly supported.
One of our recent participants also lamented this default option for measuring human performance in most organizations as strictly a financial cost. The human resource only appeared in those financials as a cost (e.g., S, G, & A). This subtly and automatically devalues what some leaders advertise as "their most valuable resource - the human resource." When actually the financials do not assign a value at all.
To hire and promote leaders who have a systems mindset, recognize the need to reward team performance, and are goal-oriented, use OSI's Polaris competency framework in your selection, training, and performance management systems.
To learn more about OSI's Polaris® Competencies, please click here ( https://orgsysint.com/) or contact Crystal Matsuura at OSI at cmatsuura@orgsysint.com.
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