Six performance-management pitfalls and how to avoid them

Poor planning, overzealousness, and lack of insight could derail corporate performance management initiatives, say technology and management experts.

Performance management involves a company’s adoption of systematic processes to improve organizational effectiveness in the pursuit of its goals, according to Carter McNamara, a performance specialist for Authenticity Consulting LLC., a non-profit business development firm based in Minneapolis.

The idea, he said, focuses on achieving “preferred results” for the organization through planning and setting expectations, continually monitoring progress, developing competency, rating performance and rewarding accomplishments.

“Performance management redirects our efforts away from busyness towards effectiveness,” McNamara said in a recent report titled Field Guide to Consulting and Organizational Development.

The effectiveness of a performance management program requires that companies avoid certain pitfalls. Here are six of them.

1. Overcomplicating the process

“Less is more when it comes to performance management,” said Kevin Baum, founder and principal of inCentergy, a performance consulting firm in Austin, Texas.

Baum suggests that an overly complex performance management initiative can be counterproductive. “We tend to overanalyze our performance data,” he notes in a whitepaper.

An executive for a Toronto-based IT policy organization agrees.

Companies that neglect to streamline their compliance objectives are more likely to not meet their objectives, according to Jim Hurley, managing director of the IT Policy Compliance Group of Symantec Corp. , in Toronto.

“You don’t have to measure everything. Keep to the essentials,” he said.

2. Measuring the wrong things

Most organizations are prone to discuss output rather than outcome because the former is easier to measure, said Baum.

“Output is linked to our concept of work and makes for seductive performance indicators.”

By contrast, he said, outcomes are important in determining the impact of a project.

Baum suggests that companies create a “desired results/outcome” mission statement and then engage staff in determining how efforts match up against these objectives.

3. Failing to engage the workforce

Company initiatives that succeed tend to be those that involve stakeholders in consultation and decision making leading up to implementation, according to Adam Cole, director of specialty technology for McKesson Canada , a healthcare product and services provider.

“In an implementation, it is vital to get decision makers as well as stakeholders and those that will be affected by the project to buy into the plan,” he said.

Adequate information and training sessions should accompany any project rollout or performance management plan. Cole also said companies must provide ample room for employee feedback and input.

Baum said traditional approaches to strategic planning have two fundamental flaws: they often assume that executives know best and implementers often lock themselves into a set and long term course of action.

4. Perpetuating “siloed thinking”

The process of dividing organizations into functional groups might have some advantages. But Baum says it could also lead to “dysfunctional consequences.”

He said among the more pervasive drivers of siloed thinking are competition among functional and structural groups over resources such as money, budget, credit, equipment and workforce.

The isolationist mindset is highly divisive said Baum. “When exiting silos are allowed to own a menu of measures…we are tacitly stating that they alone affect the outcome of that service.”

He said the practice prevents companies from realizing performance synergies across the organization.

5. Declaring victory to early

Very often, organizations return to business as usual once performance measures have been developed.

Companies write strategic plans, insert metrics of performance, start reporting on our measurements and declare performance victory, according to Baum.

“Unfortunately, this is just where the real work begins. Performance learning begins where strategic planning ends.”

Baum said companies must train managers and workforce on proper performance diagnostics so that meaning can be extracted from the measures.

“The value of performance measure is not in the measure itself but in the questions it forces you to ask.”

6. Failing to institutionalize performance initiative

If a company wants to be performance informed organization, performance perspective has to be hard-wired into the firm’s DNA.

In goal is to turn the performance initiative into the company’s way doing business, said Baum.

Some firms, however, stumble on this issue when the workforce perceives that they or their department face financial penalty if they fail to achieve set goals.

“Performance management driven by the budget office creates a negative incentive to meet the target,’ Baum said.

For performance management to become part of the organizations management and decision making culture it has to be perceived as non-punitive.

Baum also said managers must not fear failure. “Failure is an essential ingredient in the learning process. Where you get in trouble is when you confuse performance failure with losing.”

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