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January 1, 2004

The Performance Decade

To be competitive, companies must adopt performance management.

by Mark Smith

Continued from Page 1

Performance Management and You

You know that your company needs performance management, but now what? In previous columns and articles, I've written in great detail about the process, but I'll touch on some of the highlights to get you started. (Before moving on, I need to stress that performance management isn't all about technology. Some amazing technology innovations are occurring in this field, and I have written, and will continue to write, about them in the future.)

The biggest hurdle to successfully deploying performance management occurs at the first step: understanding where the organization is today with regard to technology and processes and how the two are either aligned or not. Within your company, some organizations and people are inextricably wedded to existing investments and processes for conducting business. These organizational and cultural barriers create resistance to change. You must overcome this resistance to get the process started.

To address these barriers, successful performance management initiatives must be accepted and driven from the top-down, bottom-up, and middle-out. Everyone must buy in to the initiative. To accomplish this task, your company needs an overall strategy and methodical process to efficiently improve performance throughout the organization: The CFO must make financial and workforce improvements to manage overall business performance. The COO must improve the demand and supply chain. The CIO must assess your existing portfolio to ensure it's meeting business requirements that lead to performance management.

When coordinating the relevant importance and investment required across the business, organizations must bring everyone forward for managing performance, not just rolling it out to one group or division at a time. If you only focus on certain areas, you'll encounter challenges with synchronizing business improvements because one area will be prepared to discuss plans and impacts and another won't be at the same level of maturity.

Another obstacle is the continuing unstructured investment in pushing more information into reports despite the paucity of defined business processes and the inability to measure or monitor theseprocesses. Whether business, operational, decision, or managerial, processes need a clear designation of the people who are involved, and you need to define and monitor their actions.

The combination of these obstacles produces inconsistent, poor-quality information, uncoordinated actions, and resistance to change. Slow down. Coordinate any new investments with your performance management initiative. Take the time to define and assess business processes, how existing technologies serve them, and, if they don't, what technology you need to fill the gaps.

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These obstacles to initiating performance management in your company are not insurmountable. Nor are the challenges of doing more with less in "these tough economic times." The "decade of performance management" is about taking advantage of an opportunity to leverage the efficiencies and information of your past investments in transactional systems to improve effectiveness throughout your organization.

Mark Smith [mark.smith@ventanaresearch.com] is the CEO and senior vice president of research at Ventana Research, an advisory services and research firm providing insight and education on best practices and technology in performance management.