Monday, January 20, 2020

Performance Management Pitfalls

Performance Management is a holistic management discipline that needs to connect many relevant dots to involve business development, enablement, and enhancement.

Performance management is about how organizations manage performance at both strategic and operational levels to achieve the well-set business goals and objectives. Due to fierce competition and exponential growth of information, Performance Management is critical as new competitive challenges and active market changes underscore the strategic imperative of managing performance more than ever.

The world-class performance management is a must for shaping a world-class digital organization. Here are three performance management pitfalls need to be avoided in order for organizations to not only survive but also thrive in the digital era upon us with “VUCA” new normal.

Performance Management gets "stuck" when business leaders or managers -the people in charge get "stuck": At its core, performance management is about creating a work environment that helps your company meet its business goals and exceed the expectations of shareholders. The spirit comes from the top. Digital leaders must be able to look forward and actively position the business in the right place to take full advantage of opportunities for inspiring a culture of high performance and motivating high achievement.

In practice, most people have come to believe it's easier and safer to adapt to a culture rather than promote or initiate change. You can't drive performance without mutually accepted goals and expectations. Performance Management gets stuck when senior management allows ineffective management practices to become the norm, people at all levels often become complacent and ineffective, slow down the speed of change and stifle innovation.

The lack of accountability keeps companies from reaching their potential: Accountability goes hand in hand with the delegation of authority or power. Company leadership should be emphasizing to all its employees that accountability equals delivering results aligned to strategic goals. The better business management assigns accountability and empowers the individual/team, the better the chances it will be at least accepted. Behaving accountable is the result of culture with values that need to be organized and nurtured. Thus, accountability needs to be well embedded in the organizational culture, to encourage responsible communication, decision-making, and action, with the intention to build on morale and real productivity.

Shared accountability or collective accountability involves shared ownership, empathetic communication, the true measure of accountability is about resilience. It’s important to defining and tracking business benefits delivery and the associated change in mindset and behavior, and the business’s ability to set metrics for the progress along the way. Rewards systems should be put in place and rewards that are tailored to the individual instead of one-size-fits-all. If at some intermediate stage, one measures something that is not congruent with the final outcome, then dysfunctional behavior arises, potentially diminishes the end-to-end performance.

Functional KPIs often encourage dysfunctional "silo" behaviors and lock the overall business performance: Measures or KPI is a strong tool, which can be both rewarding but also causes damage to an organization. Functional metrics sometimes reinforce the boundaries between the "territories." In fact, driving functional KPIs excessively can actually degrade the performance of the entire organization.

One of the pitfalls in performance management is that too often functional performance is acted on the basis of improving one part of an organization at the expense of other parts of the organization. The performance of the total “system” is independent of the performance of any one of the functions and depends more on how the functions relate to each other. At the strategic level, the performance measurement setting should focus on achieving the ultimate goals of the organization as a whole for the long term, not just an individual, one team, or one department performance only.

Performance Management is a holistic management discipline which needs to connect many relevant dots to involve business development, enablement, and enhancement, avoid all sorts of pitfalls, to ensure the individual performance is assessed objectively and the corporate performance is evaluated holistically, and make sure the business as a whole is superior to the sum of pieces.


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