Friday, March 6, 2020

A Set of Blind Spots in Performance Management

Performance Management is a multidimensional management discipline by connecting all-important dots with multifaceted perspectives to make continuous improvement.

Performance Management System (PMS) is a working tool that improves performance or productivity within an organization. Often strategy management and performance management go hand in hand. There is a danger of not having a dynamic process to "develop, nurture, and measure" business performance.

Business management should make an objective assessment by asking: Can you select the right metrics and measure them right? Can you always dig through the root cause when the result does not meet expectations? Either making a measurement or evaluating results, can you dispassionately analyze the situation to close blindspot smoothly?

One possible cause of the blind spot in performance measurement is the fact that many organizations can neither sufficiently measure the value nor, as a consequence, articulate their value: Only measuring the part of the story from the finance perspective generates the blindspot to understand the multidimensional value that the organization creates. It is important to define the right set of performance measurements for evaluating multidimensional business value. The business value itself is a multi-dimensional concept, a seamless customer experience, an optimal business service, a commercial value proposition, a social value system that deals with and provides context for varying interest and need.

Different audiences are perhaps interested in varying data-based performance results. Thus, to close performance management blind spots, it’s important to both measure things right and articulate the results for tailoring varying shareholders. Effective performance measures help the management do value justification in a language the organization understands for making wise investments. Businesses have set-up KPIs and also become very adept at measuring business results and show performance improvements continuously.

Silo or dysfunctional management practices generate performance management blind spots: Silo mentality and linear logic generate the management blindspot. Functional KPIs often encourage dysfunctional management practices, "silo" behaviors lock the overall business performance. The management needs to do an objective data-based analysis of poor performance results: What are the collective thought processes and behaviors that you can see in your organization? A disconnected or distant layer of management or leadership or disengaged employees? A sea of administrative bureaucracy? Lack of clarity or direction, mistrust, or ineffective teamwork? Unclear changing priorities? Etc. Dysfunctional management practices, lack of recognition or honest feedback or a disconnect between recognition and performance generate performance management blind spots

More specifically, functional metrics sometimes reinforce the boundaries between the "territories." Driving functional KPIs excessively can actually degrade the performance of the entire 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. Thus, the performance measurement setting should focus on achieving the ultimate goals of the organization as a whole for the long term business prosperity.

It's fair to say any organization across the vertical sectors that didn't have a systematic approach has a giant blind spot that is impairing their performance: The holistic performance management approach means to well align the strategic level of measure with operational level metrics to tell an information-based story and make informed decisions. In addition to having some kind of basic measure at each level, it's critical for the company to share that information among its primary stakeholders (leaders at the top, managers at the middle, and employees at the front line) for streamlining strategy management without "lost in translation.".

Taking a systematic approach to measurement can avoid blind-spots in performance management. The tactical level of measures has to be in alignment with the strategic business goals. The holistic approach is fundamental to “keep the end” in mind, managing business performance requires a system with components parts that all work together and ensure that the performance of the entire business is superior to the sum of pieces (functional performance). Having the right performance indicators is very important, but acting on what those indicators are telling you is vital to sustaining and improving results.

The blind spots, either in strategic management or performance management are perhaps inevitable, the point is how business leaders or professionals learn to deal with them and close them seamlessly. Performance Management is a multidimensional management discipline by connecting all-important dots with multifaceted perspectives to make continuous improvement.


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