Thursday, June 10, 2021


A robust performance management system needs to be designed with end users in mind, more future oriented, output driven, not process-driven, etc, with the ultimate goals to achieve high business purpose.

The digital era upon us is about people-centricity, Human Capital does make sense within the context of the goals of a company especially when you consider Human Capital is the largest intangible asset of a company. What Key Performance Indicators would you recommend to determine the value an employee adds to their department, and ultimately for their company, and how would you implement it?

 There are different aspects of human asset performance indicators, first:what the individual adds to the department, and second: what the department adds to the business; third: besides financial value, what about innovation value, culture value, or overall brand value?

Productive time measurement: A professional is responsible for his/her actions. He/she should be accountable to his/her departments or company, to himself/herself or his/her conscience. The core of "Performance Management" is to create goals that map an individual’s performance goals to the department’s goals which are aligned with organizational strategic objectives, as well as provide reflective feedback to the person moving the particular project along. Productivity as an important production performance is the outcome of how you engage an employee or a group of employees. And it is how they engage each other. At an individual level, it might come down to the annual assessment of how he or she did against the objectives that were set, or if they had ownership of business initiatives.

It is an attempt to tease out what is core to any business and organization - productivity, which is affected by a myriad of factors. The desired outcome is to assess the employee's contribution and ability to fulfill tasks and objectives in line with organizational goals and vision, both operationally and strategically. Do they meet the desired standard or are there gaps, what is required to fill these gaps. For example, in transaction-heavy departments, you will be aware of the various measures of reliability, availability, utilization and the Turnaround KPI's like safety and cycle time; in transformations-driven departments, you focus on change, optimization/ innovation, business brand & reputation, etc. Goal alignment and performance feedback are the heart of the approach. It’s important to manage an ongoing Performance Management in a positive manner to focus on optimizing future performance and keep the end - business goals in mind as always.

Non-Productive Time Measurement: Measuring/improving effectiveness and delivering value from assets is more about having the visibility and insight into the non-productive time (NPT) and focusing on reducing that or optimizing that. When productivity is low, further analytics is needed for understanding the cause, whether it is due to the change/learning curve, inefficient practice/ process, or the culture complacency. There is perhaps another scenario, employees are not productive at the moment, if they spend time on activities to improve learning agility or future performance, it could be a leading indicator for improving the future productivity and performance..

The point is that the management needs to see things from different angles as there are many different views of employee engagement and productivity. Productivity is the outcome of how you engage an employee or a group of employees, and it is how they engage each other. Trace down the poor behaviors or lower-than-expected performance, understand the causes behind it and optimize the process to make improvement. If “non-productive-time” is actually some time that staff take activities for learning or creativity, and enforce a healthy cycle of “thinking-learning-doing continuum,” performance management should integrate with potential management to enforce an digital mantra: “To constantly learn so that the organization does not only "earn enough from today, but thrive in the future.”

Wrong selection of key performance settings could have a devastating effect on the business
: In finance's dominant organizational culture, people have been called human cost, human resource, human asset and human capital. There are both hard and soft factors, leading and lagging indicators in performance evaluation. The analysis takes into account financial and non-financial measures, internal improvements, past outcomes and ongoing requirements as indications of future performance. It is crucial that the KPIs selected have to align with strategic business goals and be adapted to the specific objectives that you want to achieve - creating business value, improving customer satisfaction, unleashing business potential, etc.

The one way to find out that the performance measurement setting is ineffective is by looking at the behavior and culture the KPI is driving employees to become. Don’t just scratch the surface to manage the numbers, remember the old saying: Often people do what you inspect, not what you expect. Even if you choose the right KPIs, you must change them from time to time accordingly. Most organizations fail to manage performance effectively because they only focus on assessing past performance, improving performance management processes, implementations, or evaluation.

Fair to say that any organization that didn't have a systematic approach to measurement and analysis at both the strategic level and operational level has a giant blind spot that is impairing their performance. It’s important to build a measuring system according to the long term business development perspective besides warming up the individual development system for particular demand. A robust performance management system needs to be designed with end users in mind, more future oriented, output driven, not process-driven, etc, with the ultimate goals to achieve high business purpose.


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