31 MAY 2006
Fundamental steps to Performance Management success

by Randal Godden, Chairman and CEO, at TEC South Africa
This article was first published in Real Business, a supplement to Business Day which appears on the third Monday of every month.

Over the past few years there has been a growing trend towards Performance Management.  Whereas the older style of managing was very much task oriented and representative of a more autocratic management style, Performance Management focuses on clearly defined, specific and measurable outcomes.

A series of steps that can lead to an effective Performance Management system can be summarised as follows:

1. Analyse and clearly define the work process chain which will assist in identifying both job roles and very specific, measurable outputs. This is often described as a “brown paper exercise”, which, in some detail, shows the process steps that are necessary to bring the business’s products and/or services to fruition.

2. Define the necessary job roles or positions necessary for the process chain, including the key attributes or skills required for success in each role. The job roles or positions need to be specific for managerial and/or key roles, but can be generic for lower level positions. In particular, try to develop the personality traits and/or attributes necessary for success in the role. For example, it is essential that sales roles require good people orientation and a “get up and go” personality.

3. Formally or informally assess the attributes and capabilities of employees, ideally using psychometric analysis for key employees and/or managers in particular. In assessing current employees and managers we are not only trying to determine a good fit for the organisation but also understand the aptitude of the individual and enhance the likelihood of career success.

4. Undertake a process of matching key job roles and individual profiles, identifying major differences in personal attributes in relation to job requirements. This process will, in most cases, isolate some “square pegs in round holes” and may require job re-allocations and also highlight some gaps. During this process changes need to be made progressively and in line with careful counseling to ensure the effective transition of good people into more appropriate roles.

Specify measurable outcomes for each job role or individual position that will contribute to achieving the purpose of the business overall. While these will vary from job to job, the sum of the outputs must ensure the successful achievement of the business purpose and the agreed results being targeted. The measurable outcomes may be financial, and will often be a ratio of units per man-hour, conversion rate of sales calls or gross profit percentage per customer category, for example.

5. The management role, then, is to correctly structure and motivate staff, matched as closely as possible to an appropriate job profile, to achieve or exceed realistic, agreed outputs.

6. This hinges on establishing realistically attainable targets for each specific output, which must also be interrelated so that the overall achievement is consistent with the targets or budgets established for the entire businesses.

7. Regular monitoring of actual results or outcomes against the target or established standard at agreed regular intervals (hourly, daily, weekly) is key to the process. 

8. Of course, the monitoring process must follow through into analysing the gap between actual performance and what is considered standard, with appropriate management intervention taken to either bridge the gap if there is a shortfall or understand the reasons for improved performance. Where possible, entrench the improved results.

Often, the course correction process is not undertaken or considered too late; it must be timely and action oriented. If during a manufacturing process, for example, a product must be treated in a bath with a temperature of 40 degrees that requires the temperature measured every hour, and no action is taken although the measurements are consistently below 40 degrees, the result will be substandard or rejected material.

Similarly, if a waste or rejected target of 5% is being achieved against the standard 7%, we need to determine what caused the improved result and how best to sustain or improve it.

The same action orientation must be applied to every job role in the business to achieve or exceed the agreed measurable outcomes.

Before the introduction of a Performance Reward system can be considered, however, an effective and efficient performance management system must be in place. This will ensure success for both the business and its participants.