By Debbie Depp
All companies claim they're customer-focused, and research shows that most customers want a performance guarantee of consistent, predictable experiences. However, no company can deliver on that promise unless people and performance are aligned to deliver it. True leaders make development of human capital and alignment of people and performance a top priority because they know that they translate into real business results.
Here's how one company met that challenge. It started at the top and cascaded down. The CEO believed that purposeful management drove strategic business results. Annually, he identified the areas of focus for the company, ensured the alignment of management and implemented change. He used a five-step performance management process:
- Set and annually update the strategic plan
- Set performance standards for the top management layers in the company
- Set specific performance goals for managers tied to the strategic plan
- Conduct performance evaluation methodically against goals and standards
- Initiate performance development plan to close the gaps between desired outcomes and current results.
Joanna Nikka, a former VP of Worldwide HR and now Managing Partner of Nikka Dolan Partners, a firm that helps companies cope effectively with change says, "Performance standards are generic descriptions of all aspects of a job performed at an outstanding level. They describe how well the 'whole' job should be performed over a future period of time, usually 2-3 years. They define long-term, mastery-level job performance regardless of the specific incumbent in a job. Most importantly they establish standards and expectations of excellence for a position and go beyond the traditional concept of annual goal setting.
Gaps between current performance and performance standards form a natural basis for the development of strategic development plans with a predefined end objective. In short, performance standards can be the foundation and the glue of any strategic performance management system."
Let's review this company's management initiative to start on a journey for excellence and increased performance. Annual strategic business goals with specific measurable targets and performance standards (people measurement) with more descriptive measures were developed for senior level management jobs company-wide.
Annual goals were developed in four areas and tied to the company's five-year plan:
- Revenue enhancement and marketshare
- Continuous performance improvement
- People management
- Financial
About 8-10 performance standards for each position were developed that defined performance at the mastery level. Knowledge, skill and experience requirements (KSEs) necessary to accomplish the performance standards were also developed - a means to the end. These included:
- Knowledge areas or career disciplines.
- Skills (such as problem solving, cross-functional influence, teamwork).
- Experiences (such as management experience in a matrixed or multi-national environment).
This was not a "feel good" exercise. Performance standards were embedded in the culture to inspire and reward top business performance. The focus was on measurable business results. And every management job automatically had the following standards:
- Incumbent must demonstrate the ability to structure and organize talent to achieve current and future unit business goals
- Must demonstrate the ability to attract, retain and develop the necessary talent
The company measured against performance standards on a performance continuum - Meeting/Not Meeting/Needs Improvement. (In contrast, annual goals were measured much more precisely against specific targets). If managers exceeded standards, then the company raised the bar to a new level of excellence (see example below).
Targeted improvement areas were a natural foundation for strategic development plans. Coaching measures were integrated along the way to convert the development plans to operating reality. The success equation for the company was: Performance standards + annual plan + development plan = Performance management. The development plan was the glue for alignment.
With divisional silos the company feared that multiple pockets of research were being duplicated. So the Corporate VP of R&D was given a performance standard to develop an inventory of projects and a forum for people to talk about their work. It transformed his job, saved money and time, and both process and people improved.
Once that standard was achieved, he was assigned a new one. The company's five-year plan involved entry into new markets. He was assigned a standard to complete an inventory of the intellectual experience to support the five-year plan.
If the company didn't have the intellectual capital, he had to start researching how to acquire or develop it. He created a complete development plan on research capability, in advance of moving into new markets. It was a real developmental approach to cultivating corporate talent, combining people management with continuous process improvement.
The process supported two-way communication. For ease-of-use the company put the performance management system online and created a simple three-step process for managers to use:
- Assess yourself after getting input from colleagues (subordinates, peers)
- Send your assessment to your boss who will reality-test the validity
- Review it together to gain agreement on results, next steps, etc.
Change is difficult to implement in any organization. Most problems occur not from misunderstanding what to do, but from a lack of discipline about how to do what needs to be done. When you align people and performance, you'll build trust and develop the skills necessary to turn ideas into results.
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