The recent resurfacing of the BI vs. PM controversy got me thinking about the longstanding confusion between financial, workforce, and IT performance management. When most people hear the term performance management, they think of what I might describe as human capital management. That is clearly different than budgeting, planning, and consolidation. The multiple uses of the term performance management explains why we’ve started using the phrase “strategy management”.
So what is strategy management? Strategy management is the process of developing, articulating, and deploying an organization’s goals and objectives. Strategy management cascades goals and objectives throughout all levels of an organization to ensure that all outcomes are synchronized. Strategy management prioritizes an organization’s efforts so that it ensures that it is working on the highest impact activities. Strategy management may also monitor an organization’s process towards its objectives using key performance indicators.
That’s right, I said may. Monitoring progress using business intelligence or other data-centric technology is not required to increase an organization’s performance. The hackneyed phrase “what gets measured, gets done” is often not true. We’ve all read horror stories of how bad measures lead to bad behavior. Personally, I prefer the Einstein attributed quote “Not everything that counts can be counted and not everything that can be counted, counts.”
Said another way, strategy management helps every stakeholder understand an organization’s strategy and how they can impact it. With increased understanding comes increased motivation. Motivated employees are more productive which leads to higher organizational performance.
So before you start your financial, workforce, operational or IT performance management project, consider whether you need to manage your strategy first.
Something that often happens in union shops, when contract negotiation have stalled, is that the workers will go into a slow-down mode. And what is that mode? Following the contract to the letter; meaning they just conveniently “forget” any shortcuts or innovations or best practices that learned and do it by-the-book. I don’t need to go any further than say what a sorry situation that is for both the company and the workers.
To stay with blue collars, managers of a janitoral business were astonished to learn that the manager who had the best results, the lowest turnover and the highest customer satisfaction, let his workers determine much of the job. The manager asked them to recommend the best cleaning products and tell him what they thought of the brands of equipment they used. He also asked them which areas of the building were being cleaned too much, and which needed more attention. If one of the floors looked clean enough to the janitors they could skip it for the night and more on. The janitors started taking pride in their jobs and would guide, or police, newer members of the team.
The other managers couldn’t believe you could trust (or maybe insert motivate) the type of people janitorial jobs usually attracted. They felt that with their education and backgrounds you had to have everything, well, measured.
A motivated workforce can go further, be more innovative, and create some terrific value for an organization. And when you start with goals, instead of metrics, you can make headlines, instead of just making your numbers.
Of course two cases may not change many minds. Which is fortunate because it gives an incredible competitive advantage to those who can think strategically and motivate rather than monitor.
Excellent post, Jonathan. I love the Einstein quote applied to the context of people trying to use only numbers to monitor performance.
Very relevant to the much-hyped frenzy around mergers and acquisitions. The pace of M&A deals has increased so fast that the ‘low’ period between this merger wave (which began in 2004) and the end of the last one (2001) was higher than the previous merger wave’s peak. And 2007 is set to be a record year — exceeding even the excesses of the dot.com era.
What’s happening, is many me-too deals and deals that are hastily crafted…and then when there’s a sensible deal proposed (as the recent Whole Foods deal appears to be), it gets stopped (albeit in this case by the regulators).
Too often these M&A deals proceed without adequate strategy or business intelligence to preceed all the negotiation. Would that they had read your post first!