Making Strategy a Reality
Strategic planning answers the vision question, “Are we doing the right things?” Best practice organizations use strategic planning as a framework to define mission statements, formulate goals and develop specific strategies to achieve those goals. Strategic planning is future-oriented and focuses on understanding how an organization will adapt to a dynamic, ever changing business environment.
Performance management answers the disciplined question, “Are we doing things right?” Best practice organizations use performance management initiatives to implement strategic plans while allowing them to evolve in response to changes in a competitive dynamic environment. Performance management represents a systematic, data-oriented approach to managing people that relies on positive reinforcement as a way to maximize performance. Through performance management systems, leaders focus organizations on the critical business drivers that enable individuals to align their own priorities and actions with accomplishing an organization’s strategic goals.
The BSC Enabling Management by Fact
To effectively execute a company’s mission and long-term objectives, strategies must be translated into specific objectives and performance measures. Performance measures are then developed to track progress. The main performance management tool used today by organizations to accomplish this purpose is the Balanced Scorecard (BSC). Organizations use BSC performance measures to represent the key success factors required to satisfy stakeholder interests. A balanced set of measures typically include customer satisfaction, internal processes, employee learning and growth in addition to the financial measures companies use to evaluate performance.
In the BSC process it is the role of senior managers to create the strategic context in which the measures will be produced and managed. Senior leadership can accomplish this goal by ensuring that divisions and departments understand how they fit into their firm’s overall strategy.
In well executed BSC efforts, employees are involved in establishing individual and departmental objectives, developing performance measures and identifying targets for each performance indicator. Active participation of the employee base increases individual accountability, builds teamwork and establishes buy-in to the organization’s strategic plan. Participation also helps answer two basic questions that concern every employee, “what is expected of me and how am I going to accomplish it?” Active participation also pushes the numbers and accountability down into the organization, where they can do the most good.
Initial buy-in at the front-line is developed through active participation in establishing targets, identifying barriers and achieving goals. However, sustained self-directed performance must be cultivated by leadership through a disciplined system of feedback, rewards and recognition. Managers who provide positive recognition and reinforcement can expect to increase the likelihood that desired behaviors and high performance levels will be repeated.
Leaders motivate through:
- articulating an organization’s vision;
- involving people in deciding how to achieve the organization’s vision;
- supporting employee efforts to realize vision by providing coaching, feedback and role modeling and;
- recognizing and rewarding success.
Leaders activate motivation through BSC performance reviews. BSC performance reviews bring together front-line employees and leadership teams to reinforce accountability and provide feedback. Current performance and projected trends are presented to illustrate results relating to short term goals and long term objectives. Key successes are shared and corrective actions are prescribed to overcome performance barriers. Teams also develop action plans to improve performance where individuals are assigned responsibility and deadlines are established.
BSC performance reviews significantly enhance a leader’s ability to lead his/her organization. Through direct observation and active participation, senior leaders can see how the company’s strategy is playing out and what needs to be changed. He/she can clarify expectations and remove barriers through their personal involvement and problem solving.
Getting Results through Performance Management
The objective of any performance management system should be to motivate everyone to successfully implement a company’s strategy. Companies which translate their strategy into specific performance measures are far better able to execute their strategy because they can more effectively communicate their objectives and their targets. Reviewing performance against strategic objectives, building accountability and recognizing achievement leads to high performance that adds value to an organization and its stakeholders.