MANAGEMENT & ACCOUNTING

Performance is the Key

Patrick Ow

Performance can be defined as the combination of behaviours

(what we do) and accomplishment (what we leave behind, measurable outcomes).
Unfortunately, we tend to focus too much on the behaviour of individuals and
too little on what individuals and teams accomplish.

T
he importance of a holistic per-
formance measurement in any
strategy execution and goal
achievement must not be under-
estimated. We know in business that:
䡲 What gets measured gets done.
䡲 If you do not measure results, you can-
not tell success from failure.
䡲 If you cannot see success, you cannot
reward it.
䡲 If you cannot reward success, you are
probably rewarding failure.
䡲 If you cannot see success, you cannot
learn from it.
䡲 If you cannot recognise failure, you can-
not correct it and improve.
䡲 If you cannot demonstrate results, you
cannot win stakeholders’ support.
Defining Performance Management
Performance management is a way of
collecting and using information to
maximise service quality and/or resource
utilisation. It allows employees, supervi-
sors, management and stakeholders to
know if the organisation is doing the right
things right and well.
Performance measurement is the process
of collecting and tracking measurable per-
formance data, used in the performance
management process. A good performance
measurement system focuses on measur-
able results or lasting outcomes rather than
the immediate outputs or inputs.
In order to succeed, it is important to ask
our customers/beneficiaries if we are

24 ACCOUNTANTS TODAY • September 2007


meeting their expectations and needs.
What we think about our customers is ir-
relevant.
Performance management is therefore
the systematic process of:
䡲 Planning work and setting expectations
based on customer feedback;
䡲 Continually monitoring per formance
against planned work and customer ex-
pectations;
䡲 Developing the capacity and capability
to perform;
䡲 Continuously rating performance and
taking corrective action to address any
deviations from original targets or expec-
tations; and
䡲 Financially rewarding achieved perfor-
mance (and not shifting the goal post by
not paying when it is time to pay).
Nice Performance Variables
Rummler and Brache1 use a framework
of Nine Performance Variables that repre-
sent “a comprehensive set of improvement
levers.” The nine variables derive from a
cross-match of Three Performance Levels
and Three Performance Needs, as shown in
the diagram.
The Three Performance Levels are the
organisation, processes and the person
doing the job (or performer). These levels
establish an anatomy for understanding
and diagnosing performance across the
organisation.
Applying knowledge of this performance
anatomy can prevent organisation prob-
lems and effectively continuously improve
performance.
Three factors or Performance Needs that
determine performance effectiveness at
each of the Performance Levels are:
䡲 Goals, the specific standards or expec-
tations that our customers have for our
products or ser vices, which we have to
strive to meet at three Performance Lev-
els;
䡲 Design, the configuration or infrastruc-
ture that enables our goals to be met ef-
ficiently and effectively; and
䡲 Management, the practices that ensure
goals are up to date and are achieved
with appropriate organisation, process
and job designs.
Taken together, there are nine Perfor-
September 2007 • ACCOUNTANTS TODAY
mance Variables (e.g., Organisation Goals,
Organisation Design, Process Goals, Pro-
cess Management, etc.)
To be successful, continuous per for-
mance improvement efforts must address
all three levels of performance at the same
time. If the Organisation Level of perfor-
mance is not defined, designed and man-
aged, then individual performance has no
context to performance at its best. This
would also mean that individual perfor-
mance will not be maximised.
The process level is the pivotal link be-
tween organisational and individual perfor-
mance. This level usually offers the great-
est opportunity for performance improve-
ment. It’s where the “white space” of rela-
The Three Performance Needs
Goals
Organisation Organisation
Level Goals
Process Process
Level Goals
Job/Performer Job
Level Goals
tionships and information flows between
the boxes on an organisation chart comes
in. As such, if you want to understand the
way work gets done, to improve
organisational and individual performance,
and to manage the way work gets done,
processes should be the focus of your at-
tention and actions.
Unfor tunately, organisations do not
place much emphasis on process improve-
ment. Likewise, if capable and well-trained
employees are managed in a setting with
clear goals, a well designed organisational
structure, efficient processes and an effec-
tive job design, then these employees will
be motivated.
Clearly, the basics of performance man-
agement affect a performer’s level of mo-
tivation and performance.
Performance Management Basics
Performance management is a cyclical
and continuous process aimed at improv-
ing performance (and achieving of busi-
Performance is the Key
ness and strategic objectives). It involves
the following principles (illustrated by a
call centre example):
䡲 Measurement
• Establish appropriate SMART perfor-
mance measures (e.g. sales turnover).
(SMART stands for specific, measurable,
achievable, realistic and timed).
• Establish SMART behavioural goals that
will improve long- and short-term perfor-
mance and behaviours (e.g. making 30
prospective phone calls a day).
• Measure current behaviours (e.g. log-
ging actual phone calls).
䡲 Appraisal
• Compare the current behaviours with
the behavioural goals and identify the
Design Management
Organisation Organisation
Design Management
Process Process
Design Management
Job Job
Design Management
main performance gaps (e.g. on average,
20 phone calls are actually being made,
giving a shortfall of 10 phone calls).
䡲 Action
• For each performance gap, strategise and
plan how to bring actual behaviours in line
with the planned goals in order to improve
the performance and behaviours (e.g. in-
troduce a revised telephone script that
qualifies the prospect more quickly, short-
ening each phone call and enabling more
phone calls to be made in the time avail-
able).
• Implement the agreed per formance
improvement plans (e.g. issue the re-
vised script to all telesales people, per-
haps with some training to support its
use)
䡲 Monitoring
• Check that the new performance plans
1 Improving Performance: How to Manage the White
Space on the Organisation Chart, Geary A. Rummler
and Alan P. Brache; Jossey-Bass Publishers, 1990.
25
Performance is the Key
are being followed accordingly (e.g. re-
view a sample of phone call recordings
to determine whether the new script is
being used and check that it is workable
or practical).
• At an appropriate time, return to the ap-
praisal stage to assess the impact of the
changes on the behavioural and perfor-
mance measures (e.g. review the aver-
age number of calls made per day and
sales achieved).
The term performance management is
often used in two contexts:
1 Way of maximising performance of an
individual, team or organisation; and
2 Institutionalised process for dealing
with underperforming individuals (or
teams).
Five Goals of Performance
Management
Goal 1 — SMART performance objectives
based on committed work are established
and clearly documented and communi-
cated for each department and individual.
They are periodically reviewed as business
conditions or work commitments change.
If necessary, objectives are revised.
Goal 2 — Performance of committed work
is regularly discussed with the individual to
identify actions that can improve it or train-
ing that is required. Those accountable for
the accomplishment of performance objec-
tives track and manage their performance,
maintaining an on-going two-way commu-
nication about the performance of commit-
ted work with those whose performance
they manage, where potential improve-
ments in processes, tools or resource man-
agement (that could enhance an individual’s
performance of committed work) are iden-
tified and actions are taken.
Goal 3 — Performance problems or issues
are actively managed on a timely basis. If
performance problems or gaps occur, they
are immediately discussed with the appro-
priate individual(s). A Performance Im-
provement Plan for individuals is subse-
quently developed for resolving persistent
performance problems, according to docu-
mented procedure, and its progress is pe-
riodically evaluated, discussed, and docu-
mented for compliance.
Goal 4 — Outstanding individual achieve-
26
ment is recognised or rewarded, especially
if the performer exceeds his or her perfor-
mance objectives. Guidelines for
recognising or rewarding outstanding indi-
vidual performance must be developed and
communicated beforehand and not changed
or aborted mid-way. This leads to a lack of
workforce trust. Therefore, recognition or
rewards are made on an appropriate basis
and financial rewards must be set aside to
ensure that a future payout is real.
Goal 5 — Performance management prac-
tices are entrenched or institutionalised
within the organisation. It is not ad-hoc.
The organisation must establish and main-
tain documented human resource policies
and procedures for conducting its Perfor-
mance Management activities, whereby
individuals are given the necessary and
appropriate orientation, guidance and train-
ing, and assigned responsibility and au-
thority for ensuring that Per formance
Management activities are continuously
performed and managed. Adequate re-
sources and tools must be provided by the
organisation for performing Performance
Management activities.
Evaluation on the performance of Perfor-
mance Management activities is regularly
conducted and there must be verification
that the Performance Management activi-
ties are conducted according to the
organisation’s documented policies, prac-
tices and procedures and, where appropri-
ate, address any non-compliance. Finally, ex-
ecutive management must periodically re-
view the Performance Management activi-
ties, status, and results and resolve issues.
Elements of a Good Performance
Management System
There must be SMART performance in-
formation. Basic measures such as costs,
averages, and percentages are relatively
simple, understandable and accessible
(element 1) to most people. However, it is
important not to oversimplify and lose vi-
tal performance information.
Provide information that is useful and
meaningful for individuals to be account-
able (element 2) for their performance,
rather than blaming the system and every-
one else.
Align (element 3) the performance man-
agement system to measurable perfor-
mance outcomes sought by your stake-
holders, taking into account the nature of
the business, its strategy and performance
measures, as well as its culture, history and
where the CEO wishes to take the
organisation.
There must be a balance of indicators
(element 4). Since what is measured is
what gets noticed, it is important to be care-
ful about what gets measured. When mea-
suring cost and speed, it is also vital to be
certain that the quality of the work or prod-
uct also remains high or customers’ needs
and requirements are satisfied.
Performance information must be com-
parable (element 5) within the
organisation over time, and between simi-
lar organisations within the same industry.
Engage and win the support, buy-in and
confidence of all employees through trans-
parency, fairness, simplicity, progressive
implementation and management commit-
ment (credibility — element 6) so as to
reduce the gap between rhetoric and real-
ity and by objectively addressing poor per-
formance.
Be careful that the collection and track-
ing of performance information is efficient
(element 7), relevant and not overly re-
source intensive and costly. It is important
that the process of collecting and tracking
per formance information be
institutionalised as an integral part of the
service provision and is not burdensome
to anyone.
The system must positively encourage
success (element 8), not hinder effective
per formance. It is vital to create an
organisational culture that deals construc-
tively with the performance information
provided, rewards success, and provides
proactive assistance and resources in ar-
eas identified as needing improvement.
Ensure that Performance Management
is an integral part (element 9) of the over-
all corporate management structure of the
organisation, and that there is a clear line
of sight for employees between their re-
sponsibilities, performance actions and the
strategic objectives of the organisation,
whereby implementation is planned and
with adequate resources allocated or bud-
geted. AT
The writer can be contacted at patrickow@
gmail.com.
ACCOUNTANTS TODAY • September 2007