As everyone knows from Chemistry 101, a catalyst is an chemical agent whose primary role is to initiate and accelerate a reaction among the other agents in a particular process. In simple terms, it is the one chemical agent that starts the “launch sequence”.

Just as certain agents are catalysts for chemical processes, performance data can be just as effective in catalyzing organizational change and performance improvement. While much of the data we collect is aimed at monitoring and controlling our day to day processes (i.e.- compliance within control limits), there are other data that have a much bigger purpose. When we benchmark ourselves, for example, one simple data “gap” between you and other organizations (assuming the data is reliable and trustworthy) can initiate a process of exploration, best practice implementation, and major organizational change. All that from one very simple but insightful comparison.

Sometimes we get so caught up in using our data for management controls and day to day reporting that we dismiss much of the data that could be very valuable in our organizational change efforts. For example, performance gaps that may appear on the surface to be outliers- big gaps that we shrug off as being bad data, or rationalize as coming from a company too different to be relevant to us. But with a little work and exploration, many of these “outliers” can serve as catalysts for MAJOR leaps in performance.

I once co-facilitated a data validation workshop for a consortium of companies who annually benchmarked their performance vis a vis each other. The purpose of the workshop was to create a “challenge environment” where participants could openly challenge their peers on such things as definitional compliance and reporting consistency. During the meeting, someone pointed out what appeared to be an anomaly- a company who failed to report maintenance cost on a certain type of electrical breaker. When challenged, the respondent replied, “well, for that particular type of breaker, you’re right, we did not report any cost…” Before he could finish his explanation, the challenger blurted out a big “AH HA!”, which was followed by a wave of frustrated grunts from the audience similar to what you’d see in British Parliament sessions when dissension occurs. After the noise subsided, however, the respondent said softly, “that’s because we have found that this particular type of breaker is much cheaper to let fail and replace, then engage in a continuous maintenance cycle. There was little reliability or safety risk associated with the failure of the breaker, and the failure rate was so low, that we eventually decided to seriously scale back our planned maintenance on that piece of equipment…and that saved us a ton of money, with little if any drop in service level or quality.”

WOW- now that was an AH HA moment of biblical proportions. Talk about a catalyst. A year later many of the organizations had made changes to their maintenance cycle, most of which had resulted in serious cost reduction. All from what appeared to be one erroneous piece of data.

Are you looking at your performance data simply as a component to your management reports, or as potential catalysts for change? As you go forward, try and remember that the real value of performance information is usually deeply hidden, and its your job as performance managers to uncover that hidden value and to leverage it to the greatest extent possible.

One of the most common questions I get from clients is how to best create “buy in” from the organization for their performance management initiatives. This question pops up frequently, as performance managers struggle to collect and report performance information, and then get the organization to actually follow through on best practice implementation and other improvement recommendations. The problem is not new, yet many are still searching for the magical answer.

Truth is, there’s probably not one magical answer. Organizational cultures are built over time, and are the result of a lot of pieces and parts working together well. Nevertheless, there are some common characteristics that exist within organizations that have achieved the type of of buy in and alignment necessary in building that kind of culture. One of those characteristics (and the most important in my opinion) is the ability of the organization to free itself from what I call an “initiative driven”, or “flash in the pan” culture. That is, a culture where management and workers are in a constant state of having something DONE TO THEM, rather than encouraging and enabling them to take ownership for their own performance improvement.

Let’s face it- we are largely a codependant workforce. We surround ourselves with consultants for everything from restructuring initiatives to the hands-on management of the company itself. This has created many problems, the most significant being that the organization loses the ability to “own” the results of their actions. I’ve actually had executives acknowledge using consultants and temporary workforces so that “there is someone else to blame when things go south”.

Most organizations used to claim they did a major restructuring every 7 years. Now, many of the same organizations (including large consulting firms, ironically!) go through an organizational shakeup every year or two. Benchmarking programs run on an annual cycle and tend to be big distractions for the workforce as these initiatives peak. Couple that with process redesign, quality, and six sigma initiatives, and what you’ve got is an organization in a perpetual state of working for the consultants and internal PM staff. Kind of backwards, wouldn’t you say?

We need to get to a place where these programs are no longer viewed as “initiatives”. A place where things like benchmarking and process improvement are woven into the fabric of day-to- day management. A world in which managers have PM tools on their desktop so that they can drive their own conclusions, rather than being spoonfed via consultant reports and presentations.

Several years ago, I led a very interesting engagement where we (the consultant) spent our time setting up profit centers throughout the enterprise. Basically, we created these small workgroups organized around business lines and service areas, each of whom was given their own P&L. Rather than redesigning their processes for them, benchmarking them, or reorganizing them, we placed all of our attention on changing the philosophy of the business model and the incentive structure. We basically incented them to think like owners, and once they did, all of the other things just fell into place. What was once done TO THEM, was now done BY THEM. A new culture was born, one which had fewer initiatives, special projects, and task forces. Fewer distractions, better alignment, and a highly innovative and productive culture.

What are you doing to rid your organization of “flash in the pan initiatives”, and the dependency that goes with it? Start doing less TO THE ORGANIZATION, and more FOR THE ORGANIZATION. Enable management rather than spoonfeed. A more aligned and motivated culture will follow.

Over the past decade, nothing has been more revolutionary to business than the advances made in online technology and the internet. Businesses use the internet for everything- from online transactions and e-commerce, to management of inventory and supply chain. So it is only fitting that we explore the implications of this technology on the discipline of performance management. In particular, it’s interesting to look at how online technology initially supported performance managers, how it has evolved, and how we can best harness the power of its future advances.

During the mid ’90’s, most of us can remember conversations with those “far out” colleagues, telling us what this ” internet thing” was going to do for the world. Most of us scoffed at the idea of the internet being as “life changing” as these prognosticators were forecasting. Even if we embraced some of their far out thinking, we all had some reservations with respect to its short term impact and relevance. It was a cool technology that would have it’s place in business, but would it really be as life changing as they were saying? Truth is, most of us were dead wrong. I won’t waste any time convincing you of this, since most you are reading this column online or in your email application. Better we focus our time on what it all means for the discipline of performance management.

A lot can be learned from looking at the evolution of performance management applications that have grown from these online advances. In the early days of the internet, simple email and bulletin boards made for easy and painless communication between individuals. It was also a faster and cheaper way to send information. But even in the early days (96-99 say), internet driven communication was still largely “one way at a time”. In essence, we were automating our existing processes. Little work was actually removed from our processes, and few enhancements to performance quality ever materialized. It was simply a slightly easier way to do what we were currently doing.

Once the glamour, and “newness” of these tools wore off however, people really started questioning what the broader implications of these technologies were. As security protocols were improved, more and more performance managers began to trust the internet as a way to collect and pass around information. ASP models emerged, enabling server side processing of information, bringing scale to data management, thus lowering transaction and processing costs (i.e.- everyone didn’t have to have their own homegrown system). “On-demand” became a key word in our vocabulary, not only for reporting and validating information, but for viewing results and analyzing trends. One way communication became two way and dynamic. Bulletin boards that once required users to post questions or comments, and later check back for answers, were quickly replaced by online discussions (chats) that occurred in real time. Online file sharing among common work groups and project teams became the norm for document exchange, outpacing the more traditional and static internal server or intranet vehicles. Desktop sharing quickly became a preferred way of presenting (live or recorded) information via tools like WebEx, Placeware, or Readytalk. The age of online COMMUNITIES was born, and what a difference that made for performance management. From data mining to performance reporting, benchmarking to best practice sharing, implementation to project management- the internet became our primary tool of choice. It’s no longer a stretch to say that the internet has reshaped, and perhaps even rebirthed, the discipline of performance management as we know it.

There are many performance management tools that have truly leveraged the online technologies that are currently available. Tools like Benchmark Communities for confidential external data sharing (http://www.benchmarkcommunities.com) , Cyndrus ADS (http://www.cyndrus.com/products/ads.htm ) and Pilot Software (http://pilotsoftware.com) for internal performance reporting and analysis, and Collaboration Zones (http://www.cozones.com) for community and network communication, are all good examples of how this toolbox has evolved.

So, armed with a good understanding of how all of this evolving, where do we go from here?

First, performance managers must learn to harness the power of existing technologies to step up their value-add, and that of their organizations. Take advantage of what’s already out there. These technologies not only help performance managers do things better, faster, and cheaper, but also can help the performance manager actually incorporate the PM process into the operating work groups and culture of the organization. Use these technologies as the vehicle for getting the PM process on the desktops of your executives and operating management. Become enablers of good performance management rather than an information clearinghouse.

Second, be “at the ready” as new technologies emerge. For example, the advent of “web services” provides a very smooth and easy way for information to be passed to and from performance managers via the posting of data elements to corresponding “subscribers” of that information. This technology alone will likely reshape the practice of data surveying, offering a far more efficient and secure vehicle for collecting and managing data. If you’re not already familiar with web services, and what it will mean for you, its time to start exploring. Most of these technologies will not arrive on your doorstep in a nice package. Effective performance managers will stay abbrest of these developments, and work with these technologies to invent creative ways in which the technology could be applied to their business. New opportunities will be born.

Third, you’ll need to think hard about how you will control the flow of information both within and outside the organization, in the presence of these technologies. This will likely be your most significant challenge. Right now, people throughout your organization are exchanging information with the outside world. That’s right- operating practices, data, benchmarks, you name it. A lot of this this takes place in the spirit of organizational learning, but even more occurs for the sake of career development and personal gain. You and I both know that as information sharing and community exchange technologies become more proliferated, it will be increasingly difficult to put the “genie back into the bottle”. Good performance managers will learn to live with this reality, using these technologies to create lead time advantage over their competition, rather than attempting to “dam” the free market flow of ideas and learning.

The leaps we’ve seen in technology will no doubt continue. They have, and will continue to offer opportunity and challenge to performance managers as they traverse their careers and continuously redefine the PM discipline within their organizations. Harnessing tomorrow’s technology will be a central element in that success.

Sometimes, the consequence of one’s performance is not near as important as the ability of the manager to consistently APPLY it across the organization.

A few weeks back, I discussed the various types of consequences (positive reinforcement, negative reinforcement, punishment, extinction), as well as some of the pros and cons of each.
Today, I want to talk a little bit about the consistent application of these consequences, and the damage that can result if we don’t follow through. To some, this may be a bit obvious. But I challenge you to look around you’re organization, and your life, and see how many times this principle breaks down.

Case in point- Over the weekend, I decided to confront my neighbor with a problem that has been festering for some time now. He, as well as 4 or 5 others in my neighborhood have been parking their unsightly work vehicles/ trailers either on the street, or in their driveway overhanging the sidewalk. I live in a rather old, very quiet neighborhood, with lots of 3rd and 4th generation families. I am not the only one with this problem, but I was one of the few who was actually willing to say something about it (call me a masochist). I tried everything, from talking quietly to the owners of these vehicles, to talking extensively with town officials, and even called the police and asked that they issue a warning. All of this to no avail.

Well, this weekend, we went at it again. The police came out and “negotiated” a solution which resulted in one of the individuals moving his vehicle (luckily, for us, it was the worst of the offenders). But the police officer advised us that despite the laws on the books, we needed to be a little bit more tolerant of these vehicles because of the “tenure” of the owners (translation: “they’ve been here a long time…so let’s not rock the boat”). Say what? We have laws on the books, fines for those who don’t abide by them, and a city “pride committee” who positively rewards clean up efforts. We have all the makings of a great performance management system that will drive all the right behaviors. So why doesn’t it work? Because we don’t enforce them!!! To the city mayor, I say- “Guess what Einstein, you’re going to keep paying your officers $50-100 per call to go out and negotiate solutions hundreds of times a year, when all you’ve got to do is enforce the rules on a select few”. No brainer? You would think so, wouldn’t you?

To some of you who have parented small children (or any children and young adults for that matter), you know the importance of follow-through all too well. I, myself see the results of my past follow- through (or lack thereof) every day. It’s the best testing ground for follow through you’ll ever get, largely because of the speed in which you can see the results of your actions and the effect of different types of consequences on behavior.

Same for the workplace. People react to consequences, positive or negative. As I noted a few weeks ago, the type of consequence will certainly determine the type of response you get. Consequences always drive some type of behavior. But failure to apply a consequence will ALWAYS produce inaction. If you want your instructions, project plan, business plan, or any other management direction to fall on deaf ears, you need only apply your performance consequences inconsistently, or not at all.

My challenge to all of you today is to look at one area of your business, try and define the specific consequences of employee actions and behavior, and then take a hard look at whether you’re applying them consistently. Document this for a week, and then look back and see where this worked , and where it breaks down. I believe you’ll see pretty clearly the importance of consistency in this arena.

There is clearly no shortage of external requests for performance information. Requests from regulators, requests from stock analysts, requests from large customer consortium, and perhaps the most common but least understood of all requests- the requests of external peer organizations, be them friends or competitors. Some of these requests must be fulfilled, but many, such as the external peer request, are discretionary- in terms of both the response itself, as well as the manner in which you respond.

It’s important to keep in mind that most of the organizations requesting information are only interested in getting information from you. Few of them are actually interested in how it affects you, the company. It’s up to you to be prudent about what information you share, and how you share it.

Whenever you share information with external parties, whether it be a regulator or competitor, its important to keep in mind a few “rules of the road”:

1. First, understand WHO is requesting it WHY. Is it discretionary or mandated? If discretionary, what’s the ultimate purpose of the information request? What’s in it for you? Admittedly, you may have little say over regulatory or analyst requests, but when it comes to sharing with other companies, it helps to know what you’re going to get out of it BEFORE you share. If it doesn’t support mutual learning, its probably best to pass.

2. Have clear terms governing what can and CANNOT be done with the information. Almost always, this will mean setting up a confidentiality or non-disclosure agreement between you and the requesting party. While you many never have to enforce such an agreement (it can often be very costly and time consuming to do so), it will serve as a good deterrent, and add a level of structure to the sharing. The parties are likely to take much more “care” of each other’s information when an agreement like this is in place.

3. Be discriminating about what is shared, and more importantly, HOW it is shared. For example, if you’re sharing information with a group of peer companies, you should insist that any information that ends up in a report is appropriately masked to protect the identities of the companies.

Sometimes a simple coding protocol will work, but I’ve found that in most cases “the code” is relatively easy to break, particularly if the information is to be shared with many people inside your company (i.e. those who may not be aware of, or do not have the same degree of respect for the confidentiality terms you’ve established).

A practice that I use (a derivative of the coding protocol, of sorts) is to only show the median of a group of companies that match a particular demographic. If they’re not more than a half dozen or so companies that match the criteria, I do not show them because of the risk of detecting the identities. This way, you get the benefit of being able to maximize insights and learning without incurring the risk of full disclosure. This will also help in the regulatory environment, in which (because of discoverability laws) it may be easy for a regulator to demand the codes of other companies. If you only report in the demographic clusters I discuss above, there are no codes to reveal.

In general, you should assume that any coding system is made to be broken. My advice is to be careful in how you use them.

4. Use a third party where multiple companies are involved. This ensures that there is a layer between the data and those who may wish to use the data against you. Having a third party between you and the reporting of information (whether it’s done through coding, or through the manner discussed in #3) will ensure that there is at least one more BIG hurdle that others will have to go through to get to the data. And since a third party is bound by confidentiality with MANY companies, it’s virtually impossible for another organization (e.g. regulator) to mandate those data be turned over. They may have discoverability laws governing YOUR data, but they certainly do not have jurisdiction over the collective group’s data, insights, conclusions, etc. Hence, it becomes harder to use the data against you. Data becomes only relevant to a regulator in the context of some type of comparison. Without that context, it’s just a data point. A third party insulates that “context” via a strong and enforceable firewall, and serves as another good deterrent.

5. Understand the nature of “give for get”. I know many companies who, because of the risk and fear associated with sharing, simply don’t do it unless they’re forced to. But when these companies need information, they don’t hesitate to ask for it. Companies are getting smarter and more discriminating about their data sharing, and it’s pretty safe to conclude that if you build a solid wall around your data sharing, others will do the same with you. Multicompany data sharing is a reciprocal business. Far better to share prudently, using the above risk management practices, than to opt out of the sharing game altogether.

There are many other smaller items that will help you manage the risk of data sharing. I’ve given you the “biggies”.

If you’re going to play the game, as I suggest most do, it pays to be prudent.