Several years ago, I was given the challenge of facilitating part a company through a large scale restructuring initiative. One of the main reasons that our firm was selected had to do with our considerable expertise in the area of performance diagnostics- a fancy way of saying that we were pretty good at “sizing up” hidden value (cost savings or service level improvements) that could be released through various process improvement initiatives.

As was the practice at our firm, the principal consultants on the project each took part of the business and led their respective team(s) through a process of defining appropriate measurements, baselining their performance, benchmarking them against “best in breed” competitors, analyzing gaps, assessing best practices, and building improvement plans. For consultants, this drill is pretty routine.

Well, the routine was about to change, and did change for me the minute I stepped foot off the airplane to start the engagement. You see, while all of the other consultants were given typical business functions as ‘their team’ to facilitate, your’s truly was given a few real winners- Internal Auditing, Risk Management, and Corporate Planning. I’m rarely one to whine about the cards I’m dealt, but this was a little nuts. How would I even begin to define measures for these functions, not to mention the later stages of baselining, benchmarking, and gap analysis? Someone either had a lot a faith in me, or was setting me up for something nasty.

Ironically, it turned out to be one of my favorite assignments. While the team I led was about as excited as I was, we all decided to approach it as a challenge…a chance to break some new ground.

While there are probably as many opinions about how to measure these types of functions(functions that are distanced from the end customer, with workload that is largely discretionary, and few if any tangible “widgets” produced), we decided to focus on what we eventually referred to as the three C’s: Customers, Competencies, and Critical Path.

Customers: For us, this was a logical place to start. Since these functions were quite removed from the end customer, we needed to define a surrogate customer of sorts- constituents whose business performance and survival was dependent on the business function being measured. The audit committee of the board, plant managers with P&L accountability, Business Unit Leaders, for example. From there, a service level agreement complete with performance standards served as the blueprint from which our baseline and benchmarks were then derived. In many cases, this was the first time the real customer had been identified- so it wasn’t uncommon to find a number of key functions that weren’t even on the customer’s radar screen. Some would fall off the board all together, as the customer would deem certain functions (often performed for years prior!)unnecessary going forward.

Competencies: Most functions like these require niche professional skill- truly unique disciplines. So the next logical place for us to go was to build a competency profile. For example, if the company wanted to have a “crack” internal audit staff (to serve the workload demanded by their customer of course!), a good yardstick of progress would be a performance measure that indicated the presence of specific competencies and expertise. These could be “soft” measures such as the presence of certain skills, or “hard” indicators like training hours or continuing education credits.

Critical Path: This was simply an indicator of progress against critical projects that emanated from the customer’s expectations. These indicators were different from the rating given by key customers and/or performance against negotiated service standards. Critical Path indicators dealt with very specific and key initiatives that were central to that function’s annual plan. While these may have been redundant in some cases, the team felt they were worth the added weight and specificity in the overall framework.

In the end, we had a balanced set of measurements that provided a clear picture relative contribution. Measures that could be clearly identified, counted, benchmarked, and used as a guidance system for gauging their long term performance.

Some would say it’s not perfect, and few performance management frameworks are. But it did serve the purpose of getting these functions involved in the restructure in a positive way, and initiated a significant improvement in the business contribution of these functions.

A far cry from – “you can’t measure us, we’re too different!”

A few years back, I encountered two organizations with virtually the same approach to Performance Management. The metrics they used were almost identical, both had a commitment to benchmarking, both were “bought in” at the executive level, and both were serious about holding people accountable. All appeared to be the same except for their ACTUAL performance track record.

On a subsequent visit however, I noticed a subtle little difference that seemed to make ALL THE DIFFERENCE. The difference was in the way they told the story to their organization- simple communication tactics that bridged the gap between the “wanna be’s” and real world performance leaders.

Note that I made a point to say SIMPLE communications. I’m not talking real hi-tech here (although today’s electronic communication does simplify things). No- we’re simply talking about management’s commitment to get the word out- plain and simple. What are our targets? How are we doing? What are the indicators telling us? And what are we doing to improve?

What was truly amazing is that none of this showed up in the data we saw or in the interviews we performed over the phone. It was something you had to see. Something in the culture. When we finally made a visit to both companies, the differences became striking.

Within the high performance company, charts were everywhere. Big, colorful, and easy to understand charts. When performance suffered, you saw it. When performance accelerated, you saw it, and celebrated it. It was hard not to know where you stood. This was their guidance system- their dashboard or cockpit, from which they navigated.

I believe strongly that in Performance Management, communications is everything. Simple graphical representations of results can have so much more impact than you’re run of the mill budget or performance report. Good communication filters out the BS and tells the organization the bottom line message. I often wonder what a disadvantage a pilot would be at if all he had to rely on were dull printouts of data, rather than the cockpit indicators, heads-up displays, and critical alarms that are built into most aircraft today.

So as you think about your role in performance management, think communications. Keep it simple. Keep it clear. And keep it coming!

These days, its hard to get by in a leadership position without embracing what I call the “management philosophy de jour”. You know what I’m talking about, don’t you?- Six Sigma, Lean Manufacturing, TQM, BPR, BPO, …you get the idea. That’s a lot to stay current with if you’ve gonna have staying power in an organization, or more importantly, be seen as someone who can make a contribution in your organization’s “new world”.

While all of these management philosophies have their niche, and may even be remembered well by history, all of them have one thing in common. They begin with a very critical review of the “as is” state of an organization, process, or business function. AND, they all end (or better yet, continue forward) with an assessment of gains over current baseline. No matter which philposophy you’re operating under today, you can’t get by without the capability of doing an honest assessment of current performance, and laying in a good foundation to track improvements and hold people accountable over time.

And here’s something else to think about. It works for life too! Whether its your golf game, your weight, or personal recovery/ imporvement…developing the skills of honestly assessing yourself, and having the discipline to set goals and hold yourself accountable is paramount. If you can develop these skills for your career, you’ll likely get a double impact, as these skills will transfer nicely into life and family. Conversly, if your don’t develop these skills, you’ll find yourself fighting an upstream current.

As you go forward, try taking a fresh look at the art of performance measurement and tracking in the context of your company’s bigger initiatives. Add more honesty and objectivity to your initial assessments. Resist the temptation to get caught up in data denial when presented with external benchmarks from companies that don’t look just like yours. Get real about goal setting and performance planning. Begin embracing true accountability for results.

I consider these all healthy aspects of the performance management discipline- The “OLD FAITHFULS” that the organization can rely on no matter which management philosophy it is embracing at the moment. These skills are timeless and will be in demand for as long as business is around. That you can bank on!

Here’s a brief story I encountered while leaving Newark International Airport following a recent business trip. Hard to believe, but true.

After a long flight home from the West Coast, I took a short train ride to the long term parking facility, located my car (which is becoming more difficult with age it seems), and proceeded to the parking exit. Note that it’s been a while since I’ve used the long term parking facility, as I normally use a car or taxi service, so I was largely unfamiliar with their new “high tech” customer solutions.

As I pulled up to the pay station (expecting the attendant to inform me of my charge), she immediately looked at me with the gaze of a very frustrated woman who’s obviously done this before. In a short tone, she barked out an instruction suggesting that I had passed an automated ticket booth, from which I should have inserted my ticket and noted the charge. I complied with the instruction, quietly wondering why this woman was in the booth at all, given the fact that the machine and I pretty much had this thing licked. I concluded of course that she must be there to collect the money, so I proceeded to pay her. Not a good assumption as she pointed me back to the machine to insert my payment. OK, I get it, I interact with the machine for this too…no problem, thinking that this is a pretty good solution. I wait for the machine to give me my receipt, an obvious assumption given how the first two steps went. Nope…wrong again. This time she wants me to drive to her and pick up my receipt, at which point she presses a button, lifts the gate, and I’m on my merry way.

I can’t help thinking about all the time and money went into implementing this slick new solution, that probably cost an arm and a leg, had little to no impact on cost savings, destroyed customer satisfaction, and obviously put the employee in a perpetual stae of ‘grumpy’. No…what this was, is yet another example of “technology for technology’s sake”.

When I work with organizations on business impovement, one of the most important themes I try to drill home is PROCESS FIRST, then technology. You don’t implement technology on top of a broken process. Nor do you attempt to fix a broken brocess with technology only.

The right path is to measure the effectiveness of the process before you begin. Establish a baseline. Understand how the process works today (‘As Is’ State). Look for places to improve the process. Define changes. Examine the effect of each potential change on overall performance. Then, and only then, define the technology, systems, skills, and organization needed to support the new process. Develop cost benefits and business cases. Re-examine the degree to which performance will be improved over baseline. And then your almost ready for implementation.

It’s a simple principle, but one that often get overlooked. Try to pay some attention to this in your everyday life and you’ll probably see many similar examples. Then, use these as lessons learned, and start living by the mantra- “First Things First”- process first, technology later.

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Just a quick note to let readers know that we have now enabled email delivery of our daily posts through bloglet. Subscribers (free of charge) will receive an email anytime we update the blog (for the most part daily). That prevents you from having to ping the site to check for new posts. Of course, you can still visit the main blog site at http://www.pmdaily.blogspot.com to access any of our past archives or new material. Readers can subscribe through any of my partner organizations’ websites, or my personal website @ http://www.rjci.com . See you on Monday! -b