I think that performance management and performance management systems should be leveraged by organizations to spur higher performing actions and activities as opposed to just using them as sort of a rear view mirror to understand how you did. I think there are probably many ways to do it but I want to talk a little bit about our approach and kind of what I believe works best for us. When you look at anything you’re trying to improve you have to understand the factors of:
- What factors drive performance
- What pieces of information do I need in order to understand how its performing now
- How it may perform in the future
You need a mechanism to get that information in. You need some type of assessment of those things; a way to surface the information about what’s the state of that information at a given moment in time. So I think I use the term assessment because it signifies what you’re really trying to get at here. You can spend a lot of time talking about metrics, measures, key performance indicators (KPIs), and things like that but I’m just going to use the blanket term assessments. I’m trying to say that what we’re trying to do is understand a specific thing that we’re trying to improve. There may be a lot of informational elements that go into understanding it but that is what that assessment is supposed to help us tease out. What that should do is give us at a specific point in time a really good understanding of the factors that contribute to success or failure at that given point in time.
Oftentimes you need more than just the state of that particular thing to really understand performance or particularly, if you’re looking at lots of those types of things. If you’re looking at a portfolio I use investments all the time because it’s a pretty easy concept to grasp. A lot of people have 401ks, mutual funds, and things like that and they understand that those things are comprised of lots of smaller investments. It’s performance across all those things that contributes to their eventual financial performance.
If you were to assess your portfolio at a specific point in time, it might be as simple as a statement that you get from the company that manages your portfolio. It’s probably going to tell you a little bit about the individual components of the portfolio that makes up your retirement account and that’s a slice in time view that you get. That is of course dependent on what company you go thru and what level of detail you’ve requested. You may get things all the way down into very detailed financial reporting that’s supposed to be indicative of specific companies that are part of your portfolio and that is great for the day that you receive that information. Unfortunately we all know that a day, a week, a month later, the market is completely different. Things can change immensely in a very short period of time as we’ve seen several times in the last ten years. Instances where we’ve gone from incredible market performance to extraordinarily disappointing market performance in what seems like the blink of an eye and you know the same is true for any organization. So one of the things you need to keep in mind is context.
For many of the companies that were a part of that portfolio, not a lot of things changed inside some of those companies when the market went south but it certainly affected their performance in the market. This despite the fact that maybe they weren’t a part of the industry segment or market segment that was bringing down the market as a whole. Their performance was affected by it so hopefully that is a way to look at context.
There’s a lot of information that you might need to help you make good decisions that’s maybe not directly related to the status of the particular things that you are trying to measure. If you miss that part of it you’re going to miss a lot of the things that inform your understanding of the assessment and make it so that you can make good decisions. So I think context is enormously important and often overlooked. You need be looking for the pools of information that help make the information that you’re gathering more meaningful.
The last of the things that I think is really important is real time situational awareness. It’s great to have that assessment, that in depth understanding of the item, and it’s great to understand the context around it but a lot times being able to translate that into things that improve performance means being able to communicate and collaborate across organizational boundaries; both inside the organization and outside the organization. It means being able to collaborate to use that information to make better decisions in a group or team environment. It means being able to understand that information because you see the changes as they occur. You’ve identified the factors that are important to you and you have a mechanism for ensuring that you become aware when certain thresholds change or when there’s activity on a particular item. I think that situational awareness piece is also often overlooked and incredibly important.
Now oftentimes the most stressed component of all of the things that I’m talking about is the assessment piece. You’ll have organizations that will invest enormous amounts of money in a point in time assessment. I’m not saying that those are necessarily a bad thing to do but I think that if you want to drive real long term performance you need to be able to have both. You have to combine that with context and with some type of communication and collaboration capability that allows you to take advantage of all of it. Then I think the final things is the business intelligence component; the piece that rolls all of that together so that you can use all of it in a way that is seamless to your organization.
- Do you have a way to pull context together, the actual assessment information, and then manipulate, share, and leverage that information across your organization so you can really foster change?
I’m curious how other people manage this. I know it’s a big space with lot of layers in it but I think the value chain that runs from the assessment, to the context, to the communication and collaboration workflow component that enables it are incredibly important as a whole. You really have to think about it as not those individual pieces because that’s how traditionally the vendor community addresses it. They have a piece that addresses how you do assessments. There’s a piece that does communication and collaboration and there’s a piece that helps manage data and does business intelligence across various elements of it. I think it’s really important to figure out how you’re going to work with those as a cohesive whole or to choose things that allow you to work as a cohesive whole across that entire value chain.