High performance organisations have three key characteristics.
- They have leaders that know how to set the direction in a way that allows the people of the organisation to contribute on how we get there. These leaders will also seek evidence to monitor how the journey is progressing and coach the teams on how to improve.
- They have teams that have selected to buy-in, and are engaged in learning how to improve performance.
- They have a performance measurement system in place that provides quantitative feedback on, not only what performance is doing, but also on the impact their initiatives are having.
And on this last point, Dean Spitzer says in Transforming Performance Measurement (2007,pages 13-14).
The measurement system – for good or ill – triggers virtually everything that happens in an organization, both strategic and tactical. This is because all the other organizational systems are ultimately based on what the measurement system is telling the other systems to do.”
A high performing organisation (HPO) is built upon the behaviours of the leaders. The leaders of HPOs also use an evidence-based approach. Also, a solid methodology for measurement to design and build their measurement system (system here is used in the context of a business system, not solely technology).
The Performance Management Framework
So let’s look at the Performance Management Framework that HPOs use.
From the diagram above we can see how the Performance Measurement Framework (or system) underpins the implementation and adaption of strategy. Following the design and planning of strategy we move into implementation and delivery. Our measurement system will inform elements of this process to ensure the planning and implementation stays on track with the initial intent. Likewise when the implementation is done, feedback from the measurement system will drive reflection. Reflection informs insights to improve. The measurement system informs all other systems and decision-making.
Only when your measurement system is provides good feedback about your performance and progress can then ‘realised strategy’ will be far more deliberate and on purpose. Rather than by happenstance. A high performing organisation.
The Two Phases of the Eight Steps
The Eight Steps to a HPO are divided into two phases.
This first phase is about the design of your measurement system. The methodology you chose, and how you engage your people and teams.
The second phase is the implementation and usage of the measurement system. The implementation is usually iterative and the measurement system builds over time. Whilst the early parts of the system are being used, the complete measurement framework is still developing. A high performing organisation has a measurement system that is a useful tool for people to use.
The Eight Steps
Step One – State Your purpose
Your purpose for measuring performance has a huge influence on the workplace culture you create. If your purpose for collecting data and monitoring KPIs is about compliance, then you cannot expect you people to focus on improving performance. Likewise, if your purpose for measuring performance is to always achieve the targets you have set. Then (most likely) you are demonstrating it is okay to manipulate the measure and or the business system to get the target. The translated purpose for measurement then becomes, “we measure to get our targets”. The unintended consequences in your workplace culture will be significant.
Ensure your WHY for measuring performance is about ‘learning how to improve’.
Step Two – Measurable Strategy in Results
This second step is all about figuring out what it is we are trying to achieve, so that we can measure it. Too much of strategy is written in language that is vague or uses weasel words, which makes it impossible to measure.
The PuMP methodology uses the term, ‘Results’ to describe what it is we plan to achieve. The outcome or the impact we want to have is described in our results. When we focus on results, we can then design measures that will tell us about the impact those actions are having on our progress towards the result.
The PuMP technique for this is Results Mapping. Taking your Results and aligning the relationships, into a causal map that allows you to build a framework of results that will tell the story of your strategy. Results from the level of teams through to the results that are part of your vision, mission and/or purpose.
Step Three – Designing Meaningful Performance Measures
The job of a performance measure is to give us feedback on the result we are wanting to make progress towards. Are our efforts moving us towards our result, or not. The signals will be in the measures we select for our Result.
PuMP provides a five-step, Measure Design process to ensure we develop and select meaningful measures for our Result. The purpose of this process is that we do not want lots of measures. We do not need more KPIs. What we need is fewer measures/KPIs that are more meaningful. Measures that specifically provide feedback on the Result we are trying to achieve.
Step Four – Fine-tune and create buy-in with the Measure Gallery
Using the principles of Open Space Technology Stacey Barr developed the Measure Gallery. We display our results and measures like a gallery. We invite people to an open gallery. No appointments, come when you can and anyone can come. People come to the measure gallery to review the Results Map and the Measures you have designed. The people within the organisation engage with the process and provide feedback on the measurement framework you have developed so far.
There are two outputs from this engagement approach. Firstly, We have created an environment where people can buy-in to the process. People buy-in when they are consulted and engaged.
Secondly, with the engagement and feedback on the Results and Measures that form the basis of our performance measurement framework (system), we can fine-tune the framework and be confident in bringing our measurement system to life (phase two).
Step Five – Defining Measures
Have you ever been in a management meeting to review performance and on considering your measures and KPIs you find the conversation turns more to the measures, rather than performance..? This fifth step is the first in bringing your measurement system to life. It is about defining the measures. So that we can all be confident in how the measure is calculated, where the data is sourced, time periods and everything else..!
With our performance measures defined and stored centrally, we can be confident that performance meetings will be more focused on discussing performance. Because everyone will have a clear and consistent understanding of the measure.
Step Six – Consistent Interpretation and Target Setting
Using the PuMP method, we use XmR charts for all performance measures. These charts were developed last century by the ‘fathers of the statistical quality control and quality’. XmRs can be a topic on there own (see more here) a big topic and are discussed in more detail in the whitepaper on The Eight Steps to a High Performance Organisation.
Suffice to say here that XmR Charts are powerful tools. They not only help us understand how the process is performing and see the natural process variation, but also a technique for setting targets that are far more thoughtful. Rather than taking an aspirational stab in the dark.
Step Seven – Manage Performance
Another big topic. However, there are two things we must get in place in this step of becoming a high performance organisation. Firstly we need to ensure that we have regular scheduled meetings that are for discussing performance. That is, knowing what performance is doing and why it is doing that. These meetings are not hunting exercises to expose who has not met their targets. Remember, our purpose for measurement is to learn so that we can improve. Which brings a new definition of accountability.
The second is to scrap the typical dashboards with dials and gauges, replacing it with some useful performance reporting. We need to know what performance is doing and then understand why it is doing that. If we want to see a change in performance then we can implement some initiatives. Then use the measurement system to monitor the impact the initiative has on our measures. Therefore moving us closer to the result.
Step Eight – Encourage a Learning Culture
We set our purpose (or why) for measuring performance in Step One. It was about building an organisation full of people who want to learn how to improve performance. It is one of the key characteristics of a high performing organisation that teams are engaged. And they are keen to understand what drives better performance.
Everything leaders and managers say and do must continue to reinforce that purpose.
Creating a culture within your organisation that learns and flourishes has always been a key to business success. Management guru, Peter Drucker is often quoted as saying, “Culture eats strategy for breakfast”. In 1982, research from two McKinsey consultants ( Tom Peters and Robert Waterman) produced In Search of Excellence. This demonstrated the difference between high performing organisations and the rest was culture. Peter Senge published The Fifth Discipline in the 1990s. And with it came the principles of systems thinking and a learning organisation.
Therefore, leaders and managers: stop deploying all those behaviours and habits that inhibit the culture of your organisation. Empower people with genuine engagement and learning opportunities, demonstrate progress. Use your measurement system as a feedback mechanism for insight, learning and growth.
Start work today on redesigning your measurement system.
Use the Eight Steps as your guide on “how to” build a better performance measurement and management system in your organisation.
Start that the journey towards your high performing organisation.