Performance management for your people: a five-step guide to transforming your organisation s culture
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- Chester Terry
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1 Performance management for your people: a five-step guide to transforming your organisation s culture
2 Introduction Performance management (PM) is now widely recognised as an essential element of business planning. A recent QlikView survey on the subject, conducted in association with Accountancy Age and Financial Director, has shown that the majority of senior decision makers see improving operational efficiency as a key challenge for 2010, with almost a quarter focusing on PM as the number one priority. In fact only 16.6% of managers believe that corporate perfomance management is of no importance, so there is clearly an understanding of its potential. However, two thirds of respondents report that they are failing to implement an effective PM strategy, perhaps because many still perceive it to be complex, time-consuming and IT led. This paper looks at the most common problems they re experiencing and provides a five-step guide to PM success. What is performance management? A corporate PM initiative seeks to improve business performance by aligning a company s strategic goals and plans with its day-to-day operational actions. Using a measurement framework like Kaplan and Norton s balanced scorecard, strategic financial and non-financial metrics can be tracked to enable businesses to clarify their vision and translate it into action by informing resource allocation for example, and providing the information required to make effective operational decisions. What can your business get out of it? Properly implemented, performance management helps business leaders drive strategy down and across an entire organisation so high-level goals can be achieved. A recent IDC survey of businesses which use QlikView a Business Intelligence and performance management tool showed that typical benefits included a 34% increase in productivity, a 39% improvement in business agility and a 16% increase in revenue. Certainly, massive efficiency gains can be expected with a more defined approach to performance management. It fosters a culture of continual improvement where greater accountability means greater transparency, and better, faster decisions can be made. What can your people get out of it? Performance management also directly benefits individual employees, because it empowers people to get the information they need to work well. It helps employees accelerate their professional development, contributing to more constructive reviews and giving everyone the recognition they deserve for their successes. Above all, the ability to make decisions based on fact eliminates procrastination, frustration and the lack of confidence experienced by those who have to go through the IT department to access data. 2
3 1. Decide which metrics will best measure your progress towards goals Only 12.7% of businesses have fully transparent KPIs According to the authors of the Aberdeen AXIS Business Intelligence and Performance Management report (2009), businesses thrive or fail based on the effectiveness of their KPIs. The report continues: Top performing companies have taken a more well-rounded approach to KPI initiatives beyond just common financial measures such as profitability and cost. However, the recent QlikView/Accountancy Age and Financial Director survey of senior decision makers reveals that only 12.7% of businesses are operating with fully transparent financial, operational, economic and external KPIs. Indeed a worrying 1 in 20 can t even track their progress against basic financial metrics. As the Aberdeen report suggests, meaningful progress is only possible if the right KPIs are identified from the start. Although important, financial metrics can only tell the story of what s already happened. They don t give any clue to performance in other areas customer relationships for example. So think: what evidence will demonstrate that your goals are being achieved? For example, if one of your strategic goals is to raise brand awareness, tracking mentions of your brand across social media might be useful. New Business Intelligence technologies are better able to support this. They can capture data on a more comprehensive set of KPIs, giving you the same level of analysis across all areas of your business for a truly holistic view. To achieve this, information from a vast range of sources company databases, spreadsheets, web programmes, financial software and so on has to be pulled together, in real time, and fed into one system for comparison. Old BI technologies relied on an intermediate data warehouse, in which complex and inflexible data cubes had to be built before the data could be mined. But now new tools make it possible to analyse internal and external data together, in real time, to monitor performance in specific areas. 2. Get everyone involved customers, suppliers and employees from shop floor to boardroom In the majority of businesses, less than 25% of staff access performance metrics Why impede the very people upon whom the success of your strategy depends? BI used to be owned by the finance and IT departments, but now it s widely accepted that an effective PM strategy needs to be visible throughout the organisation. This is another area where companies are repeatedly getting it wrong, however. The QlikView/Accountancy Age and Financial Director survey shows that in the majority of businesses questioned, less than 25% of staff have access to performance metrics. Fortunately, the new breed of BI 2.0 tools bring a whole new self-service approach to reporting and analysis, which means that businesses can now very quickly and simply build a robust PM framework with three or four key BI apps. Non-technical users can use them to search and analyse data without help from the IT department, because these new technologies have been designed to make the process as intuitive and rewarding as possible. In fact QlikView has pioneered the development of a unique technology called Associative Search, which allows users to interactively explore their data simply by applying and removing different filters with a click of the mouse. The result? Instant answers and new insights in areas that no-one had even thought to question. Developments such as these make the new tools simple and enjoyable to use, ensuring company-wide buy-in with very little training. In fact they can even be used externally to show customers their account activity, for example, or to keep everyone in the supply chain appraised of the latest forecasts. With BI 2.0, it s possible to get a PM initiative off the ground and demonstrating value within just a few days. 3
4 3. Ditch Excel and arm your people with business tools fit for the information age More than 53% of respondents use Excel to drive performance Excel is as useful for real time analysis as a fork is for eating soup. And yet, in the QlikView/ Accountancy Age and Financial Director survey, more than 53% of respondents said they used Excel to monitor and drive performance, simply because they already have access to it and are familiar with it. Despite this, most business users are all too aware of Excel s shortcomings. They know that spreadsheets are incredibly error-prone; that tiny mistakes can ripple, domino-like, through every associated calculation. And given that the probability of an error being introduced grows with every edit, how reliable is the information contained in the fourth or fifth version? Multiple users editing and re-circulating their own tweaked versions means it can be difficult to know which figures you can trust. The alarming truth is that in scrambling to consolidate and validate information held in spreadsheets, businesses are losing hundreds of thousands of pounds in missed opportunities, operational inefficiency and lost sales. A PM strategy built on such a precarious foundation is doomed to fail. Contrary to popular belief, implementing an enabling technology which provides comprehensive PM support needn t in fact shouldn t require a huge commitment in time in money. Oldstyle Business Intelligence tools traditionally required a substantial IT investment, leaving many business leaders with the impression that BI is a costly and risky endeavour. But BI 2.0 is offering a new way of exploring and presenting data. Typified by single stack products like QlikView, these new tools enable managers to base their decisions on insight and analysis rather than raw, unreliable data, and start delivering ROI in a very short period of time. 4. Make sure your information is visible, accessible and delivered in real time Not only does Excel provide an unreliable view, the way it presents data is at odds with how we find and digest information in other areas of our lives. As consumers, we ve grown used to being able to search billions of web pages in less than a second with revolutionary, era-defining tools like Google. So if employees can instantly compare the price of their car insurance across more than 100 providers, or track the progress of an expected delivery in real time, shouldn t they have access to similar capabilities at work? A major benefit of performance management solutions like QlikView is that information is presented in easy-to-read dashboards which can be configured by users to suit individual preferences. This gives employees the same freedom to explore data and find answers that they enjoy as consumers. Performance metrics are delivered monthly in over 60% of businesses Clear, real-time information is essential for business agility. Companies that have to wait until the end of the month for critical status updates are not in control and in danger of failing regulatory compliance. According to the QlikView/Accountancy Age and Financial Director survey, however, performance metrics are delivered monthly in over 60% of businesses. Only 5.8% can monitor their progress in real time. With purpose-developed tools like QlikView, information is instantly available, understandable and capable of being interrogated or filtered for deeper analysis. This is not only what people need to do their jobs well; it s also what they re used to. 4
5 5. Change behaviour and instil a new culture of accountability The QlikView/Accountancy Age and Financial Director research shows that only 23% of senior decision makers feel their employees are very accountable for their performance, but measuring performance is ultimately futile if individuals are not made responsible for their contribution. In truth, BI is as much about changing behaviour as it is about operational processes. By emphasising self-service exploration through personalised dashboards, QlikView empowers everyone to get the information they need to do their bit. And with this power comes an understanding of how individual roles align with the performance targets of the business a hugely motivating factor for disenfranchised staff who could otherwise feel ignored. Only 23% of decision makers say their employees are very accountable Making employees actions more transparent, and enabling them to compare themselves against their peers, creates a natural uplift in performance as people become more competitive. Giving everyone access to dashboards also helps with the dissemination of best practice and innovative ways of working. Conclusion As evidenced by the results of the QlikView/Accountancy Age and Financial Director survey, senior decision makers understand the value of corporate performance management. But failure to fully appreciate the benefits on both a corporate and individual level means many initiatives are not fulfilling their potential. Perhaps the most important thing for senior managers to understand is that successful PM should actually change behaviour and motivate everyone to drive improvement. Business users with the means to get reliable answers to their questions are more confident, more competent and better able to make fast, effective decisions. The latest generation of tools to support this have much more in common with consumer technologies like Google, making them popular with business users at all levels. They enable performance metrics from all areas of business to be delivered in real time, driving sustained improvement across the board for significant increases in efficiency. Most of all, they highlight the contribution each individual makes to an organisation s overall success, helping employees feel valued, included and accountable for what they do. This in turn fosters a healthy, inspiring culture, where innovation is rewarded, action is taken and improvements are seen, and everyone works towards a common goal. 5
6 Key points to take away The faster performance metrics can be analysed and acted on, and the more areas they cover, the better the chance an organisation has for success. Performance is greatly affected when more people have access to performance metrics. According to a 2009 Aberdeen AXIS report, the most successful companies give line-level, customer-facing knowledge workers access to performance data. Excel is not a strategic tool, and it shouldn t be relied on for tracking critical business performance metrics. The best PM tools need to be quick to implement and intuitive enough for non-technical users to understand with little or no training. Dashboards empower business users to take a self-service approach to exploring data. Creating a culture of accountability means everyone is invested in the success of your business. 6
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