Viewpoint -- End The Bumpy Ride To Attaining Corporate Goals

Dec. 21, 2004
Use goal-driven performance management to achieve optimal results.

A corporation is like an athletic team . . . an orchestra . . . an army. Business writers have used a host of metaphors to represent the workings of a corporation. To me the most apt metaphor is that of the bumper car ride at the amusement park. A bunch of people get into their bumper cars, careen about madly for a while with great energy and verve, gleefully smashing into each other. And then, having gotten nowhere, they get out and go home. With some allowance for exaggeration, doesn't this sound like a typical day at the office? The way many organizations function is not too different from the bumper car ride, with much commotion but little success in executing strategy. Goal-driven performance management offers a fundamentally sound way to corral the energy and talent of the corporate population and deliver the results required to achieve strategic goals. Companies can use two processes to rein in the chaos of the bumper car phenomenon and direct the collective talents and energies of their employees toward achieving organizationally significant goals. One of these processes is goal alignment -- setting goals at the top of the organization and lining up everyone's individual goals to be consistent with and supportive of those top-level goals. The second process is performance management -- ongoing management of individual performance with links to rewards and development. Think of goal alignment as giving everyone a target to shoot for and performance management as providing a reason to shoot for it as well as mechanisms for moving the target and adjusting one's aim when necessary. Goal Alignment Goal alignment starts at the top of the organization. Companies have a sense of purpose, and this is generally expressed through mission and vision statements -- descriptions of the business they are in and of what they hope to become. Each year they usually develop a set of strategic objectives to provide more specific direction over the course of the upcoming 12 months. This is the easy part. The hard part is carrying out the strategy -- executing. Goal alignment is part of the execution process. Most companies that practice goal alignment do so by cascading goals down into the organization from one level of management to the next. This usually amounts to managers discussing goals with their direct reports, the direct reports discussing goals with their direct reports, and so on. Each person ends up with a set of goals for which he or she is accountable. Each goal aligns with a higher-level goal. A marketing specialist's goal to develop marketing material, for example, may align with a marketing manager's goal to promote new products, which in turn may align with the marketing executive's goal of increasing market share. Companies try to keep close watch on their external environments (both threats and opportunities) and on internal developments that may require them to adjust their strategic goals. Thus, the setting of strategic goals and subsequent alignment of supporting goals does not comprise a one-time event. Companies must be agile, and their goal-driven performance management systems must enable them to quickly shift everyone in a new direction. Managing Performance To Achieve Goals With goals set, the performance management mechanism kicks in. In performance management, everyone tracks progress against his or her goals during the year. They revise goals as priorities change -- even drop goals and add new ones as top management responds to, or anticipates, threats and opportunities and cascades major changes down through the organization. Progress can be monitored -- and I use the term "monitor" in a positive sense rather than in the sense of snooping. If one of the strategic goals, for example, is to gain market share through the introduction of innovative products, there may be hundreds of individual goals throughout the company aligned with and contributing toward the achievement of this key goal. In a goal-driven performance management system, the CEO can see the status of these goals and discover if things are progressing well or if there are problem spots. If critical supporting goals are in trouble, managers can intervene to help overcome obstacles. Monitoring, in other words, makes things visible that are ordinarily invisible. The CEO may look across the organization at all goals, not just those aligned to a particular strategic objective. Any manager can view the progress being made on all the goals supporting his or her own goals. Furthermore, it is possible for managers and employees to see the entire goal landscape within the organization. Imagine the effect of this level of visibility on coordination and cooperation, two attributes that are often hoped for but seldom realized in bumper-car companies. It doesn't take a great leap of insight to realize that goals get achieved -- or not -- by people. They get achieved by people applying their skills, talents, knowledge, experience and energy. Many companies develop competency models that specify the skills needed to be successful in the organization and even in a particular job. Usually mixed into the competency model is a smattering of the values the organization espouses. So, for example, plant managers for XYZ Co. may be expected to exhibit certain planning, leadership and analytical skills while also acting in ways consistent with XYZ's values of working together cooperatively ("teamwork") and bending over backward to exceed customer expectations ("customer focus"). People with the right mix of competencies are able to achieve the goals for which they are accountable. In the absence of the right mix of competencies, goals don't get achieved quite so well. Thus there is much effort toward getting people into the right positions. More importantly, from a performance management perspective, managers coach their direct reports to help them apply the skills they have and build those they need in order to perform their jobs well -- and to do it the XYZ way. Performance Evaluation As A Strategic Nexus At the beginning of the year, goals are set and behavioral expectations or skill requirements are clarified. In goal-driven performance management the results people actually achieved during the year are measured at year's end. This usually is referred to as performance evaluation, and it most often includes not only the measurement and accounting of results achieved but also an assessment of the skills and behaviors people used to produce those results. Performance evaluation gives employees and their managers an opportunity to review employees' performances over the past year. Of course, if performance management is practiced according to the textbook, employees have been getting feedback on their performance all along and the performance evaluation is the capstone. The real importance of the formal annual evaluation is that it triggers two other components of performance management: rewards and development. People are driven to do good work when their work is meaningful and when they know they will receive greater rewards for outstanding work than for mediocre work. This matter of contingent rewards is the high-octane fuel that makes the goal-driven performance-management engine hum. People may find some inspiration in knowing that their work contributes to the company's achievement of its strategic goals, and they may derive satisfaction from the fact that their work involves doing things they love to do. But the real incentive to give maximum effort comes from knowing that if they deliver more than the results expected of them -- and do it the XYZ way -- they will be rewarded accordingly. In addition to reward, performance evaluation also triggers development planning. If you weren't able to achieve last year's goals, what skills should you work on to improve your chances of achieving this year's goals? If you are preparing to take on greater responsibility, what skills should you develop to improve your chances of achieving the more challenging goals that await you in your new position? Development plans can be initiated at any time, but they seem to flow naturally as part of the annual performance evaluation. The Complete Package Most importantly, the goal-driven performance-management process is -- as the name implies -- driven by goals. The primary mission of this process is to guide the organization's collective talent and energy toward executing strategy and delivering organizationally relevant results -- in other words, achieving strategic goals. Neither goal alignment nor performance management alone is sufficient to do the job. Performance management without integration with the organization's strategic objectives amounts to flailing about without a strong, clear and shared sense of direction. Goal alignment by itself amounts to having a good map of the route but not providing your drivers with any good, personal reasons for embarking on the trip. And, if the drivers do decide to take the trip, it would be difficult -- without performance management -- to determine if they are on course, to keep them on course and to get them to change course when necessary. Put the two together, however, and you've got something. Lynn Summers, an industrial and organizational psychologist, is a co-founder of Performaworks Inc., a developer of goal-driven performance management software. A published author and a former professor, he has more than 25 years of experience in industrial psychology, human resources, and training and management development. He can be reached at [email protected].

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