What Happened to Performance Improvement?

The answer to the marquee question is important and largely answered incorrectly by executives and corporate leaders today. I can attest to this from the standpoint of one who has championed performance management since being trained by two formidable forces in the mid seventies: Marine Corp Leadership School and four days with W. Edward Deming in Yakosuka, Japan. Today’s economic issues make a mandate that everyone responsible for economic recovery through the leveraged use of human capital and natural resources must know the answer to this question or at least understand its importance and have strategies under discussion and review.

Recent economic trends have focused all eyes on trimming the fat, cutting expenses and preserving capital at all costs. And even with encouraging signs for a recovery, controlling expenses and maximizing productivity and profits are still major goals for every organization. Yet survey data shows that less than 50 percent of executives and corporate leaders truly understand what drives profits in their organizations.

Remember the 80/20 rule and the Peter Principle. Both help to explain why things go the way they do and why performance management is so darned important. From the 80/20 rule: 80% of the work gets done in the last 20% of the time allotted; 20 percent of the customer base account for 80% of revenue; 20% of the product line account for 80% of sales. Any of this ring true. How about, 20% of your efforts produce 80% of your results. If you could only turn the ratio around, you would achieve an instant 400% increase in performance.

This is a rule of thumb you can use to understand where to look for solutions. Rules of thumb are not principles. Rules of thumb are derived through heuristics and pattern recognition. This rule was derived from a pattern noticed in ship yards, progenitor of core project management tools we use today.

If the current economy makes you feel under the thumb, consider the 80/20 rule in your business. Where does it exist? Is that effective? How can you make changes that leverage performance up. Let’s face it: 20% of your customers could destroy 400% of you final declared profit and destroy your business.

The Peter Principle is not a rule of thumb but may be derived from one. The American Heritage Dictionary defines it as “The theory that employees within an organization will advance to their highest level of competence and then be promoted to and remain at a level at which they are incompetent.” The Peter Principle essentially states that the true talent of ‘A’ players may be to protect their positions, income, options, bonuses, benefits, etc. Likely the executive corps drains 80% or more of the companies employment fund. Senior executive compensation is now over 400% of average employee pay.

I believe that I can speak for all in saying:
Damn the company that protects incompetence at the top
while impoverishing their communities through layoffs and cutbacks and
driving a deeper wedge between humanity and profitability.
This is not the path to a great society or economy but to social ruin and class rule.

It has been my experience that like attracts like. Bright people seek to work with and learn from even brighter people. Corruptible people seek to learn from those who are practices at corruption. Our recent Wall Street debacle and the Bernie Madoff scandal make this point crystal clear.  The brightest are promoted to positions where their lights may shine but not in the dark places of the corrupt, the incompetent.  This is why some formerly admired hi-tech companies, companies that actually make things, created dual channels for advancement: engineering management and business management. Their fall came soon after they divorced themselves from a history of development led by brilliant people who cared for more than profits and they focused development on people who understood how to manipulate the ‘trickle down’ economy and for whom profit is king.

While every organizational culture is different, the Peter Principle is alive and well in those which are highly bureaucratized and demand adherence to rigid rules: Where following ineffective status quo is mandatory to job retention and future advancement.

So, the above issues aside, what are the rational barriers to successful implementation of performance management and how can organizations overcome them? These questions were the focus of an interactive Webcast sponsored by CFO magazine, BetterManagement and SAS which sought to dispel myths about performance management, explain the slow rate of adoption in spite of economic urgency for improvement, and lessons learned from successful performance management deployments.

I’ll have more to say and share about the survey in future posts but you can view or download it now by clicking the link below.

Implementing performance management methodologies: pitfalls and speed bumps
Practical advice on overcoming the obstacles to changeSAS Performance Improvement

What is Performance Management?

According to Gary Cokins, Manager, Worldwide Performance Management Solutions for SAS. there is a lot of ambiguity, confusion and lack of consensus about what performance management is.

 

Performance management is not something new but the integration of the already familiar. Just as the ancient Romans found nothing new in sand and rock, it was mixing them with mortar that produced an aggregate and the wonders of the Roman Empire. Consider performance management to be an aggregate  archwork made up of a strategic map blueprint, balanced scorecard keystone, client profitability analysis columns, and a thoroughfare of activity-based systems like lean management, six sigma, customer relationship management and more.

You cannot make a performance management arch by pursuing any of these methodologies in isolation nor without using a setting and bonding agent. Aggregate must be properly mixed, placed, and allowed to set and bond to produce lasting artifacts. Upsetting it before it is cured produces weaknesses, the starting points for catastrophic collapse. The same can be said for performance management systems. They almost always fail when interrupted them before they have time set and produce results.

The problem is that, due to the Peter Principle, most organizations haven’t the foresight at the top to understand that aggregate is made of more than throwing a few rocks together. The rocks have to be the right size and in the right ratio. Water and cement, must be added in the correct amounts and the slurry mixed well or the resulting construction will weaken and crumble. Even properly prepared and set and bonded aggregate, suspended without support or reinforcement, will collapse under it s own weight. Creating an executable and workable performance management system is performance engineering. If the mix is not right, it will simply not work over time.

Implementing performance management methodologies in sequence or in isolation of each other is like throwing rocks, pebbles, and bits of stone together. You may build something that look like an arch, but it will be ugly and only the foolish will trust it. This is what happens when senior executives buy into a program they will not give the time or resources for success. Managers and employees may know the vision and the mission and they probably already know where action needs to be taken and what needs to be done. What they do not know and cannot understand is why the company starts such projects and then either get in the way or drops the initiative before it can bear weight. The problem is that the senior decision makers want results and are not interested in the science or the principles or the methodologies. All they want are facts that say it’s working or when it will work and to what extent they can predict the pay-off and divert profits.

The brilliance of the ancient Romans was to realize that you get a lot more when you integrate synergistic materials and processes. They monitored each construction process to learn and improve. There was the size of the aggregate, the quality of the aggregate, the composition of the aggregate. There was the water, the surface tension and salinity of the water, and even its temperature all combined to produce different effects of strength, stability, and beauty. The Romans did something modern business all too often refuses to do and that is to embed analytics into each methodology. Given today’s technology, we have an opportunity too often ignored; that is, to use predictive analytics to support arguments for a more proactive executive management style that supports effective performance management instead of tearing it down before it can do its work.

Just as the mix of aggregate material, requirements for reinforcement, and setup conditions is different for a road and a sculpture, implementing performance management methodologies is not a simple constant. Each organizational situation demands a special formulation. Engineering performance management means putting the right mix of methodologies, principles, and practices into  a system to create a feedback loop of information that informs and guides the organization toward its vision and contributes to achieving its mission with value and sustainable profitability.

The ChangeGrid presents the common denominator of all activity-based concepts by defining their merits on two primary dimensions: Challenge and Ability and two secondary measures of size and importance. The ChangeGrid is like the water in the aggregate. Each system, from lean management to CRM, is made up of certain critical activities which present challenges and require resources and abilities.  The ChangeGrid is the only system in the world that allows monitoring the probability of success for the critical activities in any methodology.

Like an oracle for performance management, the ChangeGrid provides a common platform for senior executives and others to understand where they need to intervene and what form their intervention should take.

While strategy maps can enable an organization to articulate its strategy and understand which key performance metrics are meaningful measures of success. The ChangeWorks! System looks at each performance measure as an objective, and maps the probability that it will be achieve if nothing is done to support it. The information underlying the map provides profound solutions for maneuvering to close the gap on excellence and ensure the mapped strategy is optimally pursued.

The focus of this article was an interactive Webcast sponsored by CFO magazine, BetterManagement and SAS which sought to dispel myths about performance management, explain the slow rate of adoption in spite of economic urgency for improvement, and lessons learned from successful performance management deployments.

I’ll have more to say and share about the survey in future posts but you can view or download it now by clicking the link below.

Implementing performance management methodologies: pitfalls and speed bumps
Practical advice on overcoming the obstacles to changeSAS Performance Improvement

What is a Human Performance Engineer?

When pioneering a new area of science or practice the question of what to call one’s self is bound to arise. From a branding POV this is an important question. I am often asked about my own label of Human Performance Engineer.

In the past I would mutter something about all of the systems and processes I had mastered and how they all go together to help clients identify and resolve issues. This failed to earn much business.

That was before I became a Certified ChangeWorks! Professional. Now, I have a very clear and concise response:

I help people identify and eliminate the obstacles that stand between where they are and where they want to go.

How do I do that?

I use a very simple and extremely powerful system called ChangeWorks!

What is ChangeWorks!?

ChangeWorks! is a change management system which makes sense and which is so unique and powerful it must be experienced to be understood or appreciated.

Where is it useful?

Wherever you want to feel more safe, secure, healthy, or happy: Wherever you want more control?  . . . Work? . . . . Career? . . . . Relationships? . . . Finances? . . . Health? . . . . Other?

You can experience ChangeWorks! for yourself at and decide if it is right for you by completing a standard diagnostic survey at Targeting ChangeWorks!. Just respond honestly and you will learn what you want to know.