From Performance Measurement to Performance Culture

Successful Change

We are constantly being told that organisations no longer exist in a stable environment, but in one that is rapidly and constantly changing. Change itself is not new, but the management approaches that coped successfully with the steady, incremental change of the past are inadequate for the scale and frequency of discontinuous change of the present.

"Management . . . is not about the preservation of the status quo, it is about maintaining the highest level of change that the organisation and the people in it can stand."

John Harvey Jones, Making it Happen

What is Performance Culture

A Performance Culture is one in which management best practice is integral to the way in which the organisation is structured and managed. It is a culture in which every person in the organisation understands the organisational mission and priorities, and their own role in helping to achieve those priorities, and in which every person is empowered, encouraged and motivated to use this information to act to achieve the agreed goals within recognised limits of authority.

From Measurement to Management

Between 1991 and 1995 InPhase worked with over 50 leading companies to define the true Critical Success Factors for their business and the measures that really mattered in measuring the achievement of company objectives. During 1995 we analysed over 200 leading change management texts. Analysis in 2000 by Bain and Company, and Harvard Business Review this month confirmed our experience, research and findings: Organisations implement many different approaches to support performance change. These may include one, or typically more, of the following initiatives:

• Balanced Scorecard
• Business Excellence Model
• Operational Excellence
• Investors in People
• ISO 9000
• Process Re-engineering
• Performance Measurement and Review

as well as the standard business cycles and activities of strategic and operational planning, budgeting and setting of objectives and targets.

Conclusion

Managers, like their organisations, face constant and increasing pressures, and often contradictory demands. Culture change is not achieved overnight, but every culture changes gradually, and corporate culture should be fashioned with a purpose.

The exercise of top-down initiative-led change can create ‘change fatigue’ where the multiple, and sometimes apparently conflicting requirements of these initiatives overloads the managers.

Creating successful performance change requires inclusion of a culture change that enables change to be continuous and created ‘by’ the managers more often than applied ‘to’ the managers. Creating an over-arching framework to align the specific combination of initiatives being followed and enabling a process of continuous performance management in a collaborative environment reduces the obstacles to change and empowers the organisation to succeed. The InPhase TOMAS^TM framework is an example of such a framework.

The PerformancePlus^® fully web-enabled software embodies the TOMAS^TM framework and enables organisations and managers to start the performance culture change journey now, from wherever they are, with whatever performance measurement and management approaches they are currently using.

It can be implemented incrementally, starting with those areas where most benefit can be achieved most quickly: monitoring the impact of a programme of change initiatives, for example, or to focus upon a key set of processes. Because it enables the ‘burden’ of measurement and reporting to be shared widely, the time required by any individual can be very small, even when data is not already available for automation from operational or data warehouse and MIS systems.

It must be implemented within the context of a change management philosophy and should be supporting a communication and training process that involves every employee. IT systems do not provide a ‘quick fix’ to achieve sustainable competitive advantage and performance gains, but they are required to support a successful change in today’s high-speed inter-connected world.

To obtain a hard copy of this White Paper or to find out more about PerformancePlus^®, the services offered by InPhase, and to scope your unique deployment project click here and an InPhase Consultant will contact you free of charge.

How to Integrate Multiple Performance Management Approaches

No single golden-bullet management theory

Major organisations face an increasing degree of pressure from a number of directions:

• increased demands for short and long term financial success
• ever rising product feature, quality and cost competition
• spiraling customer service expectations
• operational requirements to ‘achieve more with the same, or less’
• demands to improve the work experience for staff - or lose the best

With so many contributing pressures, no single golden-bullet performance management approach has emerged.

Instead the aspiring world class companies of tomorrow are addressing these issues through a number of management approaches simultaneously.

From work with over 50 of the most successful, blue chip, organisations we have found that the number of approaches being deployed simultaneously typically ranges from 5-11 including:

• Annual departmental budgets
• Economic Value Added analysis
• Activity Based Costing
• Balanced Business Scorecard
• Business Excellence Model, EFQM
• Management By Objectives
• Staff competency development (such as Investor In People accreditation)
• Supply Chain Engineering
• Process re-engineering
• Internal customer value chain
• Quality circles
• Kaizen
• Continuous improvement

Bringing Cohesion

The combining of multiple performance management approaches is adopted to achieve a balance of improvement in a number of areas simultaneously, each supporting the other, and producing a more significant improvement than any one or two approaches on their own.

In many companies it seems as if the plethora of approaches has appeared without co-ordination and overall coherent strategy, and each programme has its particular enthusiasts and detractors.

Even where this is the case, there is an opportunity to bring together the programmes and integrate them within a unifying framework.

Each approach has its benefits in achieving improved company performance. Each approach is intended to improve, through direct or indirect means sustainable financial success.

Unifying Building Block Approach

From work with hundreds of managers, using the leading performance measurement and management approaches, InPhase created a unifying concept and language and the software to embody it. This is now commercially available as PerformancePlus^®.

This enables each individual objective and measure to be entered only once and yet seen within the context of each of the different approaches being used: approaches which themselves are all visibly part of a consistent strategy to improve the overall team performance.

Multiple Approaches in Practice

Within NatWest bank, one of the earliest adopters and most experienced users today of the Balanced Scorecard, Divisions have now also introduced simultaneous use of the Business Excellence Model from EFQM, in parallel have achieved Investor in People accreditation, also employ divisional and departmental budgeting and personal performance appraisal and bonus schemes, and are increasingly involved in process change programmes.

For leading high street health and beauty retailer Superdrug, the management choice has included combining its own enhanced derivative of the Balanced Scorecard, with a programme of major change initiatives, and Living The Mission and personal Bonusable objectives.

The PerformancePlus^® approach and software package has been used to create single models which integrate the chosen approaches and puts each of them into context with the other.

Within these models, the key impacts can be seen, not only for each approach in its own right, but also one upon the other, improving the ability to see the relative importance and success of each, in its total effect.

The closing words should come from some of the people using PerformancePlus^®:

To obtain a hard copy of this White Paper or to find out more about PerformancePlus^®, the services offered by InPhase, and to scope your unique deployment project click here and an InPhase Consultant will contact you free of charge.

The Balanced Scorecard Information to Drive Performance

Introduction

Every organisation recognises the importance of measuring: as well as providing the means of monitoring the achievement of the organisation’s strategy, it is a vital means of communication and motivation.

That, at least is the theory!

In reality many organisations have yet to successfully implement a performance measurement system that adequately fits the bill.

"The benefits of such an approach can be financially dramatic. The impact of adopting a balanced approach to measurement have been variously estimated as a profitability increase of between 15% and 30% for a typical FT-SE 100 company."

The Balanced Scorecard (R. Kaplan and D. Norton, Harvard Business Review 1992) is one such a framework.

Benefits of the Balanced Scorecard

The Balanced Scorecard’s prescriptive approach to performance measurement requires performance measures defined in each of the three non-financial perspectives to be linked to each other through a cause-and-effect chain and to the financial measures, ensuring that the organisation’s ultimate goal: that of continuing to be successfully in existence, remains paramount. The extent to which business results can be improved by decisions taken based on a Balanced Scorecard view of the organisation is significant. Furthermore, these business results tend to be very sensitive to minor improvements in performance in key areas.

The table following illustrates the point.

Information Systems to Support the Balanced Scorecard

Information systems play an invaluable part in assisting managers to analyse beyond the summary level Balanced Scorecard measures.

When an unexpected signal appears on the Balanced Scorecard, managers need access to underlying data to investigate the cause of any problem or to analyse trends and correlation.

Every measure should be part of a cause-and-effect relationship that culminates in improving long term sustainable financial performance. The Balanced Scorecard is an illustration of the strategy, starting with the long term financial objectives and then linking them to the customer focused initiatives, internal operational processes and investments in employees and systems that combine to produce the desired economic performance.

If the information system is unresponsive, however, it can significantly impact the effectiveness of performance measurement.

Such an information system must, therefore, incorporate all of the following features:

• At-a-glance exception alerting
• Rapid access to summarised data
• Drill down to successive levels of detail
• Easy to follow dependency paths to identify the causes of performance other than drill-down
• Reporting of initiative, objective and process information including responsible owner, team members, and definitions as well as current status
• Reporting of impacts of underlying objectives upon scorecard measures
• Reporting of the impacts of objectives upon each other
• Graphical creation and modification of objectives, measures and relationships
• Support for dynamic re-planning for change
• Integration with office tools
• Inclusion of rich text information
• Graphical trending and tabular representation of data
• End user configuration and analysis options
• Integration with existing corporate data sources - with support for additional direct entry of values and annotations

InPhase PerformancePlus^® provides these facilities. PerformancePlus^® is specifically designed to support the implementation and ongoing evolution of a Balanced Scorecard measurement system, alone or integrated with other performance management approaches and initiatives, such as business planning, team and individual objectives setting, organisational and personal development, process review and change initiatives.

The Balanced Scorecard, with a comprehensive information system to support it, provides a means to make a real difference throughout the organisation from individual employee satisfaction right through to significant improvements in the bottom line.

To obtain a hard copy of this White Paper or to find out more about PerformancePlus^®, the services offered by InPhase, and to scope your unique deployment project click here and an InPhase Consultant will contact you free of charge.