Did you have a good day? How do you know?
When our consultants ask front-line managers or employees if they have had a good day, they usually respond with an answer based on the reaction of others. “I’ve had a good day when my employees/customers/suppliers/bosses aren’t complaining.” What is often missing from these responses is any sort of objective metric or measurement. Many people work each day without having a clear understanding of whether their day was productive and whether it moved them any closer to a specific objective.Performance management systems are the tools companies use to try to align everyone so they are working towards the same objectives. But many don’t work that way.
Different management perspectives
A challenge with performance systems is that you’re trying to align levels of management that think differently. Senior executives engage in long-term planning, focusing on financial data over monthly, quarterly, and yearly intervals. Middle managers navigate shorter-term horizons, working with weekly, monthly, and yearly planning data. Front-line managers grapple with real-time demands. Their focus is on what is happening today and this week.Getting all these different perspectives aligned is difficult for any organization. The way systems try to keep these perspectives in alignment is through conversion ratios that are used for scheduling work, but this is often where things get misaligned.
The critical role of scheduling
In almost every industry, planning and day-to-day scheduling is critical to manage profitability. Examples include optimizing physician time in operating rooms, matching inventory with production flow in aircraft assembly, and aligning staffing with customer demand patterns in restaurants and retail stores.Effectively scheduling resources to match demand can make the difference between a high and low-performing organization. Scheduling is the key control point between planning and measurement. It’s the final set-up before execution determines whether you make money or lose money. Yet despite its significance, how work is planned or “scheduled” is one of the least defined aspects of many organizations. Often, few people in an organization fully understand the mechanics. The result is that organizations rely on buffers of equipment, people, or time to enable them to properly respond to customer demand.
There’s too much data available
Often managers have too many reports and too much information. Over the past three decades we’ve seen a dramatic increase in the capability of organizations to collect and disseminate data to management, both in terms of volume and frequency. But it’s often simply too much to process. Another problem is how managers use information. H. James Harrington, a process improvement guru once wrote, “Measurement is the first step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.” It’s a good concept but with one caveat, measurement should be used to provide information to management, not as a tool to evaluate people. The purpose of a performance system is to control performance, not people. Measurement systems are effective if they’re used to identify conditions that can be corrected through innovation, coaching, or training. If they’re used to control people, people will eventually figure out how to game the system, making the information less valuable. Recognizing the signs of misalignment in your performance system is crucial. Understanding these common pitfalls can assist in troubleshooting and achieving the desired results for your organization. For a more comprehensive exploration of performance systems and driving results in your business, download a free chapter of Results, Not Reports.
