Cascading Effective Performance Management

Effective performance management is essentially a cascading process, which filters down from the highest ranks to the lowest ranks in an organisation. This means that the organisation's strategic plan (long term) forms the basis of the business plan (short term). This, in turn, provides the basis for team and individual performance. An integrated performance management system should therefore be developed to ensure that each level of performance feeds into the next level efficiently.

Strategy

Before one can identify goals and objectives that will contribute to the achievement of a division’s vision and mission, one would have to start with the organisation’s vision, mission and values. That is the organisation's strategy. A very clearly defined top-down approach needs to be followed to ensure that individual goals and objectives tie in with team goals and objectives which, in turn, have to tie in with division goals and objectives, which are linked to the organisation's goals and objectives.

An organisation's performance planning typically occur in four plans:

Strategic plan – performance requirements over the next 3-5 years.

Business plan – performance priorities for the next year.

Division/department/team plan – the role of these entities in achieving the goals in the business plan.

Individual performance plans – what each person (staff or manager) will achieve in the next year.

All of these are what we refer to as the organisation’s strategy. Strategy is the process by which an organisation manages its internal resources and capabilities to take advantage of the opportunities in the external environment, whilst addressing the threats that are likely to impact on the company.

Click here to view a video that explains strategy formulation.

Definition of Strategy: Strategy can therefore be defined as the long-term direction a company believes it should take, based on a combination of information available today and intelligent assumptions made by the management of the company.

Components of Strategy

The first step is to identify, understand and communicate your organisation's vision, mission and values. The vision, mission and values provide overall context for Strategic Performance Management. They are the standard starting point for any strategic planning activity.

Vision

The vision is the overall target of the organisation. It represents the ideal performance outcome in a perfect future. Where the organisation would like to see itself as an ultimate goal. Vision is seeing victory before it exists – getting where you want to go.

Mission

The mission is the fundamental purpose of the organisation. It explains the ‘what’ and ‘how’. What products and services are produced and in which manner, in order to ultimately achieve the organisations vision.

Values

The values can be defined as a set of beliefs or operating principles that guide organisational behaviour. This is when concepts like innovation, teamwork, respect, empathy, etc. influence the way in which the vision and mission is achieved.

NOTE: Remember that your division/department’s vision and mission must be aligned with and supportive of your organisation’s vision and mission.

Now that you have a better understanding of the vision and mission aspects, you should be in a position to identify, articulate and communicate specific goals and objectives contributing to the achievement of the division’s vision and mission.

This stage of the performance management process formalises what the division wants to achieve. Please remember that your division’s goals and objectives must in some way be aligned to what your organisation wants to achieve.

Establishing Strategic Goals and Objectives for the Division

Take the information from your strategy analysis (external and internal) and convert it into a set of goals and objectives that will drive your division over the next 12 months.

This process of formulating strategic objectives is often relatively simple. The process can be summarised as follows:

Key external issues and trends (opportunities and threats) – involve answering the question: ‘What do we intend to do about challenges that face us in the external environment?’

Internal skills and resources – involve asking the question: ‘We now know what our strengths and weaknesses are. What do we intend to do about it in order to meet the challenges posed by the changing external environment?’

Analysis of the constraints – require asking the question: ‘What constraints do stakeholders impose on our future operations?’ ‘What restrictions - physical, human and financial- will we have to operate under?’

Given that organisations suffer from resource constraints and that it is not feasible to achieve every strategic objective, a process must be established whereby a ‘wish list’ can be converted into an actionable list of strategic goals and objectives for every division. This can be achieved in two stages:

It is necessary to allocate priorities to alternative objectives. The method of allocating priorities will vary from division to division, depending on the particular requirements of each of the available resources.

Management must ensure that the strategic objectives conform to the following appropriate attributes:

Specific: What is the exact scope of the objective? What is included and what is not? What might be thought to be included but is being done by someone else? What must be done with the outputs?

Measurable: What measures will be used to know that the objective has truly been reached? When and how often will the process be measured? What measurement tools can be used to determine success? What format must the output take?

Achievable: A delegated impossibility is still impossible! If there is doubt over whether the objective is achievable, then the first part of the process should be either to test feasibility or to identify what would have to be changed in order to make the rest feasible.

Realistic: What is a realistic task for a functional expert to undertake in a week, may not be realistic for a junior joiner in a month. A series of roll-out meetings might be scheduled in two weeks, but clashes with public and personal holidays could mean that a month will be required. The test for a good objective is that it always deals with the reality of how long it will take to do things, rather than how long we would like it to take if we could ignore inconvenient facts.

Time bound: An objective without a clear specification of its timing priority is likely to be put at the bottom of the list. It will not get done. The simplest way to ensure that an objective will be achieved is to agree on a realistic deadline, even for objectives that are not time critical for success.

This means that for every objective a specific method of measuring or monitoring must be identified and agreed upon. For every objective a specific timeframe for monitoring or completion must also be agreed upon. This will mean that your objectives are truly SMART.

Key Result Areas (KRAs) group a division/department’s goals and objectives into cohesive and related areas of strategic concern. This ensures that the division’s effort is not a disjointed quest for a multitude of objectives, thus reducing fragmentation and isolation of issues.

The ultimate questions to be asked when testing your KRAs are:

"What is the purpose of my division?"

"What are we suppose to achieve?"

"How does my department contribute towards the existence of the organisation?"

“Will achieving this KRA indicate that we are successful as a department?”

Once you have identified your Key Result Areas, you have to identify specific goals and objectives, which will help you to achieve the department's specific KRAs. Using the table below, list as many goals and objectives as would be required to achieve each KRA. (Do not complete the last two columns – Performance Indicator, Time Frames – right now. This will be done during the Performance Contracting Phase.)