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PERFORMANCE
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    Table #1: Corporate Goals
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    Table #2: Departmental Contribution to Corporate Goals
     
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    Table #3: Departmental Goal
     
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    Table #4: Individual or Job Goal
     
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Bernard Liebowitz, PhD CMC
                President, Liebowitz & Associates, PC
              980 North Michigan Avenue, ...
Performance Management Booklet
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Performance Management Booklet

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Performance Management Booklet

  1. 1. 1 Liebowitz & Associates, PC PERFORMANCE M A N AG E M E N T The missing link between your firm’s strategy & its implementation Liebowitz & Associates, PC
  2. 2. 1 Liebowitz & Associates, PC PERFORMANCE MANAGEMENT The missing link between your firm’s strategy & its implementation The Challenge Nine out of 10 companies fail to execute their strategies after spending time and money developing them. Why? Growing firms are busy growing! They often don’t have the time to stop and consider what steps they might be missing. A key step that companies overlook is translating their overall strategy to measurable goals and cascading those goals down throughout the company so that everyone is aware of what is expected of them—in other words, aligning each employee’s goals with the firm’s strategic goals. This is called performance management. Without this important component in place, companies fall short of their goals: » Less than 7% of employees in companies truly understand their firm’s strategy— i.e., where the firm wants to go. » Only 25% of managers have incentives linked to the successful execution of strategy. » Only 40% of companies link their budgets to strategy. » An estimated 85% of executive teams spend less than an hour per month discussing strategy.
  3. 3. 2 PERFORMANCE MANAGEMENT Table #1: Corporate Goals  A    B    C   D   Financials/Profits,   The Customer Internal Processes Organizational Learning   Margins, etc. & Development 1) 1) 1) 1) 2) 2)  2) 2) 3) 3) 3) 3) 4) 4) 4) 4) 5) 5) 5) 5) 6) 6) 6) 6)
  4. 4. 3 Liebowitz & Associates, PC The Solution Liebowitz & Associates has a performance management process and software system that can help you avoid these pitfalls and fulfill your potential as a company. Unlike performance appraisal, which is a human resources function, performance management is the province of CeOs and C-level executives—it is directly related to the bottom line! Research has shown that a well-structured performance management system results in: » Increased operating margins » Quicker execution of company strategy » More rapid adaptation to change—and the need for change » Increased employee motivation and, consequently, a decrease in employee turnover » exposure of duplicate or redundant business initiatives » Integration of business initiatives across departments » Timely correction of problems related to quality, timeliness and efficiencies Underlying all of these benefits is enhanced employee identification with your firm. If employees know the firm’s overarching strategy and how their work contributes to its success, if they are consulted about process improvements that support their goals, and if they are rewarded for their performance, you will have a workforce dedicated to your company’s success! The Process Implementing a performance management process involves: » Defining » Aligning » Cascading » Rewarding » Optimizing Our experienced consultants can guide you through these steps, and our KeyneLink™ software system (see page 9) will help ensure that you stay on track. Following is an overview of the steps in the performance management process.
  5. 5. 4 PERFORMANCE MANAGEMENT Table #2: Departmental Contribution to Corporate Goals      A    B    C   D   Financials/Profits,   The Customer Internal Processes Organizational Learning  Margins, etc. & Development Corporate  Goals Sales Accounting Engineering Operations & Production Service/  Quality Control Purchasing
  6. 6. 5 Liebowitz & Associates, PC Defining Your Firm’s Objectives 1 Once you have a strategy in place, corporate goals must be established to support that strategy. Your goals can be grouped into four categories: » Financial (e.g., profits, margins) » The Customer » Internal Processes (e.g., productivity, efficiency) » Organizational Learning and Development The number of goals within each category is limited only by your corporation or organization, not by the “logic” of goal setting. And each goal can have sub-goals attached to it. For example, the goal of a division may be to increase sales revenues to $100 million. Nested within that goal may be sub-goals of $25 million for Product #1, $50 million for Product #2 and another $25 million for Product #3. The only restriction on the process of goal setting is that each goal at all levels be measurable—i.e., able to be expressed numerically. This restriction often raises eyebrows, particularly around issues related to customer perception and by service-oriented firms. For example, how can an art department measure the creativity of its output? By sales? Well, sales does measure “saleability,” but does it measure creativity? After some very intense and in-depth discussions, one art department came to the conclusion that creativity meant the number of times its work was mentioned in national trade journals relative to the mention of competitors’ work. This example illustrates that virtually all goals can be expressed numerically, and the discussions around goals that seem to defy this requirement can be very enlightening for a business. Table #1 shows how your corporate goals might be displayed. Aligning Your Goals After your corporate goals have been established, they have to be aligned across all departments. This means ensuring that: » Goals across the four categories are consistent and not contradictory » There are available resources supporting them » Objectives are tied to budgets » Overlapping “turf” issues between departments are negotiated and resolved » Necessary and relevant information flows to all departments 1 Adapted from Kaplan and Norton’s The Balanced Scorecard.
  7. 7. 6 PERFORMANCE MANAGEMENT Table #3: Departmental Goal      A    B    C   D   Financials/Profits,   The Customer Internal Processes Organizational Learning  Margins, etc. & Development Corporate  Goal Departmental  Goal How Measured?   Who Measures? Start Value? Aim or Goal? Resources  Needed? Action Steps? Dates?
  8. 8. 7 Liebowitz & Associates, PC Table #2 shows how corporate goals should be distributed across departments (or divisions) and that each department can contribute to goals in more than one category. Cascading Your Goals Once everyone is on the same page in terms of the corporate goals, each department then needs to establish specific steps it will take to move the company in that direction. A department would utilize Table #3 to indicate which goals it would support and specifics of how it would work toward those goals. Similar tables could be designed for teams or workgroups within each department or division. The further downward the cascading process goes, the more tailored the table becomes. Table #4 would be used by an individual to establish goals and how to best achieve them. These tables can help employees at various levels of your organization be better aware of what activities they are expected to perform, how performance will be evaluated and, in particular, how their performance relates to corporate strategy and objectives. Rewarding Performance The next step is developing a system for tying reward to performance—as well as to overall corporate objectives. employees need to know which expectations and goals have priority and what constitutes excellent performance so they can expend their energies on what is truly important. Reward for performance represents very tangible evidence of your firm’s appreciation and can only strengthen the commitment of your employees. equally important is the investment you make in their training and development. This shows you want them to grow and acquire the skills needed for advancement. A performance management system provides you with the tools to clearly differentiate the different levels of performance rather than having to rely on subjective impressions. It also allows managers to evaluate the impact of training and development on performance and goal attainment—something that is difficult to ascertain in the absence of such a system.
  9. 9. 8 PERFORMANCE MANAGEMENT Table #4: Individual or Job Goal      A    B    C   D   Financials/Profits,   The Customer Internal Processes Organizational Learning  Margins, etc. & Development Corporate  Goal Departmental  Goal Individual  Performance  Goal How Measured?   Who Measures? Start Value? Aim or Goal? Resources  Needed? Action Steps? Dates?
  10. 10. 9 Liebowitz & Associates, PC Optimizing the Process Tracking and monitoring your performance management process is critical for it to be successful. This requires an automated system—one based on objective measures, rather than subjective impressions like many performance review systems. Most important, it must capture buy-in from employees and clearly align their actions with corporate objectives. Our KeyneLink™system accomplishes just that. It collates your goals and related information in a convenient online location, ready to be accessed by authorized personnel. It quickly answers such questions as: Who has or has not set their goals? What teams or departments are behind in their progress? Which high priority goals are not getting the attention they need? KeyneLink™ offers a robust set of best-of-breed performance management tools that: » Automatically aligns corporate goals across the organization and cascades them down throughout the company » Tracks goals on a department, team and individual basis » Provides easy-to-access company-wide or individual reports so executives, managers and supervisors can easily identify progress and problems » Promotes frequent interaction between supervisors and employees about strategy and goals—and monitors the process » Requires periodic performance reviews at all levels of the organization, thereby holding managers and supervisors accountable for the performance of their employees » Provides important information about employees (e.g., 360-degree feedback, evaluations and training) » Protects confidentiality by permitting access to authorized individuals only » Is paperless and web-based; the involvement of your IT department is not needed » Is easy to implement and learn and can be up and running in short order See what KeyneLink™ can do for you! For a consultation and demonstration of our system, please contact: Bernard Liebowitz, PhD CMC President, Liebowitz & Associates, PC 980 North Michigan Avenue, Suite 1400 Chicago, IL 60611 312.214.3583 • 312.214.3510 fax www.liebowitzassoc.com • bernie@liebowitzassoc.com
  11. 11. Bernard Liebowitz, PhD CMC President, Liebowitz & Associates, PC 980 North Michigan Avenue, Suite 1400 Chicago, IL 60611 312.214.3583 • 312.214.3510 fax www.liebowitzassoc.com • bernie@liebowitzassoc.com

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