Take the wide view

There are several things that go against Performance: Creating the Performance-Driven Organisation. It reads in parts like an unabashed sales pitch for Synygy Inc, an incentive solutions company owned by the author, Mark A Stiffler. Also, Stiffler's I-am-the-last-word tone sometimes makes him forget that management has few if any one-size-fits-all solutions. In any case, there is no dearth of gurus who promise performance management Holy Grails for all problems.

Many might also punch holes in his assumption that you will get employees to work harder just by dangling money in front of them, even though most of the evidence says otherwise. Lastly, the dry textbook style of writing, a confusing jumble of acronyms and lack of enough non-Synygy examples can leave your head spinning with a melange of ideas about where to begin and where to focus.

If the 204-page Performance is still worth a read, the reason is simple: the author's enthusiasm for a comprehensive view of performance management that crosses departmental silos can be infectious. Most importantly, it challenges some assumptions and beliefs about how to improve performance and how an organisation can transform itself from one where performance is reactively managed to one where it is proactively driven.

At first glance, Stiffler's central theme of a unified performance management system may sound repetitive, and casual readers may even find it boring. But that would be a pity, as organisations must get out of their fragmented view on the issue. There is no doubt that performance management has become the proverbial elephant described by blind men""they all touch different parts of the elephant, and go by just the part they touch. Similarly, the current approach to performance management lacks a consistent vision that binds every component of the organisation.

Ask yourself these questions: is there a tight alignment between the objectives of your departments and the goals of the individuals working in those groups? Are you measuring past performance, when what you ought to be doing is using past performance as an input to project future performance? Have you linked the performance of the organisation and individuals to the pay of all employees?

The author makes a number of points. First, and perhaps most important, performance management is not a seasonal pastime. If you are serious about improving performance, forget about being first to the finish line. There is no finish line.

Secondly, organisations often make the mistake of waiting for a foolproof big-bang plan before implementing anything. That's a mistake; it's better to have a mediocre plan than no frame of reference for further action.

Thirdly""and perhaps this is the best part of the book""it teaches you how to make a good incentive compensation report. Such reports should clearly explain how the plan works and how results are calculated. The report should answer three basic questions: 1) What did I make? 2) How was it calculated? 3) Why did I make what I did? The report should show the calculations for payments and earnings, the performance measures and payment method used, and detailed transactions or other supporting data.

In effect, such reports should tell a story, detailed in a way that enables people to follow the story line. So don't just show calculations""show how the data were used to create those calculations. You might even want to include some "what-if" analyses to reinforce the relationship between compensation and performance.

Fourthly, for any performance appraisal system to succeed, meaningful measurements""sound objectives and a thorough understanding of unintended consequences""are a must. Wrong measures can be a disaster. Take restaurants. To maximise revenue, you may seek to turn tables over faster. The problem, of course, is that diners don't like to be rushed. But if turning tables faster becomes the measure of success, with no limits placed on the magnitude of the "achievement", the impact on revenue is likely to be the opposite of the intended result.

It thus makes sense to listen to what Stiffler says about approaching performance management from an enterprise-wide perspective.

By way of analogy, think about automobile maintenance. You can check the air, change the oil, fix the brake linings, and do a hundred other things. But if you forget to perform even one important repair such as replacing a dead battery, the car won't start. Stiffler's biggest contribution is to remind us that companies are failing to make such process repairs.

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PERFORMANCE
CREATING THE PERFORMANCE-DRIVEN ORGANISATION

Mark A Stiffler
John Wiley & Sons
Price: $45; Pages: 204