Performance Management 2.0: Are You Ready for the
CPA is an Andersen Business Consulting Alumni (1993-1999), and CEO of Syte Consulting
Performance management is often top
of mind with our manufacturing clients, as they look at where they are and
where they need to go in the future. So today, I thought I’d do a quick roundup
of some of the most relevant trends I see coming up in the area of performance
management, particularly in the manufacturing world.
What I like about this list is that
it speaks to three key components of every manufacturing business organization:
technology, process and people. At Syte, we’re big believers in the importance
of bringing these three elements together for more impactful outcomes, in any
aspect of the business, and performance management is no exception.
Whether you’re in a good and steady
operational groove or you’re seeing big change on the horizon, I hope you’ll
find this information useful and consider integrating some of these more modern
practices into your own performance management matrix.
Managing Performance for the Future
First, I want to differentiate a bit
here between “measuring” performance and “managing” performance. Obviously,
they’re closely connected — the old adage that “you can’t manage what you can’t
measure” is popular for a reason. But I think it’s important to distinguish
them because one is quantitative (measuring), and the other is more qualitative
Each side of the coin requires
deliberate intention. What I mean is that having the processes and technology
in place to manage performance is critical, but creating the right culture
around managing performance is just as important.
Let’s dive in.
Leveraging Technology to Serve
Employees (Not Vice Versa)
As ERP consultants to family-owned
manufacturing companies, a core part of what we do here at Syte focuses on
technology. We help our clients identify and implement the right technology
solutions to take their business where it needs to go.
But it’s never just about
technology. One thing we urge our clients to do upfront is a thorough assessment of the systems, processes and people
they already have in place, and an honest appraisal of where things
are working — and where they aren’t.
So when it comes to technology, it’s
worth asking: How can we use technology to help our employees improve their
performance? Does our current technology help or hinder our employees in their
day-to-day jobs? Performance management isn’t only about setting productivity
goals for individuals or teams, and measuring performance against those
benchmarks. It’s also about putting technology in place that elevates
Data Transparency That Empowers
One of the things we see most often
when we work with our manufacturing clients is that no one person seems to have
an end-to-end view of the organization’s business processes, and the inputs and
outputs at each checkpoint. Employees end up operating in silos, without any
visibility to upstream or downstream impacts.
As one technology executive put it to the folks at McKinsey,
many companies only have half the systems they really need, and the systems that
they do have aren’t connected. When you can bring disparate systems together,
you create data transparency. Suddenly, employees have access to more data in
real time, enabling them to take action on insights that they couldn’t see
Related to this is an approach
called active performance management
— using technology to gather data, monitor performance and take any required
corrective measures, all in real time.
Team Performance Over Individual
In our role as consultants helping
manufacturing companies implement new technology and processes, we see
firsthand just how much cross-functional collaboration it takes to make these
large-scale initiatives a success. So I’m happy to see the start of a shift
away from individual-based performance management toward team-based performance
There are a lot of organizational and operational wins that come
from a team-focused model. You can build teams intentionally to level people
up, and that’s good for operations, for company culture and for individual
And as business processes and
deliverables increasingly depend on cross-functional cooperation, an emphasis
on team performance, rather than individual performance, makes a lot of sense.
Individuals succeed when the team succeeds.
A team-based model also helps to
create a culture of transparency. Employees develop a bias for collaboration, which can lead
to even more innovation in the long term.
Ongoing Feedback for Continuous
Many companies follow the
traditional structure of annual or semi-annual performance reviews. Some prefer
it because it builds predictability into the process, and provides formal
“checkpoints” for setting expectations and discussing areas for improvement.
Unfortunately, that approach can also be a little rigid. Twelve months is a long
time to wait to provide (and receive) feedback on performance.
I think that’s why a model called “continuous
performance management” is on the rise. It uses a continuous feedback loop
between managers and employees around near-term business objectives and
performance. One of the benefits is that these conversations happen within the
daily flow of work. Everyone has context, and specific behaviors can be
encouraged or corrected quickly.
We’re big proponents of this model.
I always caution our clients that it requires buy-in, commitment and training
to do it right — but it’s worth it.
Human-Centered Performance Management
It should go without saying that
managing people’s performance is about people, but the process itself
can often feel pretty impersonal. The emphasis tends to be on the business’s
goals, and whether or not an employee has delivered on them. But as we all
know, there’s so much more to doing a job well than merely hitting metrics or
With employee retention being more
important than ever, it’s important to make employees feel valued and heard.
That’s not to say that you shouldn’t emphasize accountability, but modeling
other behaviors that build empathy, respect boundaries
and encourage personal and professional development will raise everyone’s
This kind of intentional change
isn’t easy — it’s work. But at the end of the day, you’ll go a lot farther if
you can create a culture of coaching and collaboration, instead of a culture of
Performance Management Is a Key
We tend to think of performance
management as a pure HR function, a sort of monitoring and measuring system to
ensure that the organization continues to deliver on all of its business
processes and goals.
But if we start to view performance
management itself as a business process (and a critical one at that), we can
give it the attention and the intention that it deserves.
Are you rethinking your own
performance management policies and procedures? I’d be happy to chat more about
how we can help you map out a path forward. Go ahead and schedule your
complimentary consultation session right here.