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Thursday, April 12, 2007

The Importance of Alignment in Performance Management

What are the obstacles to successful performance management? What can you do to overcome those obstacles? And how can you move beyond managing performance to improving it?

As the first in a five-part series of articles, the folks at SAS reveal what they've learned from more than 1,100 business professionals about their performance management efforts.

Their findings so far?

  • In the past, performance management in a typical organization meant one of two things: finance managers scrutinizing company expenditures to track revenue against goals, or the human resources department prodding managers to evaluate their employees' job performance. Not anymore.
  • Now performance management has found its way across the organization. In the vast majority of companies surveyed, most areas of the organization are involved in performance management activities to some degree. In fact, only 16 percent of respondents indicate that performance management efforts are contained within one department.
  • Despite the broader use of performance management, enterprisewide initiatives are not the norm. Most efforts involve many departments, but only a third of these are aligned strategically across departments.
  • The problem? Large-scale deployments are often bogged down by their own weight.

BOTTOMLINE: Alignment is the primary benefit companies hope to receive from their performance management efforts. However, many companies admitted to struggling with alignment issues, such as collaboration, resource optimization and tying planning to strategy, and it appears that they are looking to performance management systems to help.

To overcome these challenges, companies must nurture a culture of commitment and collaboration. Leaders must effectively articulate the company strategy. Employees need to understand the benefits of performance measurement, and they need to know their role in the effort and how it maps to the success of the company.

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