Performance Management Implementation Best Practice

Performance Management, Implementation Best Practice

Many organisations have attempted to implement Performance Management processes as they know that the potential to increase the organisations overall performance is significant. Successful case studies talk about improvements of overall organisation performance between 2% to 25% annually.

So what are the critical factors for success in implementation? This White Paper outlines some of the critical factors for successful implementation.

C-Level Support

One of the most critical factors in successful implementation and adoption is C-level support. If your C Level executives are not supportive, then no matter how well you implement the process, it will suffer from low compliance and acceptance. Managers and employees will say “why should I bother if John (CEO) thinks it’s a waste of time”.

The question then becomes - how do I get C-level support?

We would suggest the following approaches to gaining C-Level support.

1. Create a clear business case and present it to the management and C-Level Executives. You must be very clear on what is broken in your existing system, how fixing it is going to result in a business outcome and what you expect the outcome will look like of achieved. Executives usually only want to know how they can increase performance (revenue) or reduce costs. You should be able to clearly spell this out in the business case.
2. Educate C-Level Executives. If they are old school and refer to “the people stuff is intangible” clearly point out to them that it is not intangible, wages and salaries typically represent their largest operating cost (normally 60% of operating cost). Not managing your largest cost in a systematic way is the same folly as not managing your financial capital in a systematic way.

Our existing methods for managing Human Capital have been developed in the industrial age as have our financial measurement systems. Balance sheets contain assets and liabilities, Profit and Loss Statements talk about Income, Expenses and Net Profit. Where are the ratios that talk about return on investment per employee? Where are the numbers that spell out trends in Human Capital management when this investment typically represents 60% of the organisations costs? In the present information age, management of Human Capital is more important than return on Assets deployed. Organisations have less assets (they lease them), less inventory (due to Just in time manufacturing), better debtor controls (due to accounting systems). So is the old method of managing an organisation (asset management) still the most accurate method? Probably not.

The value of Human Capital directly relates to...