Linking
Your Performance Management to Business Strategy and Budget
Used
with permission of the author:
Author: Morongwa Makakane
Tlholego Business Consultants
www.tlholego.co.za
13 March 2007
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to ... Workinfo.com Human Resources Magazine Volume 1, Issue 5,
2007
What
is Performance Management? Why do organisations have to have
performance management?
Performance
management reminds us that by being busy is not the same as
producing tangible results. It also reminds us that training,
strong commitment and lots of hard work alone cannot guarantee
results. The key role of performance management is its focus on
achieving results -- useful products and services for customers
inside and outside the organization. Performance management
refocuses our efforts away from being busy toward being effective.
Simply
defined, performance management is about ensuring that
organisational goals are consistently being met in an effective
and efficient manner. Performance management can focus on
performance of the organization, a department, a process on
creating a product or service or performance of employees.
Performance
management is a process of harnessing all available resources
(human and material) within an organisation and ensuring that
these perform to the maximum, in order to achieve the desired
results. Performance management involves building processes,
systems, culture and relationships that facilitate the achievement
of organisational objectives.
The
one mistake we often make is to equate performance management to
the management of employees. However, it should be focused on more
than that.
Performance
Management should also focus on:
-
The organization as a whole and its strategic
direction (Business Strategy, Business Plan, Marketing
Strategy etc)
-
Business Units/Departments (IT support, Human
Resources, Sales and Marketing etc)
-
Organisational Processes (Workflow planning,
Budgeting, Product development, financial management,
invoicing and billing etc.)
-
Organisational Programs (implementing new
policies and procedures to ensure a compliant and safe
workplace; or, for a profit oriented organisation, ongoing
excellent and efficient delivery of service to clients)
-
Internal products or services to both internal
and/or external customers
-
Projects (Implementing a new IT system, Reviewing
organisational effectiveness etc.)
-
Teams or groups organized to accomplish a result
for internal or external customers
The
primary orientation of performance management is developmental but
must allow for effective response to consistent inadequate
performance and for recognising outstanding performance.
Performance management procedures should minimise the
administrative burden on supervisors and managers whilst
maintaining transparency and administrative justice.
A
performance management system focuses on equal participation in
performance management by the supervisor / manager and the
employee. It is developmentally oriented, encourages coaching,
regular feedback through progress reviews and annual appraisals,
in order to effectively and efficiently deliver on the
institutions strategic goals and national priorities. This system
is a means to an end, and its success will be measured by the
extent in which it contributes towards creating conditions for
effective performance and overall contribution to service
delivery.
How does
performance management link to the Business Strategy? Why?
A business strategy establishes
specific goals to meet the needs of customers, shareholders and
stakeholders and fulfill legislative and executive mandates. The
Business Strategy defines the expected results to be achieved in a
5-year period and defines measures that enable the organization to
manage program performance to achieve those results.
All
organisations (from NGOs / CBOs, governmental institutions and to
big corporates) conduct some form of strategic planning on an
annual basis, which is turned into a Strategic Plan. They do this
to review their relevance to their 5 year business strategy, their
constituencies, the impact of their work on the customers and
stakeholders that are being serviced and the quality of what that
service has achieved. Therefore the following issues are important
to ensure that the performance system that organisations are
utilising are used to the benefit of the employees, the
beneficiaries and leads to the long term sustainability of the
institution. The following benefits can be derived from using a
performance management system that is linked to a business
strategy and an annual strategic plan:
-
The
Business Strategy can be phased into implementation, by
linking identified performance factors with strategic
initiatives and projects designed to develop and optimise
departmental and individual activities
-
Employees
performance will be aligned to the organisation’s strategic
and operational goals
-
A
systematic framework for performance planning, performance
monitoring and review and performance appraisal will be
provided
-
A
shared sense of responsibility amongst staff for the
achievement of strategic goals and objectives will be
promoted.
-
A
culture of transparency and participation through open
dialogue about goals and the achievement thereof, personal
development, and performance improvement will be promoted.
-
Managers
will be encouraged to effectively create conditions for staff
to perform optimally therefore providing excellent, empathetic
and motivational leadership.
-
A
framework of assessment for identifying good and poor
performance and to act appropriately through development and
the recognition and rewarding of good performance will be
provided.
Why
does performance management have to link to the organisational
budget?
A Performance Budget is a budget presentation and plan that clearly links performance
goals with costs for achieving a target level of performance. In
general, a performance budget links strategic goals with related
long-term and annual performance goals as well as with the costs
of specific activities to influence these outcomes about which
budget decisions are made.
Annual plans, which are integrated in
the Performance Budget, define the annual incremental progress
necessary to achieve the 5-year goals. The management of
performance then is the act of planning, developing, monitoring,
and evaluating employee performance, program performance, and
organizational performance in the context of the Strategic Plan.
It is common knowledge that performance reviews are never
satisfactory to everyone and therefore the management of the
review / appraisal process in itself is a performance standard.
South African institutions in the last ten years have moved closer
to managing the performance review process and substantial strides
have been made to curb the effects of an unsatisfied personnel
post the review process. The issue of building the reward system
into the review process has become standard and more institutions
realise the need to integrate the reward system in the design of
the performance management system. Additional, to that most
institutions have a growing number of workers that are members of
representative bodies and therefore the design of the performance
system has to be negotiated with these institutions at the outset.
Finally, it is a management to ensure that the annual budget
allocate a substantial portion of its revenue to the performance
of its staff.
The benefits of a well designed and inclusive performance
management system
-
A business strategy will not have to remain a document (file
13?)– it will be turned into actionable
action!
-
It’s
the only way to measure if your strategy will be executable.
-
It
will motivate employees to work together, with enthusiasm,
towards an organisational objective –
whatever it is.
-
It
will help you to create an enabling environment by linking
organisational processes and capabilities
necessary to achieve performance through people delivering
results.
-
Strategies
and plans will be turned into individual actions, necessary to
produce a great business
performance.
Morongwa
Makakane is a MBA graduate and qualified Human Resources
Management and Development Specialist. Her areas of expertise
include Business Strategy Development, HR, HRM and HRD
Strategies and interventions design such as Change Management,
design and implementation of Performance Management, as well
as Skills Development. Her sought-after experience as a
trainer and facilitator has seen her practice her skills at
various levels of management; both locally and regionally. She
is a registered assessor. Morongwa is also a renowned
teambuilding expert and motivational speaker. Morongwa
is a Certified Balanced Scorecard Practitioner.
She can be contacted at: Tlholego Business Consultants, Tel: +27
(0)12 643 1404
www.tlholego.co.za
Short description
The key role of performance management is its focus on
achieving results -- useful products and services for customers
inside and outside the organization. Performance management
refocuses our efforts away from being busy toward being effective.
Keywords and relevant phrases
Business strategy, organisational goals, organisational processes,
organisational programmes, performance management, resources, transparency.
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