By Michael Royal, BIR Solutions
good managers focus on what their staff say they need to achieve the desired outcomes
In earlier Briefs, we have looked at the key issues for leaders and managers.
Good managers ensure their staff are able to perform clearly defined roles – roles which have defined outcomes. They provide objective and constructive feedback so their staff understand what it is they are doing well and where they can improve upon their performance.
This process is critical to the development of above average performers in your business.
The process of management is often a hard one as you need to have processes in place to measure performance. And, not all performance is easy to measure in an objective manner.
It is often when trying to determine objective measurement tools that many managers fail to grasp the nettle. As a result, they don’t set up proper channels for appraisal and feedback.
And, if the CEO only plays lip service to this process then you can bet those who report to the CEO will do even less.
Proposition: You manage what you measure.
There are two key areas you need to manage: what someone does and achieves and how they do it.
Every business has Key Performance Indicators (KPIs) which can be used to measure progress against plan. KPIs are the sign posts as to how the plan is progressing.
Determining which are the best KPIs to use which will assist in achieving your goals is critical.
Solution: Following careful assessment, determine the right KPIs for your business and for each role within your business.
Putting this solution into practice:
# 1 From the business plan, identify those outcomes which are aligned to the achievement of the goals.
These outcomes will probably be a mixture of financial (i.e. from the financial statements) and operational (from sources other than the financial statements).
An operational outcome might be customer satisfaction or the achievement of a certain percentage of deliveries in full on time to key customers.
# 2 Determine the inputs and processes which are required to achieve these outcomes.
When looking at inputs and processes, consider measuring issues such as quantity, timeliness, consistency and quality.
# 3 Select a mix of inputs, processes and outputs as KPIs – remembering less is more.
Sometimes, when there are too many KPIs, some might be competing with each other and the achievement of one KPI might be at detriment of the achievement of another KPI. It is important to select KPIs which will not confuse your staff as to what it is you are trying to achieve.
# 4 KPIs do not have to be an absolute value.
When selecting a KPI’s optimal value, consider whether the optimal value falls within a range rather than being an absolute value. Often, values of a KPI which fall outside an acceptable range (i.e. they are either too high or too low), can have negative implications for other areas of your business. For example, production levels which are too high can lead to overstocking, quality problems, bottlenecks down the line and shortages up the line. Conversely, production levels which are too low can lead to inefficiency issues for labour, stock outs and excess wastage.
Sometimes, it is preferable to consider a ratio as the preferred KPI rather than an absolute value.
For example, the number of sales calls can be a relevant number in its own right but it is also worth looking at the conversion rate of sales calls to sales achieved. The same logic applies with asset management issues. A higher debtor ledger value may only be of concern if the level of sales has not increased proportionately.
# 5 Beware, ratios can also be misleading as KPIs.
A ratio is an average. The extent of the variation around the average and the absolute high and low might also be relevant when determining the appropriate KPI.
For example, if production is supposed to hit 32 widgets per hour and the average is 32.1 then things look ok and you might rate the performance as acceptable. However, if the production fluctuates from 21 widgets to 34 widgets then the consistency in the level of performance required might not have been achieved.
# 6 Develop measurements for behaviour – ‘how’ something is done
This area is often the bug bear for many managers. They are willing to measure KPIs based upon inputs, processes and outputs but measuring behaviour seems so ‘airy fairy’.
As a result, managers often avoid measuring behaviour and are accused of favouring those employees they like.
If for no other reason, in today’s litigious society, you want to avoid such accusations.
There are some sophisticated and cost effective tools in this area, particularly for managers. For example, BIR has an assessment tool called Checkpoint 360 which is often used for internal management assessment processes. If you are interested in this tool, give us a call on 1300 783 3091300 783 309.
In other situations, it is possible and highly rewarding to develop assessments to capture feedback from internal as well as external stakeholders. Consider the following:
Using the KSS principle, the assessment should cover three main questions: What should we Keep doing; What should we Stop doing; What should we Start doing.
Work out the key aspects of behaviour you want to measure. Consider the following: communication (clarity, timeliness, regularity), responsiveness, problem ownership, delivering what is promised, follow through, friendliness, honesty and integrity.
Use a simple rating scale. We suggest a 1 to 5 scale with each number given a definition (eg 1 = poor and unacceptable; 2 = just below average; 3 = just above average; 4 = above average; 5 = exceptional).
# 7 Communicate KPIs and provide feedback on the results.
As always, communication and feedback are key to successful implementation. It is often desirable to involve your staff in the setting of the KPIs, both as to the KPIs to be used and even the levels to be set.
If you decide to set a KPI outside of the level currently being achieved, make sure your staff have a plan as to how they are going to achieve the new levels set and make sure they have the resources to do so.
To not take these steps means you are potentially setting up your staff for failure. This is not good for your staff nor for your own performance achievements.
Remember, staff who feel they are being unfairly used will either give up and just do the bare minimum required to maintain their employment or they might move on at a time of their choosing.