Discover the importance of strategic performance management, how it can transform your business, and why it's essential for long-term success.
Answer: False… well, partially false, that is.
An organization does need a clear, well-defined strategy to operate successfully. However, if every aspect of the company is not aligned to that strategy, you may as well forget it even exists. As Strategy & Business notes, good strategy needs good execution to succeed.
Great, you say, now how am I actually supposed to go about that? I’m glad you asked! The key to ensuring that your organizational goals are effectively met lies in strategic performance management.
If that term doesn’t ring a bell, read on. We are here to help. But before we dive into why you should care about this technique and how you can use it to better your organization, let’s discuss what it actually is.
If your management team has a clearly-defined business strategy, ask yourself this question: Could every employee in every department define what that strategy is and what they are personally doing to accomplish organizational goals?
Strategic performance management is an approach you take that helps you apply your strategy throughout your organization to ensure that all your goals are being met. The idea is that if you communicate simple, realistic, and appropriate guidelines and expectations, you can better ensure that your employees will adopt and nurture your goals.
Successful performance management is always powered by research. The information drawn from this research can help a company craft better goals and carry out its purpose.
Do you work in a place where people interact with each other? If so, your organization will benefit from strategic performance management.
Disorganization, wasted time, and conflicting differences are three symptoms that organizations who haven’t aligned their strategy are likely to see. Identifying and linking individual and organizational goals within a company remedies this situation, and as a bonus, leads to an increase in efficient and effective teamwork.
Aside from those great benefits, you’ll notice that:
1. Employees will be more motivated. Your organization isn’t just run by numbers—it is run by people. Promoting the personal development of employees in every department, at every level, will increase the chances of your strategy being effective. As the old Kenyan proverb goes, “Sticks in a bundle are unbreakable."
2. Management will improve exponentially. The management team should be fully in tune with the needs of their department. Understanding the goals, values, and initiatives they are working toward will empower them and subsequently help their team.
3. Better communication will be fostered. One of the main reasons that companies cannot align their strategy company-wide is because most of the personnel don’t actually know what it is! When strategy is communicated well, employees will reconsider their old assumptions, leading to more effective problem-solving, critical thinking, and decision-making. Everyone can benefit from that!
4. A culture of excellence will be created. The organization creates strategy, the departments create clear tasks to accomplish it, and the individuals align their thought processes and actions accordingly. This process gives the employees a voice and helps the management team to work more effectively with their departments. This cycle of superior performance is an excellent indicator that your strategy is working!
Technology plays a huge role in performance management. If you don’t have a streamlined way to visualize, quantify, and monitor your strategic goals, then you simply will not be able to improve your performance with any accuracy.
In order to successfully manage your strategy, you’ll need to:
You can analyze your goals and see these four steps through by adopting and creating a Balanced Scorecard, a trusted strategic planning and management system.
Ted is a Founder and Managing Partner of ClearPoint Strategy and leads the sales and marketing teams.