5 Indicators of a Successful Performance Management Culture

Leading edge business terms (including performance management and others) being bantered by large consulting firms and used skillfully by executive management among the largest corporations does not, by itself, prove that quality leadership exists.

For example, the term “Big Data” became so ubiquitous that it was dropped by Gartner from their Hype Cycle of Emergent Technologies in 2015.

Why?

It became clear that just because an executive team spoke the big data language fluently or had a big data machine on site, that alone didn’t prove to be a consistent indicator that management had a clear, competitive advantage in their respective industries.

The real test of big data performance or value is whether executive management can take day to day operating intelligence, put that data in the hands of street level managers, and drive consistent quantifiable results. And, by the way, I define the term ‘quantifiable results’ to mean those that can be measured in dollars and cents.

In today’s operating empires, some executive managers have created very expensive dashboards that are, in many cases, little more than glorified spreadsheets. But too often, these big data insights remain at the top and have little value to the street level manager where the real need for functional data is critical but remains inaccessible in many organizations.

Pushing data from the top down to lower level managers in useless forms doesn’t have real long term value, because it doesn’t allow local managers to become the real business performance specialists or the data hunters they really need to become.

Front line managers are the ones who truly have deep insights about their customer’s needs. For example, if executive management were to train these managers to be the data hunters, they can rapidly identify changes in consumer behavior, manage inventory & trade spending, and respond to trends in competitive dynamics that require immediate changes.

These and other similar data driven tactics are the real drivers of profitable growth. 

What are the key elements needed for traditional performance management to evolve into an agile business performance framework?

A truly agile performance management system will, on a day to day basis, demonstrate a fully networked and collaborative decision making set up from top to bottom of the organization, where decisions are not made at the top and pushed down through the various tiers of management.

With a collaborative information-based decision platform, local managers are no longer measured by perceived weaknesses in managing day to day activities, but are now evaluated based on a system of consistent improvement in business results that is focused on sales and profit oriented objectives.

If big data is effectively deployed, traditional performance reviews annually or semi-annually become outdated. In an agile environment, each local manager is facing a daily data driven performance review based on real time market realities such as improvement in account level profitability, growth in overall margin contribution by territory, or consistent growth in sales.

This real-time information-based flow and immediate feedback lets managers see the results of their own decisions; creating increased productivity and real accountability for results. And tying this level of results based performance to personal compensation delivers the ultimate reward for quality managers.

What are the success indicators?

  1. Agile performance systems for all levels of management: The starting place for change is to determine what data is needed at each level of the organization, formats for the data to make it useable, and the hardware/software needed to deliver the data in a useable format rapidly so that actionable decisions can be made.
  2. Organization alignment: For a performance system to work successfully, there must be alignment between overall business strategies at the top and translated to clear operational functionality at all levels of the organization so that real-time execution becomes a reality.
  3. Collaborative Communications: With actionable data in formats that are consumable and delivered with speed, all levels of management are aligned and management communications become constructive, on point, and delivered with a common goal and measurable metrics.
  4. Empowered Management: All levels of management are now empowered with actionable information which drives real accountability for results that are measured, tracked, and ultimately tied to individual compensation. The IT department is no longer the gatekeeper of critical data and reporting, but serves to ensure that all data is open and available as needed by management.
  5. Efficient Supply Chain Relationships: As actionable decisions are pushed to the street level, the relationships of customers, critical business partners, and suppliers are enhanced; leading to a common performance or results centered mentality.

An effective agile performance management system is not just a new term for today’s business climate. It is the key to creating an aligned management team and the foundation for driving long term company value and consistent financial rewards. Ultimately, those firms who lack the insights of a true performance management system will lose critical market based knowledge, fail to keep key employees & managers, and over time will lose the competitive battle.

What management legacy have you put in place?

Karl Edmunds

About the Author


Vice President, Salient Management Company

is a nationally recognized business leader and author with more than 20 years of experience working with suppliers, distributors, and retailers in the CPG industry. His focus is aligning technical solutions with sales, marketing, and organizational needs to drive long-term profitable growth.