Benito Piuzzi is the COO of Lakeview Loan Servicing and former McKinsey consultant where he specialized in large-scale transformations.
Each year, companies of all sizes constantly seek ways to drive better performance, whether it is through budgeting, planning or the ongoing launch of new improvement initiatives. One lever often used to ensure businesses capture as much value as they project is performance management. Performance management is often described and used as a way to optimize employee performance through better feedback dialogues and incentives, but unfortunately, depending on how businesses execute it, it can overlook the importance of connecting daily business performance with every employee across the organization by leveraging data.
To be successful, companies should apply three key levers to get performance management right and maximize value capture. As with many business techniques, these take time to master, but starting the journey to do this right can yield benefits right away.
1. Metric selection: Selecting the right metric at the right level of the organization with the right target is critical. It starts at the top with metrics that align with the overall strategy and goals of the business that then cascades down to metrics that align with the performance of upper management, middle management, front-line workers, etc. Not aligning the metrics top-to-bottom can result in measuring aspects of performance that are not relevant or aligned with the goals of the organization. A good set of metrics at the top will include quality, customer experience, financials and organizational health. The idea is that these metrics translate into metrics that can be used to track daily, quarterly, monthly and yearly performance.
2. Visualization: Having clear targets, the right metrics and proper tracking of performance is the first step. Second, we have to make sure we have clear visualizations. There are plenty of resources out there to explain not only the importance of data visualization but, depending on what you are trying to do, also what type of visualization makes the most sense to implement. Moreover, tools like Tableau, Looker and Power BI, among others, can make this process much more intuitive. Why is this so important? It’s because you want to spend the least amount of time understanding what the data is trying to tell you and the greatest amount of time focusing on whether you are “winning” or a problem needs to be solved. For example, depending on what you are tracking, in some cases, a trending line chart that includes quartile top/bottom performance can be more effective than a table.
3. Feedback and problem-solving: Now that we have data we can use, we need to use it. The ideal way to do this is to change the frequency of the conversations depending on the organizational layer. For example, front-line workers may have real-time feedback loops, first-line managers may have daily feedback conversations, middle-management conversations may happen monthly and executive management could meet quarterly. Frequency is important, but what’s more important is developing a culture of ongoing feedback and problem-solving in which data empowers people to clearly understand if the business is on track to achieve its goals—regardless of where you sit in the organization.
Companies that get performance management right can optimize the time people spend managing the business, improve employee morale, and more importantly, allow themselves to become more nimble in changing environments by laying out the infrastructure needed to solve problems quickly.
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