Performance Management, an Evil necessity

I know a lot of our HR colleagues will frown on this title especially when I am not an expert in performance management. However, I believe it is about time where we need to shake up the way we look at performance management.

I always say performance evaluation based on financial targets is the easiest. It is a number, either you make it or not. Easy to manage, easy to evaluate but focuses on one single angle, the financial part, which will always fire back. Trust me.

That's why the concept of our lovely friends in Finance misses the point, at least from my point of view, when they keep saying .. "Maximize shareholder value." I always find the stock market as a bad instrument to evaluate companies on a financial basis, and worse, keep doing it as a never-ending journey on a quarterly basis.

Key Performance Indicators well known as (KPIs), is an interesting concept to measure individuals' and company's performance based on a preset measures. Add to it, a Balance Score Card (BSC) and all the sudden you have a balanced KPI system that addresses few things namely, Financial, Customer, Learning and Processes.

I find BSC a difficult tool to apply, it requires few tweaks and other complementary supplements to realize the benefits i.e. strategy maps where you can then visualize the cause and effect logic.

But is it balanced? Will the stock market claps when you have made everything right and missed only few numbers by a small percentage? someone will say that's not how it works. It is a cause and effect where one leads to another. Then, it is not equal from a weight nor an importance point of view.

Another perspective is that most company's executive management will work hard to please the stock market. Quarterly basis results is not strategic, it is a short lived results that represent only 3 months of hard work.

I am a true believer of cause and effect.

Now, allow me to go back and discuss why corporation exists in the first place. There are two important elements in every business as I see it. There is a customer and there is an Employee.

Customer centric organizations are usually successful ones. However, in order to have one, you need a happy employee who gets trained, motivated and rewarded. So once you create this, you have a great reward system.

So, the magic is in customer centric organizations. Customers pay the bills. and are the main reasons for corporation existence and only on this basis, we need to build our performance management system.