Interés Nominal

In my experience, the way performance is reviewed in organizations can be one of the most powerful barriers to Strategic Performance Management. Below I outline three different scenarios of meetings used to review organizational performance (see also Figure 6.2). Which one most resembles the process used in your organization?

䊏 ‘On trial’ reviews: this resembles a court of law, whereby individuals are required to present their ‘numbers’ and explain to ‘the boss’ and the other individuals present why some are good and, particularly, why some are bad. It is a tense atmosphere of ‘trial by presenta-tion’. If any executive cannot deliver a glossy PowerPoint presentation and, most importantly, answer penetrating questions about their

department’s performance satisfactorily, then he or she is likely to be humiliated and chastised by the boss, remanded in custody pending an appeal at the next meeting or added to the list for exe-cution. The whole activity is similar to prosecutors and defendants arguing about who is to blame for the ‘bad news’. However, here there this no jury, just a judge.

䊏 ‘Can’t see the wood for the trees’ review: this is more like a random walk in the park – the discussion could go anywhere. Individuals present their ‘numbers’, but there is such a plethora of them that a somewhat random debate then occurs about the causes of particu-lar good and bad ‘numbers’, especially the potential causes of spe-cific unusual ‘spikes’. This results in these meetings tending to go into too much detail. The outcome of the debate tends to be to cut the discussion short (because the agenda is long and its planned timings have already over-run) and move on without making any strategic decisions because too much time has been expended on deliberating the minutiae.

‘On trial’ reviews ‘Can’t see the woods for the trees’ reviews

Strategic performance improvement meeting

• Fear

• Defensive reasoning

• Negative politics

• Confusion

• Frustration

• Backwards looking

• Clear purpose

• Mutual trust

• Strategic focus

• Forward looking

• Collaborative making and learning

Figure 6.2 Different performance review meetings

132 Managing performance in an enabled learning environment

The issues that are being discussed are not put into the context of strategic intentions. Some strategic considerations might get dis-cussed, but they seldom seem to get resolved with practical actions that are agreed. One manager compared this kind of meeting to driving a car where you have lots of data and information from the dashboard, but no idea where you are or where you are heading.

䊏 ‘Strategic performance improvement’ meeting: participants know exactly what the agenda and discussion will be about and how the different elements being discussed fit into the strategic plan of the organization. Performance data (quantitative and qualitative) has been circulated in advance and individuals present only the story behind the data that is relevant to the planned discussion. Business analysts attend the meeting and provide feedback and comments about their work, as well as about the relevance and confidence levels of the performance data. Leaders then present recommenda-tions about what acrecommenda-tions should be taken based on this analysis.

Most importantly, the whole emphasis of the meeting is about dia-logue and making collective decisions about what strategic actions need to be taken either to explore opportunities or deflect threats.

The emphasis is on strategic decision-making and using both single-and double-loop learning to improve future performance.

Obviously there is territory in between these three extremes, but I am certain that many employees in many organizations will recognize some of the symptoms of the ‘on trial’ and ‘can’t see the wood for the trees’ review meetings. If so, I believe they should reconsider the way they approach this vital process and, therefore, suggest that they need to have a debate among themselves about how they could move towards Strategic Performance Improvement Meetings. For a start, the name ‘review’ meeting automatically focuses the attention on past per-formance. Whereas it is important to look at past trends and see how this might give us insights into future performance, many perform-ance ‘review’ meetings only look at the past and are too concerned about finding excuses and shifting blame instead of concentrating on future performance and decision-making.

I have been a witness to several meetings that typify ‘on trial’ reviews and each time I have been appalled by the tensions and dysfunc-tional behaviour that this type of review invokes. Clearly, there is no spirit of co-operation between individuals simply because this is a struggle for survival – each person or department pitted against the others. This way of conducting performance reviews is very closely linked to the aim of ‘controlling people’s behaviour’, discussed in the

previous chapter. ‘On trial’ reviews destroy any social context that is conducive to collaboration and learning, and instead bring out an array of self-centred characteristics, negative politics, and a focus on compliance.

My colleagues at the Centre of Business Performance – Andy Neely, Chris Adams and Mike Kennerley – describe in their book¹⁷, The Performance Prism, an excellent actual example of a (predominantly

‘can’t see the wood for the trees’) dysfunctional Strategic Performance Review meeting that I believe illustrates very clearly a process that is not uncommon in boardrooms today. It is reproduced in an edited version below.

Example of a dysfunctional Strategic Performance Review process

The executive team of a leading logistics company would meet on a monthly basis to review performance. They would examine perform-ance in terms of its ability to achieve ‘notional result’, the company’s internal measure of profitability. They would also review the oper-ational performance. One of the problems with the latter was that the amount of data and number of definitions of operational performance were vast. For this company, operations could be reviewed in terms of shipments (either by weight or number), shipments delivered (on time, to the right destination, in one piece), shipments collected (before a specified time or from a specified location), packages lost (or re-routed), and so on.The volume and variety of data meant that the executive team could easily get engrossed in incredibly detailed reviews of specific areas of performance. While interesting in themselves, such detailed reviews of specific performance areas are not useful if the strategic context of these areas is forgotten.

The executive team clearly recognized this issue and began to ques-tion whether the structure and focus of their performance reviews were appropriate for their business.They began to ask themselves: how should we structure and coordinate performance reviews in a business of the company’s size and complexity in the twenty-first century? Far too often organizations seem to allow performance reviews to evolve haphazardly. Because specific measures are available, they are put on the agenda. When a particular problem occurs, a new performance indicator is developed, implemented and added to the agenda. Fifteen years later that indicator is still on the agenda, even though the original problem is lost in the mists of time and the root causes of it have long ago been eliminated. A director in another organization explained

134 Managing performance in an enabled learning environment

to me why it was good for him to have a lot of indicators. He said ‘By having so many key performance indicators, I can always find at least one that is moving in the right direction!’.

In this logistics company all of these factors added up.The perform-ance reviews had begun to lose their strategic focus, structure and purpose.They provoked interesting discussions amongst the executive team, but often the same discussion took place month after month after month. Parodying this, one director commented how the per-formance review process would encourage him and his colleagues to bring massive spreadsheets to the meetings. These would be copied onto acetates and then, in the meeting, they would pick specific cells on the spreadsheet more or less at random to talk about during their respective presentations. Often their opening statements would be prefaced with comments such as, ‘Oh, look at this. This is interesting.

It is down 15% from last month’. The executive team would then spend 15 minutes debating why the number in cell C72 was down by 15%, before the director concerned would spot another interesting number in another interesting cell on the spreadsheet and so provoke another highly therapeutic, but ultimately futile discussion. Another director described this as ‘numerical crosswords’.

The point was that the performance reviews had lost any strategic purpose and any clarity was destroyed by the random data that was reviewed. The executive team was getting so dragged into the minu-tiae of the data that they were losing sight of the big picture. Why so?

It was not the fault of the people, as such. It was actually the fault of the process. The aims and objectives of the performance review process were not clearly articulated or widely understood. Without clear structure and purpose, the performance review had drifted and evolved into a process that simply encouraged the executive team to debate the minutiae.

Creating Productive Strategic Performance