Reframing “Performance” as a System Problem and not an individual performance issue!
Setting the Context ……
GLG conducted its annual survey with Global CEOs and leading executives to understand their priorities and outlook for 2023. It was a customized B2B survey consisting of global CEOs from their premier network of professionals across every industry and country in the month of November of 2022, across North America, EMEA and the APAC region.
The questions aimed at identifying the challenges that a CEO may face in the coming year, 2023…and came out with some interesting facts and insights, the impact of which is already visible in the 1st Qtr. of 2023. What is clear is the consistency of the result across regions and a huge concern to grow the business in a globally slowing economy. Thus, the pressure on margins will remain the single biggest concern for the CEO in the coming year or years.
Extrapolating from this concern, the study identified, the top 2 areas of focus for CEOs, as given below:
● A Tightening business operating cost to combat global inflation and the rising cost of operation ….
● Customer service gaining importance by global panel of CEOs, who ranked customer service as their top priority for 2023, with more than 60% of respondents ranking it so
Of course, Asia (thanks to India and China) will fare much better than other parts of the world namely Europe and North America but the pressure on margins will remain a key area of concern. The top priority for all CEOs will be to grow and hence the focus will be on the core issue of Productivity and Performance at one end and improving Customer service at the other.
As the first Quarter moves on from the month of May, most organizations have completed the process of performance review of the past year and moved on to the planning and target definition for the current year. This is that time of the year when organizations are ready to sprint and tackle the stretched goals.
But it is also the time to “reframe” our thoughts on Performance especially in the context of how difficult it is to enjoy good margins and profits today. Many years back, Professor Daniel Markovitz had written an article in HBR called “Productivity Is about Your Systems, Not Your People” and it holds true even today. Individual performance cannot drive performance across the organization, and we unfortunately focus overly (both time & efforts) on setting up individual KRAs and goals.
Focus on Performance must move beyond the typical process to concentrate on looking at performance from the lens of a system to gain mileage and improve productivity across the organization and at every level. For example, “behaviors” like Top team “synergy” and “alignment”, inter functional “collaboration” and “coordination” at team levels and finally behaviors of “excellence” at the individual level should be incorporated as parts of this measurement criteria across the system and needs to be integrated within the culture as defined Values to get out the best!
Here are four simple STEPS to take that will help align and fine tune behaviors required to perform at every level of your organization.
Step 1- Brainstorm and ask the “collective” to answer these questions.
i. What are behaviors that help or hinder performance of the collective in my organization?
ii. What are behaviors that encourage collaboration, Cross selling or practices that discourage behaviors that are competing and individualistic?
iii. Identify the key Strategic goals, critical for growth, for the next year or two. If improving Customer satisfaction is a strategic goal of the organization for the year, how does that get incorporated and translated into every individual KRA and goal?
It’s important for the organization to discuss it and come to a consensus and general agreement on the key (2-3 max) strategic goal for the organization.
Step 2 – Linking strategic goals at every level to the desired behaviors that are effective to drive these strategic goals.
Once you identify the core behaviour that the organization should adopt and display, these behaviour indicators should be defined as “descriptors” in action terms for easy understanding.
Here are some examples of behaviors necessary to be displayed at each level of the system:
i. Level 1-Group level – At this level, the core behaviour to be displayed by the Top team is INTEGRATION. But how can one display the behaviour of Integration? The top team of the organization needs to understand that for achieving alignment they need to display empathy towards others, have an ability to do “big picture thinking” and be able to hold multiple perspectives and thoughts, and finally connecting the dots to find the linkage to the strategy. Leaders need to have a script and tell the story of alignment that is compelling enough to align not just the next level but the entire organization towards a common goal or strategy. It also means “Walk the Talk” on these behaviours by the top team itself. Their alignment is a benchmark for others to follow within the organization.
ii. Level 2 – Team level – This level focuses on “Sharing and Giving” behaviour that helps in collaboration – This is perhaps the most difficult behaviour to incorporate especially when the whole Organization has been focussed on competing within. Most people confuse cross selling with collaboration. However, the quality of interdependency is what differentiates collaborative behaviour from competitive behaviour. For example, do I think that the output of my work is an input for someone else’s work? Or do I see the contribution of my work in a workflow, where each task is connected to the other? Let’s take the sales example again …. If the sales team is only focused on generating sales, it is not thinking of the “after sales team” or the “production team” which also impacts the customers total satisfaction and experience. The sales team does an excellent job by hitting its “quota” or sales threshold for the year but the after sales team is not geared up to handle the increased number of sales or does not have enough team members trained on a new product to provide after sales support with speed and quality. Or the production team has a supply chain bottleneck and is not able to deliver as per sales commitment. The result is an increase in dissatisfaction for the client ….and the lack of collaboration within the entire team in full display and its repercussion, long term.
Learning from this example it’s time to start with changing behaviors across teams and encouraging collaborative behaviors by having some shared goals and KRA with joint accountability for some of the strategic goals of the organization. Inclusive behaviour, suspending judgement, displaying tolerance for other views are all behaviors that a manager should observe, evaluate, and give feedback on in a performance appraisal conversation …these are important data and signals to give.
iii. Level 3 – Individual Level – at the individual contributor level, the individual is focused on driving Excellence - Accelerating self-development and striving to be a better version of self is an ever-changing goal post. Most Organizations use forced ranking method rather than focusing on using self-reflecting methods to give feedback on performance improvement. A manager should support the individual by giving feedback on improvement over the last assessment period on key strategic goals and priority goals. Such an action by the evaluator will help individuals to raise their own bars and improve themselves on key goals that are important rather than generic feedback that is not specific and focused.
Here is a diagrammatic reference of how this system works. As seen in this diagram below: efforts are needed to synergies goal setting at each level to get the full potential of performance, across the organization /system as we talk.
Step 3 – Create “Balance” in the Performance system.
It is important to maintain a balance in the entire performance management system by focusing on long-term as well as short term goals. Incorporate both qualitative and quantitative measurements that can be observed and evaluated in the annual performance appraisal cycle. Today we see an overemphasis on Numbers and not much discussion beyond that. It is that balance of the paradox in this complex world that keeps the performance management system agile and flexible.
What is Balance of paradoxes? it is the constant navigation that a person does between what seem like opposite values or competing poles. At any point, a leader is in constant tension between small decisions and big decisions. The answer is not Either /Or but Both /And issue … The answer lies in integrating both the paradoxes and finding a middle ground …this is an Integrative thinking and decision approach, very necessary in today’s constantly changing world.
Integrating Strategic goal of Growth and Improving customer experience or customer satisfaction is an Integrative challenge. Or balancing the allocation of resources for the year between automation and people development is another balancing act.
Bringing in again the sales team, example of balancing the paradox can be the question on “how do I help my customer to solve his immediate problem?” vs “how do I help my customer to grow his business in future?" and balance his long-term needs vs his short-term goals?
Another example of an individual contributor’s dilemma is, “how do I focus on completing my individual goals and KRA” vs “helping out my colleague who is struggling with a difficult customer challenge?"…. Should I value my personal goal that impacts how much bonus I take home this Qtr. or should I reach out and support my colleague? “
Until the system is geared to incentivize such behaviors or disincentivize specific behaviors, the entire system will not align and synergize actions.
Step 4 – Lastly, Communicate and share the strategic goals across
Create a powerful narrative about the performance story in your organization and linkages around goals, measurement and strategy and communicate across the organization so that the last man (or women) standing is also clear about how his goal is linked to the strategic goal of the organization. Communicate it clearly, allow line managers to share with their teams and create clarity such that every person can link his individual goal to the organizational goal …
All the building blocks need to fit well for the entire organization to do well. Too much focus over the years has been given to individuals and their performances and too little on the basic building blocks at each level of the system with a focus.
What are your thoughts?