Editor's Note: No two successful performance management programs are the same, but all successful performance management programs share common principles. To shed some light on what separates a good company from a great company with regard to performance management, DC VELOCITY will publish a column on one of the 12 Commandments of Successful Performance Management each month. This month we'll drill into the seventh commandment: Integrate.
The Seventh Commandment
Integrate: Make sure everybody's working toward the same goals.
They manage production. They manage finance. They manage marketing. But when it comes to setting the goals their employees work toward each day (and measuring performance against those goals), U.S. corporations all too often leave it to their various divisions, branches, even individual departments, with little input from the top. That's not much different from sending a marching band out onto the field without a conductor: The musicians may have the potential to make beautiful music together, but if they're marching to different drummers, playing different tunes or playing in different keys, the result's more likely to be cacophony.
12 Commandments of
Consider, for example, the procurement agent who devotes his every waking hour to achieving his department's goal of reducing unit prices. He decides that instead of buying a pallet of goods, he'll purchase two truckloads because he can save 20 percent. That's great, except that the distribution manager is forced to arrange for off-site storage at $15 per pallet for 12 months?costs that far exceed the 20-percent savings. Then a couple months later, the merchandising manager discontinues the product and eight pallets have to be scrapped.
Clearly, what's best for an individual department isn't always in the overall company's best interest. Nor is pursuing functional "silo" objectives any way to achieve supply chain excellence, which, according to a Michigan State University study, depends on organizational alignment (and performance measurement). To avoid that trap, here's a simple approach you can use to create organizational alignment within your own company:
1. Start with a strategy. A company's strategy and goals are set at the top. Senior executives must decide on that strategy—whether it's to compete on the basis of operational excellence, customer intimacy or product leadership/differentiation—then lead the way, creating the vision and mission statements that will drive the organization. Ideally, the strategy itself will be unambiguous and allinclusive (no division should be left wondering where it fits in or whether the goals really apply to its own operations). But if it's not, setting concrete, measurable "sub-goals" can bring clarity to the process. A perfect example would be the way Jack Welch crystallized GE's mission by mandating that all business units become #1 or #2 in their markets Ե or else ("Fix it, sell it or close it!").
2. Align tactics—and assign each player a part. After strategic goals are set, senior executives need to assign specific objectives and tasks related to achieving those goals throughout the organization. From CEO on down, each job should be clearly linked to the companywide strategy.
3. Select the measures you'll use to evaluate success and use them! It's up to senior management to articulate the company's vision in terms of measurable objectives and to select metrics.Without measures, workers have no way of knowing whether they're making progress toward their goals or what they have to do to help the group as a whole achieve the best possible performance. Get them on the same page—and playing the same tune—and you just might be rewarded with heavenly harmonies.