There’s no one correct way of doing things that work for every company. You may need to change your methods every now and then to make sure your business is still running as efficiently as possible. Your company’s goals will, for the most part, remain the same or similar. It’s how you get around achieving them that is why business performance management is so important.
It’s a way of monitoring goings-on and the strategies that are in place to direct you towards each goal. Without it, you could be wasting money on things that just simply don’t work. With today’s ever-changing environment, you don’t know what will be thrown your way next. It’s crucial you’re constantly evaluating and taking notice of what may be more cost-effective or productive.
What is business performance management?
Every company owner or manager will go through a process of outlining the values and aims of a business and setting relevant goals in line with them. It’s then important that although you may originally implement methods of achieving these goals, they need to be monitored and managed so that wherever possible, they are being made more efficient and cost-effective.
This is where someone will analyse data and statistics to notice what’s changed and what effects this had on business and results. As a business advisor, these are the things I look at with companies and we talk through different ideas that could benefit them financially as well as with their own time and effort.
It should be noted that the aim of business performance management is to improve your own performance, as well as that of your employees. By monitoring the data side of things, you’re making the performance measurable so you can clearly say to people what needs to be done and why it’s benefitting the company.
How to implement performance management
You can break it down into three easy steps. It’s a dynamic system that works in unison with each other to develop your company’s processes and improve upon them where possible.
1. Setting goals
Take a look at the values you hold within the business. What is it you are striving for long term and short term? Although these goals may change as you move further down the system, a good place to start is aligning your goals with that of your employees and making them achievable. Unrealistic expectations will result in decreased efficiency and employee productivity.
Once you’ve set the goals, you can discuss methods and strategies that are going to effectively help you achieve them. This is where you’ll be thinking about how cost-effective, manageable and diverse your methods are and can be. You’ll need to make them measurable to make it easy to re-evaluate when needed. This way, the next step will come naturally.
Business performance management relies on the information you gather being monitored for dips and peaks. If you have a sustainable way of measuring and consolidating that data, you will quickly see that patterns will be found. Amongst this will be the particular strategies or areas of the business that isn’t performing as well. It’s likely these will be different each quarter or every few months so it gives you time to develop and implement new strategies.
3. Business adjustments
After reviewing the information, it’s up to managers and directors to decide on their priorities for implementing new strategies. Every business will have a different focus, and so it’s key you keep your adjustments in line with the goals you set at the start. It doesn’t matter if you can’t change everything at once. This is what the consolidation step is for.
You always have a means of keeping up to date with business and so can catch things before they get out of hand. Employees should be made aware of the potential changes being made and kept up to date with performance. They are a key part of the process and anything you decide will impact how they work.
Not only this, but if you have investors, partners and competition, the adjustments you make will potentially affect them as well. It’s a strategic decision you have to make but you can rely on the measurable data to show you what needs to be prioritised. Think about how much risk is involved at each step and ensure you’re not weakening any part of the company moving forward.
Where do things often go wrong?
It’s difficult to get your performance management right and it might take a while to get used to what you need and who you need to be involved to make it run smoothly. Once you’ve worked out a system that’s right for you, you’ll see how beneficial it can be. Here are a few ways in which it could go wrong so you don’t make the same mistakes.
Poor goal setting
You don’t want to fall at the first hurdle. If you’re not setting the right goals, you won’t see any useful data to benefit your business. Goals should be measurable and realistic. This can go both ways.
If you set goals that are too easy to reach or don’t take much time or effort to achieve, your employees are quickly going to get complacent and unproductive. If you’re not stretching yourself, no one has an opportunity to work harder or better themselves. This can lead to people being unsatisfied with their positions and even resigning.
However, if your targets are completely unreachable, employees probably won’t even bother trying to get there. It’s easy for people who have been in the industry for a long time to see when something is just too much. They know what they can cope with and how far their work can be pushed. You’ll never see any milestones being reached this way and it will constantly look like you’re doing everything wrong. When in actual fact, you’re just trying to do too much at once.
Choosing the wrong data
You should ensure that the data you’re choosing to display and measure, is actually complementing the performance you want to be monitoring. It’s all well and good having a monthly breakdown of sales targets – but what if you have a goal that needs to be met in a certain week? Can you specifically pinpoint what you’ve achieved in that time period to make an accurate decision on performance?
Also, you could be looking at each department or team within your business to see how projects are progressing. But if you have one particular employee who is letting them down – you’ll have to take the team’s word for it. It’s not easy to pinpoint where you’re falling short if your data is too broad. Therefore, you should make note of which data needs to be more specific at identifying pain points, and which can work at a broader range.
Lack of collaboration
This is especially apparent in larger companies. It’s a problem where the separate teams are individually managed by separate people. So they all have different targets to meet and different ways of working. Where they fail to meet in the middle is ensuring the business as a whole runs collaboratively. If every department is aware of how their goals match that of the others, you will see a more efficiently run business.
Although the overarching values and goals may be shared, the way in which they’re met between teams will impact how quickly you get the results. If one team thinks their project should be completed in 6 weeks, where another thinks they have 3 months because the managers didn’t discuss it with each other – you’ll see staggered results that don’t reliably show the productivity of the business.
The best system for performance management stems from a singular understanding where all employees can see how their individual progress has contributed to the outcome. Employees who can see a clear impact being made will strive to work efficiently. They want to see those results just as much as you do!
Implement your performance management strategy today
It’s going to look different for all businesses, but at the end of the day, it will help you attain clear, precise and measurable data as to how your business is running. With this, you can evaluate it and make strategic decisions on what should be changed to increase efficiency and cost-effective input. Think about how the methods you use align with the company’s goals and values and see where you could be going wrong.
If you’re still unsure of how to go about business performance management or implementing new business strategies, I’m happy to help! With over 30 years in the industry, I’ve successfully worked with a range of businesses to develop effective business plans, incorporating innovative sales and marketing features that provide the right results. Together, we can transform your small business, and unlock its true potential. Contact me today at firstname.lastname@example.org or complete the contact form here and I’ll get back to your shortly to discuss your individual requirements.