There’s a lot of interest in performance management these days. Implemented properly, it can focus and align efforts; improve responsiveness and customer service; increase productivity; and drive down costs. It also enables supervisors and managers to make the transition from being functionally proficient to more effective business managers. Systems integrators who see performance management as the “next big thing” are offering Business Intelligence (BI) solutions as the next step in the evolution of performance improvement.
Yet, despite its improvement capabilities, challenges with using BI solutions in performance management remain. And organizations who want to maximize on their BI investment and achieve wanted results need to not only contain the data and metrics but incorporate them into their management processes to achieve effective performance management.
Today, strong similarities are present between the current climate and the expectations and promise of transformational performance improvement resulting from Enterprise Resource Planning (ERP) of the late ‘90s—the then-favorite solution whose role is now played by BI solutions.
There is no doubt that BI applications offer potentially significant financial and operational performance improvement capabilities. They are certainly worth considering and can offer an exceptional return on investment (ROI). But “potential” and “actual” are very different and the road from one to the other is often long, expensive and arduous.
The challenge with using BI solutions in performance management is that the numbers are perceived to be personal. People are frequently measured, evaluated and paid based on the data. If the information is wrong or the human dimensions of the implementation are not adequately provided for, employees will avoid using the BI system and will start making their own—or not using anything at all, which is far more costly to the organization and unreliable to boot.
While most organizations have a lot of metrics, they are not always the right metrics or used in the right way. Organizations do not always put enough time and thought into defining the correct Critical Success Factors; Key Performance Indicators (KPIs); Performance Indicators; and Results Indicators. And even when companies do have the right metrics, they are often not incorporated into the management processes in an integrated, level-appropriate way. Metrics have to be applied continually every day at each level in the organization in order to translate into actual performance improvement—the essence of performance management. A BI system can enable this process but it will not in and of itself deliver the required outcomes.
Additionally, some organizations are allergic to accountability. If transparency and accountability are lacking, the transition to effective performance management can be difficult. It will take time for the organization to assimilate the necessary level of transparency and it generally requires professional change management support. However, if implemented properly, these processes will become fully embedded into the organization’s ethos and the outcomes will be substantial.
Get the right performance management process
While the best organizations often achieve stellar results, it involves far more than integrating a new application such as business intelligence. Converting data to reliable, actionable information; having effective business processes; and having a full understanding of how to drive performance in an enterprise environment are all critical to success.
An effective performance management process delivers quantifiable improvements in customer service, productivity and financial performance. Follow these 11 tips to implement an effective performance management process that is right for you: