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April 18, 2005

About Performance Management

Management always includes responsibility for the full lifecycle of what is being managed, including these basic phases:
- conception
- development
- implementation
- support
- evaluation
- change
Given that, what does it meant to "manage performance"?

Performance can be understood only as a degree of achievement towards a recognized goal. The most typical source of confusion about performance is confusion regarding how to define the goal so that it can be unambiguously agreed to have been reached. Often this agreement only matters within a specific community, and so the tendency is to pursue goals that the community defines. This is practical, but it does not prevent the community from establishing goals that are actually lacking value or missing the point of their ultimate concern. The most infamous examples of this now are the mythologies of the dot-com era, in which "eyeballs" and "stickiness" were treated more seriously than revenue. But that very example gets right to the heart of the matter, because for the short-term eyeball-counters, their stake did not depend on revenue, whilst for longer-term investors, the stake did depend on revenue.

So goal-setting must first be scrutinized for its ability to represent the diversity of stakeholders. Assuming that there is not a built-in defect in the goal-definition, performance might then be rationally managed against a goal.

The next step is to grab the prospect of performance by its lifecycle, close the end-to-end lifecycle into a loop, and plan to sustain attention to it through multiple revolutions. That will require capabilities suitable to each management phase, including:
- conception needs a theory of successful pursuit and milestones
- development needs a model and infrastructure for pursuit
- implementation needs a change management process
- support needs a response level policy
- evaluation needs cause-effect tracking
- change needs forecasting and risk assessment

Those "needs" share the key concerns of providing each phase of performance management with three critical characteristics: accountability, repeatability, and a methodology for integating each phase with the prior and following phase. Put another way, they make management rational, with all phases dedicated to the same ultimate goal.

With that background, it is possible to assess the relative maturity of current efforts to manage performance. A maturity model for performance management should examine the degree of planned continuity that is sustained in supporting the needs of each lifecycle phase through multiple revolutions of the lifecycle. A management profile emerges from grouping together the levels of achievement found in each phase. The most important issue is to characterise the value of each level of achievement in terms of assuring the mastery of the full lifecycle.

The remaining problem will be a big one: how to organizationally distribute the functions and authorities that enable each phase to be properly attended? This is where management systems must put the rubber to the road, solving the issues of complexity and coordination versus the need for punctual and accurate communication. The performance manager must try to identify the opportunities for the production systems that drive progressive action towards goals to cough up evidence that can be used to support performance management decisions for each phase. The likelihood is that while production systems can provide evidence, integrating the evidence in a goal-oriented context will not naturally occur, and so a performance management system will need to be implemented to integrate, contextualize and supplement the production evidence. Thus, organizations that are looking into technologies that monitor, document, and analyze business environments and business processing should work on coordinating their deployments to support management maturity.

Posted by Malcolm Ryder at April 18, 2005 4:38 PM

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