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July 27, 2005

Performance Improvement requires Change Management

Performance Management is a concept best defined by business solution developers. That is, it is based on a definition of a problem called performance, and by focusing on a theory of the problem it derives many approaches and components of "solution"...

In a comparison of myriad definitions from vendors, analysts and industry journalists, the working common denominator appears to be "management of the alignment of people and technology to improve the effectiveness of their run-time support of business objectives."

One of the more significant notes about that consensus is that it does not include "processes" in its grasp. This might be for any of several (debatable) reasons, such as:
- business process management (BPM) is thought to be a peer of performance management rather than a part of it
- solving process problems is not thought to improve the solution of performance problems.

While both of those notions seem unlikely to be true, what makes them provocative is the way they force us to defend our theory of the "performance" problem. Indeed, since process management has already had intensive attention for years through automation and reengineering initiatives, the current idea that the "performance" problem has remained unsolved lends credibility to the sense that a focus on process is at best necessary but insufficient. The suggestion, then, is that a focus on performance is at least more important than, if not actually an alternative to, process management.

Put as simply as possible, the difference between process management and performance management is, respectively, the difference between "how to" and "how well"...

Defining the performance problem as "how well" readily explains the collection of interests addressed by performance management.

At the core of the problem theory, there is a set of target levels of activity impact or event impact.

The impacts are meaningful in any of several ways (contexts):
- financial
- legal
- operational

Standards or benchmarks are established and adopted to set impact targets in any of those contexts.

The compliance of operational outcomes with the impact standards is continuously monitored, which provides alerts and data for supporting further management decisions.

The fundamental issue is therefore how to manage impact targets and manage impact compliance.

This two-pronged management requirement means:
- deciding on what specific examples, mechanisms, and evaluation models to implement regarding targets, and
- doing likewise regarding compliance to the targets.

Given that perspective, it isn't surprising to hear lessons learned such as that offered in Intelligent Enterprise by former corporate planning chief and Hackett Group cofounder David Axson:

"you can put all sorts of policies and processes in place to try to achieve compliance, but if [that] doesn't change practices and behavior, your investment in compliance [initiatives] is of marginal value..."

And why is this a predictable outcome?

While policies deliver explicit guidelines and definitions to identify priorities and permissions, their effect is essentially environmental, leaving inhabitants with the politics and preferences of adapting to the environment -- in other words, with the latitude to not comply.

And while processes prescribe the rules of activity, they don't set the motivation. And the more complexity exists in the design of a process, the more opportunities there are for motivation to vary from what is minimally required by the process to meet its execution requirements -- in other words, to not meet the "standards" for support.

The punchline is that if "performance" is essentially the degree to which execution meets impact targets, and execution is a variable phenomenon driven by behavioral issues, then there is a two-tier prerequisite to performance improvement:

- successfully managing performance (to meet targets) will be critically dependent on deliberately managing the changes that affect behavior; and...

- successfully changing the impact targets (to define "improvement") will specifically require managing behavioral adaptations to the perceived opportunities and risks of the "working landscape" offered by the new environment that compliance prescribes.

So what about technology? How does that play into the situation?

The two dominant ways that technology affects the situation are procedural automation and communications. Typically, business requirements for speed and accuracy in work flows mean that people depend on the efficiency gained through technology to "effectively" initiate, intervene and interact. However, leveraging technology functionalities offers appropriate impacts when in the right hands, and risks inappropriate impacts in the wrong hands. What makes this particularly important is the pervasiveness of the technology. Consequently, the secret to technology's role in its alignment with people is in how the administration of the technology allows the organizational structure to drive value by meeting targets. That is, technology is a critical environmental factor of organizational behaviors, affecting behaviors while also asking for behaviors to adapt to it.

Posted by Malcolm Ryder at July 27, 2005 5:36 AM

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