Performance Management Consulting

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Performance Management Consulting

Performance Management Highlights

  • Organizations performance systems can become more complex over time
  • Functional performance is not in alignment with organizational performance
  • Managers have difficulty assessing the state of process performance
  • Organizations often do not understand which parts of its business processes need attention to drive the organization towards its goals
  • Budgetary Management does not fully align functions with the organization
  • Pinnacle Strategies uses a scientific, behavior-based approach to calibrate and align performance systems

What’s Happening in Performance Management

As your company grows or changes, so does the complexity of managing your performance and processes. Unfortunately many organizations suffer from one of two conditions as a consequence: underdeveloped and fragmented or bloated and burdensome. Either way, the result is ineffective and misaligned performance systems and processes that do not support and frequently work against your ability to diagnose and direct performance consistent with your business goals.

Often, the performance management systems are focused on functional performance. When you add up all the performance in various functions, they don’t add up to good organizational performance. The challenge is to get local managers to align their functionally oriented behaviors and decisions with organization’s goals. For example, in a for-profit entity, managers must think like business people and make decisions that will produce outcomes based on the same measurements as stockholders and customers hold the organization accountable for.

Additionally, managers and system owners are unable to predict and accurately measure the effect of decisions that are made deep in the organizational structure on the goals of the organization as whole. They are simply unable to get an accurate picture of well the processes that lead to the results is operating.

Budgets are a Poor Guide for Decision Making

Often, in an effort to manage the financial aspects in an organization, the local managers use budgets, which, while important, are not a good decision model for the entire entity. The main driver of budget behavior is based on dividing the organization into silos. Good for allocating expenses, but impossible to judge decisions impact. Especially when a manager has accountability for process decisions that affect expenses in other silos .

Most importantly, budget management assumes a fixed revenue source, over which local managers have little or no control. The reality is that local managers, being part of the system, can and do have a significant impact on the revenues of an enterprise. Additionally, revenue is not a fixed thing; it’s a projection – a forecast. The result of this erroneous assumption is that many management decisions become one dimensional -based on expenses and local optimization of a revenue level that may or may not reflect the current state. The impact on the organization is often a sacrifice of revenue and market opportunities so the budget will be right.

The solution is not a balanced scorecard, but a focused set of performance based measurements and diagnostics that illuminate process behavior, the predecessor to results. These measurements, carefully calibrated to system and process behavior are then linked to reinforcement mechanisms to ensure alignment at all levels of the organization and across process boundaries.

Whether it’s designing performance systems from the ground up or calibrating and aligning your existing performance management systems, Pinnacle Strategies has the expertise and experience to ensure that they are practical and support the performance that matters to your organization. We eliminate the behavioral disconnects, build in reinforcement for the behaviors required for sustained implementation, and calibrate your systems and processes so that they work together to support your short- and long-term goals.