Last year many of us experienced challenges with local, national, and global issues that often antagonized our businesses: subprime debacle, gasoline price increases, Middle East instabilities, etc. For 2008, most those aching challenges remain and others will crop up – which means that it is more important than ever that everyone in the organization do what they are supposed to be doing to ensure all strategies are implemented effectively.
The usual way to make “a new beginning” is to make a New Year’s Resolution. To minimize the impact of the many issues/headlines in our world and community we can’t control – and to get the results you desire in 2008 – might we suggest a resolution to truly manage your credit union’s performance?
What is Corporate Performance Management?
Supervisors have conducted performance appraisals for years; planning, budgeting, sales, etc. processes have been carried out for years; employees have been trained for years – but even employee commitment as well as lots of hard work doesn’t mean results. In fact, often each of these elements happen in a “silo,” and within the silo, results might be achieved, but that doesn’t mean those results actually help the enterprise achieve the overall success of the business.
The real benefit of Corporate Performance Management is its focus on achieving results. Performance management focuses the organization’s efforts on effectiveness – and away from “busyness” (A busy organization, department, or person that isn’t necessarily effective.)
Corporate Performance Management should be viewed as a “system” of elements and processes in the organization working in harmony to achieve positive results. All the results from these various elements and processes must continue to be aligned to achieve overall results desired by the organization for it to survive and ultimately thrive. Performance management should focus on all of these areas: the organization, departments, processes (billing, budgeting, product development, etc.), programs (new policies and procedures, etc.), products and services, projects (automating the lending process, moving to a new building, etc.), and teams or groups organized to accomplish a result for internal or external customers.
Alignment is a critical factor in performance management.
By way of definition, alignment is the intentional connection between vision, values, goals, strategies, measures, tactics, and activities. Lack of alignment increases inefficiencies, risks, and competitive threats. It slows down the organization and prevents effective execution of the organizational strategy. According to a survey of 1,100 participants, conducted by SAS.com, alignment is the primary benefit organizations seek from their performance management initiatives.
According to this same study, there are three kinds of alignment:
- Strategic alignment, which refers to aligning departments across the organization, ensures collaboration and accountability toward organizational goals.
- Second is financial alignment, synchronizing financial and operational activities across the organization.
- Third is resource alignment, helping organizations warrant that their acquisition and use of resources support their strategic intent and reflecting priorities.
It’s sometimes difficult for organizations to achieve alignment. The biggest obstacle is that departments don’t share information or collaborate. Consequently, there is often a lack of trust, which becomes an issue in developing effective communication and collaboration channels. And this ultimately minimizes the real benefit of performance management/alignment – achieving results. For Corporate Performance Management to be implemented successfully, employees need to understand how all elements and processes are aligned as well as how their contribution to the enterprise supports the success of the overall organization.
Many successful credit unions are adopting Corporate Performance Management solutions to jumpstart and sustain improving company results. A good Corporate Performance Management system will have similar components: a future (shared vision) with business strategy, desired employee behaviors (values), and day-to-day operations. Strategic performance measures are also included in a performance management system to better inform decision-making and show progress toward desired results.
Corporate Performance Management solutions transform an organization’s strategic plan from an attractive but passive document into the "marching orders" for the organization on a daily basis. It provides a framework that not only provides performance measurements, but it helps planners identify what should be done and measured. It enables executives to truly execute their strategies.
Tips for implementing a successful performance management system are as follows:
- Executive sponsorship and involvement – Agreeing on the corporate mission, vision, and values – and developing a change management plan, including key communications and messages, timing, and how the employees job/work will change as the performance management plan is rolled out.
- Align organizational activities and processes to the goals of the organization – Identify organizational goals, results needed to achieve those goals, and then measure outcomes and drivers to achieve goals. Align all elements and processes to the goals of the organization.
- Prioritize the organization, department, employee’s desired results – A “weight” or prioritization in the form of a numeric ranking with 1 as the highest. This helps prioritize how you will use your company resources to achieve the desired results.
- Identify first level measures and ensure second level measures are aligned with them – First level measures are created at the enterprise level and second level measures are created for departments. Cascading these first and second level measures is an important part of alignment process.
- Identify standards of work that can be replicated so results are accurately predicted – Creating standards for performance is critical to high performing organizations, whether for process, programs, projects, communication, collaboration, or reporting. Replicating standards of how these things are done is very important, which is a necessary behavior for organization discipline.
- Review and share performance management plans at least monthly – Monthly reviews allow the management team to minimize barriers and accelerate opportunities, as they make decisions to adjust how the results are created. Sharing these plans also promotes trust, communication, and collaboration – critical for any successful enterprise.
Remembering and applying these tips to enhance your credit union’s Corporate Performance Management practices can take the sting out of 2008’s looming issues that may impact your member’s lives and your businesses. Members will be looking at their credit unions as safe havens from these issues that will most likely challenge the economy and their quality of life. Incorporating the stated performance management practices is a New Year’s Resolution that will help you help your members achieve desired results for 2008.
For more information on these performance management tips and more, please contact Jim Cardwell or Karla Norwood at Cardwell, 800-395-1410. Or visit our Connections Online website: www.connectionsonline.net.