Tools for Communication and Engagement
Performance Management is the place where “the rubber meets the road” when determining whether your strategic intentions are producing the intended results. Very frequently, business owners and their leadership teams will devote significant effort in developing a strategic plan that articulates where the business will play and how it will succeed, which is an excellent start. But where many businesses fail is in the process used to communicate and engage the organization in their vision. Communication and engagement is what produces goal alignment around that vision. This is where Profitwyse helps business owners achieve goal alignment through the implementation of several tools, described below, which we term Performance Management.
The balanced scorecard process really constitutes two parts, a balanced strategy and a scorecard. A balanced strategy or strategy map is typically comprised of the following four components:
- Financial — What are the financial goals of the company from the owner’s and/or key stakeholder’s perspectives. This include revenue growth, profitability, return on equity, changes in valuation, etc.
- Customer — This perspective focuses on the valuation proposition the company is going to pursue in order to deliver value to both current and future customers, including the development of new markets (market penetration) and new products (product diversification).
- Internal — The next perspective deals with systems and processes within a company that are required to deliver on a value proposition. This requires assessing both a company’s internal strengths and weaknesses to identify key initiatives required to either improve, build or leverage a company’s capabilities.
- People — Finally, the People perspective defines what are the critical skills and expertise needed to drive the company’s internal processes, such that the company can deliver on its value proposition and achieve the desired financial results.
Dashboards are a critical feedback mechanism for any level of your organization. When goals are cascaded from the corporate level down to functional departments, employees can more readily ascertain how their efforts contribute to the organizational vision. Dashboards are typically used to summarize Key Performance Indicators (KPIs), providing management with the necessary insight required to identify negative trends and take timely corrective action. Here is example of a typical Excel-based dashboard we create for our clients to monitor their KPIs:
As needed, we coordinate monthly and quarterly financial reviews along with period forecast updates for our clients. Establishing and following a regular review process is an important component needed to maintain focus on critical business objectives.
@ Risk Compensation
Another key aspect to engagement is creating employee commitment through the use of at risk-based compensation programs. We have found time and again, that engagement is significantly easier when a well structured bonus program is linked to the company’s KPI performance. Profitwyse utilizes a number of different templates for establishing @ risk compensation programs that quickly gain acceptance and motivate employees to pursue important company goals.
Pulling it all together
Do you need help pulling together your performance management system? If you do, we can help. We have put many performance management systems in place for clients in various industries. Contact us today to learn more.