A core element of effective performance management comes with establishing and tracking your company’s objectives. Combining a clear sense of the important goals throughout the company with a smart and malleable scoring system provides a great framework for hitting bold and ambitious targets.
Let’s take a look at a variety of methods you can use to score your performance objectives.
Objectives and key results (OKRs) have been touted by numerous successful companies as the essential foundation for setting and achieving ambitious goals. Set at the executive level and cascaded both up and down the company, OKRs provided structured goals which empower employees on the frontlines and pave the way for fresh solutions.
Here’s an example of an OKR from Intel:
Demonstrate the 8080’s superior performance as compared to the Motorola 6800
(as measured by…)
Limit your choice of OKRs to what matters most (many companies set a maximum of 3-5 OKRs to ensure focus), keep these flexible and allow the freedom to set goals from the bottom up. Used correctly, OKRs can help align your teams, focus on the right priorities and stretch performance to hit ambitious targets.
Key Performance Indicators (KPIs)
Key performance indicators (KPIs) can provide the backbone for a comprehensive system of performance measurement and target-setting. Tied closely to the top-level goals of your company, these are quantifiable and measurable data points that can be monitored and updated at any time.
Avoid using fixed targets when setting your KPIs, and make sure you measure improvements in processes rather than financial performance. Instead, ensure they are linked to your company’s teams who can agree on the criteria and brainstorm for any potential ideas. Establish a framework such as a balanced scorecard (see below) to help keep your strategy focused.
Effective KPIs will keep your company on track to spot problems and opportunities, allowing you to act on shifting trends and keep your projects oriented towards the relevant objectives.
Corporate scorecards are an excellent method for setting directional goals and providing a framework for teams to establish their goals, measures and action plans and the initiative required to achieve them. Scorecards can help you identify the best KPIs and the most ambitious but realistic goals while empowering teams by engaging them in the scorecard process.
Robert S. Kaplan and David P. Norton outlined the five basic traits of a balanced scorecard in their book, The Strategy-Focused Organization):
- Use executive leadership to mobilize change, presenting a clear vision established by company leaders.
- Transform strategy into clear operations terms, providing a clear framework.
- Bring the company into alignment, integrating teams and employees with strategic themes.
- Encourage everyone to think in terms of strategy and reinforcing positive behaviour.
- Ensuring strategy is an ongoing process as part of every day decision-making.
Benchmarking is an essential practice if you want to understand your performance in the context of competing businesses. By comparing your company against others in the same sector you can track the average performance of your industry as well as monitor established market leaders for those aspirational targets.
Choose measures that best drive success and improve performance, combining your internal figures with available external data. Trade associations and commercial market reports are both good resources.
Setting bold targets can help you reach the high-level goals you aspire to while using internal benchmarking (for instance between departments) can help encourage and promote the most effective practices.
For less complex objectives a simple done/not done or yes/no field might be perfectly adequate as a way of measuring its status. Goals that require little in the way of complicated processes to complete can be checked off easily, ensuring a smooth workflow and clarifying your objectives’ status.
For more complex goals, breaking them down into percentages allows you to easily chart a given task’s progress with greater accuracy. Allow your teams and employees to set the parameters for measuring this rate of completion to make sure the components of these goals are measurable and achievable.
Some of the data to consider tracking includes:
- Revenue targets. Are your teams and employees generating the desired revenue? Identify problems and the people with the best skills who hit their targets most effectively.
- Calls made. Is your sales department generating the number of leads your company demands? Track the data of potential clients, calls made and active leads, and so on.
- Product defects. Calculate the number of product defects so you can spot issues and keep this number as low as possible.
- Errors. If you can identify and track any errors in processes you can mitigate against their future occurrence.
- Revenue per employee. Use this estimate to establish a ballpark figure of how much revenue an individual employee brings in.
Whatever data you decide to score for, tracking it in a comprehensive performance management tool is a great way to maximize its utility and deliver the best results for your company.