Your Employees’ Performance Objectives: Do They Measure What Matters?
By Jenny Fisher
Business Strategy Specialist DMSA
DMSA has conducted extensive research into Organizational Effectiveness. This often involves establishing the degree to which employees’ objectives are aligned with business objectives.
Employees’ understanding of strategy is usually superficial
While employees will often claim to understand the organization’s strategy, deeper analysis most often reveals that this understanding is superficial at best. We also find that while the vast majority of organizations claim to cascade their organizational objectives down to all levels of employees, in practice this is very rarely conducted effectively.
More often than not, employees have no real understanding of how their performance objectives (often called Key Performance Areas or KPAs) can impact on the organization’s success. At best, they understand how their performance contributes to the success of their department, but they do not relate to the organization’s strategy on a personal level.
A strategy remains purely academic if it can’t be linked to performance objectives
The theory behind the need for alignment between employees’ performance objectives and the organization’s strategic objectives is well understood and is not the ambit of this article. Suffice it to say that a strategy remains purely academic if employees’ performance objectives are not well aligned with the organization’s objectives.
So if the theory is so well understood and the ramifications so critical, why isn’t it happening?
While there are a variety of factors that are preventing this cascading process from happening, I have chosen to address one in particular as it is probably the most common barrier we encounter in our research work.
Managers find qualitative measures more problematic than quantitative measures
In our experience, the primary reason for managers not reflecting strategic objectives in employees’ KPAs is that when objectives are qualitative rather than quantitative, managers find them too onerous to measure.
In a production environment, when the primary business objective is, for example, to produce as many teabags as possible in minimal time, it’s easy to translate this into a neat quantitative KPA such as “staple tags to 6 teabags per minute”.
But many measures such as customer service ARE qualitative
However, in today’s competitive environment, many objectives are qualitative in nature. They can’t be measured by counting or with a stopwatch. They relate to customer service, innovation and superior product quality. If one is to create a valid measure for these dimensions, they will always include a component of judgement.
And yet, managers are scared of making a judgement. And employees do not want to be judged! How has this situation arisen?
The real issue is about trust between employee and manager
In the focus groups we conduct, employees are very clear - they want ‘objective measures’. They are uncomfortable with any element of subjectivity in their performance measures; they do not want their managers to exercise any judgement.
Mistrust is the underlying cause which our research highlights - employees do not trust managers to judge them fairly.
Eliminating ‘subjectivity’ can lead to contrived and meaningless performance measures
The only way to eliminate subjectivity is by having purely quantitative measures. But if the nature of an employee’s deliverables is primarily qualitative, the only way to contrive a quantitative measure is by confining measurement to merely an aspect of their deliverable, which may not really address the ‘intent’ of an employee’s key focus area.
For example, ‘Customer Service’ can be measured in quantitative terms as ‘answer the phone within 3 rings’. Sure this may be neat, easy to measure and eliminate any subjectivity, but does it measure the most important aspects of customer service? Obviously not.
As a result, even when managers attempt to translate organizational strategy into employee performance measures, the measures are so watered down and ‘sanitized’ that they become meaningless in terms of their intended role as strategic targets.
A shift in paradigm: from ‘less talk more measure’ to ‘more talk’
The solution is a shift in paradigm. While managers and employees have been attempting to construct performance measures that can be scored with minimum debate, the focus should shift to defining in more detail what constitutes superior performance and establishing a shared understanding of these expectations.
It is proposed, therefore, that rather than focusing on creating performance measures that are unequivocal and easily measured, good performance measures should be meaningful and clearly indicate to employees how they can contribute to the organization’s strategy.
Using a two phase, iterative process:
Phase 1: Conduct open, searching conversations
There are no shortcuts
Managers and employees need to enter into real, searching conversations about the nature of strategy and performance, and they need to explore key issues in depth. The truth is that there are no shortcuts. No ‘tidy’, unequivocal, quantitative measures that leave no room for debate can replace these searching conversations.
Managers must be prepared to clarify exactly what is meant by, for example, superior customer service. The manager may not have ‘pre-packaged’ answers, but if both parties are willing to enter into a conversation about what constitutes superior customer service, such conversations can yield far more valuable insights than textbook responses ever could.
Phase 2: Document specific performance criteria
No surprises
The outcomes of such conversations should yield an agreed set of performance criteria, clearly explaining the mutual understanding of customer service.
The key is that there should be no surprises when the time comes for assessment. Employees should know exactly what the manager is looking for, and how superior performance is defined, albeit in qualitative terms.
We have found that employees’ main concern about being assessed is that when there is no objective measure in place, the manager could judge them according to criteria which haven’t been agreed. When performance criteria are well documented upfront, the potential for this happening is minimized.
Such a set of performance criteria could look something like this:
- Customer needs well understood and documented
- Proposal well matched to meet customer needs
- Deliverables in proposal met according to specifications
- Follow up with customer within agreed time
- Appropriate after sales service provided
Each of these performance criteria can be scored, and the average score could be used as the score for customer service. When a performance criterion is defined in terms that are as specific as possible, the potential for debate is minimized.
Not being able to prescribe specific parameters upfront does not invalidate a performance criterion
Although the fulfilment of these performance criteria is still open to discussion, this is something to be encouraged rather than avoided. The fact that the specific parameters of these performance criteria can’t be prescribed upfront does not invalidate them – rather it ensures that manager and employee are aware of their contextual sensitivity.
Managers and employees both need to appreciate the true value of using such performance measures as the basis for performance discussions – which is not only to provide a score, but to enable the employee to gain a deeper understanding of expectations and allow for more in depth and appropriately focused coaching.
Kick-start the process with an external facilitator
To kick-start this process, managers often need an external facilitator to guide these discussions and assist in identifying relevant performance criteria. Subsequently, managers and employees should conduct these discussions themselves with the dual purpose of building trust and identifying these more meaningful performance measures.
In conclusion, DMSA has found that when employees’ performance measures are well aligned to strategy, there are other positive factors: employees trust their managers, communication is more effective, and employees are more motivated and engaged.
Jenny Fisher is a Business Strategy Specialist employed by DMSA to ensure that research findings are meaningful to the client and to assist them in addressing issues that arise.
