Performance Management as a Business Strategy

Performance Management is a critical part of a company’s business strategy. As shown in Level 2 of the Business Hierarchy of Needs®, performance management is the bridge between strategy and results. As we have spoken to senior executives around the United States, we have found that their perception of performance management is more tactical than strategic.  We have found that functional organizations also see performance management as a check the box activity. Most companies view “performance management”

as a human resources process, and as such, demote performance management to a functional tactic rather than a business strategy. This article will discuss what performance management as a business strategy means and why this effort needs to be led by the senior leadership team, have full support from the Board of Directors and actively engage all middle level leaders in its implementation.

Performance management as a strategy needs to be focused on the company’s Most Important Goal and its supporting business strategies. It needs to supply capable organizational resources as it evolves from its current state to its future state. Performance management as a business strategy needs to be focused on the consistent execution of the company’s strategic objectives. It requires that each stakeholder (employees, contractors and suppliers) is knowledgeable of their role in executing a company’s strategic objectives, agrees with them, and are accountable to them. Stakeholders also need to have the appropriate skills at the right time and need to be engaged. The chart below (printed with permission from Gallup) provides compelling reasons for focusing on performance management as a business strategy.

A performance management strategy that engages stakeholders delivers stellar results and is especially effective with today’s increasingly remote workforce. Effectively implementing corporate strategy and achieving significantly better financial results are the two most important goals for any senior leadership team and the Board of Directors. Performance Management as a business strategy requires a holistic approach throughout the entire company and is done over a period of months and years. It is not a senior leadership project. It is a companywide strategy that impacts how everyone involved with the company prioritizes the work they do and continuously use the company’s Most Important Goal and strategic objectives as the litmus test for everything they do.

As stated earlier, performance management strategies are the domain of Level 2 of a company’s unique Business Hierarchy of Needs®. Effective performance management systems address the elements of Level 2 in an integrated fashion.

Level 2 jumpstarts the evolution toward a “Culture of Strategic Execution™” by defining Knowledge and Change Management strategies for all stakeholders throughout the company. For the purposes of this article, we will assume that the company has already done the foundational work shown in Level 1 which defines the core culture of the company, clearly defined its strategies, properly set goals, and identified its strategic gaps and operating gaps. Level 2 is primarily the domain of middle level leaders who have active support and participation from the senior leadership team. The performance management strategy is made up of tactics that address the needs of every stakeholder: Accountability, feedback, skills, hiring practices, learning maps, organizational design and talent optimization. Level 2 properly prepares the organization to close operating gaps and strategic gaps and address organization gaps that are required for effective implementation as shown in Level 3.

Performance management is a strategy, not a tactic. You can more insight to performance management as a strategy in Jim Gitney’s book: “Strategy Realized – The Business Hierarchy of Needs®”. You can find ways to purchase it and get invaluable tools for helping with the creation of a performance management strategy here.

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About the author: Jim Gitney is the CEO Group50^® and has spent the last 45 years leading organizations in large and small companies such as GE, Black & Decker, Sunbeam, Rain Bird and over 200 other companies in his consulting practice. As a result, he has seen many different approaches to performance management and developing high performance cultures. He works with healthy or troubled companies with a focus on performance management, the achievement of their Most Important Goal and implementing strategy. Group50^® has developed a unique and systematic approach to performance management that takes a company through a process of identifying its core strategic and cultural objectives, cascades them throughout the organization and utilizes cloud-based tools to significantly increases employee engagement around a company’s strategic imperatives.

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