The Performance Management Problem and Solution
Performance Management is one of the top 10 problems of 20th century management!
The definition of performance and performance management is a fundamental 20th century management problem
Performance is defined as both the actions and results of performance. The definition prevents management of results separate from performance and restricts enterprise management to one confused performance dimension. Performance Management is a big part of 20th century management, with a variety of structures like processes, dashboards, and scorecards laid over the business. Key performance indicators (KPI) mix result volumes and performance levels. Business process re-engineering focuses on business process management and performance quality to produce a process output. Many performance and productivity methods and consultants redefine costs out of the process and into other capital utilized in the business.
R-pM separates results from performance to enable 21st Century Management
Result-performance Management (R-pM) separates results from performance to organize the enterprise business in results produced and capital utilized in performance solutions. The enterprise business changes each time management decides to produce a new result, close a finished result, or utilize a different performance solution. Performance management provides and maintains cost-effective performance solutions. Result management utilizes specific performance solutions to produce specific value-quality results.
The Performance Management Problem
Performance management mixes performance activity together with performance results like goods and services
To this day, “performance” is defined to include not only the execution of actions and activities in performance, but also the outputs, things accomplished, or results of performance. Sales performance includes the capabilities applied or time taken by the salesman in making the sale, as well as the number of sales, number of items sold, and the amount of the sale. The accepted definition of the enterprise business is “the activity of providing goods and services“. Yet the definition of performance suggests that the business is “the performance providing performance“, since the activity and the goods and services are both defined as performance.
Mixing actions and results of performance together as the same entity, prevents the 20th century enterprise from managing results separate from performance in order to organize and manage the business.
Business Processes, Performance Management Systems, and Key Performance Indicators mix results and performance
Performance Management Systems report to management through a variety of dashboards, scorecards, cockpits, and control panels that are overlays on the business and the organization structure. Re-engineered business processes mix results and performance together and business process management tries to manage the monolithic process. KPIs mix indicators of performance, which indicate a level maintained over time, with measures of results, which are finite outputs produced within a time period that can be counted. This is why we hear of sales performance, revenue performance, and profit performance instead of results.
When we re-engineered business processes, we mixed up results and performance, so that we expected organizations units to manage performance and performance quality, and we set up a process team to manage a result as the output from the process. This put our results and performance backwards. We managed performance in the organization and a result across a process.
The Performance Management Solution
Result-performance Management (R-pM) separates result management from performance management. This enables the enterprise to organize and manage the business. Results can be managed to produce outputs that can be counted to reach goals. Performance can be managed across the results produced as a level over time to be monitored to meet and maintain expectations.
R-pM manages results through result management and performance through performance management
R-pM re-engineers business processes to be result value-quality chains by separately managing results and performance. Instead of business process management, R-pM organizes and manages the enterprise as a matrix or a spreadsheet, where the managers in the result organization must produce results and exceed goals, and where capital is managed as specific performance solutions to go across results and be used to produce a number of results, in order to meet and maintain expectations. Result metrics are used to measure and manage the results produced by the organization units and performance indicators are used to measure and manage the use of capital across the enterprise.
21st century Result-performance Management enables gains not possible with 20th century performance management
Separate management of results and performance enables the 21st century Result-performance Management to do many things that are not possible with 20th century business process and performance management.
- Organize results as a complete set and manage value as an attribute of results
- Measure and manage quality as an attribute of results
- Organize capital as a complete set of performance solutions of assessable worth that provide total capital and business worth
- Organize the natural business by deploying specific performance solutions to produce specific results
- Redefine business processes as result value-quality chains to manage all performance solutions producing each result and to manage all results to a final result
- Capture business activity in performance records to know the cost of capital consumption and performance solution utilization to produce a specific result
- Capture performance costs against the performance solution to know changes in worth
- Capture performance costs against the result value to know result-value added
- Manage and measure performance solutions against measured and managed results to manage performance costs against result value, performance capacity needed for result volumes, performance effectiveness producing result quality, and performance uncertainty that could impact result risk
- Enable performance solution worth assessment to identify improvement or replacement needs
- Enable result value evaluation to identify results that should be closed or improved
- Understand the relationship between meeting performance expectations and reaching result goals
- Relate result symptoms and performance problems to understand the value-added benefits to justify the cost of improvement and development
- Optimize the total attributes of results against the totality of performance to produce high value-quality results through cost-effective performance
- Provide two dimensions of management for results that utilize a set of solutions to create value and reach goals and for performance to provide qualified solutions utilized by a set of results to manage costs and meet expectations
- Provide the third management dimension to manage value-quality over time to create strategic value in the transition to the strategic business
One of the fundamental advantages of R-pM is the explicit separation of results and performance, to organize the natural business as one business structure to integrate planning, direction, control, and reporting.
Result-performance Management replaces 20th century performance management
R-pM performance management manages the capital utilized in performance to produce results managed through result management. Business processes are result value-quality chains. Key Performance Indicators are managed as specific result metrics to measure results and separate performance indicators to measure performance. Employee performance management is improved by using R-pM to develop human personnel and capability capital as performance solutions to produce value in results and increase human capital worth. R-pM eliminates the time and costs consumed in ineffective and counter-productive 20th century performance management.
21st Century Management avoids 20th century problems
When Result-performance Management (R-pM) organizes the natural business, the top ten problems and other costly 20th century management problems disappear. Slash costs, simplify business management, and boost competitive advantage through R-pM, the conventional method for 21st Century Management.
Download your 21st Century Management Manual today
Your 21st Century Management Manual, The R-pM Toolkit, is available today and is under continual development to expand and refine 21st Century Management. Get your R-pM Toolkit, and future updates, at result-performance-management.com.
November 4th, 2006 at 16:53
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