Plans Must Be Rooted in Past Performance

Performance planning is not developed in a void, nor is it based upon unsubstantiated estimates of budgets, performance and plans. Effective leadership demands plans be based upon past performance and results. By successfully implementing such plans, leaders can stimulate their subordinates to exceed normal performance expectations.

It is surprising how many managers develop annual plans and budgets without accounting for previous years’ performance and the realistic capabilities of their operational unit. Plans that lack these important elements are typically ineffective as roadmaps for achieving high output from an organizational unit.

Effective leaders understand that in order to move their unit forward, they must look at what has worked in the past and then build upon those successes. They also take proactive measures to eliminate any apparent failures and weaknesses.

This process is important for leaders to understand if they wish to motivate their subordinates to reach higher levels of achievement. Plans are not a worthless set of documents to be viewed only once or twice a year: they outline significant milestones and detail what the unit needs to do to effectively operate throughout the year. Leaders understand that performance plans lay out the path for attaining their goals and objectives.

The importance of proper planning cannot be emphasized enough: if it is to be effective and realistic, it must be focused upon prior performance of the leader’s organizational unit. Therefore, a formal review must be conducted in the following three critical areas:

Operational Performance

A formal review in this area is normally conducted on two levels simultaneously: operational and leadership. The operational review compares the organizational unit’s performance with the stated goals and objectives passed down by senior management. The leadership review compares the organizational unit’s performance with the leader’s expectations. While both levels review the same information, the leadership review is conducted from the leader’s perspective of how he or she can motivate the unit to exceed expectations.

The process of a formal review begins with a superficial selection of areas that need further examination. Particular attention needs to be paid to what did and did not work during the past year. This is where leaders can begin to develop strategies to build upon their unit’s successes and eliminate or correct any failures/weaknesses.

Leaders next need to rate the actual performance of all aspects of their organizational unit, including personnel, tasks, assignments, roles, resources and so forth. At this point, any required changes and adjustments should be noted for inclusion in future performance plans.

A final review of operational performance needs to explore the impact and affect of new trends, changes in economic conditions, and uncontrollable events on the operational unit. A thorough examination should note exactly what occurred, how it impacted the leader’s unit and how the unit responded. Any lessons learned from these experiences should also be included in future plans.

Resource Utilization

A formal resource utilization review should be conducted to determine if the leader and the organizational unit maximized their use of available resources. Typically, this review determines if the unit effectually used personnel, machinery, equipment, time, schedules and financial resources.

Leaders need to analyze the operational or production capacity of their organizational unit. This can be conducted from several perspectives, such as production, operations or administration, depending upon the responsibilities of the unit. A resource utilization review pinpoints any bottlenecks or problems that occurred in these areas.

Next, leaders must determine the causes of bottlenecks and problems, which can include inadequate scheduling or insufficient human or financial resources. The findings should be detailed and included in future planning activities.

Financial Performance

The last step in this review analyzes the unit’s financial performance. First, leaders determine how well their organizational unit worked within its budget. They will often discover problem areas that can be more deeply examined during the performance planning process.

An additional review should be conducted to look at the profitability of the organizational unit, including potential ways for it to cut costs and improve productivity. These findings should also be detailed and noted for further examination as well as inclusion in future performance plans.

If you are seeking proven expertise and best practices in performance planning to train or educate your employees to solve problems and improve their performance in this area, refer to Planning to Maximize Performance: Pinpoint Leadership Skill Development Training Series. Click here to learn more.

Related:

Six Key Benefits of Performance Management

Five Critical Steps to Maximize Performance

Measure What Needs to Be Measured

Timothy F. Bednarz, Ph.D. | Author | Publisher | Majorium Business Press
Author of Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It (Finalist – 2011 Foreword Reviews‘ Book of the Year)
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