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Plans Must Be Rooted in Past Performance

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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)
Linkedin | Facebook | Twitter | Web| Blog | Catalog |800.654.4935 | 715.342.1018

Copyright © 2014 Timothy F. Bednarz, All Rights Reserved

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Do Institutionalized Management Practices Create Formidable Obstacles to Change?

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Every organization must adapt to change whether they like it or not. Customers, competition and technology compel organizations to adjust. The success and speed of change is dependent upon several key factors that are closely associated with leadership.

However, institutionalized management practices and structures can create formidable obstacles to internal change and can prevent organizations from taking advantage of short windows of opportunity. These obstacles present a challenge to all managers.

In most organizations individuals are taught to manage not by leading but by controlling and directing. Within these organizational cultures, this style of management is often equated with leadership. This key fallacy often prevents organizations from effecting change and taking advantage of afforded opportunities.

Management is a precise set of processes that keeps a complicated system of people, resources and technology running smoothly and, hopefully, without problems. These processes include functions such as planning, budgeting, organizing and controlling. Yet management as leadership goes well beyond these activities to include the set of processes that initially creates an organization and allows it to adapt to a variety of changing circumstances.

It is important for managers to understand the difference between the two processes. Leadership is what defines the future for the organization, aligns people with a vision and motivates them to carry on despite the obstacles. Transforming an organization in the face of change requires a majority of leadership skills and a minority of controlling and directing skills. While management in the traditional sense was required to build and staff the large corporate organizations of the past, leadership is what is required to transform them in the face of change for the future.

The key factors of change within any organization are all leadership-based. In the past, management was essential to internally build and maintain large organizations and bureaucracies. While such management is still important, organizations faced with rapidly changing technologies, markets and competition must focus their efforts externally to effectively handle change and take advantage of the subsequent opportunities. This external focus is part of leadership.

The reasons behind this strategy are self-evident. Internally-focused managers and employees tend to be myopic in their thinking, which makes it difficult for them to identify the external forces presenting both threats and opportunities to the organization. Insular thinking is designed to protect internal bureaucracies and political power bases; thus, it denies the existence of the forces of change that are buffeting the organization.

Since they disregard the forces of change, these managers are highly resistant to alterations and build walls within the organization. These barriers are difficult for managers as leaders to overcome. Before they can emerge to challenge these internal barriers, they must understand how the key factors of leadership compare with the traditional management structure, and how the two vary in style and approach to change. While controlling and directing management can support leadership in the accomplishment of goals and objectives, most organizational cultures have traditional managers dictating what managers as leaders should and can do; this is the opposite of what should be happening. The following comparisons are where many of the directing/leading conflicts occur with traditional management imposing its principles and constraints upon leadership.

Planning and Budgeting vs. Establishing Direction

The role of management in the traditional sense is to establish detailed steps and schedules that direct the organization toward the accomplishment of its goals and objectives. Individuals and organizational resources are allotted according to need and assigned to specific tasks.

The role of management as leadership is to develop and define an organizational vision for the future. Managers initiate strategies to produce the necessary changes required to achieve their vision.

The conflict in traditional manager-run organizations is that they wish to have managers who lead work within the constraints of the established plans and budgets, which limits their ability to act and effect overall change. Rather, planning and budgeting should be used to support the manager’s goals and vision to implement necessary organizational change. This presents a challenge for managers as leaders: they must effect internal change before they can achieve external change.

Organizing and Staffing vs. Aligning People

The conflict between organizing and staffing on the one hand, and aligning people on the other, is an argument of form over function. Many entrenched managers have institutionalized a number of management functions, which creates highly structured programs that help the organization to achieve its institutionalized goals and objectives. Employees and resources of the organization are controlled and directed through these goals related to policies, procedures, methods and systems.

While managers as leaders understand the validity of a management structure and a need for it to support a leader’s vision, goals and objectives, they are primarily guided by the principles of aligning people to their vision. Managers who lead accomplish their goals by communicating direction, via words and deeds, to everyone whose cooperation is needed for the creation of teams and coalitions that understand the vision and accept its validity.

Once teams and coalitions are internally established, managers understand the need for the functions of organizing and staffing that support these efforts, but are not constrained by them.

Controlling and Problem Solving vs. Motivating and Inspiring

The use of control methods and techniques is management’s way to monitor results and identify deviations from the plan. Problem solving techniques are instituted to use the organizational resources that resolve the problem.

The manager who leads will use these methods and techniques only after motivating and inspiring people to overcome the major internal and external barriers to change. A key difference is that controllers and directors use methods to implement solutions while leaders motivate people to change.

Predictability and Order vs. Change and Opportunity

The fundamental difference between controlling and leading management is in the final results.

Controlling management focuses on the short-term results that are expected by various stakeholders in the organization, such as meeting budgets and quotas and producing an adequate return on investment. Their focus is on predictability and order, which inhibits organizational adaptation and transformation to meet the forces of change.

Management as leadership aims to drive the organization through change vis-à-vis their vision. While this focus may alter the organization’s short-term goals, it has the potential to produce extremely useful change by taking advantage of emerging opportunities and transforming the organization in a positive manner. The results of this endeavor can produce new products, services, approaches and methods that positively impact the organization in the long-term.

Excerpt: Facilitating Change: Pinpoint Leadership Skill Development Training Series (Majorium Business Press, Stevens Point, WI 2011) $ 17.95 USD

Related:

How Well Do You Set the Tone?

What Does Luck Have to Do With It?

Anticipating and Handling Employee Fears of Change

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)
Linkedin | Facebook | Twitter | Web| Blog | Catalog |800.654.4935 | 715.342.1018

Copyright © 2014 Timothy F. Bednarz, All Rights Reserved

Should Accountability Be a Primary Priority?

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Today it seems that much of what we hear focuses on a lack of accountability. It resonates inside business practices as well as being far reaching in the character of influential people within our political environment, cultural role models and those responsible for influencing and teaching our children. Accountability is an important topic to consider, especially in business today. After all, a lack of accountability in the workplace does produce both intended and unintended consequences that can affect so many people in a brief amount time.

The choices we make and the paths we choose to take all come with associated levels of accountability and accompanied consequences. Many in the business setting tend to have extremely higher stakes and risks. The question is; “Should accountability be a number one priority in today’s business climate?”

Basic Definition of Accountability

The basic definition of accountability can be simply defined. It is being answerable to others.  In the work environment as managers and leaders, it is important for several reasons. Accountability is the means for applying checks and balances. These protect companies from internal and external vulnerabilities and competitive disadvantages. It enhances fairness for employees and limits disruptions and frustrations that slow their efforts and personal growth. Through accountability, everyone can be given the opportunity to share their ideas, motivate and encourage those around them. Perhaps it is time to look at accountability as a “positive business relationship factor” rather than a “judgment that defines individual progress and potential”.

Personal Accountability

Accountability inside the workplace needs to be considered as a positive principle to embrace. It motivates each of us to do our best. It presses us to be better managers of the time, talents, responsibilities and resources that have been awarded us to oversee. If it were not for being answerable to someone else, it would likely become a much more difficult task to foster personal growth and to become better at what we do along the way. Nothing hampers individual promotions and work relationships more than a lack of personal accountability, or the desire for it. If you look around and give it careful consideration, you will probably notice that most divisions and derisions within departments or work units can be directly traced back to issues of little to no accountability in regard to one or more people.

Why Many Will Openly or Silently Resist Accountability?

Being in a leadership position requires the knowledge of understanding why many employees and even peers will openly or silently resist accountability. It may be wise to formally address them as part of your company expectations or workplace standards reinforcement activities.

Some Employees Have an Aversion to Accountability 

They are inwardly or even at times outwardly rebellious to authority. They sometimes feel they know better than someone else, and will refuse to adhere to any rules or suggestions that they have had no input or say into their development or implementation.

Some Employees May Be Simply Lazy and Non-Performance Driven

Accountability interferes with the ability to continue in their comfort zones fordoing what they feel they want to do, when they desire to do it.

Some Employees May Fear the Loss of Their Jobs or Positions

Accountability implies a disclosure of their negative performance in areas where they may be compared to others, where positive outcomes will become undermined or overlooked.

Some Employees May Not Trust Their Mangers or Supervisors

They refuse to believe the accountability criteria they set will be fair, or feel it will be used appropriately.

Pride or Ego Highly Contributes to the Erosion and Resistance to Accountability

Some individuals believe that the means of their own personal feelings and belief system will forever tend to justify the ends and outcomes they wish to produce. Actions of accountability and support of everyone’s interests are not a necessary part of the process for getting something accomplished. These individuals usually feel they are above the need to display qualities of corporate responsibility, while being held to the same standards as everyone else.

Accountability Stimulates Individuals Do Their Very Best

These are sobering days for any business and especially those that function within them. Character, high standards for staying on course, upholding personal convictions, promoting truthful words and unwavering actions while displaying high levels of responsibility, are all an integral part of accountability.

While it is true that everyone is probably forced to do more with less, accountability needs to become a two way street. A buy-in to accountability can make a huge difference. Work relationships generally become stronger.  Responsibility becomes part of the company culture. Paths to individual success, progress and promotion are opened up. Corporate stability is sustained, which in turn allows for greater future growth and individual prosperity. Trust within the workplace is greatly enhanced. Loyalty increases.

For multiple reasons, accountability stimulates individuals do their best, versus doing only what is needed to get by. In the end accountability will ensure that all workers will begin to hold each other to set standards, and because of it, increase pride and more positive workplace attitudes. Individuals taking advantage of circumstances and situations tend to become far fewer. Challenges can be addressed and solved without the accompaniment of intimidation and fear. By placing accountability as a number one priority, there will be far fewer challenges to overcome but more privileges, promotions and positive rewards to offer.

Related:

Supporting Employees’ Need to Achieve Maximum Results

Assessing Employee Growth and Development

Nine Rules for Coaching Your Employees

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)
Linkedin | Facebook | Twitter | Web| Blog | Catalog |800.654.4935 | 715.342.1018

Copyright © 2014 Timothy F. Bednarz, All Rights Reserved

Measure What Needs to Be Measured

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Performance plans are action plans, not static documents. Effective performance plans must detail the specific actions leaders and employees must follow to accomplish the goals and objectives set within it. Leaders understand that without meaningful performance standards, measuring and evaluating individual performance becomes difficult if not impossible. Once the plan is implemented, meaningful performance standards allow leaders to modify and adapt their plans to actual conditions.

Leaders must use solid standards to monitor and evaluate all aspects of performance. Any measurement used should determine and create an action both on the part of the employee being evaluated and on the part of the leader performing the evaluation.

There is a natural tendency for a leader to focus his or her activities on more prominent areas that will be highlighted and spotlighted, yet every element of the performance plan must be fully addressed.

It should be noted that any standard a leader creates will direct, limit and change the behavior and performance of their employees. This is important for leaders to understand because what and how they choose to evaluate can have either a positive or negative effect on the performance of their organizational unit.

A common pitfall in establishing performance standards is overdoing them. It burdens all involved with excessive factors and controls. Leaders know that to be effective, they need to set performance standards that are relevant and meaningful. It is far better to have fewer meaningful standards than to establish many useless ones. When applied, these standards will present a true picture of the performance of their organizational unit at any given point in time. Four areas to focus on in creating meaningful performance standards are:

What to Measure

The specific elements that need to be measured will vary by organizational unit. Typically, performance standards are set around productivity and profitability. Most leaders establish performance standards by setting specific performance expectations. Examples include:

  • Progress is evaluated by the reaching of specific milestones linked to individual goals and objectives.
  • Profitability is evaluated against the budgets established for each activity.
  • Efficiency is evaluated by the resource utilization within the organizational unit.

Each organizational unit has key factors that determine their success. Leaders identify these factors as indicators of performance and look for trigger points that are early indicators of the success or failure of these factors. For instance, if a leader is managing a manufacturing unit, he or she may focus on projected orders as a key indicator of their unit’s future activities. While a production supervisor may not be interested in these future indicators, a leader looks beyond the immediate horizon to maximize the efficiency of their unit.

How to Benchmark

Once leaders know what they want to evaluate, they need to benchmark each critical measurement. This establishes degrees of confidence and reliability in their numbers. They review these statistics over a meaningful period of time to establish a benchmark of past performance in each area. The longer a leader reviews the past performance of a specific area, the higher the degree of confidence and reliability he or she establishes.

Once key performance standards are benchmarked, leaders establish “triggering events” that result in taking immediate action. Since the benchmarked statistic is the standard, a triggering event can be predetermined. This event or “flag” occurs when performance rises above or falls below a specific percentage of the benchmarked standard. This provides leaders an early warning system to proactively deal with performance problems before they get out of hand.

How Frequently to Measure

Leaders are careful not to overburden themselves with needless information. They use performance standards as a means to keep their finger on the pulse of their unit’s performance. They can easily determine the frequency for receiving reports of their unit’s performance. Some statistics are meaningful on a daily basis, some hourly, and still others only when reported over prolonged periods of time.

What Measurements Indicate

Key performance standards need to inform leaders of the overall performance of their organizational unit. Specific measurements can trigger corrective actions, while others indicate the progress of the unit against performance plan goals and objectives. Effectively utilized, solid performance standards lead and direct the leader’s actions to fine-tune his or her unit’s performance. The right balance of key standards points the way to improved overall performance and productivity.

Excerpt: Planning to Maximize Performance: Pinpoint Leadership Skill Development Training Series (Majorium Business Press, Stevens Point, WI, 2011) $ 16.95 USD

Related:

Five Critical Steps to Maximize Performance

Execution: Six Action Steps

Performance Plans Create Results and Maximizes Performance

Objectives Allow Managers to Focus on Obtaining Results

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)
Linkedin | Facebook | Twitter | Web| Blog | Catalog |800.654.4935 | 715.342.1018

Copyright © 2013 Timothy F. Bednarz, All Rights Reserved

Performance Indicators Provide Feedback and Insight into All Levels of Leadership

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Key performance indicators or metrics allow organizations to create a common reporting system and language that leaders on all levels can understand and use in their decision-making. However, performance measurement decisions deliver key information and data that triggers specific decisions and actions at different levels of the organization.

Performance-based measurement systems provide feedback and insight into all levels of leadership within the organization. Local leaders make decisions based upon trigger points and triggered events as well as overall performance of their organizational units.

On the other hand, senior managers must take a strategic perspective that links the performance of all organizational units into feedback related to the entire organization’s performance; their decisions are global and focus on the sustainability of the entire organization.

It is important for leaders on all levels to understand the links between local performance and the entire organization. Key performance indicators and metrics trigger decisions on multiple levels. Lower trigger points may cause lower levels to react and make decisions and changes based upon the organizational unit in a specific location.

Senior leadership will have trigger points at higher levels that concern the performance of the entire organization, compelling them to make decisions and changes based upon the feedback they receive. While the perspectives may be different at various levels of leadership, the use of key performance indicators and metrics allows all leaders to make the decisions that are their responsibility.

Decisions can be tactical on a local operational level and strategic at a higher leadership level. The decisions are linked in that the strategic decisions will impact tactical decisions, but tactical may not affect strategic. Strategic decisions typically provide leaders with the boundaries and parameters that they must work within.

Leaders at all levels must understand that all decisions impact the organization. Daily decisions may not appear to be connected to the major areas discussed in this section, but, ultimately, all decisions made are based in one of these key areas.

Quality of Execution of Organizational Strategies

The availability of performance measurement systems and key performance indicators provides leaders on all levels of the organization with the decision making tools to measure the quality of the strategy that drives the organization.

Financial indicators are lagging indicators, while non-financial indicators provide leaders with a balanced view of what is happening. Metrics provide leaders with specific questions to facilitate the organization’s ability to make tough decisions and quickly seize opportunities as well as to evaluate how well it adapts to changing technologies and markets.

Improvement of Non-Financial Performance

Non-financial metrics linked with more traditional financial ones provide leaders with the information to make timely decisions that impact their unit’s performance and the entire organization’s ability to adapt. Triggered events and predetermined trigger points provide pivotal moments for leaders to make key performance decisions. These events can be established on both strategic and tactical levels with individual leaders responsible for making specific decisions within the organization.

Value Creation

More companies are using value creation indexes that focus on the relationship between non-financial performance and the organization’s market value. The establishment of a value creation index provides leaders with key insights by establishing direct links between the two areas of focus. Research has shown that a reliance on non-financial performance leads to more accurate forecasts and valuation. Typically the value creation drivers are:

  • Innovation
  • Quality
  • Customers
  • Management
  • Alliances
  • Technology
  • Brand
  • Employees
  • Environment

While value creation is defined and utilized by senior leadership within the organization, its metrics that measure non-financial performance are driven into the organization and become part of the suite of performance measurement tools used by leaders on all levels.

Research has shown that intangible elements such as innovation, alliance, management and employees are the key players in producing the organization’s value. Within the durable and non-durable manufacturing environment, improvement in key value drivers results in higher market values. These are the indicators that allow organizations to measure and predict future performance.

Efficient Resource Allocation

The balanced use of performance measurement systems that evaluate both financial and non-financial performance metrics allow leaders to efficiently allocate the use of scarce resources throughout the organization. Decisions that effectively manage resource allocation allow organizations to sustain their performance and profitability.

While local leadership on the tactical level makes decisions on the use and application of resources, senior leadership on the strategic level is able to ensure that resources are used in ways that benefit the entire organization. The use of performance measurement metrics allows leaders on all levels to evaluate effectiveness and make decisions regarding future performance.

Excerpt: Maximizing Financial Performance: Pinpoint Leadership Skill Development Training Series (Majorium Business Press, Stevens Point, WI 2011) $ 16.95 USD

Related:

Performance Management Must Begin With the Manage

Attaining Organizational Results Requires Visionary Thinking and Planning on Multiple Levels

Performance Plans Create Results and Maximizes Performance

Measure What Needs to Be Measured

For Additional Information the Author Recommends the Following Books:

Performance Management: The Pinpoint Management Skill Development Training Series

Planning to Maximize Performance: Pinpoint Leadership Skill Development Training Series

Strengthening Leadership Performance: Pinpoint Leadership Skill Development Training Series

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)
Linkedin | Facebook | Twitter | Web| Blog | Catalog |800.654.4935 | 715.342.1018

Copyright © 2013 Timothy F. Bednarz, All Rights Reserved

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