The performance of the organisation, its people and processes are important indicators of success. We have not included products and services here, as we will address these separately.
Performance management is therefore quite complex, and the metrics used are (should be) implemented all over the organisation.
Although measures of individual element performance are important it is extremely important, to devise a method of breaking down organisational goals and cascade actions throughout the system and them roll-back component performance to a higher level as a consolidated view of performance.
In EXTRACT we are not going to dwell too much on each component of performance – we will address this issue again in EXPAND.
It is, however, vital that we address the principle of a strategic goals cascade and associated performance measurement and evaluation.
One such method is a Lean management technique called Hoshin-Kanri.
Hoshin Kanri (directly translated from Japanese it means Policy Deployment) is a method to ensure that strategic goals drive progress and action at every level within that company. The technique eliminates the waste that comes from inconsistent direction and poor communication.
The technique attempts to direct all employee effort continuously towards set goals. It achieves this by aligning the goals of the company (Strategy) with the plans of middle management (Tactics) and the work performed by all employees (Operations). As a result, it increases productivity and decreases waste.
At a high level, the method looks like standard planning and performance management, but it is not!
A crucial detail is that the technique is not strictly top-down; it is a joint effort between managers and their subordinates who have to agree on the optimal set of goals mutually. If management dictates goals, without input and feedback first, they risk demotivation and costly errors, should some details happen to be missed.
The benefit of discussing the goals with the people who will be actively working on them is that they will think through the details much more thoroughly compared to the management – this is called Catchball.
Having well-communicated, realistic and agreed-upon goals is essential, because it enables ownership and motivation, creates a valuable feedback loop and improves the commitment to the execution process.
Review and revision cycles occur at each level every month and not just as feedback but to tweak any part of the system if it’s not working!