3 Performance Management Tools to Help You Achieve Business Goals
Every business has goals—whether they’re as simple as “sell more” or as sophisticated as “apply design thinking to business processes to increase overall efficiency and reduce costs by X%.”
A critical part of achieving business goals is using the right performance management tools to monitor progress, measure results, and create plans for improving future progress. There are many performance tools that can help you achieve business goals. Which ones are the best fit for your organization?
1) Key Performance Indicators (KPIs)
Odds are that your business is already tracking key performance indicators related to your industry/specialization in one form or another. In fact, according to a global survey of over 3,000 organizations cited by Bernard Marr, the founder & CEO of Advanced Performance Institute, KPIs were:
“the most widely used tool for managing performance, with a usage rate of about 75%… With some respondents preferring to name dashboards, benchmarking or Balanced Scorecards (which require a substantial metrics components[sic]) we can safely assume that the actual number of KPI users is even higher (and almost universal).”
At a basic level, KPIs are used to track specific metrics for the business that are considered “critical” for the success of the business.
One challenge in using KPIs is sorting out the value-adding KPIs from the ones that don’t add value to the business or are too vague to be reliably measured. Another challenge is that KPIs that are useful for one business may not work as well for another business—KPIs may even vary by job role within a single organization.
When considering which KPIs to track and which ones to leave alone, consider the following:
- Can Employees Directly Control This KPI? One of the most important considerations when picking KPIs to track is whether or not the KPI is something the employee can directly control or influence. If not, then you may want to focus on other metrics to prevent feelings of futility and employee disengagement from chasing unattainable goals.
- Is the KPI Objectively Measurable? Ideally, a KPI should be something that’s measurable in an objective fashion, such as the total number of products manufactured or sales closed. This gives employees an achievable goal to work for and eliminates ambiguity, which could create unfairness in evaluations later. Subjective metrics, such as “employee attitude,” are too open to interpretation to be a reliable measurement of performance—save those for mission statements.
- Will Improving the KPI Help My Business Achieve its Goals? Why measure something if it doesn’t impact your business at all? Focusing on nonsensical metrics that won’t serve the goals of the business wastes time and energy for employees and management at all levels. When workers spend too much time on worthless performance metrics, the time they have for improving the metrics that really matter is reduced—harming overall performance rather than helping it.
- Can I Use Data About This KPI to Make Other Decisions? A final consideration to make is whether or not the KPI provides information that would help you make better business decisions. If so, then the KPI may be worth tracking. If not, then you may want to reconsider spending time, money, and resources on tracking it.
Asking yourself these questions can help you reduce a large list of potentially valuable KPIs down to a small list of the most important things that will actually help you achieve business goals.
KPIs are a very basic and necessary performance management tool that many businesses use. When used appropriately, they can help inform business decisions and help organizations identify obstacles to success so they can be remedied. Also, KPIs are a core part of many other performance monitoring/management tools, such as…
2) Performance Management Software
In modern business, software programs and online resources that help coordinate business tasks, track key metrics, and make predictive analyses based on recorded data are becoming increasingly common. There are countless different business performance management software tools on the market, and new ones are released all the time.
Many of these software tools use a management dashboard that gives the user an overview of some KPIs that they’re tracking—such as graphs for total sales per month compared to last month, daily production output, first-call resolutions, and many other metrics based on industry.
The utility of these performance management tools is in how they can simplify the collection of key performance data for the organization—and even for individual employees. This makes it easier to see your actual progress towards your business’ goals.
However, because there are so many different tools available, finding the right performance management software can be difficult. Some things to look for include:
- Ease of Use. Overcomplicated or difficult software is software that employees (and managers) will avoid using if they can. Simple, easy to understand and easy to use interfaces make employees more likely to use a performance management tool—and thus, make the tool better at accurately tracking KPIs.
- Consistent Access to Your Data. Many software-based performance management tools are delivered via SaaS (software as-a-service) architectures. This means the software is stored in one (or more) remote sites and accessed via the internet—similar to how you’re accessing this article on this website. This also means the data used by the software is probably stored in offsite servers as well. As such, it’s important to verify that the vendor’s data storage and security solution is robust enough to ensure that you have consistent access to both the software and the data it uses to monitor your business’s performance (such as having disaster recovery, antivirus/firewall, and service level agreements that are clearly worded).
- KPI Tracking and Other Features. Every software is different. Some focus solely on measuring employee time spent on tasks, while others focus on improving collaboration between different members of a team; others, still, may just be glorified accounting programs. Reviewing key features and functions of the software can tell you almost right away if it is a viable tool for your organization to use for achieving business goals.
With the right performance management software, it can be relatively easy to track KPIs and coordinate employee actions to more consistently meet business goals.
3) Performance Improvement Plans (PIPs)
The Society for Human Resource Management (SHRM) calls the performance improvement plan a “critical tool as it helps facilitate performance discussions, records areas of concern and ways to correct them, and serves as legal and decision-making documentation.”
This particular performance management tool builds on employee reviews—which analyze employee progress toward performance goals—by establishing strategies for actually improving progress.
Some basic components that SHRM recommends incorporating into an individual’s PIP include*:
- Employee information.
- Relevant dates.
- Description of performance discrepancy/gap.
- Description of expected performance.
- Description of actual performance.
- Description of consequences.
- Plan of action.
- Signatures of the manager and the employee.
- Evaluation of plan of action and overall performance improvement plan.
*List presented as found on the SHRM.org website—accessed on 8/4/17
SHRM further states that “The PIP should identify the specific facts about performance results or behavioral issues that describe and demonstrate the performance discrepancy. The information should be specific and factual (i.e., not hearsay, opinions, generalized or vague references).”
While laying out a description of any performance discrepancies and the consequences of failing to improve may sound harsh, it’s important for establishing necessity of the PIP to the employee and avoiding issues later when consequences occur. This is especially important if termination of employment is a potential consequence.
At the same time, laying out the expected performance compared to actual performance—and the plan of action for closing the gap between the two—demonstrates to the employee that you are giving them a chance to do better.
Performance improvement plans can be tricky to employ as a performance management tool for a few reasons:
- They require significant time and effort to use correctly.
- They’re often a reactionary measure to poor performance, rather than a proactive one to drive increased success.
- If not presented properly, employees could take it as a punishment, rather than a chance to improve—impacting morale and engagement.
Despite these challenges, PIPs can be effective for helping employees recognize and overcome issues that may be holding back their performance, ultimately driving business success.
Each of the above performance management tools has the potential to help you achieve business goals. However, they aren’t mutually exclusive. In fact, both performance management software and performance improvement plans require you to collect data on your KPIs to use them in the most effective manner.
By combining these performance management tools with highly-targeted training resources, such as online training videos, you can help your employees achieve their maximum potential and drive the completion of your business’s most important goals.
Learn more about how you can help your employees maximize their personal productivity with Big Think+ lessons featuring Deepak Chopra, Howard Gardner, Shane Battier, and many more world-famous experts.