Managing and Measuring Organizational Performance Effectively
Measuring and managing organizational performance as well as improving performance in business can be viewed and analyzed on 3 different levels. These levels are: organizational performance, team performance and individual performance.
All of these different levels of performance have to be linked to each other effectively to make sure all organizational activities on every level are streamlined and leveraged into the desired direction of achieving the overall strategic goals and objectives for the company.
1. Organizational Performance
At the highest level of organizational performance the overall KPIs and supporting metrics should be directly linked to the overall goals and targets. For example, at the overall company level, KPIs like sales growth, return on investments and profitability can be measured and compared directly against the overall organizational strategic objectives and performance targets.
2. Team Performance
Next, based on the organizational KPIs and metrics, the team KPIs must be defined in a way that they will support the organizational performance. The team performance can be also viewed as department level performance or group level performance depending on the organizational structure. For example, team performance can be the overall performance of the entire sales force. In such a case, sales KPIs and metrics are directly linked to the overall goals of the company.
3. Individual Performance
Finally, each team member or employee should be evaluated and the individual progress towards achieving the goals should be measured. In the case of the sales force, each sales rep should have his / her individual goals, objectives and targets. The ongoing tracking and monitoring of individual performance is effective because it reveals any gaps in performance on time and allows management to give feedback to each team member in a timely manner.
In general, performance management should be kept simple and aligned throughout the company from the top level to department level and to individual level performance. When this performance system is simple, clear and effective, every employee at each level in the company can understand her / his roles and expectations and such a management system will produce better results at each organizational level. Effective performance management always results in optimized operations, cost reductions and successful business growth.
Having a critical few KPIs along with supporting business metrics allows organizations to create successful performance measurement system. This performance system monitors and compares actual performance against the defined targets and identifies any gaps at each company level.
In addition to the benefits for the organization, there are many benefits for the employees as well. Employees like when they have clear expectations and management support to accomplish their individual objectives. When individuals know what they are supposed to do and how they are supposed to do it, they will always try to perform at a higher level and deliver the required business results.
When there is a performance system in place, each and every business activity and process in the company is aligned with the overall goals. For example, each sales activity, new product development activity and process optimization initiative is planned and executed to support the overall business performance goals.