Performance Management, the critical component of work optimization to increasing business productivity

A strategic paper on how Performance Management solutions address pain points at all organization levels

Executive Summary

Workforce optimization enables business to maximize productivity. The key component is performance management which covers establishing and assessing performance standards and communicating its results to all levels of organization.
Performance management enables executives be informed on significant events and trends in the path towards the business direction . It let frontline managers align performance with work goals , identify strength weaknesses and concerns. For employees it provides clear communications regarding their work performance, expectations and feedback.

Need of new approach

Current approaches to performance management are cumbersome, inflexible and only solve part of the problem. They donít extend throughout the organization; they donít translate organizational objectives down to the level of the individual manager or employee; they donít provide a linkage between business direction and goals with a system required to monitor and manage performance. As a result employees donít work at optimal productivity, which negatively impact revenue performance, employee satisfaction and customer retention.

What is required

A holistic approach is required to performance management, a complete solution designed to assist the business in identifying the appropriate metrics to maximize value for the business, to translate them into work objectives for manager and employees throughout the organization and provide employees at all levels the capability and feedback they need to optimize their work efforts.

Potentially the benefits can yields millions in annual savings, it include among them :

  1. Increasing employee productivity
  2. Increasing customer satisfaction and retention
  3. Increasing revenue
  4. Reducing employee attrition and costs associated with it
  5. Balancing and reducing workload
  6. Reducing hiring and training costs
  7. Reducing learning curve time for new hires
Furthermore the performance management can be used to measure and optimize any business process, including the performance management process itself. This approach will be self-perpetuating virtual cycle of continued performance optimization , alike the Japanese Kaizen philosophy , leading to exponential improvement over time. The incremental improvements itself will ensure full adoption by all parties itself as it will not upset entrenched work culture.

The critical component

The goal of workforce optimization is a combination of systems and best practices that enable collaboration, support informed decision making, and enable business to streamline their fundamental processes , planning, execution and evaluation. In all the three functions performance management takes part in establishing the metrics, assessing performance or results and communicate them

You canít improve what you donít measure. When used effectively , a performance management system is a powerful tool for linking a companyís long-term strategy with its day-to-day business and work decisions.

Addressing the pain points

Whether in operations, sales, research and development, marketing, manufacturing or distribution, the goals of employees in every department across the enterprise need to be aligned with the businesses overall goals, and management needs to manage and measure them to ensure they are driving value into the business.

Some of the pain points experienced typically by executives, human resources, line managers and employees are listed below:

CEOís , COOís and CFOís

  1. Need to compress time between analysis and decision, and between strategic decision and tactical action.
  2. Are frustrated because their business is not flexible enough to change business models and priorities without waiting customized development projects
  3. Need to closely monitor and improve the aspects of their business that make it unique in the market
  4. Want to maximize customer satisfaction and thus protect and enhance their business revenue stream
  5. Have limited visibility into issues impacting performance because they must try to combine apples and oranges data from different systems across the organization to understand how various factors affect employee, management and enterprise performance.
  1. Must maximize employee relationship and satisfaction
  2. Must increase efficiency on the business process of managing its people
  3. Need to improve employee retention and reduce recruiting and hiring and training costs
  4. Need to weed out new hires and deadwoods who are substandard performers as quickly as possible
  5. Worry whether the company is legally protected against accusation of unfair treatment
  6. Need to reduce the effort required by any performance management process
  1. Need to know how their department and employees are performing on a daily basis
  2. Must identify and improve inconsistent proficiency and performance among their employees
  3. Must train employees who are not familiar with their organizationís best practice or how to implement them
  4. Need a single repository to organize all these information which represent work results, employee work efforts and customer information related to performance.
  1. Often feel they are treated unfairly because the performance feedback they receive is anecdotal, untimely or inconsistent
  2. Lacks clarity about how they are evaluated
  3. Are out of touch because they cannot see how their personal actions are linked to corporate goals
Performance Management Benefits drive ROI

Addressing these problems by implementing a performance management system can yield a number of bottom-line benefits and results in a speedy return of investment. Some of the key drivers of ROI include :

  1. Increasing employee productivity , so employee can be more efficient and effective
  2. Increasing customer satisfaction and retention, as it helps customer-facing-employees improve the quality of each customer interaction, enhancing its experience and measurably raise customer satisfaction levels, leading to greater lifetime customer loyalty Ė revenue contribution and profitability. It reduce along the way customer retention costs
  3. Enhancing and protecting revenue streams by enabling employees responsible for revenue generation to increase their skill levels
  4. Improving the process of process improvement through measuring and improving any business process. As a result it enables a self-perpetual virtual cycle of constant improvement
  5. Reducing costs of employee attrition, by holstering employee confidence that they are treated and evaluated fairly transparent in how their performance is measured with feedback for further improvement opportunities.
  6. Institutional Best Practices, by identifying top-performing employees and pinpoint their work best practices, an thus enabling the company to disseminate such practices to other employees.

Performance management systems are used by businesses to evaluate how employees, organizations and the enterprise as a whole are performing relative to key business drivers and goals. By enabling employees to be more efficient and effective, performance management systems can drive literally millions in bottom-line value by enhancing and protecting the businessí revenue stream, improving employee satisfaction and reducing customer churn.


1. Robert S. Kaplan, David P Norton, The Balanced Scorecard, Harvard Business School Press, 1996
2. Dr R.Frost,Measuring Performance: Using new metrics to deploy strategy and improve performance, Measurement International Inc. 2000

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