How would you respond if you were asked right now "How is your performance?" or "How is your team's performance?"
Would you respond subjectively with a "good", "bad", or "OK" response? Or would it be a more objective response aligned with a KPI based scorecard or bottom line metric? Different organizations have different semantics for how they speak to performance, I've heard a variety of variations.
Regardless of how you speak to (or even define) performance, one thing is certain: Organizations typically speak to performance in a way that addresses the end result. Whether it's net income, net operating income, EBITDA, cash flow, etc., most organizations align performance with the end result.
Performance is a Real-Time Position
Whether performance is good or bad, it's a real-time position. I don't accept future forecasts for a true measurement of performance because nobody can control how the future plays out. Performance should be evaluated in real-time based on real-time results. If a sales team isn't meeting their revenue goal but leverage their full pipeline as a means to say "in four months we'll be 8% above goal", that will not cut it with me. The reality is the sales team is not meeting goal. Period.
How do ensure your business unit achieves real-time performance?
Think of Performance as a Destination
To ensure your business unit achieves real-time performance, think of performance as a destination. If you were driving from the East Coast to West Coast and needed to be in Indiana by the end of day one, set your sights on Illinois. With Illinois as your destination, you will achieve your need to be in at least Indiana. SMART Goals apply to this situation as you can't simply say "I need to do whatever it takes to drive from NYC to LA in one day." It's impossible.
Thinking of performance as a destination is easier said than done but if you follow a specific path to the destination, you will find easier and easier to reach new destinations.
The Path to Performance
Stop 1: Attitude
The first stop on the Path to Performance is ATTITUDE. You (and your business) have to have the right attitude. I commonly refer to the culture of a organization being the organization's attitude.
Attitude is behavioral and cultural is behavioral. They are very similar except culture applies to an organization of individuals where attitude can be applied to just one person. Attitude is behavioral in the fact that we express ourselves by decisions we make and actions we take.
If a business unit has a hefty sales goal, the right attitude would be characterized by increased sales productivity. More prospecting, more calls, more follow-up. A poor attitude would be doing what you did the month before when the sales goal wasn't as high. It's in this poor attitude mode that you will hear things like "they don't pay me enough to do that", or "that's not my job description."
An organization's culture is characterized by the behaviors of the people within the organization. Winning behaviors is reflective of a positive/good culture while harmful behaviors is reflective of a negative/poor culture.
Stop 1 on the path is ATTITUDE. Get your attitude (or culture) in check so that you can move on. Without the right attitude, you will never stand a chance at stop 2.
Stop 2: Goals
Now that you have the right attitude, you have to organize the behaviors. Behaviors should be organized by goals. Using SMART goals, behaviors can be grouped in prioritized order as to achieve the SMART Goal.
Goals allow managers to break down and have full insight to performance. If performance is measured by NOI, separate income and expense goals will give more visibility into performance. A business unit may have 5 different income goals as well as 5 different expense goals that feed into 2 bigger income and expense goals. These are often referred to as goal-sets and can be very helpful in breaking down big chunks of performance.
If your performance is measured on the success of a $200M revenue goal, you will most likely have multiple goal-sets.
Goals allow you to organize the behaviors that will deliver performance. Without goals, there is no stop 3.
Put goals in place so that you can go to stop 3.
Stop 3: Measurement
The final stop on the Path to Performance is measurement. Measurement requires you to assess if your behaviors (set up on stop 2) are delivering the performance you desire.
Keep it objective - you're either hitting performance or your not. If at stop 3 you see that you are not performing, you have to go back to stop 2 and reevaluate the goals that you have in place.
Think of The Price is Right game where the participant has to put the items in the right category based on price to win. If after putting the items in position a buzzer rings, that means something is wrong and the participant has to start over. The problem in the real-world is that there is no buzzer.
Whether you have a cadence around push reporting or prefer pull reporting, real-time performance is what matters. Technology has evolved the way we measure to allow greater insight and quicker decisions. Managers need to be trained on how to (and when to) toggle between stop 2 and stop 3.
Like The Price is Right example, with unlimited chances, you're bound to get it right. Again, in business there is no such thing as unlimited chances therefor it is critical to make good decisions at stop 2. SMART goals need to be well thought of. Measurement (stop 3) is much easier when you make excellent decisions at stop 2.
Performance is a real-time data point however if you think of it as a destination, you have the opportunity to stay ahead. To seize the opportunity of staying ahead, take the Path to Performance by curating the right attitude, installing effective goals, and committing to measurement.
Reached your destination in stop 3? Set your sites on a new destination, jump back to stop 2 and get to work. From time to time, you will need to back up to stop 1, but if you're consistent in stop 2, that should be minimal.