The Goodwind Company Research
“To perform is about fulfilling an obligation, requirement or accomplish something as promised or expected. We perform (often business value creation) in relations to set expectations, our capabilities and the context we operate in. ”
In numerous discussions with CIOs and senior IT managers, I hear an urge to raise performance within the IT organization. “We must have a ‘performance culture’ where each employee and team increase ‘performance’”. What is interesting is that the word “performance” has become a buzzword, used in any circumstance, without meaning but rather something “positive”. In many cases, the word “performance” can be exchanged for words like “efficiency” (doing more for less) or being “ambitious” (working more hours). Is that really right? What does “performance” actually mean and how can it help us to actually raise performance?
To perform is about fulfilling an obligation, requirement, or accomplish something as promised or expected (thefreedictonary).
A person or team can therefore only perform in relation to a set expectation or requirement. A team that produces more than another team does not automatically perform – it depends on the expectations placed on that team. Maybe the expectation is for this team to produce twice as many units as the other (because better tools, better-trained personnel, and more experience), and they only were able to produce 15% more – they did not perform.
The key for a team to perform is to set the right expectations or goals. We tend to think that a team can perform without any goals – nothing can be further from the truth. We need to have concrete goals, targets, and/or expectations that set the focus of the team. “The goal of this team is to produce 1,000 units per year”. If the goal is achieved or exceeded – then, and only then, does the team perform. The problem is we tend not to set relevant, feasible, and suitable goals or expectations.
Performance Management is hence the framework to set relevant, feasible, and suitable goals in an organization and monitoring the achievement of these. Organizations often go through a continuous transformation and change to adapt to a changing customer/business needs – and it is that journey performance management wants to support. Performance Management becomes an iterative process without a beginning or end. Often, an extensive analysis of the internal (IT/business) and the external environment is needed to define the right organizational context and hence the right goals and expectations. The Deming cycle (Place/Do/Check/Act) is an excellent starting point for this work.
We see a number of problems with the current use of performance management and hinder organizations to raise performance and be best in class. Let us go through these problems one by one:
- Performance Management is often reduced to KPI administration. KPIs are by itself not worth anything and must be connected to a strategic plan that we want to monitor. The question to ask is “what is our role in the value chain?”, “how do we produce value to our partners?” and “what transformation do we need to do t2o improve value creation?”. These questions should be monitored by KPIs to achieve the right focus.
- Performance Management is often based on long (3-5 year) performance contract that does not support business ambition to compete in a digital environment. We see IT organizations with set KPIs for the coming four years – with little use. The frequency of the Deming Cycle needs to be adjusted to the level of predictability in the industry (often around 9-15 months).
- Performance Management in IT is often not linked to business ambitions and expectations. To ensure performance of an IT organization, it is necessary to understand what the business ambitions and expectations are, and set IT goals to support them. Just to measure SLA is not sufficient – it not linked to business ambitions.
Raising performance in a team or organization, or creating a performance culture is about creating clearly set expectations and goals (suitable and feasible), and allowing for teams to be correctly monitored and evaluated. All in the right context and understanding of how the IT organization produces business and customer value in the value chain. It is not about who produced the most but rather who has produced above expectations or has the most favorable trend.
What we see is that increasing performance is difficult and if mostly related to leadership, learning, and trust. Building an engaged team to walk the extra mile. To understand one’s role and the expectations on that role. When successful, the value creation can be raised 20-30% with quite simple means and revolutionize internal perception of the IT brand.
My recommendations:
- Understand the meaning of the word “performance” and how your organization uses the word.
- Ask yourself, what do we do to become successful? How do we create value for the business? Good questions to set the scenery for the IT organization.
- Contact The Goodwind Company! We have Best Practice frameworks to diagnose the working of performance management in your organization and how you create value.
A couple of years ago, I implemented a framework to measure and monitor the value creation by an IT organization. It was quite clear that the IT organization needed to view itself in a different light and approach business in a new way. We could in the framework identify high and low performance – and the main difference was how they defined their work. High performers (increasing value creation by 25% per year) saw their role as collaborators with business with an aim to support business success. They listened to business, understood the challenges and expectations, and continuously learning how to achieve more value. The low performers (not increasing value creation at all) saw the relationship with business as an administrative burden managing SLAs. Something they had to do as it was stated in their job description. Still arguing and placing blame across the business IT borders. A couple of months after the implementation, business got feed up with the performance of the “low performers” and they were brutally replaced. The cost of low performance in IT in the digital world is an extreme burden – and will lead to market failure. But that is another story…
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