A successful Performance Management process helps companies achieve their business goals by ensuring that the entire organization collaborates effectively and contributes to achieving these goals.
To achieve this effectively, there are six central pillars of Performance Management, which will be explained in this blog article.
1. Leadership and Communication
The success of Performance Management largely depends on the skills and willingness of leaders to properly implement and lead the system.
Therefore, clear and open communication must be established throughout the entire introduction process to ensure that everyone understands why changes are happening, what is expected, how they are affected, and how each individual can participate.
2. Goals
Every Performance Management process begins with formulating the goals to be pursued. Company-wide objectives are broken down into tangible and binding goals at various levels of the organization, down to the team level. When defining goals, adherence to criteria for goal formulation (e.g., SMART goals) is always important.
3. Metrics
To measure performance, a balanced set of metrics, known as Key Performance Indicators (KPIs), is established to gauge goal achievement. These are supported by visual representations, which facilitate quicker problem identification. KPIs can be structured, for example, based on safety, quality, cost/profitability, delivery, and personnel.
4. Team Dialogues
Exchanges take place at regular intervals to discuss goal achievement together and, where necessary, derive countermeasures. They can occur horizontally with other interface partners and vertically with the next higher-level authority. The higher the frequency of dialogues, the quicker problems are identified and actions are taken.
5. Structured Problem Solving
Often, solutions to simpler problems are obvious. However, dealing with complex problems requires a structured approach. Established concepts, learned through targeted training, can support this and be applied precisely to the problem. For example, the "5-Why Method" is a tool to identify the root cause of a problem.
6. Sustainability
Performance Management can only work if the built systems are effectively utilized in the long term. To ensure this, companies are supported, for example, by the introduction of standards to integrate Performance Management sustainably into their daily routines.y
Outlook: In the next article, we will introduce you to the concept and objectives of Performance Management.
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