Underpinnings of Integrated Performance Management - Part III

Integration: “Talking the same language”

Performance management is all about the successful execution of strategy. We identify four guiding principles to translate strategic directives into an effective performance management cycle. In part I and II we discussed focus and alignment. In this post we want to discuss the third principle which is integration: talking the same language.

Integration is about three main ideas:

• Interlinking planning, measuring and intervention processes
• Comprehensive information strategy and supporting technology architecture
• Incentives and rewards for people embedded in the performance management system

To link performance management processes, the first step is to define and describe these processes. This is relatively straight-forward to do. For each process and sub-process, define inputs and outputs, interdependencies among processes and process steps. For each process and process step, responsibility should be assigned to individual employees. To achieve linkage, the planning and reporting process needs to be integrated with people performance management and goal setting in terms of timeline, process steps and content.

The next step in integration is developing the right technology infrastructure. Technology needs to be supportive to the value model, management control structure and processes defined earlier (see part I and II).

To provide a solid foundation, the first step here is to define the enterprise information model based on information requirements to support key decisions across all major business dimensions. The enterprise information model is used to identify and implement an IPM specific toolset (this can be an ERP or best-of-breed solution). IPM tools and requirements need to be integrated into the overall IT strategy & architecture.

The most challenging part in integration is establishing rewards and incentives supportive of the performance management system. It requires establishing a framework for rewarding performance, and ensuring that the framework for rewards and incentives is linked to the planning, measuring and intervention processess.

This starts with establishing a common understanding of "performance" including functional differences and providing a framework to define individual performance expectations to individual employees. Furthermore, managers need to be provided the tools and processes enabling them to appraise performance according to individual performance expectations. Finally, reward must be linked to both achievement of corporate strategic goals and individual performance.

In the last post in this serie we will elaborate on the last remaining guiding principle for successful strategy execution: behaviour.