Without clear direction any business will fail to achieve its potential. Indeed most businesses will fail altogether, as competitors jostle each other in the struggle to be one step ahead of the field. The successful ones know that their best chance of long term survival lies in properly aligning the use of all their resources, including their people, towards a common set of goals. With the best will in the world, people cannot contribute effectively towards a common goal if they do not know what that goal is!

Strategic planning is therefore essential if any business, or public sector organisation, is to prosper in the long term.

Mission statements are now being greeted with some cynicism by employees, usually because they are full of platitudes without any real actions to back them up. However, whatever you chose to call it, this is where strategic planning must start - what business are we in?

Visioning is the second stage of the process. The senior management need a comprehensive, unified view of the future they are driving the business towards. This leads to generalised objectives for the organisation at the highest level.

Critical success factors which will lead to achieving the vision should be determined. These are the things the organisation needs to get right.

The Balanced Scorecard will detail the range of measures that the organisation will track, to make sure it is kept on course. These measures will not only show current and past financial performance, but measures of the actions taken now for future performance.

Objective Setting will take place to set achievable targets for the year, which relate to the longer-term vision. Absolute commitment by all senior managers is essential.

Action Planning must include two elements - activities that the senior team will progress, and the themes that the rest of the organisation must plan against. For instance, if the objective is to reduce costs by x%, the senior team may decide to contribute to this by a restructuring of the organisation, and the theme which is deployed to the departments may be to reduce waste. It is only the Top Team that can action the restructuring, and only the ‘workers’ who can reduce their waste.

Once the overall strategy is in place, the organisation must be managed in a way that means it will be achieved. To manage performance effectively in an organisation, it needs to be done at three levels:

• The organisational level

• The team unit level

• The individual level

This is a hierarchy. It is not possible to manage individual performance fairly and objectively unless the team goals are well-understood and communicated. Team goals and targets cannot be set in a rational fashion unless the mission and goals of the whole organisation have been properly developed and translated into actionable objectives. Therefore, it is necessary to start from the top and work towards individual Key Result Areas and staff performance assessments.

The performance management system can be represented by the diagram below:

In broad terms, it is usually best to start in the top left corner and work towards the bottom right.

Balancing the measures

To support an objective performance management system there needs to be a balanced set of measures for each level within the organisation. These must be ‘balanced’ and comprehensive so that distortions and short term practices are not encouraged. For instance, if only performance against financial budgets were measured, a manager could look very good on paper, but not be training his staff or maintaining his equipment. In the longer term this department would be in trouble, although its current performance looked OK. Running an organisation on the basis of financial results is analogous to driving a car by looking only in the rear view mirror.

The balanced scorecard approach recognises that short term performance is important, but not at the expense of the longer term. It therefore includes measures of performance which will ensure a healthy operation into the future.

Deploying the goals

Once the high level strategy is in place and the organisational objectives set, the departments and teams within the organisation should set their own missions and objectives. These must fit in with the overall organisational objectives, and the targets set in their scorecards.

The alignment of these goals and objectives is vital to the whole management process, if true empowerment and accountability is to be achieved. There should be a consistency of approach and a coherence of all these goals within the organisation. The sum of all the individual and team objectives should add up to whole of the business goals.

The process should also allow for changes in business goals. These may require changing for a number of valid reasons, sometimes very quickly as a reaction to a competitive threat. The themes that are deployed to the organisation are then responded to by the departments and teams to counter the threats or opportunities that present themselves. Goal deployment should allow for fast realignment, when necessary.

The departmental plan resulting from the actions required to achieve the objectives will lead to the formation of team projects, some of which will be cross-functional (because problems sometimes require actions outside the department as well as within it).

Managers and staff in the departments can now determine their ‘key result areas’ - the critical things they do which will contribute most to improving the performance of the department. From these KRAs their personal objectives can be determined and negotiated.

Managing the Process

The performance management system is only one part of the overall management process. If the culture of the organisation is not right, then no amount of measures and objectives will give high performance results.

A performance management system fits in with the other essentials of good, modern management:

• Customer focus

• Teamworking at all levels

• Process management

• Philosophy of continuous improvement

• Learning, knowledge based organisation

To achieve this, the style of management must be:

• Participative and consultative

• Open and honest

• Supportive

• Empowering

• Visionary

This is supported by:

• Excellent communications

• Effective training

• Appropriate reward and recognition

Transforming an organisation therefore requires senior management to look at every aspect of how the business is run. It is this holistic approach which holds the key to achieving the vision of becoming ‘the best’.