The world’s best organizations are focused on the success of their people. This is a remarkably simple idea that is difficult to achieve and execute. The realities of today’s market are driving fundamental changes in organizations. Change is continuous and rapid. Globalization and hyper-competition are having a profound impact on the ability of organizations to set and achieve long-term objectives on a sustainable basis. Due to these realities, management is challenged by limitations on the potential productivity of people, skills that are rapidly becoming obsolete and ongoing demographic changes in the workforce. Subsequently, executives have a renewed focus on the productivity and success of their employees.
As companies examine factors that can constrain organizational performance, three simple concepts take shape: alignment, development of capabilities and real-time visibility. There needs to be alignment between the strategic objectives of the organization, and the goals and capabilities of individuals and groups, and real-time visibility into how people perform against those goals. Employees often report that they do not understand how their individual activities contribute to the success of the organization. This makes it extremely difficult to measure ongoing progress against these goals and creates significant friction in planning and execution.
Executives often say that they want real-time visibility into how their employees are performing against their goals and objectives. They want to understand whether further investments in training and development are needed to achieve these goals and objectives. However, most processes and structures that are currently in place do not provide such visibility or a way to manage these activities. Typically, corporate goals are developed on a quarterly or annual basis and are intended to drive business unit, departmental and individual goals and objectives. These are measured and reported at set intervals, often after the fact, making it difficult to predict the outcome of these initiatives and adjust accordingly in real time.
The Problem—-the Misaligned Organization
A misaligned organization has multiple challenges to address: a disconnect between business strategy and work activities, gaps between promises made and results, a culture that doesn’t promote productivity and focus, lack of accountability at every level, transparency and an overall disconnect between people and core processes in the business. To tackle these challenges, companies demand organizational performance management solutions that provide a complete view of the people processes of the organization.
Companies have spent years investing in systems to measure and report financial performance and the effectiveness and productivity of sales channels and supply chains, but these systems do not measure and report the effectiveness of the people processes in the enterprise. Without a real-time management system that enables alignment, development and collaboration of people in the enterprise, a company will perform at less-than-optimal levels. Because of a lack of such management systems, companies have little or no insight into their employees’ success, what skill gaps and learning needs exist within the organization or how they affect the company’s organizational performance and productivity.
In a recent report by a leading analyst firm, almost 70 percent of the companies surveyed that have a performance management initiative use basic spreadsheets or in-house-developed applications to measure organizational performance. The majority of these organizations employ a basic process. Managers ask their employees to define goals or MBOs (management by objectives), which are then documented in a desktop productivity tool such as a spreadsheet, word processing or presentation document. The manager then consolidates various team goals and provides another document to his immediate supervisor and so on. While it may appear to suffice, this approach produces significant organizational gaps, including inconsistent processes, misinterpretation of information, reliance on traditional management hierarchy, lack of agility, reliance on old information and exclusion of information about distribution and supply chain partners.
In addition, enterprise learning initiatives are becoming more and more sophisticated. Solutions have migrated from the delivery of core training processes to meeting increasingly complex requirements, such as regulatory compliance, channel readiness and customer education. Individual learners are measured by their progress toward gaining required skills and competencies. Significant amounts of information are collected and used to continually improve the value of the programs and content to ensure that the investments have a measurable impact. Yet it remains difficult to measure the effectiveness of enterprise learning initiatives against the goals and objectives of the organization because learning typically is treated as an isolated function. Professionals in the learning and development industry, along with the business leaders they serve, are increasingly focused on delivering solutions that show the impact of learning on both the individual’s and the organization’s performance.
Historically, companies defined strategy and objectives and the measurement of employee and organizational performance as completely separate processes. There was little connection between learning and development functions and people management processes. Companies often relied on ad hoc processes, communicated where possible and assumed that if each functional area performed well and met its objectives, the company would, in turn, perform well. It is not unusual for disparate parts of an organization to meet stated objectives and still have a significant gap between that performance and the overarching corporate goals.
While it seems obvious to tie these processes together, companies have not organized to do so and have not adopted technology to support the approach. Instead, organizations typically define and manage a process for reviewing individual performance on a quarterly or annual basis. However, it is difficult for this approach to be effective because information is often outdated. It’s much like trying to read a map based on where you have been, rather than where you are or where you are going.
The Solution: A People Management System
An integrated performance and learning management system is a key component of the emerging requirement to tie the strategy and organizational processes to people processes. This allows organizations to define an organizational performance plan as the instrument that brings all of the elements together. Often, strategic directives end up buried in e-mail and are quickly forgotten, but when individuals have a single, agreed-upon performance plan, it is very clear what they need in order to be successful. With a performance plan, which is essentially an agreement between the individual and the organization, organizations can set and monitor progress against goals and objectives, make adjustments and respond to changing business conditions, ensure overall alignment of the organization, measure individual performance against those objectives and enable comprehensive collaboration, all in real time. In addition, the individual’s learning and development plan becomes a key part of the overall performance plan, and skills and competencies are mapped directly to the goals and objectives of the individual.
For example, a financial services organization may create a goal to become current on new regulatory compliance issues within a predetermined amount of time. This goal is then added to each individual employee’s performance plan. As part of achieving this goal, the organization’s enterprise learning system will deliver an offering to educate employees on the new regulation and compliance requirements. As a result, the organization will improve in real-time visibility and accountability, and reduce corporate risk because it is fully compliant.
Advanced Technology Supports New Approaches
Advances in technology, such as Web services-based applications, are changing the way companies and individuals embrace this comprehensive management system strategy. Solutions are quickly migrating away from monolithic applications toward those that allow individuals to interact with the system through their existing desktop productivity applications, such as e-mail and enterprise portals. Learning initiatives that provide progress against plans can be as simple for the learner as opening an e-mail to get an update or register for a course. The user does not have to launch a monolithic application and find the section where work is to be done. If the user needs expert help, that solution is integrated into this management system and is available through Web-services-based integration with e-mail.
Additionally, this management system can support individuals from across the extended enterprise. Enterprises today increasingly depend on contract workers, distribution partners, alliance partners and other organizations that have a material impact on the success of the organization, and the ability to bring them into a comprehensive management system process is critical. Providing stakeholders with the ability to participate allows the entire extended enterprise to align its activities with the most important goals and objectives of the enterprise.
The integrated approach increases organizational visibility, building confidence that the company is on track to meet its goals and objectives. An executive dashboard can provide decision-makers with not only a means to ensure that employees are working on the right initiatives, but also the ability to monitor their progress. This allows managers to easily identify roadblocks and lagging projects or initiatives, enabling quicker and more informed decision-making. Surprises at the end of the quarter, period or year are eliminated. Most importantly, employees focus on critical, value-added tasks and reduce time and money spent on activities that are not the best use of scarce time and resources. Today’s business climate requires this enhanced organizational agility, and an employee who lacks visibility cannot fully impact an organization’s success.
Greater visibility also leads to improved accountability and productivity across the enterprise. Performance plans, or collections of goals and objectives, can be discussed and committed to by both individuals and managers. By systematically monitoring and measuring progress, the accuracy and relevance of the ongoing performance assessment process improves. This contrasts significantly with traditional, once-a-year review processes that are backward-looking and generally regarded as tedious.
Every organization wants to motivate and retain high-value employees. Most employee performance initiatives focus on financial rewards, such as pay-for-performance and bonus programs. Yet financial reward is only one element that drives employee motivation and retention. Of greater importance is the pride employees take in their work and their ability to make a difference and contribute to the organization’s success. An integrated management system for improving performance that provides complete real-time visibility, as well as a more relevant appraisal process directly tied to achievements against objectives, can help employees better understand how they impact the organization’s success.
The Simple Conclusion
Organizations today are quickly recognizing the potential of a comprehensive real-time management system for the people processes in an organization. This is an exciting time, and there are tremendous opportunities available for innovative suppliers to add significant value to the world’s leading companies in their ongoing quest to develop high-performing people and organizations.
Senior executives want to add strategic value to the business by developing a management system that can be used by executives, line management and individuals–not solely by human resources–to improve the skills and knowledge of people across the extended enterprise. By employing a management system to align, develop and enable collaboration of people processes throughout the organization, businesses can ensure ongoing development through continuous feedback and interaction between employees and managers, and drive organizational process improvements, providing real-time visibility.
The results are impossible to ignore. Using an integrated management system, organizational agility can be achieved by aligning and managing all the people within and adapting the system to the needs of the global extended enterprise. With the right real-time management system in place, organizations can develop talent and deploy skills, set goals and priorities, locate and deploy talent, operationalize strategy, reward performance, and improve collaboration, accountability, transparency and visibility. Today’s market, with its continuous movement and speed of change, increased globalization and hyper-competition, is forcing companies to define management systems that enable them to improve organizational performance as a way to increase competitive advantage. And, as many early adopters have already begun to discover, it works.
Bobby Yazdani, the driving force behind the Saba vision, products and market direction, founded Saba in 1997 and took the company public in 2000. He can be reached at email@example.com.