Page 28 - Performance Leadership

Chapter 1 Setting the Scene • 17

the organization perceives itself. It is then, when conflicting require-
ments become visible and the different stakeholders can view the com-
plete picture, that we can understand the different trade-offs.

Performance Leadership—The “Next Practice”
As previously discussed, performance measurement and performance
management are not clearly differentiated terms. Yet there is one
important difference. Performance measurement focuses on what has
happened; it quantifies past action. In a typical planning and control
cycle, it is the step after executing a plan that helps to bring the real-
ized results together so that an analysis of differences can be made. Per-
formance measurement can be found in every business domain
imaginable—from procurement to logistics, from finance to human
resources, from information technology to marketing, and from sales
to manufacturing. However, performance measures are seldom inte-
grated. They typically describe line-of-business performance. Perfor-
mance measurement leads to visibility of what happened.
The next step up from performance measurement is performance
management. Performance management implies a more methodolog-
ical approach using, for instance, the balanced scorecard, activity-based
management, value-based management, or any other framework. The
idea is that most of the performance management frameworks link
business drivers to results. For instance, problems in the manufactur-
ing department lead to product defects or insufficient production, lead-
ing to customer satisfaction problems, ultimately impacting on revenue
and profitability. On a positive note, if a local government decides to
invest in a new IT system, this may lead to less administrative work for
police staff and allow them more time to focus on being on the streets,
which drives down crime rates. Performance management tries to cap-
ture an organization’s business model. As it becomes clear how various
business domains affect the business results, performance management
provides insight into who drives results and how results are driven.
But this book is not about what we today would call the best prac-
tices. This book is about the next practices, something I call perform-
ance leadership. Business performance is not just a process and not just
a system, it is about people.