Page 36 - Performance Leadership

Chapter 2 Traditional Performance Management • 25

which satisfactory results will ensure successful competitive perform-
ance for the individual, department, or organization. CSFs are the few
key areas where “things must go right” for the business to flourish and
for the manager’s goals to be attained. Because these areas of activity
are critical for the business to succeed, management should have the
key performance indicators to monitor progress and determine whether
the goals are realistic and will likely be met. A key performance indica-
tor (KPI) is a metric that is deemed of strategic importance to an organ-
ization. As a rule of thumb, an organization (or part of an organization)
should have three to five critical success factors, each perhaps with three
to five key performance indicators. CSFs make sure all managers are on
the same page because they help focus on the overall strategy. They
allow managers to discuss how to deploy the limited amount of resources
an organization has, and allocate them to the activities that really make
the difference between success and failure. Just as people’s strategic
insights and industry and environmental trends develop over time, CSFs
are not cast in stone either. For instance, the CSFs in the automotive
9
industry have changed dramatically over time. First, styling, service,
and cost control were the important factors. Then, meeting energy stan-
dards became important too. Later, overall brand perception became a
crucial addition. The CSF methodology provides a straight top-down
definition process. The industry and environmental trends dictate the
strategic themes, together with the strategy of the organization. Man-
agers add their own domain specific and temporal CSFs to the mix.
Then the combination of CSFs is being translated to KPIs to monitor
progress. Lastly, improvement initiatives are then undertaken to step in
where results are not satisfactory.
Another, less well-known strategic performance management method-
ology comes from the European Foundation for Quality Management. 10
The EFQM Excellence Model is a framework based on nine criteria. Four
of these criteria are outcomes, with respect to one’s own performance,
customers, people, and society. These are achieved by managing the five
enabling criteria: leadership, strategy, partnerships and resources, people,
and processes. The EFQM process largely consists of self-assessment.
According to EFQM, self-assessment is a comprehensive, systematic and
regular review of an organization’s activities and results referenced against
the EFQM Excellence Model. The self-assessment process allows the