Page 55 - Performance Leadership

44 • Part I A Review of Performance Management

certainly not be predicted if the behavioral outcome is not considered.
It could’ve been predicted if, before providing the feedback, the man-
agement team had considered the behavioral options. What could go
right, and more important, what could go wrong.
The key to predict behaviors is in understanding organizational val-
ues. In our example both cultures are based on harmony. However, a
value in the insurance company was “helping each other,” while in the
waste management company “taking it easy” was a key driver. Not all
organizational values are noble and positive.

Balancing the Metrics
The basis of every set of balanced metrics consists of three different ele-
ments: cost or revenue, quality, and speed. There needs to be a bal-
ance, if quality is the only aim, then the speed of processes will
decrease, and the costs will increase. Perfectionism comes at a price.
If cost saving is the only factor, then quality will almost immediately
suffer, and often speed will deteriorate too. You get what you pay for.
If speed is of utmost importance, then quality may suffer, and cost will
most definitely be an issue. It is not possible to optimize all three of the
elements. Speed and cost will require quality trade-offs, speed and qual-
ity will come at a premium, and low cost and quality will take time.
There are additional balances when implementing performance
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management. There needs to be a balance between short-term and
long-term issues. Reaching strategic goals usually takes a while, up to
a number of years. Step by step, you manage to get closer to the goals
until you reach them and it is time to stretch those goals again. In order
to reach those goals in the long term, today’s action is needed. Short-
term focus and long-term focus go hand in hand. Focusing on just the
long-term leads to a lack of sense of urgency. Focusing on just the short-
term leads to myopia.
A balance between financial and nonfinancial performance indica-
tors is also needed. Financial results do not tell the whole story. Accoun-
tants learn that management consists of controlling multiple flows: the
flow of goods (operations), the flow of money (finance), and the flow of
information. Although the financial bottom line is important, the value
drivers of the organization reside in the operations. A too-strong focus