LEADING THOUGHTS

A couple of articles in the International Journal of Productivity and Performance offer signposts for managers wanting to get more out of performance management systems (PMS) such as the balanced scorecard. And there are likely plenty of you out there. By some estimates, the failure rate of PMS implementation is around 70 percent.

In their project, Andre A. de Waal and Harold Counet (Maastricht School of Management, The Netherlands) asked, What problems can organizations expect to encounter when implementing PMS? To answer that, they conducted a literature review and tested the validity and relevance of what they learned with a panel of 31 performance management experts from eight countries.

De Waal and Counet discovered that while practitioners and experts/academics may differ somewhat on why a typical PMS runs into trouble, both groups point to the lack of management commitment as a crucial reason for failure.

Top Five Problems Implementing PMS According to Practitioners:

1. The organization does not have a performance management culture
2. Lack of management commitment
3. Management puts low priority on the PMS implementation
4. The organization does not see benefit from the PMS
5. The PMS has a low priority or its use is abandoned after a change of management

Top Five Problems Implementing PMS According to Academics:

1. The current information and computer technology system does not support the PMS adequately
2. The organization is in an unstable phase
3. The PMS has a low priority or its use s abandoned after a change in management
4. Lack of management commitment
5. The organization does not have a performance management culture

De Waal and Counet conclude: “The results indicate the crucial role commitment – on all levels of the organization – plays in achieving a successful PMS, and the importance of management being a role model in consequently, consistently and visibly to the organization using performance management. In short, the research results in reinforcing that important adage: forewarned is forearmed!”

~  ~  ~  ~

Between 2002 and 2004, de Waal did great work identifying 20 behavioural factors that determine whether or not performance management systems were being used successfully. Elzinga (Shell Int. Exploration and Production), Albronda, and Kluijtmans (Open U of The Netherlands) took de Waal’s work one step further by determining which of the behavioural factors are more important than others.

The three researchers replicated de Waal’s study of four Dutch organizations in the private and public sectors. Their pattern matching anaylsis identified the following seven behavioural factors as most important:

• Managers realize the importance of key performance indicators to their performance
• Managers accept the need for performance management
• Managers have earlier (positive) experiences with performance management
• Managers’ frames of reference contain similar key performance indicators (KPI)
• Managers are involved in making the analyses
• Managers do not experience KPIs as threatening
• Managers clearly see the promoter using PMS

And these are the behavioural factors that are the least important in successfully implementing and sustaining a PMS:

• Managers have been involved in decision making about the project start time
• Managers work in a stable, relatively tranquil environment
• Managers are actively communicating about the PMS project
• Managers are involved in defining KPIs
• Managers do have insight into the relationship between strategy and KPIs
• Managers are involved in making the KPI report layout
• Managers use the KPIs that match their responsibility area

“Lessons learned from performance management systems implementations,” by
Andre A. de Waal and Harold Counet; International Journal of Productivity and Performance Management (Vol. 58 No. 4, 2009, pp. 367-390)

“Behavioral factors influencing performance management systems’ use,” by Taco Elzinga, Be Albronda, and Frits Kluijtmans; International Journal of Productivity and Performance Management (Vol. 58 No. 6, 2009, pp. 508-522)

photo credit: Jinho.Jung