Chapter #2 | Calculate your next move. Planning for performance.
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We may not have the natural abilities of chess prodigies like Bobby Fischer (the youngest international chess Grandmaster at the age of 15), but we can certainly learn a thing or two about the way he played the game. Fisher believed the game was fought and won on strategy and strong tactics; on knowing the impact of each move, good or bad. In this way he was always one step ahead of the game. Just like playing a game of chess, you’re not going to head towards high performance without a strong plan. And like Bobby Fisher, your team need to know the right moves to get you to a win, as well as how to adapt when there are variations in the game. Each individual should be able to see how their work contributes to achieving the overall goals of the team and the business. But performance isn’t just about reaching goals, it’s also about the way in which you go about achieving them. By the end of this chapter you will be able to: Identify the differences between proactive and reactive performance planningCreate a performance planCreate focus and measures for team performance
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One of the biggest killers of performance is not actually knowing what you’re being measured against. You just cruise along hoping you’re doing an okay job, not really knowing one way or another. Surely, if you weren't hitting the mark somebody would have told you by now, right? Creating an effective team means providing each individual with clear direction around what it is they need to achieve. To do this you can use Key Result Areas (KRAs) and Key Performance Indicators (KPIs). Let’s take a look at what KRAs and KPIs are and how to use them.
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Congrats on getting through your unit to this point! So what have you done in this chapter? Well, you’ve:Identified the differences between proactive and reactive performance planning Looked at how to create a performance plan Looked at ways to measure team performance and successSo what now? We recommend you put into practice some of the new skills, techniques and principles you’ve just learned. This is the best way we know, to ensure you know what you need to be successful on your journey – know what we mean? Now, let’s get into the next chapter!
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Let’s say you have a goal – to lose weight. You can step on the scales each week to assess whether you’ve met your goal of losing one kilo. The assessment is pretty simple, you’ve either lost it or you haven’t. This is a quantitative lag indicator. It tells you if you have met the goal after the fact. You can’t influence the result anymore, it either is or it isn’t. You might then look at factors that contributed to you not losing the weight, maybe you didn’t exercise enough? Perhaps that cheeky Mars Bar meant your calorie intake was too high the day you missed your run? So now it’s time to make a new plan. This week you’re going to step it up. You will set and monitor the number of calories you consume each day and the number of calories you burn through exercise. These are quantitative lead indicators. Each day you have a chance to influence these factors through your behaviours.
Are outputs and results Measure results after they have happened Are difficult to influence Easily measured – you’ve either hit the goal or you haven’t
Now let’s think about this in the world of work. KPIs for a salesperson may include lag indicators, such as sales targets and gross margin %. They may also include lead indicators such as the number of calls made per week and the number of calls that turn into opportunities. So, a lag indicator could be the budgeted amount a salesperson needs to achieve for a month. It can only be measured once the month has ended and by the time this happens, it’s too late for them to change the results. However, you could add in lead indicators to know how many calls need to be made daily (based on the percentage of opportunities that result from these calls), to increase the likelihood and influence the salesperson has over their success.
Are activities and actions Measured during the process Are easy to influence Can be difficult to measure – you won’t always be able to access your measurement tools when you’d like
Think about the last time you got out of bed with the sun shining and, after a big morning stretch, thought, “Ahhhh…I wonder how I can really underperform today.” Oh wait, you’ve never done that? The reality is, we usually get things wrong when we don’t know what right is. A high performance team isn’t something that happens by luck. Sure, you need to invest time into hiring the right people into your team but it doesn’t end there. As the leader it’s up to you to spend time planning for performance, monitoring and developing each team member, assessing their performance and rewarding them when they hit their goals. Oh, and did I mention that the whole cycle begins again when it’s time to set new goals and reach a new level of performance (or correct a level of underperformance)? I know it sounds like a whole lot of work but if you invest time in performance planning you’re really setting both your team and yourself up for success. 
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Sally consistently achieves her individual sales KPIs on a weekly and monthly basis. She’s your top performer – always receiving commission and generating the most revenue. You know the other team members don’t really like her and you're not sure why. They’re probably jealous that she’s always getting commission. Why don’t they just stop focusing on what she’s doing and start focusing on themselves? Surely then they’ll achieve better results and everybody will get on much better. Now what if I told you the reason that the rest of the team don’t get along with Sally is because she tends to steal their sales? It’s true, she waits until the team member helping the customer has to go and check a price and then swoops in, strikes up a conversation and by the time the team member comes back, Sally has already put through the sale – under her name. The performance of your team members shouldn’t just be measured by their results, but also how they go about achieving those results. The way they behave and their ability to live the company values is just as important . Make sure you establish with the team a set of behavioural expectations that they agree to work towards. Weave these standards through the performance plans you create, the team charter and your everyday conversation. They should be something each member of the team lives on a daily basis. Check out this article to see how US online shoe retailer, Zappos has integrated behaviour measurements into their performance management system.
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Setting up KPIs to be meaningful to both the leader and the team member are crucial to real results being achieved. You want everybody really clear from the get-go on just what success looks like. KPIs need to be reviewed regularly so they stay relevant to the team members work on a day-to-day basis. Otherwise, they end up feeling like a ‘test’ where the team member scrams to hit them a month prior to the review date rather than having a strong sense of commitment year round.
Generate sustainable growth
Technology quality indexCustomer service delivery index
Sustain employee engagement
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End to end customer service delivery
Maximise cash flow
Training and developmentRecruitment and onboarding
Provide meaningful opportunities
Offer innovative products and services exceeding customer expectations
RevenueEBITDAFree cash flow
To enhance your life, anytime, anywhere.
Net promoter scoreCustomer satisfaction indexBrand health index
Improve availability and performance of network and IT service and systems
Provide seamless superior customer experience across all touch points
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Learn more about working with KPI’s here. Check out this article to see how global companies are revolutionising the Performance Review.
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Definition: Otherwise known as Key Performance Indicators. Detail specific targets, or measures of achievement in both a quantitative (that’s a number) and qualitative (that’s a describing word) way for each KRA. To be successful they are specific and time framed. Between two and three: Number of KPI’s per KRA. How are you doing? Use lead indicators where you can so you know when you’re heading up the creek and can turn around before you lose your paddle. How did you do? Lag indicators tell you the result after things have happened so you’ll know if you did what you set you to do. Bend and flex: The KPI’s may shift with the needs of the business at the time.
What to measure? The Balanced Scorecard is a widely used strategic planning and management system. It’s used to integrate financial and non-financial controls in a way that provides a balanced understanding of performance. To work, it needs to align business activities and goals to the vision and strategy of the organisation. Performance is monitored through a ‘balanced’ view via four perspectives: learning & growth, internal, customer and financials. For each focus area identify your goals, the actions to take and the measures to recognise your success. Let’s take a look at an example of a balanced scorecard.
Definition: Otherwise known as Key Result Areas. The main areas of accountability and responsibility for a job. They relate to the areas of performance that are critical to overall success. Between five and nine: The number of KRA’s a typical job will have. Goals and tasks: Something KRA’s are not. Stick like glue: The KRA’s tend to stay the same for a role. Housekeeping, stock, customer relations, leadership, continuous improvement, sales budgets, and administration: A list of potential KRA’s for a store manager (not in that particular order).
Descriptive of characteristics Subjective and based on opinion Common examples include customer or employee satisfaction
Quantitative By definition any quantitative KPI involves a numeric measurement or quantity of something. This might be for example, a sum of, percentages or dollar amounts.. The way they are constructed is black and white – you’ve either hit the mark or you haven’t. There’s not much room for debate. Examples of quantitative KPIs include sales budgets, number of courses attended, wage % to sales and average transaction value.
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Measurable characteristics Based on numbers and percentages Common examples include sales budget, labour costs, market share percentages
Qualitative These KPIs are descriptive characteristics of the level of ‘quality’ you’re looking to achieve. Often this quality is based on factors that are subjective, for example employee satisfaction (feelings). To measure qualitative KPIs, we turn these indicators into quantitative data, for example percentage of employees satisfied by the support they receive from their manager. This allows us to measure and track overall trends to show where we (in in this case the leader) are on or off track. In this way, the percentage of people who answered the same for a question is quantitative, but the questions and answers themselves are subjective based on an individual's opinion of quality.
SPECIFIC
TIMEBOUND
ACHIEVEABLE
MEASUREABLE
We’ve looked at the different types of KPIs and what they measure but now it’s time to set them. The SMART method is used as a way of making sure that the KPI is relevant and meaningful to all stakeholders. Let’s take a look at how this might work.
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RELEVANT
There goal is very clear, focused and easy to understand.
The goal has a measure of success using either quantitative or qualitative lead and lag tools. Ideally this would be a combination of both.
Those responsible agree that the goal is a stretch, but can be done. Utilise previous year results and new year expectations to help set targets for areas such as sales or market share. There’s no point creating a budget 10% higher than last year if you didn’t hit last year’s results anyway.
The goal is relevant to the person's role and they have direct influence over the outcome. For example, a casual team member who works once a week isn’t going to have direct influence over the stores weekly sales targets. Set them an individual KPI for the day that they work.
The goal has a deadline. You want to provide enough time that it is achievable, but not so much that it isn’t front of mind for the team member. For example, sales KPIs can be set on a monthly basis with weekly and daily targets to support their achievement and give them clear timeframes.
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Use a mixture of lead and lag KPIs Provide your team with a mixture of lead and lag KPIs. The lead indicators will give them incremental goals to achieve, whilst the lag indicators will measure their performance over a period of time. The lead indicators if constructed well will directly influence, and ultimately contribute to, the achievement of a lag indicator. They’ll be focused on the result and you’ll create a direct correlation between what they do day-to-day and their overall performance. Set them in conjunction with your team members Developing them together will mean the team and each of of its members has a higher sense of commitment to achieving them. It gives you a chance to discuss realistic and achievable goals and measures of success, based on the team members level of performance and the needs of the business. Use the smart method Utilise the SMART method to ensure the KPIs you’re setting are relevant and meaningful to both the business and the team. You’ll find they are easier to explain to your team and therefore easier for them to work towards.
Timeframe to achieve goals
KRAs
Goals
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KPIs
Action required to achieve goals
Support provided
Proactive performance planning is all about setting your team up to succeed. You're documenting exactly what’s expected of them, the goals to be achieved, how they’ll be measured and the support you’ll provide to get them there. The performance plan should be reviewed at least every 3-6 months where both parties meet to discuss if the goals set were achieved, celebrate success and create a new plan together. Whilst there is an element of planning to these meetings – as the manager you need to know where your team's current level of performance sits. They really are a collaborative process where the plan is constructed together. Prior to the meeting make sure you’ve taken time to consider: The current skill or knowledge gaps held by the team member and ways they can be overcomeTheir motivators and ways in which you can keep them focused on achieving their goalsThe team member’s strengths and ways in which these can be utilised to achieve new goalsProactive performance plan template
Team Member
So, what happens in the performance planning stage of the cycle? Performance planning involves creating individual plans tailored around building the capability of each team member. They generally include: Performance measuresSpecific goals relevant to the team memberThe actions required to achieve those goalsTime frames against the achievement of each goalThe support the team member will receive to assist them in achieving their goalThere are two ways in which you can utilise performance plans.
Reactive performance planning is usually about getting things back on track when they’ve steered off course. A performance improvement plan is all about positively addressing a team member’s performance when below expectation. There are obviously reasons for underperformance – in most cases really justifiable ones. The key is to identify them early and make a plan for improvement. Before this meeting it’s imperative that you have taken time to prepare the facts and have a clear objective you wish to achieve. Prior to the meeting make sure you’ve taken time to prepare: Evidence of underperformance – you will need this to provide clear examplesExamples of ways you’ve tried to correct the underperformance previously, such as coaching and regular feedbackDevelop the bones of the performance improvement planPlan for a follow up meeting to ensure progress towards the goal is being made
Need a template for your performance improvement plan? Download this Microsoft Word version from Fair Work Australia here.
Let’s hear from some experts on how to get performance planning right.
PROACTIVE PERFORMANCE PLANS “I need to set my team up for success – what’s the plan?”
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Include actions required by both the manager and the team member. Both parties play a role in lifting the performance to the level required.
REACTIVE PERFORMANCE PLANS “Things aren’t going according to plan – I need a new plan!”
Provide specific actionable goals that show improvement in the team members performance.
Aim to correct underperformance.
Take the guess work out for team members. They know exactly what their success is being measured against.
Create engagement. Team members know their ongoing development is a priority to their leader therefore, they become more engaged in their work.
Provide purpose. Team members know what they’re working towards at all times.