How Does Performance Management Fit Within Strategic Planning?
May 10, 2024
How Does Performance Management Fit Within Strategic Planning?

Welcome to the 23nd edition of The Pulse, your bi-weekly newsletter of Insights for Strategy Leaders. And welcome to all of the new subscribers since last edition!

We've got a lot of bonus resources at the bottom too, so hang around.

In this edition:

  • 🤔 How Does Performance Management Fit Within Strategic Planning?
  • 📚 New Resource: Guide to Building a Successful Operating Rhythm
  • 💻 Upcoming Webinar - Simplifying Strategic Planning for Success
  • ✂️ Strategy Snippets

How does Performance Management Fit Within Strategic Planning?

Last week, I had the privilege to sit down with a COO who shed light on their business and how they’ve changed internal reporting processes following the introduction of a new CEO and changes in their Board of Directors.

While the company by all measures has had a wonderful run and continues to grow, the past couple of years have been an adjustment, and the team felt it was time for a change after the longtime CEO and founder decided to step away after 10+ years.

Such transitions are commonplace in the business landscape. However, as the overall market and economic conditions continue to shift, I think a lot of businesses are taking a step back to evaluate what the next 5-10 years look like for the company, while evolving the business to meet the needs of this new phase of growth.

For businesses going through these changes, one of the best ways to ensure the new vision being cast by Leadership is to create a unified view of strategy. 🔮

Rather than spreadsheets and powerpoint slides, create a clear, transparent view that ensures all team members understand the direction of the organization. What are the priorities? How is their work connected to the vision? And most importantly, what are we all trying to achieve together?

Back to my coffee with the COO… ☕

During our discussion, the COO shared that for the past two years they have struggled with getting engagement from employees, and more importantly, seeing an impact in the execution of their strategy. So they asked me whether our team at Elate is seeing other companies trying to connect performance management with strategic planning. If so, were those companies facing similar challenges.

My answer was a resounding ‘yes’.

In fact, over 50% of the companies we work with have previously fallen victim to conflating their strategy and performance goals tracked out of performance management tools. However, the reason they now work with Elate (and I’m sure competitors would resonate with this too) is because they didn’t find success in doing so. 🚫

Back in Edition #10 of The Pulse, I wrote about the purpose we see performance management playing within an organization, and it isn’t to execute your strategy. And it makes complete sense. Performance Management tools weren’t built for Strategy and Operations Leaders or for executing a strategic plan.

Performance management tools, designed primarily for HR and People Leaders, serve specific functions such as conducting quarterly reviews and managing personnel decisions like hiring, firing, and promoting based on performance metrics.

Attempting to align these tools with long-term strategy often leads to disconnect and challenges in execution, especially since you are incentivizing employees to set goals they should unquestionably achieve. Employees may hesitate to acknowledge risks or setbacks, fearing the repercussions of not meeting predetermined targets.

Related: Performance Management Tools vs Elate: What's the Difference?

A story I often share is from a few months ago. I had a conversation with another Operations Leader who expressed a challenge they were facing. They were unsure how to communicate to the company that they would need to implement a 10% RIF and freeze new spending. The difficulty stemmed from a town hall meeting held the previous week, where it was shared that employees had achieved 98% of their performance management goals. However, the Operations Leader knew that the business was falling short of reaching 50% of its operating plan for the year.

That’s quite a conundrum.

Performance management plays a vital role in modern business, from providing 360 reviews to tracking employee comp and bonuses. But attempting to integrate it seamlessly with long-term strategy execution can set employees - and your strategy - up for failure. ⛔

Whether you use a platform or manual process, strategic planning and the execution of said strategy should be bold, ambitious, and managed in an environment where employees feel empowered to communicate challenges and share when something is "At Risk" or "Behind".

The purpose of building a dynamic strategy is to ensure it provides Strategy and Operations Leaders with visibility into the bends before they become breaks. To regularly validate whether we persist or pivot from the initiatives we’ve agreed upon as a business.

And further - if we do pivot - establish a process that prevents employees from feeling whiplash because they clearly understand the long-term goals we are collectively seeking to achieve.

Finally, your Strategic Plan should contain both Outputs and Outcomes ✅. Yes, there will be blocking and tackling work that is project-based and requires more of a progress update to completion. But most of the key initiatives or mission-critical objectives within your strategy should be outcome-driven.

This is a staple for any company that is great at strategic planning. They are able to clearly align their operating plan with the strategy being executed across the business. This approach allows flexibility in execution methods while maintaining focus on the desired end results. 🎯

A common pitfall we see is rigid adherence to the objectives set at the beginning of the quarter, irrespective of their results and impact on long-term goals. And for employees setting objectives in a performance management-based style, the chances of deviating from the agreed upon goal are slim. Because they aren’t thinking about the end result. Rather, they are just thinking about their goal and getting it crossed off the list. ☑️

It is paramount to detach employees from siloed goal-setting and foster a collective mindset towards achieving organizational goals.

So to the COO I met with for coffee and to all of those that have felt the pain 🤕 of trying to bring together long-term vision and tactical execution in a way that creates a unified view for Leaders with proactive insights, while driving alignment and engagement with employees, it might be worth thinking about disconnecting performance management from your strategy.

Instead, focus on connecting employees to the overarching strategy that drives your organization's operational plan forward.

📚 New Resource: Guide to Building a Successful Operating Rhythm

I'm really excited to share this new guide our team created because I believe it's one of those that truly brings so much value to Strategy and Operations Leaders.

Some of the topics include:

  • Building company-wide rituals
  • How/when to review Objectives
  • Transitioning quarters
  • Leadership meeting agends, structuring pre-read reports, and more

Whether you already have an operating cadence in place or you’re starting from scratch, I think this guide will help you either establish a rhythm for success or enhance your existing one.

Here is the link to grab the guide. Or just comment below and I'd be happy to send it your way.

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💻 Upcoming Webinar - From Complexity to Clarity: Simplifying Strategic Planning for Success

Thursday, May 30th, 2:00 PM EST

In 3 weeks I'll be co-hosting a webinar with Dave Fechtman, CEO of Velocity Advisory Group, and I can't wait.

Strategic planning is complicated and complex. It's hard. So we're going to talk about how to simplify the process in a way that rallies employees around a common goal.

Click here to learn more and reserve your spot. And if you can't make it, we'll send the recording after.

Alright, that's all for today. Did you make it this far? Email me at brooks@goelate.com... I love getting replies and knowing if it's valuable or not.

Have a great rest of your week.

- Brooks

PS. If you've found The Pulse valuable, would you mind writing a sentence for our website?

Strategy Snippets:

🔦 Customer Spotlight with Seismic - check out our latest customer story if you're interested in learning how we're partnering alongside companies to help bring their strategies to life.

🎬 Holiday Extras , fresh off the heels of The Goalfather, released another video, Goalfinger, to rally their teams around their top themes for the year. Talk about a company building a culture and alignment around strategic planning. 👏

A few resources you might be interested in:

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