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Connecting Employee Performance and Enterprise Performance

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Should Employee Performance Management be integrated and considered in Enterprise Performance Management?  In an interesting twist, Thomas Otter and Jonathan Becher started a conversation here at exactly the same time that I was participating in the same conversation at Knowledge Infusion’s COE.

Thomas states:

One of my present irks is that both the finance community and the HR community are rabbiting on about performance management, but I see precious little alignment between the two. Even here in the home of “if it moves integrate it”, I don’t see enough collaboration between HR and Finance on what is for me a blindingly obvious case of two sides of the same coin.

Jonathan chimes in with:

Thomas, as usual you are right. Financial, operational, customer, and HR performance management are silos. If only “corporate” performance management was really corporate. Invidual contributors would love to see how their personal objectives and KPIs tied back to the business unit mission or the corporate objectives — even to the stock price. Imagine being able to prove that your project improved profitability by 0.5%.

Unfortunately, I think we’re still 2-3 years away from this. The vendors are partly to blame but organizational inertia is just as guilty. Customers have to demand better alignment.

Meanwhile, I’m writing this over at Knowledge Infusion’s site (membership required to see the discussion there):

I personally don’t think that employee performance needs to be a component within enterprise performance. I am thinking about this rather narrowly however, in the confines of the reporting that might go to a BOD or executive management. I really don’t think they care at all about employee performance management. Employee performance is a downstream effect of many other factors, and it is those upstream factors that they care about. For example, it’s more important to look at the financial performance of the divisions and profit centers that those employees belong to. Their performance will be sufficiently stated within the financial numbers and there is not reason to go to an aggregated view of performance. Another example from the talent standpoint would be to look at the level of competencies that exist within the organization and comparing that against the workforce plan reagarding how to get the desired level of competency into the organization.
From a management standpoint, who cares about employee performance? It matters from a development perspective, but so long as it is happening and is effective, there are many other (more important) drivers for the business.

What was I thinking?  Well, sometimes it’s good to disagree just for the heck of it.  Seems to bring out the discussion in everyone and of course, I can usually argue both sides of anything.  What are your thoughts?

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6 responses to “Connecting Employee Performance and Enterprise Performance”

  1. unknown wrote an interesting post today onConnecting Employee Performance and Enterprise PerformanceHere’s a quick excerpt Should Employee Performance Management be integrated and considered in Enterprise Performance Management? In an interesting twist, Thomas Otter and Jonathan Becher started a conversation here at exactly the same time that I

  2. Ron Katz Avatar

    I have to add that while you’re all correct, there is often little alignment between individual and organizational goals, that doesn’t mean that there shouldn’t be.

    Organizations, BOD, senior management and stakeholders are primarily interested in corporate performance. But managers need to focus on individual performance management because that is all they control! The best way for a manager to influence or impact corporate performance is to focus on improving individual performance. And the best way to impact individual performance and influence people is to show them a clear alignment between what they re being asked to do and what the organization hopes to accomplish.

  3. Ron Katz Avatar

    If I may continue…
    When people understand why they’re being asked to do things, they have a greater likelihood of doing them better and being successful. This is why it’s important to monitor individual employee performance.

    Remember, what gets monitored gets managed, and what gets managed gets done.

  4. Chuck Allen Avatar

    For certain categories of contributors, it isn’t impractical to roll-up individual contributions (results against plan) into measures against organizational goals/performance. However, to do this in a broad and deep way is of course a lot more challenging. If you started making the right correlations you might also have some insights into tuning competencies, who you hire, etc. This obviously isn’t easy stuff – a lot of analysis, development of algorithms, normalizing data, etc. If you’ll allow me a shameless plug, HR-XML is running a free webinar on Wednesday that is going to look at employee performance management integration. It is very early days for HR-XML’s EPM spec, but the certified implementer’s use case that we will review may some useful insights into how one might flexibly re-purpose EPM result data for other analytical purposes. We don’t yet have a documented implementation between an EPM and business performance management system, but this is one of the use cases we consider.

  5. systematicHR Avatar

    Chuck: I think you hit it on the head with the word “correlations.” We’re probably all thinking the same thing, but not quite saying it.

    Perhaps everyone is saying that no executive wants the detail, but they do want to see how performance, compensation, recruitment, benefit design, etc.. all correlate not only with each other, but also with overall corporate performance.

    I think that Ron hits this with the alignment message as well. Being aligned doesn’t mean that employee level performance results feed into the enterprise performance reports.

    That an executive want this, but not the minutia is something I can buy into.

    (BTW – nice hearing from you Chuck – it’s been a while)

  6. mike shoemaker Avatar
    mike shoemaker

    I tend to agree with your initial thoughts. I don’t know that a CEO is ever going to get terribly excited about the correlation between competency ratings and financial performance. In part because correlation doesn’t prove anything. If you’ll humor me, as a SVP of HR I would personally feel a bit silly implying that my new T&D initiative around “Managing for Results” is somehow responsible for X% of financial performance.

    A CEO may (and should), however, be impressed that HR is performing more sophisticated analytics to, for example, target training at competencies that are shown to drive financial performance and strategic execution. It may even make her want to have her SVP play an active part when the executive team sits down next to discuss breaking into emerging markets.

  7. luis Avatar

    The whole point here is : what is Employee Performance Management today, from a software vendor point of view ? And what I see is just : are employees making their objectives, individually.

    But that is old economy. Today, there is no such thing as individual performance. We all perform within the limits of our organization and based on resources (people, teams, knowledge, capital, IT, ….) provided to us by this organization.

    Enterprise performance management does not need Individual Employee Performance Management.

    But, in the end, a business is just as good as its teams and communities and people are. It might be a good idea if HR and HR vendor forgot about segmenting and evaluating and thought about collaboration and development.