8 Organization Performance Review

Introduction

Now that we have the four cornerstones of stakeholders, strategy, systems, and scorecard in place, we are ready to use them as the framework for periodic organization performance reviews. 

We often treat the strategy as a realistic plan, when, in fact, it is simply a hypothesis. As one CEO noted, “So you got to follow through; you can’t just be a visionary. I used to think people would naturally follow me; I was wrong. I used to think I’d just communicate, and they would all jump in there and make it happen. That didn’t happen.” Once you develop the strategy and conduct the strategy deployment experiment and measure the results, you are ready to study those results and learn what worked, what didn’t work, and under what conditions.

Read Chapter 8, Organization Performance Review, in the [Re]Create Book.

Objective – Understand Organization Performance Review concepts, components, and relationships and how they contribute to leadership and organization [re]design for sustainable excellence. 

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Is your organization making progress toward its strategic goals and objectives? This lesson applies key organization performance review concepts to your organization. Specifically, align stakeholders, strategy, systems, and scorecard; create stoplight charts; and analyze each performance measure’s results. Then, develop a system of stoplight measures to frame the analysis of relationships among the measures. Finally, create project stoplights and analyze the results for each project. 

S4 Alignment 

Video 0:51

Objective – Align the stakeholders, strategy, systems, and scorecard.

1. Strategy

Identify the strategic goals. While you can start anywhere on this framework, beginning with the goals is a useful way to frame a review of progress.

2. Systems

Identify the systems that are included in the strategic goal. In other words, what systems need to be changed to help achieve that strategic goal? Look at the action plans and initiatives; the changes you plan will help you identify the systems.

3. Stakeholders

Identify the stakeholders impacted by the goal and systems. Which stakeholders are directly or indirectly impacted by the goal or the system changes?

4. Scorecard

Identify the performance measures that apply to the stakeholders, strategy, and system for each row in the framework.

Examples

#1 Increase Repeat and Referral Business

One example might be a strategy to increase repeat and referral business. To do that, you might be focused on improving the customer service system. The stakeholders most impacted by this goal and system changes include the customers whose behavior we are trying to change, the workforce that serves those customers, and the revenue that benefits the investors. Finally, the scorecard metrics used to develop and track the strategic changes include both actual behaviors and perceptions that influence those behaviors: repeat business, referral business, and customer satisfaction surveys.

#2 World-class Workforce

Another example might be a strategy to develop and sustain a world-class workforce, including a plan to reduce workforce turnover. In this case, the strategy might focus on improving leadership development and communication systems. Stakeholders include the workforce, which provides better products, services, and experiences to customers who return, spend more, and bring their friends, positively impacting investors. In this case, the workforce goal also supports the goal of increasing repeat and referral business. Two key measures you might include are voluntary workforce turnover and satisfaction survey results.

#3 Increase Solar Energy Use

In a third example, the strategy might be to increase solar energy usage by 50%. This strategy might focus on facility upgrades and improved processes. Stakeholders impacted include the natural environment, society, customers, and investors. Scorecard metrics include energy usage by type and source.

These are just a few examples of how you might align a strategy and get the system components in place in the scorecard to support a conversation and a shared understanding of what is going on. When you start reviewing how well we are doing on these scorecards, you can work backward and see what the strategy was, what systems are involved, etc.

Performance Stoplights 

Video 6:03

Objective – Create Performance Stoplights and analyze the results for each performance measure.

1. Performance Measures

Identify the Performance Measures and enter those into the first column on the left. You can use the same list you created in Lab #7 Comprehensive Scorecard and used in the Performance Measure Selection Framework 7-6 and the Measurement Data Assessment Framework 7-9.

2. Level of Performance

Using the definitions for Good, Low, and Poor (Table 8-4), determine the Stoplight color for the current performance level. Enter the words into the worksheet and color-code the cell for easy analysis. Including the words ensures that those who do not see the color codes have the information they need to participate in the review.

3. Trends

Using the definitions for Good, Low, and Poor trends (Table 8-4) determine the Stoplight color for the performance trend.

4. Comparisons

Using the definitions for Good, Low, and Poor comparisons (Table 8-4) determine the Stoplight for the comparison performance.

5. Analysis

Document any analysis and explanatory comments about the individual elements or the overall pattern. For example, the current level of customer satisfaction may be good (green) with the trend low (yellow) and the comparison poor (red).

System of Stoplight Measures 

Video 8:26

Objective – Develop a System of Stoplight Measures to frame the analysis of relationships among the measures.

In Lab #7, we started the system of measures description with net income and then worked backward to identify the inputs: gross sales, and so on. For this worksheet, you will build on that diagram and add the stoplight color-coding for each measure. The result is a diagram of performance and relationships that enables you to diagnose system performance issues and identify leverage points in the system.

Project Stoplights 

Video 10:15

Objective – Create Project Stoplights and analyze the results for each project.

The last worksheet creates a stoplight status report for all the strategic initiatives. Identify the strategic initiative projects, and then identify where each stands on schedule, scope, cost, and quality. Then, review the results of those patterns as we did in the key concepts lesson (L8-1): look at the performance pattern, develop your analysis, fill in what you think is going on, and identify options to discuss.

1. Project or Initiative

Identify the applicable projects to include in your reviews. It is useful to include both a unique code number and a short title.

2. Schedule

Using the stoplight definitions for “Good, Low, and Poor” (Table 8-7) for each project, determine the rating for the Schedule.

3. Scope

Using the stoplight definitions for “Good, Low, and Poor” (Table 8-7) for each project, determine the rating for the Scope.

4. Cost

Using the stoplight definitions for “Good, Low, and Poor” (Table 8-7) for each project, determine the rating for Cost.

5. Quality

Using the stoplight definitions for “Good, Low, and Poor” (Table 8-7) for each project, determine the rating for Quality.

6. Analysis

Document your analysis and explanatory comments. Your analysis is probably going to be more in-depth than just a few words. In the framework, provide a summary of your analysis and keep your detailed notes as support for the dialogue during the review.

Conclusion

It may seem obvious, but we have more data today than ever before, and it is in a digital form that can be manipulated like never before. However, the unfulfilled promise of “Big Data” is that it has yet to provide the insights we need to create value for multiple stakeholders. Combining a systems model with a scorecard based on that model helps us leverage big data in ways that have eluded us so far. With clearer systems and theories of how those systems work, we can truly test the long-term, downstream results of changes to our systems. The organizational performance review is the first of three learning components in the leadership system. Labs 9 and 10 address individual learning and overall organizational learning and improvement, respectively.