Working with our clients, we’ve seen a full range of responses to the term ‘performance management’. At one extreme, a complete unquestioning embrace; at the other, outright distrust, with suspicion of the intrusion of yet more banal corporate theory into working life. Of course, neither reaction is really fair, for – it is suggested here – the reasoning behind ‘performance management’ is straightforward enough. It’s the conceptual structure and processes that enables organisations to not only deliver on their mission, and produce the evidence of such success, but also hone what they’re delivering as they go along: be it in developing people, refining services or perfecting core support functions.
For mission driven organisations, creating such a structure is certainly easier said than done, especially given the common challenges of integrating impact measurement into any form of performance management. But in the current environment, it’s also critically important in securing a financially sustainable future. The constant refrain from funders and commissioners, certainly since 2008 (if not longer) has been for organisations to demonstrate and evidence – in broad terms – performance. For example: as regards statutory income, we’ve seen movement away from typical annual grants to contract-led, outcomes-based commissioning, with a 151% increase in contract income from government between 2000/01 and 2010/11 for the Voluntary sector. (NCVO Almanac 2013). For organisations that are able to respond, the opportunities are considerable, since, for better or worse, public outsourcing contracts in the UK are worth more than £3.7bn annually, making the UK the largest outsourcing market outside the US (2013 figures).
It’s not just funders and commissioners either: the full range of stakeholders, from public audiences to Trustees and Boards of Directors, to beneficiaries, are seeking transparent views and articulation on performance. To take one illustrative example: in the most recent report for the Royal Botanic Gardens, Kew, management commentary on performance (incorporating KPIs and targets), was visible right at the front of the report, directly following the Director’s introduction.
For many, these arguments are convincing and variations of performance management have become increasingly embedded in operational procedures. What is best practice, however is more difficult to discern, given the bewildering array of approaches and the need for a balance between the application of tried and tested methodologies against a bespoke expression of performance for a specific organisation. Things get more complex given the nature of many mission driven organisations. Whereas traditional performance management has tended to tie performance to readily measurable indicators of success – such as the amount of revenue brought in or number of sales made – social ventures often have goals or mandates that need to measure performance on the quality of relationships and the interactions of individuals. Hence the earlier allusion to the problems of integrating impact measurement into a performance management framework.
As you might expect, there is no ready panacea to these issues but we briefly suggest here some ways of thinking about performance management that we use in our own work with clients, which we’ve found helpful.
The first is structuring performance management to holistically reflect your organisation. Think about the key questions and associated performance areas:
Once you’ve done this, you’ll need to put the underlying processes in place that enables a performance management framework to deliver in terms of supporting internal decision making, as well as shaping longer-term strategies:
As figure 2 suggests, putting processes in place is only part of the answer. As we’ve witnessed in many client engagements, ensuring the necessary ‘performance-focused’ culture in place is critical. While this may be led from the top, the real value arrives when staff across functions become signed up to what is trying to be achieve. Of course, this can be a challenge. It should be recognised that performance management approaches can be alien to some, especially if they’re incorporated into personal objectives. Where this is apparent, we suggest that a steady, phased approach, introducing concepts and complexity step by step, can reap rewards and inculcate cultural change at the same time as shifting working practice.
 Royal Botanic Gardens, Annual Report 2014/2015 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/447227/kew-gardens-annual-report-2014-2015.pdf[/fusion_text][/fullwidth]