Expert Interview: Elena Hristozova, Management Consultant – Strategy, Leadership Development Freelancer, Bulgaria
For the report Performance Management in 2013, The KPI Institute conducted 20 semi-structured interviews with practitioners, academics and consultants from 18 countries, who offered rich insights into the state of Performance Management as a discipline.
One of the main editorial rules followed in the development of the content is that a discipline can only evolve through the combined efforts of practitioners, academics and consultants. Elena Hristozova, Management Consultant – Strategy and Leadership Development Freelancer in Bulgaria was one of the consultants that The KPI Institute has interviewed.
1. What does the term Performance Management mean to you?
For me the term includes all tools and processes in a Performance Management System, designed to align individual employee performance with the overall organizational strategy.
2. What drives interest in Performance Management?
Organizations need Performance Management (PM) to achieve effectiveness and efficiency. These are the two main drivers, which imply staying focused, tracking results in line with strategy, as well as getting the best possible Return on Investment.
You cannot improve, or even manage, what you cannot measure! Therefore, measuring results makes it easier to manage an organization. Performance Measurement as a part of PM allows companies to be more flexible when executing their strategy.
3. What are your thoughts on the relationship between Performance Management at organizational, departmental and individual level?
As a Balance Scorecard fan, I believe that these levels should be aligned. In my opinion, this is the most effective way you can encourage people to contribute to the overall strategy. All individual objectives should contribute to those of the department, and in turn the departmental performance should add to the overall performance of the organization.
4. What are 2013 key trends in Performance Management from your point of view?
Currently, there are two central trends – finding KPIs to accurately measure performance and ensuring employees’ buy-in for those KPIs.
A new trend – called BIG DATA – is emerging at the moment. It affects Performance Management primarily in terms of business intelligence. The focus is more on the market rather than on internal processes and performance. However, the expertise to capture and create value from BIG DATA will be gaining importance to internal organizational aspects of performance.
5. What aspects of Performance Management should be explored more through research?
I would once again mention the KPIs: on the one hand – which KPIs are relevant, and on the other how to prevent “the cobra effect”* when defining objectives, KPIs and incentives.
Another aspect is how to define relevant KPIs having into consideration the domain of control when more than one unit contributes to the same objective/KPIs or when individual performance depends to a great extent on externalities.
* The term “cobra effect” is coined by Horst Siebert, referring to a solution of a problem which made the situation even worse. The British government was concerned about the large cobra population in Delhi and offered a bounty for each dead cobra. However, this practice encouraged people to breed cobras for income. When the government became aware of this, it stopped the reward program, causing the cobra breeders to set the now worthless snakes free. Thus, the cobra population increased further.
6. Which companies would you recommend to be looked at due to their particular approach to Performance Management and subsequent results?
Companies from the consulting industry are now doing a lot to improve their Performance Management. I would also recommend best practices from the TelCo and the FMCG. These are usually companies where the market, in terms of customers and competition, is traditionally challenging and both managers and employees are not “spoiled” with large profit margins.
7. Which are main challenges of Performance Management in practice today?
From a top-down perspective one of the greatest challenges is to create architecture simple enough to be actually executed afterwards. It is also difficult to ensure the genuine support of the top management and to expect all of them to act as a role model.
A third challenge is convincing and preparing line and senior managers to play their roles as Performance Managers. The latter means to do simple day-to-day duties such as to communicate objectives/KPIs, observe individual performance, give feedback and guidance etc. However, these actions demand a lot of time, energy and good will.
8. What do you think should be improved in the use of Performance Management tools and processes?
To be able to benefit from their PM tools and processes, organizations should develop a real Performance Management culture, which implies the necessary attitudes and behaviors of the performance managers. In addition, the way of dealing with the qualitative aspects of Performance Management needs improvement. I believe that Performance Management is more than putting checkmarks in boxes of KPIs. It is about giving feedback and offering guidance to individuals to improve and develop. Unfortunately, performance managers are not always willing to give this feedback on a regular basis and to help people meet their objectives.
9. What would you consider best practice in Performance Management?
As far as I have observed, Balanced Scorecard is a practice that works. Another good practice is the traditional Performance Management process – defining objectives at the beginning of the year, then having mid-term reviews (it is really important to find the time for this mid-term reviews) and eventually – the final review. It is crucial to make sure that all performance managers within the organization follow these steps in order to create a best practice.
10. Which aspects of Performance Management should be emphasized during educational programs?
One aspect would be the feedback meetings between performance managers and employees – how to motivate employees to be an active part of the process, encourage them to prepare themselves for these meetings by collecting feedback for their own performance from peers and from other managers.
11. Which are the limits in order to achieve higher levels of proficiency in Performance Management among practitioners?
One limitation for the top managers is that they do not always find time and resources to start a Balanced Scorecard project to ensure alignment of individual objectives with the strategy, as they are not really convinced about the possible benefits.
Similarly, for performance managers the greatest limitation is their motivation, but also their PM expertise. They should find the time to collect examples for relevant observable behaviors of their direct reports and help them meet the quantitative and qualitative objectives.
12. If you are to name in few words the main aspects governing Performance Management today, what would they be?
- Balanced approach towards quantitative and qualitative objectives;
- KPIs which are relevant and accepted by all employees;
- Performance managers who give feedback and guide individuals towards meeting their objectives.
13. As a consultant, what are the most common issues that your customers raised related to Performance Management?
Based on my experience, customers often inquire how to help performance managers to assess in an impartial manner the performance of their subordinates and how to structure a feedback session with an employee. Performance Management as a methodology is not a challenge anymore, what makes a difference is the way it is implemented in practice.
For more interviews with professionals from all over the world, access Performance Management in 2013