All performance frameworks—whether it is the Balanced Scorecard (BSC), Objectives and Key Results (OKRs), Management by Objectives (MBO) or the Performance Prism—have a shared DNA and purpose: to create synergy in the organization to optimize key results. However, two important questions need to be asked: which performance framework should a company implement and what should one consider when selecting a performance framework?
A well-defined performance framework enables the organization to achieve its desired goals, and having various performance frameworks in hand can make it a bit tricky to choose the right one. Thus, one might be tempted to try implementing what big companies such as Google have implemented and attempt to do the same within their own organization without contextualizing the company culture, size, and business nature.
This article will illustrate the four things to consider when selecting a performance framework for the organization.
- Understand your company’s goals and objectives.
It would be silly to start furnishing an empty room without first understanding its intended purpose. Is it going to be for dining or a personal workspace? The same thing can be said when selecting a performance framework. Understanding the company’s goals and objectives is crucial as it will give you a sense of direction. For example, if the company’s goal is to have a disruptive, innovative product or achieve fast growth, then you might consider the OKRs framework as it will enable you to set challenging objectives and provide flexibility to support innovation. On the other hand, if the company’s objectives gravitate toward stability and sustaining the current market share with modest growth, then the BSC is more suitable for this type of environment as it will assist in cascading the objectives from the top down and preserve company status quo while supporting growth at the same time.
- Consider the company size and structure.
When we talk about company size, we are not only talking about its capital and asset value, but we are also talking about its workforce size and how they are structured into various functions. If the company has a huge hierarchical structure where each employee is expected to perform a very specific and specialized task that is repetitive and operational, then selecting a framework that exhibits this nature of work will enable the company to create clarity and focus for the employees. A framework to consider for this purpose is MBO, which is defined by The KPI Institute as “clearly setting and defining objectives agreed by both management and their employees.”
- Involve internal stakeholders in the selection process.
Highly engaged employees produce substantially better outcomes, are more likely to stay at their organization, and experience less burnout, according to analytics and advisory firm Gallup, Unfortunately, employees can’t reach that level unless they feel that their day-to-day tasks are linked to the company’s purpose and that they have an impact on the results. A good performance framework should be able to convey this to the employees. Asking employees what they value the most and involving them in the decision-making process will result in a highly engaged organization and limit the silo work environment. A performance framework should not be imposed but rather tailored to serve the company’s goals and its human capabilities.
- Review and assess the performance framework.
Just like a strategy review, a performance framework needs to be reviewed regularly and not ossified and treated as set in stone within the organization. As the company’s strategy, size, and market grow and change, the performance framework needs to be updated and changed as well.
In conclusion, selecting a performance framework is only the first step. It is a tool for enablement, not a purpose. All performance frameworks can be customized to fit the company’s needs—these are not off-the-shelf products that must be implemented as-is. Nevertheless, other factors play a huge role in executing performance frameworks, such as employee engagement, company structure, and business processes. All these factors influence and impact which framework to select.
This article was written and submitted by Ms. Wedad Alsubaie, who works at the Strategy Management Office of the National Unified Procurement Company in Saudi Arabia.