How,Align,Performance,Corporat business, insurance How to Align Performance to Corporate Strategy and Goals

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It used to be that performance management was managedin one department. Today, performance management has spread throughoutthe entire organization, where almost every division must focus onperformance management to some degree in order to be successful.Despite this wider range of performance management, enterprise-wideperformance initiatives are not widely practiced. And without anenterprise approach, it is extremely difficult to align yourperformance to organizational goals and objectives.According tosoftware vendor SAS, a recent survey of 1100 businesses revealed thatperformance alignment was the PRIMARY benefit companies hoped toreceive from their performance management efforts. Aligning performanceto your organization's goals and objectives is critical to yourorganization's success. On the other side, lack of alignment increasesinefficien­cies and risks and prevents optimal execution of theorganizational strategy.Think of this scenario as a model for linking corporate strategy to business objectives:Theexecutive board collaborates high-level strategic planning andidentifies goals for the CEO and organization. The CEO then meets withhis/her senior executives who in turn develop objectives derived fromthe CEOs goals and integrates those goals into the strategic plan. Inturn, those executives meet with their managers who develop objectivesderived from the strategic plan, and so on. Then, each subordinate goalis tied to one or more goals of their manager. Ideally, the finalresult is that every tracked goal in the entire company can map back toa corporate objective developed by the board.Chances oforganizational success are greatly increased by translating eachhigh-level objective into a cascading series of focused performancemeasures. Using our previous example, the CEO may focus on net cashflow while the CFO looks at debt-to-equity ratio. The controller mayfocus on liquidity ratio, while the accounts receivable manager looksat days sales outstanding, and the accounts receivable clerk worriesabout percent of collections over 30/60/90 days.This article discusses aligning corporate strategy to four key areas: departments/ divisions, workforce, finance, and systems.Departmental Performance AlignmentDepartmentalperformance alignment can be difficult when business processes withinan organization span across multiple business units and functionalsupport groups. To avoid bottlenecks, finger-pointing, and redundancyof work, shared performance measures that align people acrossorganizational boundaries must be identified and responsibilitiesaccounted for. For instance, a performance measure that includespercent of collections over 30/60/90 days might be applied both toaccounts receivables clerks and sales representatives, thus sharing andintegrating performance measures, encouraging collaboration andboosting overall performance.Workforce Performance AlignmentWhenworkforce performance is aligned with corporate objectives individualsin an organization develop a stake in that organization's performance.Employees at every level are measured by something they understand andcontrol, and that same measure is clearly linked to the goals of theirdirect supervisor and the organization as a whole.Financial Performance AlignmentInan economy where results need to be achieved fast and investorconfidence is low, CFOs and finance organizations are implementingintegrated performance management to improve information quality andvisibility. One challenge organizations face aligning performance isfinding financial measures that are meaningful to those responsible forcarrying out the work. Using the previous example net cash flow is acritical performance measure for executives, but it probably means verylittle to the accounts receivable clerk who has no idea of how theircontribution improves net cash flow performance. Stick with simplefinancial metrics that employees can understand and control.System Performance AlignmentTheIT/IS department's role is to provide technical support for the entireorganization. While we know that this alone is a complex task, today'sbusiness model requires systems to not only support users, but to aligntechnology to meet the business needs of the organization.Understanding business unit objectives and translating them quickly andaccurately into IT priorities is essential today. So how does anorganization measure how well their systems are aligned toorganizational objectives? By implementing vehicles for aligning andmeasuring IT performance, such as service level agreements,performance-based contracts, and products and services catalogs togenerate reports that illustrate how well they are measuring up tobusiness objectives.If you can move closer to aligningperformance in these areas your organization will be well on it's wayto surpassing all of it's goals and objectives. While the goal of aperformance initiative is to align performance to organizationalstrategy, it is most important to maintain flexibility and adapt toorganizational changes quickly.