How many timeshas your company asked you “What is ‘Utopia Limited’ doing well in the area of asset management?” Or “How does ‘Neighbor Industries’ manage its supply chain?”. “What about Perfecto International?- what are they doing in the area of employee retention?” Sound familiar?

Hey, there’s nothing wrong with wondering how other companies approach certain areas of there business. After all, we’re taught by our leaders and mentors to be open to new ideas…to be “out of the box” thinkers! So why do I poke fun at this kind of best practice exploring?

The short answer is that the pursuit of best practices should not begin with looking at practices. Sound strange? Ironically, best practices should be the last thing on your mind when you begin your exploration. Why? Because industry is littered with companies who have implemented ideas they “think” might work, with little or no grounding to them. In reality, many of these practices end up failing miserably. But because they are implemented within big name, or strong brand organization, they are picked up by their peers without a second thought. After all, who’s gonna argue if you implement a practice straight from the management of Perfecto International?

All joking aside, I’ve spent a lot of time in the power industry, and have watched the likes of Duke Energy, FP&L, PG&E, and others in the big name class, dominate discussion at best practice sharing forums. I’m not saying these companies are not good at what they do, nor am I saying that some of their practices are not downright super. What I am saying (with quite a bit of experience behind it) is that if you only looked at these companies, you’d be selling yourself way short. And you’d be implementing many practices that have a lot to be desired in terms of the value/ cost tradeoff. Our research has shown less that 20% of true “best practices” originate from big brand companies. Most emanate from their smaller and far more nimble competitors. Real food for thought if your in the business of finding best practices.

What we preach extensively to our clients is that companies should start with a good picture of relative performance. From there, you can isolate two or three companies that really stand out. I’m not talking about companies that look 5-10% better on the surface. I’m also not talking about companies that achieve high marks simply because they are four times your size and have an implicit scale advantage. I’m taking about companies that, all things being equal, stand out like huge anomalies. (aside: normalizing comparisons here is a BIG MUST and will be discussed in future columns), You poke and prod at these indicators and when you’re relatively confident that its not some structural difference driving the gap, then you’re probably onto something. Talking to a company about practices at that point will not only yield a treasure chest of ideas, but ideas that are also likely to have some real economic value to them.

Why don’t more companies do it this way? Well, like anything else, it takes time, skill, and patience. And in a world that moves at lightening speed, we all look for short cuts. But in the end, the right approach usually prevails. In this case, that translates into fewer implementations that go south, fewer false starts, less time aimlessly searching for ideas and more time understanding the practices that count.

As you move forward in your hunt for best practices, try starting with the data, and allow the benchmarks to be your “tour guide”. It will save you a lot of time, and generate far more valuable results.

The other day, I wrote quite extensively about the importance of PM communications in building alignment and effecting change. Here’s a little ditty to drive home the point.

Yesterday, my wife asked me to run an errand and pick up a few items from the local “Target” (which she mockingly pronounces Tar-jey out of respect for my beautiful French heritage!). I needed to get in and out quickly, so I waited by the door and entered at 7:30 sharp, just as soon as the doors opened. As I walked briskly toward the dairy section, I heard an interesting announcement over the loudspeaker: “Would all Target staff report to register 8 for the ‘morning huddle'”.

I got my stuff and headed toward checkout (register 8, of course), and found myself surrounded (quite literally) by about 50 people, with enthused expressions on their face, awaiting this “huddle thing”. The woman at register 8 checked me out and quickly rejoined the group, trying not to miss much. It piqued my interest, so I decided to eavesdrop a bit.

What amazed me was not the concept of the daily meeting- most every manager that’s worth his salt does something similar to this. No- what was unique was the content and style of the meeting. Here’s a brief summary of what I observed:

– a brief and focused rundown of what I suspect were Target’s Targets (Sorry for such a bad pun!)– a highly focused set of performance indicators that appeared to align with what was important to their store’s short to mid term success- weekend sales, product turnover goals for specific inventory items, signup goal for one of their store credit cards, results of a recent CSAT snapshot- things like that.

– reports for each indicator were presented by different staff members– many were obviously “bought into”, and directly involved in the management of these goals

– It was quick and painless– everyone standing- it didn’t drag on. Not a lot of discussion of what worked and didn’t (with the exception of a few important items from the front line), but rather a quick “here’s where we are NOW and what we need to do going forward (SHORT TERM)”.They kept the analysis and detailed discussion for later, probably off line. This was a communications meeting, but with the involvement of many.

– The focus stayed on the customer– never for one minute (even though I was a bit “engulfed” by this attentive group) was I “left hanging” during the checkout process. Nearly everyone smiled, said good morning,…then resumed their attention to the team leader. Two or three of them were ready to man whichever register I decided to walk toward.

-The environment was very “open book“. This wasn’t a closed door session or a set of “confidential management-only reports”. In stark contrast, this was done right there out in the open, by the front registers, which I concluded was very deliberate.

-The communication was undoubtedly continuous. This was a daily exercise…part of their routine. As a result, I bet very few breakdowns have time to fester given the apparent frequency of these meetings and reports.

Those are just a few of my observations. Skeptics would say “we do that too”, or that this was probably just part of their “honeymoon period”. Maybe so. But there are enough differences between what I observed here, and what I see playing out day by day inside the organizations with whom I work. Enough so, that I was compelled to watch, listen, and identify some of the differences.Food for thought. Take what you like and leave the rest.

Oh yeah- and Eat Your Heart Out COSTCO !!!

Several years ago, I was given the challenge of facilitating part a company through a large scale restructuring initiative. One of the main reasons that our firm was selected had to do with our considerable expertise in the area of performance diagnostics- a fancy way of saying that we were pretty good at “sizing up” hidden value (cost savings or service level improvements) that could be released through various process improvement initiatives.

As was the practice at our firm, the principal consultants on the project each took part of the business and led their respective team(s) through a process of defining appropriate measurements, baselining their performance, benchmarking them against “best in breed” competitors, analyzing gaps, assessing best practices, and building improvement plans. For consultants, this drill is pretty routine.

Well, the routine was about to change, and did change for me the minute I stepped foot off the airplane to start the engagement. You see, while all of the other consultants were given typical business functions as ‘their team’ to facilitate, your’s truly was given a few real winners- Internal Auditing, Risk Management, and Corporate Planning. I’m rarely one to whine about the cards I’m dealt, but this was a little nuts. How would I even begin to define measures for these functions, not to mention the later stages of baselining, benchmarking, and gap analysis? Someone either had a lot a faith in me, or was setting me up for something nasty.

Ironically, it turned out to be one of my favorite assignments. While the team I led was about as excited as I was, we all decided to approach it as a challenge…a chance to break some new ground.

While there are probably as many opinions about how to measure these types of functions(functions that are distanced from the end customer, with workload that is largely discretionary, and few if any tangible “widgets” produced), we decided to focus on what we eventually referred to as the three C’s: Customers, Competencies, and Critical Path.

Customers: For us, this was a logical place to start. Since these functions were quite removed from the end customer, we needed to define a surrogate customer of sorts- constituents whose business performance and survival was dependent on the business function being measured. The audit committee of the board, plant managers with P&L accountability, Business Unit Leaders, for example. From there, a service level agreement complete with performance standards served as the blueprint from which our baseline and benchmarks were then derived. In many cases, this was the first time the real customer had been identified- so it wasn’t uncommon to find a number of key functions that weren’t even on the customer’s radar screen. Some would fall off the board all together, as the customer would deem certain functions (often performed for years prior!)unnecessary going forward.

Competencies: Most functions like these require niche professional skill- truly unique disciplines. So the next logical place for us to go was to build a competency profile. For example, if the company wanted to have a “crack” internal audit staff (to serve the workload demanded by their customer of course!), a good yardstick of progress would be a performance measure that indicated the presence of specific competencies and expertise. These could be “soft” measures such as the presence of certain skills, or “hard” indicators like training hours or continuing education credits.

Critical Path: This was simply an indicator of progress against critical projects that emanated from the customer’s expectations. These indicators were different from the rating given by key customers and/or performance against negotiated service standards. Critical Path indicators dealt with very specific and key initiatives that were central to that function’s annual plan. While these may have been redundant in some cases, the team felt they were worth the added weight and specificity in the overall framework.

In the end, we had a balanced set of measurements that provided a clear picture relative contribution. Measures that could be clearly identified, counted, benchmarked, and used as a guidance system for gauging their long term performance.

Some would say it’s not perfect, and few performance management frameworks are. But it did serve the purpose of getting these functions involved in the restructure in a positive way, and initiated a significant improvement in the business contribution of these functions.

A far cry from – “you can’t measure us, we’re too different!”

A few years back, I encountered two organizations with virtually the same approach to Performance Management. The metrics they used were almost identical, both had a commitment to benchmarking, both were “bought in” at the executive level, and both were serious about holding people accountable. All appeared to be the same except for their ACTUAL performance track record.

On a subsequent visit however, I noticed a subtle little difference that seemed to make ALL THE DIFFERENCE. The difference was in the way they told the story to their organization- simple communication tactics that bridged the gap between the “wanna be’s” and real world performance leaders.

Note that I made a point to say SIMPLE communications. I’m not talking real hi-tech here (although today’s electronic communication does simplify things). No- we’re simply talking about management’s commitment to get the word out- plain and simple. What are our targets? How are we doing? What are the indicators telling us? And what are we doing to improve?

What was truly amazing is that none of this showed up in the data we saw or in the interviews we performed over the phone. It was something you had to see. Something in the culture. When we finally made a visit to both companies, the differences became striking.

Within the high performance company, charts were everywhere. Big, colorful, and easy to understand charts. When performance suffered, you saw it. When performance accelerated, you saw it, and celebrated it. It was hard not to know where you stood. This was their guidance system- their dashboard or cockpit, from which they navigated.

I believe strongly that in Performance Management, communications is everything. Simple graphical representations of results can have so much more impact than you’re run of the mill budget or performance report. Good communication filters out the BS and tells the organization the bottom line message. I often wonder what a disadvantage a pilot would be at if all he had to rely on were dull printouts of data, rather than the cockpit indicators, heads-up displays, and critical alarms that are built into most aircraft today.

So as you think about your role in performance management, think communications. Keep it simple. Keep it clear. And keep it coming!

These days, its hard to get by in a leadership position without embracing what I call the “management philosophy de jour”. You know what I’m talking about, don’t you?- Six Sigma, Lean Manufacturing, TQM, BPR, BPO, …you get the idea. That’s a lot to stay current with if you’ve gonna have staying power in an organization, or more importantly, be seen as someone who can make a contribution in your organization’s “new world”.

While all of these management philosophies have their niche, and may even be remembered well by history, all of them have one thing in common. They begin with a very critical review of the “as is” state of an organization, process, or business function. AND, they all end (or better yet, continue forward) with an assessment of gains over current baseline. No matter which philposophy you’re operating under today, you can’t get by without the capability of doing an honest assessment of current performance, and laying in a good foundation to track improvements and hold people accountable over time.

And here’s something else to think about. It works for life too! Whether its your golf game, your weight, or personal recovery/ imporvement…developing the skills of honestly assessing yourself, and having the discipline to set goals and hold yourself accountable is paramount. If you can develop these skills for your career, you’ll likely get a double impact, as these skills will transfer nicely into life and family. Conversly, if your don’t develop these skills, you’ll find yourself fighting an upstream current.

As you go forward, try taking a fresh look at the art of performance measurement and tracking in the context of your company’s bigger initiatives. Add more honesty and objectivity to your initial assessments. Resist the temptation to get caught up in data denial when presented with external benchmarks from companies that don’t look just like yours. Get real about goal setting and performance planning. Begin embracing true accountability for results.

I consider these all healthy aspects of the performance management discipline- The “OLD FAITHFULS” that the organization can rely on no matter which management philosophy it is embracing at the moment. These skills are timeless and will be in demand for as long as business is around. That you can bank on!