Recently, I had the opportunity to speak with Mark Stiffler, Founder, President, and CEO of Synygy Inc., a provider of compensation management solutions, about his new book: Performance: Creating the Performance-Driven Organization published by John Wiley & Sons in March 2006. I have included a transcript of our conversation.
<br> <p> </p>
<p>Recently, I had the opportunity to speak with Mark Stiffler, Founder, President, and CEO of Synygy Inc., a provider of compensation management solutions, about his new book: Performance: Creating the Performance-Driven Organization published by John Wiley & Sons in March 2006. I have included a transcript of our conversation. <br>
<br>
</p>
<p> </p>
<p>AM: Mark, you describe current perspectives or approaches to PM as fragmented and you suggest that as long as we approach PM this way, we will never succeed at managing performance effectively. Can you tell us about how you believe we should approach performance management?</p>
<p> </p>
<p>MS: The key is to have an approach that integrates organizational and individual performance management and merges the views of finance and human resources, which have very different perspectives on what performance management is. Finance tends to focus on the performance of the organization and the financial measures of performance. HR tends to focus on performance management of the employees through, for example, performance reviews. Those are very different viewpoints, so to be effective, you need an integrated approach that unifies the organization and the individual viewpoints and addresses all five of the different components of performance management: Align Measure, Reward, Report and Analyze. </p>
<p> </p>
<p>AM: Do you want to tell us a little more about those five essential components?</p>
<p> </p>
<p>MS: The Align component is when you are taking the strategic objectives of an organization and cascading them down into the organization so every individual in the organization understands what they need to do to help the organization achieve its goals. That is the basics of alignment. The Measurement component is then how you measure both the performance of the organization and the performance of the individuals. The important aspect of Measurement is that it occurs frequently, at least quarterly, and that the measures of the people are aligned with the measures of the organization. Then in the Reward section: linking the measures of organizational and individual performance to the pay of individuals, so every person in an organization´s pay is linked to their measures of performance that they affect. Then in the Report section, reporting both organizational and individual performance and giving people the information and feedback they need to help them improve performance and again, that is a process that needs to be at least quarterly. Any kind of annual objective setting process or annual performance reviews, (which often correspond to no reporting); those don´t give people sufficient feedback so that they adapt their behaviors prior to getting their paycheck. In the Analyze section, it´s about using models and analytics and other tools to automate the process of analyzing data so that answers to key business questions are understood by managers and employees.</p>
<p> </p>
<p>AM: And you suggest that all five must be in place to effectively achieve top performance.</p>
<p> </p>
<p>MS: For optimum results, yes, but I also suggest in the action plan in my book that there are some places to start if you can´t manage to put a complete process in place. An important place to start is Align. If you even set strategic objectives for an organization and you did that every quarter that would be a good first step, followed very quickly by how you cascade those objectives down to each individual so that each individual understands their contribution to the company´s success. The Align piece is high on my list of priorities, as is the Reward piece, linking performance on objective achievement to pay. If you can at least get those couple of things as foundations, you have a good start. I do think of Align as the foundation; for instance, if you don´t know what your objectives are as an individual and as an organization, how do you know what to measure, how do you know how to link it to pay, how do you know what to report on or what to analyze? The aligning and the setting of objectives for the organization and its people are the foundation for all the other processes.</p>
<p> </p>
<p>AM: You talk in the book about how crucial it is, but also how difficult it is to achieve. Do you have any specific recommendations for organizations proceeding with tightening alignment?</p>
<p> </p>
<p>MS: It´s really not complicated. It´s a commitment by senior management to actually sit down with cross departmental leaders every quarter and set objectives. For instance, at Synygy, the first Saturday of the last month of the quarter, the management team meets for four hours and presents information gathered from their departments on what they think the organization needs to achieve over the next year or the next quarter so that we can set the quarterly objectives. So if it´s a longer term goal, what do we need to accomplish in this quarter to work towards our longer long term goal? Just the discipline of sitting down and setting strategic objectives every quarter for the organization would go a long way.That doesn´t happen surprisingly enough. I see at best most organizations doing an annually strategic planning process, and that´s not enough.</p>
<p> </p>
<p>AM: You talk in the book about how becoming performance-driven is a process issue. Can you tell us a little more about the reasoning behind that statement?</p>
<p> </p>
<p>MS: To effectively drive the performance of an organization, some basic processes have to be in place, like the setting of objectives, the cascading of objectives, and measuring performance. These are all processes; it´s not something that is a technology, for instance. Software does not solve this problem. For years, Synygy, before it created the software it uses and sells to its clients for managing these processes, just used spreadsheets and manual processes, but we at least had the discipline of sitting down every quarter and going through the processes. </p>
<p> </p>
<p>AM: Now you have identified the link between rewards and performance as the other crucial step. Can you tell us about your perspective on this?</p>
<p> </p>
<p>MS: I believe that every single employee should have a portion of their pay linked to their success at achieving the objectives that are set for them. Those objectives may be similar for different individuals. For instance, at Synygy, every employee, even the receptionist, her quarterly bonus is linked to client satisfaction. That is something that can be almost like a message you want to deliver to the whole organization: what is important to our success. That clearly says we are going to link the pay of everyone to our success and one of the things that drives our success is client satisfaction. I think it is really important that every employee has a component, it could be 5%, and it could be, for more highly paid people, 25% of their pay linked to performance.</p>
<p> </p>
<p>AM: One of the main messages is the importance of forward looking PM and you say that analysis can serve as the bridge between past outcomes and future performance. Can you tell us more about that?</p>
<p> </p>
<p>MS: I talk very strongly in the book about the difference between reporting and analysis. Most "analysis" that is going on is actually just reporting. Analysis answers business questions, without the reader of the information required to do their own analysis. It is interpreted using models or analytics. </p>
<p> </p>
<p>Reporting is really about the past, almost universally at every company. It is, "how did we do?" whereas good analysis is about the future. It´s about, "what do we need to do to achieve our objectives?" and, "how do we use data from the past to help us understand what we need to do in the future?"</p>
<p> </p>
<p>AM: What do you recommend to support effective analysis?</p>
<p> </p>
<p>MS: The key is answering the business question. If I have a question, I should be able to get the answer to that question every day, every week, without an analyst sitting around trying to figure out what the answer is. That is the essence of good analysis, having information presented which directly answers key business questions. </p>
<p> </p>
<p>AM: You also comment it is better to have a bad plan than no plan at all. Can you tell us what you mean by that?</p>
<p> </p>
<p>MS: If you have the discipline of sitting down every quarter and actually at least making a plan, you will be on at least a path. I use the analogy in the book, if you want to go from point A to point B; you want to go in as straight a line as possible. In order to do that, you actually have to have a plan and adjust that plan as frequently as possible, so that you are never off course too much. It is better to at least have a plan get started in going in approximately the right direction and frequently adjust that direction as you adapt your plan</p>
<p> </p>
<p>AM: You include quite a number of action steps in the book that are of value. Could you highlight some of the important action steps that you would recommend?</p>
<p> </p>
<p>MS: I think that the keys that I talked about earlier with setting organizational objectives, cascading objectives and linking to pay are the top three. </p>
<p> </p>
<p>AM: That has to be based on the identification of the proper metrics. Do you have any recommendations in that area?</p>
<p> </p>
<p>MS: The metrics are based on the objectives you set. If you haven´t set objectives for the organization and its people, then you can´t know what metrics to set. That is the foundation. I do see a lot of companies saying: "how are we going to measure performance?" Well, measuring performance without the context of your objectives is meaningless. You´ve got to set objectives and then set metrics. </p>
<p> </p>
<p>AM: Do you have any recommendations or closing words of advice?</p>
<p> </p>
<p>MS: In your questioning, you have touched on the essence of what is important in the book. PM is a set of processes that cross different parts of the organization, especially finance and HR, each with different viewpoints; however, to optimize performance, the worlds of organizational and individual performance management need to come together. </p>
<p> </p>
<p>Information on Mark's book, can be found at</p>
<p><a href="http://www.theperformancebook.com/">www.theperformancebook.com</a></p>
<p><br>
<br>
</p>
<p> <br>
<br>
<br>
<br>
</p>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
