One of the management process to control the business performance is to set the business target and review those targets.
when the organization grows from small to large, complexity also gets grow faster than business growth thanks to more customers, more products, more people and so on. Communication also gets complicated among all the stakeholders.
To overcome the complexity and bring accountability, setting the target and review those targets becomes important.
The targets could be Business targets, Functional Targets, and Individual Targets. The targets can be termed as
Key Performance Indicators (KPI's)
Depending on the size of the organization and bandwidth to administer the performance management system, the business head can set the target in the following hierarcy
1. Business Key performance indicators
2. Functional Key performance indicators
3. People Key performance indicators
From our experience, it would be a right approach, to begin with, Business Key performance indicators covering all functional deliverables in terms of the following categories
- Productivity
- Quality
- Cost
- Delivery
- People engagement
The business head can set the annual target on the above categories as it covers all functions.
for example, "Manufacturing cost per component" is one of the key performance indicators under the category of "Cost".To achieve this KPI target, all functions have to contribute, by the way, business level KPI target setting covers all functions.
Once the organiztion becomes familiar with target setting at a business level and acquires competency, it can go to the next level of target setting at a functional level and individual level.
The business level KPI's can be set for annual basis which can be tracked every month , every week and every day.
Benefits of Setting Business Targets (KPI's)
1. Business heads and the team get clarity what they want to achieve on business profitability and growth
2. Targets set the direction to the team
3. Brings the people together
4. Improves the focus of the team
5. Improves the communication among team
Review forums :
once the business KPI's are in place, it is the responsibility of the business head to create a review forums to review/discuss the target status along with cross-functional team members and take a counteraction if it is required.
The review forum is nothing but a
meeting of a relevant cross-functional team with fixed agenda.
The review forum could be monthly KPI review meeting, weekly reviews or daily performance review.
Benefits of Review forums:
1. Review forum is excellent process to review the target status and take counteractions
2. when the review happens along with cross-functional team members, it brings accountability to all
3. Review forums brings the problem to surface and can be solved along with the team quickly rather than individual review
4. Since each cross functional team member involving and contributing to different KPI's in different roles either as lead or team member, the review forum helps the team to know each other's problem . It helps to bring the bond among the members
5.Review forums if conducted properly with a real problem-solving approach, it enhances the personal productivity of each individual.
When the targets are clear and the teams are facilitated for achieving the targets through review forums, eventually organization sets for performance management culture and it would accelerate the business performance!
