That time of year is here…employees and organizations are focused on assessing performance. Employees and managers are busy developing individual performance reviews and framing individual development roadmaps for next year. Companies, too, are assessing their overall financial performance and measuring their success, or lack thereof, while management is analyzing current budgets and revising forecasts to align strategic objectives for the coming year.
With all the layers of analysis and iterations of planning, I have always been perplexed by the absence of what should be, in my experience, a key element in the financial planning process - the link between employee performance and organizational performance. Sometimes the two performances are loosely tied through salary increases or bonus awards. However, the metrics of how and why employee performance impacts organizational strategic objectives and financial results is rarely, if ever, directly incorporated into, or aligned with, the financial planning process.
A CFO colleague recently emphasized to his CEO that there was a direct correlation between having the right people, performing at the right level in the right job, and the financial success of the organization. My CFO friend could not have been more enlightened on this obvious and overlooked financial truth.
Financial forecasts help management develop the appropriate financial strategies; likewise, a good individual Development Roadmap forecasts human performance, results-driven teams and keep an effective strategic human capital alignment between performance and business objectives. A performance forecast should be an integral step in the development of a financial forecast and strategy for any organization.
A Individual Development Roadmap that is an effective forecasting tool should have the following five elements:
- Define and Align – Define and communicate the expectations of a position, task or project. Align the employee’s effort in that role with the organization’s strategy, culture and objectives.
- Assess - Frequently assess the employee’s performance against expectations. Are his/her efforts consistently and effectively driving the direction in which the company is moving?
- Develop - Based on an assessment against defined performance expectations, tailor an appropriate plan of action to sustain or remediate performance. Managers have a responsibility to be in involved in this plan and are accountable to lead in the employee’s development.
- Analyze and Forecast - Challenge accepted views on your talent as you analyze the picture emerging from the performance assessments. Do the assessment results forecast improving or declining organizational and financial performance?
- Re-Assess - Assessing and realigning your people's performance on a frequent and periodic basis allows you to highlight needed changes in talent and keeps performance aligned with strategic objectives.
At Prism Partners International, we help you connect improved employee performance to the realization of your organization’s strategic and financial objectives through our vertically aligned organizational analysis and our human capital governance process.
Our deep experience with strategic alignment can help you unlock the potential and capacity of your people by aligning people by assessing performance against competencies and roles that are directly aligned with the organization's strategy and objectives. The organizational impact? A more engaged and productive workforce and improved financial returns.
Please contact us to learn how we can help. We invite you sign-up for our weekly blog posts at http://www.prismpartnersintl.com/blog and access our management reference material on our website’s Resources page. We also ask that you join our LinkedIn group, Strategic Human Capital Alignment Forum, Like Us on Facebook (Prism Partners International) and Follow Us on Twitter (@PrismPartners).