by Jeff Thill

Business performance depends both on planning for the future and delivering results in the present. Unfortunately, many manufacturers still take the traditional strategic-planning track—a decent process for creating forward-looking plans, but a too-passive one for delivering the ongoing results businesses need to compete.

Enter performance management. Performance management is an immediate and active approach that manufacturers can apply to the various business issues they face. At its simplest, it’s a combination of best practices and process collaboration that lets manufacturers manage performance with greater capacity and quickness.

Performance management requires manufacturers to determine the keys to their success. Once they identify what will make them successful, they can then put processes in place that can manage and measure the performance of those activities that lead to success. By creating a set of dynamic management and analytic processes, they can better direct strategic activities.

Performance management still relies on planning – just not the complicated, time-consuming variety. In fact, it’s often created over the course of two or three facilitation sessions and results in a concise, one-page map that links specific action plans to company objectives.

Turn daily activities into performance results

A performance management plan starts with three key questions:

1. Why are we in business?
   
2. What should we do to be successful?
   
3. How will our success be measured?

Some companies are so eager to implement balanced scorecards or so fixated on Six Sigma that they begin to define performance management as simply the collection of measurements. Remember, that’s only part of the equation.

The answer to the first question should always drive a manufacturer’s entire plan; it supplies the underlying reason for all activities and their measurements. Only when objectives are clearly defined can organizations determine the factors that are critical to achieving those goals. And only then can performance management be linked to everyone’s responsibility.

With the first two questions answered, manufacturers can put quality, measurable indicators in place. They can create the link between key performance indicators and daily activities, giving employees clear direction on how their actions impact success. By establishing the understanding of expectations, employees will perform at or above expected levels.

Many companies experience success by wading into performance management. They first address a specific set of problems, generate quick success, then roll out the approach more broadly.  

Seeing the benefits

Performance management gives organizations access to timely and accurate information about their business performance, which keeps them in a constant state of improvement and excellence. After all, greater visibility into processes and performance promotes faster decision-making.

The ultimate benefits of performance management are real, in predictability, productivity, and profitability. Manufacturers can control and direct action on the things that matter today, while also predicting future performance with more confidence. The end results are faster cycle times, greater cost savings, and increased customer satisfaction.