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Performance Management – Is Productivity the Answer to the IT Skills Shortage?

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Most organisations globally are experiencing a shortage of good, high-level IT skills.  Could Productivity be an answer to this?

Performance and Productivity! Is there a difference?  Or do we use Performance when we mean Productivity and Productivity when we mean Performance?  And what about Goal Setting?  Isn’t that also part of Performance Management?

So, I thought that I would investigate this further, and the results are really interesting.

What is Performance?

Firstly, I looked up the definition of “Performance”.  Here are some of them:

  • “The manner or quality of functioning,”
  • “The manner in which, or the efficiency with which, something reacts or fulfils its intended purpose.”
  • “The act of performing; of doing something successfully, using knowledge as distinguished from merely possessing it.”
  • “The process or manner of functioning or operating.”
  • “The accomplishment of a given task measured against preset known standards of accuracy, completeness, cost, and speed.”

What is Productivity?

Then I looked up Productivity, and this is what came up:

  • “The rate at which goods or services are produced especially output per unit of labor.”
  • “The output of an industrial concern in relation to the materials, labour, etc., it employs.”
  • “Labour productivity measures the amount of goods and services produced by one hour of labour.”
  • “A measure of the efficiency of a person, machine, factory, system, etc., in converting inputs into useful outputs.”
  • “Productivity equals value divided by time.”
  • “Productivity is a ratio of production output to what is required to produce it (inputs of capital, labor, land, energy, materials, etc.). The measure of productivity is defined as a total output per one unit of a total input.”

So Performance and Productivity are NOT the same!  Performance is about the way in which an individual or group functions to accomplish something, generally a goal, successfully.  Whereas Productivity is a measure of the efficiency of producing, whether producing an item or a task.

Performance Management Today

Performance Management today requires focus on three areas:

  1. Competency
  2. Productivity
  3. Goal Achievement.

Competence

Competence addresses the question “Can I DO the job?”  Each job has a discrete set of competencies needed to be able to actually DO the job.  And I’m not just talking about Behavioural Competencies here.  In order for individuals to be Competent to do the job, there are three clear Areas of Competence that need to be taken into account:

  • Technical Competence – Competent in the knowledge and abilities linked directly to the job.  For instance, a Programmer would have Programming Skills as a Competence.
  • Business Competence – Sufficient understanding of the business (or organisation) environment in which the Technical Competencies are practised.  For instance, a Business Analyst can be expected to have a good understanding of the business processes of the organisation for which they work.
  • Behavioural Competence – The underlying Competencies needed to perform the Technical Competencies in the Business environment.  For instance, a Customer Support Representative would be expected to have good interpersonal skills.

It is unfair to expect an incumbent to do a job for which they do not have the complete set of Competencies, so clearly defined Competencies are the bedrock on which Performance Management is based.

Productivity

Productivity answers the question “How WELL am I doing the job?”  This is probably the most subjective element of Performance Management right now.  But it need not be so.  Here’s an example.

In a Productivity study of computer programmers done by Spencer in about 1997[1], above-average performers were 320% more productive than average programmers.  What’s more, the “superstars” were 1272% more productive adding economic value over 11 times their salary.  Have a look at the distribution.

What does this mean to YOU??  Good question.  It means that:

  • Good performers add more than twice the economic value of average performers.
  • Top performers can add economic value over 11 times their salary over average performers
  • If you can make all your “poor” programmers “good” performers, you need a third of the staff

The scariest aspect of this graph is the skew.  It would seem that our “population” of Programmers is skewed to the Low Performance side.  As Peter Drucker said “what gets measured gets managed”!  Clearly we are not, as a matter of practise, measuring the Productivity of our IT staff.  The result – they are not as productive as they could and should be!  A failure of management? No self-respecting manager could claim otherwise.

In similar research undertaken in 1990 by Hunter, Schmidt and Judiesch[2], it was found that for high complexity jobs (e.g., software developers, systems analysts, project managers) performance one standard deviation above the mean represents a 48% increase in productivity. A 48% productivity increase means the same amount of work can be done with 32% fewer staff.

With IT skills scarce globally, productivity improvement could well be the answer.

So let me ask you a couple of questions.

  • Do YOU know, definitively, what the Productivity curve looks like in YOUR department(s)?
  • If you did, do YOU think it would improve your performance management?

Goal Achievement

Much has been said and written about Goal Achievement.  And it seems that, at least in more modern Performance Management systems, Goal Achievement is being used.

However, “goals” for “goals” sake is not what this is about.  The most well known model for Goal Achievement is probably the Kaplan and Norton “Balanced Scorecard” (BSC).  A number of organisations have adopted a BSC, or BSC-type, Goal Achievement model.  However, many of them don’t cascade these goals down the organisation, even to department level, let alone to team level.

Furthermore, one of the top four international management consultant practices is reported to have tagged the Balanced Scorecard’s (BSC) overall failure rate at 70% in 2012.  The reasons suggested are numerous.

Goals, for Performance Management, should be aligned with organisation goals – after all, the very purpose of Performance Management is to improve overall Business Performance.  And if this is not possible to individual level, then at least to team level.  Every team and team member should know what their contribution is to Organisational Success.  This is the focus of cascaded Goal Achievement models.

The REAL problem with Performance Management

The real problem with Performance Management is that it is NOT viewed as an integrated system of achievement.  In our model:

  • If an incumbent is not Competent to DO the job, then
  • Surely they cannot be as Productive as they need to be, and
  • The Goals set are unrealistic and, frankly, pie-in-the-sky.

The Foundation of Performance Management

The foundation for effective Performance Management is therefore 3-fold:

  1. The organisation needs a Competency Framework that includes all 3 areas of competence in order to define, develop, and measure the competencies needed for performance.
  2. There needs to be Productivity measurement in place to accurately measure and manage the productivity of staff.  This should not be left to the whim of management.
  3. The Goals set should enable cascading up and down the organisation in order to drill down to the exact points of non-delivery in the system.
  4. There should be a measurement system in place to inform management of their people’s contribution to organisational success.

If you don’t measure – you can’t manage!  Not my words, but the words of an expert in the field.  Why is it that we don’t take it seriously?

If you are ready to take Competency Management, Productivity and Measurement seriously …..

 

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We are ready, willing and able to assist.


[1] Spencer, “The Economic Value of Emotional Intelligence Competencies and EIC-Based HR Programs,” Chapter 4.

[2] Hunter, J. E., F. L. Schmidt & M. K. Judiesch. “Individual Differences in Output Variability as a Function of Job Complexity.” Journal of Applied Psychology 75, 1990, 28-42.