Building advance performance supervision model is essential for any businesses. It is the main tool helping to see the direction and movement of the organization. A good association for a business set-up is the ship in the ocean, where the Performance Supervision Model (PSM) is the GPS, showing current location: latitude and longitude of the vessel; sails of the ship are the befogged Management; and compass is the essential goal of the organization.
If I’d be asked to prioritize the above mentioned 3 key aspects, I’d sort them in the following order:
- Sails (Management) – without sails the ship can’t be directed to the right direction. With no sails, the ship would be thrown by ample wind (market conjuncture) from one place to another in the endless ocean (market) till it will face the rough weather and get sink.
- Compass (Goal) – is the final destination goal of the journey. It’s the vision. It’s the hope and the dream captain and all sailors are seeing. With no certain destination point, there’s no purpose of the ship.
- Latitude and Longitude (Performance Supervision Model) – the only auspicious tool helping to determine the exact location of the vessel in the ocean (market). In wide, broad, cold, tremendous and powerful ocean, it is easy to get enmeshed even for the most skilled captains. Companies having no well developed and implemented Performance Supervision Models are operating only on hopes of having the right direction, where the location of the company in the business field is determined only by the subjective opinion of today’s income.
Since you started having a raw idea about the subject, let’s interpose current associations in the real business model with numbers for substantiations.
Central Ltd is the Newspaper Typing Center located in the heart of the New York City, on Manhattan, having in its operation 3 employees: Michael – Manager, Anna – Office Administrator and Sally – the Sales Executive. Central Ltd has been established in 2007 by Andrew Rogers. The preeminent core business of Central Ltd is to sell newspapers and advertisements in the newspapers displayed on different pages. The total production capacity of the firm is 20,000 copies a month, where the main profit is generated from the sales of the advertisement.
Michael’s main job is to look after the operations and the business. He’s responsible for the entire business. He makes sure that the company is going in the right direction by determining the advertisement price, conducting market research, meeting partners, defining goals and developing strategies.
Anna is in charge of answering all the phone calls from the clients, keeping a log, register, composing E-mails, preparing the documents, contracts, serving and attending clients.
Sally is the main business drive. Sally is the one who brings the company the income. Sally is the business pillar of the organization. After receiving prices from Michael, Sally’s main responsibility is to make sure that Central Ltd is having its advertisement pages full. Sally meets and negotiates with clients, watches after competitors give the market feedback to Michael.
Performance Supervision Model
Any employee working in the organization having his own purpose to look after. Otherwise, there would be no need for employees. By hiring the employee, the organization is having certain expectations from such people. For example, by hiring salespeople, the company is expecting to generate higher sales; by hiring an HR manager, the company is expecting, maybe, to have better care and control over human resources. But the main gap in any management comes in the matter of supervising all employees and their performance on a regular basis. Let’s have a look at the initial fundament of integrating Performance Supervision Model in the organization.
Step 1. Define Indicators
You must have a clear understanding, what do you want from every employee. Make a list of points answering the question “What do I exactly want from Michael?” Listed points, we will convert into indicators. Every indicator must have its own standard to be achieved. Simply ask a question: “What Michael should do to let the business become more profitable?” The answer will be: “Develop better strategies, grow sales, etc.” The next question must be: “How many good strategies should Michael develop in a year to grow the business?” Let us determine and develop the indicators with the detailed descriptions (see Table 1 and Infographics 2).
Step 2. Measurement
Determine the way of monitoring and measuring indicators and on a regular basis (I recommend daily) keep track of values of such indicators. During the Step 1, we deeply develop all necessary indicators by defining the necessary required points, converting them into indicators and determining the fair standards to be achieved. After the fundamental homework is done during the Step 1, we’ll start keeping the track of all indicators by all employees (see Table 2, Table 3 and Table 4).
Step 3. Analytics
Analyze the indicators (I recommend every 10 days) to determine the deviation and direction of the business from the main goal. The best practice is to separate all negative indicators and deeply analyze the reason behind the distractive changes. Let’s isolate all negative sub-indicators of all employees from Table 2, Table 3 and Table 4 into a separate view for analysis (see Table 4). For example, the slump of sales might be caused by the reduced number of inquiries due to high asking prices; or, bad communication of Anna with clients can be the outcome of the depression she’s having right now due to family issues.
Step 4. Corrections
Implement necessary rectifications to the strategy, direction and the workflow for the improvement. The key reason why I advise to track the key indicators on a daily basis, as it allows spotting the distraction on a daily basis, to see from which day the deviation started. It helps management, to realize, what was the actual reason behind the distraction and prevent explicit negative implications beforehand which is leading to impasse.
As the initial stage, the management must analyze every indicator. Moreover, there must be held a meeting with the relevant employees to discuss the latest changes in the performance and flow. The vital part before the correction is to be able to announce the right diagnose of recession in the business, as smart actions taken towards the wrong reason will bring no effect of improvement. Correction in the corporate strategies requires deep and prices analytics to fixate the possible “leakages in the ship”.
For example, sales have dropped due to the reduced number of inquiries because of the high asking price. In this case, instantly, the management must mull and revise the price to the market trend in order to be back on the right track. In case, if Anna is having depression due to a family issue, it will be wise to concede and give her 7 days paid off.
Key Performance Indicators VS Performance Supervision Model
There is no common ground for Key Performance Indicators (KPI) and Performance Supervision Model (PSM), except KPI, being one of the parts of PSM. KPI is just one indicator out of thousand indicators, while PMS is the system, the predominant model that monitors the entire workflow of the individual and then the organization based on many factors and indicators.
Unfortunately, KPIs are simply ignored by many establishments without adhering to the supervision models, relying on gut feelings and hopes that the business is going in the right, long way.
Where to Start From?
To glean the transcended benefits with no dodging and to have an ideal corporate policy, system, and structure, it worth referring as to the fundamental base and starting from Building Ideal Procedures*, wherein Performance Supervision Model will be the further development, compatible to the procedures. It will surpass its own capacity and have the dual role: evaluating the performance and corporate system.
* Article: How to Build Ideal Procedures to be a Super Organization? (https://www.linkedin.com/pulse/how-build-ideal-procedures-super-company-akhmed-idigov/)
By Akhmed Idigov