Business teams must have objectives

Imagine musicians in an orchestra trying to make music without music sheets! But we expect members of a business team to perform without any clear written objectives. It makes no sense.

Managing for profit by Peter Hughes

Look at any orchestra, and you’ll see that, while there’s a conductor up front, each musician also has a music sheet telling him or her precisely when to come in and what notes to play. In short, not only do these sheets tell the musicians what is expected of them, they give them an understanding of how their respective parts fit into the whole piece. Imagine an orchestra without any music sheets. Unthinkable, isn’t it?

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As professional musicians, they might be able to play adequately for a while, but their performance would quickly deteriorate. Yet this is exactly what many business managers expect from their team – to perform without ‘music sheets’. And often without any detailed discussion of the ‘music’ they’re expected to produce, and how they will be judged.

I’m not talking about the basic ‘job description’. Progressive businesses use organisational ‘music sheets’ that are far more effective at harmonising a team than this. These procedures are known as ‘performance management systems’, and are designed to assist team members understand their jobs, know what’s expected of them, know how their performance will be measured, and understand how their jobs fit into the organisation.

In a previous article, I outlined the essential principles of setting up an effective performance management system, namely:
Identify a few key objectives or key result areas (KRAs), as well as their priority; Agree on a measurable performance standard for each KRA; Identify and commit the resources required to achieve the standard expected; Set follow-up dates for review.

How to go about it
Writing your own ‘music sheet’ isn’t easy the first time round. I have experience with several systems, but by far the best for me has been the ‘objective matrix’ (OM) format. It might look complicated, but once grasped, it is easily understood by any literate employee. Referring to Diagram 1, follow these steps in setting up an OM for a manager in charge of transport on a sugarcane farm in the Lowveld.


An example of how to set up an objective matrix for a manager in charge of transport on a sugarcane farm in the Lowveld.

Step 1: Identify the KRAs. Here there are six. Each needs to be precisely defined so that there is no doubt between the parties as to what’s going to be measured.

Step 2: Determine the performance standards expected at three levels – ‘exceptional’, ‘acceptable’ and ‘unacceptable’. These should not be thumb-suck figures, but factually based. For example, you could use averages for the past few years as a basis. Create a range of performance measures to fill the spaces between the three selected standards.

Step 3: Decide on the relative priority of each KRA. The figures allocated will total 100. That’s it. The OM is complete. Set a series of dates for review. Quarterly is probably best for interim reviews, and annual for final performance scoring.

Step 4: At final assessment time, identify the standard achieved for each KRA. In this example actual ‘tons of cane per hectare’ achieved during the year was 112. This earns seven points. Do the same for all KRAs.

Step 5: Multiply the KRA score by the priority. With KRA (a), it’s 7×35, giving you 245 points for this KRA. Do the same for the others.

Final step: Totalling the points achieved for all KRAs in this example gives 660. If the ‘acceptable’ standard had been met in all cases, the score would have been 500, so this manager has done pretty well.

Try it for yourself. I can tell you from experience it builds a better team!

This article was originally published in the 1 November 2013 issue of Farmers Weekly.