An organization cannot consider embracing analytics-based performance management methodologies without the involvement of its CEO, COO, CFO, CMO and other members of its executive team. But what type of involvement from them is needed?
I have been fortunate to have met with executives from more than 100 commercial and public sector organizations. Earlier this year, I visited with executives and/or their project teams from Canada, Belgium, the Netherlands and throughout Scandinavia. After these meetings, I reflected upon each executive’s attitude toward using business analytics and performance management methodologies, such as balanced scorecards with key performance indicators, strategy maps, customer profitability analysis, risk management, driver-based budgeting and rolling financial forecasts.
These experiences have led me to believe there are three types of executives when it comes to involvement in performance management methodology implementations: deep thinkers, pragmatists and motivators. I nickname them C-Sweet, C-Savvy and “Sea” Level executives.
What all Three Types Have in Common also Sets Them Apart
While each type of executive has a different approach to analytics-based performance management, all have one thing in common: planning horizons. In general, all executives look to the future with three planning horizons: near term (now or soon), intermediate term (the next three years) and long term (beyond three years).
However, each type of executive tends to focus on a different planning horizon, leading to the difference in whether they are considered a deep thinker, pragmatist or motivator.
Deep Thinkers: C-Sweet
These types of executives attempt to be visionaries and strategically plan for their organizations far into the future. The risk they take is that their governing boards of directors may not be patient or tolerant enough to allow the wisdom of their long-term plans to be realized. As a result, they may be placing themselves in jeopardy – especially if shorter-term financial results fall short of their board’s expected profits or the expectations of Wall Street analysts and the investment community.
These types of executives are admirable because they delegate strategy implementation responsibilities down to their line managers. That is, they muse about the future and rely on their team to connect operational processes and execution to their strategic objectives. It is their middle-level managers who implement and use the performance management methodologies. I like this type of leadership; I think of them as “sweet” because they exhibit caring and confidence in their management teams.
The Pragmatists: C-Savvy
These types of executives are typically in industries with shorter product life cycles (e.g., telecommunications) where technology is moving so quickly that they cannot risk thinking too far into the future. An example is the change from VHS tape to DVD to now Internet video downloads. Their risk is that they may miss an unforeseen turn in the road and spin out, causing a surprise decline in financial earnings. As a result, they manage closer to the operations and focus on the shorter term more than the deep thinkers.
However, the pragmatists do understand the value of implementing and integrating performance management methodologies. They realize the need for better organizational steering and control due to a complex, volatile and wired world that requires the ability to quickly react with great agility. Ideally, they prefer to be proactive and increasingly promote the use of business analytics in their organization.
I refer to them as the “C-savvy” executives, because their savvy is demonstrated through shrewdly observing that the combination of business analytics and enterprise performance management methodologies is the next big wave for organizational improvement.
The Motivators: Sea Level
Motivators are not necessarily micromanagers. They are big believers in the use of performance metrics, accountability and behavioral change management.
These types of executives are typically attracted to strategy mapping, balanced scorecards and dashboard components of the enterprise performance management framework. Strategy and performance measures are communicated to front-line employees, including performance measures with targets to motivate employees. This type of strategy communication allows motivators to monitor progress toward achieving strategic objectives.
I refer to this group as the “sea level” executives. They understand the importance of motivating their organization’s workforce not from a mountain top perch, but at the organization level where work gets done – at the organization’s sea level.
Some Realize Performance Management Value - And Some Don’t
Not every executive team sufficiently recognizes the value of and benefits from implementing analytics-based performance management methodologies. Forward-thinking executives view strategy formulation as magnitudes of importance above just having organizational effectiveness and good processes.
In contrast, there are other executives who believe that simply muddling along with conventional management methods (e.g., lean/Six Sigma, ERP, standard cost accounting) is enough to be a high-performance organization. Such executives don’t fall into any of the three categories of performance management-minded executives I’ve discussed.
Will the executives who simply use conventional management methods eventually regret this judgment? I believe their organizations will fall far below their potential, especially when compared to organizations led by deep thinkers, pragmatists or motivators.
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