Understand and adopt the four “Fs” of performance management and your organization will be better positioned for tomorrow’s challenges

Challenging times require that businesses be agile. New products can be developed in a fraction of the time it took 10 years ago. New competitors from around the corner or the other side of the globe make their presence felt in markets long dominated by a small number of huge multinationals. Consumers are craving new health-conscious and sustainably designed products that fit with their busy lives and make them feel better.

With rapid change now common in politics, economic conditions, labour markets, and consumer groups, progressive organizations must be alert to the opportunities that change presents. This means being swift to make strategic decisions. Performance goals must be both realistic and challenging. Every organization needs to have a clear sense of how to achieve these using a unique combination of human, financial, and physical resources.

Hari Das, a professor in the Sobey School of Business’s department of management at Saint Mary’s University, describes the four qualities that today’s organizations need to prosper in his book Performance Management.

• Focused. Organizations need to know their strengths as well as their limits, using these to respond to market requirements in cost-effective and strategically beneficial ways.
• Fastidious. Challenging performance goals and strategic-control systems to assess progress ensure that organizations strive for continuous improvement in strategically important areas.
  
• Flexible. Changing environments punish inflexible firms. A willingness to change different aspects of an organization, including its products, value proposition, distribution channels, and management structure, is more important than ever.
  
• Fast. Doing something more quickly than the competition usually pays dividends. Gone are the days of waiting for another organization to test the waters with innovative ideas, following it into the market once consumer acceptance is reasonably certain.

In short, continuously monitoring performance is the basis for determining where changes need to be made. Organizations that do this increase their chance of being market leaders and position themselves to survive in increasingly competitive and tumultuous times.

Value creation
The balanced scorecard remains one of the most popular methods for assessing the accomplishment of goals and objectives. And so the best way to determine the leading Atlantic Canadian organizations is to use a balanced scorecard that assesses how well organizations are doing things today that will position them well tomorrow. A balanced scorecard recognizes the importance of different organizational stakeholders, each of which sees a different aspect of performance as fundamentally important.

The main benefit of the balanced scorecard is to direct attention to non-financial performance measures. Why is this so important? Financial measures such as profitability indices, market share, and productivity indicate an organization’s success in implementing strategy in the past. These measures are typically not helpful in determining what has contributed to an organization’s success and are even less helpful in predicting future success.

An effective balanced scorecard allows organizations of all types (public, private, nonprofit, government) to track key initiatives, address problem areas, and evaluate new business ventures, all in the context of how well the organization’s strategy and vision have been translated into decisions and actions that happen throughout the organization.

Our balanced scorecard consists of four core areas, any of which can be the basis for superior performance and which financial measures can mask.

Customer orientation
The focus: Do organizations understand what customers truly value and, therefore, what they will pay more to obtain?
The benefit: Minimizing price-based competition by targeting products at market segments with specific needs that are currently not being met.

Innovation
The focus: To what extent are organizations developing new products that satisfy consumer demand in superior ways or adopting new processes that enable existing products to be produced or sold in ways that are better, cheaper, or faster?
The benefit: Creation of a competitive advantage that allows an organization to  withstand competition, survive price wars, and earn above-average financial returns.

Sustainability and governance
The focus: Being a good corporate citizen, guided by objective and transparent strategic leadership, is something customers and investors desire.
The benefit: Customers are demanding, more than ever, products that are made in responsible ways. People prefer to work for organizations that minimize harm to the environment and have a positive impact on society. Advisory boards and boards of directors that are diverse provide an ideal mechanism for guiding an organization in ways that reflect the interest of its many stakeholders.

Human resource management
The focus: How well do organizations attract and retain top talent in an increasingly competitive labour market?
The benefit: Organizations rely heavily on people to interact with customers, generate ideas, initiate change, and provide leadership. The management of human resources is key to these activities, ensuring that the needs of owners, customers, and employees are met.

Using these four broad categories of performance as a guide, we looked closely at the TOP 101 Companies to see which ones are leading the way in Atlantic Canada. What they are doing to invest in their future, adapt to changing times, and continuously improve is impressive. These organizations are extremely progressive in setting ambitious performance goals and pursuing them relentlessly.

David Wicks is the dean of the Sobey School of Business at Saint Mary’s University in Halifax.