A company may use its information system to store objectives and performance. It must determine how to manages personnel performance. It must determine how to manage staff performance.
The objectives of vertical management
- Each department has its objectives, sometimes in conflict with each other, because all are in search of margin: Sales must sell a certain quantity at a certain price
- Purchasing must buy a certain amount at a reasonable cost
- Production must produced at a “fixed” cost. Maintenance must maintain (the plant) within certain budgetary limits
- Maintenance must keep buildings within budget.
The goal is to make a profit, pay invoices and invest in development. The company may also have more noble social goals.
All areas of activity require goals and performance measurement. The overriding goal is to improve the system.
The information system records performance.
- Let it calculate goals and performance
- It can remove this measurement responsibility from middle managers
- Management compares actual performance to targets
- Management understands its objectives, employees do their job.
The main thing is the evaluation, the determination of actions based on measures. Management sets the objectives and the measured performance results are presented in relation to these objectives:
Managing performance results
- What is management’s attitude towards staff management issues? Is it paternalistic or directive?
- How is the continuous improvement cycle going?
- How is underperformance managed? Is it through understanding and seeking solutions or by demoralising people and using an authoritarian manner.
- Were objectives set SMART?
- Why have the objectives not been achieved?
- Are the reasons for underperformance valid, and are we measuring ourselves against a realistic and achievable goal?
- What are the effects of being under-objective for the company? How can the situation be rectified?
Determine the financial consequences for the company:
- What are the effects of being under-objective for the company?
- How can the situation be rectified?
Can targets be reduced if the initial target is unachievable? What are the consequences for the rest of the company?
- Must do better next time!
The consequences of underperformance in sales may require lower costs.
Over-performance may allow the company to make financial provisions for potential future underperformance.
Compare the objectives stored in the central information system with actual performance. This is part of measuring the relevance of a strategy and continuous improvement.
Staff will fear the negative consequences of underperformance if targets are not clearly stated and recorded.