What can Performance Management learn from Financial Planning?
Bringing together financial planning and people performance management to recover and reform
“Consistent” and “predictable” are probably not adjectives being used by most CFOs right now. Financial plans are under constant review, applying new assumptions and deriving new forecasts.
It’s the same for our people plans. Many organisations are rapidly realigning their people strategies and approaches to the evolving COVID-19 scenario. The hallmarks of how we protect the human resources of our organisations are often the same as the financial ones – taking different, courageous and previously unthought of actions, failing at some of them, learning from all of them and always striving to ‘do the right thing’ by those who are impacted.
New Approaches to financial planning
In their article “Planning for uncertainty: Performance management under COVID-19” McKinsey share a new approach to financial planning and performance management.
- Get a clear view of the company’s starting position
- Develop a range of scenarios
- Establish the ‘direction of travel’
- Determine best actions and moves
- Identify ‘trigger points’
So, what can the changes in the way we’re managing financial performance during this pandemic teach us about how we manage people-performance?
Four critical performance conversations
McKinsey’s approach to financial planning is not a world away from NKD’s Thrive performance management method, where we:
- Understand where the person is starting from
- Explore their range of possibilities
- Map out their ‘direction of travel’
- Create robust plans with them
- Understand what might get in the way of success
Our Thrive performance method is based on four, short yet critical ‘everyday’ conversations between leader/coach and team-member, which navigate the approach McKinsey recommends:
- Check in: for human connection
- Navigate: to give a steer in the right direction
- Tough Love: to realign when you go off-track
- Emergency response: for the unexpected curve balls
Thrive conversations are simple, human conversations that drive motivation and individual performance. They have been invaluable in keeping people feeling connected, supported and focused during lockdown. All conversations are owned by the individual; all of them are rooted in positive psychology; all of them are strengths-based. And they are all 1 to 1.
1 to 1 and ‘1 to ALL’
What we’re learning – and it’s glaringly obvious really – is that performance management is an everyday conversation. But not just a 1 to 1 conversation. The ‘1 to All’ conversation also has to be part of the Thrive performance approach.
There are some practical reasons – how do you collaborate, cocreate and achieve your goals unless you’re aligned as a team? The current situation shines a blinding spotlight on this point: as financial plans change almost daily; strategic direction and principles remain intact but the actions to achieve them and the timing of those actions change frequently. Priorities today may be different tomorrow. And that affects all people in your organisation.
The 1 to All conversation needs to happen as part of everyday performance management because people need to realign and reset frequently; and with revenue in free fall for many businesses, we have to be in it together more than ever before if we’re to return, recover and reform.
But a 1 to All is also the compassionate thing to do because financial uncertainty breeds uncertainty and anxiety in people.
Mastering the 1 to All
The vital hallmarks of the 1 to All conversation (and it IS a conversation, not a 1-way communication) are:
All of us need clarity. Last week’s announcement from the UK Prime Minister shows the confusion and conflict that occurs when people are asked to use their common sense or judgment when they don’t have the necessary knowledge to make a confident decision for themselves. A clear, widely understood fact-base is essential for our wellbeing just as it is for financial planning.
All of us need transparency. Even when it’s not good news and even when plans are subject to change. Just as we need to scenario plan for financial security, people need to be able to scenario plan for their own lives in and out of work.
All of us need empathy. We may not know how to interpret the business’ direction of travel personally. Just as we know the trigger points to adjust as a business to protect our financial position; we need to be aware of the triggers that mean we have to adjust our team’s contribution. Empathetic conversation drives self-awareness and regard for others; the result is that teams and individuals experience higher levels of control, confidence and resilience (fundamental to wellbeing and performance).
Reforming performance management
The “next normal” for financial planning may be shorter planning cycles, more frequent review of KPIs and empowerment of financial analysts and planners. So too might performance management of people find a new normal. More empowerment and accountability for teams; shorter goal setting and activity cycles; and greater priority given to both 1 to 1 and 1 to All Thrive conversations.
In short, financial recovery and reform is more likely if we apply similar principles to the way we connect, coach and care for the most precious resource of all; our people.
If you’d like to find out more about NKD’s thinking about performance management in the current virtual world sign up for our NKD LIVE session ‘Next-generation performance management’ by hitting the connect button below.
Or check out the teaser here.