Mature organizations are self-governing

At the fundamental level, performance can be constituted by one or more of four different elements. The first is the input to execute a job, and includes skills, competencies, and capabilities. The second element is the process of how an individual goes about accomplishing objectives, for example, was the right level of collaboration brought to the fore? The third element is output, or the results achieved against application of the inputs.

In many ways, this is the culmination or measurement of where an individual, team, or organization stands at a point in time in terms of what was expected and what was delivered. The fourth crucial element can be termed as the outcome or the long-term impact of actions. Outcomes are measured in terms of the impact of long-term goals, such as market share, employee engagement or brand performance.

Depending on the culture, different aspects of performance get valued. For many, it is valued more in terms of output, i.e. actual results achieved. In many others, the process is given a weightage even if output is not achieved. At senior levels, outcomes become an important element of performance. Difficult conversations result when there is misalignment of expectations of individuals and teams.

A lot of confusion is introduced for not setting these ground rules explicitly. For high growth companies especially in their early days, it is very difficult to set the right goals. As these companies mature, a bell curve is a good way to create a performance framework and bring in some rigour into the process. As the organization achieves higher stages of maturity, they become “self-governing” and by that time, formal processes are actually not needed.

By the time a company becomes self-governing, leadership evolves and people become capable of making rich judgements. In that stage a company needs to go beyond restrictions of data and numbers and start using them as inputs to make sound judgements and decisions.

Co authored by Tathagata Basu, Managing Consultant- People and Change