What is business operational performance?
Operational performance refers to monitoring and measuring the implementation of an organization's strategy to ensure that it achieves the expected results. It consists of projecting into the future to anticipate better and understand how to optimize the various management points.
The company will therefore set performance objectives, make strategic decisions, and then regularly check that its various activities are evolving toward achieving these objectives. If the desired level is not reached, reacting quickly and proposing solutions to solve problems is necessary.
Among the three types of performance, operational performance consists of the business process and making optimal use of the means and resources available in the organization to achieve the objectives. It also implies the implementation of practices aimed at guaranteeing the smooth running of business processes, both at the manufacturing and distribution levels.
Building a continuous performance management process
By using customer expectations, focusing on goal setting, and creating an effective operational performance process, you're empowering your employees to develop and improve daily, ultimately setting your organization up for success. An effective operational management process includes the three following steps.
1 - Set SMART goals
The first step is to set clear strategic objectives beforehand. For this, the SMART methodology is handy for many businesses, as it consists in defining goals that are :
- Specific - Clearly and precisely defined
- Measurable - Quantifiable to know if the objectives are reached (use of KPIs)
- Ambitious - Achievable concerning available resources
- Realistic - Relevant to the company
- Timebound - Defined over a certain period (deadline)
These objectives can relate to various issues, such as profitability, human resources, customer experience, satisfaction, Etc.
2 - Execute action plans with a Daily Management System (DMS)
A Daily Management System gives teams the tools to organize operational control, achieve objectives, and measure possible performance gaps.
That can be done using Gemba Walks, Active Supervision rounds, or management tools like the UTrakk solution. This online platform enables the digitalization of continuous operational performance and process management. A DMS combines everything the manager needs for his operational management activities: field tours, collaboration and rituals, visual management, coaching, dashboards, reports, and real-time analysis.
3 - Measuring results
As a manager, you must regularly evaluate operational performance and implement action plans to ensure your team does its best to achieve the objectives set for a given period.
Here are the main ways to measure performance in the most effective way possible:
You must then monitor operational excellence and employee performance using Key Performance Indicators (KPIs). These can be quantitative or qualitative and differ according to the company's departments (service rate, productivity, overall performance rate, health and safety, employee turnover, absenteeism rate, quality of work, speed of objectives achieved, etc.).
Thanks to these critical operational performance measures and indicators, it is possible to implement good practices, such as continuous improvement, Lean Manufacturing, or Six Sigma, to increase the company's operational level.
After the KPIs come the KBIs (Key Behavioral Indicators), i.e., the managerial performance indicators. Indeed, achieving operational excellence and operational performance depends mainly on the performance expectations and the ability of managers to integrate best practices and continuous improvement processes and then pass them on to their teams. The KBIs will therefore allow us to measure managerial competencies based on four key points:
- Knowledge (management skills)
- Know-how (management depth and active supervision)
- Management style (goal orientation and consideration factors)
- Mindset (organizational mobilization and individual condition)
Coaching is particularly effective in facilitating the absorption and implementation of best practices in improving operational performance. It allows managers to be accompanied and guided in their daily actions and methods to acquire the necessary skills and then apply them independently.
To measure and improve operational performance and steer it optimally, the manager must conduct regular follow-ups with employees through 1-1 meetings with the team members, for example. In addition, they will also have to work on the motivation and commitment of the units by using human communication, positive feedback, training, coaching, proposing team-building activities, etc.
Three coaches' tips for Operational Excellence
1) Team leadership: assess where employees are and what they want
By Tajuana Williams-Kemp - Senior Consultant at Proaction International
As a leader, you need to consider two things about your team.
First, what stage of development is it in? Is it a new group that has just formed? As a manager, you must facilitate ice-breaking and team-building activities to help your team members get to know each other. Is cohesion breaking down? If so, your role may be more of a mediator.
A helpful tip is to reiterate to your team why their various skills are crucial to achieving the goals. So often, members of a group value each other as individuals but have yet to figure out how to work together effectively.
Once your team is normalized, encourage and challenge your employees to go above and beyond to achieve a high level of performance. That can be done in many ways: a drink with colleagues, public recognition, a promotion with a prestigious title, etc.
Please get to know your team and be creative in motivating them to achieve outstanding results. That is how you will get them to the performance stage. It's an excellent stage for any manager, but it only lasts a while. Be prepared to return to the training stage when you bring new members to your group. Plan to move your team through the developmental stages quickly and accurately.
A good leader will assess what motivates their team members to perform at their best. Each person has different motivators. For some, salary, bonuses, or other financial incentives drive the will to win. The motivation is more altruistic for others: seeing others prosper or grow is essential.
As a leader, your role is to get to know the individual, assess their motivators, and use the tools you must reward and recognize them.
2) Implement an effective escalation process
By Diego Mendiola - Senior Consultant at Proaction International
When the escalation process is ineffective, frontline employees often become discouraged as they encounter the same problems repeatedly without their direct reports addressing the root cause. As a result, they find workarounds, stop escalating issues, and inefficiencies develop over time.
An effective escalation process is transparent, standardized, and part of a work culture. For example, every time a frontline supervisor resolves a problem for an operator based on their escalation, the operator is incentivized to escalate the information every time they have a problem because they know it will be addressed. This phenomenon occurs at all levels of the organization. So how effective is your escalation process?
Here are some steps to creating a company culture and work culture with an effective escalation process:
- Implement a standardized escalation and decision management process across all business areas.
- Create a centralized "action point matrix" to track issues.
- Focus on problem-solving and "addressing the problem, not the person" to create a collaborative atmosphere.
3) The shape and colour of communication
By Kiely Malden-Adams - Senior Consultant at Proaction International
We often think of communication as being either verbal or written. In reality, there are several levels. Oral and written communication is often strategic and planned. Non-verbal and physical contact are honest and direct.
Effectiveness begins and ends with understanding the people we work with beyond the surface. Therefore, it is essential to observe body language and, most importantly, to see what people do versus what they say or write.
The form of communication is evident in the eyes that turn away and down, in the arms that cross, in the distance the communicator puts between you, in an indifferent and placid facial expression, or a sincere smile.
Operational excellence is born from communicating, recognizing, and validating the people we work with daily. Communication can take the form of hands forming a heart to signify that a colleague feels seen or the bright yellow colour of a colleague laughing heartily.
Operational excellence feeds on and functions through the form and colour of communication. We are committed to this practice to create trust and safe, collaborative workspaces.
Improving performance to achieve operational excellence
Operational excellence and practical implementation are not just about reducing costs and increasing productivity. It is about making the continuous improvement approach part of the company's culture over the long term. It is a constant effort to anticipate changes, identify waste areas, optimize internal processes, and mobilize all the company's players to achieve operational excellence.
Operational performance management is, therefore, undeniably the cornerstone of operational excellence and plays an essential role in an organization's success. By implementing effective performance management tools and strategies, companies can achieve operational excellence and foster a culture of continuous improvement. To achieve this, it is essential to set clear performance criteria, identify key indicators and monitor progress diligently.
Organizations' importance on operational performance has increased in today's fast-changing economic environment. So are you ready to unleash your organization's full potential by prioritizing efficient operational performance management? Our coaches are here to accelerate your path to operational excellence.