One of the most important and impactful changes within the corporate performance management 
process has been the evolution of performance reviews to performance partnerships. A performance partnership is a collaborative and iterative process between a manager and an employee with the goal of improved individual and company performance. In ideal circumstances, a partnership takes out the “adversarial” aspects of performance management and creates a true win-win-win situation for the employee, manager, and company.
Over the past several months, I’ve been deeply involved with client projects that have been re-evaluating the entire performance management process starting with Assessment Simulations, the development of performance and skill GapMaps™, the creation of dynamic learning journeys to close the gaps, reinforcement of skills by leveraging artificial intelligence tools, and performance partnership conversations to align goals and objectives through feedback and dialogues.
Like many things related to human capital management, having goals and objectives built into the performance partnership conversations that aren’t grounded in the business strategy and goals of the company will result in misalignment, poor performance, and potentially very bad decision making.
I had the unfortunate privilege of listening in on a recent example of how things can go very wrong in a misaligned performance partnership conversation. The Manager was reviewing the goals and objectives of an employee and started to provide feedback to the employee that he was spending way too much time “innovating” and “daydreaming” and not enough time looking for ways to be more operationally efficient. “Wait, you took your team to the art museum to see the new modern art exhibit as a way of stimulating new ideas and innovations? Let me give you some feedback; I think a better use of their time should have been looking for ways of reducing the costs of raw materials used in our existing products as these costs increasing dramatically.” The employee responded, “Yes, I did take the team to the exhibit and I thought that was a good thing. But now I’m confused, I thought our business strategy is product leadership and my department is responsible for new product development. I know we are supposed to manage costs, but I didn’t think that was my number one priority.”
When I probed into this apparent disconnect, I discovered that in fact one of the annual performance goals given the employee and his team was to spend 12.5% of the time pursuing new ideas and innovations for product development. Managing budgets and expenditures was much lower of the list. As it turns out, the manager was trying to drive performance objectives of cost management that were different than what the employee heard and was focused on.
One of the reasons why this happens millions of times a day around the world in every company is a lack of foundational business acumen skills. I believe that business acumen skills are core to the process and ability of having performance partnerships because the language of business should be the same language of performance partnerships.
Based on my observations and experience in this area, here are three foundational business acumen skills that should be present when preparing for and executing a performance partnership dialogue:
Understanding of Strategy and Business Ecosystem
Everyone in the organization should have a working knowledge of business strategy and their own business ecosystem. What’s their value proposition to customers? What does their supply chain look like? Who are their key customer segments? Who are their key competitors? What are some of the drivers impacting the market?
Understanding these dynamics enables the development of specific goals, objectives, and priorities that are related to the big picture and aligned to the strategy execution of the company.
Understanding Metrics of Business Performance
Every quarter, the executives of a business provide quarterly updates on financials and key metrics of performance. I am continually astounded by how many people within organizations have no clue how to read income statements, balance sheets, or cash flows let alone understand the key metrics of performance their company has promised shareholders. How can organizations give specific financial performance metrics to employees who don’t understand them from a financial perspective?
Competitive Positioning
In this global and digital 24/7 world, differentiating between competitors is becoming increasingly more difficult. New products than convey good quality at very low prices can appear from nowhere and can instantly start taking share through an ecommerce platform. Understanding the competitive situation is a critical knowledge to have when developing goals and objectives and having performance dialogues because it helps focus the right resources and the most significant challenges.
