Performance is the end result of activity, but activity does not necessarily equal results. Have you ever had a sales rep who worked long hours, made hundreds of cold calls, sent out dozens of proposals, and hardly ever closed a deal? I think most of us have had someone like this working for us. They are always busy – always doing something, yet their results were dismal. Why?
ACTIVITY DOES NOT EQUAL RESULTS
As CEOs, we should be more concerned with results (output) than how people get there. Of course, we want to make sure they do things a certain way, follow our policies, and obey laws and regulations. But in reality, shouldn’t we be concerned more with the output than how it was achieved? This is one of the tougher issues that I deal with when coaching CEOs. Some CEOs (and their managers) get bogged down in enforcing “how” things should be done, and lose sight of “what” needs to be accomplished. Of course, the right activities should contribute to the end results, so we need to strike a balance.
You can manage both behavior and output through “controls.” Behavior controls specify how things are done, typically through policies, standard operating procedures, practices, rules, and guidelines. Output controls specify what you want accomplished by focusing on the results of the behaviors. Output controls use objectives, milestones, performance targets, and goals. Keep in mind, behavior controls and output controls are not interchangeable.
Here are some examples that you might recognize:
Behavior controls – Company policies, rules on getting to work on time, making sales calls, dress codes, sending out invoices, following a certain delivery route, spending/cost limitations, and safety rules. Having solid behavior controls in place is a good practice, particularly when the performance results may be hard to measure, but there is a clear cause and effect relationship between activity and results.
Output controls – Sales quotas, profit objectives, ROI, customer satisfaction levels, collection percentages, and on-time deliveries. Output controls are great when there are specific objective results that must be accomplished, and the activity cause and effect connection is not always clear cut.
So, in a sales environment, we establish quotas to control the output (the revenue/sales goal we need to achieve). That’s what we are concerned about. However, to ensure success in achieving this goal, we are likely to put in place behavior controls such as the number of weekly sales calls, number of proposals sent out, monthly pipeline reports, and procedures for following–up on leads. Our expectation is that these behavior controls will contribute to achieving the output controls.
It has been my experience that establishing quantifiable and realistic output controls is the first step. After everyone agrees to these end results, a backwards planning process takes place where behavior controls are created that will reinforce the behaviors needed to contribute to the ultimate achievement of the output (results) we want, but keeping in mind that the behavior controls are of little value on their own. They only exist to help our employees achieve the results we have set as our goal.