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Measuring the Performance of Your Team

Performance measures may not take potential into account.

The finance department is a key cog to the organization, and ensuring it's as functional as possible requires the type of analysis that extends beyond spreadsheets. This work involves monitoring employees, tracking their progress (either through casual observation or more formal evaluations), and coming up with metrics that will help determine whether the team is performing up to par. It also entails the dreaded – by both employees and employers alike – performance reviews.

As many workplaces evolve from nine-to-five, brick-and-mortar institutions to a virtual platform employees may connect to on different schedules, measuring performance is taking on new meanings. However, this doesn't mean tried-and-true practices are going away anytime soon.

Settling the Scorecard
One of those, the balanced scorecard method of performance management, compares financial and other measures based on target goals. The most recent "Balanced Scorecard Usage Survey" by 2GC, a management consultancy, found nearly 80 percent of organizations worldwide use BSC to influence business actions. Other major uses include aiding strategic management and informing decisions and reporting.

It may also be used for gauging employee performance, a concept recently debated among Proformative members. Several members pointed out while the BSC approach is a good way to motivate department heads or divisions as a whole, they can be ineffective and even demoralizing for employees who aren't in leadership positions. While BSC helps organizations with their big-picture issues, it may not always be the answer for matters that are on an individual level, such as those involving employees.

Giving Incentives
Another popular way to evaluate a department is through an incentive program. By providing the team with goals to meet from the start, a supervisor has set the groundwork for his own expectations and can more easily evaluate how everyone does down the road. In various discussions on Proformative, finance executives have shared incentives and metrics that have worked at their company. They include asking their finance employees to meet certain targets related to the number of:

• Invoices processed
• Collection calls made
• Journal-entry corrections
• Days sales outstanding
• Account reconciliations that have be done manually
• Hours to close the books
• Days a project came within its project time

Going Beyond Performance to Achieve Success
To be sure, relying on metrics is a common practice, particularly by CFOs, but it has downsides, as Proformative members have acknowledged. By acting too stringent about certain figures and not thinking about other factors, managers may end up discouraging their team rather than elevating it. One Proformative contributor has pointed out measuring employee performance isn't enough to pinpoint and make substantial improvements to internal processes. Many organizations fail to measure team member potential, he continued. Leadership should not just quantify output, they should qualify which personality traits, attitudes and tendencies lead employees to refine their skills and knowledge to achieve greater results.

Executives can take this insight and run with it in a number of directions. After determining an employee's potential, finance leaders can better estimate whether the team member has access to the right resources to create his or her best work.

A recent article by Forbes contributor Cy Wakeman expanded on the notion of managing performance by grasping staff's potential. She suggested several key attributes that reflect the abilities of a good employee. These include being eager to take advantage of enrichment and training opportunities, having a clearer picture of one's place within the organization – rather than just focusing on the employee-manager relationship – and having a general interest in the industry and related trends.

By recognizing these traits in employees, decision-makers can distinguish potential leaders, make special provisions that benefit the advancement of high-potential staff, and improve future their hiring processes.

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