In the business world terms “progress” and “performance” often are used interchangeably. You might hear a dialog like this:
- John: We need to measure the performance of our employees?
- Mary: How we are going to do this?
- John: Well, let’s track their progress with the current tasks.
Merriam-Webster dictionary gives us these definitions (I’m taking business context only):
- Progress: the process of improving or developing something over a period of time.
- Performance: a: the execution of an action; b: something accomplished.
BusinessDictionary.com is more precise in the business context:
- Performance: The accomplishment of a given task measured against preset known standards of accuracy.
So, what’s the difference? When we are talking about achieving certain market share, do we talk about a company’s progress or its performance?
- On the one hand, if the market share was increased over a period of a quarter, then according to the definition it is progress;
- On the other hand, a company’s market share compared to some historical data also is an indicator of a company’s performance!
Performance can exist without progress:
- A company’s sales team might have a high performance closing 20 deals per week, but compared to the last year they have not made any progress.
Progress can exist without performance:
- Take any preparation stage of any project. According to the project management software there is some progress, but the performance is still zero, as no tangible results were produced yet.
My point is that both performance and progress help us to execute business strategy better, and sometimes it is necessary to understand what exactly stands behind these words in the particular context. Otherwise, we are at risk of making wrong decisions. Let me illustrate this idea with some examples.
We made some progress, but our performance is still in the red zone
When managing some project one might face a situation when performance figures are on the big scale and they don’t permit effective micro management. Let’s take “First call resolution rate, %” as an example:
- Current rate: 40%
- Industry best practice rate: 80%
It is obvious that the situation cannot be changed in a day, company’s team need to pass some training, some additional software need to be implemented, typical clients’ problems need to be analyzed, etc. It is a good idea to plan the whole improvement project for 3-4 months. Our target value for the next month is not 80%, but let’s say 55%!
The management is checking the data in the next month:
- Baseline: 40%
- Current rate: 50%
- Industry best practice rate: 80%
The problem with reporting
I took this screenshot from BSC Designer software. You can see the contradictory situation:
- On the one hand the performance measured on 40..80 scale is 25% and it is still low, so someone might decide that the action plan does not work;
- On the other hand the progress measured on a 40…55 scale is 66.67%, company’s team shows some serious progress (moving from 40% to 50% first call resolution rate), and the only thing they need is more time to introduce the changes to the rest of the company.
How will this situation look on the company’s scorecard?
- If reporting according to the progress: management did a great job!
- If reporting according to the performance: company is still doing badly!
What is the best practice in this case?
- Measure both – progress and performance.
Progress- or performance- based payment
Let’s take another example – “progress based payment” and “performance based payment.”
- In the first case the payment depends on the progress made. A copywriter might create some dummy text as he gets paid according to the number of words (good for copywriter, bad for the business).
- In the second case the payment depends on the performance (achievements of the certain quality standards). A copywriter gets paid only when his text is engaging and keeps people on the website.
What’s the best case scenario? Track the progress (the number of words written by the date), but certainly focus on the performance (the job done according to the highest quality standards). If this sounds like some obvious idea then think about this in the context of rewards.
Progress and Performance in BSC Designer
BSC Designer is a performance management software, people use the software for reporting purposes. That’s why we have to take the difference between of “progress” and “performance” into account.
On the “KPIs” tab in BSC Designer we have both – progress and performance columns.
- BSC Designer calculates performance using min, max, and current value.
- BSC Designer calculates progress using baseline, target, and current value.
If you are looking for more specific details about how to calculate performance and progress then check out this article.