Another Way to Look at, and Balance, Performance

An article "Anatomy of Healthy Corporation" in the June 6, 2007 edition of The McKinsey Quarterly presents us with the concept of corporate health, based upon the simple metaphor of human health.  Corporate health, according to the article, can be gauged on the basis of five characteristics (summarized below):

• Resilience.  Healthy corporations are good at spotting and managing key risks, and they build mechanisms and have the resources to get themselves through difficult periods.
• Execution.  Healthy corporations pay constant attention to getting the basics right; making sound and timely decisions, forecasting with skill, ensuring employees understand their roles and responsibilities.
• Alignment.  Healthy corporations work toward a cohesive purpose and share a sense of pursuing a common cause.
• Renewal.  Healthy corporations possess the ability to generate ideas and adapt to change, both culturally and strategically.
• Complementarity.  Healthy corporations use communication and collaboration to ensure that assets, processes, relationships and management practices act in concert.

The article makes a clear distinction between the concepts of health and performance.  The above attributes of a healthy corporation as described as being "emergent characteristics of a company's performance system", in contrast with the more traditional and narrowly defined outcomes of performance.  Some the example measures of corporate health presented, for example, include ones that focus on leadership development, team satisfaction and staffing.

This perspective has some appeal for me as someone who practices in the areas of performance management and rewards.  Like the Balanced Scorecard (but perhaps in a simpler way), it promotes the idea of tracking a broader set of measures than the traditional lagging financial ones and it encourages pursuing a sense of balance between the different categories of performance.  These are positives for the measurement of organizational and individual performance and, particularly, for the development of incentive compensation arrangements.  A small but balanced set of performance measures represents one way to mitigate the "unintentional consequences" that often rear up at the heals of a poorly and/or too narrowly conceived incentive plan.