Here’s a question for you: what’s the difference between performance management and effectiveness management? If you’re unsure of the answer—or if you thought they were the same thing—you’re not alone. Many people confuse these two related but different concepts.

What’s the Difference?

Performance management is a management system that evaluates how well work is done  – doing things right. It gauges whether employees are meeting objectives, measures achievements and performance, provides feedback to employees, and is tied to compensation.

Effectiveness management, on the other hand, has all the components of performance management, but goes a step further. It focuses on what work is being done, and ensures that all work is helping to meet the organization’s strategic objectives – doing the right things.

Aligning the Chain of Objectives for Effective Management

There are several different aspects of effective management, but one of the most important components is making sure the chain of objectives is properly linked. This begins with the CEO, who sets the organization’s strategic objectives and brings them to the Board for approval.

Once approved, the CEO is then responsible for implementing them. He or she will evaluate what work needs to be done personally, and delegate the remaining tasks to subordinate managers. The subordinate managers then repeat the same evaluation and delegation process, which continues all the way down the organization until tasks are assigned to front-line employees. This creates a chain of objectives all the way down the organization, with each objective linked back in very concrete terms to a strategic objective of the organization.

Difficult?

Of course! This is no easy undertaking. To be successful, the CEO must make sure the organization’s strategic objectives are met within the required timeframe, which involves collaborating with managers and obtaining their feedback. Effective managers must then communicate with employees to make sure they understand what work they are being asked to do, how to do it, and how it ties into the organization’s overall strategy.

Effectiveness Management = Big Rewards

Effectiveness management is challenging, but can be very rewarding. Typical strategic plans only achieve their desired results 20-30% of the time, and thus need to be properly implemented in order to work. Otherwise, they are just documents. Ensuring that each manager throughout the entire organization, starting with the CEO, has objectives, which are explicitly tied to the plan’s strategic objectives, can greatly increase the chances of successful strategy implementation.