PERFORMANCE LED GROWTH VS PROFILE LED GROWTH

On an average, people with profiles on the revenue side of the organization have more importance within the system than others. Simple rule is the more revenue the department brings into the system, the more its relative importance.

But the next question comes to mind is whether Revenue contribution is equal to performance and should employees be evaluated or promoted based on their revenue contribution or Performance.

One cannot rule out the possibility that certain profiles have an inherent advantage in contributing growth as well as revenue to their organization, primarily due to external circumstances (industry growth, city, policy change etc) rather than the talent of those employees. So, if revenue led promotion is the norm which according to me is in most cases, than talent assessment itself is a myth.

Partly the reason for Revenue Led promotion is the norm is due to the extremely difficult nature of measuring performance. For e.g., unless the understanding and application of Statistical Variation (special and common causes) is not there, one cannot judge two salespersons in different markets/regions based on revenue contribution and pass a decision on their performance without factoring things such as client base, purchasing power of clients, etc. etc.

So is there a way out and more importantly what is Performance. I have come across the closest definition of performance proposed by the legendary cybernetician – Stafford Beer. The explanation in terms of ratios is as below

ACTUALITY/CAPABILITY = PRODUCTIVITY
CAPABILITY/POTENTIALITY = LATENCY

PRODUCTIVITY*LATENCY=PERFORMANCE

(Note: 1) Capability stands for given the constraints, what is the ability of the system?
2) Potentiality stands for, if certain processes/constraints are addressed, what would be the ability of the system? )

The closer the answer for performance is to 1 the more effective the individual, department is.


I admit the fact that determining the capability, potentiality is a itself a complicated task, but the above ratios gives us a framework to measure performance and have a fair evaluation for individual/departments.(as sated above, statistical variation can be good start for measuring sales performance across regions and determining capability)
Perhaps than talent assessment and Performance Measurement systems would lead to a fairer performance led growth.