Under Vested’s Rule #3 the parties work together and reach agreement on clearly defined and measurable outcomes. A key to good Performance Management—Element 5—is making sure your metrics tightly align with your outcomes and objectives (see Element 4 of the 10 Elements series). Performance Management is necessary and important because Vested is an outcomes-based business model and will ensure you avoid the Driving Blind Disease ailment.
The key part of Element 5 is to establish a quality assurance plan (QASP) that outlines how the KPIs will be reported and validated for accuracy. The QASP sets the foundation for reporting and performance management. It involves answering four questions:
- Who is responsible for the data related to the metric?
- What is the source of the data?
- How is the metric calculated?
- How often will the data collected?
It is important to remember that a Vested Agreement is jointly developed. Thus all parties must agree on how to collect the data and monitor success. The “requirements roadmap” tool (available as part of the Vested Open Source Toolkit is an excellent resource to help you work through Elements 4 and 5.
Once you have agreed on your measures, you should then establish how you will use the data. In large strategic relationships, it is common for the parties to invest in automated dashboards with drill-down functionality into process-level metrics for root cause analysis.
At a minimum you should establish basic reporting processes to determine how top-level metrics reports are used. Regular and frequent communication at the appropriate reviews of performance will ensure all parties are marching to the beat of the same drummer. We like to think of a good Performance Management process as helping you get “the rhythm of the business.”
For much more on Element 5 and Performance Management, see chapter 5 of The Vested Outsourcing Manual. And also be mindful that Vested’s free self-assessment, is a useful online tool to help benchmark an existing agreement.