•The balanced scorecard addresses the barriers to strategy
implementation…
•At the highest level, the balanced scorecard is a
framework that helps organisations translate strategy into operational objectives that drive both behaviour and performance • Traditional balanced scorecard – Norton & Kaplan External Stakeholders Objectives Measures To achieve our objectives, what stakeholder needs must we serve?
strategy & values To satisfy our To satisfy our stakeholders, stakeholders, in which what financial objectives internal business processes must we accomplish? must we excel? Learning & Growth Objectives Measures To achieve our objectives, how must our organisation learn and innovate? Performance Management What is performance management? • Performance Management is an ongoing process of managing, coaching and developing people, so as to link individual performance to key business issues, strategy and objectives and to realise business plans. • Performance management aligns individual, team and organisational purposes across the whole organisation. Performance Management & Job Evaluation Job Evaluation Performance Management
9 Management process 9 Management process
9 Systematic analysis of jobs. 9 Performance feedback 9 Determine the relative worth 9 Performance improvement of jobs. 9 Employee development 9 Forms the basis of 9 Career planning hierarchies and pay levels. 9Evaluates people against 9 Evaluates jobs and not agreed objectives. people.
Focus on job Focus on the person
Why performance management?…1 • A clear strategic vision is not enough • When in place, a strategic vision has little or no impact on the operating goals of departments and individuals • Day-to-day decisions often ignore the strategic plan • Companies fail to collect the right information to monitor progress toward their strategic goals • Companies do not identify or learn from their mistakes Why performance management? …2 • Translate the strategy message into something understandable to all • Communicate strategy top-down and provide feedback bottom-up • Encourage a different view of the company through new issues raised in goal setting • Promote demanding but realistic goals created with an eye on the bigger picture, not in a vacuum Why performance Management? …3 • Enables the Bank to assess the contribution of the employee to the Bank’s objectives. • Employee knowledge of where they stand with regards to performance. • Provides input into reward decisions and training and development needs. • Motivates for future performance. Why do performance management systems fail? • Design • Measure what is easy rather than what has most impact • Too complicated • Too many measures • Not linked to reward • Not integrated with other HR systems • Implementation • Re-launching the system without addressing the behaviours that caused the last one to fail • Lack of ownership and sponsorship by leaders • Ongoing management • Managers lack the skills to deal with performance issues. • Avoidance and reluctance to deal with underperformance. The changing face of performance From: management To: Designed to: Designed to: ¾ Control ¾ Create value ¾ Police ¾ Motivate, energise and align efforts ¾ Enable
Focused on: Focused on:
¾ Historical - “How did we do?” ¾ The future - “How can we improve?” ¾ Financial data ¾ Financial data, behaviours & attitudes ¾ Functional / parochial targets ¾ People, stakeholders ¾ Short term ¾ Opportunities ¾ Symptoms of problems ¾ Short, medium & long term ¾ Departments ¾ Causes or drivers of success ¾ Processes
Technology Communication Linkages Implementation Supporting materials Monitoring and control
The application is as important or more important than the design
A typical performance management system BALANCED SCORECARD Communicate the “big picture” of the organisation’s strategies and Provide frequent informal departmental goals to employees coaching that recognises good and show the relationship of their performance jobs to the organisation’s results and that gets below-target success performers back on track 1. Performance 2. Planning Performance and Coaching and Contracting Feedback
Development PERFORMANCE plans for each MANAGEMENT individual
4. 3 Reward Performance Review
Tie tangible and intangible Gather performance information
rewards to performance levels from employees and assess each employee’s results vs. Performance Targets Performance management system BALANCED SCORECARD Communicate the “big picture” of the organisation’s strategies and Provide frequent informal departmental goals to employees coaching that recognises good and show the relationship of their performance jobs to the organisation’s results and that gets below-target success performers back on track 1. Performance 2. Planning Performance and Coaching and Contracting Feedback
Development PERFORMANCE plans for each MANAGEMENT individual
4. 3 Reward Performance Review
Tie tangible and intangible Gather performance information
rewards to performance levels from employees and assess each employee’s results vs. Performance Targets Setting objectives Cascading Objectives
Corporate Objectives
Department & Team Objectives
Employee Objectives Benefits of setting objectives For Individual For Organisation 9 Understand responsibilities and work 9 Framework for communicating client’s objectives. strategies and objectives. 9 Know criteria for performance review. 9 Provides consistent and agreed criteria to use 9 Plans are tailored to individual needs and in reviewing performance. abilities. 9 Increase objectivity of the review process. 9 Help in self-management process. 9 Can be a motivational tool if agreed with 9 Opportunity for regular communication with employee. manager
"Those who become involved, become committed."
SMART Objectives • S Specific Objectives should be clear and concise and relate to one issue only. • M Measurable Specifying quantifiable criteria for evaluating accomplishment of the business result. It will be easier to monitor progress. • A Achievable Describing a business result that can be realistically achieved, • R Relevant Describing a business need that is important and relevant to the Jobholder. Achieving the objective must mean success in the job for the employee. • T Time Bound Indicating that there is a time schedule or deadline for achieving the business result. This helps the employee to focus and plan. SMART Objectives A well written, effective objective is:
¾ Action Oriented (Revise, select, reduce, i.e. verbs to indicate action)
An example of a SMART objective is:
Reduce (action verb)
costs (targeted area) by 31 December 2004 (target date)
Increase (action verb)
market share (targeted area) Employee objectives •At the beginning of the year, each employee will discuss and agree eight to sixteen key objectives
•Link between the job description and objectives. It
may be necessary to update the job description, if this link is not clear.
•When objectives are developed at an individual level
there must be a clear link with the Department or Business Unit objectives. •“What gets measured and reviewed, gets done.” Developing measures Why develop measures? – Measures operationalise an organisation’s strategy. – The strategy must be reflected in the measures. – Only by aligning the measures can management focus on the objectives. – They let management know how efficiently they are achieving their objectives. – They allow top management to track achievement of strategic objectives. Measures fulfill two strategic roles…
To monitor progress ... ... but also to communicate strategy
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