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PMS GUIDELINES

Introduction to the Balanced Scorecard

•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?

Internal Processes Financial

Objectives Measures Vision, mission, Objectives Measures


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

Feels: Feels:
¾ Static ¾ Active
¾ Critical & Negative ¾ Supportive
¾ Blinkered ¾ Positive
Performance management “best
practice”

Structure Application

Individual system elements People


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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