The Transforming Performance Management System

: Finding the Missing Pieces and Closing the Organizational Intelligence Gap

Lertchai Suthammanon December 12,2008

lertchai_sut@hotmail.com

Contents
Performance Management System Click Frame Workto add Title
Click to add Title Finding the Missing Pieces of PMS

1
2 3 4

FulfillingClick to PMS Gap The add Title

Challenge of PMS in Hamburger Crisis

TOP HR Agenda in Asia 2015

High

Leadership Development Transforming HR into Strategic Partner Talent Management Change & Culture Becoming LO

Performance Improvement & Reward

Work Life Balance Managing Globalization

Future

Enhancing Employee Commitment Master HR Process

CSR

Restructuring Managing Diversity Managing Demographics Shared Service Out Sourcing HR

Low

Measuring HR & Employee Performance Delivering on Recruiting& Staffing

Low

High

Current

Source : BCG 2008

Top Management Tools in 2006

The executives (8,504) survey scored the tools below according to how frequently They were used and how much satisfaction they delivered

Higher usage

Blunt instruments

Power tools
Benchmarking

Mission and CRM Vision Customer Segmentation Statements Outsourcing Core Competencies BP Reengineering Scenario and Contingency Planning Strategic Alliances Growth Knowledge Management Supply Chain Management Strategy Balanced Scorecard Lean TQM
Operations Shared Service Centers Loyalty management Collaborative Innovation Six sigma

Strategic Planning

Mergers and Acquisitions

lower usage

Consumer Ethnography

Off shoring

Rudimentary implement
lower satisfaction

Corporate Blogs RFID

Source: Harvard Business Review 2006

Specialty tools
higher satisfaction

Present and Future of Performance management tools

Present
Not Used

PM Practice

Future
Will Not Use Rarely Extensively Used

L L L L L
S S

Rarely Extensively Used

S S S
S S

balanced Scorecard 360 / Multi Rate Feedback

S S

L
L L L
S

Upward Appraisal
Team Appraisal Forced Ranking / Bell Curve Training Manager (Performance Planning/ Tracking an Appraisal) Training Employee (Performance Planning / Tracking an Appraisal)

S
S

L
S

L
L

L L

Source : Robert Leigh Compton , 2006.(Australian Study of Performance Mgt.)

Performance Management System

: From Performance Management to Strategic Performance Management

Creating Environment in which Organizational Performance Becomes Everyones Everyday Job

Everyone Clear the Strategic Direction and Competitive Advantage

Everyone Accepted Responsibility for Continuous Refinement of Strategic Direction

Use Performance Indicators Strategy to test and challenge the Strategic Assumption
Performance indicators are Collected to Inform Strategic Decision Making at All Organization Level

Integrate with Others Management Tools to Driven Organizational Performance

Source : Adapted From Bernard Marr ,2006

Performance Management Framework

Business Direction
Step1 Vision /Mission / Value Step 2 Strategy
1. Strategic Goals 2. Strategic Action (Initiative/ Project) 3. Corporate BSC / KPI

Your Company

Step 3
Planning Cascading Alignment

Step 4
Execution

Step5
Assessment & Review Tracking Assessment & Reviews

Step6
Analyzing & Reporting Organization /Team Analyzing Individual Analyzing Monthly Report Mid Year Report Yearly Report

Step 7
Reward Career Mgt. Performance Pay / Recognition

Action Planning
Budgeting Manpower planning January

Communication Implementation Monitoring Forward Feedback

Continuous
Improvement Development June

December

Human Capital + Organization Capital + Information Capital

7

Performance Review Mechanisms

Team Leader Judgment Performance Discussion Team Review Self Assessment & Review Performance Dialogue Subordinate Review Performance Forum

Performance Analysis Mechanisms

Calculate & Descriptive Comparison Benchmarking Trend & Predict Future Process Mapping

Model to Generating

Human Capital + Organization Capital + Information Capital Competency Based HR HC Planning & Acquisition Learning & Development Career & Talent Management Retention Customer knowledge and Relationship Business Partner: Value Chain Management Work Process : Six Sigma ,TQM, Lean, Shareholder : ROI,ROA, ABC,... Organization Culture Data Collecting & Warehouse Analyzing & Evaluating Sharing Knowledge Management

Organization Information

Human

Capital

Capital

Capital

The Main Purposes of Performance Management System

Rank
1

Purposes
Determine Development Need Appraise Post Performance Align Objective

2 3 4 5 6 7 8 9 10

Develop Individual Competency Assess Career Planning decision Pay for Performance Assess Future potential Discipline / Dismiss non Performance Change organization Culture Retain High Caliber Staff

Source : Robert Leigh Compton , 2006.(Australian Study of Performance Mgt.)

Validating Business Strategy

The Nine Attributes of Fortune World s Most Admired Companies Survey

Quality of Product or Service

Wise Use of Corporate Assets Financial Soundness Long-Term Investment Value

People

Partnership

Ability to Attract and Retain talented people

Quality of Management Social Responsibility

Fit for Growth

Effectiveness in Doing Business Globally

Innovation

Growth

Innovation

Source : Adapted From : Eigenhuis and Van Dijk,2007

Value of Performance Measurement

Visibility and Clarifies Expectation Focuses and Objectivity Improves Alignment and cascading Promotes Execution Warning and Feedback

Challenging and Motivating

Dark Side of Performance Measurement

Measuring wrong Things
Focusing on Reward Rather Than Improvement Too Much Measurement

Focusing on Individual / Team Rather Than Corporate

Maintain Current Status Rather Than Creating Routine Rather Than Strategic Measurement

Separating From Reward System

Too Much Relationship to Reward System More Focus on Quantity Rather Than Quality Not balanced Between Driver and Result

Un-Balanced Scorecard
Theoretical Background of Balanced Scorecard
Translates Strategy into Action/ Performance Management Holistic Performance Measurement Balancing Driver and Result

Reality of Balanced Scorecard

Ignore The Underlying Strategically
(Every US Dollar of Market Capitalization , 85 Cent Representative of Intangible Assets :Cary Cokins 2004)

Un Validity of Causal Link Between Driver and Outcome Measures

(80 % of Enterprise fail to Integrated BSC into Performance System : Cary Cokins.2004)

Fulfill the Hard and Soft Side of Performance Management Gap

Vision Goals Strategy

Mission
Performance & Competencies Relationship

Value Competency Based

Culture

Performance Based

Performance System

Integrating Performance and Competency System

Competency Based Reward Rewarding PM Process

Competency Planning Assessment &IDP

Competency Reporting

Execution Reporting Competency Assessment/ Review Development Foreword Feedback

Fulfill the Soft Side of Performance Management Gap

Vision / Mission External Factor
Industry Competitiveness
Economic Development Social & Political Development

Internal Factor Corporate Strategy

Product Competitiveness Resources (Capital, Technology ,Human, etc)

Human Resource Strategy

Organizational Culture

Individual Excellence ( Competencies) Core Leadership Management

Recruitment & Selection

Training Development

Compensation Management
Career Management

Performance Management

Information Capital : Investment for Performance Management

Study the Good Practice Start Small Long term Investment

Need Stakeholder and Support

Easy to Modify Need Open and Transparency Culture Setting Clear Expectation and Provide Learning

Strategic Performance Management Focus in Hamburger Crisis

Customer
Customer Experience Customer Engagement Customer Delight Quality & Reliability Sensibility Speed & Effective Respond Brand Intellectual Property Competency Work Process Partnership

Productivity & Waste Working Capital

Inventory Business Dual Financial Cost

Service

People Development

Intellectual Utilization

Improve PMS

Focus on Core Job Family Knowledge Flow Presenteeism Engagement Talent Management.
Strategy and PMS Linkage Cascading and Alignment Short-Term Building PMS Culture& Fear Integrating With Others System

Innovation

Agility & Change

Trust Risk Taking Recognition

Performance Management and Others Tools in Hamburger Crisis

Activity Based Costing

Customer Relation Management Total Quality Management

Knowledge Management and

learning Organization Competency Based HRM

Organizational Capital

Strategic Planning
+

Confirmed Performance Management Fitting With in Hamburger Crisis

Performance Mgt.

Team/ Individual Performance

Organization Performance

+ +

Success and Failure of Performance Management System

Impedes in Performance System Take lots of enforce But Get Little Benefit Poor Alignment with others Management Tools

Organization Culture
PM Knowledge Management Support

Acceptance & Commitment of Owner

PMS Owner & Chief Performance Officer CPO Continues Attractive