creating performance based culture trough performance management systems

Focusing on the Process Best Practices, instead of the Business Customization 3.. Focusing on the Process Best Practices, instead of the Business Customization 3.. The Roadmap to Failure

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CREATING A PERFORMANCE-BASED CULTURE

SESSION 1: THROUGH PROPER

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4 Malaysia, Singapore, Brunei, Indonesia, India,

China, Hong Kong, Philippines, Italy, Taiwan

5 Staff force: ± 500

6 Distributors: 250,000

7 Products: Consumer Goods and Services

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Why we hate Performance Appraisals

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As an

Appraisee

As an Appraisor

Complaints about Performance Appraisals

Mgmt/HR

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As an Appraisee

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As an Appraiser

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• Perfect System, Bad performance

• Recency and Halo effects

• Untrained Appraisers

Mgmt/HR

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Complaints about Performance Appraisals - Summary

1 Process problem

2 Form problem

3 People problem

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What is Performance Appraisal used for?

Reward?

Discipline? Development? Motivation? Promotion? Monitor?

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What is the OBJECTIVE?

• What is the ultimate objective of a Performance Management System?

• ‘Performance’ – achievement,

• ‘Management’ – controllable, improvement

• ‘System’ – predictable outcome, autorun

Summary?

• A Predictable process to Improve Controllable Achievements

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Summary… What went Wrong?

1 Wrong Business Model – blame PM Systems

Having a good PM System cannot correct a bad business model

2 Focusing on the Process (Best Practices),

instead of the Business (Customization)

3 Good strategy, Bad Implementation, No

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1 Get the right Business Model first

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1 Wrong Business Model – blame PMS

Having a good PMS cannot correct a bad business model

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• How to fail without trying

1 Wrong Business Model

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The Roadmap to Failure

Fred Wiersema and Mike Treacy

Ad-h oc T

actic s

Denial & Defense

Doom Projections

Overdue Failure

The Moment of

TruthX

Performance Freefall

Tomorrow’s actual performance Downpresure of

Unclear Strategy

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Denial and Defense

offering, because it doesn’t include a lot of

our features.” - ABC vs Air Asia

customer market.” - ABC vs Toyota

advantage, what can we do?” – ABC vs MILO

worked before” – AMEX vs VISA

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Ad-h oc T

actic s

Overdue Failure

The Moment of

TruthX

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Ad Hoc Tactics

• Selectively hold discounts to hold business that has

started to go elsewhere

• Introduce new promotions, terms, conditions, and offers to

confuse and cloud the market

• Beef up customer service by adding people to fix

mess-ups and quicken delayed shipments

• Delay capital investments and adjust accounting methods

to portray quarterly financial results more favorably

• Introduce “new and improved” products that are new in

form, but not in substantive ways that are of consequence

to purchasers

• Introduce Balanced Scorecards and Performance

Management Systems

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Ad-h oc T

actic s

Overdue Failure

The Moment of

TruthX

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“What is the moral

of the story?”

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2 Focusing on the Business

Strategy and Intent

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1 Wrong Business Model – blame PMS Having

a good PMS cannot correct a bad business model

2 Focusing on the Process (Best Practices),

instead of the Business (Customization)

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“…in the past 18 months, we have heard that profit is more important than revenue,

quality is more important that profit,

people are more important than profit, customers are more important than our people, big customers are more important than small customers, and that growth is the key to our success No wonder our

performance is inconsistent"

CEO, Anonymous

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Before we start…

In the old days of HR…

• Average training hours per staff

• % of staff attending training

• # of training programs

• % of training programs conducted

• Training needs analysis conducted

• Competency models developed

• Training budget as % of payroll

What’s wrong with this picture?

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“What is the moral

of the story?”

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Budgeting, Reporting, Financial Analysis, Forecasting, Tax, Legal, Treasury

Consistency, Analysis,

Value creation,

customization

Systems, Standardize, Benchmarking, ERP, Streamlining,

Direct Business

Impact, primary KPIs,

external customers

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Example: FSS Open &

7 Specialized skill sets

8 Move from staff to line

9 Salary Band

10 Career Path

11 Manage external

vendors 12.B.U.s appreciate

services

13 Additional revenue w/o

interfering core 14.Divestment/IPO 15.MSC tax break 16.Make accountable to

SBU vs HQ

17 Undertake large infra

projects

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• Mamak stall

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Operational Excellence

(low cost producer)

Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995

Product Leadership (best product)

Customer Intimacy (best total solution)

Strategy: Value Disciplines

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Operational

Excellence

• Competitive price

• Error free, reliable

• Fast (on demand)

• Error free, reliable

• Fast (on demand)

• Cross selling

Product Leadership

• New, state of the art products or services

• Risk takers

• Meet volatile customer needs

• Fast concept-to- counter

• Never satisfied - obsolete own and competitors'

• Risk takers

• Meet volatile customer needs

• Fast concept-to- counter

• Never satisfied - obsolete own and competitors'

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• Tests new products

for Cooking Times

Make what customers want

• Prowls market for new products

• Monitored field tests

*Adapted from: Businessweek , Februrary 5 th 2007

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Sample KPIs for Each Discipline

• Pipeline

Product Leadership

• Pipeline

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• Operational Excellence

• Move know-how from top performing units to others

• Benchmark against best in class

• Ensure operations training for all employees

• Use disciplines like TQM for continuous learning to reduce costs and improve quality

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• Customer Intimacy

• Capture knowledge about customers

• Understand customer needs

• Empower front line employees

• Ensure that everyone knows the customer

• Make company knowledge available to customers

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• Product Leadership

• Reduce time to market

• Commercialize new products fast

• Ensure that ideas flow

• Reuse what other parts of the company have already learned

• Ensure there are multiple sources of

funding

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Sales Cash Flow

Talent Mgmt Innovation/R&D Early wins

Slow Down HR Costs

Top Talent focus Sales, Sales, Sales Increase attrition

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3 Performance Management = Business Plan Implementation

Strategy and Intent

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3 Good strategy, Bad Implementation, No

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“To satisfy our customers,

in which internal business processes must we

Learning & Growth

“What capabilities and

tools do our employees

require to help them

execute our strategy?

Focus: Corporate Alignment

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Department Operations

Supplier &

Alliances

External Involvement

Target Markets

Products/

Services

Channel Strategies

Human Resources

Technology

Information & Intelligence

Systems &

Processes

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Profit after Tax Revenue Cash-to-cash cycle Operating cash flow

Customer Complaints Customer Acquisition Rate Product Availability Product Quality & Service Renewal Annual Subscription Distributor Rank Achievement No of Active Distributor No DC/Regional Sales Distributor with

commission Customer Database Availability Accuracy of Forecast Planning Continuous Improvement Response Time to Customer Needs Perfect Order Fulfillment Inventory Turnover Number of Effective Sponsoring Program On Time Delivery No of Effective Training Number of Effective A&P

% of staff evaluated on Core Competency Framework % of staff with Career Development Plans No of training hours

completed per staff % of staff with access to strategic information Q12 Index % staff evaluated on Culture alignment

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3.0 Achievem ents and Efforts for

Q1

4.0 Merit* 5.0 Rating

(Merit x Weight)

6.0 Appraiser Overall Comments / Feedback

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4 Aligning for Performance

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Alignment: 4-Wheels Model

Philosophies

Corporate

ObjectivePerformance

ObjectivesStructure Resources

LeadershipPerson

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Alignment: 4-Wheels Model

Philosophies

Corporate

ObjectivePerformance

ObjectivesStructure Resources

LeadershipPerson

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5 Implementing the Right System

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What is Performance Appraisal used for?

Reward?

Discipline? Development? Motivation? Promotion? Monitor?

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Behavior-based Knowledge/Skill based

Results-based

Trait-based

Which system should we use?

Managing Performance = Managing Expectations

What’s YOUR expectation?

Activity based

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Performance Management for Change

Ac co

un t

•

Ob jec tiv

es & K

ey M

eas ure s

an ce

•

Pro vid

e C oac hin

g &

Co un sell ing

RE SU LT

S

DR IVE N

• High Level of employee empowerment

• High Employee Performance

• High Employee Satisfaction

• High Employee Involvement

• Challenging Working Environment

• Optimum HRM Cost Structure

•

Re vie

w P erfo rm

an

ce & R

esu lts

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District Engineer, TNB

Duties and Responsibilities

If stated as Accountabilities then the job

must produce :

Control, operate and

maintain the District

Distribution System

Ensure uninterrupted supply to consumers in the district by operating the District Distribution System.

Manage major supply

projects to customers in

the district.

Ensure satisfaction of the major customers

in the district by managing supply and Distribution.

Supervise all technical

staff in the district.

Ensure high performance and Productivity

of technical staff by adopting proper human resource management methods on

selection, training, coaching, counselling and motivation.

Plan and design the High

voltage system

Ensure availability of adequate supply for future needs of industries in the district by planning and designing the High voltage System

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MBO Target Setting - Objectives and Measures

• Achievable (Must be within reach of the

employees, e.g to meet stated deadlines, neither too high nor too low)

• Rewarding (Rewarding means it must be

satisfying to you, no one else)

• Time phased (per quarter, per year By end of fiscal year, by 15th of November)

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MBO Target Setting - Objectives and Measures

Quality • How well the result is produced /

performed

• Errors and Appearance

Quantity • How much / many of the results

are produced or performed

Cost • At what expense the result is

produced / performedTimeliness • When is the result to be

produced / performed

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MBO – Sources of KRAs and KPIs, Targets

1 Department Scorecard [E3],

2 Employee’s Job Description,

3 Department SOP,

4 Department Quality Objectives,

5 Corrective Action Requests (CAR),

6 Preventive Action Requests (PAR), or

7 Special Projects relevant to the employee.

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MBO Standards

A Excellent Excellent

B Good Very Good

C Average Good

D Poor Not Good

E Useless Commit Suicide

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MBO Standards

A Excellent Consistently achieved 4 for 3

quarters

B Very Good Higher than planned results

D Not Good Did not fully meet planned

results

E Commit

Suicide

Unacceptable performance

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Competency Target Setting

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Competency Target Setting

3 Doing more than is required/expected in a job

4 Seeks new and improved solutions and

approaches to completing assignments

5 Looks for opportunities to help others and

team

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Competency Standards

3 Meets behavioral standards consistently Is a

good role model for others.

1 Does not meet behavioral standards

Require counseling or disciplinary actions.

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Coaching & Counseling

Month 1

Performance

Planning

Month 12 Performance Appraisal

Month 2-11

?

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Performance Setting & Review Schedule

Step One - August

Senior Management – Facilitate BOD

Strategic Planning process by studying &

producing appropriate papers from BOD

• Macro economic data and observations

• Emerging business conditions

• CNI’s strategic considerations/needs

Step Two - August

BOD consideration & consensus on:

• Macro economic information

• Emerging business conditions

• SWOT

• Strategic Needs

• Broad business goals & operating

philosophy

Sr Mgmt Strategic Planning Process

Study BOD observations and directions &

review:

• Corporate vision / mission

• Change dimensions

• Strategic initiatives

• Corporate key results

Step Three September - October

Sr Management Annual Management Plan for Board of Directors Approval

Step Five - November

Approved Annual Management Plan for execution

Step Six - December

• Senior managers performance plans,

objectives and standards

• Performance vs plans for top management review

Quarterly performance review reports of the Board of Directors

Step Four - November

Step Seven - January

• Review annually performance plans vs

results

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Performance Review processes

1 Result Planning schedule inc BSC, Budget

2 Quarterly Performance Appraisals

3 EMC – sales performance

4 QMS – non-sales performance

5 Divisional meetings

6 Annual Appraisals

7 Specialized KPI committees

8 CAR, PAR, SCAR KPI improvements

9 Internal Audit & MSD – process problems

10 HRM & TND – people problems

11 Supervisor Induction – PM training

12 Talent Management

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1 Wrong Business Model – blame PM Systems

Having a good PM System cannot correct a bad business model

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Thank You.

soft copy of slides:

www.totallyunrelatedrandomanddebatable.

blogspot.com

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