Transforming Performance Management System: Closing the Organizational Intelligence Gap

1. The Transforming Performance Management System : Finding the Missing Pieces and Closing the Organizational Intelligence Gap ระบบการบริหารผลงาน : ค้นหาส่วนที่ขาดและเติมเต็มขีด ความสามารถสูงสุดให้องค์การ Lertchai Suthammanon December 12,2008 lertchai_sut@hotmail.com

2. 1 2 3 4 Contents Performance Management System Frame Work Click to add Title Finding the Missing Pieces of PMS Click to add Title Click to add Title Fulfilling The PMS Gap Challenge of PMS in Hamburger Crisis

3. TOP HR Agenda in Asia 2015 • Leadership Development High • Transforming HR into Strategic Partner • Talent Management • Change & Culture • Becoming LO • Performance Improvement & Reward • Work Life Balance • Managing Globalization • Enhancing Employee Commitment Future • Master HR Process • CSR • Restructuring • Managing Diversity • Measuring HR & Employee Performance • Managing Demographics • Delivering on Recruiting& Staffing • Shared ServiceOut Sourcing HR Low Low High Current Source : BCG 2008

4. 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 Blunt instruments Power tools Higher usage Benchmarking ▪ Strategic Planning Mission and Vision Statements CRM ▪ ▪ Customer Segmentation ▪ ▪ Outsourcing ▪ Core Competencies ▪ BP Reengineering Scenario and Contingency Planning ▪ ▪ ▪ Strategic Alliances Growth Strategy Knowledge Management ▪ ▪ ▪ ▪ Supply Chain Management Balanced Scorecard ▪ TQM ▪ Lean Operations ▪ Shared Service Centers ▪ Collaborative Innovation ▪ ▪ Mergers and Acquisitions ▪ Loyalty management lower usage ▪ Six sigma ▪ Off shoring Consumer Ethnography ▪ lower satisfaction higher satisfaction ▪ Corporate Blogs Rudimentary implement Specialty tools ▪ RFID Source: Harvard Business Review2006

5. L L L L L L L L L L L L L L S S S S S S S S S S S S S S Present and Future of Performance management tools Present Future PM Practice Rarely -Extensively Used Will Not Use Rarely -Extensively Used Not Used • balanced Scorecard • 360 / Multi Rate Feedback • Upward Appraisal • Team Appraisal • Forced Ranking / Bell Curve • Training Manager (Performance • Planning/ Tracking an Appraisal) • Training Employee • (Performance Planning / • Tracking an Appraisal) Source : Robert Leigh Compton , 2006.(Australian Study of Performance Mgt.)

6. Performance Management System : From Performance Management to Strategic Performance Management • Creating Environment in which Organizational Performance Becomes Everyone’s 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

7. Performance Management Framework Business Direction • Vision /Mission / Value • Strategy • 1. Strategic Goals • 2. Strategic Action (Initiative/ Project) • 3. Corporate BSC / KPI Step1 Step 2 Your Company Step 3 Step 4 Step5 Step6 Step 7 Reward Planning Execution Analyzing & Reporting Assessment & Review • Organization • /Team Analyzing • Individual • Analyzing • Career Mgt. • Performance • Pay / • Recognition • Cascading • Alignment • Action Planning • Budgeting • Manpower • planning • Communication • Implementation • Monitoring • Forward • Feedback • Tracking • Assessment & • Reviews • Continuous • Improvement • Development • Monthly Report • Mid Year Report • Yearly Report June January December Human Capital + Organization Capital + Information Capital 7

8. Performance ReviewMechanisms • Team Leader Judgment • Performance Discussion • Team Review • Self Assessment & Review • Performance Dialogue • Subordinate Review • Performance Forum

9. Performance AnalysisMechanisms • Calculate & Descriptive • Comparison • Benchmarking • Trend & Predict Future • Process Mapping • Model to Generating

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

11. The Main Purposes of Performance Management System Purposes • Determine Development Need • Appraise Post Performance • Align Objective • Develop Individual Competency • Assess Career Planning decision • Pay for Performance • Assess Future potential • Discipline / Dismiss non Performance • Change organization Culture • Retain High Caliber Staff Rank 1 2 3 4 5 6 7 8 9 10 Source : Robert Leigh Compton , 2006.(Australian Study of Performance Mgt.)

12. Validating Business Strategy • Quality of Product or Service • Wise Use of Corporate Assets • Financial Soundness • Long-Term Investment Value • Ability to Attract and Retain talented people • Quality of Management • Social Responsibility • Effectiveness in Doing Business Globally • Innovation The Nine Attributes of Fortune World ‘s Most Admired Companies Survey People Partnership Fit for Growth Growth Innovation Source : Adapted From : Eigenhuis and Van Dijk,2007

13. Value of Performance Measurement • Visibility and Clarifies Expectation • Focuses and Objectivity • Improves Alignment and cascading • Promotes Execution • Warning and Feedback • Challenging and Motivating

14. 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

15. Un-Balanced Scorecard • Reality of Balanced Scorecard • Ignore The Underlying Strategically (Every US Dollar of Market Capitalization , 85 Cent Representative of Intangible Assets :Cary Cokins2004) • Un Validity of Causal Link Between Driver and Outcome Measures (80% of Enterprise fail to Integrated BSC into Performance System : Cary Cokins.2004) • Theoretical Background of Balanced Scorecard • Translates Strategy into Action/ Performance Management • Holistic Performance Measurement • Balancing Driver and Result

16. Fulfill the Hard and Soft Side of Performance Management Gap Value Vision Mission Culture Performance & Competencies Relationship Goals Competency Based Performance Based Strategy Competency System Performance System Integrating Performance and Competency System Competency Based Reward Competency Assessment &IDP Rewarding Planning PM Process Execution Reporting Competency Reporting Assessment/ Review Competency Development Foreword Feedback

17. Fulfill the Soft Side of Performance Management Gap Vision / Mission External Factor Internal Factor Industry Competitiveness Product Corporate Strategy Competitiveness Economic Development Resources (Capital, Technology ,Human, etc) Social & Political Development Human Resource Strategy Organizational Culture Individual Excellence ( Competencies) Core Leadership Management Training Development Recruitment & Selection Compensation Management Performance Management Career Management

18. 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

19. Strategic Performance Management Focus in HamburgerCrisis • Productivity & Waste • Working Capital • Inventory • Business Dual • Financial Cost • People Development • Focus on Core Job Family • Knowledge Flow • Presenteeism • Engagement • Talent Management. • Improve PMS • Strategy and PMS Linkage • Cascading and Alignment • Short-Term • Building PMS Culture& Fear • Integrating With Others System • Customer • Customer Experience • Customer Engagement • Customer Delight • Service • Quality & Reliability • Sensibility • Speed & Effective Respond • Intellectual Utilization • Brand • Intellectual Property • Competency • Work Process • Partnership • Innovation • Trust • Risk Taking • Recognition • Agility & Change

20. Performance Management and Others Tools in HamburgerCrisis • Activity Based Costing • Customer Relation Management • Total Quality Management • Knowledge Management and learning Organization • Competency Based HRM

21. Planning Performance Execution Performance Assessment & Review Performance Report Reward Confirmed Performance Management Fitting With in HamburgerCrisis + Strategic Planning + + + Organization Performance Organizational Capital Performance Mgt. Team/ Individual Performance +

22. Success and Failure of Performance ManagementSystem • Organization Culture • PM Knowledge • Management Support • Acceptance & Commitment of Owner • PMS Owner & Chief Performance Officer – CPO • Continues Attractive • Impedes in Performance System • Take lots of enforce But Get Little Benefit • Poor Alignment with others Management Tools

23. Thank You