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Paper 4: Performance Management in SMEs (Qi)
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Paper 4: Performance Management in SMEs (Qi)

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  • 1. A performance planning system designed by SSM for a medium company
    By Li Qi and Prof. Wenbin Liu
  • 2. Background & Introduction
    We undertook a performance management project for Beijing Tonsan Ltd. in 2008.
    Tonsan is a Chinese high-tech enterprise, specializing in the R&D, production, sales and service of engineering adhesives, which is a full-blossomed company with all-around functions and business activities.
    In the end of 2009, the company's profit was doubled despite the economical crisis. It turns out that it is the performance planning system, which was designed via SSM, played the key role in boosting the company's performance, according to its CEO.
    In this talk we report how to develop KP (Key Processes) and KPI (Key Performance Indicator) via SSM, and focus on performance planning for this company. 
  • 3. Improvements in Tonsan’s performance management
    Phase I: Collect much information and data for a clear picture of Tonsan.
    Phase II: Decompose the strategy by utilizing BSC and the strategy map combined with the SSM.
    Phase III: Form a set of targets and tasks of the middle-level departments, which stemmed from the strategy decomposition from top to the middle level management. To choose to measure the performance for the tasks by using 3E dimensions so as to form the performance indicator system.
    Phase IV: This phase is for design of performance planning.
    Phase V: For Tonsan, we put forward some suggestions regarding to appropriate performance feedback or organizational response.
  • 4. Phase IV Design of performance planning
    The performance planning system we developed enables the supervisors and the subordinates in the hierarchical structure to communicate and negotiate formally and informally.
    The performance planning system is to build effective bi-directional communication among the higher and the lower levels of the management to analyze what specific tasks must be carried out for the KPs that support the KPIs so that the KPIs can be fulfilled. The performance planning system will be employed to monitor the key performance processes (KPs) and the key performance indicators (KPIs).
    Our performance planning system is based on the KPs and KPIs which had been developed in the last phase, and thus the contents for the communication and discussion are more specific and systematic.
    We developed the specific contents for their performance plan for each department and unit at various levels in accordance with the KPs derived in the third phase, and called upon the managers at various levels to implement performance plan agreed upon by both managers themselves and their subordinates, track their subordinates’ progresses, provide proper guidance, and keep records of their tracking and guidance.
  • 5. Phase II Tonsan’s Strategy Map
  • 6. SSM and 3Es
    7.Take into actions
    to improve
    1.Complex situation
    inspect
    6.Debate with
    systematically desirable
    and culture feasible
    5.Compare CM with 2
    2.Express
    messy system
    Real world
    4.Formulate CM
    3.Build RD of
    relevant purposeful
    activity system
    system things
    RD1
    RD2
    RD3
    The spirit of SSM is that any system can be analysed by answering three questions as:
    What to do (P) - Efficacy relate, measures the outputs of the system
    How to do (Q) - Efficiency relate, evaluates whether minimum resources are used.
    Why to do (R) - Effectiveness relate, assesses whether the system outputs are meaningful or useful to higher level (wider) system.
  • 7. Table 7.4: The entire supporting processes analysis
    An example of supporting processes analysis
  • 8. Phase III KPs & KPIs
  • 9. An example of KPIs & KPs form
  • 10. Phase IV KP adjustment and tracking record