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The Use Of HR Performance Management Measurement in Strategic Business Planning

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  • + pboney123 pboney123 2 months ago
    the examples given were grato!!!!
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Notes on slide 1

Focus on only three things: the ‘Why’, the ‘What’, and the ‘How’ Why is the right PM System critical for both Business and Talent Managament? What do I need to fine-tune to? How do I do that?

Most organizations in Asia underestimate the PMS most use it to reward/punish their staff (to terminate) informal PMS (angpow) biasness and favoritisms family-owned business (who dare evaluate relatives?)

Performance Management System is first and foremost a ‘SYSTEM’ – meaning we have Input, Process and a predictable Output Firstly. Performance means ‘Results’. Business Performance = Business Results. If your PM System is merely to reward/punish employees, you are missing the point If your PM System does no provide a predictable Output (i.e. Results), it is not a system Secondly, everything within the system must be Controllable – no excuse if performance does not happen. This means that Cause-and-Effect principles must be built into the PM System

PMS does not equate to Performance Evaluation process entire eco-system to ensure performance PMS = Business Plan Implementation system The PM System is the only process in any organization to execute the Business Strategy. There are no other process or system that can do that. Treat it with care Why? PM System is the only thing that can link Business Strategy with the People executing it Secondly… without a strong PMS, we cannot Differentiate employees properly. If we cannot Differentiate, we cannot define and manage Talent. Link between PMS/TM/Succession Planning? Business Continuity = perpetual business performance (in Asia = Legacy) Can only be done if the right Talents are in place (bench strength) Making sure the right Talents are spotted = PMS

Many people go around setting up PMS without clear understanding of Business Directions… (sometimes its hidden from lower management & consultants)… End up HR and Finance getting beat up by Management by now implementing PMS ‘properly’ Sometimes the Business itself is unclear, in this case, do not ‘re-structure’ the PMS – it will worsen the situation. End up, most Asian SMEs do D.I.Y PMS: Cut-and-paste Off-the-shelf

The Business Model is made up of three components – Unique Selling Proposition, Profit Model and Market Discispline Each business is unique depending on how the Business Model is configured Each organization’s PMS has to follow the Business Model If your Business Model is wrong (or inferior), a better PMS cannot help you. Change your Business Model first Example: Google vs Yahoo USP – Simplicity, Search-focused, Free! Profit Model – Ad revenue MKt Discipline – Operational Excellence Example: Tata Nano vs. GM (Proton vs. Kia, Hyundai, Cherry) USP – Cheap (below USD2,500), no-frills Profit Model – Motorcycle (as opposed to Automobile manufacturing model)‏

The Profit Model is the total interaction between fives components: revenue (how to get money), cost, margin, cash flow, and asset utilization & velocity All five components must be aligned, otherwise a business cannot survive financially A PMS must ensure that all five KPIs are accounted for and have leading KPIs attached to each of the five Example: Google, Tata Nano Local example: Courts Mammoth, Jusco (Aeon)

How does the Customer define “Great Experience”? - It depends on their own perceptions. Problem is…this differs depending on the Customer! If you are very good in something that the Customer does not value, it will not improve the Experience. Example: Air Asia vs. Malaysia Airlines (or Ryanair vs. Luthansa)‏ USP – Budget Profit Model – Lowest Cost, Maximum Seats Mkt Discipline – Operational Excellence

A leading business organization can only afford to focus on ONE, at the most TWO of the disciplines If you try to accomplish all three at once, you will end up with: an average business confused employees mixed up product lines too many KPIs wasted funds To Excel – Must be a Leader in ONE of the disciplines but the other two must be at least at industry standard

Quick slide to show that the Market Discipline approach is practical and proven

Each Market Discipline requires different operational emphasis This means that each Market Discipline requires a different Performance Management System in order to achieve results Trying to accomplish or benchmark all three (even two) will confuse and dilute your PMS effectiveness

Who thinks that Mc Donald’s has the best beef burger in the world? (Asian, Malaysian poll) Who sells the most beef burger in the world? Does product have anything to do with it?

A simple Balanced Scorecard showing how all the different elements of the Business Model interact in typical well-planned PMS Reminder: if your Business Model is wrong to start with, your PMS will make things even worse. If you have a right Business Model, make sure your PMS in ‘tune’ with the Business Model (Cause-and-Effect settings)

Strategies -> KPI? : If we already know our priorities and are aware of al the strategy options available; we are creating something UNIQUE, INNOVATIVE and DISRUPTIVE e.g. Air Asia or… conducting a business Turnaround e.g. MAS KPI -> Strategies? : If we want to find out possible strategies, and determine our priorities first thru selection of important KPIs; when we are gorwing through ‘normal’ business, not a Turnaround.

Strategies -> KPI? : If we already know our priorities and are aware of al the strategy options available; we are creating something UNIQUE, INNOVATIVE and DISRUPTIVE e.g. Air Asia or… conducting a business Turnaround e.g. MAS KPI -> Strategies? : If we want to find out possible strategies, and determine our priorities first thru selection of important KPIs; when we are gorwing through ‘normal’ business, not a Turnaround.

Strategies -> KPI? : If we already know our priorities and are aware of al the strategy options available; we are creating something UNIQUE, INNOVATIVE and DISRUPTIVE e.g. Air Asia or… conducting a business Turnaround e.g. MAS KPI -> Strategies? : If we want to find out possible strategies, and determine our priorities first thru selection of important KPIs; when we are gorwing through ‘normal’ business, not a Turnaround.

Moral 2: Never forget that the goal of business is BUSINESS, not PERFORMANCE management or BSC! Do not just buy a book on ‘best practice KPIs’ and start implementing them. Understand the ‘real’ business first. E.g.

This slide explains how you can REDUCE your organization’s KPIs by focusing on what matters most

How does the Business Model and PMS affect Talent Management? Firstly…. TM = HRM Secondly… TM processes should be defined and maintained by people from the Talent Pool (this does not happen in Asia)

There are many definitions of Talent. Don’t listen blindly to Consultants (especially in Asia, Malaysia) nor simply trust books nor copy MNC practices. If PMS is not linked to Business Model, you will attract and retain the WRONG talents

John Maxwell – “You do not attract who you want. You attract who you are ” So… how does the PMS affect Talent Management? PMS creates the ‘culture’ or environment Wrong PMS = wrong culture = attract/retain wrong Talent If your PMS is not strong, all four areas of Talent Management (selection, development, evaluation, motivation) will not be effective E.g. Bell Curve, Six Sigma

Group 1: High Potential, High Performance (Talent) Staff this category will automatically be placed in the company’s Succession Plans. Be the first priority to be considered for any promotions or upgrading exercises. Career Acceleration + Specialist Career Paths. Group 2: Average Potential, High Performance (Leadership Issues) Leadership, motivational and cultural development would be given to these staff while they perform in their current positions. Group 3: High Potential, Average Performance (Potential) Should not be given career advancement unless performance improves. Good targets for transfers or job rotations to departments that require urgent manpower. Group 4: Average Potential, Low Performance (Issues) Staff in this group should be monitored closely by HR. They should be eventually moved out of their current work function, department or even the company entirely.

Common issues with how an organization’s PMS (or the lack of one) actually de-motivate Talents list is gathered from my consulting experience with organizations in Asia (especially SEA)

System problems mean that if we correct the PMS, the issues should not happen. Within the control of HR and other policy makers The rest are people problems i.e. usually with the Superior. These issues are softer and much harder to resolve.

The next four slides explain how an organization’s Business Model should affect the definition of ‘Talent’ , and the role of PMS in differentiating and highlighting them

Different Talents are attracted and motivated by different cultures, systems and norms Your Business Model (executed through your PMS) will decide which Talents you attract and keep The right Talent will help to execute the right Business Model

Tying it all together, once again, through a simplified BSC The Talent Management component comes under the ‘Learning & Growth’ perspective Once again: The Business Model (Financial, Customer, Process) is impacted by Talent (Learning & Growth). The right PMS should integrate all aspects clearly and effectively

A car can only drive straight if its four wheels are aligned. A Talent can only perform IF the four-wheels impacting them are aligned “ PEOPLE” is only one part to get Performance. We focus it here, but have to note of the rest. In other words, a Talent can or cannot perform depends on the support provided This is also another reason why in managing a Talent’s performance, TRAINING and INCENTIVES (the two most popular methods, do not really work), unless support by the other factors in the 4-wheels Your Business Model will determine the contents of the four wheels In other words, Performance Management SYSTEM = 4-Wheels

These are ten practical steps an organization can take in fine-tuning their PMS Get the Business Model right: emphasis: changing the PMS (e.g. BSC) without the proper BM in place will not work You only get better at doing the wrong things (and employees are wrongly rewarded also)

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The Use Of HR Performance Management Measurement in Strategic Business Planning - Presentation Transcript

  1. THE USE OF HR PERFORMANCE MANAGEMENT IN STRATEGIC BUSINESS PLANNING Case Studies, Concepts and Debatable Ideas Kenny Ong CNI Holdings Berhad
  2. Content
    • Why is the right Performance Management System critical?
    • Adapting the System to the Business Model and Strategy
    • Fine-tuning Performance Management for Talent Management
  3. 1. Why is the right Performance Management System critical?
    • “… 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 www.myCNI.com.my www.OOBEY.com
  5. 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? www.myCNI.com.my www.OOBEY.com
  6. Before we start…
    • Moral of the story…
    • Innovation:
      • Business models
      • Products
      • Services
    • Market Leadership
    • Competitive differentiation
    Get the picture? www.myCNI.com.my www.OOBEY.com
  7. What is the OBJECTIVE of a Performance Management System?
    • 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
  8. What is the OBJECTIVE? Succession Planning (Business Continuity) Talent Management Differentiation Performance Management System Budgeting + Planning BSC and KPIs Strategy Business Model Business Strategy Execution Talent Management
  9. 2. Adapting the System to the Business Model and Strategy Focus on the Business Strategy and Business Direction first
  10. What is the Business Model? USP Market Discipline Profit Model
    • Google
    • Tata Nano
  11. Business Model: Profit Model Revenue Cost Margin Cash Flow Assets
  12. Intro: Market Discipline
    • "Exactly what I need"
    • Customized products
    • Personalized communications
    • "They're very responsive"
    • Preferential service and flexibility
    • Recommends what I need
    • "I'm very loyal to them"
    • Helps us to be a success
    "They are the most innovative" "Constantly renewing and creative" "Always on the leading edge" "A great deal!" Excellent/attractive price Minimal acquisition cost and hassle Lowest overall cost of ownership "A no-hassles firm" Convenience and speed Reliable product and service Product Leadership Operational Excellence Customer Intimacy
    • Air Asia
  13. Strategy: Market Disciplines 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)
  14. Strategy: Market Disciplines 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) HP well-balanced portfolio, mass customization Acer super lean cost structure, aggressive pricing Apple powerful products, premium pricing, limited range Still Doing well in 2009
    • 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' products
    • Learning organization
    Strategy: Market Disciplines
    • Operational Excellence
    • Competitive price
    • Error free, reliable
    • Fast (on demand)
    • Simple
    • Responsive
    • Consistent information for all
    • Transactional
    • 'Once and Done'
    • Customer Intimacy
    • Management by Fact
    • Easy to do business with
    • Have it your way (customization)
    • Market segments of one
    • Proactive, flexible
    • Relationship and consultative selling
    • Cross selling
  16. The McPlaybook*
    • Make it easy to eat
    • 50% drive-thru
    • Meals held in one hand
    • Make it easy to prepare
    • High Turnover
    • Tasks simple to learn & repeat
    • Make it quick
    • “ Fast Food”
    • 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
  17. Systems Alignment with Business Model Revenue Base Retention Share Gain Positioning Adjacent Market New Business Financial Learning & Growth Internal Process Customers Cost Margin Cash Flow Asset Operational Excellence Product Leadership Customer Intimacy Investment Strategy Competencies Information Systems Motivation, empowerment, alignment Satisfaction
  18. Before we start…
    • Which comes first?
    • Strategies -> KPI?
    • KPI -> Strategies?
  19. Before we start…
    • Which comes first?
    • Strategies -> KPI?
    • KPI -> Strategies?
    • already know our priorities, aware of all strategy options available
    • creating something UNIQUE, INNOVATIVE and DISRUPTIVE e.g. Air Asia
    • conducting a business Turnaround e.g. MAS
  20. Before we start…
    • Which comes first?
    • Strategies -> KPI?
    • KPI -> Strategies?
    • want to find out possible strategies,
    • determine our priorities first thru selection of important KPIs;
    • growing through ‘normal’ business, not a Turnaround.
  21. Wrong KPIs
    • “ What is the moral of the story?”
  22. KPIs and Behavior
    • After: “Minutes Per Resolution” of a problem
    • Resolution in ONE CALL become the core goal
    • Reduced probability of call transfers from 45% to 18%
  23. Sample KPIs for Each Market Discipline
    • Operational Excellence
    • Price
    • Selection
    • Convenience
    • Zero Defects
    • Growth
    • Customer Intimacy
    • Customer Knowledge
    • Solutions Offered
    • Penetration
    • Customer Data
    • Customer-success focus
    • Product Leadership
    • Marketing
    • Functionality
    • # of Successes
    • # of Failures
    • Learn from key users
    • Interdisciplinary teams
    • Pipeline
    • 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
    Strategy and Systems: Market Disciplines *The Performance Management System should be focused on these
    • 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
    Strategy and Systems: Market Disciplines *The Performance Management System should be focused on these
  26. Strategy and Systems: Market Disciplines
    • 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
    *The Performance Management System should be focused on these
  27. Business Situations vs. HRM Upturn Flat Downturn Fight Complacency Sharpen Edge Keep Momentum Conquer ‘ Change’ mgmt Reduce Fat Continuity Everyone Happy Innovation Acquire Profits Build momentum Sales Cash Flow Talent Mgmt Innovation/R&D Early wins Slow Down HR Costs Top Talent focus Sales, Sales, Sales Increase attrition Motivation
  28. Business Situations vs. HRM Upturn Flat Downturn Fight Complacency Sharpen Edge Keep Momentum Conquer ‘ Change’ mgmt Reduce Fat Continuity Everyone Happy Innovation Acquire Profits Build momentum Sales Cash Flow Talent Mgmt Stack R&D Early wins Slow Down HR Costs Top Talent focus Stack Sales Increase attrition Motivation
    • Projects
    • Job Ads
    • Communication
    • F/L Manager Com.
    • Middle Management
    • Involvement (survey, suggestions)
    • Realistic Goals
    • Controllable KPIs (customer satisfaction, production)
  29. Business Situations vs. HRM Upturn Flat Downturn Fight Complacency Sharpen Edge Keep Momentum Conquer ‘ Change’ mgmt Reduce Fat Continuity Everyone Happy Innovation Acquire Profits Build momentum Sales Cash Flow Talent Mgmt Stack R&D Early wins Slow Down HR Costs Top Talent focus Stack Sales Increase attrition Many times, you need a different CEO/Leader/Management Team for each business situation
  30. 3. Fine-tuning Performance Management for Talent Management
  31. Talent Management
    • A Talent for others does not mean a Talent for you
    • ‘Talent’ has to be defined in the context of the Business Model
  32. Performance Management and Talent Management
    • Talent Management Processes
    Philosophy Training Needs, Competencies Differentiation, Targeting Improvement, Progress Rewards, Recognition Selection Development Evaluation Motivation
  33. Targeting: Identify and Attract Group I (Talent Pool) Group II (  Potential) Group III (  Performance) Group IV (Counseling) 2 3 4 5 2 3 4 5 PERFORMANCE POTENTIAL
    • Identify
  34. Complaints about Performance Management Systems
    • Bias
    • Different Standards
    • Surprise
    • Subjective
    • No linkage
    • No differentiation
    • Secretive
    • No follow up
    • No control
    • No support
    How we de-motivate our own Talent Pool
  35. Complaints about Performance Management Systems
    • Different Standards
    • Surprise
    • Subjective
    • No linkage
    • No differentiation
    • No support
    Systems Problem… *The rest are ‘people’ problems… to be dealt with in another time
    • Product Leadership
    Business Model vs. Talent & Performance Management Operational Excellence Customer Intimacy Organization, jobs, skills Management systems Information and systems Culture, values, norms
  37. Business Model vs. Talent & Performance Management
    • Operational Excellence
    • Central authority, low level of empowerment
    • High skills at the core of the organization
    • Disciplined Teamwork
    • Process, product- driven
    • Conformance, 'one size fits all' mindset
    • Integrated, low cost transaction systems
    • The system is the process
    • Command and control
    • Quality management
    Organization, jobs, skills Management systems Information and systems Culture, values, norms
    • Product Leadership
    • Ad hoc, organic and cellular
    • High skills abound in loose-knit structures
    • Concept, future-driven
    • Experimentation and 'out of the box' mindset
    • Person-to-person communications systems
    • Technologies enabling cooperation
    • Rewarding individuals' innovative capacity
    • Risk and exposure management
    • Product Life Cycle profitability
    Business Model vs. Talent & Performance Management Organization, jobs, skills Management systems Information and systems Culture, values, norms
  39. Business Model vs. Talent & Performance Management Organization, jobs, skills Management systems Information and systems Culture, values, norms
    • Customer Intimacy
    • Empowerment close to point of customer contact
    • High skills in the field and front-line
    • Customer-driven
    • Variation and 'have it your way' mindset
    • Strong customer databases, linking internal and external information
    • Strong analytical tools
    • Customer equity measures like life time value
    • Satisfaction and share management
    • Focus on ‘Share of Wallet’
  40. Business Model vs. Talent & Performance Management Revenue Base Retention Share Gain Positioning Adjacent Market New Business Financial Learning & Growth Internal Process Customers Cost Margin Cash Flow Asset Operational Excellence Product Leadership Customer Intimacy Investment Strategy Competencies Information Systems Motivation, empowerment, alignment Satisfaction
  41. Performance Support: 4-Wheels Model Philosophies Corporate Objective Performance Objectives Structure Resources Leadership Person
  42. Curse of the Bell Curve ‘ A’ Staff ‘ B’ Staff ‘ D’ Staff ‘ E’ Staff ‘ C’ Staff www.myCNI.com.my www.OOBEY.com
  43. Eight Things To Do
    • Get the Business Model and Strategy right
    • Link System to Strategy (e.g. BSC)
    • Simplify KPIs and Processes to Business Model
    • Clarify the System Philosophy to employees
    • Strengthen Performance Management System
    • Redirect Funds ($$)
    • Brainwash your Appraisers (especially new ones)
    • Support performance with 4-wheels
  44. Thank You. soft copy of slides: http://totallyunrelatedrandomanddebatable.blogspot.com/

+ Kenny OngKenny Ong, 2 months ago

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