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Strategic Performance Management

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A discourse on the role of performance management in organisations

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Strategic Performance Management

  1. 1. Strategic Performance Management Dr. Elijah Ezendu FIMC, FCCM, FIIAN, FBDI, FAAFM, FSSM, MIMIS, MIAP, MITD, ACIArb, ACIPM, PhD, DocM, MBA, CWM, CBDA, CMA, MPM, PME, CSOL, CCIP, CMC, CMgr
  2. 2. “Performance management is a proactive partnership between employees and management that helps employees perform at their best and align their contributions with the goals, values, and initiatives of the organization” - American Management Association
  3. 3. “Performance Management is a strategic and integrated approach to delivering sustained success to organizations by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors.” - Armstrong & Baron
  4. 4. “Strategic Performance Management encompasses methodologies, frameworks and indicators that help organizations in the formulation of their strategy and enable employees to gain strategic insights which allow them to challenge strategic assumptions, refine strategic thinking and inform strategic decision making and learning.” - Bernard Marr
  5. 5. The Evolution of Performance Management
  6. 6. Tools for Strategic Performance Management i. Management by Objectives (Peter Drucker) ii. Hoshin Kanri (Yoji Akao) iii. Balanced Scorecard (Robert Kaplan and David Norton) iv. Marr Balanced Scorecard (Bernard Marr) v. Value Based Management vi. Results Based Leadership vii. Result Orientated Management viii. Performance Prism
  7. 7. What is Performance Prism? It’s a framework for performance management and measurement which was developed to surmount the weaknesses of balanced scorecards. It was developed in Cranfield University, United Kingdom. This innovation was led by Prof. Andy Neely, Professor of Operations Strategy and Performance Director of Cranfield’s Center for Business Performance and Chairman of Performance Management Association.
  8. 8. The Dilemma of Balanced Scorecards The balanced Scorecards which was developed by Kaplan and Norton focused on four perspectives namely financials, customers, internal processes in addition to learning and growth. It attempts to use strategy as an end instead of a route. It focuses too much on shareholders and customers without proportionate consideration for other stakeholders such as employees, suppliers and regulatory agencies.
  9. 9. The Standpoint of Performance Prism Performance Prism upholds that strategy should not be an end. Strategy is a route for delivering value to stakeholders. Therefore, measures should not be derived from strategy. Measures must be derived from stakeholders.
  10. 10. The Performance Prism Framework Top = Stakeholder Satisfaction Side1 = Strategies Side2 = Processes Side3 = Capabilities Bottom = Stakeholder Contribution Source: Adapted from Andy Neely and Chris Adams, The Performance Prism
  11. 11. Ascertainment of Stakeholders Shareholders Employees Final Consumers Distributors Suppliers Community State Ecosystem
  12. 12. Modeling Strategies In accordance with principles of performance prism, strategies of a firm should be crafted based on mission direction towards satisfaction of distinct stakeholder values.
  13. 13. Modeling Processes The appropriate processes should be hallmark of smoothness and well thought- out mechanism for execution of a firm’s strategies. Strategy execution would definitely turn out failure if it tries to scale flawed processes.
  14. 14. Modeling Capabilities A firm should view its capabilities requirement as technology, practices, infrastructure and competencies necessary for carrying out operations vis-à-vis the established processes in order to generate values for stakeholders.
  15. 15. Stakeholder Contribution Organizations should ascertain the contribution of each stakeholder group to it’s success, so as to identify good contributors, poor contributors and non- contributors. This is necessary for effective positioning of the firm’s performance model.
  16. 16. Drivers for Using Performance Management i. Advancement in Management ii. Technology iii. Market iv. Competition v. Human Resource Strategy vi. Government vii. Industrial Relations viii. Organizational Restructuring ix. Change Management
  17. 17. Using Performance Management System Performance Standards Performance Measurement Quality Improvement Process Performance Reporting
  18. 18. The Management Challenge 9 of 10 companies fail to execute strategy i. Vision Barrier: Only 5% of workforce understands strategy ii. People Barrier: Only 25% of managers have incentives linked to strategy iii. Management Barrier: 85% of executive teams spend less than 1 hour per month discussing strategy iv. Resource Barrier: 60% of organizations don’t link budgets to strategy Source: Balance Scorecard Collaborative
  19. 19. Performance Management Maturity Model Progress Time Disparate Uncoordinated Approach Individual efforts Duplicated effort, difficult to consolidate Time consuming, irreconcilable, possibly mistrusted Systematic Performance Management Single coherent database established Key Performance data collected efficiently Efficient reporting of performance Effective Performance Reporting Cohesive set of strategies Alignment cascade throughout organisation Clear accountability is established Performance Management Ownership is devolved Objective interdependencies mapped and better understood Decisions based on facts Management actions changed through use of information Performance Culture All employees empowerment is facilitated Widespread management by fact and process Plans reflect organizational capability Capability improvement aligned with strategy Continuous improvement achieved Source: Inphase Software
  20. 20. The Role of Technology in Performance Management i. Increase data quality ii. Trigger employee behaviour iii. Enhance processes iv. Boost Performance v. Increase Accessibility of Data vi. Reinforce Compliance vii. Improve performance planning viii. Aids in development of KPI
  21. 21. Core Issues in Performance Management i. Goal Setting ii. Goal Alignment iii. Employee Competencies iv. Measuring Performance v. Performance Review vi. Development Management
  22. 22. Why Should Your Organisation Implement Performance Management? i. Communicate vision, mission, values, objectives ii. Provide impetus for effective organizational development iii. Align organizational resources for growth iv. Enhance working relationships v. Improve management vi. Communicate strengths and key areas for improvement vii. Provide Support to workers viii. Monitor organizational activities ix. Provide feedback
  23. 23. What Employees Want From PM i. Rational expectations ii. Involvement in setting goals iii. Clear evaluation criteria iv. Proper job descriptions v. Constructive and positive feedback vi. Fair treatment vii. Job and career enrichment
  24. 24. Elements & Outcomes of Performance Management Elements:  Listening  Coaching  Feedback Outcomes:  Better Performance  Improved Morale, Belief & Loyalty
  25. 25. Principles of Performance Management System i. Clarity of Purpose ii. Focus iii. Alignment iv. Balance v. Regular Refinement vi. Robust Performance Indicators
  26. 26. Conducting Performance Improvement
  27. 27. Business Analysis for Performance Improvement  Identification of stated goals and objectives.  Ascertainment of the business environment.  Evaluation of stated goals and objectives in the business environment.  Detection of fitting goals and objectives.
  28. 28. Performance Analysis Performance analysis focuses on measuring the gap between desired and actual performance. Clarified business objectives determine requirements for desired performance. Highlights of requirements include organizational structure, competencies, resources, processes, work systems and competitiveness.
  29. 29. The Place of Learning and Development Intervention Learning and Development intervention can only be applicable to gap in competencies and behavioural traits. The other requirements for desired performance call for matching intervention.
  30. 30. Translating Strategy From Organisation to Employee Translate Translate
  31. 31. Performance Indicator It’s a tool enabling the effectiveness of an operation or organisation to be measured, and allows an achieved result to be gauged or evaluated in relation to a set of objectives. Source: OECD
  32. 32. Properties of Performance Indicators i. Relevant to the purpose, policy and practice ii. Clearly defined iii. Reliable iv. Worth measuring v. Measurable vi. Galvanize action vii. Reflect results of action viii. Precisely defined as possible ix. Readily available within a reasonable time frame
  33. 33. Advantages of Performance Indicators i. Means of measuring organizational progress toward set objectives. ii. Give room for benchmarking and comparing various units, sections, departments and subsidiaries.
  34. 34. Disadvantages of Performance Indicators i. Act as bad measures if not well defined ii. Some vital indicators cant be easily measured iii. Issuance of complexity due to number of indicators
  35. 35. Key Performance Indicators in a Firm These are quantifiable factors that are clearly connected to drivers of business success in a particular firm.
  36. 36. Criteria for Selecting KPI i. Strong linkage to objectives ii. They should be connected to areas of the business that can be controlled iii. They should be quantifiable
  37. 37. Types of KPI 1. Directional Indicators 2. Quantitative Indicators 3. Actionable Indicators 4. Practical Indicators
  38. 38. Developing Targets based on KPI A Key Performance Indicator should drive managerial effort towards a mark of achievement, which is a target in accordance with set objective. KPI…….Reduce waste Target……50% by end of March
  39. 39. Dr Elijah Ezendu is Award-Winning Business Expert & Certified Management Consultant with expertise in Interim Management, Strategy, Competitive Intelligence, Transformation, Restructuring, Turnaround Management, Business Development, Marketing, Project & Cost Management, Leadership, HR, CSR, e- Business & Software Architecture. He had functioned as Founder, Initiative for Sustainable Business Equity; Chairman of Board, Charisma Broadcast Film Academy; Group Chief Operating Officer, Idova Group; CEO, Rubiini (UAE); Special Advisor, RTEAN; Director, MMNA Investments; Chair, Int’l Board of GCC Business Council (UAE); Senior Partner, Shevach Consulting; Chairman (Certification & Training), Coordinator (Board of Fellows), Lead Assessor & Governing Council Member, Institute of Management Consultants, Nigeria; Lead Resource, Centre for Competitive Intelligence Development; Lead Consultant/ Partner, JK Michaels; Turnaround Project Director, Consolidated Business Holdings Limited; Technical Director, Gestalt; Chief Operating Officer, Rohan Group; Executive Director (Various Roles), Fortuna, Gambia & Malta; Chief Advisor/ Partner, D & E; Vice Chairman of Board, Refined Shipping; Director of Programmes & Governing Council Member, Institute of Business Development, Nigeria; Member of TDD Committee, International Association of Software Architects, USA; Member of Strategic Planning and Implementation Committee, Chartered Institute of Personnel Management of Nigeria; Country Manager (Nigeria) & Adjunct Faculty (MBA Programme), Regent Business School, South Africa; Adjunct Faculty (MBA Programme), Ladoke Akintola University of Technology; Editor-in-Chief, Cost Management Journal; Council Member, Institute of Internal Auditors of Nigeria; Member, Board of Directors (Several Organizations). He holds Doctoral Degree in Management, Master of Business Administration and Fellow of Professional Institutes in North America, UK & Nigeria. He is Innovator of Corporate Investment Structure Based on Financials and Intangibles, for valuation highlighting intangible contributions of host communities and ecological environment: A model celebrated globally as remedy for unmitigated depreciation of ecological capital and developmental deprivation of host communities. He had served as Examiner to Professional Institutes and Universities. He had been a member of Guild of Soundtrack Producers of Nigeria. He's an author and extensively featured speaker.
  40. 40. Thank You
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A discourse on the role of performance management in organisations


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