Corporate Performance Measurement In Strategic Planning
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*Importance of Corporate Performance Measurement. *Benefits of Corporate Performance Measurement and where would Corporate Performance Measurement stand in future. *Ways to maximise the usage of Corporate Performance Measurement that can benefit users. *Case study on ways to utilise Corporate Performance Measurement solution and its’ end results.
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Corporate Performance Measurement In Strategic Planning
- 1. CORPORATE PERFORMANCE MEASUREMENT IN STRATEGIC CORPORATE PLANNING Case Study, Concepts and Debatable Ideas Kenny Ong CNI Holdings Berhad www.myCNI.com.my www.OOBEY.com
- 3. 1. Why we hate Performance Appraisals www.myCNI.com.my www.OOBEY.com
- 4. Complaints about Performance Appraisals As an Appraisee As an Appraisor Mgmt/HR www.myCNI.com.my www.OOBEY.com
- 9. What is Performance Appraisal used for? Reward? Discipline? Development? Motivation? Promotion? Monitor? www.myCNI.com.my www.OOBEY.com
- 10. Performance Management Performance Appraisal Performance Development Performance Measurement Common terms and definitions www.myCNI.com.my www.OOBEY.com
- 12. What is the OBJECTIVE? Succession Planning (Business Continuity) Talent Management Differentiation Performance Management System Budgeting + Planning KPIs BSC Business Model www.myCNI.com.my www.OOBEY.com
- 13. What is the OBJECTIVE? Succession Planning (Business Continuity) Talent Management Differentiation Performance Management System Budgeting + Planning KPIs BSC Business Model Business Plan Implementation Talent Management www.myCNI.com.my www.OOBEY.com
- 14. 1. Why we hate Performance Management Systems Focus on the Business Strategy and Business Direction first www.myCNI.com.my www.OOBEY.com
- 19. What is the Business Model? USP Market Discipline Profit Model www.myCNI.com.my www.OOBEY.com
- 22. Strategy: Value 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) www.myCNI.com.my www.OOBEY.com
- 25. Strategy: Value 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) www.myCNI.com.my www.OOBEY.com
- 26. Strategy: Value 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) www.myCNI.com.my www.OOBEY.com
- 27. Business Situation vs. Performance Mgmt Focus 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 www.myCNI.com.my www.OOBEY.com
- 28. Focus: Corporate Alignment Revenue Growth Base Retention Share Gain Positioning Adjacent Market New Business Operational Excellence Product Leadership Customer Intimacy Competencies Information Systems Motivation, empowerment, alignment Financial Learning & Growth Internal Process Customers Investment Strategy Productivity Market Value www.myCNI.com.my www.OOBEY.com
- 29. Focus: Corporate Alignment Financial Learning & Growth Internal Process Customers / Distributors www.myCNI.com.my www.OOBEY.com Revenue Growth Productivity Market Value Department Operations Supplier & Alliances External Involvement Target Markets Products/ Services Channel Strategies Human Resources Technology Information & Intelligence Systems & Processes
- 30. Focus: Corporate Alignment Financial Learning & Growth Internal Process Customers / Distributors 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 www.myCNI.com.my www.OOBEY.com
- 31. 1. Why we hate Performance Management Systems Implementing the Right System www.myCNI.com.my www.OOBEY.com
- 32. What is Performance Measurement used for? Reward? Discipline? Development? Motivation? Promotion? Monitor? www.myCNI.com.my www.OOBEY.com
- 33. Which system should we use? Behavior-based Knowledge/Skill based Results-based Trait-based Managing Performance = Managing Expectations What’s YOUR expectation? Activity based www.myCNI.com.my www.OOBEY.com
- 34. Dangers of Best Practice and Benchmarking… “ Abraham Wald’s Work on Aircraft Survivability”, M. Mangel and F.J. Samaniego Where would you focus reinforcement? www.myCNI.com.my www.OOBEY.com
- 35. Dangers of Best Practice and Benchmarking… www.myCNI.com.my www.OOBEY.com Company Performance high low ‘ Best Practice’ theories low high zero Performance “ Selection Bias and the Perils of Benchmarking”, Jerker Denrell, Harvard Business Review 2005 Trend line
- 36. Dangers of Best Practice and Benchmarking… www.myCNI.com.my www.OOBEY.com Company Performance high low ‘ Best Practice’ theories low high zero Performance “ Selection Bias and the Perils of Benchmarking”, Jerker Denrell, Harvard Business Review 2005 Trend line
- 41. BSC: Balanced & Cause-and-Effect Financial “ To satisfy our stakeholders, what Financial objectives must we accomplish?” www.myCNI.com.my www.OOBEY.com Internal Process “ To satisfy our customers, in which internal business processes must we excel?" Customer “ Who are our target customers? What is our value proposition?” Learning & Growth “ What capabilities and tools do our employees require to help them execute our strategy?
- 43. 2. Performance Planning MBO, KPIs, Competencies www.myCNI.com.my www.OOBEY.com
- 44. 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
- 45. MBO Standards www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent E D C B A
- 46. MBO Standards www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent E D Good C B A
- 47. MBO Standards www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent Commit Suicide E Not Good D Good C Very Good B Excellent A
- 48. MBO Standards www.myCNI.com.my www.OOBEY.com Commit Suicide Not Good Good Very Good Excellent Unacceptable performance E Did not fully meet planned results D Achieved Planned Results C Higher than planned results B Consistently achieved 4 for 3 quarters A
- 55. Lagging and Leading KPIs Historical, Outcome, Results, 1 st Level, Usually Financial or tangible, Quarterly and Annually Current, Indicators, Drivers, 2 nd Level onwards, usually non-financial or intangible, Weekly, Monthly and Quarterly www.myCNI.com.my www.OOBEY.com Leading Lagging
- 56. Developing ‘Driver’ KPIs www.myCNI.com.my www.OOBEY.com Customer Retention % Lagging, 1 st Level Customer Satisfaction Index Leading, 2 nd Level On time delivery Time to market for new products TNA % Defect levels, warranty claims Leading, 3 rd Level onwards
- 59. E3 – Department BSC Financial Perspective www.myCNI.com.my www.OOBEY.com On Time Delivery Innovation Quality OPEX CAPEX Targets Measures Goals
- 60. Individual Performance www.myCNI.com.my www.OOBEY.com 2.0 Goals and Targets for Q1 6.0 Appraiser Overall Comments/ Feedback 5.0 Rating (Merit x Weight) 4.0 Merit* 3.0 Achievements and Efforts for Q1 1.0 Key Results Area (Max 6)
- 63. Competency Standards www.myCNI.com.my www.OOBEY.com Does not meet behavioral standards. Require counseling or disciplinary actions. 1 Meets behavioral standards some of the time. Needs improvement. 2 Meets behavioral standards consistently . Is a good role model for others. 3
- 65. 3. The Manager’s Role in Performance Management Appraisal, Evaluation, Communication, Coaching, Counseling, Mentoring www.myCNI.com.my www.OOBEY.com
- 66. Coaching & Counseling www.myCNI.com.my www.OOBEY.com Month 1 Performance Planning Month 12 Performance Appraisal Month 2-11 ?
- 70. Alignment: 4-Wheels Model Philosophies Corporate Objective Performance Objectives www.myCNI.com.my www.OOBEY.com Structure Resources Leadership Person
- 71. 4. Performance Evaluation Formal Review, Incentives, Compensation, Reward, Differentiation www.myCNI.com.my www.OOBEY.com
- 72. Performance Evaluation Session: Key Ingredients www.myCNI.com.my www.OOBEY.com Self Review Evaluator’s Review Next Steps Support/ Resources Improvement Methods
- 73. PASSE P raise and encourage A sk questions allow the person to S ave Face use S MART goals E ncourage small improvements Performance Evaluation Session: Communication www.myCNI.com.my www.OOBEY.com
- 79. Compa Ratio Table www.myCNI.com.my www.OOBEY.com 1 2 3 4 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
- 80. Compa Ratio Table www.myCNI.com.my www.OOBEY.com 1 2 5% 3 4 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
- 81. Compa Ratio Table www.myCNI.com.my www.OOBEY.com 0 1 2 2 3 4 5% 7 9 3 7 4 9 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
- 82. Compa Ratio Table www.myCNI.com.my www.OOBEY.com 0 0 0 2 4 1 0 1 2 4 6 2 3 4 5% 7 9 3 3 5 7 9 12 4 7 8 9 12 15 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
- 85. Employee Distinctions through Relative Performance www.myCNI.com.my www.OOBEY.com
- 86. Employee Distinction? www.myCNI.com.my www.OOBEY.com 1 2 3 4 5 1 2 3 4 5 6 2 3 4 5% 6 7 3 4 5 6 7 8 4 5 6 7 8 9 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
- 87. Employee Distinction? www.myCNI.com.my www.OOBEY.com 0 0 0 0 0 1 0 0 1 1 1 2 3 4 5% 7 9 3 3 5 9 12 18 4 5 8 12 15 20 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
- 88. Employee Distinction www.myCNI.com.my www.OOBEY.com 0% 1.0 0 1 ≤ 1.3 0.9% 1.8 0.5 2 > 1.3 – 2.3 2.1% 2.8 0.75 3 > 2.3 – 3.3 4.2% 3.5 1.2 4 > 3.3 – 4.1 8.4% 4.2 2 5 > 4.1 Example Increment Example Rating Multiply Factor Rating Average Rating
- 90. Curse of the Bell Curve ‘ A’ Staff ‘ B’ Staff ‘ D’ Staff ‘ E’ Staff ‘ C’ Staff www.myCNI.com.my www.OOBEY.com
- 91. Managing People performance: A Summary www.myCNI.com.my www.OOBEY.com
- 94. Alignment: 4-Wheels Model Philosophies Corporate Objective Performance Objectives www.myCNI.com.my www.OOBEY.com Structure Resources Leadership Person
- 95. Thank You. soft copy of slides: www.totallyunrelatedrandomanddebatable.blogspot.com