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Performance Management_The A-Z of Strategy Execution

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Performance management: A-Z of Strategy Execution_CIPM of Nigeria conference_delivered by Dr Charles Cotter on 25 November 2021

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Performance Management_The A-Z of Strategy Execution

  1. 1. PERFORMANCE MANAGEMENT – THE A-Z OF STRATEGY EXECUTION CHARLES COTTER PhD, MBA, B.A (Hons), B.A www.slideshare.net/CharlesCotter CIPM 53RD ANNUAL NATIONAL CONFERENCE 25 NOVEMBER 2021
  2. 2. PRESENTATION OVERVIEW • BRIDGING THE STRATEGY EXECUTION GAP – 5 CRITICAL SUCCESS FACTORS TO HARNESS PM AS A STRATEGIC LEVER OF BUSINESS PERFORMANCE: • Organizational Culture (HiPO) • Tool (Balanced Business Scorecard) • System (PMS) • Process (9-step) • Role of HRM professionals (Strategic Performance Advisors)
  3. 3. STRATEGIC MANAGEMENT AND EXECUTION • Strategic management is the comprehensive collection of ongoing activities and processes that organizations use to systematically coordinate and align resources and actions with mission, vision and strategy throughout an organization. • Strategic management activities transform the static plan into a system that provides strategic performance feedback to decision making and enables the plan to evolve and grow as requirements and other circumstances change. • Strategy Execution is basically synonymous with Strategy Management and amounts to the systematic implementation of a strategy.
  4. 4. BRIDGING THE STRATEGY EXECUTION GAP – 5 CRITICAL SUCCESS FACTORS TO HARNESS PM AS A STRATEGIC LEVER OF BUSINESS PERFORMANCE • Organizational Culture (HiPO) • Tool (Balanced Business Scorecard) • System (PMS) • Process (9-step) • Role of HRM professionals (Strategic Performance Advisors)
  5. 5. DEFINING A HIGH PERFORMANCE ORGANIZATION (HiPO) CULTURE • A high-performance organization is characterized by clarity and coordination. • Everyone plays a crucial role in driving the company forward, and everything that happens at the individual, group or departmental level contributes to the organization's goals. • People understand their roles and how their efforts contribute to producing the desired results. • Andre de Waal of the HPO Center offers this more formal definition: "A High Performance Organization is an organization that achieves financial and non-financial results that are exceedingly better than those of its peer group over a period of time of five years or more, by focusing in a disciplined way on that which really matters to the organization."
  6. 6. HIPO – 5 STRANDS OF SUCCESS
  7. 7. BALANCED BUSINESS SCORECARD (BBS) • The Balanced Scorecard (BSC) is a strategy performance management tool - a semi-standard structured report, supported by design methods and automation tools that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions. • The critical characteristics that define a Balanced Scorecard are: ❑Its focus on the strategic agenda of the organization concerned ❑The selection of a small number of data items to monitor ❑A mix of financial and non-financial data items
  8. 8. • The balanced scorecard suggests that we view the organization from four (4) perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives: ❑Learning, Innovation and Growth ❑Business (Internal) Processes ❑Customer ❑Financial BBS PERSPECTIVES/DIMENSIONS
  9. 9. • The “new” balanced scorecard transforms an organization’s strategic plan from an attractive, but passive document into the "marching orders" for the organization on a daily basis. • It provides a framework that not only provides performance measurements, but helps planners identify what should be done and measured. It enables executives to truly execute their strategies. • Given the insight and wisdom provided by Kaplan & Norton, the balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. • It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. • When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise. MODERN APPLICATION OF THE BBS
  10. 10. LEARNING, INNOVATION AND GROWTH PERSPECTIVE • Strategic question: ❖ “To achieve our vision, how will sustain our ability to change and improve?” • Examples (measurable indicators): ❖ Time to develop new generation of products ❖ Life cycle to product maturity ❖ Time to market versus competition ❖ Is there the correct level of expertise for the job? ❖ Employee turnover ❖ Job satisfaction ❖ Training/Learning opportunities • Value Outcome: ❖ Organizational knowledge and growth capacity
  11. 11. BUSINESS (INTERNAL) PROCESS PERSPECTIVE • Strategic question: ❖ “To satisfy our shareholders and customers, what business processes must we excel at?” • Examples (measurable indicators): ❖ Cycle time ❖ Unit cost ❖ Yield ❖ New product introductions ❖ Number of activities per function ❖ Duplicate activities across functions ❖ Process alignment (is the right process in the right department?) ❖ Process bottlenecks ❖ Process automation • Value Outcome: ❖ Efficiency
  12. 12. CUSTOMER PERSPECTIVE • Strategic question: ❖ “To achieve our vision, how should we appear to our customers?” • Examples (measurable indicators): ❖ Percent of sales from new products ❖ On time delivery ❖ Share of important customers’ purchases ❖ Ranking by important customers ❖ Delivery performance to customer ❖ Quality performance for customer ❖ Customer satisfaction rate ❖ Customer percentage of market ❖ Customer retention rate • Value Outcome: ❖ Customer satisfaction
  13. 13. FINANCIAL PERSPECTIVE • Strategic question: ❖ “To succeed financially, how should we appear to our shareholders?” • Examples (measurable indicators): ❖ Cash flow ❖ Sales growth ❖ Operating income ❖ Return on Equity (RoE) ❖ Return On Investment (ROI) ❖ Return on Capital Employed (RoCE) ❖ Financial Results (Quarterly/Yearly) • Value Outcome: ❖ Financial performance/profitability
  14. 14. • Clarify or update a business's strategy • Link strategic objectives to long-term targets and annual budgets • Track the key elements of the business strategy • Incorporate strategic objectives into resource allocation processes • Facilitate organizational change • Compare performance of geographically diverse business units • Increase company-wide understanding of the corporate vision and strategy STRATEGIC UTILITY AND FUNCTIONAL VALUE OF BBS’s
  15. 15. PERFORMANCE MANAGEMENT BEST PRACTICES https://www.surveymonkey.com/r/V8SPMMZ • #1: The Performance Management System (PMS) of your organization is directly linked to the strategic goals of the institution. • #2: The PMS of your organization is (horizontally) integrated with the other HRM functions and also the core business processes (finance, customer & operations) of the institution. • #3: The PMS of your organization adapts from only management performance expectations to management, customer and other (internal and external) stakeholder expectations and is agile and responsive to environmental change, global best practices and future trends. • #4: The PMS of your organization is balanced in terms of focusing on improving both short-term outputs or results and also in the medium to long-term future i.e. future-proofing the business/operating model. • #5: The PMS of your organization encourages full participation and wide engagement and extensive consultation, focused on measuring quality standards.
  16. 16. PERFORMANCE MANAGEMENT BEST PRACTICES • #6: The PMS of your organization is user-friendly, simple and understandable for all users. • #7: The PMS of your organization provides an opportunity to recognize performance excellence. • #8: The PMS of your organization is vigilant and efficient in identifying and correcting poor performance levels and under achievement of performance goals and standards. • #9: The PMS of your organization is line management-driven with active support and business partnering from the human resources department. • #10: The PMS is a continuous process that accurately identifies multi-level (individual, team and organizational) performance and skills gaps i.e. generates crowd-sourced (360-degree) performance intelligence and –analytics, which is effectively leveraged as a performance development and - improvement management tool. https://www.surveymonkey.com/r/V8SPMMZ
  17. 17. • #1: BBS is aligned with organization’s strategic business plans • #2: BBS is future-focused, adopting a strategic, medium to long-term approach • #3: BBS is pro-active, sensitive and responsive to (internal and external) environmental change and trends • #4: BBS enjoys company-wide acceptance (ownership) of the measures and processes • #5: BBS is organized, well-coordinated and systematic approach • #6: BBS is a collaborative and partnering effort (managers have co-opted business partners to the process) • #7: BBS is integrated (with other business management and administrative) and cohesive process BEST PRACTICE GUIDELINES FOR BBS
  18. 18. • #8: BBS generates meaningful business intelligence which informs business planning and supports strategic decision-making • #9: BBS integrates both scientific (metrics and analytics) and artistic (planning) principles • #10: BBS utilizes cutting-edge and innovative technology and software • #11: BBS is continuously monitored, reviewed, evaluated and adapted • #12: BBS yields a positive business ROI, with tangible/demonstrable outcomes and impact – creates sustainable competitive advantages and organizational change • #13: BBS incorporates strategic objectives into resource allocation processes e.g. financing/budgeting • #14: BBS is a logical and rational process making use of cause-effect logic BEST PRACTICE GUIDELINES FOR BBS
  19. 19. THE 9-STEP BBS BUILDING AND IMPLEMENTING PROCESS (ROADMAP)
  20. 20. • Strategy maps are communication tools used to tell a story of how value is created for the organization. • They show a logical, step-by-step connection between strategic objectives (shown as ovals on the map) in the form of a cause- and-effect chain. • Improving performance in the objectives found in the Learning & Growth perspective (the bottom row) enables the organization to improve its Internal Process perspective Objectives (the next row up). • This in turn enables the organization to create desirable results in the Customer and Financial perspectives (the top two rows). STEP 4: STRATEGY MAPPING
  21. 21. ILLUSTRATION: STRATEGY MAPS
  22. 22. • During this evaluation, the organization tries to answer questions such as: ❑Are our strategies working? ❑Are we measuring the right things? ❑Has our environment changed? ❑Are we budgeting our money strategically? STEP 9: EVALUATION - STRATEGY RESULTS AND REVISED STRATEGIES
  23. 23. • #1: Balanced Scorecard is a transformation journey and change initiative, not a once off project - ensure that you have designed a Change Management plan which should run parallel to the Balanced Scorecard. • #2: Maintain a committed and engaged leadership - change should be driven from the top • #3: Develop an organizational culture based on results by establishing a strategy management office • #4: Focus the organization on strategy by holding review meetings organized around strategy • #5: Enhance individual accountability for results through objective ownership 10 CRITICAL IMPLEMENTATION SUCCESS FACTORS
  24. 24. • #6: Align the organization, systems and employee performance around strategy through a rewards and recognition programme • #7: Create a performance, results oriented culture • #8: Link budget formation, cost accounting and performance results • #9: Emphasize continual improvement • #10: Link key organization initiatives to the balanced scorecard development process 10 CRITICAL IMPLEMENTATION SUCCESS FACTORS
  25. 25. (VIRTUAL) STRATEGIC PERFORMANCE ADVISOR MODEL (COTTER, 2020) • HRM Governance (e.g. HRM policies and procedures; HRM/people risk management, compliance with ethics and x17 King IV corporate governance principles; Human Capital reporting; promoting workplace democracy and HRM Auditing) – Level 1 of strategic maturity - transactional/current. ❑ Transition from level 1 to 2 – CRAFTING OF A HRM GOVERNANCE FRAMEWORK • Workplace Advocacy (e.g. Employee engagement; employee voice; EVP; employee retention; succession planning; creating a workplace culture of brand ambassadors; mainstreaming HRM and creating future-fit employees) – Level 2 of strategic maturity - transactional/future-focused. ❑ Transition from level 2 to 3 – FUTURE-PROOFING OF THE BUSINESS MODEL • Business Intelligence (e.g. competitive predictive HR metrics and analytics; future-proofing the business model; applying evidence-based HRM; creating HIPO; knowledge management and collaborative intelligence i.e. integrating and harmonizing AI, HI and BI and being trouble-shooting solutions architects) – Level 3 of strategic maturity - strategic/current. ❑ Transition from level 3 to 4 – APPLYING PREDICTIVE ANALYTICS • HRM Strategy (e.g. embedding HRM strategy into business strategy; the use of strategy maps; adopting a strategic mindset and applying strategic management principles and processes) – Level 4 of strategic maturity - strategic/future-focused.
  26. 26. 7-POINT HRM TRANSFORMATION (COTTER, 11 JANUARY 2019) • "In order to be feasible, to prosper professionally in 2019 and to be future-fit, HRM will have to exchange the currency in which they trade from old notes to noteworthy, Industry 4.0 and business relevant denominations and value. Specifically, this change translates from: • 1. feelings to facts; • from 2. anecdotal to analytical; • from 3. hindsight to insight to foresight; • from a 4. business tributary to mainstream; • from 5. intuition to intelligence; • from 6. best practice (imitation) to best fit (internalization) to next practice (innovation) and ultimately, • from 7. a cost to a profit centre. • Generally, this 7-point transformation means an upgrade to Evidence- based HRM."
  27. 27. BUSINESS EXECUTIVE EXPECTATIONS OF THE SHRBP ROLE IN THE COVID-19 TALENT MANAGEMENT ERA (COTTER, 2021) https://www.surveymonkey.com/r/VDG2NCT • #1: Catalytic Driver of organizational Change • #2: Proactive Business-minded Thinker • #3: Collaborative business management Consultant • #4: Purpose-directed Coach (of line managers) • #5: Delivery (value-adding and results-oriented HRM practices) • #6: (Credible and Accountable) Performance Advisor • #7: Strategic Facilitator and Enabler • #8: Innovative Solutions Architect (and trouble- shooter) • #9: Digital Futurist and -Analyst • #10: (Future-focused) Organizational Behavioural Economist
  28. 28. CONCLUSION • Key points • Summary • Questions
  29. 29. DR CHARLES COTTER’S CONTACT DETAILS AND SOCIAL MEDIA PRESENCE • Mobile number: +2784 562 9446 • Email address: charlescotterhrdconsultant@gmail.com • YouTube: https://www.youtube.com/channel/UCMtDro7N29l3KTat-rtRuGQ • LinkedIn: https://www.linkedin.com/in/charlescotter/ and https://www.linkedin.com/company/dr-charles-cotter-and-associates • Twitter: @Charles_Cotter • Facebook: https://www.facebook.com/CharlesACotter/ • SlideShare: www.slideshare.net/CharlesCotter

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