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Premium member Presentation Transcript Slide 1: ENHANCING THE BUSINESS PERFORMANCE MANAGEMENT SYSTEM FOR MORE EFFECTIVE BUSINESS AND TALENT MANAGEMENT Case Study, Concepts and Debatable Ideas Kenny Ong CNI Holdings Berhad www.myCNI.com.my www.OOBEY.com Intro: CNI : Intro: CNI 19 years old Core Business: MLM Others: Contract Manufacturing, Export/Trading, eCommerce Malaysia, Singapore, Brunei, Indonesia, India, China, Hong Kong, Philippines, Italy, Taiwan Staff force: ± 500 Distributors: 200,000 Products: Consumer Goods and Services www.myCNI.com.my www.OOBEY.com 1. Why we hate Performance Appraisals : 1. Why we hate Performance Appraisals www.myCNI.com.my www.OOBEY.com Complaints about Performance Appraisals : As an Appraisee As an Appraisor Complaints about Performance Appraisals Mgmt/HR www.myCNI.com.my www.OOBEY.com Complaints about Performance Appraisals : As an Appraisee Complaints about Performance Appraisals Bias Different Standards Surprise Subjective No linkage* No differentiation Secretive No follow up No control www.myCNI.com.my www.OOBEY.com Complaints about Performance Appraisals : As an Appraiser Complaints about Performance Appraisals Cannot remember Tedious Subjective Right targets Scoring Competencies* Defensive staff No $$ to differentiate Prejudices Results or Activities www.myCNI.com.my www.OOBEY.com Complaints about Performance Appraisals : Complaints about Performance Appraisals Flexible or Control? MBO or Character? Best Practice or Fit Culture? Backward or Forward? Quarterly Results or Long-term? No $$ to differentiate* Perfect System, Bad performance Recency and Halo effects Untrained Appraisers Mgmt/HR www.myCNI.com.my www.OOBEY.com Complaints about Performance Appraisals - Summary : Complaints about Performance Appraisals - Summary Process problem Form problem People problem www.myCNI.com.my www.OOBEY.com What is Performance Appraisal used for? : What is Performance Appraisal used for? Reward? Discipline? Development? Motivation? Promotion? Monitor? www.myCNI.com.my www.OOBEY.com Performance Management : Performance Management Performance Appraisal Performance Development Performance Measurement Common terms and definitions www.myCNI.com.my www.OOBEY.com What is the OBJECTIVE? : What is the OBJECTIVE? 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 www.myCNI.com.my www.OOBEY.com What is the OBJECTIVE? : 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 What is the OBJECTIVE? : 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 1. Why we hate Performance Management Systems : 1. Why we hate Performance Management Systems Focus on the Business Strategy and Business Direction first www.myCNI.com.my www.OOBEY.com Slide 15: “…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 Before we start… : 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 Before we start… : 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 Slide 18: “What is the moral of the story?” www.myCNI.com.my www.OOBEY.com What is the Business Model? : What is the Business Model? USP Market Discipline Profit Model www.myCNI.com.my www.OOBEY.com Intro: Market Discipline : Intro: Market Discipline Mamak stall www.myCNI.com.my www.OOBEY.com Intro: Market Discipline : Intro: Market Discipline "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 "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 Product Leadership Operational Excellence Customer Intimacy www.myCNI.com.my www.OOBEY.com 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) Strategy: Value Disciplines www.myCNI.com.my www.OOBEY.com Strategy: Value 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 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: Value Disciplines www.myCNI.com.my www.OOBEY.com The McPlaybook* : 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 5th 2007 www.myCNI.com.my www.OOBEY.com 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) Strategy: Value Disciplines www.myCNI.com.my www.OOBEY.com 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) Strategy: Value Disciplines www.myCNI.com.my www.OOBEY.com Business Situation vs. Performance Mgmt Focus : 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 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 Focus: Corporate Alignment www.myCNI.com.my www.OOBEY.com Focus: Corporate Alignment : Financial Learning & Growth Internal Process Customers / Distributors Focus: Corporate Alignment www.myCNI.com.my www.OOBEY.com Focus: Corporate Alignment : Financial Learning & Growth Internal Process Customers / Distributors Focus: Corporate Alignment 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 1. Why we hate Performance Management Systems : 1. Why we hate Performance Management Systems Implementing the Right System www.myCNI.com.my www.OOBEY.com What is Performance Measurement used for? : What is Performance Measurement used for? Reward? Discipline? Development? Motivation? Promotion? Monitor? www.myCNI.com.my www.OOBEY.com Which system should we use? : Behavior-based Knowledge/Skill based Results-based Trait-based Which system should we use? Managing Performance = Managing Expectations What’s YOUR expectation? Activity based www.myCNI.com.my www.OOBEY.com Dangers of Best Practice and Benchmarking… : 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 Dangers of Best Practice and Benchmarking… : 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 Dangers of Best Practice and Benchmarking… : 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 Dangers of Best Practice and Benchmarking… : Dangers of Best Practice and Benchmarking… Selection Bias: Success Traits = Failure Traits Successful Cases + Failure Cases Worst effects in ‘Old’ industries Overvalue ‘best practice’ theories Current accomplishments unfairly magnified by past achievements Reverse Causal Dangers of Best Practice and Benchmarking… : Dangers of Best Practice and Benchmarking… Also known as ‘Beware of Consultants’: Selection Bias Big vs. Small company Selective success stories Correlation vs. Causal Survey problems Practical vs. Glamour-to-have Leaders who benchmark www.myCNI.com.my www.OOBEY.com Survey Problems… : Survey Problems… “In business after business, 60% to 80% of lost customers reported on a survey just prior to defecting that they were satisfied or very satisfied.” HBR March/April 1996 www.myCNI.com.my www.OOBEY.com Why BSC? : Why BSC? Reason 1: Balanced Reason 2: Cause-and-Effect www.myCNI.com.my www.OOBEY.com BSC: Balanced & Cause-and-Effect : Financial “To satisfy our stakeholders, what Financial objectives must we accomplish?” BSC: Balanced & Cause-and-Effect www.myCNI.com.my www.OOBEY.com Slide 42: Performance Management for Change Review Performance & Results 2. Performance Planning : 2. Performance Planning MBO, KPIs, Competencies www.myCNI.com.my www.OOBEY.com Slide 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 MBO Standards : MBO Standards www.myCNI.com.my www.OOBEY.com MBO Standards : MBO Standards www.myCNI.com.my www.OOBEY.com MBO Standards : MBO Standards www.myCNI.com.my www.OOBEY.com MBO Standards : MBO Standards www.myCNI.com.my www.OOBEY.com MBO Target Setting - Objectives and Measures : MBO Target Setting - Objectives and Measures SMART Targets Specific (definite objective and purpose to be achieved) Measurable (by definite observation and a certain time one should be able to tell whether or not it is attained) Achievable (Must be within reach of the employees, e.g. to meet stated deadlines, neither too high nor too low) Rewarding (Rewarding means it must be satisfying to you, no one else) Time phased (per quarter, per year. By end of fiscal year, by 15th of November) www.myCNI.com.my www.OOBEY.com MBO Target Setting - Objectives and Measures : MBO Target Setting - Objectives and Measures www.myCNI.com.my www.OOBEY.com Sample KPIs for Each Discipline : Sample KPIs for Each 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 www.myCNI.com.my www.OOBEY.com Strategy: Value Disciplines : 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: Value Disciplines www.myCNI.com.my www.OOBEY.com Strategy: Value Disciplines : Strategy: Value 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 www.myCNI.com.my www.OOBEY.com Strategy: Value Disciplines : 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: Value Disciplines www.myCNI.com.my www.OOBEY.com Lagging and Leading KPIs : Lagging and Leading KPIs Historical, Outcome, Results, 1st Level, Usually Financial or tangible, Quarterly and Annually Current, Indicators, Drivers, 2nd Level onwards, usually non-financial or intangible, Weekly, Monthly and Quarterly www.myCNI.com.my www.OOBEY.com Developing ‘Driver’ KPIs : Developing ‘Driver’ KPIs www.myCNI.com.my www.OOBEY.com What is the Objective? : What is the Objective? ‘Do-or-Die’ KPIs for CNI Revenue ARPU Sponsoring Retention Commission Plan (BDP) Product Corporate Image www.myCNI.com.my www.OOBEY.com MBO – Sources of KRAs and KPIs, Targets : MBO – Sources of KRAs and KPIs, Targets Department Scorecard [E3], Employee’s Job Description, Department SOP, Department Quality Objectives, Corrective Action Requests (CAR), Preventive Action Requests (PAR), or Special Projects relevant to the employee. www.myCNI.com.my www.OOBEY.com E3 – Department BSC : E3 – Department BSC Financial Perspective www.myCNI.com.my www.OOBEY.com Individual Performance : Individual Performance www.myCNI.com.my www.OOBEY.com Competency Target Setting : Competency Target Setting Initiative Teamwork Problem Solving Leadership Integrity What’s the problem here? www.myCNI.com.my www.OOBEY.com Competency Target Setting : Competency Target Setting Initiative Minimize problems quickly without needing to be asked Seeks personal growth and professional self-development Doing more than is required/expected in a job Seeks new and improved solutions and approaches to completing assignments Looks for opportunities to help others and team www.myCNI.com.my www.OOBEY.com Competency Standards : Competency Standards www.myCNI.com.my www.OOBEY.com Slide 64: Performance Setting & Review Schedule Step One - August Senior Management – Facilitate BOD Strategic Planning process by studying & producing appropriate papers from BOD Macro economic data and observations Emerging business conditions CNI’s strategic considerations/needs Step Two - August BOD consideration & consensus on: Macro economic information Emerging business conditions SWOT Strategic Needs Broad business goals & operating philosophy Sr. Mgmt Strategic Planning Process Study BOD observations and directions & review: Corporate vision / mission Change dimensions Strategic initiatives Corporate key results Step Three September - October Sr. Management Annual Management Plan for Board of Directors Approval Step Five - November Approved Annual Management Plan for execution Step Six - December Senior managers performance plans, objectives and standards Performance vs. plans for top management review Quarterly performance review reports of the Board of Directors Step Four - November Step Seven - January Review annually performance plans vs. results 3. The Manager’s Role in Performance Management : 3. The Manager’s Role in Performance Management Appraisal, Evaluation, Communication, Coaching, Counseling, Mentoring www.myCNI.com.my www.OOBEY.com Coaching & Counseling : Coaching & Counseling www.myCNI.com.my www.OOBEY.com Slide 67: Beating a Dead Horse www.myCNI.com.my www.OOBEY.com Most Common Desperate Performance Improvement methods : Most Common Desperate Performance Improvement methods Send for more Training Enforce more Incentives (positive/negative) www.myCNI.com.my www.OOBEY.com Mager and Pipe : Mager and Pipe Analyzing Performance Discrepancies www.myCNI.com.my www.OOBEY.com Alignment: 4-Wheels Model : Alignment: 4-Wheels Model Philosophies Corporate Objective Performance Objectives www.myCNI.com.my www.OOBEY.com 4. Performance Evaluation : 4. Performance Evaluation Formal Review, Incentives, Compensation, Reward, Differentiation www.myCNI.com.my www.OOBEY.com Performance Evaluation Session: Key Ingredients : Performance Evaluation Session: Key Ingredients www.myCNI.com.my www.OOBEY.com Slide 73: PASSE Praise and encourage Ask questions allow the person to Save Face use SMART goals Encourage small improvements Performance Evaluation Session: Communication www.myCNI.com.my www.OOBEY.com Incentive Problems : Incentive Problems Problem with Incentives in managing performance: Most people are confused or unsure about compensation tools Some people misuse compensation tools www.myCNI.com.my www.OOBEY.com What to Pay? : What to Pay? Pay for Service Pay for Job Pay for Performance Pay for Competency www.myCNI.com.my www.OOBEY.com Performance and Incentives : Performance and Incentives Internal Equity Internal Job Rates Performance differentials External Competitiveness External Job Rates - Benchmarking Demand & Supply www.myCNI.com.my www.OOBEY.com What’s the Difference? : What’s the Difference? Increment Bonus Promotion www.myCNI.com.my www.OOBEY.com Compa Ratio Table : Compa Ratio Table Use this if your company: Pays for Performance, and Pays for Job rates Def: Mid-Point = Mid Point of Pay Grade Grade E2 Min RM2,000 MID RM2,500 Max RM3,000 www.myCNI.com.my www.OOBEY.com Compa Ratio Table : Compa Ratio Table www.myCNI.com.my www.OOBEY.com Compa Ratio Table : Compa Ratio Table www.myCNI.com.my www.OOBEY.com Compa Ratio Table : Compa Ratio Table www.myCNI.com.my www.OOBEY.com Compa Ratio Table : Compa Ratio Table www.myCNI.com.my www.OOBEY.com Dangers of Direct Incentives : Dangers of Direct Incentives lessen internal motivation, switch to mercenary mode, do something and do not do something else, bribe and fraud culture, easier for competitors to recruit, lessen teamwork & helpful culture, less and less impact for same value, mockery of base salary and employment contract, rebellion from non-incentivised staff, end up incentivising everyone for everything?, www.myCNI.com.my www.OOBEY.com Other Performance Review processes : Other Performance Review processes Result Planning schedule inc. BSC, Budget Quarterly Performance Appraisals EMC – sales performance QMS – non-sales performance Divisional meetings Annual Appraisals Specialized KPI committees CAR, PAR, SCAR KPI improvements Internal Audit & MSD – process problems HRM & TND – people problems Supervisor Induction – PM training Talent Management www.myCNI.com.my www.OOBEY.com Employee Distinctions through Relative Performance : Employee Distinctions through Relative Performance www.myCNI.com.my www.OOBEY.com Employee Distinction? : Employee Distinction? www.myCNI.com.my www.OOBEY.com Employee Distinction? : Employee Distinction? www.myCNI.com.my www.OOBEY.com Employee Distinction : Employee Distinction www.myCNI.com.my www.OOBEY.com Employee Distinction : Employee Distinction Group I (Talent Pool) Group II ( Potential) Group III ( Performance) Group IV (Counseling) 2 3 4 5 2 3 4 5 PERFORMANCE POTENTIAL Identify www.myCNI.com.my www.OOBEY.com Curse of the Bell Curve : Curse of the Bell Curve ‘A’ Staff ‘B’ Staff ‘D’ Staff ‘E’ Staff ‘C’ Staff www.myCNI.com.my www.OOBEY.com Managing People performance: A Summary : Managing People performance: A Summary www.myCNI.com.my www.OOBEY.com More Problems…. : More Problems…. cost of evaluation vs. gains of evaluation defer achievements of a good year to next barely achieve so that next target is not high spread improvements over several years value reducing actions to increase performance most ratings are 4 or 5, new people are 3 www.myCNI.com.my www.OOBEY.com Before I forget… : Before I forget… Re-train Appraisers Train new Appraisers www.myCNI.com.my www.OOBEY.com Alignment: 4-Wheels Model : Alignment: 4-Wheels Model Philosophies Corporate Objective Performance Objectives www.myCNI.com.my www.OOBEY.com Thank You. : Thank You. soft copy of slides: www.totallyunrelatedrandomanddebatable.blogspot.com You do not have the permission to view this presentation. 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Premium member Presentation Transcript Slide 1: ENHANCING THE BUSINESS PERFORMANCE MANAGEMENT SYSTEM FOR MORE EFFECTIVE BUSINESS AND TALENT MANAGEMENT Case Study, Concepts and Debatable Ideas Kenny Ong CNI Holdings Berhad www.myCNI.com.my www.OOBEY.com Intro: CNI : Intro: CNI 19 years old Core Business: MLM Others: Contract Manufacturing, Export/Trading, eCommerce Malaysia, Singapore, Brunei, Indonesia, India, China, Hong Kong, Philippines, Italy, Taiwan Staff force: ± 500 Distributors: 200,000 Products: Consumer Goods and Services www.myCNI.com.my www.OOBEY.com 1. Why we hate Performance Appraisals : 1. Why we hate Performance Appraisals www.myCNI.com.my www.OOBEY.com Complaints about Performance Appraisals : As an Appraisee As an Appraisor Complaints about Performance Appraisals Mgmt/HR www.myCNI.com.my www.OOBEY.com Complaints about Performance Appraisals : As an Appraisee Complaints about Performance Appraisals Bias Different Standards Surprise Subjective No linkage* No differentiation Secretive No follow up No control www.myCNI.com.my www.OOBEY.com Complaints about Performance Appraisals : As an Appraiser Complaints about Performance Appraisals Cannot remember Tedious Subjective Right targets Scoring Competencies* Defensive staff No $$ to differentiate Prejudices Results or Activities www.myCNI.com.my www.OOBEY.com Complaints about Performance Appraisals : Complaints about Performance Appraisals Flexible or Control? MBO or Character? Best Practice or Fit Culture? Backward or Forward? Quarterly Results or Long-term? No $$ to differentiate* Perfect System, Bad performance Recency and Halo effects Untrained Appraisers Mgmt/HR www.myCNI.com.my www.OOBEY.com Complaints about Performance Appraisals - Summary : Complaints about Performance Appraisals - Summary Process problem Form problem People problem www.myCNI.com.my www.OOBEY.com What is Performance Appraisal used for? : What is Performance Appraisal used for? Reward? Discipline? Development? Motivation? Promotion? Monitor? www.myCNI.com.my www.OOBEY.com Performance Management : Performance Management Performance Appraisal Performance Development Performance Measurement Common terms and definitions www.myCNI.com.my www.OOBEY.com What is the OBJECTIVE? : What is the OBJECTIVE? 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 www.myCNI.com.my www.OOBEY.com What is the OBJECTIVE? : 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 What is the OBJECTIVE? : 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 1. Why we hate Performance Management Systems : 1. Why we hate Performance Management Systems Focus on the Business Strategy and Business Direction first www.myCNI.com.my www.OOBEY.com Slide 15: “…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 Before we start… : 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 Before we start… : 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 Slide 18: “What is the moral of the story?” www.myCNI.com.my www.OOBEY.com What is the Business Model? : What is the Business Model? USP Market Discipline Profit Model www.myCNI.com.my www.OOBEY.com Intro: Market Discipline : Intro: Market Discipline Mamak stall www.myCNI.com.my www.OOBEY.com Intro: Market Discipline : Intro: Market Discipline "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 "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 Product Leadership Operational Excellence Customer Intimacy www.myCNI.com.my www.OOBEY.com 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) Strategy: Value Disciplines www.myCNI.com.my www.OOBEY.com Strategy: Value 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 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: Value Disciplines www.myCNI.com.my www.OOBEY.com The McPlaybook* : 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 5th 2007 www.myCNI.com.my www.OOBEY.com 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) Strategy: Value Disciplines www.myCNI.com.my www.OOBEY.com 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) Strategy: Value Disciplines www.myCNI.com.my www.OOBEY.com Business Situation vs. Performance Mgmt Focus : 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 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 Focus: Corporate Alignment www.myCNI.com.my www.OOBEY.com Focus: Corporate Alignment : Financial Learning & Growth Internal Process Customers / Distributors Focus: Corporate Alignment www.myCNI.com.my www.OOBEY.com Focus: Corporate Alignment : Financial Learning & Growth Internal Process Customers / Distributors Focus: Corporate Alignment 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 1. Why we hate Performance Management Systems : 1. Why we hate Performance Management Systems Implementing the Right System www.myCNI.com.my www.OOBEY.com What is Performance Measurement used for? : What is Performance Measurement used for? Reward? Discipline? Development? Motivation? Promotion? Monitor? www.myCNI.com.my www.OOBEY.com Which system should we use? : Behavior-based Knowledge/Skill based Results-based Trait-based Which system should we use? Managing Performance = Managing Expectations What’s YOUR expectation? Activity based www.myCNI.com.my www.OOBEY.com Dangers of Best Practice and Benchmarking… : 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 Dangers of Best Practice and Benchmarking… : 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 Dangers of Best Practice and Benchmarking… : 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 Dangers of Best Practice and Benchmarking… : Dangers of Best Practice and Benchmarking… Selection Bias: Success Traits = Failure Traits Successful Cases + Failure Cases Worst effects in ‘Old’ industries Overvalue ‘best practice’ theories Current accomplishments unfairly magnified by past achievements Reverse Causal Dangers of Best Practice and Benchmarking… : Dangers of Best Practice and Benchmarking… Also known as ‘Beware of Consultants’: Selection Bias Big vs. Small company Selective success stories Correlation vs. Causal Survey problems Practical vs. Glamour-to-have Leaders who benchmark www.myCNI.com.my www.OOBEY.com Survey Problems… : Survey Problems… “In business after business, 60% to 80% of lost customers reported on a survey just prior to defecting that they were satisfied or very satisfied.” HBR March/April 1996 www.myCNI.com.my www.OOBEY.com Why BSC? : Why BSC? Reason 1: Balanced Reason 2: Cause-and-Effect www.myCNI.com.my www.OOBEY.com BSC: Balanced & Cause-and-Effect : Financial “To satisfy our stakeholders, what Financial objectives must we accomplish?” BSC: Balanced & Cause-and-Effect www.myCNI.com.my www.OOBEY.com Slide 42: Performance Management for Change Review Performance & Results 2. Performance Planning : 2. Performance Planning MBO, KPIs, Competencies www.myCNI.com.my www.OOBEY.com Slide 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 MBO Standards : MBO Standards www.myCNI.com.my www.OOBEY.com MBO Standards : MBO Standards www.myCNI.com.my www.OOBEY.com MBO Standards : MBO Standards www.myCNI.com.my www.OOBEY.com MBO Standards : MBO Standards www.myCNI.com.my www.OOBEY.com MBO Target Setting - Objectives and Measures : MBO Target Setting - Objectives and Measures SMART Targets Specific (definite objective and purpose to be achieved) Measurable (by definite observation and a certain time one should be able to tell whether or not it is attained) Achievable (Must be within reach of the employees, e.g. to meet stated deadlines, neither too high nor too low) Rewarding (Rewarding means it must be satisfying to you, no one else) Time phased (per quarter, per year. By end of fiscal year, by 15th of November) www.myCNI.com.my www.OOBEY.com MBO Target Setting - Objectives and Measures : MBO Target Setting - Objectives and Measures www.myCNI.com.my www.OOBEY.com Sample KPIs for Each Discipline : Sample KPIs for Each 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 www.myCNI.com.my www.OOBEY.com Strategy: Value Disciplines : 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: Value Disciplines www.myCNI.com.my www.OOBEY.com Strategy: Value Disciplines : Strategy: Value 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 www.myCNI.com.my www.OOBEY.com Strategy: Value Disciplines : 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: Value Disciplines www.myCNI.com.my www.OOBEY.com Lagging and Leading KPIs : Lagging and Leading KPIs Historical, Outcome, Results, 1st Level, Usually Financial or tangible, Quarterly and Annually Current, Indicators, Drivers, 2nd Level onwards, usually non-financial or intangible, Weekly, Monthly and Quarterly www.myCNI.com.my www.OOBEY.com Developing ‘Driver’ KPIs : Developing ‘Driver’ KPIs www.myCNI.com.my www.OOBEY.com What is the Objective? : What is the Objective? ‘Do-or-Die’ KPIs for CNI Revenue ARPU Sponsoring Retention Commission Plan (BDP) Product Corporate Image www.myCNI.com.my www.OOBEY.com MBO – Sources of KRAs and KPIs, Targets : MBO – Sources of KRAs and KPIs, Targets Department Scorecard [E3], Employee’s Job Description, Department SOP, Department Quality Objectives, Corrective Action Requests (CAR), Preventive Action Requests (PAR), or Special Projects relevant to the employee. www.myCNI.com.my www.OOBEY.com E3 – Department BSC : E3 – Department BSC Financial Perspective www.myCNI.com.my www.OOBEY.com Individual Performance : Individual Performance www.myCNI.com.my www.OOBEY.com Competency Target Setting : Competency Target Setting Initiative Teamwork Problem Solving Leadership Integrity What’s the problem here? www.myCNI.com.my www.OOBEY.com Competency Target Setting : Competency Target Setting Initiative Minimize problems quickly without needing to be asked Seeks personal growth and professional self-development Doing more than is required/expected in a job Seeks new and improved solutions and approaches to completing assignments Looks for opportunities to help others and team www.myCNI.com.my www.OOBEY.com Competency Standards : Competency Standards www.myCNI.com.my www.OOBEY.com Slide 64: Performance Setting & Review Schedule Step One - August Senior Management – Facilitate BOD Strategic Planning process by studying & producing appropriate papers from BOD Macro economic data and observations Emerging business conditions CNI’s strategic considerations/needs Step Two - August BOD consideration & consensus on: Macro economic information Emerging business conditions SWOT Strategic Needs Broad business goals & operating philosophy Sr. Mgmt Strategic Planning Process Study BOD observations and directions & review: Corporate vision / mission Change dimensions Strategic initiatives Corporate key results Step Three September - October Sr. Management Annual Management Plan for Board of Directors Approval Step Five - November Approved Annual Management Plan for execution Step Six - December Senior managers performance plans, objectives and standards Performance vs. plans for top management review Quarterly performance review reports of the Board of Directors Step Four - November Step Seven - January Review annually performance plans vs. results 3. The Manager’s Role in Performance Management : 3. The Manager’s Role in Performance Management Appraisal, Evaluation, Communication, Coaching, Counseling, Mentoring www.myCNI.com.my www.OOBEY.com Coaching & Counseling : Coaching & Counseling www.myCNI.com.my www.OOBEY.com Slide 67: Beating a Dead Horse www.myCNI.com.my www.OOBEY.com Most Common Desperate Performance Improvement methods : Most Common Desperate Performance Improvement methods Send for more Training Enforce more Incentives (positive/negative) www.myCNI.com.my www.OOBEY.com Mager and Pipe : Mager and Pipe Analyzing Performance Discrepancies www.myCNI.com.my www.OOBEY.com Alignment: 4-Wheels Model : Alignment: 4-Wheels Model Philosophies Corporate Objective Performance Objectives www.myCNI.com.my www.OOBEY.com 4. Performance Evaluation : 4. Performance Evaluation Formal Review, Incentives, Compensation, Reward, Differentiation www.myCNI.com.my www.OOBEY.com Performance Evaluation Session: Key Ingredients : Performance Evaluation Session: Key Ingredients www.myCNI.com.my www.OOBEY.com Slide 73: PASSE Praise and encourage Ask questions allow the person to Save Face use SMART goals Encourage small improvements Performance Evaluation Session: Communication www.myCNI.com.my www.OOBEY.com Incentive Problems : Incentive Problems Problem with Incentives in managing performance: Most people are confused or unsure about compensation tools Some people misuse compensation tools www.myCNI.com.my www.OOBEY.com What to Pay? : What to Pay? Pay for Service Pay for Job Pay for Performance Pay for Competency www.myCNI.com.my www.OOBEY.com Performance and Incentives : Performance and Incentives Internal Equity Internal Job Rates Performance differentials External Competitiveness External Job Rates - Benchmarking Demand & Supply www.myCNI.com.my www.OOBEY.com What’s the Difference? : What’s the Difference? Increment Bonus Promotion www.myCNI.com.my www.OOBEY.com Compa Ratio Table : Compa Ratio Table Use this if your company: Pays for Performance, and Pays for Job rates Def: Mid-Point = Mid Point of Pay Grade Grade E2 Min RM2,000 MID RM2,500 Max RM3,000 www.myCNI.com.my www.OOBEY.com Compa Ratio Table : Compa Ratio Table www.myCNI.com.my www.OOBEY.com Compa Ratio Table : Compa Ratio Table www.myCNI.com.my www.OOBEY.com Compa Ratio Table : Compa Ratio Table www.myCNI.com.my www.OOBEY.com Compa Ratio Table : Compa Ratio Table www.myCNI.com.my www.OOBEY.com Dangers of Direct Incentives : Dangers of Direct Incentives lessen internal motivation, switch to mercenary mode, do something and do not do something else, bribe and fraud culture, easier for competitors to recruit, lessen teamwork & helpful culture, less and less impact for same value, mockery of base salary and employment contract, rebellion from non-incentivised staff, end up incentivising everyone for everything?, www.myCNI.com.my www.OOBEY.com Other Performance Review processes : Other Performance Review processes Result Planning schedule inc. BSC, Budget Quarterly Performance Appraisals EMC – sales performance QMS – non-sales performance Divisional meetings Annual Appraisals Specialized KPI committees CAR, PAR, SCAR KPI improvements Internal Audit & MSD – process problems HRM & TND – people problems Supervisor Induction – PM training Talent Management www.myCNI.com.my www.OOBEY.com Employee Distinctions through Relative Performance : Employee Distinctions through Relative Performance www.myCNI.com.my www.OOBEY.com Employee Distinction? : Employee Distinction? www.myCNI.com.my www.OOBEY.com Employee Distinction? : Employee Distinction? www.myCNI.com.my www.OOBEY.com Employee Distinction : Employee Distinction www.myCNI.com.my www.OOBEY.com Employee Distinction : Employee Distinction Group I (Talent Pool) Group II ( Potential) Group III ( Performance) Group IV (Counseling) 2 3 4 5 2 3 4 5 PERFORMANCE POTENTIAL Identify www.myCNI.com.my www.OOBEY.com Curse of the Bell Curve : Curse of the Bell Curve ‘A’ Staff ‘B’ Staff ‘D’ Staff ‘E’ Staff ‘C’ Staff www.myCNI.com.my www.OOBEY.com Managing People performance: A Summary : Managing People performance: A Summary www.myCNI.com.my www.OOBEY.com More Problems…. : More Problems…. cost of evaluation vs. gains of evaluation defer achievements of a good year to next barely achieve so that next target is not high spread improvements over several years value reducing actions to increase performance most ratings are 4 or 5, new people are 3 www.myCNI.com.my www.OOBEY.com Before I forget… : Before I forget… Re-train Appraisers Train new Appraisers www.myCNI.com.my www.OOBEY.com Alignment: 4-Wheels Model : Alignment: 4-Wheels Model Philosophies Corporate Objective Performance Objectives www.myCNI.com.my www.OOBEY.com Thank You. : Thank You. soft copy of slides: www.totallyunrelatedrandomanddebatable.blogspot.com