Business Strategy & Performance Management

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Slide 1:

Organization Strategy & Performance Management BY: Ms. BHAWNA BATRA

Performance Management :

2 6 October 2011 Organization Strategy & Performance Management CONFIDENTIAL 2010 Performance Management Performance management is essential to business success and any employee performance management system will be based on a plan-do-review cycle like: setting objectives and planning the work, monitoring the employee performance against those objectives and developing their capacity to perform as needed, periodic performance evaluation and timely recognition or reward.

Business Strategy - Study :

3 6 October 2011 Organization Strategy & Performance Management CONFIDENTIAL 2010 Business Strategy - Study A Fortune Magazine study suggested that 70% of 10 CEOs who fail do so not because of bad strategy, but because of bad execution. In another study of 200 companies in the Times 1000, 80% of directors said they had the right strategies but only 14% thought they were implementing them well, no doubt linked to the finding that despite 97% of directors having a 'strategic vision', only 33% reported achieving 'significant strategic success'.

Slide 4:

4 6 October 2011 Organization Strategy & Performance Management CONFIDENTIAL 2010 A business will not grow and prosper without a well developed strategy and proper planning

Strategy Realisation essential elements:

5 6 October 2011 Organization Strategy & Performance Management CONFIDENTIAL 2010 Strategy Realisation essential elements Motivational leadership - concentrates on achieving sustained performance through personal growth, values-based leadership and planning that recognizes human dynamics Turning strategy into action - entails a phased approach, linking identified performance factors with strategic initiatives and projects designed to develop and optimize departmental and individual activities Performance management - involving the construction of organizational processes and capabilities necessary to achieve performance through people delivering results

How effective is your strategy realisation? :

6 6 October 2011 Organization Strategy & Performance Management CONFIDENTIAL 2010 How effective is your strategy realisation? There are simple ways to judge whether your strategy realisation process is working: Obviously look for business results and progress on the delivery of targets and KPI's (Key Performance Indicators). You need also to look for signs that your people have really got the corporate message and have taken it to heart.

How effective is your strategy realisation? :

7 6 October 2011 Organization Strategy & Performance Management CONFIDENTIAL 2010 How effective is your strategy realisation? A well known story illustrates the point: A group of US Senators were visiting NASA at the time when funding was under threat. One Senator asked a man cleaning the floor "So what are you doing here?" The man answered, "I'm here putting a man on the Moon!"

How effective is your strategy realisation? :

8 6 October 2011 Organization Strategy & Performance Management CONFIDENTIAL 2010 How effective is your strategy realisation? How closely do your people identify and associate their own roles with your organizational purpose? Do your people really know what your corporate aims are, and if so do they see and agree with how they fit into the scheme? Sadly in many organizations the vast majority of staff do not understand the corporate aims, let alone see themselves as an integral part of the effort. Strategy realisation will not happen without the people being an enthusiastic part of the effort. All to easy to say; another thing entirely to make happen.

How effective is your strategy realisation? :

9 6 October 2011 Organization Strategy & Performance Management CONFIDENTIAL 2010 How effective is your strategy realisation? The 'Man on the Moon' statement is a real benchmark of the process quality for turning any strategy into action - whether for a team, a department or a corporation. Every single person must know what they are doing, why they are doing it, and above all, must be fully committed to doing what they are doing. If your methods enable every single person to know what they are doing, and why , and to be emotionally committed to it, then the process of turning strategy into action is probably working.

Slide 10:

10 6 October 2011 Organization Strategy & Performance Management CONFIDENTIAL 2010 Each year, leadership teams spend weeks and even months fine-tuning their business strategies to secure competitive advantages. At the end of this process, executives understand where their organization is heading, what actions they must execute, and how they will measure success. However, there is often a disconnect between corporate leaders and employees when it comes time to implement the strategy. Employees frequently don t fully understand what role they play in supporting the strategy. And, since management will use employee performance metrics to define "success," it is vital they use the right metrics. The good news is: leaders can use the strategic planning process to ensure that organizational strategy and measurement are translated to frontline employees.

Slide 11:

11 6 October 2011 Organization Strategy & Performance Management CONFIDENTIAL 2010 For example, if we look at the call center of an organization that competes on service, management probably views the goal of each employee as "providing outstanding service," which clearly links back to the strategy. However, the company may use metrics like "attendance," or "availability to take calls," to evaluate performance. These metrics are valuable, but by themselves they don t link back to the organization's strategy.

Developing a Performance Measurement Plan-1 :

12 6 October 2011 Organization Strategy & Performance Management CONFIDENTIAL 2010 Developing a Performance Measurement Plan-1 Identify the measurement criteria that are relevant to corporate. Ensure that the right performance metrics are used to evaluate business success and match those metrics to employee performance. By doing this, your organization can empower employees to excel in their own roles while positively affecting the organization's ability to execute its strategy. Often, because employees are close to the customer, they can give useful feedback about what customers really value, help you identify metrics that truly evaluate performance, and tell you where there is disconnect between strategy and everyday reality. By clearly matching business goals with employee behavior, you can clarify how each employee can be successful and then drive desired behavior with effective incentives.

Developing a Performance Measurement Plan-2:

13 6 October 2011 Organization Strategy & Performance Management CONFIDENTIAL 2010 Developing a Performance Measurement Plan-2 Ensure that measurement system accurately interprets employee performance-Start by finding correlations between performance metrics and the realities of the business. Determine that customers of your call center prefer that their problems are resolved quickly, then short call time and accurate resolution might be the major criteria for success. Identify metrics to evaluate employees against that criteria, and invest in resources that help employees resolve issues. Next, assess the "weight" of different measures to actual outcomes. This is a matter of converting "apples and oranges" to "apples to apples so you can compare widely different data points. To do this effectively, apply statistical techniques to performance measurement, much the way an actuary assesses risk.

Developing a Performance Measurement Plan - 3:

14 6 October 2011 Organization Strategy & Performance Management CONFIDENTIAL 2010 Developing a Performance Measurement Plan - 3 Continually reevaluate your performance criteria to meet changing business environments-As your organization's business evolves, your employees must change their understanding of success. For example, if your call center needs to transform into a sales organization, your employees will need the ability to ask for the order and close the business. To help them get there, you must embed their new objectives into your communications, training, and measurement programs, and ensure incentives are effectively motivating your employees to achieve these objectives. The goal is to make employees feel personally connected to the organization's strategy. An important additional benefit is that management will be able to quickly shift strategy based upon the market information they learn while measuring employee performance.

Developing a Performance Measurement Plan - 4:

15 6 October 2011 Organization Strategy & Performance Management CONFIDENTIAL 2010 Developing a Performance Measurement Plan - 4 Communicate performance goals and key behaviors throughout the organization-Once the key metrics and incentives are defined, a clear internal communications plan is essential. This plan should be an element of corporate culture, rather than something reserved for annual reviews. Bottom line: when employees know what is expected, and have the tools and incentives to accomplish their goals, it's a winning situation for the entire organization.

A case on Performance Management & Business Strategy :

16 6 October 2011 Organization Strategy & Performance Management CONFIDENTIAL 2010 A case on Performance Management & Business Strategy An example of a company that could be said to primarily adopting a strategy of innovation is a high technology manufacturing company we shall call Techmanco. It believes the way to succeed in its particular niche market is through continuously bringing better products or better applications of existing products, or better after-sales packages to its customers. This means it needs its product development, servicing, marketing and other key staff to be innovative. The theory goes that the type of environment conducive to producing innovative results, is one that harnesses cross-functional team working, is tolerant of ambiguity, and encourages risk-taking and creative behavior. That is what Techmanco is striving to create. The type of HR policies believed likely to best support such an environment are those which emphasize team, rather than individual, achievements. In this way, performance management and appraisal systems reflect team objectives and outcomes. In order to attract the top talent in their industry to stay with them, Techmanco chooses to pay above the market pay rates. However, it is careful to ensure team members from different disciplines are paid similarly.

A case on Performance Management & Business Strategy:

17 6 October 2011 Organization Strategy & Performance Management CONFIDENTIAL 2010 A case on Performance Management & Business Strategy What does this mean for the HR issues that Techmanco may wish to measure? In this example there are two priority areas. Firstly, it needs to check on the attitude and experience of its staff towards the organization's climate and context to make sure the required behaviors of creativity, for example, have the best chance of thriving. Questions inserted in a regular employee attitude survey can be very helpful here. Secondly, since it believes internal equity in its pay and compensations systems and the development of transferable skills are critical to high performance in innovation, it will want to monitor both equity across teams and breadth of skills. Many ways of spotting key issues at organization level are demonstrated in this report. More HR function specific examples are also discussed.

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