Strategic Performance Management | Unilever
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This is a report on the strategic performance management followed by one of the leading multinational company. The report highlights the importance as well as the impact of the performance tools on the 'overall performance' of the company. An attempt has been made to understand and evaluate the effectiveness of the performance plan in motivating the employees and ensuring that their operations ultimately contribute to meeting the strategic objective.
Unilever is one of the greatest consumer goods manufacturing company in the world. It is a consumer goods manufacturing giant which serves to meet the needs of millions of hearts world wide. The wide range of brands are intended to satisfy different types of consumer wants like food,health,hygiene,personal beauty,nutrition,homecare and many more.
ABOUT THE COMPANY
The history of unilever takes back us to the 1890's when William Hesketh (Lever bros founder) scribbled down his findings on his new invention- Sunlight soap. This amazing product helped the household of Victorian England in promoting neatness and hygiene.
Later, in the year 1930 British soap maker Lever bros and the Dutch margarine producer Margarine Unie merged their entities to create the Unilever.
Now it has grown into a major multinational company having 163,000 employees, 400 different brands,14 departments and an expanded sales market segment covering about 170 countries.Appart form this the company also extended its around the clock helpdesk to its lakhs of distributors and suppliers.
The company maintains 264 manufacturing centers all over the world engaged in the continuous process of raising the standard and performance of its product to an international level. Twenty five elite brand of the company contributes seventy five percent of its total revenue.Knorr,Lipton,Slim fast, Bertolli,Cif,Comfort,Omo,Radiant,Axe,Dove,Lux,Lifebuoy,Ponds,Sunsilk,Vaseline are some of the top brands of the company.
It has established itself as a 'LEADER' in almost every spheres in which it operates because of its brand power. The companies' mission is to expand the activities by innovating and implementing new business methodologies by downsizing the adverse effect on environment at the same time.
WHAT IS STARTEGIC PERFORMANCE MANAGEMENT
Strategic performance management concentrates on the various paths to be followed to achieve high employee satisfaction, performance efficiency and increased stakeholder value.
Performance measurement process evaluates the developments made towards the attainment of the established goals whereas performance management makes necessary additions of some key aspects such as communication and efficient movements to these developments to achieve the predefined goals (Bourne, Franco and Wilkes (2003)).
The importance of performance management
Performance management is a continuous process of measuring and evaluating the actual outcomes and comparing the same with planned outcomes. It emphasis the need for continuous improvisation by maintaining a strong communication network between the managerial personnel's and subordinates.
"Performance management system emphasizes the link between individual behavior and organizational strategies and goals by defining performance in the context of those goals" (Aguinis & Pierce , 2008, banks and may 1999).
For effective monitoring of the progress made towards achievement of the organizational goal, it requires adequate feedback from the employers and as well as the employees. And performance management ensures maximum feedback. Application of these vital information derived from their feedback for assessing the overall performance should be considered as an effective technique concerning performance matters (Anstey et al., 1976; Fletcher 1993)
However it should be noted that performance management is different from performance appraisal. Performance appraisal only forms a part of performance management. "Appraisal is an inconsistent and fundamentally subjective process" (Grint 1993).Performance appraisal provides a systematic and comprehensive framework for evaluating employee performances. It is concerned with assessing and developing employee performance. The most essential ingredient of performance appraisal is to make sure that the employees give a good performance and they are rewarded satisfactorily.
This report also deals with the performance appraisal technique adopted by Unilever for upgrading the standard of performance of its people.
To start with, it is always important to link performance appraisal technique with the organizational objective. In other words, there is:
"A need to connect the strategic objective with performance targets"
Connecting the performance appraisal techniques with the predetermined goals of the company holds the key to efficient strategic performance management.
The prime objective of Unilever is 'Meeting everyday needs of people everywhere'. And with stiff competition from other global rivals it becomes essential that the company adopt effective performance evaluation tools and techniques.
The scorecard approach
The scorecard approach is one of the performance management tool that the company has been using for years. It is a very important technique which helps the managerial personnel's in converting the entities mission and strategies into well structured performance measures. "The balance scorecard: Measures that drive performance"(Kaplan and Norton1992).The scorecard was first applied by Unilever River Plate Argentina and Unilever Australia in the year 1995.The Unilever is aware of the fact that the balanced scorecard offers a common platform for the entire organization for performance evaluation and demands a systematic approach for carrying on the companies day to day and long term activities efficiently.
The Unilever scorecard approach can be broken down into mainly three stages.
Stage one starts with the construction of balance scorecard for the succeeding year on the basis of the current year's information .The stage involves defining of the performance targets which must be both attainable and measurable. Specific areas need to be identified to collect the required information.
The second stage emphasize on around the year monitoring process. Information is gathered on the present performances and they are compared against planned targets at specific time intervals. Such comparison pinpoints areas which has the scope for further improvement. And incase if the actual performance exceeds the budgeted performance it highlights the need for revision of the standards.
The third and final stage is performed at the end of the year. The overall performance is compared against the standards and assessed and these information's are then used to prepare the scorecard for the next year. Capability assessment is conducted on each of the specific areas identified in the earlier stage .The assessment is done to determine if these areas were capable of meeting the prescribed performance standards. And if performance standards are not satisfied then necessary actions are suggested to improve the situation.
On completion of the three stages it was found that certain improvements need to be made to enhance the quality of performance. The suggestion for improvement was accepted by the members of the company. An introduction booklet (accompanied by a summary card) was generated for the senior managerial personnel. A more comprehensive performance guide was offered to the intranet users and adequate training was also provided to them.
Application of the results
The most important step in the integration stage was to connect the corporate center requirements with results obtained from the balanced scorecard. A qualified facilitator was called upon to work alongside the 'centers leadership group 'for specific time period of three months.
The corporate center structure of Unilever is as shown below:
*As per the report of Steve tanner ,Executive Director, European centre for business excellence , Brigitte Tantawy- Monsou, D. Biochemistry, DEA of Food Technology,VP Organizational Effectiveness, Unilever Strategic Centre ,Unilever N.V
Such an operation was able to yield many fruitful results. One of the major achievements was the generation of 'Corporate centre scorecard'. After the completion three months time it was found out that scorecard approach had successfully been able to make the employees concentrate on the targets and strategies. They were able to take effective decisions regarding optimum allocation of resources. The corporate centre became more customers centric. At the beginning of the balanced scorecard process, only three departments were included. But because of the successful result it was able to yield, at the end of the entire process all 14 departments had developed their own scorecards.
So the balanced scorecard approach was able to provide a number of advantages to the company and raise their standard of performance.
The essence of team performance
Before discussing the importance and the way in which team performance are encouraged and evaluated in the company it is necessary to find out the actual meaning of team performance. According to Hackman the team performance consist of three important components, they are :-(i) Whether the team is capable of fulfilling the targets.(ii)Whether the employees are satisfied of being a part of the team and whether they are loyal in their efforts towards attainment of team targets(iii)Whether the team is capable of adopting different changes to increase the effectiveness of performance. The performance management should make the workers understand the need to work in harmony with their fellow workers.
It is the duty of the company to instill a sense of team spirit and harmony amongst the employees. It is very much important to make sure that the employees work as team. Proper coordination of the operations of employees at various levels of department is very much necessary to facilitate smooth sailing of the organizational operations. There is a need to encourage individual commitment to team performance in organizational goals. Lack of coordination, communication and personal dislikes among employees can create hindrances in the path of attaining organizational goals. So it should be seen that such bottlenecks are identified and eliminated at the earliest possible level.
For the purpose of making the employees aware of the importance of teamwork various education and training programs are being followed by the company. These training programs are conducted to make the people aware of their roles and responsibility and carry their duty delligently.The program includes conducting of mock drills, get together functions during weekends so that they become more familiar with one another. The trainers try to educate and convince the essence of maintaining strong communication link between the employees and the managers and amongst the employees themselves. Feedback, mentoring and training play a pivotal role in enhancing employee performance. After instituting the training program the trainers collects necessary feedback from the employees to make sure that their coaching has been successful.
For evaluating team performance the same balanced scorecard approach is being applied (already explained in the beginning).The targets shall be fixed considering various performance criteria. A team plan should be formulated and it shall contain the ideas of all the team members. The way in which the team operates towards the targets are closely studied and evaluated. It is necessary that the performance of the employees be monitored to determine whether they are able to satisfy the pre-established standards or not. If the results are satisfactory it means that the employees have been quite successful in working as a team and their combined efforts were able to deliver the expected benefits.
According to Marks et al; 2001, the success of team performance is completely linked to the capability of the group to improvise themselves from time to time. In short dynamism holds the key to success.
A review meeting of team's performance evaluates and studies the way in which the team was able to achieve the target through joint operation and through their well sketched team plan. As a compliment to their satisfactory performance, team awards shall also be presented. The team awards act as recognition of their joined efforts and it shall motivate them towards better performances in the future. The awards can be either financial or otherwise. Offering a bonus schemes to the team members if they are successful in meeting the performance targets, declaring the best team awards, conducting social events to facilitate the winners are some of the methods that can strengthen the team spirit.
In this respect it should be noted that one of the important aspect of performance management is that, it communicates to its employees whether their performances were up to the mark and whether their responses towards the changes have been satisfactory or not..
Monitoring the team performance
Monitoring is process of systematically gathering; evaluating and applying data's to clear employee grievances and ensuring consensus.
Each and every action of the employees in the team is strictly monitored by the managers and necessary recommendations are made from time to time to improve the team performance. Adequate feedback should be collected from both employees and superiors.
Performance review technique
Performance Development Planning (PDP):- It is one of the performance evaluations and monitoring system followed in Unilever.PDP links the individual goals with the organizational objective thereby motivating the employees by creating a sense of ownership. It monitors the workings of the employees and provides valuable feedback regarding the quality of performance and competence. In this way the company is able to align the performance targets with the strategic objectives. Performance Development Planning involves the monitoring and assessment of the competencies of both the employers and subordinates of the company. On the basis of the information obtained from Performance Development Planning assessment, the employees shall be rated. The ratings shall be made by comparing the competency level of the employees against the fixed standards. If they are able to perform up to the standards or exceeds the expected levels it shall be satisfactory. Otherwise it becomes a matter of concern and urgent measures need to be taken.
So it becomes necessary on part of the organization to provide proper training and education to its employees. in this regard Unilever has introduced intranet based learning center. This learning center provides all kinds of informations which help the employees in enunciating their skills and competencies. In this way the employees are made well equipped, so that they may contribute their maximum to meet the organizational objective and satisfy their personnel goals along with it.
What should be done to ensure continuous commitment of individuals
One of the most effective methods followed to capture employee commitment is establish a fair rewarding system. A fair pay scale, chances of advancement, providing challenging tasks or few words of appreciation can really boost up the confidence of the employees. The remuneration system followed by the company must be such that it must be completely based on the competence, skill and talent of the individual.
One such technique followed is the Unilever work level model. It is particularly useful to the lower level employees. The technique stresses on the need to provide a chance of advancement to higher work levels and thereby motivating and strengthening the commitment of the individuals.
The Unilever work level model
The work level model came into existence in 1988.It can be applied on a global scale. The basic idea behind this model is to encourage the employees of the lower level to take top level decisions like the executives or senior managers of the concern. The international board has pin pointed six different qualitative work levels. And the work levels are assigned different payments followed in different markets. The assessment under the work level model can be better illustrated through an example.
Unilever work level model
Nature of contribution
* As developed by Billis and Dive in the year 1988.
If an employee is capable of providing quality performance and is currently in work level 2 he shall be expected to be promoted to work level 3 and be ranked 3 in the potential list.
Work level model is easy to understand, apply and manage. Through this model the company is aiming to raise the corporate performance to a superior level.
This is a very effective technique of encouraging the employees to put in their continuous commitment towards better performance and ultimately meeting the entities goals. This model emphasizes the need to satisfy the employees by providing them with fair reward.
Other than the financial aspect it is required that the company should also see that favorable political and working environment prevail in the company. The employees can contribute their maximum only if they have peaceful and encouraging atmosphere. Poor working environment, lack of safety, no promotions, unfair and rude treatment of superiors can have adverse effect on the employees and can even lead employee turnover. Lack of creativity and innovations can create harm to the organizational goals. Absence of creative contributions from the employees can slow down the development process of the entire company. Hence efforts have should be taken to provide good working and political environment to the employees.
Considering this fact Unilever has introduced 'Unilever sustainable living plan' (information from www.unilever.com). The program was introduced in November 2010).The objective of the program is to nurture the talent, competencies and creativity of employees by providing a suitable workplace .It aims to curtail the number of accidents, mistakes, energy waste, and promote and protect the loyalty and health of the employees. The Unilever is aware of the fact that its employees are playing an indispensable role in safeguarding the quality of its brands and promoting the progress of the company in the global market. And hence it considers themselves responsible towards their employee's welfare and development.
Through the report on strategic performance management an attempt has been made to understand and study the importance of performance management in a multinational company like the Unilever. The report emphasizes on the fact that Unilever maintains a very effective performance management system which helps the concern to achieve its strategic objectives more easily.
Through the report an earnest effort has been made to explore the need of performance appraisal technique like the balanced scorecard in evaluating employee performances. The manner in which the strategic objectives are linked with performance targets and how the performances are evaluated is well explained through the various stages of balanced scorecard.
Apart from performance evaluation the report also has tried to explain the essence of team performance and how it should be managed and how it can lead to objective accomplishment. It also discusses the importance of monitoring team performance. The performance review technique followed by the company throws light into the fact that the company does no compromise in assessing the competencies of its executives and employees, and ensuring a superior quality performance.
The report tries to solve the problem of how to ensure continuous commitment from employees. Offering fair opportunities for promotions and good payment scale can help in satisfying the employees and retaining them.Unilever also exerts on the need to maintain a healthy and encouraging atmosphere to its employees at work. Unilever relies on the competency and loyalty of its employees to achieve their strategic goals.
The facts are well supported by Illustrations wherever it is necessary to provide additional information's and to facilitate easy understanding.
Finally on the basis of the report we arrive on the conclusion that Performance Management System is a system which establishes work targets, lays down performance criteria, assesses the employee performances, collects adequate feedback, and then specifies the training requirement and rewarding system to be followed by the concern.
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