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Performance management is a systematic process which improves performance of organization by developing the performance of individuals and teams. It is a strategy of getting better results from the organization, teams and individuals by understanding and managing performance within an agreed framework where goals are planned, standards and required competence are clearly defined. Strategic performance management is a process for establishing mutual understanding about what is to be achieved, and for managing and developing people in a way that makes it possible to achieve the goals in the short and longer term. It deals with broader issues of the organization. It is a tool to evaluate how the business is performing. Line management plays a key role in strategic performance Management who drive and fully owned this as per corporate governance regulation.
I like to quote some other definitions as below,
Performance management is: 'The development of individuals with competence and commitment, working towards the achievement of shared meaningful objectives within an organisation which supports and encourages their achievement'
Performance management is: the process of 'Directing and supporting employees to work as effectively and efficiently as possible in line with the needs of the organisation'
Performance management is a strategic and integrated approach to delivering sustained success to organisations by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors'
(Armstrong and Baron, 4)
Be able to set performance targets to meet strategic objectives.
Links between team performance and Strategic objectives.
Team performance is directly related to company's strategic objectives. Organisation consists of number of people who works collectively to achieve common objective of the company which is profitability, thus if team performs well whole company will perform well.
Every member of a team is assigned with specific day to day tasks which he/she is expected to do well and contribute fully for team collective output. Within team tasks are divided and resources are shared, they are interlinked and work with in cycle so, if one member doesn't finish his / her task in time it may slow down a whole next chain which can lead to slow down performance of a team as a whole. Slow progress may result loss of potential opportunities existed in the market and result in loss revenue which goes directly against the strategic objective of the company. Therefore, it is vital that each member of staff is chosen on the merit of job requirement and are fully equipped to perform his/her tasks with given time period. Team is judged on the basis of result they deliver.
In Marks and Spenser each role is aligned with specific duties as per job description, over all aim is clearly defined, each member of staff is expected to deliver best customer services and are assigned with specific day to day tasks which ultimately lead to achieve organisational objectives such as monthly sales targets. Greater the team performance is the better chances are to meet organisational objectives. This proves that team performance is directly related meeting strategic organisational objectives. The principle is everyone will be working together to contribute to corporate profits.
1.2) Tools and technique available to set team performance targets
There are many performance improvement models and tools available to set team performance targets, decision makers choose any model which best suits company's needs and assist its process. I've listed below some which are most commonly used,
Balance Scorecard: A multi-dimensional framework for managing strategy by linking objectives, initiatives, targets and performance measures across key corporate perspectives.
Business Process Reengineering: An approach to review and redesign organisational processes in order to achieve improved performance in terms of cost, quality of service and timeliness
EFQM Excellence Model: Organisational improvement framework for assessing strengths and areas for improvement across the spectrum of an organisation's activities.
Investors in People: National standard for improving organisational performance by training and developing people to achieve organisational goals.
ISO9001 Quality System: Global standard and approach for quality management systems. The standard focuses on the management of processes and documentation in order to meet customer needs and expectations.
Six Sigma: A disciplined methodology for process improvement that deploys a wide set of tools based on rigorous data analysis to identify sources of variation in performance and ways of reducing them
Management by Objectives: It is a process where objectives are agreed with in organization so management and employees understands what they are in the organization. It is driven by objectives.
Evidence over the past five years suggests that the use of the various improvement models and tools has been variable - with equally variable impact. The aim of the review is to raise awareness and understanding of some of the more popular performance improvement models and tools available to organisations and to share learning in their use to date. It is hoped that the review will enable authorities to make more informed choices on the use of appropriate approaches or tools - if appropriate to use them at all.
M&S uses investor in Business model and invest vast amount of its resources on training and coaching to improve people skills to contribute more professionally and provide best customer services. There is a full time coaching staffs assigned for each shift whose duty is to be on the floor and assist instantly where ever any member needs assistance or to ensure the customer services is at its best. Every contribution adds to achieve corporate profit.
1.3) Value of Strategic Performance tools to measure future team performance
Managing employee or system performance assist the effective delivery of strategic and operational goals. It saves time, assist to measure the output, it improves business results. It helps to check if efforts are in right direction and are serving the purpose of the organization rather wasting time. Companies are using integrated software to record employee's contributions that assist them to measure, analyze and enhance employees output. This brings direct or indirect benefits to the companies.
Direct Financial Gains
Avoid any overruns
Comply with the organizational Goals
Speedy implementation of any changes in strategic or operational goals.
Marks and Spencer (M&S) took a great advantage by implementing and constant reviewing and adapting right strategic performance tool which best suits its need and manage to turn its portfolio from making loss to producing profit since 2006 onwards, since then they are managing to keep company in profit despite tough market condition like recession hit economy where buying capacity is at its low.
Be able to agree team performance targets to contribute to meeting strategic objectives
2.1) How to determine required performance targets with in teams against current performance
The term KPI has become one of the most popular terms in business development and management. In theory it provides a series of measures against which internal managers and external investors can judge the business and how it is likely to perform over the medium and long term.
Different organisations need to monitor different aspects of their environment, there are many monitoring modules, and I've chosen to list some of them below,
For each monitoring module, one can then establish what the current level of performance is in a measurable and understandable way. This is the current performance. From industry sources, the benchmark level can normally be introduced (getting to benchmarks is often a difficult process and one requiring a mixture of low cunning and/or sophisticated analysis). Then a target level of achievement can be entered.
Let us take an example of customer satisfaction module in Marks and Spencer.
Customer Satisfaction; Current Benchmark Target
60% 90% 100%
A mystery shopper also visits twice monthly and assessed each store. If they are maintaining standards and providing best customer care which M&S is renowned for and then award score. Each store is expected to score 100%.
The KPI is central to a number of other elements in the planning platform which provides the
Basis for answering the three crucial planning questions:
Where are we?
Where do we want to be (and when)?
How are we going to get there cost effectively?
The most rapid way to establish the KPI within any set of monitoring information is to work through the three criteria in sequence.
Is the control information key to success of the organisation?
Can we measure it and influence it?
Does it provide leading edge indications of future developments?
In M&S when a new member of staff joins the company, proper induction is conducted, his role is fully briefed to him / her in detail and all key performance indicator markers (KPI's) are agreed with in one to one meeting with Manager. First three months are considered as probationary period where staff is expected to learn and demonstrate all basic qualities which are required at this role. There is a standard Career path and Job titles are self explanatory, so with in probationary period staff is provided with a title as trainee customer assistance. After successful completion of probationary period the staffs is promoted to qualified customer assistant. Next level is to become section coordinator which leads to become section Manager at next level.
2.2) need to encourage individual commitment to team performance in achievement of organisational goals.
The overall aim of performance management is to establish a high-performance culture in which individuals and teams take responsibility for the continuous improvement of business processes and for their own skills and contributions within a framework provided by effective leadership. This stage refers to working to ensure the performance objectives are achieved. Identify development needs and support it with professional training one need. When performance objectives are agreed, line managers will need to plan how to achieve expected level of performance. Provide all support and resources which he/she may need to undertake specific day to day tasks. For any new role Introduce comprehensive induction and probation period is to assess employee's performance and assess their need.
All employees should be motivated to work effectively and efficiently. This applies to all including one who has been working for same post for over the years. The essentials of effective performance management includes,
Appreciate its purpose
Clarity in process cycle and how individual can best contribute in it.
Recognition of responsibilities
Effective communication and feedback
Suggesting ways to meeting individual's targets.
M&S always encourages staffs and provide full support to increase performance. Staffs are rewarded with bonuses and reward vouchers based on feedback from customer as well as from mystery shoppers. Managers work closely with staff on the floor and assist them wherever required. Career path is designed to encourage employees to perform at their best which ensured their professional growth. It is highlighted that without every ones individual performance and contribution over all success of organization is not possible.
2.3) Application of delegation, mentoring and coaching to the achievement of the organisational objectives
Mentoring is a popular tool of personal development and type of training which is long standing. It refers to support, advice and guidance of most experienced person with in organisation to new or inexperience person for his personal development which brings benefits to organisation.
It is essentially a supportive form of development.
It focuses on helping an individual manage their career and improve skills.
Personal issues can be discussed more productively unlike in coaching where the emphasis is on performance at work.
Mentoring activities have both organisational and individual goals.
Coaching refers to developing person's skills to improve job performance in order to achieve of organisational objectives.
It is generally short term more organised and time bounded with regular meetings.
Coach needs to be qualified or experienced with formal occupational role.
It focuses on development of work related and more specific issues or immediate goals.
M&S has kept a specific role as a coaching member who preset on the floor and helps staff with their day to day activities and trains them wherever required. Mangers also work on the floor with team and use mentoring wherever they feel necessary. Mangers also delegate work with in team and seeing them through with successful completion while paying attention to manage other tasks. All this leads to team success which ultimately help to achieve strategic objectives i.e. Best store lay out and customer service which brings more sale and help corporate profit.
2.4) evaluate a team performance plan
A Team Performance Plan is a detailed plan used to:
Identify the desired performance levels of the team
Identify how these performance levels will be achieved
Provide guidance and direction to the team
Measure progress towards the desired performance levels
Although there are no strict rules as to the format of a Team Performance Plan they normally contain the following information:
Specific goals for team development
Actions required to achieve goals
An indication of how long goals will take to achieve
The Team Performance Plan should align with the organization's overall objectives. This can be achieved by:
1. Aligning the Team Performance Plan with the Team Purpose
2. Aligning the Team Purpose with the organization's objectives
Team Performance Plans might include the following types of goals:
Key Performance Indicators (KPIs)
Goals to improve team competency
Team building goals
One of the most fundamental purposes of performance management is to align individual and organizational objectives. This means that everything people do at work leads to outcomes that further the achievement of the basis of performance management 7 organizational goals. Individuals and teams are provided with the opportunity to formulate their own goals within the framework provided by the defined overall purpose, strategy and values of the organization. Objectives should be agreed, not set, and this agreement should be reached through the open dialogues that take place between managers and individuals throughout the year. In other words, this needs to be seen as a partnership in which responsibility is shared and mutual expectations are defined.
M&S set KPI for each member for staff as per their role, lets take an example of customer assistant who is assigned with following objectives,
Quantitative objectives include date rotation of all products which help to bring down daily waste ratio and ultimately help to increase profitability of store.
Staffs is expected to keep a close eye on inventory to ensure products are available at all the time which help to achieve weekly sale targets of the store.
Qualitative objectives includes all products are tagged with correct price and place in a right position which is legal requirement and standard of M&S.
Staffs are expected to ensure customer safety is paramount. If there is any spillage on the floor it should be cleared quickly and any slippery floor is sign posted to aware customer with any possible hazards. Staff need to ensure the Environment is clean and customer friendly.
Staffs are fully aware of product position and its description to answer and satisfy customer query if any.
Be able to monitor actions and activities defined to improve team performance
3.1) Process for monitoring team performance and initiate changes where necessary
Performance management provides better management control; it is flexible and responsive to their needs. It facilitates to comply with companies legal requirement. It also helps out in Audit. Workers know the criteria they will be appraised against. Goals are pre-defined. All businesses, whatever sector they are in, will have plans, aims and objectives. In some cases these can be very sophisticated but in some small businesses very modest. Whatever they are a business will need to monitor its performance in relation to these goals. Following are different ways of monitoring team performances,
Meet with Team Conduct weekly or bi-weekly meetings with team leaders to review issues, share experiences, and resolve problems and concerns. Make sure that team leaders hold similar meetings with their team members, and that identified issues are recorded, communicated, and followed through to closure.
Communication: effective communication may require nothing more than routine, informal, interaction among the team.
Recognize Success Positive reinforcement is a key element of effective team building. This can be as simple as a few words of praise or public recognition, or nomination for a more formal rewards and recognition, such as Impact.
Monitor Team Morale On a small project, "management by walking around" will be sufficient to assess team morale. On a project with multiple subprojects and/or a distributed team, more formal techniques such as team surveys may be used to identify problem areas that require corrective action.
Conduct Team Performance Reviews Make sure that the process defined in the Employee Performance and Development Program is followed to provide regular, constructive feedback on each person's performance on the project. Reviews should occur at the end of each major phase, whenever the team member or his/her team leader is about to leave the project, at the end of the project, or on a minimum six-monthly basis.
Lets take an example of Marks and Spencer where manager walk around on the floor every hour or so and observe each members performance against their agreed daily tasks, if needed they provide direction to member by prioritizing tasks.
I like to pick Mckinsey 7-S Model to define a broad view of what contributes to performance effectiveness.
McKinsey's 7-S frame work
In 1981 Richard Pascale and Anthony Athos started investigating success of Japanese industry, in the same time Tom Peters and Robert Waterman were exploring what made company excellent. The Seven S model was born at a meeting in 1978 between these four authors it was taken up by global management company called McKinsey's, since then it is known as their 7- S model. It is used to organise a company in holistic and effective way.
This is interconnected centre of McKinney's model which describes what organisation stands for and what it believes in.
It is a plan division of available resources over the period of time to achieve identified goals.
It refers to core competence of company workforce and their distinctive capabilities.
Number and type of staff members with in organisation
Refers to Management style and how they act to achieve company's goal.
A procedure, process and routines which explain how the work should be conducted, financial system, MIS, performance appraisals and recruitment process etc.
The way Management structure is outlines, its hierarchy, i.e. centralised or de centralised, a matrix etc.
3.2) Evaluate team performance against agreed objectives
Performance reviews are conducted by filling up appraisal forms with set of question in relation to KPI's set out and previously agreed with employees in one to one meeting. The outcome of review performance determine what action are required to ensure improve performance and future tasks are met. Any training required should be planned and resources are allocated in budget. Reasonable steps are taken to rectify problem if any. Excellent performance should be rewarded with bonus etc and it is assured to employees that their feedback/comments are valuable and their efforts are recognised. Any capability issue should be taken with care. Any underachievement should be dealt with as per company's policy guidelines and employee should be engaged in way where all efforts are made to provide enough support to staff to increase their output in order to achieve their targets. Manager should use all methods to increase staff performance that includes flexible hours, sharing of work load, providing new pattern of work, independent occupational advice, additional training and support.
Marks and Spenser (M&S) pays great attention to outcome of performance review, a copy of each review is attached with employees personal file. Any recommendations for training needs are scheduled at earliest opportunity. Any under performer is dealt with as per company's standard guidelines.
3.3) evaluate the impact of the team performance in contributing to meeting strategic objectives
The out put of appraisal confirms if member has been able to meet his KPI's, if yes how should you rate them as that rating has a direct reflection of his/her contribution to companies objectives, if employees does well he is rewarded with incentives i.e. bonus payment as well as salary increase if he falls behind he is dealt with as per companies policy.
In Marks and Spenser up until last year all employees were rewarded with Bonus payments because M&S did well against its budget as well as its forecast. It was evaluated that this can not be achieved with out a great hard work team members had put it.
4) Be able to apply influencing and persuading skills to the dynamic and politics of personal interactions
4.1) determine influencing and persuading methodologies to gain the commitment of individuals to a course of action
Market research shows that organization that invests and care about motivation of staff generally performs better. Organization is tasked with developing individuals and rewarding and retaining those who perform well. Organisations have a vested interest in finding out if the incentive schemes that they implement are resulting in the desired behavior from individuals. I like to highlight below the link between incentives and employee motivation.Â
Paying for performance
Advocates of pay for performance systems argue that good systems motivate employees towards achievements that support corporate goals and strategies.
Rewarding the right behaviour
By rewarding staff for their right behaviour motivates them to make the good performance consistently or make every effort to deliver best services all the time.Â
Incentives and staff performance
Incentives are very much welcomed by staff weather its time off or free drinks or bonus payments it motivate them to achieve higher goals or achieve excellent performance. The rewards usually relate to the achievement of certain goals, either personal, team or organisational, or a combination of all.
In addition, the critical success factors are:
1.Â Â Â Â Â Â To keep the scheme simple
2.Â Â Â Â Â Â Participants should be able to calculate their incentive
3.Â Â Â Â Â Â Payouts should be meaningful
4.Â Â Â Â Â Â Targets are set in month 1 and goal posts are not moved during the incentive period
Incentives do not work well in isolation from other management practices.Â Â Rather, they are further supported by other elements such as good working conditions, performance management, performance appraisals, and training opportunities.Â Weak administration and processes will inhibit its effectiveness.
There are three contributing factors for performance motivation.
Traditional Motivational Models and persuading methodologies to gain the commitment of individuals to a course of action
Maslow's hierarchy of needs
Each of us is motivated by needs. Our most basic needs are inborn, having evolved over tens of thousands of years. Abraham Maslow's Hierarchy of Needs helps to explain how these needs motivate us all.
Maslow's Hierarchy of Needs states that we must satisfy each need in turn, starting with the first, which deals with the most obvious needs for survival itself.
Only when the lower order needs of physical and emotional well-being are satisfied are we concerned with the higher order needs of influence and personal development.
Conversely, if the things that satisfy our lower order needs are swept away, we are no longer concerned about the maintenance of our higher order needs.
Douglas McGregor - theory x y
Theory x ('authoritarian management' style)
The average person dislikes work and will avoid it he/she can.
Therefore most people must be forced with the threat of punishment to work towards organisational objectives.
The average person prefers to be directed; to avoid responsibility; is relatively UN ambitious, and wants security above all else.
Theory y ('participative management' style)
Effort in work is as natural as work and play.
People will apply self-control and self-direction in the pursuit of organisational objectives, without external control or the threat of punishment.
Commitment to objectives is a function of rewards associated with their achievement.
People usually accept and often seek responsibility.
The capacity to use a high degree of imagination, ingenuity and creativity in solving organisational problems is widely, not narrowly, distributed in the population.
In industry the intellectual potential of the average person is only partly utilised.
Tools for teaching, understanding and evaluating xy theory factors
There are a number of fundamental concepts that underpin the Excellence Model that are reflected in the criteria and sub criteria of the framework. These concepts are:
1. Results orientation
2. Customer focus
3. Leadership and constancy of purpose
4. Management by processes and facts
5. People development and involvement
6. Continuous learning
7. Innovation and improvement
8. Partnership development
9. Public responsibility.
Frederick Hertzberg theory
Herzberg's research used a pioneering approach, based on open questioning and very few assumptions, to gather and analyse details of 'critical incidents' as recalled by the survey respondents.
Herzberg's research identified that true motivators were other completely different factors, notably:
In M&S Bonus payments, rewards vouchers are used to gain individual's commitment which has been very successful. In addition names are posted on notice boards who ever achieve best customer services award of the month to recognise their employee's effort. This also motivate other employees to work extra hard and be no 1 next time.
Promotions are also awarded to persuade employees to take more responsibilities and face fresh challenges in order to progress on professional career.
4.2) discuss the impact of individual dynamics, interest and organizational politics on securing the commitment of individuals to a course of action.
The approaches and tools vary. However all aim to address one or more of the following objectives, with the ultimate aim of improving performance:
1. Help understand what customers need;
2. Help organisations and employees become more results orientated;
3. Improve the quality of service to customers by improving processes or practices;
4. Provide a structured approach to strategic management;
5. Create links between individual, service and corporate objectives;
6. Translate strategy in to performance measures and targets and in doing so rationalise performance information;
7. Help demonstrate individual staff contribution to organisational objectives and create ownership of performance by staff involvement in the improvement process;
8. Identify strengths and areas for improvement;
9. Aid internal and external communication.
Marks and Spenser selected Mary Gober method as chosen service style in order to enhance its reputation, improve sales and business results, and make employee and customer proud of Marks and Spenser. Through employee's efforts, this service style became a part of M&S's very nature, character which never fades away. It acts as a powerful force, consistently delivering great service every time customer interacts. The method really helped changing individual's behaviour throughout the chains of store. It emphasised that employees should be positive, take ownership and responsibility, be respectful and be determined from the minute they say 'Hello' to customer to the minute say 'Goodbye', everything 'In Between' and 'Beyond'. This makes a dramatic, powerful impact on the customer and leaves a feel good impression.
The study of strategic performance management gives us the knowledge that how managers achieve the organization overall long term goal. The study of SPM is all about the need for finding common ground between strategy management and operations management. While strategy management seeks to make strategy relevant to employee's day-to-day responsibilities, operations management seeks strategic context for implementation and improvement projects.
This assignment give us an idea and understanding to find out the gap between management strategy, management accounting, and strategic human resource management to analyze the link between organizational strategy and systems of planning and control.