Enhancing the Business Performance Management System for More Effective Business and Talent Management

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Information about Enhancing the Business Performance Management System for More Effective...

Published on November 7, 2008

Author: kennyong

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Description

MEF National Conference 2008, MANAGING PERFORMANCE FOR BUSINESS EXCELLENCE, KL

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 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

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

1. Why we hate Performance Appraisals www.myCNI.com.my www.OOBEY.com

Complaints about Performance Appraisals As an Appraisee As an Appraisor Mgmt/HR www.myCNI.com.my www.OOBEY.com

Complaints about Performance Appraisals Bias Different Standards Surprise Subjective No linkage* No differentiation Secretive No follow up No control As an Appraisee www.myCNI.com.my www.OOBEY.com

Bias

Different Standards

Surprise

Subjective

No linkage*

No differentiation

Secretive

No follow up

No control

Complaints about Performance Appraisals Cannot remember Tedious Subjective Right targets Scoring Competencies* Defensive staff No $$ to differentiate Prejudices Results or Activities As an Appraiser www.myCNI.com.my www.OOBEY.com

Cannot remember

Tedious

Subjective

Right targets

Scoring Competencies*

Defensive staff

No $$ to differentiate

Prejudices

Results or Activities

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

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

Complaints about Performance Appraisals - Summary Process problem Form problem People problem www.myCNI.com.my www.OOBEY.com

Process problem

Form problem

People problem

What is Performance Appraisal used for? Reward? Discipline? Development? Motivation? Promotion? Monitor? www.myCNI.com.my www.OOBEY.com

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 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 ultimate objective of a Performance Management System?

‘ Performance’ – achievement,

‘ Management’ – controllable, improvement

‘ System’ – predictable outcome, autorun

Summary?

A Predictable process to Improve Controllable Achievements

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? 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 Focus on the Business Strategy and Business Direction first www.myCNI.com.my www.OOBEY.com

“… 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

“… 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"

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

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

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

Moral of the story…

Innovation:

Business models

Products

Services

Market Leadership

Competitive differentiation

“ What is the moral of the story?” www.myCNI.com.my www.OOBEY.com

“ What is the moral of the story?”

What is the Business Model? USP Market Discipline Profit Model www.myCNI.com.my www.OOBEY.com

Intro: Market Discipline Mamak stall www.myCNI.com.my www.OOBEY.com

Mamak stall

Intro: Market Discipline "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 "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 Product Leadership Operational Excellence Customer Intimacy www.myCNI.com.my www.OOBEY.com

"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

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) www.myCNI.com.my www.OOBEY.com

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 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 www.myCNI.com.my www.OOBEY.com

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

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

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 5 th 2007 www.myCNI.com.my www.OOBEY.com

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

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) 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) www.myCNI.com.my www.OOBEY.com

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 www.myCNI.com.my www.OOBEY.com

Focus: Corporate Alignment Financial Learning & Growth Internal Process Customers / Distributors www.myCNI.com.my www.OOBEY.com Revenue Growth Productivity Market Value Department Operations Supplier & Alliances External Involvement Target Markets Products/ Services Channel Strategies Human Resources Technology Information & Intelligence Systems & Processes

Focus: Corporate Alignment Financial Learning & Growth Internal Process Customers / Distributors 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 Implementing the Right System www.myCNI.com.my www.OOBEY.com

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 Managing Performance = Managing Expectations What’s YOUR expectation? Activity based www.myCNI.com.my www.OOBEY.com

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… 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 Trend line

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 Trend line

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

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… 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

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

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

“ 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 .”

Why BSC? Reason 1: Balanced Reason 2: Cause-and-Effect www.myCNI.com.my www.OOBEY.com

Reason 1: Balanced

Reason 2: Cause-and-Effect

BSC: Balanced & Cause-and-Effect Financial “ To satisfy our stakeholders, what Financial objectives must we accomplish?” www.myCNI.com.my www.OOBEY.com Internal Process “ To satisfy our customers, in which internal business processes must we excel?" Customer “ Who are our target customers? What is our value proposition?” Learning & Growth “ What capabilities and tools do our employees require to help them execute our strategy?

Performance Management for Change Review Performance & Results o Grievance level o Absenteeism o Discipline issue o Poor work ethics Degree of Clarity of Job Results Vision Led Performance driven High Low High Level of Trust & Commitment (Between Subordinate & Boss) UNCLEAR Discuss & Agree on Account Objectives & Key Measures Standards for Performance Provide Coaching & Counselling RESULTS DRIVEN High Level of employee empowerment High Employee Performance High Employee Satisfaction High Employee Involvement Challenging Working Environment Optimum HRM Cost Structure

Review Performance & Results

Discuss & Agree on Account

Objectives & Key Measures

Standards for Performance

Provide Coaching & Counselling

High Level of employee empowerment

High Employee Performance

High Employee Satisfaction

High Employee Involvement

Challenging Working Environment

Optimum HRM Cost Structure

2. Performance Planning MBO, KPIs, Competencies www.myCNI.com.my www.OOBEY.com

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 www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent E D C B A

MBO Standards www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent E D Good C B A

MBO Standards www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent Commit Suicide E Not Good D Good C Very Good B Excellent A

MBO Standards www.myCNI.com.my www.OOBEY.com Commit Suicide Not Good Good Very Good Excellent Unacceptable performance E Did not fully meet planned results D Achieved Planned Results C Higher than planned results B Consistently achieved 4 for 3 quarters A

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

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)

MBO Target Setting - Objectives and Measures www.myCNI.com.my www.OOBEY.com When is the result to be produced / performed Timeliness At what expense the result is produced / performed Cost How much / many of the results are produced or performed Quantity How well the result is produced / performed Errors and Appearance Quality

When is the result to be produced / performed

At what expense the result is produced / performed

How much / many of the results are produced or performed

How well the result is produced / performed

Errors and Appearance

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

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

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

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 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

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

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

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

Lagging and Leading KPIs Historical, Outcome, Results, 1 st Level, Usually Financial or tangible, Quarterly and Annually Current, Indicators, Drivers, 2 nd Level onwards, usually non-financial or intangible, Weekly, Monthly and Quarterly www.myCNI.com.my www.OOBEY.com Leading Lagging

Developing ‘Driver’ KPIs www.myCNI.com.my www.OOBEY.com Customer Retention % Lagging, 1 st Level Customer Satisfaction Index Leading, 2 nd Level On time delivery Time to market for new products TNA % Defect levels, warranty claims Leading, 3 rd Level onwards

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

‘ Do-or-Die’ KPIs for CNI

Revenue

ARPU

Sponsoring

Retention

Commission Plan (BDP)

Product

Corporate Image

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

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.

E3 – Department BSC Financial Perspective www.myCNI.com.my www.OOBEY.com On Time Delivery Innovation Quality OPEX CAPEX Targets Measures Goals

Individual Performance www.myCNI.com.my www.OOBEY.com 2.0 Goals and Targets for Q1 6.0 Appraiser Overall Comments/ Feedback 5.0 Rating (Merit x Weight) 4.0 Merit* 3.0 Achievements and Efforts for Q1 1.0 Key Results Area (Max 6)

Competency Target Setting Initiative Teamwork Problem Solving Leadership Integrity What’s the problem here? www.myCNI.com.my www.OOBEY.com

Initiative

Teamwork

Problem Solving

Leadership

Integrity

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

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

Competency Standards www.myCNI.com.my www.OOBEY.com Does not meet behavioral standards. Require counseling or disciplinary actions. 1 Meets behavioral standards some of the time. Needs improvement. 2 Meets behavioral standards consistently . Is a good role model for others. 3

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

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

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

Senior managers performance plans, objectives and standards

Performance vs. plans for top management review

Review annually performance plans vs. results

3. The Manager’s Role in Performance Management Appraisal, Evaluation, Communication, Coaching, Counseling, Mentoring www.myCNI.com.my www.OOBEY.com

Coaching & Counseling www.myCNI.com.my www.OOBEY.com Month 1 Performance Planning Month 12 Performance Appraisal Month 2-11 ?

Beating a Dead Horse www.myCNI.com.my www.OOBEY.com

Beating a Dead Horse

Most Common Desperate Performance Improvement methods Send for more Training Enforce more Incentives (positive/negative) www.myCNI.com.my www.OOBEY.com

Send for more Training

Enforce more Incentives (positive/negative)

Mager and Pipe Analyzing Performance Discrepancies www.myCNI.com.my www.OOBEY.com

Analyzing Performance Discrepancies

Alignment: 4-Wheels Model Philosophies Corporate Objective Performance Objectives www.myCNI.com.my www.OOBEY.com Structure Resources Leadership Person

4. Performance Evaluation Formal Review, Incentives, Compensation, Reward, Differentiation www.myCNI.com.my www.OOBEY.com

Performance Evaluation Session: Key Ingredients www.myCNI.com.my www.OOBEY.com Self Review Evaluator’s Review Next Steps Support/ Resources Improvement Methods

PASSE P raise and encourage A sk questions allow the person to S ave Face use S MART goals E ncourage small improvements Performance Evaluation Session: Communication www.myCNI.com.my www.OOBEY.com

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

Problem with Incentives in managing performance:

Most people are confused or unsure about compensation tools

Some people misuse compensation tools

What to Pay? Pay for Service Pay for Job Pay for Performance Pay for Competency www.myCNI.com.my www.OOBEY.com

Pay for Service

Pay for Job

Pay for Performance

Pay for Competency

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

Internal Equity

Internal Job Rates

Performance differentials

External Competitiveness

External Job Rates - Benchmarking

Demand & Supply

What’s the Difference? Increment Bonus Promotion www.myCNI.com.my www.OOBEY.com

Increment

Bonus

Promotion

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

Use this if your company:

Pays for Performance , and

Pays for Job rates

Def:

Mid-Point = Mid Point of Pay Grade

Compa Ratio Table www.myCNI.com.my www.OOBEY.com 1 2 3 4 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7

Compa Ratio Table www.myCNI.com.my www.OOBEY.com 1 2 5% 3 4 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7

Compa Ratio Table www.myCNI.com.my www.OOBEY.com 0 1 2 2 3 4 5% 7 9 3 7 4 9 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7

Compa Ratio Table www.myCNI.com.my www.OOBEY.com 0 0 0 2 4 1 0 1 2 4 6 2 3 4 5% 7 9 3 3 5 7 9 12 4 7 8 9 12 15 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7

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

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?,

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

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

Employee Distinctions through Relative Performance www.myCNI.com.my www.OOBEY.com

Employee Distinction? www.myCNI.com.my www.OOBEY.com 1 2 3 4 5 1 2 3 4 5 6 2 3 4 5% 6 7 3 4 5 6 7 8 4 5 6 7 8 9 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7

Employee Distinction? www.myCNI.com.my www.OOBEY.com 0 0 0 0 0 1 0 0 1 1 1 2 3 4 5% 7 9 3 3 5 9 12 18 4 5 8 12 15 20 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7

Employee Distinction www.myCNI.com.my www.OOBEY.com 0% 1.0 0 1 ≤ 1.3 0.9% 1.8 0.5 2 > 1.3 – 2.3 2.1% 2.8 0.75 3 > 2.3 – 3.3 4.2% 3.5 1.2 4 > 3.3 – 4.1 8.4% 4.2 2 5 > 4.1 Example Increment Example Rating Multiply Factor Rating Average Rating

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

Identify

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 www.myCNI.com.my www.OOBEY.com

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

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

Before I forget… Re-train Appraisers Train new Appraisers www.myCNI.com.my www.OOBEY.com

Re-train Appraisers

Train new Appraisers

Alignment: 4-Wheels Model Philosophies Corporate Objective Performance Objectives www.myCNI.com.my www.OOBEY.com Structure Resources Leadership Person

Thank You. soft copy of slides: www.totallyunrelatedrandomanddebatable.blogspot.com

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