Performance Performance ManagementManagement

by Prof. B.D. Singh IMTby Prof. B.D. Singh IMT

Mind boggling changes, technological revolution, Mind boggling changes, technological revolution, fierce competition. Perform or Perish ,survival of the fierce competition. Perform or Perish ,survival of the fittest -- survival instinct -And like the story of the fittest -- survival instinct -And like the story of the two men on a safari, in order to survive you will have two men on a safari, in order to survive you will have to die trying. While walking through the jungle, they to die trying. While walking through the jungle, they came upon a hungry tiger, when one of them started came upon a hungry tiger, when one of them started putting on his running shoes. “How is this going to putting on his running shoes. “How is this going to help? We can’t outrun the tiger.” asked the other. help? We can’t outrun the tiger.” asked the other. The first man replied: ”I don’t have to outrun the The first man replied: ”I don’t have to outrun the tiger, I only have to outrun you.”tiger, I only have to outrun you.”

Organizations redefining their strategies-- Organizations redefining their strategies-- performance appraisal to performance management performance appraisal to performance management to performance cultureto performance culture in which every member of the in which every member of the organization knows the goals & consistently make organization knows the goals & consistently make efforts to achieves high performanceefforts to achieves high performance

Behaviorism in performanceBehaviorism in performancePerformance=skill + will Performance=skill + will

Or Or Individual performance = Ability x Motivation x Individual performance = Ability x Motivation x Organizational Support + or – Chance Factors?Organizational Support + or – Chance Factors?Iccha (desire, motivation), Gyan, (knowledge) Iccha (desire, motivation), Gyan, (knowledge) (Know how), Kriya, (action, to achievement).(Know how), Kriya, (action, to achievement).Work is sublime—to do nothing is to be nothing—Work is sublime—to do nothing is to be nothing—karma is dharma— dharma of each person to karma is dharma— dharma of each person to contribute to the larger society in excess of what contribute to the larger society in excess of what she consumes out of its resources. We can work she consumes out of its resources. We can work to destroy ourselves, or to improve our lot. -to destroy ourselves, or to improve our lot. -Understand the intrinsic meaning of work can Understand the intrinsic meaning of work can guide us to better ways of controlling and guide us to better ways of controlling and directing this powerhouse of human energy. directing this powerhouse of human energy.

““Work- as – life”Work- as – life”Economic : Gainful, productive work performed to Economic : Gainful, productive work performed to meet the economic needs of a person or her meet the economic needs of a person or her family.family.Cultural : Functions, such as the rituals of birth, Cultural : Functions, such as the rituals of birth, marriage and death, death, performed as moral marriage and death, death, performed as moral duty in the course of one’s various life- passages. duty in the course of one’s various life- passages. Psychosocial : Interpersonal and interfamilial Psychosocial : Interpersonal and interfamilial interactions in one’s role as member of a social interactions in one’s role as member of a social unit. unit. Physical : All movements from birth to death that Physical : All movements from birth to death that the human body engages in.the human body engages in.Peter Drucker and three stonecutter .Peter Drucker and three stonecutter .Will to work, to achieve, to contribute, to seek Will to work, to achieve, to contribute, to seek recognitionrecognitionHelp enhance self- esteem of the worker.Help enhance self- esteem of the worker.

What is performance–Behavior+ Outcome – What is performance–Behavior+ Outcome – achievement, accomplishment at work –being, achievement, accomplishment at work –being, (‘Chance’, ‘favors the prepared mind’) – doing (‘Chance’, ‘favors the prepared mind’) – doing (‘Ideas are funny little things. They won’t work (‘Ideas are funny little things. They won’t work unless you do.) relating (role network – unless you do.) relating (role network – vertical, horizontal or otherwise.) vertical, horizontal or otherwise.) input—throughput –output (exceeds the value input—throughput –output (exceeds the value of output?)–feedbackof output?)–feedbackOutput or result dimension;Output or result dimension;Input dimension;Input dimension;Time dimensions;Time dimensions;Focus dimension;Focus dimension;Quality dimension; andQuality dimension; andCost dimension.Cost dimension.

Performance means both behavior & Performance means both behavior & result, behavior emanates the result, behavior emanates the performanceperformance performance management is creating performance management is creating culture in which organizational & culture in which organizational & individual learning are a continuous individual learning are a continuous process – integration of learning & work process – integration of learning & work – Normal vs excellent performance - Better than Normal vs excellent performance - Better than

the best- outstanding/ extraordinary the best- outstanding/ extraordinary performance-- Bench Marking,record breaking,performance-- Bench Marking,record breaking,

– Excellence is not a skill but an attitude/cultureExcellence is not a skill but an attitude/culture– The Geeta – Yogah, Karam su kaushalam The Geeta – Yogah, Karam su kaushalam

The road to excellence is always under The road to excellence is always under construction.construction.

It is necessary to always surpass oneself It is necessary to always surpass oneself and this is a lifelong occupation.and this is a lifelong occupation.

You got to be the first or the best or You got to be the first or the best or different.different.

When better is possible, good is not good When better is possible, good is not good enough.enough.

Target for the day: 1% improvement.Target for the day: 1% improvement.

Excellence is not a destination- it is an endless Excellence is not a destination- it is an endless road– excellence seeker do not follow the laid road– excellence seeker do not follow the laid down path, they break new paths & leave their down path, they break new paths & leave their trail behind-they accept the challenge so that trail behind-they accept the challenge so that they may feel the exhilaration they may feel the exhilaration Churchil- “excellence seekers never, never Churchil- “excellence seekers never, never quit, they walk on with optimism as their hope quit, they walk on with optimism as their hope helps them visualize the invisible, touch the helps them visualize the invisible, touch the intangible & materialize the impossible”intangible & materialize the impossible”Excellence is not through chance /freakExcellence is not through chance /freakLuck is what happens when preparation meets Luck is what happens when preparation meets opportunity PMS encourages individuals to opportunity PMS encourages individuals to anticipate opportunity & prepare to grab it. anticipate opportunity & prepare to grab it.

““Chance favors the prepared mind” –Fortune Chance favors the prepared mind” –Fortune favors the bravefavors the brave

Bench marking– up gradation to match with the Bench marking– up gradation to match with the best best

Fighting fit with six sigmaFighting fit with six sigma– Jack Welch’s directive that his GE managers could Jack Welch’s directive that his GE managers could

wriggle out of Six Sigma training at the cost of losing wriggle out of Six Sigma training at the cost of losing their promotion only goes to show how important it is to their promotion only goes to show how important it is to enforce this practice from the top. enforce this practice from the top.

– The people involved in Six Sigma execution are The people involved in Six Sigma execution are Master black belts who are well versed in the rules of the Master black belts who are well versed in the rules of the game,game,

Black belts (technically oriented individuals involved in the Black belts (technically oriented individuals involved in the process of organizational change and development)process of organizational change and development)

Green belts (employees who lead six sigma project teams).Green belts (employees who lead six sigma project teams).

Six Sigma FundasSix Sigma Fundas

Strong customer-oriented approach that relies on Strong customer-oriented approach that relies on data to create more efficient processes or refine data to create more efficient processes or refine existing processesexisting processesUnder the prescribed specifications, there cannot Under the prescribed specifications, there cannot be more than 3, 4 defects (defined as anything be more than 3, 4 defects (defined as anything that doesn’t add value to the end customer), per that doesn’t add value to the end customer), per million opportunities.million opportunities.You can apply it to anything, from making a You can apply it to anything, from making a movie to manufacturing truck tyresmovie to manufacturing truck tyresIt needs the unstinted support of organizational It needs the unstinted support of organizational leaders, and emphasizes teamwork and lifelong leaders, and emphasizes teamwork and lifelong evolution of practices and processes.evolution of practices and processes.

Excellence happens through unleashing Excellence happens through unleashing human potential which is infinite- culture human potential which is infinite- culture of excellence of excellence

Peter And Waterman –In search of Peter And Waterman –In search of Excellence (1982) – Excellence (1982) –

care for customer, care for customer,

craze for creativity craze for creativity

concern for people concern for people

By investing in HR, your company will By investing in HR, your company will grow and succeed.grow and succeed.

““the ability to learn faster than your the ability to learn faster than your competitor may be the only sustainable competitor may be the only sustainable competitive advantage”competitive advantage”

Performance Management?Performance Management?

PfM is another way of envisioning the totality of a PfM is another way of envisioning the totality of a manager’s function. It views the managerial function manager’s function. It views the managerial function holisticallyholisticallyPerformance management is the process of creating a work Performance management is the process of creating a work environment of setting in which people are enabled to the environment of setting in which people are enabled to the best of their abilities.best of their abilities. In a traditional system, performance tends to be evaluated In a traditional system, performance tends to be evaluated and looked at only in the short run and for immediate and looked at only in the short run and for immediate results. Organisations need to understand that for results. Organisations need to understand that for sustained performance, it has to nurture a creative, sustained performance, it has to nurture a creative, motivated and committed workforce, and for that motivated and committed workforce, and for that employee’s performance has to be planned, analysed, employee’s performance has to be planned, analysed, developed and appraised continuously rather than being developed and appraised continuously rather than being constricted to annual reviews and evaluations.constricted to annual reviews and evaluations.

P M S is concerned with creating a culture in which P M S is concerned with creating a culture in which individual learning & development are continuous process individual learning & development are continuous process It provide means for integration or learning and work so It provide means for integration or learning and work so that every one learns form success & challenges inherent in that every one learns form success & challenges inherent in day to day activities day to day activities

The desire to enhance performance is The desire to enhance performance is making ever greater demands on the making ever greater demands on the knowledge & skill of the work force & on knowledge & skill of the work force & on people, who carry a much greater people, who carry a much greater responsibility for their own responsibility for their own performance.performance.It is a holistic, systematic & continues It is a holistic, systematic & continues management function.management function.It is about performance & not just It is about performance & not just apprising. Performance & result apprising. Performance & result important but people equally important.important but people equally important.High performing people are critical for High performing people are critical for high performing organizationhigh performing organization

Performance Appraisal systemsPerformance Appraisal systems– Focus is on performance appraisal and generation of Focus is on performance appraisal and generation of

ratingsratings– Emphasis is on relative evaluation of individuals.Emphasis is on relative evaluation of individuals.– Annual exercise-normally though periodic evaluations are Annual exercise-normally though periodic evaluations are

made.made.– Emphasis is on ratings and evaluation.Emphasis is on ratings and evaluation.– Rewards and recognition of good performance is an Rewards and recognition of good performance is an

important component.important component.– Designed and monitored by the HR Department.Designed and monitored by the HR Department.– Ownership is mostly with the HR department.Ownership is mostly with the HR department.– KPAs & KRAs are used for bringing in objectivity. KPAs & KRAs are used for bringing in objectivity. – Developmental needs are identified at the end of the year Developmental needs are identified at the end of the year

on the basis of the appraisal of competency gaps.on the basis of the appraisal of competency gaps.– There are review mechanisms to ensure objectivity in There are review mechanisms to ensure objectivity in

ratings ratings – It is a system with deadlines, meetings, input and output It is a system with deadlines, meetings, input and output

and a format.and a format.– Format driven with emphasis on the process.Format driven with emphasis on the process.– Linked to promotions, rewards, training and development Linked to promotions, rewards, training and development

interventions and placements. interventions and placements.

Performance Management systemsPerformance Management systems– Focus is on performance management.Focus is on performance management.– Emphasis is on performance improvements of individuals, Emphasis is on performance improvements of individuals,

teams and the organization.teams and the organization.– Continuous process with quarterly performance review Continuous process with quarterly performance review

discussions.discussions.– Emphasis is on performance planning, analysis, review, Emphasis is on performance planning, analysis, review,

development and improvements.development and improvements.– Performance rewarding may or may not be an integral part.Performance rewarding may or may not be an integral part.– Designed by HR and Line departments but monitored by the Designed by HR and Line departments but monitored by the

respective departments themselves.respective departments themselves.– Ownership is with line managers, HR facilitates its Ownership is with line managers, HR facilitates its

implementation KPAs or KRAs are used as planning implementation KPAs or KRAs are used as planning mechanisms.mechanisms.

– Developmental needs are identified in the basis of the Developmental needs are identified in the basis of the competency requirements for the coming year.competency requirements for the coming year.

– There are review mechanisms essentially to bring There are review mechanisms essentially to bring performance improvements performance improvements

– It is a system with deadlines, meetings, input, output and a It is a system with deadlines, meetings, input, output and a format.format.

– Process driven with emphasis on the format as an aid.Process driven with emphasis on the format as an aid.– Linked to performance improvements and through them to Linked to performance improvements and through them to

other HR decisions as and when necessary.other HR decisions as and when necessary.

What is New?What is New?– Move away from appraisals.Move away from appraisals.– Move away from numbers to qualitative Move away from numbers to qualitative

assessmentassessment– Innovate. Process is more important than Innovate. Process is more important than

formatsformats– Emphasize learning and development, Emphasize learning and development,

empowerment and growth and problem. Solving empowerment and growth and problem. Solving more than assessment.more than assessment.

– Use multi ratter assessment as a supplementsUse multi ratter assessment as a supplements– Synergies with other systemsSynergies with other systems– Encourage employees to own their own Encourage employees to own their own

performance management.performance management.– Follow up actions must be taken and taken on Follow up actions must be taken and taken on

time. It may be training or job rotation or time. It may be training or job rotation or removing blocks or any other things.removing blocks or any other things.

PMS is change in managerial style of doing work.PMS is change in managerial style of doing work.It is creating & nurturing performing culture. It is creating & nurturing performing culture. The performance culture has to be built into the management & the The performance culture has to be built into the management & the enterprise. Great workplaces with high performance cultures tend to enterprise. Great workplaces with high performance cultures tend to foster growth and feed an individual’s need for learning and foster growth and feed an individual’s need for learning and development. Several successful companies have shown that high development. Several successful companies have shown that high performance culture is the sine qua non for attaining sustainable performance culture is the sine qua non for attaining sustainable competitive advantage.competitive advantage.

Frame work of Performance Management.Frame work of Performance Management.Conduct Future MappingConduct Future MappingCreate Transformational Vision, Mission and Core ValuesCreate Transformational Vision, Mission and Core ValuesCraft business strategy linked to Vision Craft business strategy linked to Vision

Annual corporate objective Annual corporate objective Annual corporate strategy-& the other details cascade down --use of Annual corporate strategy-& the other details cascade down --use of balance score card in Moser Baer balance score card in Moser Baer Performance planning Performance planning

- Task analysis and/or activity analysis;Task analysis and/or activity analysis;- Key performance areas (KPAs);Key performance areas (KPAs);- Key result areas (KRAs);Key result areas (KRAs);- Task & target identifications;Task & target identifications;- Activity plans/action plans; andActivity plans/action plans; and- Goal-setting exercises.Goal-setting exercises.

If the following questions can be answered positively after the If the following questions can be answered positively after the exercise, one could say that KPAs have been well exercise, one could say that KPAs have been well identified:identified:

1.1. Do the KPAs and targets emphasize/ indicate what the Do the KPAs and targets emphasize/ indicate what the manager (appraise) is expected to do by himself (rather manager (appraise) is expected to do by himself (rather than what his department, subordinates etc, are expected than what his department, subordinates etc, are expected to do)?to do)?

2.2. Together, do they cover a large part of his job and include Together, do they cover a large part of his job and include all significant contributions expected from his role?all significant contributions expected from his role?

3.3. Do they indicate the priority areas of work for the appraise Do they indicate the priority areas of work for the appraise during the year?during the year?

4. If all KPAs are well done, can the appraise be 4. If all KPAs are well done, can the appraise be labeled as a good performer?labeled as a good performer?

5. Are the targets set challenging and stretch the 5. Are the targets set challenging and stretch the capabilities of the appraise moderately rather capabilities of the appraise moderately rather than being routine?than being routine?

6. Are they comprehensive?6. Are they comprehensive?

7. Do they specify the standards of performance 7. Do they specify the standards of performance expected from the appraise?expected from the appraise?

8. Do they take into consideration realistically the 8. Do they take into consideration realistically the conditions under which the appraise is expected conditions under which the appraise is expected to function during the year?to function during the year?

9. Do they satisfy both the appraise and appraiser?9. Do they satisfy both the appraise and appraiser?

10. Has adequate time been spent on the process of 10. Has adequate time been spent on the process of identifying KPAs and gaining role clarity?identifying KPAs and gaining role clarity?

2.Goals — directions- if you do not know where you 2.Goals — directions- if you do not know where you are going, any road will be OK– are going, any road will be OK– Goal setting is a process intended to increase Goal setting is a process intended to increase efficiency & effectiveness by specifying the efficiency & effectiveness by specifying the desired outcomes towards which individuals, desired outcomes towards which individuals, teams & organisation should work teams & organisation should work Goals includes deadline, budget, and other Goals includes deadline, budget, and other standards of behaviour and performance standards of behaviour and performance Goals are quantifiable , consistent, precise, Goals are quantifiable , consistent, precise, challenging, measurable, achievable, shared, challenging, measurable, achievable, shared, time related, team work oriented.time related, team work oriented.SMARTSMART– S – Simple S – Simple – M – Measurable M – Measurable – A – Agreed A – Agreed – R – Realistic R – Realistic – T – Time related T – Time related

3. Performance agreement -- performance 3. Performance agreement -- performance agreements set the direction & form the agreements set the direction & form the basis of measurement, feedback, basis of measurement, feedback, assessment in the performance assessment in the performance management system management system

- Defines work to be doneDefines work to be done- The attributes required (skill +knowledge The attributes required (skill +knowledge

+ attitude)- competencies required + attitude)- competencies required - Identified measures use to monitor review Identified measures use to monitor review

and access and access - Corporate core values requiredCorporate core values required

4.4. Performance Measures – “If you can not measure Performance Measures – “If you can not measure you cannot improve” – What is not measured is not you cannot improve” – What is not measured is not worth doing– Simple Measurements (Production, worth doing– Simple Measurements (Production, Quality, Cost, Delivery, Safety etc .– profitability Quality, Cost, Delivery, Safety etc .– profitability gets measured on- gets measured on- -return on investment -return on investment -return on sale-return on sale-return on total capital-return on total capital-return on book quality-return on book quality-net income by total assets-net income by total assets

Performance measures provide evidence of whether or Performance measures provide evidence of whether or not the intended result has been achieved & not the intended result has been achieved & extend to which the job – holder has produced the extend to which the job – holder has produced the result.result.

Performance measure becomes the basis of generating Performance measure becomes the basis of generating feedback information.feedback information.

Bench marking – “ if you know your self & Bench marking – “ if you know your self & your enemy well, you can win thousands your enemy well, you can win thousands of wars” of wars” – ““BenchmarkingBenchmarking is a tool to help you is a tool to help you

improve your business process. Any business improve your business process. Any business process can be benchmarked”process can be benchmarked”

– ““BenchmarkingBenchmarking is the process of is the process of identifying, understanding, and adapting identifying, understanding, and adapting outstanding practices from organisations outstanding practices from organisations anywhere in the world to help your anywhere in the world to help your organisations improve its performance”organisations improve its performance”

– ““BenchmarkingBenchmarking is a highly respected is a highly respected practice in the business world. It is an activity practice in the business world. It is an activity that looks outward operations against those that looks outward operations against those goals”goals”

-performance appraisal for individual & -performance appraisal for individual & team- each organisation have its team- each organisation have its own- Moser bear has one own- Moser bear has one

-balance score card for organization -balance score card for organization team and individual team and individual

Financial performanceFinancial performance

Customers satisfactionCustomers satisfaction

Internal business processes Internal business processes

Employees learning and growthEmployees learning and growth

The Balanced Scorecard Provides a Framework to The Balanced Scorecard Provides a Framework to

Translate a Strategy into Operational TermsTranslate a Strategy into Operational Terms 00

To succeed financially, how should we appear to our shareholders?

Financial

•Objective

•Measures

•Targets

•Initiatives

Vision & corporate Strategy

1

00

To achieve our vision, how should we appear to our customer?

Customer

•Objectives

•Measures

•Targets

•Initiatives

2

3 To satisfy our shareholders and customers, what business processes must we excel at?

Internal Business Process

•Objectives

•Measures

•Targets

•Initiatives

00

“To achieve our vision, how will we sustain our ability to change and improve?”

Learning & Growth

•Objectives

•Measures

•Targets

•Initiatives

4

The weights assigned to different performance measures in The weights assigned to different performance measures in the balanced scorecard as used by 60 large companies the balanced scorecard as used by 60 large companies surveyed by Towers Perrin New York, is shown below:-surveyed by Towers Perrin New York, is shown below:-

Developmental result 9%

Internal business results 12%

Customer focus 19%

Financial results 55%

Innovation/ learning results 5%

5. Competency– Competency Mapping, 5. Competency– Competency Mapping, Competency Profiling, Competency Matching Competency Profiling, Competency Matching and Job Matching- at two levels behavioral & and Job Matching- at two levels behavioral & technical.technical.

Competence is skill based attributes- Competence is skill based attributes- measures what, what people can do.?measures what, what people can do.?

Competency is behavior based attributes, Competency is behavior based attributes, applies on performance, measures, how, how applies on performance, measures, how, how they do it – Behavior or set of behaviors' that they do it – Behavior or set of behaviors' that describe excellent performance in particular describe excellent performance in particular work context– Applied knowledge and skill– work context– Applied knowledge and skill– Behavioral application of knowledge that Behavioral application of knowledge that produce resultsproduce results

Competency ModelCompetency Model

knowledge

skill

aptitude

attitude

performance

Acquired ability or experience needed to fulfill responsibilities

Natural ability that prepares a person to fulfill responsibilities

Way of thinking or Behavior needed to fulfill responsibilities

Informance & understanding needed to fulfill responsibilities

attitude

Competency caused flow chartCompetency caused flow chart

Input Action Input Action OutcomeOutcome

Personnel attributes & skills

Behavior Job performance

Why Strategies FailWhy Strategies Fail

17%

8%

40%

35%

75% fail because of people- lack of competency and reluctance reluctance to change.

‘People don’t resist change, they resist change without being changed’

In a study conducted by Mc Kensey in 340 In a study conducted by Mc Kensey in 340 organizations worldwide on “Worganizations worldwide on “Why Strategy Failshy Strategy Fails”, only ”, only 17 percent of strategic failures were due to bad 17 percent of strategic failures were due to bad strategy and 8 percent due to other reasons such as strategy and 8 percent due to other reasons such as ‘September 11, War natural calamity, etc. the ‘September 11, War natural calamity, etc. the remaining 75 percent were due to lack of competency remaining 75 percent were due to lack of competency of the people who implemented the strategy; of the people who implemented the strategy; precisely 40 percent due to lack of knowledge and precisely 40 percent due to lack of knowledge and skills and the other 35 percent due to lack of right skills and the other 35 percent due to lack of right attitude, i.e. willingness to change, managing feeling attitude, i.e. willingness to change, managing feeling and emotions, etc.and emotions, etc.People who excel at their jobs demonstrate behavior People who excel at their jobs demonstrate behavior that distinguish them from their peers. Directing that distinguish them from their peers. Directing these behaviors are “Competencies” which we define these behaviors are “Competencies” which we define as underlying personal characteristics that as underlying personal characteristics that differentiate outstanding performance from average differentiate outstanding performance from average performance in a given job, role, organization or performance in a given job, role, organization or culture.culture.

– List of managerial competencies List of managerial competencies 1.1. Planning abilityPlanning ability2.2. Organizing abilityOrganizing ability3.3. Co-ordinationCo-ordination4.4. SupervisionSupervision5.5. Leadership & dynamism Leadership & dynamism 6.6. InitiativeInitiative7.7. Resourcefulness (oral & written)Resourcefulness (oral & written)8.8. Creativity & ImaginativenessCreativity & Imaginativeness9.9. Development of subordinates Development of subordinates 10.10. Contribution to team spiritContribution to team spirit11.11. Analytical abilitiesAnalytical abilities12.12. DelegationDelegation13.13. Public relationsPublic relations14.14. SociabilitySociability15.15. Self-confidenceSelf-confidence

16. Decision-making16. Decision-making17. Cooperativeness17. Cooperativeness18. Flexibility18. Flexibility19. Problem-solving 19. Problem-solving 20. Risk –taking20. Risk –taking21. Ability to motivate subordinates21. Ability to motivate subordinates22. Conflict management 22. Conflict management 23. Communication skills23. Communication skills24. Perseverance24. Perseverance25. Hard work25. Hard work26. Integrity26. Integrity27. Drive27. Drive28. Empathy28. Empathy29. Assertiveness29. Assertiveness30. Originality30. Originality31. Data management31. Data management

– Threshold competency – minimum, essential for every manager but Threshold competency – minimum, essential for every manager but that does not distinguish that does not distinguish

– Differentiating competency – superior from average performers Differentiating competency – superior from average performers Competency for high achieverCompetency for high achiever 1.1. Personal drive (achievement motivation)Personal drive (achievement motivation)2.2. Analytical powerAnalytical power3.3. Strategic thinkingStrategic thinking4.4. Creative thinking (ability to innovate)Creative thinking (ability to innovate)5.5. Divisiveness Divisiveness 6.6. Commercial judgment Commercial judgment 7.7. Decision making Decision making 8.8. Team management & leadershipTeam management & leadership9.9. Interpersonal relationshipsInterpersonal relationships10.10. Ability to communicateAbility to communicate11.11. Ability to adopt & cope with changes & pressureAbility to adopt & cope with changes & pressure12.12. Impact on resultImpact on result– Creativity & innovativeness– Creativity is more than just inspiration. Creativity & innovativeness– Creativity is more than just inspiration.

It is perspiration and hard work too… many of us believe that It is perspiration and hard work too… many of us believe that creativity is a gift given to only chosen few. Nothing can be further creativity is a gift given to only chosen few. Nothing can be further from the truth. All of us are creative in our own little way. Creativity from the truth. All of us are creative in our own little way. Creativity is a route to self-fulfillment and satisfaction.is a route to self-fulfillment and satisfaction.

COMPETENCY MAPPING –A TOOL FOR OPTIMIZING THE COMPETENCY MAPPING –A TOOL FOR OPTIMIZING THE

HUMAN CAPITALHUMAN CAPITAL The term “Human Capital” describes the economic The term “Human Capital” describes the economic value of the organization's knowledge, skill, and value of the organization's knowledge, skill, and capabilities. capabilities. Human Capital is intangible and hence cannot be Human Capital is intangible and hence cannot be managed the way organizations manage jobs, products, managed the way organizations manage jobs, products, technology etc.technology etc.““Can a round peg fit a square hole? So can’t a wrong Can a round peg fit a square hole? So can’t a wrong employee in a right organization”employee in a right organization”The organization will have to find a correct person who The organization will have to find a correct person who will fulfill its expectations or will have to chisel and will fulfill its expectations or will have to chisel and shape up the existing employee to fit its expectations. shape up the existing employee to fit its expectations. ““Know the dimensions of the square hole And buy a Know the dimensions of the square hole And buy a square peg Or chisel the round peg to fit.” square peg Or chisel the round peg to fit.” ““Successful Companies of the 21Successful Companies of the 21stst Century will be those Century will be those who do the best job of capturing storing and leveraging who do the best job of capturing storing and leveraging what their employees know”what their employees know”

Thomas Stewart in his book “Intellectual Capital: Thomas Stewart in his book “Intellectual Capital: The New Wealth of Organisation” says that The New Wealth of Organisation” says that Intellectual Capital is the intellectual material, Intellectual Capital is the intellectual material, knowledge information, intellectual property, and knowledge information, intellectual property, and experiences that can be used to create wealth.experiences that can be used to create wealth.The term ‘intellectual Capital’ represents the The term ‘intellectual Capital’ represents the awareness that information is a factor of awareness that information is a factor of production, as economists would describe it, in production, as economists would describe it, in the same category with land, labour, capital and the same category with land, labour, capital and energy. In the early mid 1990s there was an energy. In the early mid 1990s there was an increasing awareness in the business community increasing awareness in the business community that knowledge was an important organizational that knowledge was an important organizational resource that needed to be nurtured, sustained, resource that needed to be nurtured, sustained, and, it possible, accountedand, it possible, accounted

5.5. Monitoring Monitoring & Mentoring performance---- & Mentoring performance----6.6. monitoring employees performance & mentoring their monitoring employees performance & mentoring their

development is the heart & soul of performance development is the heart & soul of performance management.management.Performance management aims at sustained effort for – Performance management aims at sustained effort for – a. performance improvement a. performance improvementb. enhancement of managers competenciesb. enhancement of managers competenciesc. organisational learningc. organisational learning- differentiating leadership with leader- differentiating leadership with leaderA leader is one who knows the way, who shows the way, A leader is one who knows the way, who shows the way, who goes the waywho goes the way

-situational leadership (Directing, Coaching, Supporting, -situational leadership (Directing, Coaching, Supporting, Delegating) - Introducing movers of human behaviors – Delegating) - Introducing movers of human behaviors – coaching & mentoring – continuous search for drivers of coaching & mentoring – continuous search for drivers of performance & movers of human behavior – creating performance & movers of human behavior – creating achievers - enriching performance through diversity- achievers - enriching performance through diversity- creating building trust- encouraging change - measuring creating building trust- encouraging change - measuring results results -Mid term review.-Mid term review.How can managers get extra ordinary performance from How can managers get extra ordinary performance from ordinary people - by effectively & systematically managing ordinary people - by effectively & systematically managing performanceperformance

– – three basics principles of high performance-create trust, three basics principles of high performance-create trust, encourage change, measure the performance, -----encourage change, measure the performance, -----(reinforce and reward)(reinforce and reward)

Some monitoring/ mentoring Some monitoring/ mentoring behaviorsbehaviors

Manager meets employees regularly, on the Manager meets employees regularly, on the spot, during work process, facilitate spot, during work process, facilitate change .change .Praises good performancePraises good performanceSharing feeling than passing remarksSharing feeling than passing remarksDemonstrating & demanding integrity in Demonstrating & demanding integrity in behavior & intent behavior & intent Exacibility & availability to the employees Exacibility & availability to the employees Correcting faults then condemning Correcting faults then condemning Nurturing effective working through Nurturing effective working through continuous improvement.continuous improvement.

6. 6. Pygmalion effectPygmalion effect7.7. ANNUAL Stock taking /Performance Review Discussion ANNUAL Stock taking /Performance Review Discussion

and feedback-and feedback- Performance review- letting employee know Performance review- letting employee know where he stands-process of analysis of achievement and where he stands-process of analysis of achievement and deficiency- providing opportunity for in-depth exploration for deficiency- providing opportunity for in-depth exploration for introspection with the mentor - reinforcement in case of introspection with the mentor - reinforcement in case of deficiency, (T & D, counseling, coaching, mentoring etc.), deficiency, (T & D, counseling, coaching, mentoring etc.), appropriate reward in case of target fulfillmentappropriate reward in case of target fulfillment

Objectives – Objectives – 1.1. Helping him to realize his potential as a manager or a leader Helping him to realize his potential as a manager or a leader

etc.etc.2.2. Helping him to understand himself –his strengths and his Helping him to understand himself –his strengths and his

weakness.weakness.3.3. Providing him an opportunity to acquire more insight into his Providing him an opportunity to acquire more insight into his

behaviour and analyze the dynamics of such behaviour.behaviour and analyze the dynamics of such behaviour.4.4. Helping him to have better understanding of the Helping him to have better understanding of the

environment.environment.5.5. Increasing his personal and inter-personal effectiveness by Increasing his personal and inter-personal effectiveness by

giving him feedback about his behaviour and assisting him in giving him feedback about his behaviour and assisting him in analysing his inter-personal competence.analysing his inter-personal competence.

6.6. Encouraging him to set goals for further improvement.Encouraging him to set goals for further improvement.

7. Encouraging him to set goals for further improvement.7. Encouraging him to set goals for further improvement.8.8. Creating an empathic atmosphere to share and discuss Creating an empathic atmosphere to share and discuss

his tensions, conflicts, concerns and problems.his tensions, conflicts, concerns and problems.9.9. Helping him to develop various action plans for further Helping him to develop various action plans for further

improvement.improvement.10.10. Helping him to review in a non-threatening way his Helping him to review in a non-threatening way his

progress in achieving various objectives.progress in achieving various objectives.Condition for performance review discussionCondition for performance review discussion

General climate of openness and mutualityGeneral climate of openness and mutualityGeneral helpful and empathic attitude of management General helpful and empathic attitude of management Sense of uninhibited participation by the subordinates in Sense of uninhibited participation by the subordinates in the performance review processthe performance review processDialogic relationship in goal setting and performance Dialogic relationship in goal setting and performance reviewreviewFocus on work-oriented behaviorFocus on work-oriented behaviorFocus on work-related problems and difficultiesFocus on work-related problems and difficultiesAvoidance of discussion on rewards and punishmentAvoidance of discussion on rewards and punishment

Methods of review Methods of review

-tell & sell, tell & listen, problem solving-tell & sell, tell & listen, problem solving

7.7. Feedback-Feedback- Feedback is transmitting Feedback is transmitting information from one part of system to another information from one part of system to another part to do corrective action or initiate new part to do corrective action or initiate new action. Self feedback is highly desirable feature action. Self feedback is highly desirable feature of PMS but there is always need for managers, of PMS but there is always need for managers, colloquies, inter and external customers to colloquies, inter and external customers to provide feedbacks based on their observation provide feedbacks based on their observation (360 feedback). Feedback is considered positive (360 feedback). Feedback is considered positive because it is developmental – because it is developmental –

8.8. build feedback in to the job build feedback in to the job 9.9. on the actual event on the actual event 10.10. describe do not judge describe do not judge 11.11. refer specific behavior refer specific behavior 12.12. be positive be positive 13.13. suggest correctionsuggest correction

8. Conditions for effective feedback8. Conditions for effective feedbackDescriptive and not evaluativeDescriptive and not evaluativeFocused on the behaviour of the person and not on the Focused on the behaviour of the person and not on the person himselfperson himselfData based and specific and not impressionisticData based and specific and not impressionisticReinforces positive new behaviourReinforces positive new behaviourSuggestive and not prescriptiveSuggestive and not prescriptiveContinuousContinuousMostly personal, giving data from one’s own experienceMostly personal, giving data from one’s own experienceNeed-based and solicitedNeed-based and solicitedIntended to helpIntended to helpFocused on modifiable behaviourFocused on modifiable behaviourSatisfies needs of both the feedback given and one who Satisfies needs of both the feedback given and one who receives feedbackreceives feedbackChecked and verifiedChecked and verifiedWell timed Well timed Contributes to mutuality and building up relationshipContributes to mutuality and building up relationship

Unhelpful and helpful response of the appraisal Unhelpful and helpful response of the appraisal 1.1. UnhelpfulUnhelpful

Not encouraging creative acts Not encouraging creative acts Passive listeningPassive listeningLack of verbal responseLack of verbal responseCriticalCritical

– Criticizing Criticizing – Pointing inconsistenciesPointing inconsistencies– Repeated mention of weaknessesRepeated mention of weaknesses– BelittlingBelittling– ReprimandingReprimandingDirectiveDirective– PrescribingPrescribing– OrderingOrdering– Threatening Threatening – Giving no optionsGiving no options– Pointing out only one acceptable wayPointing out only one acceptable way– Quoting rules and regulations Quoting rules and regulations

2. Helpful Appraisal2. Helpful AppraisalEmpathicEmpathicLevelingLeveling

Rapport buildingRapport buildingIdentifying feelings Identifying feelings

SupportiveSupportiveRecognizingRecognizingCommunicatingCommunicatingAvailabilityAvailabilityCommitting supportCommitting support

Trusting Trusting ExploringExploring

QuestionsQuestionsReflectingReflectingSharingSharingProbingProbing

ClosingClosingSummarizingSummarizingConcludingConcludingContracting for follow-up and helpContracting for follow-up and help

Performance Reward, Development Performance Reward, Development & Recognition& Recognition

The outcome of performance appraisal The outcome of performance appraisal should be linked to:should be linked to:

1.1. Performance linked pay.Performance linked pay.

2.2. Development opportunities.Development opportunities.

3.3. Challenging assignments in various Challenging assignments in various task forces in the company. task forces in the company.

8.8. Counseling and Coaching & Counseling and Coaching & mentoring –directing people to do mentoring –directing people to do has always produce inferior results has always produce inferior results compare to inspiring people to do an compare to inspiring people to do an excel. While counseling helps people excel. While counseling helps people to come out of helplessness, to come out of helplessness, coaching & mentoring inspires people coaching & mentoring inspires people to an excelto an excel Counseling is helping people to help Counseling is helping people to help themselves to achieve what they themselves to achieve what they want to-complete acceptance, want to-complete acceptance, empathy, listening, sensitivity, empathy, listening, sensitivity, impartiality, helping to explore his impartiality, helping to explore his own confusion, working out own confusion, working out improvement plan along with him.improvement plan along with him.

Coaching is to assist others to make Coaching is to assist others to make changes in their work lives or to changes in their work lives or to adjust to changes with view to adjust to changes with view to improving the performance-not improving the performance-not teaching, not instructing, not teaching, not instructing, not training it is on the job to help people training it is on the job to help people develop their skills and level of develop their skills and level of competence, making people aware of competence, making people aware of their deficiency and encouraging their deficiency and encouraging them to improve- coaching is a them to improve- coaching is a process were by one people helps process were by one people helps another to unlock their natural ability another to unlock their natural ability to perform learn an achieve- to to perform learn an achieve- to increase awareness of the factor increase awareness of the factor which deterring performance, which deterring performance,

to increase their scene of self to increase their scene of self responsibility and ownership of responsibility and ownership of their performance, to self their performance, to self coaching to identifying & remove coaching to identifying & remove internal barriers of achievement internal barriers of achievement A mentor is experienced and A mentor is experienced and trusted advisor – combine four trusted advisor – combine four roles- coach, teacher, sponsor roles- coach, teacher, sponsor (adding new challenges), devils (adding new challenges), devils advocate (unusual way of looking advocate (unusual way of looking at things)- role model at things)- role model

Conclusion Conclusion

As Sherman Roberts of Harvard As Sherman Roberts of Harvard university puts it: “The best way to university puts it: “The best way to run an organization is also the best run an organization is also the best way to treat people”way to treat people”

In the words of Edward Gibbons, an In the words of Edward Gibbons, an English historian, “The winds and English historian, “The winds and waves are always on the side of the waves are always on the side of the ablest navigator.”ablest navigator.”

Balanced Scorecard for Enhancing PerformanceBalanced Scorecard for Enhancing Performance“ “ The problem is that not everything that counts can be The problem is that not everything that counts can be counted, and not everything that can be counted counts.”counted, and not everything that can be counted counts.”

As a manager, more often than not, most of our decisions As a manager, more often than not, most of our decisions and the activities are guided by the impact they will have on and the activities are guided by the impact they will have on the bottom line. Usually, we end up measuring an the bottom line. Usually, we end up measuring an organization’s performance in terms of Profit made. No organization’s performance in terms of Profit made. No doubt, profitability, gross revenues, return on capital, etc. doubt, profitability, gross revenues, return on capital, etc. are the critical, “bottom line” kind of results that companies are the critical, “bottom line” kind of results that companies must deliver to survive. But if we only focus on the financial must deliver to survive. But if we only focus on the financial health of the organization, it may jeopardize our success in health of the organization, it may jeopardize our success in the long run because financial measures are generally the long run because financial measures are generally “lagging indicators” of success and financial performance “lagging indicators” of success and financial performance depends on a variety of past action & events on which we depends on a variety of past action & events on which we may not have immediate control. They are historical. While may not have immediate control. They are historical. While they tell us what has happened to the organization, they they tell us what has happened to the organization, they may not tell us what is currently happening or be a good may not tell us what is currently happening or be a good

Indicator of future performance.Indicator of future performance.

Another consequence of merely focusing on financial Another consequence of merely focusing on financial measures is that we lose sight of the customers who are key measures is that we lose sight of the customers who are key to our well being. In such a scenario, we may end up taking to our well being. In such a scenario, we may end up taking decisions like reducing the warranty stringent to help the decisions like reducing the warranty stringent to help the organization financially, but may hurt the long term organization financially, but may hurt the long term relationships with the customers, who may eventually relationships with the customers, who may eventually reduce the purchases or leave altogether. Such decisions are reduce the purchases or leave altogether. Such decisions are sufficient to turn – off the customers in the longer run. The sufficient to turn – off the customers in the longer run. The world over, there are hundreds of companies which are no world over, there are hundreds of companies which are no more talked about probably because of their obsession only more talked about probably because of their obsession only with bottom line results. As they continued to do what they with bottom line results. As they continued to do what they had been doing, very soon they realised that their had been doing, very soon they realised that their competitors have displayed them from their place of competitors have displayed them from their place of imminence.imminence.

Instead of such a short-sighted, after the-fact view of an Instead of such a short-sighted, after the-fact view of an organisation’s performance, a more comprehensive view is organisation’s performance, a more comprehensive view is needed with an equal emphasis on outcome measures (the needed with an equal emphasis on outcome measures (the financial measures or lagging indicators), measures thatfinancial measures or lagging indicators), measures that

Will tell us how well the company is doing now (current Will tell us how well the company is doing now (current indicators) and measures of how it might do in the future indicators) and measures of how it might do in the future (leading indicators). We can’t ignore the bottom line – the (leading indicators). We can’t ignore the bottom line – the key indicator of what has happened (i.e., a “ lagging key indicator of what has happened (i.e., a “ lagging indicator”). The indicator”). The balanced scorecard balanced scorecard is just remedy for this is just remedy for this kind of problem.kind of problem.The origins of the balanced scorecard method can be traced The origins of the balanced scorecard method can be traced back to 1990, when the research arm of KPMG sponsored a back to 1990, when the research arm of KPMG sponsored a study on measuring performance in organisations. The study study on measuring performance in organisations. The study was motivated by a belief that existing performance was motivated by a belief that existing performance measurement approaches, primarily relying on financial measurement approaches, primarily relying on financial parameters which provide information about an parameters which provide information about an organisation’s past result are not well suited for predicting organisation’s past result are not well suited for predicting future performance or for implementing and controlling the future performance or for implementing and controlling the organisation’s strategic plan. And it is very much relevant in organisation’s strategic plan. And it is very much relevant in the Indian context also where many big companies which the Indian context also where many big companies which were doing quite well financially at one point of time could were doing quite well financially at one point of time could not read the writings on the wall and as a result, they are no not read the writings on the wall and as a result, they are no more talked about. By analyzing perspectives other than themore talked about. By analyzing perspectives other than the

financial one, managers can better translate the financial one, managers can better translate the organisation’s strategy into actionable objectives and better organisation’s strategy into actionable objectives and better measure how well the strategic plan is executing. measure how well the strategic plan is executing. Subsequently, in 1992, Robert S Kaplan and David Norton Subsequently, in 1992, Robert S Kaplan and David Norton introduced the balanced scorecard (BSC) for measuring an introduced the balanced scorecard (BSC) for measuring an organisation’s activities in terms of its vision and strategies organisation’s activities in terms of its vision and strategies which was published in the Harvard Business Review. It which was published in the Harvard Business Review. It gives managers a comprehensive view of the performance gives managers a comprehensive view of the performance of a business and have been widely adopted around the of a business and have been widely adopted around the world. In fact, the Harvard Business Review, in its 75world. In fact, the Harvard Business Review, in its 75thth Anniversary issue, cites the Balanced Scorecard as being Anniversary issue, cites the Balanced Scorecard as being one of the 15 most important management concepts to have one of the 15 most important management concepts to have been introduced via articles in the magazine.been introduced via articles in the magazine.

What is Balanced ScorecardWhat is Balanced Scorecard

The Balanced Scorecard method is a strategic approach and The Balanced Scorecard method is a strategic approach and performance management system that enables the performance management system that enables the organisations to translate its vision and strategy into organisations to translate its vision and strategy into implementation. The Balanced Scorecard is a conceptual implementation. The Balanced Scorecard is a conceptual

framework for translating an organization’s vision into a set of framework for translating an organization’s vision into a set of performance indicators distributed among four perspectives : performance indicators distributed among four perspectives : Financial, Customer, Internal Business Processes, and Learning Financial, Customer, Internal Business Processes, and Learning and Growth. Indicators are maintained to measure an and Growth. Indicators are maintained to measure an organization’s progress toward achieving its vision. Other organization’s progress toward achieving its vision. Other indicators are maintained to measure the long term drivers of indicators are maintained to measure the long term drivers of success. Through this scorecard, an organization monitors both success. Through this scorecard, an organization monitors both its current performance (finances, customer satisfaction, and its current performance (finances, customer satisfaction, and business process results) and its efforts to improve processes, business process results) and its efforts to improve processes, motivate and educate employees, and enhance information motivate and educate employees, and enhance information systems – its ability to learn and improve. A Balanced systems – its ability to learn and improve. A Balanced Scorecard enables us to measure not just how we have been Scorecard enables us to measure not just how we have been doing, but also how well we are doing (“current indicators” and doing, but also how well we are doing (“current indicators” and can expect to do in the future (“leading indicators”). This in can expect to do in the future (“leading indicators”). This in turn gives us a clear picture of reality.turn gives us a clear picture of reality.

The Balanced Scorecard is a way of:The Balanced Scorecard is a way of: measuring organizational, business unit’s or department’s measuring organizational, business unit’s or department’s successsuccess• balancing long-term and short-term actionsbalancing long-term and short-term actions

• balancing different measures of success

- Financial- Customer- Internal Operations- Human Resource System & Development ( learning

and growth)

Four Kinds of MeasuresFour Kinds of Measures

The scorecard seeks to measure a business from the The scorecard seeks to measure a business from the following perspectives :following perspectives :

1.1. Financial perspective - Measures reflecting financial Financial perspective - Measures reflecting financial performance, for example, number of debtors, cash flow or performance, for example, number of debtors, cash flow or return on investment. The financial performance of an return on investment. The financial performance of an organization is fundamental to its success. Even non-profit organization is fundamental to its success. Even non-profit organisations must make the books balance. Financial organisations must make the books balance. Financial figures suffer from two major drawbacksfigures suffer from two major drawbacks

2. Customer perspective – This perspective captures the 2. Customer perspective – This perspective captures the ability of the organization to provide quality goods and ability of the organization to provide quality goods and services, effective delivery, and overall customer satisfaction services, effective delivery, and overall customer satisfaction for both Internal & External customers. For example, time for both Internal & External customers. For example, time taken to process a phone call, results of customer surveys, taken to process a phone call, results of customer surveys, number of complaints or competitive rankings.number of complaints or competitive rankings.

3. Business Process perspective – This perspective provides 3. Business Process perspective – This perspective provides data regarding the internal business results against data regarding the internal business results against measures that lead to financial success and satisfied measures that lead to financial success and satisfied customers. To meet the organizational objectives and customers. To meet the organizational objectives and customers expectations, organizations must identify the key customers expectations, organizations must identify the key business processes at which they must excel. Key processes business processes at which they must excel. Key processes are monitored to ensure that outcomes are satisfactory. are monitored to ensure that outcomes are satisfactory. Internal business processes are the mechanisms through Internal business processes are the mechanisms through which performance expectations are achieved. For example, which performance expectations are achieved. For example, the time spent prospecting new customers, number of units the time spent prospecting new customers, number of units that required rework or process cost.that required rework or process cost.

4. Learning and Growth perspective – This perspective 4. Learning and Growth perspective – This perspective captures the ability of employees, information systems, and captures the ability of employees, information systems, and organizational alignment to manage the business and adapt organizational alignment to manage the business and adapt to change. Processes will only succeed if adequately skilled to change. Processes will only succeed if adequately skilled and motivated employees, supplied with accurate and and motivated employees, supplied with accurate and timely information, are driving them. In order to meet timely information, are driving them. In order to meet changing requirements and customer expectations, changing requirements and customer expectations, employees are being asked to take on dramatically new employees are being asked to take on dramatically new responsibilities that may require skills, capabilities, responsibilities that may require skills, capabilities, technologies, and organizational designs that were not technologies, and organizational designs that were not available before. It measures the company’s learning curve available before. It measures the company’s learning curve for example, number of employee suggestions or total hours for example, number of employee suggestions or total hours spent on staff training.spent on staff training.

Objectives, Measures, Targets and InitiativesObjectives, Measures, Targets and Initiatives

Within each of the balanced scorecard financial customer, Within each of the balanced scorecard financial customer, internal process, and learning perspectives, the organisation internal process, and learning perspectives, the organisation must define the following:must define the following:

• Strategic objectives – the strategy for achieving that Strategic objectives – the strategy for achieving that perspective.perspective.

• Measures – how progress for that particular objective will Measures – how progress for that particular objective will be measured.be measured.

• Targets – the target value sought for each measureTargets – the target value sought for each measure

• Initiatives – what will be done to facilitate reaching out the Initiatives – what will be done to facilitate reaching out the target.target.

The balanced scorecard provides an inter-connected model The balanced scorecard provides an inter-connected model for measuring performance and revolves around four distinct for measuring performance and revolves around four distinct perspectives – financial, customer, internal processes, and perspectives – financial, customer, internal processes, and innovation and learning. Each of these perspectives is stated innovation and learning. Each of these perspectives is stated in terms of the organisation’s objectives, performance in terms of the organisation’s objectives, performance measures, targets, and initiatives, and all are harnessed to measures, targets, and initiatives, and all are harnessed to implement corporate vision and strategy.implement corporate vision and strategy.

The name also reflects the balance between the short-and The name also reflects the balance between the short-and long-term objectives, between financial and non-financial long-term objectives, between financial and non-financial measures, between lagging and leading indicators and measures, between lagging and leading indicators and between external and internal performance perspectives.between external and internal performance perspectives.

Under the balance scorecard system, financial measures are Under the balance scorecard system, financial measures are the outcome, but do not give a good indication of what is or the outcome, but do not give a good indication of what is or will be going on in the organization. Measures of customer will be going on in the organization. Measures of customer satisfaction, growth and retention is the current indicator of satisfaction, growth and retention is the current indicator of company performance, and internal operations (efficiency, company performance, and internal operations (efficiency, speed, reducing non-value added work, minimizing quality speed, reducing non-value added work, minimizing quality problems) and human resource systems and development problems) and human resource systems and development are leading indicators of company performance.are leading indicators of company performance.

Robert S Kaplan and David P Norton the architects of the Robert S Kaplan and David P Norton the architects of the balanced scorecard approach, recognized early that long-balanced scorecard approach, recognized early that long-term improvement in overall performance was unlikely to term improvement in overall performance was unlikely to happen through technology only and hence placed greater happen through technology only and hence placed greater emphasis on organizational learning and growth. These, inemphasis on organizational learning and growth. These, in

Turn, consist of the integrated development of employees, Turn, consist of the integrated development of employees, information, and systems capabilities.information, and systems capabilities.

Context and StrategyContext and Strategy

Just as financial measures have to be put in context, so does Just as financial measures have to be put in context, so does measurement itself. Without a tie to a company strategy, measurement itself. Without a tie to a company strategy, more importantly, as the measure of company strategy, the more importantly, as the measure of company strategy, the balanced scorecard is useless. A mission, strategy and balanced scorecard is useless. A mission, strategy and objectives must be defined. Measures of that strategy must objectives must be defined. Measures of that strategy must be agreed upon to and actions need to be taken for a be agreed upon to and actions need to be taken for a measurement system to be fully effective. Otherwise, it will measurement system to be fully effective. Otherwise, it will appear as if the organisation is standing at a crossroad but appear as if the organisation is standing at a crossroad but unaware of which path to take.unaware of which path to take.

Purpose of the Balanced Scorecard Purpose of the Balanced Scorecard

Kaplan and Norton found that organisations are using the Kaplan and Norton found that organisations are using the scorecard to :scorecard to :

• Clarify and update strategyClarify and update strategy• Communicate strategy throughout the companyCommunicate strategy throughout the company• Align unit and individual goals with strategyAlign unit and individual goals with strategy• Link strategic objectives to long term targets and Link strategic objectives to long term targets and annual budgetsannual budgets• Identify and align strategic initiativesIdentify and align strategic initiatives• Conduct periodic performance reviews to learn about Conduct periodic performance reviews to learn about and improve strategy.and improve strategy.

Mission Why we ExistWhy we Exist

Core ValuesWhat we believe in

VisionWhat we want to be

Corporate StrategyOur Game Plan

Balanced ScorecardImplementation & Focus

Strategic InitiativesWhat we need to do

Individual ScorecardWhat I need to do

Strategic Outcomes

Satisfied ShareholderShareholder

Delighted CustomersCustomers

EffectiveProcessesProcesses

Motivated WorkforceWorkforce

•The Process of Building a Balanced ScorecardThe Process of Building a Balanced Scorecard

•Kaplan and Norton suggest following four step process for Kaplan and Norton suggest following four step process for building a scorecard:building a scorecard:

• Define the measurement architectureDefine the measurement architecture•Specify strategic objectivesSpecify strategic objectives•Choose strategic measuresChoose strategic measures•Develop the implementation planDevelop the implementation plan

•Benefits of Balanced ScorecardBenefits of Balanced Scorecard

•Some of the benefits include:Some of the benefits include:• Translation of strategy into measurable parametersTranslation of strategy into measurable parameters• Communication of the strategy to all stakeholdersCommunication of the strategy to all stakeholders• Alignment of individual goals with the organisation’s Alignment of individual goals with the organisation’s strategic objectivesstrategic objectives• Feed-back of implementation results to the strategicFeed-back of implementation results to the strategic planning processplanning process

• Preparing the organisation for the Change – It provides for a front-end Preparing the organisation for the Change – It provides for a front-end justification as well as a focus and integration for the continuous justification as well as a focus and integration for the continuous improvement, re-engineering and transformation process.improvement, re-engineering and transformation process.

Avoiding Potential RoadblocksAvoiding Potential Roadblocks

• Lack of a well defined strategyLack of a well defined strategy• Using only lagging measuresUsing only lagging measures• Use of generic metricsUse of generic metrics• Failure at all levelsFailure at all levels• Failure to follow through completionFailure to follow through completion

Balanced Scorecard for Enhancing PerformanceBalanced Scorecard for Enhancing Performance

In such constantly shifting environments, management must learn to In such constantly shifting environments, management must learn to continuously adapt to new strategies that can emerge from capitalizing continuously adapt to new strategies that can emerge from capitalizing on opportunities or countering threats. A properly constructed balanced on opportunities or countering threats. A properly constructed balanced scorecard can provide management with the ideal tool in reacting to the scorecard can provide management with the ideal tool in reacting to the turbulent environment and helping the organisation to correct the course turbulent environment and helping the organisation to correct the course to success.to success.Scorecard provides managers with feedback, thus, enabling them to Scorecard provides managers with feedback, thus, enabling them to monitor and adjust the implementation of their strategy – even to the monitor and adjust the implementation of their strategy – even to the extent of changing the strategy itself. In today’s information age, extent of changing the strategy itself. In today’s information age, organisations operate in very turbulent environments. Planned strategy,organisations operate in very turbulent environments. Planned strategy,

though initiated with the best of intentions and with the best though initiated with the best of intentions and with the best available information at the time of planning may no longer available information at the time of planning may no longer be appropriate or valid for contemporary conditions.be appropriate or valid for contemporary conditions.

As companies have applied the balanced scorecard, they As companies have applied the balanced scorecard, they have begun to recognize that the scorecard represents a have begun to recognize that the scorecard represents a fundamental change in the underlying assumptions about fundamental change in the underlying assumptions about performance measurement.performance measurement.

The scorecard puts strategy and vision, not control, at the The scorecard puts strategy and vision, not control, at the centre. It establishes goals but assumes that people will centre. It establishes goals but assumes that people will adopt whatever behaviours and take whatever actions are adopt whatever behaviours and take whatever actions are necessary to arrive at those goals. The measures are necessary to arrive at those goals. The measures are designed to pull people toward the overall vision. Senor designed to pull people toward the overall vision. Senor managers may know what the end result should be, but they managers may know what the end result should be, but they cannot tell employees exactly how to achieve that result, cannot tell employees exactly how to achieve that result, because the conditions in which employees operate are because the conditions in which employees operate are constantly changing.constantly changing.This new approach to performance measurement isThis new approach to performance measurement is

consistent with the initiatives under way in many organisation consistent with the initiatives under way in many organisation : cross-functional integration, customer supplier partnerships, : cross-functional integration, customer supplier partnerships, global scale, continuous improvement, and team rather than global scale, continuous improvement, and team rather than individual accountability. By combining the financial, individual accountability. By combining the financial, customer, internal process and innovation, and organizational customer, internal process and innovation, and organizational learning perspectives, the balanced scorecard helps learning perspectives, the balanced scorecard helps managers understand, at least implicitly, many managers understand, at least implicitly, many interrelationships. This understanding can help managers interrelationships. This understanding can help managers transcend traditional notions about functional barriers and transcend traditional notions about functional barriers and ultimately lead to improved decision making, problem solving ultimately lead to improved decision making, problem solving and enhanced performance. The balanced scorecard keeps and enhanced performance. The balanced scorecard keeps organisations moving forward.organisations moving forward.