Ballymena Borough Council

“A Performance Management Reflection”

Dr Adrian Gundy

Organisational Development & Growth Strategies

Jack WelchFormer CEO GE

said:90% of organisations are perfectly aligned

to achieve the results they achieve.

That’s what’s wrong with them.

He was Chairman and CEO of General Electric between 1981 and 2001. During his tenure at GE, the company's value rose 4000% and was the

most valuable company in the world for a time.

Managing Performance

How to manage Performance– Systems approach– Linking strategic vision and high level objectives

with low level day-to-day tactics and targets– Team and Personal Accountability– Alignment of Strategy– Harnessing of Resources– Utilisation of Assets– People Development– Organisational Structure & Development

Systems and People:

Systems Approach

and

Personal Performance

EFQM Fundamental Concepts of Excellence

RADAR

EFQM Excellence Model

Balanced Scorecard

Learning & Growth

What will drive the advances required in financial, customer

and internal process.

Finance / Results

Aimed at meetingstakeholder expectations.What is your equivalent of

share price?

Customer

Aimed at meetingcustomer expectations.

Who are your customers?

Internal Process

What we must excel at tomeet financial & customer

Expectations.

WHAT

HOW

Systems and People:

Balanced Scorecard

and

Personal Performance

Introduction

Balanced Scorecards provide a framework for communicating strategy in operating terms (metrics, targets, etc.)

You must communicate strategy in operating terms if you expect people to execute on your strategy.

When people are asked about strategy, they reach for their balanced scorecard.

Overview

Balanced Scorecards are constructed from strategic maps.

Throughout the process, refer back to these maps, making sure everything is linked. This is very important since we want to capture a “cause and effect” relationship in building the scorecard.

Strategic Goals

Establishing strategic goals is the first step in building the Balanced Scorecard.

Strategic goals establish direction in concrete terms. For example: “By the year 2003, we will grow revenues by 45%.”

Strategic goals anchor the rest of the process.

Strategic goals should fit with the vision and mission of the organization.

Strategic Objectives

Once we establish our first anchor (goals), we can develop a set of strategic objectives.

Strategic objectives define what actions must be taken to reach the strategic goals.

Objectives are critical to future success. For example, in order to grow revenues, we must introduce new products and expand our market share.

Strategic Themes

Based on strategic goals, three to five strategic themes should emerge.

From these themes, we will develop a strategic map.

Four common strategic themes are: Operating Efficiencies, Customer Relations, Product Innovation, and Growing the Business.

Strategic Model

Strategic Models can emerge from four principles:

1. Translate strategies into operating terms.

2. Link strategies throughout the entire organization.

3. Commit everyone to implementing strategy.

4. Make strategizing a continuous process of learning and adjusting to change.

Four Perspectives

Before we build strategic maps, we need to define four perspectives:

Financial: Top layer in the map, represents financial outcomes (profits, revenues, etc.)

Customer: Next layer down, enables financial results (service, image, price, quality, etc.)

Internal Processes: The values added to customers, such as delivery, production, distribution, etc.

Learning & Growth: The people, systems, and organization that enable processes.

Cause-Effect Hypothesis

Financial

Customer

Internal Process

Learning & Growth

4. Increased customer satisfaction will lead tobetter financial results.

1. Knowledge & skills of employees is foundation for

innovation and improvements.

2. Skilled, empoweredemployees will improve the ways they work.

3. Improved work processeswill lead to increased customer satisfaction.

Strategic Mapping

Strategic Maps are the foundation of the Balanced Scorecard.

You will need one strategic map for each strategic theme.

Maps are constructed over four perspectives. Strategic objectives are mapped over the four

perspectives, linked together.

Linking

Strategic objectives need to be placed in the Strategic Map according to which perspective fits with the objective.

Objectives may cross over more than one perspective.

We usually start at the top with outcomes and work our way down, looking at what enables (drives) the outcome.

ImproveReturns

BroadenRevenue Mix

ImproveOperatingEfficiency

Increase Customer

Confidence in our

advice

Increase customer

Satisfaction throughSuperior execution

UnderstandCustomerSegments

DevelopNew

Products

ProvideRapid

Response

MinimiseProblems

Increaseproductivity

DevelopStrategic Skills

Access tostrategic info

AlignPersonal goals

Fin

ance

Cus

tom

erIn

tern

alP

roce

ssLe

arni

ng&

Gro

wthCause-Effect Hypothesis

Approval

Once you have completed the strategic maps, you will need to get approval from executive management. Does this map accurately tell the “story” of our strategy?

If management disagrees with the map, go back and redo the maps. We need to get this step right since it represents the foundation for the entire scorecard.

Measurements

For each strategic objective, you need one measurement.

Measurement provides us with feedback on meeting the strategic objective.

Most organizations will use many of their existing measurements.

Organizations requiring major change should include driver type measurements.

Measurement Criteria

Measurements should drive change, providing teeth to our strategy.

Measurements define objectives in specific terms. A good measurement should tell you what your objective is – this is an indicator of good linkage.

Measurements should be repeatable, quantifiable, and verifiable.

Leading and Lagging Indicators

LaggingHard

ObjectiveOutcomeControlStabilityTactical

Bottom up measures

LeadingSoft

SubjectiveLearning and Growth

LeadershipChange

StrategicTop down measures

A high proportion of the measures should be forward looking and proactive, so that the Balanced Scorecard can be an

effective agent of organisational change.Need to know where we have been and where we are going

Targets

Once you establish measurements, you need to set a target for each measurement.

Targets push the organization to a required level of performance.

Targets put focus on the strategy, expressing the specifics of the strategy.

When an organization hits its targets, then it has successfully implemented its strategy.

Programs

In order for things to happen in an organization, you must initiate major programs. For example, improving customer service may require a new customer management system.

Once you put programmes in place, you should be able to meet your strategic objectives. This closes the loop, everything is now linked and away we go!

Templates

Templates are used to capture, analyse and document data. Templates are used for strategic mapping, defining measurements, etc.

Strategic Map for Strategic Theme #1:

Inte

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Lea

rnin

g F

inan

cial

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Other Important Steps

Scorecards are built around three teams: Leadership Team (upper level management), Core Team (middle level management) and Measurement Team (lower level functional personnel).

Scorecards are built around at least four group meetings: Kick Off Meeting followed by at least one meeting for each of the three teams.

How to Use Scorecards

Corporate Level

Business Unit

Department / Location

Individual Appraisal

Alig

nmen

t

Systems and People:

Systems Approach

and

Personal Performance

Linkage

Corporate Balanced Scorecard Performance Measure Increase satisfaction with service delivery services for internal and external customers by implementing a customer service strategy

Departmental Balanced Scorecard Performance Measure Achieve 95% of internal and external service delivery targets

Division Work Plan Performance Measure Achieve 95% of Safety Coordinator’s internal and external service delivery targets

Individual Work Plan Performance Measure Complete 95% or more of all accident investigations within 30 days of occurrence

Development & Introduction

Development and Introduction– Are senior managers fully committed?– Who should be consulted?– How will you keep people informed?– How will you manage performance fairly?– Who should be trained?– When should your scheme be introduced?

Planning Employee Performance

Planning Employee Performance– Agreeing objectives– Agreeing competencies– Agreeing behaviours– Outputs vs. Behaviours

What’s Involved

What’s Involved– Why is personal development important?– Targets vs. Coaching approach– What is a Personal Development Plan?– Career planning– Talent Management

Reviewing Performance

Reviewing Performance– Keeping a record of progress– Regular feedback– The Appraisal interview– Rating performance– Self Assessment– Views of others/peers/direct reports– Counter-signing reports– Buy-in and commitment

Managing Under-performance

Managing Under-performance– The importance of regular feedback– Support and Coaching– Having the difficult conversation– Disciplinary action

Performance Related Pay

Performance Related Pay– Advantages of linking pay to performance– Disadvantages of linking pay to performance– Other rewards e.g. Recognition– How is Performance Management monitored

Q and A?Q and A?

adrian.gundy@cforc.org

Twitter: adriangundy

www.cforc.org