Strategic Performance Management

A discourse on the role of performance management in organisations

1. Strategic Performance Management
Dr. Elijah Ezendu
FIMC, FCCM, FIIAN, FBDI, FAAFM, FSSM, MIMIS, MIAP, MITD, ACIArb, ACIPM,
PhD, DocM, MBA, CWM, CBDA, CMA, MPM, PME, CSOL, CCIP, CMC, CMgr

2. “Performance management is a
proactive partnership between
employees and management that
helps employees perform at their best
and align their contributions with the
goals, values, and initiatives of the
organization”
- American Management Association

3. “Performance Management is a strategic
and integrated approach to delivering
sustained success to organizations by
improving the performance of the
people who work in them and by
developing the capabilities of teams
and individual contributors.”
- Armstrong & Baron

4. “Strategic Performance Management
encompasses methodologies, frameworks
and indicators that help organizations in the
formulation of their strategy and enable
employees to gain strategic insights which
allow them to challenge strategic
assumptions, refine strategic thinking and
inform strategic decision making and
learning.”
- Bernard Marr

5. The Evolution of Performance Management

6. Tools for Strategic Performance Management
i.Management by Objectives (Peter Drucker)
ii.Hoshin Kanri (Yoji Akao)
iii.Balanced Scorecard (Robert Kaplan and David Norton)
iv.Marr Balanced Scorecard (Bernard Marr)
v.Value Based Management
vi.Results Based Leadership
vii.Result Orientated Management
viii.Performance Prism

7. What is Performance Prism?
It’s a framework for performance management and
measurement which was developed to surmount
the weaknesses of balanced scorecards.
It was developed in Cranfield University, United
Kingdom. This innovation was led by Prof. Andy
Neely, Professor of Operations Strategy and
Performance Director of Cranfield’s Center for
Business Performance and Chairman of
Performance Management Association.

8. The Dilemma of Balanced Scorecards
The balanced Scorecards which was developed by
Kaplan and Norton focused on four perspectives
namely financials, customers, internal processes
in addition to learning and growth. It attempts to
use strategy as an end instead of a route. It
focuses too much on shareholders and
customers without proportionate consideration
for other stakeholders such as employees,
suppliers and regulatory agencies.

9. The Standpoint of Performance Prism
Performance Prism upholds that strategy
should not be an end. Strategy is a route
for delivering value to stakeholders.
Therefore, measures should not be
derived from strategy. Measures must be
derived from stakeholders.

10. The Performance Prism Framework
Top = Stakeholder Satisfaction
Side1 = Strategies
Side2 = Processes
Side3 = Capabilities
Bottom = Stakeholder Contribution
Source: Adapted from Andy Neely and Chris Adams, The Performance Prism

11. Ascertainment of Stakeholders
Shareholders
Employees
Final Consumers
Distributors
Suppliers
Community
State
Ecosystem

12. Modeling Strategies
In accordance with principles of performance
prism, strategies of a firm should be
crafted based on mission direction
towards satisfaction of distinct stakeholder
values.

13. Modeling Processes
The appropriate processes should be
hallmark of smoothness and well thought-
out mechanism for execution of a firm’s
strategies.
Strategy execution would definitely turn out
failure if it tries to scale flawed processes.

14. Modeling Capabilities
A firm should view its capabilities requirement
as technology, practices, infrastructure
and competencies necessary for carrying
out operations vis-à-vis the established
processes in order to generate values for
stakeholders.

15. Stakeholder Contribution
Organizations should ascertain the
contribution of each stakeholder group to
it’s success, so as to identify good
contributors, poor contributors and non-
contributors. This is necessary for
effective positioning of the firm’s
performance model.

16. Drivers for Using Performance Management
i.Advancement in Management
ii.Technology
iii.Market
iv.Competition
v.Human Resource Strategy
vi.Government
vii.Industrial Relations
viii.Organizational Restructuring
ix.Change Management

17. Using Performance Management System
Performance Standards
Performance Measurement
Quality Improvement Process
Performance Reporting

18. The Management Challenge
9 of 10 companies fail to execute strategy
i.Vision Barrier: Only 5% of workforce understands strategy
ii.People Barrier: Only 25% of managers have incentives
linked to strategy
iii.Management Barrier: 85% of executive teams spend less
than 1 hour per month discussing strategy
iv.Resource Barrier: 60% of organizations don’t link budgets
to strategy
Source: Balance Scorecard Collaborative

19. Performance Management Maturity Model
Progress
Time
Disparate Uncoordinated Approach
Individual efforts
Duplicated effort, difficult to consolidate
Time consuming, irreconcilable, possibly mistrusted
Systematic Performance Management
Single coherent database established
Key Performance data collected efficiently
Efficient reporting of performance
Effective Performance Reporting
Cohesive set of strategies
Alignment cascade throughout organisation
Clear accountability is established
Performance Management
Ownership is devolved
Objective interdependencies mapped and better understood
Decisions based on facts
Management actions changed through use of information
Performance Culture
All employees empowerment is facilitated
Widespread management by fact and process
Plans reflect organizational capability
Capability improvement aligned with strategy
Continuous improvement achieved
Source: Inphase Software

20. The Role of Technology in Performance Management
i.Increase data quality
ii.Trigger employee behaviour
iii.Enhance processes
iv.Boost Performance
v.Increase Accessibility of Data
vi.Reinforce Compliance
vii.Improve performance planning
viii.Aids in development of KPI

21. Core Issues in Performance Management
i.Goal Setting
ii.Goal Alignment
iii.Employee Competencies
iv.Measuring Performance
v.Performance Review
vi.Development Management

22. Why Should Your Organisation Implement
Performance Management?
i.Communicate vision, mission, values, objectives
ii.Provide impetus for effective organizational development
iii.Align organizational resources for growth
iv.Enhance working relationships
v.Improve management
vi.Communicate strengths and key areas for improvement
vii.Provide Support to workers
viii.Monitor organizational activities
ix.Provide feedback

23. What Employees Want From PM
i.Rational expectations
ii.Involvement in setting goals
iii.Clear evaluation criteria
iv.Proper job descriptions
v.Constructive and positive feedback
vi.Fair treatment
vii.Job and career enrichment

24. Elements & Outcomes of
Performance Management
Elements:
Listening
Coaching
Feedback
Outcomes:
Better Performance
Improved Morale, Belief & Loyalty

25. Principles of Performance Management System
i.Clarity of Purpose
ii.Focus
iii.Alignment
iv.Balance
v.Regular Refinement
vi.Robust Performance Indicators

26. Conducting Performance Improvement

27. Business Analysis for Performance Improvement
Identification of stated goals and objectives.
Ascertainment of the business environment.
Evaluation of stated goals and objectives in the
business environment.
Detection of fitting goals and objectives.

28. Performance Analysis
Performance analysis focuses on
measuring the gap between desired
and actual performance.
Clarified business objectives determine
requirements for desired performance.
Highlights of requirements include
organizational structure, competencies,
resources, processes, work systems
and competitiveness.

29. The Place of Learning and Development
Intervention
Learning and Development intervention can
only be applicable to gap in competencies
and behavioural traits.
The other requirements for desired
performance call for matching
intervention.

30. Translating Strategy From Organisation to Employee
Translate Translate

31. Performance Indicator
It’s a tool enabling the effectiveness of an operation
or organisation to be measured, and allows an
achieved result to be gauged or evaluated in
relation to a set of objectives.
Source: OECD

32. Properties of Performance Indicators
i.Relevant to the purpose, policy and practice
ii.Clearly defined
iii.Reliable
iv.Worth measuring
v.Measurable
vi.Galvanize action
vii.Reflect results of action
viii.Precisely defined as possible
ix.Readily available within a reasonable time frame

33. Advantages of Performance Indicators
i.Means of measuring organizational
progress toward set objectives.
ii.Give room for benchmarking and comparing
various units, sections, departments and
subsidiaries.

34. Disadvantages of Performance Indicators
i.Act as bad measures if not well defined
ii.Some vital indicators cant be easily measured
iii.Issuance of complexity due to number of
indicators

35. Key Performance Indicators in a Firm
These are quantifiable factors that are clearly
connected to drivers of business success in a
particular firm.

36. Criteria for Selecting KPI
i.Strong linkage to objectives
ii.They should be connected to areas of the
business that can be controlled

iii.They should be quantifiable

37. Types of KPI
1.Directional Indicators
2.Quantitative Indicators
3.Actionable Indicators
4.Practical Indicators

38. Developing Targets based on KPI
A Key Performance Indicator should drive
managerial effort towards a mark of
achievement, which is a target in accordance
with set objective.
KPI…….Reduce waste
Target……50% by end of March

39. Dr Elijah Ezendu is Award-Winning Business Expert & Certified Management Consultant with expertise
in Interim Management, Strategy, Competitive Intelligence, Transformation, Restructuring, Turnaround
Management, Business Development, Marketing, Project & Cost Management, Leadership, HR, CSR, e-
Business & Software Architecture. He had functioned as Founder, Initiative for Sustainable Business
Equity; Chairman of Board, Charisma Broadcast Film Academy; Group Chief Operating Officer, Idova
Group; CEO, Rubiini (UAE); Special Advisor, RTEAN; Director, MMNA Investments; Chair, Int’l Board of
GCC Business Council (UAE); Senior Partner, Shevach Consulting; Chairman (Certification & Training),
Coordinator (Board of Fellows), Lead Assessor & Governing Council Member, Institute of Management
Consultants, Nigeria; Lead Resource, Centre for Competitive Intelligence Development; Lead
Consultant/ Partner, JK Michaels; Turnaround Project Director, Consolidated Business Holdings Limited;
Technical Director, Gestalt; Chief Operating Officer, Rohan Group; Executive Director (Various Roles),
Fortuna, Gambia & Malta; Chief Advisor/ Partner, D & E; Vice Chairman of Board, Refined Shipping;
Director of Programmes & Governing Council Member, Institute of Business Development, Nigeria;
Member of TDD Committee, International Association of Software Architects, USA; Member of Strategic
Planning and Implementation Committee, Chartered Institute of Personnel Management of Nigeria;
Country Manager (Nigeria) & Adjunct Faculty (MBA Programme), Regent Business School, South Africa;
Adjunct Faculty (MBA Programme), Ladoke Akintola University of Technology; Editor-in-Chief, Cost
Management Journal; Council Member, Institute of Internal Auditors of Nigeria; Member, Board of
Directors (Several Organizations). He holds Doctoral Degree in Management, Master of Business
Administration and Fellow of Professional Institutes in North America, UK & Nigeria. He is Innovator of
Corporate Investment Structure Based on Financials and Intangibles, for valuation highlighting
intangible contributions of host communities and ecological environment: A model celebrated globally
as remedy for unmitigated depreciation of ecological capital and developmental deprivation of host
communities. He had served as Examiner to Professional Institutes and Universities. He had been a
member of Guild of Soundtrack Producers of Nigeria. He's an author and extensively featured speaker.

40. Thank You