Get the opportunity to grow your influence by giving your products or services prime exposure with Performance Magazine.
If you are interested in advertising with Performance Magazine, leave your address below.
Any effective and successful business acknowledges the importance of productivity in the workplace. Organizations need engaged and highly productive employees in order to achieve their strategic objectives, while reducing hiring costs in a remarkably competitive talent market. But what are the factors that increase your employees’ commitment and productivity?
In 2017, the Performance Magazine editorial team interviewed Antonny Teo, Chief Financial Officer at Panorama JTB Tours Indonesia. His thoughts and views on Performance Management are presented in detail below.
Without precise alignment, the punishment and reward management at the individual level might not reflect the organization’s goal. With precise alignment, all the activities will have the same direction and goal.
In 2016 the economy was slow and there were a lot of unpredictable events. These events made businesses turn towards a more conservative style. Hence, value added and lean management were the key trends in performance management.
Value added is used to ensure that every activity in the corporation offers positive incremental value added, and one of the ways to measure “value added” is by using the Economic Value Added (EVA) concept.
Lean management is a methodology that relies on a collaborative team effort to improve performance by systematically removing waste activities, and it’s also very responsive in dealing with dynamic business environment.
The integration of Performance Management at the organizational, departmental and employee level is very critical. To ensure that the strategy (long term) is aligned with the operational level (short term), performance management measurement should firstly be aligned with the organizational, departmental and the individual level.
Without precise alignment, the punishment and reward management at the individual level might not reflect the organization’s goal. With precise alignment, all the activities will have the same direction and goal.
These days, the business world is more dynamic and more complex. It is constantly changing and evolving and these changes are felt by tech companies in particular. The traditional approach to performance management might take too long to develop a complete strategy map and key performance index (KPI).
Besides that, since the environment is very complex and dynamic, it will need to revise the strategy map and all KPIs frequently. In the future, businesses will need simpler, more flexible and more responsive performance management tools when dealing with the complex and fast changing business environment.
I think two things should be thoroughly explored through research:
I believe that both Astra and Gunung Sewu Group (GSG) have shown strong financial performance amidst the slow economic situation of ASEAN.
What is more, due to the concepts of lean management and value added, GSG managed to keep expanding with prudent risk management and to keep adapting to the changing environment.
In my opinion, the tradition of the annual review process should be replaced with frequent, informal check-ins between managers and employees.
The biggest limitations of annual reviews are their heavy emphasis on financial rewards and punishments and their end-of-year structure, holding people accountable for past behavior at the expense of improving current performance and grooming talent for the future.
Two of the main challenges of Performance Management in practice today are the dynamic business environment and the short supply of expertise. With the fast changing and complex business environment, the traditional annual review might be irrelevant.
When human capital was plentiful, the focus was on which people to let go, which to keep, and which to reward, and for those purposes, traditional appraisals worked pretty well. But when talent was in short supply, developing people became a greater concern and organizations had to find new ways of meeting that need.
Based on my experience, beside data collection and measurement calculation, it’s also very important to have a simple and easy to understand dashboard that can show performance results.
Sometimes it’s hard to prepare simple presentations of performance results when having to deal with complex and not very user-friendly dashboard settings. I think software companies should place more emphasis on simplifying such tools and processes.
Not matter how good the strategy map or how precise the link between the organization and the individual goal, without capable human resources all will be futile. So, beside developing a right strategy and a good link for performance measurement, companies must be able to inspire and help their employees to reach the same destination or goal.
Apart from leadership, technical skills and project management, we should emphasize the ethics and a case study of performance management evolution. A Code of Ethics and Standards should be established, to become an ethical benchmark for performance management professionals around the globe, regardless of job title, cultural differences, or local laws.
A case study of performance evolution is also a very interesting topic, which will give audiences more insight about what is happening in the world of performance management. One performance review topic could be: The traditional annual review process, might be replaced with frequent, informal check-ins between managers and employees.
The business world is changing very fast and is becoming more complex by the day. That is why, all performance management tools need to be adapted to those changes. If practitioners do not keep pace with performance management evolutionary cycles, they will be left behind.
It’s very important for practitioners to keep reading and brainstorming, so that they can be up to date with all the recent issues and with the ways in which they can be solved.
I think measuring performance outside working hours can be useful as it can help you develop your abilities or gain new experiences, e.g learning CPA/CFA for finance profession, etc. However, at the end of the day, work-life balance is just as important as it keeps all things in check and helps you stay healthy.
I use the Balanced Scorecard to track my overall performance, and when I want to measure my financial status, as well as my financial health, I use a set of ratios that I learnt from the Certified Financial Planner (CFP) certification.
GSG achieved significantly better growth compared to Indonesian GDP’s growth. GSG is leaner, more collaborative, and more prudent when managing risk, thus unlocking the potential value-added activities to the companies.
GSG is also enjoying the benefits that come with the use of the Balanced Scorecard (BSC) and project management, which lead to creative problem solving & closely monitored strategy expenses.
Startups almost always start as a staggering journey into the unknown, one in which entrepreneurs need to make sacrifices, accept ambiguity, deal with challenges, emotions and pressure.
Bill Gross, founder of Idealab, a business incubator dedicated to finding new inventions and ideas, makes a valiant attempt at shedding new light on the factors that influence some startups to succeed and others to fail. He collected data from hundreds of organizations, his own and other entrepreneurs’, and ranked each of them on five key elements. The results were astonishing.
Alexander Wagner is a researcher and a scientist who works with economists, ethicists, neuroscientists, lawyers and others, to understand what makes humans tick and how to best address the issue of fraud in corporations, seeking to improve the business world, one step at a time.
In an inspiring TED Talk, Wagner reveals that people are motivated by certain intrinsic values, known as protected values. He explains that:
“A protected value isn’t just any value. A protected value is a value where you’re willing to pay a price to uphold that value. You’re willing to pay a price to withstand the temptation to give in. And the consequence is you feel better if you earn money in a way that’s consistent with your values.”
Departing from these intrinsic values, Wagner claims that corporations can adopt one of two visions. On the one hand, they can appeal to benefits and costs and try to get people to behave according to them. On the other hand, they can select people who have the values and competencies that go in line with the organization.
Even though Wagner admits to the fact that he still doesn’t know where these protected values really come from, he reveals that their distribution looks similar for men and women, economists and psychologists, and even around different age categories among adults.
Concluding his presentation, Alexander Wagner assures his audience that it is perfectly alright to appeal to incentives and that these should not be put in a negative light in any way.
“I’m an economist; I certainly believe in the fact that incentives work. But do think about selecting the right people rather than having people and then putting incentives in place. Selecting the right people with the right values may go a long way to saving a lot of trouble and a lot of money in your organizations.”
Alexander Wagner is a Swiss Finance Institute professor at the University of Zurich’s Department of Banking and Finance.
Video source: A. Wagner (2016), What really motives people to be honest in business?, TED Talks
As the proud owners of small and medium-sized green businesses, you will be hoping to get a higher price when you decide to sell your businesses because of their exceptional brand value or reputation.
Terms of use | Privacy Statement | Cookie Policy | Disclaimer | Online Dispute Resolution (ODR)
Copyright © 2004-2024 The KPI Institute Pty. Ltd. All rights reserved
