The KPI Institute held a webinar titled “2023 Business Pulse: 5 Trends Impacting Strategy and Performance Management” in April 2023. The event was organized for executives and professionals in strategy and performance management who want to position their companies for success in today’s business environment. The discussion is based on the “2023 Global Trends Brief – Impact on Strategy and Performance Management Practices” report, which can be downloaded for free here.
2023 Global Trends Brief is a secondary research analysis aiming to outline the most important factors affecting the business environment and how they shape strategy and performance management practices. Executives and Strategy Managers are pressured to adopt management tools and processes to create resilient and agile organizations. Our research reviewed 95 reports and articles from reputable research and consultancy companies as of March 2023. These sources cover various factors shaping markets, such as geopolitical influences, global economic tendencies, society, technology, and climate. Based on our findings, five key driving factors of change for organizations have been identified and presented in the report to set the general operating context for most companies in 2023.
The public sector and government entities, especially in the UAE, tend towards excellence and global pioneering through participation in various excellence programs and awards and participation in measuring global competitiveness indicators. It has also become competitive with the private sector in the quality, efficiency, and excellence of providing services comparable to the quality and efficiency required by the highest international standards. The goal is to reach the highest levels of customer happiness,
Key trends
The public sector has gone a long way. Among the main directions it is treading are the following:
Future shaping. It is what is related to the possible and the preferred in the future, along with expectations and trends that have few possibilities but have significant impacts that can occur. There is a need to analyze the extent of their impact on government work, build future models, seize opportunities, and ensure strategic ability that will affect the operations and services of government entities as they work towards achieving customers’ and society’s happiness.
Government innovation in services and processes. When services are provided innovatively, it reduces the time of their provision and measures the added value from them. Innovation is the actual translation of creative ideas and transforming them into products, services, processes, and systems that interact with and serve society. It is necessary to measure the global innovation index, which measures the level of innovation at the level of different countries by studying a number of indicators that make up the overall index. It includes seven main criteria categories that represent innovation inputs and outputs at the state level: institutions, human capital and research, infrastructure, market development, business environment development, innovation outputs of knowledge and technology, and creative outputs.
Digital transformation. This refers to providing electronic and smart government services with a high degree of excellence, pioneering, comprehensiveness, and integration among government entities and interrelated and integrated systems to achieve the “one government” concept.
Metaverse and government use. This is a system that will provide many virtual spaces on the Internet and will also allow the integration of everyday life into virtual life. Metaverse will provide immersive and exciting experiences in various fields, such as education, health, tourism, travel, service provision, shopping, transportation, and others. This involves using advanced technologies, such as virtual and augmented reality, artificial intelligence, blockchain, cloud computing, 5G network, and other technologies. Such technology can make government administrative services efficient. For example, people can meet with virtual officials without visiting municipal offices or any government department.
Sustainability in the social, economic, and environmental fields. Programs, initiatives, and policies that support sustainability are implemented, such as applying and measuring performance indicators of the extent of the impact of operations on health, safety, and the environment. This should ensure minimizing negative impacts on society and the environment and contribute to the rationalization of energy, water, and other resources consumption.
The future of public services
Government services in the future will depend heavily on the provision of digital services that will be more efficient and will also rely on the standards and requirements of a single platform for customer data. An example is the digital identity (UAE PASS) adopted in the UAE. It is used as a primary and unified mechanism to obtain digital services for all categories of customers.
The future of government services as stated in the global star system for rating services, issued by the Prime Minister’s Office in the Ministry of Cabinet Affairs and the future in the United Arab Emirates, represented by the Emirates Program for Excellence in Government Service, as this integrated system is the first of its kind in the world. The Emirates Program for Excellence in Government Service was launched [2] in the United Arab Emirates, it sets a world-class standard that helps government and private entities measure, improve and transform the field of service delivery. This program aims to improve the quality of government and private services by focusing on customer-centric services, employee happiness, and operational efficiency to provide services at a seven-star level.
Strategic planning will play an important role in assessing the quality of government services. This happens through the awareness of senior leadership, in participating in strategic planning that focuses on developing services, linking it to strategic objectives, and supporting the government entities’ strategy to improve customer experience. In addition, these strategic goals related to services must be measured and monitored through efficient and effective performance indicators, such as: the percentage of services’ customer happiness, the average time taken to provide the service, and the average waiting time to obtain the service.
The most important characteristic of government entities is how they provide services quickly and efficiently. For this purpose, they must proactively adopt advanced technologies, such as chatbots, artificial intelligence, big data analytics, and the Internet of Things, to support the provision and management of services to continue improving customer experience and reaching the highest levels of happiness for them.
In this field, government entities should provide a central database for all customer data. It should be possible to securely access the central database for customers from all service delivery channels and to manage the security of this data. There should be special security measures to deal effectively with data breaches if they occur and training for employees on how to proactively reduce security breaches. In addition, government entities must evaluate their electronic and digital security and build a culture of enhancing the importance of data privacy and security, recognize the possibility of using the Secure Sockets Layer (TLS) protocol, and ensure secure access to service and electronic payment procedures through digital channels.
Best practices
One of the best practices that we recommend in strategic planning for government entities is strategic planning based on the Balanced Scorecard developed by Norton and Kaplan: It is a framework for translating the organization’s vision into a set of performance indicators covering the following four perspectives: financial aspect, customers, internal process, learning, and growth. Through this system, the organization monitors its current performance (financial, customer satisfaction, and business results) as well as its efforts towards developing operations, motivating and educating employees, enhancing information systems, and honing their ability to learn and develop.
It is considered an administrative system that enables the organization to clarify its vision and strategic goals and translate them into reality. It is an auxiliary tool used to measure the performance of organizations in order to lead them to continuous development and improvement as it focuses on gaps in performance and alerts work teams and senior management.
The Norton and Kaplan methodology for managing and executing strategy consists of six main steps:
Preparing and developing the strategy: This includes benchmarking with best practices, formulating the vision, mission and values, conducting internal and external analysis, identifying the value gap and defining the vision, defining the change agenda, and formulating the strategy.
Translating the strategy: It refers to defining the strategic pillars and objectives, the indicators and targets, the strategic initiatives, the responsibilities, and the general framework for the process of translating the strategy.
Cascading and alignment of the strategy: This is about distributing objectives according to roles to the main and supportive organizational units, communicating the strategy for all employees, aligning the strategy with the individual performance of the employees, aligning with incentives, aligning the strategy with external parties and partners.
Developing the main processes and linking the strategy to the institution’s budget and operations to ensure implementation: This involves defining priorities for strategic operations, using processes and driving models to activate the strategy, creating an operations dashboard, integrating financial planning and resource capabilities, managing initiatives, integration with and planning for intangible properties.
Institutional review and learning by transforming the strategy into a continuous process and establishing a formal performance-based follow-up to the strategy: This is achieved by conducting strategy review meetings, and conducting operational processes review meetings).
Testing and adaptation: This means monitoring and evaluating the strategy and adapting to the strategy based on the results achieved. It includes testing cause-and-effect relationships using data analytics, testing the robustness and solidity of the strategy, and using business intelligence and big data).
Challenges and successes
Among the biggest and most important challenges that government entities face during the implementation and usage of a performance management system are:
The inability to obtain the information needed by government entities from the performance measurement process. The solution is to adopt performance indicators that are closely related to the strategic objectives. Measuring performance indicators that are not linked to the objectives is a waste of time.
Lack of results and data to help make decisions. The solution is to establish a reliable database to obtain the data based on which accurate performance is measured to help make sound decisions at the right time.
The inability to take effective measures to achieve goals. The solution lies in the use of analysis and improvement tools that lead to the root of the problem, based on which effective measures are taken to improve performance and achieve goals.
Not knowing what exactly is important to measure. The solution is to measure a few indicators that serve the purpose of achieving the goals.
Not knowing the purpose of the measurement and that the indicators are meaningless. The solution is to adopt the performance indicator card. From the outset, the purpose of its measurement are determined.
Employees refuse to be held accountable for performance. The solution is not to punish employees for bad performance. Motivate and honor outstanding performance and good results.
No improvement in performance. The solution is to measure performance indicators over long periods of time to follow up on the improvement in performance in a phased manner. Acknowledge the possibility of taking improvement measures before the end of the performance management cycle.
Indicators are imposed on employees and are not discussed with them. The solution lies in the participation of employees in setting performance indicators and defining the responsibility of each of them for the details of the indicator, such as collecting data, monitoring improvement, measuring the indicator, and developing improvement initiatives.
In terms of building performance- and data-driven culture in the public sector, it is necessary to develop a culture of reliance on shared and open data and to measure indicators of the extent of the participation of government departments.
For the success of any performance management system:
Performance must be monitored, evaluated, and adapted to the strategy based on the results achieved;
The testing of cause-and-effect relationships must use data analytics;
Artificial intelligence and big data must be employed.
To succeed as a leader in a government entity, he or she should have behavioral competencies, the set of knowledge, skills, and behaviors necessary to achieve effective performance. These competencies play an important role in employee performance and work teams for the tasks assigned to them and often appear when employees interact with each other and with clients.
Behavioral competencies include core and leadership competencies. Successful leaders must have leadership spirit, futuristic, achievement, and influence. The leadership spirit refers to empowering employees and delegating powers, promoting accountability and responsibility, setting a role model, and opening up to the world. The efficiency of the future requires the leader to see the future, be an innovator and a catalyst for radical change, be familiar with advanced technology, and be a continuous and lifelong learner. Meanwhile, achievement and impact competence means being flexible and quick, making smart, effective, and efficient decisions, and being focused on the higher goals of the government and achieving results.
This article was written by Dr. Hisham Ahmad Kayali and was first published in the 24th printed edition of PERFORMANCE Magazine. You can get a free digital copy from the TKI Marketplace here or purchase a print copy from Amazon for a nominal fee here.
The monitoring, evaluation, accountability, and learning (MEAL) concept should be incorporated into the future corporate performance management system, according to Dr. Loai Fathi Naser, an Assistant Professor in Management at Israa University. He adds that MEAL must be implemented and promoted throughout the formal structure and culture of an organization. In this article, Dr. Naser further discussed how organizations can prepare for managing performance in the future and how to use KPIs as navigational instruments.
Trends
What were the key trends in Organizational Performance in 2021 from your point of view?
2021 is now over. Organizations have faced many challenges throughout the year that affected its operations. The key trends in organizational performance management that emerged in 2020 and seem to continue in 2022 are digital transformation, artificial intelligence capabilities, polishing skills of remote working, and emphasis on wellness and mental health.
Which of the existing trends, topics, or aspects within Performance Management have lost their relevance and/or importance, from your point of view?
I think that polishing skills for remote work lost its importance due to the gradual shift to the normal situation after the COVID-19 pandemic has ceased.
What does the corporate performance management system of the future look like?
According to the Top 3 Enterprise Performance Management Methods by profit.co., contemporary management processes are moving towards customization, flexibility, and agility. These are some of the key changes considered essential for any progressive performance management system. To adhere to agility and flexibility, the performance system should apply and promote the MEAL concept within the organization’s formal structure and culture. Organizations should focus on team performance vs. individual performance, clearly define KPIs and criteria for compensation, and integrate digital tools and technology deployment in the performance appraisal process.
What will be the major challenges in managing performance in the future and how should organizations prepare for them?
One of the major challenges in managing performance in the future is the lack of chances for managers to check in on an employee’s performance and keep them aligned because of neglecting consistent communication and the opportunity of having informal communication between the manager and employee. Designing key performance indicators (KPIs) for performance management would help organizations attract and retain a good caliber of staff through financial and non-financial means. Staff should have professional development plans that are regularly reviewed and updated.
How is technology impacting the way organizations conduct strategic planning and manage performance? Any specific technology tools you would like to mention?
Organizations should integrate digital performance tools into their team’s workflow to see positive results from the process. Making performance feedback a natural part of day-to-day work makes coaching employees and managers alike easier. One software that is available in the market is Synergita. It measures and monitors employee performance in real-time. Synergita also tracks the progress of employees. It helps organizations strengthen their HR tech stack to build high-performing teams.
How is sustainability impacting the way organizations conduct strategic planning and manage performance? Any specific sustainability aspects you would like to mention?
The practice of corporate sustainability leads to sustainability of performance and increases the efficiency of strategies, leading to greater performance. Among sustainability dimensions, it is important to note that the social sustainability aspect has the highest impact, followed by the economic and environmental aspects.
Practice
The COVID-19 pandemic has caused disruptions in our day-to-day lives, social relations, economies, and business dynamics. Given the impact of the crisis, what do you think are the specific changes in the way strategic planning and performance management is being conducted post-COVID?
Performance management under COVID-19 needs planning for uncertainty and developing a range of scenarios. It needs a clear view of a starting position in the wake of the pandemic. A social feedback system provides the employee with a larger amount of feedback (often 50 or more instances over the course of a year) from peers and others. This reduces the emphasis on receiving feedback from the employee’s manager alone. Recalibrating KPIs is essential to ensuring that remote work actually works.
What should be improved in the use of strategy and performance management tools to make an organization even more resilient to future crises?
Well-designed KPIs work as vital navigational instruments. They give a picture of the current level of the organization’s performance and find out whether the business has achieved its goals and objectives. KPIs work as standards for future performance during crises.
While navigating through these challenging times, what would you consider a best practice in Performance Management?
Honest performance appraisals for employees need leadership skill rating. The result of an employee’s good performance could be increased production, customer growth, and an enjoyable work environment. However, poor employee performance may result in just the opposite. One of the tools used to gauge employee performance throughout the year is a performance appraisal.
How does benchmarking support the improvement of performance management and target-setting systems?
Organizations engage in benchmarking to achieve the industry’s best practices and to keep abreast with competitors. Benchmarking serves as a performance management strategy by setting performance standards. It identifies performance gaps by comparing actual with target performance.
Background
Dr. Loai Fathi Naser has over 17 years of experience in program management and organizational development. As an assistant professor, he has more than 12 years of experience in academic teaching and training in Business and Management courses such as Corporate Governance, Entrepreneurship, Microfinance, Institutional Development, Strategic Planning, Project Management, Human Resource Management, Business Communication, and Total Quality Management.
As an organizational development consultant and trainer, he leads teams in organizing program evaluation, organizational capacity assessment, financial transparency and compliance, and conducting capacity-building training and coaching.
Strategy and performance management updates in tourism: Learn how the travel and hospitality industries have been navigating the post-pandemic era so far.
IATA issues new report on safety performance
The International Air Transport Association’s (IATA) 2021 safety performance data for the commercial airline industry reveals significant progress in key categories compared to both 2020 and the previous five years. Findings show that the total number of accidents, all-accident rate, and deaths declined. Last year, there were no fatal accidents among IATA members or airlines on the IATA Operational Safety Audit (IOSA) registry (which covers all IATA members). For the first time in at least 15 years, there were no runway/taxiway excursion incidents.
“Safety is always our highest priority. The severe reduction in flight numbers last year compared with the five-year average magnified the impact of each accident when we calculate rates. Yet in the face of numerous operational challenges in 2021, the industry improved in several key safety metrics. At the same time, it is clear that we have much work ahead of us to bring all regions and types of operations up to global levels of safety performance,” said Willie Walsh, IATA’s Director General. | Source: IATA.org
Hyatt Hotels Corporation shares performance data on revenues, occupancy
Hyatt Hotels Corporation said that its comparable system-wide RevPAR in May was around $127, the highest RevPAR performance in any single month since November 2019. RevPAR, a commonly used performance measure in our industry, refers to the product of the average daily rate and the average daily occupancy percentage. System-wide RevPAR in May was around 6% lower than in May of 2019(1), or approximately 3% higher when Asia Pacific was excluded. Comparable system-wide RevPAR increased by 2% in May compared to April, owing to higher occupancy, mainly in urban areas. In addition, the average daily rate in May was nearly 8% higher than in May of last year, driven by luxury brands in the Americas, which outperformed 2019 by approximately 24%. | Source: businesswire.com
GE’s Airspace Insight adds new feature for operational performance monitoring
GE Digital announced the addition of the new Network View Module to its Airspace Insight™ software. This will give airlines insights where within their network they need to focus to enhance operational performance based on a range of efficiency and safety metrics developed to identify patterns in airspace waste and minimize fuel consumption. Moreover, the module can aid in tracking and measuring the results of initiatives to enhance airspace efficiency and safety, as well as benchmarking progress against other airlines or collaborating with other airlines, regulators, and Air Navigation Service Providers (ANSPs) to promote industry efficiency and safety.
“Reduced reliance on anecdotal evidence for understanding operational issues, benchmarking, and knowledge sharing between other airlines are what airlines are looking for. They want to know which airlines are flying into this airport, and how efficiently and safely they are doing so. Which markets are underserved or not served at all? Airspace Insight’s Network View Module can help answer these questions,” said Andrew Coleman, General Manager of GE Digital’s Aviation Software business. Source: marketscreener.com
HSMAI survey reveals woes in retaining talent in hospitality
The Hospitality Sales and Marketing Association International (HSMAI) has launched the report “The State of Hotel Sales, Marketing, and Revenue Optimization Talent 2020-2021.” Results found that employers in the industry are facing issues in the areas of compensation and benefits, scarcity of competent candidates, pipeline concerns, and poaching loyalty and company culture. Meanwhile, the trends detected by the report emphasize the value of corporate culture, servant leadership, mental health and wellness, and reskilling and upskilling. The insights are from “50 brand and hotel management company revenue executives and ownership group commercial executives across disciplines to rate the challenges facing commercial talent in hospitality.” Source: hsmai.org
US announces new National Travel and Tourism Strategy
To promote the US travel and tourism industry, US Commerce Secretary Gina M. Raimondo introduced a new National Travel and Tourism Strategy. It is designed to achieve a five-year target of attraching 90 million foreign tourists to the country annually. The arrival of tourists is expected to generate $279 billion each year, strengthening employment growth in communities around the United States, its territories, and the District of Columbia. The strategy involves positioning the US as a major travel destination to encourage visitation to underprivileged and underrepresented groups; ensuring safe and efficient travel to and within the US and its territories; supporting diverse tourist experiences, particularly on federal lands and waterways while also safeguarding them; and establishing sustainable travel and tourism. Source: https://ftnnews.com/
Having a clear vision for your organization and being aware of its external environment to prevent threats and capture opportunities instead. This is how strategic thinking works for Fadi Al-Jafari, a Senior Management Consultant, Leader of Data Analysis and Visualization Center, and Project Manager at The KPI Institute. In this interview, he explains what makes a strategy and performance manager successful and how organizations can make sound decisions on the spot.
Trends
What were the key trends in Organizational Performance Management in 2021, from your point of view?
Organizations are working on digitalizing performance management systems (PMS) and ensuring that individuals have the right digital tools to perform their duties as they work remotely nowadays.
Which of the existing trends, topics, or aspects within Performance Management have lost their relevance and/or importance from your point of view?
Regarding the vast changes in external environments, organizations are shifting their strategy planning and execution practices from the traditional approach to the agile approach to make sure they capture the external opportunities and avoid the external threats in the early stages. This will help them adapt in a fast manner to those changes.
What does the corporate performance management system of the future look like?
Digitalized PMS that connects and measures individuals, teams, and organizational work in a timely manner to help top management make decisions on the spot
What will be the major challenges in managing performance in the future, and how should organizations prepare for them?
The major challenges would be how to measure the individual’s performance right and without any biases, use the data to predict future the individual’s performance, and benefit from the data they have to improve the individual’s performance. One solution is to use digital PMS that collects data regularly and measures individual performance based on the tasks they work on and then use data analytics tools to draw conclusions and predictions based on the analysis.
How is technology impacting how organizations conduct strategic planning and manage performance? Any specific technology tools you would like to mention?
Technology is a key element in supporting strategy. Technology supports environmental scanning tasks as organizations can nowadays collect and analyze data on a timely basis. They can analyze their internal environment as well as their external environment. In addition, technology also helps in predicting trends.
Technology helps organizations gather real-time data and big data. Having such big real-time data helps organizations make sound decisions based on facts and figures. Using tools like Tableau and Power BI helps an organization create real-time dashboards that show the trends and changes in data. In addition, organizations can use those tools to predict outcomes to support proactive planning.
How does sustainability impact how organizations conduct strategic planning and manage performance? Any specific sustainability aspects you would like to mention?
Sustainability requires organizational objectives and strategy to consider the social welfare of the employees and communities.
Practice
The COVID-19 pandemic has caused disruptions in our day-to-day lives, social relations, economies, and business dynamics. Given the impact of the crisis, what do you think are the specific changes in the way strategic planning and performance management is being conducted post COVID?
Organizations should focus more on creating an intelligence unit that monitors the minor and major changes in the external environment on a continuous basis. This would help them identify risks or new trends that could affect the environment. This would also help organizations become more proactive and make decisions about needed actions once they have identified the risks.
What should be improved in using strategy and performance management tools to make an organization even more resilient to future crises?
Organizations should shift their mindsets from the usual strategic management approach to a more agile approach in planning and execution. This will help organizations adapt to changes faster based on external circumstances.
While navigating through these challenging times, what would you consider a best practice in Performance Management?
To start with an organizational architecture framework of the PMS, ensure that cascading and alignments are conducted properly. This also enables organizations to develop a governance framework, processes, and procedures to efficiently run the system and avoid internal silos.
How does benchmarking support the improvement of performance management and target-setting systems?
Benchmarking is a process that involves identifying and learning from the best performers in the organization. It helps develop new and challenging targets and measures that will support organizational growth.
Research
Which organizations would you recommend to be observed due to their approach to managing performance and its subsequent results? Why?
I would say Saudi Vision 2030 is a good example to be studied and followed at the national level. Organizations can follow this example and learn how the vision realization offices in Saudi handle such vision and ensure alignments between different entities. The results that Saudi achieves are astonishing, and it can be a great case study.
What aspects of Performance Management should be explored more through research, given their importance in practice?
Alignment approach between business units, departments, and divisions. This approach is requested a lot by clients to know how to handle such alignments internally.
What are the key competencies of a successful business leader ( C-level Executive)?
The business leader must show strategic thinking in terms of having a clear vision for the organization and having a clear goal of what they would like to reach in the future. The business leader must employ analytical and critical thinking to analyze the external environment, capture opportunities, and avoid external threats that could affect the organization.
What key competencies would make a Strategy and Performance Manager succeed nowadays?
An important one is strategic thinking — to be able to analyze different situations that the organization may face and to have a proactive personality that would allow them to capture changes in the market before they arise. It is crucial to identify the opportunities, capture them before the competitors do, and determine any threats to prepare the organization to deal with them.
What processes and tools do you look at when differentiating a successful performance management system from a superficial one?
To have a successful PMS, organizations must have a clear design and architecture of the PMS itself within the organization, and it must have top management support. Moving forward, the strategy office should develop this system internally and develop needed tools and needed processes that include but are not limited to: Strategic Planning Tools, Processes and Timeline; KPI Selection Tools and Processes, Departmental Cascading and Alignment Tools and Processes; Employee Cascading Tools and Processes, and Performance Culture Tools and Processes. In this manner, the organization will perform standardized tools and processes that support the internal alignment between all internal stakeholders. This will ensure clear steps for analyzing internal and external environments, standardized KPIs following best practices, and more aligned objectives on different levels.
In addition, it’s also important for the top management and strategy team to communicate the strategic objectives, values, and organizational identity to all employees. Unfortunately, some organizations keep those elements hidden from the employees, and this leads to misalignment internally, losing organizational direction, huge gaps, and silos between departments and negatively impacting employee engagement. Missing one of the abovementioned points would weaken the PMS within the organization.
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Background
As a Management Consultant, Fadi has been involved in multiple projects related to designing, implementing, and auditing Performance Management Systems. This includes formulating objectives, selecting KPIs, documenting KPIs, and selecting initiatives on both the strategic and functional levels as well as developing balanced scorecards and dashboards to fit organizational needs.
As a Facilitator, Fadi has been delivering Certified Strategy Business Planning Professional, Certified KPI Professional and Practitioner, Certified Performance Management Professional, Certified Employee Performance Management Professional, Certified BSC Professional, Certified Data Analysis Professional and Certified Data Visualization Professional, in both Arabic and English languages.
