Track 10 dedi prawira

Event ManagementTraining & ConferencesKnowledge Development Center

the road to high performance organization by improving PERFORMANCE MANAGEMENT

system

Presented in the Forum of HR EXPO 2009 by : DEDI PRAWIRA MM Dec. 9, 2009

Contents of Presentation

THEORY of PERFORMANCE MANAGEMENT

BUSINESS CASE BAT Indonesia

- DEFINITION- FUNCTION - PERF. DIMENSION - PROCESS

- Perf. Alignment- Perf. Dimension &

Leadership Framework - Performance & Reward

QUESTIONS &

ANSWERS

20 min 40 min 30 min


THE THEORY of PERFORMANCE MANAGEMENT

DEFINITION of Performance Management

The Process of Evaluating on how well employees perform their jobs when compared to a set of standard and then communicating that information to employees

Sources : Society for Human Resources Management


The FUNCTION of Performance Management

5

COMPANY PURPOSE

1. As a Management Tools : • To empower the employee to achieve organization objective • To improve employee performance & motivate them • To provide award to employee and compensate them for their contribution• For Promotion / Demotion / Termination purpose

EMPLOYEE PURPOSE1. To provide constructive feed back to employee performance2. For counselling purpose when employee do not perform3. For development purpose (Training & Development)4. Employee expectation when having good and oustanding performance to get higher

salary & bonus

Performance Management System SHOULD HAVE direct relationship with COMPENSATION STRATEGY

1 2 3

Performance Dimension

PRODUCTION‐ Quantity ‐ Quality MARKETING‐ No of product sold‐ Customer Satisf. FINANCIAL‐ Profit‐ Cash Flow

‐ Professionalism

‐ Team Work

‐ Leadership

‐ Time Mangt.

‐ Code of Conduct

‐ Emotional Int (EI)

‐ Know How

‐ Integrity & Fairness

‐Work Passion

‐ Initiative

RESULT WORK BEHAVIOUR PERSONAL HABIT


Quiz – 1 (PERFORMANCE DIMENSION)

RESULT

Work Behaviour

PersonalHabit

PD Blue Collar

How many % the composition of each Performance Dimension for the position of Blue Collar ?

RESULT = xx % WORK BEHAVIOUR = xx % PERSONAL HABIT = xx %

Quiz – 2 (PERFORMANCE DIMENSION)

RESULT

Work Behaviour

PersonalHabit

PD Communication

Manager

How many % the composition of each Performance Dimension for the position of Communication Manager ?

RESULT = xx % WORK BEHAVIOUR = xx % PERSONAL HABIT = xx %


DEVELOPMENT• Mentoring • Training• Career Devt

HOW• Competencies • Behaviour • Development Plan

ORGANIZATION MISSION

• Strategy• Corporate Objective • Division Objective

PLANNING of PERFORMANCE MANAGEMENT

WHAT • Accountability • Objective• Standard

IMPLEMENTATION ofPERFROMANCE MANAGEMENT

INDIVIDUAL RESPONSIBILITIES• Commitment , Feedback & • Devt Plan, Open Comm, • Data Gathering, Preparation

for discussion

RATING of PERFORMANCE MANAGEMENT

NEW CONTRACT ofPERFORMANCE MANAGEMENT

PROCESS of Performance Management

Sources : Grote : 1996

MANAGER RESPONSIBILITIES• Create an environment

to motivate emp., Observe emp, Align the Objective,

• Provide Feedback & Devt Plan , • Strengthen emp behaviour

RATING• Compensation, Career Devt, • Promotion/Demotion• Termination

Accuracy of Information5

In appropriate Procedures1

Not clear of Performance Standard 2

Limited of Supporting Data3

Politic & Conflict Mngt in the Org.4

What’s wrong could be happen during Performance Review

Heart Feeling of the Supervior6


Job Performance Model

Job Performance Model


BUSINESS CASE BAT Indonesia Tbk

OUR VISION

What we work to achieve

The way we behave

The way we run our business

What we do as a company

What we do as a function

What we do as individuals

WINNING ORGANISATION

MUTUAL BENEFITRESPONSIBLE

PRODUCTSTEWARDSHIP

GOOD CORPORATECONDUCT

GROWTH PRODUCTIVITY RESPONSIBILITY

INDIVIDUAL OBJECTIVES and MOSs

LEADERSHIP CAPABILITIES LEADERSHIP PASSAGE PERF. DIMENSIONS

FUNCTIONAL OBJECTIVES and MEASURES OF SUCCESS

COMPANY CHARTER

COMPANY PLAN

GUIDING PRINCIPLES

No.1

To be the no. 1 Company within the white cigarette segment in the Indonesian Tobacco Industry

Aligning People Competencies with Aligning People Competencies with BATIBATI’’ss VisionVision


THE THE INPUTSINPUTS

from the leadership behaviours we expect from everybody and is a holistic perspectives on the effectiveness of a Manager that are required at each and every one of the passages in the pipeline and focus on development (leadership capabilities)

and how we differentiate the work of leaders at different levels with emphasising & defining leadership requirements in every role (leadership passages/pipeline – the contexts).

to focus on Performance in comparison with the objectives you have set in context of the Performance Dimensions

THE THE CONTEXTSCONTEXTS

THE THE OUTPUTSOUTPUTS

Performance & Leadership Framework

Leadership framework was established with defining & differentiating leadership requirements for managers at all level ;

BAT Leadership Framework

“the inputs”Leadership Capabilities

focus on development

PEOPLE COMPONENTSBuilds self awareness & listensEngages and inspiresSupports high performing teams

STRATEGIC COMPONENTS

“the context”Leadership Passages

“the outputs”Performance Dimensions

focus on performance

Business/Technical/ objective

Leadership objective

Management objective

Relationships objective

Innovation objective

Manage Self

Manage Others

Manage Managers

Manage Function

Manage Business

Manage Group

Time x Values x Skill

BUSINESS COMPONENTSActs commercially & consumer centricLeverages risks & opportunityEngages stakeholders proactivelyThink & Act Globally

BAT Leadership FrameworkBAT Leadership Framework

Provides direction and focusDrives for innovation & changeDrives for results


Leadership Capabilities - behaviour expectation

PEOPLE Components

BUILDS SELF AWARENESS AND LISTENSDemonstrates awareness of and maximises own impactActively listens and builds positively on others ideas Seeks, listens to and acts upon feedback from managers, team members and peers

ENGAGES AND INSPIRES Builds enthusiasm and drives momentum for change with passion and beliefCommunicates in simple and clear termsExhibits trust, fairness and ethical awarenessPromotes ideas and influences in a matrix structure without having direct control or authority

SUPPORTS HIGH PERFORMING TEAMSLeverages complementary strengths of teams, valuing different approaches, experiences, expertiseImplements and visibly supports team decisions and team’s “ground rules”Shows high commitment to personal and team development, allocating meaningful time and resources to coach, plan and

deliver on theseIdentifies, recognises and celebrates individual and team accomplishmentsManages poor performance and behaviour effectively, providing clear, timely and constructive feedbackEncourages a balance between work and outside interests

Leadership Capabilities The Core Curriculum Map for Strategic Component

ITEM Manage Self Manage Others Manage ManagersBusiness Awareness(Provides direction and focus)

New Employee InductionProduct Knowledge 1Language of Finance

Product Knowledge 2Leaf Appreciation

Horsley awareness programmesGeneral Management programme (available from a business school)

Strategy and Focus(Provides direction and focus; Drives innovation and change)

Line of Sight Strategy Formulation(available from a Business School or other consultancy, non-priority)

Process Improvement and innovation (Drives innovation and change)

Prince 2 Project ManagementISO / MRP II workshopsPADM (from Achieve Global)Creativity! (available from Citadel, suggested priority)Adapting to Change (available from Citadel. For a start, may want to avoid differentiation from Managing Others)

ISO / MRP II workshopsMaking Change Work for You(available from Citadel)

ISO / MRP II workshopsChange Leadership (available from Citadel, non-priority)


Leadership Capabilities - technical expectation

Functional Success Criteria

MarketingBrandTradeMarketing Research

Operations

PlanSource Make MoveResearch DevelopmentFacilitiesSecurity

HR/IT/ Finance/

CORA/Legal

Passage Three

Manage self

Manage others

Manager of Manager

Functional Manager

Business Manager

Group Manager

Passage One

Passage Two

Passage Four

Passage Five

Enterprise Manager

Passage Six

Lead

ersh

ip Ca

pabil

ities

Leadership Passages / Pipeline


Defines 6 passages of leadership complexity in organisationsDefines changes in job requirements at each level :

Not related to JOB GRADE

Not dependent on JOB TITLE

Not dependent on number of subordinates you have

Does not matter if your subordinates hold managerial titles or grades

Defines changes in skills, time application and values required to make the transition between levels

A model for Leadership Development that :

Leadership Passages / Pipeline - definition

SKILL REQUIREMENTS – the skills you need

TIME APPLICATIONS – the way you spend your time

WORK VALUES – what people believe is important & so becomes

the focus of their effort.

What Differentiates the Levels

Leadership Passages / Pipeline - definition


Leadership Passages – Manages Self

Definition : Leads self and peers, acts as role model, no formal leadership responsibilities, individual contributor (i.e. expert)

Time : self-planning to deliver projects- scheduling own work

Values : - accepting Company culture- adopting professional standards- getting things done quickly and effectively

Skills/ : - technical / professionalCapabilities - collaborate well with others

- complete assigned work in given parameters

Definition : First Leadership layer, direct reports in Manage Self, essential part of job is leadership

Time : - Complete own work- Help others perform effectively- Shift to work done through others

Values : - Value leadership work not just tolerate it- Other directed’ work is seen as mission critical- Cease thinking about self – start thinking about others

Skills/ : - Planning work, filling jobs, assigning work, motivating, Capabilities coaching and measuring work of others

- Establishing good relationship with boss, peer, support group- Reports (to build open dialogue and trust)

Leadership Passages – Manages Others


Definition : Leads team of managers, who themselves lead peopleTime : - Almost entirely about others

- Repeating the instruction – performance – feedback cycleValues : - identify value based resistance to leadership work

- be prepared to return people to individual contributor work if they can’t make the shift in values/ capabilities

Skills/ : - pure leadershipCapabilities - selecting people to take passage one

- assigning managerial and leadership work- measuring and coaching managers- thinking beyond function for the first time- holding first line managers accountable for managerial work- managing the boundaries between own and other units

Leadership Passages – Manages Managers

Manage Self Manage Others Manager of Managers

Time:-Self-planning to deliver projects-scheduling own work

Time:-complete own work-help others perform effectively-shift to work done through others

Time:-almost entirely about others-repeating the instruction-performance-feedback cycle

Values:-accepting Company culture-adopting professional standards-getting things done quickly and effectively

Values:-value leadership work not just tolerate it-‘other directed’ work is seen as mission-critical-cease thinking about self – start thinking about others

Values:-identify value-based resistance to leadership work-be prepared to return people to individual contributor work if they cant make the shift in values/capabilities

Capabilities: -technical-professional-collaborate well with others-complete assigned work in given parameters

Typical Pitfalls1.Resists constraints on time, doesn’t want to be rushed2.Focus on completion rather than quality3.Operate independently of others4.Disagrees with company policies and procedures

Capabilities: -planning work, filling jobs, assigning work, motivating, coaching and measuring work of others-establishing good relationships with boss, peers, support groupsand reports – to build open dialogue and trust.

Typical Pitfalls 1.Want to keep doing the stuff that made them successful before2.Time allocation shows they don’t view coaching, planning, spending time with others as mission critical3.Overpower reports with their own expertise4.Compete with reports to do assignments5.Fix direct report’s mistakes rather than coaching them to do job properly

Capabilities: -pure leadership-selecting people to take passage one.-assigning managerial and leadership work-measuring and coaching managers-thinking beyond function for the first time-holding first line managers accountable for managerial work-managing the boundaries between own and other units

Typical Pitfalls1. Difficulty delegating – single minded focus on

getting the work done.2. Hold first line managers accountable for

individual contributor work, versus their principal role of leading others

3. Choose high technical achievers for first line manager roles, rather than true potential leaders.

4. Give direct orders to individual contributors –rather than going via their direct reports.

5. Fail to build strong and diverse teams

Leadership Passages – summary


Performance at each Passage

Imagine every role in the organisation is a circle. Each of jobs has key areas of performance which are represented as five lines in the circle

Busines

s/Profe

ssional

/

Operatin

g Resu

lts

Leader

ship R

esults

Managem

ent Resu

lts

Relation

ship R

esults

Innova

tion Resu

lts

Performance Dimension

Functional / Operational Objective

Leadership Objectives

Management Objective

Relationship Objective

InnovationObjective

• Focus on Functional / Professional output• Key activities / result within own job / function unit which build on

technical & functional expertise of the incumbent.

• Focus on optimising effective internal and external network & relationship to get things done and to improve performance within unit.

• Optimising synergies though cooperation, communication and network

• Focus on continuous improvement, smarter working & value added innovation• Meeting customer and consumer needs better (internal & external) includes

benchmarking, documentation and sharing new approach

• Focus on aligning self / team to strategy & vision ; building leadership capability of self & team.

• Enabling and inspiring people and unit to perform in line with the company strategy and vision. Leadership objective include :

teamwork, personal development & setting strategy for own job & team.

• Focus on making best use of resources to meet objective, increase effectiveness and efficiency.

• Management of resources and process : budget, system, work process, setting milestones, priorities and plans.

• Management result set the frame in which good operational result can be achieved.

Performance Dimension - definition


Performance Dimensions Required Work Values Full Performance* Operational / Business Results• Effective Analysis, Procurement, Transactions• Productivity/Efficiency Gains• Project Execution• Strategy Contribution

Quality bar continuously raised. Results through others.

• Ensures self and team always meets targets, due dates and quality standards.• Produces predictable results by holding employees to agreed-upon methods and

measures.• Provides operational/technical/professional advice to assure achievement of

goals and results.

Leadership Results• Tactical Support for Strategy• Employee Technical Skill Growth and Career Preparation• Teamwork and Team Building• Company Values• Potential Identification

Success of others.Values-based results, self & other.

• Produces viable successor.• Communicates vision, business direction and department goals and assures

every employee accepts and can articulate them.• Leads by example; lives the Guiding Principles consistently.• Seeks opportunities for growth and development as a leader.• Demands discipline of self and others to raise standards and deliver stretch

results.• Gives recognition where it is due, & proactively deals with performance issues.• Provides clear and timely feedback and ongoing coaching for others.

Management Results• Tactics and Career Preparation Plans• Resource and Process Optimization• Budget Management• Measurement and Feedback (Individuals)• Individual Guidance

Work that they are good at, and enjoy doing, done through other people.

Managerial work - embracing versus tolerating.

• Conveys a clear picture of current performance to team members.• Puts right people in right job.• Requires all employees to work on their development plan.• Tracks progress and sets milestones to ensure things happen as planned.• Is available and approachable for direct reports.

Relationships Results• Working Relationships with Customers (Internal and

External)• Connection with Other Teams• Broad Relationships (Outreach)

Needs and expectations of others. • Seeks full understanding of customer needs.• Proactively builds network to understand big picture.• Displays fairness, exhibits trust and gains respect through own behaviour and

actions.

Innovation Results• Processes, Practices, Methods• More with Less• New Ways of Doing Existing Work• Complexity Reduction

Innovation in others. • Leverages the abilities of other teams (no duplication)• Designs user-friendly programs and processes from conception to

implementation.• Gathers ideas wherever they exist.• Regularly reviews what’s done, why and how.• Embraces and promotes change.

Performance Dimension & Leadership Passage (Manage Others)

Performance Standards to Develop Leaders & Define Devt GAPS

Think of jobs in BAT as five ‘LINES’ within a circle. Each ‘line’ represents outcomes around each performance standard. Everything inside the circle is the responsibility of job holder, everything outside circle is someone else’s responsibility.

`Full Performance

Not YetFull Performance

Inappropriate Performance

ExceptionalPerformance

Performance Result - individual


Using the Model to Diagnose Issues Causing Underperformance

NB START WITH THE BOSS – NOT THE DIRECT REPORT

Micro Management

Only One ThingCounts

Abdication

PerfectAlignment

Performance Result - relationship

How to prepare Performance Objective

2. Organise them into the logical (best fit) Performance Dimension heading Operations / Technical / Professional results, Leadership etc

3. Write your PO and Measure of Success for your Leadership Level ›› SS pecificpecific , , MM easurableeasurable, , AA greed, greed, RR ealisticealistic, , TT imeime--boundbound


Performance Management Cycle

EXCEEDS SUCCEEDSNEARLY THERE

INADE-QUATE

The individual has significantly and consistently exceeded performance

The individual has consistently achieved performance expectations

The individual has met expectations in most areas but not fully met expectations consistently in some

The individual has not met performance expectations

Performance Rating


• Create focus and alignment– Use of LOS processes to show individual objectives linked to the Unit’s objectives.– Improving the quality of individual performance objectives.

• Drive performance– Strong emphasis on rewarding performance.– Clearly differentiating between levels of performance.– No tolerance for sustained weak performance

• Maximise the impact of reward– Package should be communicated on a Total Remuneration basis.– More flexibility for managers to reward their staff.

Performance & Reward strategy

Superior leadership todeliver operational

performance

Operational performance supporting strategy

Results :• Operational• Leadership• Management• Relationship• Innovation

Performance Measurement based on 5 indicators :

Operating ProfitVolume ShareCash Flow (Region) Net TurnoverGDB Volume

Base Pay Variable Bonus

Performance & Reward strategy

Individual Dept & Company

Role of Element

Measures of Success


Rating/ CR 65-74 75-84 85-94 95-104 105-114 115-124 125-134 >135

MaxLump-Sum

E 22.0 21.5 21.0 20.5 20.0 19.5 19.0 18.5 18.5

S 15.0 14.5 14.0 13.5 13.0 12.5 12.0 11.5 11.5

NT 11.5 11.0 10.5 10.0 9.5 9.0 8.5 8.0 8.0

IA

Line Involvement = plus or minus 5% from above matrix

Pay Matrix

Performance Measurement

Weighting Threshold Target Normal Max Extra Max

Profit 20% 0% 2.5% 5.0% 7.5%

Volume 20% 0% 2.5% 5.0% 7.5%

Cash Flow 20% 0% 2.5% 5.0% 7.5%

Turnover 20% 0% 2.5% 5.0% 7.5%

GDB 20% 0% 2.5% 5.0% 7.5%

Total 100% 0% 12.5% 25.0% 37.5%

Performance Measurement Weighting Achievement Percentage

Profit 20% Below Target 1.5%Volume 20% On Target 2.5%

Cash Flow 20% Below Normal 3.5%Turnover 20% Below Normal 3.5%

GDB 20% Normal Max 5%Total 100% 16%

EXAMPLE : VB payout calculation for Grade 34-35

Variable Bonus


How good a job is your company doing in matching people’s pay to their performance?

2005

Internal Survey

73

How satisfied are you with these aspects of your current job: Recognition for Superior Performance.

69

2007

70

75

40

Questions & Answers


Recruiting & HR

Track 10 dedi prawira