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‘Link performance management with strategic agenda’

Strategic Reflections by HILMY CADER

Many organisations focus on the performance management process defining performance measures, the time table and the links to reward. However, it is important to align an organisation’s performance management to its strategic agenda. MTI has a comprehensive and systematic step-by-step approach to designing a performance management system.

The process starts with extracting the implications of performance management from the strategic plan. This will require the senior management to present their plans to MTI, based on which the quantitative and qualitative implications are extracted. This provides the strategic context for the development of the performance management system. 

In the next phase business health indicators (BHIs) and corresponding market pulse indicators (MPIs) are developed. This is the core of the assignment.

At the third phase BHIs and MPIs are linked and put through two tests. The first is ‘criticality and rationalisation test’. This addresses whether it is important enough to be measured. The second is the ‘linking test’. The tests focus on how they can be immediately and ultimately linked to the top, middle and bottom line. At the end of this process all BHIs and MPIs are rationalised, linked and represented in a form of a tree diagram.

At the fourth phase, for each element of the tree diagram, standards are set and extracted. This is done by ‘alarm bells’ in different levels and the organisational response to these ‘alarm bells’. 

At the fifth phase attention is given to the internal organisational structure. The BHIs and MPIs are assigned as per the current organisational structure. The need to develop baton change indicators is identified at this stage.

The sixth phase focuses on developing simple reporting formats and simple meeting formats. 

At the final stage several motivational and behavioural/culture initiatives are introduced to signal seriousness and implications of this exercise. This includes an internal launch to unveil the new performance management system. After all, an effective performance management system is at its best when it establishes a true pay for performance culture which, in turn develops employee engagement.

Improving morale, creating loyalty and increasing overall productivity in your employees through performance management by linking to organisation’s strategic agenda would no doubt help outperform the competitors. 

Mr Cader is the chief
executive of MTI Consulting

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