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1. PERFORMANCE MANAGEMENT HOW TO MANAGE & COMPENSATE PEOPLE TO MEET WORLD COMPETITION BY JOSEPH. H. BOYETT & HENRY. P. CONN CHAPTER CONTENTS 1 THE BASIS FOR…
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  • 1. PERFORMANCE MANAGEMENT HOW TO MANAGE & COMPENSATE PEOPLE TO MEET WORLD COMPETITION BY JOSEPH. H. BOYETT & HENRY. P. CONN CHAPTER CONTENTS 1 THE BASIS FOR MAXIMUM PERFORMANCE MANAGEMENT II HOW TO DETERMINE IF MAXIMUM PERFORMANCE MANAGEMENT IS RIGHT FOR YOUR ORGANIZATION III HOW TO DEFINE / COMMUNICATE VALUES / BUSINESS STRATEGIES IV HOW TO REORGANIZE FOR PERFORMANCE V HOW TO DEVELOP PERFORMANCE MEASURES VI HOW TO DEVELOP AN EFFECTIVE MIS VII HOW TO SET PERFORMANCE GOALS & OBJECTIVES VIII THE IMPACT OF CONSEQUENCES ON EMPLOYEE BEHAVIOR IX HOW TOUSE POSITIVE CONSEQUENCES TO ENCOURAGE PERFORMANCE X PAY FOR PERFORMANCE XI GAINSHARING: HOW TO INCREASE TEAM PERFORMANCE XII PAY FOR KNOWLEDGE: HOW TO INCREASE EMPLOYEE
  • 2. FLEXIBILITY XIII HOW TO DESIGN / INSTALL AN EMPLOYEE INVOLVEMENT SYSTEM XIV BEYOND MPM XV CAREER MANAGEMENT THE BASIS FOR MAXIMUM PERFORMANCE MANAGEMENT INTRODUCTION: - • TODAY BUSINESS IS BECOMING COMPETITIVE • SUCCESS OF BUSINESS DEPENDS UPON ITS PERFORMANCE • PERFORMANCE OF BUSINESS HAS TO BE EXCELLENT, WHICH DEPENDS UPON ITS PEOPLE • SUCCESS OF BUSINESS DEPENDS UPON THE PERFORMANCE OF ITS PEOPLE BUSINESS BEFORE GLOBALIZATION: • PEOPLE TREATED AS COMMODITIES • CONTROL PROBLEMATIC BEHAVIOR • COMMUNICATION ONE WAY • INVOLVEMENT ONLY AT PHYSICAL • COMPENSATION BASED ON SENIORITY BUSINESS AFTER GLOBALIZATION: • PEOPLE TREATED AS PARTNERS • POSITIVE BEHAVIOR REWARDED • COMMUNICATION TWO WAY • INVOLVEMENT AT PHYSICAL & MENTAL LEVEL • COMPENSATION BASED ON PERFORMANCE TYPES OF PERFORMERS: • EXCELLENT • POOR
  • 3. • AVERAGE EXCELLENT PERFORMER: • FEW IN NUMBER • PRODUCE HIGH VOLUME & QUALITY WORK IN TIME & AT ACCEPTABLE PRICE • EASY TO MANAGE • MINIMUM SUPERVISION & DIRECTION • GENUINELY ENJOY THEIR WORK AVERAGE PERFORMER: • PERFORMANCE VARIES. SOMETIMES EXCELLENT, SOMETIMES POOR • PERFORMANCE BELOW CAPACITY • CONSIDERABLE ROOM FOR IMPROVEMENT POOR PERFORMER: • OPPOSITE OF EXCELLENT PERFORMERS ISSUE BEFORE MANAGEMENT:- • RETAIN EXCELLENT PERFORMER • DEAL WITH POOR PERFORMERS • IMPROVE PERFORMANCE OF AVERAGE PERFORMERS CHARACTERISTICS OF EXCELLENT PERFORMERS • THEY HAVE THE FOLLOWING QUALITIES: o KNOWLEDGE & SKILL o INTERNAL MOTIVES o ABILITIES • KNOWLEDGE & SKILLS: o CONSTANTLY UPGRADE THEIR K / S o KNOW WHAT NEEDS TO BE DONE & HOW IT HAS TO BE DONE • INTERNAL MOTIVE: o WORK PROVIDES PERSONAL SATISFACTION o WORK HAS MEANING • ABILITIES o IT MATCHES WITH THAT OF THE JOB REQUIREMENT CAN EXCELLENCE BE CREATED? • YES • FOLLOWING ARE THE WAYS:
  • 4. o MATCHING OF THE JOB o TRAINING o RECRUITMENT o MANAGING ENVIRONMENT MATCHING OF JOB • PROFILING OF THE PEOPLE WITH THAT OF THE JOB CAN BE DONE • LIMITATION o BUT JOBS UNDERGOES CHANGE, BECAUSE BUSINESS IS DYNAMIC o TODAY’S MATCH WILL BE A MISMATCH TOMORROW TRAINING: • WE CAN TRAIN EMPLOYEES TO BE EXCELLENT PERFORMER • TRAINING WILL BE EFFECTIVE ONLY IF: o THERE IS FOLLOW UP o IF APPLIED ON THE JOB • LIMITATION: o LEARNING VARIES FROM PEOPLE TO PEOPLE RECRUITMENT • ALL THE EXCELLENT PERFORMERS NEED NOT HAVE APPLIED • SELECTION FROM POOL OF CANDIDATES WHO HAVE BEEN SHORT-LISTED • WE SELECT BEST FROM THE AVAILABLE LOT. • IT IS A COMPROMISING SITUATION CONTROLLING ENVIRONMENT: • EXCELLENCE IS A FUNCTION OF K / S X M X A • THESE ARE THE QUALITIES OF AN EXCELLENT PERFORMERS • TO COMPENSATE THE THREE, WE ADDRESS THE ENVIRONMENT IN WHICH THE EMPLOYEE WORKS • THE FOLLOWING ARE THE THREE ENVIRONMENTAL FACTORS WHICH HAS TO BE ADDRESSED: o INFORMATION o CONSEQUENCES o INVOLVEMENT • INFORMATION:
  • 5. o KNOWLEDGE IS INFORMATION o SHARE  VALUES / STRATEGIES  GOALS  ACTIVITIES TO BE PERFORMED TO ACCOMPLISH THE GOALS  PROVIDE FEEDBACK o IT COMPENSATES FOR THE WEAKNESS OF K/S • CONSEQUENCES: o LINK PERFORMANCE TO REWARD & PUNISHMENT o LINK PAY TO PERFORMANCE o COMPENSATES FOR THE WEAKNESS OF INTERNAL MOTIVE • INVOLVEMENT o MAKE IT MANDATORY o TRAIN FOR SELF-MANAGED TEAM o PROVIDE CROSS-FUNCTION TRAINING o COMPENSATES FOR ABILITY CONCLUSION: • ABOVE THREE FACTORS HAVE TO BE ADDRESSED SIMULTANEOUSLY • THE FACTORS ARE INTERDEPENDENT ON EACH OTHER • THEY ARE INEFFECTIVE IF IT OPERATES ALL BY ITSELF HOW TO DETERMINE IF MPM IS RIGHT FOR YOUR ORGANIZATION? • ASK THE FOLLOWING QUESTIONS TO THE CEO OF THE ORGANIZATION: o DOES HE ACCEPT THE RESPONSIBILITY FOR HIS EMPLOYEES o DOES HE HAVE CONFIDENCE IN HIS EMPLOYEES o IS HE LOOKING OUT FOR IMMEDIATE SOLUTION OR IS HE LOOKING OUT FOR A LONG TERM STRATEGY o ARE EMPLOYEES RESPONSIBLE FOR THE PERFORMANCE OF THE ORGANIZATION o DOES HE HAVE GENUINE NEED FOR IMPROVEMENT
  • 6. o IS HE WILLING TO ACT AS A COACH, A FACILITATOR FOR HIS EMPLOYEES CONCLUSIONS: • TODAY’S GENERATION OF EMPLOYEES ARE QUALIFIED • THEY ASK LOT OF QUESTIONS • THEY WANT TO BE HEARD • THEY ARE SELF-INTERESTED • DEAL YOU NEED CREATIVE WAYS IN MANAGING YOUR EMPLOYEES INFORMATION: HOW TO DEFINE & COMMUNICATE VALUES & BUSINESS STRATEGIES TO EMPLOYEES INTRODUCTION: • ALL EMPLOYEES ASPIRE TO EXCEL. THEY NEED DIRECTION • DEFINE & COMMUNICATE ORGANIZATION’S VALUES & STRATEGIES TO YOUR EMPLOYEES • SENIORS OF THE ORGANIZATION ARE RESPONSIBLE FOR SETTING THE VALUES
  • 7. WHAT ARE VALUES? • NORMATIVE PRESCRIPTION OF WHAT CONSTITUTES AN ACCEPTABLE BEHAVIOR IN AN ORGANIZATION • FEW IN NUMBERS • ONCE SET, IT RARELY CHANGES • CHANGE IN VALUES CAUSES GREAT TRAUMA IN THE ORGANIZATION • ESTABLISHES FUNDAMENTAL CHARACTER OF THE BUSINESS • PROVIDES PURPOSE FOR DAY TO DAY ACTIVITIES • IT MAKES YOU PROUD TO BE ASSOCIATED WITH SUCH ORGANIZATION • THE FOLLOWING ARE THE SEVEN DOMINANT VALUES OF EXCELLENT ORGANIZATION: o A BELIEF IN BEING THE BEST o A BELIEF IN THE IMPORTANCE OF THE DETAILS OF EXECUTION o A BELIEF IN THE IMPORTANCE OF PEOPLE BEING INDIVIDUALS o A BELIEF IN SUPERIOR QUALITY & SERVICE o A BELIEF THAT MOST MEMBERS OF THE ORGANIZATION ARE WILLING TO EXPERIMENT. SUCH ORGANIZATION SUPPORTS FAILURE FOR THE FIRST TIME o A BELIEF IN THE IMPORTANCE OF INFORMALITY TO ENHANCE COMMUNICATION o EXPLICIT BELIEF IN & RECOGNITION OF THE IMPORTANCE OF ECONOMIC GROWTH & PROFITS HOW TO DETERMINE YOUR ORGANIZATION’S VALUES: INTRODUCTION: • THE FOLLOWING EXERCISE HELPS TO DETERMINE THE VALUES:
  • 8. • VALUE EXERCISE 1: BEING THE BEST • TAKE A BLANK SHEET • DIVIDE THE SHEET INTO TWO COLUMNS • ON THE LHS WRITE “TO ME BEING THE BEST MEANS” MEANS ALWAYS DOING THESE THINGS • ON THE RHS WRITE “TO ME BEING THE BEST MEANS NEVER DOING THESE THINGS” • BE SPECIFIC WHEN WRITING THE COLUMNS • ONCE YOU HAVE MADE YOUR LIST, REVIEW WHAT YOU HAVE WRITTEN & DO THE FOLLOWING: o FROM THE “ALWAYS DO” COLUMN FOR EACH ITEM ASK YOURSELF, “ IF IT WAS IMPOSSIBLE FOR US TO DO THIS, WOULD I STILL WANT TO BE IN BUSINESS?” o IF THE ANSWER IS “NO” CIRCLE THIS ITEM AS A POSSIBLE VALUE o FOR THE “NEVER DO” COLUMN FOR EACH ITEM ASK YOURSELF,” IF WE DID THIS, WOULD I FEEL NOT JUST DISAPPOINTED BUT REALLY GUILTY ABOUT HAVING DONE IT?” o IF YOU WOULD FEEL GUILTY, CIRCLE THIS ITEM AS A POSSIBLE VALUE VALUE EXERCISE 2: IMITATING THE BEST • PICK AN ORGANIZATION YOU HAVE WORKED FOR IN THE PAST. • WHAT WAS IT ABOUT THIS ORGANIZATION THAT YOU MOST ADMIRED? • BE SPECIFIC WHILE PREPARING THE LIST • WHEN YOU HAVE FINISHED YOUR LIST, ASK YOURSELF “WHICH OF THESE QUALITIES SHOULD WE EMULATE” VALUE EXERCISE 3: AVOIDING THE WORST • REVERSE EXERCISE 2
  • 9. VALUE EXERCISE 4: SOURCE OF PRIDE METHOD 1: • MOST OF US LOVE TALKING ABOUT WHAT WE DO • IF YOU ARE ASKED o WHAT DO ENJOY MOST ABOUT YOUR JOB o WHAT MAKES YOUR JOB SO ATTRACTIVE • JOT DOWN WHAT THE PERSON SAYS METHOD 2: • YOU ARE A SUCCESSFUL EXECUTIVE IN YOUR ORGANIZATION • YOU HAVE BEEN ASKED TO SPEAK IN YOUR SCHOOL ABOUT YOUR WORK, YOUR PROFESSION OR YOUR ORGANIZATION • WHAT KEY POINTS WOULD YOU MAKE IN SUCH A SPEECH • REVIEW YOUR NOTES. ASK YOURSELF WHICH OF THESE POINTS ARE ENDURING REALITY CHECKING • ASK YOURSELF THE FOLLOWING QUESTIONS TO DO REALITY CHECKING OF YOUR VALUES: o HOW CONSISTENT IS THIS VALUE WITH WHAT IS OR HAS BEEN REWARDED IN THIS ORGANIZATION? o HOW COMMITTED AM I PERSONALLY TO THIS VALUE? IS THIS VALUE SOMETHING I AM REALLY PREPARED TO LIVE BY? • YOUR ANSWERS TO THESE QUESTIONS ARE A CHECK ON THE REASONABLENESS OF THESE VALUES FOR THE ORGANIZATION YOU ARE PART OF & FOR YOURSELF AT THIS TIME • IF YOU ARE NOT COMMITTED, YOUR BEHAVIOR WILL NOT BE CONSISTENT WITH THESE VALUES • ASK YOURSELF, “IF IT WERE IMPOSSIBLE TO OPERATE THE BUSINESS CONSISTENT WITH THESE VALUES FOR WHATEVER REASON, WOULD I BE PREPARED TO TERMINATE MY ASSOCIATION WITH THE ORGANIZATION & ACCEPT THE FINANCIAL, SOCIAL, & PERSONAL SACRIFICE WHICH FOLLOWS • IF YOUR ANSWER IS “NO” THEN YOU ARE NOT SUFFICIENTLY COMMITTED TO THIS SET OF VALUES
  • 10. HOW TO COMMUNICATE VALUES TO EMPLOYEES? • WRITTEN COMMUNICATION • FORMAL VERBAL COMMUNICATION • INFORMAL VERBAL COMMUNICATION & DEMONSTRATION HOW TO DEVELOP YOUR BUSINESS STRATEGY INTRODUCTION: • BUSINESSES ARE RUN ON VALUES. • ALL O HAVE OBJECTIVES. • BUT IN A COMPETITIVE ENVIRONMENT, IF AN O HAS TO GROW, THEN IT SHOULD HAVE CERTAIN OBJECTIVES IF ACHIEVED WILL GIVE AN ADVANTAGE TO IT, OVER ITS COMPETITORS ONE NEEDS STRATEGY • TO ACHIEVE THESE OBJECTIVES ONE NEEDS TO PLAN STRATEGICALLY. • STRATEGIES HAVE TO BE DEVELOPED. IT CONSISTS OF THE FOLLOWING STEPS: o DRIVING FORCE  WHAT ARE WE GOOD AT  STRATEGIES ARE BASED ON WHAT WE ARE GOOD AT  IT ANSWERS THE QUESTION “WHAT IS OUR BUSINESS”  WE COULD BE GOOD AT THE FOLLOWING THINGS: • PRODUCTS OFFERED TO CUSTOMERS • SERVING CUSTOMERS • TECHNOLOGY • METHOD OF SALE • NATURAL RESOURCES o KNOWING OUR COMPETITORS STRENGTH & WEAKNESS o KNOW THE FOLLOWING AREAS OF COMPETITION  CAPACITY: • VOLUME OR RANGE OF PRODUCTS  RATE: • EFFICIENCY  ACCURACY / FITNESS FOR USE: • PERCEIVED QUALITY  UNIQUENESS / NOVELTY OF PRODUCT: • UNIQUE CHARACTERISTICS OF THE PRODUCT
  • 11.  TIMELINESS: • MEETING PROMISES OF DELIVERY  AVAILABILITY: • PRODUCT AVAILABLE ON DEMAND  COST: • LESS THAN THAT OF COMPETITOR OR ESTIMATED COST  BENEFIT / VALUE: • HIGHER PERCEIVED VALUE IRRESPECTIVE OF RELATIVE COST.  CUSTOMER SERVICE: • CUSTOMER’S PERCEPTION OF CARE, ATTENTION, RESPONSIVENESS, FRIENDLINESS, CONCERN WITH PRODUCTS / SERVICE OFFERED o KNOW YOUR PEOPLE’S CAPABILITY. CAPABILITIES DETERMINE HOW ONE OUTPERFORMS THE COMPETITOR • THE CEO & HIS MANAGEMENT TEAM DETERMINE STRATEGIES. THE TEAM SHOULD NOT BE MORE THAN 5 MEMBERS COMING FROM VARIOUS FUNCTIONS • VALUES INFLUENCES STRATEGIES. HOW TO COMMUNICATE YOUR BUSINESS STRATEGY TO EMPLOYEES • COMMUNICATE THE FOLLOWING TO YOUR EMPLOYEES: o WHAT IS OUR STRENGTH [DRIVING FORCE] o WHAT IS OUR COMPETITOR’S STRENGTH o IN WHICH AREA OF COMPETITION WE ARE GOOD AT o WHAT IS THE RANGE OF OUR CAPABILITY • THE COMMUNICATION CAN THROUGH EITHER IN WRITING OR ORAL
  • 12. HOW TO REORGANIZE FOR PERFORMANCE INTRODUCTION: • INSPITE OF COMMUNICATING THE VALUES / STRATEGIES TO THE EMPLOYEES, YET THERE IS GAP IN OUR PERFORMANCE • WHY IS THIS SO? • BECAUSE VALUES / STRATEGIES DO NOT TELL US HOW TO GO ABOUT IN OUR PERFORMANCE • VALUES / STRATEGIES SHOULD SPECIFY WHAT TYPE BEHAVIOR THE EMPLOYEE SHOULD DISPLAY. • BY BEHAVIOR WE MEAN NOT ONLY INDIVIDUAL BEHAVIOR, BUT ALSO BEHAVIOR THAT RESULTS IN ACHIEVING THE GOALS OF THE ORGANIZATION CHARACTERISTICS OF THE TERM BEHAVIOUR: • IT IS WHAT PEOPLE SAY OR DO • IT CAN BE OBSERVED [HEARD / SEEN] WHILE IT IS OCCURRING • IT IS A SET OF HABITS.
  • 13. • IT CAN BE CHANGED. HENCE THE FOCUS ON BEHAVIOUR. • FOR EXAMPLE: o EMPLOYEES CANNOT DIRECTLY MAKE THE COMPANY THE “HIGHEST QUALITY PROVIDER” WHAT EMPLOYEES CAN DO, HOWEVER IS CHECK THEIR OWN WORK TO ENSURE THAT IT IS IN COMPLIANCE WITH QUALITY STANDARDS. MAKING SUCH QUALITY CHECKS & PERHAPS KEEPING A QUALITY CONTROL GRAPH IS A BEHAVIOR, WHICH CAN OBSERVED WHILE IT IS OCCURRING & IT IS CONTROLLABLE BY THE EMPLOYEE o TO OPERATE A BUSINESS IN ACCORDANCE WITH BASIC VALUES & TO ACHIEVE OBJECTIVES, YOU HAVE TO ENSURE THAT EMPLOYEES CHANGE THEIR BEHAVIOR SO THAT IT IS CONSISTENT WITH COMPANY’S VALUES / STRATEGIES o SINCE THE ULTIMATE GOAL OF THE O SHOULD BE TO ACHIEVE ITS STRATEGIC OBJECTIVES WE CANNOT IGNORE THE GAP BETWEEN STRATEGIES & BEHAVIOURS. THIS IS THE GAP WHICH SHOULD BE BRIDGED
  • 14. THE IMPORTANCE OF MISSION & ACCOMPLISHMENTS MISSION: • STRATEGIC OBJECTIVES ARE TOO BROAD IN NATURE. IT CONTAINS ONE OR MORE MISSIONS. IT SHOULD BE MADE MORE CONCRETE, & MEANINGFUL WHICH THE EMPLOYEES CAN UNDERSTAND • QUESTIONS A MISSION STATEMENT SHOULD ANSWER: o WHAT IS OUR BUSINESS? o WHO IS THE CUSTOMER? o WHAT DO CUSTOMER’S VALUE? o WHAT SHOULD OUR BUSINESS BE? • MISSION STATEMENT SHOULD o BE REALISTIC o BE SPECIFIC o FIT THE MARKET ENVIRONMENT o BE BASED ON DISTINCTIVE COMPETENCIES o BE MOTIVATING • ACCOMPLISHMENTS: o IT TALKS ABOUT COMPETITIVE REQUIREMENTS TO ACCOMPLISH THE MISSION • BEHAVIOR: o THE KEY CAPABILITIES REQUIRED TO ACHIEVE THESE COMPETITIVE REQUIREMENTS • VALUES • STRATEGIES
  • 15. • MISSION • BEHAVIOR • ACTUALLY THIS SHOULD BE THE TYPE OF O STRUCTURE HOW TO DESIGN A PERFORMANCE ORGANIZATION? • TO DESIGN PERFORMANCE ORGANIZATION, WE START WITH THE RESULTS WE WANT • WE HAVE TWO CHOICES REGARDING O: o ALONG PRODUCT / SERVICE LINES OR o ALONG MARKET / CUSTOMER LINES PRODUCT / SERVICE LINE ORGANIZATION • IF WE ORGANIZE ALONG PRODUCT / SERVICE LINES WE WILL CREATE ORGANIZATIONAL UNITS [DIVISIONS, DEPARTMENTS, SECTIONS, ETC.] WHOSE PRIMARY MISSION WILL BE: o TO PROVIDE IDENTIFIED PRODUCTS / SERVICES TO MEET THE NEEDS OF CERTAIN MARKETS / CUSTOMERS SO THAT EXISTING CUSTOMERS ARE RETAINED, & NEW CUSTOMERS OR THESE PRODUCTS / SERVICES ARE OBTAINED WHILE ACHIEVING OR EXCEEDING PROJECTED LEVELS OF PROFITABILITY • THE CRITICAL ACCOMPLISHMENTS ARE TO ACHIEVE THE COMPETITIVE REQUIREMENTS FOR ITS PARTICULAR PRODUCT / SERVICE LINE & ITS MARKETS / CUSTOMERS • THE CRITICAL BEHAVIORS FOR A PRODUCT / SERVICE LINE COMPONENTS ARE DEMONSTRATED BY KEY CAPABILITIES FOR ACHIEVING THESE COMPETITIVE REQUIREMENTS MARKET / CUSTOMER LINE ORGANIZATION: • IF WE ORGANIZE ALONG MARKET / CUSTOMER LINES, WE WILL CREATE ORGANIZATIONAL UNITS [DIVISIONS, DEPARTMENTS, SECTIONS ETC.] WHOSE PRIMARY MISSION WILL BE:
  • 16. o TO MEET THE NEEDS OF CERTAIN MARKETS / CUSTOMERS BY PROVIDING & DEVELOPING A RANGE OF PRODUCTS / SERVICES THEY DESIRE SO THAT EXISTING CUSTOMERS ARE RETAINED & NEW CUSTOMERS OF THIS TYPE ARE OBTAINED WHILE ACHIEVING OR EXCEEDING PROJECTED LEVELS OF PROFITABILITY o THE CRITICAL ACCOMPLISHMENTS FOR MARKET / CUSTOMER LINE COMPONENT ARE TO ACHIEVE COMPETITIVE REQUIREMENTS FOR THESE PARTICULAR MARKETS / CUSTOMERS & THE PRODUCTS / SERVICES PROVIDED TO THEM CHARACTERISTICS OF PERFORMANCE APPROACH • DEPARTMENTS ACCORDING TO A SUB GROUPING OF PRODUCTS / SERVICE OR MARKET / CUSTOMER • WE THEN CONTINUE TO SUBDIVIDE THE COMPANY TO THE EXTENT POSSIBLE ALONG PRODUCT / SERVICE OR MARKET / CUSTOMER LINES SO THAT EVERY ORGANIZATIONAL COMPONENT IS RESPONSIBLE FOR PROVIDING PRODUCT / SERVICE OR MEETING THE NEEDS OF SPECIFIC MARKET / CUSTOMERS ARGUMENTS AGAINST PERFORMANCE APPROACH: • WHAT ABOUT WORK THAT BY ITS NATURE REQUIRES A FUNCTIONAL APPROACH TO ORGANIZATION? • FOR EXAMPLE: o WHAT ABOUT WORK THAT REQUIRES A FUNCTIONAL APPROACH TO O o WHAT ABOUT THE ECONOMICS OF OPERATION THAT COMES FROM FULL UTILIZATION OF EQUIPMENT & AVOIDANCE OF DUPLICATION WITH FUNCTIONAL APPROACH o WHAT ABOUT REGULATORY OR SECURITY REQUIREMENTS THAT CAN BE MET THROUGH THE CONCENTRATION & CONTROL THAT COMES FROM A FUNCTIONAL STRUCTURE
  • 17. ARGUMENTS IN FAVOUR OF PERFORMANCE APPROACH • REQUIREMENT OF SPECIALIST: o WE NEED SPECIAL CAPABILITIES, NOT SPECIALIST. AND WE NEED THESE CAPABILITIES TO MEET SPECIFIC COMPETITIVE REQUIREMENTS THAT MIGHT CHANGE WHEN OUR STRATEGY CHANGES o TO PROVIDE THIS CAPABILITY WE COULD CHOOSE TO HIRE A SPECIALIST IF THE WORK IS HIGHLY SPECIALIZED & A CHANGE IN STRATEGY COULD MAKE PERFORMANCE OF THE WORK UNNECESSARY THEN WE SHOULD CONTRACT THE WORK WITH AN OUTSIDE SUPPLIER. o IN THE LONG RUN, CONTRACTING OUT WILL BE LESS EXPENSIVE THAN HIRING SPECIALISTS & THE WORK PRODUCT WILL BE MORE OBJECTIVE & POTENTIALLY OF HIGHER QUALITY. TOO OFTEN WE HAVE SEEN HIGHLY SPECIALIZED FUNCTIONS ORIGINALLY CREATED TO MEET A SHORT TERM BUT STRATEGICALLY IMPORTANT, NEED THAT NO LONGER IS REQUIRED. SUCH GROUPS CONTINUE TO PERPETUATE THEIR EXISTENCE BY LOOKING FOR SOMETHING TO DO. o IF SPECIALIST MUST BE HIRED, IDEALLY THEY SHOULD BE HIRED AS PART OF DEPARTMENT STAFF. THEN THE OPPORTUNITY EXISTS TO BROADEN THEIR SPECIALTY SO THAT IT CAN SERVE A NUMBER OF DIFFERENT FUNCTIONS • FUNCTIONAL GROUPING TO ENSURE ECONOMY & FULL UTILIZATION OF EXPENSIVE EQUIPMENT MAKE SENSE o THE PURPOSE OF THE BUSINESS IS TO PRODUCE A PRODUCT, PROVIDE A SERVICE & MEET CUSTOMER’S NEED. THIS HAS TO BE DONE WITH GREATEST ECONOMY & EFFICIENCY POSSIBLE. BUT WHAT DO WE GAIN FROM ECONOMY & EFFICIENCY IF WE FAIL IN THE ULTIMATE PURPOSE. THE CONCENTRATION OF RESOURCES RESULTS IN LONG QUEUES & GROWING BACKLOGS AS WORK PILES UP WAITING TO PASS THROUGH ONE CENTRAL POINT. THUS ALL PROPOSALS FOR CENTRALIZATION SHOULD BE EXAMINED WITH UTMOST CAUTION. • REGULATORY REQUIREMENTS & SECURITY: o IF YOU HAVE TO, YOU HAVE TO. OFTEN WELL- INTENDED REGULATIONS ARE DETRIMENTAL TO
  • 18. PERFORMANCE. . WE CAN ONLY HOPE THAT THE LOSS IN PERFORMANCE IS MORE THAN MADE UP FOR BY THE HIGHER PURPOSES SERVED BY THE REGULATIONS THEMSELVES. NEVER ACCEPT A SINGLE INTERPRETATION OF WHAT THE REQUIREMENTS REALLY ARE. o WHETHER SECURITY IS OBTAINED BY CONCENTRATION OR BY DISTRIBUTION. FOR EXAMPLE A BANK’S CASH BOX IS OPENED WITH TWO KEYS. BOTH KEYS ARE WITH DIFFERENT PEOPLE CONCLUSION: • EVEN IF YOU NEED STAFF FUNCTIONS SUGGEST HAVE THE CONCEPT OF INTERNAL CUSTOMERS. THIS WILL ENABLE US TO HAVE MISSION & ACCOMPLISHMENTS EVEN FOR THESE STAFF FUNCTIONS ACHIEVING “ EMPLOYMENT SECURITY” NOT JOB SECURITY • UNIT EXISTS SOLELY FOR THE STRATEGIC PURPOSE OF ACCOMPLISHING ITS MISSION. • WHAT HAPPENS IF A PARTICULAR PRODUCT / SERVICE OR MARKET / CUSTOMERS SERVED BY A COMPONENT IS NO LONGER REQUIRED. IN SUCH AN EVENT THE FUNCTIONAL UNITS SERVING INTERNAL NEEDS BECOMES OBSOLETE. • IN PERFORMANCE ORGANIZATION, ALL ORGANIZATIONAL UNITS ARE BY DEFINITION IMPERMANENT; IF SO, THEN ALL POSITIONS WITHIN THESE ORGANIZATIONAL UNITS ARE IMPERMANENT. • IN SUCH AN ORGANIZATION THERE IS NO JOB SECURITY PER SE, ONLY EMPLOYMENT SECURITY. THE PERFORMANCE ORGANIZATION MAKES EVERY EFFORT TO GUARANTEE CONTINUED EMPLOYMENT, BUT NOT NECESSARILY IN A SPECIFIC JOB OR JOB SPECIALTY. LONG-TERM EMPLOYMENT REQUIRES THAT THE COMPANY COMMITS ITSELF EMPLOYEE DEVELOPMENT, & THAT EMPLOYEES BE WILLING TO BE FLEXIBLE IN JOB ASSIGNMENTS • IT IS EXACTLY BECAUSE OF THIS IMPERMANENCE THAT THE PERFORMANCE ORGANIZATION DISCOURAGES OVERSPECIALIZATION, BUT ENCOURAGES COOPERATION & TEAMWORK.
  • 19. HOW TO DEVELOP PERFORMANCE MEASURES INTRODUCTION: • FEEDBACK HAS TO BE PROVIDED TO EMPLOYEES ON THEIR PERFORMANCE. OTHERWISE EMPLOYEES WILL NOT KNOW WHETHER THEIR BEHAVIOR IS CONSISTENT WITH THE EXPECTED BEHAVIOR • WHAT GETS MEASURED GETS DONE. IF YOU CAN’T MEASURE, YOU CAN’T MANAGE IT; & YOU WILL ALSO NOT KNOW IF IT NEEDS IMPROVEMENT • MEASURES PROVIDES DIRECTION, & CONFIRMATION GUIDELINES FOR DEVELOPING MEASURES OF PERFORMANCE • GUIDELINE 1: o ALL MEASURES SHOULD BE ACCOMPLISHMENT BASED o KEY ACCOMPLISHMENTS SHOULD FULFILL THE COMPETITIVE REQUIREMENTS FOR THE PRODUCT / SERVICE OFFERED OR MARKET / CUSTOMER SERVED • GUIDELINE 2: o DEVELOP GROUP / TEAM ORIENTED MEASURES • GUIDELINE 3: o WHEN DEVELOPING MEASURES, SEEK A LEVEL OF PRECISION; IF MEASURE IS A SINGLE INDICATOR o OTHERWISE USE A FAMILY OF MEASURES. • GUIDELINE 4: o MEASURES SHOULD BE REVIEWED, & CHANGED IF NECESSARY WHEN STRATEGIES CHANGE CONCLUSION: • THERE ARE POSSIBLE TYPES OF MEASURES THAT CAN BE DEVELOPED: o CO
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