Sunday, April 3, 2016

Management by Performance - how

How to implement the MBP

Definition

1. MBP is planning, organizing, directing and control that give due emphasis on output and outcome.

2.      MBP is a system of management that seeks excellence by planning and measuring efficiency and performance of all key activities and all job holders in the organization.
3.      With full participation at performance planning and evaluation stage, the management and staff would be a committed team to ensure its success and sustainability.
4.      MBP is based on the simple obvious concept that unless you know what result you want to achieve you would never get there.  The emphasis is on outcome orientated management. 

      Methodology
5.       For that purpose, the following are envisaged:
a.      Profit model: cost volume profit analysis
b.      Use the ROE chart model and business planning.
                                                              i.      Where the total input, output and outcome model shown
c.       Use the recorded performance standards in the organization
d.      Apply the globally accepted excellent model.

6. If a manager wanted to get to a set of defined results, it must:
a.      Know his current performance level.
b.      He must know his strengths and weaknesses
c.       He must be able to adopt and develop appropriate strategies, adopt the best practices and innovation.
d.      The strategies should be coordinated and linked through a strategic map.
e.      To focus on the critical performance gaps and success factors.

7.    The set goals of the CEO are cascaded to all in the organization.  Delegation done through the budgetary system ensures coordination, consistency and efficiency throughout the organization.

      MBP in planning and budgeting
8.       The MBP concept sets out to achieve its goal through a process which could be summarized as follows
a.      Identify the company SWOT by conducting performance comparative analysis with a best company within the industry.
b.      Identify the performance gaps and thereafter rank them based on criticality.
c.       Solve leakages and bleeds through immediate stop gap measures.
                                                              i.      Performance solutions such as wrong strategies
                                                            ii.      Lack of motivation or authority
                                                          iii.      Lack of competency
                                                           iv.      Lack of coordination and consistency
d.      Develop and adopt strategies based on the accepted SWOT and market conditions.
e.      Initially design an acceptable business model where strategies are put in place.
f.        Put the business into the ROE model for the final acceptable check.
g.      Otherwise go back to step 1.

9.    All job holder must have his performance scorecard where the following records are being kept:-
a.      Official Record of the job holder
                                                              i.      Purpose of the job.
                                                            ii.      Position in the organization
                                                          iii.      Size of job
                                                           iv.      Limits of authority
b.      Performance records of the job holder
                                                              i.      Key Result Areas
                                                            ii.      Performance Target
                                                          iii.      Key Performance Indicators
                                                           iv.      Performance problems and opportunities
10.  Performance targets are usually measured in SMART
11.  The value chains or processes in the business are compared against industry to identify critical improvement where necessary.
12.  Means of measuring efficiency and performance could be as follows:-
a.      Both Financial and Non-financial data
b.      Output input ratios
c.       Dynamic output input ratios
13.  Performance records keep the following:-
a.      Performance gaps between targets and actuals.
b.      Highest Performance achievements by the job holder
14.  Improvement Strategies
a.      Performance problems and opportunities
                                                              i.      When negative gaps widen and impacted the bottom line performance.
                                                            ii.      Exploit positive performance by breaking through the markets.
b.      Justify improvement change
                                                              i.      ROE calculation
                                                            ii.      IRR for cash flows projections
c.       Approach
                                                              i.      Cost reduction should be given priority
                                                            ii.      Worker initiatives
                                                          iii.      Expected outcome measured
                                                           iv.      Output input measure
d.      Conclusion

      The role of HR in MBP
15.   Performance planning meeting
a.      Goal setting for the next period.
b.      How much gaps to close.
c.       Key result areas and key performance indicators
d.      Best Practices and innovation to be adopted.
e.      Strategic mapping
f.        Administrative changes
                                                              i.      Authority
                                                            ii.      Resources
16.  Performance Appraisal
a.      Prior to review meeting
                                                              i.      Gaps are calculated
                                                            ii.      True performance are measured
                                                          iii.      Root cause analysis
                                                           iv.      Suggested Performance solutions
b.      Appraisal meeting
                                                              i.      Quantitative and qualitative Performance targets
                                                            ii.      Agree on the performance problems and opportunities
                                                          iii.      Agree on the performance solutions
                                                           iv.      Further action
17.  Staff Annual performance appraisal
a.      The purpose
                                                              i.      Reward performance based on the value of performance gains.
                                                            ii.      Promotion opportunity for the competent
                                                          iii.      Identifying critical Training needs

b.      Conduct of appraisal meetings
                                                              i.      Joint and objective analysis of performance
                                                            ii.      Has the target set been achieved?
                                                          iii.      The root cause of the problem and the solutions
                                                           iv.      Discuss the changes required
                                                             v.      Gain their commitment and ownership
c.       Follow up by the manager to all the relevant departmental heads:--

      In conclusion
18.   The benefits of MBP in summary
a.      The emphasis of management is now widened to include efficiency and performance measures.
                                                              i.      All Managers must be able to measure and evaluate key activities under his responsibility.
                                                            ii.      He must link his activities and that of his team and with that of the organization.
                                                          iii.      The Manager must measure his own performance and that of his subordinates.
                                                           iv.      He must identify and apply the industry best practices to his organization.
                                                             v.       He must adopt the right strategies and put them in practices.

                                                           vi.      Ultimately, all management activities should lead towards maximizing the return goals.