Strategic performance measurement
Introduction to Strategic performance management and its Importance
(Moore, 2010) illustrates that strategic performance management system focuses on the worker’s individual input which is stemmed from a culture inside the company based on interest and worth and it helps the employee to keep attention on base line.
- With the help of ‘Strategic performance management’ a company makes a clear mission, sets objectives and creates obvious gettable goals. ‘Strategic performance management is an influential apparatus which guides the company to gauge the outcomes, and helps the organization to find the poor areas which require attention (Moore, 2010).
- Many companies cannot judge their clear direction and fail in achieving their targets and that is the way for workforce dissatisfaction. With a proper system in place the companies know which goals should be prefers and what should be time frame to achieve those goals. With the help of a ‘performance management system’ they know whether they have to give importance to consumer or is the internal strengths are more important. They also come to know that which goals should be given more importance than others (Moore, 2010).
- As a result ‘strategic performance management helps a company to clearly define its objectives and makes the mission more clear and if everything is clear for the workforce then they know their roles which help the organization in order to get success. (Moore, 2010).
Aims and Objectives of the Assignment
In this assignment there is emphasis given to the importance of ‘Strategic Performance Management,’ its purpose and the main role in the success of an organization. The selected company is Tesco Plc and what it is doing in terms of its performance management. In addition to this the setting or desired goals and their achievement is discussed. The role of teams and the techniques for the setting targets for teams are elaborated. Moreover, it is discussed that how teams help the company achieve its objectives. There is also emphasis on the job of top management to motivate the workforce in order to get the targets are discussed and in the end the ways and means of keeping the employees motivated are presented.
Brief Introduction to Selected Organization
Tesco Plc started its business as a value retailer in 1929 and later on it became a top retail giant doing its business in more than fourteen countries with its core UK operations where it holds more than 35 % market share. The company has achieved this position with its ‘growth strategy’ which focuses on its expansion projects ranging from customers to geographies. It introduced its new strategy in 1997 with a ‘Corporate Steering Wheel which focuses on key expansion areas. The company has an integrated ‘Strategic performance management plan’ in place in order to take it forward in UK as well as abroad (Dransfield, 2001).
LO1: Performance Targets and Strategic Objectives
1.1 Links between team performance and strategic objectives
Organizations need to set clear strategic goals in order to be successful in the competitive market. These goals should be realistic and clear so that anybody associated with the operations of the organization knows his/her duty regarding these goals (Wyld, 2010).
Important aspects About Strategic Objectives
(Birnbaum, 2009) explains the importance of 10 strategic goals which are needed to be considered by any organization in order to gain success in the marketplace.
- Market Standing: The Company should make its strategic objectives keeping in the view its current position and the desired position in the market by comparing it with the rivalry it is facing. Tesco is currently number one in the UK market against its major rivals like Asda and Sainsburys’ as it holds more than 35 % of the market share as compared to almost 15 % of Asda and Sainsburys’
- Innovation: The Company should bring fresh products and services in its line-up including new technology and that is the way of progress. Tesco has started new products in its stores including its non-food section and its financial services as part of its growth strategy and has brought new technologies which can take the company to new heights with the help of fast processing, operations and customer services.
- Human resources: In order to gain its strategic objectives the organization needs to choose and improve the best of its human resource. If workforce is working efficiently then the company can beat its rivals. Tesco in its ‘Corporate Steering Wheel’ has given a specific place to its employees and their progress is monitored and presented every month in the ‘Wheel’ placed in front of them in every store (Woods, 2008).
- Financial Resources: The organization should have sufficient monetary resources in order to start its plans and follow them with more investment. If not then the plan of bringing new goods, new technology, new business and many other projects are under great pressure to grow. Tesco, over the years have grown its stores line up from Metro, Express and Hypermarkets and have also started its businesses in emerging markets like china and India.
- Physical Resources: The basic infrastructure of the company and its usage, the physical ability of the company is needed in order to show its strength in the market. Tesco has several physical resources which are a sign of its success. It has more than 2000 stores in UK and more than 400 in international market and it is still expanding
- Productivity: Proficient utilization of company possessions as needed is productivity. Tesco has given it great consideration over the years and has many ways to produce its products and services.
- Social Responsibility: Taking care of the values of community and the company ‘stakeholders’ and if the company takes care of it, it is successful in modern business. Tesco has made the ‘taking care of community’ as one of the core parts of its growth strategy presented in 1997 (www.tescocorporate.com).
- Profit Requirements: Expansion and fiscal strength are two main factors in profit requirements. Expenses minus cost is usually known as profit and if the company is going in profit it can achieve its targets and grow. Tesco faced a serious crisis at the start of year 2009 due to recession and it had two consecutive losses in its first two quarters of 2009 which had a serious blow on its plan to start its business in US.
- Action Planning: Laying of a proper plan in order to get the objectives. The company can achieve its goals if the plan goes as it is planned. Tesco has got a lot of success because it makes realistic and achievable plans.
- Future Course of Action: The Company should make plans of future keeping in view what it is doing now, who does it for the company and what are the prospects and routes to get it. Tesco revises its position by displaying its steering wheel in all of its outlets translated in different languages and keeps an eye on its overall performance and its route towards success (Dransfield, 2001).
Workforce requirements (team) capable of achieving above strategic objectives
(Coisson, 2010) emphasizes the need of a group of employees working together as a team in the organization. The management in all successful companies put ‘team-building activities in place and do the conferences in order to give knowledge to employees of the need of teams. In order to know what the benefit of making ‘teams’ in few steps are important as mentioned below:
The employees should be provided opportunities to get the knowledge of influence of working in a team environment. The company should make the benefits of a team clear to the workforce as a ‘team’ constructs the innovation and changes the quality of the work towards positive results.
The company should emphasize on the need of loyalty towards the team in the mind of workers. There should be proper systems in place in which the employees know their importance and work with eagerness towards the company. They should know that working in a team will enhance their knowledge and skilfulness and make them distinctive in a unit of workers.
Different skills emerge as a result of working in a team and employees should know it. (Likierman, 2009) illustrates the Tesco uses the ‘balanced scorecard’ in order to check the performance of employees linked with the company objectives. The company works on this scorecard in order to make a worker know that if his own goals are accomplished then the company objectives are also achieve while working in a team and in everyday job the workforce does know the effectiveness of working in a team and the balance of company values with his own intentions.
1.2 Tools and techniques available to set team performance targets:
Company Example: Litton SLC and its Self-Directed Work Teams (SDWT)
(Phillips, 1994) Litton Company makes navigation systems for ‘cruise missiles’ and ‘fighter gets’ has almost six hundred workers. It had a top-to-bottom conventional structure in 1981 which was later on changed into ‘circles’ known as employee ‘circle partic plan’ in 1981. It consisted of 3 circles, and on the base of progress of these circles of employees working together, they changed to 15 circles in 1982 and in 1983 these circles changed into teams. For the next 1.5 years there was a great progress and continual improvement in the company as a result of these teams working together. There were regular team meeting on the company floor ‘once every week’ in which company executives used to sit with the team members.
Since 1985, all of these team members were provided with 3 days training and in 1987 these teams were changed into ‘self-directed-work-teams’ (SDWT) and as the new boss took interviewed one hundred team members from different teams he find out that there were 1-2 leaders in every team that could lead the company in the future. Since then the number of teams had reached ‘133.’ On the basis of (SWDT), the top management thought to change its product line to two different product lines: 1. “P-500 product line” and 2. “Ring lazor Gyro Product line” and all this was possible due to the team performance. The company then applied total quality management technique (TQM), the waste was reduced, quality was improved, and there was more return on investment (ROI) and many other benefits. Since 1993, the company created 14 focused factories, ROI was more than 600 %, waste was reduced 50% and federal government put the company on the “preferred list” of companies by looking at its progress. This example proves that how important is building teams and what are the benefits to the organization.
Tools and Techniques
There are many tools and techniques used for the performance measurement, but here we will discuss “Mickensy’s 7S” model.
McKinsey’s 7 S models
One of the most important tools of measuring the ‘team performance targets is “Mckinsey’s 7S Model’ which was made to measure the performance of a company by a company called Mckinsey and Company (Pascale et al, 1981). All of the ‘variables’ of this model start from the Letter “S.” We will use this technique here to find out the performance of Tesco teams as follows:
These 7S include “Strategy, Structure, systems, skills, style, staff and shared values.” These variable are also known as “managerial molecule.” (Peters & Waterman, 1982). Most of the American companies gave more importance to first three of the variable while neglected others but most of the Japanese considered first two as “soft variables.” Amercians thought that the first three could change. Mickensy’s model does not give importance to the external factors that affect the strategy of the organization. Here we will have a analysis of the variables aligned with the objectives of the company.
Using the 7S Model to Analyze an Organization
So the 7S mentioned in the model are distributed into soft and hard parts. The first three are clearly mentioned in the company reports normally but in order to understand the real situation of the company the soft components are our main focus because the workforce changes these components from time to time. if we want to have a clear knowledge of the company they should be analyzed briefly. Tesco is not like the other organizations where there is more emphasis given to hierarchy than the individual performance. All of its employees know their job and how to do it.
Tesco employees know what is anticipated from them and whether they have achieved the given target or not (Gibbs et al, 2009). The ‘plan and review’ document is given to all of the workers and their performance is mentioned on the ‘steering wheel’ which is posted weekly and monthly in order to show their performance standing. Also all the soft components of Micknsy’s model are interrelated between each other such as values with the workforce and the employee goals and this interralated qualities are coincided in the ‘Corporate Steering Wheel’ of Tesco and when it is displayed at the end of the month, everything is mentioned clearly in this model.
The scorecard of Tesco is practical and it aligns the employee goals to company values and supports the employees align their own values in their daily job. Although most of the company culture and values are related to the ‘core’ of those companies but Tesco employees can pursue their own goals aligned with the company goals (Likierman, 2009).
1.3 The Value of Team Performance Tools to Measure Future Team Performance:
Capacity and Capability of Current Workforce
(Chuasiriporn, 2010) thinks that ‘performance measurement’ can made official with the help of diagrams and charts in order to keep an eye on the growth to fulfil the goals of the organization. The only method to do it is to keep measuring it in the form of numbers. When the data is put in the shape of a graph, then it can be a lead for the prospects the company wants to achieve.
There should be a estimation of current performance of the organization in full and all of the components to be measured should be clearly mentioned.
Clear ‘dates’ should be fixed in order to achieve some objectives, there might be a difference of opinion in the mind of workers and their managers but still a fixed time frame should be mentioned.
There should be clarity of which goals to be achieved first and which ones have a secondary importance. Those objectives which are needed to be taken care of first, should be prioritised.
All of the targets should be flexible and changeable in performance measurement. There should be a clear vision about the target and if any change is needed should be done. That means there should be proper ‘tracking’ of all the measures.
(Tesco Case Study) gives an idea of the ‘balanced scorecard’ used at Tesco in order to measure the performance of the employees and core reimbursements are given below:
- It clearly shows what is going to be measured by giving the current performance
- It shows what is coming next which will be gauged
- It clarifies the worker’s performance in detail and his/her contribution to the company
- There is a clear way shown in it where the company wants to go and which goal is more important
- It gives the performance of the teams clearly and shows them they way forward.
LO2: Team Performance targets to contribute to meeting strategic objectives:
2.1 Analysis of required performance targets within teams against current performance:
There should be an agreement in the teams about the specific targets to be achieved in a specific period of time, keeping in view what is most important to do first. (Hanson, 2010) thinks that in order to have influential management, the ‘performance measurement’ is important. He considers various steps to be consideredL Tesco has plan to introduce hypermarket shoping mall which is running successful in China. While international level tesco open superstore in india with tata group which is a success of tesco in Asia. Whil in Europe tesco has plan to open more store food and non food.
- Name your company goals, not more than 5 as more aims lead to confusion
- Anything related to success of any goal should be practical. For example training of ‘health and safety’ if there is a danger of accidents
- The goals of success should be changed into metrics. For example if the company has to pick up the sales, then how much sales?
- How the objectives will be achieved, what is the baseline of success target? Put a 3 point range in place, ‘minimum, moderate and “stretch” targets.’ For example, if the company wants to set a goal of how many workers will finish their training by the end of the quarter and ‘ passing grade’ is set at 70%, then the management can set 60% of employees at minimum, 65% moderate and 85% at stretch.
2.2 Individual commitments to team performance in achievement of organizational goals:
(Nash, 2009) explains that organizations should always give more importance to each of the individuals who are working in a team; workers should be given more confidence and must be engaged in all the works done by the team.( There are many factors important in this regard including taking care of the individual preferences, their choices, the values of the individual, giving them importance and rewarding them if any target is achieved. These factors can be helpful in useful contribution of the individual. When this individual with the encouragement will join a team he/she will contribute and the team will be high performing one.
2.3 Application of delegation, mentoring and coaching to the achievement of organizational objectives:
Any kind of mentoring and coaching influences the performance of the individual with new skills, behaviour and new commitment with the job. If the team member is not coached about whole of the environment and how to do the job, that member is not confident and if not confident will not contribute positively to the team. (Johnson, 2009 believes that there should be five steps given importance in this regard 1. Setting clear goals 2. Training 3. Behaviour observation 4. Feedback and 5. Positive reinforcement.
2.4 A team performance plan to meet organizational objectives:
(Holman, 2009) describes the importance of ‘team performance plan’ as this plan is not just managed in 1 department of the company; it is in the whole organization. This team performance plan has brings many benefits to the organization as the team performance Solves many problems and is helpful in different choices. Because there is not just one person taking all the decisions, it is the whole team which does it, so they become easy.
- There is more communication in different team members after working on this plan.
- The team members are able to communicate their knowledge and skills with each other.
- There are more chances of risk if the management is not working in the form of teams and if any problem occurs, then teams can handle it better. Different departments can be collaborated with the teams of each department sharing the same kind of idea. Also there is always resistance to any kind of change, so teams can handle this matter far better. Even a team member can give his views and top management has to listen to it because it is good platform. So all the targets set by organization can be achieved by dividing the big objectives into small set of performance measures.
Teams working at Tesco consist of all kinds of workers and they keep sharing their work and duties. There is great importance given to company growth strategy but the whole of the workforce which consists of teams knows what they have to do, what is the company goal and what is their own target and the route to achieve it. There is a great collaboration in teams and they work together to achieve the company objectives and they are informed every week that what is the company target and what is their progress with the help of ‘Tesco Steering Wheel.’
3.1 The process for monitoring team performance and initiate changes where necessary:
It is the responsibility of any leader to monitor the performance of any team. There can be many ways to monitor the performance (Papa, 2010). One of them can be that there should be clear objectives in mind of the leader and if the team reaches those targets then it is clear that performance is good otherwise not. Another way is taking the feedback from the team, either with the internal resources or external ones. If there is positive response from the team members, it means there are good expectations from the team and vice versa.
3.2 Evaluation of team performance against agreed objectives:
(Diligent, 2009) thinks that it is not easy to be a leader in a team and evaluate a team performance. Being in a team and leading it is one of the most difficult works to do. If there is low morale in the team it does not always mean that team is performing well but leadership is weak. Team member work in negative fashion if they think they are not treated properly by the leader. In order to get out of situation like this, a top leader has to evaluate the team performance if anything has gone wrong. Tesco leaders are not rigid but there is a democratic culture within the organization and there has not been many cases of team members going to court in order to tell that they are mistreated.
- A leader should have one-on-one meetings with the member in order to get their suggestions, answer their questions and solve their problem, these things give them confidence and show them their importance.
- A leader should take care of team members by knowing their everyday life routines so that they feel that they are not just the machines but in reality a treated as a human being.
- A good leader puts trust in the team member after he gives them a job and if they are pressurized too much, they may not cooperate.
LO4: Politics of personal interaction and influence of Leadership
4.1 Influencing and persuading methodologies to gain the commitment of individuals to a course of action:
According to (Batumalai 2008) it is important for the leaders to ‘persuade’ the team members in order to get them involved in the decision making and improve the team-work. There are many ways of doing it as mentioned below:
- Deal people with positive attitude and they will respond positively.
- If the person is given a responsibility then he will be committed to it and will be consistent to it, so give them a responsibility.
- Presenting examples to the team member of the same ‘actions’ done by other can persuade them to do things. Tell them if any other company has done it, you can do it as well (Festinger, 1954).
- If the team members like the leader, they will listen to him and the qualities of a good leader include the liking capability as well.
- The workers should be given rewards on the accomplishment of any project or course of action and this motivates them to do more for the company.
At Tesco team leaders are those workers who already have been in teams and know how to persuade people to work in a healthy environment. The techniques used in Litton are most effective ones in this regard where the top executives of the company used to sit on the same floor as the lower level employees.
4.2 Commitment of Individuals: Gains and Losses
The Myers Briggs Type Indicator (MBTI)
(Fagnani, 2006) describes that in order to give importance to the performance of an individual in a team and makes the things easy for the team-work, the knowledge of different ‘personality types’ is important and ‘Myers-Briggs Type Indicator (MBTI)’ is one way of doing it. The model has described four personality types: ‘extroverts/introverts, sensing/intuition, thinking/feeling and judging/perceiving.’ On the base of these results there are sixteen personality types discovered.
There are many methods used in MBTI to determine the personality of the team member and what role he/she can play in the team. One way of doing it is ‘Indoor roping’ by using this technique, there are six ropes used, as they are put on the floor, as a personality test the team members are asked to stand in one of the ropes. At the end the completely different types of personalities will be in opposite sides of the ropes. Similarly another method used is ‘role playing’ in which members of the team are asked to fire other individual from the job. Some of them show sympathy towards that individual while other do it straight away, so a emotional situation arises. Lastly, ‘fun exercises’ are one way of doing it in which different individuals are given a specific task to do and one of the member helps them, this shows how two members of the same team can work together.
(Thomas, 2008) describes the team building exercises and role playing at Tesco Hertfordshire in a case study and demonstrates the importance of fun games played in order to build teams and shows the enjoyment.
Training staff and developing leaders
(Thomas, 2010) describes the importance of giving training and producing leaders in the organizations around the world. In the difficult time of today there are so many companies cutting down on training but there is great need of doing it as seventy percent of companies are putting more money in training and team building.
- There should be more budget allocated for the training as it is important for company future. But there should be more precise approach in terms of training of employees than doing it as a practice in every field.
- There should be more focus on precise training and weight age should be given to the most preferred training and needed most.
- Company should focus on the laps of the skills of the employees and should try to train them in order to fill those gaps, in this way a lot of money can be saved on the training.
- For the development of leaders in the organization, existing leaders should work together with the trainers in order to give the coaching with the training.
- In the time of recession, the companies are trying to cut down on training in to get the short-term benefits but they forget the long-term payback of this investment. At Tesco every year around 7000 staff member get the training and another way of saving money for the company is that around ten thousand of the workforce change their jobs within the company which helps the company to make leaders and retain its workers who will be good loyal leader working with the company in the future.
In the assignment we discussed different issues ranging from importance of strategic performance measurement to the making of leaders. So it looks like the direction of the assignment was that how a company can make great leaders and get prosperous in the future. Any workers who joins the company is not a leader but just a worker who knows nothing how to become an influential part of the management. It is the performance measurement who guides the worker to become a good leader. The company we chose for the assignment also looks an ideal company in this regard.