Beyond Performance Management

GROUP MEMBERS

BRIJAN ANAND IYER 13077 NIMISHA SINGH 13078 DAVIS.N.S 13079 DHEERAJ GOVIND SASI 13080 FARJADH FAIYAZ AHMED KHAN 13081

Strategic Planning
1.

Mission Statement

Businesses and great relationships. Shareholder value. A Nobel purpose at wholesale foods.

Actions taken for maximize potential of the practice.

2.

Strategic Planning

Traditional planning and adaptive planning models. Discovery driven planning.

3.

Stretch goals

Aspirational goals. Action to maximize potential of the practice.

4.

Balanced Scorecard

The five common traits of a Balanced Scorecard. Its use as an inhibitor of innovation.

Actions to maximize its potential of practice.

5.

Dynamic resource management.

A portfolio managements view of resources. Actions to maximize its potential of practice.

6.

Enterprise risk management

Use of Management matrix to communicate risk. Actions taken to maximize its potential of practice.

7.

Knowledge Management

Four levels of knowledge.

Impact of social networking in knowledge management.

Actions to be taken to maximize potential of this practice.

8.

Benchmarking

Benchmarking at Hilton hotels. Actions to be taken to maximize potential of this practice.

9.

Sustainability

Focusing on social issues can be challenging and disruptive process. Actions to maximize potential of this practice.

Adding Shareholder value - Intangible Assets

The various types of intangible assets within a firm are broadly Structural Capital Human Capital Innovation Capital

Market Capital

Adding Shareholder value - Intangible Assets

Actions to avoid to ensure that intangibles are valued appropriately

Stop justifying the value of intangibles in balance sheet Accounting professionals cannot value intangibles

Adding Shareholder value - Intangible Assets

Action to promote the value of intangible assets

Identify your key intangibles Educate Managers Build the value of intangibles Focus on key value drivers
What
What What

drives brand growth?

drives customer loyalty? drives process excellence?

Measure intangibles when possible

Economic Value Added Models

Limitation with EVA such as

Encouraging focus too narrowly on increasing shareholder value and not on value adds for stakeholders, Encouraging focus on financial forecasts which are imprecise Can lead to the rejection of strategies and proposals that made sense if viewed from a more calm POV

Economic Value Added Models

What are the benefits of implementing EVA Encourages managers to act like the owners and consider their decisions to increase shareholder value Enabled manager to see which business or product segment add value and which dont Forces manager to look at the balance sheet and the income statement To provide a reward mechanism that compensates managers for increasing shareholder value

Economic Value Added Models

Actions to take

Use EVA instead of financial targets on score cards Devolve EVA to front line managers Keep the implementation of EVA simple Educate your employees

Accurately measure the cost of capital

Key Value drivers

How does identifying KVD help the organization? Focus everyone on the KVD Drive innovation Maximize shareholder wealth Action to take Teach managers about free cash flow Make strategic decision that promote expected value at the risk of short term earnings Educate employees in KVD analysis Identify and eliminate KVD that destroy value

Revenue Growth Analysis

What is the value of driving Revenue Growth Analysis? Drive Sales Growth Diversify portfolio To align rewards with real growth Actions to take Look at the company from a growth portfolio lens Build plans for the key areas of growth Spread the risk Build growth capabilities and operating capabilities Make growth through innovation your top priority Think about how to grow within your existing customer and products

Customer Value Proposition

The Standard value propositions are Product Leadership Operational Excellence Customer Intimacy Actions to take Define your core proposition Align operating processes Meet industry standard in other dimensions of value Dominate your market by improving value year after year Evolve the model continuously

Customer Relationship Management

Benefits of implementing CSM

Build strong customer relationships Provide frontline teams with a full pic of the customer relationship so that an intelligent dialogue can be developed To increase profitable sales

Customer Relationship Management

Actions to take Align CRM with a clear customer strategy Redesign sales and support processes from the customers perspective Clarify who own the customer Devolve the responsibility to frontline workers Segment customers according to the need Provide the complete picture to contact people about a customers interactions Provide channels to fee customer knowledge back to product design and customer support managers Ensure that agents can solve the customer query at the from line at the first point of contact Measure End-to-End customer outcomes Make service a way of life and not just a service

Strategic and profitable customers

Factors that add value to a relationship The cost of acquiring a customer, The base (or gross) profit from the goods or services provided to the customer, The profit from increased purchases arising from the additional spending of satisfied customers The reduced operating costs of serving loyal customers, The profit from transactions with new customers who have been referred by loyal customers, and The profit from the price premium charged to loyal customers who are less sensitive to price

Actions to take Set up a customer review Look at each customer segments as an opportunity rather than a problem Fire bad customers Monitor lifetime profitability Monitor discounts Focus on strategic and profitable customers Find way to handle unprofitable customers

Loyalty Management
Benefits of building customer loyalty

To build lasting relationships with the right customer sthose that are strategic and profitable and capture a larger share of their business To generate sales growth by increasing the number of referrals from customers and employees. To retain essential talent Improve long term financial performance

Loyalty Management
Actions to Take Ask the right customer satisfaction survey Focus on net promoter score Use a scale of one to ten Use a customer aggravation index Demand fast results Analyze defections Tie recognition and reward net promoter scores Device way to turn customer from detractors to promoters Design customer service and support round small teams Customer relate to people no corporations Align CRM with loyalty management

LEAN COST MANAGEMENT

PERFORMANCE POTENTIAL OF THE METHODS ACTIONS TO MAXIMIZE THE POTENTIAL OF METHODS

ACTIONS TO AVOID ACTIONS TO TAKE

LEAN COST MANAGEMENT

Total quality management

Investment (portfolio) management

Activity based costing

Business process reengineering Lean manufacturing Lean services Six sigma Target costing Lean accounting Shared services Outsourcing and offshoring

Expenses management

PART IV
30.ENTERPRISE RESOURCE PLANNING (ERP) SYSTEM Performance potential of this practice: To support business processes To integrate financial information and provide more reliable information To integrate customer order information To standardize and speed up manufacturing processes 31.BUSINESS INTELLIGENCE Performance potential of this practice: To deliver fast, relevant information to key decision makers To provide more time for the finance team to add value to their business partners To reduce costs through fewer errors and less reworking To enable the organization to adapt to change To provide more effective compliance and control To enhance the effectiveness of decentralized decision making.

32. KEY PERFORMANCE INDICATORS (KPI) Performance potential of this practice:

To enable managers to continuously learn and improve To provide managers with a radar screen to take fast, corrective action To enable process managers to measure progress toward strategic goals.

33. ROLLING FORECAST

Performance potential of this practice:

To improve decision making. To support regular strategic performance reviews by identifying future performance gaps. To enable senior executives to manage performance expectations and avoid shock profit warnings.

BUSINESS ANALYTICS Performance potential of this practice:

To enable managers to continuously learn and improve

To provide managers with a radar screen to take fast, corrective action

To enable process managers to measure progress toward strategic goals.

35. BEST PRACTICE REPORTING Performance potential of this practice:

To tell teams where they are today and where theyre going in the near term. To tell teams when to take action and what action to take. To communicate performance.

36. OPEN BOOK MANAGEMENT Performance potential of this practice:

To avoid reputational damage To provide more confidence in decision making.

To provide more control

To improve employee satisfaction and engagement

Performance Evaluation PERFORMANCE APPRAISAL

People dislike performance appraisal

Many companies use forced rankings

Focusing performance on the individual rather than the system can lead to a poor understanding of problems and to the wrong solutions

Be immediate and specific in praising someone

Managers should tell the employee exactly how they feel about what he did wrong.

Peer review system at HCL

RECOGNITION AND REWARDS

Most leaders believe in incentive compensation as a key driver of higher levels of performance.
Performance-based pay plans share two attributes: they absorb vast amounts of management time and resources, and they make everybody unhappy. Raising rewards to the level of teams.

Many people agree with team-based rewards in principle but reject the idea because of whats known as the free-rider problem. Persuade the executive team and the HR community to change the basis of recognition and rewards at every level to support relative improvement.

EXECUTIVE COMPENSATION

A board that uses an executive compensation plan assumes that it can motivate senior executives.

Arrive at compensation plan for executives through benchmarking

Whom you pay is much more important than how much you pay, and even how you pay.

There was no evidence that executives long-term incentive plans had any positive impact on total shareholder returns.
For fixed-price options executives could easily get a free ride when the market is improving and similarly suffer unfairly when the market is declining. There are no simple answers to the questions concerning executive pay for performance.

PROFIT-SHARING SCHEMES:

Many organizations use profit sharing to provide a fairer approach to recognizing and rewarding managers and employees. Group wide profit sharing at Handelsbanken and Southwest Airlines DuPonts incentive pay programs. The profit-sharing approach relies more on peer pressure than on direct incentives. How a company designs and implements profit sharing schemes is the most important part of a company.