Company failures and how to avoid them
Thousands of businesses close down each year. While failure is a painful reality for some organizations, you don’t have to go through it to learn from mistakes.
Practitioner Interview: Salman Atiah Al-Zahrany
In 2017, the Performance Magazine editorial team interviewed Salman Atiah Al-Zahrany, Business Planning and Corporate Performance Manager at MARAFIQ Company, Saudi Arabia. His thoughts and views on Performance Management are presented in detail below.
”The main element within Performance Management in need of dire improvement I would say is the discipline of strategy execution.”
What forces drive employee productivity?
Any effective and successful business acknowledges the importance of productivity in the workplace. Organizations need engaged and highly productive employees in order to achieve their strategic objectives, while reducing hiring costs in a remarkably competitive talent market. But what are the factors that increase your employees’ commitment and productivity?
Practitioner Interview: Antonny Teo
In 2017, the Performance Magazine editorial team interviewed Antonny Teo, Chief Financial Officer at Panorama JTB Tours Indonesia. His thoughts and views on Performance Management are presented in detail below.
Without precise alignment, the punishment and reward management at the individual level might not reflect the organization’s goal. With precise alignment, all the activities will have the same direction and goal.
Trends
- Which were the 2016 key trends in Performance Management, from your point of view?
In 2016 the economy was slow and there were a lot of unpredictable events. These events made businesses turn towards a more conservative style. Hence, value added and lean management were the key trends in performance management.
Value added is used to ensure that every activity in the corporation offers positive incremental value added, and one of the ways to measure “value added” is by using the Economic Value Added (EVA) concept.
Lean management is a methodology that relies on a collaborative team effort to improve performance by systematically removing waste activities, and it’s also very responsive in dealing with dynamic business environment.
- What are your thoughts on the integration of Performance Management at the organizational, departmental and employee level?
The integration of Performance Management at the organizational, departmental and employee level is very critical. To ensure that the strategy (long term) is aligned with the operational level (short term), performance management measurement should firstly be aligned with the organizational, departmental and the individual level.
Without precise alignment, the punishment and reward management at the individual level might not reflect the organization’s goal. With precise alignment, all the activities will have the same direction and goal.
- Which will be the major changes in managing performance, in the future?
These days, the business world is more dynamic and more complex. It is constantly changing and evolving and these changes are felt by tech companies in particular. The traditional approach to performance management might take too long to develop a complete strategy map and key performance index (KPI).
Besides that, since the environment is very complex and dynamic, it will need to revise the strategy map and all KPIs frequently. In the future, businesses will need simpler, more flexible and more responsive performance management tools when dealing with the complex and fast changing business environment.
Research
- What aspects of Performance Management should be explored more through research?
I think two things should be thoroughly explored through research:
- Comparing the financial performance of companies, whether they implement excellent performance management or not. This will encourage companies to pay more attention when implementing good performance management.
- Implementing more robust, flexible and responsive performance management tools to deal with a very dynamic and complex business environment.
- Which organizations would you recommend to be looked at, due to their particular approach to managing performance, and their subsequent results?
I believe that both Astra and Gunung Sewu Group (GSG) have shown strong financial performance amidst the slow economic situation of ASEAN.
What is more, due to the concepts of lean management and value added, GSG managed to keep expanding with prudent risk management and to keep adapting to the changing environment.
- Which of the existing trends, topics or particular aspects within Performance Management have lost their relevance and/or importance, from your point of view?
In my opinion, the tradition of the annual review process should be replaced with frequent, informal check-ins between managers and employees.
The biggest limitations of annual reviews are their heavy emphasis on financial rewards and punishments and their end-of-year structure, holding people accountable for past behavior at the expense of improving current performance and grooming talent for the future.
Practice
- Which are the main challenges of Performance Management in practice, today?
Two of the main challenges of Performance Management in practice today are the dynamic business environment and the short supply of expertise. With the fast changing and complex business environment, the traditional annual review might be irrelevant.
When human capital was plentiful, the focus was on which people to let go, which to keep, and which to reward, and for those purposes, traditional appraisals worked pretty well. But when talent was in short supply, developing people became a greater concern and organizations had to find new ways of meeting that need.
- What should be improved in the use of Performance Management tools and processes?
Based on my experience, beside data collection and measurement calculation, it’s also very important to have a simple and easy to understand dashboard that can show performance results.
Sometimes it’s hard to prepare simple presentations of performance results when having to deal with complex and not very user-friendly dashboard settings. I think software companies should place more emphasis on simplifying such tools and processes.
- What would you consider as a best practice in Performance Management?
Not matter how good the strategy map or how precise the link between the organization and the individual goal, without capable human resources all will be futile. So, beside developing a right strategy and a good link for performance measurement, companies must be able to inspire and help their employees to reach the same destination or goal.
Education
- Which aspects of Performance Management should be emphasized during educational programs?
Apart from leadership, technical skills and project management, we should emphasize the ethics and a case study of performance management evolution. A Code of Ethics and Standards should be established, to become an ethical benchmark for performance management professionals around the globe, regardless of job title, cultural differences, or local laws.
A case study of performance evolution is also a very interesting topic, which will give audiences more insight about what is happening in the world of performance management. One performance review topic could be: The traditional annual review process, might be replaced with frequent, informal check-ins between managers and employees.
- What are the limits that prevent practitioners from achieving higher levels of proficiency in Performance Management?
The business world is changing very fast and is becoming more complex by the day. That is why, all performance management tools need to be adapted to those changes. If practitioners do not keep pace with performance management evolutionary cycles, they will be left behind.
It’s very important for practitioners to keep reading and brainstorming, so that they can be up to date with all the recent issues and with the ways in which they can be solved.
Personal Performance
- What is your opinion on the emerging trend of measuring performance outside working hours?
I think measuring performance outside working hours can be useful as it can help you develop your abilities or gain new experiences, e.g learning CPA/CFA for finance profession, etc. However, at the end of the day, work-life balance is just as important as it keeps all things in check and helps you stay healthy.
- What personal performance measurement tools do you use?
I use the Balanced Scorecard to track my overall performance, and when I want to measure my financial status, as well as my financial health, I use a set of ratios that I learnt from the Certified Financial Planner (CFP) certification.
Specialization Specific Question
- Practitioner Point of View: Which were the recent achievements in generating value from performance management, in your organization?
GSG achieved significantly better growth compared to Indonesian GDP’s growth. GSG is leaner, more collaborative, and more prudent when managing risk, thus unlocking the potential value-added activities to the companies.
GSG is also enjoying the benefits that come with the use of the Balanced Scorecard (BSC) and project management, which lead to creative problem solving & closely monitored strategy expenses.
Why do some startups succeed and others fail?
Startups almost always start as a staggering journey into the unknown, one in which entrepreneurs need to make sacrifices, accept ambiguity, deal with challenges, emotions and pressure.
Bill Gross, founder of Idealab, a business incubator dedicated to finding new inventions and ideas, makes a valiant attempt at shedding new light on the factors that influence some startups to succeed and others to fail. He collected data from hundreds of organizations, his own and other entrepreneurs’, and ranked each of them on five key elements. The results were astonishing.
