Expert Interview: Aiza Azreen Ahmad, Chief Strategy and Transformation Officer at Bank Rakyat, Malaysia
The KPI Institute’s Performance Management in 2014: ASEAN Special Edition report is built on the belief that a balanced approach in such research endeavours can only be achieved by triangulating the opinions of practitioners, academics and consultants alike. In 2014, Aiza Azreen Ahmad, Chief Strategy and Transformation Officer at Bank Rakyat, Malaysia, was one of the practitioners who offered us rich insights into performance related research and trends.
“You cannot do the same thing over and over again, using the same formula. Times have changed. The world has changed. Adapt!”
- What does the term Performance Management mean to you?
Performance Management has different definitions to different people, doesn’t it? However, I normally define Performance Management as a way to control behavior, and also a way to inspire new behavior. Once you have established the vision and mission of what you aspire to be as an organization, set the desired goals and identify the target deliverables. A performance management framework and its systematic implementation ensures that both behavior and deliverables are appropriately managed towards the set direction. That’s my definition of performance management. It actually transcends human resource aspects such as capability/capacity building and talent development, to ultimately enhance competencies and/or reward systems.
- What do you think drives interest in the area of performance management?
Well, there are a few things that drive interest in performance management. At an individual level, it is really about the reward. Employees expect job clarity, clear expectations and support towards the achievement of a reward. Rewards differ from one person to another. They either come in monetary form, focus on job expansion, education, or deal with aspects aligned to the person’s career.
But, at the organizational level, what drives interest in performance management is to make sure that you have a balance between strategic achievements that will take the organization to the next level, and operational achievements that make sure everything is in place to get the organization to the next level. These are the two perspectives of what drives interest in performance management: the individual and the organization. Another thing that drives interest into performance management is the alignment of performance management, as a whole, within a company i.e. from management level to front, middle and back office employees.
- What are your thoughts on Performance Management at departmental level?
The most difficult part of making sure that performance management is implemented well, effectively, and efficiently occurs at departmental level. The challenges that arise may be due to a couple of things: at departmental level, people struggle to have clear job scopes, as well as, clarity in deliverables, because times are changing. As an example, Bank Rakyat is one of the most profitable banks, if not the most profitable, in Malaysia. To sustain its position as a profitable bank, a lot of unplanned activities are required. Therefore sometimes, at departmental level, there are expectations to deliver certain work, of a certain quality and quantity, but there are also other things that employees will have to deliver which make capturing and measuring performance or achievements even tougher. This often happens because the parameters in measuring performance were not set earlier, or they are just too difficult to set due to the dynamics of the industry. In an extreme situation, the ripple effect of these challenges will result in an inequitable reward system, which will have a negative impact on employees’ motivation.
- What do you think about KPI trends in 2014, from the point of Performance Management?
We suffered the economic downturn sometime in 2000. Therefore, what happened, and what is still happening, is that the performance management spectrum, whilst divided into four quadrants as practiced by the Balance Scorecard, still places sizeable emphasis on the financial quadrant. In most cases, the financial quadrant is given a weighting of more than 20%, whilst the remaining percentage is equally or unequally distributed to the other three. And, for an organization to just focus on the financials, and not actually look at other KPIs, it is a lopsided approach to performance management. There are the other three elements, non-financial elements which are customers, people, and operations. These particular elements should not be disadvantaged by the emphasis placed on the financial components. The non-financial elements are inputs for increase and, if not properly managed they will decrease the financial achievements.
Hence, in 2014, I don’t foresee any major changes and the trend of emphasizing financial KPIs will continue to prevail.
- Is there also a shift towards the non-financial KPIs within scorecards, or are the financial KPIs still predominant?
I can see that financial KPIs are dominant but, what I have observed as well, is that there seems to be more appreciation for customer related KPIs. Organizations are starting to realize that the biggest input to their revenue is related to customers.
At least in Bank Rakyat, awareness has been raised on the improvement of all customers’ experience so as to ensure that Bank Rakyat will be the bank of choice for all their financial needs and services in banking transactions. In Bank Rakyat, KPIs are designed to ensure that front office teams will work towards getting the biggest “share of the wallet” i.e. how much of the customer’s disposable income (and by this I mean the gross salary, or the net salary after tax) is placed with Bank Rakyat in the form of financial products, be it deposits or financing products. There is a revival in terms of customer related KPIs focusing on “customer’s satisfaction” or the “attrition rate” in the sales portfolio, as opposed to KPIs which focus on the numbers’ game such as “number of closed deals” or “number of new customer acquired in a set time period” (monthly, quarterly and/or annually).
The trend on people KPI did not change much. People-related KPIs remain to be the generic ones, such as “number of training days”, which in my opinion, is very operational. I would certainly like to look beyond 2014, and see KPIs related to talent management, succession planning and corporate ladder ascension, being given more emphasis than they are now.
In terms of operational KPIs, I still feel that these KPIs are quantity-dependent rather than quality-focused. For example in a manufacturing setup, KPIs related to defects are recorded as “number of defects per week,” rather than “number of resolutions achieved.” If there were actions taken to ensure reduction in the number of defects, then this KPI will be an input towards efficiency. But does it and will it address effectiveness of operations? The answer to this question remains the holy grail of Performance Management. Ultimately, the focus is still on quantity, when, in operations, the focus should also be on increasing quality.
- What aspects of Performance Management should be explored more through research, in your opinion?
I think this is a situation of how to eat an elephant bit by bit. If The KPI Institute could look into the “People’s” quadrant and reach for the ideal KPIs, it would be very good.
What The KPI Institute can do, is start researching on the best practices of organizations around the globe, proceed with publishing these best practices, and provide advisory services to organizations on the management of KPIs within the “People’s” quadrant, especially for organizations in the commodities industry, industrial goods and, last but, especially, not least, for players in the banking and finance industry.
In terms of research, if we could have a little bit more focus on KPIs related to talent management, capacity and capability building, then, at least, it would help someone like me, a practitioner, to stop having KPIs such as “Number of Training Days” in the People’s quadrant.
Research on what it takes to move people from where they are – i.e. current competency – to acquire new skill sets, which in turn, will allow them to take up new sets of challenges and higher authority within the value chain.
Another thing that I would like to see is, if we can be radical, or even revolutionary, and go beyond the four perspectives of the Balanced Scorecards. Can we create the quadrants to form a loop? Meaning how do we clearly link up KPIs in the financial quadrant to the KPIs in the customer quadrant, to the KPIs in the operational quadrant and the KPIs in the people quadrant. What would be the center point? Because, currently, the KPIs are organized according to the quadrants and everything is in a square. Can we change that? Can we enhance the connectivity between all KPIs? I would probably consider these aspects as valuable outputs of a well conducted research on how to improve the performance management ecosystem.
- Which companies would you recommend to be looked at due to their particular performance management results?
If we’re talking about the banking industry, I would certainly recommend some of the banks in Europe, for example Santander Bank or BNP Paribas. As for the Dot.com companies, perhaps Yahoo! or Facebook? I would like to know and understand how do these companies manage their performance? Companies like Alibaba or Apple whose net worth is equivalent to the net worth of a country like Malaysia. Literally, companies like Facebook can buy Malaysia, a country. How did Facebook manage performance management? Other companies that I would like to look at, are the top players in the banking Industry, like Goldman Sachs. It would also be interesting to see, given their success, if the fashion, or, even the film industry reference any performance management systems of their own. I would very much like to see how these non-traditional industries handle their performance management structures. Even though the competency of companies like Facebook has a lot to do with social media, there is still something there, something that companies in a banking industry, or a commodity industry, can learn from. It will be good to know how they manage customers’ experience, as well as their employees. In terms of being different, perhaps a plantation industry can learn performance management from companies like Microsoft.
- Which are the challenges in today’s performance management practice?
At my level, the challenges are on stakeholder management. In every organization there are stakeholders to manage, and the challenge is related to the expectations of the stakeholders, and whether those expectations can be aligned to how the company performs. The challenge related to performance management, at least, in my area, although I have seen this tendency almost everywhere I have worked, is connecting the dots: connecting the expectations of the stakeholders to what we can actually do as the managers of a company. That’s the challenge. I think that, over the years, “The KPI Institute” has done a good job, in informing people on the existence and use of KPIs. People can now monitor KPIs to make sure that performance is measured and rewarded. Previously, everyone asked for rewards because they simply wanted them, or because they thought they deserved them. But now, rewards are given according to their KPIs. That’s the question they ask, and it’s great! Things have changed over the last 10 years, which is fantastic!
- What improvements would you bring to the tools and processes of Performance Management?
When it comes to setting a KPI, we use the smart, specific, measurable action, that is also realistic and time bound. We do this time and time again. But, what I think I need to see among practitioners, me included, is that when we set KPIs, we don’t only focus on the statements, such as “Number of Customers Acquired per Month”, to represent the value of something. Let’s say you use this same KPI for three years. By the end of this period, the system beats you, because you, in turn, think that you can beat the system just by having the “number of acquisitions” translated into KPIs. And I would like to see proficiency in terms of quality. So, when you measure the “Number of Customers per Month” who offer you value, you also ask yourself: “Is this really the value that I am looking for and does it reflect the quality of the customer that I want?” In the banking industry, at least, it is not the number of customers, but, also, the number of customers who can actually pay back the loan you have provided for them, that’s important. So, the proficiency level I want to see in formulating KPIs is thinking beyond numbers, beyond quantity. I would like to see some thought on the measurement of quality. Players in the banking industry today are all scrambling to shift to the online space because they, pretty much, realized that no one wants to come into the branch anymore. People want to complete transactions online, rather than over the counter. Taking this into consideration, what are the KPIs used to capture and measure performance in this space?
Although we are moving towards a non-traditional way of banking at a fast space, the existent KPIs are still measuring traditional processes. Therefore, when someone does not have KPIs to motivate people in the banking business, or any other industry, into the realm of the internet and what it has to offer, then the business will slowly fade. It will reduce its existence to fighting dissolution as opposed to growth. The proficiency I would like to see in the coming years would be the formulation and implementation of non-traditional KPIs.
- What do you consider as best practices in Performance Management, especially within the ASEAN region?
The Sime Darby Group has quite a sophisticated practice in its performance management, their processes are good, and their awareness level is high, as is engagement with their employees. The education system on KPIs and Balanced Scorecards is also effective.
One of the big banks here, Maybank, has a very sophisticated way of managing performance and, when I say Maybank, I mean the group which owns the investment bank. Other examples of good management systems are companies like Top Gloves.
- Which aspects of performance management should be emphasized during educational programs, both in universities, and in training courses?
This, again, is related to smart KPIs. I think one of the things that have to be emphasized in educational programs is not just to come up with smart KPIs, which is again about quantity, but to focus on quality as well. Quality KPIs refer to the KPIs that are related to people, customers, and the operational quadrant. Such things should be included into educational programs.
These days, companies are going cross-borders and, unfortunately, when you go cross-borders, you encounter different regulations. Now I would really like “The KPI Institute” to look into cross-border KPIs. For example, how does someone in China track someone in America, when they do business? And it’s not about the quantity, but the quality, and the sustainability of the business. Talking about sustainability, I would look at companies that have enforced non-traditional KPIs related to sustainability, eco-programs, or carbon footprint management activities and how these translate into KPIs.
- What do you think that educational programs, particularly within the ASEAN region, lack, in terms of Performance Management?
I haven’t seen the syllabus of any performance management related educational program. I’m talking only from the perspective of the new graduates that come to me, seeking for work. I think that, worldwide, we must emphasize the educational value of Performance Management in order to understand that every behavior has consequences in our work and our life. Additionally, we should set goals for ourselves and have a controlling mechanism to achieve them. The reason I say this in a philosophical way is because whenever graduates come to me, I don’t think they are aware of the performance expected of them in KPI terms. It is more of “I want to do this, you have to give this job to me”. Performance management is not at the top of their minds. In the end there is no drive for improvement. There’s merely working at the same pace, giving the same quality of work. I think that educational programs focused on improvement KPIs need to address this issue.
- Which do you think are the challenges that Malaysian companies battle with while trying to achieve higher proficiency levels in Performance Management?
I think this, again, is related to the emphasis being placed on financial KPIs, and it occurs when you are focusing on those too much, with too little attention on customers. We have to be more mature about how we perceive the importance of customers, the importance of branding, and the importance of perception. Because, right now, if you just consider the financial perspective, but you don’t really think about the customers’ perception and you do your operational KPIs based on recurring actionable items, you will have, basically, a static performance. You’re not growing. And even if you’re growing, the incremental growth is probably very small. There is a lot of confusion, or preconceived notions regarding the fact that financial KPIs are always the most important. As you know, most of the Asian countries are either emerging, or pertain to the category of third world countries. So, the first thing that we believe will actually take us to the standard of our western counterparts, would be to get more money. This is the biggest misconception: thinking only about reaching the bottom line, without looking at any other aspects that may be inputs into the bottom line.
- If you are to name a few aspects governing Performance Management in the Asian area, those would be?
Financials and financial operations. That’s it. The human element is either not there, or it is compromised.
- What is your opinion on the emerging trend of measuring performance outside working hours?
I think it’s a fallacy if someone thinks now that they can actually grow within their own country. And because there are differences in the working hours, we really need to consider the KPIs that measure that. What are the inputs? What are the outputs? Should we use smart KPIs now that we operate in a completely different context? So, my personal opinion on the emerging trend of measuring performance outside working hours, is, that, again, financials would not be the most important aspect. Operations would seemingly not be the most important thing. Then what are the other things that should be considered to replace these two quadrants?
- Are there any kind of tools that you use to measure your Personal Performance? If yes, how have they influenced your life?
The performance measurement tool that I use for myself is my job scope: what I can actually do to make sure that my work leads to strategic output. What actions transform the company? Where do I take the company in terms of market positioning? So, whenever I do my job, I always measure myself in terms of the value that I’ve created for the company, the added value that I have given the company, or the people I have inspired. If you look at my career progression trajectory, you’ll learn that it has expanded quite fast. Right now, who would have thought that from a VP at Sime Darby Berhad, doing Performance Management, I would be given this job as a Chief Strategy and Transformation Officer, which encapsulates everything that I have done in my entire professional life. So, these are the kind of performance measurement tools that I use: I always question myself if I have created value, or if I have added value and, if I have indeed done that, how to subsequently quantify my results.
Other performance measurement tools I use, such as: “Can I afford to buy a car?” or “Can I afford to buy a house?”…they are financially centered. But how do I, or we, measure ourselves in terms of success? I work a lot with charities of my choice. The performance measurement tool that I use for myself, when doing charity work, for example, is probably related to the number of charities I’ve worked with in a year. Or, if the charity work is teaching English at an orphanage, I ask myself: How many of the children can speak English after what I had taught them? I do use those sort of performance measurement tools, not only to measure the gains, but also the things I like to do with my free time.
- Do you have any tips for successfully managing your work-life balance?
Well, if someone wants to manage their work-life balance, the first thing that they have to measure is their discipline. If you come in the morning an you set up to do 10 things, at the end of the day, check back and see if you have done those 10 things. Because, if you have only done 8 out of 10, the remaining 2 will spill over into the next day. And the next day there will be another 10 tasks to do and you might only complete 60% of them. And, from my experience of working with so many nationalities, and across different countries as well, the one thing that the Asians should learn from their western counterparts, is, not really about working hard, putting in the hours, and working late, but also about self-discipline, and resourcefulness. And you cannot do the same thing over and over again, using the same formula. Times have changed. The world has changed. Adapt! I don’t really have a good formula for work-life balance, other than this: be focused, and adapt your capability and capacity to the changing environment. Also, be creative with what you’re doing. If you can do something in 5 steps, why not be creative, and try optimizing the process to 3 steps? That would free up your time for other things. Also, respond to the dynamics of the world.
- Which are the recent achievements in terms of generating value as a result of Performance Management, put in practice in your organization?
In one of the organizations that I’ve worked with, I was instructed to create another component for the CEO’s Balanced Scorecard. So, instead of having 4 perspectives, it actually had 5 perspectives. The fifth one was on “nation building”, and it contained KPIs that assisted the CEO of the company in helping Malaysia build its capability. I think that the achievement I’ve gained from that workplace was that, before my team and I came up with those specific KPIs, nobody really cared about “nation building” in that particular organization. They shied away from it. But, when we included those particular KPIs, we forced businesses to work with the Human Resource department, we also mobilized an area that created jobs for the people in Malaysia and we kind of mobilized an area that ensured affordable housing. I think this is my most recent achievement. So this is the key. Coming up with nation building KPIs, ultimately mobilized the company to think about Malaysia, rather than just about their own departments and their own work.
What I have done for Rakyat Bank, over the course of 2 months, is that I helped the CEO look at a specific operating model. The value eventually generated through this operating model, is that people now have clearer perspectives in terms of the bank’s strategic pillars or thrusts, as well as, in terms of the responsibilities that have or will be assigned to them. And, in due time, I think we can come up with a performance management mechanism that makes sure everything is aligned to the vision, or to the implemented strategy.
For more interviews with specialists in the field, peruse through our report Performance Management in 2014: ASEAN Special Edition! Should you be interested in having your interview featured in one of our publications, contact us at [email protected]!
Tags: Inerviews, Performance Management in 2014: ASEAN Special Edition, Practitioners