ufhrd.co.uk · web viewin ptt group, the strategic development (sd) team was assigned to take...
TRANSCRIPT
UFHRD Europe 2012
The Future of HRD-2020 and beyond: Challenges and opportunity
23rd - 25th May 2012
Cover Page
Title: Evaluating Performance- based Management System for HPO: A Case study of
PTT group Thailand
Name of author(s): Chiraprapha Tan Akaraborworn
Organization affiliation/position(s): Program Director of the International of HROD
The School of Human Resource Development
National Institute of Development Administration (NIDA)
Address: The School of HRD, NIDAc
118 Sukhapiban 2, Bld. 9
Klongkum, Bangapi
Bangkok, THAILAND 10240
Email address: [email protected]
Stream: Scholarly Practitioner Stream
Submission type: fully refereed paper
1
Evaluating Performance-based Management System for HPO: A Case study of PTT group Thailand
AbstractSince 1995, the concept of Performance Management (PM) has initiated in PTT
(Petroleum Authority of Thailand) Public Company Ltd. and it was called PBMS
(Performance-based Management System). Then in 2005, the concept of High
Performance Organization (HPO) was introduced to Thai organizations through the
PTT. There are many private sectors has followed the PTT to become an HPO including
the public sectors. However, these organizations have found that the performance
management as their burdens rather than the organization performance improvement.
Triangular analysis was used as a research method to evaluate the PBMS for HPO of
seven companies under the PTT Group in 2011. The evolution of PM, the concept of
HPO, Thailand Quality Award (TQA) criteria, and the PM as an OD intervention were
used as a framework for this evaluation. The result found the PTT group was in the 3 rd
stage of PM Evolution, “Performance Management.” To comply with the TQA process
(ADLI), PTT group had well designed (Approach) and used IT systems (SAP and
Coach) and Strategic Thinking Session (STS) in cascading (Deploy) Corporate KPIs to
departments and individual KPIs. The evident for Learning and Integration of PBMS
were not clarified. In recommendation, PTT Group should reconfirm the objective of
implementing the PBMS for organization development in order to become an HPO and
enhancing the SPIRIT culture. The company should set the performance analysis as an
important agenda in performance review in order to create the lesson learn or
organization learning and also integrating the performance appraisal with other HR
systems under the PBMS are needed. The conceptual model of PBMS should be drawn
and used as a communication tool among the PTT group.
Key Words: Performance Management, Organization Development Intervention, High
Performance Organization (HPO)
2
IntroductionPTT (Petroleum Authority of Thailand) Public Company Ltd. was established
since 1978 and in 2001 it has been privatized and listed on the Thai Stock Exchange.
The core businesses of PTT are gas, oil, petrochemicals and refining, and international
trading. By 2005, it has announced the vision to become an HPO (High Performance
Organization) and recently its vision is to become a Thai Premier Multinational Energy
Company, using local strength for competing in the international arena. The company
has in place a clear guideline for sustainable development by keeping a good balance
among Corporate Social Responsibility (CSR), Corporate Governance (CG), and High
Performance Organization (HPO) in order to lay a strong foundation for the long-term
development of the organization.
To become an HPO, the PTT group has to prove with financial results which are
better than those of its peer group over a longer period of time (Waal A. A., 2007, p.
180). Thus, an effective performance management system is needed to enhance not
only the financial results but also to sustain the corporate result as a whole for a longer
period of time. The concept of Performance Management (PM) has initiated in PTT
since 1995 which was called PBMS (Performance-based Management System). At the
beginning, PTT has implemented the PM in the corporate level only by introducing BSC
(Balanced Scorecard), KPIs (Key Performance Indicators) Designs and EVA (Economic
Value Added) Concepts. Seven years later in 2002, PTT dissolved performance
appraisal (PA) working group, transferred KPIs & EVA Ownership to business group,
and set up PM System, Reporting & Monitoring. In 2006, PTT has transferred EVA
Ownership to Operating Units and Training, deployed EVA to 19 profit centers in and
developed IT System to derive EVA Data and drivers automatically from SAP (Software
for Enterprise Resource Planning) R3 for Oil Business Group. Also, the result-based
budgeting management has implemented in that year.
There are many private sectors has followed the PTT to become HPO as well as
the public sectors. OPDC (Office of the Public Sector Development Commission) has
formally introduced the concept of HPO to the civil servants in 2008 and in the same
year, OCSC (Office of the Civil Service Commission) has announced the Civil Service
Act B.E. 2551 (2008). In the Act, Chapter 4 (Efficiency Enhancement and Motivation-
3
Building in the Performance of Official Functions) Section 76 stated that “A supervising
official shall be under a duty to evaluate the performance of official functions of those
under his/her charge as part of the considerations for appointment and salary increase,
in accordance with the rules and procedures prescribed by the CSC. Evaluating results
under paragraph one shall also be applied for the purpose of developing and enhancing
efficiencies in the performance of official functions.”
The objective of this Act, developing and enhancing efficiencies in the
organization performance, has applied for privatized organization like PTT Group as
well. Pasu Decharin, a Government PM consultant, reviewed the performance
management tools that has been used in the public sectors and founded that they felt
the management tools as their burdens rather than the organization development tools.
Moreover, the objectives of using those tools were to response for the government
policy rather than developing their own organization (Decharin, 2006).
However, there was no research done to review the PM in privatized organization
like PTT Group who has played a leading role in PM system in Thailand. This research
was conducted as a part of the consulting project “PTT Group HR Fundamental” to
evaluate and strengthen seven HR systems for HPO in PTT group. The main objective
of this project was to indentify the best practice of HR system under the group and
improve the practice of HR professional as a strategic partner. Only the evaluation
results of the performance management (PM) are reported in this paper.
Literature ReviewTo evaluate the PBMS for HPO in PTT group, the evolution of PM, the PM
system in HPO, and PM as an OD intervention were reviewed. The status of PM in
Thailand was presented in the last session.
1. Evolution of Performance Management PM can be traced back for many thousand years since performance appraisal
(PA) has been developed and stated in Bible (Wiese & Buckley, 1998). For the formal
performance appraisal in organization, the American Army General has claimed its
initiative in the early 1800s. Then, in the early 1900s the term “Performance
Measurement” was introduced widely by Kaplan and Norton (1992). There were many
4
criticisms that the word “measurement” might not always bring about change and better
performance. “Performance Management” was used to replace performance appraisal
and performance management in the late 1900s. In the last decade, the performance
management was introduced as organization development intervention (Cummings &
Worley, 2009). Lately, the concept of “Strategic Performance Management” is
developed to take corrective actions and to keep the organization on track (Waal A. A.,
2001, p. 19). Each stage of PM evolution has been discussed below.
1.1. Performance Appraisal (PA)Performance Management (PA) was defined as a process to allow an
organization to measure and evaluate an individual employee’s behavior and
accomplishments (Wiese & Buckley, 1998) or employee’s performance in an
organization (Grote, 2002) over a specific period of time.
In the paper, “The evolution of the performance appraisal process”, was claimed
that formal performance appraisal begins in United States Industry since the early
1800s by the Army General submitting an evaluation to the U.S. War Department in
1813. In the 1840s and 1850s, Congress required efficiency ratings of clerks which
contained information on competence, faithfulness and attention. However, these
reports were not used for selection, retention or promotion. In 1912, to response to the
public concern for economy and efficiency, a Division of Efficiency was created within
the Civil Service Commission. Thus, in the late nineteenth and early twentieth century,
PA were used primarily by military and government organizations due to their large size,
hierarchical structure, geographic dispersal, and the necessity to promote the top
performers to higher organizational levels. At that time, most private organizations used
informal measures to evaluate individual performance and make subsequent
administration decision.
Thus, the concept of performance appraisal (PA) in 1800s focused on
performance of the individual level only and its result was used as a single system
which was not linked with other HR systems. PA was considered as a very subjective
tool for performance management. So PA was placed in the first stage of the
Performance Management Evolution.
5
1.2. Performance Measurement The second stage of the Performance Management Evolution can be called as
“Performance Measurement” stage. The era of performance measurement has begun in
the early of 1990s when the phase “What you measure is what you get” was stated in
Kaplan and Norton’s Harvard Business Review paper, The Balanced Scorecard –
Measures that drive performance (Kaplan & Norton, 1992, p. 71). The Balanced
Scorecard (BSC) has spread widely as a practical tool for many organizations around
the world, including Thailand (Akaraborworn, 2005). The concept of BSC was used as a
tool to measure, capture, describe, and translate intangible assets into corporate goal. It
has played a major role in performance measurement system.
Performance Measurement was defined clearly by Neely as “the process of
quantifying past action, where measurement is the process of quantification and past
action determines current performance. Organizations achieve their goals by satisfying
their customers with greater efficiency and effectiveness than their competitors.
Effectiveness refers to the extent to which customer requirements are met and
efficiency is a measure of how economically the organization’s resources are utilized
when providing a given level of customer satisfaction. A performance measure can now
be defined as a metric used to quantify the efficiency and/or effectiveness of a past
action” (Neely, 1998). To increase the competitive advantage, the performance
measurement was seen as a critical tool to drive corporate performance excellence.
1.3. Performance Management (PM)Around 1995-2005, the term “Performance management” has come to replace
the phrase “performance appraisal in many organizations” (Smither & London, 2009).
Whereas PA emphasized the (usually annual) evaluation of an employee’s
performance, “performance management” or PM refers to an ongoing process that
includes setting (and aligning) goals, coaching and developing employees, providing
informal feedback, formally evaluating performance and linking performance to
recognition and rewards. The goal of this ongoing process is to enhance the employee’s
performance (as well as job satisfaction and commitment to the organization) and the
performance of the organization (Smither & London, 2009, p. xv).
6
Moreover, the term “measurement” is not quite correct because the process of
performance measurement does not automatically lead to performance improvements
(Waal A. A., 2007, p. 19). It should always initiate action through the use of appropriate
measures. For this reason, performance management and performance system are
preferred. Robert Behn, professor from Kennedy School, Harvard University, agreed
that “Performance Management is more than performance measurement.” To produce
real results requires performance leadership. Such leaders do need measures. But they
also need strategies for motivating teams to close their performance deficit.” (Behn,
2008, p. 1). Thus, the performance management has defined broader than performance
appraisal and performance measurement.
Herman Aguinis has stated in his book, Performance Management 2nd Ed., that
we must distinguish between performance management and performance appraisal and
he defined “performance management” as a continuous process of identifying,
measuring, and developing the performance of individuals and teams and aligning their
performance with the strategic goals of the organization (Aguinis, 2009, p. 2). The
definition has two main components: continuous process and alignment with strategic
goals. Kloot and Martin (2000) agreed that the strategic management literature suggests
that there should be a strong linkage between strategic plans and performance
measures. With this definition, the performance management was considered in HR
field as an Organization Development Intervention which combined performance
appraisal and performance measurement in the process of continuous improvement so
it can be defined as the third stage of the Performance Management Evolution.
1.4. Strategic Performance Management (SPM)
In 2001, Strategic Performance Management (SPM)’s definition was introduced
by Andre de Waal. He defined SPM as the process where steering of the organization
takes place through the systematic definition of mission, strategy and objectives of the
organization, making these measurable through critical success factors and KPIs, in
order to be able to take corrective actions to keep the organization on track. (Waal A.
A., 2001, p. 19). The SPM objective is quite critical for the HR role as a change agent in
the organization. Moreover, Waal mentioned that SPM process consists of various sub-
7
processes: strategy development, budgeting/target setting, execution/forecasting,
performance measurement, performance review and incentive compensation of
employees that is needed to become and stay world-class (Waal A. A., 2001) as
presented below in Figure 1
.
Figure 1: The sub-processes of the strategic performance management process (Waal A. A., 2007, p. 20)
In the figure 1, two tasks of HR are included: Performance review and Incentive /
Compensation. With his definition, performance management can be used as an OD
intervention that links the HR systems tightly with corporate strategy in order to shape
up the organization to become a world class company. Thus, the Strategic
Performance Management (SPM) can be identified as the forth state in the
Performance Management evolution.
8
StrategyDevelopment
PerformanceReview
Execution& Forecast
Incentive/Compensatio
Performance Measurement
Budgeting /Target Setting
In summary, the evolution of performance management can be presented in the
Figure 2.
Figure 2: The summary of evolution of performance management
2. PM for High Performance Organization (HPO)Before the concept of High Performance Organization (HPO) was introduced in
early 2000s, the HR practices considering performance enhancement are known as
“High-Performance Work Practices” (HPWPs) (Huselid, 1995). The concept of HPO
was defined in Andre de Waal’s Meta analysis research on the characteristics of a high
performance organization. He defined HPO as “an organization that achieves financial
results that are better than those of its peer group over a longer period of time” (Waal
A. A., 2007, p. 180). From 91 literature sources, he identified eight factors influencing
HPO: (1) Organizational design, (2) Strategy, (3) Process management, (4)
Technology, (5) Leadership, (6) Individuals and roles, (7) Culture, and (8) External
orientation. Three factors are related to the HR practices: leadership development,
individual performance, and culture building. To become an HPO, the company has to
prove with Performance Excellences which are better than peers (Waal A. A., 2007).
9
So this is one of the reasons that every company under the PTT Group has been
encouraged to apply for Thailand Quality Award (TQA).
TQA is considered a world-class award which got start in 1996 by the Foundation
of Thailand Productivity Institute (FTPI) and the National Science and Technology
Development Agency (NSTDA). It was initiated as a part of the 9th National Economic
and Social Development Plan. FTPI has been the main organization in supporting the
productivity and services sectors to adopt TQA criteria as an essential tool to improve
their management capability. The TQA fundamental of the technical and decision-
making processes are identical to the Malcolm Baldrige National Quality Award
(MBNQA) introduced in the USA. So far, the MBNQA is being adopted by many
countries around the world (Federal of Thailand Performance Improvement, 2010).
Adopting TQA, the organization has expected for “Performance Excellent” which
means an integrated approach to organizational performance management that results
in (1) delivery of ever-improving value to customer, and stakeholders, contributing to
the organizational sustainability; (2) improving of overall organizational effectiveness
and capabilities; and (3) organization and personal learning. The criteria provide a
framework and an assessment tool for understanding organizational strengths and
opportunities for improvement and thus for guiding planning efforts (NIST, 2009-2010,
p. 61).
To assess the PM system, there are three out of seven items in TQA criteria are
mainly related; Item 2 Strategic Planning (2.1 Strategic Development and 2.2 Strategic
Deployment), Item 4 Measurement, Analysis, and Knowledge Management (4.1.
Measurement, Analysis, and Improvement of Organization Performance and 4.2
Management of Information, Knowledge, and Information Technology), and Item 5
Workforce Focus (5.1.Workforce Engagement). The TQA criteria focus on result by
encouraging the company to integrate the subsystems in holistic view. Four factors
ADLI (Approach, Deploy, Learning, and Integration) used to evaluate process, while
four factors LeTCI (Performance Level, Trend, Comparative information, and
Integration) used to evaluate results. In this paper, only the four factors in process
evaluation are used to evaluate the PBMS of PTT Group.
10
3. PM as an Organization Development InterventionMcLean defined “Organization Development” (OD) as any process or activity,
based on the behavioral sciences, that, either initially or over the long term, has the
potential to develop in an organizational setting enhanced knowledge, expertise,
productivity, satisfaction, income, interpersonal relationships, and other desired
outcomes, whether for personal or group/team gain, of for the benefit of an organization,
community, nation, region, or, ultimately the whole of humanity (Gary, 2006, p. 9). Thus,
performance management is considered as an OD intervention because it involves the
individual behavior that contributes to the individual, team, and corporate performances.
In the Organization Development & Change book, PM is an integrated process of
defining, assessing, and reinforcing employee work behaviors and outcomes.
Organizations with a well-developed performance management process often
outperform those without this element of organization design. PM includes practices and
methods for goal setting, performance appraisal, and reward systems. These practices
jointly influence the performance of individuals and work groups (Cummings & Worley,
2009, p. 421).
So PM as an OD intervention has the developmental purpose in order to improve
the performance of individual, work, and organization. The organization can expect
performance excellent if the performance management process is well integrated with
HR systems.
4. Performance Management in Thailand In Thailand, like the other countries around the world that traditionally the
organization focused only the individual performance in “Performance Appraisal” and it
has long been used in the public sector. Until the concept of performance measurement
was introduced by Kaplan and Norton in early 1990s. Many private sectors adopted the
Balanced Scorecard as Strategic measurement very quickly including PTT group. The
Performance Management System got more attention in private sectors when OPDC
launched it in 2004. And in the same year, PMAT (Personal Management Association of
11
Thailand) sponsored to review the PM status in Thai private sectors (Akaraborworn,
2005). The research result was reported in the national conference to celebrate PMAT
40th Anniversary under the conference title of “Enhancing the Company Competitive
Advantage with Performance Management.”
This PMS survey was conducted in 2004 among the Thai private sectors. The
main objectives of this study were (1) to identify the objectives of implementing PMS in
Thailand, (2) to examine the status of PMS in Thailand (Akaraborworn, 2005). The
survey was distributed among 2,500 PMAT corporate members and got 9.32 %
response rate (233 organizations). The study showed that most of the samples, 38.2%
have established PMS in the last 3 years (around 2000 - 2001) and 29% of samples
have established PMS more than 5 years. In the in-depth interview with experts found
that most of the foreign companies have implemented and introduced the PMS to Thai
companies. The survey found the most use of PMS in Thailand was for individual merit
increase (78.5%), the second most use was for goal setting (69.1%), and the third was
for promotion(65.2%) and the forth was for the training and development (62.7%). The
last use was for corporate culture development (31.8%). This was an evident that most
of Thai organizations had implemented PMS as performance appraisal and
performance measurement, not as an organization development intervention.
Research MethodologyThis paper was conducted as a part of the consulting team for PTT group to
strengthen the PTT Group HR Fundamental in the area of Performance Management
which is one of the seven modules in this project. The objectives of this project were (1)
to integrate PTT Group HR Fundamental Systems, (2) to align HR Systems and
Processes with PTT Group Strategy and TQA, (3) to utilize Group’s Resources:
Technology & People and (4) to build Knowledge- based among the HR in PTT Group.
In this paper, only the first phase of the project, HR Modules Evaluation, was presented.
To evaluate the performance management system of PTT group, the consulting
team used the “Triangulation design” as a research method for collecting both
quantitative and qualitative data simultaneously. So the investigator can converge the
data to make comparisons between detailed contextualized qualitative data and the
12
more normative quantitative data. This design is proper used when researchers seek to
compare the particular with the general or to validate quantitative data with qualitative
data (Creswell & Creswell, 2005). In this project, the triangulation analysis has obtained
the information from three sources: (1) the presentations from seven companies about
their current PM processes & practices, (2) the summary of these practices
benchmarked with ADLI in TQA criteria, and (3) the summary from in-depth interviews
and focus groups. The information from these three sources was compared and
validated in order to feedback to the PM stakeholders in PTT Group.
Figure 3: Research Methodology & Process
To keep the confidentiality of each company under the PTT group, the author
needs to reserve the individual company’s name, thus only the anonymous result will be
provided.
Finding and DiscussionThere are three parts of the findings: A. the current stage of PM benchmarking
with the evolution of PM, B. the process of current PM following ADLI in TQA criteria
and C. the summary of interviews and focus groups.
13
A. The Current Processes & Practices of PM benchmarked with the evolution of PM After seven companies under the PTT groups presented their current objectives
of implementing PM, the consulting team could benchmark their PM stages with the
evolution of PM. The result has shown in Figure 4:
Figure 4: The Current Stage of PM benchmarking with the evolution of PM
The result showed every company under the PTT groups was in the third stage
of this evolution, “Performance Management.” They all have performance appraisal as a
tool to evaluate the individual’s performance and behavior. They have implemented
“Performance Measurement” under the concept of Balanced Scorecard since 1995
under the “Performance-based Management System” (PBMS). All of them have learned
how to set up corporate KPIs from corporate strategies and cascade the corporate KPIs
to department KPIs and individual KPIs. Moreover, six of seven companies under the
14
groups have invested in IT systems, SAP and Coach, to keep track with these KPIs and
on-line performance evaluation. During the past 2-3 years, every company initiated the
performance appraisal system that linked with training and development and rewarding
system. But there is no evident shown that they have used the performance
measurement to take corrective actions to keep the companies on track as stated in
Strategic Performance Management’s definition (Waal A. A., 2007).
This research result has confirmed the PMS survey conducted in 2004 by
Akaraborworn. It stated that most of the Thai organizations had implemented PMS as
performance appraisal and performance measurement, not as an organization
development intervention. They knew how to do the goal setting in the corporate level
and they tried to link the individual performance evaluation with merit increase and
training & development.
B. The Current PM Process following ADLI in TQA criteriaFor PTT Group, in 1995, the concept of “Performance Management” has initiated
in PTT and was called PBMS (Performance-base Management System). Ten years
later, in 2005, PTT Group has announced HPO as an ultimate goal for becoming a
world class organization, so it adopted Thailand Quality Award (TQA) criteria, a world
class award, in order to align and integrate systems in an organization to create higher
organization effectiveness. So far, there were five subsidiary companies under PTT
group won the TQC (Thailand Quality Certificate score over 350) awards in 2005, 2007,
2008, 2009, 2010 and 2011 and two subsidiary companies won TQA (score over 650) in
2006 and 2010. However, there is none of the mother companies under the PTT group
win the TQA yet.
In TQA, "Process" is very important. The score of the process takes 60% (600
scores) of the total scores (1000 Scores) (Federal of Thailand Performance
Improvement, 2010, p. 12). Process refers to the methods the organization uses and
improves to address the Item requirements in Categories 1-6. The four factors used to
evaluate processes are Approach, Deployment, Learning, and Integration or ADLI. ADLI is defined as (1) Planning, including design of processes, selection of measures,
and deployment of requirements (Approach), (2) Executing plans (Deployment) (3)
15
Assessing progress and capturing new knowledge, including seeking opportunities for
innovation (Learning), and (4) Revising plans based on assessment findings,
harmonizing processes and work unit operations, and selecting better measures
(Integration). (NIST(National Institute of Standards and Technology), 2009-2010, p.
55). The consulting team used the ADLI to evaluate the current PM process of each
company under the PTT group.
Approach:In the TQA criteria 4.1 Measurement, Analysis, and Improvement of Organization
Performance, the question states that “How do you measure, analyze, and then improve organizational performance?”
Every company presented the main objective of implementing PM was for
performance improvement which aligns with the TQA criteria Item 4.1. However, there
was no evident shown that they have analyzed, and reviewed the performance results
in order to have lesson learn or try to identify root cause of unachieved KPIs. Every
company tried to link the performance with pay rather than performance improvement.
There were some evident shown in employee engagement survey reported in 2010 that
the employees dissatisfied with reward practice. They felt that they did not get the fair
reward when they compared their performances with others.
Most of the companies under the PTT group calculated bonus from corporate
performance and individual performance, not team based. There was only one company
that presented its PM linked the ratio of bonus with corporate, team, and individual
performance. It has been questioned among the collectivistic countries such as
Thailand if pay-for-performance could be implemented effectively. In such countries,
employees have been reported to be little concerned about the distributive aspect; they
show more concern with the consequences of their behavior on their “in-group”
members, and they are more likely to sacrifice personal interests for the attainment of
collective interests or harmony (Chang & Hahn, 2006).
“Pay for performance” has been criticized not only in the Thai private sector but
also in the public sector. For public sector OPDC has implemented and played a major
role in PMS since 2004. In Koonmee’s research (2009) on the effect of performance
16
management and incentive allocation on development of Thai Public Services and
Officers, it found that PMS continued to be a source for some dissatisfaction and
confusion for some segments of the Thai public sector workforce. Recently, OPDC
found that there are some positive assessments that performance-related pay was
producing many of the intended results and enjoyed positive support from most officials
(Koonmee, 2011). The study showed performance agreement, performance appraisal,
and performance-based pay contributed higher effects on efficiency and effectiveness
at the agency level than at the individual level.
In Korea, as one of the collectivistic country, the research showed the pay-for-
performance can enhance employee perception of distributive justice only when
managers commit with performance appraisal process (Chang & Hahn, 2006). Thus,
coaching, monitoring, and feedback become critical skills for supervisors and managers
who have direct responsibilities to their subordinates’ performances. Almost every
companies under the PTT group stated that they had pay attention on this matter and
had provide many related training programs for everyone in management level.
DeploymentThe second evaluating process item, “Deployment,” refers to the extent to which
an approach is applied in addressing the requirements of the criteria item. Deployment
is evaluated on the basis of the breadth and depth of application of the approach to
relevant work units throughout the organization (NIST, 2009-2010, p. 57).
In PTT group, the strategic development (SD) team was assigned to take full
responsibility to strategic deployment process: (1) Review corporate strategy, strategy
map, and corporate KPIs, (2) Review performance management system and process
under SAP, (3) Educate the department heads the corporate strategy and performance
management system, tool, process and concern through “STS – Strategic Thinking
Session”, (4) Clarify the performance management process, and (5) Develop
performance profile recording by Coach system. Under the 4th step, the HR strategic
planning (SP) team had responsible for (1) KPI cascading, (2) Individual performance
planning, (3) Progress Review, (4) Performance Appraisal Review, and (5) Performance
Classification and Merit Allocation.
17
The process of strategic development and cascading was well planned and had
IT support. This process has followed the TQA criteria 2.1.Strategy Development and
2.2.Strategy Deployment very well. However, there was lack of support from some of
the department heads in several companies which has shown in the departments KPIs
reports. They either submitted the department KPIs very late or submitted the same
department KPIs as last year. Also there were some complains in many companies
about the lack of coaching, monitoring, and feedback from supervisors. In the research
on “Culture and Commitment: A case study of the PTT Group” showed that having clear
corporate goals and providing direct feedbacks to the employee are critical factors for
the employee commitment in PTT group (Panyasiri, 2008).
LearningThe third evaluating process item, “Learning,” refers to new knowledge or skills
acquired through evaluation, study, experience, and innovation. The criteria include two
distinct kinds of learning: organization and personal. To be effective, learning should be
embedded in the way an organization operates. Learning contributes to a competitive
advantage and sustainability for the organization and its workforce (NIST, 2009-2010, p.
60).
In 2010, there was a learning evident shown in Balanced Scorecard of the
companies under PTT Group. They have changed the perspectives in BSC from
traditional 4 perspectives (Finance, Customer, Internal Business Process, and Learning
& Growth) to (1) Financial & Market outcomes, (2) Customer focused outcomes, (3)
Product Outcomes (4) Workforce focused outcomes, (5) Process effectiveness
outcome, and (6) Leadership outcomes. This can reflect the strategic planning
innovation in PTT Group.
There was no evident for organization performance evaluation how many percent
of last year corporate KPIs were achieved. Moreover, in the corporate KPIs review,
there was no linkage of the corporate KPIs and department KPIs in order to evaluate
the contributions of each department to the corporate performance.
18
IntegrationThe forth evaluating process item, “Integration,” refers to the harmonization of
plans, processes, information, resource decisions, actions, results, and analyses to
support key organization-wide goals. Effective integration goes beyond alignment and is
achieved when the individual components of a performance management system
operate as a fully interconnected unit (NIST, 2009-2010, p. 59).
The result from the performance management system linked to salary increase,
variable bonus, promotion criteria, and employee of the year. Most of the companies
used the total scores from performance evaluation to calculate both salary increase and
variable bonus. There was a doubt in this calculation since there was no performance
review on the contribution of each individual and department to corporate performance.
Thus, the performance evaluation seems to be very subjective for the employee. The
result from competency regarding the core value was used to recognize the employee
of the year. And it was not clear on how the PM linked with the career management.
Table 1: The result of TQA Process evaluation
19
In conclusion of ADLI evaluation, the consulting team rated the PM process of
PTT group around 30-45% based on the TQA process evaluation. It found that PTT
group had an effective systematic approach, responsible persons for each system, and
IT supporting system for the PBMS (Approach). The approach was deployed, although
some companies under the group were in the early stages of deployment (Deployment).
There was an evident of a systematic approach evaluated and improved such as the
improving of BSC perspectives. Lacking of coaching, monitoring and feedback from
supervisor brought to the low level of individual learning (Learning). The approach was
in the early stages of alignment the individual performance with other HR systems. Also
the PBMS run separately from the current corporate culture enhancement (Integration).
C. The Summary of Interviews and Focus Groups One of the companies under the PTT group was selected as the best practice of
PM. It was allowed the consulting team to conduct the in depth interview with top
management and focus groups with HR team, line managers, and some employees in
that company. There were 9 top management interviews, 13 focus groups with line
mangers and HR session heads, and 8 employee focus groups from 8 subsidiary
companies.
The results showed the highest complains and suggestions in the numbers of
tools and document reports in PM system. They had not seen the necessary and the
linkage between each tool and document. For the performance appraisal (PA), they
have highest complain on the tool that could not differentiate between high and low
performers. The talent employees had no different assignment from the regular
employees. Thus, the performance-based pay seems to be unfair for them. Moreover,
there was no clarification in PA for secondment employees which PA form would apply
to them since each company had different forms and evaluation systems. There was no
transparency in the HR policies regarding the performance-based pay and career
development.
20
In summary, the result of PBMS evaluation in PTT group has shown the evident
of not seeing a big picture of this system. They had lack focus on the PM objective
which was for developmental approach but they had tried to link the performance
contribution with pay and promotions while the performance appraisal system and
performance-based pay policy was not clear. Moreover, the management people lacked
of coaching, monitoring, and feedback skills.
To become an HPO in world class level, PTT Group has seen the PM as a
critical tool for both employers and employees. From the employer perspective, it is vital
to understand how employees contribute to the objectives of the business. A good
performance management system should enable the organization to understand how its
employees are currently performing, and to identify those employees that contribute
most, or least. It allows organizations to undertake a thorough assessment of the
training needs of its employees, set development plans and gives them the option of
using the results of the performance management process to influence an individual
remuneration. From the employee’s perspective, the performance management process
provides transparency over performance in the workplace, provides a framework for
documenting issues relating to performance, and can be used to assess future career
development requirements. The most important of the PM as an OD intervention, it
should help the company keep on track to become an HPO.
Suggestions for future practice1) To keep track on becoming a world class organization or HPO, PTT group
should set the performance analysis as an important agenda in PBMS to
create the lesson learn as a continuous process for improving the corporate,
department and individual performances.
2) To increase the employee commitment or engagement (TQA criteria item 5),
PTT group should pay more attention on “Goal Setting” to link the corporate
performance with individual performance by running KPIs coding. Also, the
group should enhance and reinforce the competency of management people
in coaching, monitoring, and feedback as a part of “Performance Leadership.”
21
3) To perceive the fairly distributive justice, PTT group should have a clear
policy on how to link the result of performance appraisal with other HR
systems such as training & development, compensation & benefit, and career
development.
4) To improve the communication of PBMS in PTT Group, the conceptual model
of PBMS should be drawn and used as a communication tool.
BibliographyAguinis, H. (2009). Performance Managemetn (2ndEd.). New Jersey: Pearson Education, Inc.
Akaraborworn, C. T. (2005). Performance Management System Survey. Personal Management Association of Thailand 40th Anniversary (p. n/a). Bangkok: PMAT.
Behn, R. (2008, May). Measurement is rarely enough. Harvard University, Kenedy School. MA: Kenedy School.
Chang, E., & Hahn, J. (2006). Does pay-for-performance enhance perceived distributive justice for collectivitstic employees? Personnel Review, 35(4), 397-412.
Creswell, J. W., & Creswell, J. D. (2005). Mixed methods research: Developments, debates, and dilemmas. In R. A. Swanson, & E. F. Holton III, Research in Organizations: Foundations and Methods of Inquiry (pp. 315-326). San Francisco: Berrett-Koehler Publishers, Inc.
Cummings, T. G., & Worley, C. G. (2009). Organization Development & Change (9th Ed.). Mason, Ohio, USA: South-Western Cengage Learning.
Decharin, P. (2006). Inception Report of Public Sector Development as HPO. Bangkok: OPDC (Office of the Public Sector Development Commission) (in Thai).
Federal of Thailand Performance Improvement. (2010). Criteria for Performance Excellence 2553-2554 BE. (2010-2011). Bangkokg: Siva Gold Media, Ltd.
Gary, M. N. (2006). Organization Development: Principles processes performance. San Francisco: Berrett-Koehler Publishers, Inc.
Grote, D. (2002). The performance appraisal question and anwser book: A survival guide for managers. New York: AMACOM.
Huselid, M. A. (1995). The impact of human resource management pracices on turnover, productivity, and corporate finanical performance. Academy of Management Journal, 38, 635-672.
Kaplan, R. S., & Norton, D. P. (1992, January - Febuary). The Balanced Scorecard—Measures that Drive Performance. Harvard Business Review, 71-79.
22
Kloot, L., & Martin, J. (2000). Strategic performance management: A balanced approach to performance management issues in local government. Management Accounting Research, 11, 231–251.
Koonmee, K. (2009). Effects of Performance Management and Incentive Allocation on Development of Thai Public Services and Officers. The Businss Review, Cambridge, 12(2), 163-169.
Koonmee, K. (2011). What a Performance: Performance-Related Pay in the Thai Public Sector. NIDA Case Study Journal, 3(1), 65-84.
Mills, G. E. (2007). Action Research: A guide for the teacher researcher (3rd ed.) . New Jersey: SAGE.
Neely, A. (1998). Measuring business performance, why, what and how. . London: The Economist Books.
NIST(National Institute of Standards and Technology). (2009-2010). Criteria for Performance Excellence. Gaithersburg, MD: Baldrige National Quality Program.
OCSC (Office of the Civil Service Commission). (2008, March 1). The Civil Service Act B.E. 2551. Retrieved from Office of the Civil Service Commission: www.ocsc.or.th
Panyasiri, C. (2008). Culture and Commitment: A Case Study of the PTT Group. Journal of Public and Private Management, 15(1), 9-46.
Pfeffer, J. (1998). Seven practices of successful organizations. California Management Review, 40, 96-124.
Smither, J. W., & London, M. (. (2009). Performance Management: Putting research into action. San Francisco: John Wiley & Sons, Inc.
Waal, A. A. (2001). Power of Performance Managemetn: How leading companies create sustained value. New Jersey: Wiley.
Waal, A. A. (2007). Strategic Performance Management: A managerial and behavioral approach. New York: PALGRAVE MACMILLAN.
Waal, A. A. (2007). The characteristics of a high performance organization. Business Strategy Series, 8(3), 179-185.
Wiese, D. S., & Buckley, M. R. (1998). The evoluation of the performance appraisal process. Journal of Managemetn History, 4(3), 233-249.
York, L. (2005). Action Research Methods. In R. A. Swonson, & E. F. Holton III, Research in Organizations: Foundations and Methods of Inquiry. (pp. 375-398). San Francisco: Berrett-Koehler Publishers, Inc.
23
24