1 © The Delos Partnership 2004 Rewards and recognition Making sure that people are accountable for the measures.

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Presentation transcript:

1 © The Delos Partnership 2004 Rewards and recognition Making sure that people are accountable for the measures

2 © The Delos Partnership 2004 Changing Behaviours CULTURE/ BEHAVIOUR TECHNOLOGY WAYS OF WORKING Use theseTo Measure these To Change this

3 © The Delos Partnership 2004 Culture CULTURE/ BEHAVIOUR TECHNOLOGY WAYS OF WORKING Use theseTo Measure these To Change this

4 © The Delos Partnership 2004 Today’s Measures Accountancy based Backward looking Focus on Efficiency Encourage Functional behaviour Inventory treated as an asset Purchase Price Variance hurts manufacturing Measures people causing fear and blame

5 © The Delos Partnership 2004 Tomorrow’s Measures Less financially based Forward looking - targets,milestones Focus on Effectiveness Encourage process improvement Inventory treated as a liability Total Purchase Cost not Purchase Price Variance Measures process not people removing blame

6 © The Delos Partnership 2004 Intent of New Performance Measures Designed to: –Create value from strategy –Motivate, energise and align efforts –Enable Focused on: –The future - “How can we improve?” –Behaviours, actions, decisions –Customers, Stakeholders & Shareholders –Opportunities –Causes or drivers of success Feels: –Active –Supportive –Positive –Warm

7 © The Delos Partnership 2004 Today’s Rewards How does your company reward behaviour today? How does your company appraise performance ? How does your company encourage improvement?

8 © The Delos Partnership 2004 Today’s Appraisal Process Annual appraisal process Not a favoured activity Objectives individually based Does not easily allow for job moves

9 © The Delos Partnership 2004 Today’s Rewards Based on profit –Allocated after overheads –Inventory regarded as asset –Accrual accounting etc Actual versus Budget Overhead recovery Earnings Per Share One person’s career move is another’s political disaster

10 © The Delos Partnership 2004 Today’s Rewards Managing Director gets bonus if budget profit exceeded Marketing Director gets promoted if he beats profit target and budget Manufacturing Director gets paid if overheads recovered Technical Director gets delighted if complexity achieved Finance Director becomes Group FD if inventory reduced

11 © The Delos Partnership 2004 Tomorrow’s Rewards Based on targets and milestones Based on forward looking objectives Based on constant appraisal Based on throughput not output Need to recognise value of teams Recognises inventory as a liability

12 © The Delos Partnership 2004 Suggested Rewards if... Managing Director reaches long term throughput ratio Marketing Director achieves improvement in Forecast accuracy Manufacturing Director achieves improvement in flexibility through increased velocity Technical Director delivers new products on time

13 © The Delos Partnership 2004 Appraisal Process Continual through the S & OP process Should involve 180˚ appraisal and appraisal of peers through honest feedback Requires enhanced people and team skills Give and receive constructive review Requires removal of blame culture Reduced need for the cult of the hero

14 © The Delos Partnership 2004 Link the Appraisal Process to the Strategy Strategy Grow Business Grow Business Increase Market Share Increase Market ShareMeasuresStrategy Grow Business Grow Business Increase Market Share Increase Market ShareMeasures Sales Manager …. …. ….. ….. …... …... Sales Manager …. …. ….. ….. …... …... Planning Manager …. …. ….. ….. …... …... Planning Manager …. …. ….. ….. …... …... R & D Manager …. …. ….. ….. …... …... R & D Manager …. …. ….. ….. …... …... New Product Director …. …. ….. ….. …... …... New Product Director …. …. ….. ….. …... …... Customer Director …. …. ….. ….. …... …... Customer Director …. …. ….. ….. …... …... Supply Director …. …. ….. ….. …... …... Supply Director …. …. ….. ….. …... …...

15 © The Delos Partnership 2004 Goal Deployment Employees Owner Supply Chain Owner Innovation Owner Community Owner Customer Owner Shareholder Owner TARGETS Senior Management Business Support Supply Management Demand Management New Activity Management PERSPECTIVE Process Owners GOALSGOALS Objectives PROCESS

16 © The Delos Partnership 2004 Business Excellence Performance Measurement Needs new ways to account for value Needs new basis for rewarding managers and people Needs recognition of teams Needs an effective and constant appraisal process Needs to change corporate culture