Globalization and Information Technology are placing different, challenging demands on leaders and organizations in the area of organizational performance. Having a sound business strategy in place is the first step to achieve organizational success.
Many organizations have tried to incorporate the Balance Scorecard (BSC) approach and the KPIs and KRAs frameworks into their Performance Management System (PMS). However, many organizations struggle to implement the BSC successfully and too often end up with a diluted version that fails to deliver the full benefits of this management tool.
The key to the successful implementation of any business strategy is in the execution. Organizations must be able to drive, translate and execute the strategy into operational terms at every level throughout the organization.
Success is not about constructing over-complex measures, it is about developing a simple, practical and pragmatic management tool that senior management will use with confidence and understanding.
The ability to tie operation outputs to business strategy and the means to track the performance measures at all levels as well as the cascading linkages from one level to the next, is perhaps, the most important factor in the successful execution of the business strategy. The meaningful understanding in the link between the various measurements either directly or indirectly to the organization performance measurements will ultimately lead to increased productivity and efficiency. Hence, this is the required formula if organization wants to see to it that the business strategy is executed effectively and achieve the desire outcome.
The above has identified and highlighted the importance of the performance measuring cascading mechanism and the next important step is to develop and put in place a framework to drive operation performance that links to strategic requirements to complete the transformation process from the business strategy into operation outputs.
Operation outputs are all about people performance. Organization must go back to the basic, that is, to manage its most important assets – Its Human Capital. What would it mean if all the people in the organization knew how their job performance affect corporate strategy? If they knew how their activities affected their colleagues and managers performance? If they saw their jobs not as a collection of unrelated tasks but as a sequence of activities forming the value chain that contributes to the organization performance.
The KRA development framework is an effective way of creating this knowledge and understanding for all jobholders. Once that is achieved, each individual can begin to see the bigger picture on the importance of their contribution and how meaningful it is to the overall corporate performance measurement.