CH1 - Intro to APM

Question 1

What is the key focus of APM?

Answer 1

• Look at whether the company has a Suitable Mission and the related Key Strategic Objectives,
• What are the (CSFs) are for these objectives

- What (KPIs) are being used to measure the ability/performance of meeting the objectives/CSFS.

• Questions revolve around whether the CSFs/KPIs are appropriate for the objectives and why.

• If they are not, then why not and what could the organisation do better.

•APM thus looks more at:

• - What performance management systems are needed?
  
  • and
• - What performance measures are most appropriate?

Question 2

Define:

Strategic planning

Control

Answer 2

Planning and control are fundamental aspects of performance management.

Strategic planning is concerned with 2 steps:

• 1 . Where an organisation wants to be? ^{_{(usually expressed as objectives)}}
• 2 . How it will get there? _{^{(strategies).}}

Control is concerned with:

• Monitoring the achievement of objectives or suggest if corrective action is needed.

Question 3

What are the different levels of Planning and control within an organisation?

Answer 3

Planning and control at different levels within an organisation

The performance hierarchy operates in the following order:

• (1)Mission
• (2)Strategic (corporate) plans and objectives (Board level)
• (3)Tactical plans and objectives (manager level)
• (4)Operational plans and targets (day to day)

Question 4

What is a mission statement?

Answer 4

A mission statement outlines the broad direction and summarises the reasons and values that underlie that organisation.

A mission statement should be:

• Succinct (briefly and clearly expressed)
• Memorable
• Enduring, i.e. the statement should not change unless the entity’s mission changes
• A guide/goal for all staff to work towards (unified mission)
• Addressed to a number of stakeholder groups, for example, shareholders, employees and customers.

Question 5

Why is the mission important?

and

What was Drucker’s view?

Answer 5

The mission forms a key part of the planning process and should enhance organisational performance:

• It acts as a source of inspiration and aids in developing ideas for detailed plans and objectives.
• Used to assess the suitability of any proposed plans in terms of their fit with the organisation’s mission.
• It can impact the day to day workings, guiding the culture and business practices used.

Drucker - had the view a mission should answer 4 fundamental questions-

• What is our business?
• What is valued by the customer?
• What will our business be?
• What should our business be?

Question 6

What is the lifespan of a mission?

Answer 6

The lifespan of a mission

There are no set rules on how long a mission statement will be appropriate for an organisation.

• It should be reviewed periodically to ensure it still reflects the environment.

If the market has changed since the statement was written, it may no longer be appropriate.

A change in the mission statement may result in new performance measures to monitor the achievement of the new mission.

Question 7

What are the potential pros, cons and failures to an organisation of setting a mission statement?

Answer 7

Pros

• Provides strategic direction, helping to form acceptable strategies
• Help resolve a conflict between stakeholders
• Provide a framework for decisions
• Communicate key values
• Helps prevent misinterpretation of the organisation’s purpose

Cons and failures

• Unclear and vague
• Could be unrealistic
• Elements of the mission can be contradictive
• Inconsistent with management actions (ignored by management)
• Lack sufficient external focus
• Difficult to measure the achievement of a mission
• Possibly appropriate P.M’s may not be established, to begin with

Question 8

Explain why it is important to translate a mission into objectives at the three different levels.

and

Give the characteristics of objectives at the three different Levels

Answer 8

Why and importance?

• To enable an organisation to fulfil its mission, the mission must be translated into strategic, tactical and operational plans.
• Objectives will be general broad aims at strategic, further broken down to more specific objectives at the tactical level and ultimately to detailed targets at the operational level. Each level should be consistent with the one above.

Characteristics

• Strategic Level - Broad Objectives/ Board level
  
  • Long term focus 3 or 10-year plans.
  • Affects the whole organisation
  • Information/Data is more qualitative and externally focused e.g customer requirements/ market demands. Used for planning rather than control
• Tactical Level - ​Middle-level management
  
  • Shorter-term objectives, quarterly or annual
  • Affects specific departments or divisions
  • Information is more internally focused, to support the strategic objectives. Aids in short term planning and control
• Operational level - Day to Day
  
  • ​Focus on day to day activities, objectives are set to meet and achieve specific tactical-level objectives.
  • Focus on controlling specific job roles and departments
  • Information is detailed and task-specific, mainly quantitative

Question 9

What is the role of performance management in planning and control?

Answer 9

The role of performance management in planning and control

Define Performance management: A process designed to improve performance and ensure that goals are met.

• 1. Planning takes place to establish appropriate mission / strategic objectives. Aligned with CSF’S
• 2. “SMART” objectives/targets are set with Appropriate “KPI’s” for each objective.
• 3. P.M techniques are used to put the most appropriate strategies in place to achieve objectives/mission.
• 4 . Finally, P.M techniques will aim to measure achievement of the targets set, and recommend any improvement strategies, if need.

Performance management aims to direct and support the performance of all employees and departments so that the organisation’s goals are achieved.

Extra:-

P.M.System should be linked to performance measures at different levels of the hierarchy.

One model of P.M that helps to link the different levels is the “performance pyramid”.

The performance pyramid derives from the idea that an organisation operates at different levels, each of which has a different focus. However, these levels must support each other. It translates objectives from the top down and measures from the bottom up, the aim being that these are co-ordinated and support each other

Question 10

What is strategy?

and

Define: Strategic Planning

What role does performance management play in strategic planning?

Answer 10

What is strategy?

The core of a company’s strategy is about choosing:

• Where to compete?
• How to compete?
• How will you make money?

It is a means to achieve a sustainable competitive advantage.

Strategic (or corporate) planning:

• Involves formulating, evaluating and selecting strategies to enable the preparation of a long-term plan of action and to attain objectives.

In terms of Performance Management, to test if a strategy is good by:

• - Making sure a strategy allows the organisation to use its resources/competencies to its advantage in an ever-changing environment.

Question 11

How does the Strategic analysis, choice and implementation framework used to the bigger picture of performance management?

Answer 11

Question 12

Clarify corporate (strategic) objectives?

and

Where do they come from?

Answer 12

Corporate (strategic) objectives:

• Objectives that concerns the whole business and focus on the intended desired results to achieve.
• Simply - targets that an organisation sets out to achieve.

The first stage of the strategic planning process, strategic analysis, will generate a range of objectives, typically relating to:

• Maximisation of shareholder wealth
• Maximisation of sales
• Growth
• Survival
• R&D
• Leadership
• Quality of service
• Contented workforce
• Respect for the environment.

These need to be clarified in two respects:

• Conflicts between objectives need to be resolved: e.g. profit versus environmental concerns
• To facilitate implementation and control.
  
  • Objectives need to be translated into “SMART” targets

Illustration:

A statement such as “maximise profits” would be of little use in corporate planning terms.

The following would be far more helpful:

• achieve growth in earnings per share (EPS) of 5% pa over the coming ten-years
• obtain a turnover of $10 million within six years
• launch at least two new products per year.

Question 13

What role does performance measurement play in making strategic choices?

Answer 13

Strategic Choices are evaluated by the SAF model.

Suitability

• Does the strategy have a suitable fit? to the mission/objectives, builds and take advantage of strengths and opportunities.

Acceptability

• Is the strategy acceptable to all the stakeholders? in terms of risk and return.

Feasibility

• Can the necessary resources and competencies be obtained?
• Can the process of change be managed?

Question 14

What is role of performance measurement in checking towards the objectives set?

Answer 14

Not enough for management to just set plans and implement them, they need to check:

The results of the strategic plans have to be:

• - Measured
• - Compared

against stated objectives to assess the firm’s performance.

This is so potential action can then be taken to remedy any shortfalls in performance.

Performance measurement is an ongoing process, which must react quickly to the changing situation of the business and its environment

Question 15

What are the stages of performance management?

Answer 15

Question 16

Why do you think managers need to understand strategic (corporate) planning?

Answer 16

• Understanding Corporate planning is essential for all management because lower levels of objectives and targets are linked to higher-level strategies and missions.

Understanding how the strategies and their development process will be an effective guide to action and aid in improving performance.

• Also whatever level the manager operates within an organisation, he or she can have some influence over that organisation’s strategic (corporate) strategy.