Regardless of its size, every organization has two major challenges: the first is to design, implement, disseminate and execute its business strategy, and the second is to define the indicators to measure compliance with the strategy and the individual contribution of its collaborators.
The first challenge begins with the definition of the mission, derived precisely from its reason to exist, from its business perspective to create value. Likewise, a vision – which is the point where the organization wants to be at a given time – is established. Another very important pillar are the values, that is, the principles that guide the relations among collaborators, customers, suppliers and strategic partners. The strategy is made up of the way in which that aspiration is materialized and how the components of the business model are executed.
The concept of the strategy implicitly involves two aspects: 1) to achieve the specific strategic objectives that the company has defined as a guide based on its mission, vision and analysis of its current and future situation, and 2) decision-making and the definition of the plan of action during a certain period of time.
It is very important that the company’s mission and vision are well understood and disseminated from the highest level to the bottom of the organizational pyramid; that is, that all employees make that mission and vision theirs so they can embody and model the behavior required by its organizational values. A well-articulated vision cannot make its transformative power a reality if it is abandoned in a corporate planning folder. Therefore, companies with the best work experiences have the ability to execute what they propose.
It is essential to anchor the mission, vision, values and strategy in clear objectives, actions and conducts, in responsible people, delivery dates and sense of timing that yield the best results.
Grupo Nacional Provincial (GNP), a 100 % Mexican insurance company with a presence in the market for more than 112 years, has been inclusive, meticulous and disciplined in the design and implementation of its mission, vision and values, and thus, in the execution of its strategy. In 2014, it redefined the direction of the company and launched its new Vision 2019, with which it wants to be the best in three dimensions – economic growth, unsurpassed service and a vanguard institution with two focuses, in people and in business, and in three stages: win market share, consolidate market leadership and set the standard in the industry.
A key element of follow-up has been the annual strategic planning process and its model of government, with which the key business decisions are administered by the Management Information System (MIS). The MIS integrates organizational intelligence in order to have a sufficient capacity for analysis of what happens in the business and how things are going in the direction of strategic initiatives.
The GNP has established parameters for the members of the organization by defining and aligning performance indicators from the first level (General Direction) to the supervisory level (a level below middle management), involving more than 1,700 employees, who adopt what has been defined as a performance contract.
The second challenge of any organization, as already mentioned, is to define the metrics to determine compliance with the strategy and the individual contributions of its employees.
Without clear, measurable and achievable indicators, the vision and strategy would be just a dream. Instead, having a management methodology with goals allows a distinctive culture of performance to be cultivated that represents a competitive advantage for the organization.
METHOD OF THE INDICATORS
In GNP, every year performance contracts are signed that include three to seven indicators per employee. At the close of the financial year, they are converted into a key element in the individual performance assessment.
The definition of the indicators is based on a top-down process, once the annual operational plan is approved.
The best way to define the indicators and their respective relative weights is by forming committees of design and approval of the performance contracts, which have as their main function to ensure the alignment of the objectives and the expected contributions of each employee.
Figure 1. Example of contract
There are different types of indicators, including:
Financial. Measure the impact of profitability and productivity, as well as the costs, expenses and savings.
Service. Define service levels. They are assessed by satisfaction surveys of internal and external customers.
Projects. Measure the projects in terms of benefits, costs, time, and end-customer satisfaction.
All indicators have a relative weight on a base of 100, a goal or expected plan, and ranges of compliance that depend on the aspirations of the organization. These ranges are used to reveal the expected levels of each indicator and the consequences arising from the results. The ranges are based on a scale of 1 to 5, where 3 is to meet the expected goal, 1 is to be significantly below and 5 far exceeding the goal.
During the annual exercise, each employee and immediate supervisor are responsible for managing the individual performance and making the necessary adjustments to the performance contracts, according to the needs of the company and with the approval of the committee that evaluates the changes.
Figure 2. Annual cycle of design and approval of performance contracts.
Over time, this model has compiled a database of more than 1,200 indicators and progress has been made toward a culture of individual measurement and alignment of the objectives with the contributions of each employee.
The main challenges in implementing the model are:
Overcoming the natural resistance of the collaborator to being measured.
Ensuring equity in the “acidity” of indicators.
Establishing indicators of co-responsibility.
Ensuring that the performance contracts are a tool of daily management of the employees.
Given these challenges, it is recommended that communication campaigns are prepared and that directors display strong leadership, to reinforce the importance of the model and detect and constantly update the indicators that reveal the contribution of each collaborator.
RESULTS
Having established this system of Design and Approval of Indicators in GNP has allowed the alignment of individual efforts and, therefore, the building of the platform on which opening new opportunities on a large scale can be contemplated, meeting the challenges of the market and, mainly, achieving the goals of Visión 2019.
The impact on the GNP staff has been very satisfactory, as evidenced by the results of the performance survey, which measures the satisfaction and health of the organization in three dimensions: alignment, implementation and renewal of the strategy, and in nine components.
The survey is conducted every year. More than 90% of the employees evaluate direction, environment and values, accountability and motivation, among other components. These components show growth in the following manner:
CONCLUSION
To successfully implement the design methodology and implementation of the mission, vision, business strategy and definition of the performance indicators, the involvement and commitment of the General Director, the leaders of each area and the employees is essential. The system must be sponsored and promoted by the General Director, and executed by his/her management team, so that the entire organization adopts it and carries it out.
It is essential that the leaders of the areas routinely manage the performance of their employees, for which the performance indicators for each one must be updated, depending on the needs of the company.
References
Becker Brian E., Mark A. Huselid y Dave Ulrich (2002). El cuadro de mando de RRHH. Barcelona: Gestión 2000.
Brickley, James A., Clifford W. Smith Jr., Jerold L. Zimmerman y Janice Willett (2003). Diseño de organizaciones para crear valor. México: Mc Graw-Hill Interamericana.
Fitz-enz, Jac (1999). Cómo medir la gestión de los recursos humanos. Bilbao: Deusto.
Freeman, J. y M.T. Hannan (1990). Technical change, inertia, and organizational failure. Technical report #90-4. Ithaca: Cornell University Press.
Porter, Michael E. (1980). Competitive Strategy, Nueva York: Free Press.
Performance Indicators: Anchor of a Business Vision and Strategy
Regardless of its size, every organization has two major challenges: the first is to design, implement, disseminate and execute its business strategy, and the second is to define the indicators to measure compliance with the strategy and the individual contribution of its collaborators.
The first challenge begins with the definition of the mission, derived precisely from its reason to exist, from its business perspective to create value. Likewise, a vision – which is the point where the organization wants to be at a given time – is established. Another very important pillar are the values, that is, the principles that guide the relations among collaborators, customers, suppliers and strategic partners. The strategy is made up of the way in which that aspiration is materialized and how the components of the business model are executed.
The concept of the strategy implicitly involves two aspects: 1) to achieve the specific strategic objectives that the company has defined as a guide based on its mission, vision and analysis of its current and future situation, and 2) decision-making and the definition of the plan of action during a certain period of time.
It is very important that the company’s mission and vision are well understood and disseminated from the highest level to the bottom of the organizational pyramid; that is, that all employees make that mission and vision theirs so they can embody and model the behavior required by its organizational values. A well-articulated vision cannot make its transformative power a reality if it is abandoned in a corporate planning folder. Therefore, companies with the best work experiences have the ability to execute what they propose.
It is essential to anchor the mission, vision, values and strategy in clear objectives, actions and conducts, in responsible people, delivery dates and sense of timing that yield the best results.
Grupo Nacional Provincial (GNP), a 100 % Mexican insurance company with a presence in the market for more than 112 years, has been inclusive, meticulous and disciplined in the design and implementation of its mission, vision and values, and thus, in the execution of its strategy. In 2014, it redefined the direction of the company and launched its new Vision 2019, with which it wants to be the best in three dimensions – economic growth, unsurpassed service and a vanguard institution with two focuses, in people and in business, and in three stages: win market share, consolidate market leadership and set the standard in the industry.
A key element of follow-up has been the annual strategic planning process and its model of government, with which the key business decisions are administered by the Management Information System (MIS). The MIS integrates organizational intelligence in order to have a sufficient capacity for analysis of what happens in the business and how things are going in the direction of strategic initiatives.
The GNP has established parameters for the members of the organization by defining and aligning performance indicators from the first level (General Direction) to the supervisory level (a level below middle management), involving more than 1,700 employees, who adopt what has been defined as a performance contract.
The second challenge of any organization, as already mentioned, is to define the metrics to determine compliance with the strategy and the individual contributions of its employees.
Without clear, measurable and achievable indicators, the vision and strategy would be just a dream. Instead, having a management methodology with goals allows a distinctive culture of performance to be cultivated that represents a competitive advantage for the organization.
METHOD OF THE INDICATORS
In GNP, every year performance contracts are signed that include three to seven indicators per employee. At the close of the financial year, they are converted into a key element in the individual performance assessment.
The definition of the indicators is based on a top-down process, once the annual operational plan is approved.
The best way to define the indicators and their respective relative weights is by forming committees of design and approval of the performance contracts, which have as their main function to ensure the alignment of the objectives and the expected contributions of each employee.
Figure 1. Example of contract
There are different types of indicators, including:
All indicators have a relative weight on a base of 100, a goal or expected plan, and ranges of compliance that depend on the aspirations of the organization. These ranges are used to reveal the expected levels of each indicator and the consequences arising from the results. The ranges are based on a scale of 1 to 5, where 3 is to meet the expected goal, 1 is to be significantly below and 5 far exceeding the goal.
During the annual exercise, each employee and immediate supervisor are responsible for managing the individual performance and making the necessary adjustments to the performance contracts, according to the needs of the company and with the approval of the committee that evaluates the changes.
Figure 2. Annual cycle of design and approval of performance contracts.
Over time, this model has compiled a database of more than 1,200 indicators and progress has been made toward a culture of individual measurement and alignment of the objectives with the contributions of each employee.
The main challenges in implementing the model are:
Given these challenges, it is recommended that communication campaigns are prepared and that directors display strong leadership, to reinforce the importance of the model and detect and constantly update the indicators that reveal the contribution of each collaborator.
RESULTS
Having established this system of Design and Approval of Indicators in GNP has allowed the alignment of individual efforts and, therefore, the building of the platform on which opening new opportunities on a large scale can be contemplated, meeting the challenges of the market and, mainly, achieving the goals of Visión 2019.
The impact on the GNP staff has been very satisfactory, as evidenced by the results of the performance survey, which measures the satisfaction and health of the organization in three dimensions: alignment, implementation and renewal of the strategy, and in nine components.
The survey is conducted every year. More than 90% of the employees evaluate direction, environment and values, accountability and motivation, among other components. These components show growth in the following manner:
CONCLUSION
To successfully implement the design methodology and implementation of the mission, vision, business strategy and definition of the performance indicators, the involvement and commitment of the General Director, the leaders of each area and the employees is essential. The system must be sponsored and promoted by the General Director, and executed by his/her management team, so that the entire organization adopts it and carries it out.
It is essential that the leaders of the areas routinely manage the performance of their employees, for which the performance indicators for each one must be updated, depending on the needs of the company.
References