performance evaluation

Performance evaluation based on balanced scorecard method

Evaluating the correct performance of the organization leads to the achievement of high peaks of excellence. Strategy It is the lifeline of the organization, because in every organization, it is this strategy that determines how the organization achieves its goals, missions, and visions, and it can place the organization in the lofty peaks of excellence on the one hand, or it can make the organization on the other hand even though a suitable strategy has been defined.

Inadequate evaluation of the data extracted from the personnel and processes is one of the main reasons that despite the proper definition of the strategy can lead to deviation of the organization from its goals. This proper assessment can be done for several reasons:

• Focusing on evaluating personnel instead of evaluating the system and its processes
• Lack of correct definition of processes in the organization
• Failure to use appropriate methods for performance evaluation

Focus on the system and its processes

"An organization that focuses on personnel evaluation is approaching its death."

William Edward Deming, one of the founders of total quality management

When the focus on personnel evaluation is high, personnel either sacrifice efficiency for effectiveness or sacrifice effectiveness for efficiency. Efficiency is a concept that is expressed for the amount of cost and resources spent to perform a unit of work. Effectiveness is also a concept that is expressed to pass the necessary work standards.

So, when it is said that the personnel lose efficiency, it means that they spend a lot of resources to do the work effectively, and when we talk about the loss of effectiveness, it means that the personnel may pay a lot of money to do the work. But even the work cannot pass the necessary standards.

Based on this, performance evaluation should be changed from personnel to process performance evaluation in order to improve efficiency and effectiveness in the first place and in the second place to enable continuous improvement in achieving goals.

Definition of organization processes

It is often seen in Iranian organizations that they talk to the personnel of the organization about a process (for example, purchasing), they say that we do not have a duty in this process and it is the responsibility of the purchasing unit. When we talk about the process in an organization, it means that a set of units work in a specific process to achieve a common goal, and it is these processes that form the components of the system.

So, in order to know how the system works in achieving its goals based on strategies, we must talk about processes and how to evaluate them using appropriate indicators.

The right way to evaluate performance

Apart from the fact that many performance evaluation methods are based on personnel evaluation and should be avoided, many other process-based methods focus on purely financial indicators.

In the performance evaluation method based on balanced scorecards, the strategy is divided into 4 perspectives:

• Financial
• Customers
• Internal processes
• growth and learning

In this method, for each of the above-mentioned perspectives, indicators are defined in order to achieve goals based on the strategy specified by the organization's strategic management, and the progress of each indicator is determined by the owners of the process during specific time periods.

The competitive advantage of this, among a multitude of measurement methods, is to consider the organization in 4 perspectives that have a logical sequence. In this way, the improvement of growth and learning processes leads to the improvement of the internal processes of the organization, the improvement of the internal processes of the organization leads to the improvement of communication with the customer, and the improvement of satisfaction and communication with the customer leads to the improvement of financial indicators.

On the one hand, the method provides the possibility of regular reports on the advancement of indicators, and it is possible to monitor the effectiveness of actions and activities to advance the goals, and if the actions are not effective, alternative decisions can be made quickly.

According to the reports of Bain and Company, organizations adopt the method of parallel score cards due to the following reasons:

• Clarifying or updating the organization's strategy
• Convert strategy goals into long-term goals
• Observation of the main elements of the strategy
• Allocating the right resources to strategic goals
• Facilitating change management in the organization
• Monitoring the performance of the organization's processes
• Increasing the understanding of personnel regarding the organization's strategy

Modirfa services in the field of performance evaluation

Noor Management Consultants Group (Modirfa) will be by your side in order for organizations to achieve their goals in the context of strategy with the proper establishment of the appropriate performance evaluation system for your organization.

First phase: Preparation

At this stage, after the general knowledge of the organization, it is necessary to define the goals, dimensions and territory of the system and all the stakeholders have a consensus and agreement about it. It is especially necessary for the senior managers of the collection to accompany this process because they are the direct beneficiaries of the process.

If the processes of the organization are not defined, at the same time as the continuation of the phase, the processes of the organization will be identified during numerous interviews, and based on the identified processes, the key performance indicators will be determined and explained in the next steps.

Also, the project implementation team is formed and the requirements for starting work are provided. At this stage, the initial training is also held for the team. In general, the following activities take place at this stage:

• Detailed project planning
• Formation of required working groups
• Primary education
• Examining the directional elements of the organization (mission, vision and strategies of the organization)

Required training courses:

Senior managers:

• The training course titled Description of BSC Colleges

Experts:

• Training course on how to prepare a strategy map
• A training course on the implementation of strategies using the BSC model

The second phase : Strategic goals and strategy map drawing

In this stage, after compiling the strategic goals and objectives, strategic goals are determined that enable the realization of the organization's mission, vision and strategies. Then, by considering the cause and effect relationships between perspectives and strategic goals, the strategy map of the organization is developed. Therefore, at this stage, the following activities are performed.

Step 1- Definition of strategic objectives (strategic objectives mean the definition of 2-3 year goals of the organization in the form of financial and market terms according to the vision of the organization).

• Examining and studying the vision and mission of the organization
• Examining and studying plans and documents of the organization's strategy and analysis of stakeholders
• Interviewing senior managers of the organization in order to obtain their opinions and views
• Defining and approving the strategic goals of the organization

Step 2- Identification and definition of strategic themes

Strategic themes are key processes for the realization of strategies.

Step 3- Definition of strategic goals

After drafting the strategy, it is necessary to divide this strategy into smaller components.

This component is called goals. Objectives are the main parts of strategy.

• Defining strategic goals and assigning the above goals to each of the four perspectives of the balanced scorecard
• Determining the key factors of success (determining the critical factors of success) and achieving and classifying them in the achieved aspects.

Step 3- Draw a strategy map

In this step, a strategic map of the organization's macro strategy is drawn. which will show how goals interact with each other and affect each other.

The strategic map is drawn using the information of the previous step and the balanced scorecard framework. Each of the goals should be placed in one of the four parts of the BSC model.

• Creating a set of balanced criteria to achieve goals
• Determining and understanding the cause and effect relationships between strategic goals and preparing and compiling the initial model of the strategy map
• Holding a one-day workshop with the participation of all senior and middle managers in order to review the strategic goals and strategy plan and agree on it.

third phase: Translating the strategy into operational terms and defining metrics and setting quantitative goals and identifying, delineating and prioritizing the required key initiatives.

In this step, the measure or measures are determined for the strategic goal determined in the previous step. The strategy management system should include a set of forward and backward metrics. Different metrics can be extracted at this stage, and it is necessary to prioritize and refine these metrics according to some characteristics. Then, a birth certificate is prepared for the selected measurements, which includes information about the measurement and how to collect information about the measurement. Quantitative goals are used during planning to determine the results that the organization must achieve, and during evaluation, the measurement results become meaningful. At this stage, quantitative goals are set for metrics. Also, at this stage, strategic measures or initiatives necessary to realize the goals and vision of the organization are determined. The purpose of this stage is to develop and prioritize initiatives that help the organization to achieve its goals. The necessary activities at this stage are as follows:

• Facilitating the determination of criteria
• Preparation of birth certificate of measures
• Facilitation of setting quantitative goals
• Facilitating the preparation and compilation of a list of existing initiatives in the company and the allocation of the aforementioned initiatives to strategic goals
• Facilitating the elimination of non-strategic initiatives and, if necessary, identifying and defining new initiatives
• Facilitating the prioritization of strategic initiatives

The fourth phase: Performance reporting system and review of strategies

The main steps of this stage are:

• Designing a performance reporting system
• Conducting performance analysis meetings and revising strategy maps
• Creating a strategic dashboard

Finally, annually, team consultants will be at your service to re-engineer indicators and redefine indicators to create continuous improvement in order to achieve goals based on your organization's strategies.