1. Managing Performance

Strategy & Execution Speed & Balance Senior Management Forum Strategising for the New Business Landscape 25 April 2001

Strategy & Precision in Executing Speed & Balance in Managing Business Growth

Superior Execution Inseparable from Strategy “Most businesses with mediocre strategies will do well if you execute well. A bold strategy executed poorly is very bad. Therefore, you need relentless follow up on execution.” Chairman, global food company “I think a great strategy by itself, without efficient execution, will fail. A bad strategy with excellent execution will probably do better.” CFO, Electric Utility.

Performance Ethics Mc Kinsey Survey Must Do’s - To be world class in all 5 areas Mission

4.3 Exceptionally strong embracement of the organization

Targets

3.9

Organization 3.4 Performance 3.0 Feedback Consequence Management

Unique clarity of purpose Organization units and targets could be more performance oriented

1.9 World Class Target = > 4.3

Performance Ethics Mc Kinsey Survey Mission

4.3

Targets

3.9

Organization 3.4 Performance 3.0 Feedback

Consequence Management

1.9

Basics are clearly in place, but links to individual performance need reinforcement. Need to further strengthen coaching & mentoring. We are not managing the non performers. There’s low consequence of not performing.

Performance Ethics Mc Kinsey Survey Choose one lever from each group to be distinctive at. Distinctive = 4.5

Coordination & Control

2.2

3.4

3.7

Motivation

Values

3.7

Incentives

3.5

Operational

Financial

2.8

People

Common = 2.5

Opportunities

Best Practice = 3.5

Coordination & Control Strength & Weaknesses Distinctive = 4.5 Best Practice = 3.5

People Common = 2.5 +ve Emphasize on training -ve Coaching & development not 2.8 3.5 3.7 common, prefer formal feedback. P F O Financial +ve Adoption of VBM & benchmarking; -ve Lack of rigorous financial KPIs Operational +ve Comprehensive operational targets; -ve Weak link to individual performance and rewards

Motivation Lever Strength & Weaknesses Distinctive = 4.5

Incentives +ve Attractive in Malaysian context; -ve Limited use of non financial incentives

Best Practice = 3.5 Common = 2.5

2.2

Opportunities +ve Abundant learning opportunity for staff; -ve Not all opportunities given to staff Values +ve Focus on contribution to the country -ve Attract international talents

I

3.4

3.7

O

V

PMS Survey - Planning +ve +ve ? -ve

Our organisation has clear business goals My performance expectations are linked to the business plans I’m clear about the results I’m expected to achieve in my job. My Supervisor and I plan my performance expectations at the beginning of my new performance year.

PMS Survey - Coaching +ve

+ve ? ? -ve

My immediate supervisor is accessible and approachable when I have work related issue to resolve or need directions in decision making. Gives me the information or assistance I need to accomplish my performance expectations. My Supervisor gives me feedback on how I’m doing towards achieving the results. My Supervisor gives me feedback on how I’m doing with regards to the behaviours expected. My Supervisor and I hold progress reviews to discuss my performance in my job at least two times a year.

PMS Survey - Reviewing +ve ? ? -ve

I know what I need to do to meet expectations in my job Our organisation has a fair system for evaluating an employee’s performance. I have a clear understanding of how my performance is assessed My supervisor and I worked together to design an individual development plan for me

PMS Survey - Rewards +ve ? ? -ve

Better performers are rewarded more than average performers. Compensation at my company motivates me to work hard on my job. When things go well in my job, my contributions are recognised often. Our current pay system encourages employees to work as a team.

What Gets Measured, Gets Done; What Gets Reviewed, Gets Managed; What Gets Feedback, Gets Done Well; What Gets Rewarded, Gets Repeated.

Managing Strategy & Managing People Are Inseparable • Why people is our most overlooked lever? • Why our practices show that we are separating the two issues? • Could an increase in opportunities affect morale and retains superior performers?

Performance Distribution 99/00 3500 3000 2500 2000 1500 1000 500 0 5

4

3C

3B

3A

2

1

Above Average Performers ranges from 9% to 34% among OPUs.

Under Performers - Execs Percentage of below 3B Performers by Groupings 12% 20%

68% 1st Timer

Consistent

Yoyo

•1.3% (65 staff) of the executives’ population •Rating 3C is 1.2 % •Rating 4 is 0.14% •First Timer (FY00) 68% •Consistent Under Performer - 20% •Yo-Yo Syndrome Performer - 12%

Under Performers Non Execs Percentage of Below 3B Performers by Groupings 18%

58%

24%

1st Timer

Consistent

Yoyo

•1.6 % (116 staff)of the Population •Rating 3C is 1.5 % •Rating 4 is 0.1% •Rating 5 is 0.04% •First Timer (FY 00) 58% •Consistent Under Performer - 24% •Yo -Yo Syndrome 18%

Total Number of Staff Resigned by Year Should our retention rate depend so much on the economic situation? 250 4.5%

3.8%

200 Total Staff Resigned

4.4%

150

1.7%

1.5%

1.5%

100 50 0 1995

1996

1997

1998

Years

1999

2000

Exit Interview Findings Period 1/6/ 2000 - 31/1/ 2001 Exit Interview Findings by Category 5% 24% 54% 17%

Better Job Offer Career Advancement Personal Reasons Further Studies

• Blaming Culture • Lack of Coaching/ Counseling • Lack of recognition • Management not transparent • PMS not properly implemented • Career development not taken seriously • Salary not competitive

Hay Compensation Report (June 2000 Base Date) Total Remuneration - Executives Annual Ringgit Malaysia (RM 000)

(Data Consolidated From 87 Organisations) 520 480 440 400

AVG MED

360 320

PETRONAS

280 240 200 160 120 80 40 0 200

300

Line 1 P25

400

500

P90 P10

600

700

800

P75 AVG

900

1000

1100

1200

MED PETRONAS

Hay Compensation Report (June 2000 Base Date) Annual Base Salary - Executives Annual Ringgit Malaysia (RM 000)

(Data Consolidated From 87 Organisations) 400 360 320

AVG MED

280 240 200

28

160 120 80

2021

40

22

23

24

27

26

25

29 PETRONAS

0 200

300

Line 1 P25

400

500

P90 P10

600

700

800

P75 AVG

900

1000

1100

1200

MED PETRONAS

Staff Movements by Business Units Total staff movements in year 2000 is 572. Only 11% of the executives are transferred to other jobs. 150 100 Total Number of Staff

50 0

E & Gas Petc

Total No of Staff 119

75

114

Oil Mari TRM Educ HCU 83

14

Business Units

10

16

141

Is The Way Forward = Going Back to Basics?

Creating High Performance Team To create a high performance team, we must replace typical management activities like supervising, checking, monitoring and controlling with new behaviours like coaching and communicating. Ray Smith, CEO, Bell Atlantic

I’m in a rut. They throw the ball, I bring it back. They throw it again, I bring it back again. What’s the point of it all?

Leadership A vision is only a dream if it does not have the commitment and support from the people involved. You can only be as good as your people

For The Want of Feedback For the want of feedback, residue accumulated. Because residue built up, trust was lost. For the want of trust, working together became difficult. Because working together became tedious, decisions were avoided. For the want of making decisions, the business failed. All for the want of feedback. Thomas G. Crane

Feedback 360 Feedback and Mentoring are the two most useful learning strategies to achieve developmental objectives apart from Job Rotation and Special Project Assignments. 1998 International Survey by Linkage International, 1998

Feedback 360 Feedback and Mentoring are the two most useful learning strategies to achieve developmental objectives apart from Job Rotation and Special Project Assignments. 1998 International Survey by Linkage International, 1998

Coaching We must see people in terms of their future potential, not their past performances.

Great Job, As a reward, I’d like you to prepare the other 65 reports

Developing Talent Pool “A single conversation across the table with a wise man is worth a month’s study of books.” Chinese Proverb

I realise, I’m being groomed as your successor, Sir But is all this absolutely necessary?

Mentoring The art of Mentoring …. Passing along the wisdom Learning is not attained by chance, it must be sought for with ardor and attended to with diligence. Abigail Adams

What is it Bob? You seem a little withdrawn today

Getting the soul at work We need to see employees as people with lives, ideas, dreams and fears.

Lighten up Ted, I know you are in here somewhere

The Future Depends on Us

Thank you