Review of the Performance Measurement Systems and Management Practices

Businesses nowadays are under a lot of pressure, and businesses must improve their effectiveness and efficiency, adopt better business strategies, and continue to be effective while using fewer resources in order to be competitive. The topic of performance improvement and the function of performance management is crucial. The Best Practice Approach, a set of universal management improvement techniques, is used by British Oil Company to enhance the company’s performance globally. British Petroleum Company made the decision to implement new safety and performance-enhancing measures, like Improve Performance and Reward, in the wake of the hazardous oil leak on April 20, 2010. The firm would Improve Performance and Reward. The company would measure performance and reward based on safety, silent running, and operational risk management. They also had to include New Leadership: This was seen to be essential to improve the Company’s industry safety record. The issue of safety is to be driven from the top and not just from the department. Otherwise, the necessary change would not happen.

Introduction

This report aims at presenting a plan to assess performance and to provide management decision support. Management by use of value streams model is developed to assess company’s performance. This process involves a set of related and interactive activities that produce outputs from inputs, that is, the process of transforming the material into products and services in the British Oil Company that make it competitive in the world. The company’s activities, such as operations, are considered to add value, but other processes also include non-value adding activities. A value stream consists of value and non-value adding activities that make the transformation and performance improvement possible. The information on the effects of development intervention also is reviewed through this report, analyzed and synthesized. This covers a broad scope of qualitative and quantitative methods of assessing the effectiveness of development interventions in the UK Petroleum Company.

British Petroleum value streams and the competitive basis

The importance of the Value streams in business assessment is to enable efficiency and effectiveness in value chain performance, by spearheading the improvement in the promotion, and maintenance of a united, universal, rational business process structure and related reference models for value streams management. The recent focus of Value Chain Group research is on Business Agility. Special focus should be done specifically to methods and tools to ensure that

Business company’s objectives are met in business agility through Value Chain Management Value delivery and business flexibility must be evolved through concepts of Value Chains, Value Streams, and Value Delivery Processes. Value Chain Assessment or Value Stream Mapping are useful tools for working out on how the company can create the greatest possible value for its customers, as well as their best way for profit maximization (Wysocki, 2004).

The Value Stream Model is as shown below

Strategy & Mission

Corporate Planning

Product Development Chain Supply Customer Relations

The Execution Process

Market Research Develop Acquire Build Fulfill Brand Sell Support

GOVERN PROCESS

Finance & Information Assets & Lifecycle Rules

Performance Technology Personnel & change Compliance

Performance Measurement tools for the Company’s system

Jelali (2013). For the British Oil Organization to determine better value stream opportunities which will improve the competitive process, criteria must be established on the things that should be included and those that should not be considered as a value chain opportunity. This process is the one lacking in most companies like British Oil firm, which denies them a competitive advantage in the world. Value is to be determined both non-quantifiable and quantifiable. The company must define value regarding decisions based on costs effective benefits such as in price, time, quality, and innovation and to show the decision structure. The Subjective knowledge of value should be converted into an objective knowledge by use of data analysis. The purpose of assessing the value chain and value delivery process is to sense the operational performance and market dynamics, which assures the business agility and this drives a market distinction by addressing critical areas of necessity for the company to become more competitive as well as mature Enterprise.

According to (Sherif et.al, 2008) reinforcing the value streams the company’s management needs to understand the Value Chain process well. Value Chain is a model of how the company gets raw materials as inputs, adds value to those materials via various processes and sells the finished products to customers. This is the generic value-adding processes of the firm.

Below is the value chain model

Example of a Value Chain model

Complexity

Strategic

Tactical

Operation

Activities

Activities

Description of the Value Chain model.

This model consists of horizontal chain dependent processes which when adapted by the British firm can develop benefits and value to the end consumer. These processes include; 1. Strategic level, which involves all the activities that govern, execute and plans used for gaining competitive advantage. 2.) Tactical Level; this is the second level of this model which consist processes strengthening, implementation of strategic objectives through keen decisions and configurations. 3.) Operational Level; this level establishes links between business-specific activities and the value chain. 4.) Activities Level; is a synthesis of the operational processes, with each activity being specific to the company that may be shared between partners. 5) Action Level; this last step of the model consists of Individual work instructions which cannot be decomposed as pointed out in (Jelali, 2013).

The performance measurement systems should engage the employees and customers on discussions and conversations over the progress of the company. The employees are allowed to discuss the performance of the management, the weaknesses portrayed and the strengths of the leadership. Customers also evaluate the quality of the product, and their views are required to the firm. This conversation helps the company to know the progress and conduct the necessary Changes required and improvement required from the public opinions. Use of visual war-rooms and dashboards which integrate end-to-end performance information of the Company along the value streams provides an ample environment where the data can be displayed, discussed and implemented. This process keeps the company on toes to improve the performance towards customer’s satisfaction and maximize the profits.

Jelali (2013), highlights that the Performance Measurement System of the British Petroleum should aim at integrating the company’s activities across various managerial levels and processes for balancing many indicators such as cost, flexibility, time and quality. The process involves the individual performance measures and the set of performance measures as an entity. The individual performance measures are the vital signs of the organization which measures how well the company should achieve a specific goal writes (Bacon, 2008).

The performance measurement system as an entity examines the company beyond financial statements by noting the cost-effective relations which could explain the performance of the company’s production and operation functions. It is used to quantify both the effectiveness and the efficiency of operations which helps in tracking the performance of an organization. The PMS helps the company internal and external communication regarding its performance, facilitates the managers in tactical and strategic decision making. This is important also in capturing knowledge in the British Petroleum and facilitate in organizational conversation and learning.

Analyzing the performance management Practices of British Oil Company

According to (Ramanathan, 2003) the assessment on Human resource models, British Oil Company, appears to be adopting the best approach in improving performance and reward. It is improving safety culture environment through best practices approach and deploying resource-based view approach for new management leadership. British Petroleum adopted best-fit approaches based on organization’s strategy and linking this to human resource strategy of improved employee performance. Furthermore, the British Company employs the best practices approach in creating a safety department thereby relating this to improve the performance of its operations. This process was also adopted by internally appointing a new leader to improve performance when a new CEO Bob Dudley was appointed. However, there were some management weaknesses identified in British Petroleum which include: lack of risk evaluation, inadequate training on safety procedures, lack of employee’s voice, poor leadership, lack of corporate culture, and poor performance management systems. This needs to be rectified through proper analysis of management performance practices measurements as discussed below.

The main significance of analyzing the performance measurement management processes, by ensuring that they are working properly is to tighten the relationship between strategic business goals and the daily actions. The efficiency and effective goal setting and a method to track management progress and identify barriers contribute to success and better results. The general tracking progress against performance objectives also provides a chance to identify and reward employees for their merited performance and effort that they have contributed to job productivity and satisfaction. This is because the employees desire to feel successful, to do well at their job and witness that they are making a valuable contribution. For this to happen, they need a clear understanding of individual objectives and how they fit into the larger company such as British Petroleum Company argues (Sherif et.al, 2008).

To optimize the review of performance management practices, it is important to set and evaluate goals. Setting goals are the fast steps of a company to identify the key job expectations and responsibilities which is the main guide for an organization. Goals set should both address what is expected for the BP Company, and how it will be achieved. The goals should be specific, Measurable, Achievable, Realistic and Timely bound (SMART). The second step in performance management practices is planning. The performance planning sets the stage for communicating objectives/goals and setting an effective plan to guide the employee to successfully achieving the goals. Performance planning is a collaborative process between the leaders and employee though with some non-negotiable elements. The process ensures that there is an ongoing goal setting, performance planning, performance monitoring, feedback, training and supports the creation of the performance appraisal, which promotes processes related to rewards, learning and improvement (Ramanathan, 2003).

Another step in this process is the information gathering from various sources. Gathering performance information from divers of sources improves the objectivity and ensures all factors impacting management performance are looked at. This information should include important data such as call records, sales reports, and end-month reports. Other important data include results of personal observation, feedback from others, documentation of ongoing dialogue, records of any environmental factors impacting the performance. Many reviews on performance measurement also include an employee self-evaluation. Another step which is very vital to any organization is documentation. This involves note taking that must be consistent and should include all significant occurrences, both negative and positive.

Waltz (2003), argues that the documentation process is important to support performance plans, decisions, and for sharing purposes. The note-taking helps in follow-up processes and facilitates the manager to keep records for each employee with performance activities, successes and the performances that require improvement. An ongoing dialogue and feedback is a process which is equally important. The customer’s and employee’s feedback delivered in time enhances learning and provides a chance to make necessary accommodations to meet the set goals. Regardless of the frequency of management meetings, the attitude towards ongoing feedback is very important in performance management measurement. When there are an organizational recognition and support for the need to build effective feedback into the company’s daily activities, the environment will encourage development and drive towards goal-oriented performance improvement. Also, the automation of the best practices with the technology is necessary too. This is because an automated system ensures that the performance measurement management process is built around world-class known best practices which are efficient, easy to complete, and consistent across the whole BP company.

The analysis of the performance measurement interventions.

The system approach to performance measurement has the tools to bring transparency to the objectives and means of different participants in the production process of a company. It is the identification of key performance indicators along the input, output and outcome indicators and ensure efficiency and the effectiveness of the internal company’s process and also covers the accountability to the customers and other external stake holders. The system measurement or benchmarking allows the company to evaluate objectively whether the changes done to the firm is necessary and whether the processes lead to better performances results. The results of the assessment can help as an input for organizing the system’s changes or improvement. It can also be used as a forward mechanism to predict trends, anticipate needed changes and fore-tell future environments as narrated in (Waltz, 2003).

Model for a system of management for company improvement

Feed forward

Customer-focused improvement

Employee improvement

Measurement benchmarking

Leadership

Process improvement

Process

Input output

Feedback

Copeland (2005) asserts that the leadership in a system which is strategic in nature, it helps to create and maintain an atmosphere of open communication, information sharing, trust, and integrity. Employee involvement is another system performance measurement that develops a spirit of cooperation within the company and counts the collective creative contribution of each employee. Process improvement is another approaches also which consists of the efficiency and the effectiveness of the company’s management and processes that influence the customer’s quality of services and products. Customer focus in the model, deals with gaining a better knowledge of customer’s requirements and using this understanding to providing satisfactory product and services.

To improve the management performance measurement of the British Oil Company, it’s important to get the underlying causes of the problems and obstacles in the business. Unless one gets to the cause of problems as done in BP, the problems continue to resurface. The first step in this process is identifying the most critical obstacle. Once enough information is gathered about the root-cause and where the performance issues are, then the process of analyzing the cause of the problems. This process can help in the problem-solving procedure in British Petroleum.

From the extreme ups and downs of the British Oil Company’s financial markets during the past decade, senior directors and investors are redesigning the way they define the assess the performance. This can be done by constructing a comprehensive performance analysis that measures the long-term and short-term value outcomes and how to improve. This also helps the management to balance the short-term and long-term creation of value for the customers for the board members and investors to determine whether the policies put in place and the company’s price is on target as pointed out in (Copeland, 2005).

In conclusion, the process for effective and efficient performance management in any company is not always an easy one, however, progressing towards a long-term goal by making realistic changes, progressively, will bring about significant outcomes. An effective process should involve the setting of SMART goals and communicate effectively to stakeholders and understand the value and purpose of every business process. Planning, ensuring the ongoing process, gathering the information and documentation are some basics in performance measurement of a company. The use of models, a management based processes system is a complicated but rewarding process; the model developed for performance evaluation reveals interesting results, with positive results and Value streams based strategy.

References

Wysocki, R. (2004). Project management process improvement. Boston: Artech House.

Evaluation of the Sea Grant Program review process. (2006). Washington, D.C.: National Academies Press.

Sherif, M. and Khalil, T. (2008). Management of technology innovation and value creation. New Jersey: World Scientific.

Business Process Management of Japanese and Korean Companies. (2009). World Scientific.

Power of performance management. (2001). New York: John Wiley.

Mukesh Kumar. And Charles, V. (2014). Business performance measurement and management. Newcastle upon Tyne, England: Cambridge Scholars Publishing.

Bacon, C. (2008). Practical portfolio performance. Chichester, England: Wiley.

Bertonèche, M. and Knight, R. (2001). Financial performance. Oxford: Butterworth-Heinemann. Ezzamel, M. (1994). Business unit & divisional performance measurement. London: Academic Press.

Waltz, J. (2003). Management, measurement & verification of performance contracting. Lilburn, GA: Fairmont Press.

Knight, J. and Satchell, S. (2002). Performance measurement in finance. Oxford: Butterworth- Heinemann.

Measuring and improving infrastructure performance. (1995). Washington, D.C.: National Academy Press.

Fitz-enz, J. (2009). The ROI of human capital. New York [u.a.]: AMACOM: [s.n.].

Islam, S., Islam, S. and Manzoni, A. (2009). Performance Measurement in Corporate Governance. Heidelberg: Physica-Verlag.

Mattox, J. (n.d.). Learning analytics.

Cadle, J., Paul, D. and Turner, P. (2015). Business analysis techniques. Swindon: BCS The Chartered Institute for ITFord, J. and Kozlowski, S. (n.d.). Improving training effectiveness in work organizations.

Copeland, T. (2005). Outperform with expectations-based management. Hoboken, N.J.: Wiley.

Anheier, H. (2013). Civil Society. London: Taylor and Francis.

Marr, B. (n.d.). Key performance indicators for dummies.

Bragg, S. (2012). Business ratios and formulas. Hoboken, N.J.: Wiley.