Performance Management Framework and Organizational Alignment

Strategic Alignment in Performance Management

Alignment is a state in which the key components of an organization—its people, customers, strategy, and processes—work in collaboration to provide its primary purpose, thereby increasing the value for stakeholders. For business companies, this means growth and profit. For long-term sustainability of a performance management framework, it is critical to ensure that it continues to be relevant at all times. This implies that all components of the performance management structure must always reflect the present state and future interests of the entire company. This requires ensuring that the performance management structure and performance indicators both accurately depict the present state of business strategy and properly signify the interests of all divisions (Chingos, 2002).

During the alignment process, the performance management structure becomes an essential business management device. The key to maintaining this level of relevance is staying open to change. When the business environment changes—whether internally or externally—a change in functional and business strategy usually becomes necessary. In turn, this may require a change in performance objectives and measures. Alternatively, performance indicators that prove unhelpful in managing the company and strategy should be modified as needed. Maintaining this advanced state of alignment ensures that the performance management structure continues to be relevant to organizational needs.

Organizational Performance Philosophy and Inventory Management

The organizational performance philosophy proposed here employs a pull system to avoid overproduction. A prevalent issue in many industries is stagnant and damaged supplies. Another problem is orders prepared before they are guaranteed. A pull system indicates that demand drives the company. This system starts with the client's order. With this philosophy, the organization produces only enough products to satisfy client orders. One advantage of this system is that there will be no excess stock requiring storage, thereby decreasing inventory levels and reducing carrying and storage costs (Kumar, 2011).

However, a major drawback of this philosophy is the high possibility of encountering ordering problems, such as a supplier being unable to deliver promptly. This leaves the company unable to fulfill orders on time and contributes to customer dissatisfaction. An example of a pull inventory system is the Just-In-Time (JIT) program. The goal is to keep inventory levels to a minimum by maintaining only enough stock to meet customer demand—no more and no less. The JIT program removes waste by decreasing the amount of storage space required for inventory and reducing product storage costs.

To identify the appropriate skills required within the company, a three-step job analysis process will be conducted.

Job Analysis and Skill Identification

This step involves describing current workers in terms of their experience, skills, knowledge, and how they operate together to accomplish tasks. This information is then mapped onto the strategic plan to identify the knowledge and skills needed for expected new functions. Similarly, the organization must consider how present work could be restructured to make the best use of both current and future workers.

This step identifies any gaps between the abilities and skills current workers possess and the abilities and skills employees need to meet future business goals. To ensure a comprehensive understanding of the new function from all perspectives, current workers should be asked what they believe the function would include. The following table outlines examples of needed skills, knowledge, and qualities:

Examples of Needed Skills, Knowledge, and Qualities

Measuring Employee Skills and Competencies

The process begins by using a general salary range to help determine budgeting needs and whether potential applicants fall within budget constraints. A job assessment may be completed, whereby tasks and their corresponding salaries are ranked. It is vital to consider the significance of critical skills and knowledge for each function, evaluate roles, and rank the new position on the pay scale accordingly. The external market provides another useful source for determining salary. This involves reviewing similar roles in other companies by examining job postings online, speaking with professionals in the industry, reading professional advertisements, or purchasing salary surveys.

The Skills Self Assessment Tool (SSAT) is an interactive, IT-based scorecard that managers use to evaluate their employees against the needed skills, behaviors, and knowledge to succeed in their job. The device is used to map skill gaps and coaching needs of individuals, teams, divisions, and the entire organization. The SSAT functions in two ways. First, it allows the organization to benchmark and evaluate employee growth over time against the skill sets required for their positions. Second, organizations can use the information produced to evaluate and determine strengths as well as gaps within particular positions, across teams, divisions, the entire company, or industry.

Aggregated information on main areas of weakness provides essential evidence to inform the organization's workforce development strategy. This strategy can then be applied through specialized coaching and personalized support. A reassessment after a period is an effective way of calculating the success of such methods on both individual and organizational performance (Guerra-López, 2008).