Design and Implementation of Performance Management Systems, KPIs and Responsibility Centers: A Case Study
Prabhu, Dwarkanath, Hegde, Sateesh, South Asian Journal of Management
Responsibility centers, balanced score cards, EVA, performance management system, KPIs, etc., are organizational systems of great significance for creating corporate performance. Glories of successful corporate transformations using these systems have been well documented and studied in depth. However, there have been also multitudes of partial or total failures of such organizational transitions which are often neglected by researchers. Study of failure cases can provide the control group necessary to test the critical factors influencing successful transformations which are often credited to top management involvement, charismatic leadership, capacity building, etc. Moreover, most case studies are about large, especially fortune 500 companies, usually headquartered in the US or Europe the lessons from whose experience may not be applicable to Asian companies, particularly those in the SME and MME sectors. This paper describes and" discusses a case study of a small Indian enterprise in order to highlight the issues required to be considered when designing and implementing organizational transformation programs for smaller Asian organizations.
As Binoy Roy, CEO of TechEdge, walked out of the meeting room followed by the Vice Presidents of the different departments, the expressions on their faces betrayed various feelings ranging from relief to frustration. It is not easy to develop a consensus even among the top management team on such a critical issue as performance management.
TechEdge is a system integration company in core business of providing IT solution and services for multiple industry verticals. The company partnered with various technology vendors in various capacities such as System Integrator, Value Added Technology Partner, Technology Consultant, etc. It is a B2B business model. TechEdge sold their technology consulting services, 'Business Technology Optimization' services, project implementation services and maintenance services for complex information technology infrastructure. The main departments of the company are sales, consulting, support and services, back office operations, and finance and software. The formal structure of the company is very lean. Each department is headed by a Vice President who is assisted by managers who in turn handled teams independently. The branch offices across die country has a similar structure with the branch manager (a VP level position), reporting directly to the CEO.
All the Vice Presidents are at the same level in the hierarchy, but at different payscales depending on their experience and perceived importance or criticality of the department for the company. Sales was supposed to be the most powerful department, followed by support and services, and finance. All VPs reported directly to the CEO in terms of day to day business activities, internal financing for new assets, salaries, etc.
REPORTING STRUCTURES AND THE ROLE OF HR
Though the roles and responsibilities of each department are clearly defined within the department, members of all departments are required to work in temporary teams with members of other departments for delivering projects. The role of HR is reduced to routine recruitment. The individual department needs of training, appraisal, performance measurement, and the like was completely driven by individual VPs. The HR department is never taken into confidence on people management issues and they responded to such issues as if they are under 'learned helplessness'.
Though all the departments worked together to deliver the final project, none of them are answerable to each other. Each department had a clear focus on their individual tasks. Within each temporary team, the project leader is responsible for the team's performance but each member of the team reported directly to his/her own VP The project leader usually from the support and services team. The entire business transaction comprised broadly of understanding the customer's business problem, creating a feasible solution to address the problem, selling the contract for concept design, consulting and delivering the desired service, mobilizing resources to meet the contract obligations, and collecting the payment. …