Performance Management System: Pasifika Petroleum Company - Case Study Example

Name: Professor: Course: Date of Submission: Performance Management System: Pasifika Petroleum Company STAKEHOLDERS’ UNDERSTANDING OF COMPANY’S BUSINESS STRATEGY Pasifika Petroleum Company (PPC) is a subsidiary firm owned by the Australian Pacific Petroleum in the small island nation of Pasifika. Though small, the company has a diverse stakeholder base, which stays adequately informed about its strategy through continual communication and operational mechanisms. It is imperative that stakeholders in the company understand the company’s strategy when it is put in the clear goals and visions in the company. The Island fuel importer and distributor has outlined its goals and visions, making it easy for all stakeholders to access and understand the company’s business strategy and their role in achieving such goals and visions. Pasifika Petroleum follows an induction process in which new employee recruits are helped understand organizational culture, values, and mode of operations before embarking on their roles in this company. This process ensures that every employee understands the company operations. Other stakeholders such as business partners, shareholders and the community understand the company’s business operational programs because the company has clear goals, visions, mission, and integration of its goals with community affairs. The clear business strategies enable all stakeholders embrace and actualize the firm’s goals while pursuing satisfaction and convenience of the workplace environment. HUMAN RESOURCE MANAGEMENT STRATEGY At the core of Pasifika’s business strategy is the desire to establish new innovative products in the market while halving operational costs and doubling the net profit. This is achievable through operational excellence strategy, and an explicit business philosophy based on understanding of people and human motivation work place. The company’s human resource management (HRM) strategy focuses on ways that enhance leadership, build teamwork culture and establishment of improved stakeholder relationships. The HRM strategy seeks to transform employee’s workplace experiences through improved recruitment and learning development that enhances staff skills, and talent development through placement of people at their right jobs without consideration of differential factors such as gender, age or origin. According to Liker (7), the Pasifika Petroleum operational strategy designed by the mother compan defines the company’s management style and the uniqueness that differentiates the oil firm from competitors. The human resource management framework at the petroleum company revolves around integration of employees with the organizational values and goals at all levels. The integration strategy involves creation of rigorous working teams dedicated to the achievement of the organization’s specific goals. The human resource management believes in careful induction of all workers with the organization’s culture regardless of their location or area of operations. The HRM strategy seeks to mechanisms that reward productivity and competence while checking poor performance, values that will bolster a working culture that promotes performance and positive behavior. In addition, there is need for learning and development mechanism that would build employee skills and drive the organizational long-term plan of replacing expatriate stewards with locals. The strategy connotes a concept of flexibility and adaptability in the company’s operations, which are strongly emphasized to ensure that employees are not affected by global changes in the working environment (Liker 34). A STAKEHOLDER AND RISK ANALYSIS Being an internationally oriented corporation, PPC is anchored on the five core stakeholders composition including customers, employees, business partners, the local and global communities. Though the management has been trying to install operational practices that ensure general satisfaction, PPC faces risks especially in its productivity and growth areas. As provided by Innovation and Business Industry Skills Council (8), sustained performance at PPC is threatened by the increasingly unresolved health and safety concerns at the company’s working environment. Particularly, the company has consistently witnessed increasing time-injury frequency ration, which is practically significant in the side of the productivity. Of importance to note as regards the risk on employees as stakeholders is that despite the increasing safety concerns, safety audits continue to report lack of actionable policy and adequate injury reporting system. The company appears to be static in the part of growth and development strategies in the wake of the ever changing business environment. Innovation and Business Industry Skills Council (8) asserts that the company has not been able to exhaust its capital budget for three years, which reflects an increased loss risks to the stakeholders. Particularly, the threat of decreasing investment resources is exacerbated by the fact that despite the payback by the government on the capital expended in the government pricing formula, the capital not spent becomes a cost item as opposed to its supposed profitability advantage. Lack of a performance management system at PPC is apparently the cause of the stagnated operational trends at the company. This is reflected by steady increase in the credit period, which as extended to 38 days compared to the required 20 days. The trend implies that the sales personnel has not been adjudicating their policy obligations of collecting due payments especially from indigenous creditors or customers of Indian decency. The overall repercussion has been a decrease in the targeted sales volume. Furthermore, it has emerged from financial and operational periodic audits that serious non-conformances have been reported but remain uncorrected. WAYS OF DEALING WITH THE STAKEHOLDER RISKS The initial remedial strategy at PPC revolves around a healthy and safe working environment for its human capital, which implies that there is an urgent need for the HRM section to institute and implement health and safety policy. The policy should explicitly underline an injury reporting procedure while providing strong application clauses. The company needs to have routine staff meetings for the management to listen and address rising concerns promptly and efficiently to limit their dissatisfaction. PPC should urgently contract competent business development experts especially from Australia where its mother company is domiciled in order to help engineer actionable capital exploitation growth and development strategies. Additionally, the experts should help the company create sales regulatory policy that enforce debt collection at due dates. PERFORMANCE MANAGEMENT SYSTEM DESIGN The performance management system entails outlining of key performance management activities such as performance and development planning, defining performance measures, concluding performance agreements, review, analysis and formal assessment of annual performance (Grote 198). The system entails role and profile definition in which role holders easily identify, know and understand what they are able to do. It also enables the role holders to know how they are expected to behave in terms of behavioral competencies and upholding the organizational core values (Armstrong 6). However, such role profiles require frequent updating through a formal performance agreement development. The current strategy at PPC is wanting in that there is absolute inconsistency in the way appraisals are done and results acted upon. There appears not to be a standard remuneration and rewards system because salary increments are confined mainly to the executives only. A strategy change is proposed that shall entail the review of existing job descriptions and motivational strategies. The recruitment of workers should take into consideration the skills and qualifications required for every role in the organization. After the recruitment, the new employees should be properly inducted in order to acquaint themselves with the organizational culture, values and their roles in the company operations. Job description will enable the management to match the skills of the workers with the allocated role in order to promote efficiency and effectiveness in the organization. The reward system should involve both financial rewards and recognition of employees that have outstanding performance in the organization effectively deliver in the part of motivational goals. The ethnicity issue that has been at the core of efficiency issues at PPC shall be addressed through a merit based policy, which shall as well regulate the management’s actions. A continued audit in the HRM and finance sections shall be administered by an external body to reflect correctable operational anomalies. IMPLEMENTATION PLAN The implementation shall start with creation of awareness on the importance of the system and communication of the organizational goals and values. The management shall be at the forefront to ensure that every individual understands the intentions of the organization of introducing the system into the company operations. Implementation of the system shall ape the version of an organizational change on a large scale. In this case, the implantation process can involve a pilot test before implementation of the full system. The implantation process has to start with selection of a team to oversee the implementation process and allocation of specific roles to different individuals. All stakeholders should be involved from the planning phase to the evaluation stage of the implementation process. The implementation process has to comprise a continuous communication from top to bottom and vice verse to ensure identification of loopholes and resistance in the implementation of the system (Mathis 33). The implementation process will be underlined by a close monitory program, which shall be done by assessors or managers to ensure that all limitations to the successful implementation of system are addressed for purpose of countering potential barriers of full implantation. After implementation of the system, the management should conduct evaluation assessments to determine success of the process as well as reception by the all stakeholders. Figure of the Implementation Plan Design TRAINING For efficacy of performance improving plan, the company has to invest seriously on the locals and lay out an expatriates’ lay off plan. This should categorically target young people interested in the operational units at the company, who should be sponsored adequately. Effective implementation of the performance management system requires training of managers and the system assessors. The training process should focus on empowering managers to have informed control over the employees, motivational strategies and employee performance. The training process should also involve providing managers with performance appraisal skills. This will enable managers to apply the appraisal skills throughout the performance management process rather than applying as a problem solving strategy. The training process should begin with the training of the system managers and assessors who will in turn train other participants in the system implementation. The training process will further require administration of routine refresher courses to ensure sustainability of the skills acquired (Nyambezi 28). The periodic training of managers and assessors is important to ensure that the assessors have the necessary performance assessment skills. The training process should include all stakeholders of the organization to ensure that they understand the importance of the performance management system. The training processes should entail provision of rewards and incentives to encourage workers managers and other workers to participate in the training process. The communication strategy should entail team briefing and downward communication, which helps convey the information about the extent and success of the implementation process. The communication should involve exchange of organizational goals and values. However, a two-way communication would be more effective in ensuring effective implementation of the system. The downward communication is important in conveying information that the management deems important to be communicated to the managed people. On the other hand, the upward communication is important in ensuring that all stakeholders in the implementation of the system are given an opportunity to express their views on the progress of the system implementation. Communication strategy for the system implementation As relayed through the flow chart, it is imperative that communication has been singled out as the most important component of the innovative organizational strategy. This is because success of many projects that has been witnessed in performing companies is a function various communication channels and techniques. The communication aspect to be ingrained in the PPC context reflects the principles of motivating, leading, delegating, and the feedback behavior of the stakeholders. Work Cited Armstrong, Michael. Armstrong's Handbook of Performance Management: An Evidence-Based Guide to Delivering High Performance. London: Kogan Page Publishers, 2009. Print. Grote, Richard C. The Complete Guide to Performance Appraisal. New York, NY: AMACOM, 1996. Print. Innovation and Business Industry Skills Council Ltd. Appendix 1 Scenario: Pasifika Petroleum Operational Information and Business Strategy, 2011. Print. Assignment Notes. Mathis, Robert and John, Jackson. Human Resource Management: Essential Perspectives. Stamford: Cengage Learning, 2011. Print. Nyambezi, Vuyo. Development of a Performance Management System for the SABC (Port Elizabeth), 2009. Web. Read More