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UFHRD Europe 2012

The Future of HRD-2020 and beyond: Challenges and opportunity

23rd - 25th May 2012

Cover Page

Title: Evaluating Performance- based Management System for HPO: A Case study of

PTT group Thailand

Name of author(s): Chiraprapha Tan Akaraborworn

Organization affiliation/position(s):

Program Director of the International of HROD

The School of Human Resource Development

National Institute of Development Administration (NIDA)

Address: The School of HRD, NIDAc

118 Sukhapiban 2, Bld. 9

Klongkum, Bangapi

Bangkok, THAILAND 10240

Email address: chira123@gmail.com

Stream: Scholarly Practitioner Stream

Submission type: fully refereed paper

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Evaluating Performance-based Management System for HPO: A Case study of

PTT group Thailand

Abstract

Since 1995, the concept of Performance Management (PM) has initiated in PTT

(Petroleum Authority of Thailand) Public Company Ltd. and it was called PBMS

(Performance-based Management System). Then in 2005, the concept of High

Performance Organization (HPO) was introduced to Thai organizations through the

PTT. There are many private sectors has followed the PTT to become an HPO including

the public sectors. However, these organizations have found that the performance

management as their burdens rather than the organization performance improvement.

Triangular analysis was used as a research method to evaluate the PBMS for HPO of

seven companies under the PTT Group in 2011. The evolution of PM, the concept of

HPO, Thailand Quality Award (TQA) criteria, and the PM as an OD intervention were

used as a framework for this evaluation. The result found the PTT group was in the 3rd

stage of PM Evolution, “Performance Management.” To comply with the TQA process

(ADLI), PTT group had well designed (Approach) and used IT systems (SAP and

Coach) and Strategic Thinking Session (STS) in cascading (Deploy) Corporate KPIs to

departments and individual KPIs. The evident for Learning and Integration of PBMS

were not clarified. In recommendation, PTT Group should reconfirm the objective of

implementing the PBMS for organization development in order to become an HPO and

enhancing the SPIRIT culture. The company should set the performance analysis as an

important agenda in performance review in order to create the lesson learn or

organization learning and also integrating the performance appraisal with other HR

systems under the PBMS are needed. The conceptual model of PBMS should be drawn

and used as a communication tool among the PTT group.

Key Words: Performance Management, Organization Development Intervention, High

Performance Organization (HPO)

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Introduction

PTT (Petroleum Authority of Thailand) Public Company Ltd. was established

since 1978 and in 2001 it has been privatized and listed on the Thai Stock Exchange.

The core businesses of PTT are gas, oil, petrochemicals and refining, and international

trading. By 2005, it has announced the vision to become an HPO (High Performance

Organization) and recently its vision is to become a Thai Premier Multinational Energy

Company, using local strength for competing in the international arena. The company

has in place a clear guideline for sustainable development by keeping a good balance

among Corporate Social Responsibility (CSR), Corporate Governance (CG), and High

Performance Organization (HPO) in order to lay a strong foundation for the long-term

development of the organization.

To become an HPO, the PTT group has to prove with financial results which are

better than those of its peer group over a longer period of time (Waal A. A., 2007, p.

180). Thus, an effective performance management system is needed to enhance not

only the financial results but also to sustain the corporate result as a whole for a longer

period of time. The concept of Performance Management (PM) has initiated in PTT

since 1995 which was called PBMS (Performance-based Management System). At the

beginning, PTT has implemented the PM in the corporate level only by introducing BSC

(Balanced Scorecard), KPIs (Key Performance Indicators) Designs and EVA (Economic

Value Added) Concepts. Seven years later in 2002, PTT dissolved performance

appraisal (PA) working group, transferred KPIs & EVA Ownership to business group,

and set up PM System, Reporting & Monitoring. In 2006, PTT has transferred EVA

Ownership to Operating Units and Training, deployed EVA to 19 profit centers in and

developed IT System to derive EVA Data and drivers automatically from SAP (Software

for Enterprise Resource Planning) R3 for Oil Business Group. Also, the result-based

budgeting management has implemented in that year.

There are many private sectors has followed the PTT to become HPO as well as

the public sectors. OPDC (Office of the Public Sector Development Commission) has

formally introduced the concept of HPO to the civil servants in 2008 and in the same

year, OCSC (Office of the Civil Service Commission) has announced the Civil Service

Act B.E. 2551 (2008). In the Act, Chapter 4 (Efficiency Enhancement and Motivation-

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Building in the Performance of Official Functions) Section 76 stated that “A supervising

official shall be under a duty to evaluate the performance of official functions of those

under his/her charge as part of the considerations for appointment and salary increase,

in accordance with the rules and procedures prescribed by the CSC. Evaluating results

under paragraph one shall also be applied for the purpose of developing and enhancing

efficiencies in the performance of official functions.”

The objective of this Act, developing and enhancing efficiencies in the

organization performance, has applied for privatized organization like PTT Group as

well. Pasu Decharin, a Government PM consultant, reviewed the performance

management tools that has been used in the public sectors and founded that they felt

the management tools as their burdens rather than the organization development tools.

Moreover, the objectives of using those tools were to response for the government

policy rather than developing their own organization (Decharin, 2006).

However, there was no research done to review the PM in privatized organization

like PTT Group who has played a leading role in PM system in Thailand. This research

was conducted as a part of the consulting project “PTT Group HR Fundamental” to

evaluate and strengthen seven HR systems for HPO in PTT group. The main objective

of this project was to indentify the best practice of HR system under the group and

improve the practice of HR professional as a strategic partner. Only the evaluation

results of the performance management (PM) are reported in this paper.

Literature Review

To evaluate the PBMS for HPO in PTT group, the evolution of PM, the PM

system in HPO, and PM as an OD intervention were reviewed. The status of PM in

Thailand was presented in the last session.

1. Evolution of Performance Management

PM can be traced back for many thousand years since performance appraisal

(PA) has been developed and stated in Bible (Wiese & Buckley, 1998). For the formal

performance appraisal in organization, the American Army General has claimed its

initiative in the early 1800s. Then, in the early 1900s the term “Performance

Measurement” was introduced widely by Kaplan and Norton (1992). There were many

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criticisms that the word “measurement” might not always bring about change and better

performance. “Performance Management” was used to replace performance appraisal

and performance management in the late 1900s. In the last decade, the performance

management was introduced as organization development intervention (Cummings &

Worley, 2009). Lately, the concept of “Strategic Performance Management” is

developed to take corrective actions and to keep the organization on track (Waal A. A.,

2001, p. 19). Each stage of PM evolution has been discussed below.

1.1. Performance Appraisal (PA)

Performance Management (PA) was defined as a process to allow an

organization to measure and evaluate an individual employee’s behavior and

accomplishments (Wiese & Buckley, 1998) or employee’s performance in an

organization (Grote, 2002) over a specific period of time.

In the paper, “The evolution of the performance appraisal process”, was claimed

that formal performance appraisal begins in United States Industry since the early

1800s by the Army General submitting an evaluation to the U.S. War Department in

1813. In the 1840s and 1850s, Congress required efficiency ratings of clerks which

contained information on competence, faithfulness and attention. However, these

reports were not used for selection, retention or promotion. In 1912, to response to the

public concern for economy and efficiency, a Division of Efficiency was created within

the Civil Service Commission. Thus, in the late nineteenth and early twentieth century,

PA were used primarily by military and government organizations due to their large size,

hierarchical structure, geographic dispersal, and the necessity to promote the top

performers to higher organizational levels. At that time, most private organizations used

informal measures to evaluate individual performance and make subsequent

administration decision.

Thus, the concept of performance appraisal (PA) in 1800s focused on

performance of the individual level only and its result was used as a single system

which was not linked with other HR systems. PA was considered as a very subjective

tool for performance management. So PA was placed in the first stage of the

Performance Management Evolution.

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1.2. Performance Measurement

The second stage of the Performance Management Evolution can be called as

“Performance Measurement” stage. The era of performance measurement has begun in

the early of 1990s when the phase “What you measure is what you get” was stated in

Kaplan and Norton’s Harvard Business Review paper, The Balanced Scorecard –

Measures that drive performance (Kaplan & Norton, 1992, p. 71). The Balanced

Scorecard (BSC) has spread widely as a practical tool for many organizations around

the world, including Thailand (Akaraborworn, 2005). The concept of BSC was used as a

tool to measure, capture, describe, and translate intangible assets into corporate goal. It

has played a major role in performance measurement system.

Performance Measurement was defined clearly by Neely as “the process of

quantifying past action, where measurement is the process of quantification and past

action determines current performance. Organizations achieve their goals by satisfying

their customers with greater efficiency and effectiveness than their competitors.

Effectiveness refers to the extent to which customer requirements are met and

efficiency is a measure of how economically the organization’s resources are utilized

when providing a given level of customer satisfaction. A performance measure can now

be defined as a metric used to quantify the efficiency and/or effectiveness of a past

action” (Neely, 1998). To increase the competitive advantage, the performance

measurement was seen as a critical tool to drive corporate performance excellence.

1.3. Performance Management (PM)

Around 1995-2005, the term “Performance management” has come to replace

the phrase “performance appraisal in many organizations” (Smither & London, 2009).

Whereas PA emphasized the (usually annual) evaluation of an employee’s

performance, “performance management” or PM refers to an ongoing process that

includes setting (and aligning) goals, coaching and developing employees, providing

informal feedback, formally evaluating performance and linking performance to

recognition and rewards. The goal of this ongoing process is to enhance the employee’s

performance (as well as job satisfaction and commitment to the organization) and the

performance of the organization (Smither & London, 2009, p. xv).

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Moreover, the term “measurement” is not quite correct because the process of

performance measurement does not automatically lead to performance improvements

(Waal A. A., 2007, p. 19). It should always initiate action through the use of appropriate

measures. For this reason, performance management and performance system are

preferred. Robert Behn, professor from Kennedy School, Harvard University, agreed

that “Performance Management is more than performance measurement.” To produce

real results requires performance leadership. Such leaders do need measures. But they

also need strategies for motivating teams to close their performance deficit.” (Behn,

2008, p. 1). Thus, the performance management has defined broader than performance

appraisal and performance measurement.

Herman Aguinis has stated in his book, Performance Management 2nd Ed., that

we must distinguish between performance management and performance appraisal and

he defined “performance management” as a continuous process of identifying,

measuring, and developing the performance of individuals and teams and aligning their

performance with the strategic goals of the organization (Aguinis, 2009, p. 2). The

definition has two main components: continuous process and alignment with strategic

goals. Kloot and Martin (2000) agreed that the strategic management literature suggests

that there should be a strong linkage between strategic plans and performance

measures. With this definition, the performance management was considered in HR

field as an Organization Development Intervention which combined performance

appraisal and performance measurement in the process of continuous improvement so

it can be defined as the third stage of the Performance Management Evolution.

1.4. Strategic Performance Management (SPM)

In 2001, Strategic Performance Management (SPM)’s definition was introduced

by Andre de Waal. He defined SPM as the process where steering of the organization

takes place through the systematic definition of mission, strategy and objectives of the

organization, making these measurable through critical success factors and KPIs, in

order to be able to take corrective actions to keep the organization on track. (Waal A.

A., 2001, p. 19). The SPM objective is quite critical for the HR role as a change agent in

the organization. Moreover, Waal mentioned that SPM process consists of various sub-

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processes: strategy development, budgeting/target setting, execution/forecasting,

performance measurement, performance review and incentive compensation of

employees that is needed to become and stay world-class (Waal A. A., 2001) as

presented below in Figure 1

.

Figure 1: The sub-processes of the strategic performance management process

(Waal A. A., 2007, p. 20)

In the figure 1, two tasks of HR are included: Performance review and Incentive /

Compensation. With his definition, performance management can be used as an OD

intervention that links the HR systems tightly with corporate strategy in order to shape

up the organization to become a world class company. Thus, the Strategic

Performance Management (SPM) can be identified as the forth state in the

Performance Management evolution.

In summary, the evolution of performance management can be presented in the

Figure 2.

Budgeting /

Target Setting

Performance

Measurement

Incentive/

Compensation

Execution

& Forecast

Performance

Review

Strategy

Development

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Figure 2: The summary of evolution of performance management

2. PM for High Performance Organization (HPO)

Before the concept of High Performance Organization (HPO) was introduced in

early 2000s, the HR practices considering performance enhancement are known as

“High-Performance Work Practices” (HPWPs) (Huselid, 1995). The concept of HPO

was defined in Andre de Waal’s Meta analysis research on the characteristics of a high

performance organization. He defined HPO as “an organization that achieves financial

results that are better than those of its peer group over a longer period of time” (Waal

A. A., 2007, p. 180). From 91 literature sources, he identified eight factors influencing

HPO: (1) Organizational design, (2) Strategy, (3) Process management, (4)

Technology, (5) Leadership, (6) Individuals and roles, (7) Culture, and (8) External

orientation. Three factors are related to the HR practices: leadership development,

individual performance, and culture building. To become an HPO, the company has to

prove with Performance Excellences which are better than peers (Waal A. A., 2007).

So this is one of the reasons that every company under the PTT Group has been

encouraged to apply for Thailand Quality Award (TQA).

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TQA is considered a world-class award which got start in 1996 by the Foundation

of Thailand Productivity Institute (FTPI) and the National Science and Technology

Development Agency (NSTDA). It was initiated as a part of the 9th National Economic

and Social Development Plan. FTPI has been the main organization in supporting the

productivity and services sectors to adopt TQA criteria as an essential tool to improve

their management capability. The TQA fundamental of the technical and decision-

making processes are identical to the Malcolm Baldrige National Quality Award

(MBNQA) introduced in the USA. So far, the MBNQA is being adopted by many

countries around the world (Federal of Thailand Performance Improvement, 2010).

Adopting TQA, the organization has expected for “Performance Excellent” which

means an integrated approach to organizational performance management that results

in (1) delivery of ever-improving value to customer, and stakeholders, contributing to

the organizational sustainability; (2) improving of overall organizational effectiveness

and capabilities; and (3) organization and personal learning. The criteria provide a

framework and an assessment tool for understanding organizational strengths and

opportunities for improvement and thus for guiding planning efforts (NIST, 2009-2010,

p. 61).

To assess the PM system, there are three out of seven items in TQA criteria are

mainly related; Item 2 Strategic Planning (2.1 Strategic Development and 2.2 Strategic

Deployment), Item 4 Measurement, Analysis, and Knowledge Management (4.1.

Measurement, Analysis, and Improvement of Organization Performance and 4.2

Management of Information, Knowledge, and Information Technology), and Item 5

Workforce Focus (5.1.Workforce Engagement). The TQA criteria focus on result by

encouraging the company to integrate the subsystems in holistic view. Four factors

ADLI (Approach, Deploy, Learning, and Integration) used to evaluate process, while

four factors LeTCI (Performance Level, Trend, Comparative information, and

Integration) used to evaluate results. In this paper, only the four factors in process

evaluation are used to evaluate the PBMS of PTT Group.

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3. PM as an Organization Development Intervention

McLean defined “Organization Development” (OD) as any process or activity,

based on the behavioral sciences, that, either initially or over the long term, has the

potential to develop in an organizational setting enhanced knowledge, expertise,

productivity, satisfaction, income, interpersonal relationships, and other desired

outcomes, whether for personal or group/team gain, of for the benefit of an organization,

community, nation, region, or, ultimately the whole of humanity (Gary, 2006, p. 9). Thus,

performance management is considered as an OD intervention because it involves the

individual behavior that contributes to the individual, team, and corporate performances.

In the Organization Development & Change book, PM is an integrated process of

defining, assessing, and reinforcing employee work behaviors and outcomes.

Organizations with a well-developed performance management process often

outperform those without this element of organization design. PM includes practices and

methods for goal setting, performance appraisal, and reward systems. These practices

jointly influence the performance of individuals and work groups (Cummings & Worley,

2009, p. 421).

So PM as an OD intervention has the developmental purpose in order to improve

the performance of individual, work, and organization. The organization can expect

performance excellent if the performance management process is well integrated with

HR systems.

4. Performance Management in Thailand

In Thailand, like the other countries around the world that traditionally the

organization focused only the individual performance in “Performance Appraisal” and it

has long been used in the public sector. Until the concept of performance measurement

was introduced by Kaplan and Norton in early 1990s. Many private sectors adopted the

Balanced Scorecard as Strategic measurement very quickly including PTT group. The

Performance Management System got more attention in private sectors when OPDC

launched it in 2004. And in the same year, PMAT (Personal Management Association of

Thailand) sponsored to review the PM status in Thai private sectors (Akaraborworn,

2005). The research result was reported in the national conference to celebrate PMAT

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40th Anniversary under the conference title of “Enhancing the Company Competitive

Advantage with Performance Management.”

This PMS survey was conducted in 2004 among the Thai private sectors. The

main objectives of this study were (1) to identify the objectives of implementing PMS in

Thailand, (2) to examine the status of PMS in Thailand (Akaraborworn, 2005). The

survey was distributed among 2,500 PMAT corporate members and got 9.32 %

response rate (233 organizations). The study showed that most of the samples, 38.2%

have established PMS in the last 3 years (around 2000 - 2001) and 29% of samples

have established PMS more than 5 years. In the in-depth interview with experts found

that most of the foreign companies have implemented and introduced the PMS to Thai

companies. The survey found the most use of PMS in Thailand was for individual merit

increase (78.5%), the second most use was for goal setting (69.1%), and the third was

for promotion(65.2%) and the forth was for the training and development (62.7%). The

last use was for corporate culture development (31.8%). This was an evident that most

of Thai organizations had implemented PMS as performance appraisal and

performance measurement, not as an organization development intervention.

Research Methodology

This paper was conducted as a part of the consulting team for PTT group to

strengthen the PTT Group HR Fundamental in the area of Performance Management

which is one of the seven modules in this project. The objectives of this project were (1)

to integrate PTT Group HR Fundamental Systems, (2) to align HR Systems and

Processes with PTT Group Strategy and TQA, (3) to utilize Group’s Resources:

Technology & People and (4) to build Knowledge- based among the HR in PTT Group.

In this paper, only the first phase of the project, HR Modules Evaluation, was presented.

To evaluate the performance management system of PTT group, the consulting

team used the “Triangulation design” as a research method for collecting both

quantitative and qualitative data simultaneously. So the investigator can converge the

data to make comparisons between detailed contextualized qualitative data and the

more normative quantitative data. This design is proper used when researchers seek to

compare the particular with the general or to validate quantitative data with qualitative

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data (Creswell & Creswell, 2005). In this project, the triangulation analysis has obtained

the information from three sources: (1) the presentations from seven companies about

their current PM processes & practices, (2) the summary of these practices

benchmarked with ADLI in TQA criteria, and (3) the summary from in-depth interviews

and focus groups. The information from these three sources was compared and

validated in order to feedback to the PM stakeholders in PTT Group.

Figure 3: Research Methodology & Process

To keep the confidentiality of each company under the PTT group, the author

needs to reserve the individual company’s name, thus only the anonymous result will be

provided.

Finding and Discussion

There are three parts of the findings: A. the current stage of PM benchmarking

with the evolution of PM, B. the process of current PM following ADLI in TQA criteria

and C. the summary of interviews and focus groups.

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A. The Current Processes & Practices of PM benchmarked with the evolution

of PM

After seven companies under the PTT groups presented their current objectives

of implementing PM, the consulting team could benchmark their PM stages with the

evolution of PM. The result has shown in Figure 4:

Figure 4: The Current Stage of PM benchmarking with the evolution of PM

The result showed every company under the PTT groups was in the third stage

of this evolution, “Performance Management.” They all have performance appraisal as a

tool to evaluate the individual’s performance and behavior. They have implemented

“Performance Measurement” under the concept of Balanced Scorecard since 1995

under the “Performance-based Management System” (PBMS). All of them have learned

how to set up corporate KPIs from corporate strategies and cascade the corporate KPIs

to department KPIs and individual KPIs. Moreover, six of seven companies under the

groups have invested in IT systems, SAP and Coach, to keep track with these KPIs and

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on-line performance evaluation. During the past 2-3 years, every company initiated the

performance appraisal system that linked with training and development and rewarding

system. But there is no evident shown that they have used the performance

measurement to take corrective actions to keep the companies on track as stated in

Strategic Performance Management’s definition (Waal A. A., 2007).

This research result has confirmed the PMS survey conducted in 2004 by

Akaraborworn. It stated that most of the Thai organizations had implemented PMS as

performance appraisal and performance measurement, not as an organization

development intervention. They knew how to do the goal setting in the corporate level

and they tried to link the individual performance evaluation with merit increase and

training & development.

B. The Current PM Process following ADLI in TQA criteria

For PTT Group, in 1995, the concept of “Performance Management” has initiated

in PTT and was called PBMS (Performance-base Management System). Ten years

later, in 2005, PTT Group has announced HPO as an ultimate goal for becoming a

world class organization, so it adopted Thailand Quality Award (TQA) criteria, a world

class award, in order to align and integrate systems in an organization to create higher

organization effectiveness. So far, there were five subsidiary companies under PTT

group won the TQC (Thailand Quality Certificate score over 350) awards in 2005, 2007,

2008, 2009, 2010 and 2011 and two subsidiary companies won TQA (score over 650) in

2006 and 2010. However, there is none of the mother companies under the PTT group

win the TQA yet.

In TQA, "Process" is very important. The score of the process takes 60% (600

scores) of the total scores (1000 Scores) (Federal of Thailand Performance

Improvement, 2010, p. 12). Process refers to the methods the organization uses and

improves to address the Item requirements in Categories 1-6. The four factors used to

evaluate processes are Approach, Deployment, Learning, and Integration or ADLI.

ADLI is defined as (1) Planning, including design of processes, selection of measures,

and deployment of requirements (Approach), (2) Executing plans (Deployment) (3)

Assessing progress and capturing new knowledge, including seeking opportunities for

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innovation (Learning), and (4) Revising plans based on assessment findings,

harmonizing processes and work unit operations, and selecting better measures

(Integration). (NIST(National Institute of Standards and Technology), 2009-2010, p.

55). The consulting team used the ADLI to evaluate the current PM process of each

company under the PTT group.

Approach:

In the TQA criteria 4.1 Measurement, Analysis, and Improvement of Organization

Performance, the question states that “How do you measure, analyze, and then

improve organizational performance?”

Every company presented the main objective of implementing PM was for

performance improvement which aligns with the TQA criteria Item 4.1. However, there

was no evident shown that they have analyzed, and reviewed the performance results

in order to have lesson learn or try to identify root cause of unachieved KPIs. Every

company tried to link the performance with pay rather than performance improvement.

There were some evident shown in employee engagement survey reported in 2010 that

the employees dissatisfied with reward practice. They felt that they did not get the fair

reward when they compared their performances with others.

Most of the companies under the PTT group calculated bonus from corporate

performance and individual performance, not team based. There was only one company

that presented its PM linked the ratio of bonus with corporate, team, and individual

performance. It has been questioned among the collectivistic countries such as

Thailand if pay-for-performance could be implemented effectively. In such countries,

employees have been reported to be little concerned about the distributive aspect; they

show more concern with the consequences of their behavior on their “in-group”

members, and they are more likely to sacrifice personal interests for the attainment of

collective interests or harmony (Chang & Hahn, 2006).

“Pay for performance” has been criticized not only in the Thai private sector but

also in the public sector. For public sector OPDC has implemented and played a major

role in PMS since 2004. In Koonmee’s research (2009) on the effect of performance

management and incentive allocation on development of Thai Public Services and

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Officers, it found that PMS continued to be a source for some dissatisfaction and

confusion for some segments of the Thai public sector workforce. Recently, OPDC

found that there are some positive assessments that performance-related pay was

producing many of the intended results and enjoyed positive support from most officials

(Koonmee, 2011). The study showed performance agreement, performance appraisal,

and performance-based pay contributed higher effects on efficiency and effectiveness

at the agency level than at the individual level.

In Korea, as one of the collectivistic country, the research showed the pay-for-

performance can enhance employee perception of distributive justice only when

managers commit with performance appraisal process (Chang & Hahn, 2006). Thus,

coaching, monitoring, and feedback become critical skills for supervisors and managers

who have direct responsibilities to their subordinates’ performances. Almost every

companies under the PTT group stated that they had pay attention on this matter and

had provide many related training programs for everyone in management level.

Deployment

The second evaluating process item, “Deployment,” refers to the extent to which

an approach is applied in addressing the requirements of the criteria item. Deployment

is evaluated on the basis of the breadth and depth of application of the approach to

relevant work units throughout the organization (NIST, 2009-2010, p. 57).

In PTT group, the strategic development (SD) team was assigned to take full

responsibility to strategic deployment process: (1) Review corporate strategy, strategy

map, and corporate KPIs, (2) Review performance management system and process

under SAP, (3) Educate the department heads the corporate strategy and performance

management system, tool, process and concern through “STS – Strategic Thinking

Session”, (4) Clarify the performance management process, and (5) Develop

performance profile recording by Coach system. Under the 4th step, the HR strategic

planning (SP) team had responsible for (1) KPI cascading, (2) Individual performance

planning, (3) Progress Review, (4) Performance Appraisal Review, and (5) Performance

Classification and Merit Allocation.

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The process of strategic development and cascading was well planned and had

IT support. This process has followed the TQA criteria 2.1.Strategy Development and

2.2.Strategy Deployment very well. However, there was lack of support from some of

the department heads in several companies which has shown in the departments KPIs

reports. They either submitted the department KPIs very late or submitted the same

department KPIs as last year. Also there were some complains in many companies

about the lack of coaching, monitoring, and feedback from supervisors. In the research

on “Culture and Commitment: A case study of the PTT Group” showed that having clear

corporate goals and providing direct feedbacks to the employee are critical factors for

the employee commitment in PTT group (Panyasiri, 2008).

Learning

The third evaluating process item, “Learning,” refers to new knowledge or skills

acquired through evaluation, study, experience, and innovation. The criteria include two

distinct kinds of learning: organization and personal. To be effective, learning should be

embedded in the way an organization operates. Learning contributes to a competitive

advantage and sustainability for the organization and its workforce (NIST, 2009-2010, p.

60).

In 2010, there was a learning evident shown in Balanced Scorecard of the

companies under PTT Group. They have changed the perspectives in BSC from

traditional 4 perspectives (Finance, Customer, Internal Business Process, and Learning

& Growth) to (1) Financial & Market outcomes, (2) Customer focused outcomes, (3)

Product Outcomes (4) Workforce focused outcomes, (5) Process effectiveness

outcome, and (6) Leadership outcomes. This can reflect the strategic planning

innovation in PTT Group.

There was no evident for organization performance evaluation how many percent

of last year corporate KPIs were achieved. Moreover, in the corporate KPIs review,

there was no linkage of the corporate KPIs and department KPIs in order to evaluate

the contributions of each department to the corporate performance.

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Integration

The forth evaluating process item, “Integration,” refers to the harmonization of

plans, processes, information, resource decisions, actions, results, and analyses to

support key organization-wide goals. Effective integration goes beyond alignment and is

achieved when the individual components of a performance management system

operate as a fully interconnected unit (NIST, 2009-2010, p. 59).

The result from the performance management system linked to salary increase,

variable bonus, promotion criteria, and employee of the year. Most of the companies

used the total scores from performance evaluation to calculate both salary increase and

variable bonus. There was a doubt in this calculation since there was no performance

review on the contribution of each individual and department to corporate performance.

Thus, the performance evaluation seems to be very subjective for the employee. The

result from competency regarding the core value was used to recognize the employee

of the year. And it was not clear on how the PM linked with the career management.

Table 1: The result of TQA Process evaluation

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In conclusion of ADLI evaluation, the consulting team rated the PM process of

PTT group around 30-45% based on the TQA process evaluation. It found that PTT

group had an effective systematic approach, responsible persons for each system, and

IT supporting system for the PBMS (Approach). The approach was deployed, although

some companies under the group were in the early stages of deployment (Deployment).

There was an evident of a systematic approach evaluated and improved such as the

improving of BSC perspectives. Lacking of coaching, monitoring and feedback from

supervisor brought to the low level of individual learning (Learning). The approach was

in the early stages of alignment the individual performance with other HR systems. Also

the PBMS run separately from the current corporate culture enhancement (Integration).

C. The Summary of Interviews and Focus Groups

One of the companies under the PTT group was selected as the best practice of

PM. It was allowed the consulting team to conduct the in depth interview with top

management and focus groups with HR team, line managers, and some employees in

that company. There were 9 top management interviews, 13 focus groups with line

mangers and HR session heads, and 8 employee focus groups from 8 subsidiary

companies.

The results showed the highest complains and suggestions in the numbers of

tools and document reports in PM system. They had not seen the necessary and the

linkage between each tool and document. For the performance appraisal (PA), they

have highest complain on the tool that could not differentiate between high and low

performers. The talent employees had no different assignment from the regular

employees. Thus, the performance-based pay seems to be unfair for them. Moreover,

there was no clarification in PA for secondment employees which PA form would apply

to them since each company had different forms and evaluation systems. There was no

transparency in the HR policies regarding the performance-based pay and career

development.

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In summary, the result of PBMS evaluation in PTT group has shown the evident

of not seeing a big picture of this system. They had lack focus on the PM objective

which was for developmental approach but they had tried to link the performance

contribution with pay and promotions while the performance appraisal system and

performance-based pay policy was not clear. Moreover, the management people lacked

of coaching, monitoring, and feedback skills.

To become an HPO in world class level, PTT Group has seen the PM as a

critical tool for both employers and employees. From the employer perspective, it is vital

to understand how employees contribute to the objectives of the business. A good

performance management system should enable the organization to understand how its

employees are currently performing, and to identify those employees that contribute

most, or least. It allows organizations to undertake a thorough assessment of the

training needs of its employees, set development plans and gives them the option of

using the results of the performance management process to influence an individual

remuneration. From the employee’s perspective, the performance management process

provides transparency over performance in the workplace, provides a framework for

documenting issues relating to performance, and can be used to assess future career

development requirements. The most important of the PM as an OD intervention, it

should help the company keep on track to become an HPO.

Suggestions for future practice

1) To keep track on becoming a world class organization or HPO, PTT group

should set the performance analysis as an important agenda in PBMS to

create the lesson learn as a continuous process for improving the corporate,

department and individual performances.

2) To increase the employee commitment or engagement (TQA criteria item 5),

PTT group should pay more attention on “Goal Setting” to link the corporate

performance with individual performance by running KPIs coding. Also, the

group should enhance and reinforce the competency of management people

in coaching, monitoring, and feedback as a part of “Performance Leadership.”

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3) To perceive the fairly distributive justice, PTT group should have a clear

policy on how to link the result of performance appraisal with other HR

systems such as training & development, compensation & benefit, and career

development.

4) To improve the communication of PBMS in PTT Group, the conceptual model

of PBMS should be drawn and used as a communication tool.

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