2.2 Employee’s Strategic Alignment
2.2.4 Employee Strategic Alignment Dimensions (Make Strategy Everyone’s Everyday
2.2.4.2 Defining Personals and Team Objectives
The employee-department or employee-organisation alignments offer an open door for inspecting arrangements of individual jobs and obligations, implanted work structures, and current work practices to the broader objectives and goals of their organisation (Alagaraja &
Shuck, 2015).
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The previous viewpoints on alignment definitions stress the linkages inside the organisations and portray how various divisions and individuals pursue shared hierarchical objectives. Hence, it achieves the organisation's strategic goals, a performance management system with reliable indicators is required to measure the degree of goal achievement, and those performance indicators should cascade from a strategic level to departmental and individual levels.
Performance measurement systems enable organisations to enhance the strategic plans' alignment and organisational learning to attain competitive advantage (Alagaraja & Shuck, 2015).
The purpose of defining an employee's (individual's or teams) objectives follows the principles of management by objectives (MBO), introduced by Peter Drucker in 1954.
The United States government accountability office, as cited in Ayers (2015), suggested that enhancing governmental performance is done through performance indicators to develop an apparent link between employee performance and organisational outcomes.
Creating employees' goals aligned with the organisation's objectives can be done by two methods, namely cascading and aligning key performance indicators, which are discussed next. What is Cascading?
Cascading a balanced scorecard means the translation of the organisation scorecard down into business units, supporting units or departments and, after that, to teams or individuals. It helps organisations focus and create a mutual vision between what employees do and the desired goal.
The performance indicators of an organisation cascaded from the higher level to the lower level in the same matter, and a higher organisation goal cascaded into objectives (BSCI, 2020).
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BSC developers use a unique management process called cascading to align performance indicators with an organisation's strategy; the cascading practice highlights strategies at various organisational levels (e.g., top management, middle management and front line). A cascading method is a methodical approach to aligning the strategic organisational objectives to the operational, functional indicators (Decoene & Bruggeman, 2006). The same terminology can be applied to describe how the higher-level strategic objectives are translated to individual-level performance indicators that are balanced to cover the four aspects of the BSC but on an individual level.
Cascading assists in aligning strategies by spreading the information from the top-level management to all the subordinate organisations. Additionally, another style follows a bottom- up cascading approach. The top-bottom approach is mainly used in organisations with business units or departments with shared business characteristics. Organisations with several business units with different business models use the bottom-up approach. The top-bottom approach has several benefits: ease of use, improved communication, increased competitive advantage, enhanced learning, and internal information sharing (Prasetyo & Secokusumo, 2019). Figure (5) illustrates how performance indicators cascade.
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FIGURE 5ALIGNINGPERFORMANCEINDICATORSTHROUGHORGANISATIONLEVEL
Strategic Performance Indicators Alignment
Performance indicators are terms used to characterise the performance of a team or group of individuals who collaborate to achieve a shared goal; those measures provide clarity and ownership. Although, adding the term "key" to describe the performance indicators means that we measure performance on a critical success factor that their enhancement will lead to an organisation's excellence (Parmenter, 2015). Hence, performance indicators are critical for measuring the moving toward an intended result. It can be used to improve performance, focus management and employees' attention on what matters, and finally, it provides decisions maker with evidence (through the use of scorecards and dashboards) to take the right decisions. The selection of the proper performance indicators is not an easy task. While it usually relies on an indictor's bank to choose what is suitable for their case, an unsuitable performance indicator might lead to harmful results if selected. For example, inadequate employment of resources,
organization
Team and Indivduals
Department
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resistance to change by the employees who picked the performance indicator and finally, the employees might show a tendency to focus on the result instead of the indicator that is used as a means to get to a result (Peral, et al., 2017).
Key Performance Indicators (KPIs) are deemed fundamental for an organisation's well-being.
Nevertheless, some researchers, for instance, Parmenter (2015), claimed that KPIs could not include finical measurement.
Strategic performance indicators mean monitoring progress toward accomplishing a stated goal.
(Kalgin, et al., 2018) Suggests that a performance management system should enforce the employee's satisfaction and commitment toward their organisation by enhancing the employees' understanding of their organisation's mission and vision. Moreover, the higher the degree employees comprehend how their work contributes to their organisation's goal achievement, the higher they link how performance management affects their job satisfaction and organisational commitment.
When employees are held accountable to perform a particular task, attain specific results and develop robust performance requirements that cascade from the organisation's strategic goals, the cascading performance indicators might improve organisational performance (Ayers, 2015).
A performance management system is expected to communicate the predicted employee's contribution to their organisation's strategy. People should be involved with and committed to the organisation's strategy. When people are committed to their strategy, they are predisposed to be part of behaviours that support and assist the strategic plan's execution. Hence, employees will possess the needed strategic goals and objectives when they understand their role in the
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strategy and what is expected. Accordingly, the performance indicators should make sense to the employees and be linked to the organisation's core (Prieto & de-Carvalho, 2018).
Nevertheless, while employees can get motivated by understanding their organisation's mission and tailoring their work effort according to its mission, they fail to connect their job and organisation-level goals, resulting in frustration. Accordingly, a clear organisational goal is not enough to develop motivation, but clear organisational goals linked to individual levels are the key to successful performance (Kalgin, et al., 2018).
Performance management in governmental organisations approaches issues of strategic linkage with operational performance. Nonetheless, looking into the literature, one can notice that performance management in the governmental sector concentrates on efficiency (i.e., operational) and have less emphasis on effectiveness (i.e., strategic) (Kloot & Martin, 2000).
(Wu, et al., 2010) stated that the early governmental performance system focused only on financial performance; for example, before 1980, the governmental performance assessment in the United States of America (USA) only focused on the financial and budgeting aspects to measure performance. Later, management by objectives replaced this system, and performance started to be evaluated by achieving pre-stated objectives until 1988 when the governments started focusing on customer-driven objectives. This scenario required the governmental agencies to start focusing on developing and implementing an accountable system to measure performance.
The step of defining an employee's objectives can be seen as extrinsic motivation by setting performance indicators that are linked to a higher purpose moreover. By linking the performance indicators to rewards (as discussed in the next section), employees can see that their efforts to
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achieve organisation objectives are rewarded in performance appraisal and rewards and intensives, leading to higher engagement and better performance (Kaplan & Norton, 2004).