PERFORMANCE MANAGEMENT

SYSTEM FOR WELL FIT HEALTH AND

FITNESS CLUB

CLASS: MBA 1.5 Years

SUBMITTED TO:
Sir Umer Shaikh

SUBMITTED BY:
Sidra Nadeem
Shanza Jaffar
Syeda Yusra Batool

SUBMISSION DATE:

04-01-2019
 ACKNOWLEDGEMENT

This report has been prepared by great work, research and dedication. It would not have been possible

without the support of many individuals and organization. Therefore we would like to extend our sincere

gratitude to all of them.

First of all we are thankful to ALMIGHTY ALLAH for giving us strength to accomplish this task

successfully. I would like to express my generous appreciation to all my group members who provided

the responsibility to complete this report on time. The report cannot be completed without their efforts

and co-operation.

Last but not least, many thanks to our kind teacher of the course of Performance Management, Sir Umer

Shaikh who have invested his full efforts in guiding us to achieve the goals.

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 TABLE OF CONTENTS

Abstract

1. Company Introduction

2. Performance Management

2.1 Objectives of Performance Management

2.2 Performance Management Systems

2.3 Implementation of Performance Management System

2.4 Challenges in Implementing PMS

3. Change Management While Implementing PMS

4. Literature Review Related to Performance Management Aspects

5. Critical Evaluation of Possible Frameworks of PM

5.1 The Performance Measurement Matrix

5.2 The Performance Pyramid

5.3 The EFQM Business Excellence Model

5.4 Brown’s Input, Processes, Outputs and Outcomes Framework

5.5 Balanced Scorecard

6. BSC as a Framework For Establishing PMS at Well Fit

6.1 Mission Statement

6.2 Vision Statement

6.3 Company’s Overall Business Strategy

6.4 Four Perspectives of Balance Score Card

6.5 Vertical Integration

6.6 Horizontal Integration

6.7 Limitations of BSC

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7. Conclusion

8. References

9. Checklist

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 ABSTRACT

This report includes the brief overview of performance management and design & implementation of the

performance management system in Well Fit health care and fitness organization.

A critical evaluation is done through secondary research of health industry and various performance

measurement frameworks have been identified like The Performance Measurement Matrix (PMM),

Performance Pyramid, EFQM Business Excellence Model, Brown’s Input, Processes, Outputs and

Outcomes Framework and Balanced Scorecard. The purpose and usage of these frameworks in health

care industry has been check through secondary research of overall industry and previously establish

PMS based on these frameworks.

Among these frameworks balance score card (BSC) is used as the framework for designing PMS at Well

Fit. Since Balance Score Card is the most widely used framework with multiple benefits and suitable for

our organization, its four perspectives are used to define goals, key performance indicators, targets and

initiatives necessary for PMS of Well Fit. A thorough analysis along with vertical and horizontal

integration as well as limitations of the frameworf is well defined in this report.

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1. COMPANY INTRODUCTION:

Well Fit! is an expanding chain of Health and Fitness Clubs in the UK, employing approximately 900

staff in headquarters office and the 80 clubs it currently owns.

Well Fit! Was started by an ex-Olympic athlete Kenny Benny, who founded the first club fifteen years

ago. Within five years he had expanded to five clubs. Eighteen months ago there was a large cash

injection into the organization by a group of venture capitalists – and at this time the management team

were also invited to buy shares in the clubs and form a new Board of Directors. The overall investment

was used to expand the organization by buying out two other small club chains, resulting in the number

of clubs.

Clubs are split into two types:

Premium Clubs- these eleven clubs are all in major city centers and are geared to providing for

professionals who are likely to use the clubs mainly before or after work and in the lunch breaks. They

all have a swimming pool, gym, sauna and steam rooms and a member’s lounge, serving complimentary

soft drinks, tea and coffee. They charge the highest rate of member ship and offer corporate packages to

the largest of the local companies. Each club offers extra income generating services such as massage

and health treatments, laundered towels, club merchandise (sports clothing and footwear) and good

quality toiletries.

Lifestyle Clubs- these sixty nine clubs are based either on the edge of large cities or in smaller towns.

They are geared to offering facilities to a range of users, “worker members” who usually use the

facilities weekday, morning or evening, “families” who tend to attend after school hours and at the

weekends, and “leisure members” those who can attend in off peak hours such as young mothers or the

retired. Each club has a small leisure pool, gym and “classroom” – where fitness classes are held in off-

peak hours, and a member’s café where soft drink and simple meals are served. In these clubs offer a

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range of membership packages, “gold” which gives all-hours access, “silver” – off peak weekdays and

all weekend, and “bronze” off peek weekdays only. Additional services are merchandising, specialist

fitness classes, social events and the food and drink sold in café.

2. PERFORMANCE MANAGEMENT:

Performance management is a continuous process of identifying, measuring and developing the

performance of individuals and teams and aligning their performance with the organizational goals. It is

a means of getting better results by understanding and managing performance within an agreed

framework of goals, standards and competency requirements. (Armstrong and Murlis, 1994).

2.1 OBJECTIVES OF PERFORMANCE MANAGEMENT:

According to Lee, 2005, the real goals of any performance management system are threefold – to correct

poor performance, to sustain good performance and to improve performance. Following are the main

objectives of performance management:

 To align individual and organizational objectives

 To improve organizational performance

 To provide the basis for personal development and improvement in individual performance

 To develop a performance culture

 To inform contribution/ performance pay decisions

2.2 PERFORMANCE MANAGEMENT SYSTEMS:

A performance management system is a set of interrelated activities and processes that are treated

holistically as an integrated and key component of an organization’s approach to managing performance

through people and developing the skills and capabilities of its human capital, thus enhancing

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organizational capability and the achievement of sustained competitive advantage. (Armstrong and

Murlis, 1994).

2.3 IMPLEMENTATION OF PERFORMANCE MANAGEMENT SYSTEM:

The key to have an effective performance management system is to implement it properly by making

sure that everyone understands how it works and what is in it for them. According to Herman Aguinis’

following are the four main steps involved in the implementation of PMS:

1. SET EXPECTATIONS:

Inform employees what results and behaviors are expected from them. Set performance standards

which must be measurable and attainable.

2. OBSERVE AND HELP THEM PERFORM:

After setting expectations give ongoing feedback and make sure employees maintain good

performance by making it clear it is being noticed. Continuous monitoring of performance

should e done throughout the year.

3. ASSESS THEIR PERFORMANCE:

Assess and evaluate their performance through appraisal forms and self-assessment forms.

Choose a criteria which is relevant and valid.

4. REVIEW AND REWARD PERFORMERS:

Last step is to discuss with the employees about their performance throughout their review

period and share the observations, assessments and how their performance can be improved in

future. Clarify what goals are expected to be achieved in future.

After reviewing, associate rewards with the performance feedback so that the performance

management activity remains effective, positive and energizing for all. Rewards may include

both financial and non-financial rewards and benefits.

2.4 CHALLENGES IN IMPLEMENTING PERFORMANCE MANAGEMENT SYSTEMS:

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According to De Waal and Counet (2009), following are the few challenges or potential barriers faced

while implementing PMS:

 Management put low priority on implementation because of work pressures and time constraints

which slows doen the speed of implementation process.

 Insufficient resources and capacity for the implementation because organizations cannot free

enough resources to implement the system.

 Resistance to change and lack of leadership creates issues and barriers.

 Lack of a clear and understandable strategy, mission and objectives for the organization and poor

goal setting for individuals cause problems.

3. CHANGE MANAGEMENT WHILE IMPLEMENTING PMS:

Resistance to change is normal. Implementing a new PMS is a big change for the employees and

management. The successful management of change is defined by the ability of people to move towards,

and accept, the vision for change. Change management is the process, tools and techniques to manage

the people side of change to achieve the required business outcome. Change management incorporates

the organizational tools that can be utilized to help individuals make successful personal transitions

resulting in the adoption and realization of change. (Bratte, 2015)

4. LITERATURE REVIEW RELATED TO PERFORMANCE MANAGEMENT ASPECTS:

For effective, integrated and dynamic performance management system models are required that provide

critical review of existing framework and techniques. This models ensure that the organization

performance management system remain effective and efficient. This study found that current

knowledge and technology in this field are sufficiently matured to facilitate the dynamic performance

management system. (Bititci, 2016)

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Corporate performance management is considered as the key mechanism of control for the organization.

CPM is taking different forms, reflecting differences between management and strategic control

priorities faced by the management in the organization. Organization redesign the corporate performance

management system to check the appropriateness of the organization devolved business unit. (Lawrie,

Cobbold & Marshall, 2004)

The design, implementation and use of measurements should be a simultaneous and continuously

evolving process in which changes in the strategic direction and learning requirements of an

organization are constantly accounted for. It ensures a speedy and effective implementation of the

formulated strategy. (Feurer, & Chaharbaghi 1995).

Organizations which do not integrate ongoing performance measurement and feedback into their
management development programs tend to experience lower than expected performance improvements
and higher dissatisfaction and turnover of employees (Longenecker and Fink, 2001).

Benchmarking is comparing ones business processes and performance metrics to industry best practices

from other companies. Benchmarking is a powerful tool that help organization to improve their

performance by learning from other best organizations. Benchmarking methodology that was used is

based on five phases plan, collect, analyze, adapt and review. The benchmarking study on performance

management system develop an audit template of performance management in the organization and this

template is used to examine and improve the performance measurement in an organization. ( Bauer,

Tanner. J, & Neely, A., 2004)

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5. CRITICAL EVALUATION OF POSSIBLE FRAMEWORKS OF PERFORMANCE

MANAGEMENT:

Following are the various frameworks that can be used for establishing a performance management

system and measuring performance of an organization according to the literature review.

5.1 THE PERFORMANCE MEASUREMENT MATRIX (PMM):

The PMM was developed by Keegan et al. (1989). It integrates financial and non-financial internal and

external facets of business performance. The main strengths of PMM are its simplicity and integrated

structure. However, the matrix could have been developed further to incorporate certain element of lead

measures, refined, within their dimensions. Lead measures are those measures that focus on analyzing

forward looking, predictive and future performance comparisons.

5.2 THE STRATEGIC MEASUREMENT ANALYSIS AND REPORTING TECHNIQUE

(SMART) OR PERFORMANCE PYRAMID:

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SMART, which is also known as the Performance Pyramid, was developed to eliminate the

disadvantages associated with traditional, financially focused performance measurement systems (Cross

and Lynch, 1989). This pyramid integrates the strategic objectives and operational performance

dimensions through a four level structure. It is useful for describing how objectives are communicated

down to the troops and how measures can be rolled up at various levels in the organization. This system

monitors performance at different levels of organization.

The Performance Pyramid (Cross & Lynch, 1992)

5.3 THE BUSINESS EXCELLENCE MODEL OF THE EUROPEAN FOUNDATION FOR

QUALITY MANAGEMENT (EFQM):

The EFQM’s Business Excellence2 model is a framework, which links the key performance results of an

organization to its processes and leadership. Referring to Figure and working from right to left:

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  Long-term sustainable performance (key performance results) is a function of satisfied people

(people results), satisfied customers (customer results) and a positive impact on the society

(society results)

 These results in turn are enabled by well-developed and mature processes that are resourced with

good people with appropriate education, training and attitudes; directed by appropriate policies

and strategies; supported by appropriate partnerships (e.g., suppliers) and other resources.

 All the results and enablers, in turn, are enabled by appropriate leadership.

The EFQM Business Excellence Model

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5.4 BROWN’S INPUT, PROCESSES, OUTPUTS AND OUTCOMES FRAMEWORK:

This framework is conceptually appealing and useful, as it highlights the difference between input,

process, output and outcome measures. The framework develops the concept of linking measures

through cause and effect relationships.

5.5

BALANCE SCORECARD:

The Balanced Scorecard is a strategic performance measurement model which is developed by Robert

Kaplan and David Norton. Its objective is to translate an organization’s mission and vision into actual

actions through strategic planning. The BSC provide strategic managers with a deep insight into the

overall organization and hence assists them to make informed decisions about long and short-term

objectives, internal and external performance, and financial and operational performance. The BSC

enables managers to transform strategy into tangible performance measures, align strategy with the

overall organization mission and vision, and articulate and monitor organization activities to promote,

support and enhance the achievement of a strategy.

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The BSC is useful for strategic management to coordinate a wide range of management processes such

as performance appraisal, goal setting, resource allocation, and employee learning and development.

Four Perspectives of Balance Score Card

6. BALANCE SCORE CARD AS A FRAMEWORK FOR ESTABLISHING PMS AT WELL

FIT!:

According to the secondary research, BSC is ranked as one of the top 10 management tools used

globally. BSC could be the best method to be used for a growing organization like Well Fit! Since it is

globally and widely used successfully. It covers not only the financial perspective but presents a solution

that includes human issues.

The BSC approach has been incorporated in day-to-day operation of many public and non-for-profit

organizations during the last two decades and the main reasons for this shift are the new perspective of

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the state on strategic management and sustainability, the constrained resources towards public

organizations and the increased demand for accountability on behalf of the stakeholders. The reason for

the appropriateness of the BSC method for health care and fitness organizations is the fact that it

simultaneously links financial performance measures with customer focus, the improvement of internal

processes and the enhancement of innovation and learning.

The BSC must be aligned with the mission, vision and strategic objectives of the organization. So,

following are the vision and mission statements established for Well Fit, in order to create a performance

management system based on balance score card framework.

6.1 MISSION STATEMENT:

We will deliver innovative fitness and lifestyle programs; our friendly, professional staff will inspire and

support you in your commitment to enhancing the quality of your life, one person at a time.

6.2 VISION STATEMENT:

Our vision is to be the premier health and wellness facility providing innovative, collaborative

programming centered on the whole-health and well-being of our community and our region. We will be

known for an exceptional member experience, with the highest quality fitness services.

6.3 COMPANY’S OVERALL BUSINESS STARTEGY:

The overall strategy for this business is to generate enough income to expand by buying other clubs and

the aim is to have grown to 200 clubs in the next five years. In order to fund this each club has an

objective of growing total income by 10% per year.

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6.4 FOUR PERSPECTIVES OF BALANCE SCORE CARD:

1. FINANCIAL PERSPECTIVE:

Strategic Goals Performance Target Initiative

Indicator
Increase Revenue Net Income/ Net 10% increase in Customer growth
profits total income per and profitability
year
Improve efficiency Return on To expand up to Balance gains and
of investment Investment (ROI) 200 clubs costs of revenue

2. CUSTOMER PERSPECTIVE:

Strategic Goals Performance Target Initiative

Indicator
Good Quality of Customer At least 90% of Provide timely
Services satisfaction for customers to be services and fulfill
services and satisfied customer demands
facilities and needs
Customer Retention % Customer To retain and
retention rate increase our
customers
Growth in No. of current Expansion of clubs Re-engage lost
Members customers chain customers and
provide discounts
on new
memberships

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 3. INTERNAL BUSINESS PROCESS:

Strategic Goals Performance Target Initiative

Indicator
Improve employee Employee To improve Train and develop
performance satisfaction and employee employees
loyalty performance for
overall business
efficiency
Innovation in No. of successfully To improve Design new flexible
services and new implemented new business process membership
ideas ideas or services and attract packages to fulfil
launched customers customer needs

4. LEARNING AND GROWTH PERSPECTIVE:

Strategic Goals Performance Target Initiative

Indicator
Build a culture to Employee To inspire and Make friendly work
encourage engagement support customers environment
motivation
Establish No. of high To enhance Set monthly goals
performance based performers employee for employees
culture performance and Rewards and
improve day to day incentives for high
learning of performance
employees

The KPI’s used in the balance score card in this case are the most relevant due to the following reasons:

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  Net Income and ROI are essential performance indicators as the company is looking forward for

expansion as well as increasing profit outcomes. These two KPIs may help in assessment of the

company’s goals of growth and improved revenues.

 Customer satisfaction, customer retention and increase in no. of customers are the KPI’s that are

linked with the company’s vision, mission and strategy of providing quality services to their

customers as well as increasing their number of clubs. Improved percentage of retention and

increased no. of customers may show the company’s path towards its success.

 Employee satisfaction and loyalty will help in assessing whether employees are willing to

perform well so that overall organizational performance is improved to achieve its goal and work

according to mission whereas and implementation of new innovative ideas may help attract more

customers thus help in expanding the clubs chain.

 Employee engagement and high performance in terms of achieving maximum individual goals

will let the organization learn and develop for its future prospects.

6.5 VERTICAL INTERGRATION:

The important aim of performance management is to support the achievement of business goals and

strategies. Vertical integration is necessary to achieve this aim which means linking and aligning

business, team and individual objectives.

According to the mission, vision, strategies and goals set in the balanced scorecard of Well Fit,

following steps must be considered and checked to vertically integrate the individual and business goals:

 Survey to gain firsthand knowledge of individual goals, interests and objectives. Align individual

objectives to organizational objectives and encourage individuals to uphold corporate core

values.

 Enable expectations to be defined and agreed in terms of role responsibilities and accountabilities

(expected to do), skills (expected to have) and behaviors (expected to be)

 Provide opportunities to individuals to identify their own goals and develop their skills and

competencies.

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  Motivate people by providing them with recognition and opportunity to use and develop their

skills and abilities which are in the interest of organization as well as individuals.

6.6 HORIZONTAL INTEGRATION:

Horizontal integration is the cross functional connection of performance measurement system along

divisions throughout the organization. Horizontal integration will be achieved when individuals,

teams and their goals link with each other. In order to integrate the BSC in Well Fit following steps

must be considered:

 Create a climate for individuals and teams that supports them in achieving organizations

vision, mission and values together.

 Resolve any intergroup conflict and create effective communication processes

 Strengthen team processes and integrate HRM to achieve a coherent approach to

management and development of people for high performance.

 Integrate individual needs with those of organization as far as it is possible to focus on

performance improvement in order to increase organizational, team and individual

effectiveness.

6.7 LIMITATIONS IN BALANCE SCORE CARD:

Despite the widespread use and benefits, the BSC has some limitations both in concept and in practice.

The concept of the BSC has no clearly defined relationship with organization performance, the objective

and definitions of measures exclude key stakeholders, lacks the definition of key success factors

necessary for identifying KPIs, and the four categories limits the view of the organization. In practice,

the BSC focuses resource to achieve its goals leading to underutilization of organizations’ potential

beyond the targets of the BSC; perceives an organization has hierarchical structures, clearly delineated

job responsibilities and one way linear cause-and-effect relationships and promotes closed innovation.

These limitations hamper the effectiveness of the BSC.

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7. CONCLUSION:

In conclusion, the balance score card framework can be used as an effective measurement framework in

order to establish Performance Management System. Since Well Fit is looking forward for expansion

and profit growths per year, the KPI’s set are according to the current goals, objectives and strategies of

the business. This process of designing and implementing performance management system must be

reviewed and continuously improved according to the needs of the organization.

8. REFERENCES:

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CHECKLIST:

DESIGNING PMS:

 It must help in achievement of defined and agreed objectives

 The objectives of performance management should be to improve organizational performance,

individual performance, provide basis for employee development and inform performance or

contribution pay decisions

 It must be a tightly controlled system based on guiding principles but provide flexibility in

operation in line with principles

 It must focus on required role outputs and inputs

 It must provide SMART individual goals aligned with organizational goals

 It should help managers to coach employees and tends to improve their performance based on

the feedback.

 It should help organization to anticipate and respond to needs emerging in and outside the

organization.

IMPLEMENTING PMS:

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  While Implementing PMS keep in mind the culture of the organization and people’s view about

the system to avoid potential problems.

 Expectations about the required goal achievements should be well explained

 Performance standards must be set and must be measurable and attainable.

 Performance evaluating techniques must be checked thoroughly whether they can measure

accurately or not.

 Performance measures and KPI’s must be set according to the needs of organization

 Good performers must be rewarded to ensure energy and motivation.

MANAGING PMS:

 Unbiased decisions and thorough review of performance management system must be done.

 While managing the system it must be ensured that every individual’s interest is aligned with the

overall business strategy

 Help in improving the employee performance and increase employee engagement for success of

system

 Performance measurement framework must be focused to stick to the agreed objectives and

clearly monitor and manage actions of individuals

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