Performance Management System, Strategic Model and

Challenges: A Study on KFC

PA-412: Performance Management: Theory and Practice

Submitted to
Dr. Nusrat Jahan Chowdhury
Associate professor
Department of Public Administration
University of Dhaka

Submitted By

A.M.M. Mubassher Shah

Roll: SS-042-065
7th Semester, 4th Year
Department of Public Administration
University of Dhaka

Date of submission: 15th July, 2020

Table of Contents
Introduction ................................................................................................................................................... 3

Organizational profile ................................................................................................................................... 3

Performance management and strategic management of KFC ..................................................................... 4

Strategic Management of KFC ..................................................................................................................... 4

Strategic planning model of KFC ............................................................................................................. 5

SWOT analysis ..................................................................................................................................... 5

Performance management system of KFC.................................................................................................... 6

Purpose of performance management ....................................................................................................... 6

Models of performance management in KFC ........................................................................................... 7

TQM model for ensuring quality product and service in KFC ................................................................. 7

Process of TQM .................................................................................................................................... 8

Quality management instruments used in KFC .................................................................................... 8

Quality, Service, Cleanliness program (QSC)......................................................................................... 9

Certification of product and service Quality ......................................................................................... 9

MBO model for managing performance of the employees ..................................................................... 10

Phases of MBO ................................................................................................................................... 10

360 degree feedback............................................................................................................................ 11

Mode of goal directed behaviour ........................................................................................................ 11

CHAMPS Card ................................................................................................................................... 12

Integrating performance management model and strategic model ............................................................. 12

Challenges ................................................................................................................................................... 12

Conclusion .................................................................................................................................................. 13

Reference .................................................................................................................................................... 14
Introduction
Performance management is a continuous process of improving performance by setting
individual and team objectives that are aligned with the organization's strategic objectives. It
involves preparing for the achievement of the goals, reviewing and assessing progress and
improving the expertise, skills and capabilities of the employees (Armstrong 2006). Performance
management is essential for any type of business. Good performance management requires the
engagement and dedication not only of HR, but also of managers and workers. It helps to
improve employee interest in the workplace and generates better results (Grumman & Saks
2011). It helps to accomplish the objectives of the organization in an effective and profitable
manner. This also eliminates the risk of confusion and guarantees the highest standard of service
delivery. Of this purpose, performance management is extremely necessary for any company to
ensure the optimum use of its resources and to achieve its strategic objectives within the
timeframes anticipated (Walker et al. 2011). An effective performance management system
requires a strong strategic planning. And then implementing the plan successfully an
organization can gain their expected outcome. In this assignment, the performance management
system of KFC is discussed addressing the strategic planning model, performance management
model and the process of implementation of these models in this organization. In the later part,
the implementation challenges faced by this organization are mentioned. This assignment is
written based on only secondary information.

Organizational profile
Kentucky Fried Chicken (KFC) is
a fast food restaurant primarily
founded in the United States,
centered in Louisville, Kentucky.
Initially founded by Colonel
Harland Sanders in 1930 and
specializes in chicken (Sanders
2012). It is the second-largest
restaurant chain in the world in
terms of sales, following
McDonald's as of December 2019. KFC is now owned by Yum! Brands that also own the quick-
service fast food chains Taco Bell and Pizza Hut (Randhir et al. 2016).

KFC currently has 22,621 branches in 150 different countries and 24,000 employees globally.
The brand KFC is worth of just over US$ 5.5 billion according to the latest stats (Statista 2020).
Transcom Foods Limited, a Transcom Group's concern, successfully opened a KFC outlet in
Bangladesh in 2006. Right now, there are 21 KFC restaurants serving high quality fast food in
Bangladesh.

KFC's original product is a pressurized chicken fries seasoned with a Sanders recipe of 11 herbs
and spices. In addition, KFC offers breaded chicken sandwiches, hot & spicy cuisine, chicken
nuggets, big zinger, grilled chicken, zinger burger, chicken mania, burgers, salads and side
dishes such as French fries, coleslaw, desserts and soft drinks. The aim of KFC is not only to sell
chicken to make money and to make profit but also to provide better service, faster service and
better customer service than other competitors.

Performance management and strategic management of KFC

The performance management system of KFC is discussed addressing the strategic planning
model, performance management model and the process of implementation of these models in
KFC. The discussion is given below:

Strategic Management of KFC

Strategic management is the mechanism in which the organization creates and executes policies
that support the goals and objectives of the organization. When developing a strategic plan, there
are certain goals that the company is focused on achieving during the execution of the strategic
plan. The purpose of strategic planning is to set the overall goals for your business and to create
a strategy plan to achieve them. This includes where the company is going and what its goals
should be (Kriemadis & Theakou 2007). Strategic planning is must to gain the goal of the
organization. Besides:
❖ This allows organizations to always be proactive rather than reactive.
❖ It creates a sense of direction.
❖ It increases effectiveness.
❖ It helps to boost profits and market share.
 ❖ It can make a company more sustainable.

Strategic planning model of KFC

For strategic planning, KFC adopts issue based strategic planning model. Issue based strategic
planning model is flexible and dynamic. This concept of strategic planning concentrates on the
recognition of all the different factors, internal and external, that affect your organization's ability
to achieve its objectives. To recognize the internal and external factors KFC conducts SWOT
analysis (Omer 2018). The process of SWOT analysis is given below:

SWOT analysis
Through SWOT analysis KFC
identifies the internal and external
factors related with the organization’s
capacity (Rahman 2019; Frue 2019).
The steps of SWOT analysis for KFC
are given below:

Strengths: Strengths identifies the

things that the company is good at
and what distinguishes it from its
counterparts. KFC Strengths are:

❖ Strong international identity

❖ loyal consumer base
❖ Variety in the menu
❖ The famous special formula of the KFC

Weakness: Weaknesses hinder a company from functioning at its optimal level. These are areas
where business needs to change in order to compete effectively:

❖ Supply chain and distribution issue

❖ Managing franchises
Opportunities: Opportunities refer to the aspects that any company can use to its advantage to
increase its market share, revenue, brand value, etc. This is the strongest factor in KFC's SWOT
Analysis because it will decide the future of the company's strategy. Opportunities are:

❖ Expand to new geographies

❖ Experimentation with food products to meet changing needs

Threats: Threats refer to factors that can affect a company in the future. Despite the fact that
threats give a company a far-sighted view of the difficulties that the company is likely to face in
the future, this is one of the most critical factors in KFC's SWOT Analysis. Threats of KFC are:

❖ Changing food trends

❖ Competition in local and global level
❖ Health consciousness of the people

Through SWOT analysis KFC identify their internal and external factors and then conduct a
strong strategic plan for achieving organizational goal. It also identifies the major issues and
strategies to address the goals. Based on the strategic planning KFC conducts its performance
management system to implement the plan successfully and maintain the performance of the
products and employees at a standard level.

Performance management system of KFC

Aiming to be the best among the fast food chain over the world, KFC prepares a strategic plan
and runs its performance management operation to achieve the goal with two departments. One
is human resource department and another is quality control department. The human resource
department aims to ensure employees performance to achieve the organizational goal. On the
other hand, quality control department is responsible for maintaining quality of the product as
well services to the customers (Wilding 2018).

Purpose of performance management

The main purposes of the performance management system of KFC are to ensure-

❖ The work performed by employees accomplishes KFC’s goals

❖ Employees have a clear understanding of the quality and quantity of work expected from
them
 ❖ Employees receive ongoing information about how effectively they are performing
relative to expectations
❖ Best employees’ performance and best quality food to the customers.

Besides, performance management system aims to-

➢ Identify the opportunities for employees’ development.

➢ Identify the good performers for rewarding based on their performance.

Models of performance management in KFC

The performance management system of KFC is operated following two performance
management models. These are:

➢ Total quality management (TQM)

➢ Management by objectives (MBO)

The human resource department use MBO (Management by Objectives) model for ensuring
better employees performance. Simultaneously, TQM (Total Quality Management) model is
used by the quality control department for maintain food quality that are served to the customers.
The process of performance management system of KFC is elaborated below following the
above mentioned models.

TQM model for ensuring quality product and service in KFC

Total Quality Control is a process by which management and staff may engage in a continuous
improvement process of products and services. This concept has been developed by W. Edwards
Deming (Best 2005). KFC adopted this performance management model for ensuring quality
service. This model is used in KFC in three parts. At first they determine how the quality of the
product will be maintained. Then using an instrument they determine the quality of the foods and
services gathering information on the perception of the customers. Finally they get certificate of
standard quality from ISO 9001, JIT and HACCP (Othman et al. 2017).

The key purposes of TQM in KFC are:

➢ Improvement in product quality,

➢ Improvement in product service,
 ➢ Improvement in employee morale and quality consciousness.

KFC apply this model in their organization using some instruments and following some process
and techniques. These are stated as follows:

Process of TQM
KFC uses the Total Quality Management (TQM) model in three steps process. The process of
implementing TQM in KFC restaurant is discussed below:

Benchmarking

This is a trend to associate company processes and efficiency indicators with the best markets
and best practices of other businesses. KFC typically conducts its benchmarking activities with
companies such as the Burger King, McDonalds Subway, Starbucks, etc.

Employee Involvement

Employee engagement has become a key component of today's business scenario. As

competition increased, employers realized the importance of building a competent organization
that attracts, retains and engages employees. Employees are eager and able to contribute to the
success of the business and are, therefore, real assets to an organization. To make employees
work better, KFC involve their employee properly.

Continuous Improvement

A continuous improvement approach is a procedure or process in the workplace that helps to

maintain a focus on improving the existing processes on a daily basis. The Quality Management
System of Kentucky Fried Chicken further emphasizes the continuous development of
procedures, employee control and preparation of employees to use quality management
techniques and methods.

Quality management instruments used in KFC

KFC uses an instrument to measure the quality of product and services provided by KFC.
Through this instrument they collect information from the customers about their attitude towards
the foods and services provided by KFC (Apte 1995). The instrument is described below:
Quality, Service, Cleanliness program (QSC)
Through this instrument KFC collects the perception of the customers on some issues under three
quality dimensions. Then the quality is measured based on the data. These issues are as follows:

Service

Under this dimension customer’s perception is collected about-

• Service time
• Attentive, energetic, warm and courteous service
• Professional appearance including wearing a uniform
• Accuracy of order taking and filling
• Helpful and suggestive selling

Quality

Under this dimension customers are asked about-

• Standard temperature
• Proper breading of chicken
• Colour, texture and overall appearance

Cleanliness

Under this dimension some issues are asked-

• Clean entrance door

• Clean and well supplied rest rooms
• Clean and neat service counter
• Clean customer sitting area

Certification of product and service Quality

After using QSC instrument, KFC gets the feedback from the customers. Then they send the
report for recognition of the standard of quality they maintain. The certificates of standard
quality of KFC are categorized into three parts (Siah 2018). These are:
ISO 9001

ISO 9001 certification is feasible for all

forms and sizes of organizations and is well
recognized worldwide as a highly valuable
quality management system standard.
Because KFC has a reliable certification,
there is no need for further checks to be
carried out by the consumer.

JIT model

Just in time inventory is a technique to maximize productivity, reduce cycle time and waste by
receiving products just when they are required in the manufacturing process, thus reducing
inventory costs. Cycle time has become a crucial concern in today's fast food industries. KFC
adopts this model in the implementation of Total quality control by reducing waste time and
cycle time to ensure performance.

Hazard Analysis Critical Control Point (HACCP)

The HACCP is a food safety management program. This method involves the detection,
evaluation and monitoring of physical and biological hazards to ensure food health. In KFC, it is
used from obtaining raw materials in restaurants to serving customers. It measures the possibility
of safety hazard.

MBO model for managing performance of the employees

Management by objectives (MBO) is a strategic management approach that seeks to increase the
efficiency of the company by clearly defining the goals that both management and staff agree on.
Theoretically, having a voice in goal setting and action planning encourages cooperation and
dedication among workers, as well as aligning goals across the company (LI & Yu 2015).

Phases of MBO
Management by objectives is applied in KFC in three phases. These are:

 Setting expectations for employee performance

  Maintaining a dialogue between supervisor and employee to keep performance on track,

 Measuring actual performance relative to performance expectations.

Through these above mentioned phases the performance of the employees are managed. Some
methods are used for measuring the performances of the employees. Based on the measurement
some employees are given reward as motivation and some of them are sent for training for
professional development.

360 degree feedback

360 Degree Feedback is a program or mechanism in which workers receive private, anonymous
input from those employed around them. This
typically involves the employee's boss,
colleagues and direct reporters. KFC is using
360 degree feedback systems in two ways.
These are:

i. 360 Feedback as a learning tool to help

employees understand strengths and
weaknesses and to become more
efficient.

ii. 360 Feedback as a Performance

Appraisal Tool to analyze the
performance of the employees.

Mode of goal directed behaviour

This was the ranking system adopted by the KFC HR Department in 2000-01, which they used to
analyze the performance of their employees. This is also known as the MGB (My Growth Body)
or two-point rating scale. The information gathered from 360 degree feedback provides them
with a basis on which to identify their employee as a good performer or a poor performer. So,
basically in this method, there were two points, either satisfactory or dissatisfactory performance.
There is no thing as moderate performance (Rahman et al. 2017).
CHAMPS Card
KFC feels that appreciation and praise is one of the main ways to ensure that workers improve as
it boosts their productivity and inspires them to perform even better. CHAMPS, which stands for
Cleanliness, Hospitality, Accuracy, Maintenance, Product and Speed, is an example of a
effective acknowledgement system in which any employee can get a CHAMPS appreciation card
based on the information of 360 degree feedback and rating of MGDB (Jones 2018).

Based on these performance appraisal method employees are divided into two groups. One group
consists of the employees who got the CHAMPS card and another group is formed with the
employees who don’t get the card. Then the good employees are provided reward and the poor
employees are selected for development by training.
Integrating performance management model and strategic model
The integration of strategic planning and performance management of an organization is very
important for achieving the organizational goal. Strategic planning sets the goals for the
company and defines major issues. This sets out an action plan as well as management plans,
specifies an organization's budget. Later, the performance management program handles the
execution of the strategic plan. In terms of KFC, through strategic plan, it identifies the internal
and external factors and prepares a strong strategic plan. With effective performance
management system KFC follow TQM model and MBO model for achieving the benchmarks set
in the strategic planning. Thus the strategic planning and performance management system of
KFC are integrated and this integrated approach drives to achieve the goal of KFC.

Challenges
KFC faces some challenges in their functioning over the world. The challenges they face while
implementing the strategic planning are mentioned below:

• TQM needs higher training and development cost as the implementation of this process is
time consuming. So, this can be a challenge for KFC.
• The implementation of these models needs continuous monitoring. It will be a challenge
for KFC to arrange regular audits.
 • Cultural factor is a vital issue for food chain companies. A food that is popular in one
country maybe got rejected in another country because of cultural difference. So,
considering this setting benchmark can be a challenge for KFC.
• Over franchising is a challenge for KFC. About 96% of KFC outlets are owned by
franchises. So satisfying all the stakeholders is a tough task to achieve (Statista 2020).
• Animal diseases like bird flu can hamper the implementation of strategic planning of
KFC. This kind of emergency situation can be a challenge for fast food chain like KFC.
• Employee turnover for fast food market is comparatively higher than any other business
organization. It is recorded that fast food chain has 85% annual employees’ turnover
(Park & Shaw 2013).
• To run globally business, KFC has to overview the local context. It is based on basically
customer habits. KFC acquires so much earnings from the Asian territory because of
having demand of those people, cultural values. In India, the demand of KFC has been
reducing because of not staying eye on cultural values, and government regulations. To
run a business, every global businessman has to follow government regulations which
can be both congenial and adverse of an organization. Recently, these regulations are
faced by KFC. It is one of the big challenges right now.
These are the key challenges of KFC to implement their performance management and strategic
management system in their organization to achieve the goal.
Conclusion
This assignment attempts to give an overview of the performance management system and
strategic planning of KFC. It is seen that KFC integrate the strategic planning and performance
management to achieve their goal. They use TQM model for ensuring standard quality of
product and service. Simultaneously, to manage the performance of the employees they follow
the MBO model of performance management. Before that they prepare a strong strategic plan
following the issue based planning model by conducting SWOT analysis of the organization.
After implementation process they measure the quality of the product and service following QSC
instrument and on the other hand they use 360 degree method, MGDB and CHAMPS method for
analyzing and rewarding the employees. Thus the strategic planning and performance
management system of KFC are operated to integrate the individual goal to the organizational
goal and make KFC one of the successful fast food chain over the world.
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