Unit-5

Strategic Implementation

Introduction

Strategy implementation refers to various activities involved in executing the

strategies of an organization. In simpler words, strategy implementation puts an
organization‘s strategies into action through various procedures, plans and
programs. Strategy implementation involves actions and tasks that are needed to
be performed after the formulation of strategies.

It is influenced by management‘s perspective, as management sets the strategies

that are executed in the implementation stage. An effective implementation of
strategy is significant for an organization‘s growth, whereas failure in effective
strategy implementation may have negative consequences for an organization.

What is Strategy Implementation?

Strategy implementation is a procedure through which a chosen strategy is put

into action. Strategies are only a means to an end i.e., achievement of
organization‘s objectives which have to be activated through implementation.
This is because both strategic formulation and strategic implementation process
are intervened into each other.

Strategy formulation and implementation are interconnected though skills and

levels of skills are dissimilar. The relationship between the two can be better
understood in terms of forward and backward linkages. Forward linkage means
elements in strategy formulation influence strategy implementation.

Top 5 Features of Strategy Implementation

Features of strategy implementation are explained in the following points:

1. Action Oriented:

It implies that a strategy should be actionable. A strategy is made actionable

with the help of different management processes, such as – planning and
organizing. The role of management is not just restricted to formulating the
plans, but also extends to converting these plans into actions.

2. Varied Skills:

It implies that strategy implementation involves wide-ranging skills. In an

organization, vast knowledge, attitude, and abilities are required to implement a

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strategy. These skills help in allocating resources, designing structures, and
formulating policies.

3. Wide Involvement:

It means that strategy implementation requires the participation of the top,

middle, and lower level management. The top management must clearly
communicate the strategy, which needs to be implemented, to the middle
management. You should note that the middle management plays an active role
in strategy implementation.

4. Wide Scope:

It involves a range of managerial and administrative activities. In simpler

words, any managerial action can be a part of the strategy implementation
process because of its wide scope. For example, implementing a marketing
strategy may involve preparing marketing budget, conducting market research,
developing advertising and promotional plan, conducting test marketing,
launching product, and collecting customers‘ feedback.

5. Integrated Process:

It refers to the fact that different activities in the strategy implementation

process are interdependent. Therefore strategy implementation is an integrated
and holistic process. For example, different activities of a promotional strategy
of an organization are interrelated.

The 6 key strategy implementation steps

Before you can implement your strategy you need to create a strategic plan.

Your strategic or implementation plan outlines the steps your team or

organization needs to take in order to achieve a goal or objective. Your
implementation plan is the roadmap to a successful strategy execution and
should include the following steps:

1. Define your goals

2. Conduct proper research
3. Map out any risks
4. Schedule all milestones
5. Assign tasks
6. Allocate helpful resources

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Once your strategic plan is set, it‘s time to get it on the road! There are six steps
to follow on your way to a successful implementation.

Step 1: Set and communicate clear, strategic goals

The first step is where your strategic plan and your strategy implementation
overlap.

To implement a new strategy, you first must identify clear and attainable goals.
Your goals should include your vision and mission statements, long-term goals,
and KPIs.

The clearer the picture, the easier the rest of your strategy implementation will
be for your team and organization simply because everyone will be working
towards the same goals.

As with all things, communication is key. Once your goals are clearly defined,
use goal tracking software to communicate your strategy with the rest of your
team.

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Step 2: Engage your team

To implement your strategy both effectively and efficiently, you need to create
focus and drive accountability. There are a few ways in which you can keep
your team engaged throughout the implementation process:

 Determine roles and responsibilities early on. Use a RACI matrix to

clarify your teammate‘s roles and ensure that there are no responsibility
gaps.
 Delegate work effectively. While it can be tempting to have your eyes on
everything, micromanagement will only hold you back. Once you‘ve
defined everyone‘s roles and responsibilities, trust that your team will
execute their tasks according to the implementation plan.
 Communicate with your team and ensure that everyone knows how their
individual work contributes to the project. This will keep everyone
motivated and on track.

Step 3: Execute the strategic plan

Allocate necessary resources like funding for strategic or operational budgets so

your team can put the strategic plan into action. If you don‘t have the right
resources you won‘t be able to achieve your strategic plan, so this should be a
top priority. Here‘s how you can ensure that your team has the resources they
need:

 Start with the end in mind to effectively align your project‘s objectives,
key deliverables, milestones, and timeline.
 Identify available resources like your team‘s capacity, your available
budget, required tools or skills, and any other unconventional resources
 Define a clear project scope so you know exactly what your project needs
when.
 Share your project plan with everyone involved in the implementation
process using a work management tool.

The better built out your strategic plan is, the easier it will be to implement it.

Step 4: Stay agile

You‘ll inevitably run into issues as you begin implementing your strategy.
When this happens, shift your goals or your approach to work around them.

Create a schedule so you can frequently update the status of your goals or
implementation strategy changes. Depending on the strategy you‘re
implementing, you can create weekly, monthly, or quarterly project status
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reports. Share these updates with your external stakeholders, as well as your
internal team, to keep everyone in the loop.

Step 5: Get closure

Once you implement the strategy, connect with everyone involved to confirm
that their work feels complete. Implementing a strategy isn‘t like a puzzle that‘s
finished when the last piece is set. It‘s like planting a garden that continues to
grow and change even when you think you‘re done with your work.

Getting closure from your team will be the second to last milestone of your
strategy implementation and is a crucial step toward completion.

Step 6: Reflect

Conduct a post-mortem or retrospective to reflect on the implemented strategy,

as well as evaluate the success of the implementation process and the strategy
itself. This step is a chance to uncover lessons learned for upcoming projects
and strategies which will allow you to avoid potential pitfalls and embrace new
opportunities in the future.

What you need to implement a strategy

No matter how well thought out your strategy is, you‘ll need these five key
components to successfully implement any strategy.

People

You‘ll need a team that not only understands the strategy you want to
implement but also has the skills and bandwidth to support you. Appoint, hire,

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and train the right people for the job and ensure that the competencies needed to
succeed are present in your project team.

Resources

Effective resource allocation is one of the most important parts in strategy

implementation. Resources can be both financial (e.g., cost of labor) and non-
financial (e.g., time to implement strategy).

Organization

Everyone in your organization needs to know what their responsibilities are so

they can be accountable for their part in implementing the strategy. This also
means that the chain of command has to be defined and communicated so
everyone knows who to communicate with during the implementation process.

Systems

The tools, capabilities, and systems you‘ve put in place are another key
component. You have to know what the functions of each of these systems are
and how they will support your strategic management process during and after
the implementation.

Culture

The final key component is the organizational culture within your company.
Rolling out new strategies can be confusing and stressful for teams. Ensuring
that everyone knows what they need to know and feels valued and included is
crucial for a successful and effective implementation.

Process of Strategy Implementation

1. Building an organization, that possess the capability to put the strategies into
action successfully.

2. Supplying resources, in sufficient quantity, to strategy-essential activities.

3. Developing policies which encourage strategy.

4. Such policies and programs are employed which helps in continuous

improvement.

5. Combining the reward structure, for achieving the results.

6. Using strategic leadership.

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The process of strategy implementation has an important role to play in the
company‘s success. The process takes places after environmental scanning,
SWOT analyses and ascertaining the strategic issues.

Core Competencies

Core competencies are the resources and capabilities that comprise the strategic
advantages of a business. A modern management theory argues that a business
must define, cultivate, and exploit its core competencies in order to succeed
against the competition.

A variation of the principle that has emerged in recent years recommends that
job seekers focus on their personal core competencies in order to stand out from
the crowd. These positive characteristics may be developed and listed on a
resume. Some personal core competencies include analytical abilities, creative
thinking, and problem resolution skills.

―Core competencies‖ stand for what a corporation does best, its expertise in its
field of business, and the uniqueness of its products in the eyes of its customers.

Core competencies reflect the fundamental knowledge and technical skills that
make a corporation and its products ―special.‖ The core competencies of a
corporation help it distinguish itself from its rivals and seize a competitive
advantage in the marketplace.

3 key characteristics of a core competency

Prahalad and Hamel, in that HBR article, list the following three primary
conditions a business activity must satisfy to be considered a core competency:

1. It must provide superior value (e.g., benefits) to the customer or

consumer.
2. It should provide potential access to a wide variety of markets.
3. It should not be easy to replicate or imitate.

The authors cite Honda to illustrate the concept. According to them, Honda's
core competencies in engines and power trains enabled the company to deliver
superior benefits to its customers. These capabilities gave Honda competitive
advantages in the car, motorcycle, lawn mower and generator businesses. At the
time, no other company could match Honda's unique and powerful capabilities.

Sources of core competencies

Contributions to a company's core competencies can come from its:

 people
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  capital
 brand equity
 assets
 intellectual property

For long-term growth and success, it's important for an organization to develop
and nurture all these elements. It should consistently invest its resources on
building and maintaining the skills that contribute to its core competencies. It
must identify and isolate its best abilities that can provide a competitive
advantage -- as Southwest Airlines did with operational costs -- and then
develop them into organization-wide strengths.

Furthermore, the company's development strategy should focus on developing

these skills and strengths in ways that are unique from competitors and deliver
enhanced value to customers -- as Southwest did with superior service and a fun
work culture.

To focus resources on core competencies and strengthen their competitive

position, companies can outsource or divest areas that fall outside their primary
expertise. Such streamlining was in focus, as Prahalad and Hamel pointed out,
in the 1980s; it remains relevant today.

More real-world examples of core competencies

Three of the best examples of companies that have enjoyed sustained success by
focusing on their core companies are the following:

1. McDonald's
2. Apple
3. Walmart

McDonald's best core competence is its ability to standardize its food service
and delivery processes. Every McDonald's offering tastes and looks exactly the
same, regardless of its geographical location or outlet -- after accounting for
local tastes and exceptions. Since customers always know what they will get
when they order a Big Mac or Chicken McNuggets, they trust the brand. That
trust continues to drive McDonald's success.

Apple has a unique ability to design and produce electronic devices that appeal
to consumers' esthetic sensibilities and material aspirations, such as the iPhone,
iMac and iPad. Each product boasts attractive visual esthetics and tactile appeal
that have allowed Apple to achieve the status of the world's most valuable
company in current market capitalization.

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Walmart has the buying power that even its closest competitors cannot match.
The company's massive supply chain operations allow it to buy products in bulk
and at low rates, and then undersell its competitors to attract and retain more
customers.

Every business must aim to maximize its core competencies in every area of
operations, including advertising or reputation management, marketing or
human resource management, sponsorship and strategic management. This
holistic approach will empower a company to pursue long-term growth and
success. In addition, it must develop more than one competency to maintain and
improve its competitiveness and unique market position.

Identifying and building core competencies for business

Prahalad and Hamel mentioned three tests to identify core competencies in a

company:

(1) Core competencies gives potential access to a wide variety of markets—for

example, competence in optics made Canon a market leader in not only cameras
but also laser printers.

(2) They contribute significantly to end-product benefits—for example,

Honda‘s engines initially powered portable generators and later motorcycles
and cars.

(3) They are difficult to imitate—for example, Sony‘s ability to miniaturise

electronics.

In order to build core competencies, a corporation should

 understand which of its abilities customers value the most

 develop an intra-organisational think tank to isolate key abilities and
make a plan to transform them into strengths across various departments
 depute key personnel (―competence carriers‖) and allocate funds to
building core competencies for the organisation as a whole
 integrate technologies and coordinate diverse production skills
 opt for strategic alliances, acquisition, or licensing arrangements to
strengthen core competencies
 observe competitors active in the same market to ensure that the core
competencies being built are unique
 preserve the pursuit of developing core competencies even in the wake of
organisational changes

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In order to identify core competencies and build them, it is also necessary to
understand what they are not. Core competencies are not necessarily about
outspending competitors in research spending, opting for vertical integration,
cutting costs by sharing resources among a corporation‘s business units, or
outsourcing non-core processes to focus on core functions.

These may help, but by themselves they are not adequate to build core
competencies.

Why build core competencies?

Core competencies go into the making of corporate strategies. They are also
used to

 improve a corporation‘s position in its own market and also develop new
markets
 integrate strategic thinking across all wings
 decide allocation of resources
 refine decisions on outsourcing, sale or disinvestment of divisions

Corporations that fail to exploit their core competencies are condemned to

compete with their rivals on the basis of their product price.

When this strategy fails, they find themselves ousted from the market. They
may then start thinking of core competencies, but that may be too late.

Building core competencies is an ambitious enterprise. Once built, they are

strengthened by their constant use and deployment. ―But competences still need
to be nurtured and protected; knowledge fades if it is not used,‖ Prahalad and
Hamel point out.

What are the competitors capabilities?

Competitive capabilities have been defined as a plant's actual performance

relative to its competitors, with the most commonly investigated capabilities
being quality, delivery, flexibility, and cost.

strategic capability includes resources and competences that a firm utilises to

compete in its business environment. It can therefore constitute a firm's
strengths and weaknesses, and be a source of competitive advantage or
disadvantage over its rivals.

Develop policies and Procedures for implementation

Policies and procedures are guidelines that help shape company culture and
employee behaviour. They usually include lists of what is allowed, what is
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prohibited, and what should be done in certain scenarios. Both employees and
managers are responsible for the success of policies and procedures.

What is a Policy?

A policy is defined as a comprehensive set of rules on a specific topic (such as a

process, a situation, a group of people, or a particular environment). The overall
purpose of policy creation is to establish protections against incidents that
would disrupt the organization‘s dynamic or workflow as well as the individual
lives of employees.

What is a Procedure?

A procedure is defined as an ordered list of recommended steps for performing

a task. Standard operating procedures, for instance, must be followed step-by-
step to get the desired output (work that is on par with the organization‘s quality
and safety standards). Deviating at any step in the procedure may lead to
unexpected outcomes with serious consequences.

Policy vs Procedure: What is the Difference?

The difference between policy and procedure is that policy requires

organizations to take a stand or make a decision on how to approach a specific
problem occurring in the workplace while procedure requires organizations to
agree on how to perform a task for the best results.

Policy and Procedure Examples

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Below are the various types of workplace policies and procedures:

1.Policies and Procedures for Attendance

Attendance policies and procedures specify the required working hours and
times. For example, employees are required to work 8 hours a day from 9 am to
5 pm. These policies and procedures also include what counts as tardiness. For
example, if the employee is in the building lobby at 9 am, but only gets to the
office at 9:10 am, is it considered being tardy? Workplace managers will need
to provide answers to these kinds of questions in the policies and procedures for
attendance.

2.Policies and Procedures for Employee Conduct

Code of conduct policies and procedures are typically based on company

values, which act as the guiding pillars for how employees at all levels should
behave. In policies and procedures for employee conduct, it‘s important to state
what is appropriate and what is deemed unacceptable behavior. By clearly
establishing the lines which employees should not cross, workplace managers
will have less incidents concerning harmful or indecent behavior from
employees.

3.Policies and Procedures for Use of Company Property

By company property, most organizations are referring to the physical

(Information Technology) IT equipment provided to employees to help them do
their jobs. These are items such as computers, keyboards, headsets, and even
laptops. But sometimes, company property can also refer to the software or the
digital platforms and tools that employees need to use. Additionally, company
property includes the physical office spaces (e.g., rooms and corridors) and the
items within them (e.g., desks and whiteboards).

4.Policies and Procedures for Harassment and Discrimination

Harassment and discrimination in the workplace is a serious issue that needs

active policies and procedures to stop them from happening. Though wider
company culture issues need to be addressed, specific acts and behaviors
displaying harassment or discrimination should be identified and strictly
prohibited. Policies and procedures against harassment and discrimination
should also be legally binding, acting as a deterrent and to prevent such
incidents from being seen as trivial, merely internal, or just personal
disagreements.

How to Develop Policies and Procedures.

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An overview of the stages in policy development.

Policy development involves identifying need, gathering information, drafting,

consulting and review.

Stages in policy development

The following steps summarise the key stages involved in developing policies:

1. Identify need

Policies can be developed:

 In anticipation of need (e.g. child protection policies should be in place

once an organisation starts to work with children or young people); and
 In response to need (e.g. a policy position on a government strategy may
be developed in response to a consultation paper).

The organisation needs to constantly assess its activities, responsibilities and the
external environment in order to identify the need for policies and procedures.
(More on what policies you need to develop).

2. Identify who will take lead responsibility

Delegate responsibility to an individual, working group, sub-committee or staff

members, according to the expertise required. (More on the management
committee's role in policy development).

3. Gather information

Do you have any legal responsibilities in this area? Is your understanding

accurate and up to date? Have other organisations tackled the same issue? Are
there existing templates or examples that you could draw on? Where will you
go for guidance?

4. Draft policy

Ensure that the wording and length or complexity of the policy are appropriate
to those who will be expected to implement it.

5. Consult with appropriate stakeholders

Policies are most effective if those affected are consulted are supportive and
have the opportunity to consider and discuss the potential implications of the
policy. Depending on whether you are developing policies to govern the
internal working of the organisation or external policy positions, you may wish
to consult, for example:
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  Supporters;
 Staff and volunteers;
 Management Committee members; and
 Service users or beneficiarie.

6. Finalise / approve policy

Who will approve the policy? Is this a strategic issue that should be approved
by the Management Committee or is the Committee confident that this can be
dealt with efectively by staff? Bear in mind that, ultimately, the Management
Committee is responsible for all policies and procedures within the
organisation.

7. Consider whether procedures are required

Procedures are more likely to be required to support internal policies. Consider

whether there is a need for clear guidance regarding how the policy will be
implemented and by whom. (E.g. a policy regarding receiving complaints will
require a set of procedures detailing how complaints will be handled). Who will
be responsible for developing these procedures? When will this be done? What
will be the processes for consultation, approval and implementation?

8. Implement

How will the policy be communicated and to whom? Is training required to

support the implementation among staff and volunteers? Should the
organisation produce a press release (for external policy positions)?

9. Monitor, review, revise

What monitoring and reporting systems are in place to ensure that the policy is
implemented and to assess usage and responses? On what basis and when will
the policy be reviewed and revised (if necessary)?

Design Of Performance Linked Reward System Business Essay

Performance-related reward system involves rewarding employees according to

their performance, or results achieved or contribution to organisations
performance as individuals or as a part of a group. It involves a shift of focus
from remuneration models based on the worth of jobs and employee skills to
their performance.

Designing a performance-linked reward system is conditioned by a variety of

factors such as the nature of business, type of technology, the attitude of unions

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and human resource management strategies of the organisation. Therefore, no
particular model can be recommended; it has to be custom-tailored.

Performance-linked reward systems reduce labour cost, result in increases in

real wages and motivate performance. They provide a method of absorbing cost
escalation on account of pay increases and thus help in sustaining
competitiveness of the organisation.

Forms and choice of performance linked reward system

There are several types of performance-linked reward schemes. Generally, these

are designed to-share with or distribute to employees as individuals, groups or a
collectivity productivity gains, profit improvement or financial results of
enterprise performance. Such schemes fall into the following broad categories:

Schemes based on individual or small group performance including piece rates,

traditional merit pay, and sales commission.

Incentive schemes which may relate pay to profits on the basis of a pre-
determined formula.

Bonus schemes based on contribution to productivity and profitability according

to a pre-determined formula with gains sometimes distributed among the
individual employees on the basis of merit rating.

 Productivity Bargaining.
 Employee Stock Options Plan (ESOP).
 Competency-based pay.

1. Merit Incentive Pay

A common method which has long been in existence is pay increase or bonus
payment on the basis of performance rating.

The merit incentive pay scheme provides another method of recognising and
rewarding differential performance. This method could particularly be suitable
for office staff. The scheme essentially involves the following steps:

a) The determination of result-oriented merit rating procedures,

b) The identification of job factors and their relative importance,

c) The formulation of a scale of reward, and

d) The communication of the basis of monetary reward.

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Illustratively, job factors of salesman can be identified as (a) sales promotion,
(b) realisation of outstandings, and (c) good-will calls, (d) after-sales service
and, (e) investigation of complaints.

Sometimes merit increments and merit awards are also given in recognition of
superior performance on the part of individuals. These are poor substitutes for a
system of merit incentive pay because of several shortcomings.

Under a system of merit increments, there is no prompt relationship between

reward and effort. The quantum of reward at a point of time will be considered
inadequate. Additional cost in the form of enhanced allowances is built for the
company on permanent basis. Employees continue to benefit from their best
performance even if it remains below standard in the future.

Employees getting merit awards cannot visualise a proportionate relationship

between their performance and reward. The basis of determining the quantum
can not be explained to employees who are not given such awards. This may
evoke jealously and friction and may thus jeopardise cooperation and goodwill.

2. Incentive Schemes

Output-based incentive scheme are appropriate where tasks are repetitive and
measurable. These involve the following steps:

 Selecting the objectives

 Determining the parameters of performance in accordance with the
objectives
 Determining the norms or base values or benchmark values for each
parameter
 Determining performance-reward relationship
 Fixing the relative importance of the selected parameters, that is, their
weightages
 Designing information and procedure formats
 Determining the maximum payable incentive amount (incentive
opportunity) and , payment period
 Formulating a communication and review scheme

These are, however, not suitable for high technology and service activities,
which require information sharing, problem solving and team work.
Productivity gain or profit sharing or employee stock options plan (ESOP) may
be suitable types for such activities.

3. Group Incentive and Productivity Gain Sharing

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Under the productivity gain sharing schemes, productivity gains are shared in
accordance to an agreed pre-determined formula. Profit sharing gives a share of
profit. Sometimes, the quantum of bonus is determined on the basis of profit as
well as productivity improvements according to a pre-determined benchmark
value for each of them.

4. Productivity Bargaining

Productivity bargaining can provide yet another method of improving

productivity and linking wage increases- to such improvements. Productivity
bargaining, however, does not mean an incentive scheme or wage increases in
return for assurances and promises from unions for achieving production
targets. This method implies (a) a detailed analysis of the firms operations, (b)
the identification of cost reduction possibilities, (c) estimation of savings in
cost, and (d) the development of a system o indexing wage increases with cost
reductions actually realised over time. The climate for productivity bargaining
has never been more favourable than now. It is for managements to take
initiative and build this approach in their collective bargaining relationship with
Unions.

5. Long-Term Incentive (ESOP)

Long-term incentive in the form of employee stock options schemes are

operated both to improve long-term incentive and to reduce fixed cost. ESOP
envisages employee participation in and ownership of a company‘s equity.

This plan is intended to provide an incentive to the employees to improve the

all- round performance and growth of the company and share its prosperity. The
plan usually involves allotment of equity shares according to a laid down
procedure and subject to governmental regulations, laws and rules. The
employees benefit in the form of enhanced market value of his shares and
capital gains, which in turn depend on company‘s and employee performance.
Several software and high-tech organisations such as Infosys have conceived
and designed such plans.

6. Competency-based Pay

The competency is a critical determinant of performance. Therefore, there is an

increasing interest in offering monetary incentive for acquiring competencies
required for higher performance on the present job or for the next job. Such
competency may for instance include values, attitude and behavioural
characteristics which influence performance.

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In designing a performance linked reward scheme, choice of an appropriate
scheme should be considered as critical. The choice will be determined by a
variety of factors such as the nature of the organisation, the nature of
technology, the nature of profits, the nature of markets, the human resource
strategy and business objectives.

STEPS IN DESIGNING

There is a variety of forms of performance-linked schemes. These must be

closely adapted to the particular conditions of individual enterprises and the
concerned groups of companies. In designing a custom-tailored performance-
linked reward scheme, the following steps are important:

1. Custom-Tailored

There is little scope for relying on model or standardized schemes. Attempts to

impose specific performance-linked reward systems through central regulations
generally appear to fail. Frequently the appropriateness of what is being
required may appear questionable from the perspective of individual enterprises.
Therefore, care must be taken in adapting such schemes to the particularities of
individual enterprises.

2. Objectives

The objectives of the schemes need to be carefully formulated. Such objectives

are needed to guide the selection of performance measures, the specification of
bonus calculation formulae and the reaching of common understanding on the
size of bonuses that may be expected through the schemes. The potential for
performance improvement may vary greatly from one enterprise to another, as
well as with the passage of time. Both the short and long run objectives for the
scheme should be identified.

3. Selection of Performance Measures

The selection of performance measures must be consistent with the scheme

objectives; these must encourage those types of behaviour considered important
for organizational performance such as increasing output, reducing labour and
other costs, improving quality or timeliness of delivery, encouraging co-
operation amongst work groups, enhancing adaptability and innovations, etc. In
addition, they must not be pursued at the expense of other performance
parameters. At the same time, the measures of performance selected should, to a
large extent, be under employee control, and not influenced by external
influences. Employees will be demotivated if their best efforts are offset by
factors they cannot control.
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4. Basis

Depending on circumstances, performance awards may be determined on the

basis of improvements over the previous year, improvements over a base period
performance, or the maintenance of a high level of performance. Bonuses which
become exceptionally large should be integrated into basic wages in order to
avoid distortions in pay structures. Where necessary, it may be advisable to
resort to procedures for stabilising bonuses of lengthening the period over
which performance is calculated.

5. External Influences

To the extent possible, the initial agreement establishing the scheme should
specify how target performance levels are to be dealt with when their
achievement is affected by external influences such as changes in. production
methods, product mix and prices of inputs and outputs.

6. Distribution

The rule for the distribution of bonuses amongst workers should be simple and
widely supported. It may be based on wage rates or average earnings. Also, to
discourage excessive absenteeism, bonus is sometimes varied with the number
of hours or days worked. However, distributions in accordance with
assessments of individual worker performance by supervisors may be
problematic, especially if such assessments lead to significant variation in pay.

7. Equity

There should be equal opportunities to earn bonuses, even though the

performance measures may vary. In addition, performance targets should be set
after a careful scrutiny of the historical behaviour of the measures selected. The
quantum of bonus should be significant enough to evoke extra efforts. At the
same time performance awards should not be so large as to put at risk a
significant part of employee earnings for reasons beyond their control.

8. Safeguards

Such schemes should not be substituted for wage increases that otherwise would
have been granted or replace fixed wages with variable wages. Performance pay
should supplement rather than replace existing wage bargaining arrangements
and should not question the need to maintain basic wages at adequate levels.
Perhaps of even greater importance in some contexts may be the need to give
assurances to existing employees that productivity improvements would not
place jobs in jeopardy.

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9. Involvement and Communication

Such schemes must be perceived as acting in the interest of employees as well

as employers. Accordingly such schemes must be implemented in ways that
convince employees that they will receive a fair share of the benefits derived
from their extra efforts and their jobs will not be threatened. Schemes based on
collective performance work more effectively when the scheme objectives and
operation are explained in detail to all the employees concerned. The success of
schemes depends to a large extent on the amount of effort given by management
to consultation at various stages – in the planning and design of the scheme, in
the process of implementation and monitoring of results. In addition, the
schemes have a better chance of success if employees are provided with full
opportunities to present their ideas for bringing about improvement.
Performance- linked schemes function most effectively when they are
accompanied by a formal participative system that facilitates: (a) the
transformation of agreed practical suggestions into actual changes in operating
methods and procedures; (b) two-way communications at all levels on operating
difficulties and general business trends.

10. Union Participation in the Design

Performance reward schemes may work most effectively when worker

representatives are given full opportunity to participate in their design and
administration. Such involvement may facilitate comprehension and acceptance
of scheme objectives. Moreover, workers may only fully trust the scheme if it
has been elaborated in consultation and agreement with worker representatives
and they are subsequently given opportunities to verify that awards is being
calculated fairly.

Also, the commonality of interests of workers and employers in improved

productivity, performance, earnings and equity is likely to be much more
apparent where pay systems are developed and elaborated in accordance with
rules established through collective bargaining.

11. Review

There should be a clear provision for modifications owing to changes in

production methods or in prices or inputs or outputs.

The effectiveness of all pay systems decays with time and the duration of
schemes based on collective measures of performance are particularly short.
Accordingly it should be foreseen that the basic parameters of such schemes
would undergo regular periodic revisions. Indeed it should be expected from the

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outset that the collective performance measures and targets would undergo
continuing change every few years in the light of the experience.

4 Reward Systems to Have for Employee Morale

Employee rewards are incentives given to staff members based on individual

performance, team performance, or the overall performance of the organization.
These rewards may come in the form of commission payments, one-time
bonuses, pay raises, stock options, and "swag" such as corporate discounts,
sporting event tickets, and extra time off.

Offering rewards to your employees is one of the most effective ways to boost
team morale, motivate staff to work harder, and retain your top performers.
While a reward system can involve cash, there are many other types of
incentives that can help you build a positive, productive work team. Below,
we'll take a look at four common types of employee reward systems.

1.Monetary Reward Systems

The most common type of monetary reward system is an annual or semi-annual

bonus. These mid-year and end-of-year incentives are great for encouraging
healthy competition between employees with respect to performance and
productivity. Other examples of monetary rewards include cash awards, profit
sharing plans, and stock options. In many industries, monetary incentives are
enough to get maximum productivity your of employees. This type of reward
system works best with employees who are motivated by cold, hard cash.

2.Non-Monetary Reward Systems

A non-monetary reward system could be something as simple as a "top

performer" or "employee of the month" certificate. This type of reward satisfies
an employee's psychological desire to be recognized for his or her efforts. Other
types of non-monetary rewards to consider are extra time off, flexible work
hours, corporate discounts (such as a gym membership), and free parking.

3.Employee Assistance Programs

Employee assistance programs are designed to help workers achieve greater

work-life balance by supporting employees' physical and psychological health.
Some employee programs offer health-related corporate discounts, such as
fitness memberships. Other employee assistance programs provide help to
employees coping with work stress, family problems, and grief. Employee
assistance programs are a great way to support your staff members with their
home responsibilities so they'll give their best performance at work.

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4.Employee Recognition Programs

Research shows that employees who are recognized for their contributions and
accomplishments tend to work harder and have more positive workplace
attitudes. Employee recognition could be as simple as verbal praise or as formal
as an award ceremony. Depending on the type of employee recognition given
rewards can be doled out daily, weekly, or at the end of the month. As with the
other types of reward systems, employee recognition benefits both the employer
and the employee by helping create a more productive, positive work
environment.

Reward systems.

‗Reward system refers to all the monetary, non-monetary and psychological

payments that an organisation provides for its employees in exchange for the
work they perform.‘

Rewards schemes may include extrinsic and intrinsic rewards. Extrinsic rewards
are items such as financial payments and working conditions that the employee
receives as part of the job. Intrinsic rewards relate to satisfaction that is derived
from actually performing the job such as personal fulfilment, and a sense of
contributing something to society. Many people who work for charities, for
example, work for much lower salaries than they might achieve if they worked
for commercial organisations. In doing so, they are exchanging extrinsic
rewards for the intrinsic reward of doing something that they believe is good for
society.

Objectives of a reward scheme

What do organisations hope to achieve from a reward scheme? The following

are among the most important objectives:

1. To support the goals of the organisation by aligning the goals of

employees with these.
2. To ensure that the organisation is able to recruit and retain sufficient
number of employees with the right skills.
3. To motivate employees.
4. To align the risk preferences of managers and employees with those of
the organisation.
5. To comply with legal regulations.
6. To be ethical.
7. To be affordable and easy to administer.

Types of reward systems

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Here are some examples of common types of reward systems:

1.Commissions

Commissions are an incredibly common incentive scheme, normally as a

reward for sales staff. Typically, in this scenario, the employee has a lower
basic salary and commission pay is used as remuneration, in line with the
percentage value of the sales they make. This type of reward programme can
encourage employees to secure higher value sales so they can benefit from the
financial reward that comes from their efforts. Typically, a salesperson's pay
depends on commission, so it's important to regulate the programme to ensure
that employees remain ethical in their sales techniques.

2.Bonuses

Bonus programmes are traditionally used to reward individual

accomplishments. But, businesses are now increasingly using them as an
incentive to recognise group performance at team, department and even
business-wide levels. They typically reward bonuses for outstanding
accomplishments that go above the basic requirements of the individual or
group. Target-driven bonuses can be a great short-term motivator and a strong
structure can eliminate the perception that bonuses are simply an entitlement on
top of basic salary.

3.Profit-sharing

Profit-sharing is typically a group reward scheme that distributes a share of the

company's profits amongst its qualifying employees. This type of system
rewards employees for their contributions towards the profit goals of the
organisation as a whole. The scheme encourages employees to work together as
a team to achieve wider business objectives, but also to stay with the company
so they can receive their share of the reward. In many cases, profit-sharing
requires an employee to work for the organisation for a set length of time to be
eligible to take part in the programme.

4.Stock options

Offering employees stock options is another long-term motivator similar to that

of profit-sharing. Once an employee has been working for the company for a set
period of time, the organisation might offer them an opportunity to purchase
shares of the company at a fixed price. The employee is then free to retain their
stock or sell it on the open market, with the difference in price acting as their
reward. The method can incentivise employees to help the company succeed, as

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the higher the market value of the stock they possess, the greater the profit they
receive when they sell their shares.

5.Piecework schemes

Piecework schemes are one of the oldest performance-based pay schemes that
can help to motivate staff and increase productivity. This type of programme
works best in a scenario where you easily can track employee output in
measurable units. Typically, an employer pays a set price per unit of output,
therefore the higher the output an employee can produce, the more they can
receive. This can enhance productivity, but it's also useful to incorporate a
quality control system to ensure that employees maintain a high standard of
work.

Evaluating and monitoring implementation

Monitoring and Evaluation (M&E) is used to assess the performance of

projects, institutions and programmes set up by governments, international
organisations and NGOs. Its goal is to improve current and future management
of outputs, outcomes and impact. Monitoring is a continuous assessment of
programmes based on early detailed information on the progress or delay of the
on-going assessed activities. An evaluation is an examination concerning the
relevance, effectiveness, efficiency and impact of activities in the light of
specified objectives.

Monitoring and evaluation are both tools and strategy which help a project
know when plans are not working, and when circumstances have changed.

They give the management the information it needs to make decisions about the
project, and about the changes that are necessary for strategy or plans. In this
sense, monitoring and evaluation are iterative.

What is Monitoring and Evaluation?

Although the term ―monitoring and evaluation‖ tends to get run together as if it
is only one thing, monitoring and evaluation are, in fact, two distinct sets of
organizational activities.

Monitoring is the periodic assessment of programmed activities to determine

whether they are proceeding as planned.

At the same time, evaluation involves the assessment of the programs towards
the achievement of results, milestones, and impact of the outcomes based on the
use of performance indicators.

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Both activities require dedicated funds, trained personnel, monitoring and
evaluation tools, effective data collection and storage facilities, and time for
effective inspection visits in the field.

What it follows from the discussion is that both monitoring and evaluation are
necessary management tools to inform decision-making and demonstrate
accountability.

Evaluation is not a substitute for monitoring, nor is monitoring a substitute for

evaluation. Systematically generated monitoring data are essential for a
successful evaluation.

Monitoring Definition

Monitoring is the continuous and systematic assessment of project

implementation based on targets set and activities planned during the planning
phases of the work and the use of inputs, infrastructure, and services by project
beneficiaries.

It is about collecting information that will help answer questions about a

project, usually about the way it is progressing towards its original goals, and
how the objectives and approaches are taken may need to be modified.

It provides managers and other stakeholders with continuous feedback on

implementation, identifies actual or potential successes and early indications of
the progress, problems, or lack thereof as early as possible to facilitate timely
adjustments and modification to project operation as and when necessary.

Monitoring tracks the actual performance against what was planned or expected
by collecting and analyzing data on the indicators according to pre-determined
standards.

If done properly, it is an invaluable tool for the good management and provides
a useful base for evaluation. It also identifies strengths and weaknesses in a
program.

The performance information generated from monitoring enhances learning

from experience and improves decision-making.

It enables you to determine whether the resources available are sufficient and
are being well used, whether the capacity you have is sufficient and appropriate,
and whether you are doing what you planned to do.

Monitoring information is collected in a planned, organized, and routine way at

specific times, for example, daily, monthly, or quarterly.
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At some point, this information is needed to be collated, brought together, and
analyzed so that it can answer questions such as:

 How well are we doing?

 Are we doing the right things?
 What differences are we making?
 Does the approach need to be modified, and if so, how?

Example

This example is drawn from the World Bank Technical paper entitled
―Monitoring and Evaluating Urban Development Programs: A Handbook for
Program Managers and Researchers‖ by Michael Bamberger.

The author describes a monitoring study that, by way of rapid survey, was able
to determine that the amount of credit in a micro-credit scheme for artisans in
Brazil was too small.

The potential beneficiaries were not participating due to the inadequacy of the
loan size for their needs. This information was then used to make some
important changes in the project.

Bamberger defines it as: ―an internal project activity designed to provide

constant feedback on the progress of a project, the problems it is facing, and the
efficiency with which it is being implemented.‖

Evaluation Definition

Evaluation, on the other hand, is a periodic in-depth time-bound analysis that

attempts to assess systematically and objectively the relevance, performance,
impact, success, or the lack thereof and sustainability of the on-going and
completed projects about stated objectives.

It studies the outcome of a project (changes in income, better housing quality,

distribution of the benefits between different groups, the cost-effectiveness of
the projects as compared with other options, etc.) to inform the design of future
projects.

Evaluation relies on data generated through monitoring activities as well as

information obtained from other sources such as studies, research, in-depth
interviews, focus group discussions, etc.

Project managers undertake interim evaluations during the implementation as

the first review of progress, a prognosis of a project‘s likely effects, and as a
way to identify necessary adjustments in project design.
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In essence, evaluation is the comparison of actual project impacts against the
agreed-upon strategic plans.

It is essentially undertaken to look at what you set out to do, at what you could
accomplish, and how you accomplished it.

Example

Once again, we refer to Bamberger, who describes an evaluation of a co-

operative program in El Salvador that determined that the co-operatives
improved the lives of the few families involved but did not have a significant
impact on overall employment.

Formative and Summative Evaluation

The task of evaluation is two-fold: formative and summative.

Formative evaluation is undertaken to improve the strategy, design, and

performance or way of functioning of an on-going program/project.

The summative evaluation, on the other hand, is undertaken to make an

overall judgment about the effectiveness of a completed project that is no longer
functioning, often to ensure accountability.

 We usually seek to answer the following questions informative

evaluation:
 What are the strengths and weaknesses of the program?
 What is the progress towards achieving the desired outputs and outcomes
 Are the selected indicators pertinent and specific enough to measure the
outputs?
 What is happening, that was not expected?
 How are staff and clients interacting?
 What are implementers‘ and target groups‘ perceptions of the program?
 How are the funds being utilized? How is the external environment
affecting the internal operations of the program?
 What new ideas are emerging that can be tried out and tested?

Conventional and Participatory Evaluation

Evaluation can broadly be viewed as being participatory and conventional.

A participatory approach is a broad concept focusing on the involvement of

primary and other stakeholders in an undertaking such as program planning,
design implementation, monitoring, and evaluation.

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This approach differs from what we know as a conventional approach in several
ways. The following section adapted from Estrella (J997) is designed to
compare these two approaches of evaluation.

Conventional Evaluation

 It aims at making a judgment on the program for accountability purposes

rather than empowering program stakeholders.
 It strives for the scientific objectivity of Monitoring and Evaluation
findings, thereby distancing the external evaluators from stakeholders.
 It tends to emphasize the need for information on program funding
agencies and policymakers rather than program implementers and people
affected by the program.
 It focuses on the measurement of success according to predetermined
indicators.

Participatory Evaluation

It is a process of individuals and collective learning and capacity development

through which people become more aware and conscious of their strengths and
weaknesses, their wider social realities, and their visions and perspectives of
development outcomes.

This learning process creates conditions conducive to change and action.

 It emphasizes varying degrees of participation from low to high of

different types of stakeholders in initiating, defining the parameters for,
and conducting Monitoring and Evaluation.
 It is a social process negotiation between people‘s different needs,
expectations, and worldviews. It is a highly political process that
addresses the issues of an entity, power, and social transformation.
 It is a flexible process, continuously evolving and adapting to the
program-specific circumstances and needs.

Core Objectives of Monitoring and Evaluation

While monitoring and evaluation are two distinct elements, they are decidedly
geared towards learning from what you are doing and how you are doing it by
focusing on many essential and common objectives:

1. Relevance
2. Efficiency
3. Effectiveness
4. Impact
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 5. Sustainability
6. Causality
7. Alternative strategy

These elements may be referred to as core objectives of monitoring and

evaluation.

Differences between Monitoring and Evaluation

The important differential characteristics of monitoring and evaluation are;

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The 10 Steps of Monitoring and Evaluation

Developing M&E is a process which is integrated with conceptualizing the

project implementation itself. The M&E should ideally form a kind of critical
dialogue, which upholds the reality of beneficiaries, and the complex context at
the forefront.

Step 1: Needs Analysis

Where a project is not responding to a real, subjectively experienced need, with

the right solutions to motivate beneficiary participation, it is unlikely that it will
be effective. Although you may observe a need, a deep exploration of whether
the same is perceived by beneficiary groups is an important piece of
groundwork. Beneficiaries and their communities are always best placed to
determine whether a need exists, and have frequently put a great deal of thought
into the design of relevant and viable solutions. A thorough needs analysis will
allow you to take your concept, and test is out for relevance and viability in the
space where it is expected to create the change you hope see.

Step 2: Programme and M&E Design

Once you‘re clear on the need, you can begin with the creative process of
solution design, the work that will ultimately define your project, as well as
your M&E. Once you‘re clear on the need to be addressed, it is a good idea to
conduct extensive research on similar projects addressing similar needs,
exploring the lessons learnt and reporting. Although real solutions may lie in
truly novel work, there is a lot to be said for starting from an understanding of
what has and what has not worked in similar contexts.

Step 3: Stakeholder Mapping; beneficiary Identification

Although you will have already identified and engaged with beneficiary groups
by the time you are mapping stakeholders, this part of the process will enable
you to explore how the different stakeholders are linked in the context of the
work you are aiming to do. This forms an integral part of the M&E process, as
you aim to develop specific indicators, and important project milestones which
frequently includes actions, or necessary participation of key people, or groups
of people. This section of the work is not only about mapping individuals in
their capacity as participants, but identifying important officials, and
understanding how their role is integral to your project success.

Step 4: Defining the Theoretical Framework

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In this step, you are ultimately defining the change you hope to create, within
the situational, as well as the theoretical context. You are creating your Theory
of Change. This is an important part of the process where implementers should
work hand-in-hand with the M&E team to make sure that the results you hope
to achieve, and the empirical evidence you are basing the expected causal
pathways on resonate with everyone working on the project, particularly those
who are most familiar with the particular circumstances of the implementation
such as field workers who understand the communities. Workshopping a theory
of change using the language of results, and then researching around the salient
points that emerge is one way of doing this, and ensuring the breadth and depth
of the work.

Step 5: Defining the Logic, Mapping the Indicators

Once you have the high-level theory; the story behind the change well-defined,
then it is time to explore the technical aspects of the work you are doing, and to
define incrementally how specific, observable occurrences, which form the
basis of the evidence of the change you‘re creating, can be counted and mapped
to record the change taking place. In this step, it is important to research and
identify these indicators, where possible adhering to global best practice, or sets
of pre-defined indicators, particularly if you are working with global funders
and aim to show how your work aligns with their objectives.

Step 6: Milestone Identification, planning and scheduling

Once you are clear on what the results should look like and how to intent to
measure them, you need to consider timing really carefully. Consider your
assumptions. What needs to be in place, before your activities will be able to
achieve the change to hope to see? Do you need critical buy-in from key
stakeholders? Or perhaps you are working on an agricultural project and certain
programme activities are seasonal.

Step 7: Designing the Instruments; selecting the tools

Once you have your indicators identified and specified in time, and your
programme plans are clear, then you can begin to design instruments and select
tools which will work to collect the information against key indicators at
specific points in time. These may be anything from paper-base to biometric
attendance tools, to questionnaires about what benefit people perceive, to
assessment to see whether skills have been successfully imparted. Spend time
on this, and consider this very carefully in the context of the type of overall
evaluation approach you are using. These instruments will form the very basis

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of the information you will have to describe the change you have created and
ultimately to determine whether your programme was a success.

Step 8: Implement and Monitor

Ensuring that quality is maintained as you implement is key. Monitoring and

implementation should take place side-by side with monitoring teams
continually ensuring that the programme work is consistent in quality such that
the data gathered is reliable, with the implementation team providing feedback
where certain things about how the work is done might need to change due to
circumstances. This is really where the magic happens, and is the vast majority
of the work that you will do. As the M&E team, be sure to listen, and respond.
Facilitating implementation while giving sound strategic advice can add
immense value, and boost the ability of the implementing team to create
meaningful and lasting change.

Step 9: Analyze

Cleaning data is no one‘s favorite job, but with well designed instruments, and
good tools, the analysis can be the most fun. Explore different types of analysis;
think about whether you‘re looking for overall reach, or whether the analysis is
looking to identify some kind of causation. Visualization software can be
extremely helpful to provide graphical analysis of your data. Thematic analysis
for qualitative survey feedback can be a helpful method. Statistical tools are
most frequently used to try and show directions and intensity of causation (be
cautious about applying these to complex problems though).

Step 10: Report

Finally, write your report. In my work, it is always most useful to consider a

range of approaches and apply different methods to different parts of the work.
Impact really is a story. George Shackle, an obscure but brilliant radical
economist once wrote that there is no such thing as repeatable experiment. What
he meant by this is that even the same experiment at a different time is a
different experiment. In development practice there are no closed systems, yet
we seek to develop an understanding which can help ourselves and other
elsewhere to do good, to make good, and to spend precious resources as wisely
as possible. Reporting should aim to map such a path, between the immense
complexity, and the ‗answers‘. When writing your report, context is key, be sure
that programme teams provide input. It is always better to understate rather than
overstate success. Be true to the values, and true to the beneficiaries. How you
ultimately compile the reporting will depend on the M&E methods you have
chosen and on the project success.
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