Learning objective of group assignment: To provide you with practice and experience in applying the information we have learned about performance management systems, this group assignment asks you to design a balanced scorecard as a performance management

SPC Ardmona

Presented by: Liz Merlot,

Michela Betta, Tim Pluekhahn,

Susan Quinn

Problem definition • Overall problem

– The key performance problem for SPC Ardmona has been poor financial performance.

• How does this problem relate to each of the four perspectives of the balanced scorecard?

• Financial: • Increasing losses requiring bailouts from government and parent

company (Malone, 2015; Tonkin, 2015) • Customer:

• Stagnated offerings, product recalls (Hatch, 2016; Tonkin, 2015) • Internal Processes:

• Aging and out of date manufacturing equipment (CCA, 2014; Tonkin, 2015)

• Learning and Growth: • Turnover, rising employment costs (Durie, 2015; Tonkin, 2015)

Evaluating performance

Strengths Australian image

Community involvement New product lines

Weaknesses Competition

Reliable fruit quality Low technological innovation

Opportunities “Clean & Green” image

“Health” image Online retail

Parent company Coca-cola Amatil

Threats Supermarket private labels

Global competition High employment costs

Poor economic condidtions

SWOT Analysis

Source: Chang & Kristiansen, 2006; Malone, 2015; SPC Ardmona company website; Tonkin, 2015

Proposed Design of Balanced Scorecard with Innovation

To bring premium packed fruit and

vegetables to Australians

Financial Perspective Expanding financial measures to include measures of social

and environmental stakeholders.

Internal Business Process

Using relationships with local community and fruit growers to

build traceability. Develop online retail store to provide new

distribution opportunities.

Learning and Growth Develop partnerships with local universities to

build capacity for new knowledge. Use broader CCA network to develop career

pathways for staff.

Customer Perspective

Expanding to new sources of health

conscious consumers

Source: Kaplan & Norton, 1996 Voepel, Leobold &Eckhoff, 2006

The role of HRM • HRM practices are considered a crucial input for

organisational innovation (Ling & Nasurdin, 2010). The proposed balanced scorecard needs to be supported by the performance appraisal system, learning, training and development initiatives, and rewards.

• Performance appraisal systems provide the opportunity to build goals to improve collaboration and idea generation into individual performance management systems so that performance goals are in alignment (Gupta & Singhal, 1993).

• Learning, training and development initiatives provide the skills and capacity for individuals to achieve new performance initiatives (Truss, Mankin & Kelliher, 2009)

• Reward systems signal the importance of proposed initiatives to employees so effort is exerted on desired results and behaviours and performance is improved (Aguinis, 2009)

Performance Appraisals role in improving performance

• In alignment with increasing collaborative relationships proposed in the BSC, revamping performance appraisals to include a focus on relationships and increased generation of ideas builds innovation into the HRM system (Gupta & Singhal, 1993; Voepel et al., 2006)

• How can the performance appraisal system be designed to address performance problems and improve innovation? • Reports back on new products showcased at trade

conferences. • Contacts with local growers • Ideas for workgroup for experimentation

Performance appraisal

• Gupta and Singhal (1993) recommend that frequent performance appraisals are required to support innovation. • Introduce new, supplementary self appraisal online

system, to allow staff to reflect on performance ,to be completed twice a year (Hutchinson, 2013).

• What measures will be used to evaluate impact? • Attendance numbers at identified trade events • Number of ideas reported from network and for a

workgroup

Learning, Training and Development initiatives to improve performance

• In alignment with increasing collaborative relationships and development of new knowledge proposed in the BSC learning, training, and development initiatives provide SPC Ardmona with the skills and capacity to support innovation and improve performance (Jiménez-Jiménez & Sanz-Valle, 2008; Truss et al., 2009).

• How can learning, training and development be designed to address performance problems and improve innovation? • Offer work-team time in experimentation lab • Staff training in online skills, training in manufacturing technology • Placement scheme in larger CCA network or with local growers

Learning, Training and Development • Modifying Kirkpatrick’s model for evaluating training

(Reaction, Learning, Job behaviour and Results) provides a means for evaluating the impact of learning, training and development to improve innovation (Truss et al., 2009).

• What measures will be used to evaluate impact? • Staff satisfaction with learning, training and development initiatives

(Reaction) • Ideas reported back to workgroup and tested in experimentation lab

(Learning) • Ideas from learning, training and development initiatives implemented

in workgroup (Job behaviour) • Staff undergoing training (Results) • Numbers of staff taking up placement scheme (Results) • Return on investment (cost of initiatives by revenue)(Results)

Using rewards to improve performance

• Effective reward systems in innovative companies motivate employees to take risks, develop successful new products, and generate more new ideas (Gupta & Singhal, 1993; Jiménez-Jiménez & Sanz-Valle 2008).

• Rewards are designed to target behaviours and results of individuals and work groups using time buyout and financial rewards (Hutchinson, 2013)

Rewards • Rewards to address performance problems and

improve innovation? • 10% time ‘buyout’ scheme • Collaborative grants with local growers • Team bonuses for implementation of innovative ideas

• What measures will be used to evaluate impact? • Numbers of staff in buyout scheme (behaviour) • Number of ideas generated by buyout scheme

(results) • Number of collaborative grants (results) • Amount spent on team bonuses (results) • Revenue generated by new ideas (results)

Fostering innovation • The proposed design should foster innovation

through: • Fostering creativity through supporting idea

generation and developing collaborative efforts in recognition that innovation is a collective achievement (Subramaniam & Youndt, 2005).

• Removing some of the barriers to innovation identified by Albury (2005) by increasing support for appropriate risk taking and generating new ideas, to improve rewards as incentives to be innovative, and to expand sources of innovation.

Conclusion

• Developing greater online retail and building networks requires a corresponding increase in staff capacity. Performance appraisal provides an ongoing system for ensuring staff meet these strategic objectives. Learning, training and development initiatives work to provide skills and capacity to meet new objectives. Rewards encourage staff to develop skills and behaviours to meet objectives.

References • Aguinis, H 2014, Performance Management, 3rd edn, Pearson, Essex. • Albury, D 2005, ‘Fostering Innovation in Public Services’, Public Money & Management, vol. 25, no.1,

pp.51-56. • CCA, 2014, Coca Cola Amatil Annual Report, viewed 22 September 2015 <

http://ccamatil.com/INVESTORRELATIONS/Pages/AnnualReports.aspx> • Chang, H.-S. and Kristiansen, P. 2006, ‘Selling Australia as “clean and green”’. Australian Journal of

Agricultural and Resource Economics, vol .50, no. 1, pp. 103–113. • Durie, J, 2015, ‘SPC chief Peter Kelly to go in CC Amatil shake-up’ The Australian, Business Spectator,

January 14. • Gupta, AK. and Singhal, A. 1993, ‘Managing human resources for innovation and creativity’, Research

Technology Management, vol. 36, no.3, pp.41-48. • Malone, P, 2015, ‘State intervention a success for SPC Ardmona, staff, fruit growers and consumers’, The

Age, May 2. • Hatch, P, 2016, ‘SPC Ardmona recalls potentially explosive tinned tomatoes’ The Sydney Morning Herald,

Business Day, May 17. • Hubbard, G, Rice, J. and Galvin, P, 2015, Strategic management: Thinking, analysis, action, 5th edition,

Pearson: Melbourne. • Hutchinson, S, 2013, Performance Management: Theory and Practice, CIPD: London. • Jiménez-Jiménez, D and Sanz-Valle , R. 2008, ‘Could HRM support organizational innovation?’ The

International Journal of Human Resource Management, vol.19, no.7, pp. 1208-1221.

References Continued • Kaplan, R.S. and Norton, D.P. 1996, Appendix ‘Building a scorecard’ in The Balanced

Scorecard: Translating strategy into action, Harvard Business School Press: Boston Massachusetts pp. 294-311.

• Ling, TC. and Nasurdin, AM. 2010, ‘Human resource management practices and organizational innovation: An empirical study in Malaysia’, The Journal of Applied Business Research, vol.26, no.4, pp. 105-115.

• Malone, P, 2015, ‘State intervention a success for SPC Ardmona, staff, fruit growers and consumers’, The Age, May 2.

• SPC Ardmona company website. <http:// http://spcardmona.com.au/en/about- us/who-we-are> viewed 19/07/2016.

• Subramaniam, M. and Youndt, MA. 2005, ‘The influence of intellectual capital on the types of innovative capabilities’, Academy of Management Journal, vol. 48, no.3, pp.450-463.

• Tonkin, B, 2015, Fruit and Vegetable Processing in Australia, IBISWorld, C1140 • Truss, C., Mankin, D and Kelliher, C 2012, Strategic Human Resource Management • Voelpel, S.C., Leibold, M. and Eckhoff, R.A. 2006, ‘The tyranny of the Balanced

Scorecard in the innovation economy’, Journal of Intellectual Capital, vol. 7 no. 1 pp. 43 – 60.