Stages of Management Processes that DSM need to Link its KSF
Dutch State Mines (DSM) was a state-owned company that was established in 1902. The company has expanded overtime while at the same time changing from petrochemical business to commodity chemicals. Currently, it is a specialty company that operates in the areas such as health, and nutrition. Apart from transforming its line of business, the company has also changed its management style over the years. It started with a traditional strategic planning process, which it later changed to Business Strategy Dialogue (BSD) because the former had limitations such as poor quality, poor link between strategy and performance, and it was only focusing on reducing cost of operations. An effective performance management should have the ability to link the goals and strategies of a company in order to ensure effectiveness and efficiency in its operations, making it profitable.
Therefore, DSM should use the following processes of performance management in order to ensure that it successfully links its key success factor. First, the company should engage in strategic planning, which should be in line with both long-term and short-term goals. In order to make the plan more successful, the management should work hand in hand with junior employees in drafting and implementing the plan (Paile, 2012). The plan should also constitute measurable goals that the company wants to achieve. In addition, the goals and objectives of the plan should clearly be understood by employees. Importantly, the DSM should closely monitor the executed plan about a given strategic group of employees on how it can enhance or maximize the key success factors.
The planning should go hand in hand with critical analysis out output data and information from the selected strategic group. The analysis should be aimed at transforming the data into actionable information that can enable DSM to gain a competitive advantage in the industry. It is through the availability of actionable information from the analyzed data that the company will be in a better position to understand the crucial factors in the selected strategic groups, and determine whether they are successful or not.
In addition, it would be important for the company to share and disseminate information to almost all levels of management. More importantly, DSM should make the information available to top management and top level staff, which would be used to improve the performance of junior employees, leading to an increase in output. Therefore, through effective planning, strategic analysis of available data, and proper dissemination of actionable information, DSM will ensure that all its key success factors are linked to obtain a common goal (Paile, 2012).
Aligning Business to Performance Management
Performance measures are mainly linked to pinpointing and close monitoring of the progress based on the goals of an organization. It is also crucial for an organization to take note of prospects for improvement and evaluation of performance by paying close attention to internal and external values (Eckerson, 2009). As a result, in order for DSM to align its business strategy to performance management it must consider the following drivers.
First, the company should enhance its cash flow return on investment (CFROI) by investing and exploring techniques that can effectively be used to increase CFROI. Finding ways of increasing CFROI will significantly help the business to align its business strategy to performance (Eckerson, 2009). The second driver that DSM can use is to invest in projects that are highly viable and profitable, which will enable it to further enhance its CFROI. It should ensure that the selected project can only increase or maintain CFROI, but not decrease it. The third driver that can help the company to align its business strategy to performance is the services that it offers to its customers. DSM should consider investing in retail business in order to enhance its operations. In addition, it should ensure that the services offered meet the needs and desires of its customers in order to gain competitive advantage in the market.
DSM’s Competitive Advantage
Based on the information from the case, it is clear that DSM is striving to come up with a sustainable competitive advantage that will ensure its survival in a competitive business environment. Therefore, the assessment of its competitive advantage is based on planning, organization, and controlling. First, the company has come up with clear strategic plans. DSM future strategic plans are in with its goals and objectives, including its position. The strategic planning can be seen in how the company has changed its operations and management style overtime. For instance, it started with traditional strategic planning before adopting BSD, which was more effective.
Secondly, the company is having a decentralized organizational structure, comprising of various departments. The departments are more of independent while at the same time empowered to undertake various business operations. Consequently, the decentralized structure can enable the company to easily adapt to changes in the industry and the market. Thirdly, DSM is exercising effective control measures. It is using timely and accurate feedback from all its departments to ensure that everything is in control. Successful control leads to effectiveness and efficiency, leading to a higher competitive advantage.
Eckerson, W. W. (2009). Performance management strategies. Business Intelligence Journal, 14(1), 24-27.
Paile, N. J. (2012). Staff perceptions of the implementation of a performance management and development systems: Father Smangaliso Mkhatswa case study (Doctoral dissertation). University Of South Africa.