Performance Management System at Gas Company

The case is about the implementation of a performance management system (PMS) in ALPHA, a gas processing company. ALPHA is also a subsidiary of a multinational company based in Malaysia. The new performance management system was imposed on ALPHA by its parent company.The PMS integrates the following key management processes, i.e. strategic planning, portfolio management, resource allocation, performance measurement and reporting and executive compensation in the organization. The ultimate aim of the new system is to ensure that the focus of business activities is on economic value creation. At the heart of this system is the use of key performance indicators (KPIs) for each of the management processes coupled with performance targets for all the KPIs.However, there were various implementation problems in the company. The employees had difficulty in formulating their performance indicators. There was also confusion and anxiety among the organizational members regarding the new system, specifically on how it would impact on their performance appraisal. Consequently, most of the employees formulated two sets of indicators, one to be used for their performance appraisal and another indicator for the performance management system, which is not used in their evaluation system.Ms. Marinah, the General Manager of the Finance Division and also the person responsible for the implementation of the new performance management system needs to make a decision as to whether to continue the usage of two sets of indicators for the parent company or to brief the managers again about the usage of value based indicators for their appraisal system.