CASE STUDY | Autoren: Marcin Kraska (BCC), Ewa Ignaszewska (BCC)
Vorbereitet in 2007 r. | Seitentreffer: 7583 | Durchschnittsbewertung: 5
In October 2006 BCC finished an information technology project support enhancing management efficiency in Polish Oil Concern ORLEN SA (Polski Koncern Naftowy ORLEN SA) – one of the biggest companies in Middle – East Europe.
For key management members of PKN ORLEN a new bonus system has been introduced, based on the MBO idea. Changes supported with an IT project led by the Project Team in PKN ORLEN and BCC finished with developing an informatics solution reinforcing with complexity MBO in the Concern. The solution is based on mySAP HR and Business Data Warehouse SAP BW.
Scale with no precedent
PKN ORLEN is the largest Polish company running business in different branches. More than a hundred companies in Poland and other countries belong to ORLEN Group, hence the results of the Concern are generated by hundreds of managers, and for setting shareholder value added (SVA) the company uses almost one thousand key values monthly.
The consequence of the above mentioned is a significant influence of MBO on the company’s strategy as well as the need of exact correlation of business ideas with information technology project.
At the bottom of MBO system (Management by Objectives) lies the idea found in the 50’s by P.F. Drucker. It creates management mode with freedom left for the employees in the way they want to fulfill certain objectives in the company. It influences development and lets using potential of the management to a greater extent.
From business concept to cards of objectives
The starting point of the project was business concept developed by PKN ORLEN SA, defining the rules of MBO functioning in the Concern.
“The MBO business module has been planned basing on employees’ knowledge about the enterprise, and on the knowledge of MBO method. This process was important not only considering the need to minimize risk of project failure. Solutions introduced here are and will be the basis of further development of MBO standards. The information system is therefore only a tool supporting processes, designed in business undertaking, being, however, an essential, integral part of MBO program” – underlines Robert Toczko, Teleinformation Manager of the MBO Project in PKN ORLEN SA.
For each manager concerned in the MBO system, a set of objectives has been defined, both qualitative and quantitative, indicating him/her direction of activities. The level of objectives defined before is being transposed onto the height of bonuses granted.
The idea of the project was to build an information system supporting the MBO process from the moment of creating the set of objectives (card of objectives) till the moment of bonus payment. The aim of the project was to reflect the whole process with use of already existing systems, particularly SAP BW and mySAP HR.
The proceedings covered unification of the names for key values (during the works led from September 2006, 1500 key values has been covered), preparation of the system for their registration, processing and giving access to the employees and their superiors.
The task of BCC was also to prepare an automatic mechanism for bonus calculation related with objectives accomplishment and reporting it on the payroll. Moreover, a particularly important element was to ensure a correct data flow, so that both an appraised manager and his/her superiors had one and same basis to communicate and report on defined objectives in MBO system.
To draw from a good source
Works identifying data sources for business objectives were an important part of the project in the scope of business. The aim of this part was to indicate, where the system has to take data from, so that the level of accomplishment was calculated automatically. This lets saving employees’ time and reduces the risk of generating mistakes.
For BCC consultants, defined data sources were a basis for creating infocubes in Business Information Warehouse. Building additional extractors in SAP BW also occurred essential. Indicated source parameters enabled working on the hierarchy, inter alia for CC (cost centers), accounting accounts, material indexes etc. Owing to that, the process of key values updating is faster and easier in use, as it does not require objectives being reset, but only updating certain hierarchical node.
Standard not always the best
Modeling new processes in informatics solutions required preparing and vast development used by PKN ORLEN SA data warehouse in SAP BW and mySAP HR. Probably the most interesting and innovative part of supported by BCC project was creating a solution exceeding SAP standards, which vastly facilitates managers and the MBO team defining, monitoring and reporting on the objectives.
Andrzej Skotak, Human Resources and Payroll Systems Development Manager in Informatics Office of PKN ORLEN SA comments:
“It is clear that it is worth using standard solutions provided by the system producer. Surely, it is easier to transfer them on the newer version of the system while upgrading. Not for any price, though. Together with BCC we came to a conclusion that profits from creating a tailor-made solution overlap potential inconveniences. To translate easy expectations of the customer on the standard system language is nothing particular. We expect something more from our implementation partner – that is creative approach to our not always conventional requirements”.
In both directions
“Owing to SAP BW and mySAP HR integration, a kind of interactive objectives (key values) platform has been created, ensuring access to coherent data concerning objectives. This lets us be certain that a change updating key values is made only in one place by the user, but is visible both in SAP BW and mySAP HR” – stated Robert Toczko.
Particular key values are set by the user on SAP BW. After an automatic migration of key values, they are used in mySAP HR, where depending on the roles defined for the manager (supervisor) a checklist with all defined key values/objectives is being displayed. With help of an easy interface, these key values are being attributed by the manager to a card of objectives of his/her subordinate.
On this ground, an automation of the card of objectives setting and its’ acceptance is being developed. Thanks to that, not only had the Concern eliminated appraisal on paper and accelerated the process of MBO objectives approval, but it also ensured a fully electronic supervision on every phase of the whole process.
For each key value, there has been created a so called form of additional information about the key value, which supplies the user (the card owner) with additional, very useful knowledge on a certain objective. The form notifies, whether the level of objective accomplishment is calculated manually or automatically by the system.
If the objective is calculated with a formula, a calculation method (an algorithm) is being added in the form of technical and business description. The system shows information, what are the sources of data necessary for objective calculation, who mapped the key value, which category and type the objective belongs to, etc.
The data displayed on the form of additional information about the key value are introduced in SAP BW, and displayed on the card of objective accomplishment in SAP HR.
Efficient integration
Thanks to solutions applied, technical administrator in PKN ORLEN SA has a clear picture of integrated solutions in the project. Such integration became more efficient, easier and cheaper in use.
Similarly, thanks to the intermodule integration the manager is sure to get data on time, not only with the guarantee of quality, but also easiness of access and analysis. All involved in MBO process sides use the interface either of dedicated applications, or reports, which have been made totally accessible on WWW sites. Such a coherent form of data processing, from their definition to visualization, additionally influences the efficiency of accomplishment of the MBO idea.
Control of objectives accomplishment
In the project framework, BCC also prepared a tool, thanks to which medium and high staff level can control the objectives accomplishment currently on the intranet portal.
This functionality is one of the elements of the Manager Self Service (MSS), directed on the quality of the operative information. For, the created solution provides not only the possibility of following the fulfillment of our own objectives. The manager can analyze the level of objectives accomplishment divided between his/her subordinates concerned in MBO.
All the information is accessible currently in the form of direct comparison with values set at the start of the appraisal period. With high quality of key values definition and their reliable processing it gives an effect of feedback – the outcomes of the actions taken can be observed almost up-to-date.
The second important aspect of the internet tool prepared by BCC in mySAP HR is providing the service of objectives, which according to their nature are inconvertible and are subject only to a subjective appraisal.
The system provides a 2-level service of such objectives. One can introduce an appraisal as an outcome of a direct interview between the superior and subordinate. Next, the appraisal can be corrected by the superior of the higher level in the organizational structure of the company.
The whole of the MBO process carried out by the web browser is supervised up-to-date by the substantial administrators. They can verify and correct each of the steps, administer with the solution, operate and control the process of the possible employee recalls, reporting remarks to the appraisals.
Changes for better
A complex approach to the topic of MBO implementation in PKN ORLEN SA was inseparably related with organizational changes. The project of information technology modifications had to be synchronized with the project of organizational alterations necessary for the success of the undertaking.
Above all, the way of appraisal and bonus calculation for the managers depending on the level of objectives’ accomplishment has been restructured. New roles has been designated, such as: MBO technical administrator, MBO business administrator.
Today they have over 1500 objectives (key values) under control. This way a system of support and help for all the employees concerned in the MBO system – the appraisers and appraisees has been created.
Better use of the potential of implemented innovative SAP functions, as well as new quality of communication and motivation of the management level are the effects of the organizational changes. And all that only to increase efficiency of human capital and added value for the shareholders of PKN ORLEN SA.
Technological benefits
Lets take a look at the benefits of MBO implementation based on SAP BW and mySAP HR from technological point of view. The solution developed in PKN ORLEN SA is not limited to an easy support of motivation processes.
An adopted integration method lets achieving an effect of synergy of data gathered in different SAP modules by ascribing them in SAP BW, using the same data to build motivation systems in HR, as well as to create company value management systems. A possibility of using scattered data for calculation of objectives accomplishment level is also precious.
The time to access the data about the fulfillment of strategic objectives has been shortened. The system ensured reliability and topicality of data by elimination of inaccuracies existing between the objectives describing the same values. The bonuses are calculated automatically.
Business benefits
Business benefits from MBO implementation are more long-lasting and indirectly transpose onto the development of market advantage. A new standard is providing the possibility of qualitative objectives’ appraisal , which in spite of not being measurable also transpose onto to real effects.
The managers can commit less time on activities related with monitoring of objectives’ accomplishment, moreover, on fulfilling their managerial responsibilities, to some extent automatically realizing company’s priorities. The feeling of tight connection between the company and employees grows.
“Implementation of MBO supported by SAP solutions created a new quality of strategy realization on the level of everyday managers’ work. Thanks to the automation of the process of gathering executive data about certain objectives, PKN ORLEN SA got a reliable and fast strategic information, which is instantly accessible on particular levels of organizational structure.
Such an approach towards MBO not only results in an augmented motivation level of management, but also transposes on satisfaction visible in the increase of the shareholder added value” – stated Mateusz Stefański, Informatics Office Director in PKN ORLEN SA.
MBO and what then
Till October 2006, the new bonus system has been introduced among around 500 employees of the management level in PKN ORLEN SA and around 20 companies from the ORLEN Group. In farther stages the next employee groups will be concerned.
Till the end of 2007, almost 1300 employees will be comprised with the MBO system, including both Czech Capital Group Unipetrol and ORLEN Deutschland management. The consequences of the MBO project are plans to expand mySAP solutions supporting employees’ competences development in PKN ORLEN SA.
Setting the objectives standing in front of an employee is only the beginning of the whole way. Even the best prepared system calculating parametric values will not provide their efficient management. Those responsible are people, who, using their skills, have a task to influence them efficiently. However, nothing is given forever and competences are in this case no exception.
Every professional HR department has a task to provide not only their monitoring, but also tools enhancing their constant development” – summarizes Andrzej Skotak, Human Resources and Payroll Systems Development Manager in Informatics Office of PKN ORLEN SA.
As experience of one of the biggest companies in Middle-East Europe shows, integration of business and information technology projects brings measurable benefits. Perspective use of developed solution intensifies efficiency in achieving higher shareholder added value.
It is necessary to remember, that efficiency of such an operating system depends on the quality of each element – regardless of them being on the side of business or technology. The chain of information implemented in MBO simply has to be complete. Only a full, updated, accessible on time and in a clear form information gives possibility of its’ efficient use and above all – management on its’ basis.
PKN ORLEN (Polski Koncern Naftowy ORLEN SA) is a Polish company and one of Central Europe’s largest refiners of crude oil. ORLEN specializes in processing crude oil into world-class unleaded petrol, diesel, heating oil, and aviation fuel as well as plastics and other petroleum related products.
PKN ORLEN operates 7 refineries, of which 3 are located in Plock, Trzebinia and Jedlicze (Poland), another 3 in Litvinov, Kralupy and Pardubice (the Czech Republic) and 1 in Mazeikiu (Lithuania). The total deep processing capacity of the refineries reaches 31.7 million tonnes per annum (PKN ORLEN share). PKN ORLEN’s retail network comprises approximately 2,700 outlets offering services in Poland, Germany, the Czech Republic and Lithuania. In Poland petrol stations operate under three brands: ORLEN (premium brand), Petrochemia Plock and BLISKA (economy brand). Clients in Germany are served at stations branded ORLEN and STAR, and in the Czech Republic at outlets bearing standard Benzina and premium Benzina Plus logos. Petrol sations in Lithuania operate under the ORLEN Lietuva and Ventus logos.
PKN ORLEN’s retail network is efficiently supported by a logistics infrastructure comprising ground and underground storage depots, a network of pipelines as well as sea reloading facilities in Poland and Lithuania.
As at the end of FY 2007 the ORLEN Group employed 22,927 employees, of which 4,748 accounted for PKN ORLEN (mother company), 3,448 for Anwil Group; 4,281 for Unipetrol in the Czech Republic, 3,059 for Mazeikiu Nafta in Lithuania and 97 for ORLEN Deuschland in Germany.
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Experience of the biggest Polish company shows that making implementation of MBO concept effective requires treating it with complexity. You have to remember about supporting the motivation system with complete and reliable information from different areas. Moreover, you have to provide tools dealing with processing and accessing data connected with MBO.
