Application: Key Performance Indicators in Alliances
After an initial agreement has been reached, it is not unusual for partnerships to experience difficulties. Issues that seemed simple going into an alliance often become more complicated at the implementation stage. One partner may have expectations of the other that were not clearly spelled out to the satisfaction of each. Memorandums of Understanding (MOUs) can create initial consensus, but Service Level Agreements (SLAs) in manufacturing and the service industry have set higher expectations and outcomes, and even more specific expectations with Key Performance Indicators (KPIs) used for assessing actual performance. KPIs are an important means of measuring specifically targeted areas of performance that, if achieved, will help ensure that the organization fulfills its operational and strategic goals, thus helping to monitor the success of the agreements between the alliance partners.
Early in the process of negotiating KPIs with vendors, there is often a failure to get key stakeholders, such as HR, legal, internal IT, and the vendor, all together to agree on the KPI content. Using the Laurent (2008) article, "Human Resources and Recruiting Management," to provide context, specify the causes of such failures and consider what the HR department can do to remedy these situations. Consider recommended practices in developing key performance indicators.
To complete this Assignment, respond to the following in a 3- to 4-page paper:
• Evaluate the importance of negotiating key performance indicators with alliance partners.
o Why are KPIs crucial to the success of alliance agreements?
o Describe how KPIs alleviate potential problems with alliance partners.
o From your research on negotiating KPIs, what types of barriers to agreements often get in the way?
- How can such barriers be removed or avoided?
• Analyze the effects of foundation accords, governance accords, and change accords on the success of a strategic alliance.
o How should the organization's overall strategy drive the accords?
o What are the potential risks and benefits associated with each type of accord on the success strategic alliances?
o Which type of accord do you consider most important for the long-term success of the strategic alliance? Why?