DP World Company’s Performance Management Analysis

DP World is one of the largest companies in the sphere of worldwide trade, representing a valuable link in the global supply chain. The company operates a variety of businesses that range from maritime services to inland terminals, through either ancillary service to automated solutions. Founded in 2005 in Dubai, the United Arab Emirates, DP World employs under forty thousand workers across one hundred and ten countries, establishing and maintaining strong bonds with importers, exporters, governments, and other important business actors (DP World About Us par. 2).

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Aims and Objectives

The primary objective of the report is to review the current performance management strategies that are in place in the company, identify the main strategic issues, and offer some recommendations for how the strategic issues can be handled, in order to ensure stability and maintain the company’s competitive advantage in the market.

Literature Review

The main area to be considered in the course of the report is performance management, which is defined by Aguinis as a “continuous process of identifying, measuring, and developing performance in organizations by linking its individual’s performance and objectives to the organization’s overall mission and goals” (2). Due to the fact that performance is assessed with the use of Key Performance indicators, it is also important to define them. Key Performance Indicators (KPIs) represent a framework of quantifiable measures that a business employs in order to measure its performance in accordance with set goals (Investopedia par. 1).

Methodology

The data collected for the report was taken from external sources, including company’s website, and the company’s Annual Performance Reports that can be freely accessed. DP World was chosen for analysis, as it is one of the largest global UAE companies. One of the core businesses of the company is container handling, which accounts for more than half of the company’s revenue. To give an example of the company’s operation, in the year 2015, DP World managed to handle nearly sixty-two million twenty-foot equivalent units (TEU).

With the global expansion of the company in addition to the pipeline development, nowadays DP World manages to achieve a gross capacity of seventy-nine point six million TEU. In the future, the company’s management predicts an increase of a hundred million TEU by the year 2020, a factor designed to meet the demand set by the stakeholders of the global transportation market. Therefore, one of the main features of the company’s strategy is foreseeing needed change and creating innovative solutions, in order to create the most efficient and safe transportation services framework that will meet the customers’ expectations. The company’s vision is associated with leading the future of global trade, through adding value to its customers and building a global legacy.

Data Analysis

DP World Performance Management System

The work done by DP World employees is, for the most part, supported by a fair system of performance management, followed by succession planning, as well as providing company employees with opportunities for learning and development. The system of performance management in DP World is applied in accordance with the annual goals set by the company each year. The results of the company’s and employees’ performance are reviewed by the company’s board as well as its committees. The process of the performance evaluation and further management takes place in four steps.

The first step is “self-evaluation,” which implies the completion of a questionnaire given to every director and each member of the board. This particular questionnaire consists of questions that relate to how the company performed over the previous year. The second step is conducting meetings, led by the DP World Chairman and Senior Independent Non-Executive Director, to review the responses given in the questionnaires. The third step is the consolidation of the responses presented to the board during the meetings. Lastly, the fourth performance assessment step consists of reviewing the results and preparing a new plan of action to be implemented in the next year (DP World Performance Evaluation par. 2).

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Key Performance Indicators to measure the company’s performance change in accordance with the goals set by the board for the following year. For example, in 2012 the board set a goal for ensuring the safety of all contractors and employees. To measure the performance with respect to the goal that had been set, the board measured the frequency of lost time injuries, which they found to be 7.3, in comparison with 8.0 in 2011. Therefore, the board came to the conclusion that the set goal had been achieved. An additional example is the goal of increasing earnings per share.

In this case, the board used the KPI of earning per share to see that in 2012 in earnings had increased by eight cents per share. Success was also achieved in terms of increasing the return on capital employed. Through KPI tracking, the Board saw a 0.8% increase in comparison with the previous year (DP World Annual Report 17). As these examples show, to make sure that the company reaches the set goals, management uses Key Performance Indicators across all areas of its business.

Strategy and Challenges

When analyzing DP World’s marketing strategy, four main priorities can be outlined. The first strategic priority relates to driving a shareholder value that can be sustained for a long period of time. For example, the company sets complex but realistic financial aims that drive the business through strategy optimization. Additionally, DP World invests in the kind of high-priority terminals that will allow for growth and increased collaboration with primary stakeholders. The second strategic priority, as outlined by the company, is creating an effective and profitable experience for customers.

This priority is implemented through leading the global transportation market with reliable and high-quality services that meet customer demand. The third strategic priority impels the development of an efficient and secure framework for world trade management.

This strategy is three-fold: DP World continuously manages risks and optimizes performance, develops and maintains the sustainability and profitability portfolio, and adopts an appropriate strategy for investments that adds value for both customers and the company itself. The last strategic priority relates to establishing an environment for continuous growth and learning, by means of creating a learning culture and an open work environment within the company, as well as maintaining the position of being an “employer of choice” (DP World Annual Report 13).

In order to communicate its marketing strategy and sustain the company’s success in corporate performance, in 2013, DP World introduced a system of balanced scorecards. The adopted framework is effective in providing a measurable guide for reaching the set goals and sustaining the results of performance management in the long run, by implementing the Key Performance Indicators assessment. The KPIs relate to the already mentioned strategic priorities of finance, customers, learning, and people, operational and internal.

However, the company is challenged by the fact that the process of performance management is only starting to gain momentum within its business operations. As recently as 2014, DP World introduced the Talent Management system, which had been aligned with the performance review cycle (DP World Performance Opportunity 25). Therefore, the performance management system is what requires the most attention for assessment and improvements planning.

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Furthermore, the company’s strategy is greatly challenged in sustaining relationships with other enterprises, particularly between companies from private and public sectors. Due to the fact the DP World is largely focused on providing reliable services to its customers and increasing value, the sustainability of partnerships related not only to business issues such as maritime piracy, for instance, is often disregarded.

Discussion and Conclusions

It can be concluded that performance management in DP World is a process that is taken seriously, since the company sets realistic goals in accordance with its vision, and measures performance to identify whether goals have been reached. The examined annual reports presented extensive information on which performance indicators are measured to determine progress in the set goals.

However, the reports only mentioned the improvements the company experienced in its performance; there were no decreases, indicating that in some aspects the company still needs to perform better. On the one hand, the lack of indication of negative performance boosts the company’s confidence, and establishes it as one of the most successful transportation corporations in the world.

On the other hand, if management is always satisfied with performance, there is no need to grow and improve current practice. Therefore, in some aspects, it may be beneficial for the company’s management to include unsuccessful performance indicators into their annual reports, so that a much more extensive analysis can be conducted in terms of the company’s performance management.

Recommendations

Due to the fact that the system of performance management is fairly new to DP World, one of the primary recommendations is to properly structure the process of performance evaluation in order to measure the necessary KPIs effectively. For example, not only the board should be involved in the assessment of the company’s performance. Employees can also be integrated into the process of performance assessment, in small areas of the company’s operation, so that there is less risk in terms of errors and inconsistencies.

In order for DP World to reach its set goals, it is important to maximize the human resources available within the company. The company’s management should promote employee engagement to create a sustainable corporate environment in which employees will go to great lengths to respond to the posed challenges and set goals.

It has been mentioned that ports are the main components of DP World’s operation, providing three-quarters of the company’s revenue. Therefore, one of the most important recommendations relates to measuring port performance indicators, to show how well the company is moving toward the goal of becoming the foremost transportation company in the world. Addressing the challenges of management scarcity and capital scarcity, as well as changing conditions in all ports under DP World’s global coverage, will present higher management with a bigger picture of how the business operates, as well as provide an opportunity to address any issues as soon as they arise.

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Works Cited

Aguinis, Herman. Performance Management. Edinburgh, UK: Edinburgh Business School, 2005. Print.

DP World. About Us. 2016.

—. Annual Report. 2012. PDF file.

—. Performance Evaluation. n.d.

—. Performance Opportunity. 2014. PDF file.

Investopedia. Key Performance Indicators – KPI. n.d.

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