“Project on Performance Management System of

Flipkart”
Project Report Submitted in Partial Fulfilment of the Requirements
of the Degree of

M.B.A. (Master of Business Administration)

Under the supervision of

Dr. Swetalina Mishra

SCHOOL OF MANAGEMENT

Subject Name: - Performance management

Subject Code: - MGHR2317

Submitted By
Name: - M. Arun Prasad Achary
Registration No: - 210402100020

CENTURION UNIVERSITY OF
TECHNOLOGY & MANAGEMENT
Jatni, District: Khordha, Bhubaneswar Campus, Odisha,
Pincode:752050
 Performance Management System of
The Leading E-commerce company in India

“Flipkart”

Flipkart is the perfect place for

people who want to build and create.
We offer this flexibility and freedom
in ample measure. Our
entrepreneurial spirit combined with
an open culture makes us a great
place to work for top talent. We pride
ourselves on our system of
meritocracy. The core of our review
system is what and how. What refers
to what the employee did? What were the achievements and the impact of the
employee. The ‘how,’ on the other hand, looks at the way the employee went about
making the impact. The alignment of the ‘how’ to our core values is a critical part of the
assessment. We also use a 360-degree feedback process as part of the performance
review. This means that every employee’s review has inputs from self-review, peers,
managers, and the employee’s direct manager. This makes the feedback and consequent
assessment balanced and fair

Real-Life Example

Aayush Sikhwal is a passionate and hands-on HR professional currently working on

Total Performance and Talent Development at Flipkart. He is an IIM Ranchi alumni with
an undergrad degree in Electrical Engineering. He strongly believes and follows the
saying “Opportunities do not happen. We create them.”

He is inquisitive and likes learning new things. He pushes the boundaries and aspires to
make each day better than the last. When not indulged in professional endeavours, he
delves into philately, swimming, and table tennis. He enjoys conversing and is keen to
talk about anything under the sun. Here are his key experiences in the industry in
relation to Performance Management.
How important is Performance Management in today’s high-flux
organization?

In today’s world, people are not only concerned about what they do, they are concerned
about if they are making a difference. This thirst for making a difference creates a high-
flux environment in an organization. In such a scenario, performance management
becomes a very important part of enabling a fulfilling career, which brings employee
ownership to the forefront. The concept of Performance Management has broadened in
scope from just a yearly evaluation
exercise to an overall development and
engagement process. The shift from the
traditional “Judgement/Evaluation based”
system to a more connected and
development-based approach is what
makes it important for today’s high-flux
organization. The reality is you can never
have a single lasting solution in a high-flux organization, it needs to evolve continuously
according to the needs of the people and the environment in which it operates. We need
to reinvent continuously, redesign radically and personalize to suit the needs of the
people we enable. Provide multi-source feedback and create an environment that
promotes transparency and accountability. Not only will this help create individual
differentiation but also build organizational citizenship with team-based differentiation.

How does Performance Management help companies like yours?

E-commerce, like any other industry that changed the status quo of things, needs a very
robust performance system that continuously enables the following:

● Efficiently change with the evolving business and people needs

● Recognize the efforts of people

● Enable employee development

● Determine pay and promotions

● Handle low performance

What are the key gaps in current industry practices in managing
employee’s performance?

“One of the basic rules of the universe is that nothing is perfect. Perfection simply does
not exist. Without imperfection, neither you nor I will exist” – Stephen Hawkins.

I believe any process in an organization also falls in a similar situation. Nothing is

perfect and there will always be gaps that need identification and course correction. A
few gaps that I think exist in managing
employee performance are: A once-a-
year process with no other
touchpoints: Having a year-end
process that only delivers a judgment
on an employee’s performance with no
round-the-year feedback and
opportunities to improve will always
top the list. Considering it as an exclusive HR process: Performance management is a
process that is employee-owned, and HR facilitated. Disconnecting it from the business
is a pitfall that should be avoided. Lacking authentic leadership: No process can be
effective if not embedded and followed consistently by the organization starting from
the top.

This makes authentic leadership

one of the most important parts of
the overall performance life cycle.
Not using Technology: “Hear the
things that are not being said” If
we do not use technology to feed
into review/feedback, we are
basically managing performances
based on perceptions. Technology-enabled decision-making for each employee helps
counter not only perception but also biases. Disconnected systems: Performance
management is not an exclusive singular system. It must work hand in hand with other
processes like L&D, Recognition, Talent Management, Succession Planning, etc. If not,
we are not unleashing the actual power of performance management.
Ignoring Change Management: In a constantly evolving business environment, all HR
processes need to evolve as well. If the change is not managed efficiently and effectively
it will not become a part of the organizational DNA. Over focused on either Impact or
Behaviour: Performance management needs to be balanced to recognize both the
impact created by the employee and the behaviour that needs to be reinforced as the
corporate values.

What makes an effective Performance Management program? Any

best practices to share.

“The most effective way to do it, is to do it” – Amelia Earhart

● Continuous improvement and touchpoints: An efficient and effective performance

management process is one where the employee is given a chance to develop, grow,
and course-correct throughout the cycle. Not just at the end of the year.

● Connected Systems: The performance management system should be an input to

define people development strategy. This enables the personalization of other

people’s management practices.

● Enable managers with technology and feedback: The most effective way to remove

biases and perceptions from the process is to provide multiple sources of data to
enable performance management.

● Continuous and Multiple sources feedback: Employee and Manager: Feedback is the

most critical part of the performance management process. It should be continuous,

effective, and honest.

● Business owned and HR facilitated: An ideal performance management process is

weaved into the day-to-day working of an organization, owned by the manager and
employee, and facilitated by HR.

● Balance Impact and Behaviours: Create a balance in the process, take both the

performance and the potential into consideration.

India is undergoing major fundamental problem unemployment. Start-ups are

contributing a predominant role in the development of the economy and to resolve the
issue of unemployment. India is amongst the fifth largest start-up communities of the
world. By the end of 2018 more than 3,000 start-ups were launched.

These start-ups have been providing 80,000 new jobs and it is contributing to the
remarkable growth of the Indian economy. There is a positive impact of start-ups
towards improving the economy in the form of Gross Domestic Product (GDP). The
startup units initially facing sustainability after that turn into start-up companies which
are playing a significant role in
the growth of the economy
(Martinson’s, 2002). As a result,
the government of India has
taken various initiatives for the
development of start-ups in India.
In India, a few success stories
such as Flipkart, Quicker, Practo,
Zomato, and Inmobi start-up companies have indeed, come a long way. But some of
them startup companies are failures lack financial resources. Any start-up would face
financial issues and problems at different stages (Colombo, 2008). This paper to focus
on performance evaluation and its sustainability of flipkart in India with the objectives
to know the structural framework of flipkart, to analyse the performance and its
sustainability of flipkart and the prospects of this company analysed by the researcher
to take policy decision for the improvement of the company. Index Terms- Flipkart,
Performance evaluation, Sustainability, Outlook.

INTRODUCTION
Since India has restricted to
invite FDIs in online retail. As a
result, Flipkart is established to
accelerate e-commerce business
in retail. The operating and
trading activities of online retail
are complicated and many inter-
connected logistics have been
performing by the entities for attaining customer satisfaction. Flipkart India Private Ltd.
Is popularly known as ‘Flipkart.’ It was incorporated on the 19th of September 2011 as
a start-up unit. Later, it was turned into a start-up private limited company. The head
office is in Bangalore, Karnataka.

There are two full-time directors were appointed viz., Santosh Kumar Bethala and
Prabhu Bala Srinivasan. The longest holding director is Prabhu Bala Srinivasan who was
appointed on 3rd July 2018. He has been holding on board for 1.8 months and recently
the second director appointed Mr. Santosh Kumar Bethala who was appointed on the
16th of February 2020.

II. REVIEW OF LITERATURE

Azoulay and Share, (2001); Bloom & Van Reenen, (2010); Armanios, (2017); Kulchina,
(2017) had expressed that variance reasons for failure of start-ups companies. It may be
lack of management capabilities, skilled labour, financial crisis etc. Baron and Hannan,
(2002); Beckman, Burton, and ‘O’ Reilly, (2007) stated technology start-ups are
knowledge intensive
employees required for
high performance of the
company. Ineffective of
this key resources lead to
downfall of the growth
and even threaten for
survival. Kulchina, (2016)
highlights some start-ups
founders acquired on hire basis experienced managers on the other hand rely on their
own trial and error to run the business. Due to their sustainability, start-ups are very
dull and them drift is very poor towards achieving desired goals. Vermeulen, (2018)
said that a wide array of topics including strategy, finance, marketing, and people
management issues are highly variable.

As Entrepreneur to manage these variables are very difficult for sustainability of start-
up companies. In some of the business firm are their survival and growth of the firm
based on nature of the business. These are small/large, schools and hospitals for their
business set of structure and goals. These businesses are getting continues feedback for
improvement of their business (Bloom and Van Reenen, 2006). Shaik G., Babu P.R.
(2019) refer to use of information for mobilizing funds from the banker to run the
business effectively.

RESEARCH GAP

The above review of literate indicates the failures of start-ups lack of management
capabilities, skilled labourers, financial crisis etc. No study has done in performance
evaluation and its sustainability of start-up companies. Due to this the researcher
focuses on performance evaluation of Flipkart and its prospects for sustainability of this
company.
IV. OBJECTIVES OF THE STUDY

1. To know the structural framework of Flipkart

2. To analyse the performance and its sustainability of Flipkart
3. To find out the prospects of this company

V. METHODOLOGY OF THE STUDY

The data has been collected from the secondary sources. For analysing the data, the
researcher used various statistical techniques viz., correlation co-efficient, regression
analysis and Anova. Based on the availability of data last 5 years has taken to find the
performance and sustainability of the company.

VI. STRUCTURE OF THE FLIPKART

PVT LTD- SINGAPORE Four subsidiary entities were incorporated in Singapore with
100 percent holding by Flipkart Private Ltd. These are Flipkart Digital Media Private
Limited in November
2010, Flipkart Payments
Services Ltd. in December
2011, Flipkart logistics
private limited in
September 2012, and
Flipkart Market place
Private Ltd. In September
2012. The Flipkart India Pvt. Ltd was incorporated in September 2011 the holding of
0.01 percent. The Flipkart Internet Pvt. Ltd was incorporated in October 2012 with the
holding of 99.39 percent of which Flipkart.com provides a technology-based platform to
e-commerce business entities.

Flipkart Payments Gateway Private Ltd. was incorporate in December 2011 earlier as
Flipkart Digital Private Limited. It was holding the share of 99.76 percent, the remaining
share is having by Flipkart private ltd. i.e., 0.24 per cent. From Annexure 1, the success
of any company supporting Mechanisms is required; otherwise, it increases the risk of
failures (Salamzadeh A. F., 2015).
The availability of finance is critical for the start-ups and its sustainability depending
upon getting enough (Ashish, 2014) (Truong, 2016). The ownership of Flipkart Private
Ltd., Singapore largely rests with 29.5 percent by Tiger Global, 11.5 percent by Accel
Partners, 8.7 percent by Naspers and the Bansal’s. About 30 percent stake is holding by
Tiger Global the US-based hedge fund in the parent company.

PROFITABILITY AND LONG-TERM VIABILITY

Initial stage many

start-ups i.e., two-third
of units are failure only
the rest of the units are
turned into start-up
companies (Vesper,
1990). Many start-ups
have a failed lack of
attention on existing
trends, legal issues, and environmental elements. Establishing an entity is easier than
forecast the environmental aspects of the business(Boeker, 1988) (Bruton G. &., 2002).
In September 2012 Flipkart acquired WS Retail. The board members were the Bansal’s
and his two relatives. During this time, a large stake holding by former Chief Operating
Officer of Mr. Rajeev Kuchhal, On Mobile Global Ltd.

Tapas Rudra Patna and Sujeet Kumar were having 46% and more than 75% of stake in
WS Retail and Flipkart’s business, respectively. Both entities used to share offices and
their warehouses. Flipkart had made sharing of ownership to increase long-term profits.
But the results were not satisfactory. For the year ended 31st March 2013 and 2014, the
losses were recorded by all entities of Flipkart India amounted to INR 644.37 crores and
INR 719.49 crores, the revenue of INR 1,163.10 and INR 3,025.505, respectively.

FINANCIAL HIGHLIGHTS OF FLIPKART BY THE END OF 31st MARCH

2019

Operating revenue of Flipkart India Private Limited is INR 500 crore for the financial
year 31st March 2019. It is operating profit such as earnings before interest, tax and
depreciation has decreased by -89.33 percent comparatively the previous year and its
book net worth was also reduced by -3.38 percent. The paid-up capital of this company
by the end of September 2019 was INR 0.98 crore. The debt equity ratio of the company
is 0.03. It is very low in the e-retail business. The subsidiary units of this company such
as logistics and
fashion retailer
Myntra reported a
net loss of INR
5.770 crores on
revenues about INR
18, 000 crores.

As per the records

of the corporate affairs ministry by the end of March 31 st, 2019, posted a total loss of
Flipkart was INR 3, 836.8 crores whereas compared to the previous year recorded a loss
of INR 2,063.8 crore. It was increasing the net loss by 85.91 percent. Highlights income
statement of flipkart during the period of 2014-19. The revenue from operations of
Flipkart rose 42.82 percent i.e., from INR 21, 657.7 crores to INR 30,931 crore during
the period of 2017-19.1 The net income has been increasing from 4.0 million to INR
38.4 million between 2014 and 2019.

INCOME STATEMENT OF FLIPKART

DURING THE PERIOD OF 31ST MARCH 2014-2019

This company has been facing tough competition from the rival of Amazon. The Flipkart
internet has been providing various functions and services to Amazon. This was also
one of the reasons for the losses of Flipkart about 40 percent i.e., INR 1, 624 crores for
the year ending 31st March 2019 whereas the operating revenue of this unit rose by 51
percent i.e., INR 4,234 crores as against the previous fiscal year. has been decreasing by
-89.33%.

The debt-equity ratio of this company is also very low i.e., 0.03. The net loss of this
company during the period 2018-19 was increased to Rs.3, 836.8 crores from
Rs.2,063.8 crores. The net income of Flipkart has been increasing from 4.0 million to
Rs.38.4 million between 2014 and 19. From the analysis, it is observed that there is a
strong positive correlation between revenue and net income as the obtained coefficient
of correlations is 0.8757>0.7 (as the rule of thumb). Further to examine the impact of
revenue on net income is analysed using the regression analysis. The result states that
the model is highly significant with the coefficient of determination i.e., R2 = 0.766, this
value indicates that 76.6% of the
variance in dependent variable i.e., net
income is better explained by the
explanatory variable i.e., revenue. The
obtained regression model is as
follows.

Net Income = -6.730 + 0.125 Revenue

……. Model

FUTURE OUTLOOK

The Flipkart India Pvt limited is involved in various business services are including B2B
and B2C. Due to the sequence of losses the Flipkart India Pvt Ltd sold its business to US-
based giant retail company Wal-Mart with an amount of $16million i.e., 77 percent
stake. This is a long-term strategy of the company for its sustainability in the e-retailing
business.

CONCLUSION

It may conclude that based on the findings of the company initially as start-up unit since
2011 in profitable line in half of the decade. Due to transformation of the unit to large
scale company and it has opened subsidiary units in different countries without proper
financial planning. Still, the Flipkart the revenue is positively correlated with net income
even though selling their stake to Wal-Mart with a long-term strategy. Hence, it is,
therefore, this company with the help of various business strategies will be sustaining
and attaining greater heights in the future. We must understand that every employee’s
experience is determined by multiple factors most influenced by their direct manager.

It also includes key touchpoints in their journey like their interaction with leaders,
cross-functional teams, processes, policies, and the work environment, highlights
Krishna Raghavan, Chief People Officer, Flipkart. Krishna Raghavan is the Chief People
Officer at Flipkart. Before his current role, he has been the Technology Head for
Flipkart’s Fulfilment and Services
and Customer Experience Groups.
During his tenure at Flipkart,
Krishna has spearheaded the
launch of the marketplace
platform and has led multiple
strategic technology initiatives for
Ekart. Aside from his strong tech
expertise, he is also known to be a
people leader. A leader with the right blend of technical and people skills has built
exemplary engineering teams from scratch with intuitive people management and
sound organisational planning. In an exclusive conversation with People Matters,
Krishna shares how Flipkart is leading its hybrid working policies and shares expert
insights on creating transparent communication channels and performance
management practices and ensuring employee work-life balance. As organisations
embrace hybrid working models, what challenges still need to be addressed? How are
you overcoming them?

Shifting to a hybrid work

culture requires discipline
from managers and
employees to maintain a
positive and balanced work
environment. Building a
successful hybrid workforce
can be challenging, as it is
not just about combining the aspects of working from home and an in-person work
model. Leaders must have a collaborative approach that creates a transparent
communication channel between employees and employers, enabling organisations to
design an ideal employee experience. At Flipkart, our employees form the backbone of
our organisation, and we strive to approach decision-making transparently.

Based on employee feedback and considering several critical external factors, we

adopted a hybrid model beginning in March 2022. This model combines employees
 working remotely and from
the office on different days of
the week, allowing teams to
decide the days that work best
for them. We have opened
additional offices across the
country by maintaining a
flexible approach to
customising solutions based on employee needs. We are also offering employees the
flexibility to work out of satellite offices within Bangalore. Through this model, we are
helping every Flipster play a vital role in the decision-making process. These steps
enable us to foster trust and flexibility within the organisation, which helps us operate
in an efficient hybrid work environment. The proximity bias seems to be a concern for
employers who opt for hybrid working models, especially during performance reviews.

How can leadership today consciously move away from such practices
and enable fairer, more transparent performance management?

The ecosystem has undergone

various changes. The notion of
employees being more
productive in the office has
changed drastically over the past
two years, which has compelled
many leaders to rethink and be
more inclusive. The new world of
work demands a more continuous performance management process that aligns with
the goals and objectives of an organisation. This means inviting all the voices to be
heard in two-way conversations between managers and employees, creating a sense of
community even for the remote workforce. Continuous performance management can
be different for every organisation. For example, the process often alternates between
one-on-one check-ins and intervals in which employees track progress against quarterly
goals.
This framework creates a continuous communication channel between leaders and
employees and helps employees work towards broad career goals. This approach can
also help leaders gain a deeper insight into how their employees operate and give them
more opportunities to reward hard work. Data from a continuous feedback process can
also help leaders make more informed decisions and introduce new people-centric
policies.

Some recommendations include:

Goals Focussed Approach:

Being objective and focused
only on goals can help give
a pivot towards the actual
work done and take away
the focus from the mode in
which the work was done
(in person or from home)
Addressing any biases:
Performance calibration
and review conversations can be a good opportunity for the leadership and HR teams to
identify and deep dive into inherent factors that managers consider during these
conversations. For example, whether a particular judgment is based on facts or
assumptions can be identified as any inherent proximity biases etc.
Proactively looking at data to see if there is a pattern emerging on ratings/promotion
recommendations for talent that has had a physical presence and keeping managers
honest by openly engaging on
these data points and actively
addressing the bias can also be
helpful. With flexible working
hours, the boundaries between
work and personal lives get
blurred, a challenge that
employees continue to face. So how can leaders create an environment where their
people can easily switch off from work and have that work-life balance? It is essential to
understand that every employee functions differently.

Therefore, leaders should

enable employees to create
their own work-life balance.
Provide employees with all
the necessary tools and
support them so that they
can plan their priorities,
whether they are personal
or professional. We must
understand that every
employee’s experience is determined by multiple factors most influenced by their direct
manager. It also includes critical touchpoints in their journey like their interaction with
leaders, cross-functional teams, processes, policies, and the work environment. You
cannot ignore any of these if you are looking at building an exceptional employee-
focused culture.

At Flipkart, we look at these by ensuring that we are a bottom-up organisation; every

voice matters and is heard through various channels, be it focus groups, leadership
connects or regular surveys. We focus on empowering our people managers across all
levels and ensuring they are equipped with the right skills, behaviours, tools, and
support systems to nurture and mentor talent. Our policies are never designed in
isolation - at the outset, it
incorporates feedback and
suggestions from people for
the policies they are
designed for. We emphasise
a work environment
designed to help our
employees excel with the
right tools and policies and
are highly empathetic to
their needs.

What would be your

advice to HR leaders
on measuring the effectiveness of their hybrid models of work?

My word of advice would be to

keep listening and learning. Use
tools like surveys, employee
feedback, and focus groups to
measure employee engagement,
understand challenges, and
identify ways to work more
effectively. Use a continuous
feedback loop to check whether
the employees can work collaboratively. At Flipkart, we conduct hybrid work surveys to
continuously listen in on their overall experience, be it with tech, collaboration,
decision-making effectiveness, flexibility, and Work-life balance. This helps us stay close
to reality and understand what works and can be improved.

Leaders must ensure that they provide their employees with the same empathy and
support developed during the pandemic while everyone was working from home. Use
transparent communication channels to create a strong sense of trust within the
workplace. Lastly, the success of a hybrid work environment will show up in employee
satisfaction and the way the company is performing. As hybrid provides more flexibility
to employees, they will bring their best to the table, and the organisation will also be
able to attract fresh talent.

What are we doing to develop leaders for the hybrid model?

It is one thing to implement policies and processes to enable the hybrid model. But what
about the all-important tone from the top – what are companies doing to shift their
leadership search and succession planning to develop a more hybrid-savvy leadership?

Even as companies around the world invest in the infrastructure, processes, and
training to enable a distributed workforce, a curious gap remains. Surveys over the last
two and a half years have consistently found that employees and organisational leaders
have widely differing views as far as hybrid work – or remote, or flexible, depending on
a company's approach – goes.

Part of the challenge is

simply that in the short
term, the benefit to
employees is noticeably
greater than the benefit to
businesses and leaders.
Employees are happier and
more productive, but that
productivity does not reflect
in broader business performance – which is what leaders pay most attention to – for at
least a quarter or longer. Meanwhile, HR teams pour time and resources into policies
and processes to support hybrid work, while managers worry about the impact on
collaboration. Goldman Sachs CEO David Solomon might have called remote work an
aberration last year, but the second part of his remark got a lot less attention – the fact
that he had 3,000 new hires, most of them fresh graduates, incoming, and was worried
about whether they could be remotely integrated into existing teams.

The easy way out is, of course, to put a stop to hybrid work. A considerable number of
leaders have already tried that, with some even threatening to fire staff who work
remotely or demote them to contractor status. That harsh response clearly indicates
 that such leaders still struggle
with the idea that hybrid work
can be anything more than a
drag on productivity and an
obstacle to collaboration, even
when faced with opposing
research and real-life examples
from their peers. Is there a
better way to close this gap?
The best long-term solution
might be to invest in helping
leaders work through this
cognitive dissonance –
matching hybrid strategies with leadership development strategies that enable leaders
to lead and manage effectively in this model. So, for an external perspective of what
companies are doing in practice, People Matters asked several search experts what they
have seen in terms of leader recruitment and succession planning. Doubling down on
experience and competencies. Several the key skillsets involved in leading and
managing distributed teams have already been on companies' Wishlist’s since long
before the pandemic, say the recruitment experts. Nick Chia, Managing Director for
Russell Reynolds Associates (RRA) in Singapore, shared that with global or pan-Asia
executive search assignments, the ability to manage distributed teams with diverse
backgrounds is always a requirement. On top of this, more emphasis is now being added
to certain skills including agility, adaptability, communication, delegation, and
influencing skills. Companies are giving higher priority to candidates who demonstrate
these abilities.

These were always there, but the ‘louder’ competencies – leading from the front, driving
hard on execution, for example – were more visible and rewarded, and now the ‘softer’
competencies are moving up in importance given the ambiguity and uncertainty that
continue to characterise the world today.” Agreeing, Alena Salakhova, Regional Director
of SThree, said that the in-depth development of leadership competencies is key. “Your
capacity to work should not be limited by the changes of the working environment,” she
remarked. “Our customers on leadership levels also shared that the ability to be vocal,
sincere and genuine will always remain essential.” And unsurprisingly, there is a high
demand for leadership candidates who have experience with managing in the hybrid
model. This includes candidates who held leadership roles during the pandemic, when
they had to manage without
physical interaction.

“During interviews, I see

questions being asked around
how these leaders coped with
hybrid working, what
learnings they acquired, and
what are some of the
challenges they face in managing people,” said Jaya Dass, Managing Director at Randstad
Singapore, and Malaysia. “Organisations want to get a sense of the person's learning,
agility, ability to flex, empathy for people, and whether they're willing and able to adapt
– to change up policies and ways of working in response to adjustments and shifts in
their environment.”

But has the underlying structure changed?

The search for hybrid-

savvy leaders should,
theoretically, be the first
step in long-term
strategic planning for
leadership development
and succession in the
hybrid working model.
But is that really the case? Dass does not think so. “If you're asking whether leadership
competencies, skill sets, job descriptions, KPIs, management values, and such have been
adjusted, the answer simply is not yet.” One major challenge, she said, is that even now,
there is no broad consensus or actual clarity on what capabilities leaders need to have
for long term hybrid working.
In theory, hybrid or remote
working shifts the focus away
from inputs and day to day
operations, and toward
outputs. But even under the
hybrid model as it's currently
understood, remote work
remains regimented, adhering to the traditional 9-5 schedule, and collaboration
between those at home and those physically in the office is still not factored in. “The
structure of hybrid working has been put in place, and therefore there are
conversations around areas such as insurance coverage, benefits, how to measure an
employee's output or manage poor performance,” she observed.

“But I have not seen too

much policy change behind
the scenes on what the
leadership team needs to be
like. The competencies
being tested for in
interviews? They have not
been worked into job
descriptions, KPIs, or management structure, and there is no official description for
what a manager or leader needs to look like in a hybrid environment.” Part of the issue
may simply be that the kind of structural and process planning required to overhaul the
leadership itself – with the attendant implications on the entire organisation as a result
– takes a long time to get moving and is frequently reactive rather than forward-
thinking. Then, there is the lingering resistance to change: two years of the pandemic
has not been enough to really shift people's mindsets, as shown by the urgency with
which leaders around the world have been demanding a return to the office.

“There is still an old school mentality among leaders at the top level,” commented
SThree's Salakhova. “We need a mindset shift and that requires time.” On top of these
inbuilt challenges, the greatest obstacle to a long-term hybrid-savvy leadership may,
right now, simply be that no one is quite certain what such a leadership needs to be. In
fact, as Dass pointed out, many organisations are not quite sure what hybrid working
should be – and it may be too premature to even ask this question. “I don't think
companies have pivoted yet,” she said. “There has not been a shift to the point where
people say, let us sort out the structure and
the leadership team; there is not really a
clear sense that this (hybrid) is what the
world of work will be like going forward.
And to give the benefit of doubt, I do not
think anyone knows the answer yet. But I
think it's in the making.” Complex dynamic
applications drive online businesses and
application performance has a direct impact
on business KPIs as it determines end-user
experience.

Performance monitoring tools play a crucial role is shaping end-user experience. These
tools have evolved with performance management strategies. Application availability,
reachability, reliability, and performance are the central pillars of digital end-user
experience monitoring. The evolution of performance management has pushed the need
for a more proactive monitoring mindset, especially when preparing for high-traffic
events.

E-commerce Performance Monitoring

 The digital landscape is
evolving continuously –
everything from the way
applications is built, the
infrastructure to the skills
involved in building,
deploying, and maintaining
applications. Applications
are no longer monolithic; it
has transitioned to an architecture that relies on microservices as it provides a lot of
flexibility in building and deploying applications. Teams can work exclusively on
specific features within the application without impacting the overall application. IT
infrastructure has also evolved to support this new breed of applications. It has moved
from on-premises to a multi-cloud, multi-CDN or even a hybrid model. Edge computing
is the next level in this evolution process moving the spotlight to edge content delivery,
networking, security, and edge performance monitoring.

Even with all these changes, delivering a great customer experience remains the focus
and application performance is central to maintaining the customer experience. The
definition of good end-user experience has also changed over the last few decades.
There was a time when a page that loads in 10 seconds was acceptable. Ecommerce
giants like Amazon and others have redefined customer experience and now the
acceptable page load time is below 2 seconds. Considering the current highly
distributed and complex architecture, there is a pressing need to rethink performance
monitoring to provide insightful data and analysis. Performance monitoring is crucial as
it –

Mitigates the impact on revenue

Every 1 second of performance improvement increases conversions by 2%

Every 100 Ms of performance improvement, grew incremental revenue by up to 1%

SEO benefits for entry pages and reduce bounces

Protects your brand value

Downtime costs $8,000/minute – roughly $800,000 per incident

Downtime can have a significant impact on brand value. Saves IT productivity IT spends
less time firefighting performance issues You can focus better building, deploying, and
marketing your products and services.

Preparing for High-Traffic Events. Before the event, when prepping for a peak event
such as Black Friday, there are six important phases to consider:

1. Building effective strategies: Consider a multi-tenant application architecture that is

resilient and delivers better performance. Invest in caching and failover strategies.

2. Caching:

(I) Cache offload to CDNs

(ii) Improve Cache hit on CDN and tiered cache proxies

(iii) Revisit cache-busting scripts.

3. Failover Implementations:

(i) DC/Cloud-based delayed failovers

(ii) Application-level failovers

(iii) Improved customer experience via waits room implementations.

4. Preparation and testing: Stress test the application to understand how performance
varies with different amount of traffic to identify bottlenecks in the application. This
involves testing all third-party services including the CDN provider as well as the
monitoring tools you use.

5. Implement performance monitoring: Single pane simplified dashboards that give a

clear picture of the entire delivery chain. Log aggregation intervals must be consistent
across different layers in the infrastructure.

6. Alert configuration: Identify and set up relevant alert types, alert severity, and map
alerts to the right team to ensure it is addressed immediately.

During the Event

During the event, ensure you have a support team on call and ready to act when needed.
You must discuss guidelines defining escalation policies as part of the prep. This will
make it easier for different teams to communicate any critical issues without delay.
There should also be an effective plan of action in place to handle a crisis.

After the Event

Once the event is over, it is important to conduct a retrospective analysis of the

performance data and incidents during the event. This helps to understand –

Did everything go according to plan?

What could have been done better?

How did the infrastructure handle the traffic and load behaved?

How does the stress test data aggregate during the event prep compared to the post
even data?

The performance data can also be used to benchmark different metrics that will help
you prepare better for the next peak event.

Proactive Monitoring for Improved Performance

There are multiple third-party infrastructure and service providers in the industry. The
adoption of services such as multi-DNS, multi- and hybrid-cloud, multi-CDN, and others
mean that when everything is operating smoothly, end users are getting content and
services delivered to them faster than ever before. However, these developments in
architecture and digital delivery come with a cost. Every additional layer in the delivery
chain adds complexity, introduces visibility gaps, and reduces these teams’ ability to
understand how infrastructure health is affecting the end-user experience.

This means that whenever there is a disruption in the infrastructure delivery chain, IT
teams are often left scrambling to identify the root cause of the problem. Proactive
monitoring essentially eliminates the blind spots created by all the different
components in the delivery chain. Root cause analysis is easier as the IT teams can
correlate and analyse data effectively. The performance data will help identify and
resolve bottlenecks easily. Third-party integrations can be monitored, and you can hold
service providers accountable for any SLA breaches. Proactive monitoring is especially
useful during A/B testing as you can evaluate the performance of each component.

Tips for Improved Performance Monitoring

Proactive monitoring is a must when preparing for high traffic events. We suggest a
five-step process for effective and improved performance monitoring:

1. Measure everything: Latency or downtime can be introduced at any layer in the

application. Critical endpoints, microservices and tag management tools are all potential
bottlenecks. Monitor every single component including every third-party so there is
end-to-end performance visibility. Measuring real user performance is recommended
along with synthetic to help correlate performance trends and understand user
behaviour.

2. Benchmark: Benchmarking is essential to performance monitoring. It helps you

understand industry best practices. You can evaluate multiple service providers and
identify those with ideal performance. The trend from benchmarking provides
interesting insights to help improve performance of your application.

3. Establish a baseline: A performance baseline is the expected performance of an

application/service under certain conditions. With this information, we can determine:

- Expected performance when there is a surge in traffic.

- How to scale our application and services.

- How a new version of the application/service is performing compared to a previous

version.

By baselining data, we will learn to:

- Look beyond averages and understand percentiles.

- Look at historical data and analyse trends.

4. Identify optimization areas: There are hundreds of performance metrics but

measuring every single metric does not help. Each performance scenario calls for a set
of metrics relevant to that scenario. It is easier to understand and correlate the data
without having to pore through unnecessary information. So, identify areas that need
optimization, focus on the optimization methodology while picking only the metrics that
matter.

5. Tie to business KPIs: When trying to improve performance, start with the business
KPIs, look at historical data trends/patterns and then the metrics that impact these
KPIs. You can then focus on generating performance budgets to build process that
ensure a focus on performance across the project lifecycle.

These five points are essential when prepping for a peak event to ensure great end-user
experience. We must remember that no matter how great the tools are, they will count
for little if organizations do not have visibility into the health and reliability of each of
the pieces that make the whole application. To conclude, we believe that performance
management must be viewed as a year-round priority and the performance strategies
you have implemented should help you:

Gain performance visibility

Analyse and learn from the data

Implement changes and improve consistently

In E-commerce system environment,

how to develop effective
performance appraisal system, how
to combine the organization and
personnel's practices with corporate
strategic objectives by the
performance evaluation system and
reflect the commercial value of e-
commerce is particularly important for enterprise development. This paper builds
evaluation index system based on Balanced Scorecard, then adopts information entropy
to determine the weight of each index factor, and fuzzy comprehensive evaluation is
adopted to calculate overall scores and each dimension scores of E-commerce
performance.

Example analysis indicates that the multilevel fuzzy synthetic evaluation approach is
more suitable to evaluate E-commerce performance in enterprise, and contributing
factors and restrictive factors
can be found through
adopting this method, which
will be helpful for the further
development of E-commerce.
In the last decade,
management accounting
researchers have become
increasingly interested in
analysing the impact of non-financial performance measures on the performance of the
firm. As competition in the marketplace has intensified, non-financial performance
measures have become progressively more important as new sources of relevant
information (Hemmer, 1996). The need for planning, information and control systems
that can assist managers in their decision-making has also stimulated the need for new
non-financial measures of performance.

This need has focused attention on developing new models to assist managers with
their strategic decision-making, planning and control decisions (Banker and Johnston,
2000). One model that has generated attention in the past decade is the Balanced
Scorecard model developed by
Kaplan and Norton (1992). This
framework emphasizes the need
to measure and monitor the
performance of companies within
the broad framework of both
financial and non-financial
parameters of performance. As a
part of the new age economy, Business-to-Consumer companies or Dotcoms or e-
retailers are among the new age companies that have revolutionized the marketplace.
These new economy companies appear to defy the basic rules of business. The global
reach of the Internet and the consequent bargaining power it has provided the
worldwide customer has invalidated most of the older management practices.
 Dotcoms or eCommerce
companies have necessitated
the development of a whole
new set of performance
measurement parameters for
monitoring and measuring
their performance. For
example, reach, click through
ratio, hits, visits, number of
subscribers, quick loading time, personalization, number of affiliates and navigation
have been suggested as parameters that indicate the operational and marketing
efficiency of these companies (Seybold, 2000). Although the Balanced Scorecard model
was initially proposed in 1992, and the model has been widely accepted by most
practitioners, little empirical analysis has focused on validating the model.

In this paper, four sets of performance measurement parameters specifically designed

for eCommerce companies are developed, drawing on the Balanced Scorecard
framework. Data Envelopment Analysis (DEA) using these measures is then employed
to examine the efficiency of Balanced Scorecard parameters in measuring and
monitoring the performance of eighteen eCommerce companies. Finally, six of the
eighteen companies are analysed to compare the three most successful companies with
three that subsequently failed in order to examine the effectiveness of the Balanced
Scorecard parameters in predicting bankruptcy.

Background and Significance

In their pioneering research on measuring the performance of organizations, Kaplan,

and Norton (1992) describe the innovation of the balanced scorecard as follows:

"The balanced scorecard retains traditional financial measures. But financial measures
tell the story of past events, an adequate story for industrial age companies for which
investments in long-term capabilities and customer relationships were not critical for
success. These financial measures are inadequate, however, for guiding and evaluating
the journey that information age companies must make to create future value through
investment in customers, suppliers, employees, processes, technology, and innovation."
 Kaplan and Norton (1992) suggest
a balanced scorecard, which
requires managers to balance four
different but linked perspectives in
order to identify appropriate
measures of performance. The first
perspective represents (traditional)
accounting measures that report
the financial consequences of
actions already taken. This financial perspective highlights how the company appears to
shareholders and concentrates on measures relating to profitability and growth, cash
flow and gearing. The Balanced Scorecard supplements these financial measures with
three other perspectives dealing with (a) customers, (b) internal processes, and (c) the
firm's innovation and learning record - all three areas that are important drivers of
future financial performance. The customer perspective is designed to highlight the
factors that really matter to customers such as value for money, time, and performance.

The internal business perspective is designed

to focus on those critical business activities
that must be performed in order to satisfy the
expectations of its customers. These include
cycle time, quality, and efficiency of
operations. The innovation and learning
perspective highlights the fact that, in the face
of intense competition, firms must make
continual improvement and have the ability
to introduce new products in the future. An
automatic side benefit of this critical thinking
is the development of a deeper understanding of the various dimensions of the business
and what activities must be performed well if the firm is to achieve success. In turn,
such measures can be valuable in external benchmarking exercises. In addition, by
working closely with production, marketing and other staff to agree and obtain such
information, the management accountant can help to bring together these disciplines
and install a greater sense of purpose and focus.
Kaplan and Norton (1992) argue that
managers should not have to choose
between financial and operational
measures of performance. Rather,
managers want a balanced
presentation of both financial and
non-financial measures. Measuring
the performance of eCommerce
companies has always been a
relatively difficult task. Practitioners
and consultants have suggested
different parameters to measure the
success of these companies. For
example, numbers of subscribers, reach (unique visitors), and revenue have been
identified as relevant measures to assess the performance of these companies. In terms
of marketing parameters, personalization and offering value to customers have been
linked with the success of the eCommerce firms (Seybold, 2000). eCommerce firms have
also focused on continuous innovation to integrate technology with offering customized
tailor-made services to the customers.

Through the integration of technology, one-

on-one marketing, permission marketing and
personalization have become necessary tools
for any eCommerce company in order to stay
competitive. The focus has been on integrating
various offline and online processes to provide
solutions to customer needs. eCommerce firms
are presently using parameters such as
revenue, click-through-ratios and other
indirect parameters to measure their
performance. Thus, in practice, eCommerce
companies already measure their performance
by using a mix of traditional and new parameters. Both academics and practitioners
have attempted to apply the Balanced Scorecard concepts to eCommerce companies.
 These attempts differ from
Kaplan’s scorecard in terms
of the perspectives and
parameters. Launched in
1999, McKinsey‟s e-
performance scorecard
collects data about a variety
of visitor, customer, and
financial metrics (Agarwal,
Arjona, and Lemmens, 2001).
The scorecard comprises 21
indicators that measure
performance both statically
(at one point in time) and dynamically (over a period). These indicators are grouped
into three categories – attraction, conversion, and retention – and then folded into the
overall e-performance scorecard, which is a weighted average of the twenty-one
indicators. The McKinsey scorecard highlights two key dimensions: the efficiency of
costs (for example, the cost of attracting visitors to a site and of maintaining active
customers) and the effectiveness of a site’s operations (such as conversion rates, the
rate at which the number of customers increases, and customer gross margins).

Best practice in the eBusiness

sector combines the lowest costs
with the highest effectiveness. In
her book Customers.com, Seybold
lists eight success factors for
eCommerce companies (Seybold,
2000). These factors cover
various aspects of the business
but she suggests that the main
focus should be the customer. While these factors are primarily related to the customer,
other researchers focus on other areas of eCommerce such as Logistics. The future role
of distribution and fulfilment has been summed up as follows: "eCommerce delivery will
become the one area in which a business can truly distinguish itself.
It will become the critical core
competence. Its speed, quality and
responsiveness may well become
the decisive competitive factor, even
where brands seem to be
entrenched. And there are no
multinational businesses and
altogether very few businesses that
are organized for it. Very few yet
even think that way," (Drucker,
2000). To summarize, from a
practitioner or applied perspective,
parameters that assess much more
than financial performance have been consistently highlighted. The customer point of
view and integration of technology to produce personalized web content for customers
are considered important measures of performance in eCommerce companies.
Processes, logistics, and technological innovations are other measures of performance
for eCommerce companies that have been emphasized.

The applied perspectives

highlighted in this section suggest
that the focus of practitioners is
on measures such as technology,
business model, web-site
features, customer value and
innovation rather than the core
business perspective of
generating economic value for the
business. These non-financial
measures are very consistent with those emphasized by Kaplan and Norton (1992) in
their Balanced Scorecard approach to measure and monitor the performance of
organizations. Since the Balanced Scorecard Framework focuses simultaneously on both
financial and non-financial measures of performance, it is considered particularly
appropriate for eCommerce companies.
 Therefore, in this paper, the
BSC is utilized to assess the
performance of a sample of
eCommerce companies. First,
the framework is developed
for application to eCommerce
by selecting measures
developed by practitioners to
represent the three non-
financial perspectives, i.e. the
Customer, Internal, and
Innovation dimensions. Then, the four sets of measures (1 financial, and 3 non-
financial) are derived for a sample of 18 eCommerce companies that were active in
1999. DEA analysis is performed on these measures to examine the efficiency of these
companies on each of the BSC perspectives. As Kaplan and Norton (2001) suggest,
performance measurement has consequences far beyond reporting on the past.

They suggest that measurement

creates a focus on the future as the
measures chosen to communicate
important messages to all
organizational units and employees.
Thus, the DEA analysis is followed by
a comparison of the efficiency of the
financial and non-financial
parameters for companies that
remained successful in 2000-2001
with three companies that
subsequently filed for bankruptcy.
Based on these comparisons, it is
argued that these Balanced Scorecard parameters can effectively help us to understand
and explain the success and failure of the selected eCommerce companies. Financial
Dimension: The first perspective represents traditional accounting measures that
report the financial consequences of actions already taken.
This financial perspective highlights
how the company appears to
shareholders and concentrates on
measures relating to profitability and
growth, cash flow and gearing.
Traditional financial measures
include ROS (return on sales) and
financing as a percentage of revenue.
These measures are applicable to
eCommerce companies and therefore,
have been included as representing
the financial perspective. Customer
dimension: The customer perspective is designed to highlight the factors that really
matter to customers such as value for money, time, and performance. Numbers of
unique visitors and customers are important performance indicators for eCommerce
companies. Marketing expenditures and number of affiliates are used to generate
visitors, some of whom will become customers and buy the products and services.

Thus, potential inputs such as

marketing expenditure and
number of affiliates are
assumed to generate number
of visitors, number of
customers, and sales revenues
as outputs representing the
customer dimension. Internal
processes dimension: The
internal business perspective
is designed to focus on those
critical business activities that
must be performed to satisfy the expectations of its customers. These include cycle time,
quality, and efficiency of operations. It is argued that number of employees and
available financing influences the cycle time, quality, and efficiency of operations and
thus represent the internal processes dimension.
 More efficient use of these
resources will impact the
conversion factor (i.e. numbers of
unique visitors who become
customers). Hence, outputs are
number of customers and sales
revenues. Innovation and learning
dimension: The innovation and
learning perspective highlights
the fact that, in the face of intense
competition, firms must make
continual improvement and can
introduce new products in the future. Development expenditure and number of
employees are measures of the amount of resources that are allocated to develop new
products and services and improvements in service quality. Thus, these are considered
the inputs representing the innovation dimension to generate numbers of customers
and revenue as outputs. The financial and non-financial performance measures derived
by applying the BSC to performance indicators developed by practitioners to assess
eCommerce companies were then utilized to investigate empirically the utility of the
framework and measures. The methodology of the empirical investigation is described
in the following section.

Sample

The data were obtained from

the eCommerce Almanac data
set collected by the Intermarket
Group. This almanac from the
Intermarket group compiles
exhaustive information about
eCommerce companies and
includes financial, marketing, operational and other information that can be categorized
into the balanced scorecard framework. The original data set includes eighty-two
eCommerce companies.
 However, data on all the
performance measures that were
derived for each of the four BSC
dimensions were available for
only eighteen companies. Hence,
the final sample consists of these
eighteen eCommerce companies.
In order to analyse the relevance
of the balanced scorecard in
differentiating between both
successful and failed eCommerce
companies, it was very important to include companies that were active and functioning
companies at the time of data collection. Hence, the sample set includes data from the
year 1999 when all the eighteen companies were in operation and were going concerns
(i.e., companies that were expected to be in operation in the near future). In the first set
of analysis, DEA methodology is applied to measures used to represent each of the four
BSC dimensions. In the second set of the analysis, three companies that subsequently
filed for bankruptcy (in 2000-2001) were chosen for analysis and compared with three
companies that were highly ranked in the DEA analysis conducted on all 18 companies
based on data from 1999.

Conclusion

In conclusion, results from the

two types of analyses (DEA and
KPI methodology) suggest that
the financial dimension of the
Balanced Scorecard framework
provides insufficient information
to differentiate between the
eCommerce companies that
remained successful and those that subsequently failed. The results of the DEA analysis
were mixed, while the KPI analysis indicated that five out of the six firms chosen could
fail (due to negative earnings) soon.
Including the non-financial dimensions of the Balanced Scorecard framework provides a
much more complete picture of the performance of the selected companies, based on
which it would have been possible to predict subsequent success or failure. In both
analyses (DEA and KPI methodology), the customer and innovation and learning
dimensions enable differentiation between successful and subsequently failed
eCommerce firms. On the internal process dimension, although the DEA analysis does
not differentiate clearly between the successful and failed companies, the KPIs clearly
differentiate between the two sets of companies.

Overall, these results show that the customer and innovation and learning dimensions
are able to differentiate between eCommerce companies with the potential for
continued success and those that are likely to fail. The fact that these dimensions are
especially important for eCommerce companies is consistent with conventional
wisdom. The results therefore underscore the importance and relevance of the
Balanced Scorecard framework for the performance measurement of eCommerce
companies.
Thank You