“Evaluating the Effectiveness of Performance Management Systems to Move Towards Become a Digital Company”: Case Study PT. XYZ (SOE Company in Indonesia)

Abstract

The era of digitalization requires State-Owned Enterprises (SOE) in Indonesia to carry out digital transformation. PT. XYZ is a state-owned company engaged in Electronics for Industry and Infrastructure in Indonesia. The Ministry of SOE has implemented the Seven Elements of Human Capital Architecture to increase competitiveness in the face of current digitalization. One of the architectural elements that is carried is the Performance Management and Rewarding System. Currently PT. XYZ still uses the traditional performance management system whose use is ineffective due to several factors including non-integrated data; manual processing takes a lot of time only for administrative functions and does not have a major impact on employee development. This bring a question whether the performance management used by PT. XYZ is currently in accordance with the SOE company plan to move toward becoming a digital company. In carrying out digital transformation, a broader is needed culture in companies that instill a digital mindset in the company's values. Based on the digital cultural framework promoted by CIGREF, the authors adapted this framework to measure the readiness of digital culture and the effectiveness of PT XYZ's performance management system. The seven dimensions measured in PT XYZ's digital culture are Viability, Openness, Knowledge, Agility, Trust, Interdependence, and Responsibility. Three dimensions measured in the Performance Management System of PT. XYZ stands for Openness, Knowledge, and Agility. Primary data to analyze and research this question were collected from the results of an interview with one of the HR and GA employees of PT. XYZ as well as the distribution of questionnaires. The survey also shows that the effectiveness of PT. XYZ's performance management system in moving towards a digital company is at a medium level with levels for the dimensions of Openness, Knowledge, Agility as well as medium. The recommendation to improve the effectiveness of the current performance management system is to digitize a performance management system that supports the needs of a performance management system as well as improvements in each cycle of the performance management system.