Effectiveness of the BSC on Alignment of Responsibility Areas and People

329 2. The effectiveness of communication differs, between responsibility areas, hierarchical levels and people Simoes [7], showed that knowledge and sharing of strategy differ: - There was evidence that employees involved in the performance management system have superior knowledge of the company’s strategy and a more global vision of the contribution of each responsibility area to the strategic challenge; - The responsibility areas more directly involved in the business have greater knowledge of the strategy map and its content; - The administrative areas and employees that are not integrated in the performance management system have limited knowledge of the company strategy and are mainly focused on the local objectives or guidelines.

III. Effectiveness of the BSC on Alignment of Responsibility Areas and People

Simoes [7] showed that managers of the company believe that BSC aligns and focuses on operational areas. Employees know and understand objectives: The strategy decentralization process is the responsibility of front-line managers. This process develops differently in each of the functional areas, depending on the nature of the functions and its proximity to strategic objectives, nature of objectives, dimension of the teams, and leadership profiles. IV. Effectiveness of the BSC on Monitoring, Learning and Feedback for the Strategy Revision Management literature suggests that BSC facilitates strategic learning in the organization and its environment Kaplan and Norton, 2001a, 2008a, 2008b; Olveet al., 1999. Kaplan and Norton 1996c assumed that there are cause-and-effect relationships among the strategic objectives. This is a crucial assumption given that it allows the monitoring of non-financial objectives to be used to predict future financial performance. This suggests that the BSC helps to structure strategic thinking, translate strategy and revise former strategies. This means that the BSC and, in special, the coherence and underlying logic to the relations or inter relations between the various components of the strategy map promote strategic learning and facilitate strategy revision. 330 METHODOLOGY In this study, Balanced Scorecard is the main variable with 4 sub-variables that represent the effectiveness of the application of balanced scorecard in strategic management process, they are : 1. BSC describes the firms strategy 2. BSC communicates the strategy and ensures the alignment of company’s strategy 3. BSC harmonize areas of responsibility and the companys employees 4. BSC provides feedback to revise the strategy in achieving corporate performance This investigation adopts an explanatory and exploratory qualitative case study method to analyze the effectiveness of BSC over the strategy management processes. The researchers choose the case study method because it provides a good understanding and content theorization of the processes and context in which the practices of management control take place Adams et al., 2006; Berry and Otley, 2004; Berry et al., 2009. As the research objective is to answer the why and how, the case study approach was selected. In this study, a single case study is chosen instead of multiple case studies for three reasons. Firstly this single case study ‘represents the critical case in testing a well-formulated theory’ Yin, 2003, p. 40. The case selected is chosen to test whether or not the factors reported in the literature that lead to successful Balanced Scorecard implementation are sufficient, i.e. with accomplishment of all these factors, whether enterprises can implement the Balanced Scorecard successfully. Secondly the case represents a unique case Yin, 2003, p. 40. Thirdly this is a revelatory case, in which the researcher ‘has an opportunity to observe and analyse a phenomenon previously inaccessible to scientific investigation’ Yin, 2003, p. 42. In this study, the researchers were involved in setting up the Balanced Scorecard from the beginning. Data were collected for the study from interviews and researchers observation. Two in-depth interviews were conducted, one with the manager-owner and the other with the employee who was directly responsible for the design and implementation of the Balanced Scorecard. The researchers also observed and facilitated the design and 331 implementation of Balanced Scorecard in the company over the same period. The main focus of the interviews and the observation was the factors critical for successful implementation of Balanced Scorecard; these include the design of Balanced Scorecard, clarification of mission, senior management commitment and involvement of employees, communication process, development process, availability of time and resources, and uses of hardware and software system. These factors are based on what is found in the existing literature on successful implementation of Balanced Scorecard in both large organisations and SMEs. The researchers recorded all of the data obtained from both interviews and observation and summarised the findings. The findings were then sent back to those interviewed to confirm the accuracy of conclusion as to what happened in their organisation. The interviewees agreed with the researchers conclusion, confirming the validity of the data obtained in this study. The researchers then used theese data for further analysis The research was conducted in a pilot study from January 2009 to December 2016. The study was conducted in PT Hexpharm Jaya Labs, one of the largest Pharmaceutical companies owned by Kalbe Farma Tbk. The company has 600 employees, generating annual sales in excess of 1.3 Trillion rupiahs. For data collection, the researchers use semistructure interviews, direct observation and document collection. Data collection was made during a 7 year period, which allowed a deep knowledge to be gained about the culture and management methods used in Hexpharm. Balanced scorecard effectiveness Balanced Scorecard is a strategic performance measurement framework, providing a comprehensive view of business performance and relating measurement to strategy, vision and mission. BSC facilitated the good execution of four key management processes: 1 translation of vision and strategy; 2 communication and alignment of strategic objectives and measures; 3 planning, defining milestones and aligning strategic initiatives; 4 promoting feedback and learning by Kaplan Norton 1992, 1996. BSC describes the firms strategy 1. The strategy map clarifies and 1. Hexpharm has strategy map which clarifies and 332 describes the vision and strategy 2. The strategy map promotes consensus around strategy describes the vision and company’s strategy 2. The strategy map developed by hexpharm promotes the consensus around the startegy established. BSC communicates the strategy and ensures the alignment of company’s strategy The strategy map communicates strategy to the organization All hexpharm employee have already known the strategy developed BSC harmonizes areas of responsibility and the companys employees BSC promotes alignment of responsible area and all employees All area and employees have aligned responsibility due to company’s strategy developed BSC provides feedback to revise the strategy in achieving company’s performance BSC stimulates feedback to revise the strategy in achieving company’s target Feedback has already been done by hexpharm in achieving the company’s goals and targets. REFERENCES Rozhan Othman, 2006, Balanced Scorecard and Causal Model Development: preliminary findings, Faculty of Economics and Management Sciences, IIUM, Kuala Lumpur, Malaysia Management Decision, 44 5, 690-702 q Emerald Group Publishing Limited 0025- 1747 DOI 10.110800251740610668923 Gerui , Kang; Fredin, Amy 2012, The Balanced Scorecard: the effects of feedback on performance evaluation, Management Research Review 35 7 637-661. Gawankar, Kamble, Raut 2015. Performance Measurement Using Balance Scorecard and its Applications: A Review Research Scholar 333 at National Institute of Industrial Engineering, Nagpur, Maharashtra, India. Thomas, Pichai, Khan 2014. Balanced Scorecard to Create a Strategy Focused Organization at DUBAL, UAE, Bharathan Viswanathan Skyline University College, University City of Sharjah, UAE 2 College of Business Administration, AL Dar University College, Dubai, UAE 3 Manipal University, Dubai, UAE 4 College of Business Studies, Al- Ghurair University, Dubai. M. Punniyamoorthy, Murali 2008. Balanced Score for the Balanced Scorecard: a benchmarking tool. Faculty of Production and Operations and Finance, Department of Management Studies, National Institute of Technology, Tiruchirappalli, India, and R. Faculty of Human Resources and Finance, Department of Management Studies, National Institute of Technology, Tiruchirappalli, India. Simões, Rodrigues 2013. The Effectiveness of the Balanced Scorecard on Strategy Management Processes: A Case Study in a Portuguese Industrial Company, Instituto Universitário de Lisboa ISCTE-IUL, BRUUNIDE, Lisboa, Portugal. Anderson, Karen 2004. A Critique of Benchmarking and Performance Measurement: Lead or lag? 465-483. Kaplan 2001. Transforming the Balanced Scorecard from Performance Measurement to Strategic Management: Part I, Harvard Business Review : 89 – 94. Rompho, Nopadol 2011. Why the Balanced Scorecard Fails in SMEs: A Case Study, Department of Operations Management, Faculty of Commerce and Accountancy Thammasat University, 2 Prachan Rd. Bangkok 10200, Thailand. Pujas, Dragan 2009. Barriers to the Successful Implementation of the Balanced Scorecard - the Case of Plava Laguna J.S.C. Modul University Vienna. 334 The Influence Of Corporate Culture And Competitive Advantage On The Company’s Business Performance Case Study In Pt Bank Ocbc Nisp Tbk. Yulia Isana Pratiwi yuliaisanayahoo.com 1,3 , Valiensi Utia valiensi.utiagmail.com 2,3 1 Service Assistant at PT Bank OCBC NISP Tbk.; 2 Finance and Accounting Section Head PT. Astra Nippon Gasket Indonesia; 3 Students of Master of Management Program, Faculty of Economics and Business, Universitas Padjadjaran RESEARCH BACKGROUND Competition among companies is getting more stringent and tighter in this economic era. All parts of the company have responsibility to maintain its competitive advantage that is unique, or in other words difficult to be imitated by other companies. To operate efficiently, company needs same values that can drive the organization as a whole in order to achieve the same goals. In a period of time, those values will form a culture or further we called it as corporate culture or organizational culture that believed collectively and then used as a guideline or reference for behavior by all employees. The importance of corporate culture and competitive advantage has became a real issue in today’s business because of its relevancy to corporate performance, notably business performance. In this study, we would like to examine the influence of corporate culture and competitive advantage that may indirectly affect company’s business performance. There are some decisive components that determine hereinafter referred to the company the effectiveness of a team in a company. Earlier research revealed that if companies pay attention and manage its stakeholders, which includes customers, employees, and also leadership matter, it will be more outperform 1 compared to companies that do not have the characteristics of a culture Kotter and Heskett, 1992; Wagner and Spencer, 1996. To get a deeper understanding in this study, we need to identify these matters below: 1. Is it important for the organization or company to have something that can not be measured such as a culture? Why? 2. How to measure corporate culture? 1 According to Oxford Learner’s Dictionaries, outperform verb means ‘to achieve better results than somebody or something’. 335 3. Is there any relationship between corporate culture and competitive advantage? If so, how can it affect each other? 4. How can we see, or probably feel a deep impact of corporate culture and competitive advantage, which is intangible, compared with financial statements that are more visible and measurable with fix indicators inside of it? Culture has been considered to be a key variable in establishing a competitive advantage, and intuitively, this would suggest that it could have an influence on organizational performance. Related to aspects of competitive advantage, corporate culture is derived from the values, attitudes, beliefs, habits, and traditions which are typically shared among its members. Therefore, any uniqueness will be known as company’s identity or personal trait, or even further company’s fine quality that must become a priority to be developed by the company itself. At present, company continues to improve the quality in terms of both products and services in order to raise competitive advantage so that it can achieve meaningful business performance and produce valuable outcomes Phillips et al, 1983; Wagner, 1984; Buzzell and Gale, 1987; Kordupleski et al, 1993; Sohal et al, 1993; Anderson et al, 1994; Maani et al, 1994; Lakhal et al, 2006 in Lakhal 2011. The focus in this study will be on OCBC NISP, a go-public financial institution that continously develop its growth and sustainability through different strategies. Since OCBC Bank Singapore added its shareholding in OCBC NISP to 74,73, OCBC NISP experienced a transition from what they called as “corporate value” to “corporate culture” within the company. It was an important milestone for OCBC NISP when it commemorated 70 years of service in 2011. Previously, OCBC NISP used the corporate philosophy, vision, and mission as the basic foundation and also took reference to the corporate values. OCBC NISP believed that value and meaning, trust, strong moral and ethical beliefs, respected alliances and partners, sincerity and genuineness, and prudent principle are core philosophies that support company’s vision and mission, in order to achieve corporate main goal, that is “ to be a bank of choice with world- class standards recognized for its care and trustworthiness” an the mission that is, “OCBC NISP will conduct its business and work as an honorable corporate citizen by growing together continously with the society. 336 Meanwhile, corporate values consist of core values such as solid, genuine supportive, connected, forward-looking, and dynamic. 2 In 2012, after a merger with OCBC Bank Singapore with the shareholding increases to 85,1, to strengthen Bank’s culture foundation, OCBC NISP readjusted their corporate culture to confront with current circumstances and future possibilities. The new corporate culture named ONe PIC, serves as guidelines for all employees their conducts and work. ONe PIC is abbreviation from OCBC NISP one, Professionalism, Integrity, and Customer Focus. ONe PIC culture is consistently applied to all organization which consist of 6,922 highly motivated employees to serve customers in 339 offices and in 60 cities throughout Indonesia. The Power of Corporate Culture Corporate culture in regards to financial performance has become a very important study matter in last two decades. Many empirical researches have been examined by many authors and investigators about the effect of corporate culture on the financial performance of a firm. Kilman et al., 1985 and many other authors have characterized culture as “something to do with the people and unique quality and style of organization”. Also Deal and Kennedy, 1982 proclaimed that “expressive non-rational qualities of an organization” or else “the way we do things around here”. There are several definitions of corporate culture. The managerial literature focuses on the notion of culture as a set of norms and values that are widely shared and strongly held throughout the organization OReilly and Chatman 1996. In this literature the function played by culture is that of “social control.” According to O’Reilly 1989, most individuals care about the people who surround them. Thus, if we share a common set of expectations with the people we work with, we are under their control whenever we are in their presence. Guiso, Sapienza, Zingales, 2013 Based on what Post, W. Z., Coning et al., 1998 believed that culture in any organization is the character of the individual. It is intangible yet it is very common in every organization and it can be observable through ethics, 2 OCBC NISP Corporate Values, taken from OCBC NISP Annual Report 2011. 337 attitude, and values which gives them the right direction and meaning. Culture is not simple to understand but very interesting to focus on, many organizations do not have the sufficient time to focus on corporate culture; however, it has a significant effect on the business itself. Pfeffer 1981, Wilkins and Ouchi 1983 define corporate culture as a shared phenomenon. This means that culture is a product that can be learnt within experienced individuals and also can be found only in a group with an important history. Many researchers and authors, proclaimed that there are two stages of corporate culture, the visible stage and the less visible or deeper stage. The visible phase includes behavior patterns that are used via group, such as the social and physical atmosphere. However, the culture with less visible phase is associated to the values of a group that comprise of objectives and concerns that will form a sense of what is must to do. This is what known as basic assumptions in Schein’s opinion. Scholz, 1987 claims that corporate culture is very different from similar looking theory such as national culture, organizational climate or corporate identity. It is the intrinsic, hidden, implicit, and informal awareness of the corporation which leads people’s behavior. Goffee and Jones, 1998 stated that corporate culture is mainly the influential strength for cohesion in current companies. Directors may affect on the methods cultures development, locating their company for a constant competitive that is impossible to be copied by means of any other competitors. The Growth of Corporate Culture Recently, the notion of culture has been used quite more than before Robbins, 1993. However, according to Schneider, 1975 corporate climate can be measurable and visible directly, that is why it has an extensive research tradition. As Schein, 1990 has stated, the influence of Sociology and Anthropology on the growth of culture has increased gradually in the field of corporate culture. Likert, 1961 stressed the need for corporate culture in an organization of collaboration and this shows that there is an important link among the attitude of employees and the performance of a company. In the late 1970s, it was very clear and consistent that the concept of corporate culture started to attract organizations. Drucker, 1973; Ouchi 338 and Price, 1978; Peters, 1978; Silverzweig and Allen, 1976 These writers have believed that if directors and managers focus on values, principles and the norms of the organization, they will figure out powerful instruments to improve the organizational impact. Measuring Corporate Culture There are many various ways for measuring corporate culture, this can be tested depending on the culture’s element. It can be observable, for instant quantitative methods or conscious like behaviors and values. Corporate culture was defined in previous sections as behaviors, norms and values, which focused on the conscious elements. However, corporate culture can be measured using the combination of qualitative and quantitative methods, which includes interviews, questionnaire and surveys, to investigate and examine the cultural phenomenon Rosseau, 1990. Xenikou and Furnham, 1996 have stated that questionnaires must be used in order to measure organizational culture. Researchers and managers are using questionnaire in measuring corporate culture, because both of them are willing to understand and amend corporate culture. Several empirical studies have been conducted to measure quantitatively corporate culture which was done by various researchers, for instant Cooke and Lafferty’s, 1989 have developed a culture questionnaire in “Organizational Culture Inventory” as well as also O’Reilly et al, 1991 Culture as Your Competitive Advantage Hofer and Schendel 1978 and Porter 1985 mentioned, ”Sustainable competitive advantage is the unique position of a firm in relations to its competitors that allows it to outperform them consistently.” The main components are sustainable, unique position, competitors, and outperform. In order to gain competitive advantage, company must find its organizational competencies as a major source of advantage Nelson and Winter, 1982; Reed and DeFillippi, 1990; Selznick, 1957 to create a defensible position over its competitor Porter, 1985 so company can have better performance and be more profitable. Turock 1999 emphasize, “Great work is done by people who are not afraid to be great. Great cultures unleash people’s capacity for greatness. That’s the essence of why culture is your ultimate competitive advantage. 339 Turock 1999 also claimed that “While competitors may replicate a product and these outer manifestations of best practices, it is extremely tough to copy a company’s purposes, values, and norms that drive choices and actions – in other words, the culture. If culture can’t be copied, then its advantage become sustainable.” Turock 1999 emphasized that people or human resource with capacity are the main actor who do great work with great culture and finally gain an sustainable competitive advantage. It is important for the company to have clear goals, values, and norms, so the competitors will find it hard to imitate a corporate culture that can support a greater business performance. Business ethics should become part of corporate codes, and if implemented in the line of business as a corporate philosophy it should help achieving a competitive advantage for the firm Rania A. Azmi, 2006. While short-term competitive advantage is obtained by appealing to customers in targeted external markets in the context of globalization, long-term sustainable competitive advantage is the result of exploiting an enduring core of relevant capability differentials cultivated by responsible management of tangible and intangible internal skills and assets Petrick and Quinn, 2001. Business ethics of a firm has been defined as one of the invaluable intangible assets for competing. In general, intangible assets are assuming increasingly competitive significance in rapidly changing domestic and global markets. As the speed of comparable tangible assets acquisition accelerates and the pace of imitation quickens, firms that want to sustain distinctive global competitive advantages need to protect, exploit and enhance their unique intangible assets, particularly integrity building firms of integrity is the hidden logic of business ethics. In the context of OCBC NISP competitive advantage, several initiatives were undertaken in 2015, in order to increase the amount of deposit balances and the number of customers or accounts of the Third-Party. Deposits product: • Focusing on TANDA saving product as the Bank’s main product and flagship to the acquisition of new customers through campaign programs on a regular basis, including continuing the TANDA POIN loyalty program for TANDA 360, Time Deposits, TAKA and Tanda Valas and Tanda Funtastrip Lottery. 340 • Conducting the renewal of SMS Banking USSD Unstructured Supplementary Service Data to facilitate customers in conducting banking transactions, both financial and non-financial, through SMS. • Developing a notification system for new customers. • Launching the Telkomsel Top Up Promo at ATM, • Internet Banking and Mobile Banking. • Conducting periodic certification for the sales team with a thorough product information briefing through training and access of product portal internal website.In 2015, these growth strategy and initiatives contributed to the increase of the total savings at Bank OCBC NISP by 21 compared to 2014. As we can see from those initiatives above, OCBC NISP has a relevant capability in building and maintaining its product. For example, OCBC NISP starts to offer saving product through campaign programs on a regular basis, then the most important thing, OCBC NISP develops information and technology component to make sure that customers can have an enjoyable experience in electronic banking transactions, both financial and non- financial. It might be right that intangible thing such as information and technology can be a core competency and also competitive advantage for OCBC NISP. Business Performance Gates 1999:4 mentioned that, “A strategic performance measurement system translates business strategies into deliverable results. Combine financial, strategic and operating measures to gauge how well a company meets its targets.” Four important components are deliverable results, interpret that strategic measurement system has to be able to actualize existing business strategy into real action and tangible or perceived result. It also includes financial, strategic, and operations aspects in order to see how well company can reach the planned targets. The spread of culture plays a large role in formatting the life of corporate culture which can be related to some stages of the organizational financial performance. Many studies have proved that the link between corporate culture and the performance is more likely to vary from one organization to another in whence of the performance measures Saffold, 1988. Peters and Waterman 1982 classified six performance measures to link with corporate culture which are, averages of ROS, ROE, ROCE, turnover 341 growth, “ratio of market to book value, namely compounded asset growth”. Nevertheless, Peters and Waterman did not have any empirical evidence of testing statistically to find the link between corporate culture and the economic performance. According to Denison 1990 corporate culture was measured by Denison through the perception of individuals of corporate activities. The information was gathered from different organizations in America using questionnaires and surveys, the questionnaire included many aspects that satisfied the researcher queries. Measurement of Business Performance Operational performance and financial performance were used for measuring business performance. This study confirms the work of Wang and Wang 2012 on operational performance measures. Six items were used for operational performance including customer satisfaction, developed service, cost management, responsiveness, past performance and company management. Financial performance was measured with four items adapted from Inman et al. 2011. They consist of shares profit, previous period profit, customers deposits and shareholders investment. Taherparvar, Nastaran; Esmaeilpour, Reza; Dostar, Mohammad OCBC NISP Business Performance ROA, ROE, and NPM Perspective 2010 2011 2012 2013 2014 2015 Return on Assets 1,29 1,91 1,79 1.81 1.79 1.68 Return on Equity 8,12 12,90 12,22 11.87 9.68 9.6 Net Profit Margin 16.4 25.9 26.9 28.4 29.7 28.5 Profitability Ratio Profit margin, return on asset and return on equity will be calculated in order to demonstrate the profitability of OCBC NISP. Profit Margin Profit Margin = Net Profit Total Revenue This is the ratio of net profit to net sales, and is also expressed as a percentage. It indicates the amount of sales left for shareholders after all 342 costs and expenses have been met. It is the difference between gross profit and operating and non-operating income minus operating and non- operating expenses after deduction of tax. The ratio measures the overall efficiency of the management. Practically, it measures the firm’s overall profitability. If the ratio is found to be too low, many problems may arise, dividend may not be paid, operating expenses may not be paid etc. Moreover, higher profit earning capacity protects a firm against many financial hindrances such as adverse economic condition. The higher the ratio, the greater will be profitability, and the higher the return to the shareholders. 5 to 10 may be considered normal. Return on Total Equity Return on Total Equity = Net IncomeShareholders Equity This is calculated by dividing the net profit after tax by the shareholder’s equity. This ratio is applied for testing profitability. The higher the ratio, the better is the return for the ordinary shareholders. Return on Asset Return on asset = Net income Total asset This is the ratio of net profit to total assets. It also indicates whether the total assets of the company have been properly used or not. If not properly used, it proves inefficiency on the part of the management. It also helps measure the profitability of the firm. CONTEXTUAL SECTION Brief History of Bank OCBC NISP Bank OCBC NISP existance in Indonesia’s banking industry for almost 76 years is always attributed to the contribution from Karmaka Surjaudaja and Lelarati Lukman as a founding chairman and founding chairwoman. Bank OCBC NISP has been carried out with prudent and mainly cater to the small and medium enterprise segment. While facing fluctuative economic and politic condition in 1967 in Indonesia, Bank OCBC NISP survived and became a commercial bank, then became a licensed foreign exchange bank in 1990. In 1994, Bank OCBC NISP became public corporation by listed its 343 share on the Indonesian Stock Exchange in order to anticipate market’s transparency and competition also strengthen its capital structure OCBC NISP Annual Report 2015, p. 36-39. Bank OCBC NISP’s well-known reputation in the market and its promising growth had merited attention from various international institutions among others International Finance Corporation IFC, part of the World Bank Group, which provided senior loan in 1999 and became a shareholder in 2001-2010. Meanwhile, since early 1990s the Netherlands Development Finance Company FMO provided long-term loans with attractive interest rate to be distributed to Small and Medium Enterprise SME segment. Later, OCBC Bank- Singapore, become a controlling shareholder of Bank OCBC NISP through acquisitions and tender offer since 2005. OCBC Bank - Singapore currently owns 85.1 stake in Bank OCBC NISP. With valuable support from OCBC Bank - Singapore, Bank OCBC NISP dynamically strengthten its infrastructure, including human resources, information technology, risk management, branch network and internal audit. The rapid development compelled the relocation of Bank OCBC NISP’s Head Office to Jakarta in 2005, which allows direct access to the heart of businesses in Indonesia. As part of its long-term strategies, Bank OCBC NISP adopted a new name “OCBC NISP” since end of 2008, followed by culture strengthening and implementing basic policies across all organization. In 2011, Bank OCBC NISP entered an important milestone, as OCBC Bank Singapore consolidated their business strategy in Indonesia by integrating its subsidiary, Bank OCBC Indonesia with Bank OCBC NISP. The merger shows a full commitment from OCBC Bank - Singapore as the majority shareholder, to be focus on supporting Bank OCBC NISP. OCBC NISP Corporate Culture OCBC NISP has responsibilities regarding its relationship with the stakeholders, especially the customers. It has 6.922 employees across Indonesia 3 , which is spread over 339 conventional and sharia branches. This is the reason why OCBC NISP needs an exact standard or guideline in managing how people must act and behave as a representative of the corporate. Moreover, having a culture is totally important for the company 3 See more OCBC NISP Annual Report 2015 344 in order to reduce complaints from customers, so that employees in one place or branch can act and behave appropriately in the right way just as other employees elsewhere through the same standard. Finally, corporate culture may have power on showing how good or how bad the image of the company is. Therefore, corporate culture becomes an essential component in the company that has to be implemented and understood by all employees in OCBC NISP to ensure the growth and sustainability or the company’s business. Before 2012, OCBC NISP implemented these corporate values below: • Solid – OCBC NISP builds and protects customers’ financial future on established foundations • Genuine – OCBC NISP is accesssible, human and treat people with respect • Supportive – OCBC NISP listens to customers’ to better understand their needs and provides them with the most appropriate solution • Connected – OCBC NISP is in tune with their customers’ needs and make themself accessible to the customers • Forward-looking – OCBC NISP understands where customers are today and where customers can be in the future • Dynamic – OCBC NISP keeps pace with the best financial institutions to provide customers with opportunities that will help them to be succeed After 2012 Since 2012, the Bank launched ONe PIC as corporate culture that became the basis of employee behavior, ranging from communicating, interacting, working up to when making decisions in their daily work environment. This basis of behavior must be implemented consistently so that all parties, co- workers, supervisor, customer, third party and the public can feel its positive impact. In general, ONe PIC Means: ONe - OCBC NISP ONe Employees think and act on common goals by placing interest of Bank OCBC NISP above group of individual. P – Professionalism – Employees take pride in being professional and accountable for everything they do. I – Integrity – Employee consistently act on what they say with integrity. 345 C – Customer Focus – Employee focus on customers in everything they do As a working culture that is agreed upon, the Bank seeks gradually to introduce the existence and the values contained in ONe PIC to all employees, both through the promotioncampaign, socialization, discussion forums and internalization. The reason why OCBC NISP corporate culture changed is probably because its willingness to fully support the needs and wants of the customers. This means that all parts of OCBC NISP have to be customer-driven or customer-focus in order to achieve its vision so they can gain competitive advantage through the implementation of corporate culture. RESEARCH METHODS The research will use qualitative research method using research tools such as interviews an surveys in order to gain an understanding the underlying reasons, opinions, and motivations, also uncover trends in thought and opinios, and dive deeper into the problem. The interview and survey involve employees of Operation and Service Division, including teller, service asisstant, operation head, and senior branch operation head. Criteria: Corporate culture, survey and interview based on these criteria below: • Employees who work before 2012 and after 2012 they must work until now, until the survey had been done. • Title: Operation and IT, especially from Operation Service Division è including teller, service assistant, operation head or branch operation head, dan senior branch operation head • Employees of OCBC NISP Bandung branches • The questions involve aspects of corporate culture in OCBC NISP. Competitive advantage, survey and interview based on these criteria below: • After implementing One PIC as corporate culture, do the employees feel those cultures as a competitive advantage of OCBC NISP? If so, why? If it is not, why? Give a reason. • What is the competitive advantage of OCBC NISP from Cost Side or Differentiation? And how can it be understood by employee? 346 Business performance, based on OCBC NISP Annual Report year 2011-2015 as a primary data, and employees opinions related to business performance including profit margin, Return on Asset ROA and Return on Equity ROE. The components are deliverable results, interpret that strategic measurement system has to be able to actualize existing business strategy into real action and tangible or perceived result. It also includes financial, strategic, and operations aspects in order to see how well company can reach the planned targets. RESEARCH RESULTS, LIMITATION, AND ORIGINALITY Expected Findings: The expected results of this study is to find how corporate culture and competitive advantage affect business performance. Furthermore, this study is also expected to provide a new perspective in perceiving corporate culture and competitive advantage as key elements to develop business performance. Relationship of Corporate Culture, Competitive Advantage and Business Performance The main objectives of the study are, first, to understand what is corporate culture and how can it be measured. Second, to outline organizational financial performance and assess key factors and ratios responsible for deriving the company’s financial status. Third, to analyze the theoretical relationship between corporate culture and organizational financial performance. And finally, to measure and analyze the impact of corporate culture on the organizational financial performance. There has been a long history of figuring out the connection between corporate culture and organization performance. Many researchers have tried to explain the link between culture and performance in their own ways. However, it can be said that the roots of corporate culture and performance link has been found in 1980s. Peters and Waterman 1985, Deal and Kennedy 1985, Kotter and Heskett 1992 have used Denison model 1984, 1990, 1996 in order to explain the relationship between corporate culture and organizational effectiveness. All of these writers focused on the importance of employee adaptability with the corporate culture of the organization. They were successful to 347 demonstrate that a positive corporate culture within a company helps the employees to strive for the best and hence, the organization performs better. Sadri and Lees 2001, both agreed that an organization should have a positive or a negative corporate culture that will affect on the financial performance. An organization could gain massive benefits from a positive corporate culture, so this will lead to a competitive advantage between other organizations in the same industry. On the other hand, negative corporate culture could also affect on the financial performance negatively, and this could prevent the organization from adopting the instrumental changes or the essential strategic. The existence of this kind of culture in an organization will possibly restrain future changes. Kotter and Heskett 1992, declared that corporate culture is very important on the long-run performance of an organization. Also, they have stated that in the next decade corporate culture will become very essential in identifying the failure or success of an organization. There have been researches where measurement of effectiveness was described at the most critical issue of organization culture theory Steers, 1975; Zammuto 1982. Ouchi 1980 and Rohrbaugh 1983 have also explained the relationship between corporate culture and performance using competing value framework. They found a positive relationship between corporate culture and organizational effectiveness. On the other hand, Haaland and Goelzer 2004 also proved the effect of organizational culture. Expected Findings: The expected results of this study is to find how corporate culture and competitive advantage affect business performance. Furthermore, this study is also expected to provide a new perspective in perceiving corporate culture and competitive advantage as key elements to develop business performance. ManagerialPractical Implication: The result of the study will have managerial implication to OCBC NISP management, specifically to ensure that corporate culture is believed as a competitive advantage in order to drive a better business result. This study also provide practical implication such as building employees awareness 348 through OCBC NISP corporate culture to act and behave in certain ways when they deliver service to all customers. Originality Value: This study provides support for the description on how corporate culture and competitive advantage can affect business performance on OCBC NISP Bandung area. REFERENCES Journals Fairbairn, Ursula. 2005, “HR as a Strategic Partner: Culture Change as a an American Express Case Study”, Human Resource Management, Vol. 44 No. 1, pp. 79-84, retrieved from http:search.proquest.comdocview222104486?accountid=4829 Fiol, C. 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Available at SSRN: https:ssrn.comabstract=2435528 or http:dx.doi.org10.2139ssrn.2435528 Levitt, Arthur, 2015, “Corporate Culture and the Problem of Executive Compensation” Available at SSRN: https:ssrn.comabstract=868518 or http:dx.doi.org10.2139ssrn.868518 Azmi, Rania A., 2006, “Business Ethics as Competitive Advantage for Companies in the Globalization Era ”. Available at SSRN: https:ssrn.comabstract=1010073 or http:dx.doi.org10.2139ssrn.1010073 Guiso, Luigi and Sapienza, Paola and Zingales, Luigi, 2013, “The Value of Corporate Culture” Chicago Booth Research Paper No. 13-80; Fama- Miller Working Paper. Available at SSRN: https:ssrn.comabstract=2353486 or http:dx.doi.org10.2139ssrn.2353486 Taherparvar, Nastaran; Esmaeilpour, Reza;Dostar, Mohammad, 2014,“ Customer knowledge management, innovation capability and business performance: a case study of the banking industry” https:www.researchgate.netjournal1367- 3270_Journal_of_Knowledge_Management Websites OCBC NISP Annual Report, retrieved from http:www.ocbcnisp.comGroupsHubungan- InvestorLaporanLaporan- 350 Tahunan.aspx?viewmode=0devicename=langobjectlifetime=re questloaddevice= 1lang=en-US http:www.oxfordlearnersdictionaries.comdefinitionenglishoutperform ?q=outperform 351 The Influence Of Talent Management And Innovation Capability To Employee Satisfaction In Micro Credit Unit Bank Mandiri Anugerah Mufti Putra anugerahmuftiputrayahoo.com 1,3 , Arif Madya Armanto arif.madyagmail.com 2,3 1 Entrepreneur at Agnia Shoes Home Industry, Tasikmalaya; 2 M2M Marketing at PT. Tricada Intronik, Bandung; 3 Students of Master of Management Program, Faculty of Economics and Business, Universitas Padjadjaran RESEARCH BACKGROUND Introduction Employees are important assets to a company, without them a company would not be able to run its business. A company needs to develop and maintain employees in order to make them feel honored. Therefore, the employees will be loyal to the company and will have an effect on improving its performance. Furthermore, a company needs to be able to do some sustainable innovations; those innovations can be done in the sectors of products to product marketing. Innovations need to be done due to technology development; it urges companies to be more creative in making innovations. Those two factors above are linked to employees’ satisfaction which becomes an important factor to a company. Because today, employees not only have a role as labors but also as company’s assets who determine whether a company will be successful or not in achieving its targets. The employees’ satisfaction should be a main priority to a company. Employees’ satisfaction in this matter includes how to make the employees to feel comfortable in the office, how to make them to get working programs which will develop their skills, also how big the compensation that they will get compared to the effort they make in the company. Micro credit unit is one of the units of Bank Mandiri. The main focus in this unit is to sell micro credit and employees’ credit to the public. This unit is highly dependent on micro staffs that have the role to sell the products. At Bank Mandiri the level of employees turnover is quite high. This problem is caused by low effort done by the company to develop and maintain the employees, especially highly achieving employees in order to improve 352 employees’ loyalty to the company, other than that, the selling of credit unit is also unstable, it is because the credit staffs do not have an interesting program which could attract the targeted customers to use micro credit and employees’ credit which are offered by Bank Mandiri. Based on explanations and the backgrounds above, thus, the researcher accordingly decided to make “The effect of Talent Management and Innovation Capability toward employees’ satisfaction at Bank Mandiri Micro Unit” as the title of this research. Research Question Lacking of programs to develop and maintain talented employees become a main factor of high numbers of employees turnover, many talented employees in the company, decided to resign from the company he was working at the rival companies because of the this factor. Developing and maintaining employees will give them satisfaction; this factor will have a direct impact on the improvement of company performance. Therefore, the under-selling credit unit by micro credit employees is blocking the company to gain maximum profits. According to the factors above, it is required to have a suitable identification and good planning strategy which can be used by the company to fix and improve its performance in order to be able to compete with other companies in the targeted market. Therefore, the problems which are discussed in this research are: a What does the company have to do in order to keep their talented employees of moving to the other companies? b What kind of innovations in the marketing strategy which can be applied by the company to increase the selling of micro credit and employees’ credit c Do the maintenance and strategic marketing program done by the company have an impact toward employees’ satisfaction? LITERATURE REVIEW I. Talent Management Twenty first century is an age of technology and globalization, technology development to be applied at a company can be found and observed easily. Therefore, the business leader can start promoting human resource as a part of company’s competitive excellence in making the human resource as an asset to compete with competitors. 353 In order to hire, to maintain and to develop talented employees are the only ways to get sustainable profit for the company. The idea about talent management can be accepted generally, but on its process it faces several obstacles, there are several factors which affect the company if it applies talent management, there are: 1. Definition of Talent Management TM. The first problem which should be considered before implementing talent management is the talent term itself. Professional organization and talent management need to understand who are the people that they consider as talented before implementing talent management policy and training Zhang and Bright, 2012 . Thorn and Pelant 2006 define talent as “someone who has the ability above others and does not try hard to use it. These people excel with easiness and grace. A talented person has a certain aura in hisher ability that others wish to emulate and from which lesser mortals draw inspiration”. Michaels et al. 2001,p.3 defines talent as “the sum of a person’s abilities, his or her intrinsic gifts, skills, knowledge, experience, intelligence, judgment, attitude, character, and drive. It also includes his or her ability to learn and to grow potential for further development”. 2. Relation Between Talent Management and Human Resource Management HRM. The relations between talent management with human resource management have become a topic of discussion for the past few years. The confusion between talent management and human resource management has become one of the reasons why organizations do not apply talent management in their practice. Chuaiet. Al 2008 explains several main differences between talent management and human resource management. Talent management focuses on employees’ talents. Talent management is integrated with other activities at the company. While human resource management focuses on developing its 354 employees. Talent management focuses on important employees or talented ones, while human resource management focuses on the whole employees in the company. 3. Knowledge About Talent Management To make talent management implementation successful, it is required several basic tools and processes which need to be developed and implemented. Stahl et al. 2012 says that it is needed to differentiate between practices and principles. The best practices are the best only in the context in which they have been designed. The principles have broader application. Practices can be built on the basis of principles in the given context. 4. Effectiveness Evaluation Of Talent Management There is no standard method for evaluation affectivity about talent management. In general, there are two possibilities to evaluate affectivity of talent management, there are Qualitative method a method which is based on specification of talent management training and Quantitative method a method which is based on estimation of ROI by calculating the targeted outcome yang and doing cost- benefit analysis. In measuring talent management, benchmark and dimension are required. Donald 2014 divides talent management into: leadership, full participation of organization, employees’ participation and workplace scorecard. Kaliannan, et al 2016, in his journal, divides talent management into staffing and recruitment, training and development, appreciation and recognition and keeping in practice. Definition of Talent Management Source Definition Component CIPD 2006 Talent Management is systematic activities that include process of attracting, identifying, developing, attachments, maintain, and deploy talented individuals especially valuable for organizations • Identification of employees • Employee development • Entanglement employees • Retaining 355 employees • Distribution of talented individuals Donald 2014 Talent management is implementation of integrated strategies or systems designed to increase productivity by • Productivity • Process improvement • Attractive • Develop developing improved process to attract, develop, retain and exploit the people with the skills and talent needed to meet current business needs and future • Maintain • Utilize • Skills and Talent Fegley 2006 ; Mercer 2005 Talent Management is defined as the process of implementation and functions of the integrated human resources, including recruitment, selection, development, and performance assessment which aims to increase the capacity of the organization • Recruitment of employees • Selection of employees • Employee development • Performance assessment Kaliannan, et al 2016 Talent management pay attention to how the company designs and maintains a policy of strategic human resources for business organization in meeting its objectives • Design Companies • Maintain HR policy • Meets destination Newhall, S 2012 Good Talent Management Program covering recruitment, employee management, development, and promotional programs for talented employees • Recruitment • Management of employees • Employee development • Promotion of employees 356 ni, A., Joshi, U 2012 Implementation of Talent Management is important for the performance of the organization and assist business leaders in taking the right decisions that help organizations ensure talented employees working in the right position • The performance of the organization • Decision- making II. Innovation Capability Innovation is a broad concept and multidimensional which refers to commercial activities, finance, organizations, and technology which aims to implement a new technology or to improve product’s quality or service OECD, 1997. Innovation has become a main issue on several departments and institutions in the company, and because its importance, innovation forces researchers to identify factors which could improve innovation itself. Becheikhet at., 2006. The relations between innovation and organization’s performance have been assigned in the previous researches. There is a proof in the academic literature which indicates positive relations between innovation and company’s performance in manufacturing industry. Loof et al., 2002 ; Cheng et al., 2010. The followings are theoretical backgrounds and conceptual foundations of innovation: 1. Innovation Capability Innovation Capability is a company-level innovation Calantone et al., 2002. Avermaete et al. 2003 claims that product, process, organization related issues, and market innovationare the scopes of innovation. Technical innovation includes product and service and new services to the company, or some changes of how a company manufactures or ships their product. There are several groups of dimensional innovations, they are: • Product Innovation • Process Innovation • Marketing Innovation • Organizational Innovation 2. Firm Performance There are three dimensions which are related to performance, they 357 are: • Product Quality • Operational Performance • Financial Performance Definition of Innovation Capability Source Definition Component Koen, P.A., Ajamian, G.M., Boyce, S., Clamen, A., Fisher, E., Fountoulakis, S., Johnson, A., Puri, P., and Seibert, R 2002 Organizational innovation is strongly influenced by access to consumers and the ability of competitors, with awareness on matters relating to the organization and technological capabilities, and by understanding the external demand influenced by government policies, environmental regulations, laws, adan Socioeconomic trends • Innovation organization • Government policy • Regulatory environment • Law • Socioeconomic Trends Avermaete et. Al 2003 Products, processes, matters relating to the organization and market innovation is the scope of innovation • Product • Process • Market Innovation

III. Employee Satisfaction Employee satisfaction has always been an important issue in an