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  • 1. PERFORMANCE MANAGEMENT 10th July 2009
  • 2. THE STORY OF THE BUILDER An elderly carpenter was ready to retire. He told his employer- contractor of his plans to leave the house building business and p g live a more leisurely life with his wife enjoying his extended family. He would miss the pay check, but he needed to retire. They could get by. The contractor was sorry to see his good employee go and asked if he could build just one more house as a personal favor. The carpenter said yes, b t i ti t id but in time it was easy t see th t hi h t to that his heart was not in his work. He resorted to shoddy workmanship and used inferior materials. It was an unfortunate way to end his career. When the carpenter finished his work and the builder came to inspect the house, the builder handed the front-door key to the carpenter. “This is your house ” he said :”My gift to you” house,” said, you”. 2
  • 3. THE STORY OF THE BUILDER What a shock! What a shame! If he had only known he was building his own house, he would have done it all so differently. Now he had to live in the home he had built none too well well. Think of yourself as the carpenter. Think about your house. Each day you hammer a nail, place a board, or carpet, or erect a wall. Build wisely. It is the only life you will ever build. Even if you live it for only one day more, that day deserves to be lived graciously and with dignity. The plaque on the wall says,”Life is a do-it-yourself project”. Who could say it more clearly? Your life today is the result of your attitudes attit des and choices in the past Yo r life tomorro will be res lt past. Your tomorrow ill result of your attitudes and the choices you make today. 3
  • 4. Business Vs. People Culture PEOPLE Marketing g Finance 4
  • 5. ORGANIZATIONS OF THE PAST Structure Stability Consistency Rules Rigidity Linear 5
  • 6. ORGANIZATIONS OF THE FUTURE Exploration Dynamics Innovation Adjustment Change Uncertainty Growth Deploy yourself. Strike hard. Try everything. : Warren Bennis 6
  • 7. DEFINITION OF PERFORMANCE APPRAISAL… APPRAISAL The overall objective of performance appraisal is to improve the efficiency of an enterprise by attempting to mobilise the possible efforts from employees. Such appraisals achieve four objectives: • Development and training • Planning job rotation • Assistance promotions • Salary reviews 7
  • 8. PERFORMANCE MANAGEMENT : WHAT IS IT? Performance Management is an ongoing communication process, undertaken in partnership, between an employee and his or her immediate superior, which has two sub-sets : 1. Involves establishing clear expectations; g p 2. Understanding about the jobs to be done. 8
  • 9. PERFORMANCE MANAGEMENT : WHAT IS IT? The essential job functions the employee is expected to do; p ; How the employee’s job contributes to the goals of the organization; What “doing the job well” means in concrete terms; How employee and supervisor will work together to sustain, improve or build on existing employee performance; How job performance will be measured; and Identifying barriers to performance and removing them. them 9
  • 10. PERFORMANCE MANAGEMENT : WHAT IS IT? Performance Management is a means of preventing poor performance, and working ti f d ki together to improve performance. Is a ongoing process with two way g g p y communication between the performance manager and the staff member. g 10
  • 11. PERFORMANCE MANAGEMENT : WHAT ISN T? ISN’T? Performance Management isn’t : 1. Something a manager does to an employee; 2. A club to force people to work better or harder; 3. Used only in poor performance situations; 4. About completing forms once a year. Key point : it is about people working with people to make every one perform better and you have a much greater chance to succeeding. Everyone wins. 11
  • 12. OBJECTIVE OF PERFORMANCE APPRAISAL Performance Appraisal is concerned with encouraging the BEST possible level of Performance from an Executive through the provision of appropriate Management Support Employee knows what they are expected to do and can determine how well they have done it Employee is involved in establishing objectives which raises their commitment to achieving them Employee understands how his/her performance is measured and can monitor themselves Employee feels that the results are important and attainable Four main components of Performance Appraisal : Plan ==> Act ==> Monitor ==> Review 12
  • 13. PERFORMANCE APPRAISAL - NEEDS ORGANIZATIONAL EMPLOYEE • To ensure the appraisal is fair & • To discuss my performance objective • To Develop competent, trained & • To discuss plans for future motivated employees • To get a fair hearing • To identify Training & Development opportunities • To provide ideas / feedback on role • To achieve organizational performed objectives • To improve the flow of information • To understand my role better • To raise performance standards • To develop working relations 13
  • 14. HISTORY OF PERFORMANCE APPRAISAL… APPRAISAL Early references of Performance Appraisal were over a hundred years back. Merit Rating System – Federal Civil Service Commission : 1887. 1914, Lord & Taylor introduced performance appraisal. Initial Performance Appraisals were more focused on individual’s p personality y and traits than actual achievements. 1950, 1950 Peter Drucker’s Management by Objectives (MBO) Drucker s and Douglas McGregor’s book The Human Side of Enterprise led to a formal Performance Appraisal System.4 1
  • 15. NEW MODELS OF PERFORMANCE APPRAISAL… APPRAISAL A Job Performance Model A Performer; In a given Situation; Engages in certain behaviours; that produces results. results A Situation Analysis. Traits based Performance Appraisal. Behaviorally Anchored Rating Scales (BARS) Appraisal on a specific job. Essay-type Performance Appraisals Balance Scorecard Methodology Methodology. 15
  • 16. TRENDS IN PERFORMANCE APPRAISAL Item Former Emphasis Present Emphasis Terminology Merit Ranking Employee Appraisal Performance Appraisal Purpose Determine qualifications for wage Development of the individual, increase, transfer, promotion, lay- improved performance on the job; off and to provide emotional security Factors Rated Heavy emphasis upon personal Results, accomplishments, traits performance Techniques Rating scales with emphasis upon Mutual goal-setting, critical scales. Statistical manipulation of incidents; group appraisal; data for comparison purposes performance standards; less quantitative Post Appraisal Superior communicates his rating Superior stimulates employee to Interview to employee and tries to sell his analyze himself and set own evaluation to him; seeks to have objectives in line with job ; j j employee conform to his view requirements; superior is helper and counselor 16
  • 17. EFFECTIVENESS OF PERFORMANCE APPRAISAL As an example company GE has used MBO / Theory Y approach in 1960. Scientific Study results are : y Criticism has a negative effect on achievement of goals. Praise has little effect one way of the other. Performance improves most when specific goals are established. Defensiveness resulting from critical appraisal produces inferior performance. Coaching should be a day-to-day, not a once a year activity. Mutual goal setting, not criticism, improves performance. Interviews designed primarily to improve a man’s performance. Participation by the employee in the goal setting procedure helps produce favorable results. Even today the above findings are equally relevant as they were in 1960. 17
  • 18. HOW FORTUNE 100 COMPANIES USE PERFORMANCE APPRAISAL DATA Improving work performance. Administering merit pay. Advising employees of work expectations. g p y p Counseling & Motivating employees. Making Career Decisions & career goals goals. Assessing employee potential. Development plans plans. Better working relationships. Validating hiring decisions. V lid ti hi i d i i 18 Source : Steven Thomas and Robert Bretz “Research & Practice in Performance Appraisal.
  • 19. PERFORMANCE EXCELLENCE .. Is about reviewing and raising the performance threshold, for self and as part of a team for competitive edge; team, setting and meeting stretch targets; accomplishing and exceeding performance commitments. It means discouraging mediocrity in others and ourselves and confronting status quo. 19
  • 20. Performance Excellence Positive Indicators Negative Indicators • Pursues results with • Frequently fails on professionalism commitments. • employee engagement and respect to system / process • Accepts mediocrity • Encourages Performance • Disowns f il Di failure Culture • Creates hurdles in the way • Uncompromising of performance responsibility • Transfers negative emotions • Quality with speed • Proactively builds systems & • Indecisive even when p processes adequate data & authority • Nurtures calculated risks exists. • Resolves conflicts in favour of larger interests 20
  • 21. PHILOSOPHY • To build a Performance sensitive Organization g • To create a culture of measures for achievements – across all functions. • To differentiate and identify star p y performers, consistent , performers, and “below expectations performers” • Driven around Organization Values & Competency Model 21
  • 22. Transformation towards a Great Place to Work … THRUST: • Build a Value-driven Leadership • Develop a Performance sensitive Organization • Create an Engaged Culture amongst Employees 22
  • 23. Transformation towards a Great Place to Work … Differentiating… Diff ti ti Apples from Oranges 23
  • 24. UNDERSTANDING CAPACITIES AND COMPETENCIES Potential Capacity Competency Capacity = Demonstrated competencies +UUnrealized potential li d t ti l 24
  • 25. Capacity to Learn Observing one’s own thoughts, actions and Willingness to look g emotions/feelings and back and learn; ability using the awareness to to learn from mistakes improve further and and identify areas of perform better improvement Ability to get into a new y g experience with an open mind and flow with the experience. The child like ability to derive joy out of learning 25
  • 26. Capacity to Think Capacity to think comprises of analysis creativity & analysis, innovation and a combination of both i.e. judgment Analysis is about Creativity and asking the right questions and Innovation is about breaking complex generating new things into simpler thoughts and breaking things Judgment requires a the existing patterns of combination of both, this is what , thought helps us take quality decisions 26
  • 27. Capacity to Relate p y Ability to Listen Empathizing with warmth and is the ability to respect. Active put oneself in listening is free of someone else’s biases,evaluation Trust requires a shoes(by getting and pre-conceived combination of both out of our own notions ti empathizing and listening. shoes) h ) It’s about authenticity, openness and genuineness 27
  • 28. Capacity to Act delegation,attention Organizing to detail and focus one’s time on the right process and build capacity to resources so implement that we convert Working under pressure and our intentions time constraints and the ability to into reality handle multiple tasks without negative stress 28
  • 29. BASIC CORE COMPETENCIES Managing Relationships Direction Setting Personal St l P l Style Getting Results Managing Change ENABLERS High Learning Quotient Professional Conviction Performance E P f Excellence ll 29
  • 30. PERFORMANCE MANAGEMENT : BENEFITS For Managers : 1. Reduce your need to be involved in everything that goes on (micromanagement). 2. Save ti 2 S time b h l i by helping employees make d i i l k decisions on their own (knowledge building and clear understanding). g) 3. Increases role clarity among employees. 4. Reduces mistakes and errors (and their repetition). PMS is an investment upfront for the Manager can just let their employees do their jobs p y j 30
  • 31. PERFORMANCE MANAGEMENT : BENEFITS For Employees : 1. Know their performance during the year (Discuss work progress; receive feedback. 2. Enables degree of empowerment – make decisions ab es deg ee o e po e e t a e dec s o s 3. Clear role clarity. 4. Identifies the improvement areas. 5. Opportunity t d 5 O t it to develop new skills. l kill 6. Reduces mistakes and errors (and their repetition). Employee benefit from better understanding their jobs and their job responsibilities and enable them to act freely within the defined p y parameters. 31
  • 32. PERFORMANCE MANAGEMENT : BENEFITS For Organization : 1. Every employee understands how their work contributes to the success of the company company. 2. Increases Productivity. 3. 3 High Morale among all employees employees. 4. Documenting performance problems on timely basis. basis 5. Tracking communication and YOY performance. 6. 6 Legal Perspective Perspective. 32
  • 33. PERFORMANCE MANAGEMENT : KEY SUCCESS FACTORS PMS should provide : 1. 1 A means of work that aims to achieve the goals and objectives of the organization. 2. 2 Identify the critical processes remove bottle- processes, bottle necks and improve processes that keep the organization more effective. 3. Clear integration of other HR sub-processes such as promotions, employee development etc. 4. A method of providing regular, ongoing feedback to employees in a way that supports their motivation. 33
  • 34. PERFORMANCE MANAGEMENT : KEY SUCCESS FACTORS PMS should provide : 5. 5 A means of preventing mistakes by clarifying expectations, establishing shared understanding of what employees can and cannot do on their p y own; 6. Showing how each employee’s job fit in the organization context. It is very important to think PMP as system; focus on the overall purpose. 34
  • 35. PERFORMANCE MANAGEMENT : EFFECTS OF POOR DESIGN AND EXECUTION 1. Undermines the credibility of management. 2. Employees consider the process as “waste of time”. 3. Hurts morale. 4. Bring employee and manager in a confrontational positions that damages motivation. 5. Poor systems and execution can provide a false sense of security. f i 6. Managers may suddenly find themselves caught in i a situation i which th are h l l it ti in hi h they helpless t d l to deal with performance problems. 35
  • 36. THE CONTEXT OF MEASUREMENT Performance Measurement is a process by which an agency / program / function / outlet office objectively assesses and evaluates the extent to which it is accomplishing a specific objective, goal, or mission. Performance measurement alone is incomplete. Performance Management is a systemic link between company strategy, Investments, and processes. Performance Management is a comprehensive management process. 36
  • 37. WHY MEASURE PERFORMANCE? Enables decision making Manage by results Promote accountability Distinguish between program success and failure Allow for organizational learning and improvement Justify budget requests Optimize Investments Provide means of performance comparison Fulfill mandates Establish catalysts for change And so onon… 37
  • 38. WITHOUT MEASURING, DECISION MAKERS HAVE NO BASIS FOR: Knowing what is going on in their enterprise Effectively making and supporting decisions regarding Investments, plans, policies, schedules, and structure Specifically communicating performance expectations to subordinates Identifying performance gaps that should be analyzed and eliminated Providing feedback that compares performance to a standard Identifying performance that should be rewarded 38
  • 39. TYPES OF MEASUREMENTS Measure Type Definition Example Intermediate outcomes that predicts or Leading drive bottom-line performance results Employee turnover rate Bottom-line performance results Lagging resulting from actions taken Employee satisfaction rating Amount of Investments, assets, equipment, Input Number of cashiers labor hours, or budget dollars used Units of a product or service rendered Output - a measure of yield Number of Value Meal orders fulfilled Resulting effect (benefit) of the use or Outcome application of an output Customer satisfaction rating Objective / Empirical indicators of performance Wait time Quantitative Subjective / Perceptions and evaluations of major Customer complaints received as a % customers and stakeholders of total customers served Qualitative Q alitati e 39
  • 40. EXAMPLES OF MEASUREMENTS BY PERSPECTIVE Stakeholder / Customer Internal Processes • Current customer satisfaction level C t t ti f ti l l • Number of unscheduled maintenance calls • Improvement in customer satisfaction • Production time lost because of maintenance  • Customer retention rate problems • Frequency of customer contact by customer  • Percentage of equipment maintained on schedule i service • Average number of monthly unscheduled outages • Average time to resolve a customer inquiry • Mean time between failures • Number of customer complaints Learning and Growth Investments • Percentage employee absenteeism • % of facility assets fully funded for upgrading • Hours of absenteeism H f b t i • % of IT infrastructure investments approved % of IT infrastructure investments approved • Job posting response rate • # of new hire positions authorized for filling • Personnel turnover rate • % of required contracts awarded and in place • Ratio of acceptances to offers • Time to fill vacancy 40
  • 41. A MULTIPLE CHOICE QUESTION – APPROPRIATE MEASUREMENT ?? The measurement, % of employees following a supervisor approved competency model, would most i d t d l ld t likely be placed in which perspective of the Balanced Scorecard? a. Stakeholder / Customer b. b Learning and Growth c. Agency Investments d. Internal Processes 41
  • 42. MULTIPLE CHOICE QUESTION – AND THE ANSWER IS . . . b – this measurement relates to helping g grow the workforce and this would most likely fit with the Learning and Growth perspective of the Balanced Scorecard. 42
  • 43. SOME BASIC GUIDELINES FOR GOOD PERFORMANCE MEASURES • You should have at least one measurement for each objective. • Measurements define or explain objectives in quantifiable t tifi bl terms: Vague => We will improve customer service Precise => We will improve customer service by reducing response times by 30% by year end. • Measurements should drive change and encourage the right behavior. • Should be able to influence the outcome. 43
  • 44. SELECTION CRITERIA FOR PERFORMANCE MEASUREMENTS MEANINGFUL - related significantly and directly to organizations g y y g mission and goal VALUABLE – measure the most important activities of the organization BALANCED – inclusive of several types of measures (i.e. quality, efficiency) LINKED - matched to a unit responsible for achieving the measure PRACTICAL – affordable price to retrieve and/or capture data COMPARABLE – used to make comparisons with other data over time CREDIBLE - based on accurate and reliable data TIMELY - use and report d t in a usable ti f d t data i bl timeframe SIMPLE -- easy to calculate and understand 44
  • 45. WHAT IS PERFORMANCE PLANNING? Performance Planning is a Discussion Process. A First Step of an Effective Performance Management Process. 45
  • 46. OBJECTIVE OF PERFORMANCE PLANNING Coming to agreement on the individual’s key job individual s responsibilities. Developing a common understanding of the goals and objectives that need to be achieved. Identifying the most important competencies that the individual must display in doing the job. Creating an appropriate individual development g plan. 46
  • 47. IMPORTANCE OF PERFORMANCE PLANNING It is the bedrock of an effective PMS PMS. Gives Manager the chance to talk about his/her expectations which are genuinely i i hi h i l important i the in h individual’s job. Gives Individual a clear operating charter so that he can go about doing the job with the full certainty. certainty Individual’s working on the highest priority responsibility and operating in a way that the organization expects. 47
  • 48. GOAL SETTING – A KEY ELEMENT OF PERFORMANCE PLANNING It identifies the key responsibilities of the Individual s job. Individual’s job The competencies or behaviours that p the organization expects every one to display. Setting S tti appropriate goals f th upcoming year(s). i t l for the i ( ) 48
  • 49. GOAL-SETTING FUNDAMENTALS KPA – principle of prioritizing, concentrating – What habits do h bit d I need t cultivate t practice thi d to lti t to ti this principle? Goals, Objectives Goals Objectives, Targets - Outputs Deliverables. Outputs, Deliverables Measures of Performance – choosing appropriate meas res measures, using multiple measures, line and service measures measures. Time Standards for each deliverable. Detailing, Aligning, Detailing Aligning and Cascading Cascading. 49
  • 50. GOAL SETTING – RESULTS It forces the identification of critical success factors in the job. It mobilizes individual and organizational energy. It forces concentration on highest priority activities activities. It increases probability of success. It generates increases in productivity. 50
  • 51. CG’S PMS JOURNEY : INSIGHTS & EXPERIENCES 51
  • 52. CG’s PMS JOURNEY- KEY LEARNINGS • Role Clarity for an Individual Individual. • Employee started feeling & seeing that they are part of Company / Business Performance Performance. • Employees have taken ownership of their goals. goals • Interdependency to achieve goals. • E l Employees f l new PMS to b f i feel be fair. • Pushed individual performance to higher level. 52
  • 53. CG’s PMS JOURNEY- KEY LEARNINGS • Institutionalized culture of meticulous planning to hi t achieve goals.l • Subjectivity in appraisal of performance reduced. j y pp p Giving way to objectivity. • Performance Counseling sessions got kicked off off. • Linkage between Business performance and Individual Performance got established. • Automation of process lead to speedy tracking and execution of Appraisal. 53
  • 54. FEATURES OF CG’S APPRAISAL CG S SYSTEM Align the Business objectives, Individual Objectives & CG Values. Values Achieve Clarity on: Roles (Principal Accountability) Goals Performance Standard Performance Review Process. Aspire towards a culture of “Performance Excellence”. Helping E H l i Executives t F ti to Focus on priorities within th i j b i th fi t step i iti ithi their jobs is the first t in managing performance at CG 54
  • 55. APPRAISEE S APPRAISEE’S OBJECTIVE Why I am Doing? What I am Doing? By When I am Doing? How am I doing ? Getting feedback about: Strengths Opportunities for improvement 55
  • 56. APPRAISEE S APPRAISEE’S OBJECTIVE Opportunity to express one’s point of view Prepare an improvement /rectification plan Check concern on individual growth and development & Have the achievements acknowledged. 56
  • 57. GOAL SETTING PROCESS PURPOSE : Greater alignment of goals, performance measures and targets Company and divisions Company and support functions Divisions and support functions Cascading the same…from Company to Division/ function to department to individuals KPIs. A system to clearly articulate performance expectations. Raise the bar on company, division/ function and individual p y, performance. Differentiate between performance and great performance Create ownership of the process 57
  • 58. GOAL SETTING PROCESS Individual Top Management Team VISION Goal  Setting  Setting 25 ROCE Goal Setting Team Process 20 Sales Growth 15 10 5 0 Y1 Y2 Y3 Business Plan Goal setting Framework 58
  • 59. GOAL SETTING PROCESS SBU1 SBU 2 Business VISION Plan Process1 Process2 59
  • 60. GOAL SETTING PROCESS- CASCADING GOALS Str.Business Unit Goal BP Goals & Prod. Supply, pp y Process Goals Marketing New Products Sub function Goals Production Sales S l R&D HRD Group Goals FIN Plant, Division , Factory Manager, Production  Manager, Key Influencers Key g , Divisional Manager, Performance Area Sales Manager Indicators 60
  • 61. GOAL SETTING PROCESS - WHAT DOES GOAL SETTING TEAM DO? Define goal setting principles (approach, stretch, goal selection criteria, cascade principles etc) Review goals at each level to check conformance to goal setting principles Reviewing goals for conformance to Business Plan Vetting functional goals and individual performance plans 61
  • 62. GOAL SETTING PROCESS Goals for each SBU and function shall be set in the realm of Goal Setting Framework OK’d by the Top  Management Team and cascaded from the Corporate Vision Corporate Process Description Process Description 1 2 3 6 Corporate  Translate Goal  Translate Link Operating  Goals • Goal Setting Principles to include  Vision Setting  Goals approach to goal setting, principles on  Principles cascading, stretch, review of goals,  relativity etc relativity etc SBU Assign Link Link • Goal Setting committee may consist of 4 5 7 • A representative from the Top  Translate SBU  Link SBU  Management SBU Goal s Business  Operating  • Head of HR Plan Goals • VP IT & Strategic Planning Function Link • Goal setting to be done for SBU,  5 8 Function, Sub‐function and Group  Level SBU Goal  Link Function  Setting  Operating  Principles l Goals • Individual KPAs are derived from goals Goals at each level will be set, following principles on selection of goals, stretch, benchmarks etc. 62
  • 63. GOAL SETTING PROCESS ACTIVITY RESPONSIBILITY Level 1, The Annual Planning Committee Annual Planning Committee Annual Plan Derive SBU level goals Level 2: SBU heads SBU/Functional goals Derive Functional goals g Level 3: SBU, Function heads , Verify SBU goals, functional goals for Goal Setting conformance to annual plan, principles of goal setting, Committee verify lateral linkages for functional goals A 63
  • 64. GOAL SETTING PROCESS A ACTIVITY RESPONSIBILITY Sub-functional & Level 4: Function Heads Group goals Cascade functional goals down to team & individual goals and all Managers Function Heads to verify Sub-function goals and Sub-function Heads to verify all individual goals for Functional, Sub- conformance to annual plan, principles of goal setting, functional Heads and lateral linkages Goals tie up linearly to annual plan, No or laterally across functions Rework Goals Yes Finalize Performance Plans Goal Setting Committee 64
  • 65. CG’s GOAL SETTING FRAMEWORK 1. Goal Setting framework - basis on which goals are set by all the Units in CG. Various bases/references used are: Goal S tti G l Setting Framework F k Manifestations M if t ti Vision focused Goals commensurate with corporate vision Historical basis Growth/Improvement over last year Market linked eg. Industry growth + 4% Value focused Goal setting to achieve objectives of a certain level of TSR/EVA/other value creation objectives 65
  • 66. CG’s GOAL SETTING FRAMEWORK 2. Bases are interactive and not mutually exclusive - Recommended that the goal setting process takes into account all the above factors. 3. 3 Goal setting committee provides the framework at all levels of goal setting, i.e. i e strategic objectives improvement expectations objectives, expectations, benchmark peer companies and value creation expectations, if any 66
  • 67. GOAL SETTING PROCESS- A Performance planning Framework 1. Inputs 2. Process 3. Outputs 4. Outcomes 5. Goals Design of products/ services Skilled Motivated, Production f P d ti of Engaged Products Employees Performance Products Delighted Repeat Customer of services Customers Business Requirements Services A Delivery/ B C Customers’ D Long Distribution of Financial Term Raw Needs Met Survival materials products/ Results & Equipments Services Capital Servicing Products A Input B Process C Output D Outcome Measures Measures Measures Measures 1. Employee   1. Processes/  1. Product/ Service  Engagement 1. Customer Satisfaction operational Measures Quality Measures 2. Supplier  2. Safety/ Environmental  2 Safety/ Environmental 2. Financial   2 Financial Performance Measures Performance  3. Financial Measures 3. Financial Measures Measures 67
  • 68. PERFORMANCE TREE RoS a3% Exp. a3% Exp RoCE(PBIT) a1 % (+) a4 % Deprn. (X) a5 % FC  P % a2 Organization g ( ) (+) Performance Cap Turns a6 % WC Market‐Old/New SALES  New Products Growth 68
  • 69. Cascading Measures : Illustration Corpora Key Financial Key Operational Outcomes Key Influencers te vision Indicators •Sales from unexplored markets [Different countries, GM Different categories P&S Manager Manufacturing New Products New Services]] • End Customer /Dealer Satisfaction I d S i f i Index Sales growth • Revenue from New Existing Products (Cutting edge Market Share/ products) • Target number of Segments vendors per item Profits • ‘A’ class item Vision •Brand Profitability procurement lead time • ‘A’ class item inventory Costs turns •Reduction in RM cost and Cycle time • ‘A’ class item cost / cost due to formulation efficiency of production •Supply chain cost s •Direct material cost/cost - Inventory Turns of production •Reduction in raw - Transportation costs/Sales •RM, PM, FG inventory material costs (Vendor - Direct Material cost/Cost of production turns participation in Cont. R - Di t labour cost/Cost of production Direct l b t/C t f d ti •Transportation T t ti improvement) 0 - Direct expenses/Cost of production costs/Sales •No. of items under VMI C E •Selling costs -media spend -promotion costs - MR-Salaries & overheads • Value of Rejects •Debtors turnover ratio •I t Instances of stockout f t k t •Stockouts of RM, of RM Capital PM • Value/volume •Plant Uptime supplied by self Capacity utilization certified vendors 69
  • 70. Functional measures Corpor ate Fin Measures IT &STRAT. PLANNING • Internal customer vision ii satisfaction inde index - Information • Sales from - IT Infrastructure unexplored markets • Cost & time overruns in • End Customer /Dealer ERP implementation Satisfaction Index • Process Efficiencies Sales growth • Revenue from new ENGG. SERVICES Existing • Process cost reduction Market products (Cutting edge products) • Additional capacity share created on account of improvement projects • Time & Cost overruns of Profits projects Vision Vi i •Brand Profitability Costs HR •Reduction in RM cost and Cycle time Processes • Ratio of HR operating expense due to formulation efficiency to total operating expense • Percent of workforce having desired competencies •Supply chain cost s • Attrition rate/staffing rate - Inventory Turns • Reduction in manpower costs - Transportation costs/Sales through redeployment of staff - Direct Material cost/Cost of production • Training inputs/employee - Direct labour cost/Cost of production R - Direct expenses/Cost of production O -Cost of reprocessing C FINANCE , CORPORATE E AFFAIRS •Selling costs • Timeliness of preparation of -media spend financial statements and MIS -promotion costs • Cost of Funds - salaries & overheads -Procurement of funds against •Debtors turnover ratio targets - Returns from surplus funds Capital - Cash/fund flow management • Successful negotiation mergers & Capacity utilization acquisitions • Instances of significant savings on account of interpretation of statutes 70
  • 71. GOAL SETTING PROCESS The Goals need to be Understood as: Objectives Measures Targets 71
  • 72. GOAL SETTING PROCESS Objectives • Objectives are statements of intent to achieve specific business results or critical outcomes • For Example: Reduce throughput time Improve unit price realization Benchmarking against the best Improve market reach I k t h Manage investor relations Move to systems oriented product delivery parameters Improve plant and manpower productivity Standardize solutions Standardi e IT sol tions and implement ERP Increase operating efficiency for the department Achieve accelerated sales growth through exports 72
  • 73. GOAL SETTING PROCESS Measures • Measures are specific quantifiable parameters by which to measure the hi th achievement of an objective t f bj ti • For Example: Reduce throughput time Improve unit price realization Benchmarking against the best Improve market reach Manage investor relations Move to systems oriented product delivery parameters Improve plant and manpower productivity Standardize IT solutions and implement ERP Increase operating efficiency for the department Achieve accelerated sales growth through exports 73
  • 74. GOAL SETTING PROCESS Targets • Measures are specific quantifiable parameters by which to measure the hi th achievement of an objective t f bj ti • For Example: Reduce throughput time Improve unit price realization Benchmarking against the best Improve market reach Manage investor relations Move to systems oriented product delivery parameters Improve plant and manpower productivity Standardize IT solutions and implement ERP Increase operating efficiency for the department Achieve accelerated sales growth through exports 74
  • 75. CHARACTERISTICS • It is a step by step process • It examine the employee strengths and weaknesses • Scientific and objective study • Ongoing and continuous process • Secure information for making correct g decisions on employees 75
  • 76. HOW PA CONTRIBUTE TO FIRM’S COMPETITIVE ADVANTAGES Improving performance Making correct Values and behavior decision Competitive advantage Minimizing dissatisfaction Ensuring legal And turnover competence 76
  • 77. FORCED DISTRIBUTION METHOD No. of employees 10% 20% 40% 20% 10% poor Below average good Excellent average Force distribution curve 77
  • 78. LINKAGES OF PMS Rewards & Recognition s Performance Job Career Management Rotation Management g System Based on Balanced Scorecard Approach Development Plans 78
  • 79. Focus of Performance Management Progress and success toward goal achievement 79
  • 80. Assessing Needs • Your goals • Th employee’s goals The l ’ l • The department’s goals department s • The organization’s goals 80
  • 81. Considerations • Focus on • Knowledgeg performance issues • Ongoing • Clear expectations • Detailed • Improvement • Monitored • Productivity • Consistent • Objectivity • Fair • Accuracy • Timely • P f Performance, not • Motivational person 81
  • 82. Why Do Performance Management? M t? • Communicate goals, mission, values, g , , , purpose • Improve working relationships • Improve management • Identify and communicate strengths and areas f improvement for i t • Provide feedback • Develop • Monitor • Support 82
  • 83. Reflecting on Performance Discussions Di i Think about your last review: - Wh t thoughts come to mind? What th ht t i d? - What went right, what went wrong? 83
  • 84. What Do Employees Want? • Clear expectations • Positive/constructive • Accurate job feedback on regular g descriptions basis • Be treated fairly and • Understand consistently evaluation criteria • Sharing of info and resources • Involvement in goal setting • J b/ Job/career enrichment i h t opportunities 84
  • 85. Elements and Outcomes Elements Outcomes • Listening • Better performance • Coaching • Improved morale, trust, trust and loyalty • Feedback • Commitment 85
  • 86. Listening Skills • Active listening • Expression • Verbal/non-verbal cues V b l/ b l • Distractions • Retention 86
  • 87. Active Listening • Reflection • Reiteration/Paraphrase • Body Language B d L • Elaboration • Acknowledgement 87
  • 88. Coaching Skills • Observation • Solutions • Counsel • Agreement • Condition C diti • Follow th F ll through h • Criteria • Adjustment • Response • Follow-up 88
  • 89. Feedback • Purpose • Accurate • Setting • Balanced • Timing Ti i • Relevant R l t • Forward focused • Comprehension • Two-way • Agreement • Responsive • Follow up Follow-up 89
  • 90. Giving Feedback • Professional • Start with positive • Purpose • “I” vs “you” I vs. you • Listening vs. talking statements • P f Performance, not t • Factual personality • Strategize • Support • Goal setting focus • Privacyy • Resolution 90
  • 91. Receiving Feedback • Have an open mind • Avoid defensiveness • Listen for Li t f meaning i • Seek out resolution • Give guidance • Utilize effectively 91
  • 92. Communicating Effectively • Preparation • Professionalism • Matching body language t message M t hi b d l to • Tone awareness • Scripting • Focusing • Responsiveness 92
  • 93. Problem Solving • Define • Brainstorm alternatives • Identify Id tif causes • Collect/analyze info • Consensus • Action plan 93
  • 94. Conflict Destructive Conflict • Adversarial • Issues/problems not positions iti defined • Right vs. wrong • Breakdown in • N li t i No listening communication • No alternatives • Win/lose, lose/lose offered • Unyielding 94
  • 95. Conflict Constructive Conflict • Focus on issue • Allow reflection • Acknowledge A k l d • R Repeat b k back • Allow for venting • Brainstorm • Separate feelings alternatives lt ti from issues • Obtain agreement • Active listening • Win/win / 95
  • 96. COACHING 96
  • 97. • “Coaching is a solution–focused, results–orientated systematic process in which the Coach facilitates the enhancement of performance, self–directed learning and personal growth of other individuals” indi id als” • Coaching is… is – A means for learning and development. – About the Coach guiding the coachee towards his or her goals goals. – About the mutual sharing of experiences and opinions between the coach and the coachee to create agreed-upon outcomes. outcomes – About the Coach inspiring and supporting the coachee. 97
  • 98. Coaching is NOT… – An opportunity for the coach to correct the coachee s coachee’s behaviors or actions. – About the coach directing the coachee to meet goals. – About the coach being the expert or supervisor with all the answers. – About the coach trying to address personal issues of the coachee. 98
  • 99. • Coaching is about individual change and continuous improvement. • Individual h I di id l change i involves th l three phases: h Phase One:  Awareness and Acceptance Awareness and Acceptance A clear understanding and assessment of current behaviors that lead to  effective leadership Phase Three: Phase Two: Support, Maintain and Action and Application Measure A clear personalised plan to A support framework that address specific behaviour comprises key stakeholders that gaps with measures of will help bring about change and success monitor progress 99
  • 100. In the Coaching process, the Coach acts as a Personal Facilitator wherein s/he takes shared ownership of the key behavioral and performance outcomes of the coachee. The Coach provides a high level of supportive behavior which includes frequent (monthly) contact, collaborative idea generation, ongoing feedback on progress, suggestions for action. The Coach indulges in a low level of directive behavior. This means that the coachee must take primary responsibility of thinking through options, arriving at plans, executing plans and reflecting on behaviors. 3 2 Coach as  Coach as  Personal Facilitator Trainer/Teacher Shared ownership. Collaborative  Psycho‐educational. Explain  brainstorming. Creation of  and teach models and  personal reflective space. methods for change. e Behaviour 4 1 Coach as Mentor Coach as Consultant Infrequent contact. q Frequent contact. q Level of Supportive Minimal direction. Coach leads and directs  process, may set agenda. High degree of self‐directed  learning from coachee Level of Directive Behaviour Adapted from :  Chapman, T., Best, B., & Van Casteren, P. (2003) 100
  • 101. An Effective Coach While there are several attributes and definitions to define a good coach, an effective coach must do the following: • Display a genuine interest in the coachee’s development • Build a good rapport with the coachee • Establish trust • Inspire Energize and Motivate Inspire, • Help the coachee ‘find the answer’ • Maintain focus on results Maintain focus on results The coach must practice ‘tough love’ with  the coachee. The coach must ensure that  the coachee The coach must ensure that Managing Coaching the coachee never loses sight of his/her  Focus on: Focus on: goals. Telling Exploring Directing Di ti Facilitating F ilit ti Manager as a Coach Authority Partnership For a Manager to make a transition from  Managing people to Coaching people, it  Immediate needs Long–term Typically want one development is important that s/he traverses the  is important that s/he traverses the specific outcome Open to many possible following continuum: outcomes 101
  • 102. There are five key steps in the Coaching process. Each step is detailed further: SET AGENDA 1 2 MONITOR ENROLL PROGRESS STAKEHOLDERS COACHING 5 3 REVIEW GET ACTION FEEDFORWARD PLAN SUGGESTIONS 4 102
  • 103. Structuring a Coaching Session - GROW model • Session structure is a crucial factor in the success of the coaching relationship as it provides a structure and focus to every interaction between the Coach and the Coachee. t t df t i t ti b t th C h d th C h • The GROW model, devised by Sir John Whitmore, is a recommended coaching model as it offers a way of structuring coaching sessions to facilitate a balanced discussion: – GOAL - Defining what the coachee wants to achieve – REALITY - E l i th current situation, relevant hi t Exploring the t it ti l t history and f t d future t d trends – OPTIONS - Coming up with new ideas for reaching the goal – WRAP-UP - Deciding on a concrete plan of action • In practice, since most coaching is driven by questions, this means that different types of question are used at each stage: – GOAL - Questions to define the goal as clearly as possible and also to evoke an emotional response • What do you want to achieve? What will be different when you achieve it? What's important y y p about this for you? – REALITY - Questions to elicit specific details of the situation and context • What is happening now? Who is involved? What is their outcome? What is likely to happen in future? – OPTIONS - Open-ended questions to facilitate creative thinking • What could you do? What ideas can you bring in from past successes? What haven't you tried yet? – WRAP-UP - Focused questions to get an agreement to specific actions and criteria for success • What will you do? When will you do it? Who do you need to involve? When should you see results? 103
  • 104. The Coaching Process • Given the highly contextual nature of coaching, the contracting process is highly critical for success. Here’s what the process looks like. Agrees On Takes Responsibility For • Coachee is valued as a high performer in • Setting expectations of ‘breakthrough my team y ea Manager of performance’ with th coachee f ’ ith the h Coachee • I am keen to help the coachee achieve a • Working with the coach to provide feedback ‘significant breakthrough’ in performance as and support to the coachee a leader • I am keen to achieve a ‘significant significant breakthrough’ in my performance as a • Achieving the ‘significant breakthrough’ in leader performance Coachee • I am open to accepting and working on • Working on own behaviors and actions as feedback from my peers, subordinates, y decided during the process g manager and coach • I am keen to help the coachee achieve a ‘significant breakthrough’ in performance Providing feedback and suggestions to the Stakeholders • I will be honest a d helpful in my feedback o es and e p u y eedbac coachee and suggestions • I am committed to helping the coachee achieve a ‘significant breakthrough’ in • Setting up, facilitating and managing all performance Coach C h conversations during the process • I will treat all conversations during the • Reporting progress to process owner process as strictly confidential with the individual involved 104 104
  • 105. COUNSELING 105
  • 106. COUNSELING Subordinate-centered communication that outlines actions necessary for subordinates to achieve individual and organizational goals. 106
  • 107. Counseling Cycle Continuous Process EXIT INTERVIEW OER/ NCOER ARRIVE AT UNIT - Sponsorship - Reception and Integration Initial OER / PATHWAY TO NCOER SUCCESS Counseling (30 days) Quarterly Counseling Quarterly Counseling Personal Issues NCOER Checklist NCOER Checklist Event: Non-select for school / Periodic Review promotion of OER Support Form (Rater/ (R t / SR R t ) Rater) Quarterly Counseling NCOER Checklist MIDPOINT 6 MONTHS 107
  • 108. THE COUNSELING PROGRAM – A company level leader’s responsibility – A dynamic system of skilled leaders helping subordinates to develop – Takes time energy, and effort to build and time, energy sustain – An investment in leader development and the unit 108
  • 109. THE EFFECTS OF COUNSELING ON THE ORGANIZATION – Develops subordinates – Strengthens the chain of command – Provides opportunity for leader growth 109
  • 110. A COUNSELING PROGRAM SHOULD: Strengthen the Chain of Command Clarify policies and procedures Reinforce standards Prevent rumors Praise success Avoid surprises Develop responsible subordinates 110
  • 111. COUNSELING AND LEADER GROWTH Through counseling, leaders: - Learn about their own effectiveness - Learn more about “leadership”p - Gain an appreciation for the diversity of those they lead 111
  • 112. SUBORDINATE-CENTERED (TWO- WAY) COMMUNICATION Subordinates assume an active role in the counseling sessions and maintain responsibility for their actions. The following skills assist leaders in subordinate-centered counseling: – Active listening – Responding – Questioning 112
  • 113. THE LEADER AS A COUNSELOR 1. 1 Leaders have a responsibility to develop their subordinates. 2. During counseling, the leader acts primarily as a helper, not a judge. 113
  • 114. THE LEADER AS A COUNSELOR (CON’T) The f ll i Th following qualities help the leader to liti h l th l d t assume an effective role during a counseling session: – Respect for subordinates – Self and cultural awareness – Credibility – Empathy 114
  • 115. THE REASON FOR COUNSELING – To help subordinates develop in order to achieve organizational goals and objectives. – This overriding theme of “subordinate subordinate development” includes helping subordinates to improve (or maintain) performance, solve problems, or attain goals. – C Counseling requirements are also integrated into the evaluation system. 115
  • 116. TWO CATEGORIES OF COUNSELING Event-Oriented Counseling Performance Counseling Professional Growth Counseling 116
  • 117. Event-Oriented Counseling Counseling centers around a specific event or situation and is personal in nature Examples include: Reception and Integration p g Promotion Counseling Corrective Training g Referrals Separation Crisis Positive Performance 117
  • 118. PERFORMANCE COUNSELING Includes Performance improvement counseling; outlines values, attributes, skills, and actions; establishes performance indicators for the leadership competencies. PROFESSIONAL GROWTH COUNSELING Includes Pathway to Success and Career counseling Counseling is future oriented based on an established time line 118
  • 119. PREPARATION FOR COUNSELING O O COU S G 1. 1 Select a suitable place 2. Schedule the time 3. Notify the subordinate well in advance y 4. Organize the information 5. Outline the components of the counseling session 6. Plan a counseling strategy 7. 7 Establish the right atmosphere Why should a leader prepare an outline? What is a counseling strategy? 119
  • 120. THE STAGES OF A COUNSELING SESSION 1. OPEN THE SESSION Identify the purpose and establish a constructive and subordinate- centered tone tone. 2. DISCUSS THE ISSUE Help the b di t develop an understanding of th i H l th subordinate d l d t di f the issues and viable d i bl goals to effectively deal with them. 3. DEVELOP A PLAN Develop an action plan with subordinate. The plan that evolves from the counseling process must be action-focused and facilitate both leader and subordinate attention toward resolving the identified developmental needs. 4. CLOSE THE SESSION Discuss the implementation, including the leader’s role in supporting the subordinate’s effort. s bordinate’s effort Gain the s bordinate’s commitment to the plan subordinate’s plan. Ensure plan is specific enough to drive behaviors needed to affect the developmental needs 120
  • 121. DEVELOP A PLAN OF ACTION 1. Actions should facilitate the attainment of goals. 2. Plan may entail contacting a referral agency. 3. Actions should be specific enough to drive behavior. 121
  • 122. CLOSE THE SESSION - Summarize the counseling session. - Discuss implementation of the plan; check for understanding and acceptance. - Identify leader’s responsibilities leader s responsibilities. What is follow-up and why is it necessary? p y y Describe the assessment of the plan of action. Why is it integral part of th counseling process? an i t l t f the li 122
  • 123. APPROACHES – BLUE COLLAR 123
  • 124. APPROACHES – BLUE COLLAR Skill Productivity against standard norms 124
  • 125. MEASURING PERFORMANCE Individual Based : Grade Seniority linked with skill and Attendance Team Based : Re-work, Rejections, Throughput Combination : Of both the above factors. Payments links to the above 125
  • 126. ROLE OF IT IN PMS 126
  • 127. ROLE OF IT - PMS Integrated across the Company. Uniform approaches and practices. Timeliness : Initiation, Completion and Decision. , p On-time tracking of Process. Speed of Execution. 127
  • 128. ROLE OF IT - PMS System should provide for: 1. Development, reporting, and interpretation of key measures and indicators related to the quality, timeliness, accuracy, and usefulness of f f products and services. 2. Identification of significant performance trends to find successes and address deficiencies. 3. Useful and meaningful information and feedback for forecasters, managers, partners, and customers. t 128
  • 129. A FINAL THOUGHT The conventional definition of management is getting work done through people, b t real management th h l but l t is developing people through work. - Agha Hasan Abedi 129
  • 130. PERFORMANCE CRITERIA FOR EXECUTIVES • For top managers – Return on capital employed – Contribution to community development – Degree of upward communication from middle-level executives – Degree of growth and expansion of enterprise. enterprise 130
  • 131. FOR MIDDLE LEVEL MANAGERS • Departmental performance • Coordination among employees • Degree of upward communication from supervisors • Degree of clarity about corporate goals and policies 131
  • 132. FOR SUPERVISORS • Q Quality and quantity of output in a g y q y p given p period • Labor cost per unit of output in a given period • Material cost per unit in a g p given p period • Rate of absenteeism and turnover of employees • No of accidents in a given period 132