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ENHANCING PERFORMANCE PLANNING AND REVIEW Case Study, Concepts and Debatable Ideas Kenny Ong CNI Holdings Berhad www.myCNI...
Intro: CNI <ul><li>19 years old </li></ul><ul><li>Core Business: MLM </li></ul><ul><li>Others: Contract Manufacturing, Exp...
1. Why we hate Performance Appraisals www.myCNI.com.my www.OOBEY.com
Complaints about Performance Appraisals As an Appraisee As an Appraisor Mgmt/HR www.myCNI.com.my www.OOBEY.com
Complaints about Performance Appraisals <ul><li>Bias </li></ul><ul><li>Different Standards </li></ul><ul><li>Surprise </li...
Complaints about Performance Appraisals <ul><li>Cannot remember </li></ul><ul><li>Tedious </li></ul><ul><li>Subjective </l...
Complaints about Performance Appraisals <ul><li>Flexible or Control? </li></ul><ul><li>MBO or Character? </li></ul><ul><li...
Complaints about Performance Appraisals - Summary <ul><li>Process problem </li></ul><ul><li>Form problem </li></ul><ul><li...
What is Performance Appraisal used for? Reward? Discipline? Development? Motivation? Promotion? Monitor? www.myCNI.com.my ...
Performance Management   Performance Appraisal   Performance Development   Performance Measurement   Common terms and defi...
What is the OBJECTIVE? <ul><li>What is the ultimate objective of a Performance Management System? </li></ul><ul><li>‘ Perf...
What is the OBJECTIVE? Succession Planning (Business Continuity) Talent Management Differentiation Performance Management ...
What is the OBJECTIVE? Succession Planning (Business Continuity) Talent Management Differentiation Performance Management ...
1. Why we hate Performance Appraisals Focus on the Business Strategy and Business Direction first www.myCNI.com.my www.OOB...
<ul><li>“… in the past 18 months, we have heard that profit is more important than revenue, quality is more important that...
Before we start… <ul><li>In the old days of HR… </li></ul><ul><li>Average training hours per staff </li></ul><ul><li>% of ...
Before we start… <ul><li>Moral of the story… </li></ul><ul><li>Innovation: </li></ul><ul><ul><li>Business models </li></ul...
<ul><li>“ What is the moral of the story?” </li></ul>www.myCNI.com.my www.OOBEY.com
What is the Business Model? USP Market  Discipline Profit Model www.myCNI.com.my www.OOBEY.com
Intro: Market Discipline <ul><li>Mamak stall </li></ul>www.myCNI.com.my www.OOBEY.com
Intro: Market Discipline <ul><li>&quot;Exactly what I need&quot; </li></ul><ul><li>Customized products </li></ul><ul><li>P...
Strategy: Value Disciplines Operational Excellence (low cost producer) Ref:  The Discipline of Market Leaders , Michael Tr...
<ul><li>Product Leadership </li></ul><ul><li>New, state of the art products or services </li></ul><ul><li>Risk takers </li...
The McPlaybook* <ul><li>Make it easy to eat </li></ul><ul><li>50% drive-thru </li></ul><ul><li>Meals held in one hand </li...
Strategy: Value Disciplines Operational Excellence (low cost producer) Ref:  The Discipline of Market Leaders , Michael Tr...
Strategy: Value Disciplines Operational Excellence (low cost producer) Ref:  The Discipline of Market Leaders , Michael Tr...
Business Situation vs. Performance Mgmt Focus Upturn Flat Downturn Fight Complacency Sharpen Edge Keep Momentum Conquer ‘ ...
Focus: Corporate Alignment Revenue Growth Base Retention Share Gain Positioning Adjacent Market New Business Operational E...
Focus: Corporate Alignment Financial Learning & Growth Internal Process Customers / Distributors www.myCNI.com.my www.OOBE...
Focus: Corporate Alignment Financial Learning & Growth Internal Process Customers / Distributors Profit after Tax. Revenue...
1. Why we hate Performance Appraisals Implementing the Right System www.myCNI.com.my www.OOBEY.com
What is Performance Appraisal used for? Reward? Discipline? Development? Motivation? Promotion? Monitor? www.myCNI.com.my ...
Which system should we use? Behavior-based Knowledge/Skill based Results-based Trait-based Managing Performance = Managing...
Dangers of Best Practice… <ul><li>Also known as ‘Beware of Consultants’: </li></ul><ul><li>Big vs. Small company </li></ul...
Survey Problems… <ul><li>“ In business after business, 60% to 80% of lost customers reported on a survey just prior to def...
Why BSC? <ul><li>Reason 1: Balanced </li></ul><ul><li>Reason 2: Cause-and-Effect </li></ul>www.myCNI.com.my www.OOBEY.com
BSC: Balanced & Cause-and-Effect Financial “ To satisfy our stakeholders, what Financial objectives must we accomplish?” w...
Performance Management for Change <ul><li>Review Performance & Results </li></ul>o  Grievance level o  Absenteeism o  Disc...
2. Performance Planning MBO, KPIs, Competencies www.myCNI.com.my www.OOBEY.com
District Engineer, TNB Duties and Responsibilities If stated as Accountabilities then the job must produce : Control, oper...
MBO Standards www.myCNI.com.my www.OOBEY.com   Useless Poor Average Good Excellent E D C B A
MBO Standards www.myCNI.com.my www.OOBEY.com   Useless Poor Average Good Excellent E D Good C B A
MBO Standards www.myCNI.com.my www.OOBEY.com   Useless Poor Average Good Excellent Commit Suicide E Not Good D Good C Very...
MBO Standards www.myCNI.com.my www.OOBEY.com   Commit Suicide Not Good Good Very Good Excellent Unacceptable performance E...
MBO Target Setting  - Objectives and Measures <ul><li>SMART Targets </li></ul><ul><li>Specific   (definite objective and p...
MBO Target Setting  - Objectives and Measures www.myCNI.com.my www.OOBEY.com   <ul><li>When is the result to be produced /...
Sample KPIs for Each Discipline <ul><li>Operational Excellence </li></ul><ul><li>Price </li></ul><ul><li>Selection </li></...
<ul><li>Operational Excellence </li></ul><ul><ul><ul><li>Move  know-how  from top performing units to others </li></ul></u...
Strategy: Value Disciplines <ul><li>Customer Intimacy </li></ul><ul><ul><ul><li>Capture knowledge about  customers </li></...
<ul><li>Product Leadership </li></ul><ul><ul><ul><li>Reduce  time  to market </li></ul></ul></ul><ul><ul><ul><li>Commercia...
Lagging and Leading KPIs Historical, Outcome, Results, 1 st  Level, Usually Financial or tangible, Quarterly and Annually ...
Developing ‘Driver’ KPIs www.myCNI.com.my www.OOBEY.com   Customer Retention % Lagging, 1 st  Level Customer Satisfaction ...
What is the Objective? <ul><li>‘ Do-or-Die’ KPIs for CNI </li></ul><ul><li>Revenue </li></ul><ul><li>ARPU </li></ul><ul><l...
MBO – Sources of KRAs and KPIs, Targets <ul><li>Department Scorecard [E3],  </li></ul><ul><li>Employee’s Job Description, ...
E3 – Department BSC Financial Perspective www.myCNI.com.my www.OOBEY.com   On Time Delivery Innovation Quality OPEX CAPEX ...
Individual Performance www.myCNI.com.my www.OOBEY.com   2.0 Goals and Targets for Q1 6.0 Appraiser Overall Comments/ Feedb...
Competency Target Setting <ul><li>Initiative </li></ul><ul><li>Teamwork </li></ul><ul><li>Problem Solving </li></ul><ul><l...
Competency Target Setting <ul><li>Initiative </li></ul><ul><li>Minimize problems quickly without needing to be asked </li>...
Competency Standards www.myCNI.com.my www.OOBEY.com   Does not meet  behavioral standards. Require counseling or disciplin...
Performance Setting & Review Schedule Step One - August <ul><li>Senior Management – Facilitate BOD Strategic Planning proc...
3. The Manager’s Role in Performance Management Appraisal, Evaluation, Communication, Coaching, Counseling, Mentoring www....
Coaching & Counseling www.myCNI.com.my www.OOBEY.com   Month 1 Performance Planning Month 12 Performance Appraisal Month 2...
<ul><li>Beating a Dead Horse </li></ul>www.myCNI.com.my www.OOBEY.com
Most Common Desperate Performance Improvement methods  <ul><li>Send for more Training </li></ul><ul><li>Enforce more Incen...
Mager and Pipe <ul><li>Analyzing Performance Discrepancies </li></ul>www.myCNI.com.my www.OOBEY.com
Alignment: 4-Wheels Model Philosophies Corporate  Objective Performance Objectives www.myCNI.com.my www.OOBEY.com   Struct...
4. Performance Evaluation Formal Review, Incentives, Compensation, Reward, Differentiation  www.myCNI.com.my www.OOBEY.com
Performance Evaluation Session: Key Ingredients www.myCNI.com.my www.OOBEY.com   Self  Review Evaluator’s  Review Next  St...
PASSE P raise and encourage A sk questions allow the person to  S ave Face use  S MART goals E ncourage small improvements...
Incentive Problems <ul><li>Problem with Incentives in managing performance: </li></ul><ul><li>Most people are confused or ...
What to Pay? <ul><li>Pay for Service </li></ul><ul><li>Pay for Job </li></ul><ul><li>Pay for Performance </li></ul><ul><li...
Performance and Incentives <ul><li>Internal Equity </li></ul><ul><ul><li>Internal Job Rates </li></ul></ul><ul><ul><li>Per...
What’s the Difference?  <ul><li>Increment </li></ul><ul><li>Bonus </li></ul><ul><li>Promotion </li></ul>www.myCNI.com.my w...
Compa Ratio Table <ul><li>Use this if your company:  </li></ul><ul><li>Pays for  Performance , and  </li></ul><ul><li>Pays...
Compa Ratio Table www.myCNI.com.my www.OOBEY.com   1 2 3 4 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
Compa Ratio Table www.myCNI.com.my www.OOBEY.com   1 2 5% 3 4 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
Compa Ratio Table www.myCNI.com.my www.OOBEY.com   0 1 2 2 3 4 5% 7 9 3 7 4 9 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0....
Compa Ratio Table www.myCNI.com.my www.OOBEY.com   0 0 0 2 4 1 0 1 2 4 6 2 3 4 5% 7 9 3 3 5 7 9 12 4 7 8 9 12 15 5 > 1.3 ≥...
Dangers of Direct Incentives <ul><li>lessen internal motivation,  </li></ul><ul><li>switch to mercenary mode,  </li></ul><...
Other Performance Review processes <ul><li>Result Planning schedule inc. BSC, Budget </li></ul><ul><li>Quarterly Performan...
Employee Distinctions through Relative Performance www.myCNI.com.my www.OOBEY.com
Employee Distinction? www.myCNI.com.my www.OOBEY.com   1 2 3 4 5 1 2 3 4 5 6 2 3 4 5% 6 7 3 4 5 6 7 8 4 5 6 7 8 9 5 > 1.3 ...
Employee Distinction? www.myCNI.com.my www.OOBEY.com   0 0 0 0 0 1 0 0 1 1 1 2 3 4 5% 7 9 3 3 5 9 12 18 4 5 8 12 15 20 5 >...
Employee Distinction www.myCNI.com.my www.OOBEY.com   0% 1.0 0 1 ≤  1.3 0.9% 1.8 0.5 2 > 1.3 – 2.3 2.1% 2.8 0.75 3 > 2.3 –...
Employee Distinction Group I (Talent Pool) Group II (   Potential) Group III (   Performance) Group IV (Counseling) 2 3 ...
Curse of the Bell Curve ‘ A’ Staff ‘ B’ Staff ‘ D’ Staff ‘ E’ Staff ‘ C’ Staff www.myCNI.com.my www.OOBEY.com
Managing People performance: A Summary www.myCNI.com.my www.OOBEY.com
More Problems…. <ul><li>cost of evaluation vs. gains of evaluation </li></ul><ul><li>defer achievements of a good year to ...
Before I forget… <ul><li>Re-train Appraisers </li></ul><ul><li>Train new Appraisers </li></ul>www.myCNI.com.my www.OOBEY.c...
Alignment: 4-Wheels Model Philosophies Corporate  Objective Performance Objectives www.myCNI.com.my www.OOBEY.com   Struct...
Thank You. soft copy of slides:  www.totallyunrelatedrandomanddebatable.blogspot.com
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Enhancing Performance Planning And Review for Business and Talent Management

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*Why we hate Performance Appraisals and why most Performance Management Systems do not work
*From performance appraisal to performance management, and from a bureaucratic requirement to a tool for managing and improving performance
*Planning, managing and developing the performance of subordinates
*Rewarding performance and Managing Talent

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  • Transcript of "Enhancing Performance Planning And Review for Business and Talent Management"

    1. 1. ENHANCING PERFORMANCE PLANNING AND REVIEW Case Study, Concepts and Debatable Ideas Kenny Ong CNI Holdings Berhad www.myCNI.com.my www.OOBEY.com
    2. 2. Intro: CNI <ul><li>19 years old </li></ul><ul><li>Core Business: MLM </li></ul><ul><li>Others: Contract Manufacturing, Export/Trading, eCommerce </li></ul><ul><li>Malaysia, Singapore, Brunei, Indonesia, India, China, Hong Kong, Philippines, Italy, Taiwan </li></ul><ul><li>Staff force: ± 500 </li></ul><ul><li>Distributors: 250,000 </li></ul><ul><li>Products: Consumer Goods and Services </li></ul>www.myCNI.com.my www.OOBEY.com
    3. 3. 1. Why we hate Performance Appraisals www.myCNI.com.my www.OOBEY.com
    4. 4. Complaints about Performance Appraisals As an Appraisee As an Appraisor Mgmt/HR www.myCNI.com.my www.OOBEY.com
    5. 5. Complaints about Performance Appraisals <ul><li>Bias </li></ul><ul><li>Different Standards </li></ul><ul><li>Surprise </li></ul><ul><li>Subjective </li></ul><ul><li>No linkage* </li></ul><ul><li>No differentiation </li></ul><ul><li>Secretive </li></ul><ul><li>No follow up </li></ul><ul><li>No control </li></ul>As an Appraisee www.myCNI.com.my www.OOBEY.com
    6. 6. Complaints about Performance Appraisals <ul><li>Cannot remember </li></ul><ul><li>Tedious </li></ul><ul><li>Subjective </li></ul><ul><li>Right targets </li></ul><ul><li>Scoring Competencies* </li></ul><ul><li>Defensive staff </li></ul><ul><li>No $$ to differentiate </li></ul><ul><li>Prejudices </li></ul><ul><li>Results or Activities </li></ul>As an Appraiser www.myCNI.com.my www.OOBEY.com
    7. 7. Complaints about Performance Appraisals <ul><li>Flexible or Control? </li></ul><ul><li>MBO or Character? </li></ul><ul><li>Best Practice or Fit Culture? </li></ul><ul><li>Backward or Forward? </li></ul><ul><li>Quarterly Results or Long-term? </li></ul><ul><li>No $$ to differentiate* </li></ul><ul><li>Perfect System, Bad performance </li></ul><ul><li>Recency and Halo effects </li></ul><ul><li>Untrained Appraisers </li></ul>Mgmt/HR www.myCNI.com.my www.OOBEY.com
    8. 8. Complaints about Performance Appraisals - Summary <ul><li>Process problem </li></ul><ul><li>Form problem </li></ul><ul><li>People problem </li></ul>www.myCNI.com.my www.OOBEY.com
    9. 9. What is Performance Appraisal used for? Reward? Discipline? Development? Motivation? Promotion? Monitor? www.myCNI.com.my www.OOBEY.com
    10. 10. Performance Management Performance Appraisal Performance Development Performance Measurement Common terms and definitions www.myCNI.com.my www.OOBEY.com
    11. 11. What is the OBJECTIVE? <ul><li>What is the ultimate objective of a Performance Management System? </li></ul><ul><li>‘ Performance’ – achievement, </li></ul><ul><li>‘ Management’ – controllable, improvement </li></ul><ul><li>‘ System’ – predictable outcome, autorun </li></ul><ul><li>Summary? </li></ul><ul><li>A Predictable process to Improve Controllable Achievements </li></ul>www.myCNI.com.my www.OOBEY.com
    12. 12. What is the OBJECTIVE? Succession Planning (Business Continuity) Talent Management Differentiation Performance Management System Budgeting + Planning KPIs BSC Business Model www.myCNI.com.my www.OOBEY.com
    13. 13. What is the OBJECTIVE? Succession Planning (Business Continuity) Talent Management Differentiation Performance Management System Budgeting + Planning KPIs BSC Business Model Business Plan Implementation Talent Management www.myCNI.com.my www.OOBEY.com
    14. 14. 1. Why we hate Performance Appraisals Focus on the Business Strategy and Business Direction first www.myCNI.com.my www.OOBEY.com
    15. 15. <ul><li>“… in the past 18 months, we have heard that profit is more important than revenue, quality is more important that profit, people are more important than profit, customers are more important than our people, big customers are more important than small customers, and that growth is the key to our success. No wonder our performance is inconsistent&quot; </li></ul>CEO, Anonymous www.myCNI.com.my www.OOBEY.com
    16. 16. Before we start… <ul><li>In the old days of HR… </li></ul><ul><li>Average training hours per staff </li></ul><ul><li>% of staff attending training </li></ul><ul><li># of training programs </li></ul><ul><li>% of training programs conducted </li></ul><ul><li>Training needs analysis conducted </li></ul><ul><li>Competency models developed </li></ul><ul><li>Training budget as % of payroll </li></ul>What’s wrong with this picture? www.myCNI.com.my www.OOBEY.com
    17. 17. Before we start… <ul><li>Moral of the story… </li></ul><ul><li>Innovation: </li></ul><ul><ul><li>Business models </li></ul></ul><ul><ul><li>Products </li></ul></ul><ul><ul><li>Services </li></ul></ul><ul><li>Market Leadership </li></ul><ul><li>Competitive differentiation </li></ul>Get the picture? www.myCNI.com.my www.OOBEY.com
    18. 18. <ul><li>“ What is the moral of the story?” </li></ul>www.myCNI.com.my www.OOBEY.com
    19. 19. What is the Business Model? USP Market Discipline Profit Model www.myCNI.com.my www.OOBEY.com
    20. 20. Intro: Market Discipline <ul><li>Mamak stall </li></ul>www.myCNI.com.my www.OOBEY.com
    21. 21. Intro: Market Discipline <ul><li>&quot;Exactly what I need&quot; </li></ul><ul><li>Customized products </li></ul><ul><li>Personalized communications </li></ul><ul><li>&quot;They're very responsive&quot; </li></ul><ul><li>Preferential service and flexibility </li></ul><ul><li>Recommends what I need </li></ul><ul><li>&quot;I'm very loyal to them&quot; </li></ul><ul><li>Helps us to be a success </li></ul>&quot;They are the most innovative&quot; &quot;Constantly renewing and creative&quot; &quot;Always on the leading edge&quot; &quot;A great deal!&quot; Excellent/attractive price Minimal acquisition cost and hassle Lowest overall cost of ownership &quot;A no-hassles firm&quot; Convenience and speed Reliable product and service Product Leadership Operational Excellence Customer Intimacy www.myCNI.com.my www.OOBEY.com
    22. 22. Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com
    23. 23. <ul><li>Product Leadership </li></ul><ul><li>New, state of the art products or services </li></ul><ul><li>Risk takers </li></ul><ul><li>Meet volatile customer needs </li></ul><ul><li>Fast concept-to- counter </li></ul><ul><li>Never satisfied - obsolete own and competitors' products </li></ul><ul><li>Learning organization </li></ul>Strategy: Value Disciplines <ul><li>Operational Excellence </li></ul><ul><li>Competitive price </li></ul><ul><li>Error free, reliable </li></ul><ul><li>Fast (on demand) </li></ul><ul><li>Simple </li></ul><ul><li>Responsive </li></ul><ul><li>Consistent information for all </li></ul><ul><li>Transactional </li></ul><ul><li>'Once and Done' </li></ul><ul><li>Customer Intimacy </li></ul><ul><li>Management by Fact </li></ul><ul><li>Easy to do business with </li></ul><ul><li>Have it your way (customization) </li></ul><ul><li>Market segments of one </li></ul><ul><li>Proactive, flexible </li></ul><ul><li>Relationship and consultative selling </li></ul><ul><li>Cross selling </li></ul>www.myCNI.com.my www.OOBEY.com
    24. 24. The McPlaybook* <ul><li>Make it easy to eat </li></ul><ul><li>50% drive-thru </li></ul><ul><li>Meals held in one hand </li></ul><ul><li>Make it easy to prepare </li></ul><ul><li>High Turnover </li></ul><ul><li>Tasks simple to learn & repeat </li></ul><ul><li>Make it quick </li></ul><ul><li>“ Fast Food” </li></ul><ul><li>Tests new products for Cooking Times </li></ul><ul><li>Make what customers want </li></ul><ul><li>Prowls market for new products </li></ul><ul><li>Monitored field tests </li></ul>*Adapted from: Businessweek , Februrary 5 th 2007 www.myCNI.com.my www.OOBEY.com
    25. 25. Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com
    26. 26. Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com
    27. 27. Business Situation vs. Performance Mgmt Focus Upturn Flat Downturn Fight Complacency Sharpen Edge Keep Momentum Conquer ‘ Change’ mgmt Reduce Fat Continuity Everyone Happy Innovation Acquire Profits Build momentum Sales Cash Flow Talent Mgmt Innovation/R&D Early wins Slow Down HR Costs Top Talent focus Sales, Sales, Sales Increase attrition www.myCNI.com.my www.OOBEY.com
    28. 28. Focus: Corporate Alignment Revenue Growth Base Retention Share Gain Positioning Adjacent Market New Business Operational Excellence Product Leadership Customer Intimacy Competencies Information Systems Motivation, empowerment, alignment Financial Learning & Growth Internal Process Customers Investment Strategy Productivity Market Value www.myCNI.com.my www.OOBEY.com
    29. 29. Focus: Corporate Alignment Financial Learning & Growth Internal Process Customers / Distributors www.myCNI.com.my www.OOBEY.com Revenue Growth Productivity Market Value Department Operations Supplier & Alliances External Involvement Target Markets Products/ Services Channel Strategies Human Resources Technology Information & Intelligence Systems & Processes
    30. 30. Focus: Corporate Alignment Financial Learning & Growth Internal Process Customers / Distributors Profit after Tax. Revenue. Cash-to-cash cycle. Operating cash flow Customer Complaints. Customer Acquisition Rate. Product Availability. Product Quality & Service. Renewal Annual Subscription. Distributor Rank Achievement. No. of Active Distributor. No. DC/Regional Sales. Distributor with commission Customer Database Availability. Accuracy of Forecast Planning. Continuous Improvement. Response Time to Customer Needs. Perfect Order Fulfillment. Inventory Turnover. Number of Effective Sponsoring Program. On Time Delivery. No. of Effective Training. Number of Effective A&P % of staff evaluated on Core Competency Framework. % of staff with Career Development Plans. No. of training hours completed per staff. % of staff with access to strategic information. Q12 Index. % staff evaluated on Culture alignment www.myCNI.com.my www.OOBEY.com
    31. 31. 1. Why we hate Performance Appraisals Implementing the Right System www.myCNI.com.my www.OOBEY.com
    32. 32. What is Performance Appraisal used for? Reward? Discipline? Development? Motivation? Promotion? Monitor? www.myCNI.com.my www.OOBEY.com
    33. 33. Which system should we use? Behavior-based Knowledge/Skill based Results-based Trait-based Managing Performance = Managing Expectations What’s YOUR expectation? Activity based www.myCNI.com.my www.OOBEY.com
    34. 34. Dangers of Best Practice… <ul><li>Also known as ‘Beware of Consultants’: </li></ul><ul><li>Big vs. Small company </li></ul><ul><li>Selective success stories </li></ul><ul><li>Correlation vs. Causal </li></ul><ul><li>Survey problems </li></ul><ul><li>Practical vs. Glamour-to-have </li></ul>www.myCNI.com.my www.OOBEY.com
    35. 35. Survey Problems… <ul><li>“ In business after business, 60% to 80% of lost customers reported on a survey just prior to defecting that they were satisfied or very satisfied .” </li></ul>HBR March/April 1996 www.myCNI.com.my www.OOBEY.com
    36. 36. Why BSC? <ul><li>Reason 1: Balanced </li></ul><ul><li>Reason 2: Cause-and-Effect </li></ul>www.myCNI.com.my www.OOBEY.com
    37. 37. BSC: Balanced & Cause-and-Effect Financial “ To satisfy our stakeholders, what Financial objectives must we accomplish?” www.myCNI.com.my www.OOBEY.com Internal Process “ To satisfy our customers, in which internal business processes must we excel?&quot; Customer “ Who are our target customers? What is our value proposition?” Learning & Growth “ What capabilities and tools do our employees require to help them execute our strategy?
    38. 38. Performance Management for Change <ul><li>Review Performance & Results </li></ul>o Grievance level o Absenteeism o Discipline issue o Poor work ethics Degree of Clarity of Job Results Vision Led Performance driven High Low High Level of Trust & Commitment (Between Subordinate & Boss) UNCLEAR <ul><li>Discuss & Agree on Account </li></ul><ul><li>Objectives & Key Measures </li></ul><ul><li>Standards for Performance </li></ul><ul><li>Provide Coaching & Counselling </li></ul>RESULTS DRIVEN <ul><li>High Level of employee empowerment </li></ul><ul><li>High Employee Performance </li></ul><ul><li>High Employee Satisfaction </li></ul><ul><li>High Employee Involvement </li></ul><ul><li>Challenging Working Environment </li></ul><ul><li>Optimum HRM Cost Structure </li></ul>
    39. 39. 2. Performance Planning MBO, KPIs, Competencies www.myCNI.com.my www.OOBEY.com
    40. 40. District Engineer, TNB Duties and Responsibilities If stated as Accountabilities then the job must produce : Control, operate and maintain the District Distribution System Ensure uninterrupted supply to consumers in the district by operating the District Distribution System. Manage major supply projects to customers in the district. Ensure satisfaction of the major customers in the district by managing supply and Distribution. Supervise all technical staff in the district. Ensure high performance and Productivity of technical staff by adopting proper human resource management methods on selection, training, coaching, counselling and motivation. Plan and design the High voltage system Ensure availability of adequate supply for future needs of industries in the district by planning and designing the High voltage System
    41. 41. MBO Standards www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent E D C B A
    42. 42. MBO Standards www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent E D Good C B A
    43. 43. MBO Standards www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent Commit Suicide E Not Good D Good C Very Good B Excellent A
    44. 44. MBO Standards www.myCNI.com.my www.OOBEY.com Commit Suicide Not Good Good Very Good Excellent Unacceptable performance E Did not fully meet planned results D Achieved Planned Results C Higher than planned results B Consistently achieved 4 for 3 quarters A
    45. 45. MBO Target Setting - Objectives and Measures <ul><li>SMART Targets </li></ul><ul><li>Specific (definite objective and purpose to be achieved) </li></ul><ul><li>Measurable (by definite observation and a certain time one should be able to tell whether or not it is attained) </li></ul><ul><li>Achievable (Must be within reach of the employees, e.g. to meet stated deadlines, neither too high nor too low) </li></ul><ul><li>Rewarding (Rewarding means it must be satisfying to you, no one else) </li></ul><ul><li>Time phased (per quarter, per year. By end of fiscal year, by 15th of November) </li></ul>www.myCNI.com.my www.OOBEY.com
    46. 46. MBO Target Setting - Objectives and Measures www.myCNI.com.my www.OOBEY.com <ul><li>When is the result to be produced / performed </li></ul>Timeliness <ul><li>At what expense the result is produced / performed </li></ul>Cost <ul><li>How much / many of the results are produced or performed </li></ul>Quantity <ul><li>How well the result is produced / performed </li></ul><ul><li>Errors and Appearance </li></ul>Quality
    47. 47. Sample KPIs for Each Discipline <ul><li>Operational Excellence </li></ul><ul><li>Price </li></ul><ul><li>Selection </li></ul><ul><li>Convenience </li></ul><ul><li>Zero Defects </li></ul><ul><li>Growth </li></ul><ul><li>Customer Intimacy </li></ul><ul><li>Customer Knowledge </li></ul><ul><li>Solutions Offered </li></ul><ul><li>Penetration </li></ul><ul><li>Customer Data </li></ul><ul><li>Customer-success focus </li></ul><ul><li>Product Leadership </li></ul><ul><li>Marketing </li></ul><ul><li>Functionality </li></ul><ul><li># of Successes </li></ul><ul><li># of Failures </li></ul><ul><li>Learn from key users </li></ul><ul><li>Interdisciplinary teams </li></ul><ul><li>Pipeline </li></ul>www.myCNI.com.my www.OOBEY.com
    48. 48. <ul><li>Operational Excellence </li></ul><ul><ul><ul><li>Move know-how from top performing units to others </li></ul></ul></ul><ul><ul><ul><li>Benchmark against best in class </li></ul></ul></ul><ul><ul><ul><li>Ensure operations training for all employees </li></ul></ul></ul><ul><ul><ul><li>Use disciplines like TQM for continuous learning to reduce costs and improve quality </li></ul></ul></ul>Strategy: Value Disciplines www.myCNI.com.my www.OOBEY.com
    49. 49. Strategy: Value Disciplines <ul><li>Customer Intimacy </li></ul><ul><ul><ul><li>Capture knowledge about customers </li></ul></ul></ul><ul><ul><ul><li>Understand customer needs </li></ul></ul></ul><ul><ul><ul><li>Empower front line employees </li></ul></ul></ul><ul><ul><ul><li>Ensure that everyone knows the customer </li></ul></ul></ul><ul><ul><ul><li>Make company knowledge available to customers </li></ul></ul></ul>www.myCNI.com.my www.OOBEY.com
    50. 50. <ul><li>Product Leadership </li></ul><ul><ul><ul><li>Reduce time to market </li></ul></ul></ul><ul><ul><ul><li>Commercialize new products fast </li></ul></ul></ul><ul><ul><ul><li>Ensure that ideas flow </li></ul></ul></ul><ul><ul><ul><li>Reuse what other parts of the company have already learned </li></ul></ul></ul><ul><ul><ul><li>Ensure there are multiple sources of funding </li></ul></ul></ul>Strategy: Value Disciplines www.myCNI.com.my www.OOBEY.com
    51. 51. Lagging and Leading KPIs Historical, Outcome, Results, 1 st Level, Usually Financial or tangible, Quarterly and Annually Current, Indicators, Drivers, 2 nd Level onwards, usually non-financial or intangible, Weekly, Monthly and Quarterly www.myCNI.com.my www.OOBEY.com Leading Lagging
    52. 52. Developing ‘Driver’ KPIs www.myCNI.com.my www.OOBEY.com Customer Retention % Lagging, 1 st Level Customer Satisfaction Index Leading, 2 nd Level On time delivery Time to market for new products TNA % Defect levels, warranty claims Leading, 3 rd Level onwards
    53. 53. What is the Objective? <ul><li>‘ Do-or-Die’ KPIs for CNI </li></ul><ul><li>Revenue </li></ul><ul><li>ARPU </li></ul><ul><li>Sponsoring </li></ul><ul><li>Retention </li></ul><ul><li>Commission Plan (BDP) </li></ul><ul><li>Product </li></ul><ul><li>Corporate Image </li></ul>www.myCNI.com.my www.OOBEY.com
    54. 54. MBO – Sources of KRAs and KPIs, Targets <ul><li>Department Scorecard [E3], </li></ul><ul><li>Employee’s Job Description, </li></ul><ul><li>Department SOP, </li></ul><ul><li>Department Quality Objectives, </li></ul><ul><li>Corrective Action Requests (CAR), </li></ul><ul><li>Preventive Action Requests (PAR), or </li></ul><ul><li>Special Projects relevant to the employee. </li></ul>www.myCNI.com.my www.OOBEY.com
    55. 55. E3 – Department BSC Financial Perspective www.myCNI.com.my www.OOBEY.com On Time Delivery Innovation Quality OPEX CAPEX Targets Measures Goals
    56. 56. Individual Performance www.myCNI.com.my www.OOBEY.com 2.0 Goals and Targets for Q1 6.0 Appraiser Overall Comments/ Feedback 5.0 Rating (Merit x Weight) 4.0 Merit* 3.0 Achievements and Efforts for Q1 1.0 Key Results Area (Max 6)
    57. 57. Competency Target Setting <ul><li>Initiative </li></ul><ul><li>Teamwork </li></ul><ul><li>Problem Solving </li></ul><ul><li>Leadership </li></ul><ul><li>Integrity </li></ul>What’s the problem here? www.myCNI.com.my www.OOBEY.com
    58. 58. Competency Target Setting <ul><li>Initiative </li></ul><ul><li>Minimize problems quickly without needing to be asked </li></ul><ul><li>Seeks personal growth and professional self-development </li></ul><ul><li>Doing more than is required/expected in a job </li></ul><ul><li>Seeks new and improved solutions and approaches to completing assignments </li></ul><ul><li>Looks for opportunities to help others and team </li></ul>www.myCNI.com.my www.OOBEY.com
    59. 59. Competency Standards www.myCNI.com.my www.OOBEY.com Does not meet behavioral standards. Require counseling or disciplinary actions. 1 Meets behavioral standards some of the time. Needs improvement. 2 Meets behavioral standards consistently . Is a good role model for others. 3
    60. 60. Performance Setting & Review Schedule Step One - August <ul><li>Senior Management – Facilitate BOD Strategic Planning process by studying & producing appropriate papers from BOD </li></ul><ul><li>Macro economic data and observations </li></ul><ul><li>Emerging business conditions </li></ul><ul><li>CNI’s strategic considerations/needs </li></ul>Step Two - August <ul><li>BOD consideration & consensus on: </li></ul><ul><li>Macro economic information </li></ul><ul><li>Emerging business conditions </li></ul><ul><li>SWOT </li></ul><ul><li>Strategic Needs </li></ul><ul><li>Broad business goals & operating philosophy </li></ul><ul><li>Sr. Mgmt Strategic Planning Process </li></ul><ul><li>Study BOD observations and directions & review: </li></ul><ul><li>Corporate vision / mission </li></ul><ul><li>Change dimensions </li></ul><ul><li>Strategic initiatives </li></ul><ul><li>Corporate key results </li></ul>Step Three September - October Sr. Management Annual Management Plan for Board of Directors Approval Step Five - November Approved Annual Management Plan for execution Step Six - December <ul><li>Senior managers performance plans, objectives and standards </li></ul><ul><li>Performance vs. plans for top management review </li></ul>Quarterly performance review reports of the Board of Directors Step Four - November Step Seven - January <ul><li>Review annually performance plans vs. results </li></ul>
    61. 61. 3. The Manager’s Role in Performance Management Appraisal, Evaluation, Communication, Coaching, Counseling, Mentoring www.myCNI.com.my www.OOBEY.com
    62. 62. Coaching & Counseling www.myCNI.com.my www.OOBEY.com Month 1 Performance Planning Month 12 Performance Appraisal Month 2-11 ?
    63. 63. <ul><li>Beating a Dead Horse </li></ul>www.myCNI.com.my www.OOBEY.com
    64. 64. Most Common Desperate Performance Improvement methods <ul><li>Send for more Training </li></ul><ul><li>Enforce more Incentives (positive/negative) </li></ul>www.myCNI.com.my www.OOBEY.com
    65. 65. Mager and Pipe <ul><li>Analyzing Performance Discrepancies </li></ul>www.myCNI.com.my www.OOBEY.com
    66. 66. Alignment: 4-Wheels Model Philosophies Corporate Objective Performance Objectives www.myCNI.com.my www.OOBEY.com Structure Resources Leadership Person
    67. 67. 4. Performance Evaluation Formal Review, Incentives, Compensation, Reward, Differentiation www.myCNI.com.my www.OOBEY.com
    68. 68. Performance Evaluation Session: Key Ingredients www.myCNI.com.my www.OOBEY.com Self Review Evaluator’s Review Next Steps Support/ Resources Improvement Methods
    69. 69. PASSE P raise and encourage A sk questions allow the person to S ave Face use S MART goals E ncourage small improvements Performance Evaluation Session: Communication www.myCNI.com.my www.OOBEY.com
    70. 70. Incentive Problems <ul><li>Problem with Incentives in managing performance: </li></ul><ul><li>Most people are confused or unsure about compensation tools </li></ul><ul><li>Some people misuse compensation tools </li></ul>www.myCNI.com.my www.OOBEY.com
    71. 71. What to Pay? <ul><li>Pay for Service </li></ul><ul><li>Pay for Job </li></ul><ul><li>Pay for Performance </li></ul><ul><li>Pay for Competency </li></ul>www.myCNI.com.my www.OOBEY.com
    72. 72. Performance and Incentives <ul><li>Internal Equity </li></ul><ul><ul><li>Internal Job Rates </li></ul></ul><ul><ul><li>Performance differentials </li></ul></ul><ul><li>External Competitiveness </li></ul><ul><ul><li>External Job Rates - Benchmarking </li></ul></ul><ul><ul><li>Demand & Supply </li></ul></ul>www.myCNI.com.my www.OOBEY.com
    73. 73. What’s the Difference? <ul><li>Increment </li></ul><ul><li>Bonus </li></ul><ul><li>Promotion </li></ul>www.myCNI.com.my www.OOBEY.com
    74. 74. Compa Ratio Table <ul><li>Use this if your company: </li></ul><ul><li>Pays for Performance , and </li></ul><ul><li>Pays for Job rates </li></ul><ul><li>Def: </li></ul><ul><li>Mid-Point = Mid Point of Pay Grade </li></ul>Grade E2 Min RM2,000 MID RM2,500 Max RM3,000 www.myCNI.com.my www.OOBEY.com
    75. 75. Compa Ratio Table www.myCNI.com.my www.OOBEY.com 1 2 3 4 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
    76. 76. Compa Ratio Table www.myCNI.com.my www.OOBEY.com 1 2 5% 3 4 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
    77. 77. Compa Ratio Table www.myCNI.com.my www.OOBEY.com 0 1 2 2 3 4 5% 7 9 3 7 4 9 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
    78. 78. Compa Ratio Table www.myCNI.com.my www.OOBEY.com 0 0 0 2 4 1 0 1 2 4 6 2 3 4 5% 7 9 3 3 5 7 9 12 4 7 8 9 12 15 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
    79. 79. Dangers of Direct Incentives <ul><li>lessen internal motivation, </li></ul><ul><li>switch to mercenary mode, </li></ul><ul><li>do something and do not do something else, </li></ul><ul><li>bribe and fraud culture, </li></ul><ul><li>easier for competitors to recruit, </li></ul><ul><li>lessen teamwork & helpful culture, </li></ul><ul><li>less and less impact for same value, </li></ul><ul><li>mockery of base salary and employment contract, </li></ul><ul><li>rebellion from non-incentivised staff, </li></ul><ul><li>end up incentivising everyone for everything?, </li></ul>www.myCNI.com.my www.OOBEY.com
    80. 80. Other Performance Review processes <ul><li>Result Planning schedule inc. BSC, Budget </li></ul><ul><li>Quarterly Performance Appraisals </li></ul><ul><li>EMC – sales performance </li></ul><ul><li>QMS – non-sales performance </li></ul><ul><li>Divisional meetings </li></ul><ul><li>Annual Appraisals </li></ul><ul><li>Specialized KPI committees </li></ul><ul><li>CAR, PAR, SCAR KPI improvements </li></ul><ul><li>Internal Audit & MSD – process problems </li></ul><ul><li>HRM & TND – people problems </li></ul><ul><li>Supervisor Induction – PM training </li></ul><ul><li>Talent Management </li></ul>www.myCNI.com.my www.OOBEY.com
    81. 81. Employee Distinctions through Relative Performance www.myCNI.com.my www.OOBEY.com
    82. 82. Employee Distinction? www.myCNI.com.my www.OOBEY.com 1 2 3 4 5 1 2 3 4 5 6 2 3 4 5% 6 7 3 4 5 6 7 8 4 5 6 7 8 9 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
    83. 83. Employee Distinction? www.myCNI.com.my www.OOBEY.com 0 0 0 0 0 1 0 0 1 1 1 2 3 4 5% 7 9 3 3 5 9 12 18 4 5 8 12 15 20 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
    84. 84. Employee Distinction www.myCNI.com.my www.OOBEY.com 0% 1.0 0 1 ≤ 1.3 0.9% 1.8 0.5 2 > 1.3 – 2.3 2.1% 2.8 0.75 3 > 2.3 – 3.3 4.2% 3.5 1.2 4 > 3.3 – 4.1 8.4% 4.2 2 5 > 4.1 Example Increment Example Rating Multiply Factor Rating Average Rating
    85. 85. Employee Distinction Group I (Talent Pool) Group II (  Potential) Group III (  Performance) Group IV (Counseling) 2 3 4 5 2 3 4 5 PERFORMANCE POTENTIAL <ul><li>Identify </li></ul>www.myCNI.com.my www.OOBEY.com
    86. 86. Curse of the Bell Curve ‘ A’ Staff ‘ B’ Staff ‘ D’ Staff ‘ E’ Staff ‘ C’ Staff www.myCNI.com.my www.OOBEY.com
    87. 87. Managing People performance: A Summary www.myCNI.com.my www.OOBEY.com
    88. 88. More Problems…. <ul><li>cost of evaluation vs. gains of evaluation </li></ul><ul><li>defer achievements of a good year to next </li></ul><ul><li>barely achieve so that next target is not high </li></ul><ul><li>spread improvements over several years </li></ul><ul><li>value reducing actions to increase performance </li></ul><ul><li>most ratings are 4 or 5, new people are 3 </li></ul>www.myCNI.com.my www.OOBEY.com
    89. 89. Before I forget… <ul><li>Re-train Appraisers </li></ul><ul><li>Train new Appraisers </li></ul>www.myCNI.com.my www.OOBEY.com
    90. 90. Alignment: 4-Wheels Model Philosophies Corporate Objective Performance Objectives www.myCNI.com.my www.OOBEY.com Structure Resources Leadership Person
    91. 91. Thank You. soft copy of slides: www.totallyunrelatedrandomanddebatable.blogspot.com
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