The Role of People Management, Performance and Incentives in more effective Lab Safety and Security

THE ROLE OF PEOPLE MANAGEMENT, PERFORMANCE AND INCENTIVES IN MORE EFFECTIVE LAB SAFETY AND SECURITY Case Study, Concepts and Debatable Ideas Kenny Ong CNI Holdings Berhad www.myCNI.com.my www.OOBEY.com

Intro: CNI

19 years old

Core Business: MLM

Others: Contract Manufacturing, Export/Trading, eCommerce

Malaysia, Singapore, Brunei, Indonesia, India, China, Hong Kong, Philippines, Italy, Taiwan

Staff force: ± 500

Distributors: 250,000

Products: Consumer Goods and Services

www.myCNI.com.my www.OOBEY.com

1. The role of proper people management in ensuring Lab Safety and Security www.myCNI.com.my www.OOBEY.com

Alignment: 4-Wheels Model Philosophies Corporate Objective Performance Objectives Structure Resources Leadership Person

Alignment: Why is it important?

Mamak stall

The McPlaybook*

Make it easy to eat

50% drive-thru

Meals held in one hand

Make it easy to prepare

High Turnover

Tasks simple to learn & repeat

Make it quick

“ Fast Food”

Tests new products for Cooking Times

Make what customers want

Prowls market for new products

Monitored field tests

*Adapted from: Businessweek , Februrary 5 th 2007 www.myCNI.com.my www.OOBEY.com

Alignment: Framework

Equal / Fair

Happy / Productive

Performance vs Potential

Retention / Engagement

Philosophies www.myCNI.com.my www.OOBEY.com

Alignment: Framework

Org Structure

Job Design

C&B

Policies & procedures

Decision making

Job fit

Management Systems

BSC and KPIs

Decentralized & Empower

www.myCNI.com.my www.OOBEY.com Structure

Strategy: Framework

Tools

Physical facilities

Peer support

Information

T&D Programs

Mentors

Guides

ICT

OJT

www.myCNI.com.my www.OOBEY.com Resources

Strategy: Framework

Role modeling

Vision/Mission/Philosophy

Leadership Style

Delegation & Empowerment

C&B, Promotions

Sense of Urgency

Speak regularly about Performance

www.myCNI.com.my www.OOBEY.com Leadership

Strategy: Framework

Recognition

Recruitment

Training

Profit sharing

Values

Motivation

Self Efficacy

Awareness

Useful Competencies

Career aspirations

Attribution (control)

www.myCNI.com.my www.OOBEY.com Person

Alignment: 4-Wheels Model Philosophies Corporate Objective Performance Objectives www.myCNI.com.my www.OOBEY.com Structure Resources Leadership Person

2. The ‘People’ Problem In Lab Security And How To Deal With It www.myCNI.com.my www.OOBEY.com

The ‘People’ Problem

Right Person, Wrong Job (5%)

Wrong Person, Right Job (20%)

Wrong Person, Wrong Job (1%)

Right Person, Right Job, Managed Wrongly (74%)

Understanding Yourself and Others - Personalities www.myCNI.com.my www.OOBEY.com Closed Open People Task Perfect: Melancholy Powerful: Choleric Popular: Sanguine Peaceful: Phlegmatic

Understanding Yourself and Others - Motives www.myCNI.com.my www.OOBEY.com Power (nPow) Achievement (nAch) Affiliative (nAff)

Beating a Dead Horse

Most Common Desperate Performance Improvement methods

Send for more Training

Enforce more Incentives (positive/negative)

Mager and Pipe

Analyzing Performance Discrepancies

3. Enhancing Lab Security by Proper Performance Management of Lab Personnel 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

Bias

Different Standards

Surprise

Subjective

No linkage*

No differentiation

Secretive

No follow up

No control

As an Appraisee www.myCNI.com.my www.OOBEY.com

Complaints about Performance Appraisals

Cannot remember

Tedious

Subjective

Right targets

Scoring Competencies*

Defensive staff

No $$ to differentiate

Prejudices

Results or Activities

As an Appraiser www.myCNI.com.my www.OOBEY.com

Complaints about Performance Appraisals - Summary

Process problem

Form problem

People problem

What is Performance Appraisal used for? Reward? Discipline? Development? Motivation? Promotion? Monitor? www.myCNI.com.my www.OOBEY.com

Performance Management Performance Appraisal Performance Development Performance Measurement Common terms and definitions www.myCNI.com.my www.OOBEY.com

What is the OBJECTIVE?

What is the ultimate objective of a Performance Management System?

‘ Performance’ – achievement,

‘ Management’ – controllable, improvement

‘ System’ – predictable outcome, autorun

Summary?

A Predictable process to Improve Controllable Achievements

What is Performance Appraisal used for? Reward? Discipline? Development? Motivation? Promotion? Monitor? www.myCNI.com.my www.OOBEY.com

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

Why BSC?

Reason 1: Balanced

Reason 2: Cause-and-Effect

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?" 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?

Performance Management for Change

Review Performance & Results

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

Discuss & Agree on Account

Objectives & Key Measures

Standards for Performance

Provide Coaching & Counselling

RESULTS DRIVEN

High Level of employee empowerment

High Employee Performance

High Employee Satisfaction

High Employee Involvement

Challenging Working Environment

Optimum HRM Cost Structure

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

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 Good B Excellent A

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

MBO Target Setting - Objectives and Measures

SMART Targets

Specific (definite objective and purpose to be achieved)

Measurable (by definite observation and a certain time one should be able to tell whether or not it is attained)

Achievable (Must be within reach of the employees, e.g. to meet stated deadlines, neither too high nor too low)

Rewarding (Rewarding means it must be satisfying to you, no one else)

Time phased (per quarter, per year. By end of fiscal year, by 15th of November)

MBO Target Setting - Objectives and Measures www.myCNI.com.my www.OOBEY.com

When is the result to be produced / performed

Timeliness

At what expense the result is produced / performed

Cost

How much / many of the results are produced or performed

Quantity

How well the result is produced / performed

Errors and Appearance

Quality

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

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

Competency Target Setting

Initiative

Teamwork

Problem Solving

Leadership

Integrity

What’s the problem here? www.myCNI.com.my www.OOBEY.com

Competency Target Setting

Initiative

Minimize problems quickly without needing to be asked

Seeks personal growth and professional self-development

Doing more than is required/expected in a job

Seeks new and improved solutions and approaches to completing assignments

Looks for opportunities to help others and team

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

4. Designing Incentive Schemes That Encourages Lab Safety www.myCNI.com.my www.OOBEY.com

Incentive Problems

Problem with Incentives in managing performance:

Most people are confused or unsure about compensation tools

Some people misuse compensation tools

What to Pay?

Pay for Service

Pay for Job

Pay for Performance

Pay for Competency

Performance and Incentives

Internal Equity

Internal Job Rates

Performance differentials

External Competitiveness

External Job Rates - Benchmarking

Demand & Supply

What’s the Difference?

Increment

Bonus

Promotion

Compa Ratio Table

Use this if your company:

Pays for Performance , and

Pays for Job rates

Def:

Mid-Point = Mid Point of Pay Grade

Grade E2 Min RM2,000 MID RM2,500 Max RM3,000 www.myCNI.com.my www.OOBEY.com

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 - ≤0.9 < 0.7

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

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

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

Dangers of Direct Incentives

lessen internal motivation,

switch to mercenary mode,

do something and do not do something else,

bribe and fraud culture,

easier for competitors to recruit,

lessen teamwork & helpful culture,

less and less impact for same value,

mockery of base salary and employment contract,

rebellion from non-incentivised staff,

end up incentivising everyone for everything?,

Curse of the Bell Curve ‘ A’ Staff ‘ B’ Staff ‘ D’ Staff ‘ E’ Staff ‘ C’ Staff www.myCNI.com.my www.OOBEY.com

Possible TEAM-type KPIs and incentives www.myCNI.com.my www.OOBEY.com

Recognition for exceptional success (usually not in cash)

Individual role considered in normal merit increase process

Functional

Recognition for exceptional individual or team successes in spot awards or share increases

Venture profit sharing

Network/ Partnerships

Recognition for exceptional individual contributions in spot wards or salary increases

Project / programme Phantom Stock or Profit Sharing

Project/ Time-based

Team competencies recognised in pay for proficiency approach

Gainsharing or operational progress incentives

Process Possible Incentive Type Team Type

Team Incentive Models

1. Fixed Salary Proportion (Fixed Personal, Variable Team)

Performance Incentive = Fixed Quantum + (Balance Sum In Bonus Pool ÷ Headcount) www.myCNI.com.my www.OOBEY.com

2. Two-tier Multiplier (Variable Personal, Variable Team)

Performance Incentive = Personal Target Achievement + (Personal Target Achievement x Team Performance Multiplier) www.myCNI.com.my www.OOBEY.com

3. Team Ratio Plan (Variable Personal, Fixed Team)

Performance Incentive = Team Ratio x Personal Target Multiplier www.myCNI.com.my www.OOBEY.com

5. Using The Right Management And Leadership Methods Supervising Lab Personnel In Order To Ensure Lab Security www.myCNI.com.my www.OOBEY.com

Coaching & Counseling www.myCNI.com.my www.OOBEY.com Month 1 Performance Planning Month 12 Performance Appraisal Month 2-11 ?

Removing Obstacles for Improved Performance Philosophies Corporate Objective Performance Objectives www.myCNI.com.my www.OOBEY.com Structure Resources Leadership Person

Situational Management www.myCNI.com.my www.OOBEY.com Directive Behavior Supportive Behavior Low High High D1 D2 D3 D4 Consulting Participating Delegating Telling

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

Managing People performance: A Summary www.myCNI.com.my www.OOBEY.com