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Performance%20 management kasubean%5b1%5d.doc

  1. 1. A Overview of the new Performance Management System “KAUSABAN” P.B.S. KUMAR B.Sc.MA(PM),MA(Ind.Eco.),MBA(HR),BGL,DLL,PGD IR&PM MANAGER-HR P.B.S. KUMAR
  2. 2. Objective of today’s discussionUnderstand... Basis & rationale for the new PMS - The whyDiscuss... Key Features of the proposed PMS - The whatDemonstrate… Performance Appraisal Process - The howFamiliarise... The Communication material - The toolsDefine... Key Roles in the new PMS- The who P.B.S. KUMAR
  3. 3. So what is “KAUSABAN”??? • It is the name of AAOIL’s new Performance Management System • It covers the employees in Supervisory Grade and above. • Measurement of your performance will be conducted based on “KAUSABAN”KAUSABAN Stands for excellence, sharp growth through performance and alignment to business goals. Reflects the spirit of AAOIL’s endeavours towards aligning each individual’s performance to the strategic thrust of the organisation. P.B.S. KUMAR
  4. 4. Need for “KAUSABAN”“KAUSABAN” was needed to ensure the following  Clear alignment of individual performance with Corporate, Division & Department goals Objective measurement of performance against targets plus assessment of skills and abilities Uniformity and consistency of the process across the organisation, clearly aligning it with the corporate Objectives. Clear defined steps in the process with clearly articulated roles for each player, minimising scope for subjectivity. Ownership of PMS by line, HRD as a facilitator only. Visible and transparent linkage with rewards and other HR systems. Simplicity and ease of administration - assuming future technology enablement. P.B.S. KUMAR
  5. 5. KAUSABAN aims to meet these basic objectives... Drive vision and Address the performance across shortcomings of the the company current PMS system Meet key stakeholder expectations from the new PMS Top Mgt. Perspective Appraiser Perspective Appraisee Perspective Build Performance Focus  Facilitate process of planning,  Provide clear Alignment of individual monitoring & review performance definition with corporate goals  Make an objective assessment  Transparency in the Consistency in the of performance. process performance planning  Enable him to provide  Clear linkage with process objective feedback rewards & other HR Ownership of  Enable focus on capability systems performance by line development of appraisee P.B.S. KUMAR
  6. 6. Characteristics of the “Performance Management” Process• Facilitates Quarterly Appraisals• Facilitates “mid-course” corrections through monthly reviews for specific departments• Defines desired corporate, division and department performance through “Business Planning”• Aligns individual performance to corporate, division and department performance• Facilitates mid-course corrections through Performance Reviews• Links performance on KRAs to a Variable Pay Scheme, to sharpen focus on performance around “business goals”• Facilitates a “Balanced view of Performance” through linking KRAs and Routine Responsibilities to “annual increments”• Focuses not only on “performance” but also on “development” P.B.S. KUMAR
  7. 7. Definition of Performance - “KAUSABAN” Key Responsibility Routine Areas ResponsibilitiesKRAs are “Critical Routine Responsibilities areAchievements” required to “on-going tasks or outcomesdeliver Globals desired that are undertaken or deliveredbusiness results on a day-to-day basisThe targets for these are The targets for these comederived from the Corporate from the targets on processgoals and objectives- these efficiency that are either sethave been derived through internally in a department/the Balanced Scorecard division or as a part ofexercise initiatives like Six Sigma P.B.S. KUMAR
  8. 8. Identifying Key Result Areas– KRAs are directly linked to the AAOIL’s business goals and to ensure that alignment, a tool called the “Balanced Scorecard” will be used. • Framework for articulation of corporate strategy • Development of strategic initiatives along 4 themes - Financial, Customer, Internal Process and Learning & Growth • Cascading of strategy to actionable initiatives (KRA’s) at Division & Department levels P.B.S. KUMAR
  9. 9. Development through KAUSABAN– A key element of KAUSABAN, focusing on building individual capability using Competencies.– Competencies are “Skills and abilities described in behavioral terms that are coachable, observable, measurable, and critical to organizational performance” for e.g., teamwork – No marks assigned - used only for Development – Competency dictionary is under preparation. – Levels of Proficiency and behavioral indicators would be defined for each Competency once established. P.B.S. KUMAR
  10. 10. Key Roles in KAUSABAN Appraisee Appraiser ReviewerEvery Employee whose Every Executive who Your Appraiser’sperformance is assesses the Appraiser, who isassessed in XXXX performance of one or responsible for more Appraisees that reviewing the entire report to him/her performance process It’s about your  Will help you manage  Will ensure Performance your performance & Objectivity, provide continuous Transparency & You are the key driver feedback and Consistency of the process coaching P.B.S. KUMAR
  11. 11. Overall Performance Planning Cycle Corporate Performance Mid Planning Session December Division Target Setting End Session December Individual Performance Planning Session Q4: Final Performance 14th January Appraisal 7th January Q1: Appraisal review & feedback 7th April Ongoing monthly Q3: Appraisal review & review and feedback feedback7th October Q2: Appraisal review & feedback P.B.S. KUMAR 7th July
  12. 12. How does Corporate Performance get measured? Objective • To measure achievement of stated strategic corporate objectives Step 1 Step 2 Step 3Define Business Set corporate targets and Review and measureSuccess Criteria for the weightages for the quarter achievement against targetscorporate every quarterKey features• Coincides with the annual Corporate Budgeting session.• Business Success Criteria defined here, at the beginning of the first quarter (Mid-December to end-December ).• 4-5 performance goals, typically from the corporate scorecard as part of the Business Plan.• Corporate targets set once every quarter (Q1: Mid-Jan, Q2: Mid-Apr, Q3: Mid-Jul, Q4: Mid-Oct).• Targets defined on a 5-point scale, enabling objective measurement of achievement.• Weightages against Corporate targets to be decided once a year and spread across 4-5 goals defined• Review occurs through quarterly monitoring of the Business Plan P.B.S. KUMAR
  13. 13. How does Division Performance get measured? Objective • To measure achievement of stated division targets and objectives Step 1 Step 2 Step 3 Step 4Define Business Set Division Identify and Review and measureSuccess Criteria targets and ensure element of achievement againstfor the Division weightages for stretch in targets targets every quarter the quarterKey features• Identical to Corporate Performance Planning• In addition, consistent element of stretch ensured by incorporating the ‘Stretch Tool’ P.B.S. KUMAR
  14. 14. Anchoring Targets to the Rating Scale Business Success Criteria Target Order Booking Rs. 20 Crore 1 2 3 4 5 Significantly Mod erately Meets Moderately Significan tly Below Below Expectations Above Above Expectations Expectation Expectations Expectations 15 Million 18 Million 20 Million 22 Million 25 Million The required level of achievement for each point on the Five Point Rating Scale must be defined P.B.S. KUMAR
  15. 15. Performance and Development Planning Performance Development Planning Planning Routine Other SkillKRAs Competencies Responsibilities Gaps P.B.S. KUMAR
  16. 16. Performance Planning [and linkages to pay-outs] Quarterly [Q1, Accentuating performance on key result areas Q2, Q3 & Q4] • From Final Score Key Result Department BSC Areas (max. 8) Simple Average covering at least Will serve as the basis for 1 from each variable payout category of BSC Overall Performance Rating Annually [End of Q4] • Average of Relative Key Result quarterly “Final Overall Score Weightage Areas Scores” [As for KRAs depicted above] Will serve as the basis for • Based on an Relative fixed pay increases or Routine Weightage understanding promotional decisionsResponsibilities for Routine of the role Responsibiliti es (max. 4-5 nos.) P.B.S. KUMAR
  17. 17. Development PlanningDevelopment Planning DevelopmentalCompetencies CompetenciesCompetencies to be A maximum of 4, to bepicked from the identified from the listCompetency Masterand expected levels Development Plan Other Skill Gapsapplicable to the roleto be identified (Behavioural/ Technical) Any number, agreed upon by the Appraiser and the Appraisee, based on the specific needs of the role Forms the basis for the Training Calendar drawn by HR. Training Needs The Appraiser to drive the “learning and development” of the Appraisee throughout the year, based on this Development Plan P.B.S. KUMAR
  18. 18. Evaluation of Individual Performance Objective • To set “clear performance expectations” from the individual Step 1 Step 2 Step 3 Step 4Performance Monthly reviews Quarterly Final PerformancePlanning and feedback appraisal, review Appraisal [Q4] and feedback [Q1, Q2 & Q3]Key features• Performance measured on KRA’s and Routine Responsibilities• KRA’s, typically from the Department scorecard, identified at the beginning of the year• Targets, set once every quarter (Q1: Mid-March, Q2: Mid-July, Q3: Mid-October, Q4: Mid- January)• Pre-determined weightages based on job type and Division category• Monthly reviews between appraiser and appraisee (important to ensure that any relative change in importance of particular KRA gets reflected or updated in the form)• Appraisal & feedback on a quarterly basis P.B.S. KUMAR• Rater bias removed through the introduction of a reviewer
  19. 19. Action PlanningThe Action Plan describes the specific steps, milestonesand resources planned by the Appraisee to accomplishthe KRA or Routine Responsibility. KRA TargetOrder Booking Rs. 20 CroreAction Plan:– Scan the market on an ongoing basis to identify opportunities– Analyze existing customer base to identify possibilities of repeat orders– Reduce cycle time to submit proposals/tender– Conduct analysis identifying reasons for loss of past orders and determine weather loss was due to technical or commercial reasons– Gather market intelligence on pricing strategy of competitors and keeps units abreast of the same– Have on-going discussions with units on bids being prepared so as to ensure that optimal techno-commercial bid is prepared P.B.S. KUMAR
  20. 20. Monthly Reviews Objective • To facilitate “mid-course” corrections, and ensure that targets reflect market realities Applicability • Divisions where the targets are very flexible and their realization depends upon market forces • The division heads of the respective divisions need to decide at the beginning of the year whether monthly reviews are required for their divisions Process• Appraisee does self appraisal and determines how he/she is performing against the targets set for the quarter• Appraisee and Appraiser have a discussion around the targets and the Appraiser gives Feedback to the Appraisee on his/ her performance• If required, Appraisee and Appraiser revise targets for the quarter to reflect market realities [This is to done only if necessitated by business realities] P.B.S. KUMAR
  21. 21. Quarterly Appraisals [Q1, Q2,Q3 & Q4] Objective • To assess performance of the Appraisee on KRAs, against the targets outlined for the quarter Process • You and Your Appraiser will rate your performance on the KRAs articulated at the beginning of the year on the basis of the Action Plan or Steps Taken by you for its accomplishment and the extent of achievement against outlined targets for the period. Appraisal Q1 Appraisal 1st Week of April Schedule Q2 Appraisal 1st Week of July Q3 Appraisal 1st Week of October Q4Appraisal 1st Week of January Computation of Your Final Score for the quarter will be arrived by adding up the “Final Score” individual ratings on each KRA and dividing it by the no of goals or KRAs . This will give you your score on KRAs. Final Score = Average of Scores on each KRA for the quarter P.B.S. KUMAR* Scoring will be done based on the 5 point rating scale mentioned in the next section.
  22. 22. Rating scale for Performance EvaluationThe rating scale used for the evaluation of performance on KRA’s is a five point scaleand is explained below:5: Exceeds Expectations consistently - Consistently exceeded the expectationsbeyond a point which deserves special mentionThis is the highest rating and is given when the results put in by an individual is trulyoutstanding.4: Exceeds Expectations occasionally - Exceeded most of the set expectations by areasonable marginThis rating is to be used when a majority of the the set expectations were exceededand outcomes and efforts were above average.3: Meets Expectations consistently - Met all the set expectations as per targetThis rating is the average rating, when an employee delivers what s/he is bound todeliver. Needs to be given only when all the expectations were met.2: Meets Expectations on most occasions - Met most of the set expectationsWhen an employee meets most, but misses some of the expectations, this rating isapplicable.1: Does not meet Expectations on most occasions - Failed to meet most of theexpectations. P.B.S. KUMARWhen a majority of the expectations are not met, this rating is applicable
  23. 23. Final Appraisal Objective • To assess overall performance of the Appraisee on KRAs and Routine Responsibilities and to assess development against the Development Plan charted at the beginning of the year Time • End of Q4 [First Week of January ] Process• The Appraisee undertakes a self-appraisal and gives a rating on all the KRAs for the quarter [Q4] and Routine Responsibilities• The Appraiser then does the assessment & rating.• He/ she also reviews the actions taken towards achievement of the Appraisees’s development plan.• The Reviewer then reviews the ratings. At any stage the appraiser and/or reviewer can call for a discussion with the Appraisee.• The overall rating has to be a consensus between Appraisee, appraiser & the reviewer.• In case of a dispute, the reviewer’s rating will be treated as final and will feed into the Overall performance score of the Appraisee.• After ratings are finalized by the Reviewer, they are consolidated by HR and then, checked for “Rater Bias” P.B.S. KUMAR
  24. 24. Final Appraisal Computation of Your Overall Score for the year will be arrived by taking a weighted “Overall Score” sum of ratings on routine responsibilities and average of ratings on KRAs for the 4 quarters. Overall Score = ((Average of Final Scores on KRAs for the 4 Quarters) * KRA Section Weightage) + ((Average of scores on Routine Responsibilities) * Routine Responsibility Section Weightage) Overall Performance Rating Annually [End of Q4] • Final Score for Q1 Key • Final Score for Q2 Relative Result • Final Score for Q3 Simple Average Weightage Overall Score Areas • Final Score for Q4 for KRAs** Will serve as the basis for Routine • Scores on Relative fixed pay increases or Weightage Responsi Routine Simple Average promotional decisions Responsibilities for Routine bilities Responsibiliti es*** Scoring will be done based on the 5 point rating scale as discussed earlier** Relative Weightages for KRAs and Routine Responsibilities are detailed in the following slide P.B.S. KUMAR
  25. 25. Relative weights for KRA’s and routine responsibilities Objective • Top management to have greater relative weight on achievement of KRA’s vis-à-vis routine responsibilities (as compared to Middle Management and Junior Management) • Support or service functions to have greater relative weight on achievement of routine responsibilities than KRA’s (as compared to non-support/ production functions Core Functions Non-Support (Production) Divisions [For e.g., HSM, SIP, BF) Weightages KRAs Routine Responsibilities Top Management 70% 30% Middle Management 60% 40% Junior Management 50% 50% Support Divisions (For. e.g., CRG, Finance etc.) Weightages KRAs Routine Responsibilities Top Management 50% 50% Middle Management 40% 60% Junior Management 30% 70% Note: Classification of grades/ bands into Top, Middle & Junior Management will P.B.S. KUMAR need to be decided
  26. 26. Removing rater bias Objective • To improve the consistency and soundness of the evaluation process • Removing rater (appraiser) bias through introduction of a reviewer • Applicable to final scores (arrived at in each quarter) and the overall performance score (computed at the end of the fourth quarter) Calculate the average of all the “overall ratings” given by an 1Methodology appraiser to each employee. Call this A Calculate the average of all “average overall ratings” (or average 2 of all “A”s) given by all Appraisers. Call this figure B. 3 Now check for variance for each Appraiser - (A-B)/ B * 100 = x% 4 If x% falls in the range -10% to 15%, there is no rater bias. If it does not fall in this range, there is a possibility that rater 5 bias may be occurring, and hence this forms an outlier For such outliers, the appraiser has to give justification for the 6 rating given and if the reviewer feels that the justification is not P.B.S. KUMAR sound enough, he/she may direct the appraiser to revisit the rating
  27. 27. Assessing Development Plans Assessing Development Plans ⇒ During the year-end appraisal, the Appraiser will rate the Rating Appraisee on the Competencies, based on the 5 point rating scale Competencies* mentioned below. ⇒ These ratings will be used only for “Developmental purposes” and will not form a part of the “Overall Score” and will thus not be linked to incentives or increments. Other Skills ⇒ The Appraiser will also assess the achievement of the Development Plan of the Appraisee on Other Skills during the year, on the action plans charted by the Appraisee. This however, will not result in any scoring of any sort ⇒ Based on the “current performance levels” of the incumbent, the Career Appraiser, in consultation with the Appraisee, will capture “Career Aspirations* Aspirations” for the Appraisee, if any will provide his/ her assessment of the readiness/ potential of the Appraisee based on the scale mentioned in the next slide. P.B.S. KUMAR* Scoring will be done based on the 5 point rating scales detailed in the next slide
  28. 28. Rating Scales for Competencies and Career Development For Competencies A: Role Model- Encourages and influences others to display the skill. B: Strength- Almost always demonstrates behavior/skill where appropriate C: Capable- Often demonstrates the behavior/skill D: Development Area- Sometimes demonstrates the behavior/skill where appropriate E: Learner- Has not yet demonstrated the behavior/skill. For Assessing Potential The following five point rating scale will be used: ⇒High - This individual can advance well above (one or two levels above) current position ⇒Moderate - This individual shows potential for taking on greater responsibility or moving to next management/technical level over a period of 6-12 months ⇒Limited - This individual can continue to contribute significantly in his/her current position, but may have limited upward growth opportunities. A lateral move may be an appropriate growth opportunity for this individual ⇒Key Resource - This individual is a key resource in his/her current position. This vital knowledge precludes movement at this time, but development opportunities should continue to be identified ⇒Too New- This individual has been in his/her current position less than six months and is too new to evaluate P.B.S. KUMAR
  29. 29. Linkage of Kausaban to Consequence Management Variable Pay Score on KRA’s component Fixed Pay IncrementsCumulative Score on KRA’s and Routine Responsibilities Promotion Decisions Rating on Competencies Training Plan Development Plan P.B.S. KUMAR
  30. 30. ARANI AGRO OIL INDUSTRIES LIMITED, KAKINADA Performance Review and Development Plan From : To : Name : Designation : Emp No. Join Dt. : Grade : Qualification : Division : Department : Section :Name of the Name of theReporting Officer : Reviewing Officer : P.B.S. KUMAR
  31. 31. KRAs to be established at the Beginning of the Year. H-1 H-2S.No Key Result areas Weightage Q1 Q2 Q3 Q4 Task Factors (What to do)1(F)2(F)3(F)4(C)5(C)6(IP)7(IP)8(IP)9(L&G)10(L&G) TOTAL 100% Competencies (How to do) 1 2 3 4 5 6Competencies will be used for Skill Upgradation and Career Progression only.Appraisee Reporting Officer Reviewing Officer P.B.S. KUMAR(Signature) (Signature) ………... (Signature)
  32. 32. Performance for Quarter - 3 of FY 2005 WeightageS.No KRA Measurement Criteria (W) TASK (What to do)1(F)2(F)3(F)4(C)5(C)6(IP)7(IP)8(IP)9(L&G)10(L&G) TOTAL 100% Competency data will be used for skill enhancement for career progression COMPETENCY (How to do) Degree of Competency 1 2 3 4 5 6Appraisee Reporting Officer Reviewing Officer(Signature) (Signature) ……………..…... (Signature) P.B.S. KUMAR
  33. 33. Performance for Quarter -3 of FY 2005 1 to 5 Lowest 1 Highest 5 Rating by Rating by Self Moderation, if Measurement Weightage Reporting ReviewingS.No KRA Appraisal required Criteria (W) Officer Officer ( R-1 ) ( R-4 ) ( R-2 ) ( R-3 ) TASK (What to do)1(F)2(F)3(F)4(C)5(C)6(IP)7(IP)8(IP)9(L&G)10(L&G) TOTAL 100% Total % in the Quarter Competency data will be used for skill enhancement for career progression COMPETENCY (How to do) Required Degree of competency Rating by Rating by Self Actual Level Reporting Reviewing Appraisal of Officer Officer ( R-1 ) Competency ( R-2 ) ( R-3 ) 1 2 3 4 5 6 Rating Criteria Partial Significant Exceptional Contributor Non Performance Contributor Contributor Contributor (C) (PC) (SC) (EC) <60% 60~69% 70 ~ 79% 80 ~ 89% 90~100%Total Score P.B.S. KUMARAppraisee Reporting Officer Reviewing Officer(Signature) (Signature) ……………..…... (Signature)
  34. 34. On line PMS - Flow Chart Opening Lotus updation of Master KRA Sending PMS Notes ID for Emp Master / identification Database linkage every Dept. Master and updation to all Employees Individual by PMS Dept. for every thr.Lotus Notes. Department Receipt of Approval of Generartion of Training / approved Annual Plan by Annual plan by Workshop for Annual Plan by reviewing Reporting ONLINE PMS Appraisee Officer. Officer Generation of Sent to Approval by Approval by Quarterly plan by Reporting reviewer and Reporting Appraisee. Setting Officer for sent to officer & send KRAs, targets and Approval appraisee to Reviewer Weightages Approval by Approval by QuarterlyPerforma Sent to Reviewer Reporting nce Appraisal by Reporting (Quarterly officer & send Appraisee (self Officer for Appraisal over to Reviewer Appraisal on 1- 5 ) Approval scale) P.B.S. KUMAR
  35. 35. On line PMS - Flow Chart ……… continue Sr # Activity By Whome For What When Remarks 1 Annual Business Reporting Create Annual Business End of Auto generation of lotus Plan Officer Plan and Send to Reviewing Dec. note to reviewer with a Officer copy to Appraisee. 2 Annual Business Reviewing Finalization and Send to End of Auto generation of lotus Plan Officer Appraisee Dec. note to Appraisee with a copy to Reviewer. 3 Annual Business Appraisee View and to create End of Plan Quarterly Performance Dec. Plan 4 Quarterly Appraisee Create Quarterly Business End of Auto generation of lotus Performance Plan and Sent to Reporting Dec. note to Reporting officer Plan Officer 5 Quarterly Reporting Approval and sent to End of Auto generation of lotus Performance Officer Reviewing officer. Dec. note to reviewer with a Plan copy to Appraisee. 6 Quarterly Reviewing Finalization of quarterly End of Auto generation of lotus Performance Officer plan and sent to Appraisee. Dec. note to Appraisee with a Plan copy to Reporting Officer. 7 Quarterly Appraisee Received and View End of Performance Dec. Plan 8 Quarterly Appraisee Create and Send to 1st week Auto generation of lotus Performance reporting Officer for the of April note to Reporting officer Card review of performance for 1st Quarter. 9 Quarterly Reporting Approval of Quarterly 1st week Auto generation of lotus Performance Officer performance and sent to of April note to reviewer with a Card Reviewing Officer copy to Appraisee. 10 Quarterly Reviewing Finalization and 1st week Auto generation of lotus Performance Officer performance rating. of April note to Appraisee with a Card copy to Reporting Officer. P.B.S. KUMAR Same Process continue for other quarters.
  36. 36. Thank youP.B.S. KUMAR