Approach Note on Performance Management System ver.1 2016

Performance Management System
(Goal Setting, Performance Review, Performance Appraisal, Reward & Recognition)
www.career-tree.in
HR Technology Solutions
Executive Search /
Temp Staffing
Mass Recruitment /
Learn & Earn
OD Consulting Solutions
Approach Note by
Career Tree HR Solutions Pvt. Ltd

2Copyright @ CareerTree HR Solutions2016-17
Credentials of CareerTree

3Copyright @ CareerTree HR Solutions
About Us
Integrated HR solutions provider,
began our journey in 2003 as specialist in
OD Consulting, Recruitment, and HR Technology;
operations in over 6 states; partnering with over 200 clients;
over 70 passionate professionals;
continuing our endeavor to make positive difference in the lives of
millions of workforce.
2016-17

Business Verticals
Helps organization in building work
culture / system & processes for
achieving high performance
OD Consulting Competency Management HR Audit
Performance Management Organization Health Survey
HR Process Outsourcing Learn & Earn / SMT
Helps organization to select the right
talent through scientific selection
process
Talent Acquisition Executive Search Temporary Staffing / Payroll
Mass Recruitment Wage Survey / Compliance Audit
Recruitment Process Outsourcing Employee Assessment
Enables organization to make use of
technology in providing HR services
HR Technology MyPDCA.in Jobsfactory.in
Helps employees to gain experiential
learning
Training & Development Leadership Development Outbound Training

5Copyright @ CareerTree HR Solutions
Apollo Tyres Ashok Leyland Bajaj Auto Brakes India
CEAT Tyres Daimler Mahindra & Mahindra Michelin Tyres
MRF Royal Enfield Schindler Tata Motors
Volvo Asian Paints Coromandel Fertiliser EID Parry
HPCL India Cements Indorama, Indonesia ITC
Petronas, Malaysia Saint Gobain Welspun Alembic
Dr. Reddy‟s Labs Granules India Matrix Laboratories Orchid Chemicals
Strides CavinKare Heinz Hindustan Unilever
Home Center KFC PepsiCo Pioneer Seeds (Dupont)
Airtel Apollo Hospitals Care Hospitals GMR Airports
GVK Group KPMG MSSRF Spencer‟s Retail
2016-17
Our Valued Clients…

Our Consultant‟s Expertise in Facilitating
Performance Management Initiative
Few indicative list of clients
 Magna Electro Castings
 Indofil Industries
 Sterlite Industries
 SPML
 Sakku Group
 VATech Wabag
 Facilitated Visioning to Goal Setting
 Scorecards Developed and
Implemented at Frontline /
Grassroots level in the SMT context
 Have used various models – MBO,
Policy Deployment / X-Matrix, and
BSC.
 Trained and Formed internal Cross-
Functional team (PDCT) for Goal-
Setting across the Organization.
Several public workshops have
been conducted across India by
CareerTree Consultants.

The Contents in this document are copyrighted items of
CareerTree HR Solutions Pvt. Ltd.
(formerly known as CEO Talent Search Pvt. Ltd)
www.career-tree.in
2016-17 7Copyright @ CareerTree HR Solutions

This document is prepared with an intention to provide clarity on „how and
where CareerTree can facilitate and add value‟ to the initiative of
Performance Management System. This is a general approach paper
and can be customized once the scope of work is finalized.
8
Approach Paper
2016-17 Copyright @ CareerTree HR Solutions

Fundamentals of PMS
Performance Planning
Performance Coaching
Performance Review and Appraisal
Linkage to Rewards
9
Document Outline

Performance Management
(Fundamentals)

Values
Vision
Mission
Objectives
Measures
What we stand for
What we want to be
Indicators and
Monitors of success
Desired level of
performance & timelines
Planned Actions to
Achieve Objectives
O1 O2
AI1 AI2 AI3
M1 M2 M3
T1 T1 T1
Specific outcomes expressed in
measurable terms (NOT activities)
Targets
Initiatives
What we must achieve to be successful
Strategic Planning Tool

PMS Principles & Objectives
Achieving a performance driven culture that has
well-defined measures and demonstrated
values,
and through which the performing employee is
objectively rewarded,
and
continuously developed,
to achieving company‟s business results and
overall success.

Cascading of Goals
SBU Goals
& Measures
Dept / Unit Goals
& Measures
Individual Performance
Planning
Mid-Year Review
Year End Review
Bonus,
Increment,
Training
Ongoing
Feedback
Corporate Goals
& Measures
Career
Development
GOAL – does everyone in the team understand the same way as the one who sets the goals?

Performance Management Cycle
PHASE II
(Continuous)
PHASE IV
Performance Appraisal
(Annual)
WHAT? HOW?
COACHMEASURE
REWARD &
RECOGANIZE
LONG TERM PLAN
Vision / Mission /
Business Objectives &
Strategies
PHASE III
Performance Review
(Quarterly / Half Yearly)
PHASE I
Performance Planning /
Goal setting
(Dept / Individual)
PERFORMANCE
MANAGEMENT
CYCLE
By Jan – Mar
By End Sep
By End Mar

(MBO, Hoshin Kanri, Balanced Score Card)

 “Managers should avoid the activity trap”, getting so involved in their day-to-
day activities that they forget their main purpose or objective. Instead of just
a few top managers, all managers should:
 participate in the strategic planning process,
 in order to improve the implementability of the plan, and
 designed to help the organization stay on the right track.
- Peter Drucker, 1954 (The Practice of Management)
 In 90s, Peter Drucker himself toned-down the significance of this
management method, when he said, “It‟s just another tool. It is not the great
cure for management inefficiency… Management by Objective works if you
know the objectives, 90% of the time you don‟t.”
Management by Objectives
(MBO / MBR)

 The essence of MBO is
 participative goal setting,
 choosing course of actions and
 decision making between
management & employees.
Ingredients of MBO

MBO Lifecycle

Performance Measures – KPI?
“...a form of performance measurement in terms of setting
goals by individual in alignment with company‟s
business strategy with clear description, measures,
target and timing.”

Performance Measures – KPI?
PART 1: KEY PERFORMANCE INDICATORS (KPIs)
Goals & Objectives Weightage
(%)
(Priorities)
KPI / Measures Target And / Or Target Date
 Improve supply system reliability and
quality
30%  System unavailability index (SUI)
 No. of breakdowns
 Reduce SUI by 30%
 Reduce no. of breakdowns by
40%
 Reduce system losses 25%  System loss  Reduce system losses by 4%
 Improve customer satisfaction 25% – Customer satisfaction Index (CSI)
– No of written complaints
 Increase CSI by 5%
 Improve employee productivity 20% – Sales (Gwh) / employee – Increase sales (gwh) /
employee by 2%
 –

100%
• Goals and Objectives are employee‟s key performance objectives for the year.
• Measures is the criteria for target achievement.
• Target can be qualitative or quantitative

MBO
– Uniqueness and Limitation
Uniqueness Limitations
Strategic Orientation Principle Driven than Process Driven
Alignment at all Levels Tasks becoming Objectives
Focus on SMART Goals Goals with vague Measures
Participative Approach Rater Scale – Most Subjective
Focus on What & How
Time Tested
Easy to Apply

Hoshin Kanri
 Means “Policy Deployment” in Japanese Language.
 Hoshin is composed of two characters
 Ho means “method or form”
 Shin means “shiny needle or compass”
 Taken together, hoshin means a “methodology for a strategic direction setting”.
 Kanri means “management or control”.

Hoshin Kanri Strategy
Deployment

X Matrix

“Catch Ball” Process
Measures becoming the Objectives for next level.

Hoshin Kanri
Visual Planning Tool Detail Oriented
Alignment at all Levels Time Consuming
Participative Approach Tracking becomes Cumbersome
Ownership at all Levels
PDCA Methodology
Pareto – Focus on the Vital Few
Cause & Effect Relationship

Objectives
Measures
Targets
Initiatives
Objectives
Measures
Targets
Initiatives
Objectives
Measures
Targets
Initiatives
Objectives
Measures
Targets
Initiatives
Strategy
Vision -> Goals -> Themes
Financial Perspective
What financial results are
required for meeting the
expectation of our shareholders
Learning Perspective
What organizational values are
critical for meeting our strategic
goals and objectives
Customer Perspective
What customer needs must we
satisfy for meeting shareholder
expectations
Internal Perspective
What processes must we deliver
on for meeting customer and
shareholder expectations
Mission
The Balanced Scorecard
Framework

Internal Process
To satisfy our customers, in which internal
business processes must we excel?
Customer
To satisfy our shareholders, what financial
objectives must we accomplish?
The Vision & Mission
Financial
To achieve our financial goals, what customer
needs must we satisfy?
Learning & Growth
To achieve and maintain a competitive
position, how must the organization learn and
improve?
Cause
Results
Actions
Effect
The Perspectives

29
The Score Card

Balanced Scorecard
Strategy Driven Non-starter without Strategy
Strategy & Objectives Linkage Time Consuming
Total Alignment
Metrics w/o Measurement
Mechanism
Objectives under Perspectives
(Balancing Act)
Non-aligned Weightages
Strong Metrics Driven
Administrative Challenge w/o
Technology
Weightages for Prioritizing Difficult to take it till the last Level
Linkage to Initiatives

Linkages between MBO, Hoshin
Kanri & BSC

- Success Measures
 Understand where the organization and his/her department are
heading
 Performance Plan is set and agreed upon
 Clearly understand “how” he/she is going to achieve the KPIs
 Clearly see how his/her performance is going to contribute to
business results
 Clearly understand how his/her performance will be evaluated at the
end of the year
 Documented the discussion on the form
The planning session is complete if employees….

Performance Management
(At Grassroots Level)

ATTRIBUTES AND PARAMETERS
1. Discipline
• Attendance
• Safety
• Workplace Discipline
• Personal Hygiene
2. Attitude
• Participation & Initiatives
• Workstation Housekeeping
3. Compliance
• Record Updation
• Systems Compliance
4. Efficiency
• Productivity
• Quality
FEATURES
• The attributes and parameters covers
both behavioural and technical aspects
of the employees working in the shop floor.
• All parameters carry a equal weightage.
• Max possible score = 50;
• Min score = 25
• Evaluation by immediate supervisor /
facilitator (each employee is assigned to
resp. facilitator) and Final validation by
the Departmental Head.
TM Performance Scorecard
(Eg.1)

• Delivery
 Production Quantity
• Quality
 Rejection
 Rework
 Customer Complaints
• Cost
 Production per person
 Material loss / breakage
E Score
Team Performance Scorecard
(Eg.2)
• Morale (Team)
 Absenteeism
 Sunrise / set adherence
 Discipline violations
• Safety
 Accidents
 Incidents
 Violations

Team Performance Scorecard
(Eg.2)

Nature is important - that is our
DNA and we are here because
of that
But Nurture will help you to
learn, grow and succeed.
Skill &
Behaviour
Personality
Behaviours can be learnt and developed overtime
Nature vs. Nurture

Employee Motives drives their
Career Orientation
Getting Ahead

Coaching (or) Teaching
 Gen Y looks for examples – and not
Gyan
 Coaching should be “both prefix &
suffix” to Training
 The challenge is organizations groom
Managers and not Coaches
1. Development
2. Building Relationship
3. Direction
4. Accountability
5. Result

Performance Review & Appraisal

Performance Review
 “Performance Review” is a formal session of coaching and feedback
where employees have a greater opportunity to seek feedback. During
this meeting, Managers and Employees will:
 assess current level of achievement on employees‟ goals;
 revise the goals, if needed.
 identify and discuss any difficulties that employees are facing in the
achievement of their KPIs and the competencies
 No formal assessment is done in this review

Performance Review
- Guidelines for Changing KPIs
Goals & Objectives Weightage (%)
(Priorities)
KPI / Measures Target And / Or Target Date Comments / Reasons
for change
 Improve supply system
reliability and quality
30%  System unavailability
index (SUI)
 No. of breakdowns
 Reduce SUI by 30%
 Reduce no. of breakdowns by 10%
Revised KPIs, if any: 35% – Reduce SUI by 30%
– Reduce no. of breakdowns by 20%
Revised business plan
has put more emphasis
on improving the system
reliability
 Reduce system losses 25%  System loss  Reduce system losses by 4%
Revised KPIs, if any:
 Improve customer
satisfaction
25% – Customer satisfaction
Index (CSI)
– No of written complaints
 Increase CSI by 5%
Revised KPIs, if any:
 Improve employee
productivity
20% – Sales (Gwh) / employee – Increase sales (gwh) / employee by
2%
Revised KPIs, if any: 15%
100%

Performance Review
- Success Measures
 Employees have asked their Managers for guidance and support
 Manager has given employees‟ feedback and coaching on each KPIs
and selected competencies
 If required, changes have been made on the KPIs / Measures /
Weightage
 Employees have documented the discussion on the form
The performance review session is complete if ….

Outcomes
Building a committed
workforce.
Recognise contribution.
Encourage a future look at
performance
Purpose
• Assess performance against the pre-
established performance plan.
• “What You Do”
o Key Performance Indicators (KPIs)
• “How You Do It”
o Leadership Competencies.
o Technical Competencies.
• Discuss and exchange thoughts on the
employees‟ overall progress and performance
trends.
• Set time to meet in two-weeks to identify
individual developmental needs and future
plans.

- Arriving at a Final Rating
YEAR –END ASSESSMENT
Goals & Objectives Weightage (%)
(Priorities)
KPI /
Measures
Target And /
Or Target
Date
Self
(25%)
Manager
(75%)
JOINT
RATING
RATING
PER KPI
 KPI 1 30%
  
NI ME EE
  
NI ME EE
  
NI ME EE
2 x 0.3 = 0.6
 KPI 2 25%
  
NI ME EE
  
NI ME EE
  
NI ME EE
2 x 0.25 =0.5
 KPI 3 25%
  
NI ME EE
  
NI ME EE
  
NI ME EE
2 x 0.25 = 0.5
 KPI 4 20%
  
NI ME EE
  
NI ME EE
  
NI ME EE
2 x 0.2 = 0.4
 KPI 5
  
NI ME EE
  
NI ME EE
  
NI ME EE
 KPI 6
  
NI ME EE
  
NI ME EE
  
NI ME EE
100%
2
OVERALL KPI RATING Meets
Expectation
Overall KPI Score

- Success Measures
 Employees have completed their self-assessment prior to the session for HR
to include in the form.
 Managers have given their feedback on each goal and competency and
arrived at an overall score and communicated the same to the employees.
 Employees and their Manager have set a date to meet and sketch out a
developmental plan and articulated developmental/training needs in the next
Employee Developmental meeting.
 Employees have discussed and agreed on the final rating and documented
reason for dissatisfaction, if any.
 Employees have documented the discussion on the form and both
Employees and Managers have signed the form.
 Managers has sent the form to the Reviewer, if needed.
The performance appraisal session is complete if ….

Linkage to Reward & Employee Development
(Creating the Future)

0
10
20
30
40
50
60
70
Outstanding Good Average Below Average
Rating Scale
No.ofPersons
Low Performers Average Performers High Performers
10% 80% 10%
Bell Curve
- Forced Ranking / Normal Distribution
Rationality
vs.
Business
Compulsion

Pay for Performance & Growth
for Competencies
Development
needs
Career Growth
or
Pay for Skill
Increment /
Incentive /
Variable Pay
Competencies
KPIs

Linkage to Career Progression
Performers Stars
Question Marks Potentials
Score on Competencies

Employee Development Plan
 It helps the employees to answer questions
like...
 Where do I see myself growing in the company in the next few years?
 What are some strengths and areas of improvements do I have
currently?
 What development outcome do I need to meet the current / future
performance objectives?

Count on our expert support..
Corporate Office:
Career Tree HR Solutions Pvt. Ltd
# 4, 3rd Cross Street,
Shenoy Nagar,
Chennai – 600030.
Tamil Nadu, India.
Write to us at
karthik@career-tree.in
raji@career-tree.in
ranjeet@career-tree.in
kavita@career-tree.in
Visit us at
www.career-tree.in
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Approach Note on Performance Management System ver.1 2016

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