Generic Goal Setting and Performance Management Process in Binani Group

February 12, 2005

Scope
Organisational Goal Setting Process 2005-06 Concept explained; integration with Business Plan Workshops at

Zinc Cement ; and Glass Fibre businesses Goal Setting process Freezes Organisational Goals 2005-06 Designs templates for Individuals, Groups and Function as well Measurement and Appraisal Process Reviewing Feedback Mechanism and Employee Self Development Rewards, Accolades, Appreciations RUN TIME : Mar 2005-10 April 05; Performance Assurance @ RLSs initiative : 2 May 05 & (H1) Oct 05 during the Performance Review process

Organization Without a Formal Goal Setting Process

Functional Boundary Organisation Boundary

Mis-aligned efforts to meet the environmental challenges Departments with strong leaders may create their own alignments/ bureaucracy, not necessarily aligned to the direction of corporate vision and strategy.
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Basics
START FROM THE BASICS Targets, Objectives, KRAs, Business Goals, Business Plan Identify and define for each business- Key Business Performance Indicators - Key Business Performance Drivers - Key Cost Drivers Communicate to the people; motivate, coach and guide them to target work to reach the destination Practice self-reliance, achieve orientation, creativity, speed CONSTANT ALERT on: Our Competitors SWOT analysis of competitors: their strategies, our counter-measures Our Revenue streams Plot the value deliverers; so also the leakages(sources of cash loss, revenue loss etc.) Learning process: learning the markets, competitors and new opportunities, new skills
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Organization With a Formal Goal Setting Process

Everyone moves towards the organisation Vision and Mission

Non-existent or very weak Departmental boundaries Partnerships and teamwork a way of life reenergised work environment Everybody is pulling the organisation in the same direction to give that extra
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Practice boundarylessnes and professionalism at work: intra and inter-Function(Dept)

The Purpose of Goals in the Company

Ensure that we all work towards a common purpose, namely the success of the company in achieving its long term Mission
Burst Bureacracy - call all across the organisation Learn to work outside their functional silos as well

Meet the needs of our colleagues who are also engaged in supporting the long term goals of the company Look to the future, to anticipate change and challenges to be ready for them

Use our resources efficiently; single KRA of everyone address -Resource Loss

Tap the organisational synergy, of all people, cutting across invisible function boundaries set, perhaps, unknowingly by themselves ! Usher in an atmosphere of feeling of commonality of purpose Work in unison with colleagues, not at cross purposes
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Defining Goals TARGETS with specific measures and accompanying ACTION PLANS set for a specified future DATE with exacting PRECISION as the keyword and TIMELINESS in achievement ( Roles, Responsibilities and Accountabilities and Achievement Ownership defined)
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An Overview of Goals
GOALS

Focus on efficiency (i.e. doing things faster and smarter) Focus on effectiveness (i.e. doing the right things) Contribute to Business Goals and Key customers Goals

Strategic Level Functional Level Team Level Individual Level

Have Quality requirements, indicators and measures

Focus on Quality, Quantity, Precision and Timeliness & Follow-up
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Functional Objectives
Two possible sources of information: 1. Business as usual / chalte bhi ho with little/ no improvements - derived from job description/ lack of it ! 2. Breakthroughs required to achieve the Short Term and Long Term Goals - derived from organisational challenges and priorities - taps the organisational synergies through people - ushering in a self-managing and tracking performance culture - self motivated people in self managed teams achieve targets - shares the joys of achievements , as well

The Balanced Scorecard Framework to Translate Vision and Strategy into Operational Terms
To succeed financially, how
Should we appear to our Shareholders ?

Financial

To achieve our vision,

Customer

how should we appear to our customers?

Vision And Strategy

Internal Business Process

To satisfy our shareholders and customers,what business processes must we excel at?

To achieve our vision, how will we sustain our ability to change and improve?

Learning and Growth

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The Balanced Scorecard Framework The Art of Selecting and Designing Measures
Core Financial Measures
ReturnonInvestment Economic Value Added Profitability Revenue Growth / Mix Cost Reduction Productivity

Core Customer Measures

Market Share Customer Acquisition Customer Retention Customer Profitability Customer Satisfaction

Core Internal Measures

Core Learning and Growth Measures

Innovation & Creativity

Organisational Learning & Employee Development Quality Employee Satisfaction Response Time Employee Retention Cost New Product Introductions Employee Productivity
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How To Write Good Objectives

S
M

: Specific + Stretched + Speed for each activity

: Measurable

A
R T

: Aggressive + Achievable
: Related to Corporate Vision and Mission Relevant for the Organisation, Function, Team, Job Holder : Time bound
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Sample Measures
Quantity
No. of customers/clients served per day, month, etc. No. of items(forms, reports, orders) processed per day etc. No.cases/complaints handled per day Percentage of employee participation No. of hours spent for employee & customer communication No. of work hours lost to absenteeism per month Variance Analysis & Corrective Action/ Redial Plan

Quality
Error rate/ ratio Percentage of orders without errors

Cost
Percentage variance from plan/ budget Rupees as line item in budget (for overtime or other cost) Rupees saved over previous period

Time
No. or percentage of deadlines missed No. or percentage of calls answered within specified time No. of days to complete a task/ activity Turnaround time Frequency of an event each month/ quarter Variance Analysis & Corrective Action/ Redial Plan
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Rate of employee turnover

Percentage of items requiring rework Downtime percentage Overall Equipment Efficiency ( OEE) Variance Analysis & Corrective Action/ Redial Plan

No. of hours required to complete each unit Efficiency per negotiation Variance Analysis & Corrective Action/ Redial Plan

Goal/ Objective Setting Sample Format

S l. N o .

Goal / Objective

Target/Dat e for the Measures current year

Key Actions to Result Deliverables Achieve the Goal R,R,A,Q,Q,P,T*

* Role, Responsibility, Accountability, Quantity, Quality,Precision,

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Types of Performance Objectives Most Appropriate for a Specific Job

Short-range objectives can be accomplished within the performance cycleoften within a few weeks or a few months Long-range objectives might require a full performance cycle or longer to complete, (and will probably have to be divided into two or three objectives, or spread over several milestones) Routine or Maintenance objectives will help you maintain performance at currently acceptable levels, or keep things at a minimum standard Organisational objectives contribute directly to the wider organisation (such as establishing a new procedure within a unit) Problem-solving objectives can be set to improve performance that has slipped below acceptable levels Innovative objectives are created to stimulate creativity or new thinking, or take a fresh approach Personal Development objectives are meant to enhance learning and the employees self development and his/her long -term performance results Cross-functional Synergy objectives are meant to release the synergies of people 15 so that, that extra leverages the human potential for the organisation to be

What Is Performance Management System

Performance management is defined as a proactive partnership between employees and management that helps employees perform at their best and align their contributions with the goals, values, and initiatives of the organisation."
Much of it is dependant on the employee putting the heart, body and soul to it so that he is emotionally contracted into it !!!
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Benefits of a Good Performance Management System

1. Improved performance 2. Improved communication 3. Organisation alignment 4. Organisation capability & Capacity-building of people 5. Reduced management time 6. Increased employee self-management; less bureaucracy, less levels, less order-taking, less inefficiencies - only reporting RESULTS !!! 7. Increased employee satisfaction
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Characteristics of An effective Performance Management System

Performance Management isn't something you do to employees, its something you do with themit's a partnership

Role, Role clarity, Role effectiveness conforming to the level held in the organisation and demonstration of leadership
Performance Management is about maximising the potential of the team Performance management is about getting employees to take responsibility and accountability for managing their own performance Effective Performance Management System allows employees the freedom they need to do their best work without worrying that you will second-guess their decisions and actions
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Typical Appraisal Process

Process Owner Target time Measures
Orgn. Targets Dept. Goals

Appraisee
& Appraiser

JDs

Goal Setting

KRA Sheet

Year Start

Appraiser & Appraisee

KRA Sheet Incident File

Mid year review

Mid Year Course Correction

Mid Year

Appraisee, Appraiser & Review Team

KRA Sheet Incident File Review Sheet

Self Appraisal, Appraiser & Review Team

Appraisee Appraiser Discussions, Employee Development Action Plans Next Years KRAs

Year End

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Other Typical Uses of Performance Management System Besides Improving Performance of Employees
1. Salary Increases/ Increment 2. Other Rewards 3. Job Rotation 4. Promotion 5. Employee Self-Development Action Plans 6. Competency Mapping, Training Needs Assessment 7. Career Planning

8. Succession Planning

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Critical Issues in Effective Implementation of PMS

1.0 Goal Setting : 1.1 Alignment with corporate goals 1.2 Linkage of strategic planning and business plans with functional/ individual go 1.3 How seriously is taken by different layers of managers? 1.4 How much value add is done by the immediate boss? 1.5 How well these are written? SMART 1.6 Weightage given to different goals 1.7 Personal Development goals in addition to business goals
2.0 Review and Monitoring Process 2.1 Ongoing feedback 2.2 Formal and informal reviews 2.3 Feedback Giving Skills 2.4 Coaching Relationship 2.5 Organisation Culture of openness, trust and credibility 3.0 Performance Assessment Events 3.1 Timing and time allotted 3.2 Preparation by all concerned 3.3 Skills 3.4 Facilitative stance 3.5 Review of Development Needs

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Critical Issues in Effective Implementation of PMS

4.0 Performance Rating Normalisation: 4.1 Bell Curve Syndrome; balancing of assessments, assessment centres 4.2 Organisation will to adhere to the process decided 4.3 Managers skill and courage to defend their position both upwards and downwards 5.0 Rewards and recognition 5.1 Ongoing rewards 5.2 End of the year awards increments, bonuses, stock options 5.3 Career progression moves 5.4 Succession planning 6.0 Review against a set of competencies 6.1 Organisational values 6.2 Core competencies required for organisations success 6.3 Functional and Individual Competencies for superior performance in a role

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