Performance Management System

Harding Trust

Probable KRA and KPIs

A Key Resource Areas (KRA) defines the outcome or end result expected to be delivered,
not always result oriented, an individual has to perform being on job and A Key
Performance Indicator (KPI) is a measurable value that demonstrates how effectively a
company is achieving key business objectives. Organizations use KPIs to evaluate their
success at reaching targets.
Segregating the term KRA:Key = Crucial/Main
Result = Outcome/End/Consequence
Area = Space/Range
KEY RESULT AREA = Crucial Outcome Space
The probable KRA and KPIs for the organization:The business matrix for the organization is shown below.
KRA

Category

KPI
Customer Frequency
Customer Consistency

Incremental Sales

Customer

Average Units per Month

Marketing Response
Promotional Mix of Sales
No. hours of Productivity

Adherence
policy

to

company

Internal Business Process

Nominations for
quarterly basis

rewards

on

Nominations for training half

yearly basis
Overall quality
Perceived reliability

Customer Satisfaction

Customer

Extent of
fulfilled

customers

needs

Contract Renew Cycle Time

Crude Absence Rate
Summary Measures
Employee Absenteeism

Internal Business Process

Bradford Scores
Online Absence
Systems

Management

Targets Achieved
Management reporting on
Internal Business Process
Sales Performance

Shortfalls
SWOT Analysis
Monthly Targets
Review

Development
Action Plans

of

Sales

Customer

Update
Management approvals
quarterly basis

on

Incremental Sales:With marketing campaigns, the baseline of KPIs (key performance indicators) for your
business that act as your compass as to whether your marketing actions are having the right
impact. The organization has erratic sales, mostly didnt meet the target, with 20% - 30%
deviation.
Adherence to company policy:To ensure consistency in the organization in terms of the performance appraisal process,
the actions are taken accordingly.
Customer Satisfaction:As the feedback from the customers has not been good it is very important to take a
measure of customer satisfaction. The greatest predictors of customer satisfaction are the
customer experiences that result in attributions of quality.
Perceived quality is often measured in one of three contexts:
Overall quality - The measure of quality that the customers expect and the outcome
delivered.
Perceived reliability The customer perception about the life of the product and trust
about the product performance.
Extent of customers needs fulfilled - The measure of the extent of the demands of the
customers are met by the organization.
Employee Absenteeism:As the workforce is indiscipline in terms of absenteeism and leave, there should be defined
policy of leaves to be taken by the employees and measure of the absenteeism.
Absenteeism and leave can be measured by the following KPIs:-

Crude Absence Rate - This is the time lost due to sickness absence as a percentage of
contracted work time. Its advantage is that it tells you what proportion of time you get from
your employees.
Summary measures - Summaries can be calculated for individual workers, groups of
workers, age groups, gender - or for the entire workforce. These can then be used to
identify the most frequently reported causes of absence, identify patterns; identify
individual levels and give trigger points for management intervention, as well as providing
comparison between departments, staff levels or benchmarks against other companies.
Both frequency and length of absence are measured.
Bradford Scores - When most staff work shifts, the disruption of frequent short term
absences is usually greater than that of intermittent long term absence. Bradford combines
measurement of absence frequency and duration to measure whether an individual's
sickness absence record comprises few, or many, spells of short or long term. They can
indicate trends in sickness absence and are another way to provide trigger points.
Online absence management systems - These vary but, in general, all help identify
absenteeism patterns and trends; some automatically calculating absentee rates for
individuals, as well as highlighting commonly reported causes and trigger points.
Management reporting on Sales Performance:The organizations achievement of sales goals per month is erratic and mostly does not
meet its targets and has a deviation between 20-30% from monthly sales target. Therefore
it is critical to keep a track of the sales by creating and sending monthly reports to the
managers.
Development of Sales Action Plans:Conducts market research and develops sales plans and updates periodically based on
changing market scenarios and insights from the prior quarters. The Sales plan must be
reported every quarter to management team for analysis and approval.

Design of an appraisal form

EMP ID
NAME
DEPARTMENT
JOB TITLE

APPRAISAL
PERIOD

FROM

TO

PART 1
Please rate the below mentioned parameters on a scale of 1 to 5 where,
1 - Unsatisfactory
2 Needs Improvement
3 Meets Expectations
4 - Exceeds Expectations
5 Outstanding
Also, enter comments and examples justifying the rating in the space provided below.

PARAMETERS
WORK QUALITY
Comments by appraisee:
Comments by appraiser:
JOB KNOWLEDGE
Comments by appraisee:
Comments by appraiser:
NEW KNOWLEDGE
Comments by appraisee:
Comments by appraiser:
PLANNING & ORGANIZING
Comments by appraisee:
Comments by appraiser:
ANALYSIS & JUDGEMENT
Comments by appraisee:
Comments by appraiser:
DEPENDABILITY
Comments by appraisee:
Comments by appraiser:
COMMUNICATION
Comments by appraisee:
Comments by appraiser:
INTERPERSONAL SKILLS
Comments by appraisee:

RATING
APPRAISEE

BY RATING BY APPRAISER

Comments by appraiser:
INITIATIVE
Comments by appraisee:
Comments by appraiser:
TEAM WORK
Comments by appraisee:
Comments by appraiser:
PARAMETERS

RATING
APPRAISEE

BY RATING BY APPRAISER

RESOURCE USE
Comments by appraisee:
Comments by appraiser:
SERVICE CENTERED WORK
Comments by appraisee:
Comments by appraiser:
DIVERSITY SUPPORT
Comments by appraisee:
Comments by appraiser:
ATTENDANCE
&
PUNCTUALITY
Comments by appraisee:
Comments by appraiser:
SAFETY & HEALTH OBSERVANCE
Comments by appraisee:
Comments by appraiser:

PART 2
Complete the following:
1. Describe the accomplishment and achievement during the appraisal period.

COMMENTS BY APPRAISEE

COMMENTS BY APPRAISAL

2. Trainings completed this year.

COMMENTS BY APPRAISEE

COMMENTS BY APPRAISAL

3. Goals completed this year.

COMMENTS BY APPRAISEE

COMMENTS BY APPRAISA

PART 3
(ONLY FOR APPRAISEE)
1. Ideas for training or course that would help you in enriching your skill set.

2. How can your supervisor help you improve you work in the major areas of
responsibility?

3. Describe any obstacles that abstain you for performing your work efficiently.

Appraisees
name & signature

Appraisers
name & signature

Reviewers name
& signature

Reward mechanism
Reward mechanism is a very essential component of a Performance Management System. It
is crucial in attracting, retaining and motivating employees.
In the case mentioned, the requisites that the company should keep in mind while designing
the reward mechanism are:
The reward system should be linked with the performance development system. It
should focus on performance based pay and offer ample learning opportunities
along with a healthy work environment.
The reward system should instil a sense of ownership among the employees,
facilitate long term focus with continuous improvement, reduce service operating
costs, promote team work, minimize employee dissatisfaction and enhance
employee interest in the financial performance of the company.
The reward system should recognize two types of employee activity performance
and behaviour.
The various ways in which the company can reward the employees are:
Variable pay in the compensation variable pay can play a crucial factor in
motivating the employees, especially star performers. The variable pay can be linked

to sales revenues, customer consistency, increase in customer base, increase in

productivity in terms of production, quality of production of workers, etc.
Bonuses and commissions bonuses and commissions can be given to the sales
employees on meeting particular customer targets. It can be given on a monthly,
quarterly or yearly basis, depending on the revenues generated and the operating
costs.
Benefits benefits are a type of reward in strategic reward system. The employees
will definitely notice the benefits the company provides. For example, the company
can provide pension schemes and health insurance to the employees.
Team rewards as mentioned, the customer feedback has not been good and
repeat business is got after a long gestation period. Hence a team performance
based reward system can be implemented for the design team. It can be in the form
of end year bonus. This will encourage team work and the designers will be
motivated to come up with creative designs which will get good customer feedback.
This in turn will help in increasing revenues.
Recognition and appreciation they are integral components of a winning strategic
reward system. Recognition means acknowledging employees before their peers for
specific accomplishments achieved, actions taken or attitudes exemplified through
behaviour. Appreciation means expressing gratitude to someone for his or her
actions. For example, a personal note can be sent to a sales representative as an
appreciation for achieving a huge sales target. It can also be done by combining
recognition and appreciation in the form of a public statement of thanks in front of
the employees co-workers or team, citing specific examples of his or her
achievements. These non-monetary reward mechanisms are a great way to boost
employee motivation.

The organization should evaluate on the effectiveness of the reward system by considering
the following:
The organization should ensure that the reward system is relevant and generates the
required productivity and motivation from the employees.
The organization should ensure that the reward system is valued by the employees.
The organization should also check out for the undesirable consequences of
administration of any reward practice.

Design of Performance Improvement Plan

A performance improvement plan, or PIP as it is usually denoted as, is nothing but an effort
from the employers end to help improve the performance of employees who are
underperforming. As a supervisor or an HR representative, it's important to develop a
performance improvement plan before taking disciplinary actions against an employee in
order to include him or her in strategizing performance improvement.
There needs to be a proper HR function in the organisation in order to design and
implement the performance improvement plan in an efficient manner. This should be a very
significant change in the current structure of the organisation, wherein the owner carries
out the HR functions as well. This needs to be rectified.
In the case given, a performance improvement plan can be designed and implemented in
certain phases. These include identifying the problem, developing an action plan and then
following up on it in order to achieve the desired results i.e., improvement in employee
performance.
Identifying the Problem:
In the case given, there are mainly two problems that are impacting the organisation hugely:
1. The feedback from the customers has not been good. Along with this, achievement of
sales goals per month is erratic and mostly does not meet its targets and has a deviation
between 20-30% from monthly sales target.
2. The workforce is indisciplined in terms of absenteeism and leave.
Both the above mentioned problems can be rectified with a proper improvement plan in
place. These problems have a direct correlation with the productivity and performance of
the employees.
The first step here should be that of documenting problems. A detailed document
containing information about the problems being faced, probable reasons behind it,
identified underperforming employees and others should be created.
This needs to be followed by a one-on-one conversation with the employees in order to
understand their concerns. It should basically be a two-way communication wherein the HR
needs to highlight the observations of the line managers or supervisors of those employees
regarding them and at the same time give the employees also a fair chance to explain their
side of the story. The HR needs to make sure that the employees understand the
significance of the outcome of their behaviour or performance on the organisation.

 Developing an Action Plan:

Firstly, SMART goal setting must be carried out so as to have a clear vision of the expected
results. Goals should be definitive and if possible, include numbers that can be measured
later to assess progress effectively. For eg. : In the case provided, an example of a specific
and measurable goal would be : Employee will produce at least 100 units per month. or
Employee will clock in for work no later than 9:00 a.m. every day.
Post this; a list of resources available must be created. These resources can include funds,
training materials, time away from normal responsibilities, or other peoples time and
expertise. This gives an idea to the employee as well as the HR/employer as to what all can
be used in order to improve performance and the ways in which they need to be utilised in
order to do so.
A timeline needs to be created with details of goals that need to be achieved in a timebased manner. This will keep the employee on track in achieving the goals in his or her plan
to make steady progress toward overall performance improvement.
Identification of a metric that would help to track the progress is a very essential step. To
avoid any confusion on the part of the employee, it is important to be as specific as possible
in how his or her progress toward achieving goals would be evaluated. Different goals will
require different methods of measurement. In this case, the improvement in the
productivity can be measured by keeping a tab on the number of units produced or the
quality of the final output products. This would help in curbing the problem of unfulfilled
demand and customer complaints.
Finally, reviewing the performance improvement plan with the employees concerned on a
regular basis and providing feedback or corrective advice wherever necessary is extremely
essential. It is important to review a performance improvement plan thoroughly with the
employees so that both understand and feel comfortable with the terms of the plan. This is
an agreement between two parties and can serve as a legal document in the future, if
necessary.
Following Up:
Observing the employee and documenting progress regularly is an important step. Using the
metric established in the performance improvement plan, measuring the employees
progress toward meeting his or her targets, and documenting the progress as thoroughly as
possible is essential. This will provide the employers with objective evidence of the
employee's progress and help in sharing useful feedback to them.

Suggested Techniques for Managing and Developing

Performance
Get crystal clear on what you want from your staff
Its vital to identify whats important to you, your team, and your business or
organisation so that you can concentrate on specific areas for really improving staff
performance.
Being absolutely clear on what the staff is expected to do. Discussing with them all
the Key Result areas and explaining to them how they can be achieved as well as
taking their suggestions.
Describe to your staff exactly what you want from them using performance
objectives
Research tells us that having clear objectives with effective measures can improve
performance by over 30%. Employees will do a better job if they know on what areas
is their performance evaluated. Set clear goals that are SMART.
Gain your staffs commitment and agreement to meeting the objectives
Effectively communicating objectives to your staff (and working with them to write
objectives) wins their total commitment to achieving the objectives. Be open to your
employees, giving them the freedom to do the best work possible as well as letting
them voice their concerns.
Monitor your staffs performance
Monitor and measure staff performance against objectives and standards so that
you can collect the data you need to give the type of performance feedback that
improves performance and satisfaction. Only setting clear objectives isnt enough,
reviewing the staffs performance is important to let them know what standard of
performance are they expected to achieve.
Prepare well for the performance review meeting
When you and your staff member effectively prepare for the performance review or
appraisal meeting youve got everything in place to make the meeting energetic,
collaborative and highly motivational
Hold a motivational performance review meeting
Put together an agenda that focuses on meeting the motivational needs of the staff
member. Review with the staff member their performance and job satisfaction put
the staff member first by asking for their opinion before offering your own. Agree
performance evaluations step by step
Explain performance feedback in clear, objective, non-judgemental language
Explain performance feedback (particularly criticism) so that your staff member finds
it easy to understand and accept. The most difficult part of a performance review
mechanism is giving feedback, it is important that the actual message reaches the
employee in a way that he/she can improve.

 Use results and consequences

Identify and explain results and consequences to persuade your staff member to
make a change to their performance a change that leads to improvement. Not
using emotions or criticism to convey the feedback but using results and
consequences has a positive impact on the employees.
Have performance improvement discussions
Hold performance improvement discussions with your staff member where you give
the criticism gain their agreement and offer your support. Understand the types of
reactions and responses you may get and learn how to deal effectively with those.

Ways for Communication of new PMS across organization

1. Preparation and Implementation of New PMS
Achieve system buy-in by employees through pilot run of the new PM
system.
Discover problems and fix the problems.
Take feedback from sample employees and take corrective action before
rolling out to the entire organization.
2. Communication Plan:
Communicate important factors and reasons for implementing new PMS and
its benefits.
When there is poor communication and the rumour mill starts spreading
rumours about change, it can create resistance to the change. Being proactive
in communications can minimize resistance and make employees feel like they
are part of the process.
3. Appeals process:
Set up grievance team who would look into the problems and issues faced by
the employees once the new PMS is introduced.
Sometimes employees encounter barriers when implementing
changes. Barriers can be with other employees, other departments, inadequate
training, lacking equipment or supply needs. Sometimes management also
needs to deal with resistant or difficult employees.

4. Trainings:
Raters and line managers should be given training on the new PMS system and
how they can communicate it to their subordinates in form of one to one
interaction with the employees.
5. Continuous monitoring and Evaluation:
Cost benefit - How the new PMS has helped in reducing cost of the
organization.
Performance level - Has the new PMS improved the performance of
employees.