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Basic of Performance Evaluation & Development Process

The success of an organization will depends on its ability to measure accurately the performance of their employees and use it persuasively to develop them as valuable resources.

The Performance Evaluation & Development process aims at being more than a mere tool to evaluate performance and focuses on professional performance development.

OBJECTIVE

To identify the most important aspects of the job and base performance measures on the same.

To evaluate employees on their performance during the appraisal period.

To facilitate employees in planning and management of their own work, leading to enhanced performance.

To facilitate career planning by determining appraisees potential for taking on diverse roles and responsibilities.

To provide training focused on specific developmental needs.

The Performance Evaluation & Development process has been designed to allow a holistic view on the employees performance. It consists of the following categories

1] Key Result Areas (KRAs)

Key Result Areas are critical functions of a job or a role, which makes its distinct contribution to the achievement of the companys goals. KRAs require tasks to be performed by an employee in relation to his job. They are critical areas of performance assessment and should be mutually agreed upon and listed at the beginning of each appraisal period. Each KRA can be further broken down into specific tasks.

The KRAs have to be:

a. SMART I.e. S- specific, M- measurable, A- agreed, R- realistic, T- time bound.

E.g. 1. To achieve a sales turnover of Rs.5 lakhs.

E.g. 2. To conduct Induction Training for all new recruits twice a month.

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b. There should be a minimum of 5 KRAs assigned to a person.

KRA = KEY RESULT AREA,

KPA = KEY PERFORMANCE AREA. IT IS NOT OFTEN POSSIBLE TO EVALUATE KRA, AND HENCE IT IS SPLIT INTO KPAs. KPAs are more focused and easy to monitor/evaluate with KPI.

Key Result Areas Key Result Areas or KRAs refer to general areas of outcomes or outputs for which the department's role is responsible. A typical role targets three to five KRA. Value of KRAs.

Identifying KRAs helps individuals:

Clarify their roles

Align their roles to the organization s business or strategic plan

Focus on results rather than activities

Communicate their roles purposes to others

Set goals and objectives

Prioritize their activities, and therefore improve their time/work management

Make value-added decisions

Description of KRAs Key result areas (KRAs) capture about 80% of the department's work role. The remainder of the role is usually devoted to areas of shared responsibility (e.g., helping team members, participating in activities for the good of the organization) .

CORE KRAs of HR DEPARTMENT

-RECRUITMENT/ SELECTION -WORKFORCE PLANNING/ -DIVERSITY MANAGEMENT -PERFORMANCE MANAGEMENT -REWARD MANAGEMENT

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-WORKPLACE MANAGEMENT -INDUSTRIAL RELATIONS -SAFETY AND HEALTH WORKPLACE -BUILDING CAPABILITIES AND ORGANIZATION LEARNING -EFFECTIVE HR MANAGEMENT SYSTEMS , SUPPORT AND MONITORING

KRAs [ KEY RESULT AREAS are managed by -KPAs [ KEY PERFORMANCE AREAS] -KPIs [KEY PERFORMANCE INDICATORS]

KEY PERFORMANCE AREAS

These are the areas within the HR DEPARTMENT, where an individual or group, is logically responsible & accountable for the results. To manage each KRA/ KPAs, a set of KPI are set . KRA and hence KPI is attributed to the department which can have effect on the business results and is self measured where applicable. THE IMPORTANCE AND WEIGHTAGE OF THESE ELEMENTS KRAs/KPAs/ KPIs ARE GUIDED BY THE *VISION STATEMENT *MISSION STATEMENT *CORPORATE OBJECTIVES *CORPORATE STRATEGY *CORPORATE BUSINESS UNITS/ DEPARTMENTAL PLANS/STRATEGY, FOR THE BUDGET PERIOD, WHICH IS USUALLY 12 MONTHS.

MANAGER LEARNING AND DEVELOPMENT

KRAs and KPIs.

KRA 1-deliver relevant and targeted programs to the organization employees. KPI 1--EMPLOYEE SATISFACTION FEEDBACK THROUGH SURVEY SATISFACTION LEVEL MINIMUM 70%. KPI 2--% INCREASE IN TRAINING PROGRAMS KPI 3--% INCREASE IN EMPLOYEE PARTICIPATION. KRA 2-promote the programs/learning culture

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KPI 1--EMPLOYEE SATISFACTION FEEDBACK THROUGH SURVEY. SATISFACTION LEVEL MINIMUM 70%. KPI 2--NUMBER OF DEPARTMENTS SATISFACTION LEVEL. KPI 3--% INCREASE IN TYPES OF ACTIVITIES

KRA 3-provide lead in the provision of organization learning and development service KPI 1--NO. OF TRAINING DAYS % INCREASE KPI 2--NO. OF EMPLOYEES PARTICIPATING % INCREASE KPI 3--NO. OF INHOUSE PROGRAMS % INCREASE KPI 4--NO. OF EXTERNAL PROGRAMS ATTENDED %INCREASE. KPI 5--NO. OF EXTERNAL TRAINING PACKAGES BOUGHT %INCREASE. KPI 6--% INCREASE IN COST. KPI 7--% INCREASE IN RESOURCE REQUIREMENTS. KRA 4-improvements in capabilities/ capacities to deliver L&D. KPI 1--PROGRAMS IMPLEMENTED ON TIME [ % ] KPI 2--PROGRAMS IMPLEMENTED WITHIN BUDGET [ %] KPI 3--EFFECTIVE USE OF PERFORMANCE MANAGEMENT SYSTEM FOR DEVELOPMENT [ % ] HR MANAGER KEY RESULT AREAS.

KRA 1 Recruitment / Selection KRA 2 Workforce Planning and Diversity KRA 3 Performance Management KRA 4 Reward Management KRA 5 Workplace Management and Relations KRA 6 A Safe and Healthy Workplace KRA 7 Building Capabilities and Organizational Learning KRA 8 Effective HR Management Systems, Support and Monitoring

For the management trainer, key result areas could be:

Design of solutions Delivery of solutions Evaluation of solutions Budgets Client satisfaction Innovation

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General Management or Senior Executive KRAs include

Internal operations Market development Profitability Organizational structure Organizational vision and mission Asset and liability management Board of directors relationship Productivity Financial strategy Business development Technology Customer satisfaction Community relations Regulatory compliance

Finance and Accounting KRAs include

Credit referencing Management information Capital expenditure Security Financial analysis Cost control Internal audit Regulatory reporting Credit control Financial records Payroll Cashflow forecasting Budgeting Costing

Sales KRAs include

New business acquisition Territory management Customer care Lead generation Lead follow up (internal and external)

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Account management Customer retention Interpersonal skills Negotiating skills Product knowledge Sales forecasting

Manufacturing KRAs include

Stock control Maintenance Labour relations Waste Reworks Productivity Health and Safety Quality control Record keeping

Marketing KRAs include

Advertising Promotional strategy Pricing Market research Field support Marketing materials Media relations Sales support Agency relations

Secretarial, Clerical and Administrative KRAs include

Correspondence Filing Records management Administrative support Internal customer relations Equipment maintenance

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Forms administration Scheduling Supply maintenance and purchasing Telephone coverage Project support Finally, key result areas for everyone in an organization are: Personal development Professional development Internal and external customer satisfaction Public relations Communication - oral and written Interdepartmental relations Project management

KPI FOR THE VARIOUS KRAs should be

-quantity oriented -quality oriented -time oriented -cost oriented or a combination .

Quantity

Number of units produced/published /sent/received/ processed/ deadlines Calls per hour/day/week New products introduced Grievances per 100 employees Staff turnover Customer complaints and compliments Error rate or reworks Returned goods Sales increased Profit increased Increase in market share

Cost

Variance against budget Rs spent Profit Waste Overtime incurred Speed

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Time

Reduction in number of minutes/hours/ days etc. Deadlines and schedules met Average call response time Projects completed per week/month etc. Number of minutes between customers

Therefore: example Key Result Area = Sales Objective = Sell x new product to customers KPI = Number of units sold per new customer whilst maintaining gross profit level of 25% SUPPLY CHAIN MANAGEMENT DEMAND PLANNING

-demand planning for core products -demand planning for parts/accessories -demand planning for critical items -developing product life cycle trends -product life cycle forecast for new products etc

KPI could be -remove stock shortages[ by %]

-improve inventory levels.[ 98% max] etc

PROCUREMANT

-quicker stock replenishment -continual stock replenishment -reduction in lead time -remove stock shortages[ by %]

-improving stock availability [100%] -reducing cost [ 5%] -reduction working capital [ 7%]

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SUPPLY

-better supply coordination -more effective communication with supplier -faster / timely communication etc

KPI could be -developing supplier profile [ all accounts] -developing suppliers networking [ all accounts] etc

RAW--INVENTORY

-quicker replenishment -customer focused inventory building -logistical lead time reduction -demand based inventory etc

KPI could be -better material availability[ 100%] -good/ usable inventory levels [ 98% satisfaction] etc

MANUFACTURING

-elimination of wastages in production -improving throughput efficiency -process efficiency etc

KPI could be -reducing back orders[ nil %] -improving targeted delivery date [ 98%] etc

FINISHED --INVENTORY -reduction in logical lead time -full stock availability etc KPI could be -full total inventory[ 100%] -full stock / range availability [ full range] etc

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ORDER SERVICE -short--response time to query -shortening order cycle time etc KPI could be -making targeted delivery date [ 100%] -providing order status [ at all times] etc

DISTRIBUTION

-order fill rate -on time delivery -backorder by age -service/ parts availability -targeted delivery date -order completeness -delivery reliability

KPI could be -improve order fill rate [ 98%] -improve on-time delivery [ 98%] -reduce shipment delays[ 0%]

CUSTOMER SERVICE -order status -delivery reliability -documentation integrity etc KPI could be -timely order status [ 100%] -timely delivery status.[ 100%] etc

THE SUPPLY CHAIN MANAGEMENT KPIs could include

-IMPROVING MATERIAL FLOWS -REDUCE RAW MATERIAL INVENTORY LEVELS -REDUCING PURCHASING COST -REDUCE FREIGHT COST -REDUCE OBSOLETE STOCK LEVELS -IMPROVING WAREHOUSING OPERATIONS EFFICIENCY

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-OPTIMISE STOCK LEVELS -REDUCE LEAD TIME -REDUCE TOTAL INVENTORY LEVELS -REDUCE FINISHED STOCKS -IMPROVE DEMAND FORECASTING -IMPROVE MATERIAL RESOURCE PLANNING

OTHER KPIs could be as follows MANUFACTURING

- Unit volume level - unit cost target -production efficiency improvement -productivity improvement -quality improvement index

-capacity utilization MARKETING

-market share % -new product launches success -profit contribution by product lines

SALES

-sales against last year -sales against target -sales coverage improvement -market coverage -customer coverage -channel coverage

CUSTOMER SERVICE -CUSTOMER SERVICE IMPROVEMENT -CUSTOMER SATISFACTION ACHIEVEMENT

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WAREHOUSING / TRANSPORTATION

-%ACHIEVED AGAINST ORDERS -PICKING / PACKING RATE -FINISHED GOODS INVENTORY LEVEL -STOCK TURNOVER

FINANCE

-Cost of Capital USED - Receivables level / against sales -Bad-debt level -Debt-equity ratio

PROCUREMENT / SUPPLY -raw material inventory levels

-cost saving target