pms bsc 20th may
TRANSCRIPT
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Performance Management System
20th May 2011
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HR Plan & PMS
Roles/Job
DescriptionStructure
Competency
PMS
(BSC/KRAs)
Development Career &Succession
PlanningVariable pay
Compensation
Structure
Hiring/Management/Induction
Climate Survey
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Performance Management System(Performance management is the process of creating a work environment in which
people are enabled to perform to the best of their abilities in line with
Organizational goals & objectives.)
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PMS: Objectives
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PMS: ObjectivesThree fold objectives
1. Performance Relatedy Linking Individual Performance to Organization goals
y Measure performance against predetermined and mutually accepted goals
y Provide clarity of the expectations and responsibilities of the functions to be performed by theemployee
y Differentiate performance
y Reward performance transparently & objectively and link to compensation (includes annualincrement and promotions)
2. High Potential Identificationy Career Paths
y Identify talent and build competencies
y Redeploy talent and develop talent pool
y Attrition Management
3. Development Tooly Identify Strengths and Development Areas in line with role requirement
y Career Planning including Training & Coaching
A systems driven and engaging PMS process resulting in high communication,transparency and objectivity
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PMS: Linkages with Key Business
processes
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PMS: Linkage with Key Business Processes
Organizational Inputs
Individual Inputs
Outputs
Vision
Goals
Mission
Budgets (AOP)
Job Description
Targets & Goals (KRAs)
Competencies
Learning &
Development
Performance
Rating
Evaluation
Framework
Potential &Aspirations
Training &Development
Systems
Career &Succession
Planning
Annual
Increments/
Promotions
Rewards &
Recognition
System
Culture
Building
Performance
Management
System
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Appraisal parameters/Rating scale/Normal distribution
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Appraisal parameters
Refers to a set of individual targets that support theorganizations targets to be accomplished for theyear. Each Performance Target needs to have a clearsuccess criteria spelt out in order to gauge/measureachievement of the Target at the time of the reviewperiod.
Individual
KRAs
Core Responsibilities are responsibilities, which areintegral to an employees job and are listed in theemployees' job description.
CoreResponsibilities
Skills and abilities described in behavioral terms thatare coachable, observable, measurable, and criticalto the success of an individual and organization'sperformance.
Competencies
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Individual Performance rating scale (KRAs/ Core responsibilities)
Core ResponsibilitiesRating Description ofRating
1 Below Average
2 Average
3 Good
4 Very Good
5 Outstanding
Each Core
responsibilitywill be rated on
a 5 point rating
Scale
Each KRA will be
rated on the same
scale. Each Point
on the scale will
correspond to the
expected %
achievement of
target
KRARating
Description ofRating %Achievement oftarget
1 Below Average Below 70%
2 Average 70% - 85%
3 Good 86% - 95%
4 Very Good 96% - 99%
5 Outstanding 100% & above
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Normal distribution of KRA ratings & fitment
KRA rating Description ofRating Rating distribution
1 Below Average 2%
2 Average 30%
3 Good 40%
4 Very Good 18%
5 Outstanding 10%
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Goal setting & Performance measurement
through
Balanced Scorecard (BSC)
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Balanced Scorecard
Balanced Scorecard provides a performance measurement
framework, which in addition to financial metrics, also takeinto account strategic non-financial performance measures
(Customer, Process and People) to give managers a more
'balanced' view of individual and organizational performance.
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Balanced Scorecard and source of KRAs
BSC
(Sign off by
CMD/JMD)
BSC
Business Unit/Corporate Functions(Sign off by Business Head/ Function
Head & CMD/JMD)
BSC Functional
(Sign off by Functional/Business head)
Individual KRAs
(Sign off by Individual/Superior)
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Using the Balanced Scorecard (BSC) to derive
Organizational priorities
4 Perspectives of BSC
How do we appear before our shareholders
What are the business performance levers we use tocreate value - Return, Profitability, Growth
What financial results are our key strategic intent
Financial Goals
What does financial success meanto shareholders
How do we look at our customers
Who are our customers ; what customer/marketsegments do we serve
What is our value proposition; i.e., what do customersin each segment value & expect from us
Customer Must Win Battles
To achieve my vision how must welook at our customers
What is that we must excel at
Should directly impact employees so that clear targets
are specified May include cycle time, productivity, quality etc.
Process Critical Success factors
To satisfy our customers, at whatprocess must we excel
People Critical Success factors
To achieve my vision, how mustmy organization learn & improve
Can we continue to improve and create value
Can we innovate to get new products, new customers,
new markets etc.
What enabling capabilities do we need in order to
execute our strategy15
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LinkingIndividual performance rating to Organizational performance
(Business Unit BSC & Functional BSC)
Final performance score for an individual (termed as Consolidated
individual performance score) will be based on Individual, Business Unit-
weightages will differ based on the level.
Weightages would be based on line of sight and interdependencies. Certain indicative
weightages have been recommended below:
Management levelContribution to consolidated individual performance score
Group Unit / Corporate Function Functional/Individual
Business Heads N.A. 100% N.A.
Functional Head (Direct reportees of
BH)
N.A. 60% 40%
Direct reportees (not below DGM) of
Functional Head
N.A. 40% 60%
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Sample output: KRAs/ Core
responsibilities & Competencies
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Sample Output:
Performance assessment Key result areas (KRAs)Job Ops Head Plant X
Job Holder Mr. ABCKeyResultAreas
Perspective Metric Wt Annual target Achievement Rating Rating wt.
Financial
Cost reduction in line A&B 30% Cost reduction of 40 Lakh 47 Lakh 5 1.50
Reduction inWIP Inventory 20% WIP inventory to be reduced by Rs. 10
Lakhs over previous year
10.8 Lakh 5 1.00
Customer
Defective PPM from line A&B 15% Defective parts to be less than 100ppm
120 ppm 1 0.15
Customer complaints from line
A&B10% Maximum of 5 complaints 5 complaints 3 0.30
Process
No. of hours lost due to model
change from line A&B
15% Hours lost to be less than 50 Hours Lost=50 2 0.30
People
Organization Climate Score for
respective area10% Increase in Score by 15% Score increase
= 15%
3 0.30
OVERALL RATING FOR KRAs 3.55
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Sample Output:
Performance assessment Core responsibilities Job OpsHead , Plant X
Job Holder Mr.ABC
Responsibility Wt. Performance Rating RatingWt.
Ensure Smooth implementation of TPM &ISO systems
and monitor and control the progress and ensure that
abnormalities are rectified and the system is
strengthened
30% Very Good 4 1.20
Develop systems and procedure for addressing welfare
issues and grievance redressal for employees in lines
A&B
25% Good 3 0.75
Identify training needs for people in line A&B and
coordinate with HR to arrange for this training
25% Average 2 0.50
Ensure that best practices in safety, hygiene and
environmental management are being practiced in
respective work area.
20% Average 2 0.40
OVERALL RATING FOR CORE RESPONSIBILITIES 2.85
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Competencies assessment (Scale 1-5)
S.No. Competencies Desired
proficiency
level
Actual
proficiency
level
Score
1 Strategic orientation 3 4 1
2 Change Management & Innovation 4 3.5 .9
3C
ustomer orientation 3 31
4 Team Leadership ----- ----- -----
5 Impact & Influence ----- ----- -----
6 Personal effectiveness ----- ----- -----
7 Result orientation ----- ----- -----
8 Problem Solving & decision making ----- ----- -----
Score 2.9
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PMS outputs : Inputs for Variable pay, Increments and
Identification of High performers/High potential
PMS outputs PMS outputs application
Performance rating (KRAs &C
ore responsibilities) Variable pay
Total Annual Appraisal Rating
(KRAs + Core responsibilities + Competencies)
Increments
+
H
igh performers/H
igh potential(Max.15%)
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PMS Weightage
PERFORMANCE (KRAs/CRs)
KRAs 80% (of 80%)
Core responsibilities- 20% (of 80%)
80%
COMPETENCIES 20%
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Distribution ofWeightages: KRAs/ Core responsibilities (CRs)/ Competencies
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INPUTS FOR:
Annual increments + High performer/High
potential
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Sample Output:
Performance assessment Performance Score Calculation
Job Ops Head, Plant X
Job Holder Mr. ABC
Weightage Distribution of PMS Elements In Final Score Calculation
PMS Element Weightage Rating Rating wt.
KRAs
(80% of 80% weightage)
64% 3.55 2.27
CRs
(20% of 80 % weightage)
16% 2.85 0.45
Individual Performance Rating 2.72
Competencies
(100% of 20% weightage)
20% 2.90 0.58
Overall Annual Appraisal Rating 3.30 (Pre-normalization)
Inputs for Annual increment)24
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INPUTS FORVARIABLE PAY
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Sample Output:
Performance assessment Performance Score Calculation
Job Ops Head, Plant X
Job Holder Mr. ABC
Weightage Distribution of PMS Elements In Final Score Calculation
PMS Element Weightage Rating Rating wt.
KRAs
(80% of 80% weightage)
64% 3.55 2.27
CRs
(20% of 80 % weightage)
16% 2.85 0.45
Individual Performance Rating 2.72 (Rounded off to 3)
Good
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Sample output: Performance score calculation
( Functional Head/ Business Head)
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Sample Output : - Functional Head
Performance assessment Performance Score Calculation
Job Functional Head , Plant XJob Holder Mr. ABC
Weightage for Business Unit & Functional/ Individual performance rating in working out
Individual Performance Score for Variable pay
Final Score Calculation (Refer Variable pay Scheme)
Elements of rating Rating Weightage Rating wt. Description of
rating
Group level N.A. N.A. N.A.
4 - Very GoodBusiness Unit 4.00 * 60% 2.40
Functional/ Individual 4.00 40% 1.60
* Based on Business Unit BSC/ KRA s Total
achievement
4.00 (Consolidated Individual
Performance Score)
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Sample Output : - Business Head
Performance assessment Performance Score Calculation
Job Business Head, Plant XJob Holder Mr. ABC
Weightage for Business Unit performance rating in working out Business Head Performance
Score for Variable pay
Final Score Calculation (R
efer Variable pay Scheme)Elements of
rating
Rating Weightage Rating wt. Description of rating
Group level N.A N.A N.A
4 Very GoodBusiness Unit 4.00 100% 4.00
Functional/
Individual
N.A N.A N.A
Total 4.00 (Consolidated Business Unitperformance Score applicable to Business
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Annexure
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Definition: Competencies1. Strategic orientation:
y Needs to enhance the ability on his understanding of the linkages of his department/function
activities with the organizational strategy, to prioritize activities/initiatives within his own
function
y Needs to demonstrate greater understanding of financial implications of business decisions
y
Needs to enhance the ability to anticipate future obstacle/ issues related to his function/department and build the same into alternative future courses of action
2. Change Management & Innovation:
y The ability to challenge status quo, create a business case for change and clearly visulaize the
desired end state
y Accept change and adapt to different situations and manage challenges of an uncertain
environment
y Understand the difference in peoples capacity for change and support in the transition process
to sustain the change
y Use innovative approaches and methods to find practical and feasible solutions in a given
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3. Customer Orientation:
y Displays a long term perspective while addressing customer needs
y Displays the ability to add value to the customer on a regular basis by being a trusted
advisor
y Displays the intent to keep the customer up to date on project progress at all times
y Exhibits the ability to sensitize the team about the importance of customer feedback
y Displays the ability to use customer feedback to conduct action planning for
improvement
4. Team Leadership:
y The ability to identify the capability of individuals and delegate appropriate authority and
responsibility to allow others to act with a sense of purpose and ownership for outcomes
yCoach and mentor others continuously and communicate organizational imperatives
y Demonstrates nurturing and empathetic behaviors, for solving concerns, correcting mistakes &
solving problems and providing team members with a supportive atmosphere to work in
y Be an active team player and set direction of team towards achieving organizational goals
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5. Impact & Influence:
y The ability to persuade, convince , or impress others in order to get them to support
the individuals ideas or point of view
y Cultivate mutually beneficial relationships inside and outside the organization with
key stakeholders
y Influence others and gain buy-in and commitment to desired agenda
y Use effective communication for negotiating with others to achieve win-win solutions
6. Personal Effectiveness:
y The ability to take ownership for and excel in executing tasks to attain favorable outcomes
y Continuously update ones knowledge and skills in line with changing business needs and roles
y Demonstrate approachability and openness to others views and opinions
y Persist and take initiative for achieving results and larger organizational success.
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7. Result Orientation:
y The ability to translate goals into workable actions plans by allocating targets and using resources
optimally and achieve the desired goals within defined timelinesy Continuously monitor performance and track progress through continuous follow up and
coordination with various internal and external stakeholders
y Focus on outcomes and define challenging goals in order to continuously raise the performance
bar
y Consistently achieving objectives, overcoming obstacles, and striving to raise the quality of output
8. Problem Solving & decision making:
y The ability to identify and define the problem, to systematically break it down into interlinked
components and prioritize action steps
y Infer patterns and leverage on past experience to solve the problem by putting seemingly disparate
pieces together
y Make sound and effective decisions, keeping in mind the constraints presented by the situation
based on measured assessment of options
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