KPI(Key Performance Index) Operation PlanHuman Capital Development & Compensation by Performance Basis

(HRM Group ‘14 02)

1. Background Statement of Company is changed, so HR Paradigm innovation needed Evaluation + Compensation + Promotion based Age, joined period NOT by performance

basis evaluation with clear Criteria, so MBO application needed As growth as company to be Glocalization Construction Company, performance must be a

basis of HR paradigm for Evaluation + Compensation + Promotion

1996 2009 2011 2013

Global E&C

50

100

300

400

700

T/O

$M

• Global HR apply• KPI apply

Steel Structure

• HR Stable• No KPI

2020

Evaluation Criteria

• Age• Joined Experience• No clearly E. Tool

• Performance & Capability• KPI

EvaluationCompensation Promotion

(To be) MBO Model Application

KPI set up(year)

Jan DecManagement by

Objective

Key Talent

Compensation

PromotionTracking, Evaluate

Monitoring

Year endEvaluation

For increasing the effectiveness of business operation, the MBO monitoring is needed

- ‘KPI set up – Quarterly Evaluation – Year end evaluation’ Guide line set up - Set up Competency Framework for Capacity Evaluation and Education Clearly Evaluate by Monitoring Process on

quarterly of MBO result - Set up Monitoring Standard

(Process/Contents/Ability) - Provider feedback of Monitoring Result by Group

Unit

Jum

p up

2. KPI and It’s characteristic?

• KPIs is: (Key Performance Index) - The Index which is able to measure the Key Performance (Target)• Helping corporate monitoring and evaluate the Actual Performance compared with Target has set

• KPIs is: (Key Performance Index) - The Index which is able to measure the Key Performance (Target)• Helping corporate monitoring and evaluate the Actual Performance compared with Target has set

• Objectives is SMART - Specific with Detail Action - Measurable - Achievable - Relevant - Time Phased

• Why KPI is needed? - Leading employee performance close to Organization Target - Evaluate Clearly performance of employee - Compensate rightly - Key person select - Career Developing

• Clarify Group’s KPI for Set up Team’s KPI - Group Target - Scope & Responsibility - Leader Target

• Team’s KPI = T. Leader’s KPI

• Clarify Group’s KPI for Set up Team’s KPI - Group Target - Scope & Responsibility - Leader Target

• Team’s KPI = T. Leader’s KPI

• Clarify Company’s KPI for Set up Group KPI - Company Objectives - Scope & Responsibility - Leader Target(want to achieve)

• Group’s KPI = Gr. Leader’s KPI

• Clarify Company’s KPI for Set up Group KPI - Company Objectives - Scope & Responsibility - Leader Target(want to achieve)

• Group’s KPI = Gr. Leader’s KPI• Clarify Team’s KPI for

set up member’s KPI - Team Target - Scope & Responsibility - Member Target

• Member KPI = 1 part of Team’s KPI

• Clarify Team’s KPI for set up member’s KPI - Team Target - Scope & Responsibility - Member Target

• Member KPI = 1 part of Team’s KPI

3. How to set up KPI? Process(1) Member KPI is set up based on related to Dept KPI, Scope Work and Responsibility Process KPI sharing Session for review and provide feedback before report for approval

COMPANYKPI

MemberKPI

• Member Target set up• Member Target set up

• Select KPI and action Plan

• Select KPI and action Plan

• KPI sharing session • KPI sharing session

• Discuss to manager & Modify Approval

• Discuss to manager & Modify Approval

【 KPI sharing Session Process 】• KPIs Operation• KPIs Operation

KPI set up Process

Start

DEPTKPI

GROUPKPI

TEAMKPI

【 Org’s KPI clarify for individual KPI set up 】

3. How to set up KPI? Process(2)【 Step 1: Clarify and Decide a Key

Performance 】No Action

1 Clarify Job Responsibilities

2Make a list of Top function and Responsibilities which are critical one to achieve

3Make Final List of Key performance among Top Critical One

4Decide the Final of Key Performance(Target)

【 Step 2: Determine the Standards for implement 】

No Action

1Make List of the Criteria for evaluation for select KPI and it’s Unit

2Determine the Formula/ Definition of each KPI for evaluation

3Comparing the Present Result with each KPI

4 Determine the Level of each KPI

【 Step 3: Make action Plan and Schedule 】

No Action

1Make a specific action plan which are able to achieve the KPI

2Review the action plan with KPIs result to make sure it’s feasible to achieve KPIs

3 Make schedule of each KPIs

【 Step 4: Process session for sharing KPIs 】

No Action

1Individual present own KPIs to make sure that individual KPIs is set up as Smart regulation

2 Discuss with Line Manager for KPIs

3Modify and report to Line Manager for approval

4 KPIs operation

Divide Kind Target (KPI)Target Level

Ratio Detail Action Plan

JobObjec-

tive

StrategyJob

.. .. <Pre>..<Plan>..

..1~2Q ..

3~4Q ..

.. .. <Pre>..<Plan>..

..1~2Q ..

3~4Q ..

Individual Owned Work

.. .. <Pre>..<Plan>..

..1~2Q ..

3~4Q ..

.. .. <Pre>..<Plan>..

..1~2Q ..

3~4Q ..

Spot Job ..

GeneralObjec-

tive

CostSaving

.. .. <Pre>..<Plan>..

..1~2Q ..

3~4Q ..

HM Manage(*)

.. .. <Pre>..<Plan>..

..1~2Q ..

3~4Q ..

Self De-velopLan-

guages Duty ( TOEIC Level)

<Pre>..<Plan>..

3. How to set up KPI?(Form)

MBO set up Form( Sample)

1 2 3 4 5 6

Individual KPIs is including: Job Objective(Target): Strategy Job , Individual Owned Job, Spot Job General Objective: Cost Saving, HR Control, Self Development

7

3. How to set up KPI?(Components Definition)

Divide: KPI including 2 kind of Target

- Job Objective: KPI related of Function and Responsibility of Individual

- General Objective: General Duty of all member(indirect related to individual owned job)

※ HR control is KPI for Manager Level onlyKind: Divide basing on Work’s Characteristic

of

each function including: - Strategy Job: it related with company Strategies, Vision, Philosophy, KPI

- Individual Owned Job: related to duty of member

- Spot Job: Target arising out of KPI setting

period- Cost Saving: KPIs of Cost saving related to implement Process of Individual Owned Job

- HM Manage: Staff control and development

(apply for from Team Leader to above)- Self Development: Knowledge management/ development/ Training: Languages Duty (TOEIC)

5

KPI: The index which is able to measure and evaluate clearly the completion of Target ( KPI )

KPI should be quantitative

4

6

7

Target Level:

The challenging standard of KPIs compared with actual KPI result

Level is KPI’s Unit which is able to calculate the achievement of KPI

Ratio: The Important Standard of Target.

Unit: from 5%

(Total 100%, The 1st Evaluator confirm the Ratio when evaluate)

Detail action plan: The specific action plan for achieving the KPIs on Schedule has set

( Action Plan is set up base on Quarter Unit)

1 Target: The Priority Target selected among Targets

which want to do

2

3

How it definite?

Divide Kind Target (KPI)Target Level

Ratio Detail Action Plan

JobObjec-

tive

StrategyJob

.. .. <Pre>..<Plan>..

..1~2Q ..

3~4Q ..

.. .. <Pre>..<Plan>..

..1~2Q ..

3~4Q ..

Individual Owned Work

.. .. <Pre>..<Plan>..

..1~2Q ..

3~4Q ..

.. .. <Pre>..<Plan>..

..1~2Q ..

3~4Q ..

Spot Job ..

GeneralObjec-

tive

CostSaving

.. .. <Pre>..<Plan>..

..1~2Q ..

3~4Q ..

HM Manage(*)

.. .. <Pre>..<Plan>..

..1~2Q ..

3~4Q ..

Self DevelopLanguages

Duty ( TOEIC Level)

<Pre>..<Plan>..

Attached: KPI Form

Attached: KPIs Pool【 Business Field 】

No Kind KPI Formula Unit1 Biz PJT Pool Collection Number and Level of Orderable Project (A,B,C) Level

2 Biz Won Project Amount The Size of Project Amount

3 Biz New Market Share Rate The % of Market Share %

4 BizHigh Class Potential

CustomerPool

The Rate of High Potential Customer in Total Customer %

5 Biz Failure PJT rate The Rate of Failure PJT in Total Tender PJT %

6 Biz PJT Profit Rate The % of Profit of PJT ( After completed) compared with Same PJT %

7 Biz % Of Lost The % of Lost of PJT compared with PJT Cost %

8 Biz Customer Retention rate The Rate of Loyal Customer in Total Customer %

9 Biz Sales per employee Annual Sales per employee Amount

10 Tender % Gross Margin Gross Margin = Profit/ Selling Price*100 %

11 Tender % of Awarded Tender The Rate of Awarded Tender in Total of Tendering PJT %

12 TenderAverage time to complete tendering

Average of from Start day to Close Tender Day

13 TenderDifference between tenderPrice and Actual price

Tender ability to price/ estimate correctly and pridict future shifts %

Target Key Performance (KPI).. .... ..

Using a key performance index which is able to measure the completion of Target

- KPI and Formula can be revised to actual Biz

- In case Pool have no reference KPIs, create new KPI - KPI Pool will be update and sharing as Dictionary Tool

【 Construction 】

No Kind KPI Formula Unit

1 ConstAverage Delay DeliverySchedule

Actual delivery date – Plan of Delivery date Day

2 Const EPC Project Execution Experience Rate

EPC Project Execution Number/EPC Project 시도 건수 X 100 %

3 Const Estimate Error Rate Σ(I 확정실행률 - 개략견적 실행률 I/ 개략견적 작성 PJ 수 ) %p

4 ConstThe rate schedule of Basis

Estimation Completion∑{if( 조치한계일 - 개략견적 작성일≥ 0, 100%, 0%/ 개략견적 작성 건수 } %

5 Const Original Profit Rate ( 해당팀 매출액 - 매출원가 - 판매관리비 - 영업외수지 )/ 해당팀 매출액 X100 %

6 Const Schedule Obey Rate ( 실적공정률 / 예정공정률 )X100 %

7 Const Schedule Rate ∑( 실행기성 / 실행예산 )X100 %

8 ConstTechnical Main power

secure rate( 자격증확보 기술인력 인원수 / 본부 기술인력 인원수 )X100 %

9 ConstPrize awarded from out

sideΣ 대관표창 수상 건수 건

10 ConstIncrease of Sub contract

Price∑ Increasing of Sub Contract Amount 금액

11 Const Turnover ∑(Sub contract Price X Rate of Construction Progress) 금액

12 Const 사전점수검 지적률 사전 점수검 지적 건수 / 사전 점수검 대상 세대 수 X100 %

13 Const 설계변경 계약금액률 Σ( 현장별 도급증가금액 / 도급계약금액 )X100 %

【 Human Resource Management 】

No Kind KPI Formula Unit

1 HRM Productivity for each staff Number and Level of Orderable Project (A,B,C) Amount

2 HRM Languages Level The increasing level in compared with previous Level

3 HRM Key Talent Pool Rate The Rate of Key Talent/ Total Employee * 100 %

4 HRM Employee Happiness Index Basing on the employee survey result %

5 HRM Employee Loyalty Index Basing on the Survey of Employee from Outside %

6 HRM Return on Recruitment Total Number of qualified candidate/ Investment for Recruitment Amount

7 HRM Time of RecruitmentThe Average time of success recruitment from date of received

Request to date of Offer Letterdays

8 HRM Labor Cost Index The Average % of Labor Cost/ Revenue * 100 %

9 HRM Business Expert Pool The Rate of Expert on each Function/ Total Employee * 100 %

10 HRM Experienced Resign Rate Total experienced employee resign/ Total employee *100 %

11 HRMCompensation Competitiveness Rate

The Average Compensation Index in compared with Competitor %

12 HRM Staff Rate Total Staff Function/ Total employee * 100 %

13 HRDCareer DevelopmentSatisfaction Rate

The Survey Result of employee on Training Program Level

14 HRD Rate of Education(Develop) The educate hour of each employee/ total employee hr