performance%20 management kasubean%5b1%5d.doc

P.B.S. KUMAR

A Overview of the new Performance Management

System

“KAUSABAN”“KAUSABAN”P.B.S. KUMAR

B.Sc.MA(PM),MA(Ind.Eco.),MBA(HR),BGL,DLL,PGD IR&PM

MANAGER-HR

P.B.S. KUMAR

Objective of today’s discussion

Key Features of the proposed PMS - The what

Performance Appraisal Process - The how

Discuss...

The Communication material - The tools

Demonstrate…

Key Roles in the new PMS- The whoDefine...

Familiarise...

Basis & rationale for the new PMS - The whyUnderstand...

P.B.S. KUMAR

So what is “KAUSABAN”???

• It is the name of AAOIL’s new Performance Management System

• It covers the employees in Supervisory Grade and above.

• Measurement of your performance will be conducted based on

“KAUSABAN”

KAUSABAN Stands for excellence, sharp growth through performance and alignment

to business goals. Reflects the spirit of AAOIL’s endeavours towards aligning each

individual’s performance to the strategic thrust of the organisation.

P.B.S. KUMAR

Need for “KAUSABAN”

Clear alignment of individual performance with Corporate, Division & Department goals

Objective measurement of performance against targets plus assessment of skills and abilities

Uniformity and consistency of the process across the organisation, clearly aligning it with the corporate Objectives.

Clear defined steps in the process with clearly articulated roles for each player, minimising scope for subjectivity.

Ownership of PMS by line, HRD as a facilitator only.

Visible and transparent linkage with rewards and other HR systems.

Simplicity and ease of administration - assuming future technology enablement.

“KAUSABAN” was needed to ensure the following

P.B.S. KUMAR

KAUSABAN aims to meet these basic objectives...

Drive vision and performance across

the company

Address the shortcomings of the current PMS system

Meet key stakeholder expectations from the

new PMS

Build Performance Focus Alignment of individual

with corporate goals Consistency in the

performance planning process

Ownership of performance by line

Facilitate process of planning, monitoring & review

Make an objective assessment of performance.

Enable him to provide objective feedback

Enable focus on capability development of appraisee

Appraiser Perspective

Provide clear performance definition

Transparency in the process

Clear linkage with rewards & other HR systems

Top Mgt. Perspective Appraisee Perspective

P.B.S. KUMAR

Characteristics of the “Performance Management” Process

• Facilitates Quarterly Appraisals

• Facilitates “mid-course” corrections through monthly reviews for specific

departments

• Defines desired corporate, division and department performance through

“Business Planning”

• Aligns individual performance to corporate, division and department

performance

• Facilitates mid-course corrections through Performance Reviews

• Links performance on KRAs to a Variable Pay Scheme, to sharpen focus on

performance around “business goals”

• Facilitates a “Balanced view of Performance” through linking KRAs and Routine

Responsibilities to “annual increments”

• Focuses not only on “performance” but also on “development”

P.B.S. KUMAR

Definition of Performance - “KAUSABAN”

Key Responsibility Areas

Routine Responsibilities

KRAs are “Critical Achievements” required to deliver Globals desired business results

The targets for these are derived from the Corporate goals and objectives- these have been derived through the Balanced Scorecard exercise

Routine Responsibilities are “on-going tasks or outcomes that are undertaken or delivered on a day-to-day basis

The targets for these come from the targets on process efficiency that are either set internally in a department/ division or as a part of initiatives like Six Sigma

P.B.S. KUMAR

Identifying Key Result Areas

– KRAs are directly linked to the AAOIL’s business goals and to

ensure that alignment, a tool called the “Balanced Scorecard”

will be used.

• Framework for articulation of corporate strategy

• Development of strategic initiatives along 4 themes - Financial, Customer, Internal Process and Learning & Growth

• Cascading of strategy to actionable initiatives (KRA’s) at Division & Department levels

P.B.S. KUMAR

Development through KAUSABAN

– A key element of KAUSABAN, focusing on building individual

capability using Competencies.

– Competencies are “Skills and abilities described in behavioral

terms that are coachable, observable, measurable, and critical to

organizational performance” for e.g., teamwork

– No marks assigned - used only for Development

– Competency dictionary is under preparation.

– Levels of Proficiency and behavioral indicators would be

defined for each Competency once established.

P.B.S. KUMAR

Key Roles in KAUSABAN

Appraisee Appraiser Reviewer

Every Employee whose performance is assessed in XXXX

Every Executive who assesses the performance of one or more Appraisees that report to him/her

Your Appraiser’s Appraiser, who is responsible for reviewing the entire performance process

It’s about your Performance

You are the key driver of the process

Will help you manage your performance & provide continuous feedback and coaching

Will ensure Objectivity, Transparency & Consistency

P.B.S. KUMAR

Overall Performance Planning Cycle

Corporate Performance Planning Session

Division Target Setting Session

Individual Performance Planning Session

Q1: Appraisal review & feedback



Q4: Final Performance Appraisal

Mid December

End December

14th January

7th April

7th July

7th October

7th January

Ongoing monthly review and feedback

P.B.S. KUMAR

How does Corporate Performance get measured?

Objective • To measure achievement of stated strategic corporate objectives

Step 1

Define Business Success Criteria for the corporate

Step 2

Set corporate targets and weightages for the quarter

Step 3

Review and measure achievement against targets every quarter

Key features

• Coincides with the annual Corporate Budgeting session.

• Business Success Criteria defined here, at the beginning of the first quarter (Mid-December to end-December ).

• 4-5 performance goals, typically from the corporate scorecard as part of the Business Plan.

• Corporate targets set once every quarter (Q1: Mid-Jan, Q2: Mid-Apr, Q3: Mid-Jul, Q4: Mid-Oct).

• Targets defined on a 5-point scale, enabling objective measurement of achievement.

• Weightages against Corporate targets to be decided once a year and spread across 4-5 goals defined

• Review occurs through quarterly monitoring of the Business Plan

P.B.S. KUMAR

How does Division Performance get measured?

Objective • To measure achievement of stated division targets and objectives

Step 1

Define Business Success Criteria for the Division

Step 2

Set Division targets and weightages for the quarter

Step 4

Review and measure achievement against targets every quarter

Key features

• Identical to Corporate Performance Planning

• In addition, consistent element of stretch ensured by incorporating the ‘Stretch Tool’

Step 3

Identify and ensure element of stretch in targets

P.B.S. KUMAR

Anchoring Targets to the Rating Scale

Business Success Criteria Target

Order Booking Rs. 20 Crore

33Meets

Expectations

22Moderately

BelowExpectation

44Moderately

AboveExpectations

11Significantly

BelowExpectations

55Significantly

AboveExpectations

20 Million 22 Million 25 Million15 Million 18 Million

The required level of achievement for each point on the Five Point Rating Scale must be defined

P.B.S. KUMAR

Performance and Development Planning

KRAsRoutine

Responsibilities

Performance Planning

Development Planning

CompetenciesOther Skill

Gaps

P.B.S. KUMAR

Performance Planning [and linkages to pay-outs]

Key Result Areas


• Average of quarterly “Final Scores” [As depicted above]

• Based on an understanding of the role (max. 4-5 nos.)

Overall Score

Will serve as the basis for fixed pay increases or promotional decisions

Overall Performance Rating

Key Result Areas

• From Department BSC (max. 8) covering at least 1 from each category of BSC

Final Score

Will serve as the basis for variable payout

Accentuating performance on key result areas

Quarterly [Q1, Q2, Q3 & Q4]

Annually [End of Q4]

Relative Weightage for KRAs

Relative Weightage for Routine

Responsibilities

Simple Average

P.B.S. KUMAR


Competencies

Competencies to be picked from the Competency Master and expected levels applicable to the role to be identified


Training Needs

Developmental

Competencies

A maximum of 4, to be identified from the list

Other Skill Gaps

(Behavioural/ Technical)

Forms the basis for the Training Calendar drawn by HR.

The Appraiser to drive the “learning and development” of the Appraisee throughout the year, based on this Development Plan

Development Plan

Any number, agreed upon by the Appraiser and the Appraisee, based on the specific needs of the role

P.B.S. KUMAR

Evaluation of Individual Performance

Objective • To set “clear performance expectations” from the individual

Step 1

Performance Planning

Step 2

Monthly reviews and feedback

Step 4

Final Performance Appraisal [Q4]

Key features

• Performance measured on KRA’s and Routine Responsibilities

• KRA’s, typically from the Department scorecard, identified at the beginning of the year

• Targets, set once every quarter (Q1: Mid-March, Q2: Mid-July, Q3: Mid-October, Q4: Mid-January)

• Pre-determined weightages based on job type and Division category

• Monthly reviews between appraiser and appraisee (important to ensure that any relative change in importance of particular KRA gets reflected or updated in the form)

• Appraisal & feedback on a quarterly basis

• Rater bias removed through the introduction of a reviewer

Step 3

Quarterly appraisal, review and feedback

[Q1, Q2 & Q3]

P.B.S. KUMAR

Action Planning

The Action Plan describes the specific steps, milestonesand resources planned by the Appraisee to accomplish the KRA or Routine Responsibility.

KRA Target

Order Booking Rs. 20 Crore

Action Plan:– Scan the market on an ongoing basis to identify opportunities– Analyze existing customer base to identify possibilities of repeat orders– Reduce cycle time to submit proposals/tender– Conduct analysis identifying reasons for loss of past orders and determine weather loss

was due to technical or commercial reasons– Gather market intelligence on pricing strategy of competitors and keeps units abreast

of the same– Have on-going discussions with units on bids being prepared so as to ensure that

optimal techno-commercial bid is prepared

P.B.S. KUMAR

Monthly Reviews

Objective • To facilitate “mid-course” corrections, and ensure that targets reflect market realities

Process

• Appraisee does self appraisal and determines how he/she is performing against the targets set for the quarter

• Appraisee and Appraiser have a discussion around the targets and the Appraiser gives Feedback to the Appraisee on his/ her performance

• If required, Appraisee and Appraiser revise targets for the quarter to reflect market realities [This is to done only if necessitated by business realities]

Applicability • Divisions where the targets are very flexible and their realization depends upon market forces

• The division heads of the respective divisions need to decide at the beginning of the year whether monthly reviews are required for their divisions

P.B.S. KUMAR

Quarterly Appraisals [Q1, Q2,Q3 & Q4]

Objective • To assess performance of the Appraisee on KRAs, against the targets outlined for the quarter

Appraisal Schedule

Process • You and Your Appraiser will rate your performance on the KRAs articulated at the beginning of the year on the basis of the Action Plan or Steps Taken by you for its accomplishment and the extent of achievement against outlined targets for the period.

Q1 AppraisalQ1 Appraisal



Q4AppraisalQ4Appraisal

1st Week of April

1st Week of July

1st Week of October

1st Week of January

Your Final Score for the quarter will be arrived by adding up the individual ratings on each KRA and dividing it by the no of goals or KRAs . This will give you your score on KRAs.

Computation of “Final Score”

Final Score = Average of Scores on each KRA for the quarter

* Scoring will be done based on the 5 point rating scale mentioned in the next section.

P.B.S. KUMAR

Rating scale for Performance Evaluation

The rating scale used for the evaluation of performance on KRA’s is a five point scale and is explained below:

5: Exceeds Expectations consistently - Consistently exceeded the expectations beyond a point which deserves special mentionThis is the highest rating and is given when the results put in by an individual is truly outstanding.

4: Exceeds Expectations occasionally - Exceeded most of the set expectations by a reasonable marginThis rating is to be used when a majority of the the set expectations were exceeded and outcomes and efforts were above average.

3: Meets Expectations consistently - Met all the set expectations as per targetThis rating is the average rating, when an employee delivers what s/he is bound to deliver. Needs to be given only when all the expectations were met.

2: Meets Expectations on most occasions - Met most of the set expectationsWhen an employee meets most, but misses some of the expectations, this rating is applicable.

1: Does not meet Expectations on most occasions - Failed to meet most of the expectations.When a majority of the expectations are not met, this rating is applicable

P.B.S. KUMAR

Final Appraisal

Objective • To assess overall performance of the Appraisee on KRAs and Routine Responsibilities and to assess development against the Development Plan charted at the beginning of the year

Time • End of Q4 [First Week of January ]

Process

• The Appraisee undertakes a self-appraisal and gives a rating on all the KRAs for the quarter [Q4] and Routine Responsibilities

• The Appraiser then does the assessment & rating.

• He/ she also reviews the actions taken towards achievement of the Appraisees’s development plan.

• The Reviewer then reviews the ratings. At any stage the appraiser and/or reviewer can call for a discussion with the Appraisee.

• The overall rating has to be a consensus between Appraisee, appraiser & the reviewer.

• In case of a dispute, the reviewer’s rating will be treated as final and will feed into the Overall performance score of the Appraisee.

• After ratings are finalized by the Reviewer, they are consolidated by HR and then, checked for “Rater Bias”

P.B.S. KUMAR

Final Appraisal

Your Overall Score for the year will be arrived by taking a weighted sum of ratings on routine responsibilities and average of ratings on KRAs for the 4 quarters.

Computation of “Overall Score”

Overall Score = ((Average of Final Scores on KRAs for the 4 Quarters) * KRA Section Weightage) + ((Average of scores on Routine Responsibilities) * Routine Responsibility Section Weightage)

* Scoring will be done based on the 5 point rating scale as discussed earlier ** Relative Weightages for KRAs and Routine Responsibilities are detailed in the following slide

Key Result Areas


• Final Score for Q1• Final Score for Q2• Final Score for Q3• Final Score for Q4

• Scores on Routine Responsibilities

Overall Score

Will serve as the basis for fixed pay increases or promotional decisions

Overall Performance Rating Annually [End of Q4]

Relative Weightage for KRAs**

Relative Weightage for Routine

Responsibilities**

Simple Average

Simple Average

P.B.S. KUMAR

Weightages KRAsTop Management 50%Middle Management 40%Junior Management 30%

50%60%70%

Routine ResponsibilitiesSupport Divisions (For. e.g., CRG, Finance etc.)

Weightages KRAsTop Management 70%Middle Management 60%Junior Management 50%

Non-Support (Production) Divisions [For e.g., HSM, SIP, BF)Routine Responsibilities

30%40%50%

Relative weights for KRA’s and routine responsibilities

Objective • Top management to have greater relative weight on achievement of KRA’s vis-à-vis routine responsibilities (as compared to Middle Management and Junior Management)

• Support or service functions to have greater relative weight on achievement of routine responsibilities than KRA’s (as compared to non-support/ production functions

Note: Classification of grades/ bands into Top, Middle & Junior Management will need to be decided

Core Functions

P.B.S. KUMAR

Removing rater bias

Objective • To improve the consistency and soundness of the evaluation process

• Removing rater (appraiser) bias through introduction of a reviewer

• Applicable to final scores (arrived at in each quarter) and the overall performance score (computed at the end of the fourth quarter)

Methodology

Calculate the average of all the “overall ratings” given by an appraiser to each employee. Call this A11

33 Now check for variance for each Appraiser - (A-B)/ B * 100 = x%

22Calculate the average of all “average overall ratings” (or average of all “A”s) given by all Appraisers. Call this figure B.

55If it does not fall in this range, there is a possibility that rater bias may be occurring, and hence this forms an outlier

66For such outliers, the appraiser has to give justification for the rating given and if the reviewer feels that the justification is not sound enough, he/she may direct the appraiser to revisit the rating

44 If x% falls in the range -10% to 15%, there is no rater bias.

P.B.S. KUMAR

Assessing Development Plans

Rating Competencies*

During the year-end appraisal, the Appraiser will rate the Appraisee on the Competencies, based on the 5 point rating scale mentioned below.

These ratings will be used only for “Developmental purposes” and will not form a part of the “Overall Score” and will thus not be linked to incentives or increments.

Assessing Development Plans

Other Skills

Career Aspirations*

* Scoring will be done based on the 5 point rating scales detailed in the next slide

The Appraiser will also assess the achievement of the Development Plan of the Appraisee on Other Skills during the year, on the action plans charted by the Appraisee. This however, will not result in any scoring of any sort

Based on the “current performance levels” of the incumbent, the Appraiser, in consultation with the Appraisee, will capture “Career Aspirations” for the Appraisee, if any will provide his/ her assessment of the readiness/ potential of the Appraisee based on the scale mentioned in the next slide.

P.B.S. KUMAR

Rating Scales for Competencies and Career Development

For Competencies

A: Role Model- Encourages and influences others to display the skill.

B: Strength- Almost always demonstrates behavior/skill where appropriate

C: Capable- Often demonstrates the behavior/skill

D: Development Area- Sometimes demonstrates the behavior/skill where appropriate

E: Learner- Has not yet demonstrated the behavior/skill.

For Assessing Potential

The following five point rating scale will be used: High - This individual can advance well above (one or two levels above) current position Moderate - This individual shows potential for taking on greater responsibility or moving

to next management/technical level over a period of 6-12 months Limited - This individual can continue to contribute significantly in his/her current

position, but may have limited upward growth opportunities. A lateral move may be an appropriate growth opportunity for this individual

Key Resource - This individual is a key resource in his/her current position. This vitalknowledge precludes movement at this time, but development opportunities should continue to be identified

Too New- This individual has been in his/her current position less than six months and is too new to evaluate

P.B.S. KUMAR

Linkage of Kausaban to Consequence Management

Score on KRA’sVariable Pay

component

Cumulative Score on KRA’s and Routine

Responsibilities

Fixed Pay Increments

Promotion Decisions

Rating on Competencies

Development Plan

Training Plan

P.B.S. KUMAR

Name : Designation : Emp No.

Join Dt. : Grade : Qualification :

Division : Department : Section :

Name of the Reviewing Officer :

ARANI AGRO OIL INDUSTRIES LIMITED, KAKINADA

Performance Review and Development Plan

From : To :

Name of the Reporting Officer :

P.B.S. KUMAR

S.No Key Result areas Weightage Q1 Q2 Q3 Q4

Task Factors (What to do)

1(F)

2(F)

3(F)

4(C)

5(C)

6(IP)

7(IP)

8(IP)

9(L&G)

10(L&G)TOTAL 100%

Competencies (How to do)

1

2

3

4

5

6

Competencies will be used for Skill Upgradation and Career Progression only.

Reporting Officer Reviewing Officer (Signature) ………... (Signature)

KRA's to be established at the Beginning of the Year.

H-1 H-2

Appraisee (Signature)

P.B.S. KUMAR

S.No KRA Measurement CriteriaWeightage

(W)TASK (What to do)

1(F)

2(F)

3(F)

4(C)

5(C)

6(IP)

7(IP)

8(IP)

9(L&G)

10(L&G)

TOTAL 100%

COMPETENCY (How to do) Degree of Competency

1

2

3

4

5

6

Reporting Officer Reviewing Officer(Signature) ……………..…... (Signature)

Competency data will be used for skill enhancement for career progression

Performance for Quarter - 3 of FY 2005


P.B.S. KUMAR

1 to 5Lowest 1Highest 5

S.No KRAMeasurement

CriteriaWeightage

(W)

Self Appraisal

( R-1 )

Rating by Reporting

Officer ( R-2 )

Rating by Reviewing

Officer ( R-3 )

Moderation, if required ( R-4 )

TASK (What to do)

1(F)

2(F)

3(F)

4(C)

5(C)

6(IP)

7(IP)

8(IP)

9(L&G)

10(L&G)

TOTAL 100% Total % in the Quarter

COMPETENCY (How to do)Self

Appraisal ( R-1 )

Rating by Reporting

Officer ( R-2 )

Rating by Reviewing

Officer ( R-3 )

Actual Level of

Competency

123456

Non PerformancePartial

Contributor(PC)

Contributor( C )

SignificantContributor

(SC)

ExceptionalContributor

(EC)

<60% 60~69% 70 ~ 79% 80 ~ 89% 90~100%

Reporting Officer Reviewing Officer(Signature) ……………..…... (Signature)

Performance for Quarter -3 of FY 2005

Competency data will be used for skill enhancement for career progression

Rating Criteria

Total Score

Required Degree of competency


P.B.S. KUMAR

On line PMS - Flow Chart

Opening Lotus Notes ID for every Individual

Master KRA identification and updation for every Department

updation of Emp Master / Dept. Master by PMS Dept.

QuarterlyPerformance Appraisal by Appraisee (self Appraisal on 1- 5 scale)

Receipt of approved Annual Plan by Appraisee

Approval of Annual Plan by reviewing Officer.

Sending PMS Database linkage to all Employees thr.Lotus Notes.

Approval by Reporting officer & send to Reviewer

Generartion of Annual plan by Reporting Officer

Training / Workshop for ONLINE PMS

Generation of Quarterly plan by Appraisee. Setting KRA's, targets and Weightages

Sent to Reporting Officer for Approval

Approval by Reporting officer & send to Reviewer

Approval by reviewer and sent to appraisee

Sent to Reporting Officer for Approval

Approval by Reviewer (Quarterly Appraisal over )

P.B.S. KUMAR

On line PMS - Flow Chart ……… continueSr # Activity By Whome For What When Remarks

1 Annual Business Plan

Reporting Officer

Create Annual Business Plan and Send to Reviewing Officer

End of Dec.

Auto generation of lotus note to reviewer with a copy to Appraisee.


Reviewing Officer

Finalization and Send to Appraisee

End of Dec.

Auto generation of lotus note to Appraisee with a copy to Reviewer.


Appraisee View and to create Quarterly Performance Plan

End of Dec.

4 Quarterly Performance Plan

Appraisee Create Quarterly Business Plan and Sent to Reporting Officer

End of Dec.

Auto generation of lotus note to Reporting officer


Reporting Officer

Approval and sent to Reviewing officer.

End of Dec.



Reviewing Officer

Finalization of quarterly plan and sent to Appraisee.

End of Dec.

Auto generation of lotus note to Appraisee with a copy to Reporting Officer.


Appraisee Received and View End of Dec.

8 Quarterly Performance Card

Appraisee Create and Send to reporting Officer for the review of performance for 1st Quarter.

1st week of April

Auto generation of lotus note to Reporting officer


Reporting Officer

Approval of Quarterly performance and sent to Reviewing Officer

1st week of April



Reviewing Officer

Finalization and performance rating.

1st week of April

Auto generation of lotus note to Appraisee with a copy to Reporting Officer.

Same Process continue for other quarters.

P.B.S. KUMAR

Thank you

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