Performance Management System-Pls Share Ur Views

Dear All,
I have implemented a new performance management system,which is vision of our chairman.
The system is a monthly evaluation system.Where in each department has to give a presentation on their monthly performance in the monthly staff meeting(Includes chairman,management and the entire staff).
It's 100 point system.If an employee gets 100 points he gets Green salary.If an employee gets 95 to 99 points he gets yellow salary.If an employee gets less than 95 points he gets Red salary.
Here the salary is common for each designation.There is no change in salary for technical and non-technical staff.It's same salary for the newly promoted manager and exprncd manager.
I have implemented the management's vision in the perfect way.But I don't from an HR's point of view how good is the system.So kindly share ur views.(I can provide you more details if u require)
Thanks and Regards,
Ms.George

Dear Ms. George,
Kindly mail the same on my mail id so that the same can be looked into and a report on the same can be prepared and sent back to you with modifications required and any addition/deletion.
Thanks and Regards

Dear Sunku,
Thanks a lot for the reply.There is nothing in black and white for this performance management system.Every month our staff will be preparing a PPT based on their performance.And the same they will be presenting.Based on this presentation,the employee will be evaluated.Incase if you require more inputs from me,I can provide the same.
Regards,
Ms.George

Dear Ms George,


What you have mentioned is how you will evaluate a department and not on what criteria will you evaluate. My comments on your proposal are as below:

a) Monthly assessment is too frequent. You can have it quarterly.

b) Have you taken in account the senior management's time spent in the whole exercise? In the proposed system, every month your top management will invest at least a day. Have you calculated proportion of the value of this exercise vis-a-vis investment of their time?

c) Secondly, you just cannot give targets to your HODs and tell them to attain them. You need to have an audit of the kind of staff they have. Is the staff capable to support their HOD? Are they trained properly?

d) Every employee expects 'x' amount of money as take-home salary. In the existing procedure, nothing is certain. There could be ups and downs in the take home salary. How will the employees manage their family budget? Reduced take home pay may reduce their morale also. In the process, if employees start quitting, attrition may upset the apple cart.

e) You have not given figures of employee attrition in your company. Average attrition in any industry today is around 15%. When the staffs joins new, his/her performance is low. This may affect the department's performance. Will you penalise HOD for this?

f) Lastly, the difference among green, yellow and red bands is too low. Achieving 100% targets month after month is no easy task. If HOD achieves 99% then what is the loss of salary compared with green?

g) Performance many times is a result of culture also. Take the case of Purchase Department. Every company expects their suppliers to be prompt in delivery, maintain quality and above all maintain consistency. At the same in many companies management is wary of paying vendors on time. Procurement professionals in many companies end up addressing calls of suppliers. Their 25-33% time is just lost in this activity. How will you account for this loss of time?

h) In case of HR Department, in the recruitment, "no show" by the selected candidate, is routine challenge. For no show, will HR department be held responsible? If yes what percentage drop do you expect in their performance? What band will they come in such cases?

My recommendations: - I am not against linking payment to the performance but frequency of measurement should not be lower than a quarter. Secondly, have you trained your managers on the concept of KPIs and KRAs? Have you done audit of the management practices followed in every department? Who did the audit and what were the parameters of the audit?

Final Comments: - Company none less than Infosys bore the brunt of the introduction HR Policy named iRace. It had caused lot of heartburn. In fact after introduction of iRace, attrition which was below the industry average all along has crossed the average limit. You can <link outdated-removed> to read the whole story.

To avoid the situation of this kind, you may introduce the monthly or quarterly evaluation without linking the salary to the performance. See how the things are progressing and then link the salary to the performance. Otherwise, follow the usual path of Performance Management through KPI/KRA, which is less cumbersome.

Thanks,

Dinesh V Divekar

Bangalore – 560094


Limit of your words is limit of your world.

dear ms. george,
u need to be very precise as u have to set kra's and set tool to measure what u r doing may bring not only attrition level but also anxiety among employees because unless until he is good in presentation he wont be able to justify his/her work.

Dear George,
PMS ( Performance Management System) has purely implemented for employees growth and not to discourage them. If anybody is not scoring good points according to your system then he should be trained rather giving less salary to him.
regards,
Swapnil..

Dear Mr.Dinesh,

Thanks a lot for the response.

We have different criteria for evaluating different department. KRAs are given for each department. The department (team+head) have to give a presentation (PPT) on the achievement of their KRAs.If a team member gets 99 point ,that one point will be deducted from the department head’s point also.

A&b)Monthly Assessment-This Performance Appraisal System is a product of our chairman’s vision.I think the concept is similar with 360 degree appraisal system.But conducting 360 degree appraisal in 12 months of an year.But the management is very particular about the monthly evaluation.

c)We staff adequately in each departments and we are sure that a realistic target is given to all departments.

d)About the salary-There is an uncertainity.But what we have done is we’ve maintained the salary that they were drawing as the fixed salary.But a fixed salary for each designation. For example Executive-18000.But before that we had executives with salary of 14000,16000,18000,20000,22000.And the same case with all the categories.And introduced a policy that the base salary for executive is 18000.Incase of Red salary whatever is the least(If 16k is ur base then u ll get 16,if 22k is ur base then u ll get 18)
When we introduced this policy. Some of them them started getting the base salary less than what they were getting previously.But the management was particular that each of them should get Green,which is much higher than their base salary.This was not convincing to our staff as achieving Green was a difficult task. So the attrition rate gone up.

And it affected the employee morale.As the newly joined executives started getting 18000 as their starting salary,where as the experienced executives got only 16.

Now we have streamlined this issue by introducing the equal red salary for all.For example 22000 for all.In this case big gain for some and no loss-no gain for some people.And made the scheme like this.

Designation-Executive
Red salary-22000
Yellow salary-25000
Green salary-28000

This is common for all the executives in all departments. And this is applicable for all the designations in all department

e)But after all these also the attrition rate remains high, that is not due to the salary. But due to the method of questioning their performance in a public forum. The manager’s feel humiliated that they get blasted in-front of their subordinates. The management is very rude to employees on the meeting day. I have put up this issue to management. But management is particular that the evaluation meeting should be conducted as it is. Else the intended result won’t be there it seems. But the employees are open for a department wise meeting. But not for this

f)I can give a sample HOD scale

Green-56000
Yellow-48000
Red-40000

As the number of subordinates increases, the risk of HOD is high.

g) Here the management expects the raw material to be in housed on time with good quality. Rejection and delay will cause point deduction. But their efforts behind this are not considered.

h)Pls give more clarity on the same.

Here the new joiners are exempted from this system for the initial 3 months. The KRA’s are developed by the departments and we have made necessary additions and deletions.Since it’s a transparent system departments can’t hide anything and all the departments are interconnected. For example if the material is received on time, that should be clear from the production’s report.

Regards,
Ms.George

@sounbhachawat-I completely agree with you .This happens here.There are employees who work hard.But when it comes to presentation they are poor in convining management.This leads to employee demotivation

Dear Ms.George,

I have gone through your long reply. There are so many things I need to know still. The system that you have adopted is quite advanced wherein systems and processes are stabilised absolutely. It requires lot of organisational maturity.

You have mentioned that that there is lot of employee attrition. Have you calculated the cost of attrition? Employee attrition - whose baby is this? If you cannot manage attrition, then you cannot have sustained competitive advantage.

Your existing procedure will make your managers short-sighted. Forever, they will worry for their monthly meeting. In the bargain, they will lose sight of long-term goals. If the staffs or managers are demotivated, they will never propose anything new. Against this backdrop how will you innovate your product or services or processes?

Anyway we live in the world where "boss is always right" is the mantra for our survival. Let us see, how many months or years the existing procedure continues. Please keep us updated on the developments that happen in future.

Thanks,

Dinesh V Divekar

Dear Mr.Dinesh,
Well said!!That's what happening now in our company.All HODs are worried about the monthly presenation and salary.Nobody thinks for the company.And at the same time they ar looking for better opportunities with less work pressure
As you said ,we live in a world,where"Boss is always Right".So I have to go along with this.I feel this system is good for our plant employees,as their work is target based work.
I will keep you guys updated about the happenings.
Thanks again,
Ms.George