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
Q2: Appraisal review & feedback
Q3: 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
Routine Responsibilities
• 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
Development Planning
Competencies
Competencies to be picked from the Competency Master and expected levels applicable to the role to be identified
Development Planning
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
Q2 AppraisalQ2 Appraisal
Q3 AppraisalQ3 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
Routine Responsibilities
• 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
Appraisee (Signature)
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
Appraisee (Signature)
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.
2 Annual Business Plan
Reviewing Officer
Finalization and Send to Appraisee
End of Dec.
Auto generation of lotus note to Appraisee with a copy to Reviewer.
3 Annual Business Plan
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
5 Quarterly Performance Plan
Reporting Officer
Approval and sent to Reviewing officer.
End of Dec.
Auto generation of lotus note to reviewer with a copy to Appraisee.
6 Quarterly Performance Plan
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.
7 Quarterly Performance Plan
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
9 Quarterly Performance Card
Reporting Officer
Approval of Quarterly performance and sent to Reviewing Officer
1st week of April
Auto generation of lotus note to reviewer with a copy to Appraisee.
10 Quarterly Performance Card
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