Performance Measurement or Management - PMS - 6P5R Metrics ,Goal Setting with Hoshin Karni

Performance Management System(Performance appraisal) - What gets measured gets done

Performance management (PM) includes activities which ensure that goals are consistently being met in an effective and efficient manner. PM has wider connotation than performance appraisal.
Performance management systems
Performance management is a systematic approach that involves a range of activities undertaken to get the best performance from people to achieve agency and team objectives and individual goals.
Cycle
Performance management is a continuous process of setting employee goals, monitoring their progress against the goals, evaluating outcomes, and then recognising their performance.
The entire process is supported by the giving and receiving of feedback.
Objectives
Performance management systems address the following key areas:
Performance discussions
Performance discussions are a means by which managers develop and review individual work goals with their employees, and discuss development needs to support and enhance work performance. These collaborative discussions between manager and employee are fundamental for building and managing performance.
The form and focus of performance discussions vary according to the stage of the performance management cycle, but the principles remain the same. There should be at least one discussion for developing the employee’s performance plan, and at least one – but preferably two or three – discussions to review the employee’s achievements.
 

Catch-ups
Informal meetings, or ‘catch-ups’, between formal performance discussions allow you to discuss work in progress, address any current concerns or barriers, help the employee prepare for a new or challenging task, and explore development activities.

Catch-ups avoid surprises in the formal performance discussions and provide an opportunity for you to discuss issues with employees before they progress into something larger.
Record keeping

Record keeping should support performance management, not drive it. As record keeping varies from agency to agency you should check what is required by your own agency. Performance plans need to be recorded as the basis for monitoring and reviewing performance. Key accomplishments and successes should be recorded along with the performance assessment and identified development needs.
Records of discussions and performance plans should be accessible by both managers and employees. Any questions or concerns should be raised with your HR unit.

The planning phase

The planning phase is a collaborative effort between the employee and manager when you both agree on performance plans. In this phase, the initial performance discussion provides the forum to agree on individual goals that align with agency objectives, and also establish capability and development needs.

The action phase

Once you and your employees have agreed on the performance objectives and standards they can then work towards those objectives and standards.

The review phase

The review phase allows for the evaluation and review of actions and plans that have been put into place. The review phase involves a performance discussion to assess achievement against the planned goals, track development progress and resolve any issues.
Creating a Mission Statement, Setting Goals
 A mission statement is a guiding light for a business and the individuals who run the business. It is usually made up of three parts:
  • Vision - big picture idea of what you want to achieve.
  • Mission - general statement of how you will achieve your vision.
  • Core Values - how you will behave during the process.
Each of these three elements is an important aspect of the businesses guiding light.
Once you have developed your mission statement, the next step is to create the following items:
  • Goals - general statements of milestones you need to meet to achieve your vision.
  • Objectives - specific, time-sensitive statements for achieving your goals
  • Strategies/Action Plans - specific implementation plans of how you will achieve your objectives and goals.
Mission Statement Elements
Below are definitions of the three mission statement elements. An example of the statements for a value-added business is included for clarification. XYZ  is a company that starts value-added businesses. Because of its unique nature, it is important that XYZ create a meaningful mission statement to convey its purpose to it leaders, staff and members.
Vision - A vision statement is a mental picture of what you want to accomplish or achieve. For example, you may want to develop a profitable winery or a successful organic dairy business.
 A vibrant rural economy driven by value-added agriculture. 
The vision statement should be concise and easy to remember. Because it is easy to remember, it is easy for everyone in the organization to focus on the vision. When people focus on the vision, their daily activities are automatically directed towards achieving the vision.
Mission - A statement of mission is a general statement of how you will achieve your vision. There is a very close relationship between the vision and mission. The mission is an action statement that usually begins with the word “to”. Once again it is a very simple and direct statement that is easy to understand and remember.
XYZ  Mission - To create and facilitate the development of value-added agricultural businesses.
Core Values - Core values define the business in terms of the principles and values that the business leaders will follow. They provide the bounds or limits of how the business leaders will conduct their activities while carrying out the vision and mission.
Core Values:
  • Provide economically sound business opportunities for our members.
  • Practice high ethical business standards.
  • Respect and protect the environment.
  • Produce high quality products that are safe for consumers.
  • Meet the changing needs and desires of consumers.
The Role of Goals and Objectives
Once you have developed your vision, mission and core values, you can then develop the goals and objectives needed to achieve your vision.
Goals - Goals are general statements of what you want to achieve. So they need to be integrated with your vision. They also need to be integrated with your mission of how you are going to achieve your vision. Examples of company goals are:
  • To improve profitability
  • To increase efficiency
  • To capture a bigger market share
  • To provide better customer service
  • To improve employee training
  • To reduce carbon emissions
A goal should meet the following criteria:
  • Suitable: Does it fit with the vision and mission?
  • Acceptable: Does it fit with the values of the company and the employees?  
  • Understandable: Is it stated simply and easy to understand?
  • Flexible: Can it be adapted and changed as needed?
Make sure the goals are focused on the important properties of the business. Be careful not to set too many goals. You run the risk of losing focus. Also, design your goals so that they don’t contradict and interfere with each other.
Objectives - Objectives are specific, quantifiable, time-sensitive statements of what is going to be achieved and when it will be achieved. They are milestones along the path of achieving your goals. Examples of company objectives are:
  • To earn at least a 20 percent after-tax rate of return on our net investment during the next fiscal year
  • To increase market share by 10 percent over the next three years.
  • To lower operating costs by 15 percent over the next two years by improving the efficiency of the manufacturing process.
  • To reduce the call-back time of customers inquiries and questions to no more than four hours.
Objectives should meet the following criteria:
  • Measurable: What will happen and when?
  • Suitable: Does it fit as a measurement for achieving the goal?
  • Feasible: Is it possible to achieve?
  • Commitment: Are people committed to achieving the objective?
  • Ownership: Are the people responsible for achieving the objective included in the objective-setting process?
ShareShare How to set a Goal in your Organisation (a must read by every HR Business Partner)




Performance management systems to be effective, they should have the below characteristics :


 6P AND 5R Metrics for Performance Measurement

“What you sow is what you reap” or rather the quality of your output is just as good as the quality of your input and the processes used to transform the input to output. Thus, to achieve a target/goal, businesses need to have the right match of inputs/resources and processes which would aid in effective transformation of the inputs to outputs. Changes or variables in the inputs and the processes of the system will have an impact on the output as a consequence.


Consider for instance the transformation of a seed to a plant.
A seed needs the right conditions to germinate and to grow into a plant. It requires water, air, a suitable temperature, sunlight and the right soil to survive and grow. Thus, these favorable conditions are the inputs required to transform a seed to a plant.                                  

 Thus, the effective creation and maintenance of assets/resources contribute immensely in value creation. These assets/resources are referred to as the 6Ps- Build Attributes  that help in delivering better results. The assets/resources need to be built and maintained in an effective manner and businesses need to figure out which of the inputs have the biggest influence on the results.

Again, results or business performances/outcomes can be measured in a number of ways, eg Profits, customer delight, revenues etc. These outcome experiences are referred to as the 5RsOutcome Attributes

Thus, Stakeholder delight can pertain to both ‘means’ and ‘ends’– Assets and Experience. This is why it is important that a leader focuses on both the “build” and “outcome” aspects of his/her business. In a knowledge-based industry, such as ours, a focus on developing businesses to compete in tomorrow’s marketplace (i.e. build) is as important as sustaining market share today (i.e. outcome).



6Ps
5Rs
Asset Building
Outcome  Experiences
Value Creation / Resources
Value Realization and Extraction
Means
Ends
Input
Output






Metrics Framework



2.1       GUIDELINES FOR Definition of 6Ps AND 5Rs

The Ps and the Rs are referred to as the ‘attributes’ of a business.

6Ps

People:                         Grow Leaders Faster than Competition

Each business must have the right number of people with right skills.
Ask key questions:
          Does my business have the right number of people?
          Do the people in my business have the requisite skills?

Process:                      Demystify Knowledge

Processes serve as a mechanism that aids value creation and is the formal, defined and documented structure of activities.
Ask key question:
         Do I have well documented processes for my businesses and do I have mechanisms to ensure knowledge capture?

Product:                       Put Technology to Work

Represents automation of all possible processes and minimizing manual intervention.
Ask key questions:
          Have I automated all possible activities within my business?
         Do I continue to have a dependency on manual systems?

Proliferation:              Don’t Reinvent the Wheel

Refers to maximizing ‘reach’ and ensuring penetration across all possible stakeholders so as to maximize value of our soft assets; It also refers to  Institutionalization and standardization of best practices, enhancing repeatability and  minimizing duplication of efforts across businesses and Satyam.
Ask key questions:
          Have I reached out to all possible beneficiaries?
          Have I shared my best practices across Satyam?
          Have I incorporated others’ best practices into my business?

Patent:                         Find a Better Way

Uniqueness and innovation introduced, which enables continuous improvement when compared to competition & prevalent practices within the organization.
Ask key questions:
         Is my ‘business’ clearly differentiated from those of my competitors?
         Am I doing things better than yesterday?


Promotion:                            Let Perception lead Reality

‘Branding’, ‘Communication’, ‘Collaboration’ and ‘Relationship Building’ with stakeholders is very important. This dimension refers to the ability to ‘demonstrate’ the ‘capability’.
Ask key questions:
         Am I periodically communicating about the successes of my business, to my stakeholders?
         Am I making my stakeholders excited about my business - by passionately demonstrating its capabilities?


5Rs
FasteR:                        Compress Cycle-Times

Refers to ‘Cycle Time’ reduction (e.g. time taken for Visa processing).
Ask key questions:
         Have I reduced the cycle time?

BetteR:                        Always Exceed Customer Expectations

Refers to improving the quality of deliverables and reducing defects. Emphasis is on the ability to deliver an overall improved experience to the recipient of the value - internal & external.
Ask key questions:
         Have I improved my Customer Delight score?


CheapeR:                    Use your Limited Resources Well

Increasing ‘Profitability’ is the primary focus – (e.g. through enhanced productivity, resource / cost optimization or higher pricing resulting in increased margins).
Ask key questions
         Have I reduced my ‘operational’ cost?

LargeR:                        Maximize Scale Opportunities

Refers to Increase in ‘Scale’ and ‘Size’ – (e.g. Revenues in a business).
Ask key questions: 
         Is my business growing?

SteadieR:                    Be Predictable

Reduction in ‘Variability’, especially in businesses where transactional volumes are high. (e.g. Payroll SLA Adherence, ELTP Recruitment etc.)
Ask key questions: 
·         Is my business delivering results in a consistent manner?





Mature organisations can have balance between goals but evolving company's cannot afford to look for balancing.It is normally skewed towards financial goals



Hoshin Karni - Direction Management.Goal Setting. Performance Management.- To be considered for KRA setting

Goal Setting is an important part of performance management.

While setting goals, the following points need to be kept in mind :

SMART - Specific , Measurable , Attainable, Relevant, Time Specific

BHOG - organization-wide goal which is audacious, likely to be externally questionable, but not internally regarded as impossible.

SMART vs BHOG : Balance of fear of failure and hope of success

Once goals are set based on above principles, they have to be deployed meticulously using tools like Hoshni Karni.

Hoshin kanri- Direction management through Strategy deployment tools. Dr. Yoji Akao, used a Deming cycle (Plan-Do-Check-Act) to create goals, choose control points (measurable milestones), and link daily control activities to company strategy.



Weightage of individual KRA based on cause and effect relation with corporate goals for the year



 

Monthly Appraisal system

At Coca-Cola India, managers are no longer pressured to accomplish annual performance reviews. In alignment with the global vision of the parent company, — to make performance enablement the new approach to work—Coca-Cola India has revamped its performance management system, making it a monthly affair with dynamic goals.

If GE and Microsoft were the first movers to do away with performance ratings, Coca-Cola has taken the leap by moving to a monthly feedback mechanism.

The beverage major has moved to an agile method of working where conversations between line managers and employees now happen on a monthly basis to see whether the individual is on track or a course correction is required. Under the new system, the manager can change and calibrate goals on a monthly basis.

“This is important to mobilise people to deliver goals that matter the most. The flexibility in framework enables everyone to put their best foot forward,” said Manu Narang Wadhwa, VP-HR, Coca-Cola India and South West Asia.

The new system of appraising employees covers the corporate business unit of Coca-Cola India, which has around 300 associates. Over the last seven months, around 80-85% managers have synced with the new system and are giving monthly feedback.

Coca-Cola India has 25,000 employees. The new system may be scaled up eventually in a gradual manner.

Globally, the parent, which wants to become a total beverage company, has repurposed its vision “to get ready for tomorrow today”, given that the world all around is changing. The beverage giant has tweaked its strategy to cater to shifting consumer preferences and growing health consciousness. The new performance enablement is a pre-requisite for bringing about such changes and a culture of agility.

“The old performance management system, where goals were set annually, provided limited opportunity to offer real-time feedback. Given today’s business dynamics in a VUCA world, organisations need to have a dynamic system so that goals can be improved upon and individual performances bettered as per requirement,” said Wadhwa.

The new system that Coca-Cola India has adopted takes away the fixed mindset of having a single goalpost for an employee in a year.

“Today’s millennial workforce does not believe in one-time planned feedback. So we have done away with the lengthy process of long form filling that used to happen when performance management system was done on an annual basis. We have also introduced an upward feedback mechanism. Employees now have an equal voice to drive the change,” said Wadhwa.

Around 70-75% employees have offered upward feedback at Coca-Cola India. More companies are doing away with annual appraisals in favour of frequent feedback mechanisms. Annual appraisals are usually tedious and put pressure on managers to complete the task of appraising employees for the entire year in a short span. Over the last few years, a number of companies like Accenture, KPMG, Deloitte has moved towards ongoing conversations on performance.

(This article was originally published in The Times of India)


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