Table of Contents

Background and Objectives

Performance Management Framework
Whats new?
Next steps

2016

Headline
Performance
Sub Headline
Management
Communication Deck

Performance & Development, and HR

April 2016

Background and Objectives

Relook at the way we do things

Imbibe new work habits our culture to propel this growth
ALL move in the right direction as SLT
Ensure that all our employees are motivated to move in sync with us

2016 is going to be a Game-Changing year. Hence, we need to:

Our 2016 Performance Management Framework aims to tell all of us that effective results
come with attractive rewards, and that:

We are transparent with the way we conduct Performance Management;

Our corporate and operational KPIs are directly cascaded from our Vision and Mission;

We value regular check-ins between our Line Managers and Employees, ensuring that expectations
are clear and achieved;

There is a clear differentiation of salaries and incentives across varying performance levels

Employees performance results will be used to determine their career progression within Smartfren

Being employer of choice requires a relentless push for performance.

1 Based on feedback from the 2015 Employee Engagement Survey

Table of Contents
Background and Objectives
Performance Management Framework
Whats new?
Next steps

(5)
Recognition,
Rewards &
Consequence
Mgt.

(2) Goal
Setting

(1)
Business
Plan

(5) Consequence Management (Feb.-Oct.)

Line Managers and Employees conclude level of

performance achieved, exhibited strengths and
weaknesses, and development plans
PA results are agreed.

(4) Evaluation & Feedback (Jan.)

Line Managers and Employees regularly discuss

performance progress
Delivery is on track.

(3) Monitoring and Review (Jul., & every month in

between)

Corporate KPIs are translated into operational KPIs for each

function, role and cross-functional team.
Goals are agreed and signed for each employee.

(2) Goal Setting (Jan.)

Annual business and operating plans are set in alignment

with our mid- and long-term growth ambitions
Corporate KPIs are set.

(1) Business Plan (Sept.-Dec.)

Our PM Framework aims to make

Smartfren a High-Performing Company

(4)
Evaluation
&
Feedback

(3)
Monitoring
& Review

Performance results are used to recommend bonuses,

salary increments, promotions, succession, learning and
exposure opportunities.

The main components of the PMS are as

follows:
Smartfren Performance Management reinforces the
importance of both results and behaviors

(WHAT)

Focus on results
(KPIs)

Values & Cultures

(HOW)

Focus on valued
behaviors

PERFORMANCE = what + how

KPIs

Link to Reward, Career Development, Learning, etc.

Smartfren Performance Management System leverages on balancing
and achieving business results using the Scorecard concept, which links
corporate goals to that of individual and emphasizes the demonstration
of values and cultures.

Service Revenues
EBITDA to Service Revenue Ratio [Operations]
Handset Subsidy
Data Revenue Market Share (keeps us on track for 2019 goal)

2018

2019

OPEX Ratio (variable cost)

OPEX Ratio (fixed cost)
Employee Satisfaction Index

Net Promoter Score (NPS)

Migration
RGU Subscribers base

Examples:
Timely financial closing and reporting
Recruitment fulfillment
Unit cost reduction for device purchases
Timely approval of import permits

2017

2019 Goal
# 3 in Data Revenues Share among 4 operators

For PM to work, each employee MUST know

how he contributes to the big picture

2016
Corporate Goals
(affects all P&C
employees)

Shared Goals
(Key drivers to achieve
Corporate Goals)

Individual Goals
(sets expected delivery for
each employee to support
the Corporate &
Shared Goals)

Notes

Budget/Target

Payout Curve

Smartfren KPI design

Formula/Description

Sliding scale.
[Where available, target may be set as a
percentage point lead over the top
competitor]

Weight

2016 KPIs

xx = 100%
xx - xx = Sliding scale
< xx = 0%
pts.

Measurement
Unit

Sliding scale, capped at 110%

achievement (>70%).
2015 EES Result was at 64.8%. This is the
minimum threshold.

30%

NET PROMOTER SCORE

(NPS)

IDR

Sliding scale, to be calculated using

average RGU subs every month as per the
2016 BP

68.0%

Budget average RGU subs = 100%

< Budget = Sliding scale to 0%
</= Dec. 2015 RGU = 0%

Notes

> 70.1% = 110%

68.0-70.0% = 100%
64.8%-67.9% = Sliding scale
< 64.8% = 0%
6.7 Million -- TBC

Budget/Target

Payout Curve

Subs

35%

100%

35%

(#Promoters #Detractors) divided by total

number of customers surveyed (%)
Average score for all 4 quarters based on xxx
report.

Average number of revenue-generating

subscribers for the full-year 2016 (e.g. Ave
(Jan + Feb + Mar + ...))

EMPLOYEE SATISFACTION Overall Employee Satisfaction Index from the

INDEX
2016 Employee Engagement Survey.

RGU SUBSCRIBER BASE

Formula/Description

Weight

2016 KPIs

Binary -- yes or no

Measurement
Unit

All activities are done = 100%

100%

Sliding scale, measured on a quaterly

basis

30%

a. Drive the approval for Band 26 and Band 5

deployments, to maximize the strategic value
and commercial success for Smartfren. This
includes earlier ramp down for CDMA850.
b. Review the use of 850MHz for UMTS and
drive final recommendation by 1Q2016.

100.0%

Notes
Binary

Payout Curve

Sliding scale, capped at 100%

2016 > 2015 = 100%

2016 </= 2015 = 0%

Measurement
Unit

>/= 12 = 100%
< 12 = Sliding scale

Budget/Target

instances

2016 > 2015 result

12

50%

100%

50%

Weight

Sliding scale

STRATEGY FOR
SPECTRUM AND
NETWORKS

Formula/Description

All Reports are submitted on time =

100%
Reports are submitted with delays =
sliding scale

2016 KPIs

YOY rating improvement in the Management

Effectiveness Survey

xx% = 100%
xx - xx% = Sliding scale
< xx% = 0%

30%

MANAGEMENT
EFFECTIVENESS INDEX

Conduct at least 12 Regulatory Affairs SLT

(up to Section Heads) Meetings within 2016.
Meetings should discuss team performance
against monthly and full-year operating plans,
and Regulatory Affairs culture development
activities

100%

40%

Submit Annual AND Quarterly performance

reports to the Regulator. The Reports consist
of all obligation stated in the LICENSE that
REGULATORY REPORTING
must be fulfilled such as report of Progress of
Network Development, Quality of Services,
company Financial report etc.
xxx
XXX

REGULATORY AFFAIRS
SLT MEETINGS

Organization, People and Culture KPIs are may be in the form of:
- 180 degree surveys
- carrying out activities for culture building (i.e. Committing to Departmental Workshops on a periodic basis)
- reinforcing employee loyalty (i.e. Measured by voluntary attritition rates)
- displaying improvements in specific cultural/behavioral indices

B. OPC KPIs (10%) -- (DRAFT)

Individual KPIs are those that are directly related to the employee's operational/functional responsibilities.

A.2 -- Individual KPIs: 30%

Shared KPIs are to be from main KPIs of the 7 Differentiating Pillars (DPs) and Strategic Priorities

A.1 -- Shared KPIs: 60%

A. Business KPIs -- (DRAFT)

Goals must be something that the employee him/herself can directly impact,
and for which he/she has the resources to successfully execute.

What is Key Performance Indicator (KPI)

Key Performance Indicator (KPI)

Some definition :
Defines and measures the progress towards goals
Task with expected results, as agreed between the
employee and manager
Measures the level of success of your job responsibility
The What measures will be derived by cascading from
Group/ Regional Pillar/ Country/ Department business plans
and taking into account unique job-holder responsibilities.
KPI will be divided into 3 parts:
Shared KPI
Individual KPI
Organization, People & Culture KPI
8

Actual

Actual

Actual

Aggregated
Weight

Aggregated
Weight

Aggregated
Weight

How to Fill in 2016 KPI

Weight

NWH = 130
Managers
4DX = 30 Managers
Constitution =
Approved, published
& socialized
SLT Alignment = 2

Budget/Target

Measurement
Unit

Approved Rewards & Recognition

Framework/Policies = 100%

All activities are done = 100%

All activities are done = 100%

4 of 5 activities are done = 80%
3 of 5 activities are done = 60%
< 3 activities = 0%

Binary -- yes or no

Binary -- yes or no

Sliding scale, capped at

100%. Minimum threshold
is < 3 activities are done

Description of what it means to

be 100%, less than or beyond

Formula/Description

30%

100.0%

Description of the
expected target for
the current year

2016 KPIs
Rollout:
1) New Work Habits (NWH) = 130
Managers
2) 4 Disciplines of Execution (4DX) =
30 Managers
3) Get approval for the Constitution =
100%
4) Socialize the Constitution = As per
roadmap
5) Conduct SLT Alignment Programs
= 2 Programs in 2016

25%

100.0%

Weight proportion of
the KPI (in total must
be 100%)

CULTURE
DEVELOPMENT

-Develop and get approval for the new

PM Framework;
- Socialize the Framework among
Department Heads+
- Set up 2016 KPIs in accordance with
the new Framework
20%

100.0%

All activities are done = 100%

Binary -- yes or no

Notes

PERFORMANCE
MANAGEMENT

- Develop the Rewards & Recognition

Strategy and Framework
- Develop and get approval for the
Rewards and Recognition Policies

25%

Payout Curve

REWARDS and
RECOGNITION
STRATEGY

TALENT &
LEADERSHIP
DEVELOPMENT

100%

- PDC is conducted for Division

Heads+
- Retention Program for identified
talents is approved and rolled out
- Leadership Programs are
implemented for 20 Top Managers

Table of Contents
Background and Objectives
Performance Management Framework
Whats new?
Next steps

10

Basis for bonus

payout
We have Shared KPIs up to N-2
composed of EBITDA, Revenues,
Smartphone market share, and NPS

Basis for performance bonus payout

is generally unclear

Current

10% of the goals will be on improving Organization,

People and Culture (OPC)

Shared KPIs are key drivers that support the

achievements of Corporate KPIs
Shared KPIs are extended up to N-3 or Department
Heads (D-E)

Corporate KPIs achievement form the basis for any

performance bonus payout.

Proposed

Whats New? Top Highlights

1

Goals alignment

All goals (100%) are related to

business delivery

Item

Goals composition
Goal setting and performance appraisal will be done
Changes to goals are difficult to track
online (PMIS)
Appraisal is mostly top-down
PA form will include changes to calculations and
Final PA results are mostly not
include OPC goals
communicated to employees
PA will be initiated by the employee him/herself

Goal Setting (GS)

and Performance
Appraisal (PA) Flow

New #1
Corporate KPIs

EBITDA TO SERVICE REVENUE

RATIO [Operations]

SERVICE REVENUES

2016 Corporate KPIs

Ratio of handset subsidy to total device sales

EBITDA [Operations] to Service Revenues Ratio, excluding

migration cost

Total service revenues at year end 2016

Formula/Description

15%

20%

35%

Derived from our annual Business Plan (BP) and must directly contribute to our mid-term, sustainable goals;
Dynamic they change every year depending on the Companys focus and competitive landscape;
Set at the beginning of the year after the BP is approved;
Answers the question: Are we getting a performance bonus for 2016 or not?

Corporate KPIs are:

2
HANDSET SUBSIDY

Weight

DATA REVENUES MARKET SHARE

100%

30%

Source: Aggregated Annual Reports from Telkomsel,

Indosat and XL

Full-year 2016 SF Data Revenues divided by Full-year Data

Revenues from 4 operators (Telkomsel, Indosat, XL,
Smartfren)

Total

12

New #2

Current

Individual KPI
(30%)

Individual KPI
(50%)

Proposed
Business KPI
Shared KPI
(60%)

Business KPI

OPC KPI

10%

OPC KPI

10%

OPC KPI

10%

OPC KPI

Organization, People &

Culture (OPC)

Individual KPI
(30%)

Individual KPI
(30%)

Individual KPI
(40%)

Business KPI

Shared KPI
(60%)

Shared KPI
(50%)

Business KPI
10%

OPC KPI

Individual KPI
(50%)

Unit

Business KPI

Budget /
Target

pts.

Shared KPI
(40%)

Weight

33

Subs

10%

25%

6.7 Million

Subs

Individual KPI
(90%)

(#Promoters #Detractors) divided by total number of customers

surveyed (%)
Average score for all 4 quarters based on Milward Brown report.

25%

1.9 Million

Individual KPI
(100%)

Business KPI
(100%)

Individual KPI
(100%)

Business KPI
(100%)

N Shared KPI
(50%)

Business KPI
(100%)

N Shared KPI
(70%)

Business KPI
(100%)

Business KPI
(100%)

Shared KPI weights per Job Grade

CEO

(Grades A-B)

(Grades C)

(Grades D-E)

(Grade F below]

New #2:

NET PROMOTER SCORE (NPS)

Number of revenue-generating subscribers for the full-year 2016

25%

38%

IDR

2016 Shared KPIs

RGU SUBSCRIBER BASE

100% of UVC and HVC CDMA subs are migrated by November

2016

7.5%

857 K

Formula/Description

2
MIGRATION

Annual Variable cost (COGS, Sales & Marketing, and Distribution

Incentives) to total service revenues: 38%

7.5%

68.00%

No. 2016 Shared KPIs

3
4.a
OPEX RATIO [Variable Cost]

Annual Fixed cost (Network, Personnel and G&A) per RGU subs :
Rp 857k

10%

4.b
OPEX RATIO [Fixed Cost]

Overall Employee Satisfaction Index from the 2016 Employee

Engagement Survey.

100%

EMPLOYEE SATISFACTION
INDEX

Total

14

New #3:
Organization, People & Culture (OPC) Goals
OPC goals:
Are intended to reinforce culture-forming behaviors within Smartfren;
May be in the form of:
 Organizational Productivity Reviews and restructuring
 180 -360 surveys (i.e. Management Effectiveness Index)
 Carrying out activities for culture building (i.e. Committing to Departmental Workshops on a periodic basis,
personally facilitating VMC workshops, etc.)
 Reinforcing employee loyalty (i.e. Measured by voluntary attrition rates)
 Displaying improvements in specific cultural/behavioral indices of SPEED, INNOVATION, THINKING LIKE AN
OWNER, CUSTOMER CENTRICITY.

Sample KPI for RH

Formula/Description

25%

A.1 -- Shared KPIs: 40%

2016 Shared KPIs

(#Promoters #Detractors) divided by total number of customers surveyed (%)

Average score for all 4 quarters based on Milward Brown report.

Weight

Net Promoter Score (NPS)

25%

25%

No.
1

100% of UVC and HVC CDMA subs are migrated by November 2016

Number of revenue-generating subscribers for the full-year 2016

7.5%

Migration

7.5%

RGU Subscriber Base

Annual Fixed cost (Network, Personnel and G&A) per RGU subs : Rp 857k

Annual Variable cost (COGS, Sales & Marketing, and Distribution Incentives) to total service revenues: 38%

3
4.a
OPEX Ratio [Variable Cost]

100%

10%
Total

4.b
OPEX Ratio [Fixed Cost]
Employee Satisfaction Index

Overall Employee Satisfaction Index from the 2016 Employee Engagement Survey.

A.2 -- Individual KPIs: 50%

Formula/Description

20%

30%

Weight

2016 Individual KPIs

Regional AVA index, full year improvements (Q1 2016 vs. Q4 2016)

Achievements of Regional activation targets

No.
AVA index

Regional activation

10%

10%

Cost per Acquisition (CPA)

Regional Quality of Activation

Cost per Acquisition (CPA)

15%

15%

Quality of Activation

Regional revenue achievements vs. Business Plan

4
Revenue

3
5

Regional RGU Subs vs. Business Plan

Number of voluntary resignation

Formula/Description

35%

30%

100%

RGU Subs

2016 OPC KPIs

Span of Control

Total

Attrition rate

Number of internal promotion (fulfilment of vacant position from within)

B. OPC KPIs (10%)

Span of Control

16

100%

35%

Internal fulfilment rate

Weight

No.

Total

15

New #3:
Culture

Level 1
Exercises at the minimum
level
Enhances Customer
Satisfaction
Manages customer
expectations
Improve Customer
Experience
Drives Working Unit
Results
Creates performance
tension in business unit
Persists to completion

Creates a Service
Reputation
Establishes service
practices
Assures customer
Provides resources

Leads Group change

Aligns Group change to
organizational change
Drives and measures
change
Celebrates success

Drives Group Results

Demonstrates business
acumen
Models and promotes
long-term perspective

Promotes Customer
Focus
Creates customerfocused practices in the
Group
Pursues continuous
service improvement

Leads organization
change
Advocates innovation
within Smartfren
Links changes to
strategic directions

Drive Organization
Results
Demonstrates
entrepreneurship
Inspires passion for
results
Inspires a sense of
urgency

Champions Customer
Focus
Inspires others to be
customer focused
Champions long term
customers

Level 5
Role Model Organization Level

Leads unit change

Identifies change
opportunities
Addresses barriers and
resistance in the unit
Encourages innovation

Cultivates Organizational
networks
Drives partnership
development across
Groups
17

Level 4
Role Mode Group Level

Cultivates unit networks

Develops partnership
opportunities for the unit

Cultivates Group
networks
Promotes relationship
building within the Group
Uses diverse networks
as an advantage

Level 3
Propagates at the unit
level

Sample OPC Goals Employees (Draft)

Customers are at
the heart of
everything we do

Sustains Customer
Satisfaction
Clarifies customer
interests
Resolves customer
issues
Sets Team Standards
Sets standards for team
excellence
Ensures high-quality
outputs from the team
Takes responsibility for
the team

Level 2
Consistently exercises
the behavior

We think & care

like an owner

Sets Work Standards

Shows tenacity
Sets standards of
excellence for self
Takes responsibility

Facilities Change
Rewards change
Addresses change
resistance
Manages complexity and
contradictions

Together we make Collaborates

the difference
Places higher priority on
team or organization
goals than on own goals.
Volunteers assistance

Speed of
innovation &
execution is key
to our success
Innovates
Evaluates multiple
solutions
Approaches change or
newness positively

Builds partnerships
Encourages positive
relationships
Develops others and
own ideas
Facilitates agreement
with stakeholders

New #4:
PMIS and Rating Scale
The Performance Management Information System (PMIS) aims to:
Document Employee and Line Managers agreement of Goals/KPIs for the year, and performance appraisal (PA)
results;
Enable Employees to activate their self-appraisal as a starting point for PA discussion;
Reduce paper work and provide an easily-extractable data for making sure that goals/KPIs are uniformly cascaded
from the Corporate KPIs and Differentiating Pillars.

The PMIS is currently being revamped and will be up in time for the mid-year performance review scheduled
in July-August, 2016.

18

View/
Check KPI

Send KPI to
Superior

Introducing the Online Goal Setting

Input
OPC KPI

Steps:

Input
Individual KPI

19

Input OPC KPI

https://office.smartfren.com/inhouse_portal/

1. Login through Smartfren Office Portal;

Input individual
KPI

KPI Approval Process

Employee
Direct Manager
2nd Line
Manager

Send KPI to
superior

Approve / reject
KPI

Approve / reject
KPI

Performance Management

2. Select Menu HRGAHRGA-BFM

Revise KPI if
needed

21

22

3. Click Individual
KPI.

Sample of Individual KPI

= 30%
= 40%
= 50%
= 90%

23

Individual KPI portion

by Grade:
A-B
C
D-E
F-L

Click to revise/
Edit KPI

Click to Delete
KPI

24

4. Click OPC KPI

Sample of OPC KPI

25

OPC KPI
portion per
Grade = 10%

26

Send KPIs to Superior

5. Click View My KPIs to

preview all the KPI that has
been set

6. Click if there are no changes

required. Once click will be
submitted to Line Mgr.

Approve KPI for Line Manager (1st Layer)

1. Click View Subordinate KPIs

to preview your subordinates
KPI (submitted)

Note:
Line Mgr will receive email
notification once the KPI is submitted
27

28

2. Click NIK subordinate to

preview their KPI

Check your KPI subordinate if its

already aligned

3. Click Send KPIs to Superior

N2 if you approve the KPI and
submit to 2nd layer approval

4. Click Reject KPIs if you find

that the KPI is not aligned and
therefore return it to the
respective Employee

29

Note:
2nd layer approval will receive notification that they
are required to review and approve the KPI
Respective employee will receive notifica30
tion on
the status of their KPI

Approve KPI for Manager (2nd Layer)

1. Click View Subordinate Layer 2 KPIs

to preview the KPI of their 2nd layer below

NIK is only clickclick-able once the 1st

reviewer has approved and
submitted to 2nd layer approval

2. Click NIK subordinate to

preview their KPI

31

32

3. Click Approve KPI if you find that

the KPI is already aligned. Once
clicked, will be stored in the
database

Table of Contents
Background and Objectives

Note:
Respective employee will receive notification of the
approve/ reject status of their KPI
33

4. Click Reject KPI if you want to

reject them

Performance Management Framework

Whats new?
Next steps

34

Dec

Feb

Prev Year Appraisal

Performance Appraisal
and feedback
Career conversation

Jan

KPIs cascade
Corporate KPI
Shared KPI
Individual KPI

May

Jun

Rewards Execution
Salary & benefit survey results
Recommendations for annual
salary increase, performance
bonus, additional incentives (if
any)
First wave of promotion

Apr

Jul

36

setting
new
Business
Plan

Nov

Development programs will be

executed all year long

Oct

Second
wave
promotion

Mid-Year Performance Review

Sept

YTD achievement vs. target

Year-end forecast

August

Progress on execution of
development plans

People Development
Committee
Succession and
Development Planning

People Development
Committee

Talent mapping

Succession and
Development Planning
Promotion
recommendations (1st
wave)

Talent mapping

Mar

A disciplined execution motivates

higher performance

Nov

Business Plan
Next years
operating and
budget plans are
finalized

2
4

Headline
Sub Headline

37