Post Graduate Diploma in HRM [PGDHRM]

PGDHRM-M-23-KPI based PMS

Performance Management
• What
• When
• Why
• How
• Who

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 Post Graduate Diploma in HRM [PGDHRM]

Performance

Achieved RESULT not EFFORT

Based on Past not Future

• Quality Failure: 0%
Example
• Produced 500 pcs

SKILL

Ability to
perform
Technical
Know how

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Indicator
• Means: Measurement factor/ areas
• Time factor: within this month/ this week/
year etc
• Quality / quantity standard: 10/15/ 0%
error/ 1 % error/ 1 crore etc
• Cost
• Profitability
• Sales Volume
• Retention
• Engagement
• Learning

Performance Indicator

• Measurement areas of
Results
• Differ due to different
positions
• NOT Target/ Goal
• Measurement area of Target
/ GOAL Achievement

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KEY Performance Indicator

• Measurement areas of Key

Results
• NOT all results
• Measurement area of Target /
GOAL Achievement [Key
Goals]

Result Area
•Area through which the Result is visible
•Example: Profit, Compliance

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 Post Graduate Diploma in HRM [PGDHRM]

Goal/ Target

• Future oriented
• Based on Prediction
• Sometimes Goal setting
influenced by
Performance Indicator

Measures/ Measurement Tools/ Source of Information

• Instrument/ Tools/ Record

through which performance can
be measured
• Balance Sheet for measuring
organizational Performance
• Sales volume for measuring
performance of Sales people

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 Post Graduate Diploma in HRM [PGDHRM]

KPI: Insights
1 Indicator not target
2 Universal 3 Aligned

4 Relevant
Standard measurement 6
Cascade down to
5
tools individual

7
More focused on
number oriented goal

Reinforcement of Learning: Which one is KPI

• Increase sales by 5% • Result Area

• Quality • KPI
• Want to produce 10 pc • Goal/ Target
• Daily Production Report • Measures/ Measurement Tool
• Volume of Sales
• Lead time to hire
• Compliance
• Leave Record

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TERMINOLOGY STANDARDS
Objectives KPIs Initiatives
start with start with start with

$ = Value of

Verb # = Number of Noun

% = Percentage of

Increase customer satisfaction $ Revenue per client CRM software implementation

# Complaints received

% Customer satisfaction

13

IDENTIFY THE KPIs

% Employee satisfaction
$ Turnover
Finalise project by 31 December
# Clients from referrals
# Employees
% Projects delivered on time and on budget
Quality
% Defect rate
$ Budget
Increase market share to 28%
KPI Definition:
A measurable expression for the achievement of a desired level of results in an area relevant to the evaluated entity’s
activity.
(The KPI Institute)
14

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 Post Graduate Diploma in HRM [PGDHRM]

THE VALUE ADDED BY KPIs

Improvement

Clarity Focus
Communication

15

Let us do individual exercise on Individual KPI

development

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Exercise
• Mention your Role/ Task [1]
• Design KPI based on that role/ task [1]

Types of KPI

Strategic
As per
Contribution
Operational

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Types of KPI

As per Result Chain

Output Impact

Outcome

Types of KPI

Leading
As per
Focus Lagging

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 Post Graduate Diploma in HRM [PGDHRM]

LEADING VS LAGGING KPIs

Task:
• Cluster the following examples into leading and lagging KPIs.

No. KPI examples Leading or lagging?

1 % Employee engagement
2 % Customers from referrals
3 % Customer satisfaction
4 % Market share
5 $ Profit
6 % Returning customers
7 # Service lead time
% Staff with competencies
8
at desired level

21

LEADING VS LAGGING KPIs

22

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 Post Graduate Diploma in HRM [PGDHRM]

Individual Exercise
• Mention your Role/ Task [1]
• Design KPI based on that role/ task : One Leading and One Lagging

Types of KPI

As per measurement

Qualitative Quantitative

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 Post Graduate Diploma in HRM [PGDHRM]

Financial
Types of KPI

Learning &
Customer
Growth

Internal Business
Process/
Operational
As per Function [based on Balanced Scorecard]

Characteristics of KPI based PMS

• Objective oriented Assessment System

• Holistic view of Performance
• Unbiased PMS
• Balanced PMS [Balancing with different aspect
of Balanced Scorecard or CEEPP]

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Meaning of RIGHT KPI

✓RIGHT means SMART

✓RIGHT Means relevant
✓RIGHT means right weight
✓RIGHT means linked with
responsibility
✓RIGHT means linked with ROLE
✓RIGHT means right TYPE

KPI Selection/ development Technique

Role analysis Task analysis

Know the industry

Goal analysis
standard

Availability of
measures/ Ensure Balancing
Measurement tools

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 Post Graduate Diploma in HRM [PGDHRM]

Scope/ Level of KPI

•Organizational Level
•Departmental / Team Level
•Individual Level

Steps of KPI development &

implementation program: Standard
•Design/ Analyze Organizational Goal/ KPI
•Design and analyze Functional/ Departmental
Goal/KPI
•Identify and analyze Role or Deliverables of
Individual to achieve functional/departmental
goal/KPI
•Define the measurement criteria/ KPI of that
deliverables

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 Post Graduate Diploma in HRM [PGDHRM]

Steps of KPI development & implementation

program: Standard
• Design the Action Plan/ Job Description to achieve KPI
• Design measurement Tools for measuring KPI
achievement
• Design Assessment method and format
• Design KPI achievement monitoring tools and SOP
• Design method and format for KPI achievement analysis
• Link with reward and punishment

KPI Selection Criteria

Relevancy?

Accuracy?

Measurable?

Aligned?

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 Post Graduate Diploma in HRM [PGDHRM]

Financial

Balanced Learning &

Customer
Scorecard Growth

Internal Business
Process/
Operational

Format
KRA KPI Wei Targ Achiev Score (F) Final
(A) (B) ght et ement If the higher the Score
(C) (D) (E) better: (E/D)*100 F*C
If the lower the
better: (D/E)*100
Recrui Lead 15 60 70 86 13
tment time to % day days
hire s

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Techniques for Giving KPI weightage

• Impotence level
• Time Consuming issue

Job Description
1. Conduct Selection interview
2. Ensure the right person for the right position at right time
3. Ensure the proper orientation and placement
4. Ensure regular guidance
5. Conduct Training for the employees
6. Execute proper performance management system in the organization
7. Ensure employee retention
8. Ensure proper output from every employee
9. Assist (if required) to execute compensation program
10. Maintain employee database
11. Analyze attendance report
12. Maintain leave record

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 Post Graduate Diploma in HRM [PGDHRM]

Template : KPI Table for HR Manager

Template : KPI Table for HR Manager

Key result areas are the main goals

that HR manager needs to
accomplish. In this sample, we have
four key result areas.

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 Post Graduate Diploma in HRM [PGDHRM]

Template : KPI Table for HR Manager

• Key performance indicators are

measurable indicators used to
evaluate your performance level
• Every Key Result Areas must
have at least one KPI.
• Total number of KPIs shoud be 8
– 10 items.

Template : KPI Table for HR Manager

Weight of each KPI should

be defined.
Weight of KPI is
determined based on the
scale of priority. Total
weight should be 100.

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 Post Graduate Diploma in HRM [PGDHRM]

Template : KPI Table for HR Manager

Targets are defined
based on historical
data and future
expectations.
Targets can be
percentage,
number, or score –
depending on the
type of KPIs.

Template : KPI Table for HR Manager

Actual is the actual results. Or

target achievements.
We should develop reporting
system to capture these results.

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 Post Graduate Diploma in HRM [PGDHRM]

Template : KPI Table for HR Manager

Template : KPI Table for HR Manager

Formula to calculate score :

Actual / Target x 100 (for KPI
Maximize, the higher the better)
or
Target / Actual x 100 (KPI
Minimize; the lower the better).

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 Post Graduate Diploma in HRM [PGDHRM]

Template : KPI Table for HR Manager

Template : KPI Table for HR Manager

Formula to obtain Final Score

= Score x Weight /100

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 Post Graduate Diploma in HRM [PGDHRM]

Template : KPI Table for HR Manager

Final Score is used to determine bonus

allocation, salary increase, and promotion.

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