DECISION

MAKING
DILEMMA
Earlier Situation
Individual PMS based on goal setting between
superior and the subordinate
Problems with individual based system
• Subjectivity in target setting leads to
lack in transparency.
• Officers hesitant to collaborate so as
to achieve individual goal.
• High probability of increase in WIP
Situation Analysis Current Situation
Performance management based upon both
individual target and overall performance of the
plant and unit.
Problems with CPI
• Conflict between individual targets and
parameters of CPI such as ideas/person.
To increase information • There might be no scope of improvement
sharing and
in reducing rework occurrences. Therefore,
incorporating the
bigger picture loss of prospective bonus.
• Percentage of income not a parameter for
cost effectiveness.
• Implementation of CPI will lead to
reduction of bonus for high performers.

Top down structure is not congruent with the big picture policy.
Therefore, a mismatch between the structure and system of the company

Problem Statement:

Lack of an effective performance management framework which leads to conflicting task responsibilities for the
employees.
CRITICAL SUCCESS FACTORS

ON-TIME QUALITY COMPLIANCE COST

DELIVERY TO OVERALL CONSIDERATION
DESIGN
 1. Revert to original system
2. Change metrics in CPI by removing inappropriate parameters
• Ideas per person to be removed
• No. of units of PU not the entire plant
• Return on Capital investment in place of Expense as percentage of
income.
• Cost of Rework against a baseline in place of reduction in rework due
to improvements in quality
• Average time vs standard time (based on time study analysis) in place
OPTIONS of improvement in effective working time over previous year.
3. Use different PMS at worker and at managerial level.
• Workers are measured on adherence to standardized processes, there
by maintaining quality and fulfilling demand (not exceeding it)
• Officers are incentivized on the PU level as well as individual level.
• Individual level would check metrics such as target vs actuals.
• PU level performance would include measures such as cost reduction
due to reduced WIP, compliance to specs of product, and quality of
products by the PU
EVALUATION CRITERIA & EVALUATION OF
OPTIONS
Options Revert to original Dissect PMS at worker Change metrics in CPI by
system and at managerial level removing inappropriate
metrics
Evaluation Criteria
Increasing intra-PU and inter-PU
coordination

Ensure process adherence for

quality

Cost effectiveness

Transparent performance
management process

Recommended Option
 1. Conduct time study of manufacturing processes, determine standard times,
with the range of time that ensures quality. The responsibilities of the worker
will be clarified to him by his supervisor.
2. The workers’ performance is appraised based on whether the worker is
adhering to the given range of time.
3. At the managerial level, the performance appraisal is two-fold.
A. At the individual level, that is measured along with the parameters of
ACTION PLAN compliance to standards, quality of the part/sub-assembly and in full
delivery as per demand.
B. At the PU/Plant level, this is ensured by linking the performance of the
PU (for officers) and plant(for heads) to their performance.
4. Appropriate communication ensured between managers to keep a record of
each time an officer helps reach PU goals to ensure non-penalisation on
individual front.
5. Employ gainsharing to incentivize the managers for collaboration in form of
resource (labour only) and information sharing, to improve PU/plant’s
productivity and cost efficiency.
THANK YOU