Goal Setting

Performance Management System at RPG

Step 1: Goal Setting

The Performance Cycle

Goal SettingMarch - April

Mid term review September - October

Annual appraisalAnd review

May - June

Rewards:Increments, incentives

June

On going feedback

On going feedback

The performance management cycle • Directly impacts the L&D Action plan of employees• Influences the career progression decisions

Discuss – (Why) do we need Goals?

Two sides of the same coin

Business performance management

Employee performance

management

Environment

Two sides of the same coin

Business performance management

Employee performance

management

Employee objectives (goals)

Business objectives (goals)

Environment

Two sides of the same coin

Business performance management

Employee performance

management

Business results

Employee objectives (goals)

Employee results

Business objectives (goals)

Environment

Why set goals

Goal Setting

I know what is expected of me

I know which areas are most critical

I am challenged to stretch myself& achieve my personal ambition

Set parameters against which performance will be evaluated

Will help drive organisational focus areas

Drive a performance culture across the organisation

Organisational context Individual context

A well defined goal is critical because…

Setting your Goals

is the First step towards

Achieving them.

RPG - Goal Setting Philosophy

• Goal setting helps define parameters against which performance is evaluated

• Goal setting drives organizational priorities and helps focus on key initiatives in line with the strategy

• Goals will challenge individuals and drive performance

Goal Setting – the first step

Existing Principles

• Uses the framework of BBSC

• BBSC Parameters defined by each company

• Mutually agreed between supervisor and employee

• Goals should integrate into the overall organisational goal

Example of company BBSC for the year gone by.Perspective / Objectives Measure Weights Target Value Floor

ValueFINANCE 25 Improve Profitability ROCE 5 12.99% 10.20%Improve Cashflow Operating PATD - Rs. Crs. 15 88.02 70.31

Benchmarking with Industry EBITDA margin gap with average of Top 3 players 5 < 1.25% <1.5%

CUSTOMER 20 Increase Replacement market share a) Truck - Without STU No.Tyres - Avg. Sales /Month 10 87,620 78,109 b) Non-Truck Rs.Crs - Avg. Sales /Month 6 48 35Increase Speciality Sales Avg. MT/month 4 1,096 794OPERATIONS 22 Own production MT 5 136,800 131,210Improve Operational efficiency a) Bhandup Conversion cost Rs./Kg * 5 15.83 16.08 b) Nashik Conversion cost Rs./Kg * 5 16.78 17.45

Benefits from A.T. Kearney project Annualised savings in Rs crores 4 Rs 6 cr/yr by H2FY08 Rs 4 cr/yr by H2FY08

Reduction of Headcount Manpower Nos. 3 5975 6202STRATEGIC 23

Doubling of Giant OTR capacity Start - Aug'07 /Complete - Oct'07 2 Aug-07/

Oct-07Oct-07/Dec-07

Complete New financial re-structuring Delisting - Jan'08 /Relisting -Feb'08 3 Jan-08 /

Feb-08Feb-08/Mar-08

Start Bhandup Replacement unit Meeting Milestones 5 - -Sale Of Bhandup Land Meeting Milestones 3 Jan-08 Mar-08Identification of Technology partner and RoadMap for New Radial Plant Meeting Milestones 10 - -

ORGANISATION 10 Improve Employee Engagement ESS (%) 3 68% 63%Organisational Development Meeting Milestones 3 - -RPG Organisational Excellence Score out of 1000 4 600 572GRAND TOTAL (Full Score) 100

BBSC: Balanced Business Score Card is a

management tool that provides stakeholders

with a comprehensive measure of how the

organization is progressing towards the

achievement of its strategic goals.

Comprehensive: It takes into account various perspectives / outlooks of the business

If we succeed, how will we look to our shareholders?

Financial Perspective

To achieve our vision, how must we look to our

customers?

Customer Perspective

To satisfy our customers, which processes must we

excel at?

Internal Perspective

To achieve our vision, how must our organization learn and

improve?

Learning & Growth Perspective

The Strategy

Perspectives of BBSC

• Make sure that the BBSCs of the team members are aligned to the HODs• Make sure that the Target Levels and Floor Levels are clearly mentioned.• Ensure that the weights are well defined and adds up to 100.• BBSCs can be used with the general framework or can be modified to suit business

requirements.

CEAT Raychem RPG KEC CESCFinance Finance/Profit Finance FinanceOperations Customer Customer Customer

Strategic Process Business Process Business Process

Organisation Learning Learning and Growth Learning and Growth

(Modified based on business or functional need)

Things To Remember

The above example shows how the scorecard at corporate level is cascaded to division level, and further to plant level and employee level.

Level of Organization Financial Customer Internal Process Learning & GrowthCorporate Scorecard Increase profit margin Improve customer Increase inventory turns Increase level of

satisfaction level Improve internal process employee competency

Division Scorecard Optimize cost of production Improve customer Increase inventory turns Increase level ofReduce inventory levels satisfaction level Improve internal process employee competency

Plant Scorecard Optimize cost of production Increase percent of Increase inventory turns Number of "on the Increase yields ratio on time delivery Reduce number of defects job training" deliveredIncrease labor productivity Reduce customer per million Number of performanceReduce inventory levels complaints per million Improve quality incoming coaching session

materialsMaintain optimum equipment speed

Frontline Employee Reduce waste Reduce equipment downtime Number of "on the Scorecard Reduce overtime Reduce number of poor job training" attended

Increase production rates solders Number of performanceReduce number of cracked coaching session bulbs attended

Drill Down

Guiding principles

• Goals have to be written across all aspects of the BBSC

• Goals should be role relevant: i.e. what are the activities, numbers

that are within my locus of control

• 85% of weightage should be to the big 3 / 4 items i.e. key priority

expected from your role

• Criticality of the goal and not time spent will define weightage assigned

Some Examples

A goal must have

• An objective statement – What will I do

An example of an apt goal

To increase sales…

• To increase sales by 10% over last year without reducing profit margin

• Increase the average Plant Load Factor from current 90% to 95% without increasing overtime

• To discuss, document and submit all team members goal sheets by 30 April to HR

• A standard – measure of how I am doing

May have

• A condition – What do I need to keep in check

…by 10% over last year

…without reducing profit margin

Are these Goals effectively written?

Performance Objectives have to be

Specific(concrete, detailed, well defined)

Measurable(numbers, quantity, comparison)

Achievable (feasible, actionable)

Realistic

Time bound

SMART Principle

Checklist for SMART Goals

SPECIFIC

• WHAT am I going to do?

• WHY is this important for me to do?

• WHO is going to do what? Who else need to be involved?

• WHEN do I want this to be completed?

• HOW am I going to do this?

SMART Principle

MEASURABLE

• How will I know that the change has occurred?

• Can these measurements be obtained?

ACHEIVABLE

• Do I understand the limitations and constraints?

• Can we get it done in the proposed timeframe?

• Can we do this with the resources we have?

• Has anyone else done this successfully?

SMART Principle

REALISTIC

• Is this possible?

• What resources do I have / need to achieve this objective?

• What do I need to priorities to make this happen?

SMART Principle

TIMEBOUND

• When will this objective be accomplished?

• Is there a stated deadline?

SMART Principle

Are these goals effectively written follow up exercise…

Can we make them (more) effective using the SMART principle

Setting Floor levels and Stretch targets

• Floor Level – The basic minimum at which the score is zero

– E.g: Sales that is achieved last year– Reduced number in employee attrition just by doing a salary correction

• Target Level – The result achieved through efforts beyond normal. Target is usually a stretched one.

– Benchmarking the industry best– Percentage increase in the last year’s figures

* Floor and Target Levels are mutually set based upon discussions between you and your supervisor and approved by top management

What is the role of the supervisor

What is the role of the employee

We all have a role to play

Role of the supervisor

• Ensure all relevant reference material is available

• Help formulate apt goals– Objective is well laid out

– Measure is clear

– Condition is clarified

• Assign standardised goals in a team

• Account for personal aspirations where possible

• Explain organisational context

• INVOLVE THE EMPLOYEE

Role of the employee

• Understand the organisational context

• Formulate complete goal statements

• Take personal responsibility for follow up

• Identify constraints and support required early on

• Keep a copy of the agreed and signed goals

• Plan your work and work your plan

Process of goal setting - Individual

Refer to

• Current supervisor’s goals

• Last year’s goals

• Objectives databank (being developed)

• Key behaviour indicators against competencies (being developed)

• Take the e-learning course on goal setting

• Personal aspirationsDraft objectivesEnsure ‘SMART’ goals

Assign weights

Agree on levelsRealistic floor levelsChallenging Stretch targets

Ensure alignmentCollaborate on contradictory goals Ensure standardized expectations

Documentation

Sign completed documentsKeep one copy with employeeForward original toHRD

Ownership of goals

Individuals preparing for the Goal Setting

• What went well last year? What helped me?

• What are the function’s / team’s objectives?

• What are the immediate priorities?

• How can I contribute to these?

• What do I need to do this year?

• What support will I need?

• How will I know that the job is done / well done?

10-Mar

10-Mar

25 Mar

12 Apr20 Apr25 Apr

5 Apr

30 Apr

Monitor HOD

HR

Report to MD and Group HR

Organization wide Goal Setting Process

If we don’t know where we are going

any road will take us there.