Score-cards are and not working. Why and what to do?

Performance appraisal area

Performance management consists of performance indicators, monitoring, appraisal and effect – feedback and salary.

Performance appraisal comes out of a need to estimate, evaluate or appraise if agreement between manager and employee is fulfilled from employee part. Then employer does his part – pay salary and bonuses.

Beedo lets to organize performance review to task level, day goal, week or month goal.

How often performance review and appraisal should be done? Lets refer to main human longings. One on them is result, while another is a process. More often we achieve our expected results more often happy we are. Taking into consideration that we do errors, longer periods of measure are too long. For example yearly measurement allows us to do up to 50 errors in life…

There are other motives to make performance appraisal more frequent:

• Mentality – a lot of people are able to look only a day – week ahead. Longer perspective is worthless because they cannot take it;
• Feedback loop speed – more often manager gives feedback to employee, more speedy self development may be;
• Economical – our home life is based on daily, weekly and monthly purchases so majority of money we are used to get in these frequencies.

Performance appraisal consist of 3 key elements:

• generic performance appraisal (GPA);
• key performance indicators (KPI);
• key business indicators (KBI).

Generic performance appraisal GPA
measures what efforts where dedicated and what tasks where done. It can be used in work areas, where:

• jobs is not highly specialized. Usually it happens in small medium business, or corporates’ duties with mixed activities;
• professions, where KPI achievement takes long time or each time budget is unique for task.  A lot of creative work is like this: designing, programming, selling, recruiting, etc.

Key performance indicators KPI
are used when result is achieved within a accountable period (day, week or month) as:

• sales leads per day, sales revenue per month;
• production item produced per day;
• calls or emails answered a day.

Quite seldom due to business changing environment KPI is fully applicable for employee performance evaluation.
Key business indicators KBI
are based on money factors:

• sales volumes, revenue, net profit, ebit, ebitda, market share;
• may be related to absolute numbers, targets or increase (delta);
• KBI is used for management performance as only they are fully responsible for achieving of such results.

As this is quite simple indicator to measure, get data and mostly used – we will not analyze it deeper here.
Why GPA is a good?

• GPA requires more attention to justify results but output is more clear;
• KPI requires much less intervention of manager, but becomes useless if business circumstances change within employee review – accounting period;
• Very rear there is 1 KPI, which is simple to understand – usually managers what to add 3, 4 even 5 – This reminds the requirement to sit on 5 chairs, while You have only 1 back;
• GPA has only 2 performance indicators: efforts and productivity rate (%). They are standard, cannot be changed.

GPA environment
GPA requires task and project management environment including priority adjustment process which is very new and modern, while KPI requires only regular business statistics (leads, revenue, production, calls, emails and so on.)

JST Verozona experimented 6 years of trying to implement KPIs. Also are known experiments in other companies like Coca-Cola for more that 4 years. After 10 years or experiments company finally moved to GPA performance appraisal in 2008. Today it has 4 years of GPA experience with developed methodology.

Professions can be hardly moved under KPIs and here are some performance appraisal examples:

• Recruitment works – recruitment cycle never matches month or even quarter, value of each recruited person;
• IT maintenance – you cannot focus on reducing cost, because without long term perspective it may ruin Your business. Up-time measurement is achievement of long work (6-12 months) and investments for what employee may;
• Person responsible for promotion organization. Promotion cycle rare matches regular month, not often is possible to exclude impact of responsible person to all activities of companies to get good or bad sales results of promotion;
• Programmer. Only team of programmers delivers the version (iteration). Iteration scope is a mater or project manager or customer;
• Customer support via calls or emails. Call or email may be long or short. If blindly apply KPI rule, then starts fight in the team for easy jobs, when hard answers (most valuable for customers) are voided;
• Project or team managers – project scope depends on customer needs, focus to price or quality always depends on situation;
• IT Helpers, documentation writers, architects – there is nothing recurrent in their work, so no point to attach to KPI;
• Business development or partnership developer. To make contacts, relationships and eventually sales takes years, there no volume of leads than creativity of approach;
• Accountants or financial analysts. Seems to be ideal routine professions for KPI, but my experience in Coca-Cola HBC of implementation of KPI in finance department was a failure. Just because You (finance manager) cannot not to deliver the reports on time, number or documents if FMCG triples in summer vs winter. There are cases of transactions which require tons of time. We could prolong this long list of professions why KPI is not performing and why Verozona went to GPA.

Introduction of GPA

• work has to be organized in task, project, priorities framework
• work is based on time forecasting and actual recording
• work duration is based on experience of employee and verified by experience of manager
• should be done and approved daily or weekly plans manager should appraise team every morning or once a week

And here comes a lot of even unforeseen benefits:

• Employees start thinking ahead – because process requires. Initially it is like pain of muscles (actually mind), but afterwards You have colleagues looking to perspective;
• Working effort – hours becomes an important issue, which solves the habits to hide some morning hours of coffee time, long lunch, sleep after lunch, easy leave a job, and sickness (pretended or real);
• Priorities are aligned daily or weekly. This is good for manager to expect right and for employee to be sure what to do;
• Discussions about speed of doing some repeated tasks (because You have history of previous and may analyze it to shorten;
• Overview what is possible to do within a day or a week of Your team (because each team is unique in capabilities);
• Reward or punishment comes next morning – so soon to get instant feedback loop;
• Good foundation for next organizational step process management (without this it does not work).

Beedo is a project and teamwork management, software and training services developed with all performance management cycle: from brainstorming of project, delegating tasks, day planning and approval, and finally – GPA performance review and appraisal for improvement of Your team or company.