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Thursday, 31 January 2013

Part 5- How to define Performance Rating scale and associating it with performance percentage?


How to Build mature performance management system without any automation software?- Part 5- How to define Performance Rating scale and associating it with performance percentage.



Many organization use rating scale to define performance of an individual. Often, there is confusion in the mind of HR professional, on deciding what should be the performance rating pattern i.e. whether to choose 5 rating scale or 10.

I have used both the rating scales and find 5 rating scale is better and easy to monitor. It also can be understand by both employee and manager easily. Although more than rating, meaning of rating is important. If rating 1 is considered as top level performance, then employee will consider it superior, else if, rating 5 is considered as top level performance, then employee will consider it superior.

For my HR friends, I am sharing below, which describes, 5 Rating scale along with significance of rating scale, detailed meaning of rating, suggested bell curve distribution and what is the action plan suggested for manager to take against employees who scores respective rating. For my friend who do not understand concept of Bell curve can google it. In brief, it is basically a performance pattern which can be exhibited by a group of employees.


Rating 5 (Exemplary Performance)
Meaning :  Performance is exemplary. Extremely smart worker, who successfully innovates and is cut above the rest of his peers in terms of ability.
Distribution %  : 10%
Plan of Action against each Rating ( to be provided by Manager ) : i.   Growth Roadmap : options of growth for employee as foreseen by Manager. Action plan to groom the employee towards same. Ii. Promotion Recommendations : Ready for next level growth and same should be recommended with supporting

Rating 4 (Exceeds Expectation)
Meaning :  Performance substantially exceeds the standard expected in all areas of the job. The review / assessment indicates that the jobholder has not only achieved effective results against all of the performance criteria but also has been able to give Value addition to client in terms of impact & satisfaction.
Distribution %  : 25%
Plan of Action against each Rating ( to be provided by Manager ) : i.   Growth Roadmap : options of growth for employee as foreseen by Manager. Action plan for grooming the employee towards the same. Ii. Promotion Recommendation : Ready for next level growth and same should be recommended with supporting i.   Growth Roadmap : options of growth for employee as foreseen by Manager. Action plan for grooming the employee towards the same. Ii. Training Needs

Rating 3 (Meets Expectation)
Meaning :  Employee is meeting the job expectation set for profile. 
Distribution %  : 45%
Plan of Action against each Rating ( to be provided by Manager ) : i.    Opportunity Areas : areas that the person can focus on for further growth or development for higher rating ii. Training Needs.

Rating 2 (Does not meet expectation- But can be improved)
Meaning :  Employee is not meeting expectation set for him. Need improvement. There is possibility of improvement in performance if given guidance. 
Distribution %  : 10%
Plan of Action against each Rating ( to be provided by Manager ) : i.      Grace : Borderline. Not met expectation due to external factors and hence given grace, ii.      PIP : Improvement required and hence to be put in PIP iii. Drop from role / organisation due to incompetence

Rating 1 (Does not meet expectation- Poor Performance)
Meaning :  Employee is not meeting expectation set for him. Very poor performance and need immediate improvement. 
Distribution %  : 10%
Plan of Action against each Rating ( to be provided by Manager ) : i.     Immediately put under PIP (Performance improvement Plan ii) Out of organization, in case no improvement


Relation Performance percentage with Performance rating:

Another question, which comes in our mind, how to relate performance percentages with performance rating? Now it can differ from manager to manager and organization to organization, but as HR you need to define a range which can be referred by both employee and manager. Of course, a little deviation is ok, let’s say 20% up or down but it should be monitored properly else every manager will have its own definition of rating scale and later on we will find it difficult to bring symmetry in same.

Below is the range, which I use for linking performance rating and performance percentages.

Rating            Significance                                                 Performance
5                      Exemplary Performance                           121% and above
4                      Exceeds Expectation                                 110% to 120%
3                      Meets expectation                                     90% to 109%
2                      Sometime meets expectation                   70% to 89%
1                      Does not meet expectation                       <70%




Further we will see, how above association is used to evaluate employee performance and assign performance rating to him?



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Wednesday, 30 January 2013

Medi-claim Insurance Policy : 4 ways to reduce premium cost by controlling claim ratio.


Medi-claim Insurance Policy : 4 ways to reduce premium cost by controlling claim ratio.



Many companies, now days, take Group Medical insurance policy for their employees’ welfare and most of the time it is HR department which facilitate inception and execution of this benefit to employee. HR department need to contact various vendors who provide medical insurance services and participate in designing of medical insurance policy for their employees. Here designing medical insurance policy means, selecting various features, benefits and constraints in the policy.

With my experience, I can say that a poor designing of medical insurance policy can lead to high claim ratio which means, a huge load on company, in terms of increase in premium next year or worst case that policy can be cancelled in between. As HR, we would surely not like to face both of the situations i.e. huge increase in insurance premium or cancellation of insurance policy in between.

What is claim ratio?
Claim ratio is basically a measure, to give ratio of premium paid by company and amount claimed by its employees.

Eg. If a company pay Rs 1,00,000/- as premium for medical insurance and its employees, all together, claims rs 5,00,000/- then the claim ratio will be 500%.

But obvious no insurance company would like to bear such loss, end of the day they are in business to make profit.

To avoid such instance here are few things which you can keep in mind while designing your insurance policy:

·         Co Payment Clause : Co payment clause means, employee also need to pay certain percentage of total claim amount.

Eg. If an employee, claims rs. 50,000/- and there is co-payment is of 10%, then rs 5000 will be paid by employee and rest rs 45000 will be paid through insurance company.

I would suggest that co payment should be in between 10% to 20%. Co-payment clause do help in reducing your claim ratio as employee becomes attentive to expenses happening for the treatment otherwise if employee knows that 100% claim will be borne by insurance company,  he becomes careless and hospitals do not wish to loose opportunity to claim maximum amount once they know that the person has medi-claim insurance policy.

·         Room rent Capping : It is another way of ensuring that employee do not take medical insurance policy as luxury but as a facility, which can help them in medical crises. Room rent capping means employee is restricted to take room of certain per day rent and in case employee take room of higher than decided maximum rent as per policy then employee need to bear extra cost by himself.

Eg. If the room rent capping is 2% of sum insured and sum insured is Rs 1 Lakh then employee can claim maximum room rent of Rs 2000 per day from insurance company and in case employee choose room where rent is more than Rs 2000 then additional cost will be borne by employee.

Now it is up to you to choose room rent capping percentage. Also I would suggest  thatwhile choosing capping on room rent, you should keep ICU admission without any capping so that in case of emergency and critical situation employee should not stopped from ICU facility.

·         Disease wise capping : It is wise idea to choose disease wise capping also. Medical experts have identified maximum expense which can happen on treatment of a particular disease, hence we can take this feature. This will stop hospital in overcharging.

·          Inclusion of Parents: Generally, claim ratio in medical insurance policy, where parents are included, is very high. This is due to the simple fact that senior citizen need more health benefits. Hence you need to see whether your company have budget to take load of such expenses. Hence premium of insurance policy with parents is very high.


Please share more ideas reduce claim ratio through your comments.

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Monday, 28 January 2013

How to Build mature performance management system without any automation software?- Part 4- Lets understand, how to Define evaluation of a KRA? ....continue..

continuation from Previous blog.... click here to view previous blog

  •      Employee induction KRA

It will be a good example to see, how we can evaluate Employee induction KRA. Employee induction is complete when few activities are completed. For our understanding we will not take all those activities but we will take two activities in our evaluation criteria to describe evaluation of Induction KRA. We will take Employee induction and Bank Account opening as two activities.
Let’s say TAT (Turn around time) to complete induction of an employee is 15 days and to open an account is 20 days then evaluation criteria will look like below:

Induction
Bank Account Opening




Induction Conducted in :
Score
Bank Account Opened in:
Score
<15 Days
130%
<20 Days
130%
15 Days
100%
20 Days
100%
16-25 Days
70%
21-30 Days
70%
26-30 Days
50%
31-35 Days
50%
More than 30 Days
-50%
More than 35 Days
-50%

  •        Employee Birthday Mail

As it is a task, which will take very less time and also carry 5% weight-age. Simple way to evaluate this KRA is to see how many days HR executive has not sent Birthday mail.

Hence following evaluation criteria can be put in place:

Miss to send Birthday mail              :           0 time :          100%
                                                            :           1 time :           50%
                                                            :           2 times or above :     -50%

There are two important points, which you can observe in above evaluation.
  • ·        There is no slab for giving more than 100% performance, which means, it is not necessary to give more than 100% in every KRA evaluation. There could be some KRA, where you as manager, would not like to give more than 100% or there is no chance of getting more than 100% in that KRA. But please note that number of such cases should not be more.
  • ·        Also, HR executive has been penalized by given -50% performance, if he forgets to send B’day mail 2 times in a month. It is due to importance of this task and HR executive should not miss it twice a month.

I am leaving preparation of evaluation criteria of Exit Formalities and Miscellaneous work KRA on readers as exercise.

There could be some KRA, where you don’t want to associate any evaluation criteria but want to give performance percentage by yourself then it is doable although not advisable. Such evaluation criteria will be called qualitative, which allow manager to give performance percentage directly without any evaluation criteria. This can be done in case of KRA which are difficult to evaluate. As I said above, all KRA can be evaluated through data and logic but some KRA evaluation need more time to prepare data point hence manager do not wish to evaluated it and want freedom to give performance percentage by themselves which is ok.


Points to keep in mind while defining KRA, weight-age and EVALUATION CRITERIA
  • ·        EVALUATION CRITERIA should always be discussed with employee and buy in should be taken else employee will not be with you and will tell story in case employee do not achieve good performance percentage at end of month.
  • ·        Once agreed upon, it should be sent to employee over email and acceptance should be taken.
  • ·        Any change in KRA, weight-age and EVALUATION CRITERIA, due to any reason, should be communicated back to employee in formal way.
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How to Build mature performance management system without any automation software?- Part 4- Lets understand, how to define evaluation of a KRA?



Evaluation Criteria against each KRA
This is one of the difficult tasks which functional manager and HR manager will face. 

I would suggest both functional and HR manager to spend quality time on this because it is the measurement criteria which will decide performance level of an employee.

I have seen many functional managers stating that some of their KRA can not be measured in quantity. But I feel that there is nothing which cannot be evaluated in quantified term, but it is true that some KRA need lot of efforts to measure. Now the decision which we need to take is whether we want to spend that much of time and energy to evaluate that KRA or we would like to keep it as qualitative evaluation where there is no as such data behind the evaluation and performance is given on manager judgement.

Please note followings while preparing evaluation criteria:
  • Evaluation criteria should not be very lenient or strict.
  • In case of lenient evaluation criteria, employee will over score and in case of strict EVALUATION CRITERIA, employee will underscore.
  • Employee evaluation should be strictly on EVALUATION CRITERIA defined. In case of any change in evaluation criteria it should be properly communicated to employee before implementation.
  • Employee should get 100% as performance in a particular KRA, when he do exactly what is expected from him. E.g. If a person is suppose to do 40 calls in a month then he should get 100% if he do 40 calls.
  • There should be provision (performance slabs) of scoring more than or less than 100% also.
  • There are some KRAs, where you don’t want to give more than 100%, in that let the highest be 100% and do not keep any slab for more than 100%.

Example:

Let’s take example of above profile and try to define evaluation criteria for each KRA. Reader can change it as per their own company design and process.

  •  Recruitment KRA

Below is a sample,  to define evaluation criteria for Recruitment KRA. Let’s say, HR executive is expected to fill any position within 30 days then following can be evaluation criteria:

RP Closed in :
Score
< 28 Days
130%
29-28 Days
120%
30 Days
100%
31-40 Days
70%
41-50 Days
50%
More than 50 Days
-50%
Hiring Open Till Date
-50%




Now you can see that person has been given 100% for closing a position in 30 days wherein there are options if person close the position before or after 30 days. You as a manager can change the evaluation slab and performance percentage against each slab. Also, you must have noticed that HR executive is getting maximum 130% and minimum -50% for recruitment. Maximum performance percentage has been kept as 130% considering that it is difficult of a person to achieve more than 130% in most of the KRA (today even if employee can give 100% of what is expectation from him then also management will be super happy J ). Minimum performance percentage has been kept as -50% to penalize employee who are falling at “not expected level” of evaluation criteria matter.

I am taking so much time to explain how to evaluate a KRA because if you understand how to make evaluation criteria for one then you will be able to make it for other.

In above case, we are assuming that one set of evaluation criteria will be sufficient to evaluate recruitment KRA, but let’s say, you need two set of evaluation criteria to evaluate single KRA. Example, if we say, HR executive should close below manager profiles in 45 days but manager and above profiles in 30 days, then we have two set of evaluation criteria to take care. Hence now it would look like as below:


Recruitment
Lead Executive and below
Managers and above
RP Closed in :
Score
RP Closed in :
Score
<42 days
130%
< 28 Days
130%
44-42 Days
120%
29-28 Days
120%
45 Days
100%
30 Days
100%
46-55 Days
70%
31-40 Days
70%
56-65 Days
50%
41-50 Days
50%
More than 65 Days
-50%
More than 50 Days
-50%
Hiring Open Till Date
-50%
Hiring Open Till Date
-50%

Now you can take average or weighted average of performance coming out of above mentioned two evaluation criteria, to get Recruitment KRA final performance.


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Friday, 25 January 2013

How to Build mature performance management system without any automation software?- Part 3- Giving weight-age to KRA.

How to Build mature performance management system without any automation software?- Part 3- Giving weight-age to KRA.


Weight-age of KRA:

Weight-age of each KRA is next important thing, which functional manager and HR manager should decide. One can keep following point in mind while deciding weight-age of KRA for each person.
  • ·    Organization objective : If any KRA is directly impacting organization objective then it should be given higher weight-age.
  • ·     Departmental objective : If any KRA is directly impacting departmental objective then it should be give higher weight-age after KRA impacting organization objective.
  • ·        Individual objective/ Other KRA : Individual objective should be given last place.
  • ·   KRA consuming more time should be considered important over KRA consuming less time. Still organization and departmental objective KRA will be on higher place.
  • ·        Total KRA weight-age should be 100%.

Example :

Assume, in our case, organization is in growth stage and its main concern is to hire quality manpower, then KRA weight-age recruitment KRA of HR Executive in above table i.e. Table 1, should be more, around 50%.

Keeping above points in mind, below is the weight-age of various KRA mentioned above:

Table 2:
S.No.
KRA
Sub KRA- Detail
Weight age
1
Recruitment
Getting ER (Employee Requisition)
50%
In case of new Profile Formulate JD along with HoD
Discussion with HoD for new Profiles
Searching profiles through Naukri, internal References etc
Telephonic Round
Align interviews and other coordination
Preparing Salary Chart and Salary Negotiation
Reference Check for Below Senior Executive Level
Offer letter issuance
Follow up for Acceptance of offer letter
Intimation to all Concerns about candidate acceptance
Monthly Job Profile Updation on Web Portal Check
Coordinating with Consultants




2
Employee Induction
Confirmation of Candidate Joining on DOJ
20%
Joining Formalities (Documentation, Medical Certificate, Checking certificates)
HR Induction
Coordination for Asset, I Card, Access Card, Email id etc
Aligning with HOD
Department Induction of Candidate
Preparation of Appointment letters
Handing over all documents to Documentation in charge
Post Employment Verification of New Joinees
Bank Account Opening




3
Employee Wishes Mail
Birthday Mail, Wedding Anniversary Mail
5%




4
Exit Formalities
Sending No Dues and Exit Interview form to Resigned Employee
20%
Assisting Signing Authority from HR on No dues
Issuance of Relieving and Experience Letter




5
Miscellaneous Work
Warning, Disciplinary, Appreciation Letters
5%
Coordinating of Monthly Performance Incentive distribution
100%


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