Presentation On Goals Setting

Goal Setting and the Performance Management System

Appolo Goma,

Feb. 2015

Effective Goal setting

What are Goals or objectives ? An objective describe something which has to be accomplished- a point to be aimed at. Objectives or goals can be used interchangeably. Goals define what organizations, functions, departments, teams, and individuals are expected to achieve.

Types of objectives; Work Objectives ( refers to the results to be achieved or contribution to be made to the accomplishment of corporate objectives) Developmental (learning objectives concerned with what individual should do and learn to improve their performance)

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Target Setting Target setting is the process of defining the performance level & outputs expected from team and individual employees within a specific performance period. The target set should: •Enables the definition and agreement of job objectives and key result areas for each job position •provides a basis (Key performance Indicator /measures) for determining the performance or contribution of an employee at the end of the appraisal period •Be SMART.

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Writing Performance objectives When writing down your objectives consider the following; •What is to be accomplished? •How will accomplishment be measured? •When is it to be accomplished? •Within what budget ? •Does it tie to the unit, departmental or divisional objectives

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Goal Setting Tool Kit Linking Individual Performance to Organizational Goals

• • • •

S.M.A.R.T. Goals Aligned Goals Calibrated Goals Cascaded Goals

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Effective Goal Setting Overall goal setting will help you and your direct reports: • Integrate the work unit’s business goals with people’s individual goals. • Agree on specific performance goals and the results expected. • Resolve differences to develop challenging yet realistic goals. • Develop an up-front, agreed-upon basis for reviewing and discussing performance, preventing surprises at the performance discussion.

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Benefits of Effective Goal Setting Goal setting will answer these questions for your direct reports: • What are the organization’s priorities? • What are my Division’s priorities? • What are my Department’s priorities? • What are my Manager’s priorities? • What am I expected to accomplish? By when? • How will I accomplish it? • What resources will I need to be successful? • What are the time/cost/quality constraints? • How will my manager and I know if I have successfully accomplished each goal? 8

Setting a practical and Relevant goalswhat to consider • Ensure that everyone involved in achieving a goal is involved in setting it. • Hold goal-setting conversations not only between managers and direct reports, but also with managers, colleagues, team members, and customers. • Ensure that each person in the system has a set of business-related goals to guide his/her actions throughout the year. • Hold people accountable for achieving their goals. • Review goals regularly and revise them when necessary to meet the demands of the changing business conditions. • Monitor progress of employee’s performance against goals they have set at the minimum every six months. 9

Features of an effective goal To be effective at guiding business success, goals need to be: • SMART -Specific/Measurable/Attainable/Relevant/Ti boundwith the System’s strategic goals • me Aligned • Calibrated using specific measures, weights, and number of goals • Cascaded to the right employees as appropriate. 10

FIRST, IT MUST BE SMART Setting SMART Goals If goals aren’t reachable, they aren’t worth setting. All you have to do to set realistic goals is follow the SMART goals guidelines

1.SPECIFIC- Your goal should not be vague. It should clearly indicate what you intend to achieve. For instance, What details do you want to accomplish?. I want to increase my profitability by 20%.

2.MEASURABLE - All goals should have a way to evaluate whether or not they were accomplished. There should be a clear measurement tools and techniques. Data should be available for measurement and/or analysis. If it can not be measured, it can not be improved. Hence, the inability to evaluate performance. 11

3. ACHIEVABLE - Goals must be something you are capable of reaching. It should be attainable. The goal must be set within the limit of organizational challenges and constraints. Although, targets are set to be achievable, they are not supposed to be comfortable. It should drive the employee to bring out the best in them, to be on their toes. That is how organizations achieve excellence.

4. RELEVANT - Make goals that are important to you and your business. The goal should correlate directly with your organization or business vision. For Departments and units within the organization, the goals must be a cascade of the organizational goals and objectives.

5. TIME BOUND - Make sure that you have a time set as a “dead line” so your goal is not unending. For instance, compare the following: “My goal is to be able to run a half marathon.” “My goal is to run in a half marathon by May of 2009”

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SMART GOAL

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LET US TAKE A LOOK AT THESE TWO SET OF GOALS

NOT S.M.A.R.T. “Try to improve our customer satisfaction as quickly as possible.” S.M.A.R.T. “Implement a customer satisfaction program to increase satisfaction rates by 10% by year end. Launch Program by July and work with peers to define our processes and protocol to support the program.” 14

SECOND, IT MUST BE ALIGNED!

Goal Alignment is making sure that the goals of individual employees support the strategic goals of the Organization. Goal Alignment Corporate> Division > Sub division >Dept. >Unit >Individual. Leadership goals & department goals must align with each other.

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SECOND, IT MUST BE ALIGNED! EXAMPLE of Alignment

Departmental Goals

Corporate Goals 1.

2.

3.

To achieve production capacity of 1250MT/Day of urea for 20 consecutive days in 2015 . To achieve 95% on time full delivery of product to customers in 2015 To reduce product defect rate by 10% in 2015

1.

To achieve zero Break down maintenance in the plant for 30 consecutive days in 2015

2.

To achieve 10% reduction in bagging Plant downtime in 2015

3.

To sample , analyze, & communicate Urea biuret result to Urea Plant within every 3 hours in 2015. 16

THIRD, IT MUST BE CALIBERATED Goal Calibration means Goal Measurement “What can not be measured, can not be improved” If this is true and the primary aim of setting target is to improve performance. There should be a valid means of evaluating and monitoring progress. Suppose you want to improve CS Index from 70.3% to 73.1 % (2.8% increase). The following matrix can be utilized; 1 2 3 4 5

= = = = =

less than 70.3% 70.3% to 71% 71.1% to 72% 72.1% to 73% 73.1 or greater

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THIRD, IT MUST BE CALIBERATED Goal Calibration: Weighting

• Goals should be weighted according to what the employee is accountable for. • Do not share the same weights for a goal when the employee’s responsibilities do not impact the weight. • Assign weights according to the goal’s importance and impact to the organization.

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THIRD, IT MUST BE CALIBERATED Goal Calibration: Number of Goals • Goals should describe what employees need to keep in mind as they go about performing and planning their day-to-day work. • Research suggests that the optimal number of employee goals is between 2 and 4. • Employees should be able to easily remember and recite all the goals in their goal plan. • Do not confuse goals with tasks.

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LASTLY, IT MUST BE CASCADED Cascading goals is a straightforward method for ensuring goal alignment.

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LASTLY, IT MUST BE CASCADED CHECKLIST FOR CASCADING GOALS Question

Considerations

Is this goal business applicable?

Does it support strategic goals?

Is it written in SMART terms?

Does it demonstrate the following attributes: specific, measurable, attainable, relevant, and timely?

For a cascaded goal, is it relevant to role of employee?

The employee must have attainability.

Do the tasks visibly support the goal?

Can the tasks be used to explain an employee’s effort to support the goal?

Is the number of goals manageable?

A plan may already contain noncascaded goals. There should be no more than 4 to 6 goals. 23

Cascading Goals: Example (CEO)

(Head of Operations )

(HR Manager)

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Goal Execution Goal Execution

Goal Alignment

Goal Review

How can you reinforce aligned goals in every day work? 26

Tips for Interactive Goal Setting •Clearly state the performance goal or standard expectations •Break it down into manageable components •Isolate resources needed to accomplish each component •Identify possible barriers •Develop a periodic time to meet and review progress 27

Supporting Goal Achievement To support goal achievement, there is need to find answers to the following questions: •What skills are needed? •What information/knowledge is needed? •What help/collaboration is needed? •What resources are needed? •What might block progress?

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The need to follow-up Regular Follow-up is Critical! •Supervisors & employees should regularly review goal progress •Dialogue keeps goals fresh and on track •Milestones can help to sustain motivation & excitement •Changing needs, priorities and resources may require goal adjustment, postponement or addition of a new goal

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End of Part 1

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Part 2

Performance Management Systems

Appolo Goma, Ag. Chief Operating Officer. 32

The Balanced Scorecard Back ground The balanced scorecard is a  strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. It was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework that added strategic nonfinancial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance. 33

Perspectives of the B.S.C • 



The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives: The Learning & Growth Perspective This perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement. In a knowledge-worker organization, people -- the only repository of knowledge -- are the main resource. In the current climate of rapid technological change, it is becoming necessary for knowledge workers to be in a continuous learning mode. The Business Process (Internal) Perspective This perspective refers to internal business processes. Metrics based on this perspective allow the managers to know how well their business is running, and whether its products and services conform to customer requirements (the mission). These metrics have to be carefully designed by those who know these processes most intimately; with our unique missions these are not something that can be developed by outside consultants 34

Perspectives of the B.S.C Cont’d •

•

The Customer Perspective Recent management philosophy has shown an increasing realization of the importance of customer focus and customer satisfaction in any business. These are leading indicators: if customers are not satisfied, they will eventually find other suppliers that will meet their needs. Poor performance from this perspective is thus a leading indicator of future decline, even though the current financial picture may look good. The Financial Perspective Kaplan and Norton do not disregard the traditional need for financial data. Timely and accurate funding data will always be a priority, and managers will do whatever necessary to provide it. In fact, often there is more than enough handling and processing of financial data. With the implementation of a corporate database, it is hoped that more of the processing can be centralized and automated. But the point is that the current emphasis on financials leads to the "unbalanced" situation with regard to other perspectives. There is perhaps a need to include additional financial-related data, such as risk assessment and cost-benefit data, in this category. 35

Identifying the components of the 4 perspectives

Financial perspective - how does the firm look to shareholders? Amongst the measures of success are: goals  Market share  Corporate  Revenue growth

 Survival

 Profit ratio

 Profitability

 Return on investment

 Growth

 Economic value

 Process cost savings

added  Return on capital employed  Operating cost management  Operating ratios and

 Increased return on assets  Profit growth  Measures  Cash flow  Net profitability ratio  Sales revenue

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Identifying the components of the 4 perspectives Customers perspective - How do customers perceive the firm?  Customer areas Particular service of focus would include:  New products  New markets  Customer retention  Customer satisfaction

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Potential goals for the customer perspective could include: Customer satisfaction New customer acquisition Customer retention Customer loyalty Fast response Responsiveness Efficiency Reliability Image 38

Measures for Customers Perspective Amongst the measures of success are:  Customer satisfaction index  Repeat purchases  Market share  On time deliveries  Number of complaints  Average time to process orders  Returned orders  Response time  Reliability  New customer acquisitions  Perceived value for money 39

Internal Perspective The Internal Perspectives seek to identify:  How well the business is performing.  Whether the products and services offered meet customer expectations.  The critical processes for satisfying both customers and shareholders.  Activities in which the firm excels?  And in what must it excel in the future?  The internal processes that the company must be improved if it is to achieve its objectives. *** This perspective is concerned with assessing the quality of people and processes.

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Potential goals for the internal perspective include:  Improve core competencies  Improvements in technology  Streamline processes  Manufacturing excellence  Quality performance  Inventory management  Quality  Motivated workforce

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Measures for Internal Perspective Amongst the measures of success are:  Efficiency improvements  Reduction in unit costs  Reduced waste  Improvements in morale  Increase in capacity utilization  Increased productivity  % defective output  Amount of recycled waste  Amount of reworking

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Learning & Growth Perspective The Learning Perspectives is concerned with issues such as:  Can we continue to improve and create value?

 In which areas must the organization improve?  How can the company continue to improve and create value in the future?  What should it be doing to make this happen? Potential goals for the innovation and learning perspective include: • New product development • Continuous improvement • Technological leadership • HR development

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Measures for Learning Perspective Amongst the measures of success are:  Number of new products  % sales from new products  Amount of training  Number of strategic skills learned.  Value of new product in sales  R&D as % of sales  Number of employee suggestions.  Extent of employee empowerment

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The Balance Scorecard Framework

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Defining objectives using the Balanced Scorecard

The Balanced Scorecard, developed by Kaplan and Norton at Harvard University, provides an excellent framework for defining goals and objectives and translating them into specific measures. Objectives defined using this framework are “Balanced” in that they are defined from four perspectives: 

•The Customer Perspective emphasizes satisfying the needs of customers.  •The Financial Perspective emphasizes the stakeholder concern about how efficient and effective the unit is at using its resources.  •The Internal Business Perspective emphasizes excellence at performing internal processes and in employee competencies.  •The Innovation & Learning Perspective emphasizes continuous improvement and the creation of value. 

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Defining objectives using the Balanced Scorecard cont’d The “Scorecard” measures the achievement of objectives. Begin by making a list for each objective of what is measured currently and what else could be measured.  Select those measures that present the most complete indication that the objective is being achieved. Try to limit the number of measures to no more than six per objective and be sure to measure results and desired outcomes, rather than processes. The measures you select will be your “Key Performance Indicators.” •The Customer Perspective measures often include customer service factors important to the customer, such as time to provide service, quality, and customer perceptions on meeting their needs. •The Financial Perspective measures include increases in funding from different sources, reductions of cost and risks, and enhanced use of assets. •The Internal Business Perspective measures include service delivery, core competencies and productivity. •The Innovation & Learning Perspective measures include time to create change, maturity of improvements, growth and competitive success. 48

Objective setting for the Balanced Scorecard Corporate Goals & Objectives (Based on Organizational Vision)

Divisional BSC Goals & Objectives ( Based on Corporate goals) Sub-divisional BSC Goals & Objectives ( Based on Divisional Goals) Departmental BSC Goals & Objectives ( Based on The sub-divisional Goals)

Unit BSC Goals & Objectives ( Based on the Departmental Goals)

Unit members tasks, Goals & Objectives ( Based on the Unit Goals)

Aligning & Cascading Corporate goals & Objectives on 49

Target Setting and Measurement for BSC Performance are measure by one or combination of these standards; Quantity ; physical units of production (e.g. MT), market share, No of errors, No of rejects, etc. Time ; meeting deadlines, servicing customers, completing a project Money; impact on profits, cost, budgets, debts, sales, income, etc. Baseline Setting •Baselines are usually best set from the data available from the previous year performance •The target for the year is set as % of improvement on the baseline considering * Available resources * Constraints in the systems * Strategies in place, etc. 50

Performance Management An important aspect of a Manager’s job is managing the performance of staff by •Setting goals with associates in line with overall business goals •Evaluating their contribution to corporate success •Recognizing them and rewarding their contribution

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Why Performance Management? • Identify Gap (if any) between expected and actual performance • Implement Strategy; ensure every one is working towards overall corporate goals • Instill the Values of the organization; the criteria, the priorities • Improve performance • Identify High potentials • Motivation • Promotion and pay decision

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s/ n

Setting goals and objectives for individual Employee

POSITION

BSC input

Source of Objectives/ Targets

Head of Division

Corporate Objectives

Divisional goals/ objectives

Sub divisional Head

Divisional Goals and objectives

Sub divisional goals & objectives

Departmental Head

Sub divisional goals and objectives

Departmental objectives

Unit Head

Departmental goals & objectives

Unit objectives

Unit Members

N/A

Unit objectives

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Setting goals and objectives for individual Employee Threshold – 75% of Target Normal – 100% of Target Stretch – 125% of the Target Scoring criteria ( Scale of 0 to 5) Threshold – 75% of 5 Normal –100 % of 5 Stretch & above - 125% of 5

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End of Part 2

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Thanks

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Our Guiding Principle Translating Our Strategy into Desired Outcomes MISSION Why We Exist CORE VALUES What We Believe in

Preserve the Core

VISION What We Want to Be STRATEGY How We Plan to Get there BALANCE SCORECARD How We Will Know That We Have Arrived STRATEGIC INITIATIVES What We Need To Do PERSONAL OBJECTIVES What I Need To Do

Strategic Outcomes

Stimulate Progress ( Manage Change)

“If you don't know where you are going, you're likely to wind up somewhere else!” Think of a goal as your final destination, if you don’t know what your final destination is, there is no way to plan on how to get there.

Goal = Success

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THANK YOU

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