The Scorecard

Most companies have started to do away with the ‘Bell Curve’ employee appraisal system. Some of the global giants that have moved away from it include Accenture, IBM, Infosys, Wipro, and TCS. The shift was necessitated to focus on appraising employees on individual performance and one involving a more regular feedback mechanism than an annual or quarterly activity.

In most organizations, the traditional performance evaluation system is being replaced with a system that considers various dimensions of an employee's performance such as business results, impact on client success, innovation, personal ownership & responsibility to others, and skills. It also leads to rewards being given in real-time for good performers and helps others to better their performance on a consistent basis. The regular feedback mechanism allows under-achievers to improve their performance at the right times and motivates them to try and meet the targets. One of the major reasons behind this shift is retaining talent.

Thanks to technology and digitization, it is possible to provide regular feedback to employees and align the individual with the organization in real time to create a win-win situation where both sides are happy and expectations are clear.

An organization and its people are much more successful when they operate with clarity and purpose. Everyone inside an organization performs better when they know what their roles are and why they do what they do. This helps to develop strategic thinkers across the organization with a focus on innovation, persuasion, communication, results orientation, future potential, credibility, business aptitude, and people skills. To provide a clear view to employees, it is important to have the KRAs defined objectively and the need to move away from subjective to objective KRAs. An organization should ensure that all senior and mid-level managers have all the KRAs defined objectively whereas the level below can have over 60% of objective KRAs. The biggest advantage of objective KRA is receiving a regular scorecard that depicts where one stands with respect to the defined KRA. This helps employee know where they are lacking and where the focus needs to be instead of waiting for the year-end.

In addition, it is important to have a recurring monthly meeting between the manager and the employee to:

·     build trust

·     foster a closer relationship

·     create a positive work environment

The biggest advantage of an objective KRA and a regular discussion is that instead of comparing employees relatively against each other, it focuses on positive and weak points of employees that they can improve upon.

Following is a broad set of KRAs that can be objectively defined and considered by an organization as part of its employees’ scorecard. However, the applicability criteria will depend on the organization’s size, revenue, and other factors.

Net Promoter Score (NPS)

The Net Promoter Score measures the willingness of customers to recommend a company’s products or services to others. It is an index ranging from -100 to 100. It is used as a proxy for gauging the customer’s overall satisfaction with a company’s product or service and the customer’s loyalty to the brand.

The Customers are surveyed on a single question and are asked to rate on an 11-point scale the likelihood of recommending the company or brand to a friend or colleague.

·     ‘Detractors’ gives a score lower or equal to 6.

·     ‘Passives’ gives a score of 7 or 8.

·     ‘Promoters’ gives a score of 9 or 10.

The Net Promoter Score (NPS) is then determined by subtracting the percentage of customers who are detractors from the percentage who are promoters. The passive customers are considered as neutral. 

Customer Satisfaction (CSAT)

CSAT is a measure of how products and services supplied by the company meet or surpass customer expectation. In today’s competitive marketplace where businesses compete for customers, customer satisfaction is viewed as a key differentiator and a key element of business strategy.

In case of CSAT, the respondent has to express his/her satisfaction for a certain release on a score from 1-5. Individuals who rate their satisfaction level as '1,' by contrast, are unlikely to return and can hurt the firm by making negative comments about it to prospective customers. Individuals who rate their satisfaction level as '5' are likely to become return customers and might even evangelize for the organization.

CSAT scores are expressed on a scale of 0 to 100 percent, with a score of 100 representing total customer satisfaction. Below is the calculation for CSAT:

The number of satisfied customers includes respondents who provide a rating as “4” or “5”.

% of Satisfied Customers = (# of Satisfied Customers / # of Satisfaction Survey Responses) * 100

Revenue

Revenue is the overall income that a business earns from its normal business activities, usually from the sale of goods and services to customers. Senior-level and mid-level managers have a large influence on the revenue generation. Having it as a part of the scorecard will have more accountability and ownership on them to drive additional revenue - by identifying newer opportunities with the existing, previous and newer customer on various requirements and change requests.

Gross Margin

Gross margin reflects the total sales revenue minus the overall cost divided by total sales revenue. It is important that to meet the revenue target set by an organization, one should have a strict control on the cost. If this is not monitored closely, the revenue target might be met but the overall project may not be profitable. Hence, this could be one of the key KRAs that would encourage managers to plan and execute better and not overshoot the resources.

Gross Margin (%) = (Sales Revenue – Direct Cost) / Sales Revenue

Attrition

It's a familiar saying: "People leave managers, not companies". According to a Gallup study, around 50% of employees leave their company to get away from their bosses. Managers should build the trust & loyalty and create the right opportunities for the employees, and praise for a job well done, as everyone likes and need to be appreciated. Hence, attrition can be an important objective KRA where managers have a big role to play in retaining their team members.

Attrition = Number of employees who left the company during the year / Average number of employees

Thought Leadership

There are many ways in which a leader can contribute to the organization and lead by example. They can help the team grow by sharing knowledge and conducting training. Additionally, leaders can contribute by writing blogs and encouraging other to write that goes a long way in contributing towards the organization’s growth.

Project Health Metrics (PHM)

Once a project plan has been created, the onus moves to execution and tracking. A project plan is never final and has to be refined as the project goes along. How well it is managed, tracked and the process adhered to defines the project success. Quality Auditors can be an external team that can conduct audits from time to time and specify the health in terms of a pre-defined scale. The score can give an indication of how well the project is progressing and the need for intervention.

Applied Innovation

A team should continuously strive to produce better quality and in less time. For this, they can automate repetitive tasks, make recommendations that add value or identify tools that make their task simple and reduce the overall effort and enhance efficiency. This goes a long way in delivering what a customer expects versus what value-add can be offered that makes customers happy.

Utilization

There are various instances where an individual continues to be on the bench and would like to remain on the bench wherein they are unwilling to take up options being provided to them. To overcome this, every individual can have a utilization target so that they are continuously on the lookout for an opportunity to get themselves allocated to projects. This will help an organization improve the overall talent utilization.

Utilization = Average hours worked / Available hours

Team Quality

When a project is executed, there are a group of people who come together to accomplish certain tasks. Each individual plays a different role. There are certain attributes that are required to work as a team to deliver the expected output. You can define criteria that are accomplished at a team level e.g. velocity in an agile project. This would mean if a certain %age velocity is not accomplished, the entire team will be impacted. So, a team member should be willing to help others to ensure the overall team velocity is achieved.

Individual Quality

During project execution, the team members need to possess qualities that help in smooth delivery. A certain part of those traits can be included as part of the KRA e.g. quality of the output. This may include the number of bugs that were introduced in each sprint by an individual OR number of fields issues that were reported over a certain timeframe.

Above are just some of the guidelines or pointers to define objective KRAs which can be tracked and provide regular feedback to the individuals. This would help an individual retrospect as to where they are faltering and not wait until the end of the review/appraisal cycle and become a well-rounded leader.

Do share your thoughts on setting up objective KRAs that have been successfully tried and tested by you, on your teams.