Performance Control Tools at the Organizational Level

Definition of Performance Control

 The process of monitoring, measuring, and adjusting performance to maintain
desired levels.
 Organizational performance control tools are essential for measuring and
improving the overall effectiveness and efficiency of a company. These tools
provide valuable insights into various aspects of the business, allowing for
informed decision-making and strategic planning. Here are some of the most
common performance control tools used at the organizational level:

Importance of Performance Control

 Ensures alignment with organizational goals
 Facilitates effective decision-making
 Drives continuous improvement

Performance Control Tools

1. Key Performance Indicators (KPIs)- are quantifiable metrics that measure how
well an organization, department, or individual is achieving its objectives. In
performance management, KPIs are essential for tracking progress, identifying
areas for improvement, and making data-driven decisions.

KPIs can be financial, operational, or behavioral and are typically aligned with an
organization’s strategic goals. Effective KPIs are specific, measurable, achievable,
relevant, and time-bound (SMART).

Importance of KPIs in Performance Management

KPIs serve as a fundamental tool in performance management because they:

 Align individual and team efforts with organizational objectives.

 Provide clear metrics to measure progress and success.
 Allow for data-driven decision-making.
 Identify areas for improvement.
 Motivate employees by setting clear expectations.

Characteristics of Effective KPIs

 Specific: Clearly defined objectives.
 Measurable: Quantifiable metrics.
 Achievable: Realistic and attainable goals.
 Relevant: Aligned with the organization’s goals.
 Time-bound: Defined timeframes for achievement (SMART criteria).

How to develop effective KPIs

1. Define objectives: Clearly articulate the goals and outcomes you want to
achieve.
2. Identify key metrics: Select metrics that directly measure progress towards your
objectives.
3. Set SMART goals: Ensure your KPIs are Specific, Measurable, Achievable,
Relevant, and Time-bound.
4. Consider data availability: Make sure the data needed to track your KPIs is
accessible and reliable.
5. Align KPIs with rewards: Tie KPIs to performance evaluations and rewards to
incentivize achievement.

Examples of KPIs across different industries

 Sales: Revenue, sales volume, average order value, customer acquisition cost,
customer lifetime value
 Marketing: Website traffic, conversion rate, social media engagement, brand
awareness, market share
 Customer service: Customer satisfaction ratings, customer churn rate, first-
contact resolution rate, average response time
  Operations: Productivity, efficiency, defect rate, on-time delivery rate, cost per
unit
 Human resources: Employee turnover rate, employee satisfaction, training
completion rate, time-to-hire
 Finance: Profitability, return on investment (ROI), debt-to-equity ratio, cash flow

2. Balanced Scorecard (BSC)

Understanding the Balanced Scorecard

The Balanced Scorecard (BSC) is a strategic performance management tool that
helps organizations align their business activities with their vision and strategy. It
goes beyond traditional financial metrics to include non-financial measures that drive
long-term success.

Key principles of the BSC:

 Strategy alignment: Ensures that all organizational activities are aligned with
the overall strategy.
 Balanced perspective: Considers four perspectives: financial, customer, internal
business process, and learning and growth.
 Cause-and-effect relationships: Identifies the causal links between actions and
results.
 Continuous improvement: Fosters a culture of continuous learning and
improvement.

Four Perspectives of the Balanced Scorecard

1. Financial Perspective:
 Measures: Revenue growth, profitability, return on investment, market
capitalization.
 Example: A company might set goals for increasing revenue by 10% and
reducing costs by 5%.
2. Customer Perspective:
  Measures: Customer satisfaction, market share, customer acquisition and
retention rates.
 Example: A retail company might aim to increase customer satisfaction by
20% and reduce customer churn by 15%.
3. Internal Business Process Perspective:
 Measures: Efficiency, quality, productivity, cycle time.
 Example: A manufacturing company might focus on reducing defect rates by
50% and improving production lead times by 30%.
4. Learning and Growth Perspective:
 Measures: Employee satisfaction, employee turnover, training and
development, innovation.
 Example: A technology company might aim to increase employee satisfaction
by 15% and invest in training and development to improve skills.

Developing a Balanced Scorecard

1. Define the organization's vision and strategy: Clearly articulate the
desired future state and the path to get there.
2. Identify critical success factors: Determine the key factors that will drive
success in each perspective.
3. Develop performance measures: Create specific, measurable, achievable,
relevant, and time-bound (SMART) goals for each critical success factor.
4. Link measures to strategy: Ensure that all measures are directly connected
to the organization's vision and strategy.
5. Implement and monitor the BSC: Collect data, analyze performance, and
take corrective actions as needed.

Benefits of Using a Balanced Scorecard

 Improved strategic alignment: Ensures that all activities are focused on
achieving the organization's goals.
 Enhanced performance management: Provides a framework for measuring
and improving performance.
  Increased accountability: Creates a shared understanding of expectations
and responsibilities.
 Enhanced decision-making: Supports informed decision-making based on
data and analysis.
 Improved communication: Facilitates better communication and
collaboration across the organization.

3. Benchmarking

What is Benchmarking?
Benchmarking is the process of comparing similar characteristics between or within
businesses, identifying the most successful practices, and integrating them into the
company procedure. It's a systematic way to assess your company's HR
performance, identify areas for improvement, and align practices with industry norms
and standards. After collecting data for comparison purposes, HR professionals can
better determine the benchmark—the target they want to shoot for.
Companies usually benchmark against similar competitors of the same size or
industry to understand how to incorporate better practices into their routines.

Types of HR Benchmarking

 Internal Benchmarking:
This type of benchmarking makes use of existing or provided data to understand
how departments, teams, and groups within an organization compare to each other.
This is an easy way to understand which teams are the most engaged, which
departments perform the best, which locations have a higher engagement score,
etc. Metrics such as employee engagement scores, time-to-hire, and training
effectiveness are commonly used. The average of all data collected would result in
the norm for the organization. As an example, if your organization measured
engagement across all departments and teams, and the net promoter score was
+50, that would be the average engagement across the organization. You’re then
able to understand which teams fall below or above that. That will help you devise
the right employee engagement plan for your organization.

 External Benchmarking:
This benchmark measures how your organization stacks up against other
organizations. It provides good context for the industry norm and whether your
organization is performing above or below that. These benchmarks are very useful
when determining your HR strategy for the year. They help you position yourself
favorably in whichever market you are operating in. Common metrics used are
Employee Turnover Rates, Time-to-Hire, Employee Engagement and
Compensation and Benefits.
Example: The Bank of the Philippine Islands (BPI) has been recognized as a leader
in employee experience within the Asia-Pacific region, ranking among the top five
banks in the twimbit Purpose Index. This recognition stems from BPI's
comprehensive training and wellness initiatives designed to enhance employee
engagement and uphold ethical standards. Key features include mandatory training
courses, wellness programs for holistic well-being, and continuous skill development
initiatives.

Key HR Metrics for Benchmarking

HR benchmarks encompass a wide range of metrics and practices, including but not
limited to:

 Employee turnover rate

 Time-to-hire
 Training investment
 Diversity metrics
 Employee engagement

Discussion:
Employee turnover rate

Employee turnover is the percentage of employees that leave your organization

during a given time period. Organizations typically calculate turnover rates annually
or quarterly. They can also choose to calculate turnover for new hires to assess the
effectiveness of their recruitment policy.

Why Employee Turnover Matters

Replacing an employee is expensive compared to retaining them. The
whole recruitment process must start again, which requires time and resources. If
your turnover rate is high, i.e., lots of people are leaving simultaneously, it can result
in:
 Extra expense in recruiting a replacement
 Lower morale for those who are left
 Shortage of skilled and knowledgeable workforce
 Loss of belief in team’s capabilities

When employee turnover has so many serious consequences, it makes business

sense to keep a tab on it so that you can take necessary action when it starts getting
high.

Voluntary vs. Involuntary Turnover

Voluntary turnover - When employees leave an organization of their own will,

typically to work in a different organization or relocate to be with their family.
Involuntary turnover - When employees leave an organization because they were
asked to do so. Retirement and firing are two of the most common examples of
involuntary turnover.

Turnover Rate Calculation

Here’s the formula to calculate your turnover rate percentage:
Annual turnover = [(no. of employees who left/average no. of employees) *100]
For example, say, your organization had 42 employees at the beginning of the year
and 62 at the end of it. And 13 employees left during the same period. To calculate
your average number of employees you would simply add 42 and 62, then divide the
total by two. Divide 13 (the number of employees who left within the time period) by
52 (the average number of employees), then multiply that number by 100 to get an
employee turnover rate of 25%.
annual turnover % = 13/52*100 = 25%

How To Analyze Your Turnover Rate

How good or how bad the turnover rate you have calculated depends upon your
industry. If we continue with our example, the turnover rate of 25% would be nothing
if you are in manufacturing or retail. However, if you are in education, you need to
investigate the reasons behind the high turnover rate.
Turnover rate is not just a metric. You should analyze it from different angles to
better understand the information hidden behind that number. To begin, ask these
questions:
 Who are the employees that are leaving? Is it the new hires that are leaving or
is it the senior ones?
 Why are the employees leaving? If it is the new hires that are leaving, is it
because they find a gap between what they expected and what they are actually
doing? Do you need to train them more or rework your job description to ensure
the right candidates are applying? If senior employees are leaving, maybe you
need to develop an upskilling or career management program to retain them.
 Is there any pattern in their departure? For instance, if more employees are
leaving just before or after the annual appraisal, maybe they are not satisfied with
the process or your standard increment rates.

Bottom Line
Turnover rate is an excellent indicator of what is wrong or right with your human
resources policies and the organization in general. You need to analyze and uncover
the hidden indications behind those numbers so that you can double down on what’s
working and improve what is not.

Time-To-Hire

Time to hire is a common recruiting metric. It measures the number of days between
a candidate applying for a job and that same candidate accepting a job offer. This
means that time to hire provides information about two important recruiting
processes.
 Recruiting efficiency. The time to hire metric measures the speed at which a
candidate is processed, assessed, interviewed, and accepted for a job. A long
time to hire indicates a slow and inefficient process with unnecessary
bottlenecks.
 Candidate experience. The time to hire metric is also an indicator of candidate
experience. If you were a candidate and could choose, you would prefer a time to
hire of two weeks rather than two months. A faster time to hire will lead to a better
candidate experience.

Time to hire vs. time to fill

Time to hire and time to fill are often confused, even by leading recruiting vendors.
However, they are radically different metrics.
 Time to hire measures the days between the candidate applying and accepting
the job offer.
 Time to fill measures the days between the approval of a job requisition and the
candidate accepting the job offer.

Time to hire and candidate slate

Hiring managers are often eager to interview candidates as soon as they come in,
especially when candidates seem highly qualified. Theoretically, a qualified
candidate could be hired in just a few days – after the usual phone intake,
assessment, and interview process. However, there is another process that is often
overlooked. This is the candidate slate.

A candidate slate is a list of candidates who are suitable for the job. Ideally, you will
want to wait until you have five to eight candidates before starting the interview
process. By the way, this should never take longer than a few weeks.

The idea behind this is that unless you are intimately familiar with the position you
are hiring for, you need a comparison. Having five to eight candidates provides you
the benchmark to make a good choice. The only exception is if the hiring manager
has hired 3 or more people in the same position in the past 2 years. In this case,
these interviews form the benchmark you need and you don’t have to wait until you
have a full slate.

In other words, it should never be the aim to have a time to hire of less than two
weeks. This is only possible if there is already a full slate of suitable candidates or
extensive interviewing experience for that specific role.

Average Time-to-Hire
Most of the research on recruitment speed has focused on time to fill instead of time
to hire. The Society for Human Resource Management (SHRM) reports an average
time-to-fill of 36 days.
However, time to hire can vary depending on several factors, including;
 Industry: Some industries, such as technology and finance, may have longer
hiring times due to the specialized skills required.
 Role: Higher-level positions may take longer to fill as there are fewer qualified
candidates. Urgency of position can also be a factor on the speed of hiring
process.
 Institution: Public institutions hiring process is generally longer compared to
private companies.
 Company size: Larger companies may have more complex hiring processes,
which can extend the time to hire.
 Location: Hiring in major cities like Manila or Cebu may be faster than in smaller
towns or provinces.

Training Investment

Training Investment is the amount of money and resources spent by the organization
on training programs, training infrastructure and other allied items related to
employee training. A lack of training often leads to poor performance. Unfortunately,
this poor performance is often blamed on the individual, when in actuality they were
not given the tools and knowledge required for success. Over time, this leads to a
revolving door of interviewing, onboarding, poor performance, low morale and,
finally, attrition. Training isn’t an expense—a lack of training is. When you invest in
training for your team, you are strengthening the entire organization. Regular training
has been shown to lead to higher engagement, employee retention rates and job
satisfaction.

Why Invest in Training?

1. Enhanced Skills and Knowledge refer to the improvement and expansion of an
individual’s abilities and understanding through training and education. This
enhancement can lead to better job performance, increased confidence, and the
ability to take on more complex tasks

2. Increased Productivity refers to the ability to produce more output with the
same or fewer inputs. This can be achieved through various means, such as
improving processes, enhancing skills, or leveraging technology. Well-trained
employees are more efficient and productive, which can lead to better
performance and higher output.
Example: In our unit, we automate repetitive data entries and use macros in
generating reports to lessen the time consumed in doing these tasks. BPI also utilize
the cloud technology wherein we put some reports in Microsoft Sharepoint Online for
a collaborative, efficient and secured organizing, sharing and access of data for
information generation.

3. Employee Retention: Investing in employee development shows that a

company values its workforce, which can improve job satisfaction and reduce
turnover. Training helps employees to gain new knowledge and skills which will
pave their way to opportunities for employee development and career
progression or promotion. If we train employees, we make them feel that they are
an integral part of the organization.

4. Adaptability: Continuous training helps employees stay updated with industry

trends and technologies, making the organization more adaptable to changes. In
the workplace, this means being flexible and open to change, which is crucial for
both individual and organizational success.

Example: Remote work and training. BPI have been implementing e-learning for
over a decade, wherein employees can enroll for online courses that will help us to
become better with our functions and other skills as well. Thus, when the COVID-19
pandemic hit, whenever applicable, BPI transitioned to work from home set up. The
shift from office based to online set up was smoother since the bank have already
inculcated as for this type of environment. Until now, trainings have been conducted
remotely through online videocalls, meetings and coferencing apps, which definitely
minimize spending while promoting a continuous learning.

Benefits of HR Benchmarking
Your people strategies can be more data-driven
The first benefit relates to awareness. The collection of data either internally or
externally gives you real insight into how your organisation is performing and
whether the policies you have put in place are working. From this you can make
data-informed decisions, which will give your people strategy further credibility.
Improved recruitment and retention
Benchmarking will also enable you to see how you are doing on the recruitment and
retention side of things compared to others in your industry. This is especially vital
right now as we find ourselves in the midst of ‘The Great Resignation.’ Do you offer
competitive salaries, benefits, holidays, remote working etc? From this you can
make the necessary adjustments and ultimately improve the quality of people you’re
hiring and it’ll also enable you to retain your best talent.
You can identify key trends
Regularly benchmarking will allow you to see developing trends within your
organization which you can use to affect your decision making. For example, if your
industry’s engagement rate is rising but yours isn’t, you can look at what other
companies are doing and implement employee engagement surveys. The results will
help you uncover why it’s an issue in your organization.
Continuous improvement
Ongoing benchmarking can lead to continuous improvement, if the data collected is
used correctly and acted on. Take this example; you notice that your eNPS scores
are quite far behind the industry average, this gives you an area to focus on and
improve and, as you know it’s based on data and not just a gut feeling, you are more
likely to see positive results.
This approach to continuous improvement will also ultimately benefit the
organization in meeting their overall goals. For example, if a goal is to reduce
overheads, then retaining employees and lowering turnover will be a big contributor
to this goal.

Steps in HR Benchmarking
1. Identify Metrics: Determine which HR metrics to benchmark.
2. Data Collection: Gather relevant data from internal or external sources.
3. Analysis: Compare the data to identify trends, gaps, and best practices.
 4. Implementation: Apply the insights gained to improve HR practices and
processes.
5. Review and Adjust: Continuously monitor and adjust strategies based on
benchmarking results.

4. Employee Engagement Surveys

What is Employee Engagement?

Employee Engagement is far more than just having a happy employee who is
satisfied with their job. A number of employees in your organization may seem
content and enjoy being in the office, but are they truly engaged?
Employee engagement is an emotional commitment; it is the drive that an employee
has to give it their all at work each day and put their best foot forward.
Engaged employees are motivated to work hard because they care about their work
and strive to help their organization reach its goals. They have a solid understanding
of their role and how it ties in with the overall company objectives. They tend to be
more customer centric, and take less time off of work.
Having a highly engaged workforce is crucial for the financial health of your
organization and can provide the following benefits:
 Increased Productivity
 Higher Employee Motivation
 Higher Customer Satisfaction
 Increased Sales
 Higher Profits
 Higher Shareholder Returns

Employee Engagement Surveys

Employee Engagement Surveys are designed to measure and assess how
motivated and engaged your employees are to perform their best at work each day.
From these surveys, you can gain insight into employees’ thoughts and attitudes
towards their work and the overall environment. You can also locate any areas that
may be holding your employees back from performing at their best.

Key Components of Employee Engagement Surveys

1. Survey Design and Structure
When conducting employee engagement surveys, give careful thought to the
approach. While online versions are popular, paper surveys may be more
successful in certain instances. Annual or biennial surveys can help you avoid
survey fatigue, and lifecycle surveys can be used at important times like hiring or
firing interviews. The use of quantitative (e.g. Likert Scale) and qualitative (open-
ended questions) elements can increase the effectivity of the survey. Feedback
from employees is much better when it is anonymous and confidential since
feeling safe encourages employees to provide their observations. Making sure of
these things can have a good impact on the process of employee engagement
as a whole.
2. Engagement Measurement Metrics
Engagement surveys should have a clear focus area or engagement topics.
Some surveys measure only one engagement metric while there are others with
different subsections. Key employee engagement metrics being measure in this
type of survey are:
 Job Satisfaction
 Employee Advocacy and Commitment
 Leadership
 Career Development

Benefits of Conducting Employee Engagement Surveys

 Improved Performance: Engaged employees are more productive and
contribute positively to the organization’s goals.

 Reduced Turnover: Understanding and addressing employee concerns can

lead to higher retention rates.
  Enhanced Workplace Culture: Regular feedback helps build a positive and
inclusive work environment.

 Informed Decision-Making: Data from surveys guide strategic decisions

related to HR policies, training programs, and organizational changes.

Implementation Strategies
1. Clear Objectives: Define the purpose of the survey and what the organization
aims to achieve.

2. Anonymity: Ensure responses are anonymous to encourage honest and candid

feedback. Anonymity is essential in increasing response rates and securing
genuine feedback. Employees must trust that their responses will not adversely
affect their professional standing or relationships within the company.
Guaranteeing anonymity promotes openness, leading to more accurate and
actionable insights from the survey data. Collaborating with Third-Party Partners
is one way of doing this. Ensure as well that there is no identifying information in
the survey form and present the data as a whole.

3. Regular Frequency: Conduct surveys at regular intervals (e.g., annually, bi-

annually) to track changes over time. Also, avoid survey fatigue. To prevent
overwhelming participants, consider deploying a series of shorter surveys spread
over a period, rather than one lengthy questionnaire. This strategy helps maintain
engagement levels, reduces the risk of fatigue, and allows the organization to
track shifts in employee sentiment over time.

5. Total Quality Management (TQM) as a Tool for Performance Evaluation

Introduction
Total Quality Management (TQM) is a comprehensive and structured approach to
organizational management that focuses on continuous improvement in the quality
of products, services, and processes. TQM involves all members of an organization
in the pursuit of high-quality standards, ultimately aiming to achieve customer
satisfaction. In the context of performance evaluation, TQM provides a systematic
method for assessing and improving the performance of individuals, teams, and
entire organizations by fostering a culture of quality and accountability.

Definition of TQM
Total Quality Management (TQM) is defined as a management approach aimed at
embedding awareness of quality in all organizational processes. According to
Goetsch and Davis (2014), TQM is a customer-oriented process that aims to
improve long-term success through employee involvement and continuous process
improvement. This definition emphasizes the importance of involving all employees
in the quality improvement process, from the top management to the frontline staff,
to ensure that every aspect of the organization contributes to delivering high-quality
products and services.

Importance of TQM as a Performance Evaluation Tool

1. Customer-Focused Performance: TQM centers around customer satisfaction,
making it an essential tool for evaluating how well an organization meets customer
expectations. By evaluating processes through a customer lens, TQM helps
organizations determine whether their performance aligns with customer needs.
2. Continuous Improvement: TQM encourages continuous assessment and
improvement of processes. It uses data-driven metrics to evaluate employee and
process performance, identifying areas for improvement and setting standards for
progress.
3. Employee Involvement: TQM emphasizes the active participation of all
employees. This collective approach ensures that performance evaluations are not
limited to individual metrics but also include contributions to team objectives and
overall quality improvement.
4. Data-Driven Decision Making: TQM relies on quality control tools such as
statistical analysis, process mapping, and benchmarking to evaluate performance.
This data-driven approach allows organizations to identify variations, understand
their causes, and take corrective actions.
Objectives and Purpose of TQM in Performance Evaluation
 To achieve customer satisfaction by continuously improving the quality of
products and services.
 To evaluate employee performance through the lens of quality metrics,
thereby driving accountability.
 To foster a culture of continuous improvement, ensuring that all employees
are contributing to organizational objectives.
 To use data-driven insights for evaluating process efficiency and
effectiveness.

Example: Toyota’s Implementation of TQM

Toyota is one of the most well-known examples of successful TQM implementation.
The company adopted TQM in the 1960s, which has since become an integral part
of its corporate philosophy. Toyota’s TQM approach, also known as the "Toyota
Production System," focuses on quality control, customer satisfaction, and
continuous improvement.

Explanation:
Toyota’s TQM system incorporates several quality tools, including:
 Kaizen (Continuous Improvement): Employees at all levels are encouraged
to make suggestions to improve processes and reduce waste. This involves
routine performance evaluations to identify areas for improvement.
 Just-In-Time (JIT) Production: Toyota ensures that products are
manufactured based on customer demand, reducing excess inventory and
improving overall efficiency. Performance evaluation of production processes
is done in real-time to ensure alignment with demand.
 Statistical Process Control (SPC): Toyota uses statistical tools to monitor
processes and maintain quality standards.

Insights from the Example:

  Toyota’s implementation of TQM demonstrates that quality is a collective
responsibility. The emphasis on involving all employees in the quality
improvement process helps create a culture of accountability.
 Continuous improvement practices like Kaizen foster a proactive approach to
performance evaluation. Employees are not only evaluated based on
outcomes but also on their contribution to process improvement.
 By integrating statistical tools, Toyota uses data-driven evaluations to ensure
quality standards are consistently met, highlighting the importance of
measurable performance metrics in TQM.

Conclusion
Total Quality Management (TQM) is an effective tool for performance evaluation, as
it provides a structured approach to improving organizational quality through
employee involvement, continuous improvement, and customer focus. TQM
emphasizes the importance of assessing performance at both the individual and
process levels, ensuring that all employees contribute to the overall success of the
organization. The case of Toyota highlights the value of involving all members of an
organization in the quality management process, using real-time metrics and
statistical tools to ensure consistent quality standards.

Recommendation
Organizations seeking to enhance their performance evaluation processes should
adopt TQM principles by:
 Fostering a culture of continuous improvement and encouraging employee
involvement at all levels.
 Using data-driven quality control tools to assess and monitor performance.
 Aligning employee objectives with organizational quality goals to ensure a
customer-focused approach.
 Leveraging technology to support TQM initiatives, providing real-time insights
and feedback to employees for continuous improvement.
6. Six Sigma as a Tool for Performance Evaluation
Introduction
Six Sigma is a data-driven methodology used for improving processes and minimizing
defects within an organization. It focuses on enhancing quality and efficiency, ultimately
leading to better customer satisfaction and reduced operational costs. As a performance
evaluation tool, Six Sigma provides a structured framework for identifying inefficiencies
and measuring improvements, which is crucial for organizations seeking to achieve
operational excellence.

Definition of Six Sigma

Six Sigma is defined as a set of techniques and tools for process improvement, with the
goal of reducing variability and achieving near-perfect quality in processes. According to
Harry and Schroeder (2000), Six Sigma aims for no more than 3.4 defects per million
opportunities by using a systematic approach that relies on data collection, statistical
analysis, and process optimization. The methodology typically follows the DMAIC
(Define, Measure, Analyze, Improve, Control) framework to guide quality improvement
initiatives.

Importance of Six Sigma as a Performance Evaluation Tool

1. Reduction of Process Variability: Six Sigma helps in identifying and minimizing
process variations, which are often the cause of quality issues. This reduction
improves consistency in performance, allowing for more reliable performance
evaluation.

2. Data-Driven Evaluation: Performance is measured based on statistical data,

ensuring objective assessment. Six Sigma tools like control charts, cause-and-effect
diagrams, and process capability analysis provide valuable insights into performance
metrics.
3. Focus on Customer Satisfaction: By minimizing defects and improving quality,
Six Sigma ensures that customer requirements are consistently met, which is an
essential performance indicator for any organization.

4. Cross-Functional Collaboration: Six Sigma projects involve teams from different

departments, which promotes cross-functional collaboration. This holistic approach
helps evaluate the impact of individual and team performance on overall process
outcomes.

Objectives and Purpose of Six Sigma in Performance Evaluation

 To reduce process defects and variations, resulting in improved quality and
efficiency.
 To evaluate employee and process performance using objective, data-driven
metrics.
 To identify root causes of performance issues and implement sustainable
solutions.
 To align performance goals with customer satisfaction and organizational
objectives.

Example: Motorola’s Implementation of Six Sigma

Motorola is recognized as the pioneer of Six Sigma. In the 1980s, the company
faced challenges with product defects and customer complaints, leading to declining
market share. To address these issues, Motorola introduced Six Sigma to improve
quality and reduce costs.

Explanation:
Motorola's Six Sigma approach involved:
 DMAIC Framework: Motorola used the DMAIC approach to identify, measure,
and eliminate the causes of defects. Each step of the framework was
implemented rigorously to ensure that all processes were aligned with quality
objectives.
  Employee Training: Motorola trained employees across all levels in Six Sigma
methodologies. Employees earned certifications like Green Belt and Black
Belt, which empowered them to lead quality improvement projects.
 Data-Driven Analysis: By using statistical tools, Motorola was able to measure
process performance, identify sources of variation, and implement corrective
measures. This approach led to a dramatic reduction in defects and improved
overall product quality.

Insights from the Example:

 Motorola’s success with Six Sigma demonstrates the importance of involving
all employees in quality improvement initiatives. By equipping employees with
Six Sigma skills, Motorola created a culture of continuous improvement.
 The use of data-driven tools provided Motorola with a clear understanding of
process performance, which enabled the company to make informed
decisions to enhance quality.
 Six Sigma’s emphasis on reducing variability helped Motorola achieve
consistent product quality, leading to improved customer satisfaction and
significant cost savings.

Conclusion
Six Sigma is an effective tool for performance evaluation because it provides a
structured, data-driven approach to process improvement and defect reduction. By
focusing on minimizing variability and enhancing quality, Six Sigma helps
organizations achieve operational excellence, meet customer expectations, and
reduce costs. The case of Motorola illustrates how Six Sigma can be successfully
implemented to transform an organization’s quality management system and
significantly improve performance.

Recommendation
 Organizations looking to enhance their performance evaluation processes should
consider implementing Six Sigma by:
 Adopting the DMAIC framework to systematically identify and address
performance issues.
 Providing Six Sigma training to employees at all levels to create a culture of
quality and continuous improvement.
 Utilizing data-driven metrics for evaluating performance and making informed
decisions.
 Focusing on reducing process variability to achieve consistent quality, which
directly contributes to better customer satisfaction and reduced operational
costs.

7. Performance Management Software (PMS) as a Tool for Performance

Evaluation

Introduction
Performance Management Software (PMS) refers to digital tools that facilitate the
process of assessing and enhancing employee performance within organizations. By
automating various performance management tasks, such as goal setting, progress
tracking, feedback collection, and performance reviews, PMS enables organizations
to streamline their performance evaluation processes. In today’s technology-driven
environment, PMS is crucial for aligning employee performance with organizational
objectives and fostering a culture of continuous improvement.

Definition of Performance Management Software

Performance Management Software is defined as a digital platform that helps
organizations manage and improve employee performance through features such as
goal setting, continuous feedback, performance appraisal, and analytics (Towers
Watson, 2016). PMS allows managers and employees to track progress towards
objectives, facilitate communication, and gather data for performance assessments,
ultimately enhancing the overall effectiveness of performance management
processes.

Importance of Performance Management Software as a Performance

Evaluation Tool
1. Automation of Processes: PMS automates time-consuming performance
management tasks, such as data collection and report generation, allowing
managers to focus on strategic decision-making and employee development.

2. Real-Time Feedback: The software enables continuous feedback between

employees and managers, fostering open communication and timely recognition
of performance issues or achievements.

3. Alignment with Organizational Goals: PMS allows organizations to set and

track objectives that align with overall business goals, ensuring that individual
performance contributes to organizational success.

4. Data-Driven Insights: By collecting and analyzing performance data, PMS

provides insights into employee performance trends, helping organizations make
informed decisions about talent management and development.

5. Scalability: PMS can be easily scaled to accommodate organizations of all

sizes, providing flexibility as the organization grows and its performance
management needs evolve.

Objectives and Purpose of Performance Management Software in Performance

Evaluation
 To streamline the performance evaluation process through automation and
digital tools.
 To facilitate continuous feedback and communication between employees
and managers.
  To align individual objectives with organizational goals for improved
performance.
 To provide data-driven insights for informed decision-making regarding
employee performance and development.

Example: Adobe’s Use of Performance Management Software

Adobe is a notable example of a company that successfully implemented
Performance Management Software to transform its performance evaluation
process. Adobe replaced its traditional annual performance review system with a
continuous performance management approach using its PMS.

Explanation:
 Feedback and Recognition: Adobe’s PMS emphasizes continuous feedback
and real-time recognition. Employees receive ongoing feedback from
managers and peers, allowing them to adjust their performance and
strategies proactively.
 Goal Setting and Tracking: The software enables employees to set specific,
measurable goals that align with the company’s objectives. Managers can
track progress in real-time, facilitating timely interventions and support.
 Performance Development Plans: Adobe encourages employees to create
performance development plans based on feedback received through the
PMS. This approach empowers employees to take ownership of their growth
and career advancement.

Insights from the Example:

 Adobe’s implementation of PMS demonstrates the effectiveness of
continuous feedback in driving employee performance. By moving away from
traditional annual reviews, the company fostered a culture of ongoing
dialogue and improvement.
  The emphasis on goal alignment ensures that individual efforts contribute to
broader organizational objectives, enhancing overall performance.
 The integration of performance development plans empowers employees to
actively participate in their growth, leading to increased engagement and
motivation.

Conclusion
Performance Management Software (PMS) serves as a vital tool for performance
evaluation, enabling organizations to automate processes, facilitate continuous
feedback, and align individual performance with organizational goals. Adobe’s
successful implementation of PMS highlights the effectiveness of this approach in
driving employee engagement and performance improvement.

Recommendation
Organizations looking to implement Performance Management Software should
consider the following:
 Choose a PMS that aligns with the organization’s specific needs and culture.
 Provide training for employees and managers to maximize the software’s
capabilities and foster a culture of continuous feedback.
 Establish clear goals and expectations within the PMS to ensure alignment
with organizational objectives.
 Regularly analyze performance data collected through the PMS to identify
trends and inform talent management strategies.

Comparison of Performance tools

Key Performance Indicators (KPIs) vs. Balanced Scorecard:
 KPIs: Specific, quantifiable metrics used to evaluate the performance of an
individual, team, or organization. KPIs focus on measuring key results aligned
with strategic goals.
  Balanced Scorecard: A broader framework that incorporates financial and
non-financial metrics across four perspectives (financial, customer, internal
processes, learning, and growth) to provide a comprehensive view of
organizational performance.

Performance Appraisal System vs. Benchmarking:

 Performance Appraisal System: A formal process in which an employee’s
performance is evaluated, typically by a supervisor, against pre-established
criteria. It is used for performance feedback, rewards, and development
planning.
 Benchmarking: A continuous process of comparing organizational
performance against industry best practices or competitors to identify areas
for improvement. It focuses on understanding the gap between current
performance and the best-in-class.