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Performance Management

Guide A Step-by-Step guide to KRA Setting Process at Piramal Group

Human Resources Team

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PREFACE

This year marks an important beginning in the Piramal group’s journey, with the

purpose for our Group being defined - which is ‘’Doing Well and Doing Good”.

This purpose sets the right tone of our expectations from our Performance

Management System. A strong and robust system will enable us in fulfilling this larger

purpose as it commonly binds and applies to all the employees in an organisation. If

each employee sets out in his excellence expedition with a good performance

management system acting as an enabler, we will not be far from achieving this larger

goal of “Doing Well’’.

Also, with our Core Values of Knowledge, Action and Care being imbibed in our HR

processes including the PMS process, we can be confident of “doing well’’ in a manner

that would “make a positive difference, serving people and living our values”.

The fundamental premise of our performance management system is encouraging

excellence in a collaborative manner. Performance of an employee is like the hub of a

wheel which has to be run by the four core spokes of feedback, development, coaching

and mentoring. And as it is said – “What cannot be measured cannot be improved” –

this process begins with the important task of setting out measurable goals and

objectives.

Our PMS process is designed to capture these critical elements of real performance

management through our KRA cascade process, mid-year reviews, end-year reviews

and other appraisal outcomes with a strong linkage to career progression, succession

planning and learning & development initiatives.

Our PMS process has been developed through extensive research and analysis of

best practices in the industry as well as utilizing the feedback from employees using

surveys.

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It gives me great pleasure to present the first PMS Manual, which details out each

aspect of our PMS system for the benefit and clarity of all stakeholders. We believe in

continuous evolvement and hence we will look forward to suggestions and feedback.

Srinivas Chunduru

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Table of Contents

1. Performance Management System at Piramal Group……………………………..5

2. Setting Objectives………………………………………………………………………6

3. What are KRAs?..………………………………………………………………………7

4. What are SMART objectives?...………………………………………………………8

5. Drafting KRAs and KRA Setting form………………………………………………..9

6. KRA Audits……………..…………….………………………………………………..15

7. Guidelines for Employees……………………………………………………………17

8. Guidelines for Managers..……………………………………………………………17

9. FAQs…………………………………………………………………………………...19

10. PMS Calendar for 2015-16…………………………………………………………..21

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Per formance Management Sys tem at P i ramal Group

Performance management system in Piramal has been designed to be an on-going,

two-way and a systematic process to:

1. Plan work and set expectations

2. Continually monitor performance and develop the capability to support good

performance

3. Periodically review performance and provide feedback

4. Identify areas where employee needs to improve and provide necessary

development support

5. Reward good performance

There are three steps to evaluating performance at Piramal Group:

Setting ObjectivesAppraisal

Mid Year & End Year

Communication and

Reward

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Set t ing Object ives

At Piramal Group, individual objectives are linked to organizational goals, and hence

the objectives setting process is the starting point of the cycle.

Stages in Objectives Setting process

Objectives are cascaded in a top-down approach. In the month of January preliminary

budgets are circulated. Then organisation’s goals are decided, articulated as objectives

and are cascaded further down to specific businesses, departments and Individuals.

The objective setting process for the new financial year starts in

the month of January of every year. Following are the stages:

1. Finance Controller circulates the preliminary budgets for the

year

2. Mancom members & Business Heads share company’s

objectives and business plan & preliminary budgets with their

direct reportees

a. Business Head & his direct reportees work on the

Business & Individual KRA and the budgets for the

year

b. Business plan for the year and KRAs are sent to the

Chairman for comments

c. Basis feedback received from the Chairman, the

Business Plan & KRAs are finalized

3. Final KRAs and budgets for each business are presented to

the Chairman for final approval

4. The final KRAs of Mancom members, Business Heads and

their direct reportees are cascaded further down

5. Business Head share their KRAs with the Site Head who

prepare their KRAs in alignment with the Business Objectives

6. Functional heads prepare their KRAs in line with Site Head’s

KRAs and cascade them down to the managers. Managers

prepare their KRAs and cascade their objectives to the

executives.

After completion of the cascading process, Business HRs will

collect the final KRAs of all employees in their Business.

Stage 6

Cascaded down to

Functional Heads,

Manager and

Executives

Stage 5

Site Heads

Stage 4

KRAs of Mancom Members/ Business Head are finalized

Stage 3

Approval by Chairman

Stage 2

Mancom members, Business Heads and

their Direct Reportees

Stage 1

Freezing of Preliminary Budgets

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Objectives are often expressed as Key Result Areas (KRA) and underpinned by

performance standards and performance measures.

What are Key Results Areas?

Simply put, Key Result Areas or KRAs are the five or six critical areas where targets

must be met if the objectives set for the year are to be achieved.

Defining your key result areas gives you clarity around what you should be doing so

you can focus, be highly productive, and make the most impact in your role.

While setting KRAs, the following principles should be adhered to:

1. KRAs should contribute to the achievement of overall Department, Business and

Organisation’s objectives

2. They should cover 80% of work done on a daily basis. However they should

focus on results rather than activities

3. Draft a maximum of 5-6 KRAs. Too many KRAs will not allow you to focus on

the critical areas of your work.

4. They should be S.M.A.R.T. (Specific, Measurable, Achievable, Relevant, Time-

bound)

5. They should be tailored so that they consider an individual’s abilities, experience

and aspirations

6. They should be stretching and challenging so that the individual has an

opportunity to develop new skills and experiences (this refers to the quality of

the work not quantity)

7. They should be in line with Piramal’s values

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What are SMART Objectives?

Developing sound objectives is critical to managing performance. Well defined

objectives or SMART objectives help employees focus on the critical areas and work

towards achieving the desired objectives.

A SMART objective is defined as one that is Specific, Measurable, Achievable,

Relevant, and Time-bound. Below is a definition of each of the SMART objective

criteria:

1. Specific: a specific objective is distinct and defines as much of the objective as

is possible. It does not contain any ambiguous language

2. Measurable: define specific criteria for measuring progress toward

accomplishing each established objective

3. Achievable: requires staff members to stretch but is not impossible to achieve

4. Relevant: the objective is related to the department’s mission and/or a specific

project or program

5. Timely: the time frame is clearly defined or progress toward achievement is

tracked at regular intervals

Guidelines for writing SMART Objectives

Specific

1. Make your objective focused and well defined. A specific objective has a much

greater chance of being accomplished than a general objective

2. When setting your objective, make sure you can answer the 6 "W" questions:

Who, What, When, Where, Which, and Why.

3. Ask questions such as: what do I want to accomplish? When will this happen?

Why am I setting this objective, etc?

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Measurable

1. Have a yardstick for measuring outcomes. Establish concrete criteria for

measuring progress toward the attainment of each objective you set. When you

measure your progress, you stay on track, reach your target dates

2. Ask questions such as: How much? How many? How will I know when it is

accomplished?

Achievable

1. Draft realistic and achievable objectives. They should stretch you slightly so you

feel challenged, but not impossible to achieve.

2. Achievement of the objective should be within your control and influence.

3. Ask questions such as: Is the objective achievable with the available resources?

Is the objective achievable within the timeframe originally outlined?

Relevant

1. Develop objective which is aligned to the department’s key accountabilities

2. Ask questions such as: How will the objective help in achieving my job’s

objectives? Is this objective important to me?

Time-bound

1. Objectives should be time-bound. They should have a deadline or there should

be a date for completion. Setting a deadline reinforces the seriousness of the

objective in your mind and also acts as a measure of achievement.

2. Ask yourself: By when can I finish the task to achieve results?

Drafting KRAs and the KRA Setting Form

Across Piramal group, a simple format is used to capture KRAs and targets for an

individual at the start of the year. Both the progress during the mid-year review and

target achievement during the End-Year review is tracked through this format.

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The format follows the pattern of the 4-Quadrant method where employees need to

identify and draft their KRAs under the four perspectives or categories- Financial,

Customer, Processes and Learning- discussed below:

1. Financial/ Profitable Growth: these are few relevant high impact financial

measures which allow managers to track financial success.

a. E.g.: Sales revenue growth, TVA, EBIDTA, costs, collection, key

milestones for projects, Capex, etc

2. Customer (Internal or External): these measures are used to indicate how your

customers perceive your performance.

a. E.g.: market share, customer satisfaction measures, customer processes,

new markets, approvals, new product development, PMPP, etc

3. Internal Processes: covers internal operational objectives and outlines the key

processes necessary to deliver the organisation’s key objectives.

a. E.g.: productivity measures, quality measures, timeliness, certifications,

OTIF, documentations, SLAs, systems, etc

4. Learning & Growth/ People: measures that contribute to an individual’s and

organisation’s ability to innovate, improve and learn.

a. E.g.: percentage employees trained, ability to launch new products,

employee satisfaction, employee retention, recruitment, employee

engagement, etc

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This format helps an organisation to articulate its strategy in actionable terms, provide

a roadmap for execution and align its employees to the organisation’s goals.

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Performance assessment form used at Piramal is as follows:

Performance Assessment Form Employee No.:

Targets Agreed Business:

Periodicity :

Name of the Employee: Review for the Period :

Designation :

Assessing Manager (AM):

Purpose Statement:

Sr. No.

Code KRA Weightage (A)

Measurement

Target

Mid Year Review End Year Review

Achievement

Action Achievement (B)

Weighted Average

Score (A x B)

1 Financial/ Profitable Growth

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3 Customer (Internal and

External)

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5 Internal Processes

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7 Learning and Growth/ People

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100%

Total

Assessee: The progress so far will ensure achievement of KRA by year end

Reporting Manager: The progress so far suggests challenges for achieving the KRA. The chances of achievement are relatively bright

The progress so far suggests huge challenges for achieving the KRA. The chances of achievement seem low

Feedback during Mid-Year:

Feedback during End Year:

Assessing Manager Name

Local HR Head Name

Piramal Values

Knowledge Expertise We strive for a deeper understanding of our domain.

Innovation We aspire to do things creatively.

Action Entrepreneurship We are empowered to act decisively and create value.

Integrity We are consistent in our thought, speech and action.

Care Trusteeship

We protect and enhance the interests of our customers, community, employees, partners and shareholders.

Humility We aspire to be the best, yet strive to be humble.

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Understanding the format

During the Objective setting process, the employee needs to fill in the first portion of

the form, to capture his KRAs for the year, weight of each KRA, measure and target to

be achieved.

Following are the guidelines to help fill the form during the objective setting process:

1. Employee Details

a. Employee number: fill in your employee code/ number/ ID E.g. 723167

b. Employee name: fill in your name as it appears in official records

c. Designation: mention your designation in the organisation. E.g. Chief

Manager - HR

d. Assessing Manager: Name of your manager who will assess your

performance. This may typically be your functional reporting manager

e. Business: Name of your Business such as Pharma Solutions, OTC, etc

f. Periodicity: Bi-annual

g. Review for the period: the period for which the KRAs are being set. E.g.

1st April 2013 to 31st March 2014, FY 2014, etc

2. Purpose Statement:

This portion reflects the Purpose Statement that has been defined for your

Business. Our Business’ Purpose will be our guiding force the will define the

direction we need to take to achieve our goals.

3. Drafting KRAs

This portion of the KRA is to be filled in after discussion with the reporting or the

assessing manager. The numbers and initiatives should be consistent with the

approved budgets and plans.

a. Code: category under which the KRA may be categorized into. E.g.

Financial perspective, customer perspective, etc. You may add or delete

extra rows under each of the category depending on your requirement.

b. KRA: clear statement of objective indicating the KRA to be tracked. You

may utilize the SMART objective principles while drafting the KRA under

each of the four categories.

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c. Weightage: this will indicate the importance of the KRA towards achieving

your overall objectives for the year. In addition, it should also take into

account the amount of time and resources that will go into achieving the

target.

• The minimum weight that can be given to a KRA is 5%

• The maximum weight for a particular KRA cannot be more than

30%

• The sum total of all the weights given to different KRAs cannot be

more than 100%

d. Measure: this will indicate the parameter on which the success can be

judged upon. E.g. customer satisfaction score

e. Target: this will typically be a quantifiable number or a milestone which

will indicate how much, what or by when to achieve a particular KRA. E.g.

by 31st December, 7 out of 10 on customer satisfaction score, etc

4. The employee and the assessing manager need to sign the form after the KRA

setting process is complete. In case of dual reporting, the form has to be signed

by both the functional manager and the administrative manager

5. Rest of the columns and rows pertain to the appraisal process and will be

explained in detail later in the manual.

6. Important Guidelines:

a. For all Band 1 & a few Band 2 employees, all the deliverables may be

concentrated in Customer/ Processes section if their job does not

encompass focus on the other parameters

b. Where there are no reportees, "People" section can be used for setting

target on developing self, gaining new skill, etc

c. For employees in Band 2, it is not necessary to have financial KRAs such

as EBDITA. Instead they can have other KRAS such as sales, cost

reduction; productivity; managing raw materials within X cost, meeting

budgets, etc., which are directly relevant to their role and responsibilities

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Indicative weights

The total weight given to KRAs under each of the four perspectives or categories need

not be standard. They may vary depending upon the Band of the employee and

responsibility. However, the following may be taken into account as an indicative

guideline while ascribing weights:

Line Functions: Sales, Marketing, Production, Plant

Operations, OE, Supply Chain, etc

Code Band 1 Band 2 Band 3 Band 4 Band 5 Band 6

Financial 20% 30% 40% 40% 50% 50%

Customer

Process

Learning & Growth 5% 5% 10% 10% 10% 10%

Support/ Corporate Functions: Quality, Strategy, Finance,

HR, Corporate Communications, M&A, IR, etc

Code Band 1 Band 2 Band 3 Band 4 Band 5 Band 6

Financial 10% 20% 25% 30% 35% 35%

Customer

Process 20% 20% 20% 20% 20% 20%

Learning & Growth 5% 5% 10% 10% 10% 10%

The functions listed above are not exhaustive. Functions not captured above may use

the relevant table to ascertain guidelines applicable to them.

KRA Audits

Every manager is responsible to ensure that the KRAs of his reportees are in line with

the department, business and organisation’s objectives.

After completion of the cascading process, Business HRs collect the final KRAs of all

employees in their Business.

Business HRs will audit the KRAs of the employees to ensure that the Objectives have

been cascaded down successfully and that the KRAs are in alignment with the goals of

the Businesses and the Organisation.

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To ensure fairness in the process of audit, a cross-site/ cross-business team will be

formed to audit the KRAs of a sample set in each of the Site/ Business.

Business HR needs to check the following while auditing the KRAs:

1. Each of the KRA follows the principles of SMART objectives

2. In an individual’s KRA sheet, the total weight of each of the four perspective

follows the band wise guidelines

3. KRAs of all the members of a team are linked to their managers KRA and

together, they work towards achieving the goals of the Business.

4. KRAs of all the HODs have been audited

5. KRAs of at least 30% of the eligible population have been audited

6. In addition to the HOD of the department, KRAs of at least 1 team member are

audited.

With the KRAs set and discussed, each employee now has a clear focus of what he

needs to do to achieve the objectives of the Organisation. Post completion of six

months in the financial year, first formal performance review is done. At this stage

manager and employee will discuss the progress made so far and if the employee

needs any support.

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Guide l ines fo r Employees

KRA Setting:

1. Discuss with your manager and set a meeting date in advance

2. Study your managers KRAs in detail and plan your own KRAs accordingly

3. Make sure your KRAs adhere to the SMART Principles i.e. each KRA should have

measurable metrics, achievable objectives and should be time bound.

4. In case you have any doubts regarding your measurable targets, discuss in

advance with your manager and agree on an objective.

5. Make sure the weight ages are as per the tabular format given in the KRA Section

of this manual.

6. Plan your Learning and Development initiatives in advance to discuss in the KRA

Cascade meeting.

7. During the meeting, make any changes which are necessary and freeze your

KRAs.

Guide l ines fo r Managers

KRA Setting:

Preparation

1. Share your KRAs well in advance with your team for them to prepare and come for

the KRA cascade meeting.

2. Explain your broad plan for the year and your expectations from each individual in

your team

3. Set a meeting date in advance with your team and share the formats for KRA

setting

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The Meeting

1. Give a brief presentation of your KRAs for the year to your team.

2. While reviewing the KRAs, make sure your team’s KRAs are linked with your KRAs.

3. Keep in mind whether the KRAs are in line with the SMART principles. Each KRA

should have measurable metrics, achievable objectives and should be time bound.

4. Spend time in finding out whether your team has included at least 80% of their work

as part of their KRAs. Make changes where necessary.

5. Make sure the weight ages are as per the tabular format given in the KRA Section

of this manual.

6. Discuss the Learning and Development inputs that the team would need and make

sure they are given due weightage in the KRAs.

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Frequent ly Asked Quest ions

1. What is the eligibility for the Performance Appraisal process?

To be eligible for Performance appraisal for a financial year, employee should have

completed atleast 6 months in the Organization by the end of the financial year. Simply

put, any employee who joined the organization before 1st October of the financial year

will be eligible to participate in the performance appraisal process for the year.

KRAs and Objective Setting

2. What is KRA?

Please refer to page 7 of the manual

3. Why KRAs?

Defining your key result areas gives you clarity around what you should be

doing so you can focus, be highly productive, and make the most impact in your

role.

4. To whom all are KRAs applicable?

All employees need to have KRAs defined for them irrespective of whether they are

eligible to take part in the performance appraisal process for the financial year under

review.

5. What are the timelines to send KRAs?

All employees need to finalize their KRAs by the 31st March of the previous financial

year. For new employees, KRAs will be finalized, in discussion with their managers

within a month of their joining Piramal group.

6. Do I have to fill KRAs under each bucket?

To attain the overall objective, an employee should have KRAs under each of the four

categories. However, in case of Band 1 & 2 employees their KRAs may be

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concentrated around Customer and Internal Process perspectives. For more detailed

guidelines, please refer page 13.

7. How do I make my KRA measurable?

While drafting your KRAs, you should adhere to the principles of SMART objectives.

Please refer to page 7 for a detailed explanation on each of the aspects of SMART

principle.

8. Can I make a course correction in my KRAs? Can my KRA's be changed

in the middle of the year?

Yes the KRAs can be changed at the time of mid-year review process, if there are

significant changes in your role. You need to discuss the required changes with your

manager and get approval from the HOD. Post approval from the HOD, your KRAs will

stand modified to make them more relevant to your new responsibilities.

9. Why are the KRAs set by March-end while the appraisals finalized in

June?

KRAs are set for the next financial year while the appraisal is done for the year gone by.

Since the new financial year starts from April, hence it is important for all the employees

to have their objectives and KRAs set for the year before that.

Financial performance of the organisation for the year under review, is an important

aspect of the appraisal process and subsequent outcomes. Since the financials are

approved by the Board members only by May of the next financial year, and

subsequently performance decisions are taken based on it, the process can only be

completed by July of the new year.

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PMS Calendar for 2015-16

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