8. Performance Management System of the Leading Logistic Company.

 Background of the Organization

Logistic Group is one of the largest shipping house agencies and freight forwarder groups in Sri Lanka. The volume of the group’s operations accounts is for approximately 12.5% of the container throughout of the Port of Colombo and is the largest car carrier handling agent in the port of Colombo. This group consists of 22 Strategic Business Units (SBU’s) and each SBU sets its own long and short term goals and objectives along with the strategies and action plans to achieve them.

Human Resources strategic plans of the company. 

• Succession planning and Talent Pool Development
• Effective Performance Management System (PMS)
• Enhanced  Employee Relations  & Organizational Culture
• Structured Remuneration and Benefits Structure

Performance Appraisal system of the company.

The company has introduced a Performance appraisal system in November 2011.

Following competencies are essential present day logistics personnel to meet the evolving challenges in a client supply chain and transportation industry.

• Open mind and innovative talents. Strong personal initiative and willingness to accept responsibilities; comprehensive grasp of logistics operations and practices.
• Leadership - Ability to manage and mentor a technical team by demonstrating leadership.
• Communication - Good communication skills including ability to prepare and present concise oral and written logistics operations reports, briefings, updates and other documentation and ability to conduct meetings.
• Planning and Organizing - Ability to establish priorities and to plan, coordinate and monitor work plans.
• Judgment/Decision Making - Sound judgment in applying technical expertise to resolve a rank of issues/problems.
• Client Orientation - Good negotiating skills and ability to influence others to reach agreement. Convincing to reach compromise between the partners in a temporary virtual business.
• Technological Awareness - Extremely good skills in fully automated information systems Ability to develop and operate common database software, spreadsheet, project management applications and complex text documents.
• Teamwork - Good interpersonal skills, ability to lead teamwork sessions, demonstrated ability to develop and maintain effective working relationships with logistic counterparts in a multi-cultural, multi-ethnic environment with sensitivity and respect for diversity. Critical analysis of problems and their not conventional solution often required in business situations not to be experienced by companies operating in companies with long-term relationships and opportunities to improve them.
• Extreme adaptability to constantly changing requirements of a temporary business.

Based on the feedback received from staff’s exit interviews, analysis of internal people survey and the recommendation of certain Heads of  the SBU’s,  the company management had decided to carry out an independent survey through  Lanka Market Research Bureau (LMRB).

The challenges and drawbacks pertaining to area of performance appraisal of the LMRB survey (depicts on figure 3.1- blog 3 ) were discussed with the company Director (Director of one SBU).

Identified Issues and negative consequences (Source: Director’s Performance appraisal  report)

• There was a lack of confidence in people on performance appraisal system introduced by HR Dept.
• Lack of Transparency at the time of setting up individual goals.
• Dissatisfied with the evaluation criteria. Employees feel that their performances have not been evaluated in a fair manner.
• Inconsistency in reviews leads to low staff morale and in turn affects the productivity levels of the staff.

Identified Root causes for Employees' Dissatisfaction

Figure 8.1 : Cause and Effect Diagram for employees dissatisfaction of the Logistic company. 

Source: SBU Problem analysis report (2012)  

 Improvement Plan 

Employees need to be given a clear and precise definition of what is expected—the job description— and that managers and supervisors must be consistent and fair in judging their employees’ fulfillment of expectations.( Corey Sandler and Janice Keefe, 2004). Employees’ positions on the other five areas of work life concern their values per[1]training to the management of their time at work. They are; workload, controls, rewards, community, fairness and values (Andrew J. Elliot, Carol S. Dweck, David S. Yeager, 2017) Goal setting or work agendas, which can be introduced as a distinct notion, is another key ingredient in objective systems of performance appraisal such as the BARS and MBO approaches (Latham and Yukl, 1975; Cramton and Carroll, 1997). Developing an appraisal system that accurately reflects employee performance is a difficult task. Performance appraisal systems are not generic or easily passed from one company to another; their design and administration must be tailor-made to match employee and organizational characteristics and qualities (Henderson, 1984, cited by Deborah,F.1997).

According to the HRD Division the company has developed the following areas and action was taken to evaluate the Employee satisfaction level six monthly.

1.     Planning Annual corporate / department wise Strategic Objectives.

2.     Executive Divisional Monthly  Committee meetings (EDMC).

3.     Introduced new Job Description form/ Performance agreement- The following tasks and area included in the Job Description form.

1. Position
2. Minimum qualification require
3. Report to
4. Main Job roles
5. Key Accountabilities
6. Performance measures (KRAs)
7. Knowledge and Skill Need
8. Competency required and Level 

4.     Introduced new appraisal form link with the performance measure / KRA.

5.     Training needs identified through the Performance Appraisal forms.

6.     Annual Training Plan.

7.     Evaluation of effectiveness of the training.

8.     Other employees reward and leadership strategies. 

1.     Introduced new appraisal form link with the performance measure / KRA.

Proposed Actions - Performance Improvement Plan (PIP)

1. Discuss and agree upon all Job Descriptions of all levels of staff’s at company, explaining how the job role and responsibilities contribute to wider goals. To have all employees with a clear understanding of their work roles within the respective SBU/SSU, including the contribution of their work to the achievement of group’s vision and strategies.
2. A arrange training for those individuals involved as raters. This training should start with a focus on providing the manager with a systematic approach to the practice of effective people management. 
3. Translates the organizational objectives into departmental and then individual position objectives and get the mangers to working with staff’s to agree their key result area’s and personal performance targets, and assign mutually agreed weight age expressed as a percentage for respective KRA’s.
4. Develop the evaluation form using the job description and standards (duties and responsibilities with expected results). Use the knowledge, skills, quantity, and quality of the work that can be observed and measured. The evaluation forms should be designed for fairness (all employees get the same evaluation) and consistency (the form is the same each time it is used) across all job descriptions. Focus on the main requirements of the job, since it may not be necessary to address all areas in one evaluation.
5. Identify performance measures or descriptors (1 to 4 rating). Each measurement should have explanations of the measure. For example, an excellent may mean that the employee is so successful at this particular job standard that special note (special remark as outstanding performance) may be taken.
6. Regular and ongoing monitoring of performance to be established at all SBU. It is the responsibility of respective managers to ensure that this process is working uninterruptedly.
7. Formal performance appraisal to be taken place on a quarterly basis in order to ensure; Identifying of specific indicators of achievement, highlight the areas of greatest/least effectiveness, stimulate improved performance, develop mutually established goals and establish effective appraiser - appraisee communication.
8. Career planning shall be discussed during performance appraisals with a view to identifying; Individual training needs related to job requirements and work performance, Personal and career aspirations and Organizational opportunities. Outcome of this discussion need to be incorporated into organization’s Annual Training Plan and activities.
9. Form a team of senior managers to evaluate the system for any flaws. Carefully examine the evaluation form for each job description and set of job standards.

List of Reference

1. Andrew J. Elliot, Carol S. Dweck, David S. Yeager ( 2017), Handbook of Competence and Motivation, The Guilford press, New York and London.
2. Carroll, Stephen, and Henry Tosi (1973) Management by Objectives: Applications and Research. New York, NY: MacMillan.
3. Corey Sandler and Janice Keefe (2004), Performance appraisal phrase book, Adams Media Avon, Massachusetts
4. Henderson, (1984) cited by Deborah,F (1997) Desigining Effective Appraisal System, MCB University.
5. Latham, Gary P., and Gary A. Yukl (1975) "A Review of Research on the Application of Goal Setting in Organizations." Academy of Management Journal