UNDERSTANDING PERFORMANCE
OPTIMIZATION
SY BCOM HRM Minor
Teacher’s Name: Anuja Zend
(Assistant Professor, Department of Commerce)
Meaning and
Definition
• Performance optimization refers
to the continuous process of
improving individual, team, and
organizational performance to
achieve strategic goals efficiently.
It ensures that resources,
capabilities, and efforts align with
desired outcomes.
Significance of Performance Management
• Aligning with Organizational Goals
• Enhancing Employee Performance
• Facilitating Employee Development
• Promoting Open Communication
• Ensuring Objective Evaluation
• Boosting Motivation and Engagement
• Identifying
Top Talent +Addressing Poor
Performance
• Supporting Data-Driven Decisions
• Ensuring Legal Compliance
• Encouraging Continuous Improvement
Evolution of Evaluations
Examples
•Google: Uses Objectives and Key Results (OKRs) to align individual
goals with organizational objectives.
For a product launch, teams define measurable OKRs such as user
adoption rates or feature completion.
•Toyota Implements the Lean Manufacturing Model to eliminate waste
and improve operational performance.
Focus: Continuous improvement (Kaizen) and error reduction.
•Netflix Relies on a data-driven culture for optimizing performance.
Real-time analytics to recommend content and measure customer
satisfaction metrics like retention rates.
Let's Brainstorm
How can performance optimization influence:
a) Customer experience?
b) Employee productivity?
c) Financial performance?
BSC (Balance Score Card)
• Introduced by Kaplan and Norton in the 1990s.
• The scorecard presents managers with four different perspectives
from which to choose measures. It complements traditional
financial indicators with measures of performance for customers,
internal processes, and innovation and improvement activities.
Much more than a measurement exercise, the balanced scorecard
is a management system that can motivate breakthrough
improvements in such critical areas as product, process, customer,
and market development.
a) Financial: Profitability,
cost management.
b) Customer: Satisfaction,
loyalty.
c) Internal Processes:
Operational efficiency.
d) Learning & Growth:
Employee skills, innovation.
Management by Objectives (MBO)
•Popularized by Peter Drucker.
•Aligns individual objectives with organizational
goals.
• Management by objectives (MBO) is a process in
which a manager and an employee agree on
specific performance goals and then develop a
plan to reach them.
• It is designed to align objectives throughout an
organization and boost employee participation
and commitment.
• There are five steps: define objectives, share
them with employees, encourage employees to
participate, monitor progress, and finally,
evaluate performance and reward achievements.
• Critics of MBO argue that it incentivizes
employees to achieve these goals by any means
necessary, often at the cost of the company.
Advantages Disadvantages
• Employees take pride in their work • As MBO is focused on goals and targets, it
and are assigned goals they know often ignores other parts of a company, such as
they can achieve that match their the culture of conduct, a healthy work ethos,
strengths, skills, and educational and areas for involvement and contribution.
experiences. • Strain is increased on employees to meet the
• Assigning tailored goals brings a goals in a specified time frame.
sense of importance to employees, • Employees are encouraged to meet targets by
boosting their output and loyalty to any means necessary, meaning that shortcuts
the company. could be taken and the quality of work
compromised.
• Communication
between management and • If management solely relies on MBO for all
employees is increased. management responsibilities, it can be
problematic for areas that don’t fit under MBO.
• Management can create goals that
lead to the success of the company.
Happy Secret to Better Work
Case Study
Background
ABC Tech Solutions, a mid-sized IT company, faced a high attrition rate of 25% per year, primarily among
software developers. Exit interviews revealed that employees left due to limited career growth opportunities,
lack of work-life balance, and dissatisfaction with the compensation structure.
To address this, the HR department adopted the Management by Objectives (MBO) approach.
HR Objectives Set Under MBO
1. Reduce the attrition rate to 15% within 12 months.
2. Improve employee satisfaction scores by 20% in six months.
3. Implement career development plans for at least 50% of employees within the next year.
4. Launch a flexible work policy for all employees within three months.
Design HR policy to attain these goals
https://youtu.be/1ht_1VAF6ik?si=q6Twwn_UugKPtScC
Video by Prof. Andy Grove
the person most responsible for harnessing the power of the microchip (Intel)
KPI (Key Performance Indicators)
● Key performance indicators (KPIs) measure a company’s success vs. a
set of targets, objectives, or industry peers.
● KPIs can be financial, including net profit (or the bottom line, net
income), revenues minus certain expenses, or the current ratio
(liquidity and cash availability).
● Process-focused KPIs aim to measure and monitor operational
performance across the organization.
● Businesses generally measure and track KPIs through analytics
software and reporting tools. KPIs are usually not externally required;
they are internal measurements used by management to evaluate a
company’s performance.
Types of Key Performance
Indicators
Strategic- Functional KPIs hone in on specific departments or functions within a
company. For example, a finance department may keep track of how many new
vendors they register within their accounting information system each month. A
marketing department measures how many clicks each email distribution receives.
Operational- Operational KPIs are focused on a tight time frame. These KPIs
measure how a company is doing month over month, or sometimes day over day,
by analyzing different processes, segments, or geographical locations.
Leading/Lagging-Leading/lagging KPIs describe the nature of the data being
analyzed and whether it is signaling something to come or something that has
already occurred. Leading KPIs indicate a change that is coming in the future.
Lagging KPIs indicate a change that has already happened.
Types of KPI
Financial Metrics: Key
performance indicators
tied to the financials
typically focus on
revenue and profit
margins. Net profit, the
most tried and true of
profit-based
measurements,
represents the amount of
revenue that remains, as
profit for a given period,
after accounting for all of
the company’s expenses,
taxes, and interest
Customer Experience
Metrics
Number of new tickets
Number of Resolved Tickets
Average solution time
average solution time
Average response time
Top customer service agent
ratings
type of request
Post Performance Indicator
Production Efficiency- Often measured as the production time for
each stage divided by the total processing time. For example, a
company may strive to spend only 2% of its time soliciting raw
materials. If it discovers it takes 5% of the total process, the
company knows that area needs to be improved.
Total Cycle time- The total amount of time needed to complete a
process from start to finish.
Throughput- The number of units produced divided by the
production time per unit, measuring how fast the manufacturing
process is.
Error rate - The total number of errors divided by the total
number of units produced.
Quality Rate- A measure of the items produced that pass quality
Marketing Metrics
Website traffic
Social media
traffic
Conversion rate
on call-to-action
content
Articles published
Click-through
Sales KPI
● Customer lifetime value (CLV): The total amount of money that a customer is expected
to spend on your products over the entire business relationship.
● Customer acquisition cost (CAC): The total sales and marketing cost required to land
a new customer. By comparing CAC to CLV, businesses can measure the effectiveness
of their customer acquisition efforts.
● Average dollar value for new contracts: The average size of new agreements. A
company may have a desired threshold for landing larger or smaller customers.
● Average conversion time: The amount of time from first contacting a prospective client
to securing a signed contract to perform business.
● Number of engaged leads: How many potential leads have been contacted. This metric
can be further divided into mediums such as visits, emails, phone calls, meetings, or
other contacts with customers.
Define the KPIs
IT
Human Resource
How to measure the success?
https://youtu.be/nyqLJSclNb4?si=7IvBcKILQXbMjH2T
https://youtu.be/fLJsdqxnZb0?si=bG0bopOFw9EgZtjH - Secret of
Happy Work
Difference between KPI & Metrics
Types of
Performance
Appraisal
Definition and Objectives
Performance appraisals are used to review the job
performance of an employee over some period of time. These
reviews are used to highlight both strengths and weaknesses
to improve future performance.
● A performance appraisal is a regular review of an employee’s job
performance and contribution to a company.
● Companies use performance appraisals to determine which
employees have contributed the most to the company’s growth, to
review their progress, and to reward high-achieving workers.
● Although there are many different kinds of performance reviews, the
most common is a top-down review in which a manager reviews
their direct report.
Features and Need of Performance Management
Criticism of P.A.S
● can lead to issues between subordinates and supervisors
● can lead to the adoption of unreasonable goals
● The employees might be judged not by their accomplishments
but by their likability. They can also lead to managers giving
underperforming staff a good evaluation to avoid souring their
relationship.
● Unreliable raters can introduce a number of biases that skew appraisal results
toward preferred characteristics or ones that reflect the rater’s preferences.
● Performance appraisals that work well in one culture or job function may not be
useful in another.
Types of Performance Appraisal
360-degree feedback assessment
Peer Review
Behaviorally anchored rating scale (BARS)
Negotiated appraisal
360 degree feedback
Feedback from range of stakeholders-
Managers, Peers , Individual Reports, Even Themselves
Assesses the behavioural Patterns -
Communication, Adaptability , Positive Attitude etc.
How to Do it?
Use to encourage growth and give opportunities
Develop positive and open ended questions
personal review (feedback) before or at the time of team review
Use HRIS (Human Resource Information Systems) for quick and
efficient results.
Peer review
Review amongst your peers - colleagues
and co-workers
a process where colleagues assess
each other's work performance, skills,
and behavior
Before hiring and yearly review
Clear Goal, Metric and performance review
software
Take into consideration
Process Do’s and Don’t
Behaviourally Anchored
Rating Scale
Understand each role in working environment
Understanding, Assess and grade of employee behaviour
when at work
Links each position with goal of company
Used to hire, promote, transition and demote employees
Enforce more positive than negative change
Specific and Impartial evaluation
More about BARS
Requires Research and Time
Governance and expert teams
Developing scales
Works as a tool to measure if the employee is working on the right
position
Customer service representatives, waiter , ola driver
Negotiated Appraisal
https://youtube.com/shorts/VSGmjNiem-E?si=AoPQ2BPZCDWlTt1P
https://youtube.com/shorts/cYNTkfoBV-0?si=xM-DKK0_48X2Bgcu
Techniques of giving constructive
feedback
Establish Trust
Balance the Positive and the Negative
Observe, Don't Interpret
Be Specific
Talk Face-to-Face
Don't Make it Personal
Provide Feedback Consistently
Be Timely
Constructive Feedback
Feedback About Time Management
Feedback About Productivity
Feedback About Work Ethic
Thankyou!
