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HOW TO LINK KPI TO PERFORMANCE APPRAISAL?
(by Choong Ewe Lee)
(choong@brainperformance.com.my)

   
 
     
 

While taking about Performance Appraisal Review (PAR), it will catch the eye balls & attentions of majority. This is also the most frequent asked question during my KPI Training Workshop. To make KPI successful, I would suggest to link KPI to the Performance Appraisal System. Any performance appraisal without linking to KPI , the appraisal will be “subjective” with rater bias. For example, if Siti is appraised on the appraisal criteria of “Customer Service”. If she is good, what would be the rating given to her in term of “1 to 5”, where 1 is very poor, and 5 is excellence. If she is rated “5”, would it be too high, and “Why?”. If she is rated “3”, would she be satisfied ?
 
  For traditional PAR system, we appraise our employees based on their attitude/ behavior/ competency by using rating scale (i.e. 1 – 5). The different view of score given may give rise to disagreement between appraiser & appraisee, either explicitly or kept in their heart due to its subjectivity.  
 
To solve this subjectivity, the linking of KPI to PAR will close the gap of this concern. As KPI is result based (refer to previous article), it will make our performance appraisal more objective. Let’s give an example, if our sales target as “1 million/year”, if we achieve it, then we will be rated “3”. If we achieve 10% more than the target set, then we will be rated “4”, and the other way round. With the pre-set appraisal rules, as superior, we may have the headache of giving the point, and the employees may have a clear mindset that, “what level of their achievement”, will lead to “score” gained. Thus, they will work their way out to achieve the set target.
 
  Would Result based KPI replace the behavioural based appraisal ? Of course, No. We would suggest our client to proportion it out into ration of 50% to 50% or 70% to 30% basis in their performance appraisal form.  The PAR score can be generated as the basis of rewarding the employees.  
  Next Issue:
After generating the PAR score, “Could we link our KPI directly to our Bonus & Salary Increment Exercise ?” Please read our next issue. 
 
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