In order to maintain success, businesses must make the most of their most valuable asset—their talent. When employees feel appreciated, encouraged, and supported, they work at their best, which is what the performance management function strives to do. Its three primary components—measuring and enhancing results, cultivating talent, and rewarding performance—when combined, can propel your company to new heights. Performance management can also contribute to engagement at a time when 82% of workers desire to feel more valued as individuals.

While our earlier articles talk more about the aspects of OKR and feedback, we would like to share a few insights into the objectives of performance management. Firstly, one needs to be aware of what performance management actually means.

So, What Is Performance Management, Really?

Performance management is simply described as: “A continuous process that seeks to identify, measure, and develop the performance of the workforce periodically”

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It is a process that an organization uses to assess the performance of its employees. This can include things like performance reviews, 360-degree feedback, or goal-setting and tracking systems. The purpose is to identify areas of strength and areas for improvement in order to help employees grow and develop and to ensure that they are meeting the expectations of the organization.

There is a fair chance that the organizational performance report has not met the expected level. Also, the existing performance management system is not enough to evaluate employee performance.

Instead of pushing your performance management system to the edge, a touch of redesign will bring great results.

The first step in establishing a high-performance management system that actually works is to understand the objectives behind it.

We also should pen down clear and concise objectives of a Performance Management System

performance management system

Objectives of Performance Management

  • Setting and defining goals to fulfill organizational objectives
  • Setting the right expectations for each employee – managers and employees
  • Setting Performance Standards and metrics to measure
  • Establishing effective communication channels between managers and subordinate
  • Determining training plan.
  • Review the process periodically.

Setting and defining goals to fulfill organizational objectives

Goal setting is the most profitable way for initiating better performance among employees. It has been constantly demonstrated that effective goal setting

  •  allows employees to focus on what’s important.
  •  aligns individual objectives to the business objectives.
  • optimizes employees’ individual performance.
  • helps to identify the Key Results and work upon delivering them.

An efficient performance management system will ensure that goal setting is one of its integral requirements. As an employee/manager, one should set goals that benefit both- employee performance and business performance.

Curious about the best OKR software for 2023, Read more in Best OKR Software

Setting the expectations right for each employee – managers and employees

An efficient performance management system should set expectations right for each employee – managers and employees. As a manager, it’s crucial that you place manageable expectations from your employee. It is absurd to expect a poor performer to start giving good results right away. Or a star performer to stay consistent every other week.

Similarly holding managers to high expectations will only bring in poor management decisions.

How then do we set expectations to bring in desired results?

  • Define the expectations of your employees in clear terms and communicate the same. Get acknowledgment to avoid any misinterpretation
  • Document expectations and the progress towards them periodically. Review conversation and feedback are very important without which any performance management system will only be a check-in-the-box activity.
  • Once every employee understands his/her roles, responsibilities, and accountabilities they are more consistent and productive.

This will facilitate better business performance and also encourage the personal development of the employee.

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Setting Performance Standards and metrics to measure

Once the goals are set and communicated, there have to be set standards for deliverables. There should be metrics to measure the objectives defined and keep it simple. They have to be realistic and in line with the industry practice and most importantly ensure the deliverables are adding to the company objectives.

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Establishing effective communication channels between managers and subordinate

There is a long-existent gap in most PMS which is a lack of conversation between managers and their team members. It is not a standalone activity to achieve rather as a team they need to contribute to the overall organizational goals. Hence it is important to communicate and have discussions regularly. This would give the employee an understanding of how well he has been doing and how to prioritize the remaining goals.

This is possible through conversations being done periodically. This channel also gives an opportunity to both – the managers and the team member to have a better connection and address many other employee issues that may be underlying. Not just addressing issues, but also identifying HiPos at an earlier stage is possible. There is always room for improvement and a need for up-skilling among the employees. All of these can be addressed through a proper communication channel.

Determining training plan.

As it is important to fuel our vehicles for better efficiency, it is highly important to upskill your employees in order to perform with better efficacy. Among the practices prevalent in the industry for recruiting talent which is Build-Buy-Borrow, what could be more cost-efficient than cross-department training. This ensures the skill available within the organization is shared with a larger talent pool. This ensures the knowledge is not vested in only one/few talents rather the talent pool is larger.

This also ensures lower dependency and identifies talent and better means of engagement and recognition.

Review the process periodically.

Once the system is functioning well, it needs to be counter-checked to avoid any missed chances. There should be a regular audit of the reports and fine-tuning of the process and system for at least 3 years once. This not only eradicates the loopholes but also allows for alignment with the industry practice.

Conclusion

You can accomplish so much more within your business while using a solid performance management system. A solid performance system acts as a tool to attain the goals of each individual worker whilst also reaching the overall goals of the company. With OKRs helping you to track and access the performance of each employee, it is more likely to end on a successful note. Talk to our coaches and experts to gain more insights on performance management and OKR.

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Manufacturing industries are process-oriented and driven by high-quality standards. In manufacturing companies, the organization’s objectives are well defined and the key milestones (KPIs) are written to achieve individual targets, which carry different weightage and priorities. These KPIs are typically measured every month and are different for teams like supply chain, production, and quality. Lets share few OKR examples for Manufacturing to get started.

In manufacturing companies, the business goals and KPIs work hand in hand. Few KPIs are required to understand the current benchmark to set the OKRs to achieve beyond what is capable today. Monthly or Quarterly planning will help to accomplish key targets.

To start with, we need to know the productivity rates and efficiency before setting the OKRs. Productivity is typically the number of units manufactured in a specific period. While measuring productivity. We can break it down into weeks and months to understand the core of it. This will help the team to forecast what is required to meet the demand or manage the delays. Since this is a highly competitive market, data is the key to review and planning.

How Does OKR Software Help the Manufacturing Industry?

It’s very important to align business priorities with the key metrics of all the departments. At a macro level, the Leadership team looks at productivity and efficiency. Objectives and Key Results (OKRs) help in aligning to the goal set by the management team. For example, Production plan Vs Actual helps in identifying productivity, and measuring OEE (Overall Equipment Effectiveness) is essential for measuring the overall plant efficiency. OKR examples for Manufacturing will connect all the key metrics to deliver the organization’s priorities.

Top 5 key metrics for Manufacturing Industry

Effective Manufacturing OKRs?

Most of the manufacturing companies would have key milestones to follow for each process. Key Results are those metrics to know where you are travelling currently and with that visibility, you can create quarterly deliverables as Objectives, together called as OKRs. The OKRs collectively indicate your priorities for the next 90 days.

The OKRs for the manufacturing industry starts with an organizational goal, that gives way for measuring further departmental objective. For example, if the Profitability of a plant has to increase, the goal has to be set considering Raw materials, operational and infrastructure cost, with a clear indication of the department that will own such OKRs. Here are a few examples that can help

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Top 15 OKR Examples for Manufacturing Success

1. Objective: Increase Sales in MENA by 20%

  • Key Result 1: Go out and get ahold of fifteen new clients in MENA.
  • Key Result 2: Raise the selling volume from existing customers by ten percent.
  • Key Result 3: Lower customer churn rate by three percent.

2. Objective: Raise Production Volume by 13 Tons Before Q3

  • Key Result 1: Shorten the cycle time from five minutes to one minute
  • Key Result 2: Add 2 new production lines.
  • Key Result 3: Reduce in-process rejections by 8%.

3. Objective: Decrease Quality Rejections by 2%

  • Key Result 1: Reduce plant PPM from 108 to 80.
  • Key Result 2: Lower customer rejection rate on finished goods to 5%.
  • Key Result 3: Conduct 4 additional quality training sessions for staff.

4. Objective: At least 10% decrease in costs.

  • Key Result 1: by better negotiation reduce raw material costs by 10%.
  • Key Result 2: Logistics costs reduction by 5%.
  • Key Result 3: Lower the inventory holding cost through optimizing the inventory level by 7%.

5. Objective: Implement and Drive New Strategies for Seamless Maintenance

  • Key Result 1: Increase MTBF by 1 hour with condition-monitoring sensors.
  • Key Result 2: Decrease MTTR by 25 minutes.
  • Key Result 3: Implement a preventive maintenance schedule for 100% of equipment.

6. Objective: Launch an SUV by Q4 that is Safer and More Sophisticated

  • Key Result 1: Ensure the front chassis endures a 10,000-cycle stress test.
  • Key Result 2: Optimize passenger airbag pressure by 10%.
  • Key Result 3: Complete all regulatory safety certifications by Q3.

7. Objective: Increase Capacity Utilization

  • Key Result 1: Boost utilization from 80% to 90%.
  • Key Result 2: Decrease throughput time by 3 minutes.
  • Key Result 3: Implement lean manufacturing principles in 5 key areas.

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8. Objective: Comply with and Enhance Audit Practices and Procedures

  • Key Result 1: Complete internal audit by May.
  • Key Result 2: Achieve zero non-conformities in customer audits.
  • Key Result 3: Implement 3 new compliance procedures.

9. Objective: Create a Learning Culture Within Teams

  • Key Result 1: Increase training hours by 8 hours per employee.
  • Key Result 2: Launch a training application by May.
  • Key Result 3: Conduct quarterly knowledge-sharing sessions.

10. Objective: Foster a Safe Work Culture

  • Key Result 1: Ensure zero accidents in the plant.
  • Key Result 2: Raise safety awareness to 100%.
  • Key Result 3: Conduct monthly safety drills.

11. Objective: Enhance Customer Satisfaction

  • Key Result 1: Raise the net promoter score (NPS) by fifteen points.
  • Key Result 2: Reduce customer complaints by twenty percent.
  • Key Result 3: Implement a customer feedback system by Q2.

12. Objective: Increase Supply Chain Efficiency

  • Key Result 1: Shorten supply chain lead time by ten percent.
  • Key Result 2: Attain a ninety-five percent on-time delivery rate.
  • Key Result 3: Decrease supply chain costs to seven percent.

13. Objective: Reduce Environmental Impact

  • Key Result 1: Cut energy consumption by 15%.
  • Key Result 2: Reduce waste generation by ten percent.
  • Key Result 3: I100% recycling program for waste materials is in place.

14. Objective: Optimize inventory management

  • Key Result 1: Lower inventory holding costs by twelve percent.
  • Key Result 2: Enhance inventory turnover ratio by twenty percent.
  • Key Result 3: Adopt just-in-time inventory systems.

15. Objective: Enhance Workforce Productivity

  • Key Result 1: Increase labor efficiency by 10%.
  • Key Result 2: Implement a new productivity tracking system by Q2.

Key Result 3: Introduce performance incentives to boost productivity by 5%.

Implement OKR Software solution for your Manufacturing Industry.

While implementing OKRs in the manufacturing industry it is essential to understand the process and key metrics that support achieving the organization’s performance. Setting clear department goals and individual goals is very important as there are various metrics available. Recognizing the key metrics that matter to business will help in crafting OKRs.

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Talk to our experts more about OKR Software.

Talk to our experts to more about manufacturing OKRs. Our domain experts can work along with the organizations to create solutions that are specific to organizations. OKRs are industry agnostic and it is very interesting when it is applied to process and metric-driven manufacturing verticals. The outcome is quantified and hence the results are more tangible in nature. Write to Datalligence for implementing OKRs today.

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