INTRODUCTION AND
The concept and characteristics of KPI
KPIs (Key Performance Indicator): 1 a job performance evaluation indicator is a tool to measure and evaluate work efficiency expressed through data, ratios, and quantitative indicators to reflect operational efficiency
2KPIs are indicators to measure the effectiveness or success of activities in the organization to achieve the goals set by the manager Each title, department, department, or department will have a job description or daily work plan month Managers will apply indicators to evaluate the effectiveness of those activities.
Each title, department, and department has its own KPIs
KPIs are a modern tool to help managers implement enterprises' business strategies into specific management goals and action programs for each functional department, each field, and each individual Therefore, KPIs apply to many purposes, such as: (i) managing the performance/performance of an organization, (ii) self-managing the work of groups and individuals.
Importance of the Project
KPIs are a significant indicator for businesses However, today many companies do not meet KPIs for the following reasons:
(1)Enterprises do not adequately understand the set of KPIs, leading to asynchronous and complete implementation.
Many businesses have embarked on implementing and applying
KPIs as a mere evaluation tool to establish and measure the work completion results of employees at the end of each evaluation period The essence of KPI is a set of criteria established for strategic management, from setting goals - monitoring the implementation process - warning performance for improvement
1 https://www.klipfolio.com/resources/articles/what-is-a-key-performance-
(2) Enterprises do not have consistency from the leadership level in the application and implementation of KPI
KPI implementation is allocating a common goal to each department and individual so that everyone knows their tasks and what they need to do to implement the standard plans and strategies Therefore, proper understanding and consistency from top to bottom are necessary However, when applying KPIs, many businesses need to pay attention to this, leading to employees and organizations not understanding KPIs correctly; they will feel this is a tool to monitor themselves, leading to dissatisfaction and no spirit of contribution or work.
(3)The set of KPIs is not interested in the leadership of the organization
Because they have yet to be advised to understand the essence of KPI implementation properly, the importance of KPIs for the overall development of the business, underestimate or pay attention, high determination to put all efforts and determination.
Commission ultimately leaves the subordinates to implement, while KPI is a common goal, unified, and requires synchronous determination and actions of the whole team.
(4) The capacity and coherence of responsibilities of the implementation team is not strong enough
Often in each company, the implementation team is drawn from excellent employees of different departments when embarking on
KPI implementation Therefore, when this KPI is completed, this group usually breaks up and returns to regular work Meanwhile,
KPI always needs a dedicated person or group to monitor and summarize to give timely warnings It is impossible to wait until the end of the period to "alert" will be meaningless.
(5) Enterprises lack preparation and focus resources to implement KPI
Because of misjudging, seeing KPIs as just a set of measures and evaluations to control employee performance leads to no gathering of the organization's total resources to coordinate implementation.
In the face of the fact that businesses often evaluate job completion, which is often emotional, they need to assess the capacity and working efficiency of employees adequately The project should build KPIs suitable to increase labor productivity and increase the enterprise's efficiency of human resource management The KPIs project brings benefits not only to businesses but also to employees The project builds a set of KPIs indicators to help businesses know the completion level of employees to evaluate, reward and train appropriately, promoting effective labor productivity The KPIs project helps employees be aware of their existing competencies and plan their work goals.
PROBLEM STATEMENT AND IDENTIFICATIONS
Problem Statement
Damsan Textile J.S.C (hereinafter called “The Company”) was established in 2006, operating in producing yarn, woven fabric, finishing textile products etc
The company's operational objectives are to build and maintain the brand name, rationally use resources, save costs, improve labor productivity, and increase revenue and profit From 2019 to
2021, the company achieved the following results;
Net revenue Profit After Tax
Figure 2 1 Revenue growth chart of Damsan Textile J.S.C in the period of 2019-2021(million USD)
Source: Accounting Department of Damsan Textile
The long-term orientation of Damsan Textile J.S.C is to develop the textile business vigorously In 2023, the Group sets the target: Total revenue: of 250 million USD, up 79% compared to the implementation in 2021 Profit after tax: 43 million USD, up
26% compared to the performance in 2021.
Table 2 1Targets of the company's 2023 Plan.
Source: Accounting Department of Damsan Textile J.S.C
The company's profit plan is quite challenging in the current economic downturn This requires the company to have appropriate strategies and business plans in which reducing operating costs related to employee productivity is very important.
Evaluating employee productivity is essential in completing the
Company's business plan Suppose the enterprise does not have a formal job evaluation system In that case, each employee will also face many disadvantages: they will need to recognize their progress and mistakes or errors in the work Job; they will not have the opportunity to be evaluated for consideration for promotion; they will not be identifying and correcting their weaknesses through training, and they will have less chance to exchange information with management Therefore, employees will work according to their emotions, and labor productivity could be more practical, affecting the Company's overall business results Thus, building a set of standard KPIs becomes a vital concern for the Company at this time.
Applying standard KPIs to the company's management system will help the company manage human resources effectively, improve labor productivity, and contribute to increased revenue and profit For employees, applying KPIs will help them improve their strengths and limit their weaknesses at work, which is the basis for proposing a salary increase or promotion At the management level, the KPIs standard helps managers make the right human resource decisions and evaluate the competent or incompetent staff to take appropriate measures In addition, the business through exchanging opportunities and career planning, strengthens good relations between superiors and subordinates, etc Performance evaluation is done well for the proper purpose, benefiting the business and the employees.
The current capacity assessment of employees applied at
Damsan Textile J.S.C has the following limitations: (1) The present set of indicators cannot be measured (2) The current set of indicators is not the key to helping the business achieve its goals (3) Inappropriate execution time.
The above analysis shows that the current job performance evaluation has many limitations, failing to meet the criteria of a goal (according to the SMART method) In the situation that evaluating the Company's work performance is not a source of encouragement for employees to strive to accomplish goals, the author has proposed to the leadership to develop and apply KPIs to the Company.
The limitations of this Project are just focused on building KPIs for the Technical Department only due to the lack of the Project's human resources and costs The technical department is essential to the company, directly affecting business results Still, most performance evaluation activities are subjective, not ensuring fairness for development—human resource development in the company Recognizing the importance of developing KPIs for the Techinical department, the author has chosen to build KPIs for this department, which is also the motivation of this Capstone Project.
Project Aim and Objectives
KPIs standards play an essential role in human resource management at enterprises in general and Damsan Textile J.S.C in particular However, the company's current set of KPIs is still limited Developing a suitable set of indicators improves the company's governance capacity, promoting sales and profit growth.
As a result, the purpose of this project are as follow:
(1)To investigate the ability of developing KPIs at the case
(2)To figure out the procedure to develop and manage KPIs system at the case Company;
(3)To build successful KPIs for Technical Department at the case Company;
Along with the above project’s purposes, the following questions should be answered throughout the Project:
(1)Is it possible for the case Company to develop KPIs system?
(2)Which is the process to develop and manage KPIs system at the case Company?
(3)What are the suitable KPIs for Technical Department at the case Company?
As a result, this Capstone Project is divided into five sections:
(1)Section 1 – Introduction and setting the scene and context
(2)Section 2 – Problem Statement and Identifications
(3)Section 3 – Management Techniques, Tools and Analysis
MANAGEMENT TECHNIQUES, TOOLS AND ANALYSIS
Data Collection
No Question Data need to be collected Data Collection Method
Is it possible for the case
Company to develop KPIs system?
Data from surveying by questionnaire to figure out the possibility of the case company to develop KPIs
In this study, the researcher used qualitative research method Qualitative research is research that involves analyzing and interpreting text and interviews and observations in order to discover meaningful patterns descriptive of a particular phenomenon
For this research, to find out more about the conditions for applying KPIs at the Company, the author used the questionnaires method to collect opinions from the Company's leaders and employees Questionnaire surveys are a technique for gathering statistical information about the attributes, attitudes, or actions of a population by a structured set of questions.The survey method collects market information using questionnaries survey sheets sent to participants to receive their answers Customer responses will be statistically analyzed to find helpful information and make meaningful market research conclusions The current organization of the survey is done by sending survey forms to employees working at the Company, for production workers conducting interviews and filling out survey questionnaires.
For this project, the author directly went to each department in the company and sent questionnaires to 30 employees, including the human resources department, technical department, sales department, accounting department, textile factory, and five leaders, including General Director, Deputy General Director, 2 Executive Directors, and an assistant General Director The time to survey and collect data is four weeks.
Survey Questionnaire is attached in Appendix 1: Employee’s Comments surveys and Appendix 2: Leadership survey comments. Scoring is based on how much you agree with the statement, including: 1: very low; 2: Low; 3: Medium; 4: High; 5: Very high After collecting data, it will be analyzed on basic excel software to evaluate the consensus level of survey subjects and give results.
Which is the process to develop and manage KPIs system at the case Company?
Data from group discussion and Literature Review to find out the suitable process for the case company to develop and manage KPIs system
Group Discussion was held at the company's main meeting room on October 3, 2022 Participants include: 2 members of the company's board, 3 members of KPIs project team, 6 heads of Relevant Departments Discussion Questionnaire is attached in Appendix 3.The Meeting minutes of the discussion are attached to Appendix 7.
During the discussion, Team will discuss and propose an appropriate process and set of indicators to build KPIs for the company based on data from LiteratureReview (Financial statements for 2019 -2021 (Appendix 4)) to evaluate and agree on appropriate indicators for the company in the following years The members will agree and give their opinions to agree or disagree on the steps to develop the company's KPIs The author uses the excel method to analyze the consensus level and make an assessment.
Source: 3 Qualitative research; 4 Questionnaires method, 5 The interview method
3 https://istss.org/education-research/istss-research-guidelines/trauma-research-methods/an-introduction-to-qualitative-research- methods-fo?gclidaIQobChMIpJPDsNXs-wIV9sIWBR2huwRrEAAYASAAEgIdzfD_BwE
4 https://www.sciencedirect.com/topics/earth-and-planetary-sciences/questionnaire-survey
5 https://www.scribbr.com/methodology/interviews-research/
Data Analysis Tools and Techniques
The author uses Ms.Excel software to collect and analyze survey and interview data according to the project's questions that need to be clarified The author used qualitative methods and analytical - synthesis methods. Which, Qualitative research method is to synthesize documents and data from secondary data, then conduct analysis, interpretation, and determination of evaluation criteria Method of analytical- synthesis to make preliminary conclusions for the project In addition, the author also conducted interviews with groups of experts to analyze the mission and vision of the Company From there, the critical success factors in building KPIs for the Company are identified
Interpret Results and Finding
After data collection & data analysis, the author will analyze the results and make the findings shown in Section4.
PRESENTATION OF FINDINGS
General Introduction of Damsan Textile J.S.C
6In May 2006, Thai Binh Investment Trading Joint Stock Company and the handicraft import-export company members decided to contribute capital to establish Textile Joint Stock Company
Damsan In June 2006, the Company started construction of the
Damsan I factory with a total investment of 15 billion VND.
Head office: Lot A4, Bui Vien Street, Nguyen Duc Canh Industrial
Park, Thai Binh City, Thai Binh Province.
Main business fields: Producing yarn, woven fabric, finishing textile products; wholesale fabric, ready-made goods; wholesale textile yarn, cotton
6 http://damsanjsc.vn/gioi-thieu/
Figure 4 1Textile Joint Stock Company Damsan's organizational apparatus (Source: Administration - Human Resources Department)
Characteristics of the company's human resources
The company's size is relatively small, so the number of employees working in the workshops is only 220 people as of
December 31, 2021 The number of workers at the textile factories is about 150 people The rests are technical blocks and office staff The technical team is 45 people The author will focus on building priority KPIs for the Techinical Team in this article
Labor structure by sex, age in 2021
Figure 4 2 Labor structure by sex
Figure 4 3 Labor structure by age
Figures 4.2 and 4.2 show that Damsan Textile J.S.C can employ male and female workers Therefore, the ratio of male and female employees in the company is approximately equal This advantage helps the company's recruitment source broaden and makes finding workers easier The percentage of female employees is mainly concentrated in the indirect labor sector, such as management, professional skills, and service Jobs such as maintenance and technology often use male workers because of the characteristics of the jobs that require workers outside the qualification to have good health The company's employees are mainly young workers The number of employees under 30 years old accounts for the highest rate of 52%, followed by workers aged 31 to 40 accounting for 42%, while the number of workers from 41 to 50 and over 50 years for a low rate of about 6% The number of young workers is mainly direct labor With their youth, dynamism, creativity, and enthusiasm, they can easily access new technologies to control the company's advanced machinery and equipment The number of elderly employees with their long experience mainly in charge of management and professional tasks.
Structure of labor by qualifications in 2021
Figure 4 4 Structure of labor by qualifications in 2021
Based on Figure 4.4, the labor structure by qualification mainly focuses on unskilled workers, in which high school is 34%, and lower secondary school is 43.39%; this is also due to the characteristics of the garment industry, focusing on labor as workers in workshops and factories The university, college, and university degrees account for about 10%, mainly focusing on office blocks, management work, and professional skills Level
For intermediate and technical workers, about 13% are mainly for the positions of machine maintenance, machine operators, etc.
0.3% is the number of seasonal workers serving at offices Thus, unskilled workers account for the majority of the structure of skilled workers This is an advantage for the Company in recruitment because it is easy to find workers, but it costs training In the long term, the Company should organize learning and improve skills for sustainable development Jobs for this workforce or increase direct recruitment of highly skilled people to reduce training time and ease access to high-tech machinery.
Findings
4.2.1 Ability to develop KPIs at the Company
From the data collection, Table 4.1 below will describe the survey results of 5 leaders about ability to develop KPIs at the Company.
Table 4 1 Summary of leaders' survey opinions on the construction of KPIs
1 The company has a clear mission vision (degree of clarity) 2.6
2 The leadership supports the application of KPI tool in evaluating employee's work performance (Level of agreement) 4.4
3 The leadership team is provided with full training materials on KPIs (Level of agreement with this statement) 2.6
4 Are you willing to take the time to participate in KPI seminars? (Level of readiness) 4.4
5 Have you selected potential members to the KPI development and implementation team? (Possibility of selection) 4.4
6 Are you ready to empower employees to take the initiative in doing their work? (level of readiness) 4.4
7 Are the criteria for evaluating the current performance of employees specific, clear and suitable for groups of titles? (Clear, relevant) 2.2
8 Currently, do employees trust (accuracy, fairness) in the assessment of management? (Trust level) 1.2
9 Does the company have a complete database to store KPIs? (Full extent) 1.2
10 Are the current employee evaluation results associated with employee rights and responsibilities? (degree of attachment) 1.6
11 Do you support the application of KPI tools to evaluate the performance of employees? (support level) 4.4
12 Are you willing to organize an internal PR on applying KPIs? (readiness level) 4.4
13 Are you ready to use measurement results to improve your work? (readiness level) 4.4
14 Are you in favor of hiring external consultants to advise on the implementation of
15 Do you believe that applying KPIs to assess the performance of employees at the
Company will be successful? (Trust level) 4.4
(Scoring is based on how much leaders agree with the statement, including 1-Vey low, 2-low, 3- Medium, 4- Hign, 5- Very high)
Source: Processing results from the author's survey data
Table 4.1 includes 15 indicators of leadership's assessment of the company's goals and the ability to support the development of a new set of KPIs for the company The results are evaluated based on the average score collected by the author Scores ranged in agreement from 1.2 points (very low) to 4.4 points (very high).
From Table 4.1, the author lists several indicators that are agreed upon and highly appreciated by the leaders, as shown in the table below:
Table 4 2 Top rated content by leaders
2 The leadership supports the application of KPI tool in evaluating employee's work performance
4 Are you willing to take the time to participate in KPI seminars? (Level of readiness) 4.4
5 Have you selected potential members to the KPI development and implementation team?
6 Are you ready to empower employees to take the initiative in doing their work? (level of readiness) 4.4
11 Do you support the application of KPI tools to evaluate the performance of employees?
12 Are you willing to organize an internal PR on applying KPIs? (readiness level) 4.4
13 Are you ready to use measurement results to improve your work? (readiness level) 4.4
15 Do you believe that applying KPIs to assess the performance of employees at the Company will be successful? (Trust level) 4.4
Source: Processing results from the author's survey data
Firstly, (Question No2) the leadership supports the application of the KPI tool in assessing the performance of employees (score
4.4/5) (Question No15) The administration also expressed confidence in the project's success (score 4.4/5) This result shows that the company leaders fully support the KPIs tool in measuring employee performance
Secondly, survey results show that the Board of Directors is willing to empower key employees (Question No 6-Score 4.4/5).
This is an advantage in implementing KPIs
For the question No 13: "Are you willing to use measurement results to improve your work?" the results have an average score of 4.4/5 This shows that the Company's leaders want to use measurement results to improve work performance.
The factors that leaders underestimate are shown in the table below:
Table 4 3 Underrated Criteria by leaders
10 Are the current employee evaluation results associated with employee rights and responsibilities? (degree of attachment) 1.6
8 Currently, do employees trust (accuracy, fairness) in the assessment of management? (Trust level) 1.2
9 Does the company have a complete database to store KPIs? (Full extent) 1.2
Source: Processing results from the author's survey data
As stated in Table 4.3 above, we can say that most leaders believe that Most leaders believe that the current system of KPIs is not suitable to assess the capacity and responsibilities of employees with a score of 1.6/5
The question “Currently, do employees trust (accuracy, fairness) in the assessment of management? (Trust level)” with a score of
1.20/5 This shows that employee trust lies in specific, properly measured evaluation numbers Therefore, to increase employee support, it is necessary to build a clear and particular KPI performance evaluation system.
Most of the leaders think that the database is incomplete
(Adequacy level is 1.2/5) Therefore, company needs to be a database to save all KPIs
The above-evaluated contents are evaluated by the leaders quite closely with the current status of KPIs management The following is a survey of employees at the company to see a better overview of the current set of KPs and the need to build a new set of indicators more suitable.
Table 4 4 Summary of employee survey opinions on the
1 I have a clear job description and standards (clarity) 1.43
2 My work goals/targets are specifically assigned (to a specific extent) 1.5
3 I clearly understand the goals of the company as well as the goals of the department/department I am working for (Level of understanding) 1.8
4 I am able to plan my own job goals based on departmental goals and job description
(Severe Agree with this statement) 2.23
5 My direct manager actively supports me in planning my work goals (Level of agreeing with this statement) 2.57
6 I have the necessary permissions to get my job done 2.5
7 I know what I need to do to reach my work goals 2.5
8 The evaluation of the current employee's job performance is based on clear criteria
(the extent to which you agree with this statement) 1.43
9 Overall, the current evaluation of employees is fair (Severe agree with this statement) 1.43
10 I support that employee appraisals should be quantitative (specific, measurable)
(Severity agree with this statement) 3.3
11 Currently, before my supervisor's assessment, I self-assess my work (The degree of agreement with this statement) 1.7
12 The results of my management's evaluation of me were adequately responded to and explained by management (Level of agreement with this statement) 1.8
13 The results of the employee's job performance assessment are now associated with the employee's responsibilities and rights (Level of agreement with this statement) 2.5
14 I have been trained in performance metrics (Strongly Agree with This Statement) 1.1
I am willing to support the application of a new method of performance evaluation, which is quantitative and linked to the performance of work goals (Level of agreement with this statement)
Scoring is based on how much employees agree with the statement, including 1-Vey low, 2-low, 3- Medium, 4- Hign, 5-
Source: Processing results from the author's survey data
Table 4.4 shows 15 factors that employees agree to apply to the
KPIs The results are evaluated based on the average score collected by the author Scores ranged in agreement from 1.1 points (very low) to 4.73 points (very high).
From Table 4.4, the author lists several indicators that are agreed upon and highly appreciated by the leaders, as shown in the table below
Table 4 5 Top rated content by employees
I am willing to support the application of a new method of performance evaluation, which is quantitative and linked to the performance of work goals (Level of agreement with this statement)
10 I support that employee appraisals should be quantitative (specific, measurable)
(Severity agree with this statement) 3.3
The question "I am ready to support the application of a new method of performance evaluation, quantitative and associated with the implementation of work goals" has an average score of
4.73/5 and the question “I support that employee appraisals should be quantitative (specific, measurable)” with a score of
3.3/5 This indirectly shows that employees fully support the development of KPIs and want a performance evaluation system that brings accuracy, fairness, and motivation to strive
Factors that are underrated by employees:
Table 4 6 Underrated Criteria by employees
3 I clearly understand the goals of the company as well as the goals of the department/department I am working for (Level of understanding) 1.8
12 The results of my management's evaluation of me were adequately responded to and explained by management (Level of agreement with this statement) 1.8
11 Currently, before my supervisor's assessment, I self-assess my work (The degree of agreement with this statement) 1.7
2 My work goals/targets are specifically assigned (to a specific extent) 1.5
1 I have a clear job description and standards (clarity) 1.43
8 The evaluation of the current employee's job performance is based on clear criteria
(the extent to which you agree with this statement) 1.43
9 Overall, the current evaluation of employees is fair (Severe agree with this statement) 1.43
14 I have been trained in performance metrics (Strongly Agree with This Statement) 1.1
Table 4.6 shows that the question " I have been trained in performance metrics” with a score of 1.1/5.This shows that employees' understanding of this method is limited
The question "Employees rate the clarity of their current job" only got 1.43/5 The current employee performance evaluation is based on clear criteria" with 1.43/5.Overall, the current employee evaluation is fair” with a score of 1.43/5 The above scores show that most employees need help understanding the process and evaluation method, creating a feeling of unfairness Therefore, the Company needs to improve the precise job description and analysis to serve as a basis for employees to evaluate more accurately.
From the above analysis, the author comes up with the Findings:
Firstly, the leadership supports the application of the KPI tool in assessing the performance of employees.The administration also expressed confidence in the project's success.This is a significant factor determining the success of KPIs in evaluating the performance of the task.
Secondly, the leaders is willing to empower key employees.
Empowerment creates initiative for employees in implementing work and taking timely corrective action when KPIs do not meet the target Incorporate metrics, reporting, and performance enhancements to get the job done.The result shows that the
Company's leaders want to use measurement results to improve work performance.
Thirdly, employee's support for the development of KPIs.
Employees fully support the development of KPIs and want a performance evaluation system that brings accuracy, fairness, and motivation to strive However employees' understanding of this method is limited.
In addition to the favorable factors mentioned above, the
Company also encountered complicated aspects that can be cited as follows:
Fourth, the scores show that most employees need help understanding the process and evaluation method, creating a feeling of unfairness Therefore, the Company needs to improve the precise job description and analysis to serve as a basis for employees to evaluate more accurately.
Fifth, there needs to be a database to save all KPIs The data stored to control employee work is limited Most of the leaders think that the database is incomplete Employees find it challenging to collect evaluation information An incomplete or less widely available database makes it difficult for both leaders and employees, which causes reduced effectiveness of evaluation Therefore, it is necessary to mention more specifically how to collect information and store the database to support the organization's development and application of KPIs.
Thus, besides the advantages of developing KPIs, the Company also encountered specific difficulties Current difficulties can be overcome in implementing and applying KPIs based on implementing detailed and reasonable solutions.
4.2.2 Process to develop and manage KPIs system
In this section, the author uses the Group discussion method to build the KPIs process The results of the meeting on October 3,
2022, are collected by the author in the table below:
Table 4 7 Comments on building a set of KPIS
Step 1 Opinion to develop principles for applying KPIs according to SMART requirements 100% 0%
Step 2 Formulating the company's strategic goals and key elements 70% 30%
Step 3 Company-level KPIS allocation 85% 15%
Step 4 Set up functional KPIs for each department 65% 35%
Step 5 Set weight and review set of KPIs 85% 15%
Step 6 Set goals for the plan 80% 20%
Source: compiled by the author
Regarding building a set of KPIs: 100% of members agree to develop a set of indicators according to SMART principles and based on historical data and financial information from 2019 to
(i) 100% of the members agree that they must give their according to SMART requirements, specifically:
S = Specific - Specific, clear The indicators given must be particular and precise When offered, it must be explainable.
What does this indicator say? Why choose this indicator? How is this indicator measured?
M = Measurable - Can be measured KPIs are only valid when defined and counted correctly “Becoming the most famous business” is not a KPI because there is no way to measure the popularity of a business or compare it to other companies.
A = Achievable - Attainable There are many measurable KPIs that are not the key to business success When choosing KPIs, you should select the necessary ones to help businesses achieve their goals This indicator will closely follow the plans – the goals that the company realizes have many factors in attaining the goal realistically So the KPIs given must also be realistic indicators that can be achieved.
R = Realistic - Realistic The given indicators also need to consider and follow the goals and reality Providing hands beyond the ability to measure truth or KPIs different from the actual work is not recommended.
T = Timed - Timed How long and when are these indicators applied?
(ii) 70% of members gave opinions on building the company's strategic goals and critical factors, including the following six factors:
Professional working style; Delivery as committed; Make the most of resources; Qualified staff; Increased customer satisfaction;
(iii) 85% of members agree to allocate company-level KPIS
Based on the set of Company-level KPIs to determine strategic
KPIs that can be distributed down to the
Division/Department/Department/Individual level according to the following principles: Strategy related to
Division/Department/Department/Individual Any individual will be allocated to that Division/Department/Department/Department.
(iv) 65% of members agree on the addition of functional KPIs
After allocating KPIs, based on the job description, consider additional functional KPIs An enterprise's strategic goals only sometimes represent objectives related to all functions and departments Therefore, after allocating strategic goals down to the KPIs of departments, it is necessary to review the set of KPIs of departments to add KPIs associated with the department's functions This step will further answer the question: "How will my department contribute to the company's success if I do not see the mission of my department in the strategic goals?"
(v) 85% of members agree on weighting and review of KPIs
Prioritize and assign weight to each KPI (if necessary) This is a significant step because of the proportion of each KPI in the set of
KPIs of the unit, and the individual will directly direct the unit's efforts and individual on the KPIs that the business wants to focus on, corresponding to those essential strategic goals The proportion of 1 regular KPI should be at most 50% and should be at least 5% because it will quickly lead to negative behaviors of employees when focusing on or ignoring those KPIs
(vi) 80% of the members agree on Setting Targets for the Plan
Setting plan targets is usually based on the following principles to ensure the plan targets are challenging and achievable:
Key summary of findings
In section 4, the author gave an overview of Damsan Textile J.S.C
Company, outlined the current status of the evaluation of the
Company's work performance, and examined the Company's application conditions through the survey They surveyed the opinions of 50 randomly selected employees and five senior staff members leaders, interviewed leaders, and discussed with experts From there, the author summarizes and comments on the issues mentioned in section 2.
Firstly, about the conditions for applying KPI at the Company The results show that the favorable conditions include leadership commitment, and the Company has successfully used the current quality management system However, there are still many limitations, such as the general job description needing to be attached With specific evaluation criteria, the evaluation of employees is still emotional Therefore, it is necessary to rebuild a set of KPIs aligned with the Company's orientation and development.
Second, the author has summarized and presented the process of building KPIs and the contents of the Company's KPIs.
Third, the author has summarized the comments and given suitable KPIs for the Technical Department.
From the actual situation and findings mentioned in section 4, in section 5, the author will present recommendations for evaluating the job performance of employees working at the Company through the construction of measurement indicators proper performance on assessing the performance of employees working at Damsan Textile J.S.C Company
PRESENTATION OF SOLUTIONS / RECOMMENDATIONS AND IMPLEMENTATION
Conclusions
The analysis of the current situation and findings in Section 4 shows that to improve the Company's operation in general and the Technical department in particular The application of performance evaluation according to KPIs is essential.
The current work performance evaluation has yet to tell employees which tasks they should focus their resources on to complete, what the periodic tasks assigned every year are, and what deadlines need to be completed Moreover, the current assessment is still emotional and needs to categorize employees who do well and who do not This not only makes employees lose motivation to do well but also destroys the motivation for development at the Company.
From the findings in Section 4 about:
(1)The ability to develop KPIs at the case Company.
(2)To Figure out the procedure to establish and manage the
KPIs system at the point Company.
(3)To build successful KPIs for Technical Department at the case Company,
Thus, the author proposes to create a process to apply KPIs for the Company and the Technical Department in Section 5.
Recommendations
Based on the results and information in section 4, the KPIs development process includes the following steps
Figure 5 1 the KPIs development process
The company's KPIs are built based on financial targets for three years (2019-2021) These indicators ensure SMART (specific, measurable, feasible, meaningful, and time-bound) In addition to looking to the future, these indicators also refer to past statistics to ensure feasibility.
Table 5 1 The company's KPIs from 2022 to 2024
Source: According to the author's research
The measurement data of the indicators in 2 years (2020 and
2021) (Appendix 06) is taken as the basis for building a new KPI norm These metrics most accurately reflect the operational productivity of the business, as well as the actual basis, the foundation for setting future goals.
To ensure the implementation of the set goals, along with the analysis of internal and external factors, environmental conditions as well as maximum productivity of the Company, in consultation with experts and the Head of the Company In the Technical
Department, the author has built a new KPI norm (in the next 3 years) for the indicators of the Engineering Department as follows:
Table 5 2 Technical department KPIs from 2022 to 2024
Source: According to the author's research
5.2.3 KPIs Implementation and Management Plan
The leadership needs to regularly monitor and update the status and progress of performance evaluation At the same time, the commitment of the Board of Directors will help employees feel the care and connection between all levels in the Company.
Create the highest relationship (from the leadership to the staff departments) to build a practical resource.
During the testing process, there are definite criteria that are not suitable during use, so the Groups and individuals will adjust and change some indicators to maintain relevance and application.
Adjusting hands to suit organizations, departments and individuals ensures a continuous cycle of improving the process of using arrows.
After conducting the pilot assessment, the KPI project team discussed with the Head of the Department to finalize the evaluation criteria.
Once completed, the KPI project will be submitted by the Board of
Directors for approval Here are some problems encountered:
In the grading process, there is a difference between workers of different teams Typically, in this testing period, teams 3 and 4 had an explosion of batteries (objective causes), which caused a waste product, so the KPI on the failure rate of teams 3 and 4 did not meet the requirements
Regarding this factor, the KPI project team discussed and proposed the statistics department supplement information that excludes objective factors In addition, a supervisory inspection coordinator should confirm the results with the department head.
Some targets are easy to achieve while others are difficult to achieve For example, the criterion of "Number of finished products" is performed by most workers, but with the standard of
"Increasing productivity," quite a few workers can achieve the required level Similarly, the target "Number of machine downtimes due to subjectivity" is also reached by a few workers.
As a result, the KPI project team needs to revisit some of the assessment requirements.
Understanding the causes of these difficulties, the author has identified two main reasons leading to the inability to complete the set targets:
Due to external objective factors in determining KPIs, they have been overlooked or ignored.
Because timely implementation support measures have yet to accompany the setting of new KPIs For example, in the target of
"Increasing productivity," to achieve the set KPI targets, the
Company needs to apply new working methods or rebuild the working process to optimize the use of resources.
Based on the problems encountered, the KPI project team and the Board of Directors discussed and agreed on content to ensure a balance in grading between departments:
Taking into account objective factors or errors in the direction of superiors, leading to failure to complete KPIs when scoring KPIs for workers and employees.
Initially, when applying KPIs, a Supervisory Board will be established to monitor the departments' KPIs statistics The inspection and supervision committee will include quality management system specialists and members in charge of ISO in the Company After being synthesized by Human Departmet, the
KPI scores will be sent to the Supervisory Board for consideration before submitting to the General Director for approval.
(1)Training on KPIs for company and employees
For the Company: Conveying knowledge to employees is essential for employees to know how to proactively complete work The training content is not limited but must at least show the following scope:
General training on KPIs: Basic concepts, benefits of applying
KPIs, critical success factors, PI/KPI/KRI, steps to use, deploy KPIs at all levels, database and measure KPIs
Training on employee evaluation skills according to KPI: The purpose of the evaluation, collecting evaluation information, the ability to self-assess
For employees: It is necessary to actively learn and improve professional qualifications to have a higher ability to achieve KPI targets In setting goals, performing work, self-assessment, and evaluation according to KPI, employees need to exchange information and feedback with management actively Effective communication will help employees know how to focus on the goal to get the job done and learn how to adjust the actions necessary to achieve the set goals proactively.
( 2)Database build up and Statistic report
According to the experience of applying KPIs in some companies, the assessment will take a long time and require a lot of information Therefore, the Company needs to build a database to store performance metrics to support KPI planning and employee performance evaluation The Company can create a database using Excel to keep metrics.
Build a sound information collection system to monitor the implementation and evaluation process.
KPI is a strategic management system managing organizational performance goals Looking at the design of indicators, usually, people only see the final result But if you only see and apply it like that, the application of KPI will inevitably not bring the desired effect The strength of this system is the ability to quantify even qualitative work and thereby form the basis for regular monitoring of the system's performance on the way to the set goal, simultaneously proposing appropriate corrective and promotion measures.
Many Vietnamese businesses apply KPIs but need to prepare themselves with sufficient information collection infrastructure to monitor the implementation process and evaluate the goals of departments and individuals The inaccurate assessment leads to no measures to support and promote activities, making the KPI system lose many of its inherent effects.
( 3)Job analysis and Job descriptions by KPI
To apply the regulation on employee evaluation according to KPI, the Company needs to make job descriptions of all titles according to KPI When departmental KPIs change, departmental and individual job descriptions need to be adjusted for re- approval, job descriptions need to have specific criteria, especially rebuild KPIs following the functions of each department and the tasks of each individual.
Information in the KPI system is transmitted through 3 primary levels: Department, KPI Project Team, and Leadership The software used in the system in Excel.
Department: Periodically (weekly), the Heads of Departments report the assigned KPIs to the person in charge.