Personnel Assessment System | Increase efficiency in enterprise

How the impact of personnel assessment system, and motivation system on the efficiency of the enterprise processes. Herein this article, we are going to discuss in details.

To develop a Personnel Assessment System and motivation system, the starting point is a real assessment of the staff: Who and how performs their functional duties. What is the payment for the work perform. How to assess the contribution of each and, on this basis, suggest possible ways to improve the efficiency of their work. This is an analysis of the situation in order to determine the compliance of the qualifications of personnel with the functions performance. The next stage is the development of a motivation system, considering its characteristics at a particular enterprise and the individual qualities of personnel.

Consider the most interesting, from a practical point of view. Systems of evaluation and motivation of personnel.

Enterprise Personnel Assessment System

Consider the personnel assessment system on the example of an enterprise where a system of real wage management has developed and operates depending on the financial situation of the enterprise. Where there is a mechanism that allows solving issues of personnel employment depending on the workload of production. And the remuneration system for the results of labor provides for the encouragement of personnel in the form of an increase in remuneration for improving the evaluation indicators of production and economic activity subdivisions of the enterprise. But the employees of any structural unit, due to their individual differences, do not perform their production functions equally.

In order to differentiate employees by the results of work, a unified system for assessing the effectiveness of each of their duties is needed. And this system should have a positive impact on the motivation of employees of the organization, help them adjust their attitude to work and improve its quality.

The system used at the enterprise in question allows to solve the following tasks:

• Determine the insufficient competence of the employee and, on this basis, plan his professional training or retraining.
• Identify the strengths and weaknesses of employees, their professionally important qualities and plan on this basis professional growth and career.
• Ensure the adoption of informed decisions on remuneration, promotion, dismissal of employees and thereby increase the efficiency of the entire organization.

It is necessary that the Personnel Assessment System itself meets a number of requirements.

First, it should have a high degree of objectivity and be perceived by the employee as objective. The evaluation criteria should be open and understandable.

Secondly, the results of the evaluation should be to the extent necessary confidential, since their publication can create tension in the team, cause antagonism between managers and subordinates, which creates certain difficulties in the implementation of individual plans to eliminate shortcomings.

It is known that personnel can be evaluated by direct and indirect assessments. Direct directly reflect the results achieved by the employee comparable to the goals of the organization. Indirectly, as a rule, characterize the qualities of the employee himself. Which are associated with the results of his activities by functional dependence: qualifications, professional skills, business qualities.

Job Descriptions

The complexity of the use of indirect assessments lies in the problem of establishing the most functional relationship between the qualities of the employee and the results of his activities. Therefore, the company proposes to evaluate Personnel Assessment System based on the results of labor.

According to the proposed methodology, the functions and responsibilities of each individual employee are first determined, based on job descriptions. Then – performance standards, which are select for each employee, base on the general goals of the company, specific and promising tasks facing the unit, and workplace conditions.

The coefficients obtain in the evaluation process are directly link to the wages of employees. The degree of implementation of the goals shows how effectively the organization operates, i.e., how effectively organizational resources and, above all, personnel are use.

Thus, the main indicators characterizing the results of the unit’s activities are:

• Fulfillment of the planned task in terms of volume and nomenclature of products (services).
• Quality of products (services).
• Labor productivity.
• Terms of work.

Labor evaluation is carrying out according to objective indicators characterizing the activities of the unit’s team. Supplement by an assessment of its contribution to the work of the unit.

Functional Duties

To do this, the functional duties of the manager should include:

• Planning the work of the team.
• Recruitment, placement and training.
• Control and evaluation of employees’ activities.
• Stimulation of creative work of subordinates.

The assessment of the head of the unit can be carrying out both by a superior manager and by a commission.

Development of System

The development of a system for assessing employees based on the results of work is carried out according to the following scheme.

1. Establishment of a list of the main functional duties of the employee, which should include the functions regularly performance by him and targeted one-time activities for the planned period (quarter, year). The implementation of the first stage is primarily associated with the availability of well-developed job descriptions.
2. Establishment of the scope of responsibility of the employee of the unit. At this stage, each function from among the targets entered into the target indicators is specified in certain economic or organizational categories (development of STC work plans, control over the implementation of plans, deadlines, etc.) On the example of the head of the STC, in whose subordination there is a team of nine people, we will reveal the essence of the implementation of the second and subsequent stages. Table 1 shows the functions and responsibilities of the head of the STC.
3. The development of criteria for assessing the implementation of each function. That is, units of measurement and a system of criteria reflecting the performance of managers (for example, the percentage of planned activities in relation to the previous year, etc.) are summarized in Table 2.

Table 1. Functions and responsibilities of the Head of the Scientific and Technical Center (STC)

Table 2. Establishment of criteria

4. Development of individual performance standards, i.e. levels of achievement of the established criteria. At the same time, from 2 to 5 standards are develop for each criterion. In the above example (in Table 3), three performance standards are used: “satisfactory”, “good”, “excellent”.

Table 3. Performance standards

At this enterprise, five fixed categories of assessment are used:

O – “excellent” (5 points), X – “good” (4 points), BUT – “below expected” (3 points), NS – “below average” (2 points), H – “unsatisfactory” (1 point).

The final score is derive as the arithmetic mean for each function being evaluate. In the same way, the overall average assessment of labor results for all functional positions establish at the beginning of the year (quarter, half year) is derived.

Evaluation of the employee by the results of work, or management through the setting of goals, ensures that the employee is tied to the goals of the organization.

Current enterprise management systems require that increasing importance be attach to the selection, training, and evaluation of personnel on whom production efficiency will depend. A common feature of all personnel evaluation systems is the periodic evaluation of the employee on a wide range of issues related to both his professional activities and business and personal qualities.

The remuneration system based on the assessment of structural units has been implement at this enterprise for 3 years and consists of the salary tariff for the employee plus the current bonus. Bonuses depend on the coefficients obtained as a result of the assessment and are accrued for the achievement of the established quantitative indicators by the structural unit. Based on the criteria developed as a result of assessing the actions of the staff, it is possible to turn a group bonus into an individual one.

ERP & Personnel Assessment

This enterprise has implemented enterprise management systems, which are for their intended purpose information managers (CAM) and meet the ERP standard.

The ERP information system and the personnel assessment system are being implemented in parallel, but in terms of information they are not yet interrelated. Therefore, in this work, a workstation will be created for filling, storing, and further using data throughout the assessment process.

AWP is an automated workplace of the control system, equipped with means that ensure human participation in the implementation of automated control system functions.

Combining various workstations into a single information system is one of the most pressing problems of the production control automation process. Therefore, it is necessary to create such information systems that could be expanded without any problems, and such workstations that would be freely included as a separate module in any information system.

The company has developed information support for the personnel assessment program, where the input data are: job descriptions for production shops, staffing table for workshops, additions to the job description (evaluation criteria), a memorandum containing quantitative information on evaluation criteria.

The output will be a report on the results of the personnel assessment, indicating the average score received by each employee during the assessment, as well as an appendix on the certification of the specialist.

Workflow procedures are designed to automate the processes of development, coordination, and execution of documents between services and officials. Each document management procedure determines the scheme of interaction of the workstation for each group of incoming and outgoing documents, as well as the phasing and direction of the actions of executors and officials.

Motivation system

In economic activity, efficiency is determine, base on the set goals, as a function of the results achieve, and the resources spent. The final performance indicators of the enterprise depend on its technical equipment, on the provision of material resources for production, and this, ultimately, should be ensure by the performance of the functions of the relevant structural units.

In this situation, the assessment of the individual contribution of each employee to the result of the functioning of the unit is indispensable. Since the determination of the amount of remuneration for the unit will be link to the implementation of bonus indicators for the structural unit.  The distribution of the bonus within the unit is complete in accordance with the performance standards.

The impact of improving the wage system on the implementation of effective economic activity is clearly manifest in the dynamics of indicators of the financial stability of the enterprise, business activity, etc.

The adopted indicators of the business plan are best correlate with the indicators of bonuses for structural units. Which will force the personnel of the enterprise to carefully consider their implementation.

The most important drawback of the system of staff motivation that exist until recently was the lack of correlation between the real results of the work of employees and the size of their wages.

Now there is and continues to be constantly improved and supplemented by a modern system.

The basis of which are such principles as:

• connection with the long-term development plan of the company.
• simplicity and clarity.
• measurability and a unified approach within the company.
• competitiveness.
• mechanisms of non-material motivation.
• motivation is not by punishment, but by encouragement.
• better awareness of the staff on the motivation system.
• the main increase in the employee’s income due to the growth of the variable part of the salary.
• improving differentiated treatment by

(a) taking into account individual and collective working conditions.

1. b) determining the ranges of operation.

Direct revenues of the company are form on the basis of current and long-term incentives.

Current incentives: the permanent part of the salary (salary, tariff), the variable part of the salary (allowances, additional payments, bonuses based on the results of production activities).

Long-term incentives: profit sharing through a performance premium for the year.

Employees also receive indirect-monetary income: social supplements and benefits under collective agreements, rest and vouchers, fully or partially financed by the company, advanced training at the expense of the enterprise. gifts at the expense of the company for various significant events and holiday dates.

Labor Motivation system

One of the main components of the system of labor motivation is material and non-material stimulation of labor. To stimulate personnel to achieve the target performance indicators of the enterprise. These indicators should be known to the staff, moreover, they should be included as criteria. The achievement of which clearly implies the receipt of material remuneration by employees. An effective bonus system should constitute a significant part of wages and include a limited set of criteria corresponding to the objectives of production. The achievement of which really depends on the labor efforts of the staff. The criteria should reflect the general and specific performance of each production.

The achievement of the most important target indicators of production and enterprise as a whole is subject to stimulation:

• Achievement of quantitative indicators of output (volume of work performed).
• Fulfillment of requirements for the quality of products (quality of work performed).
• Fulfillment of normative indicators of expenditures of all types of resources per unit of output (works performed).
• Providing customer service: providing the consumer (customer) with finished products (work performed) at the proper level (production culture). A truly effective bonus system (or more broadly, a variable part of wages) can become truly effective, stimulating the achievement of the required labor results only if its part in the salary is at least 50%.

When developing a bonus methodology.

It is important that based on the results of production activities. It is produce monthly in the following areas:

• For a particularly important task :  Up to 50% of the variable part of the payroll is use for bonuses in this area.
• From the fund of the head of the workshop (section) :  Is establish within 10% of the variable part of the payroll of the enterprise.
• For collective results :  A variable part of the payroll is use for bonuses in this area, which remains after the allocation of funds for bonuses for performing especially important tasks and using the fund of the head of the workshop.

In order to eliminate the shortcomings of a single tariff scale for the differentiation of permanent incomes, as well as in order to strengthen both the material and non-material interest of employees in increasing responsibility for the final results of work and the level of professional skill, it makes sense to develop a provision on the establishment of allowances for high qualifications.

The selection of employees for the appointment of allowances for high qualification can be according to the following criteria:

For workers –

Collective:

• performance of production tasks by the brigade (subdivision).
• absence of accidents due to the fault of the brigade.

mandatory individual:

• quality of work performed, labor safety, trouble-free operation.
• absence of violations of labor discipline.
• mentoring.
• innovation (mastering new technology, rationalization).

Additional individual:

• education.
• upgrading.
• regional mobility.
• combining professions.

For managers and specialists –

mandatory individual:

• Education.
• Professionalism (for managers, the work of the unit is require to take into account, can be assess on the basis of the ongoing system assessment of personnel, periodic certification).
• Innovative activity (work in tasting, technical and other councils).
• Identification of the company’s goals with personal goals.
• Discipline.

Additional individual:

• work experience in the specialty.
• education (availability of additional).
• knowledge of a foreign language.
• advanced training (as well as self-education).

In each particular enterprise, the criteria may be establishment and its all depending on the actual conditions.

Such a personal allowance may be in the amount of 30 to 50% of the average monthly salary of employees of the relevant category. Up to 10% of the monthly payroll is sent to establish allowances. However, in order to use it effectively, a personal allowance may be establish for a period of six months. Further payment or termination of it is complete after an assessment of the level of work and the corresponding indicators.

Conclusion

The main problem in the development of a system for assessing and motivating personnel is to maintain a balance of interests. When it is important to decide what is mandatory and what is an additional requirement. It is important that the system of evaluation and motivation contributes to healthy competition between departments, well-coordinated work of the team, from which the division, the enterprise and, ultimately, the consumer who receives products of stable quality, benefit.

The Personnel Assessment System and motivation is develop by specialists of  HR Department.  It is constantly being improve and supplement on the time to time.

The existing system of staff motivation will justify itself and will be viable if it fulfils the main task – it will change the attitude to work among the staff and teach people to work in a new way, which will be a real confirmation of the implementation of the three principles of the quality management system: leadership of managers, staff involvement and continuous improvement.