Misconceptions of Key Performance Indicators, Promotions and Pay Increments
posted in Career, Working Smart, Always Ask, Using Law Of Attraction At Work, Are You Asset Or Liability, Boss Mentality, Globalization, Outsourcing, KPI |Hey Folks,
Let us do a recap of what we have talked about so far:
1) A Company (and by extension the bosses) will pay only enough to keep you on the job.
2) Globalization and Outsourcing gives a company alternative solutions to his manpower cost which can be significantly cheaper.
3) In the New Economy, you are paid a salary which is a function of what a company is willing pay to create/manufacture a service or product.
Now that I have given you a sense of what are the factors that could influence your bosses human resource policies (such as salary), it is time to take a look at how he is going to measure your performance.
Key Performance Indicators (KPI)
KPIs used to be the yardstick for measuring whether an organization has met it’s goals. It was later used as a yardstick for key employees and more recently, companies has adopted it for all employees in general.
It could come in various forms but it is generally a set of goals that would determine your performance for that year. Some call it goal setting exercise and others call it target setting. I just refer to it as KPI and it is usually an agreed target between boss and employee.
Since both party agreed on the KPI, there should not be any miscommunication right? Wrong! Both party only agree on the KPI, what most party failed to convey was what happens after KPI is met or not met.
The Employees Idea Of KPI
To an average employee, meeting the KPI means that they are entitled to the average pay increment and bonus. Exceeding the KPI means that they are entitled to better than average increment, better than average bonus and a good chance of promotion!
To some employee, if they were given a high standard of KPI, they may interpret as meeting the KPI means an automatic entitlement to a good increment, good bonus and a very good chance of promotion!
The Bosses Idea of KPI
Unfortunately for the employees, the standard interpretation of the situation for the average boss is this:
1) An employee is given a set of KPI that he should have no problem meeting for his given salary.
2) Meeting the KPI means that the employee is only good enough for the pay he is given.
3) Exceeding the KPI means the employee is good enough to be considered for pay adjustment and a bonus.
4) An employee will be considered for promotion when they consistently exceed their KPI and shows potential to handle more responsibilities.
As you can see there is a gap between expectations and that is where unhappiness usually begins.
So What Is Wrong?
Every company practices KPI and renumeration in a slightly different way but one thing I notice is that majority never say what happens if employees meet their KPI and the employees never ask! They usually quote “Your salary adjustments and bonus will depend on your KPI”. It doesn’t say exactly that “You will get your increment only if you exceed your KPI” but thats what usually happens.
So why don’t they say it out loud? I am not exactly sure but I have an idea.
It’s About Mindset
When the old economy model make way for the New Economy, the average employee either did not realize what has changed or they realized but do not know how to change or do not want to change. Maybe you can tell me your reason.
So why doesn’t the boss make it clear? I tend to believe that during the transition, it was abundantly clear for the companies with overpaid staffs. The signal was in the form of retrenchment and pay cuts. For the rest (such as new companies), I am not entirely sure. Maybe my readers who are also bosses can enlighten me in this aspect. 
Cheers
James
PS: Next post is what everyone employee is waiting for! So stay tuned.
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