Reward and Performance Management: KPIs Analysis and Report

This report delves into the utilization of Key Performance Indicators (KPIs) as a critical instrument within the realm of performance management. It commences by elucidating the function of KPIs in assessing both individual and organizational performance, emphasizing their role in aligning workforce objectives with broader strategic goals. The report then meticulously examines the strengths of KPIs, such as their capacity to monitor and track performance, ensure fair appraisal processes, and foster market flexibility. Conversely, it critically analyzes the weaknesses of KPIs, including potential for rigidity, resistance from employees, and the time-consuming nature of implementation. The report concludes by providing actionable recommendations for optimizing the implementation of KPIs, including the setting of clear targets, effective data presentation, and continuous process improvement, thereby maximizing their contribution to organizational success and employee development. The report also emphasizes the importance of continuous research and refinement of processes to ensure the ongoing effectiveness of KPIs as a performance appraisal tool.

Running head: REWARD AND PERFORMANCE MANAGEMENT
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REWARD AND PERFORMANCE MANAGEMENT

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Table of Contents
Question 1........................................................................................................................................3
Question 2........................................................................................................................................3
Question 3........................................................................................................................................5
Question 4........................................................................................................................................6
References........................................................................................................................................8

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Question 1
Performance management instruments are the tools used by the management for constant
check on the performance of the employees which helps in improving the performance of
employees as well as organization (Maté, Trujillo & Mylopoulos, 2016). There are many
performance management instruments used by HR manager and management of the organization
for measuring, reporting and assessing the performance for effectiveness in the organization.
These appraisals are aimed at improving an organization’s deep line by stimulating employee
performance. It also manages workforce and individual goals with the wider organizational goals
and mission (Ostakhov, Artykulna & Morozov, 2018).
One such performance appraisal instrument is Key Performance Indicators also known as
KPIs. This is an instrument which helps in determining the performance of individuals, projects,
business units or companies in relation to the targets and objectives of the organization. This
instrument measures the performance at both individual as well as organizational level. At
overall organizational level it helps in finding how well the organization is responding in
achieving its goals. For instance if the organization wants to check the performance of a project
or a product KPI would inform the number of customers who are unsatisfied and how many are
happy with the service which can help in assessing how well the product is performing in
relation to the target set by the organization for the product (Κομηνέας, 2016).
Question 2
Strength of KPIs as a performance appraisal instrument:
 Helps in monitoring and tracking the performance of organization: KPIs helps in
continuous assessment of the individual as well as organizational performance by

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keeping a track on the operations so that real time adjustments and change in strategies
can be done for effectiveness of the task in the organization (Κομηνέας, 2016).
 Ensure a fair appraisal process: The ultimate strength of KPI is its ability to provide a
fair appraisal for all the individuals, projects or the entire organizations. It measures the
performance of individuals as well as the organization in response to the goals and targets
set by the organization.
 Helps in fostering the market flexibility: Key performance indicator helps in assessing
what marketing efforts are working better than expected and what are not working so that
the advertising and marketing strategies can be mould which would maximize the return
on investment for the organization (Noe, Hollenbeck, Gerhart & Wright, 2017).
 Gauge the problem very quickly: KPI helps in setting indicators for key performance
which helps in spotting problems quickly so that effective measures can be taken by the
organization.
 Improving the frequency of feedback: KPI created a proper feedback mechanism and
constant check on the performance by measuring the performance and the frequency also
enhances through this instrument.
Efficient
Managemen
t Provides
solutions
Of
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s
Achieves
goals and
target
Aligns with
Mission and
vision
Gives
competitiv
e edge
Strength
Of KPI

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Question 3
Though there are many advantages and importance of adopting KPI as a performance appraisal
tools but some of the features of Key performance Indicators suggests that it lacks reliability and
fairness while assessment for the employees and organization. Some of the disadvantages of
KPIs are:
Leads to Rigidity: Setting performance targets can be a disadvantage for the organization if
proper follow up is not taken. Sometimes employees become reluctant when continuous
assessment and evaluation of their performance is monitored.
Resistance from employees: Strict assessment of the performance is often resisted by the
employees. They take it as a restriction on their freedom and because of this appraisal only keep
performance are review the non key result areas are not analyzed which may also impact the
performance of the organization (Kislinskaya, 2019).
Does not keep external parties and benchmarks in reference
The Key Performance Indicators is intended to simply improve the future prospects and targets
of the organization. It is important to keep this in mind for better results (Hao & Yu-Ling, 2018).
Time consuming and Expensive Process: It is expensive to create processes for measuring
performances of the units, projects, products, performance of employees and organization. A lot
of time, money and efforts of the management are involved in it. Sometimes the money spent is
more than the benefits achieved from this appraisal system which reduced its value (Kim & Seo,
2015).

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Lacks Reliability and fairness
Key Performance indicators are based on human assessment and are subjected to errors, which
reduces its reliability and fairness as a performance appraisal tool.
Question 4
Key performance indicators can yield maximum returns if it associated with proper choosing,
implementation and reporting of it at various level. The instrument can be properly. There can be
following improvement in the instruments for giving maximum benefits for the entire
organization so that the objectives and goals of the organization can be achieved effectively and
efficiently (Ji, 2016).
Following are the steps for proper implementation of KPI:
Step 1: It needs to be considered that the respective KPI needs targets and what type of target
would it require.
Step 2: While drafting KPI graphs it needs to be considered that it is properly displayed for
correct assessment.
Step 3: There should be accurate conversation for KPI results.
Step 4: The root causes of should be focused for improving the performance not the symptoms
so that KPI gives better results.
Step 5: The improvements should be treated like experiments and not success therefore the
constant improvement can be set as benchmarks for the next assessment for reliability and fair
assessment (Camilleri & Camilleri, 2018).

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Step 6: There should be constant research on improvement in processes, system also so that
individual and organization performance can be judged accurately and effective results can be
drawn so that this performance appraisal tool can be effectively used.
Therefore it can be concluded that Key Performance Indicator can be one of the best contribution
to better understanding of how business operates and continuous assessment of targets. With KPI
the organization can be at a better position in comparison to its competitors and there can be
healthy environment in the organization. It is a better position to allocate the financial and human
resources and improves the commitment of capacity for the operations of product and services
(Cascio, 2015).

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References
Camilleri, M., & Camilleri, A. (2018). The Performance Management and Appraisal in Higher
Education.
Cascio, W. F. (2015). Managing human resources. McGraw-Hill.
Hao, Z. H. O. U., & Yu-Ling, H. E. (2018). Comparative Study of OKR and KPI. DEStech
Transactions on Economics, Business and Management, (eced).
Ji, H. (2016, December). The Advantages and Disadvantages Analysis on the Online Appraisal
System of Independent College. In 2016 2nd International Conference on Economy,
Management, Law and Education (EMLE 2016). Atlantis Press.
Kim, K. R., & Seo, E. H. (2015). The relationship between procrastination and academic
performance: A meta-analysis. Personality and Individual Differences, 82, 26-33.
Kislinskaya, M. V. (2019). APPLICATION OF THE KPI SYSTEM: POSSIBILITIES AND
LIMITATIONS. In Сборник избранных статей по материалам научных конференций
ГНИИ" Нацразвитие" (pp. 100-102).
Maté, A., Trujillo, J., & Mylopoulos, J. (2016, November). Key performance indicator elicitation
and selection through conceptual modelling. In International Conference on Conceptual
Modeling (pp. 73-80). Springer, Cham.
Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2017). Human resource
management: Gaining a competitive advantage. New York, NY: McGraw-Hill Education.

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Ostakhov, V., Artykulna, N., & Morozov, V. (2018, August). Models of IT Projects KPIs and
Metrics. In 2018 IEEE Second International Conference on Data Stream Mining & Processing
(DSMP) (pp. 50-55). IEEE.
Κομηνέας, Γ. (2016). Modelling of key performance indicators (KPIs) for manufacturing
processes (Doctoral dissertation).