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Summer Internship Report

Prepared By: Gaurav Kumar MHRM, IIT Kharagpur


MHRM IIT KHARAGPUR

Preface Highlights of Internship Start date of Internship: 15th May, 2012 End date of Internship: 13th July, 2012 Organization Name: Phoenix Conveyor Belts, India Internship Domain: Human Resource Management Supervisor: Mr. Avik Sengupta Duration: 2 months Intern’s Name: Gaurav Kumar

Hi, This report documents the work done by me during my summer internship at Phoenix Conveyor Belts India (PCBI), Kolkata under supervision of Mr. Avik Sengupta. The purpose of this report is to explain what I did and learned during my 2 months of internship at PCBI. My assigned project was “Alignment of Performance appraisal with training need analysis and calculation of effectiveness of training.” I have tried my best to understand PCBI HR practice and prepare this report. This report will brief you with existing PCBI policies for performance appraisal and training program. I have also added some suggestions to improve current practices. I have tried to keep this report short and concise but useful. I hope I succeed in my attempt Thanks!!!!!! Gaurav Kumar MHRM, IIT Kharagpur gaurav.iitkgpmba2012@gmail.com


MHRM IIT KHARAGPUR

Contents

Features 3

Performance Appraisal @PCBI

5

Calculation of Appraisal Score

10

Performance Review

13

Employee Dialogue

17

Training Need Analysis

19

Training and Development Process@ PCBI

20

Training Identification – Development Summary & Skill Matrix

27

Kirkpatrick Model

30

Return on Training Investment

32

Monetary value of Training Benefits

3

30

32

17

17

13


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Our Values

Freedom To Act

Passion To Win For One Another Trust

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Performance Appraisal

Performance Appraisal @PCBI

Performance appraisal at PCBI is a process of identifying, measuring and developing the performance of individual, team and finally PCBI. For Sustainable growth and development, it’s very important to align individual and team goal with organizational goal. Performance appraisal planning in PCBI is done at 3 levels; individual, department and organization. Performance appraisal in PCBI starts at the start of financial year with goal and objective setting of PCBI for next year. PCBI goal and objective is set by Managing Director and Head of

Departments (HODs). While setting goal and objective for PCBI, mission and vision of PCBI, resources and capabilities play crucial role. Last year, PCBI set goal to increase revenue from 65M€ to 130M€ by 2017. Department goal and setting is cascaded from PCBI goal and objective. Each department set their own target and goal. While framing (G & O) of individual, employees’ job description play a crucial role. For each individual, key accountabilities and performance standard are set according to his job description.

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Performance Appraisal Process Performance Planning Performance Reward

Performance Review

Performance Execution

Performance Assessment

Performance Appraisal process at PCBI

Once performance planning is done, execution phase starts. Employee and manager play equal role to achieve goal and target. At the end of financial year, appraisal assessment is done. PCBI uses 2 scores to appraise individual performance. These scores are: 1. Business Balanced Scorecard (BBSC) 2. Competency Scorecard(Comp. Score)

The significance and meaning of these 2 scores are different and has its own importance. Both these scores have different attributes which have been selected very wisely to capture the contribution and skills of individual employees. Business Balanced Scorecard: BBSC score captures or signifies the performance of employee in last financial year. It depends on work done and business generated by employee. Competency Score: Competency score measures the potential and capabilities of employees through various behavioral and capabilities parameters and attributes. Phoenix Conveyor Belts India | 4


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Performance Appraisal Score Calculation

Calculation of Competency Score and Business Balanced Score Competency Score (Comp. Score) Calculation PCBI uses rating system on a scale of 1-5 to rate competencies of employees, where 1=Does not meet expectation, 2=Needs Improvement, 3=Meets Expectation, 4=Meets and sometimes exceeds expectation and 5=consistently exceeds expectation. PCBI uses a number of attributes to compute Comp. Score. These attributes differs from grade to grade. The weightage of these attributes also varies from grade to grade. Following are the attributes which PCBI consider for Comp. Score calculation.

1. Managing Director(MD) 2. Executive Member(Exe Mem) 3. Department Head 4. Interfacing Department Head(Intf Dept Head) 5. Peers 6. Conduct 7. Attitude 8. Fitness 9. Self

Employee Competency AssessmentThe Next Step Towards Building Capabilities

Grade wise weightage of different attribute are given in the Table 1. Initially, Comp. Score is calculated with a total of 100 points and then it is scaled down to 50(For grade up to M2). The Competency form to calculate comp. score is different for grade (TCA, M1, and M2) from grade (M3, M4, M5 and M7), however for all grade there is 2 major competency; 1) General Competency 2) Functional Competency. The attributes or the indicators for competency measurement vary on the basis of grade, department and position. Phoenix Conveyor Belts India | 5


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Performance Appraisal Score Calculation MD

Exe Mem

Dept Head

Intf Dept Head

Conduct

Attitude

Fitness

Self

Pe ers /ju nio rs

TCA

15

15

25

15

5

5

5

15

M1

15

15

25

15

5

5

5

15

M2

15

15

25

10

5

5

5

10

10

M3

15

15

25

10

5

5

5

10

10

M4

15

15

25

10

5

5

5

10

10

M5

15

15

20

15

5

5

5

10

10

M7

30

20

5

5

5

10

Exe Mem (peers)

Exe Mem /(Peers)

15

10

Table 1

As mentioned above, General and Functional competencies for grade TCA, M1 and M2 differ according to department and designation. These competencies are set by HOD with the consent of employee at the start of financial year. Competency appraisal is done by MD, Exe Mem, Dept Head, Intf Dept Head and selfappraisal. Initially score is calculated in 50 points and then it is scaled down as mentioned in Table 1.Finally, aggregating all

these scores give Comp. Score of employee. For grade M3 and above, General competency is measured with the help of Big Six Capabilities; however functional competency’s attributes still differ as per department and designation. These Big Six capabilities are given below.

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Performance Appraisal Score Calculation MD

Exe Mem

Dept Head

Intf Dept Head

Conduct

Attitude

Fitness

Self

Pe ers /ju nio rs

TCA

15

15

25

15

5

5

5

15

M1

15

15

25

15

5

5

5

15

M2

15

15

25

10

5

5

5

10

10

M3

15

15

25

10

5

5

5

10

10

M4

15

15

25

10

5

5

5

10

10

M5

15

15

20

15

5

5

5

10

10

M7

30

20

5

5

5

10

Exe Mem (peers)

Exe Mem /(Peers)

15

10

Table 1

As mentioned above, General and Functional competencies for grade TCA, M1 and M2 differ according to department and designation. These competencies are set by HOD with the consent of employee at the start of financial year. Competency appraisal is done by MD, Exe Mem, Dept Head, Intf Dept Head and selfappraisal. Initially score is calculated in 50 points and then it is scaled down as mentioned in Table 1.Finally, aggregating all

these scores give Comp. Score of employee. For grade M3 and above, General competency is measured with the help of Big Six Capabilities; however functional competency’s attributes still differ as per department and designation. These Big Six capabilities are given below.

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Performance Appraisal Score Calculation

Vision

Entrepreeurship

Execution

Drive

Learni -ng

Interac -tion

There is a total of 27 competency indicator/attributes distributed across these 6 capabilities. Out of total of 50 comp. score, General competency (Big Six Capabilities) contributes 30 whereas 20 come from Functional score. Functional capabilities vary according to department and designation. Like the earlier grades, competency score is obtained from MD, Exe Mem and others as per Table 1. These scores come in out of 50. As per Table 1, these scores are scaled down. Aggregating all these scaled score give Comp Score.

Business Balanced Scorecard (BBSC Score) Calculation

IT IS “YOU�WHO MAKES

Business Balanced Scorecard (BBSC Score) captures the performance of employee in last financial year. It compares the performance of employee and his goal and objective set at the time of performance appraisal planning. Like Comp. Score, the appraisal form for grade M3 and above is different from grade M2 and below.

THE DIFFERANCE

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Performance Appraisal Score Calculation Attributes

Area

Enabling Indicator

Internal Business process

KRAs’/ Deliverab -le & objectives

Strategies /Actions

Annual Target

UOM

Achiev -ement

BBSC % weight

Score by rater

Score by reviewer

Learning & Growth Result Indicator

Financial

Customer

The BBSC Score is obtained from MD, Dept Head and others as per Table 1 out of total score of 50. These sores are scaled down as per Table 1. After aggregating all these scores, we get BBSC Score of employee.

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Performance Review

Performance Review @PCBI

Performance Review is next step in the appraisal process of PCBI. Performance Review is important to find out how someone has performed in the last year. Who is the best performer in marketing or operation department? There are many other such questions which could be answered with the help of performance review. At PCBI, we usually do 2 types of score analysis: 1. People performance Potential Model 2. Comparative Analysis of Score People performance Potential Model: This model is very much similar to BCG matrix. Like the BCG matrix, based on performance (BBSC Score) and potential (Comp. Score), performance of employees’ are divided into 4 quadrant. Each Quadrant has its own meaning & significance.

P e r f o r m a n c e

BackBone

Star

Icebergs

Problem Children

Potential

Star (High Performance & High Potential): Starts are the best performer and have real potential for future. Company should invest more in starts and give them more responsibility. Phoenix Conveyor Belts India | 10


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Performance Review Backbone (High Performer but low Potential): These are the people who have reached their full potential. Company should acknowledge their effort and contribution. Try to find out other areas/domain where they can contribute by improving their skills. With proper training and guideline, they can become star.

Problem Children (High Potential but low Performance): These are individuals who have high potential but not performing in their role. It may be

because they are new to the role or not comfortable with current role. Give them some training if require. If still not able to perform then change their role.

Icebergs (Low performance and low Potential): Individuals who have performed poorly and have low potential. Try to find out their potential and shift them in role where they can contribute. Give them opportunity to improve and contribute, failing to do that can lead to volunteer retirement service (VRS) or exit from organization.

Comparative Analysis of Scores Another was of analyzing appraisal score is comparative analysis of appraisal scores across different years. Comparative score helps us to understand how any individual is performing across years. It helps to identify whose performance is improving continuously and whose performance is decreasing. Good performer whose performance is increasing continuously can be given more responsibility and whose performance is decreasing, we can try to figure out the reason and fix it. It also helps individual to see his performance across years and make career planning.

80 70

60 50

Comp. Score

40

BBSC Score

30

Total Score

20 10 0

2009

2010

2011

2012

Comparative analysis of above bar-graph shows that Comp. Score of individual is increasing across years whereas BBSC Score is decreasing. Phoenix Conveyor Belts India | 11


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Performance Reward

Performance Reward @ PCBI Performance Reward is next phase of performance appraisal process at PCBI. PCBI believes in regular reward and reorganization system to keep employees motivated. Performance review helps to identify good and start performer. PCBI uses appraisal scores to reward its employees in following ways:

Performance Link Incentive (PLI): This PLI is one time paid incentive and solely depends on last year performance and hence BBSC Score.

1. Annual Increment 2. Performance Link Incentive(PLI) 3. Promotion

Annual Increment: PCBI uses total score (Sum of Comp. Score & BBSC Score) to determine annual increment in salary. Usually, it varies from 6%-14%.Again, the increment criteria for grade (TCA, M1 and M2) is different from other grade. For Ex: if you are scoring total of 80 or more and if you are in M3 or above group, then you are entitle for 14% increment whereas if you are M2 or below then you are entitled for 12% increment.

Promotion: Appraisal score plays very important role for promotion and succession planning at PCBI. During the time of succession planning, performance potential score contribute as much as 50% , so out of 50 total points, appraisal score contribute 25 points. Points associated with performance potential (PP) score are as follows: STAR-25; Backbone-20; Problem Child-15; Icebergs-10.

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Employee Dialogue

Employee Dialogue @PCBI Employee dialogue at PCBI is an integral part of performance management system. The purpose of employee dialogue is to have an open discussion with employee regarding his appraisal and plan his training and career development program. It’s important to listen to employee before closing appraisal process for the year. It helps to build confidence between employee and his manager. Any grievance from employee’s side should be listened and proper steps should be taken to mitigate it, otherwise employees’ turnover is a norm after performance appraisal. The employee Dialogue form of PCBI consist many sections, some of important section and their significances are as follows: 1. Section I.3 of PCBI employee dialogue form consist “Review of Competency “. (Knowledge, Experience and Big Six capabilities.) 2. Section II consists employee’s Individual training & development plan (on and off the job), suggested by supervisors. 3. Section I.3.1 is specifically designed to evaluate current skill set which employee should have to do their regular task. Any gap in skill set is necessary to be bridged through training program.

4. Section I.5 evaluates overall performance of employee. There are 4 levels of performance: a) consistently exceeds expectation b) meets and sometimes exceeds expectation c) meets expectation d) does not meet expectation 5. Section I.6 talks about “Review of potential”. Again, there are 4 levels as follows: a) potential for a position at the same level b) potential for a position that is evaluated one level above current position c) position for a position that is evaluated two levels above current position d) potential for a senior executive function Phoenix Conveyor Belts India | 13


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Employee Dialogue performance with himself and give him an opportunity to put his views on appraisal. If any change is needed it should be done here before closing appraisal process. Employee also gets feedback from his manager and supervisors regarding his performance and achievements.

5. Section I.3.5 checks whether employee is competent enough to promote or not and if yes then to what level. Proper training and career development plan should be prepared accordingly. 6. Section III is about possible successor for current position from employee’s and supervisor’s perspective. 7. Section II is about Individual development plan. II.3 talks about idea about future professional development within the next 2 years and within the next 3-5 years. 8. Section II.4 is about Individual development measures (on and off the job)

Employee dialogue plays very important role in determination of training and career development program for employees. As mentioned, some sections are specifically provided to analyze employee performance and training need suggestion from managers. We will see more of training need analysis in next section.

The objective of all these sections and employee dialogue is to discuss employee’s

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Points to Ponder

Management By Objective (MBO)

Management By Objective (MBO) is a holistic approach used at PCBI. The core aim of MBO is the alignment of company goals and subordinate objectives properly, so everyone in the organization works towards achieving the same organizational goal. It is quite helpful in performance appraisal planning phase. It helps to identify organization goal and then cascade it to department and then individual level. Some features of MBO: 1. Manger-Employee participation 2. Joint goal setting 3. Joint decision on approach Steps in MBO Planning: Organization 's Goal Setting Employees' Goal setting Matching Goal and Resources Implementation Of Plan

Review and Performance Appraisal Steps in MBO

Confirmatory Appraisal @ PCBI Confirmatory appraisal is another dimension of performance appraisal at PCBI. It is mandatory for all new joinee whether fresher or work experienced to undergo 1 year of probation period. At the time of on boarding process, employees are told about their duty and expectations from them. For new joinee, there is midyear review system at PCBI. The purpose is to guide them about their performance. After completion of 1 year, given that employee has met all expectation and good enough to work at PCBI, confirmatory appraisal is offered. At the time of confirmatory appraisal, hike in salary is also given. Phoenix Conveyor Belts India | 15


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Training & Development Program @PCBI

Alignment of Training Need with Performance Appraisal

Training Need Analysis Training and Development Process at PCBI

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Training Need Analysis

Alignment of Training Need Analysis with Performance Appraisal @PCBI Training and development is a common practice at PCBI. In this dynamic market with continuous change in technology, process and skills, it is very important for the employees of PCBI to update them accordingly. It is responsibility of PCBI to identify any such gap and bridge it with proper training and development process. It is also very important to identify such employees who are struggling to catch up with their goal and expectation. Proper assistance is much needed for such employees to raise their potential so that they can give their best performance and contribute towards organization and self development.

Performance appraisal helps to identify training need. At PCBI, Training need analysis is done at 3 levels: 1. Organizational 2. Department level 3. Individual level Organizational level: Performance appraisal helps to determine how organization is doing and if there is a need of common training for all employees then everyone should attend it. For Ex: Suppose last year absenteeism rate was very high due to back pain then organization can arrange training on how to control it. Organizational level training is also needed

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Training Need Analysis

if organization has adopted some new technology/process like implementation of ERP or change in vision, mission or value. In such cases, it is important that all employees should undergo training program to understand it. Department Level: As discussed, Appraisal form (BBSC Scorecard and Comp. Scorecard) consists many competencies and Skills specific to a department. Department level training is Needed when all or most of the Employees of a department Failed to do very well in a specific competency. Department level training is also needed when there is introduction of new technology or process. For Ex: PCBI is adopting a new process of vulcanization, splicing or a new machine is installed recently. Then it would be mandatory for all employees associated with it to attend training.

Individual level: Individual level training analysis is one of the major objectives of performance appraisal. The 2 components of appraisal- Performance and Potential both are measured and judged with standard competency level. PCBI identifies any gap between performance and standard performance and bridge it with proper training program. Through individual performance appraisal PCBI identifies Star as well icebergs and problem children. PCBI plans training program for problem child and icebergs whereas plan career development program for Star performer. The basic objective of all training and development program is to improve the potential of employees so that their performance can improve.

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Training & Development Process

PCBI Training and Development Process is Shown Below: Organizational Thrust Areas (Any change in the business requirement)

Needs from different CFT and Business Meeting and Employee Dialogue program

Identification

Training requirement is identified through competency mapping, PMS ST/ LT Training Needs

Training Need Identified – Organizational / Individual needs

Explore Training modules for enhancing employee training, education & career development

Design of Training program, Contents, Faculty, Duration, Schedule, Location, Delivery methods, aids to be used Training Imparted

Analysis of feedback and Measurement of Training Effectiveness

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Effectiveness

Nomination for External /Cross border Training

Implementation

Identification of Training Agency (Internal/External)

Trg. Design

Training Plan


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Training & Development Process

As shown in the figure, training and development process at PCBI can be divided into 4 steps: 1. 2. 3. 4.

Training Identification Training Design Implementation Effectiveness of Training

Training Identification: Proper training identification is as important as proper identification of ailment from symptoms. Management spends so much time and money in training program so without proper training identification the complete process can turn into a futile task. At PCBI, BBSC Score and Comp. Score help to identify training needs. There are many ways to interpret these scores and identify training needs. We will see 2 very widely used approach: 1. Development Summary (Strength/ Development areas Analysis) 2. Skill Matrix

effective way to understand training need for individual employees. It also helps to identify employees’ strength which can help PCBI to proper use of its resources. A hypothetical development summary for Mr. X is shown in next page. It shows the strength and improvement areas based on the score obtained by Mr. X in Competency Scorecard.

Development Summary: PCBI uses rating from 1-5 to rate employees’ competencies. We can use this rating score to find strength and development areas of any employee by preparing development summary for individual employee. Development Summary is a very Phoenix Conveyor Belts India | 20


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Development Summary

Development Summary

Favorable Zone

For Mr. X Skill Set

All Observers Rating

Strengths

1

2

5

4

3

If the average of scores (obtained from MD, Dept Head etc) is more than 3.75 i.e. fall in the favorable zone, then it would be considered as strength of Mr. X. 4.8

Display Commitment

4.6

Achieves Result

4.5

Build Personal Relationship 4.1

Listen to others

3.9

Work efficiently

3.8

Flexibility

Development Areas If the average of scores (obtained from MD, Dept Head etc) is less than 3.75 i.e. fall below the favorable zone, then it would be considered as development areas of Mr. X and he should undergo such training program. 3.6

Provides Direction 3.3

Delegates Responsibility

3.1

Communicate effectively 2.8

Team Player Motivates others

2.2

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Skill Matrix

Skill Matrix: Skill Matrix is very helpful when we are analyzing training need for a team. We prepare one matrix with employees of the team with relevant skill sets required for the team. We then try to analyze the Splicing

Mr. A

Vulcanization

Mr. F

Belt laying

Repairing textile conveyor belt

Repairing steel cord conveyor belt

Matching the splice

√ √

Mr. D Mr. E

Shipping

Mr. B Mr. C

Handling

training need for team as well as individual. Suppose, At PCBI, manufacturing and operation team consist of 6 members from Mr. A to Mr. F and 8 skill sets are required to work efficiently.

A tick mark in a cell represents that corresponding employee can do that work. For Ex: Mr. A can do vulcanization, belt lying and matching the splice. From such skill matrix, we can deduce useful information like: 1. Only 1 person (Mr. D) can do repair steel cord conveyor belt. 2. Mr. B can do only “Handling”. He needs to improve his competency in other

√ √

√ √

fields. 3. Mr. E is very valuable resource to the organization as he can do all the works except repairing steel cord. There are many other useful formations which we can deduce from Skill Matrix.

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Skill Matrix

Skill matrix also helps to determine any gap between desired skills set required for the department and available skills. For Ex: Suppose in the previous case, Management Splicing

Mr. A

Vulcaniza tion

Belt laying

Repairin g textile conveyor belt

Repairing steel cord conveyor belt

Matching the splice

Total

Need

Gap

3

4

1

1

4

3

5

4

5

4

7

4

4

4

√ √

Mr. D Mr. E

Shippi ng

Mr. B Mr. C

Handlin g

wants everyone to have at least 4 skills out of 8 and every skill should be possessed by at least 4 employees. Skill matrix helps to determine this gap.

Mr. F

√ √

Total

2

5

4

2

4

4

1

3

Need

4

4

4

4

4

4

4

4

Gap

2

2

3

1

From above skill matrix, it is very clear about training need for department as well as employee. Department can see it needs 2 more trained resources for splicing and shipping whereas need 3 resources for repairing steel conveyor belt and 1 for matching the splice. At employee level, Mr. A and Mr. B have 3

and 1 skill set respectively. They have to learn at least 1 and 3 skills respectively. We can use Skill Matrix other ways as well to find training need based on speed of working and quality of work. Phoenix Conveyor Belts India | 23


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Training Design

Training Design Training design is next step of training and development program at PCBI. After proper training identification, it is important to design it properly. There are many factors involved in training design. Here, we will consider some important factors like 1. Scheduling Training 2. Cost and time 3. Evaluating current performance and setting objective.

Scheduling: Training schedule at PCBI is mainly about scheduling training program. Depending on the type of trainer, we can divide training schedule in 2 categories. a. External Training b. Internal Training External Training: As name suggests, External training program takes place outside PCBI premise. External training is needed when no one is available inside PCBI who can train others. Usually, this happens when PCBI wants to introduce new technology or production process etc to improve productivity. This type of training is usually attained by senior and experienced employees. To facilitate external training, PCBI has association with many training institute and organization. Some of them are: i.

The Associated Chambers of Commerce and Industry of India

ii. Bombay Academy of Management Studies iii. Indian Institute of Technology, Kharagpur iv. Indian Chamber of Commerce v. Confederation of Indian Industry To schedule external program, PCBI HR team first sends one application to institute seeking permission to allow its employee to attend the training program. After getting permission, PCBI sends check of appropriate amount to confirm participation. PCBI also believes in overseas training and sends its employees for overseas training program. The purpose behind such training program is to bring new technology and better process system in PCBI as overseas companies are using better technology and process. Phoenix Conveyor Belts India | 24


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Training Design External training programs bring new ideas, technology and process but huge amount of cost is involved in the external training program. In 2012, around 25 PCBI employees went to around 15 different overseas places to enhance their skills. Internal Training: When training is given inside the PCBI premise, it is called internal training. In such trainings, usually the trainer is also a PCBI employee. Internal Training is quite frequent at PCBI. PCBI has many training classrooms at Kalyani location and most of the training programs take place at Kalyani location. The cost involved in internal training program is very low compare to external training program. Internal training is always the first preference for PCBI. When only training cannot be given internal, it goes for external training.

goals for training. Evaluation is important as it will give an idea about current status of employee’s capabilities, so that accordingly we can set goals for training. For Ex: suppose current productivity of any employee is 1000 units per year, we can set his objective as 1500 units per year after training program.

Training Implementation: For internal training, PCBI uses both on job and off job training module. On job training module is highly encouraged as the best way to learn any skill is to learn on job. However, some training program takes 1-2 complete day session which usually takes place at Kalyani plant location. Training should be imparted in such a way so that it helps employees to learn and then transfer skills into work. Proper training implementation helps employees to increase profit and saving -the main objective of training program.

Cost and Time: 2nd factor which affects training design is cost and time. Cost is a major factor and management always wants to spend as less as possible on training. Time is also money, so as far employee is kept out of work for training program, it is loss of PCBI. So, training program should be design in such a way so that it will cost as less as possible and will take less time as well. Evaluation of current performance and setting objective: Before implementing training program, it is important to evaluate current performance and set objectives and

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Effectiveness of Training Program

Effectiveness of Training Program and Calculation of Return on Investment (ROI)

Kirkpatrick’s Model Monetary Value of Training Benefits Phoenix Conveyor Belts India | 26


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Kirkpatrick Model PCBI Management spends a lot of money on training and development program and obviously they want to know effectiveness of training program. So, Calculation of effectiveness of training program becomes important to measure the degree to which training achieves its intended purpose and desired goal. If there is any bottleneck in training program, then it should be identified and corrected before next training program. Kirkpatrick Model of Training Evaluation is quite helpful and

Result

Transfer Learning Reaction Level 1 Evaluation—Reaction Just as the word reaction implies, evaluation at this level measures how participants in a training program react to it. It attempts to

widely used method to find effectiveness of training. The focus of this model is on measuring four kinds of outcomes that should result from a highly effective training program. Kirkpatrick’s model includes four levels or steps of outcome evaluation: Level 1 Evaluation—Reaction Level 2 Evaluation—Learning Level 3 Evaluation—Behavior/ Transfer Level 4 Evaluation—Results

According to this model, evaluation should always begin with level one, and then, as time and budget allows, should move sequentially through levels two, three, and four. Information from each prior level serves as a base for the next level evaluation. Thus, each successive level represents a more precise measure of the effectiveness of the training program, but at the same time requires a more rigorous and time consuming analysis.

answer questions regarding the participants' perceptions - Did they like it? Was the material relevant to their work? According to Kirkpatrick every program should at least be evaluated at this level to

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Kirkpatrick Model provide for the improvement of a training program. In addition, the participants' reactions have important consequences for next level 2 i.e. learning. Although a positive reaction does not guarantee learning, but a negative reaction almost certainly reduces its possibility.

Level 2 Evaluation—Learning

Level 3 Evaluation—Behavior

The purpose of this level is to assess the extent students have advanced in skills, knowledge, or attitude. Measurement at this level is more difficult than level one. Methods range from formal to informal testing to team assessment and self-assessment. If possible, participants take the test before the training (pretest) and after training (post test) to determine the amount of learning that has occurred.

This level measures the transfer that has occurred in learners' behavior due to the training program. Evaluating at this level attempts to answer the question - Are the newly acquired skills, knowledge, or attitude being used in the everyday environment of the learner? However, measuring at this level is difficult as it is often impossible to predict when the change in behavior will occur, and thus requires important decisions in terms of when to evaluate, how often to evaluate, and how to evaluate. Level 4 Evaluation—Results Level four evaluation attempts to assess training in terms of business results. However, Level four outcomes are not limited return on training investment (ROI). Level four outcomes can include other major results that contribute to the well functioning of an organization. Phoenix Conveyor Belts India | 28


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Kirkpatrick Model Level four outcomes are either changes in financial outcomes (such as positive ROI or increased profits) or changes in variables that would have a positive effect on financial outcomes of organization at some point in the future. Here are some examples of different kinds of level four outcomes: Higher productivity. Improved quality of work. Reduction in turnover. Reduction in scrap rate (i.e., less wasted resources). Improved quality of work life. Improved Human Relations (e.g., improved vertical and horizontal communication) Increased sales. Fewer grievances. Lower absenteeism. Higher worker morale. Fewer accidents. Greater job satisfaction. Increased profits. Improvement of any of the above factor in short or long term implies that training program was effective and it helped employees and thus organization to increase business or profit.

Return on Investment (ROI) Calculation As mentioned, Management spends lot of money for training program and wants to see

benefits in monetary term. They want to know what they are getting after training investment. Basically they are interested to know return on investment. Defining ROI: There are 2 common ways to define return on investment; Cost-benefits ratio and subtracting cost from benefits. 1. Cost-benefits ratio: To find the benefit/cost ratio, we divide the total monetary value of the benefits by the cost as shown in the following formula: Benefit/Cost Ratio = (Total monetary Value of Benefits)/ (Cost of Training) 2. Subtracting cost form benefits: According to this, ROI= [(monetary benefits – cost of the training) / cost of the training] x 100

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Return on Training Investment

From the definition of ROI, it is very clear that cost incurred in training and total benefit achieved after training calculation is a major step in ROI calculation. Still, we can divide ROI calculation into following steps: Calculation of Total Cost Identify Result/Outcomes of Training Find Effect of Training Convert Result in Monetary Benefits. Compare Monetary Benefits with Cost.

Calculation of Total Cost: Any training program bears 2 types of cost; direct cost and indirect cost. Some of the major direct costs involved in training programs are transportation cost, infrastructure cost, trainer cost and material cost. Indirect cost includes loss of man-work hours. Most of the time, we don’t see or ignore this cost. However, it is very important to calculate this cost. To find out work-hours loss cost involves in training, we need to know following things: i. ii.

Weekly working hour of employee Salary of employee

From weekly working hours of employee, we can calculate yearly working hour. Dividing employee’s salary by yearly working hours gives cost incurred per hour of training. Now, Phoenix Conveyor Belts India | 30


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Return on Training Investment multiplying this number by number of hours of training gives indirect cost which company has to bear due to absence of employee form work. If this was group training then we need to do the same for every employee.

Identify Result/Outcomes of Training: As mentioned earlier (Kirkpatrick level 4), there could be many results/outcomes of a training program. Some of the outcomes could be intangible as well like improvement in employee self-esteem and morale. Here, we will consider only tangible results which can be measured. Other than this, all training programs are intended for different purposes. . For example: Training intended to improve production process can result in increase in production, training intended to improve quality can result less defects in production and so on. Thus, it is very important to identify all the results/outcomes from a training program.

Find Effect of Training: To determine ROI, it is important to find the change in outcome. According to Kirkpatrick model it is important to learn from training and then transfer that knowledge into work.

Finally, this will be reflected into improvement of result/outcome. To find the change in outcomes, we need to know pre and post training outcome status. During training design itself, we set objective and find pre training outcome value. Post training outcome status can be calculated after training. The difference between pre and post outcome status shows the effect of training. For Ex: If improvement in production is one of the outcomes then we need to know pre and post production status. If pre training production was 1000 units and post training it is 1500 units, then change in production is 500 units. We can say due to training production has increased by 500 units.

Convert Result in Monetary Benefits: Conversion of training results in monetary term is very important and most crucial task. It helps management to know about the benefits of training in monetary term. It is crucial as it is the most difficult step and Phoenix Conveyor Belts India | 31


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Return on Training Investment approach changes with change of result. There could not be a single uniform approach to calculate monetary benefits. We saw many training results/outcomes in Kirkpatrick level 4. Here, we will consider following important outcomes and how to calculate monetary benefits in such cases. 1. 2. 3. 4. 5. 6.

Productivity Absenteeism Employee Turnover Wastage/faulty item reduction: Accidents Sales

Productivity: Any training program intended

For the previous two years productivity averaged 7 additional units a month, without any training program (84 units a year.) Subtract the previous year’s increase before training from the new increase after training. 600 unite – 84 units = 516 units The yearly increase attributed to training is 516 units. Monetary value of each unit was Rs. 87. Calculate the dollar value of the increase. 516 units × 87 = Rs. 44,892 year

to improve the production process or implementation of new process etc would directly affect productivity of employees. To calculate monetary benefit in such case, we need to answer following questions: a) b) c) d)

Productivity pre training Productivity post training Monetary value of each unit Usual increase in productivity, without training (yearly) e) Effective increase in productivity, due to training: Suppose, Productivity before training= 1000 units/ month Productivity after training = 1050 units /month So, Yearly increase in units, (1050-1000) x 12 months = 600 units

Absenteeism: Suppose, due to an HR training program on “Motivation and employee engagement” or a training program on “how to stay healthy” helps to reduce absenteeism. We can calculate monetary benefits due to reduction of absenteeism. We need to know following: Phoenix Conveyor Belts India | 32


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Return on Training Investment a) Absenteeism Pre Training (For all attendees in hours) b) Absenteeism Post Training (For all the attendees in hours) c) Avg. Hourly Wage for All Employee: (Calculated during the time of calculating indirect cost) Suppose, Absenteeism Pre Training (for all attendees in hours): 650 Absenteeism Post Training (for all the attendees in hours): 540 Avg. hourly wage for all Employees: RS. 300 Hours Saved After Training= 650-540=110 hours. Monetary value of Hours Saved= 110*300=RS. 33000

calculate monetary benefits due to reduction of employees’ turnover. We need to know following: a) Employee retention ratio pre training b) Employee retention ratio post training c) Cost of employee turnover Suppose, Employee retention ratio pre training=95% Employee retention ratio post training=98% Cost of 1 turnover= Rs. 1, 00,000 and 100 employees underwent HR training. Turnover before training was 5% or (100 x 5%) = 5 employees year Turnover after training was 2% or (100 x 2%) = 2 employees year

Employee Turnover: Suppose, due to an HR training program on “Motivation and employee engagement”, the employees’ turnover has decreased. We can

Reduction in Employees’ Turnover= 5-2= 3 i.e. as a result of training, an additional 3 employees stay with company. Monetary benefits of training = 3*1, 00,000 = Rs. 3, 00,000 Phoenix Conveyor Belts India | 33


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Return on Training Investment Wastage/Faulty Item Reduction: Suppose, Due to a training program on quality management, the wastage or faculty items produced during production process have been reduced. We can calculate monetary benefits due to reduction of wastage and faulty item. We need following information: a) Number of Faulty items Pre Training b) Number of Faulty items Post Training c) Cost of each item Suppose, Number of faulty items pre training=600 units Number of faulty items post training=200 units Cost of each item=Rs.1000 Decrease of faulty item/wastage =600200=400 units Total saving on wastage of items = 400*1000 = Rs. 4, 00,000

Accidents: Suppose, Due to training on occupational safety and health, number of accidents has come down. We can calculate the monetary benefits of training. We need following information: a) Number of Accidents Pre training b) Number of Accidents Post Training c) Cost of Accident Suppose, Number of Accidents Pre Training=10 Number of Accidents Post Training=4 Decrease in number of accidents=10-4=6 Cost Per Accident=Rs. 50,000 Saving due to reduction of accidents = 6*50,000 = Rs.3, 00,000

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Internship Report

Return on Training Investment Increase in sales:

Price of each unit=Rs. 10,000

Suppose, Due to training on marketing and sale, the sale has increased. We can calculate monetary benefits of this training provided we have following information:

Increase in revenue due to increase in sales= 500*10,000=Rs. 50, 00,000

a) Sales in unit Pre Training b) Sales in unit Post Training c) Price of each unit Suppose, Sales in units pre training=1000 units Sales in units post training=1500 units Increase in Sales (in units) =1500-1000= 500 units Compare Monetary Benefits with Cost The last stage of ROI calculation is comparing training cost with monetary benefits of training. We have already calculated training cost and monetary value of benefits due to training till the previous step. As defined earlier, we can find ROI with either of given 2 formulas: 1. Benefit/Cost Ratio = (Total monetary Value of Benefits)/ (Cost of Training) 2. ROI= [(monetary benefits – cost of the training) / cost of the training] x 100

P.S: Please refer the tool developed in excel to determine return on investment (ROI).

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MASTER OF HUMAN RESOURCE MANAGEMENT IIT KHARAGPUR Knowledge begins and ends with humanity.


Gaurav Summer Internship Report  

This report documents the work done by me during my summer internship at Phoenix Conveyor Belts India (PCBI), Kolkata under supervision of M...

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