Proceedings of the 3rd European Conference on Intellectual Capital

Harmonization Process Between Individual Performance
Appraisal and Business Unit Performance Appraisal
Without Decreasing Employee Engagement
Yuli Purwanti, Nelson Rikardo Pasaribu and Paul Lumbantobing
PT. Telekomunikasi Indonesia, Tbk, Bandung, Indonesia
yuli_purwanti@telkom.co.id
Abstract: This paper is a case study <strong>of</strong> how <strong>the</strong> process to synchronize Individual Performance Appraisal and
Business Unit Performance Appraisal while maintaining Employee Engagement in PT. Telekomunikasi
Indonesia, Tbk., which is <strong>the</strong> largest telecommunications operator in Indonesia. In 2004, TELKOM improved its
human resource management by implementing competence-based human resource management (CBHRM).
Performance Management is one <strong>of</strong> CBHRM processes, which is important to motivate employee to perform his
or her best to <strong>the</strong> company so company goals can be achieved. Telkom Performance Management was designed
with <strong>the</strong> principle <strong>of</strong> maintaining <strong>the</strong> sustainability growth <strong>of</strong> corporate performance through employee
performance management. Therefore, appraisal <strong>of</strong> employee performance must always associate with
achievement <strong>of</strong> company performance. It means that employee performance should reflect corporate
performance or business unit performance in this case. As a stimulant, <strong>the</strong> company provides a budget as an
excellent achiever rewards given to <strong>the</strong> business units, which managed to reach its target, to be distributed to all
employees in <strong>the</strong> unit based on <strong>the</strong> contribution <strong>of</strong> each employee. The Problem is although <strong>the</strong> business unit did
not reach its, Individual performance appraisal data from 2004 to 2006 showed that appraisal value <strong>of</strong> individual
performance always above-average business unit performance. So, Employees still got excellent achiever
rewards (incentives) periodically. As a result, employees became less attention on business unit performance.
They have already got what <strong>the</strong>y needed. The condition became a major concern and management tried to find
<strong>the</strong> solution. At <strong>the</strong> end <strong>of</strong> 2007, TELKOM implemented a new performance management policy that includes
regulations governing <strong>the</strong> process <strong>of</strong> harmonization <strong>of</strong> <strong>the</strong> appraisal value <strong>of</strong> employee performance with <strong>the</strong>
achievement <strong>of</strong> business unit performance. This process aims to harmonize <strong>the</strong> appraisal value <strong>of</strong> <strong>the</strong> individual
performance with business unit performance as well as to get <strong>the</strong> composition <strong>of</strong> individual performance value
which distributed normally, meaning that <strong>the</strong>re will be an outstanding, average and underperformed employee
classifications. These classifications will affect directly or indirectly to <strong>the</strong> employee remuneration, career
development, and employee development. The process has been going every year since 2007 until now and it is
a learning organization process. It said that be a learning organization process because in its implementation has
been occurred many problems that appears to be solved and demanded to modify <strong>the</strong> scoring system for <strong>the</strong>
company's expectations achieved yet employee engagement maintained. The role <strong>of</strong> a leader is needed in this
harmonization process because <strong>the</strong> problem that <strong>of</strong>ten arises is a leader not expressly dares to provide different
appraisal <strong>of</strong> employees so that after <strong>the</strong> harmonization <strong>of</strong> <strong>the</strong> result continued to show <strong>the</strong> average rating score. It
will reduce employee engagement, which performs nicely but getting <strong>the</strong> average value. To overcome <strong>the</strong> above
problems, this paper provides some proposed solutions, which addresses to <strong>the</strong> company and employee and
also be given as a contributions <strong>of</strong> practitioners to <strong>the</strong> enrichment <strong>of</strong> human resource management science in <strong>the</strong>
academic world.
Keywords: performance appraisal, harmonization process, employee engagement, excellent achiever incentive,
learning organization
1. Introduction
Telkom has been implementing Competency-Based Performance Appraisal to measure employee
performance since 2004. Employee is demanded to prepare individual work program at <strong>the</strong> beginning
<strong>of</strong> <strong>the</strong> year, which is called “Sasaran Kinerja Individu (SKI)”. It will be assessed based on <strong>the</strong>
achievement at <strong>the</strong> end <strong>of</strong> <strong>the</strong> year and <strong>the</strong> result is called “Nilai Kinerja Individu (NKI)” or Individual
Performance Score. Individual work program is prepared based on business unit work program, which
is followed Annual Corporate Program that already agreed by Board <strong>of</strong> Directors. Therefore, Unit
Leader Work Program must exactly <strong>the</strong> same as business unit work program.
Performance Appraisal System will provide scoring in <strong>the</strong> form <strong>of</strong> P1 for x > 110%, P2 for 103% ≤ x <
110%, P3 for 96% ≤ x < 103%, P4 for 90% ≤ x < 96%, and P5 for < 90%. P1 means <strong>the</strong> highest score
in Telkom Performance Appraisal System.
Business Unit Performance is ideally a manifestation <strong>of</strong> all employees work programs in one unit. So,
if <strong>the</strong> member <strong>of</strong> unit do not perform maximum, it will definitely affect business unit performance.
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