- The PPO rating then is a matter of adding the points achieved and
expressing it as a percentage of the total to arrive at the performance rating.
There should not be too many PPO or the process becomes too
complicated.
Too many PPO may make it impossible for employees to achieve all the
PPO. A realistic number of PPO is eight or nine but these could be
made up of two or three relevant sub-categories.
Staff involvement
Involving the employees in this process is very important. If you want them to
buy into the process, then they must have ownership of the process. Ownership
comes because of assisting in the development of the PPO.
Before sitting down with the employee to discuss PPO for the coming year, the
manager should:
Give advance notice to the employee that it is time to start preparing their
PPO.
Make a definite appointment with the employee to discuss their PPO.
Provide the employee with any records they will require such as sales
reports, commission reports.
Ask the employee to come prepared with data and ideas of his or her own to
contribute to the formulation of the PPO.It should be understood that this is a co-operative exercise and that PPO will be
negotiated within certain guidelines
It will be a serious discussion: not a crystal ball session.
Grossly underestimating or overestimating PPO can be very serious for the
business because much of the
consolidated data will be used as the
basis for budgeting and deploying
the business assets.
For example
Poor forecasting could result in gross
imbalances in inventories with
resulting problems in production and
customer service or perhaps excessive
financing charges.