PERFORMANCE IMPROVEMENT STRATEGIES OF TEA
PLANTATION AND PROCESSING COMPANIES
AT PT XYZ WEST JAVA
ARIZONA STATE UNIVERSITY
WPC 480 - STRATEGIC MANAGEMENT
SPRING 2024
INTRODUCTION:
The Covid-19 pandemic, the Russia-Ukraine war, and the China-Taiwan geopolitical
tension are some of the phenomena that have caused the current global economic uncertainty.
All business actors are faced with the risk of a crisis that affects the continuity of the business
itself. In June 2023, the World Bank released a global economic projection that illustrates a
warning to the world economy that is still in a precarious and uncertain condition (see Figure
1.1). The projection depicts economic growth in a global recession from 2022 to 2023. The
projection shows that economic growth is fluctuating or tends to be erratic, which should be
an alarm for all business people to maintain their business continuity.
Since the passing of the Covid-19 pandemic, in general, the global economy will
continue to slow down until 2024. In the June 2023 edition of the Global Economic Prospects
report, the World Bank revealed that the precarious position was due to the lingering effects
of the pandemic, plus the war between Russia and Ukraine, and the tightening of monetary
policy in various countries in order to reduce inflationary pressures. In the April 2023 edition
of the World Economic Outlook (WEO) report, the International Monetary Fund (IMF)
projects that Indonesia's economic growth could reach 5% in 2023. Although the figure rises
in 2023, Indonesia's economic growth is still forecast to be weaker than in 2022, as shown in
the graph in Figure 1.2 below.
Companies or all business entities are required to survive and compete to adapt in this
era in all aspects of the company such as vision, mission, strategy, and company goals.
Companies are required to immediately adjust the vision and mission clearly, change
adaptive strategies, and determine real goals so that the company does not lose in the industry
competition that the company is involved in in an era like this. The company needs to
determine the right evaluation of the company's performance value which is influenced by the
factors supporting its performance. The company must ensure that the factors supporting its
performance can run well and help the company achieve the vision and mission that has been
set. If there are factors that do not support the company's performance, then the company
needs to immediately find the right solution to overcome these problems. The company must
ensure that all factors that do not support performance do not have a negative effect on other
factors that are already positive. For this reason, it is necessary to measure company
performance that is able to identify factors that affect company performance to achieve
company strategies and goals. Measuring company performance is very important for
management to know the condition and position of the company in the midst of the current
industrial and economic situation. Performance measurement is a description of the level of
achievement of the implementation of an activity program or policy in realizing the goals,
objectives, vision, and mission of the organization as outlined through the strategic planning
of an organization (Moeheriono 2012).
One of the most important aspects of performance measurement is human resources.
Company performance measurement is closely related to human resource performance
measurement. Human resources have a very important role in determining company
performance. No matter how good the equity is, it will not be useful if the human resources
do not play their role well. The better the level of quality of human resources owned, the
higher the competitiveness of the company's performance should be. Performance on a
person or organizational performance is impossible to know if there is no measure of success
(Moeheriono 2012). By Therefore, factors such as effectiveness, resource efficiency, or
quality of work life in the current company must be known, namely through evaluation or
assessment based on Key Performance Indicator (KPI).
Measuring company performance will increase the effectiveness and efficiency of the
organization in achieving its goals. Effectiveness is briefly explained by Bayangkara (2016)
as the level of success of a company to achieve its goals, while efficiency is a process
measure that connects inputs and outputs in company operations. Effectiveness and efficiency
are the weapons of organizations/companies in facing business competition and tight industry
selection. The effectiveness and efficiency of an organization is highly dependent on the good
and bad development of resources within the organization itself. To ensure that the resource
function has been running and contributing well in achieving the company's success, the
company needs to conduct an assessment (evaluation) of the implementation of resource
programs that have been developed in achieving overall company goals. This assessment or
evaluation is used to measure whether the company's resources have worked effectively and
contributed to achieving the goals set by the company (Bayangkara 2016).
The Sink and Tuttle Model is an approach that describes the relationship between the
seven performance criteria in improving performance which ultimately refers to increasing
profitability for the company, so that it will facilitate understanding of the concept of
performance criteria. The seven performance criteria are (1) effectiveness; (2) efficiency; (3)
quality; (4) productivity; (5) quality of work life; (6) innovation; and (7) profitability. This
method also describes the relationship between elements in an organization ranging from
upstream systems, inputs, processes, outputs to downstream systems (Phusavat 2010). From
these performance elements, this method then designs, develops and implements evaluation
system measures that can assess whether the company is moving in a predetermined direction
and assess the extent of what has been done. According to Tangen (2005), Sink's Seven
Performance criteria model has advantages compared to other models, namely that it can
provide a clear definition between performance criteria concepts, can describe complex
interrelationships between performances, and has a timeless and time-tested measurement
concept.
PT XYZ is one of the leading companies engaged in the tea plantation and processing
industry. PT XYZ has a plantation area and green tea processing factory located in West Java
Province. PT XYZ has long-term and sustainable goals as stated in the company's vision
which is to become a trusted and recognized agribusiness company nationally and
internationally. Meanwhile, the mission of PT XYZ is (1) to manage competitive and
international standard plantations; (2) to use efficient and environmentally friendly
technology in the field of tea cultivation and processing; (3) to become a competitive trader
of tea commodities in the global market; (4) to prioritize customer satisfaction quickly,
precisely and consistently; (5) to create a creative and innovative work environment; and (6)
to provide maximum benefits and profits for stakeholders.
PT XYZ currently has a workforce of 310 people, either as a permanent monthly,
daily or casual workforce. PT XYZ has been reducing the number of workers as a strategy for
cost efficiency and effectiveness of human resource performance. Since 2020, PT XYZ has
consistently reduced its workforce from year to year. The reduction in the number of
employees every year is carried out because the amount of production produced by PT XYZ's
plantation has not been stable, so that it indirectly affects the company's revenue which also
has an effect on the need to carry out cost efficiency from all fields, including labor. A
comparison of the development of the number of workers and the amount of production per
year from 2020 to 2023 can be seen in Figure 1.
PT XYZ must implement an effective Key Performance Indicator (KPI) standard,
which can be a measuring tool in assessing the performance of the company and human
resources themselves. Currently, PT XYZ conducts human resource performance assessment
using the "Work Performance Assessment Table" form (Appendix I) which consists of
technical aspects of work, non-technical, personality, leadership, and rewards and sanctions.
However, the assessment is still very general (does not touch the strategic goals of the
company's vision and mission), very simple and does not include effective KPI points that
can touch all aspects of work standards or standard operating procedures. Most of PT XYZ's
performance measurements are currently only measured based on the achievement of
plantation productivity targets. If the plantation production target has been met, human
resources can be said to have good performance.
PT XYZ's current performance measurement cannot be used as a benchmark, therefore
the company needs to implement an appropriate performance measurement system to
determine whether the company's performance is optimal or not. PT XYZ as a business
entity, needs to have the right strategy to survive and have strong competitiveness against its
competitors. The company's strategy must be directed towards increasing value through
human resource management that is carried out professionally, effectively and efficiently so
that the company is able to meet the expectations of stakeholders. PT XYZ performance
measurement evaluation system that can assess the efficiency and effectiveness of the
company from all aspects, both qualitatively and quantitatively. The Sink and Tuttle Model
can overcome the weaknesses of conventional performance measurement that only focuses on
harvest or plantation productivity, by evaluating management performance measurement
comprehensively through seven performance criteria that become a measure of performance
improvement and increased profitability for the company. The ideal KPI development with
the Sink and Tuttle Model will be able to interpret the company's vision, mission and strategy
into comprehensive, coherent and balanced human resource performance measures.
2.1 Performance
Performance or achievement comes from the word "performance", which means
achievement, appearance, or performance of duties. "Performance is the result of work that
can be achieved by a person or group of people in an organization in accordance with their
respective authorities and responsibilities, in order to achieve the objectives of the
organization concerned legally, not against the law, and in accordance with morals and
ethics", said Prawirosentono (2011). In other words, performance or achievement is a record
of the results achieved during a certain time through certain tasks or activities at work. It is
clear that performance is a measure of how well a work unit does something within a certain
period of time to assess their capabilities. In this case, performance is more related to work.
Performance, according to Rivai and Basri (2005: 14), is the result of work or the
overall level of success of a person during a certain period of performing the duties or
responsibilities that have been given in an effort to achieve goals in accordance with the
standards and criteria that have been set for the job. According to The Scribner-Bantam
English Dictionary, published in the United States and Canada (1979), "performance" is a
translation of the word "to perform", which has several meanings: (1) To do, run, execute (to
do or carry out, excecute); (2) To fulfill or carry out the obligations of an intention or vow (to
discharge of fulfill; as vow); (3) To carry out or complete a responsibility (to excecute or
complete an understaking), (4) To do what is expected of a person or machine (to do what is
expected of a person machine).
To obtain good performance requires abilities that meet the criteria of a job. Ability is the
skills and abilities that individuals have in carrying out a job and utilizing an opportunity by aligning
and motivating themselves to achieve goals. High success is when an employee does things well,
mostly because there are no obstacles in the way. Even if a person is willing and able, obstacles can
get in the way. There are four components that each affect a person's performance: ability, acceptance
of company goals, the degree to which goals are achieved, and the interaction between company goals
and employee ability.
2.1.1 Human Resource Performance
Labor productivity, efficiency, job satisfaction, commitment, turnover index,
leadership, quality relationships, recruitment standards, and employee capabilities are some
of the performance measures that are widely used to measure human resource performance
(Dyer and Reeves 1995).
Labor Productivity:
Labor productivity is the relationship between real and physical results (goods and
services) and previous inputs, or the amount of results achieved by employees or other
production factors in a certain period of time. Every organization must have the principle of
efficiency, which basically means avoiding waste. Many causes of inefficiency, such as
waste, can occur due to ineffective behavior of organizational members or due to
inappropriate knowledge and skills of organizational actors in using and utilizing the facilities
and infrastructure that have been provided (Wibowo 2010).
Job Satisfaction:
Job satisfaction is when a person feels happy and loves their job. Morale, discipline,
and job performance reflect this perspective. Job satisfaction can be defined as enjoyment on
the job, off the job, or a combination of both (Hasibuan 2008). According to the Job
Descriptive Index (JDI), the five indicators that affect job satisfaction (Luthans 2006, cited by
Sunuharjo and Ruhana 2016) consist of:
a. The job itself, i.e. the satisfaction of the job itself is the main factor in satisfaction,
b. Wages and salaries are known to be important but cognitively complex and
multidimensional factors in job satisfaction,
c. Supervision, which is another important factor that affects job satisfaction. Supervisory
style has two aspects that affect job satisfaction. One is employee-centered, and the other
is influence or participation, as demonstrated by managers who allow employees to
participate in decision-making.
d. Coworkers, or team members who work together, are the simplest source of job
satisfaction. Work groups, especially strong teams, provide support, comfort, direction
and assistance.
Organizational Commitment According to Bashaw and Grant (2008), cited by Sunuharjo
and Ruhana (2016), organizational commitment is defined as an employee's desire to
remain a member of the organization and is willing to make extraordinary efforts to
achieve organizational goals.
Employee Turnover Rate (Turnover Index):
Employee turnover rate, also known as turnover index, is when an employee leaves their job
voluntarily or moves to another job.
Leadership:
Leadership can be defined as a field that thoroughly studies how to direct, influence,
and supervise the following others to accomplish tasks in a planned manner. The science of
leadership has developed along with the dynamics of human life. The four leader behaviors,
according to the Hersey and Blanchard model (Dwiyani and Sarino 2018), consist of: (a)
instruction, where a leader defines the responsibilities needed to complete a task and tells
subordinates what, where, when, and how to do it; (b) consultation, where a leader provides a
place for subordinates and is supportive; (c) participative, where a leader and subordinates
share in decisions regarding how best to complete their tasks well; (d) delegation, which is
the leader's ability to hand over responsibility for the implementation of work to subordinates
in order to carry out work effectiveness.
Quality Relationship
To improve the work quality relationship between employees and superiors, by
gathering to discuss all business activities or activities and strategies to achieve company
goals.
Recruitment Standard
To assess the performance of every employee who works for a company, it is
necessary to measure performance. This performance can be done to evaluate the
performance of each employee who works for a company so that it can have a good impact
on the company to see the quality of each worker.
Employee Skills
Employee ability is a very important skill for a company to support and improve its
own quality by producing good and quality products in accordance with customer
requirements and desires.
2.1.2 Factors Affecting Performance
Performance, which is a multidimensional structure, is influenced by many factors.
There are several components that affect performance (Anwar Prabu 2014: 21, cited by Ulfa
and Ridwan 2015): (1) Individual/personal factors, including knowledge, skills, abilities,
confidence, motivation, and commitment; (2) Leadership factors including encouragement,
enthusiasm, guidance, and support provided by managers or team leaders; and (3) Team
factors including the level of support and enthusiasm provided by the team.
2.1.3 Performance Indicators
There are three metrics that can be used to measure the performance of each worker
(Yusuf Qordhawi 1997: 112 to 116 cited by Ulfa and Ridwan 2015): (1) Quantitative
measurement, which refers to quantity, which includes the calculation of the results of the
process or activities performed. This is related to the number of products produced; (2)
Quality, which is the quality to be made (good or not), indicating the level of satisfaction, or
the quality of completion, and is related to the type of output; (3) Timeliness is a quantitative
measure that measures how quickly a task is completed or not in accordance with the planned
time.
2.1.4 Performance Measurement
According to Dessler (2017), performance appraisal means assessing an employee's
current and/or past performance relative to his or her performance standards. Performance
appraisal usually consists of a three-stage process known as the performance appraisal process
(Sastrohadiwiryo 2012), namely (1) setting work standards; (2) assessing the employee's
actual performance relative to those standards, usually involving various forms of
assessment; and (3) stating that management or appraisers conducted the performance
appraisal to assess the employee's performance. This is accomplished by comparing
performance to the job description or descriptions over a specified period, usually at the end
of the year. This is done to measure proper performance against the results or outputs that
employees produce.
According to Mondy (2016), performance appraisal is an important part of performance
management, as it is a formal system used to assess and evaluate job performance performed
by individuals or teams. Although performance appraisal is only one part of performance
management, the system is very important because it has a direct impact on the organization's
strategic plan. Performance appraisal or measurement is a formal effort carried out by the
organization periodically to evaluate the results of activities that have been carried out based
on predetermined goals, standards, and criteria. According to Mulyadi (1999), the main
purpose of performance measurement is to encourage employees to achieve organizational
goals and comply with established standards of behavior.
Ideally, performance measurement is conducted in two stages (Mulyadi 1999). The
first stage includes measuring the components to be measured, the standards used to measure
performance, and the actual performance measurement activities. The second stage includes
comparing actual performance with previous goals and desired performance. To measure
performance, an appropriate tool is needed that can produce an objective performance
assessment. Performance measurement is a way to evaluate how well something is working.
The philosophy that can be used to plan a performance measurement system must be in
accordance with the goals, strategies, and organizational structure of the business. An
effective performance measurement system helps management implement control processes
and provides motivation to improve and enhance their performance. This performance
measurement is needed to ensure that performance has met the plan, completed on time, or
results have been achieved as expected. The ability to measure performance is necessary to
carry out the measurement process properly. Performance measurement can only be done on
real and measurable performance, to be able to improve performance it is necessary to know
what the current performance is like (Wibowo 2009).
Performance appraisals are essential for informing employees about strategic
objectives, placement, replacement planning, and training and development. Three things that
can be concluded about performance appraisal (Rivai and Basri 2005) are: (1) The most
effective tool to find out whether employees have provided adequate work results and have
met performance standards; (2) Techniques for assessing employee performance by looking
at their strengths and weaknesses; (3) The best tool for assessing employee performance and
making suggestions for improvement. Performance measurement is also a process evaluating
how far the work has progressed to achieve the goals and objectives that have been set.
Performance measurement includes data on the efficiency of services, comparison of the
results of activities with goals, and the effectiveness of actions to achieve goals. When
assessing performance in performance management, three important factors must be
considered, namely behavior (process), output (direct product of the activity), and results
(impact of the activity). These three variables are dependent on each other and cannot be
separated.
2.1.5 Performance Measurement Function
Making decisions and evaluating the performance of management and related units in
the organization are important components of company performance measurement, which
contribute to the progress and success of the company in achieving its goals (Nugrahayu
2015). The three main tasks that need to be performed by management, according to
Atkinson, Banker, Kaplan, and Young (1997), are (1) focusing organizational members on
organizational goals by selecting primary and secondary goals during the planning process,
then setting measures for these goals, (2) coordinating individual decision makers by
ensuring that all organizations understand what the organizational goals are and know how to
achieve them, and (3) providing information about strategies to achieve these goals.
2.1.6 Performance Measurement System
Performance measurement system criteria can be divided into the following (Agus
Darma 2009: 20 cited by Ulfa and Ridwan 2015):
1. Relevance, is one of the criteria for a performance measurement system which can be
interpreted as (1) a strong relationship between certain job standards and organizational
goals, and (2) a clear relationship between the important components of a job that have
been identified through job analysis and the components that will be evaluated in the
form of an assessment.
2. Sensitivity, indicating that the performance appraisal system has the ability to distinguish
between effective and ineffective employees.
3. Reliability indicates that the evaluation is done consistently.
4. Acceptability, the results of an employee's assessment tend to be the same even though the
tool is used by two different people. The performance measurement designed must be
acceptable to those who use it.
5. Practicality, which means an assessment instrument that is agreed upon and easily
understood by the parties involved in the assessment process.
2.1.7 Key Performance Indicator (KPI)
KPIs are metrics or quantitative measurements (such as averages, ratios, and
percentages) used to help companies measure and determine their progress toward their goals
(Pratiwi 2009). KPIs are indicators to measure whether the strategy has been carried out
correctly and in accordance with the company's vision and mission (Moeheriono (2016).
According to Pratiwi (2009), the KPIs are usually linked to an organization's strategy in
assessing hard-to-measure activities such as profit, development, leadership, agreements,
service, and satisfaction. KPI components are not the same for every company, it depends on
the characteristics and strategy of the company. Companies will benefit from good KPIs,
such as eliminating unnecessary work, increasing productivity, finding systematic ways to
improve business, increasing innovation and creativity, carrying out work efficiently,
understanding business goals, and achieving work optimization. KPI performance should be
based on comprehensive information about the company's performance, both internal and
external, in financial and non-financial terms.
Indicators or measures are important things used in measuring the level of performance
achievement against strategic goals. Every strategic goal in every part of the organization
must have a KPI. The process of determining this KPI is not easy. The resulting
organizational performance can be irrelevant if the KPI is incorrectly set. KPIs can be
divided into two types (Lorisa and Doaly 2017), namely: (1) lagging KPIs are KPIs that
measure output or performance results; and (2) leading KPIs are KPIs that measure processes
that drive lagging achievements. KPIs must have several indicators (Moeheriono 2012 cited
by Ulfa 2015), such as: (1) Specific and clear to avoid misinterpretation. It is possible to b e
measured objectively and the measures used, both quantitative and qualitative, must be
clearly explained; (2) Relevant, which means that it can handle objective aspects that are
elevant, achievable, important, and useful for achieving inputs, outputs, results, benefits, and
impacts as well as processes; (3) Sensitive to change, flexible enough to change or adjust the
operation of a task; (4) Effective, which means that data can be collected, processed, and
analyzed at available costs. KPIs must be SMART (specific, measurable, agreeable, realistic,
timebound)
which means specific, measurable, agreeable, realistic and time-bound. KPIs are also related
to data collection, the more data that is easy to collect, the more performance measurement
bases that can be selected as the basis for KPIs. To obtain the organization's scorecard, which
seems similar to a report card, it is necessary to calculate the organization's performance
score for each strategic objective. The performance grade can be obtained using the following
formula:
2.2 Strategy
The word "strategy" comes from the Greek word "strategos", which means "general",
and its meaning literally means "art and general", which refers to the things that are most
important to the top management of the organization. Specifically, strategy includes setting
the company's mission, setting the organization's goals by combining internal and external
forces, formulating specific policies and strategies to achieve these goals and ensuring their
proper implementation, so that the organization's main goals and objectives are achieved. At
first, the term "strategy" was only known in military circles, especially in the field of war
strategy. In a war or battle, a person (commando) is tasked with creating a strategy to win the
war, and more and more, the term "strategy" is used to refer to the strategy of the military
strategy used (in addition to the strength of the troops), the greater the likelihood of winning
(Suyadi 2013).
Strategy is the establishment of goals and funds to achieve the long-term objectives of
a business or organization and the allocation of resources to achieve them. The term
"strategy" is defined as a goal to be achieved, an attempt to communicate what will be done,
who does it, how they do it, and to whom it is communicated. In addition, it is important to
understand why performance results should be assessed. A strategy consists of an integrated
set of choices, and keep in mind that these choices may not reach or fulfill leadership or
executive decisions that are considered important. According to Michael Porter (Rachmat
2014), a strategy is a collection of different actions or activities that are carried out to achieve
a certain value. According to the expert, strategy consists of highly competitive actions and
business approaches to achieve performance targets. Actually, strategy is based on a thorough
and holistic analysis. This means that when a strategy is created, every component of the
organization has a long-term goal. Strategy is basically made to achieve the vision and
mission of the corporation.
2.1.1 Human Resource Management Strategies
Human resource management today is increasingly involved in strategic committees
to determine the strategic direction of the company. This is a common phenomenon in the
modern world of work. In order to gain a competitive advantage, human resource
management has evolved into an organization's strategic strength. According to a perspective
known as the resource-based perspective, sustainable competitive advantage can be achieved
through human resource capabilities (Tjahjono 2015). Michael E. Porter defines competitive
advantage as the basis of a company's strategy in competition (Strickland 2010). To achieve
competitive advantage, companies use three generic strategies (Simamora 2012), namely:
1. Innovation Strategy.
Companies use innovation strategies to make their products and services different from
competitors. Companies that implement innovation strategies must have the following
characteristics (Simamora 2012):
a. Work that requires close interaction and coordination between groups,
b. Performance appraisals that better reflect the achievement of group goals over a longer
period of time,
c. Work that allows employees to develop their skills that can be applied elsewhere in the
company,
d. A compensation system that prioritizes internal equity over market equity,
e. Salary levels tend to be low, but allow employees to become shareholders and have the
freedom to choose between salary, bonus, and stock rights that form the basis of their
compensation package,
f. Broad career paths that encourage the development of a wide range of skills. The
behavioral profile of employees who implement this strategy will, in the long run, exhibit
smart, innovative behavior, little control, and performance appraisal.
2. Quality Improvement Strategy
This is a human resource management strategy that aims to improve the quality of
products or services so as to gain an advantage over competitors by improving clear job
descriptions, employee participation, balance between group and individual results-oriented
standards, fair treatment, and thorough and continuous employee training and development.
The employee behavior profile that supports this strategy includes repetitive and predictable
behavior, long-term focus, good cooperation, interdependent behavior, high commitment to
quality with adequate attention to quantity of output, high commitment to goods and services
made or delivered, low level of risk activities, and commitment to organizational goals.
3. Cost Reduction Strategy
This strategy aims to gain a competitive advantage by becoming a producer of low-cost
products. Human resource (HR) practices should include the following to gain a competitive
advantage in a cost reduction strategy:
a. Stable and clear job descriptions that are easier to understand,
b. A narrow career path that encourages efficiency, specialization, and expertise,
c. Performance appraisals are short-term and results-oriented,
d. Comprehensive monitoring of salary levels in the labor market that will be used to make
compensation decisions,
e. Minimum level of employee training and development.
The employee behavior profile that fits this strategy is one that is predictable and relatively
repetitive, short-term focused, concerned with individual activities, adequate attention to
quality combined with high attention to quantity of output, low risk-taking, and stability.
2.3 Benchmarking the Performance of Plantation Companies Tea
2.3.1 Picking
Plucking, also referred to as the activity of obtaining tea plant shoots eligible for
processing, is an important factor affecting tea quality and productivity. Plucking also
improves the condition of the plant so that it can produce high yields (Mufti 2014). There are
three types of picking tools: hand picking; scissor picking; and machine picking. Scissor
picking is usually used manually, but it is commonly used to increase the capacity or
productivity of pickers while maintaining plant health and shoot quality (Herawati and
Nurawan 2009). Machine picking produces a larger quantity of shoots, is faster and easier,
and can fulfill production capacity. However, many leaves are damaged because unwanted
leaves are cut and put into the machine bag (Kusumawati and Triaji 2017).
The amount of production produced by tea plantations is influenced by various
factors, according to Setyamidjaja (2000). Included in this category are type of picking,
picking method, picking rotation, picking area arrangement, picking labor, and picking
procedure. Kusumawati and Triaji (2017) stated that the quality and quantity of tea produced
is greatly influenced by the way the tea leaves are plucked. Most of the employees involved
in plucking are currently women. Apart from being housewives, tea leaf picking is still their
main job. Producing high-quality tea requires fine plucking. Ghani (2002) states that plucking
can be divided into three categories based on the plucking tools used: machine plucking,
scissor plucking, and hand plucking. Sufficient and appropriate labor is required for hand
picking. This makes it possible to maintain the relative quality of the leaves and prevent the
shrubs from being overly stressed. When picking labor is expensive and scarce, scissor
picking is used. In peak production conditions (flush), scissor picking can be used
temporarily, with a percentage of scissor picking 1.5 to 2 times that of hand picking (40 to 70
kg per person). Machine picking is done when the selling price of tea is stagnant, or
unchanged, and the cost of picking labor is high. Machine picking is only done when there
are many shoots available. The objective of the activity is to determine the evaluation of the
picking technique and its influencing components in an effort to improve the quality and
quantity of tea shoots produced.
2.3.2 Gilir and Hanca Quote
Picking rotation is the amount of time it takes to carry out one picking to the next
picking in the same place. Managing the picking rotation is one way to optimize production.
Pratami (2020) states that climate, plant health, and pruning age affect the speed of shoot
growth. The picking rotation is also influenced by the picking method. The picking rate is the
area of land that must be picked in one day of picking. With a short picking rotation, plenty of
shoots in the field, and proper labor, the picking rate will increase. The standard picking rate
for machine picking is 0.75 ha HOK-1, and manual picking is 0.04 ha HOK-1. Picking rate is
affected by location and topography. Difficulties in location and topography will cause the
picking to not be completed in one day and must be continued on the next day.
2.3.3 Capacity and Power Requirements Pick
According to Pratami (2020), the condition of the field shoots affects the capacity of
the picker. In addition, weather, plant population, plucking ability, and topography of the
plucking location also affect plucking capacity. To get the best tea production results, picking
power is one of the most important components. The need for picking labor in accordance
with the picking labor ratio will help achieve the production target (PPTK 2019). The manual
ratio is 1 person per ha-1, while the machine ratio is 0.7 person per ha-1. In general, a
shortage of pickers is found in areas where tea plantations operate due to a lack of
productive-age workers for tea-picking jobs, especially those who work manually. This is due
to low salaries and lack of picking technology. Labor shortages can lead to annual production
targets not being achieved and hanca picking not being completed in one day. This lengthens
the cycle and causes the tea shoots to become blighted or past picking time (Kusumawati and
Triaji 2017). Picking machines can attract the attention of young people.
2.3.4 Analysis Quote
Picking analysis is conducted to determine the skill of the pickers and the condition of
the plants in the field. This is done by separating the shoots based on their picking formula,
which is expressed in percent. Mondays and Thursdays are the two times a week where
picking analysis is done manually. In observations, machine picking analysis is used to
compare results in the field. According to PPTK (2006), the expected medium picking type
has at least 70% medium shoots, 10% fine shoots, and 20% coarse shoots. The skill of the
picker greatly affects the quality of the picking analysis. The problem in the field is that
manual pickers use sickles to pick, which makes the picking type irregular and damaged. This
is a result of piece picking, where the main priority is quantity over quality.
2.3.5 Yield Productivity Output Factory
Yield is the ratio between the production output (dry tea) produced and the input of
raw materials processed (wet shoots). In general, the yield value is directly proportional to the
amount of production produced and vice versa for the quality produced (Gotama et al., 2011).
If the value of tea yield is high, the more quantity of dry black tea produced, but the quality
of the tea produced is low. The production yield will greatly affect the profit of the Company.
2.3.6 Green Tea Factory Utilization
Green tea is dried tea from the processing of shoots and young leaves of the tea plant
(Camellia sinensis (L.) O. Kuntze) through the process of withering without going through
the enzymatic oxidation process, through the process of rolling and or grinding, drying,
sorting and grading so that it is safe for consumers. According to the shape and particle size
(SNI-3945 2016), green tea is classified into 20 (twenty) types, namely:
1. Pekoe Super, a green tea whose particles are densely coiled and twisted, green to
blackish green in color, very slightly mixed with leaf bones with a particle length
between 2 to 5 mm.
2. Pekoe, green tea with densely rolled, twisted particles of blackish-green color, longer
than super pekoe with a particle length of more than 5 mm, slightly mixed with fibers
and leaf bones.
3. Jikeng, green tea whose particles are loosely rolled and less twisted, blackish green to
brownish yellow in color, mixed with many leaf bones with a particle length of between
1 to 20 mm.
4. Powder 1, green tea whose particles are not rolled but are flat pieces, blackish to
brownish yellow in color, at least 75% passing mesh sieve 4 and retained mesh sieve 10,
slightly mixed with fibers and leaf bones.
5. Powder 2, green tea whose particles are not rolled but are flat pieces, blackish-green to
brownish-yellow in color with at least 75% pass.
mesh sieve 10 and retained mesh sieve 45, many mixed with fibers and leaf bones.
6. Powder 3, green tea whose particles are not rolled but in the form of flat pieces, blackish
green to brownish yellow at least 75% passing a 45 mesh sieve, mixed with a lot of leaf
bone fibers.
7. Broken Tea (BT), slightly flattened and poorly twisted tea leaf particles, blackish green
to yellowish green in color, passing mesh 6 or mesh 7 sieve and retained mesh 14 sieve.
8. Fanning (F), short tea leaf particles, blackish green to yellowish green in color, small and
flat, passing mesh 18 sieve and retained mesh 20 or mesh 22 sieve.
9. Dust, tea leaf particles that are small, granular, and blackish-green to yellowish-green in
color, passing through a 22-mesh sieve and retaining a 30-mesh sieve.
10. Stalk, green tea that is 100% handle particles are brownish yellow in color with particle
lengths ranging from 3 mm to 30 mm.
11. Gun Powder 1 (GP1), green tea particles in the form of very dense rolled granules of
green to blackish color, at least 75% passing mesh 10 sieve and retained mesh 14 sieve,
pure unmixed with fibers and leaf bones.
12. Gun Powder 2 (GP2), green tea whose particles are solid rolled granules, green to
blackish green in color, at least 75% passing mesh 6 sieve and retained mesh 10 sieve,
pure not mixed with fibers or leaf bones.
13. Gun Powder 3 (GP3), green tea whose particles are less dense rolled granules, green to
blackish green in color, at least 75% passing mesh 4 sieve and retained mesh 6 sieve,
pure not mixed with bones and leaf fibers.
14. Chun Mee 1 (CM1), green tea whose particles are rolled densely elongated, greenish
black to black in color, at least 75% passing mesh 10 sieve and retained mesh 18 sieve,
pure not mixed with bones and leaf fibers.
15. Chun Mee 2 (CM2), green tea whose particles are rolled densely elongated, greenish
black to black in color, at least 75% passing mesh 8 sieve and retained mesh 14 sieve,
slightly mixed with bones and leaf fibers.
16. Chun Mee 3 (CM3), green tea whose particles are densely rolled lengthwise, greenish-
black to black in color, at least 75% passing mesh 6 sieve and retained mesh 14 sieve,
slightly mixed with bones and leaf fibers.
17. Chun Mee 4 (CM4), green tea whose particles are rolled densely elongated, greenish to
black in color, at least 75% passing mesh 6 sieve and retained mesh 10 sieve, mixed with
a little bit of bone and leaf fiber.
18. Sow Mee 1 (SM1), green tea whose particles are flat pieces, brownish-greenish-black
color at least 75% pass the mesh 10 sieve and retain the mesh 18 sieve, contains tips.
19. Sow Mee 2 (SM2), green tea whose particles are flat pieces, greenish-black to brownish
in color, at least 75% pass mesh 14 sieve and retain mesh 25 sieve, containing little tip.
20. Broken Mixed (BM), tea leaf particles that are a mixture of two or more types of green
tea grades.
2.3.7 Quality Requirements for Green Tea
Green tea quality requirements consist of general quality requirements (physical and
organoleptic) and specific quality requirements. General quality requirements are the basic
requirements that must be met to fulfill quality requirements. These requirements are usually
used for general market standards and are used by almost all entities involved in the green tea
buying and selling industry in Indonesia. The description of general quality requirements is
shown in Table 2.1 below.
2.3.8 Analysis Pucuk
The shoot analysis is done to predict the quality of the shoots and the picker's wage is
calculated by the percentage obtained from the shoot analysis. Shoot analysis is conducted in
the factory every day before the tea is processed or when the shoots are received. For manual
picking, the manual shoot analysis standard is 60% qualified shoots (PMS) and for machine
picking it is 55% PMS. Low shoot analysis is influenced by various factors, including plant
condition, plucking ability, shoot holding that exceeds the capacity of the waring, and
exposure to direct sunlight. Manual picking ability greatly affects the quality of manual
picking. In most cases, manual pickers will leave some shoots that can be picked in the next
picking.
During the growth period, there are two budding periods: the bird budding period and
the peko budding period. Both periods have different budding periods and move with each
other. The flushing period or peko period indicates active growth and the dormant period
indicates inactive growth (Setyamidjaja 2000). Plant health can be measured by the condition
of its shoots. Healthy plants have a longer peko shoot time, while unhealthy plants have a
shorter bird shoot time. According to Haq et al. (2016), healthy tea plants have a ratio of peko
shoots and bird shoots of 2:3, which means about 30% peko shoots and 70% bird shoots.
2.3.9 Tea Leaf Quality Standard Green
The quality of the raw materials (tea shoots) will affect the quality of the dry tea
produced, the better the raw material of wet shoots, the better the dry tea produced. To obtain
good wet shoot raw materials, certain rules need to be followed. These rules can ensure high
tea production without damaging the plants due to plucking. Plucking of tea plants is not
damaged if done regularly. Irregular plucking will cause the plant to be tall, the plucking
plane is uneven, and few leaves are plucked.
In processing green tea, tea leaves contain many compounds that can create a unique
flavor and aroma. They are catechins and tannins. Tea polyphenols consist mostly of
catechins, which account for 90% of its total polyphenols. The catechin content of Indonesian
tea ranges from 7.02 to 11.60 percent of seeds, while the catechin content of tea from other
countries ranges from 5.06 to 7.47 percent of seeds. Tea also contains other components that
are beneficial to health, such as amino acids, peptides, carbohydrates, vitamins (C, E, and K),
carotenoids, and minerals such as potassium, magnesium, and magnesium. The requirement
for leaves to be picked is that the green leaves are young and have sufficient sap content,
leaves that are too old will be difficult to roll so they should be avoided.
2.4 Sink and Tuttle Model
"Sink and Tuttle" is a combination of the names of two engineering and industrial
management school professors, D. Scott Sink and Thomas C. Tuttle. First person,
D. Scott Sink is an associate professor in the School of Industrial Engineering and
Management at Oklahoma State University and director of the Oklahoma Productivity Center
at Oklahoma State University (OSU), USA. Sink is a renowned expert in areas including
productivity management and measurement, work measurement and improvement, and
organizational behavior. While her colleague, Thomas C. Tuttle, is a professor and director of
the Maryland Center for Productivity and Quality of Working Life (UMCQP) at the
University of Maryland, USA. With these two in mind, they came up with a performance
measurement method based on the intricate interrelationships between seven performance
criteria that is now known as the "Sink and Tuttle Model" or "Sink's Seven Performance
Criteria".
Effectiveness, effectiveness, quality, productivity, quality of work life, innovation,
and profitability are the seven performance criteria used in the classic Sink and Tuttle
performance measurement method to measure organizational performance. Every member of
the organization, from top management to the bottom level, has two important responsibilities
to fulfill: (1) doing the job right (doing things right, at the right time, with the right quality,
and using the right resources); and (2) doing the job sustainably (building self, group,
organization, and performance systems). According to Sink (Wicaksono 2010), research and
coverage of various verified literature found at least seven performance criteria that can be
relevant and dependent on organizational systems:
1. Effectiveness, this is a performance criterion that accomplishes tasks appropriately, at the
right time, and with the right quality. In addition, effectiveness can be described as the
ratio of actual output to expected output,
2. Efficiency, which is the criterion for the ability to take the right action,
3. Production, which is the ratio between expenditure and revenue, a clear relationship
between one or more inputs and the amount of output from a process, e.g. labor
productivity can be defined as the number of hours of work performed for each physical
unit of output,
4. Quality, is a performance that has a fairly broad sense, which includes all the processes
of an organization and about the quality results it provides to others. For example about
customer satisfaction, whether the service has met customer expectations,
5. The quality of working time, which is an important criterion of a well-performing
system, suggests a good standard for measuring each working time used,
6. Innovation, as an important criterion for maintaining and improving performance,
7. Profitability, as a criterion that is also the main goal for every organization.
The seven standards indicate that performance can be measured quantitatively or
qualitatively. Performance indicators can be categorized into several general categories
(Fiksel in Willig 1995, in Nuraini and Heri 2010):
1. Qualitative, which refers to the assessment of one's views, semantics, and perceptions of
something based on one's observation and judgment of it. The advantage of this metric is
that the data collection is relatively easy and straightforward. The disadvantage is that it
implicitly involves a subjective point of view, making it difficult to validate,
2. Quantitative are measures that describe performance in physical, financial or other forms
based on empirical data and numerical results. Effluent quality limits are an example.
The advantages of these metrics are clear, objective and reliable. The disadvantage is that
the necessary data may be difficult to obtain or not available at all.
In general, categories of business performance measures can be classified in the following
ways:
1. Productivity, traditionally defined as the sum of one or more inputs compared to the sum
of the outputs of a clearly defined process, is known. The most common measure is
l a b o r productivity, which measures the amount of labor (such as labor hours or
employees) for each unit of physical output. Another measure is labor productivity.
Another aspect of quality (customer satisfaction) relates to whether the service provided
matches the customer's expectations, desires, or specifications. Some consumer measures
mainly relating to services are quite subjective, and can be post-audit evaluations,
complaints, customer satisfaction surveys, etc,
2. Timeliness is usually considered part of quality, but on-time delivery can be measured by
the technical accuracy of the product,
3. Cycle time is the amount of time required for a key process, from start to finish,
4. Utilization is the amount of resources used compared to the resources available for use.
Although utilization is usually considered to be related to the capacity of the plant
equipment, utilization is sometimes required,
5. Innovation and creativity are essential for businesses like advertising or art. While it is
difficult to measure the level of creativity and innovation directly, one can see it as it
happens.
6. Output consequences/outcomes are immediate, hence processes are sometimes
insignificant or difficult to measure. But ultimately there are the most important
outcomes or consequences that can be measured. For example, the outcome of a
salesperson does not depend on how many brochures are distributed or how many phone
offers are received by customers. Rather, the outcome of a successful or failed sales
transaction with a customer is the result of the seven Sink performance criteria
mentioned above, which essentially have the same meaning and are not tied to each
other. They each represent a zero level of data with a different measurement structure.
Success can be guaranteed in the long term if the organizational system relates to the
seven performance criteria above (Ningsih et al. 2014). If a system component is
changed to improve performance, performance improvement will also occur if any of the
above seven criteria are met (Ningsih et al. 2014). Figure 2.1 shows a chart illustrating
the relationship between the organizational system and the seven performance criteria
established by Sink's Seven Performance Criteria.
2.5 Analytical Hierarchy Process (AHP)
In the 1970s, Dr. Thomas L. Saaty of the Wharton School of Business created the
Analytical Hierarchy Process (AHP), which is used to assess performance based on how
decision-makers prefer the importance of each perspective KPI group. AHP is also very
popular as a decision-making method, and can be used to structure a masquerade of criteria
and sub-criteria.
2.5.1 Working Principle AHP
The working principle of the Analytical Hierarchy Process (AHP) consists of three
principles (Surjasa and Phiong 2018) as follows:
1. Principles of Hierarchy
Describe and decompose hierarchically by breaking the problem into separate parts. The trick
is to divide our complex knowledge, our complex thoughts, into their elemental parts, and so
on hierarchically.
2. Principles for Prioritizing Decisions
How the matrix works to establish consistency and prioritize Using pairwise comparisons
with a comparison scale (Saaty 1993), we can establish which elements are most important
based on the opinions of experts and parties involved in decision-making, either directly
through discussions, interviews, or indirectly through questionnaires.
3. Matrix Logical Consistency Principle
Cardinal and ordinal relationships must exist in the weights obtained from the pairwise
comparison results. In the Analytical Hierarchy Process (AHP) model, the comparison
matrix is acceptable if the CR value is <0.1, which indicates a good level of consistency and
can be accounted for.
2.5.2 Application Procedure AHP
The Analytical Hierarchy Process (AHP) method includes the following process
(Marimin, 2004):
1. Hierarchy Formation
The establishment of a hierarchy is used to show the influence of the highest level goal to
the lowest level. A hierarchy can also be used to organize complex problems so that they
become systematic and structured.
2. Pair-wise Comparison
This pairwise comparison is used to consider decision factors or objectives and
alternatives. This pairwise comparison considers the objectives between other factors or
subfactors and criteria or sub-criteria.
2.6 Objective Matrix (OMAX)
The Objective Matrix (OMAX) method, a partial productivity measurement method
that aims to monitor productivity in each part of the company, using a matrix of performance
indicators to measure one measure, is one method that uses KPIs as data to be analyzed.
OMAX has four advantages (Parson 2000 cited by Azlia, et al. 2017):
(1) ability to normalize the units of various measurement specifications, (2) flexibility to
accommodate measurement quality, time, safety, employee behavior, productivity, and
results, (3) output orientation rather than measurement activities, (4) ability to counter-
measure performance and results.
There are three steps in the OMAX calculation (Azlia et al. 2017) that are commonly
applied in research:
1. Defining, at this stage, elements that affect business performance are determined.
2. Quantifying, this stage determines the division of KPI performance achievement levels.
It consists of ten levels, with the lowest level being 0. Level 10 indicates the highest level
or target that the company has set. Level 3 indicates the company's initial level of
achievement or performance, and levels below 3 indicate poorer achievement over the
course of the company's operations.
The next step is to calculate the score level of 9 to 4 and the score level of 2 to 0. To
assess the score value, a linear scale is used. The linear scale calculation is done twice, the
first to find the interval value between score level 10 and score level 3. And the second to
find interval value between score level 3 and score level 0. Linear scale formula to find the
interval value:
2.7 Traffic Light System (TLS)
The Traffic Light System (TLS) is closely related to the scoring system. The TLS
system uses three colors to indicate whether a performance indicator score needs
improvement (Azlia, et al. 2017).
1. Green, indicating that the achievement of the performance indicator has been achieved, is
indicated for scores at levels 8-10.
2. Yellow, indicating that the achievement of the performance indicator has not been
achieved, is shown for values at level 8-10. Therefore, management must be very careful
with all possibilities.
3. Red color, used for performance indicators that are at level 0-3 and indicate that the
achievement is far below the predetermined target and needs immediate improvement.
2.8 Previous Research
Some previous studies that are references in this study such as those conducted by
Najmi, Rigas, and Fan (2005) resulted in the conclusion that an organization's performance
measurement system is a mechanism for regulating and controlling the organization.
Maintaining organizational effectiveness and measurement systems requires a systematic
assessment/measurement process. The performance appraisal process is a complex task that
spans the entire organization, a good appraisal process is one that can provide the right
assessment base balance between organizational benefits and the effort required. The research
is supported by Digalwar and Sangwan's (2006) research on performance measurement
systems for green manufacturing that performance measurement is a key element in
measuring performance management improvement.
Research on the analysis of procurement performance measurement using "Sink's
Seven Performance Criteria" from Wicaksono, Suliantoro, and Sari (2007), shows that the
performance of an organization/department (Procurement/Purchasing Department) can be
known by looking at the category of good or bad performance achievement. From the results
of the analysis with the Importance Performance Matrix by Wicaksono, Suliantoro, and Sari
(2007), it can also recommend several functions that can optimize the use of company
resources including costs, time, and human resources so as not to cause waste, change bad
and harmful habits, implement innovations that can improve performance, monitor and
evaluate all internal and external activities, make good and mature planning.
Research on performance measurement systems using the "Sink and Tuttle Model"
from Putra and Suliantoro (2014), with the background of a company's performance
assessment that is only based on the ability to achieve targets set by the company. On the
other hand, the company's productivity declined due to old machinery and low yields. As well
as human resource issues that also affect company performance, with many human resources
who are less competent but still trusted for strategic positions. As a result, the existing
process planning is not appropriate so that the factory can suffer losses due to production that
does not reach the target. The research provided the results of 27 Key Performance Indicator
(KPI) that describes the performance of the company (factory) in an integrated manner. In
addition, the study also obtained criteria that are important for the continuity and
improvement of performance starting from the highest order, namely productivity,
effectiveness, efficiency, quality, profitability/budgetability, quality of work life, and
innovation. Then the results of data processing and performance measurement found that the
performance index is influenced by profitability while profitability is influenced by
productivity.
Sodikin, Yusuf, and Pangestu's (2020) research on designing company performance
measurements using the Sink and Tuttle Model and Integrated Performance Measurement
System (IPMS) methods, based on the background of the demands of the globalization era,
resulted in the conclusion that companies must make continuous improvements in their
company's performance, stating that each of the criteria for efficiency, productivity,
effectiveness, quality, quality of work life, customers, investors, suppliers have equal weight
in the Key Performance Indicator (KPI) used as the basis for measuring company
performance. The Company's performance index achievement for 6 months from January to
June is included in the yellow category, which means it is still good but needs some
improvement.
2.9 Conceptual Framework
PT XYZ is a tea plantation and processing company that has a large workforce of 310
workers. PT XYZ sells its production and processing products to local and international
buyers/customers. Local buyers come from all over Indonesia, and international buyers come
from countries including Australia, China, the United States, Singapore, Malaysia, Pakistan,
Israel, Iran, Dubai, Russia, Ethiopia, and several countries in continental Europe. Based on
current conditions, the company has not conducted a performance measurement review
process based on existing KPIs, so the company does not know what factors affect human
resource performance and company performance. So far, performance measurement is only
general, very simple and only based on the achievement of harvest productivity based on
quantity.
This research begins with the stages of KPI identification and performance
measurement system based on Sink and Tuttle criteria. From the performance measurement,
the criteria weighting will be generated through Analytical Hierarchy Process (AHP) and
score determination using Objective Matrix (OMAX). After that, a performance evaluation
will be carried out using the Traffic Light System (TLS) method. After the performance
evaluation stage, then analyze the results of the system design and draw conclusions about
human resource performance and company performance. The stages of the conceptual
framework can be seen in Figure 2.2 below.
2.1 Approach Research
This research uses associative and quantitative descriptive methods. The associative
descriptive approach is a research approach that aims to determine the relationship
(influence) between two or more independent variables on the dependent variable. In
addition, this research also takes a quantitative research approach, so the method used is a
survey approach, namely data collection and assessment of respondents' instruments of the
variables to be studied using a questionnaire. The questionnaire used is a questionnaire with
closed answers which is the source of data processing with the Analytical Hierarchy Process
(AHP) method. The research objects used in this study are aspects of company performance
criteria based on the Sink and Tuttle Model approach.
2.2 Processing and Analysis Methods Data
To carry out the research framework above, the stages of data processing and analysis
will be divided into: (1) the identification stage, (2) the stage of determining strategic
objectives from determination, verification to the formation of KPI specifications, (3) the
performance measurement stage, (4) the performance evaluation stage, and (5) the analysis
stage and the proposed strategy for improving the performance of PT XYZ's human resources
as well as conclusions and suggestions. An overview of the process stages of the data
processing and analysis method that will be carried out can be shown as in Figure 3.1 below.
Research will begin by looking for the background of the problem, determining
research objectives, making a work plan and collecting references to previous related studies
as well as various journals, books, news and other information as references that can provide
input and support the smooth running of this research process to achieve the goals to be
achieved. In the next stage, researchers will collect all data sources (both primary and
secondary) needed in this research. Then at the next stage, researchers will identify the
collected data to determine strategic objectives, form KPI specifications that match Sink and
Tuttle criteria and verify KPIs. At this stage, researchers will use the basis of Sink and Tuttle's
7 performance criteria, namely:
1. Effectiveness
2. Efficiency
3. Productivity
4. Quality
5. Quality of work life
6. Innovation
7. Profitability
After KPI specifications are formed based on the above performance criteria, a
performance measurement system/structure will be formed that is able to provide a clear
description of each performance criteria. The seven criteria are broad in nature, but not
binding to always be used together. They represent level zero in the measurement structure
breakdown. An intervention to improve the performance of one element may result in an
improvement in one or more of the seven basic criteria. Then at the performance
measurement stage, the criteria will be weighted using the Analytical Hierarchy Process
(AHP). After that, the score will be determined using Objective Matrix (OMAX). At the next
stage, the data that already has a score will be processed again to be clarified by the Traffic
Light System (TLS) method. In the end, the data that has been processed with TLS will be
able to describe the results of the analysis and recommendations in this study.
2.2.1 Stage Identification
The identification stage is the initial stage of the process of designing a performance
measurement system/structure based on the data sources that have been collected, which
consist of existing company KPIs, Standard Operating Procedure (SOP), operational data,
financial data, interview results, questionnaires, and other sources of information. In this
stage, all data sources will be verified to determine KPIs and strategic objectives for
performance measurement in this research. In this stage, researchers have also sorted data
based on criteria and indicators that match the criteria in the Sink and Tuttle Model.
2.2.2 Performance Measurement System Design Stage
The design of the performance measurement system in this study is determined by
several considerations, namely:
1. Strategic Goal Setting
The determination of the company's strategic goals is based on the company's
vision, mission and objectives with reference to each perspective.
2. KPI Determination
In determining this KPI, the company's vision, mission and strategy that have
been obtained are translated into strategic goals or objectives, each objective has its own
indicators, namely KPIs, the KPI approach is carried out using the Sink and Tuttle
method, namely by using 7 criteria.
3. KPI Verification
After that, KPI re-verification is carried out so that it is feasible to do weighting.
If it is not feasible, it is returned to determining the KPI, if it is feasible, weighting is
carried out with AHP using the "Expert Choice" software.
4. KPI Targeting and Initiatives
At this stage, the targets and initiatives of each KPI are determined, which are
obtained through interviews based on the company's historical data. Target determination
is the basis for performance evaluation and is very influential on the process of
motivating employees.
2.2.3 Performance Measurement Stage
At this stage, performance measurement is carried out using the "tools" of weighting
criteria with Analytical Hierarchy Process (AHP), determining scores with Objective Matrix
(OMAX), and clarifying data with the Traffic Light System (TLS) method.
1. Criteria Weighting with KPI and AHP
Data sources that have been obtained and meet the criteria will be designated as KPIs and
strategic objectives as data that will be processed further. The weighting of strategic
objectives and KPIs is carried out by providing questionnaires and direct interviews with
management. Furthermore, the data will be processed using the Analytical Hierarchy Process
(AHP) method. In AHP a consistency check will be carried out. Consistency matrix can be
calculated based on eigen value max as follows:
2. Score Determination using OMAX
The score is determined according to OMAX by determining the score scale for three values,
namely:
(1) Level 0, the lowest work value based on history.
(2) Level 3, based on historical average values.
(3) Level 10, the expected performance value or target value of the OMAX structure.
The OMAX format above is divided into 3 main parts which are the main stages, which can
be explained as follows:
1) Devining - defines the factors that influence performance.
a. Determination of performance criteria, with the following conditions: the criteria must be
unrelated to each other and must be measurable factors;
b. Performance, is the current achievement value, namely the value of each criterion based
on the last measurement.
2) Quantifying - a matrix body consisting of 11 levels of achievement, ranging from 0 for
unsatisfactory performance to 10 for superior achievement. The increase in performance
value is adjusted by interpolation. Next, the calculation is done by interpolating the value at
the level you want to find.
2.2.4 Stage Analysis Performance
The performance analysis step is the step of analyzing the results of designing a
performance measurement system such as strategic objectives, KPIs, weighting results, and
performance measurement results such as determining scores using OMAX and determining
indicators for each KPI using the TLS method. Based on the evaluation results of the
performance analysis carried out, conclusions will be drawn about the performance of human
resources. The following are also suggestions and input that can be given to the company.
Conclusions and suggestions will be drawn based on the analysis of the data collected with an
approach that is in accordance with the scope of this research.
4.1 Factors Affecting Company Performance at PT XYZ
The achievement of PT XYZ's performance is determined by various factors that
determine the level of achievement of KPIs in the PT XYZ company. To find out the factors
that affect the performance of PT XYZ, it is necessary to do 2 things, namely (1) identify the
focus of strategic targets that are in accordance with the company's vision and mission based
on the Sink and Tuttle Model approach; and (2) identify the focus of strategic targets that are
in accordance with the company's vision and mission.
(2) determine KPIs that are considered to be the determining factors of PT XYZ's
performance.
4.1.1 Strategy Goal Identification of PT XYZ
The identification of strategic objectives is an elaboration of the company's vision and
mission into the seven criteria of the Sink and Tuttle Model with the aim of ensuring that the
seven criteria are more focused and targeted in touching the meaning of the vision and
mission of the PT XYZ company that has been determined. The determination of strategic
objectives was carried out by distributing questionnaires to the respondents who had been
determined. The distribution of questionnaires aims to set strategic goals that have been
agreed upon through discussions based on the level of importance. The form of the
questionnaire distributed can be seen in Appendix II.
Based on the results of processing the questionnaire data, the results of mapping
between the company's vision and mission against the seven Sink and Tuttle Model criteria
are shown in the table of vision and mission mapping results to determine strategic objectives
below (Table 4.1).
4.1.2 Determination of KPIs as Factors Affecting Company Performance at PT XYZ
The following shows the finalization of the KPI design which is also the determining
factor of company performance at PT XYZ. There are 25 factors (KPIs) that have been
determined based on Sink and Tuttle criteria and strategic objectives that affect the
performance of PT XYZ, namely:
- Effectiveness
, consisting of (1) Picking, (2) Picking Labor Productivity, (3)
Mill Output
Productivity Yield, and (4) Mill Utilization;
- Efficiency, consisting of (5) Labor Costs at the Farm, (6) Labor Costs at
the Mill, (7)
Material Costs at the Farm, (8) General and Administrative Costs;
- Quality
, consisting of (9) Percentage of Shoot Analysis, (10)
Supplier
Raw Material
Quality,
(11) Supplier Cooperation, (12) Product Reprocess, (13) Product Returns,
and (14)
Customer Complaints;
- Productivity
, consisting of (15) Shoot Production Achievement, (16) Garden Yield
Achievement;
- Quality of Work Life
, consisting of (17) HR Quality Level, (18)
Job Satisfaction Level,
(19) Employee Discipline Level, (20)
Occupational Security, Safety and Health Level;
- Innovation
, consisting of (21) Process Innovation, and (22) Technology Innovation;
- Profitability
, consisting of (23) Gross Margin Growth Rate, (24) Sales Growth Rate,
and (25) Sales
From the 25 factors mentioned above, performance measurements will be
carried out to find out how these factors affect the performance of PT XYZ. From the
performance measurement, it will also be known which factors have a strong influence on
the Company's performance. After that is known, an assessment will be carried out based on
the OMAX method to measure the assessment of the performance achievement of each of
these factors from each strategic target criteria.
4.2 Design of Performance Measurement System of PT XYZ
After determining KPIs as factors that affect the performance of PT XYZ, the next
step is to compile the performance hierarchy of PT XYZ based on the Sink and Tuttle Model
approach. The preparation of the performance hierarchy can facilitate the understanding of
the performance measurement system model for the next stage, namely determining the
weight. The preparation of the hierarchy is carried out before the weighting process is carried
out, based on 7 (seven) performance criteria in the Sink and Tuttle Model perspective. The
preparation of the hierarchy aims to group measurement indicators, strategic goals in the
performance measurement system in accordance with the 7 (seven) perspectives of the Sink
and Tuttle Model which are supported by the concept of the Analytical Hierarchy Process
(AHP) method. The preparation of the performance hierarchy can facilitate the understanding
of the performance measurement system model for the next stage, namely determining the
weight.
4.3 KPI Weighting Analysis with AHP
After the hierarchy preparation stage is carried out, the next step is to weight the
performance measurement indicators using the Analytical Hierarchy Process (AHP) method
with the help of the Expert Choice application. KPI weighting is carried out to be able to
determine the priority level of importance of one KPI with another. Where KPIs that have
been verified are then weighted using the Analytical Hierarchy Process (AHP) method. In
this weighting, it is necessary to carefully determine the KPI hierarchy, making the KPI
hierarchy based on the structure of a decision. In measuring employee performance, it forms
3 (three) levels of hierarchy, namely:
·
First level: Decision objective (company performance measurement)
·
Second Level: Measurement criteria based on Sink and Tuttle Model
·
Third Level: KPIs that have been verified and approved This weighting is needed to
determine the level of importance of the KPIs each strategic target variable and
performance measurement indicator (KPI). This weighting is carried out at 2 (two)
hierarchical levels, namely (1) the level of strategic objectives based on performance
criteria or also called strategic objectives (performance criteria) Sink and Tuttle Model,
then (2) the level of performance measurement indicators (KPIs). In addition, an
assessment was also carried out based on the results of the questionnaire distribution.
The results of the questionnaire form a pairwise comparison matrix which becomes data
input to the Expert Choice application. The screen display of the data input form of the
pairwise comparison matrix questionnaire for each respondent in the Expert Choice
application is shown in Figure 4.2 below.
The data of each respondent that has been inputted in the Expert Choice application is
processed by combining the results of all respondents. The next step is to determine the
priority scale at the KPI level. To determine the priority scale of the KPI level, the results of
the questionnaire that has been distributed are used and then inputted in Expert Choice. After
that, weighting is carried out between each KPI variable to determine which is the priority
scale in each strategic goal. From the weighting, the inconsistency value of the overall data is
also considered to ensure that the data processing is in accordance with the research
requirements. Display of data processing results in the Expert Choice application for each
KPI in each strategic goal.
In the first data processing at the effectiveness strategic target level, performance
indicators that influence each other can be seen. The performance indicators consist of the
Picking Power Productivity Ratio having the highest weight value (0.412), followed by the
Picking Ratio (0.366), Factory Output Productivity Ratio (0.132), and Factory Utilization
Ratio (0.09), as shown in Figure 4.3 below. This illustrates the level of weight in the
assessment of company performance at PT XYZ.
CONCLUSIONS:
Based on the results of the research that has been carried out, conclusions can be
drawn, among others:
1. Factors that influence company performance at PT XYZ, based on the Sink and Tuttle
Model approach, amount to 25 factors consisting of performance indicators (KPIs) that
influence each other. These factors consist of: (1) picking, (2) picking labor productivity,
(3) Mill output productivity, (4) Mill utilization, (5) labor cost in the farm, (6) labor cost
in the Mill, (7) Farm material cost, (8) general and administrative cost, (9) shoot analysis,
(10) supplier raw material quality, (11) supplier cooperation, (12) product reprocess,
(13) product return,
(14) customer complaints, (15) shoot production, (16) farm yield achievement,
(17) the level of human resource quality, (18) the level of job satisfaction, (19) the level
of employee discipline, (20) the level of occupational security, safety, and health, (21)
process innovation, (22) technological innovation, (23) gross margin growth rate, (24)
sales growth rate, and (25) sales.
2. The results of measuring human resource performance using AHP and OMAX at PT
XYZ with the sum of the values of 7 (seven) perspectives of Sink and Tuttle's strategic
goals resulted in an overall performance achievement or current performance indicator
of 5,545. This result indicates that in general the achievement of strategic goals is in the
medium category (not too good and not too bad). Of all the strategic objectives,
"productivity" is the biggest factor affecting human resource performance at PT XYZ.
3. The statistical results generated using the AHP, OMAX and TLS methods above show
KPIs that are not achieved in the criteria for achieving human resource performance at
PT XYZ, namely (1) Factory output productivity ratio; (2) Factory utility ratio; (3) Labor
cost ratio in the Garden; (4) Labor cost ratio in the Factory; (5) Material cost ratio; (5)
General and administrative cost ratio; (6). Percentage of shoot analysis; (8) Yield
achievement, and (9) Gross Margin growth rate.
4. PT XYZ's performance improvement strategy can be summarized in 5 (five) parts,
namely:
a. Improved supervision of human resources by leaders at every level, both in the
Plantation and in the Mill. Especially for shoot analysis activities, farm maintenance and
mill management. Leaders must be able to determine the number of productive workers
who are able to work optimally, and eliminate employees whose performance levels are
still low. Leaders (especially in the Mill) must also be able to make decisions if a
reduction in days is needed to achieve cost efficiency.
b. Improving the quality of shoot analysis and the processes involved in its analysis. Filter
good raw materials, especially those produced from our own farms, that meet the Buyer's
demand standards. Then change the SOP of the shoot analysis process that can be
improved so that there is no acceptance of low quality raw materials. The lower the
quality of the processed shoots, the more detrimental it will be to the company.
c. Monitoring the maintenance of factory machines on a regular basis. Conduct standard
tests of factory machinery in accordance with existing SOPs. Then anticipate the
provision of spare parts for factory machinery if there is damage. Fast response in
repairing damage to the factory that is completed.
d. Conduct drone mapping to analyze crop health. Drone mapping will assist management
in identifying crop health so that they can estimate crop productivity and yield correctly,
and carry out intensive maintenance needed on crops that require greater attention.
e. Benchmark or control the right unit of production cost and unit selling price. Having
many data sources and comprehensive market analysis that can be used as a reference for
determining the right selling price. PT XYZ also needs to analyze and review production
costs regularly and in detail in order to control or anticipate excessive production costs
and impose gross margins on the company.
