Organization Development and Change

Chapter Seventeen: Performance Management

Vincent Daniel Clement Megha Nagpal

Performance Management
It is an integrated process of defining, assessing and reinforcing employee work behaviors and outcomes. It involves goal setting, performance appraisal and reward systems that align member work behavior with business strategy, employee involvement and workplace technology.

A Performance Management Model

Business Strategy Reward Systems Individual and Group Performance Goal Setting Employee Involvement

Performance Appraisal

Goal Setting
Goal setting involves managers and subordinates in jointly establishing and clarifying employee goals. Goal setting influence what people think and do by focusing their behavior in the direction of the goals. Goals energize behavior, motivating people to put forth the effort to reach difficult goals.

Stages in goal setting

Diagnosis

Preparing for goal setting

Setting of goals

Review

Characteristics of Effective Goals

Goals are Challenging
Challenging but realistic Goals are set participatively

Goals are Clear

Goals are specific and operationally defined Resources for goal achievement are negotiated

Management by Objective(MBO)
MBO attempts to align personal goals with business strategy through increased communications and shared perceptions between managers and subordinates MBO programs may go beyond manager and subordinate roles to address individuals, work groups, and to reconcile conflicts.

Implementing MBO - Process

1) Work group involvement 2) Joint manager- subordinate goal setting 3) Establishing action plans to accomplish goals 4) Establishing criteria of success 5) Review and Recycle 6) Maintenance of records

Performance Appraisal
Performance appraisal is a systematic process of jointly assessing work-related achievements, strengths and weaknesses. It links employee performance with rewards.

Performance Appraisal Elements

Elements
Purpose Appraiser Role of Appraisee

Traditional Approach High Involvement Approach

Organizational, legal Fragmented Supervisor or manager Passive recipient Developmental Integrative Appraisee, co-

workers, and others Active participant

Subjective Objective and Measurement Concerned with validity subjective Period, fixed, Dynamic, timely,

Timing

administratively driven

employee- or workdriven

Performance Appraisal Application Stages

1) Select the right people 2) Diagnose the current situation 3)Establish the systems purposes and objectives 4) Design the performance appraisal system 5) Experiment with implementation 6) Evaluate and monitor the system

Characteristics of Effective Appraisal Systems

Timely Accurate Accepted by the users Understood Focused on critical control points Economically feasible

Reward Systems
Organizational rewards are powerful incentives to improve individual and group performance. It produces high level of employee satisfaction and motivation for performance.

Reward System Design Features

Design Feature Person/Job Based vs. Performance Based Market Position (External Equity) Internal Equity Hierarchy Centralization Rewards Mix Definition The extent to which rewards are based on the person, the job or the outcomes of the work The relationship between what an organization pays and what other organizations pay The extent to which people doing similar work within and organization are rewarded the same The extent to which people in higher positions get more and varied rewards The extent to which reward system design, decisions and administration are standardized The extent to which different types of rewards are available and offered to people

Security
Seniority

The extent to which work is guaranteed

The extent to which rewards are based on length of service

Characteristics of Effective Reward Systems

Availability Timeliness Performance Contingency Durability Equity Visibility

Types of Rewards
Pay
Skill-based pay plans Performance-based pay systems link pay to performance Gain sharing involves paying bonuses based on improvements in the operating results

Promotions Benefits

Salary-Based Pay for Performance Ratings

Individual Plan Productivity 4 Cost effectiveness 3 Superiors rating 3 Group Productivity Cost effectiveness 3 Superiors rating 2 Productivity Cost effectiveness 2

1 1 1 3 1 1 2 1

1 1 1 1 2 2 1 2

4 4 3 2 4 3 3 4 4

Organizationwide

Stock/Bonus Pay for Performance Ratings

Individual Plan Productivity 5 Cost effectiveness 4 Superiors rating 4 Group Productivity Cost effectiveness 3 Superiors rating 3 Productivity Cost effectiveness 3 Profit

3 2 2 4 1 1 3 1 2

1 1 1 1 3 3 1 3 1

2 2 2 3 3 3 3 4 3 3

Organizationwide

4 3

Gain Sharing Pay Plan Considerations

Process of design - participative or top-down? Organizational unit covered - plant or companywide? Determining the bonus - what formula? Sharing gains - how and when to distribute? Managing change - how to implement system?

WIPRO Wipro is a well establish company. In 1979, Wipro began developing its own computers

and in 1981, started selling the finished product. This was the first in a string of products that would make Wipro one of India's first computer makers. Now Wipro moved in software development and started developing customized software packages for their hardware customers. HR practices of Wipro is internal recruitment, intensive training, job rotation, Wipro Employee Stock Option Plan (WESOP) allows employees to share in the companies success, performance appraisal etc. There are so many methods of appraisal implemented at Wipro:E-performance management PCMM( People Capability Maturity Model) Identification of star performers Training programs Quaterly and half yearly performance appraisal Wipro employee stock option plan (WESOP) allows to share in the company success Wipros solution aims at strategic value delivery in the least possible time incorporating rich functional features, aided by smooth workflow, notification, authorization, etc. Align employee objectives to the business goals. Enable strategic Performance Management through Management by Objectives (MBO) Measure and Assess employee performance periodically and provide feedback and support to achieve quantitative, qualitative and process targets Evaluate and track Hi-Performance and achievers based on Competency driven practices. Enable online Reward and Recognition.

GRASIM (ADITYA BIRLA GROUP)

There is 2 methods of performance appraisal implented in GRASIM: TRADITIONAL METHOD: Supervisiors used to rate the employees Time consuming, lot of paper work- Logistical Nightmare CURRENTLY USED METHOD:- A few years back the company decided tocoutsource its HR system to a company named ICOMM. Appraisals are done online.Employee . Appraiser communications are also maintained online. All the users were empowered independently using separate Login ID's .