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results in organizations by improving the performance and developing the capabilities of teams and individuals. MEANING OF PERFORMANCE MANAGEMENT Performance management is a systematic process by which the overall performance of an organization can be improved by improving the performance of individuals within a team framework. PERFORMANCE MANAGEMENT SYSTEM It is a System or Process of managing employee performance for driving the individuals and the organizations towards desired performance and results to achieve organizational objectives. PROCESS OF PERFORMANCE MANAGEMENT 1. Jointly setting and allotting Performance goals (targets) to departments or teams and individuals. 2. Continuously reviewing progress. 3. Taking remedial actions to over come problems and short falls through continuous feed back and coaching. 4. Motivating employees through rewards. 5. Implementing Training and Development Programs. OBJECTIVES OF PERFORMANCE MANAGEMENT 1.To enable employees to achieve superior standards of work performance. 2. To help employees in identifying the Knowledge, Skills and Attitudes required for performing the job efficiently and effectively. 3. To boost the performance of employees by encouraging employee empowerment, motivation and implementation of an effective reward mechanism. 4. To identify and overcome barriers to effective performance through constant monitoring, coaching and development interventions. 5. To create a basis for strategic planning, succession planning, promotions and performance - based payment.
3.RATING SCALES WERE USED. and (iii) .6. Concerned with establishing a culture of trust and mutual understanding that fosters free flow of communication at all levels in matters such as clarification of expectations and sharing of information on the core values of an organization which binds the team together. EVOLUTION OF PERFORMANCE MANAGEMENT 5 PHASES OF EVOLUTION OF PM FIRST PHASE: 1.POINT. 5. 2. 6. . skills and attitudes). FOR APPRAISAL. NORMALLY TEN TRAITS ON 5 OR 10. ANNUAL CONFIDENTIAL REPORTS OR EMPLOYEE SERVICE RECORDS REFLECTED PERFORMANCE OF EMPLOYEES. EARLY 1960. Concerned for continuous performance improvement and development by creating a learning culture and an open system.providing a regular and transparent feedback for improving employee performance and continuous coaching. Concerned with the output (the results achieved). 7. ADVERSE COMMENTS NOT COMMUNICATED TO EMPLOYEES. ACRs/ESRs USED AS A TOOL TO CONTROL BEHAVIOURS. 6. 2. Skills and Attitudes. outcomes. 3. Concerned with the provision of procedural fairness and transparency in the process of decision making. processes required for reaching the results and also the inputs (knowledge. ADVERSE COMMENTS IN ACRs/ESRs AFFECTED CAREER GROWTH OF EMPLOYEES. 4.communicating the functional and organizational goals. To promote personal growth and advancement in the career of the employees by helping them in acquiring the desired Knowledge. To promote two-way system of communication between supervisors and employees for (i) . 4.clarifying expectations about the roles and accountabilities. (ii) . Concerned with defining business plans in advance for shaping a successful future. FOCUS OF PMS 1. 5. Concerned with measurement of results and review of progress in the achievement of set targets.
THE TRAITS WERE: JOB KNOWLEDGE. EMPLOYEES WERE PERMITTED TO WRITE ABOUT THEIR ACCOMPLISHMENTS IN THEIR PERFORMANCE REPORTS. TARGET OR PERFORMANCE BASED. MUTUALLY DECIDED THE KEY RESULT AREAS IN THE BEGINNING OF THE YEAR AND REVIEWED THE PERFORMANCE AFTER EVERY 6 MONTHS. 4. 3. THE REPORTING OFFICER AND APPRAISEE. LEADERSHIP. BESIDES RATING TRAITS. 2. BETWEEN LATE 1960s AND EARLY 1970s. LOYALTY. ADVERSE REMARKS OF PERFORMANCE REPORTS WERE COMMUNICATED. ETC. PARTICIPATIVE AND OPEN INSTEAD OF CONFIDENTIAL. The system focused on performance planning. SECOND PHASE: 1. 4. IN QUANTITATIVE TERMS. 3. FOURTH PHASE: STARTED IN MID 1970s IN INDIA. WERE INCLUDED IN THE PERFORMANCE APPRAISAL FORMS BY SOME ORGANISATIONS. . THIRD PHASE: THE TERM “ACR” WAS REPLACED WITH “PERFORMANCE APPRAISAL”. STATE BANK OF INDIA AND SOME OTHER ORGANISATIONS UNDERTOOK REFORMS IN APPRAISAL REPORTS.. COMMUNICATION RELATED TO TRAITS WHICH REQUIRED IMPROVEMENTS. 5. PUNCTUALITY. 3. review and development of an employee by following a methodical approach. SINCERITY. 4. SEVERAL NEW COMPONENTS FOR INDICATING ACHIEVEMENTS. 2. HOWEVER THE CONFIDENTIALITY OF REPORTS. DYNAMISM. THE APPRAISAL PROCESS BECAME MORE DEVELOPMENT DRIVEN. 2. L ARSEN AND TOUBRO. CERTAIN ORGANISATION ALSO INCLUDED NEW SECTION ON TRAINING NEEDS IN THE PERFORMANCE APPRAISAL FORMS. WAS STILL MAINTAINED. REVIEWING OFFICER HAD POWERS TO OVERRULE RATINGS OF REPORTING OFFICER.
REVIEW AND DEVELOPMENT. IN PUBLIC SECTOR ORGANISATIONS: NAVRATNA AND MAHANAVRATNA COMPANIES. Employee retention and loyalty. 3. PRESENT STATUS IN INDIA: IN GOVERNMENT ORGANISATIONS: STILL ACR SYSTEM IS FOLLOWED. UTMOST IMPORTANCE WAS GIVEN TO CULTURE BUILDING AND TEAM APPRAISALS. PMS IS STILL EVOLVING TOWARDS IMPROVEMENT.Improved organizational performance. MUTUALLY. Clear accountabilities. FIFTH PHASE: PERFORMANCE DRIVEN WITH EMPHASIS ON DEVELOPMENT. Cost advantages. THUS. 4. THE FOCUS IS ON PERFORMANCE PLANNING. 6. FACTORS AFFECTING PERFORMANCE. 5. NEW TARGETS AND RATINGS WERE DISCUSSED. QUALITY CIRCLES WERE ESTABLISHED FOR ASSESSING THE IMPROVEMENT IN THE OVERLL EMPLOYHEE PRODUCTIVITY. PROFESSIONAL COMPANIES FOLLOW PERFORMANCE AND IMPROVEMENT FOCUSED SYSTEM. PMS – BENEFITS BENEFITS TO ORGANISATION 1.IN THE REVIEW. PLANNING AND IMPROVEMENT. MANY ORGANISATION CREATED HR DEPARTMENTS FOR TAKING CARE OF DEVELOPMENTAL ISSUES OF THE ORGANISATION. IN PRIVATE ORGANISATIONS: NON-PROFESSIONAL COMPANIES FOLLOW ACR BASED SYSTEM. 5. TRAINING NEEDS. 2. 2. 3. Overcoming the barriers to communication. Improved productivity. .
By defining the training requirements of the employees based on the results of the reviews and diagnosis of the individual and organizational competencies. 5. Clarifies expectations of the employees. By linking the performance with scope of promotions. and 6. 2. PMS AND 2 CRUCIAL OBJECTIVES PMS helps achieve: 1. rewards and career development. 2. Contributes to improved performance. Promotes job satisfaction. By evaluating the readiness of the employees for taking up higher responsibilities. Coaching and counseling helps in: winning the confidence of the employees. and 4. . incentives. 3. 2. 2. Consistency in performance.BENEFITS TO MANAGERS 1. DEVELOPMENT OBJECTIVES 1. Clearly defines career paths. Saves time. 3. 3. Reduces conflict. Provides self assessment opportunities. 4. and strengthening the relationship between the superior and the subordinate. Developmental Objectives EVAVULATION OBJECTIVES 1. By providing a feedback to the employees on their current competencies and the need for improvement. Clarifies the job accountabilities. 2. BENEFITS TO EMPLOYEES 1. Ensures efficiency. Evaluation Objectives. improving their performance.
Participative process. MONITORING PERFORMANCE 3. . DEVELOPING WEAK PERFOMANCE. Assessing the future potential and the development needs (professional and personal). Facilitating a shared understanding of mutual accountability through giving and receiving feedback. Consistency and fairness in application.REWARDING GOOD PERFORMANCE PMS IN ACTION AID 1. . fully.PMS . 4. mission and goals clearly defined and understood by all levels. A commitment towards recognition of high performance. 5. 2. PMS : STAGES OF DEVELOPMENT AND IMPLEMENTATION 5 .STAGES 1. Organizational vision. Top management support and commitment. All the concerned members should participate. Open and transparent communication.PREREQUITES SOME OF THE PREREQUITES: 1. WORK PLANNING AND DEFINING EXPECTATIONS. 5. Clear definition of the roles for performing a given job. 2. 9. . 3. 2.PERFORMANCE RATING. Proper organizational training to the staff members based on the identification of training needs from periodic evaluation and review of performance. 6. Identification of major performance parameters and definition of key performance indicators. Action Aid aims at continuous development of the staff members and recognizing their contributions. 7. and 3. 4. 1O. 8.
qualitative and quantitative dimensions.FEEDBACK IN ACTION AID 360 DEGREE FEEEDBACK from multiple sources on key performance areas of the employees. 5. Such as competency. SUPERIOR PERFORMANCE BENCHMARKING: COMPETENCY MANAGEMENT APPROACH Competency based management approach . the competencies are aligned with the performance management framework. 4. Work Plans are laid down each year for the following year.It aims at achieving an optimum performance in the long term by developing the skills and competencies of the employees on continuous basis. attitude. 2. Aim of Competency based approach .Annual Review at organisation level. and . values. Identification of the Key Result areas both at the organizational level and the regional/unit level. Alignment . work life balance. PERFORMANCE MANAGEMENT PRTOCESS IN ACTION AID PMP IN ACTION AID PASSES THROUGH 6 STAGES: 1. . 3. WORK PLANS are derived from the KRA’s in the departmental level and also from the job descriptions and assigned to Staff Members. 6.Competency based management approach is primarily employee centric performance management that focuses upon how an organization achieves a desired performance. Identification of training needs of the staff members followed by finalization of a new action plan for the ensuing year. behavior. major achievements and areas of improvements. Identification of those set of behaviors and attitudes which are critical for effective performance. Reviews of performance against the plans and behavioral dimensions: . The supervisors provide a feedback to the employees on the performance goals to be achieved and how the work was performed.In this approach.Mid Reviews at departmental or unit level. which form the basis of assessment for the appraiser. The staff members describe the key performance indicators.
1994) -Performance management systems are based on personal competencies. etc.organizations which use core competencies based systems are regarded as high performers or visionaries.Competency based PMS . Purpose of Identification and Definition To realize the performance goals /objetives.The manager and the employee. analytical thinking. 1996) personal competencies as achievement orientation. during the stage of setting performance plans.1: By identifying and defining the key competencies required for realizing the performance goals/objectives. 1996) Competencies are primarily job specifications concerned with the Knowledge. High Performing Organisations Collins and Porras (1996) .. Personal Competencies (Englemann & Roesch. Assessment of Competencies Competencies are ultimately assessed during performance review period in connection with the performance goals/objectives realized by the employees.Competency based performance management systems help the employees in understanding the performance expectations and improving the competencies. . customer service orientation. Basis of PMS-(Reagan. Who identify Key Competencies? . Skills and Abilities of an individual which defines the personal as well as the organizational success. Integration of Competencies and PMP: 2 Methods METHOD . goals and objectives. relationship building. team work. which are derived from the values and core competencies of an organization. METHOD – 2: By identifying the competencies which are required for performing an employee’s job/role into the performance management process. Competencies (Englemann & Roesch.
the competencies are identified from the competency profile from the employee’s job description. senior and middle management on the basis of critical incidents. and . building star performers and global focus. Performance goals and objectives? -The performance goals/objectives deal with the aspect of what must be achieved over the entire period of review. . vision. focus groups and rigorous interviews.783. Competency based PMS in Wipro Performance Management Process begins with the identification and assessment of critical competencies for top. Wipro focuses on strategic thinking. Preparing Personal Development Plans Finally.523.The Competencies address the question of how an employee achieved the pre determined performance goal by demonstrating an expected pattern of behavior.8 MILLION TO EURO 1. PERFORMANCE MANAGEMENT AT LUXOTTICA Products: Sun Glasses and Eyewares Results: 3rd quarter of 2012 NET SALES: INCREASED FROM EURO 1. Competency Alignment Competencies are aligned in each phase of the performance management cycle.In this Method. and Based on the results of the feedback training programme is organized for improving the deficit areas of performance. personal development plans are formulated for each employee for monitoring and tracking the improvement in competencies or skill sets.5 MILLION. 360 degree feedback is used for providing a feedback on the existing competencies of the employees. It also includes the performance goals/objectives for being reviewed. Building Competencies For building competencies.
open to diverse environments and have international backgrounds. simple & fast. Differentiate employees by performance in the short and long term. entrepreneurial.0% ATTRACTING TALENTS . Managers and the HR team constantly develop learning and professional training programs. given top-tier individual and/or company performance.I. PAYS FOR PERFORMANCE * Luxottica links both individual and company performance with compensation and helps employees understand the relationship between the work they do and the company's bottom line. Meet the needs of employees while balancing long-term interests of shareholders and customers. * To appropriately align compensation with job responsibilities and performance . CRITERIA USED FOR EVALUATION . what is in the best in order to . On-the-job learning is preferred. dynamic. AIM OF LUXOTTICA’S PROGRAMS * To attract and retain talented people with the skills and expertise needed to achieve company objectives. passionate. our Corporate culture and vision for the future. flexible. * Luxottica’s compensation programs are designed to be competitive within a defined market and deliver total compensation in the top tier of the market. UP 17. beyond their initial starting positions.E.with passion. energy and innovative ideas to company's and their own success. THEY CONTRIBUTE . UTMOST IMPORTANCE Utmost importance in Luxottica is sharing our mission and Characteristics. TRAINING AND DEVELOPMENT Luxottica makes considerable investments in young talents.Results achieved and learning agility are the criteria used to evaluate a person’s skills assign increasing responsibilities to them.People who work at Luxottica are Imaginative.
the programs will deliver total compensation in the lower tier of the market. Leaders. Paying Competitive Salary and Benefits Examples:Industry-wise. Professional Companies: Infosys. Exemplary-behaviors. Luxottica measure the performance of employees Widely recognized achievement of superior business results through effective Consistent achievement of expected business results through effective 3. For employees who have a significant percentage of their total compensation in variable pay (annual bonus. Talent Management: Practices and Corporate Strategies Talent Management? Effective Management of employees to get desired performance to achieve organizational goals and employee expectation . Unacceptable--Inconsistent achievement of expected business results and/or use of behaviors. REMUNERATION GUIDELINES * Luxottica’s compensation programs are designed to be competitive within a defined market and deliver total compensation in the top tier of the market. ii. long term incentives). Non-Professional Companies. . Successful-behaviors. TCS. when individual and/or company don’t achieve the expected results.Nearest Competitors. 2. Market rates. given top-tier individual and/or company performance. Wipro. 2. IT INVOLVES Attracting Talents Example: i. PAY AND BENEFITS: INFOSYS AND WIPRO: Use VARIABLE PAY AND ESOP for PERFORMANCE AND RETENTION.MEASURING AND FORMULATING COMPENSATION There are three levels by which and formulate compensation: 1.
ii.. 3. 5. Tata Group. GLOBAL COMPANIES AND TALENT MANAGEMENT Survey in 2006 by Economist Intelligence Unit (EIU). Wipro. ii.Maha Nav Ratna Companies: ONGC. L & T etc. Tata Group. all Nationalised Banks. Government Companies: . IOC etc. and International (DDI) Development Dimensions . Birla Group. Leading IT Companies. SAIL. NTPC. Training and Developing Examples: i.Infosys. Other leading Companies. 4. Maximising Job Satisfaction Examples: . Providing stimulating working environment Examples: i.EICHER GROUP: . ii. 6. Leading Companies: . Taking action on Performance reviews Examples: i.Indirctly.ALLOWS EMPLOYEES to DESIGN their own COMPENSATION PACKAGE. Making Succession Planning Examples: Indian family owned large companies. 7.. All leading performance & employees – focused private companies.
It acts as a point of reference during the period of performance review. Specific. . Major Strategic Challenges to Talent Management 1. Measurable.Global CEOs spend most of their time on: Recruitment. It is part of performance management process. * It serves as a basis for: . 2.Monitoring progress . Enables defining verifiable SMART objectives i. Mentoring. An increase in the virtual workplaces. A rise in the trends of globalization in the labor market. and Retention. It defines and manages expectations by establishing an understanding on the part of the role holder. Talent management. etc. 3. Performance management. It is about what is to be achieved. Objective Setting and MBO-SMART Objectives OBJECTIVE SETTNG It is a process of setting objectives. Succession planning. race.e. Achievable. .Performance review. BENEFITS OF SETTING OBJECTIVES * Enables defining the Performance expectations. Diverse workforce in terms of age. Realistic and Time Bound.
USA. Today. . The system involves continuous monitoring and feedback for improving the quality of outcome. 3. Tasks/Projects. MBO APPROACH Invented by First. They explain what has to be done and why a job has to be done. adopted by Peter F. 2. Developmental Objectives.. 4.Work Objectives.Coaching and Training. Behavioral Parameters. Values. The main aim of MBO approach is to improve organizational performance by aligning the organizational goals with the individual objectives at all levels and attaining those goals within a prescribed time frame. The main aim of MBO approach is to improve organizational performance by aligning the organizational goals with the individual objectives at all levels and attaining those goals within a prescribed time frame. 7. 1. 5. 6. Targets. It is an organized and a systematic approach of defining organizational goals and realizing them within the available resources. The major focus of this approach is on inviting participation from all the managers in the goal setting process and strategic planning and implementing a range of performance systems which help an organization to remain on the right path. CLASSIFICATION OF OBJECTIVES 1. Performance Improvement. General Electric Co..WORK OBJECTIVES Are the Key Result Areas (KRA) in a role profile of an employee. Drucker in 1954.Recognition and Rewards. many organizations set goals and objectives through Management by Objectives. .
PERFORMANCE IMPROVEMENT . which are Recruits candidates with high degree of learning ability and having special competencies like analytical skills. Example: FEDEX’s Value is to maximize employee satisfaction for promoting customer satisfaction. etc. Example: SOUTH WEST AIRLINES . 2. The organization rewards and provides career growth opportunities to those employees who perform well in their jobs. . 3.Aims at realization of an improved performance by directing all the attention towards achieving better results. communication skills and problem solving skills. Desired Work Objectives clearly define activities.Example: Respond proactively to the customer complaints and queries for maximizing customer satisfaction. 6. cost in terms of the results or standards. Example: TATA STEEL Tata Steel manages performance of employees by focusing on Work Objectives or the KRA’s. TASKS / PROJECTS Are the objectives which carry a deadline and should be fulfilled within a specified time frame or can be completed in phases.This objective is part of Performance Improvement Plans of employees which describe what steps or measures can be jointly adopted by the Managers and the Employee for an optimal performance.. identified as desirable and undesirable behaviors which may be useful in the process of performance planning and reviewing. service delivered. income. 4. 5. to be accomplished. VALUE It is a belief of an organization. Example: INFOSYS be measured in quantifiable terms like output.TARGETS Are the results which can reduction. based on which it does business and uphold its core values. BEHAVIOURAL PARAMETERS Are normally set out within the competency frameworks.
Ratings. 4. 2. . TECHNIQUES FOR PERFORMANCE ASSESSMENT 1. 5. 6. 4. training and development is a continuous process for developing the competencies of the employees. Forced Ranking. Quota Systems.In GE. 2. Consistent with the values of an organization. Example: GENERAL ELECTRIC CO. Achievable as per an individual’s capability. PREREQUISITE FOR A GOOD OBJECTIVE Should be: 1. .Aims at improving performance of its employees by providing them appropriate training for handling the requirements of the job challenges. 7. Mutually agreed by the manager and the employee concerned. Time bound and team based results. Precise and Well defined. 6. 3. Narrative Assessment. 3.Are highlighted in the personal development plans and include the diverse areas of development for an employee which can help in the enhancement of skills and knowledge levels of an employee. DEVELOPMENTAL OBJECTIVES . compensating them favorably and keeping them motivated for winning their loyalty.It invests in in-house training and development programmes and sponsors its employees for MBA course in reputed universities. Forced Distribution. Challenging for encouraging better performance and attainment of superior standards. 5. . A holistic analysis of performance. Measurable in quantifiable terms. 7.
4. This technique lacks consistency in the criterion used for assessments as different managers will consider different aspects of performance. 2. RATING TECHNIQUE: In this technique.20% MIDDLE PERFORMERS – 70% BOTTOM PERFORMERS – 10% 5. Example: GE and ICICI Bank use ratings for assessing the performance of their employees for making pay related decisions. NARRATIVE ASSESSMENT: This is in the form of a written summary of views about different levels of performance achieved and is normally prepared by the managers. USA: TOP PERFORMERS . The basic assumption is that the employees’ performance levels fall under a normal statistical distribution. . Since the concept of performance is vague. 3. performance can be assessed through evaluation on a scale against certain parameters – qualitative or quantitative. Example: Few organizations like BP Amoco implement this technique of performance assessment for providing a feedback to the staff where they are good at.A HOLISTIC ANALYSIS OF PERFORMANCE: This technique aims at reaching an agreement for future action or development after carefully analyzing the strengths or possible weaknesses. FORCED DISTRIBUTION In this technique. the manager is forced to offer ratings according to the pattern of a normal curve. so the rankings should be accompanied by meaningful performance data. FORCED RANKING The employees are assigned ranking on the basis of categories. EXAMPLE: GENERAL ELECTRIC COMPANY.
as per the quota fixed. Managers need to restrict their assessment ratings. SOLUTION: They may be explain the concept. supported by Work Study. SOLUTION: Standard solutions to common problems of Performance Assessment should be practiced by Managers. PERFORMANCE ASSESSMENT: PROBLEMS AND SOLUTIONS PROBLEM: Performance assessments depend upon the ability to judge a performance. Time and Motion Study and other similar companies standards for good performance. for each ranking. QUOTA SYSTEMS: In Quota system.6. PROBLEM: Lack of awareness about concept of “good performance” and “not so good performance ” in Managers and Employees. SOLUTION: Qualitative and Quantitative parameters should be specified and Managers be encouraged to measure. . accordingly. PROBLEM: Managers have tendency of generalizing few experiences with poor and other aspects of performance.
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