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Summer Project

Comparison of Performance
Management between
Schlumberger & IFFCO

By: Saad Subbooh


BBA General
2008-2011

Faculty: Mrs. Kushi Sharma

Date…
Acknowledgement

I would like to express my gratitude to all those who gave me the possibility to complete
this project. I would like to thank Mrs. Suphia Ahmad for providing me her valuable time
as well as great deal of information. I have further more to thank Mr. Masood Naik for
his time as well as his valuable advice regarding my way forward.

I am deeply indebted to my faculty guide Mrs. Kushi Sharma Ma’am whose help,
suggestions and encouragement helped me in the time of research and writing of this
project.

My Parents, I want to thank them for all their help, support, interest and valuable hints.
Abstract

The objective of the project is to understand performance management and its effect on
today’s corporate scenario, also understanding performance management in different
organizations. In this project we have gone deep into the concept of performance
management and its impact, we have also looked into various performance appraisal
methods followed by organizations today and also looked into the performance
management system and processes in 2 large private sector companies known world over:
Schlumberger & IFFCO group. I interviewed the HR representatives of both the
companies and received a deep insight into how their processes work; both the companies
are of different origin, nature and type, both offering different products to the consumers.
We found how the perception of both the HR representative varies along with the PMS
followed in both the organizations.

Based on personal interviews with both the HR representatives and a visit to both the
organizations I drew my results and conclusions.

The interviews were taken based on a questionnaire designed to cover all aspects of
performance management to get deeper insight on individual and organizational thoughts
in the subject.
Contents

Introduction
• Background
• Limitations
• Company Profiles: Schlumberger & IFFCO

Methodology

Results
• Benefits
• Types
• Process
• Concerns
• Performance Appraisal
• Comparisons between Schlumberger and IFFCO

Conclusion

Appendices

Reference
Introduction
Fully realized, performance management is a holistic process, bringing together many of
the elements which go to make up the successful practice of people management,
including in particular learning and development. But for this very reason, it is complex
and capable of being misunderstood.

Performance management is defined as 'a process which contributes to the effective


management of individuals and teams in order to achieve high levels of organizational
performance. As such, it establishes shared understanding about what is to be achieved
and an approach to leading and developing people which will ensure that it is achieved'.

It is a strategy which relates to every activity of the organization set in the context of its
human resource policies, culture, and style and communications systems. The nature of
the strategy depends on the organizational context and can vary from organization to
organization.

The keys to the successful introduction and application of performance management are:
• being clear about what is meant by performance
• understanding what the organization is and needs to be in its performance culture
• being very focused on how individual employees will benefit and play their part
in the process
• Understanding that it is a tool for line managers and its success will depend on
their ability to use it effectively.

Performance management is the process of assessing progress toward achieving


predetermined goals. It involves building on that process, adding the relevant
communication and action on the progress achieved against these predetermined goals
helping organizations achieve their strategic goals. The main purpose of performance
management is to link individual objectives and organizational objectives. Additionally,
performance management tries to develop skills of people to achieve their capability to
satisfy their ambitiousness and also increase profit of a firm.

They go on to stress that it is 'a strategy which relates to every activity of the organization
set in the context of its human resource policies, culture, style and communications
systems. The nature of the strategy depends on the organizational context and can vary
from organization to organization.'
Background
Performance Management began around 60 years ago as a source of income justification
and was used to determine an employees wage based on performance. Organizations
used Performance Management to drive behaviors from the employees to get specific
outcomes. In practice this worked well for certain employees who were solely driven by
financial rewards. However, where employees were driven by learning and development
of their skills, it failed miserably. The gap between justification of pay and the
development of skills and knowledge became a huge problem in the use of Performance
Management. This became evident in the late 1980s; the realization that a more
comprehensive approach to manage and reward performance was needed. This approach
of managing performance was developed in the United Kingdom and the United States
much earlier than it was developed in other countries.
In recent decades, however, the process of managing people has become more formalized
and specialized. Many of the old appraisal methods have been absorbed into the concept
of Performance Management, which aims to be a more extensive and comprehensive
process of management. Some of the developments that have shaped Performance in
recent years are the differentiation of employees or talent management, management by
objectives and constant monitoring and review. Its development was accelerated by the
following factors:
• The introduction of human resource management as a strategic driver and
integrated approach to the management and development of employees; and
• The understanding that the process of Performance Management is something
that’s completed by line managers throughout the year – it is not a once off annual
event coordinated by the personnel department.

Limitations

• The sample sizes collected were not large


• Managers were reluctant in giving out too many details fearing exposure of company
secrets
• Was not able to get adequate time with the Mr. Masood Naik of IFFCO
• Was unable to get feedback from employees of the respective companies regarding
their PMS

Company Profile: Schlumberger

Schlumberger Limited is the world's largest oilfield services corporation operating in


approximately 80 countries, with about 87,000 employees (March 2009. Schlumberger
supplies products and services such as seismic acquisition and processing, formation
evaluation, well testing and directional drilling, well cementing and stimulation, artificial
lift, well completions and consulting, and software and information management.
Schlumberger also provides similar products and services for the groundwater industry.
Operating revenue in 2008 was US$27.16 billion with a market capitalization as of 5
May 2009, of US$63.77 billion.

In this project, we will look into the performance management system of Schlumberger.
Looking at the large scale of operations and the size of the company one can conclude
that the company is bound to have a large & complex performance management system.

Company Profile: IFFCO

IFFCO is a United Arab Emirates based business house, which manufactures and markets a
well integrated range of mass-market consumer products. Their business segments are:
Food and Beverage, Personal Care and Cleaning, Packaging & Industrial Products,
Logistics, Insurance, Advertising & Real Estate.

IFFCO also manufactures related derivatives and intermediates associated with these
business segments.

Since its inception in 1975, IFFCO's history has been one of consistent and successful
growth. This period has seen their transformation from a trading company to a highly
successful, responsive and dynamic group of companies, which invest in building winning
brands that continuously seek to create value for the consumer.
IFFCO brands now enjoy the confidence and preference of consumers in over seventy
country markets all over the world

Their product lines cater to the whole spectrum of consumers’ daily needs.

In today's highly competitive business environment where advantages tend to be short


lived, maintaining a responsive, reliable and cost efficient product and material supply
chain is often a decisive success factor. With this in mind, IFFCO has structured logistics
as a distinct business segment, offering ship chartering, shipping agencies, freight
forwarding, transportation services, warehousing, road transportation and cold store
warehousing services.

It is a private sector organization employing over 12,000 people.

In this project, we will also look into various performance management systems, how
performance management works, its tools and techniques, also the impact of performance
management techniques on the working of organizations as well as its benefits &
performance appraisal and its methods. We will also analyze and draw comparisons
between 2 companies regarding the same.
Methodology
Information on both companies was done through primary & secondary collection of
data.

1. Interviewing a key HR person to understand the performance management system of a


company.
2. Reviewing the policies and procedures manual to understand the same.

The 1st respondent to my interview was Mrs. Sufia Ahmad who has been working with
Schlumberger Limited Dubai, for over 6 years now and currently holds the designation of
HR Information System Support Analyst.

The 2nd respondent to my interview was Mr. Masood Naik who has been working with
IFFCO Group UAE, for over 6 years now and currently holds the designation of HR
Manager in the organization

Details on performance management, how performance appraisal works, its tools and
techniques, also the impact of performance management techniques on the working of
organizations as well as its benefits were collected though secondary data over the net
and articles.

The data samples were collected through a questionnaire designed to cover various
aspects of PMS.

According to me, primary data is far better than collecting secondary data especially
when it comes to company data because one cannot obtain detailed data on processes and
systems about a company from their public portals or publications. Secondly, personal
interaction with company professionals gives far better understanding and insight on their
companies as well as a great learning and professional experience personally. However,
getting through to company personnel and asking for their time is a little tough on top of
that the information provided might be biased or too brief to draw detail analysis. But
despite the drawbacks I think personal interview is a better option than going for another
form of data collection.

Initially, I thought of interviewing the employees as well and getting their feedback on
their PMS but I was unable to do so hence I only interviewed the HR representatives of
the organizations.
The Performance
Management Study -
Interview (Sample)
Section – A: General Profile of Respondents:

1. Sex: Male Female


2. Age group: 25 – 35 36-45 46+
3. Designation : _______________________
4. Experience
a. Less than 1 year b. 2-4years c. 5-7 years d. More than 7 years
5. Which of the following economic sectors best describes your organization?
a) Public Sector b) Private Sector- manufacturing
c) Private Sector – Service d) others (pls. specify)
6. Approximately how many people are employed in your organization?
a) Less than 100 b) 101-500 c) 501-1000 d) More than 1001

Section B: Nature of current performance management systems:

1. Does your organization operate a formal performance management system?


a) Yes b) No
2. If yes, which of the following groups of employees do these processes apply to?
Senior Managers Other Managers/team leaders
Technical/ Clerical Professionals
Manual/ Blue Collar
3. How do the performance management processes you operate differ between
the above groups?
a) Adoption of different methods of appraisal for different groups
b) Extensive use of self-appraisal for certain bands of employees
c) Adopting different time spans of appraisal for the different groups
4. What are the techniques that are used in your organization for assessing
Performance?
a) Observation b) Assessment and Development Centers d) Checklists
e) Others pls. specify ___________________________________

5. Please indicate which of the following methods of performance appraisal


Form a part of your system?
a) Written Essay method f) Critical Incident assessment
b) Graphic rating scales g) Behavioral Assessment (BARS)
c) Ranking method h) Paired Comparison Method
d) 360 degree appraisal i) Forced distribution method
e) Self appraisal j) Balance Score card
k) Any other pls. specify_______________
6. Are the following processes a part of your performance management systems?
a) Coaching b) Training and development
c) Career management & development d) Succession planning
Plans
7. Who sets the performance goals/requirements for individuals?
a) Senior Managers b) Line managers/Team leaders
c) HR professionals d) Appraisee
e) Appraiser & Appraisee e) others (pls. specify)

8. Why do you have performance management systems in your


Organization? (Please tick as many boxes as appropriate)
Retention strategy Reward allocation
Identification of training and development needs Facilitates
Promotions & Transfers & Termination decisions To clarify an employee’s
job requirements Identifying barriers to performance
Motivational Strategy.
9. How are individual, team and organizational objectives linked?
a. Cascading of goals(Top – down approach)
b. By enabling employees to see how their job contributes to the overall
objectives of the organization through frequent interactions.
c. Comparing employee performance with work groups
d. Other.___________________________________________
10. What are the determinants for job performance in your organization?
Organizational Culture Technology
Competency of the employee Intelligence
Attitude Aptitude

Section – C: Perceptions of HR Professionals about Performance Management


Systems:

1) What according to you is the most challenging aspect of performance management?


a) Determining the evaluation criteria
b) Creating a rating instrument
c) Lack of competence
d) Errors in rating and evaluation
e) Resistance
f) Other._____________________________________________
2) What is the difference between performance appraisal and performance management?
a) They are the same b) Performance management has a wider scope.
3) The quality management guru Edward Deming had called performance management
as a “deadly disease”. Do you agree with him? a) Yes b) No
4) Success of performance management systems depend on:
a) Alignment of individual goals to organizational goals
b) Choosing the right method of appraisal
5) How is performance -linked pay related to performance management in your
organization?
a) Performance – Linked incentives
b) Promotions coupled with salary increase
c) Provision of Fringe Benefits
d) Providing ESOP’s
6) Who should own the performance management system?
a) Line managers
b) HR Managers
c) Employees

7) Do performance appraisals get done because the system requires it in your


organization? ( i.e. is it a bureaucratic chore)?a) Yes b) No
8) Does performance management distract people from more important activities?
a) Yes b) No
9) According to you performance management involves:
a) Looking backwards
b) Filling forms
c) Focuses on development and fostering communication
d) Any other, pls. specify______________

10) What is the relevance of human judgment in a Performance Management System?


a) Highly relevant
b) Has no place in competency – based performance management
Section – D: Process of Performance Management

1. Do you give an overall rating for performance?


a) Yes b) No
2. If yes, what sort of feedback do you give?
a) Numerical/alphabetical b) Verbal (all positive)
c) Verbal (positive and negative) d) Combination of the above
e) Others (pls. specify)
3. Documentation of performance reviews is the function of:
a) HR department b) Line Manager/ Project Manager
c) Individual d) others (pls. specify)
4. Do you have a separate appraisal system for evaluating teams?
a) Yes b) No
5. Do you undertake performance planning?
a) Yes b) No
6. If yes, when is performance planning carried out?
a) Hiring or transferring employees
b) Business plans are newly developed.
c) Annual performance and
Development reviews have been completed
7. How many meetings are scheduled in a year to discuss employee
Performance?
a) 1 b) 2 c) 3 or more

8. Did the following people receive training in performance management


Techniques? (Please tick as many boxes as appropriate)
All Employees Other Managers/team leaders
Heads of departments Appraisers
HR Team None
9. Are there trade unions operating in your organization?
a) Yes b) No
10. If yes, were the current performance management arrangements agreed
with the union? a) Yes b) No

11. What was the attitude of the union(s)?


a) Positive b) Neutral
c) Negative

Section E: Analysis on Issues in Performance Management:


1. What in your opinion are the causes for failure of performance appraisal
System? a) Lack of role clarity b) Interval of appraisals c) Lack of
Communication by superiors d) any other pls.
specify______________________________
2. What are the stages of performance management during which you communicate
with your employees?
a. Goal-setting stage
b. Data-gathering stage
c. Mid – term reviews
d. Annual Reviews
3. Do you use any of the following to reduce subjectivity and bias in the
performance appraisal system?
a) Multiple raters b) Critical Incidents
c) Continuous Observation d) Peer review outcomes
e) Selective evaluation f) Training evaluators
4. What do you do when you identify poor performers post your review
Session?
a) Training b) Improvement coaching
d) Relocation e) Dismissal/discharge
5. As an appraiser which role do you think you perform better?
a) Judge b) Helper c) Both
6. Do you believe that the entire process can be carried out objectively?
a) Yes b) No
7. Your opinion on employee self-appraisal?
a) Highly beneficial b) Beneficial to a certain degree
c) Tends to be inflated d) Not beneficial at all

8 .In which of the following situations do you find yourself uncomfortable in:
(Pls. tick as many options as appropriate)
a) Appraising distant subordinate
b) Appraising technically superior subordinate
c) The older, highly experienced subordinates
d) The highly compensated individual
e) Dealing with unrealistic expectations
f) Coping with employee defensiveness
9. What according to you would constitute psychological barriers to effective
Performance appraisal?
a) Feelings of insecurity
b) Being too skeptical or modest
c) Worrying that performance appraisal might cause resentment to subordinates.

10. Do you believe that linking rewards to performance would:


a) Motivate employees b) compound problems

Section F: Effectiveness of Performance Management Systems and methods used in


evaluation:

1. Is there a formal system for evaluation of performance management


practices of the organization?
a) Yes b) No
2. If yes, please specify the process you use, to evaluate.
a) Opinion/ attitude surveys b) Informal feedback (verbal)
c) Formal Feedback (written) d) Others (pls. specify)
3. What strategies of your organization have been linked to the performance
management systems to make it more effective?
a) Reward Strategy b) Culture Strategy
c) Team work strategy d) Leadership strategy
4. Is attrition rate computed in your organization after the performance appraisal?
a) Yes b) No
5. If yes, what do the trends suggest with regard to attrition during the post
appraisal phase?
a) Increase in employee turnover
b) Decrease in employee turnover
6. In general, how effective has your organization’s performance management
processes proved in improving overall performance?
a) Effective b) Moderately effective c) Ineffective d) Don’t Know
7. Which according to you would improve effectiveness of an organization’s
performance management process?
a) Bureaucratic approach b) Participative approach
8. Are you going to make any changes to your performance-management
systems in the next 12 months?
a) Yes b) No c) Don’t Know
9. If yes, in what aspect of performance management would you introduce the
Change? _______________________________________________________
_____________________________________________________________________

10. Are there any other comments you would like to make about your performance
management arrangements not covered in the questions above?
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
______

Results
Performance management is the process of assessing progress toward achieving
predetermined goals. It involves building on that process, adding the relevant
communication and action on the progress achieved against these predetermined goals
helping organizations achieve their strategic goals. The main purpose of performance
management is to link individual objectives and organizational objectives. Additionally,
performance management tries to develop skills of people to achieve their capability to
satisfy their ambitiousness and also increase profit of a firm.
Performance management is closely connected to Performance measurement. They are
sometimes mistaken for each other. In careful usage, Performance Management is the
larger domain and includes Performance Measurement as a component.
Performance management can also be defined as 'a process which contributes to the
effective management of individuals and teams in order to achieve high levels of
organizational performance. As such, it establishes shared understanding about what is to
be achieved and an approach to leading and developing people which will ensure that it is
achieved'.

Benefits

1. PM focuses on results, rather than behaviors and activities


A common misconception among supervisors is that behaviors and activities are the same
as results. Thus, an employee may appear extremely busy, but not be contributing at all
toward the goals of the organization. An example is the employee who manually reviews
completion of every form and procedure, rather than supporting automation of the
review. The supervisor may conclude the employee is very committed to the organization
and works very hard, thus, deserving a very high performance rating.

2. Aligns organizational activities and processes to the goals of the organization


PM identifies organizational goals, results needed to achieve those goals, measures of
effectiveness or efficiency (outcomes) toward the goals, and means (drivers) to achieve
the goals. This chain of measurements is examined to ensure alignment with overall
results of the organization.
3. Cultivates a system-wide, long-term view of the organization.
An effective performance improvement process must follow a systems-based approach
while looking at outcomes and drivers. Otherwise, the effort produces a flawed picture.
For example, laying off people will likely produce short-term profits. However, the
organization may eventually experience reduced productivity, resulting in long-term
profit loss.

4. Produces meaningful measurements


These measurements have a wide variety of useful applications. They are useful in
benchmarking, or setting standards for comparison with best practices in other
organizations. They provide consistent basis for comparison during internal change
efforts. They indicate results during improvement efforts, such as employee training,
management development, quality programs, etc. They help ensure equitable and fair
treatment to employees based on performance.

Types

 In network performance management,


(a) a set of functions that evaluate and report the behavior of
telecommunications equipment and the effectiveness of the network or network
element
(b) a set of various sub functions, such as gathering statistical information,
maintaining and examining historical logs, determining system performance under
natural and artificial conditions, and altering system modes of operation.

 In organizational development (OD), performance can be thought of as Actual


Results vs. Desired Results. Any discrepancy, where Actual is less than Desired,
could constitute the performance improvement zone. Performance management and
improvement can be thought of as a cycle:

1. Performance planning where goals and objectives are established


2. Performance coaching where a manager intervenes to give feedback and
adjust performance
3. Performance appraisal where individual performance is formally
documented and feedback delivered
A performance problem is any gap between Desired Results and Actual
Results. Performance improvement is any effort targeted at closing the gap
between Actual Results and Desired Results.

 Application Performance Management (APM) refers to the discipline


within systems management that focuses on monitoring and managing the
performance and availability of software applications. APM can be defined as
workflow and related IT tools deployed to detect, diagnose, remedy and report
on application performance issues to ensure that application performance meets
or exceeds end-users, and businesses, expectations.

 Business performance management (BPM) is a set of processes that


help businesses discover efficient use of their business units, financial, human
and material resources.
 Operational performance management (OPM) focus is on creating
methodical and predictable ways to improve business results, or performance,
across organizations.

 Integrated business planning (IBP) refers to the technologies,


applications and processes of connecting the planning function across the
enterprise to improve organizational alignment and financial performance.

 Project Performance Management is a sub-discipline of Project


Management that seeks to establish measurements of project performance, such
as performance of project scope, performance according to a time schedule
and/or performance according to a project budget. It seeks to use such
measurements to inform project stakeholders, lead the project team and improve
project performance.

 Business Transaction Management (BTM) refers to the discipline


within systems management that monitors business transactions across the
datacenter in order to manage IT performance

 Customer Performance Management (CPM) refers to the practice of


managing the effectiveness of all the business activities and processes related to
handling customer relationships, to a common set of financial and customer
focused goals and objectives. This includes all aspects of creating and
maintaining a master source of customer related data.

Process

Performance Management involves the following (illustrated by a call centre example):

Measurement
• You establish performance measures
(e.g.: sales turnover)
• You establish measurable behavioral goals that will improve performance
(e.g.: making 30 prospective phone calls a day)
• You measure current behaviors
(e.g.: logging actual phone calls)

Appraisal
• You compare the current behaviors with the behavioral goals and identify the main
differences
(eg: on average, 20 phone calls are actually being made, giving a shortfall of 10
phone calls).

Action
• For each difference, you plan how to bring actual behaviors in line with the goals, in
order to improve the performance
(eg: introduce a revised telephone script that qualifies the prospect more quickly,
shortening each phone call and enabling more calls to be made in the time available)
• You implement the plan
(eg: issue the revised script to all telesales people, perhaps with some training to
support its use)

Monitoring
• Check that the new plans are being followed (e.g.: review a sample of phone call
recordings to determine whether the new script is being used and check that it is
'workable').
• At an appropriate time, you return to the appraisal stage to assess the impact of the
changes on the behavioral and performance measures
(eg: review the average number of calls made per day and sales achieved).

Concerns

Typical concerns expressed about performance management are that it seems


extraordinarily difficult and often unreliable to measure phenomena as complex as
performance. People point out that today's organizations are rapidly changing, thus
results and measures quickly become obsolete. They add that translating human desires
and interactions to measurements is impersonal and even heavy handed.

Performance Appraisal

In some cases, the performance appraisal processes are structured and formally
sanctioned while in other cases they are an informal and essential part of daily activities.
Performance refers to the extent of completion of the tasks that make up an individual's
job. One type of performance appraisal is to evaluate employees against standards of
personal qualities and work profile. A common approach to assessing performance is to
use a numerical or scalar rating system whereby managers are asked to score an
individual against a number of objectives/attributes. In some companies, employees
receive assessments from their manager, peers, subordinates and customers while also
performing a self assessment. Certain techniques in performance appraisal have been
thoroughly investigated, and some have been found to yield better results than others.

Performance Appraisal also known as employee appraisal, is a method by which the job
performance of an employee is evaluated (generally in terms
of quality, quantity, cost and time). Performance appraisal is a part of career
development.
Performance appraisals are regular reviews of employee performance
within organizations
In order to make a comparison one has to know what methods of appraisal are in use in
today’s scenario
Figure: Performance Appraisal Methods

Individual Evaluation Methods

Under the individual evaluation methods of merit rating, employees are evaluated one at
a time without comparing them with other employees in the organization.

(a) Confidential report: It is mostly used in government organizations. It is a


descriptive report prepared, generally at the end of every year, by the employee’s
immediate superior. The report highlights the strengths and weaknesses of the
subordinate. The report is not data based. The impressions of the superior about the
subordinate are merely recorded there. It does not offer any feedback to the appraisee.
The appraisee is not very sure about why his ratings have fallen despite his best efforts,
why others are rated high when compared to him, how to rectify his mistakes, if any; on
what basis he is going to be evaluated next year, etc. Since the report is generally not
made public and hence no feedback is available, the subjective analysis of the superior is
likely to be hotly contested.

(b) Essay evaluation: Under this method, the rater is asked to express the strong as
well as weak points of the employee’s behavior. This technique is normally used with a
combination of the graphic rating scale because the rater can elaborately present the scale
by substantiating an explanation for his rating.
While preparing the essay on the employee, the rater considers the following factors: (i)
Job knowledge and potential of the employee; (ii) Employee’s understanding of the
company’s programs, policies, objectives, etc.; (iii) The employee’s relations with co-
workers and superiors; (iv) The employee’s general planning, organizing and controlling
ability; (v) The attitudes and perceptions of the employee, in general.

Essay evaluation is a non-quantitative technique. This method is advantageous in at least


one sense, i.e., the essay provides a good deal of information about the employee and also
reveals more about the evaluator.

(c) Critical incident technique: Under this method, the manager prepares lists of
statements of very effective and ineffective behavior of an employee. These critical
incidents or events represent the outstanding or poor behavior of employees on the job.
The manager maintains logs on each employee, whereby he periodically records critical
incidents of the workers behavior. At the end of the rating period, these recorded critical
incidents are used in the evaluation of the workers’ performance. An example of a good
critical incident of a sales assistant is the following:

July 20 – The sales clerk patiently attended to the customer’s complaint. He is polite,
prompt, and enthusiastic in solving the customers’ problem.

On the other hand the bad critical incident may appear as under:
July 20 – The sales assistant stayed 45 minutes over on his break during the busiest part
of the day. He failed to answer the store manager’s call thrice. He is lazy, negligent,
stubborn and uninterested in work.

This method provides an objective basis for conducting a thorough discussion of an


employee’s performance. This method avoids bias (most recent incidents get too much
emphasis).However, Negative incidents may be more noticeable than positive incident;
this might go against the employee. Most frequently, the critical incidents technique of
evaluation is applied to evaluate the performance of superiors rather than of peers of
subordinates.

d) Checklists and weighted checklists: Another simple type of individual evaluation


method is the checklist. A checklist represents, in its simplest form, a set of objectives or
descriptive statements about the employee and his behavior. If the rater believes strongly
that the employee possesses a particular listed trait, he checks the item; otherwise, he
leaves the item blank. A more recent variation of the checklist method is the weighted
list. Under this, the value of each question may be weighted equally or certain questions
may be weighted more heavily than others. The following are some of the sample
questions in the checklist.
l Is the employee really interested in the task assigned? Yes/No
l Is he respected by his colleagues (co-workers) Yes/No
l Does he give respect to his superiors? Yes/No
l Does he follow instructions properly? Yes/No
l Does he make mistakes frequently? Yes/No

A rating score from the checklist helps the manager in evaluation of the performance of
the employee. The checklist method is most frequently used in the employee’s
performance evaluation.

(e) Graphic rating scale: Perhaps the most commonly used method of performance
evaluation is the graphic rating scale. Of course, it is also one of the oldest methods of
evaluation in use. Under this method, a printed form, as shown below, is used to evaluate
the performance of an employee. A variety of traits may be used in these types of rating
devices, the most common being the quantity and quality of work. The rating scales can
also be adapted by including traits that the company considers important for effectiveness
on the job. A model of a graphic rating scale is given below.

Table: Typical Graphic Rating Scale


Employee Name................... Job title.................
Department......................... Rate...............
Data..................................
Quantity of work: Unsatisfactory Fair Satisfactory Good Outstanding
Volume of work under
normal working
conditions
Quality of work:
Neatness, thoroughness
and accuracy of work
Knowledge of job
A clear understanding
of the factors connected
with the job
Attitude: Exhibits
enthusiasm and
cooperativeness on the
job
Dependability:
Conscientious,
thorough, reliable,
accurate, with respect
to attendance, reliefs,
lunch breaks, etc.
Cooperation:
Willingness and ability
to work with others to
produce desired goals.

From the graphic rating scales, excerpts can be obtained about the performance standards
of employees

(f) Behaviorally anchored rating scales: Also known as the behavioral expectations
scale, this method represents the latest innovation in performance appraisal. It is a
combination of the rating scale and critical incident techniques of employee performance
evaluation. The critical incidents serve as anchor statements on a scale and the rating
form usually contains six to eight specifically defined performance dimensions. The
following chart represents an example of a sales trainee’s competence and a behaviorally
anchored rating scale.
Table: An Example of Behaviorally Anchored Rating Scale (BARS)
Performance Points Behavior
Extremely good 7 Can expect trainee to make valuable suggestions for
increased sales and to have positive relationships with
customers all over the country.
Good 6 Can expect to initiate creative ideas for improved sales.
Above average 5 Can expect to keep in touch with the customers throughout
the year.
Average 4 Can manage, with difficulty, to deliver the goods in time.
Below average 3 Can expect to unload the trucks when asked by the
supervisor.
Poor 2 Can expect to inform only a part of the customers.
Extremely poor 1 Can expect to take extended coffee breaks and roam around
purposelessly.

(g) Forced choice method: This method was developed to eliminate bias and the
preponderance of high ratings that might occur in some organizations. The primary
purpose of the forced choice method is to correct the tendency of a rater to give
consistently high or low ratings to all the employees. This method makes use of several
sets of pair phrases, two of which may be positive and two negative and the rater is asked
to indicate which of the four phrases is the most and least descriptive of a particular
worker. Actually, the statement items are grounded in such a way that the rater cannot
easily judge which statements applies to the most effective employee. The following box
is a classic illustration of the forced choice items in organizations.

Table: Forced Choice Items


1. Least Most
A Does not anticipate difficulties A
B Grasps explanations easily and quickly B
C Does not waste time C
D Very easy to talk to D
2. Least Most
A Can be a leader A
B Wastes time on unproductive things B
C At all times, cool and calm C
D Smart worker D

The favorable qualities earn a plus credit and the unfavorable ones earn the reverse. The
worker gets over plus when the positive factors override the negative ones or when one of
the negative phrases is checked as being insignificantly rated.

(h) Management by Objectives (MBO): MBO represents a modern method of


evaluating the performance of personnel. Thoughtful managers have become increasingly
aware that the traditional performance evaluation systems are characterized by somewhat
opposing judgments on the part of the rater. There is a growing feeling nowadays that it
is better to make the superior work with subordinates in fixing goals. This would
inevitably enable subordinates to exercise self-control over their performance behaviors.
anced Scorecard
The balanced scorecard method of Kaplan and Norton is a strategic approach and
performance management system that enables organizations to translate a company's
vision and strategy into implementation, working from 4 perspectives:
1. Financial perspective,
2. Customer perspective,
3. Business process perspective,
4. Learning and growth perspective.

It is a strategic performance management tool for measuring whether the smaller-scale


operational activities of a company are aligned with its larger-scale objectives in
terms of vision and strategy. By focusing not only on financial outcomes but also on
the operational, marketing and developmental inputs, the Balanced Scorecard helps
provide a more comprehensive view of a business, which in turn helps organizations
act in their best long-term interests..

Organizations are encouraged to measure, in addition to financial outputs, those factors


which influenced the financial outputs. For example, process performance, market share /
penetration, long term learning and skills development, and so on.

The underlying excuse is that organizations cannot directly influence financial outcomes,
as these are dry measures, and that the use of financial measures alone to inform the
strategic control of the firm is unwise. Organizations instead also measure those areas
where direct management intervention is possible. In so doing, the early versions of the
Balanced Scorecard helped organizations achieve a degree of balance in selection of
performance measures. In practice, early Scorecards achieved this balance.

Implementing Balanced Scorecards typically includes four processes:

1. Translating the vision into operational goals;


2. Communicating the vision and link it to individual performance;
3. Business planning; index setting
4. Feedback and learning, and adjusting the strategy accordingly.

The Balanced Scorecard is a framework, or that claims to incorporate all quantitative and
abstract measures of true importance to the enterprise. According to Kaplan and Norton,
“The Balanced Scorecard provides managers with the instrumentation they need to
navigate to future competitive success”.
Multiple person Evaluation Techniques

The above-discussed methods are used to evaluate employees one at a time. Now, let us
discuss some techniques of evaluating one employee in comparison to another. Three
such frequently used methods in organization are – ranking, paired comparison and
forced distribution.

Ranking method

This is a relatively easy method of performance evaluation. Under this method, the
ranking of an employee in a work group is done against that of another employee. The
relative position of each employee is tested in terms of his numerical rank. It may also be
done by ranking a person on his job performance against another member of the
competitive group.

While using this method, the evaluator is asked to rate employees from highest to lowest
on some overall criterion. Though it is relatively easier to rank the best and the worst
employees, it is very difficult to rank the average employees. Generally, evaluators pick
the top and bottom employees first and then select the next highest and next lowest and
move towards the average (middle) employees.
Paired comparison method

Ranking becomes more reliable and easier under the paired comparison method. Each
worker is compared with all other employees in the group; for every trait the worker is
compared with all other employees. For instance, when there are five employees to be
compared, then A’s performance is compared with that of B’s and decision is arrived at as
to whose is the better or worse. Next, B is also compared with all others. Since A is
already compared with B, this time B is to be compared with only C, D and E. By this
method when there are five employees, fifteen decisions are made (comparisons).
For several individual traits, paired comparisons are made, tabulated and then rank is
assigned to each worker. Though this method seems to be logical, it is not applicable
when a group is large. When the group becomes too large, the number of comparisons to
be made may become frighteningly excessive. For instance, when n=100, comparisons to
be made are 100 (100-2) = 100 (98) = 9800.

Trait: ‘Quantity of work’

Table: Employee Rated


As compared to A B C D E
A + – + –
B – + – +
C + – + –
D – + – –
E + – + +

Forced distribution method

Under this system, the rater is asked to appraise the employee according to a
predetermined distribution scale. The rater’s bias is sought to be eliminated here because
workers are not placed at a higher or lower end of the scale. Normally, the two criteria
used here for rating are the job performance and promotability. Further, a five point
performance scale is used without any mention of descriptive statements. Workers are
placed between the two extremes of ‘good’ and ‘bad’ performances. For instance, the
workers of outstanding merit may be placed at the top 10% of the scale. The rest may be
placed as – 20% —good, 40% —outstanding, 20% —fair and 10% —fair. To be specific,
the forced distribution method assumes that all top grade workers should go to the highest
10% grade; 20% employees should go to the next highest grade and so on.

Job performance as the criterion apart, another equally important factor in this method is
promotability. Employees may be classified according to their promotional merits. The
scale for this purpose may consist of three points – namely, quite likely promotional
material, may/may not be promotional material and quite unlikely promotional material.

One strong positive point in favor of the forced distribution method is that by forcing the
distribution according to predetermined percentages, the problem of making use of
different raters with different scales is avoided. Further, this method is appreciated on the
ground that it tends to eliminate rater bias.
Group appraisal

In this method, an employee is appraised by a group of appraisers. This group consists of


the immediate supervisor of the employee, other supervisors who have close contact with
the employee’s work, manager or head of the department and consultants. The head of
the department or manager may be the Chairman of the group and the immediate
supervisor may act as the Coordinator for the group activities. This group uses any one of
multiple techniques discussed earlier. The immediate supervisor enlightens other
members about the job characteristics, demands, standards or performance, etc. Then the
group appraises the performance of the employee, compares the actual performance with
standards, finds out the deviations, discusses the reasons therefore, suggests ways for
improvement of performance, prepares an action plan, studies the need for change in the
job analysis and standards and recommends changes, if necessary.

This method eliminates ‘personal bias’ to a large extent, as performance is evaluated by


multiple rates. But it is a very time consuming process.

Field Review Method

Where subjective performance measures are used, there is scope for rater’s biases
influencing the evaluation process. To avoid this, some employees use the field review
method. In this method a trained, skilled representative of the HR department goes into
the ‘field’ and assists line supervisors with their ratings of their respective subordinates.
The HR specialist requests from the immediate supervisor specific information about the
employees performance. Based on this information, the expert prepares a report which is
sent to the supervisor for review, changes, approval and discussion with the employee
who is being rated. The ratings are done on standardized forms.

Since an expert is handling the appraisal process, in consultation with the supervisor, the
ratings are more reliable. However, the use of HR experts makes this approach costly and
impractical for many organizations.

Comparison between PMS of Schlumberger and IFFCO


Schlumberger IFFCO
Nature of Current Performance Nature of Current Performance
Management System Management System

• The organization operates a formal • The organization operates a formal


performance management system whose performance management system whose
processes apply to most of the working processes apply to all managers and
groups in the organization like Senior professionals including the senior
Managers, Technical staff and Professionals management
and Team Leaders.

• The PM processes that are operated differ • The performance management processes for
between these groups as the management different groups differs with the KRAs (Key
adopts different time spans of appraisal for Result Areas) allotted to them.
different groups and through Management by
Objectives of each employee in the group.

• Management by Objectives (MBO) and Key • Assessment, Checklists methods and KRAs
Performance Indicator (KPI) are the are the techniques that are used in the
techniques used in the organization for organization for assessing performance
assessing performance.

• The methods that form a part of the • Methods of Appraisal that form a part of the
performance appraisal system in system are,
Schlumberger: 1. Self-Appraisal
a) Written Essay Method 2. Graphic Rating Scales
b) Ranking Method 3. Ranking Method
c) Self Appraisal 4. Bell Graph
d) MBO
e) Forced Distribution Method

• Coaching, Training and development & • Career Management & development processes
Career management & development plans are are a part of their PMS
processes that are a part of the PMS of
Schlumberger.

• The performance goals or requirements for • Senior Managers and HR Professional set he
individuals are set by the Appraiser and goals/KRAs for the individuals
Appraisee.

• According to Mrs. Sophia the need for PMS • According to Mr.Masood Naik, the need to
arises due to the following factors: have a PMS in the organization is as follows:
a) Reward allocation 1. PMS is used as a form of retention
b) Identification of training and development strategy
needs 2. Reward Allocation
c) Facilitates promotions, transfers and 3. To facilitate promotions, transfers and
termination decisions termination decisions
d) To clarify an employee’s job requirements 4. Identifying barriers to performance
e) Identifying barriers to performance 5. To be used as a motivation tool
Conclusions
Performance Management is a term used to improve team performance, based on the
principles of measurement, appraisal, and action and monitoring. However, it can be
manifest in very different forms depending on whether the aim is to further improve good
performers, or deal with underperformance

Typically, we think of performance in organizations, we think on the performance of


employees. However, performance management should also be focused on:
1. The organization
2. Departments (computer support, administration, sales, etc.)
3. processes (billing, budgeting, product development, financial management, etc.)
4. Programs (implementing new policies and procedures to ensure a safe workplace; or,
for a nonprofit, ongoing delivery of services to a community)
5. Products or services to internal or external customers
6. Projects (automating the billing process, moving to a new building, etc.)
7. Teams or groups organized to accomplish a result for internal or external customers

Performance management is not easy to implement. It should be ‘owned’ by everyone in


the organization, and especially line managers – it is emphatically not about guardianship
by personnel departments.
In its most positive form, performance management will help individuals not only to
understand what is expected of them but also how they contribute to achieving
organizational goals.
Performance appraisals can be an effective measurement tool or they can produce wrong
answers. If subordinate attributes are separated from system attributes, performance
appraisals are more likely to be accurate. If managers fail to recognize what variables are
controlled by subordinates, true and accurate performance reports cannot be made. In
order to have effective performance appraisals, the raters must distinguish between
system and employee factors of production. Merely focusing on the bottom line, raters
will not be able to give effective and accurate readings.

Schlumberger Limited has a very comprehensive and effective performance management


system. It covers all its employees and the entire organization is linked through an
internet network system. The PMS is mostly net based where each employee has an
account in the company network.
 The employee receives his objectives from his direct manager for each quarter, these
main objectives then have secondary smaller objectives to be completed on time basis
and priority of the objectives are also set so that the employee can choose how he can
go about accomplishing them
 Secondly, Based on the objectives of the employee performance factors are set by
their manager to help in performance evaluation
 Thirdly, routinely the employee fills up his data on his account stating the status of
his objectives and his comments and these are viewed by his manager on the net
 The performance of the employee is reviewed quarterly and then an annual review is
done where the manager gives his comments about the employees performance
 The manager is assisted by a reviewing manager who gives his comments on the
performance of the employee based on his achievement in completing the objectives
and comments of his manager
 Based on the performance of the employee the manager then deduces the
development needs of the employee if required
 Before the final evaluation is done the employee gives his comments or a self-
appraisal.
 Finally, overall rating of the employee is given by the year end, the rating is given as
follows :
a) A - Outstanding (12% - 15% of the employees fall in this category)
b) B - Exceeds Expectations (30% - 35% of the employees fall in this category)
c) C – Meeting Expectations (30% - 35% of the employees fall in this category)
d) D – Development needed (10% - 15% of the employees fall in this category)
 Based on these rankings the employees performance rewards are decided and poor
performers are provided with more training and improvement coaching where they
can discover what went wrong

People need to know what is expected out of them. Expectations from them are usually
communicated verbally in one to one meetings or team meetings in the organization.
However, as soon as they are back their day to day activities these expectations loose
visibility. It helps to document performance expectations or Key Result Areas (KRA).
In Iffco the entire PMS revolves around these KRAs. Their entire performance
management process includes 3 main steps – evaluating the employee, knowing his
potential & rewarding. Let us look into their performance management process. Before we
start I would like to highlight that Iffco is a family-owned company.

• Firstly, business plans are set by the senior managers along with the owners these plans
are aligned with the corporate, business and individual objectives of the organization.
These plans are then moved down to the H.O.Ds of the various departments.
• These plans are given to the employees in the form of KRAs.
• This process takes place in July every year followed by a mid term review and in-
between discussions.
• Now, as and when these KRA are achieved the employee then ranks himself, based on
the effectiveness and efficiency of how the task was completed the employee marks
himself out of 4 grades.
• Simultaneously, when the tasks of achieving the KRAs are being carried out the
manager also makes his evaluation at fills up the grades of the employee as and when these
goals are completed.
• After this, the HR managers carry out the Bell Graph evaluation based on this graph
each employee is put into the category of Excellent-15%-20%, Good-30%-40%, Average-
25%-30%, Poor-5%-10%.
e.g. Bell Graph

• Based on this assessment the rewards are then decided for each employee usually
incentives and bonuses are given to the good performers.
• The company does not usually have an action plan for poor performers at it tries to
keep most of its employees above the poor level but in that scenario they undertake
discussion meetings and counseling for these employees.
• The self appraisal and the manager’s evaluation are both done online by the
respective person and the results of the evaluation and feedback is given to the
employees both in written and verbal form.

Summary

An effective performance management system sets the foundation for rewarding


excellence.
• By linking individual employee work efforts with the organization’s mission and
objectives, the employee and the organization understand how that job contributes
to the organization.
• By focusing attention on setting clear performance expectations (results + actions
& behaviors), it helps the employee know what needs to be done to be successful
on the job.
• Through the use of objectives, standards, performance dimensions, and other
measures it focuses effort. This helps the organization get done what needs to be
done and provides a solid excuse for eliminating work that is no longer useful.
• By defining job-mastery and career development goals as part of the process, it
makes it very clear how the current position supports employee growth and the
additional opportunities the employee needs to explore.
• Through regular check-in discussions, which include status updates, coaching,
and feedback, it promotes flexibility, allowing you and the employee to identify
problems early and change the course of a project or work assignment.
• By emphasizing that an annual appraisal should simply be a summary of the
conversations held between employer and the employee during the entire cycle, it
shifts the focus away from performance as an “annual event” to performance as
an on-going process.
An effective performance management system, while requiring time to plan and
implement, can save the management and the employee time and energy. Most
importantly, it can be a very effective motivator; since it can help the management and
the employee achieve the best possible performance.

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Appendices
References
http://ezinearticles.com/
http://en.wikipedia.org/wiki/Performance_management
http://managementhelp.org/perf_mng/perf_mng.htm
www.cipd.co.uk/subjects/perfmangmt/general/perfman.htm
http://www.citehr.com
ARMSTRONG, M. and BARON, A. (2004) Managing performance: performance management in
action
http://www.degree-essays.com/coursework/management-essays/
http://www.openlearningworld.com/
http://en.wikipedia.org/
Understanding performance appraisal By Kevin R. Murphy
http://maaw.info/
www.slb.com
www.wikipedia.com
Interview with Mrs. Sufia Ahmad, HR Information Systems Support Analyst
www.iffco.com
Interview with Mr. Masood Naik, HR Manager, IFFCO.