Strategic Performance Management

Prof. K. B. L. Srivastava
Department of Humanities and Social Sciences
Indian Institute of Technology, Kharagpur

Lecture – 04
Performance Management Process

We have seen how we can develop a good performance management system and what are its
characteristics. Here we are going to discuss how we are going to manage the performance of
the individual group or the organization, but the main focus here is on individual
performance.

(Refer Slide Time: 00:49)

We are going to start with the first stage, which is prerequisites. Then we have to see what are
the things required to start. Next, we move to the planning stage, followed by execution.
Finally, we are going for review, and based on this review, what is to be done. Whether you
are going to review the same performance or we are going to re-contract it.

Whether you are going to change anything like targets or other things, are based on feedback.
Then we move to the first stage, which is prerequisites. It is the most important thing in the
process. This is the first stage, and then we move to plan, execution, assessment, and other
steps. We are going to discuss what the different stages are, and at each stage, what is the
requirement. So, we will take up one by one each of these stages or the processes and will
discuss them.
(Refer Slide Time: 01:58)

We start with the first stage of the process. Before we start discussing it, I will give you some
examples. Pfizer is a pharmaceutical organization. If you look at the performance
management process of this organization, it starts a performance plan which is related to
development, then moving to review. Based on this review, they are going to decide about the
compensation.

If you look in the middle, you will find coaching and feedback. It means that regularly,
feedback and coaching is provided at every stage. In this example, how this process works.
Before we go for performance planning, we decide about certain things. You have to provide
feedback. How performance planning is being developed and implemented by the
organization. I am talking about how we are going to have a good performance management
system. You are going to create certain standards for evaluation. Once implemented, you are
going to review the performance. Based on it, you are going to compensate people. It means
that performance is linked with reward. You also have an inbuilt system or providing
feedback at every stage.
(Refer Slide Time: 03:38)

Let us take another example from a Government organization- a defense and aerospace
supplier. It is a big organization, and there do 3 things. First of all, set the goals because these
goals used as criteria. Then based on that PM system is implemented. They monitor the
performance regularly. The goals are used to evaluate performance. The evaluation is linked
with the reward. This example is given to explain how we go about the performance
development process or performance management process. It is more specifically related to
how we go about developing the performance management system.

(Refer Slide Time: 04:34)

Now, moving to the first stage, there are certain prerequisites before we move to discuss a
performance management system. These pre prerequisites include the stakeholders, or line
managers, HR managers, and top management involved in implementing a good and effective
management system should have a good knowledge of the organization's mission goals and
objectives, and they also have good knowledge of the job.

You have to know about the strategies, goals, and objectives of the organization. For the
second part, you have to go for a thorough job analysis looking into job description as it
provides a basis for identifying tasks, duties, and responsibilities.

(Refer Slide Time: 05:27)

The first thing is the knowledge of organizational goals and mission. Here you become a part
of the strategic planning process. The performance management system has a decisive role in
contributing to the performance of the people, group, and organization. If you are considering
a performance management system as a good plan for yourself, you need to develop
strategies on how to devise a good and effective performance appraisal system.

Now, to have a good performance management system, you have to see what are your
strategy for the planning of the performance. As you know that before we go about a strategy,
you have to decide vision and mission. What are the goals and objectives that you want to
achieve? In strategic planning, you decide about what would be your strategy to achieve the
goals and objectives of the organization, but before that, you must clear your vision and
mission; mission is you need to identify the purpose or reason for the existence of the
organization. For example, suppose if I am talking about IIT Kharagpur. We can say the
objective or the purpose of the existence of IIT Kharagpur is to provide the best quality
people in the field of engineering and science.

Another thing is related to the vision is where it wants to be in the future. Suppose I say that
IIT Kharagpur is in the top 500 organizations or technical institutions in the world. Now from
500, you want to move to 200. So, being within 200 is the goal that you want to achieve. You
will have certain strategies so that you can achieve it, and to have this kind of goal at the top
level, you have to see that this becomes your organizational goal. This organization goal
further percolates down or cascade down to the units of the department goal.

Now you are going to identify the goal of the unit or the Department or unit. The unit or
department goals are further percolating down at the individual level. Then you have to see
that it is aligned with the Department, followed by the organization. It means the individuals
contribute to the Department or units, and the units or departments are going to contribute to
the organizational goals.

So, this kind of alignment is called strategic alignment, and it must be congruent with each
other so that everybody contributes to their level to the growth and development of the
organization. So, stakeholders involved in the process of devising a good performance
management system must know about it.
(Refer Slide Time: 08:46)

Another important issue is that they need to understand the job, which is done through job
analysis. Job analysis has two contents that are job description and job specification. Job
description refers to tasks, duties, responsibilities, which a person is supposed to perform in a
given job, and to perform these tasks duties and responsibilities, he needs to have certain
knowledge and skill knowledge, skills, and abilities that are required to complete a particular
job. It is called the Job specification.

When you are going to design a performance management system, it provides you input or a
tool for identifying what you are going to measure in terms of performance. You will be
evaluated based on what you do, and that comes from job analysis. To see that what a person
does, you are going to observe it, or you are conduct interviews or use a questionnaire to
identify the job description- task duties and responsibilities associated with the job. Similarly,
you also need to identify what is knowledge and skill base, which is required. You need to
match the person with the job. For example, if I am going to teach a course on HR, it means
that I must have enough knowledge or have this skill and abilities to teach this course. So, if I
am going to teach a course on performance management, it becomes a part of my duty and
responsibility. Teaching this performance management course, I should have a specialization
in performance management broadly under human resource management. I must have enough
experience to teach this course.

You match both the job and the person to ensure the job is performed effectively. This
provides input for job analysis. It is essential to see that job description, and job specification
is carried out correctly. You also need to understand the environment in which this is to be
carried out. The environment is acting as an enabler to perform well, and to get data on this,
you are using certain methods like interviews, observations, and other methods so that you
can get information about the job and the person.

(Refer Slide Time: 11:41)

When you are going to conduct a job analysis, you need to ensure that it is free from any kind
of biases or error. We need to remove certain preferences in conducting job analysis. For
example, if I am going to conduct a job analysis for faculty, we can identify duties and
responsibilities like teaching, doing research, taking up assignments, consulting assignments,
taking up projects. In addition to these duties and responsibilities, one also has other things
like administrative responsibility or being a professor in charge, a warden. It forms the part of
the job description. To perform this, you need certain key skills like knowledge skills and
attitude to help you to perform your job effectively

What are the problems that may come up? Problems include self-serving biases, social
projects, and false consensus biases. Self-serving bias means you are going to report your
behavior and personality traits, which is required for a successful job compared to the
behavior and personality of others. You are going to propagate yourself more when you are
going to conduct this analysis. It should be avoided, and you should also think that you are
not going to ensure that people are similar to you because that is not possible as everyone is
different.

This kind of false consensus should not be there. You should not project it because social
projection and false consensus are bias. You need to talk about these things where people
believe that others are similar to them. While the fact is that it may not be true. People may be
different, even if people doing the same kind of job could be different. What you are going to
match here is not the traits and personality of the people. You are going to ensure that those
traits and personalities which are related to the performance are covered. You can remove
these biases related to these factors.

(Refer Slide Time: 14:21)

Now, when it comes to providing a common frame to all the raters, it means those who are
evaluating performance should tell them how you are going to evaluate the performance,
especially supervisors. They should know how they are going to rate each dimension.
(Refer Slide Time: 14:59)

Let me give an example. You want to evaluate the performance using rating scales. You are
going to use a rating scale, which can have a five-point scale starting with 1, 2, 3, 4, and 5, on
a particular dimension related to rating. Suppose you want to measure punctuality- how
punctual you are starting with not at all to very punctual.

You need to give a point such as somewhat, average, standard, and good so far as punctuality
is concerned. You can also use twenty percent, forty percent, sixty percent, eighty percent, or
a hundred percent for this dimension. If you are clearing all these dimensions, then it would
be easy for raters to understand whether he is going to provide 1 point or 2 points or 3 points.
If you are not able to do it, you can't understand these kinds of things.

So, raters must understand how the rating is to be done so that they can go for these kinds of
ratings. You have to provide evaluators with each rating dimension.
(Refer Slide Time: 16:41)

We also have scale anchors, but we need to decide how it is going to start, which dimensions
are to be rated. You also describe behaviors that are indicative of these dimensions. For
example, in the above case given by me, I told you that if you say one, it means your
punctuality level is very less or 20 percent, if you say 4, it means that the person achieves that
on average 80 percent punctuality. Similarly, if you take any dimension which is used for
measuring performance, you need to describe behaviors. It means that you need not only
provide a level, but you also need a description of the level of rating. Then raters should
practice it before they start rating so that they know what they are doing. Then they can be
given feedback about the rating is, whether they are accurate, whether it is standard, whether
it is going to reliable and valid. We talked about these points related to the effective
performance management system. So, accuracy and fairness are such dimensions that come
from raters. We need to ensure that raters are clear about it.
(Refer Slide Time: 17:56)

In addition to this, you also need to plan the performance after discussing these two
prerequisites. It includes knowledge of the organization's mission and knowledge of the job.
Then we move to the next stage of performance planning. At this stage, you need to plan the
performance. Here the line managers, along with the supervisors, or if you need, you can also
invite and include HR managers where they discuss the plan and what needs to be achieved in
terms of goals and objectives.

What is to be discussed in the beginning by the supervisors and the managers includes
knowing goals to be achieved. For example, a sales manager plans the performance of the
sales force by inviting them and having a discussion about total sales output to be achieved,
and how it is going to be distributed across the sales force. Then what individuals need to
achieve in terms of sales targets and how they are going to achieve it.

So, the discussion related to the performance plan should consider both the results and the
behavior. You require a certain sales target that comes under results, and to achieve these
sales targets, what kind of behavior would be required.

For example, if you take the case of salespeople, then what are the qualities that would be
required in addition to achieving the goals and objectives. You should have good
communication skills, good interpersonal relationship. You should be good at negotiation.
You should be able to persuade people to achieve the targets and frequently follow up on
everything that is going on.
These behavior are required in addition to the targets. We need to examine what is required
for planning the performance. So, when we are talking about the result, that is the outcome—
for example, sales targets and key accountability, which are specific objectives and
performance standards.

So, we are going to discuss what comes under results that are key accountability, specific
objectives, and performance standards and then will talk about what comes under behaviors.

(Refer Slide Time: 20:40)

We will talk about performance results or key accountabilities, which examine what the
things you are responsible for to produce the results are. When it comes to objectives, you
have to be very specific in terms of identifying them as a part of accountability, which is
important and measurable. How are you going to evaluate the standards? You need to provide
certain norms. For example, if you can achieve 60 percent of your target, would you call it an
average performance or standard performance. If you achieve eighty percent that is used as a
yardstick to evaluate your sales target, then you call it a performance standard. It means that
you need to define the performance standard.

Suppose you can sell ‘x’ units of the product, then you are meeting performance standards.
You have achieved these performance standards related to each objective, and make sure that
it is acceptable to the supervisors or line managers. This performance standard is measured in
terms of quality and cost time. It means that you have achieved within a given time frame to
qualities standards, made the number of units that you are going to sell, and it is cost-
effective. So, the performance standard is measured along these dimensions to ensure the
results

(Refer Slide Time: 22:30)

In addition to the performance, you are also going to measure the behavior. When we are
discussing behavior, it means how we are going to perform the job. It includes your
competencies, knowledge, and skills, which is critical in determining how results will be
achieved. For example, to achieve the sales target, say ‘x,' what kind of competencies you
need. It includes good product knowledge, technical details of the product, good interpersonal
skill, good communicational skill, and negotiating activities. It could be behavioral
competencies. So, you need to identify those competencies or behavior as a part of our
knowledge skill and attitude, which is critical in examining how the results will be achieved.

If you have these competencies at a standard level, then it would help you to achieve the sales
target. The result is important because that is to be achieved. However, the results are
achieved through your behavior or competencies, which related to knowledge, skill, and
attitude. It is to be defined as competencies in standard terms that are be required by an
individual to perform a job effectively.
(Refer Slide Time: 24:03)

Once you have identified the kinds of behavior and results are required. You have a
performance development plan. It means you have these behaviors. Suppose you are not a
good negotiator, or you are not able to pursue people, or you are not able to convince people.

It can not be the desired behavior required for the sales job. You discuss it with your manager
and identify the areas where the person is not good, and they need improvement. If these
behaviors are not there, then he will not be able to achieve the set goals and objectives. You
also identify those areas which need improvements. If he has good technical knowledge about
the product, he can specify it very well. He can communicate it very well. But when it comes
to negotiation and persuasion, he is not good. It means that it is an area that needs
improvement so that he can achieve the targets.

Now, these development plans include both the results and behavior. So, you need to ensure
that the technical part, as well as the behavioral part, is taken care. If there is a lack in certain
areas, then the person is not capable enough, and he would be able to improve.
(Refer Slide Time: 25:30)

After the performance development, you move to the next stage; it means that you are going
to execute it. It means you have a development plan, and you have decided what is to be
achieved.

The next is the implementation stage. At this stage, you are going to see how people are
going to perform the job and achieve the goals and targets given to them so that could be used
for the evaluation. What is required at this stage? You are going to execute certain things as
required by the individual. You must be committed to the goal. It means that once you have
decided with your supervisor about the goals and objectives, you should engage yourself in
achieving those goals and objectives which are set for you.

You continuously make efforts to apply your knowledge and skill to perform your job to the
best of your knowledge. You also show some commitment and engagement to the job to
perform. Besides, the line managers are responsible for ensuring that regular feedback is
provided to the employees.

When I discuss the second point, it means the responsibility of the supervisors and line
managers to give regular feedback. It would help individuals to understand their level of
achievement or performance. If they are not able to reach the performance level within a
given time frame, then top management or line managers can also think about coaching them
to improve their performance
.

The third point is you need to communicate with your supervisors regularly. If you have any
problems, hassles, or barriers, or you need support in terms of equipment, resources, and
technology, then it is the responsibility of the supervisor to provide all these things to you to
enable you to do your job effectively. Finally, you need to share data with your subordinates.
Line managers are going to examine your performance. They are going to share this data
which their subordinates. It is how you are going to perform and be a part of the review.
Ultimately looking at this performance data, you are going to review the performance.

It means both the supervisor and the subordinate must get ready to see how well they have
performed. What are the reasons for bad performance? Why they have been able to achieve
the said level of performance. Why it has happened. It is the performance execution stage.

(Refer Slide Time: 25:45)

What is the job of supervisors when it comes to executing performance. So, let us be clear.
Supervisors regularly observe and document the performance regularly. They know how well
subordinates are performing, and they can provide a regular update about the objectives
standards and accountabilities. They should give feedback about the performance and provide
all the resources which are required to perform well, and then they encourage people to
perform better and better. So, the supervisor has a responsibility to provide feedback
regularly.
They are supposed to provide reinforcement. They are supposed to provide all kinds of
direction, help, and encouragement, which is required. They also need to reinforce productive
areas by providing them suitable rewards. They should go for documentation regularly to
ensure that they are going to be factual and honest in the reporting of the performance.

(Refer Slide Time: 30:03)

Similarly, employees also have the responsibility to communicate and share everything and
then ask for help if anything is required.

Moving from performance execution, it is the time for assessment. In this phase, you are
going to observe how well the person has performed. Employees and managers are both a
part of the process of the evaluation. Evaluation is related to result as well as behaviors.

You are going to examine the extent to which the goals are met. They have taken ownership
and responsibility for achieving the goals and objectives. So, the managers and subordinates
both should actively participate in the process to ensure that the assessment is done fairly, it is
accurate, it is reliable and valid, and in the process, we are also including employees and
provide them an opportunity to listen to them. They would be in a better position to tell you
why it has happened. If you do not include them in the evaluation process, they become
defensive because then they will try and attribute this performance to external factors, not to
them. They would blame others and not to themselves.

It is imperative to ensure that they do not become defensive when this review happens. If the
employees are included in the process, you are going to be much more secure and safe. It is
going to be a more accurate assessment of the performance of the employees.

(Refer Slide Time: 31:52)

So, when it comes to reviewing, make sure that it is very productive. So that you can identify
if the performance is good or bad depending upon the objectives. What kind of behaviors are
you relating to good and bad performance? You are going to listen for feedback in terms of
reactions and explanations. Why they have performed well or not performed well. You can
ask for a reason for good or bad performance. How this changed behavior is going to ensure
that they are going to perform well. The idea is to communicate employees about their
performance during the review session. So that they know what their performance level. If it
is poor performance, what are the things that they need to do or improve, to bring about the
change in the behavior? You also need to explain what kind of behavior was expected from
employees. What type of behavior is required in the future, and what are the problems related
to performance. In the review session, what happens is you go for developing an action plan.
if you want employees to improve his efforts so that he improves his performance and you
get ideas from employees, what needs to be done to improve the performance, and finally,
you follow up and monitor to ensure that you can do it.
(Refer Slide Time: 33:30)

Finally, the last stage is renewal and re-contracting. So, whatever insight or data input you
have got based on that, you again move to the set goals for the next performance cycle. In
performance renewal, once the entire process completes, you get the feedback based on that
you are going to set the goals for the next performance cycles. You are going to contracting
again for the next performance cycle.