Performance Management &Reward System

End term Examination

Name: - Amrita Baranwal

URN-No: - 2019-M-22081997
Ques.1-What is the importance of performance management? Explain the
importance of reward systems and recent trends in performance systems.
Answer.1 IMPORTANCE OF PERFORMANCE MANAGEMENT

● The importance of performance management to measure and improve employee

capabilities cannot be understated. Technology that supports modern performance
management not only facilitates a transparent process, but provides valuable data you
need to measure your success..

1. Provides Clarity in the Organization

It is a common problem that many employees are unsure of what exactly their role entails,
what is expected of them, and who they are to report to. Through performance management,
the company can make all of this very clear. A lack of understanding often leads to a lack of
productivity. Therefore, by providing clarity for employees, the result will often be increased
productivity and confidence

2. Helps Create Development and Training Strategies

As mentioned above, the earlier a problem is detected, the better. One of these problems could
be that employees do not know how to perform certain processes correctly. If this continues,
the organization might fall apart due to oversight. However, with performance management,
this would probably be detected. The organization could then create training programs to
change the issue into an opportunity for improvement.

3. It Provides a Look into the Future

By consistently monitoring and managing workplace performance, leaders can see potential
future problems. Like with any type of issue, early detection is key. The earlier problems are
confronted the less effect that they will likely have.
For instance, if the company notices that a certain employee is not a team player, they can
either move that employee to a position that does not require teamwork, provide training to
that employee revolving around teamwork, or let that employee go before it becomes a
problem. By acting before the potential problem becomes an actual problem, the organization
can prevent unnecessary trouble.

4. Increases Employee Retention

Performance management also encourages organizations to reward and recognize their
employees. Lack of recognition is a big reason some employees leave a job and look for
another. They want to be appreciated for their hard work. In addition to the clarity, the ability
to share feedback, and the additional training when needed, rewards and recognition can play
an important role in employee retention.

5. Boosts Employee Engagement

Performance management, when it truly involves employees, will boost employee engagement.
When there is a disconnect between management and employees, it is almost as though
employees are just going through the motions of the day. Their position becomes merely a job
as opposed to a rewarding career. However, performance management has the capability of
engaging employees fully and making them feel invested in the company. This leads to job
satisfaction and employee loyalty, all of which increases productivity.

6. Provides the Opportunity for Exchanging Feedback

A lack of communication in a relationship is grounds for trouble, and this includes working
relationships. Quite often, management speaks to employees about their performance, but
employees do not very often get a chance to voice concerns or frustrations. Effective
performance management provides an avenue through which both the employer and the
employee exchange feedback. In addition to gaining insight, employees often feel much more
valued when they can voice their thoughts.

IMPORTANCE OF REWARD SYSTEM

The elements of reward system within a business organisation are all the things that they use to
attract potential employees into their business which includes salary, bonuses, incentive pay,
benefits and employee growth opportunities such as professional development and training
opportunities. Having a reward management system in place provides the business with many
advantages, especially in small to medium size organisations where the managers must have a
good relationship with the employees. Reward programmes have proved to be very successful
in motivating employees and in turn increase the performance of the organisation as a whole.

Below are some of the reasons why a reward system is important:

Mutually beneficial- A reward system is beneficial not only to the employee but also to the
organisation. The employee will feel more motivated to work harder.by having a reward system
in place the employee will feel more committed to their work and their productivity will
increase. An increase in productivity will then benefit the organisation. Therefore, a reward
system is mutually beneficial to the employee and the organisation.

Motivation-A reward system will motivate employees by reaching targets and organisational
goals in exchange for rewards. A reward system is great at motivating employees but they will
also be motivated to prove themselves to the organisation.

Absenteeism-A reward system will reduce absenteeism in the organisation. Employees like
being rewarded for a job well done and if there is a reward system in place, employees will be
less likely to be ringing in sick and not showing up for work. Also, by having a reward system in
place the employees will be clearer about the targets and goals of the organisation as they will
be rewarded when reach certain targets. So, by having a reward system as an incentive they
will be less likely to be absent from work.

Loyalty-A reward system will increase the employee’s loyalty to the organisation. By a reward
system being in place the employee feels valued by the organisation and knows that their
opinion matters. If an employee is happy with the reward system, they are more likely to
appreciate work place and remain loyal to the organisation

Morale-Having a reward system in place providing employees with incentives and recognition
will boost their morale. By encouraging employees to meet goals and targets it gives them clear
focus and purpose which will their morale. By the employee’s morale being boosted this will
increase the morale of the entire organisation. This is all down to a reward system in the
organisation.

Teamwork- The reward system will increase the teamwork spirit in the organisation. The
reward system will promote teamwork to the employees. The employees will work together as
part of a team to achieve their targets in return for rewards. Teamwork within the organisation
will help increase efficiency and create a happier workplace. This is another reason why reward
systems are important in business organisations
Question.2 Discuss in detail the Performance planning need for Performance
Planning with Key Performance Areas (KPA) and Goal Setting.
Answers 2-Performance planning is the process of communication between a manager and an
employee that results in mutual understanding of what the employee should be doing during
the next period of time

NEEDS FOR PERFORMANCE PLANNING

● To award the High performers

● To help the low performers to improve their achievements

● It's necessary for performance improvement in the long run. Effective performance
measurement helps companies identify their strengths and weaknesses, top high
performers, areas for improvement, and helps set benchmarks with historical data.

KEY PERFORMANCE AREAS AND GOAL SETTING

Key performance areas refer to the areas within the business for which a person is responsible
e.g. Process Improvement, Safety and Health, Security, etc. ... To be effective, a KPI must be
well-defined, quantifiable and be crucial to achieving your goal

Action Plans are simple lists of all of the tasks that you need to finish to meet an objective. They
differ from To-Do Lists in that they focus on the achievement of a single goal. Action Plans are
useful, because they give you a framework for thinking about how you'll complete a project
efficiently.

Goal setting involves the development of an action plan designed to motivate and guide a
person or group toward a goal. Goal setting can be guided by goal-setting criteria such as
SMART criteria. Goal setting is a major component of personal-development and management
literature.

Q.3Short Notes

Answers: - What is Competency mapping:- Competency mapping identifies an individual's

strengths and weaknesses. The aim is to enable the person to better understand him or herself
and to point out where career development efforts need to be directed

PROCESS OF COMPETENCY MAPPING

 INTERVIEWS
 QUESTIONNAIRES
 ASSESSMENT CENTRES
 CRITICAL INCIDENTS TECHNIQUE
 PSYCHOMETRIC TEST

 INTERVIEWS
Competency-based interviews may be structured, semi-structured or unstructured depending
on the person conducting the competency mapping. Interview should be carefully designed so
as to provide information about both the easily observed information and the general
disposition and motivation of the employee. Questions prepared should target each
competency and give an overview of the tangible skills and knowledge possessed by the
employee, how he or she acts under certain conditions, and how they behave with other
people. The questions focus on relating past job performance to future on the job performance.
Biasness and distortion of flow should be avoided as much as possible (Balaji, 2011). If handled
effectively, interviews can prove to be a powerful technique for getting accurate details and
obtaining information which may otherwise be unavailable.

 QUESTIONNAIRES
Competency mapping questionnaires consist of a list of questions either standardized or
prepared solely for the purpose of competency mapping which the employees are expected to
fill. There may be competency mapping questionnaire for employees or for managers
depending on the level at which the mapping is being conducted. One form of a questionnaire
is the Common Metric Questionnaire (CMQ) that makes use of five domains to examine
competencies to improve work performance.  These five domains are as follows: background,
contact with people, decision making, physical and mechanical activity and work setting.
Another form is Functional Job Analysis (FJA) which is a qualitative analysis and breaks the job
down to seven parts: things, data, worker instructions, reasoning, people, mathematics and
language. The behavior and actions of the employees in the seven areas is a part of FJA.

 ASSESSMENT CENTRES
Assessment centres is a process (and not a location) that helps to determine the suitability of
employees to specific type of employment or job role. Using validated tests, different elements
of the job are simulated. The candidates or employees are expected to complete a number of
assessments specifically designed to assess the key competencies required for the job role they
are applying. These tests focus on assessing the individual based on their knowledge, skills,
attitudes and other behaviors. An essential feature of this process is using situational test to
observe job specific behavior.

 CRITICAL INCIDENTS TECHNIQUE

This technique was developed by Flanagan (1954) and involves direct observation of the
employee in specific situations. The observations should be recorded as accurately as possible
since it would be used to identify behaviors that contribute to success or failure of individual or
organization in a specific situation. First step, is to make a list of good and bad on the job
behavior. After this, the supervisors should be trained to note down incidents when the
employee was successful or not successful in meeting the job requirements. At the end of the
year, a balance sheet for each employee is created to find how well the employee has
performed (Balaji, 2011)

 PSYCHOMETRIC TEST
These are standardized and scientific tools used to assess the mental capacities and behavioral
styles of employees in an organization. The most commonly used psychometric assessment is
aptitude, achievement and personality testing. Aptitude tests help to determine the capacity of
the individual to acquire with training a particular type of skill or knowledge. Achievement tests
help to determine the level of proficiency an individual has achieved in a given area. Personality
testing gives a description of the unique traits and characteristics that drive the employee’s
behavior. Apart from these, competency mapping rating scale may also be used as a part of
assessment.