HUMAN RESOURCE MANAGEMENT

UNIT 3

Managing Employee Performance and Training

 Learning Outcome :

1. Students will be able to learn the Concept scope and importance of HRM

2. Students will be able to learn the different methods of HR Acquisition and retention.

3. Students will be able to demonstrate the use of different appraisal and training methods in an
Organization.

4. Students will be able to outline the compensation strategies of an organization

5. Students will be able to deal with critical and complex situation effectively in the context of
organizational circumstances by using the tools and techniques
 Unit 3

Managing Employee Performance and Training

Performance appraisal

Meaning: Performance appraisal is a process of evaluation and employees’ performance of a job in

the terms of requirements. Performance means the degree of accomplishment of the task which is
assigned to the individual. In other words, performance appraisal gives us an idea about the
completion of job. In every field, the technique of performance appraisal is applied e.g. bankers
evaluate the performance of their creditors or loan holders, teachers evaluate the performance of
students or parents evaluate the behavior of their children

Definitions :

1) Spriegel W. R. :

“It is defined as a process of evaluating an employee’s performance of a job in terms of its

requirements.”
Objectives of Performance Appraisal

 Performance Appraisal can be done with following objectives in mind:

 To maintain records in order to determine compensation packages, wage structure, salaries
raises, etc.
 To identify the strengths and weaknesses of employees to place right men on right job.
 To maintain and assess the potential present in a person for further growth and
development.
 To provide a feedback to employees regarding their performance and related status.
 To provide a feedback to employees regarding their performance and related status.
 To review and retain the promotional and other training programmes.

Advantages of Performance Appraisal

It is said that performance appraisal is an investment for the company which can be justified by
following advantages:

1. Promotion: Performance Appraisal helps the supervisors to chalk out the promotion
programmes for efficient employees. In this regards, inefficient workers can be dismissed
or demoted in case.
2. Compensation: Performance Appraisal helps in chalking out compensation packages for
employees. Merit rating is possible through performance appraisal. Performance Appraisal
tries to give worth to a performance. Compensation packages which includes bonus, high
salary rates, extra benefits, allowances and pre-requisites are dependent on performance
appraisal. The criteria should be merit rather than seniority.
3. Employees Development: The systematic procedure of performance appraisal helps the
supervisors to frame training policies and programmes. It helps to analyse strengths and
weaknesses of employees so that new jobs can be designed for efficient employees. It also
helps in framing future development programmes.
4. Selection Validation: Performance Appraisal helps the supervisors to understand the
validity and importance of the selection procedure. The supervisors come to know the
validity and thereby the strengths and weaknesses of selection procedure. Future changes in
selection methods can be made in this regard.
5. Motivation: Performance appraisal serves as a motivation tool. Through evaluating
performance of employees, a person’s efficiency can be determined if the targets are
achieved. This very well motivates a person for better job and helps him to improve his
performance in the future.
Performance Appraisal Process

1. Establishing performance standards

The first step in the process of performance appraisal is the setting up of the standards which will
be used to as the base to compare the actual performance of the employees. This step requires
setting the criteria to judge the performance of the employees as successful or unsuccessful and the
degrees of their contribution to the organizational goals and objectives. The standards set should be
clear, easily understandable and in measurable terms. In case the performance of the employee
cannot be measured, great care should be taken to describe the standards.

2. Communicating the standards

Once set, it is the responsibility of the management to communicate the standards to all the
employees of the organization. The employees should be info
rmed and the standards should be clearly explained to the employees. This will help them to
understand their roles and to know what exactly is expected from them.
The standards should also be communicated to the appraisers or the evaluators and if required, the
standards can also be modified at this stage itself according to the relevant feedback from the
employees or the evaluators.

3.Measuring the actual performance

The most difficult part of the Performance appraisal process is measuring the actual performance of the em
4.Comparingactualperformancewithdesiredperformance The actual performance is compared with the desired
can show the actual performance being more than the desired performance or, the actual performance being l

Feedback
The result of the appraisal is communicated and discussed with the employees on
one-to-one basis. The focus of this discussion is on communication and listening. The results, the
problems and the possible solutions are discussed with the aim of problem solving and reaching
consensus. The feedback should be given with a positive attitude as this can have an effect on the
employees’ future performance.

Methods of Performance Appraisal

Following are the tools used by the organizations for Performance Appraisals of their employees.

1. Ranking
2. Paired Comparison
3. Forced Distribution
 4. Confidential Report
5. Essay Evaluation
6. Critical Incident
7. Checklists
8. Graphic Rating Scale
9. BARS
10. Forced Choice Method
11. MBO
12. Field Review Technique
13. Performance Test

We will be discussing the important performance appraisal tools and techniques in detail.

1. Ranking Method

The ranking system requires the rater to rank his subordinates on overall performance. This consists in
Advantages of Ranking Method

Employees are ranked according to their performance levels.

It is easier to rank the best and the worst employee.

Limitations of Ranking Method

iii. The “whole man” is compared with another “whole man” in this method. In
practice, it is very difficult to compare individuals possessing various individual
traits.
iv. This method speaks only of the position where an employee stands in his group. It
does not test anything about how much better or how much worse an employee is
when compared to another employee.
v. When a large number of employees are working, ranking of individuals become a
difficult issue.
vi. There is no systematic procedure for ranking individuals in the organization. The
ranking system does not eliminate the possibility of snap judgements.
2. Forced Distribution method

This is a ranking technique where raters are required to allocate a certain percentage of
rates to certain categories (eg: superior, above average, average) or percentiles (eg: top 10
percent, bottom 20 percent etc). Both the number of categories and percentage of
employees to be allotted to each category are a function of performance appraisal design
and format. The workers of outstanding merit may be placed at top 10 percent of the scale,
the rest may be placed as 20 % good, 40 % outstanding, 20 % fair and 10 % fair.
 Advantages of Forced Distribution

i. This method tends to eliminate raters bias

ii. By forcing the distribution according to pre-determined percentages, the problem of
making use of different raters with different scales is avoided.

Limitations of Forced Distribution

iii. The limitation of using this method in salary administration, however, is that it may
lead low morale, low productivity and high absenteeism.

Employees who feel that they are productive, but find themselves in lower
grade(than expected) feel frustrated and exhibit over a period of time reluctance to
work.
3. Critical Incident techniques

Under this method, the manager prepares lists of statements of very effective and ineffective behaviou
Advantages of Critical Incident techniques

This method provides an objective basis for conducting a thorough discussion of an employees perf
This method avoids recency bias (most recent incidents are too much emphasized)

Limitations of Critical Incident techniques

iii. Negative incidents may be more noticeable than positive incidents.

iv. The supervisors have a tendency to unload a series of complaints about the
incidents during an annual performance review sessions.
v. It results in very close supervision which may not be liked by an employee.
vi. The recording of incidents may be a chore for the manager concerned, who may be
too busy or may forget to do it.
4. Checklists and Weighted Checklists

In this system, a large number of statements that describe a specific job are given. Each
statement has a weight or scale value attached to it. While rating an employee the
supervisor checks all those statements that most closely describe the behaviour of the
individual under assessment. The rating sheet is then scored by averaging the weights of all
the statements checked by the rater. A checklist is constructed for each job by having
persons who are quite familiar with the jobs. These statements are then categorized by the
 judges and weights are assigned to the statements in accordance with the value attached by
the judges.

Advantages of Checklists and Weighted Checklists

i. Most frequently used method in evaluation of the employees performance.

Limitations of Checklists and Weighted Checklists

ii. This method is very expensive and time consuming

iii. Rater may be biased in distinguishing the positive and negative questions.
iv. It becomes difficult for the manager to assemble, analyze and weigh a number of
statements about the employees characteristics, contributions and behaviours.

BARS

A BARS can be developed in following steps.

Collecting samples of effective and ineffective job behavior from the experts by analyzing the
critical incident method

Converting these samples into performance dimension

Relocating the performance dimension (from unacceptable to outstanding)

Rating the performance dimension accordingly, starting from 1

Finally, using the scale anchor to evaluate employee’s performance

360 Degree performance appraisal method:

A) Organizations that Use this to Assess Employee Performance :

360 degree feedback is the most comprehensive appraisal where the feedback about
the employees’ performance comes from all the sources that come in contact with the
employee on his job.

B) The Stakeholders in doing 360-Degree Assessment :

360 degree respondents for an employee can be his/her peers, managers (i.e.
superior), subordinates, team members, customers, suppliers/ vendors - anyone who comes into
contact with the employee and can provide valuable insights and information or feedback
regarding the “on-the-job” performance of the employee.

C) 360 Degree Appraisal has four Integral Components:

 1) Self appraisal :
2) Superior’s appraisal :
3) Subordinate’s appraisal :

Management by Objectives: Management by objectives (MBO) is a strategic management model

that aims to improve the performance of an organization by clearly defining objectives that are
agreed to by both management and employees The term was first outlined by management guru
Peter Drucker in his 1954 book, The Practice of Management

Performance Appraisal Biases

Managers commit mistakes while evaluating employees and their performance. Biases and judgment errors of

1. First Impression (primacy effect): Raters form an overall impression about the ratee on the
basis of some particluar characteristics of the ratee identified by them. The identified
qualities and features may not provide adequate base for appraisal.
2. Halo Effect: The individual’s performance is completely appraised on the basis of a
perceived positive quality, feature or trait. In other words this is the tendency to rate a man
uniformly high or low in other traits if he is extra-ordinarily high or low in one particular
trait. If a worker has few absences, his supervisor might give him a high rating in all other
areas of work.
3. Horn Effect: The individual’s performance is completely appraised on the basis of a
negative quality or feature perceived. This results in an overall lower rating than may be
warranted. “He is not formally dressed up in the office. He may be casual at work too!”.
4. Excessive Stiffness or Lenience: Depending upon the raters own standards, values and
physical and mental makeup at the time of appraisal, ratees may be rated very strictly or
leniently. Some of the managers are likely to take the line of least resistance and rate
people high, whereas others, by nature, believe in the tyranny of exact assessment,
considering more particularly the drawbacks of the individual and thus making the
assessment excessively severe. The leniency error can render a system ineffective. If
everyone is to be rated high, the system has not done anything to differentiate among the
employees.

Performance management

Performance management is the process of identifying, measuring, managing, and developing

the performance of the human resources in an organization. Performance appraisal, on the other
hand, is the ongoing process of evaluating employee performance
Unlike performance appraisals, a performance management system looks at the present and the
future of an employee’s position with the organization and provides ways for employees to do
better in their role with the future in mind. Performance management can be defined as “all
activities which enable staff to perform to the best of their abilities.”
Performance management can mean everything from HR’s activities in choosing the right
candidates, to giving staff access to training and courses to build core competencies, to assigning a
mentor that will give feedback, and more. In contrast to performance appraisals, performance
management is an ongoing process of evaluating employee performance and providing
constructive criticism to encourage and support the progress of staff toward organizational goals.

Performance feedback

 Create the Right Contest for the Discussion :

 Managers should choose a neutral location for the feed-back session. should describe the
meeting as an opportunity to discuss the role of the employee.
 Ask the Employee to Rate His or Her Performance before the Session :
 Having employees complete a self-assessment before the feedback session can be very
productive. It requires employees to think about their performance over the past rating
period, and it encourages them to think about their weaknesses.
 Encourage the Subordinate to Participate in the Session :
 When employees participate in the feedback session, they are consistently satisfied with the
process. Participation includes allowing employees to voice their opinions of the
evaluation, as well as discuss performance goals.
 Recognize Effective Performance through Praise :
 Performance feedback sessions as focusing on the employee's performance problems. The
purpose of the session is to give accurate performance feedback, which entails recognizing
effective performance as well as poor performance.
 Focus on Solving Problems :
 To improve poor performance, a manager must attempt to solve the problems causing it.
This entails working with the employee to determine the actual cause and then agreeing on
how to solve it.

Training and Development

1. Training:
Training is the act of increasing the knowledge and skill of an employee for doing a
particular job. Training is the methods used to give new or present employees the skills they need
to perform their jobs.

2) Development: Development is a long-run process. It is concerned with managerial

personnel.
 B) Definitions :
 Dale S. Beach. :
“Training is the organized procedure by which people learn knowledge and / or skill for a
definite purpose. “

 Michael J. Jucius. :
"Training is a process by which the aptitudes, skills and abilities of employees to perform
specific jobs are increased.”

The objectives of training are as follows:

 To provide job related knowledge to the workers.

 To impart skills among the workers systematically so that they may learn quickly.
 To bring about change in the attitudes of the workers towards fellow workers, supervisor
and the organization. a. Higher productivity
 Increased efficiency in operation
 A safe and harmonious working environment.

Importance of Training:
1. Increased Productivity:
It improves performance. Better skilled workers increase quantity and improve quality of output.
Wastages are reduced. It reduces the learning time with the resultant productivity.

2. Improvement in Employee Morale:

Training improves needed skills, which build up confidence and satisfaction. This, in turn,
develops enthusiasm and pride, which are indicative of high morale.

3. Better Safety:
More accidents are caused by deficiencies in people than by deficiencies in equipment and
working condition. Proper training with emphasis upon selected safety points reduces accidents.

4. Reduced Supervision:
Untrained personnel are a source of constant worry to the immediate supervisor. Once he acquires
the requisite skill he is entitled to lesser close supervision.

5. Personal Growth:
The training programmes give the participants a wider awareness, a sense of self-satisfaction and
fulfilment, an enlightened philosophy and a value system that are the apex to the personal growth.

6. Ensure better Placement:

Training helps in spotting out promising men and in locating mistakes in selection. Promising
trainee will be discovered from his quick understanding of instructions.

7. Organizational Stability:
Training and development programmes foster the initiative and creativity of employees, which
increases a sense of belonging, thus preventing manpower obsolescence. There is no greater
organizational asset than that of trained and motivated personnel.

Features

I. Increases knowledge and skills for doing a particular job- Training bridges the gap between job
needs and employee skills, knowledge and behaviours.
II. Focuses attention on the current job- It is job specific and provides employees with specific
skills. Training helps employees’ correct deficiencies in their performance.
III. Concentrates on individual employees- Training lays emphasis on changing what employees
know, how they work, their attitudes toward their work or their interactions with their co-workers
or supervisors.
IV. Narrow focus- Tends to be more narrowly focused and oriented toward short-term
performance concerns. It tries to fix current skill deficit. The goal of training is a fairly quick
improvement in workers’ performance. It is a job specific and individual-oriented effort aimed at
improving short term performance fairly quickly
V. Relatively permanent change in employee behaviour- Training is actually a learning experience
that seeks a relatively permanent change in individuals that will improve their ability to perform on
the job.
Development, in contrast, is considered to be more general than training and more oriented to
individual needs in addition to organizational needs and it is most often aimed toward management
of people.
There is more theory involved with such education and hence less concern with specific behaviour
than is the case with training. Usually, the intent of development is to provide knowledge and
understanding that will enable people to carry out non-technical organizational functions more
effectively.
The term ‘education’ is wider in scope and more general in purpose when compared to training.
Training is the act of increasing the knowledge and skills of an employee while doing a job. It is
job-oriented (skill learning). Education, on the other hand, is the process of increasing the general
knowledge and understanding of employees.
It is a person-oriented, theory-based knowledge with the main purpose of improving the
understanding of a particular subject or theme (conceptual learning). Its primary focus is not the
job of an operative.
Education is imparted through schools or colleges and the contents of such a programme generally
aim at improving the talents of a person. Training is practice-based and company-specific.
However, both have to be viewed as programmes that are complementary and mutually supportive.
Both aim at harnessing the true potential of a person/employee.

TRAINING PROCESS

Step # 1. Identifying Training Needs:

Training need is a difference between standard performance and actual performance. Hence, it tries to bridge
Step # 2. Establish Specific Objectives:
After the identification of training needs, the most crucial task is to determine the objectives of training. Henc

3. Select Appropriate Methods:

Training methods are desired means of attaining training objectives. After the determination of
training needs and specification of objectives, an appropriate training method is to be identified
and selected to achieve the stated objectives. There are number of training methods available but
their suitability is judged as per the need of organizational training needs.
Step # 4. Implement Programs:
After the selection of an appropriate method, the actual functioning takes place. Under this step,
the prepared plans and programs are implemented to get the desired output. Under it, employees
are trained to develop for better performance of organizational activities.
Step # 5. Evaluate Program:
It consists of an evaluation of various aspects of training in order to know whether the training
program was effective. In other words, it refers to the training utility in terms of effect of training
on employees’ performance.

Methods of Training:
There are various methods of training. The choice of any of the methods depends upon several
factors like cost of training, number of workers, depth knowledge required, background of the
trainees, purpose of training and so on.

1. On-The-Job Training:
On the job training is concerned with developing employees in the present job. It involves assignment of the n

He is trained by an experienced employee, special instructor or his superior. With competent

instructors, this type of training may be most effective, for rapid training of large number of
unskilled and semi-skilled workers. It is a simple method, since there is no division of
responsibility between the training department and the line supervisors.

a. Vestibule Training:
New workers are trained for specific jobs and special machines or equipment are provided in a
separate location, near the actual place of work under practical work situation. Here more
emphasis is on teaching the best method than on production. Trainees have an opportunity to get
accustomed to work routine and recover from their initial nervousness before going on to the
actual job.
b. Apprenticeship Training:
This method is followed in those trades, crafts and technical fields in which long period is required
for gaining proficiency. It aims at providing necessary background, practical knowledge and
necessary experience to the worker.

It combines classroom instructions, demonstrations and on-the-job training. A trainee has to work
in direct association and under the direct supervision of his masters. Learning is by imitation and
experience.

c. Coaching Training by Supervisors:

The fresh employee is trained by the supervisor, who familiarises him with the input and outputs of
the work and techniques of operation of equipment etc. The supervisor guides and instructs or
supervise the employee, whenever needed.

The employee has also opportunity of remaining doubts. The method develops good relationship
between worker and supervisor. The method prove to be ineffective, if the supervisor is
incompetent and does not take interest in the training.

d. Orientation or Induction Method:

The training is imparted by a competent and experienced executive, who provides knowledge
about the work; tools, equipment, techniques and situational problems. The object of the training is
to make the employee aware and believe in the ideologies of the working.

e. Under Study Method :

It is another method of ‘on the job training.’ Under this method, the worker or the new employee is
imparted training by senior and experienced. The method teaches motivation, because the
employee has to continue training for a long period.

f. Job Rotation Method :

It is broad-based training, wherein the employee has to rotate from one job to other, from one
department to other department, from are work to other work, or from one section to other section,
so that he may learn the working of various departments.

2. Off- The- Job Training:

1. Conference/Lecture and Seminar Method:
The top level of management holds conference and shows his views with the employees. He
informs to the employee about the future development in the Field and new ideas. He also gives
the ideal measure to solve all the problems. This is an easy method and is adopted at levels of
training.

2. Internship Training:
Here the technical institutions and business houses cooperate. Such training will bring about a
balance between theory and practice. Students may be sent to factories for practical training under
this system. Reputed training institutes provide meaningful training.

3. Classroom Method:
Where concepts, attitudes, theories and problem-solving abilities are to be learnt, the classroom
instruction is the most useful device. In other words it is more associated with knowledge rather
than skill. Orientation about organization; safety training or refresher training can be accomplished
most effectively in the classroom.

There may be different methods of instruction such as:

(i) Formal Lecture:
Formal Lectures are arranged by the organization and delivered by the lecturer presumed to be a
master of the subject at hand. The lecture method may be used for a large group and therefore, cost
per trainee is low. Trainee should be permitted to ask questions.

(ii) Conference and Seminar:

The seminars and conference may be arranged to achieve the training purpose. Under this method,
a particular topic is followed by discussion and exchange of view under a chairman, who sums up
the discussion by his fruitful advices and comments.

(iii) Case Study:

It is a practical problem faced by an industrial unit which is discussed at large in the group,
possibly to find an optimum solution. The supervisor reviews the solutions and discusses it with
the trainees.

(iv) Role-playing:
Under this system, the trainees play their assigned role under an instructor who prepares them and
assigns different rules for the play.

4. Case Study Method:

In order to solve many problems in the management the social, economic and technical aspects of
the problem is to be studied. If the worker is struggling with the problem, he must be briefed about
it and it has to be rectified with the solution.

5. Role Playing:
Under this method of training practical Knowledge of the work is imparted through assigning
notes of manager, supervisor, worker, customer etc. The employee learns how to deal with the
complexities of interdependence and interaction involved in different roles.

6. Management Institutions:
Training is arranged in different training colleges, universities and management institutions.
Desirous candidates and employees of business establishment, Join these courses and gain
Knowledge in the specific Field.

7. Brain Storming:
Through collective analysis process we can solve all the business problem. A group of people from
various fields are invited to put forward their ideas, Knowledge, and experience. In other words,
the training is imported by pooling of collective Knowledge and experience of trainees.
Evaluation of Training Program

Training evaluation is a systematic process to analyze if training programs and initiatives are
effective and efficient. Trainers and human resource professionals use training evaluation to assess
if the employee training programs are aligned with the company's goals and objectives.

Kirkpatrick Training Evaluation Model

The Kirkpatrick Four-Level Training Evaluation Model is designed to objectively measure the
effectiveness of training. The model was created by Donald Kirkpatrick in 1959, with several
revisions .

Level 1 Reaction measures how participants react to the training (e.g., satisfaction?).

Level 2 Learning analyzes if they truly understood the training (e.g., increase in knowledge, skills
or experience?).
Recommended Text book
1.Human Resource Management, Dr. S.S. Khanka, Sultan Chanda , Delhi
2.Human Resource Management, Deepak Bhattacharya, Sage Publishing Ltd.
3.Human Resource Management, Arun Monppa , Tata McGraw Hill Publishing Company
4.Human Resource Management, Mirza & Zaiyaddin
6.Human Resource Management, R.S.Dwiwedi , Vikas Publishing House.
7.Human Resource Management, C.B.Mamoria , Himalaya Publishing House
8.Human Resource Management, Gary Dessler Dorling Kindersley Pvt Ltd.
9.Human Resource Management: Text and Cases, K Aswathappa , Tata McGraw Hill Publishing
Compnay.
Suggested Reference Books:

1. Human Resource Management in Organizations, Izabela Robinson, Jaico Publishing House.

2. Armstrong’s Essential Human Resource Management Practice - A guide to people management,
Michael Armstrong, Koganpage.
3. Applied Psychology in Human Resource Management, Cascio & Aguins, PHI.