Concept of Performance Management

It is the process of : Planning performance,  Appraising/Evaluating performance,  Giving its feedback, and  Counseling an employee to improve his performance.

Dr.Sarita Kumari,Associate Professor,IIBM,Navi Mumbai 1

1.Performance Planning

 It

is the process of determining what and how a job is to be done in such a manner that both the employee and his superior understand what is expected from the employee and how success is defined and measured.

Kumari,Associate Professor,IIBM,Navi Mumbai


Dr.Navi Mumbai 3 .Process of Performance Planning  In consultation with the superior. each objective and its contribution to organizational objectives is discussed and it is also determined how the accomplishment of each objective will be measured.  During Performance Planning session. any developmental activities that will be required by the employee are worked out.  In the light of the stated objectives. the employee formulates his job objectives keeping in view the organizational/unit objectives.Associate Professor.Sarita Kumari.IIBM. it is the responsibility of the employee to carry out the objectives and responsibilities specified in the plan.  Once performance plan is established.

Employee Appraisal.2. Personnel Rating. The other names of Performance Appraisal include Performance Evaluation. Performance Review.Associate Professor. It is the activity used to determine the extent to which an employee performs work effectively. Dr.Navi Mumbai 4   .Sarita Kumari. normally including both quantitative and qualitative aspects of job performance. Merit Rating.Concept of Performance Appraisal  Performance Appraisal is the method of evaluating the behavior of employees in the work spot . and Employee Evaluation.IIBM.

Sarita Kumari.IIBM.Navi Mumbai 5 .  Personal development.Associate Professor. Dr.  Promotion decisions.  Feedback.  Training and development programs.Objectives of Performance Appraisal Appraisal of employees serves several useful Purposes such as:  Compensation decisions.

Have raters gather data on employees’ performance. Make decisions and file evaluation. Step 1 of this process is completed when an organization conducts a job analysis. Establish performance standards for each position and criteria for evaluation. 5.Sarita Kumari. Establish performance evaluation policies on when to rate. 3.Associate Professor.IIBM. 2. In order to provide these a systematic process must be followed which is as follows: 1. and who should rate. Have raters (and employees in some systems) evaluate employees’ performance. Discuss the evaluation with the employees.Format/Process of Appraisal Performance appraisal must provide accurate and reliable data.Navi Mumbai . 4. 6. 6 Dr. how often to rate.

Navi Mumbai 7 .Format/Process of Appraisal Cont… Establish Criteria: The dimensions of performance upon which an employee is evaluated are called the Criteria of Evaluation .Associate Professor. for example quality of work. they should arrive at similar conclusion about the quality of that worker’s output. quantity of work.Sarita Kumari. If different raters view the same worker. The most important type of consistency for a performance measure is inter rater reliability. Dr. and cost of work etc… An effective criterion should possess the following characteristics: a) Reliability: A measure of performance must be consistent.IIBM.

Associate Professor.Navi Mumbai 8 . That is.Format/Process of Appraisal Cont… b) Relevance: A measure of performance must be related to the actual output of an incumbent as logically as possible. d) Practicality: The criterion must be measurable. c) Sensitivity: Any criterion must be able to reflect the difference between high and low performers. Dr. high and low performers must receive criterion scores that accurately represent the difference in their performance. and data collection cannot be inefficient or too disruptive.IIBM.Sarita Kumari.

 The choice of criteria is not an easy process.Associate Professor.IIBM.  One must be careful to evaluate both activities (for example.Format/Process of Appraisal Cont… Most studies reveal multiple criteria are necessary to measure performance completely.  Dr. rupees of sales).  Management must weigh the importance of multiple criteria.Navi Mumbai 9 . A combination of criteria using results and activities is desirable. The multiple criteria are added together statistically or combined into a single multifaceted measure. number of calls a salesperson makes) and results (for example.Sarita Kumari.

10 . Hence the manager can not evaluate performance effectively. There are two choices for when to actually conduct evaluations: (a) The date the person was hired—Anniversary date. (ii) It may not be related to normal task cycle of the employee. When. and How Often:  When should evaluation be done? -In US a majority of the organizations continue to evaluate performance on an annual basis. (b) Alternatively a single calendar date. Merit-It is convenient administratively Demerits – (i) It requires rater to spend lots of time conducting evaluation interviews and completing forms at one time.Format/Process of Appraisal Cont… Set Policies on Who Evaluates. for which they may want to get it over with quickly.

Dr.Format/Process of Appraisal Cont… Set Policies on Who Evaluates.  Alternatively without a clear task cycle.IIBM. When.6) percent of US organizations evaluate performance twice a year.Sarita Kumari.6) percent of US organizations have implemented quarterly evaluation.Navi Mumbai 11 .Even small (3. Goals can be established by the consensus of manager and employee regarding the task cycle .Associate Professor.One study of 244 Indian firms found that appraisals were most often conducted once a year. Task cycle terminates with an evaluation of the employee’s performance during that cycle. One way to set the date is by setting goals. and How Often Cont…:  Hence it is better to schedule the evaluation at the completion of a task cycle.A small proportion(15. based on the date. . . .

Consultants.Sarita Kumari.Navi Mumbai 12 . When.Format/Process of Appraisal Cont… Set Policies on Who Evaluates. Dr. Combination of Approaches (360 Degree Feedback).Associate Professor. and How Often Cont…:  Who should do the appraising? Performance evaluation is a HRM activity that involves cooperation between the line operating managers and HR specialists. The various appraisers are: a) b) c) d) e) f) g) Operating Manager (Immediate Supervisor) Committee of Several Supervisors Employee’s Peers (Co-Workers) Employee’s Subordinates Self Appraisal.IIBM.

" "multi source feedback.V Rao and others at IIMA as a fact finding and self correction technique. Dr. such as pay or promotion. feedback from external sources such as customers and suppliers or other interested stakeholders.  Feedback is provided by subordinates.  The results from 360-degree feedback are often used by the person receiving the feedback to plan training and development.IIBM. and supervisors. It was originally developed by T.  It may be contrasted with "upward feedback. also known as "multi-rater feedback. peers. "360" refers to the 360 degrees in a circle.Navi Mumbai 13 .Sarita Kumari." is feedback that comes from all around of an employee. Results are also used by some organizations in making administrative decisions. It also includes a self-assessment and. with an individual figuratively in the center of the circle. 360-degree feedback." where the employees are most often reviewed only by their managers.Associate Professor. in some cases." where managers are given feedback by their direct reports. or a "traditional performance appraisal." or "multi source assessment.Format/Process of Appraisal Cont… 360-Degree Feedback:  In human resources or industrial/organizational psychology.

Feedback from all. Anonymous upward feedback which results in full participation. 2. & outsider.Associate Professor.Sarita Kumari. Requires a plan and welltrained raters which is not typically found in organizations. can be overwhelming. 5. 3. 3. Ratings can evaluate person based on actual contact and observation. 2. 5. Rater can hide in a group of rates and provide harsh evaluations. Conflicting ratings can be confusing and frustrating. Multiple perspectives of a person’s performance. peer.Navi Mumbai 1. 4. below. 4.Format/Process of Appraisal Cont… Merits of 360-Degree Feedback 1. Linking findings to rewards can prove to be unfair. Learning about weaknesses and strengths is motivational. Demerits of 360-Degree Feedback: Dr. 14 . Feedback is provided from multiple directions-above.IIBM.

The Methods are: 1.Checklists and Weighted and Checklists 6.Ranking 2.Methods/Techniques of Performance Appraisal Individual Evaluation Methods Evaluating employees individually.Sarita Kumari. The methods are: 1. No comparison with other employees.IIBM.Forced Choice 3.Forced Distribution Dr.Paired Comparison 3.Critical Incident Technique 5.Essay evaluation 4. Thus the standard of performance are relative: an employee’s performance is defined as good /bad as compared with the performance of other employees.Behaviorally Anchored Rating Scale Multi-Person Evaluation Methods Direct/indirect comparison of performance of one employee with that of other employees.Associate Professor.Navi Mumbai 15 .Graphic Rating Scale 2. The standards of performance are defined without reference to other employees.

These are as follows: Judgment Error Poor Appraisal Forms Lack of Rater Preparedness Ineffective Organizational Policies and Practices Dr. The problems that affect the validity and dependability of the Performance appraisal systems are called Performance Appraisal Errors.IIBM.Performance Appraisal Errors  (A) (B) (C) (D) Performance appraisals are intended to evaluate the performance and potential of employees. Still these may not be valid indicator of what these are intended to assess because of a variety of limitations on their uses.Associate Professor.Sarita Kumari.Navi Mumbai 16 .

Sarita Kumari.Navi Mumbai 17 .IIBM.Associate Professor. These are:          First Impression( Primacy Effect) Latest Behavior (Recency Effect) Halo Effect Horn Effect Stereotyping Central Tendency Leniency Strictness Spillover Effect Dr.Performance Appraisal Errors Cont… (A)Judgment Error: People commit mistake due to biasness and judgment errors while evaluating people and their performance.

adequate. Problems with evaluation standards arise because of perceptual differences in the meaning of the words used to evaluate employees.Navi Mumbai 18 .Sarita Kumari.Associate Professor. and excellent may mean different things to different evaluators.  The forms may be too long and complex.  The rating form may ignore important aspects of job performance.Performance Appraisal Errors Cont… (B) Poor Appraisal Forms : The appraisal process might also be influenced by the following factors relating to the forms that are used by raters: The rating scale may be quite vague and unclear. satisfactory. Thus good.IIBM.  Dr.

the motivation to do the job thoroughly finishes off. This is a serious problem when technical competency of a ratee is evaluated. Dr.Performance Appraisal Errors Cont… (C) Lack of Rater Preparedness:  The raters may not be adequately trained to carry out performance management activities.  The rater may have poor self image and low confidence.Associate Professor.Navi Mumbai 19 . (D) Ineffective Organizational Policies and Practices: If the sincere appraisal report put in by a rater is not suitably rewarded.  The rater may get confused when the objectives of the appraisal are somewhat vague and unclear.  The rater may not have sufficient time for systematic appraisal and feedback sessions.IIBM.Sarita Kumari.

IIBM.Sarita Kumari. In the modern era of HRM.Potential Appraisal     1.Navi Mumbai 20 . Dr. Help the organization chalk out a suitable succession plan. This is better fulfilled by the Potential Appraisal which involves assessing the capability of an employee which he possesses but that is not being utilized fully. Update training efforts from time to time. appraisal system lays greater emphasis on the development of employees rather than on their evaluation. It is to identify the potential of a given employee to occupy higher positions in the organizational hierarchy and undertake higher responsibilities. 3. 4. Potential appraisals are required to: Inform employees about their future prospects.Associate Professor. 2. Advise employees about what they must do to improve their career prospects.

2) Psychological tests to know managerial and behavioral dimensions.e. risk taking 21  .Process of Potential Appraisal Role descriptions Organizational roles and functions must be defined clearly.  Qualities needed to perform the roles Based on job descriptions the roles to be played by people must be prepared (i. technical. 3) Simulation games to uncover the potential of the candidate. managerial jobs and behavioral dimensions)  Rating mechanisms 1) Rating by others to examine technical capabilities. For this job descriptions must be prepared for each job. 4) Performance records and ratings on candidates previous jobs can be examined on dimensions like creativity.

What are the mechanisms of assessing the individual on different indicators of his potential.Navi Mumbai 22 .Sarita Kumari.Process of Potential Appraisal Cont. How much weightage to accord to merit in place of seniority in promotions? 2.Associate Professor. and behavioral qualities? 3. Organizing the system HR manager sets up a system to allow the introduction of the scheme smoothly incorporating answers to some complex questions such as: 1. managerial.  Dr. How much weightage to accord to each of the performance dimensions-technical. and with what degree of reliability?  Feedback Every employee must have the opportunity to know the results of his assessment..IIBM.

Navi Mumbai HIGH 23 .PROBLEM CHILDREN 1. ? 4.Sarita Kumari.IIBM. SOLID CITIZENS POTENTIAL PLANNED SEPARATION LOW LOW PERFORMANCE Dr.Associate Professor.Potential Appraisal at Philips India HIGH 3. STARS 2.

2.  It is a potential-cum-performance based model. business orientation. personal influence. Philips lays down a fast-track career growth plan for the star performers (five to ten year plan) Dr. professional ambition. and control etc.) Once the potential of an employee is measured along these dimensions on a five-point scale.) Operational Effectiveness (including result orientation. Philips uses a five-point scale to measure the potential of an employee and put him into one of the above quadrants.Navi Mumbai 24 . 4. entrepreneurial orientation. 3. innovativeness.Associate Professor.IIBM.Sarita Kumari. and sense of reality etc. individual effectiveness.) Interpersonal Effectiveness (including network directedness.) Achievement Motivation (including drive. negotiating power. and stability etc. and verbal behavior etc. risk-taking.Potential Appraisal at Philips India Cont…   1. The potential appraisal criteria include the following: Conceptual Effectiveness (including vision.

Associate Professor. What his strengths and weaknesses are. Appraisal Feedback must be provided to employees to enhance their Self-Perception.3.Appraisal Feedback   1. Self-Perception is the process of understanding oneself: Where he stands in terms of his efficiency.Navi Mumbai 25 . 4. Dr. he is able to use his capabilities.Sarita Kumari. 2. 3. To what extent.IIBM. How he can improve himself further.

   Exploring information about performance.Sarita Kumari.Performance Counseling It is an interactive process between the employee and his counselor to anticipate the likely problems in job performance.4. and implementing those actions on a continuous basis. Drawing action plans. To define future goals. defining proactive actions to overcome those problems. Dr. Steps in Performance Counseling:  Rapport between employee and counselor.IIBM.Associate Professor.Navi Mumbai 26 .

Focus on work-related behavior. Dr.Sarita Kumari.Navi Mumbai 27 .IIBM. Continuous desire for learning.Performance Counseling Cont… Pre-requisite for Performance Counseling:     Organizational culture for performance improvement.Associate Professor. Continuous dialogue.

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