PERFORMANCE MANAGEMENT AND COMPETENCY MAPPING
PROF. SHWETA MITTAL
EVOLUTION OF PERFORMANCE APPRAISAL There are early references to performance appraisal in America going back over a hundred years. The federal Civil Service Commission’s merit rating system was in place in 1887. Lord & Taylor introduced performance appraisal in 1914. Before World War II, however, very few organizations conducted any formal performance appraisals. In the 1950s Peter Drucker’s novel idea of management by objectives (MBO) and Douglas McGregor’s book The Human Side of Enterprise, which introduced his notions of Theory X and Theory Y, gained a lot of attention. A few companies moved from a mere trait assessment to the development of a procedure that concentrated on goal setting and made the appraisal process a shared responsibility between the individual and the manager. From the work of Drucker and McGregor, the performance appraisal procedure has grown to the point where a huge majority of companies now have a formal appraisal system.
‘‘Effective development of managers,’’ McGregor wrote in a 1957 Harvard Business Review article, ‘‘does not include coercing them (no matter how benevolently) into acceptance of the goals of the enterprise, nor does it mean manipulating their behavior to suit organizational needs. Rather, it calls for creating a relationship within which a man can take responsibility for developing his own potentialities, plan for himself, and learn from putting his plans into action.’’
Drucker’s initial proposal of an MBO process to replace trait appraisals and McGregor’s integration of a ‘‘Theory Y’’ approach into the appraisal process produced a change in the way organizations went about assessing the contributions of their members. General Electric was singled out by McGregor as an example of a company that was using an MBO/Theory Y approach to performance appraisal. GE conducted a truly scientific study in the early 1960s to test the effectiveness of its annual, comprehensive appraisal approach. It found that: Criticism has a negative effect on achievement of goals. Praise has little effect one way of the other. Performance improves most when specific goals are established.
Today. somewhere between three-quarters and nine-tenths of all companies use a formal performance appraisal procedure. Mutual goal setting.Coaching should be a day-to-day. not criticism.
. not a once-a-year activity. Participation by the employee in the goal-setting procedure helps produce favorable results. when about half of 400 employers surveyed reported using appraisal systems. These findings remain today as valid as they were when GE first developed them. Performance appraisal as a management tool spread quickly in the 1950s. Interviews designed primarily to improve a man’s performance should not at the same time weigh his salary or promotion in the balance. depending on the survey. improves performance.
goals . objectives . vision .
. Performance management is a systematic and holistic approach to identify critical dimensions of performance and to carry out activities necessary to ensure that the missions . and values of the organization are being met in an effective and efficient Manner.Armstrong and Baron (2004) observe that performance management establishes a shared understanding about what is to be achieved and an approach to leading and developing people which will ensure that it is achieved.
defines PfM as a strategic and integrated approach in delivering sustained success to organizations by improving performance of people by developing the capabilities of teams and individuals. These experts consider PfM as a strategic tool since it is concerned with achievement of long-term organizational goals and effective functioning of organizations in its external environment. teams and individuals by understanding and managing performance within the agreed framework of planned goals and competency requirements.According to Armstrong.
. ‘PfM is a means of getting better results from the organizations. PfM – Integrated Approach Armstrong and Baron.’ It is a process for establishing shared understanding about what is to be achieved and an approach to managing and developing people.
and strategies onto tasks at different levels and parts of the organization. Aspirations. Functional integration :. Policies .It deals with focusing functional energies . and goals of the managers with that of the goals and objectives of the organization.This ensures effective integration of different subsystems of HR management to achieve the organizational goals with optimum performance. individual . Goal integration :. Vertical Integration :.PfM effects four types of integrations namely.It focuses on arriving at a congruence between the needs.
. plans. and team levels and integrating them for effective performance.Aligning objectives at organizational . Human resource integration :.
In Merrill Lynch . Finally end of the year review incorporates feedback from several sources. and imposing rigorous consequences. EXAMPLES :. evaluates progress towards objectives and identifies areas that need improvement. and developing the performance of individuals and teams and aligning performance with the strategic goals of the organization. the performance management system is based on three pillars : setting clear and measurable goals. implementing concrete action. measuring. employees and managers set employee objectives in the month of January. Managers also get extensive training on how to set objectives and conduct reviews.Performance management is a continuous process of identifying .
. A survey conducted by the consulting firm Watson Wyatt showed that only 3 in 10 employees believe their company’s performance review system actually helped them improve their performance. Mid year reviews are taken. At Siemens .
Performance Management is NOT performance appraisal
PM is NOT performance appraisal • Performance Management
– Strategic business considerations – Driven by line manager – Ongoing feedback
• So employee can improve performance
PM is NOT performance appraisal • Performance Appraisal
– Driven by HR – Assesses employee
• Strengths & • Weaknesses
– Once a year – Lacks ongoing feedback
Output or result dimensions 2. Cost dimension
. It is simple.
Performance has many dimensions:1.PERFORMANCE MANAGEMENT SYSTEM
• Performance management involves thinking through various facets of performance . reviewing and developing and enhancing performance and related competencies. commonsensical and enjoyable. Quality dimension 6. Focus dimension 5. identifying critical dimensions of performance. Time dimension 4. Input dimension 3. planning.
for a month . They are called key result areas.The most acceptable and visible as well as measurable dimension of performance is result or the output. Input Dimension :. Performance equation says that any individual’s is a function of three sets of factors : ability or competence to perform various tasks that lead to performance.The input dimension deals with the activities or tasks to be accomplished by the individual.Result and Output :.Performance can be defined for a task.
. Time Dimension :. year or for life. The time period for performance is important. for a week. for a day . Performance management is time bound as well as role specific. The sales figures. customers numbers. motivation to carry on each of these tasks or work efforts to carry out the tasks and the organizational support one gets to carry out these tasks. financial targets etc are all stated in result form.
profits or new areas covered .
.Focus :.The performance of a sales executive – focus can be on market Share .
. planning. Emphasis is on ratings and Emphasis is on performance Evaluation. development and improvements. review. ratings.Difference between Performance Appraisal Systems and PMS
Focus is on performance Focus is on performance appraisal and generation of management. Annual Exercise Continuous process. improvements . analysis . Emphasis is on relative Emphasis is on performance evaluation of individuals.
Designed by the HR department but could be monitored by the respective departments themselves.
Ownership is mostly with the Ownership is with line managers. Designed and monitored by the HR department.PAS
Rewards and recognition of good performance is an important component.
Defining and setting performance standards is an integral part. implementation.
. HR facilitates its HR department.
Developmental needs are identified at the end of the year on the basis of the appraisal of competency gaps.
. Developmental needs are identified in the beginning of the year on the basis of the competency requirements for the coming year. There are review mechanisms to ensure objectivity in ratings.PAS
KPAs and KRAs are used for bringing in objectivity.
KPAs or KRAs are used as planning mechanisms. There are review mechanisms essentially to bring performance improvements.
Performance is what is expected to be delivered by an individual or a set of individuals within a time frame.
. with specification of condition under which it is to be delivered. tasks and quality . What is expected to be delivered could be stated in terms of result or effort.
Positively ? Negatively ?. output. Developing capabilities to perform or the capability to give inputs . conditions under which these are to take place.PERFORMANCE MANAGEMENT CONSISTS OF THE FOLLOWING :1. 3. 4. 5.
.Defining performance taking into account all the complexities.Planning performance both in terms of the input. 6. possess competencies to convert the inputs into desired output. Monitoring and reviewing it.Analyzing performance and understanding what caused it or contributed to it . 2.Recognizing various dimensions of performance and rewarding it where appropriate.
punishments and threats. 3.
. To control employee behavior by using it as an instrument for rewards. To make decisions regarding salary increases and promotions . 2. 4. To appraise people confidentially and generate data about employee for placement and promotion. To identify the training and developmental needs of the employees.OBJECTIVES OF PERFORMANCE APPRAISAL – THE PAST
The appraisal system in most organizations are designed today to meet the following objectives : 1.
They can help each employee to understand more and more about his role and become clear about his functions. They can be instruments in helping each employee to understand his own strengths and weaknesses with respect to his role and functions in the company. 5. if designed properly:1.NEW OBJECTIVES OF PERFORMANCE APPRAISAL
Performance appraisal systems can serve the following purposes. 2. 4. They can help in identifying the developmental needs of each employee with respect to his role and functions. 3. They can be mechanisms of increasing communication between employee and his supervising officer. They can increase mutuality between each employee and his supervising officer.
. 7. norms and values of the organization .6. They can help in preparing employees for performing higher level jobs. They can be instruments to provide an opportunity for the employee for self reflection and individual goal setting so that individual planned and monitored development takes place. 9. 8. They can play a role in helping every employee internalize the culture . They can be instruments in the creation of a positive and healthy climate in the organization that drives to give their best and enjoy doing so.
5.A SUGGESTED FORMAT
• 1. 4. Self appraisal by the appraisee. In order to achieve these objectives the appraisal format should have the following components:Identification of key performance areas and target setting through periodic discussions between each employee and his boss.
2. 3. Performance discussion and counseling to understand each other and assist each other. Performance analysis to identify factors that have facilitated and factors that have hindered performance. Identification of qualities required for the present and future jobs in the company.
7. He then calls the appraisee for the discussion. SEQUENTIAL STEPS The following sequences of activities is suggested for using the components outlined so far : 1. 8. At the end of the year the employee appraises his performance on these KPA’s and targets as well as pre identified behaviors included in the appraisal format. Final assessment by the supervising officer for administrative purposes. He then passes on his form to his supervisor. 3. His supervisor reflects about the performance of his appraisee and make his notes and comments. Action planning and goal setting for future. Identification of training needs. In the beginning of the year every employee sits with his supervisor and identifies his individual KPAs and sets challenging targets for the next year. 2.
They also identify the development needs of the appraisee and set goals for the next period. etc and try to understand and help each other.4.
. The supervisor then gives his final ratings and recommends about the developmental needs. comments. During the performance discussion they exchange notes. rewards and other activities. 6. The personnel or HRD department uses these for training . 5. He shows these to the appraisee and takes his comments if needed and passes these on to the personnel department through his supervisor.
Developing productive relationships with colleagues is a key competency for managers. The definitions of job and criteria are clarified (behavior and results ) ( Specific criteria) Self – insight and development are enhanced Administrative actions are more fair and appropriate.THE PERFORMANCE MANAGEMENT AND REWARD SYSTEMS
A performance management system can make the following important contributions : Motivation to perform is increased Self – esteem is increased Manager’s gain insight about subordinates :.
. Organizational goals are made clear.
There is better and more time differentiation between good and poor performers.g :. Both assessing and monitoring the performance of others are listed as key competencies for managers) Organizational change is facilitated. e. ( There is greater accountability in how managers Discuss performance expectations and provide feedback.Employees become more competent. Supervisors’ views of performance are communicated more clearly.IBM (1980s) Motivation commitment and intentions to stay in the organization are enhanced.
An organization’s culture cannot be installed.”
. It can be guided and influenced by policies. skills and procedures that are implemented and reinforced.COMMENT ON THIS STATEMENT Randy Pennington . “ The truth is that the culture change is driven by a change in performance. practices . The only way to change the culture is to change the way individuals perform on the daily basis. president of Pennington Performance Group .
3. 7. 4. 9. 10. 6.DISADVANTAGES /DANGERS OF POORLY IMPLEMENTED PM SYSTEMS
• 1. Varying and unfair standards and ratings Emerging biases Unclear rating system
. Use of misleading information Lowered self –esteem Wasted time and money Damaged relationships Decreased motivation to perform Employee burn out and job dissatisfaction Unjustified demands on managers and employees resources. 11. 2. 5. The negative consequences associated with low –quality and poorly implemented systems are :Increased turnover :.They can leave physically or withdraw psychologically. 8.
Purposes of PM Systems:
Strategic Administrative Informational Developmental Organizational maintenance Documentational
Link individual goals with organization’s goals Communicate most crucial business strategic initiatives
Provide information for making decisions re:
Salary adjustments Promotions Retention or termination Recognition of individual performance Layoffs
Communicate to Employees: Expectations What is important How they are doing How to improve
Performance feedback/coaching Identification of individual strengths and weaknesses Causes of performance deficiencies Tailor development of individual career path Feedback is an important component of a well – implemented performance management system. including feedback that is non threatening and is Focused on behaviors and coaching to help interpret the feedback provided.
• Organizations should strive to create a “ feedback culture” that reflects support for feedback .
ORGANIZATIONAL MAINTENANCE PURPOSE :.g. abilities. and assignment Histories of current employees). promotional potential.
. which is information on current resources ( e.. DOCUMENTATIONAL :-PMS allow for the documentation of important administrative decisions. Performance management systems are the primary means through which accurate talent inventories can be assembled.Important component of workforce planning effort is the talent inventory. skills.
An Ideal PM System: 14 Characteristics
. Congruent with organizational strategy Thorough Practical Meaningful Specific Identifies effective/ ineffective performance 7. 6. 2. 3. 4. 5.
An Ideal PM System: 14 Characteristics (continued)
8. Acceptable and Fair 10. Open (No Secrets) 12. Standardized 14. Ethical
. Valid 9. Inclusive 11. Correctable 13.
Congruent with organizational strategy
• Consistent with organization’s strategy • Aligned with unit and organizational goals
• All employees are evaluated • All major job responsibilities are evaluated • Evaluations cover performance for entire review period • Feedback is given on both positive and negative performance
• • • • Available Easy to use Acceptable to decision makers Benefits outweigh costs
• Standards are important and relevant • System measures ONLY what employee can control • Results have consequences • Evaluations occur regularly and at appropriate times • System provides for continuing skill development of evaluators
Concrete and detailed guidance to employees • What’s expected • How to meet the expectations
Identifies effective and ineffective performance
• Distinguish between effective and ineffective
– Behaviors – Results
• Provide ability to identify employees with various levels of performance
• Consistent • Free of error • Inter-rater reliability
• Relevant (measures what is important) • Not deficient (doesn’t measure unimportant facets of job) • Not contaminated (only measures what the employee can control)
which includes perception of the performance evaluation received relative to the work performed.It includes perceptions of the procedures used to determine the ratings as well as the procedures used to link ratings with rewards. Procedural justice :.
. and perceptions of the rewards received relative to the evaluation received.ACCEPTABILITY AND FAIRNESS :Distributive justice . Good systems are inherently disdiscriminatory.
Acceptable and Fair
• Perception of Distributive Justice
– Work performed Evaluation received Reward
• Perception of Procedural Justice
– Fairness of procedures used to:
• Determine ratings • Link ratings to rewards
• Represents concerns of all involved
– When system is created.Inclusive
• All participants must be given a voice in the process of designing and implementing the system. employees should help with deciding
• What should be measured • How it should be measured
– Employee should provide input on performance prior to evaluation meeting
ongoing evaluations and feedback 2-way communications in appraisal meeting Clear standards.Open (No Secrets)
• • • • Frequent. ongoing communication Communications are factual. honest
• Recognizes that human judgment is fallible • Appeals process provided
• Ongoing training of managers to provide • Consistent evaluations across
– People – Time
• Supervisor suppresses self-interest • Supervisor rates only where she has sufficient information about the performance dimension • Supervisor respects employee privacy
Performance execution 4.Prerequisites 2.PERFORMANCE MANAGEMENT PROCESS
There are six steps involved in the performance management process
1.Performance Assessment 5.Performance Renewal & Recontracting
.Performance Review 6.Performance planning 3.
P Performan ce Performance Management Process Execution Performan ce Renewal and Recontracti ng PPerforma nce Assessmen t
Performan ce Planning
Performan ce Review
. The second important prerequisite is to understand the job in question. As a result of a job analysis.1. and abilities (KSAs ) required of a particular job. the goals it wants to achieve. and the strategies it will use to attain these goals.There are two prerequisites that are required before a performance management system is implemented :A) Knowledge of the organization’s mission and strategic goals B) Knowledge of the job in question Strategic planning allows an organization to clearly define its purpose or reason for existing. where it wants to be in future. skills. we obtain information regarding the tasks carried out and the knowledge. This is primarily done by job analysis. The important objective of any PMS is to enhance each employee’s contribution to the goals of the organization.
.Job descriptions are a key prerequisite for any performance management system because they provide the criteria (i. yardsticks) that will be used in measuring performance.
In the beginning of each performance cycle. and agree upon .2. the supervisor and the employee meet to discuss .
. This performance planning discussion includes a consideration of both results and behaviors as well as a developmental plan. specific objectives for each accountability and performance standards.
Results refer to what needs to be done or the outcomes an employee must produce. A discussion of results needs to include key accountabilities. Performance Planning :. what needs to be done and how it should be done.
Key accountabilities Specific objectives Performance standards
Broad areas of a job for which the employee is responsible for producing results
Objectives are statements of important and measurable outcomes.Specific Objectives
The objectives are that the employee will achieve as part of each accountability.
• “Yardstick” to evaluate how well employees have achieved each objective • Information on acceptable and unacceptable performance.
How a job is done
Performance Planning: Competencies
• Measurable clusters of KSAs • Critical in determining how results will be achieved • Examples of competencies are customer service , written or oral communication, creative thinking and dependability
Performance Planning: Development Plan
Areas for improvement Goals to be achieved in each area of improvement
Execution :- At the performance execution stage , the following factors must be presented :-
Commitment to goal achievement Ongoing performance feedback and coaching Communication with supervisor Collecting and sharing performance data. Preparing for performance reviews
Supervisory have primary responsibility over the following issues :Observation and documentation Updates Feedback Resources Reinforcement
. Employees write their own performance management objectives based on organization and unit objectives. Then .Lockheed Martin Corporation . managers approve the objectives and are encouraged to give ongoing feedback about the progress toward meeting the objectives.EXAMPLE :. PMS includes the active participation of both employees and their supervisors.
PERFORMANCE ASSESSMENT :. peers. in most cases the direct supervisor provides the information. There are many sources to collect performance information ( e. both the employee and the manager are responsible for evaluating the extent to which the desired behaviors have been achieved.
. subordinates ).In the assessment phase.g.4.
Multiple Assessments Are Necessary
Employee involvement in the process is used for the following purposes : Increase employee ownership Increase commitment Provide information Ensure mutual understanding
Performance Review Overview of Appraisal Meeting
The performance review stage involves the meeting between the employee and the manager to review their assessments. • Past Behaviors and results Present
– Compensation to be received
– New goals and development plans
Performance Renewal and Recontracting
• Same as/different from Performance Planning – Uses insights and information from previous phases – Cycle begins again
Phase I – Planning Setting Performance Objectives Employees and managers meet to clarify expected outcomes for the year and set objectives that link the employee’s job to department and campus objectives.A. Managers and employees should aim to define S.R.T. objectives. Specific Measurable Attainable Relevant Timely
. Objectives define “what” employees are expected to accomplish.M.
It is equally important to provide feedback on areas of success as on those requiring improvement. managers should check in regularly with employees to discuss the status of objectives and to provide feedback based on observations of an employee’s performance. It may occur as often as is necessary to acknowledge the employee for accomplishments and to plan together for improved performance
.Phase II – Check-In Once performance objectives are set. Phase III – Assessment The performance assessment summarizes the employee's contributions over the entire appraisal period (usually one year).
The definition of performance does not include the results of an employee’s behaviors. The characteristics of the behaviors are :1.
.It means that there are many different kinds of behaviors that have the capacity to advance ( or hinder ) organizational goals. but only the behaviors themselves. Multidimensional :. neutral or positive for individual and organizational effectiveness.DEFINING PERFORMANCE AND CHOOSING A MEASUREMENT APPROACH Performance management systems usually include measures of both behaviors ( what an employee does ) and results ( the outcomes of an employee’s behavior ).It means that such behaviors can be judged as negative . 2. Evaluative :.
EXAMPLE Consider a set of behaviors that can be grouped under the general label “ contribution to effectiveness of others in the work unit”. shares information and resources.
. develops effective working relationships: builds consensus. This set of behaviors can be defined as follows : Works with others within and outside the unit in a manner that improves their effectiveness. constructively manages conflict.
DETERMINANTS OF PERFORMANCE A combination of 3 factors allows some people to perform at higher levels than others : 1. and goals. principles. including information regarding a given task's requirements . and interpersonal skills. physical . perceptual. Motivation involves 3 types of choices
.Declarative knowledge 2. Motivation Declarative knowledge is information about facts and things . labels . Procedural knowledge 3. Procedural knowledge is a combination of knowing what to do and how to do it and includes cognitive. motor .
The three determinants have a multiplicative relationship. 2. Such that. Choice to persist in the expenditure of that level of efforts. focus on what is happening and why u are Doing things the way u do. Choice of level of effort 3.
. While performing . Choice to expend effort.1. Deliberate practice involves the following 5 steps:1. Performance = Declarative knowledge * Procedural knowledge *Motivation. Approach performance with the goal of getting better and better. 2.
IMPLICATIONS FOR ADDRESSING PERFORMANCE PROBLEMS Performance management system need not only to measure performance but also to provide information about the source of any performance deficiencies. your situation and your organization. 5. When the task is finished. Repeat steps1-4 continually and on an ongoing basis. Build mental models of your job. 4.3.
. seek performance feedback from expert sources and the more sources the better.
PERFORMANCE = declarative knowledge * Procedural knowledge * Motivation FACTORS DETERMINING PERFORMANCE
Declarative knowledge Facts Principles Goals
Procedural knowledge Cognitive skill Psychomotor skill Physical skill Interpersonal skill
Motivation Choice to perform Level to effort Persistence of effort
PERFORMANCE DIMENSIONS Performance is multidimensional . distributing its finished products.
. or providing important planning . Two types of behaviors or performance facets stand out : Task performance Contextual performance Task performance is defined as :Activities that transform raw materials into the goods and services that are produces by the organization. or staff functions that enable the organization to function effectively and efficiently. Activities that help with the transformation process by replenishing the supply of raw materials . coordination .It means that there is a need to consider many different types of behaviors to understand performance. supervising.
.Contextual performance is defined as those behaviors that contribute to the Organization’s effectiveness by providing a good environment in which task performance can occur.
and defending organizational objectives. supporting . Following organizational rules and procedures. Endorsing . Helping and cooperating with others. TASK PERFORMANCE CONTEXTUAL PERFORMANCE VARIES ROLE PRESCRIBED ANTECEDENT:KSA FAIRLY SIMPLE NO ROLE PRESCRIBED PERSONALITY
.Contextual performance includes behaviors such as the following :Persisting with enthusiasm and exerting extra effort as necessary to complete one’s own task activities successfully. Volunteering to carry out task activities that are not formally part of the job.
Both task and contextual performance in the performance management system provides an additional benefit.The reasons why both task and contextual performance dimensions should be included in performance management System :1. 2. Global competition is raising the levels of efforts required of employees. Many organizations are forming employees into teams. 3. 4.
. There is a need to offer outstanding customer service. Interpersonal cooperation is a key determinant of team effectiveness.
The majority of the TRW behaviors actually focus on contextual performance. Headquartered in Dublin.. one of the world’s largest automotive suppliers and one of the top financial performers in the industry. The case of O2 Ireland. the TRW behaviors emphasize many of the elements of contextual performance including trust and teamwork. O2’s PMS includes Task – related facets centered in hard metrics regarding productivity as well as contextual – related facets such as involvement in staff socialization and contribution to team Development. Specifically .EXAMPLE :. Ireland’s second largest mobile phone operator.TRW Automotive Inc.
O2 concluded that this focus on both task and contextual performance has led to higher levels of customer service and employee satisfaction.
Job Performance in Context
A perform er (individu al or TRAIT team) Engages in certain behavi ors
In a given situati on
That produce various results
Approaches to Measuring Performance
• Trait Approach
– Emphasizes individual traits of employees
• Behavior Approach
– Emphasizes how employees do the job
• Results Approach
– Emphasizes what employees produce
• Emphasis on individual
• Evaluate stable traits
• Cognitive abilities • Personality
• Based on relationship between traits & performance
Trait Approach (continued)
• Appropriate if
• Structural changes planned for organization
• Improvement not under individual’s control • Trait may not lead to
• Desired behaviors or • Desired results
• Link between behaviors and results is not obvious • Outcomes occur in the distant future • Poor results are due to causes beyond the performer’s control
Not appropriate if
• above conditions are not present
• Less time • Lower cost • Data appear objective
Results show consistent improvement over time :. There are many ways to do the right job :.
.When results improve consistently over time. Behaviors and result are obviously related :.An emphasis on results is appropriate when workers have the necessary knowledge and skills to do the work.RESULTS APPROACH The result approach is most appropriate under the following circumstances : Workers are skilled in the needed behaviors :.When there are different ways in which one can do the tasks required for a job. a result approach is appropriate.Certain results can be obtained only if a worker engages in certain specific behaviors. it is an indication that workers are aware of the behaviors needed to complete the job successfully.
Shaping the Bell Right
Forced ranking .Vitality Curve
• The Normal Distribution Curve is used as tool in measuring human capacities.Dead man’s Curve .Up or Out
. Pioneered by the leader Jack Welch former CEO of GE • It is a differentiation tool used to assess an employee’s performance and promotability • Jack called it as ‘Vitality Curve'. Also known as .Rank and yank .
Grading the curve
• The employee force is ranked into a 2070-10 bucket. • Where 20 percent are rated as 'excellent‘ • 70 percent as the ‘vital’ .back bone of the company • 10 percent as ‘bottom-feeders’
Illustratively. Not more than 10% should be promoted in each department 2.Cont.
. 1.. it is to show appraisers that. The rest being rated from average. 3. good to very good. Least 10% must be weeded out for low performance.
The Dead Man’s Curve
Also referred to as 9 Block
Advantages of Vitality Curve in PAM
It brings objectivity to the PAM process It helps in normalization of the appraisal process It lends itself to predictable performance patterns It guides appraisers on how to follow an uniform rating process/pattern • It helps management in planned attrition and in predicting promotions/job enlargements/job enrichments/rewards/incentives. • • • •
. it provides a bird's eye view of the uniform. systematic performance patterns across grades/levels/functions in the organization.Cont. • On a predictive index..
• It systematically identifies high performers for commensurate rewards and identifies low/weak performers for training/forced attrition.
.year. year-on.Disadvantages of Vitality Curve in PAM
• It seems rigid and impractical. especially for small/medium. It may reduce organizational flexibility. • It does not promote 'performance adjustments' • It makes 'extreme raters" skeptical since it does not allow them to rate as they wish causing anxiety or discontentment • It may be difficult to simulate/follow since outstanding performers or weak performers may not essentially be 10%-20% .
• Being a 'forced-distribution' method.. it may face dissent from appraisers • It may not adjust well with skill/managerial demand-supply situations
• The methodology may not be easily understood by all appraisers • Training inadequacy in appraisers may yield disastrous results • Implementation may be difficult since HR has to ensure constant compliance.
ST Microelectronics Ltd. there is a good chance that the worst in the high performing group may be better than the best in an average performing group. Finally. • Subjective . says Hari Mohan Jha. ITC Welcome Group Hotels
. while losing some good ones. the company may be left with low performers. Country Human Resource Director. VP (HR). not across all the employees.Arguments against the use of vitality curve in PAM
• Unethical . but to individual department / team / function.Forcing a certain section of employees every year is unethical says Praneet Mehrish.Since the bell curve is applied.
Logically too. it can work only for a large. it also creates a sense of fear among those who remain behind says Ed Lawler of Enron
• Not compatible for small teams .Bell curve method may increase productivity and pave growth opportunities for good performers. Professor. says Madhukar Shukla. such a model cannot work for a very small group of extremely high or low performers for the simple reason that it force-fits them into predefined compartments. If it works. randomly selected sample. XLRI • Dysfunctional work environment .Cont..
document all performance-related conversations you have had with the employee in order to have important evidence on your side if he or she contests the termination.Before you Bell the Curve. • Finally. • Shift the onus of improvement onto the employee.
. There could be reason for his / her poor performance.. • Follow up frequently. • Confront the employee.
• Use objective parameters for the performance appraisal system. but offer your assistance if needed.
Robert Kaplan (Harvard Business School) and David Norton. The balanced scorecard approach provides a clear prescription as to what companies should measure in order to 'balance' the financial perspective.A new approach to strategic management was developed in the early 1990's by Drs. Balanced Scorecard is the Management System that enables organisation to clarify their vision and strategy and translate them into action.It provides feedback on both internal process abd external outcomes in order to continously improve strategic performance and results.
suppliers. These financial measures are inadequate.Kaplan and Norton describe Balanced Scorecard as: “ Balanced scorecard retains traditional financial measures. however. processes.”
. and innovation. for guiding and evaluating the journey that information age companies must make to create future value through investment in customers. technology. employees. an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. But financial measures tell the story of past events.
Vision and Strategy
Business Process Perspectives
Learning and Growth perspectives
Profit • Cost Reduction • Productivity Improvement • Asset Utilization • Investments
.Explanation of the 4 perspectives
Financial Perspectives: •Revenue Growth.
• It includes things like mentor and tutors. • Employee training and corporate cultural attitude related to both individual and corporate self-improvement. • It includes technological tools “high performance work system”
.Learning and Growth perspective
• Learning and growth constitute the essential foundation for success of any knowledge-worker organization. within the organization as well as ease of communication among workers that allows them to readily get help on a problem when it is needed.
Learning and growth Perspective
Core Measurement Results Employee Retention Employee Satisfaction Enablers Staff Competencies Technology Infrastructure Climate of Action Employee Productivity
Marketing . These processes enable to deliver the value propositions to customers and satisfy stake holders expectations.Product Design • Product Development Process Implementation
Operating Process .Manufacturing . Innovation Process .Business Process Perspective
Critical internal process in which organization must deal.After Sale Service
In today’s business scenario “Customer is the king”
• Due to increasing realization of customer focused and customer satisfaction in any organization therefore developing the metrics for satisfaction customers should be analyzed in terms of kind of customers and kind of processes for which we are providing a product or service to those customers groups.
Short Lead Time .Anticipating Needs
.On Time Delivery .Customer perspective
• Customer Satisfaction • • • • • Customer Retention New Customer Acquisition Customer Profitability Market Share Measures of value Proposition to customer .Innovative Products .
Customer Perspective – Core Measure
Financial Perspective Customer Perspective Internal Process Learning and Growth Revenue Customer
On Time Delivery Process Quality Process Cycle Time
* Average years of service * Number of cross-trained employees * Internal communication rating
. * Bill Processing time * Bill Processing accuracy * Cost of unutilized capacity.SL.
LEARNING & GROWTH
* Absenteeism * Turnover rate * Employee Productivity * Training Hours * Leadership Development * Percentage of employees with advanced degrees. 1
MEASURES * Return on Investment * Revenue per employee
* Customer Satisfaction * Customer Loyalty * Total cost to customer * Price relative to competition * Hours spent with customer * Market Share
* Response time (From Reception to Bed) * Quality of services rendered.NO.
Challenges in Executing Strategy
Financial Management Tools
Balance Sheets Income Statements Statement of Cash Flow
Process Management Tools
Six Sigma Supply Chain Management TQM
Strategy Management Tools ???
Customer Management Tools
CRM Customer Segment Analysis Customer Surveys
People Management Tools
MBO Training Programs HRIS 360 Feedback
select performance measures and link measures to incentives
Set target for each goal and re-deploy resources to activities and initiatives to achieve targets
Feed Forward Learning
Provide feedback on performance and learn from results
.The Balanced Scorecard
Train and Communicate Strategy
The Balanced Scorecard
• • • • • A robust tool – but keep it simple! Makes strategy tangible –everyone’s job! Tracks what’s important – hits and misses Measurement-lead management Provides feedback for short-term course corrections and long-term learning
Balanced Scorecard Perspectives
How do we succeed financially?
B. Learning and Growth
How do we sustain our ability to change and grow?
How do we appear to our customers?
C. Internal Process
At what processes must we excel?
To Build the Strategic Capabilities.
.We Use the Scorecard to Articulate Strategic Hypotheses in Cause-effect Terms
And Realize the Vision
To Drive Financial Success.. Systems... and Tools
Equip our People.
Needed to Deliver Unique Sets of Benefits to Customers.. Skills...
Balanced Scorecard Perspectives
How do we Objectives Measures appear to our Stockholders? Vision
Strategy At what internal O bjectives Me H ow d o w e O b jec tivesM ea su res Targ ets In itiatives processes m ust ap p ear to o u r we excel? C u s tom ers ?
C u s to & e r m
Learning and G ro wt
H ow d o we O b jectives M easu res Tar su stain ou r ab ility to ch an g e
Cascading Scorecards to Build Alignment
Sound Fiscal Mgmt
Long-Term Investment Strategy
Customer – The Value Proposition
Product/Services Price Selection The Value Proposition Quality Availability
Relationship Partnership Services
Customer Mgmt Deepen Knowledge about customer Attract Retain Grow Relationship
Innovation New learning Partnerships Future needs
Operational Excellence Admin excellence Network of supplier for Products & services Adaptability
Learning & Growth
Climate for Action Personal Growth
Competencies Functional Excellence Leadership Skills Strategic Readiness
Perspective: Financial / Customer / Internal Process / Learning&Growth Information Type Strategies Objectives Measures Targets Are….9 of 10 Average Customer Rating Train CSR Staff in Problem Resolution Skills
. High Level Goals Example is… Increase Market Share
Measures of action plans Increase Customer Satisfaction Indicates success or failure Desired level of performance for a measure Management actions taken to achieve target Average Customer Rating (scale of 1-10) Achieve 9.
The TCS Model
Source: Human Capital Vol.9 No.12 May 2006 ‘Redefine the HR Agenda’
IT solutions & services and also delivering value and joy to all stakeholders.Vision
• Global Top 10 by 2010 in the IT Industry
Customer delight by providing best-in-class consulting. •
Shareholder Value Human Resource Efficiency
Human Capital Effectiveness
INTERNAL PROCESS PERSPECTIVE
Manage Customer relationships Deliver world class services
Competencie s Leadership
LEARNING & GROWTH PERSPECTIVE
Manage Operating efficiency
Cultural Climate Strategic Alignment /Motivation
Keys to Success
• • • • • Educate your Executive and Teams Devise the right metrics Follow through to completion Start small! – Report immediately small Don’t over measure
Manage the strategy
– Gather detailed information about the measure and initiative
. Measure the strategy
– Develop the measures.Getting Started – Customize Your BSC
1. critical data points
3. Describe the strategy – burning platform?
– Strategy Map
The Successful Scorecard…
• Is a dynamic process –
– continues to set higher targets and achieves them –
• Define jobs strategically
– from the perspective of where it fits in with the strategic business goals
• Supports joint decision
– making about what you do/don’t do based on strategic goals
PERFORMANCE APPRAISAL METHODS
Problems occur when results measures are difficult to obtain. • Results-based measures – Focus is on accomplishments or outcomes that can be measured objectively. • Behavior-based measures – Focus on what an employee does and what the employee should do differently. or ignore the means by which the results were obtained.What to Evaluate?
• Traits Measures – Are an assessment of what the employee is. outside employee control. not what the employee actually does.
• Absolute Measurement
– Employees are all measured strictly by absolute performance requirements or standards of their jobs.How to Evaluate?
• Relative Assessment
– Employees are measured against other employees and ranked on their distance from the next higher to the next lower performing employee.
• Comparative • Comparative – Ranking – Ranking – Paired Comparison – Paired Comparison – Forced Distribution – Forced Distribution • Absolute • Absolute – Critical Incident – Critical Incident – Narrative Essay – Narrative Essay – Checklist – Checklist – Graphic Rating Scale – Graphic Rating Scale (GRS) (GRS) – Behaviorally Anchored – Behaviorally Anchored Rating Scales (BARS) Rating Scales (BARS) – Behavioral Observation – Behavioral Observation Scales (BOS) Scales (BOS) – Forced Choice – Forced Choice • Objectives • Objectives
Apprais al Method s
• Ranking • Alternation Ranking • Paired Comparison • Forced Distribution
There is no attempt to fractionalize what is being appraised into component elements. DISADVANTAGES The how and why u have rated A better than B is not questioned. It is subject to the halo and recency effects.
.ADVANTAGES Its advantages include ease of administration and explanation.
PAIRED COMPARISON METHOD The paired comparison method is a systematic method where each employee is compared with all other employees in the group. one at a time.
. for each trait.
PAIRED COMPARISON: For the trait “Creativity
ARUP BHAVANA CHARLES
ARUP BHAVANA CHARLES DILIP EESHWAR
+ _ _ + + + + +
_ _ +
_ _ _ +
_ + _
Suitable for small organization with limited number of employees.MERITS Simplest method Need no specialist knowledge or skill Complete ranking of all employees Demerits Time consuming and cumbersome for appraisers.
• It is a narrative appraisal method and is based on absolute standards • It describes an employee's actions rather than indicating an actual rating • The intent is to allow the rater more flexibility than other rating methods do.
identify developmental needs and also suggest courses of remedial action These essays can either be composed alone or in collaboration with the appraisee
. Each dimension is followed by some space where the rater has to write an essay on that dimension These essays concentrate on performance strengths and weaknesses.The Process
A job is broken up into various general dimensions.
• Final appraisals are frequently written in a narrative form • Supervisor rates employee by describing the behaviour related to each factor
4. and 5.
. Appraisee’s personality traits and attitude toward his job. peers . Appraisee’s relationship with other employees and Manager. 3. Appraisee’s understanding and commitment to organization’s goals and objectives. 2. manager and the organization. Job knowledge and skills exhibited by the appraisee while performing his job. Appraisee’s potential for future organizational roles.The appraiser takes note of these factors :1.
DEMERITS 1. Employee performance and work behaviors are documented in detail. Incorrect sentence construction can give a different impression. 2.Facilitates design of performance improvement programme with ease given ready availability of performance records.MERITS 1. More closed evaluations of employee’s work and performance. 2. 3. Honesty of appraiser in recording and reporting employee performance is central to the effectiveness of this method.
. 3. Maintaining a diary for noting performance of employees on regular basis increases cost of supervision and reduced time for performing critical managerial activities.
• The rater plays the role of ‘Observer’ rather than ‘Judge’. We could save a lot of lives due to the above factor.CRITICAL INCIDENT METHOD
• Critical incidents are behaviors that result in good or
poor job performance.
• For eg. “I saw Mishra closing the steam line valve at the
instant the pipeline burst.”
. • The rater records all such incidents and the ratee’s involvement in it.
The critical incident method provides the list which has numerous examples of what specifically the subordinate can do to eliminate deficiencies. The downsize of this method is that without numerical rating .The critical incident method makes the supervisor think about the subordinate’s appraisal all during the year (so the rating does not reflect the employee’s most recent performance). this method is not too useful for comparing employees or for salary decision.
RECORDING CRITICAL INCIDENTS
• • • • Should be Specific Focus on Observable behaviours that have been exhibited on the job Describe the Context in which the behaviour occurred Indicate the Consequences or Outcomes of the behaviour
if raters record incident throughout the rating period. 2. 4. The approach has descriptions in support of particular ratings of an employee. The evaluation is based on actual job behavior.ADVANTAGES 1. It also reduces the recency bias. This approach can increase the chances that the subordinate will improve because they learn more precisely what is expected of them.
. Job related feedback to the ratee is also easy. 3.
Managers may unload a series of complaints about incidents during an annual performance review session. Overly close supervision may result. 4. 2. The recording of incidents is a chore to the supervisor and may be put off and easily forgotten. 3.Negative incidents are generally more noticeable than positive ones.
• Raters check statements most representative of the characteristics and performance of an employee. • Checklists consist of groups of statements that pertain to a given job.CHECKLIST & WEIGHTED CHECKLIST
• This method requires the rater to select statements or words that describe the employees performance or characteristics.
STEPS IN CONSTRUCTION
• Generate a large no. of behavioural statements relevant to work
– These should represent all levels of effectiveness – Rules to follow
• • • • Express only one thought per statement Use understandable terminology Eliminate double negatives Express thoughts simply and clearly
MERITS 1. It is economical. 2. It is easy to do the administration. 3. The rater doesn't require much of the training. 4. It is standardized. DISADVANTAGES 1. It doesn't allow the rater to give up relative ratings 2. The use of improper weights. 3. Misinterpretations of checklist items.
When points are allotted to the checklist , the technique becomes a weighted checklist.
GRAPHIC RATING SCALE (GRS)
In a Graphic Rating Scale, the rater assesses a ratee on performance-related characteristics and personality characteristics, ie. factors like quantity of work, dependability, job knowledge, cooperativeness, ability to lead, interpersonal skills, etc. by using a rating scale.
A graphic rating lists traits ( such as quality and reliability ) and a range of performance values ( from unsatisfactory to outstanding ) for each trait. The assigned values for the traits are then totaled.
. The supervisor rates each subordinate by circling or checking the score that best describes his or her performance for each trait.
Issues in constructing GRS
Selecting the characteristics to evaluate
• • •
Deciding the number of points on the scale Scaling the characteristics Providing descriptions for each criteria and each point on the scale
The rater can be biased.
. It is easy to understand 3. 2. There is an implication that a high score on one factor can compensate for a low factor on another. It is easy to use. 2. DEMERIT 1.MERITS 1. Many employees can be evaluated.
FORCED CHOICE SCALE
• It comprises of the use of statements that are grouped into sets according to certain statistical properties.
.What is the Forced Choice Method ?
• A rating technique specially designed to increase objectivity and to decrease biasing factors in ratings. • Rater is “forced” to select from each group of statements a subset (usually 2) of those statements that are “most descriptive” of each ratee.
• • • • • • • • Aim of lesson is clearly presented Repeats questions to whole class before answering Conducts class in orderly manner At ease before class Is patient with slow learners Lectures with confidence Keeps interest and attention of class Acquaints class with lesson objective in advance
Favourability Index (FI)
Discriminability Index (DI)
• Items for forced-choice scales are arranged according to two statistical properties of each of the statement.
. or social desirability of the behaviour or characteristic it describes. attractiveness.Discriminability Index – DI Favorability Index .FI
FI = Indicates the extent to which a statement reflects the niceness. DI = Reflects the extent to which a statement describes a behaviour or a characteristic that distinguishes superior employees from others.
.Forced Choice Scale
• A tetrad of four statements is provided • In the tetrad all the 4 statements have equal favourability • 2 statements have significantly greater discriminating power than the other 2.
29 2.57 1.35 2.85
.39 0.20 0.79 FI 2.54 1.75 2.15 0.82 2.53 1.DI & FI
STATEMENT At ease before class Conducts class in orderly manner Repeats questions to whole class before answering Aim of lesson is clearly presented STATEMENT Is patient with slow learners Lectures with confidence Keeps interest and attention of class Acquaints class with lesson objective in advance DI 0.22 2.38 FI 2.89 2.14 DI 1.
• Research has proved that ratings from this method were a more valid measure of real worth than ratings from other formats used earlier.
.Advantages of the method
• Difficulty in deliberately distorting ratings in favor of or against particular individuals because raters have no idea which statements of each group will ultimately result in higher (or lower) ratings.
• Inability to make an evaluation or a direct rating can be frustrating to raters.Why is it not popular among raters?
• Raters prefer other methods as with this method they cannot determine whether they are rating their best people high or their worst people low.
.ASSESSMENT CENTRE METHOD This method is used to test candidates in social situation. 2. using a variety of procedures and number of assessors. Assessment centers are used for the following purposes:1. and also for higher levels of management for development purposes. To determine the individual training and development needs of employees. The most important feature of the assessment centre is job related simulations. sales and upper management positions. To measure the potential for first level supervisors.
. To assist in implementing affirmative action goals. To make an early determination of potential. To select recent college students for entry level positions.3. 6. 4.
Typical simulated exercise include :The in.basket Leaderless group discussion Management games Individual presentations Objective tests The interview
.MANAGEMENT ASSESSMENT CENTRES A management assessment centre is a two to three day simulation in which 10 to 12 candidates perform realistic management tasks under the observation of experts who appraise each candidates leadership potential.
and predictive are said to be high in the assessment centers. content validity . The reliability. Assessment centre staff are often influenced by subjective elements such as personality of the candidates. Employees who receive a poor report from the centre may react in negative ways. Assessment centers are costly.e.
. examination taking syndrome.DEMERITS 1. A well conducted assessment centre can and does achieve better forecasts of future performance and progress than other methods of appraisal. The approach involves real hazards i. 4. 3. 2.
BEHAVIORALLY ANCHORED RATING SCALES (BARS)
• • • Developed by Patricia Cain Smith and Lorne Kendall A series of continuous graphic rating scales arranged vertically Behavioural descriptions exemplifying various degrees of each dimensions serve as anchors on the scale Designed to allow superiors to be more comfortable while giving feedback
4 Group member has read some agreedupon material 3 Group member participates in discussions.BARS Dimension: Quality of Group Member Input
Effective 5 Group member has read all agreed-upon Material and gives valuable ideas. though not always prepared 2 Ineffective Group member does little work and offers no valuable ideas or feedback
1 Group member does not attend any meeting
and define each dimension.The Steps in BARS development
• GENERATE CRITICAL INCIDENTS : Ask persons who know the job (job holders.
. • DEVELOP PERFORMANCE DIMENSIONS : Have them cluster the incidents into a smaller set of 5 or 10 performance dimensions. supervisors) to describe specific illustrations of effective and ineffective performance.
. – A critical incident is retained if some percentage (usually 50% to 80%) of this second group assigns it to the same cluster as did the first group.
– They get the cluster definitions and the critical incidents in a jumbled manner – They reassign each incident to the cluster they think it fits best.)
• REALLOCATE INCIDENTS : Another group of people who also know the job then reallocate the original critical incidents.The Steps in BARS development (contd.
• SCALE THE INCIDENTS : the second group then rates the behavior described by the incident as to how effectively or ineffectively it represents performance on the dimension ( 7to 9-point scales are typical) DEVELOP A FINAL INSTRUMENT : choose about 6 or 7 of the incidents as the dimension’s behavioral anchors.The Steps in BARS development (contd.
This should produce a good gauge of job performance. average performance . 4. 3.People who know and do the job and its requirements better than anyone develop the BARS. Independent dimensions :.BARS based evaluation seem to be relatively reliable .The critical incidents make it easier to explain the ratings to appraises. and so forth. A more accurate gauge :.While more time –consuming than other appraisal tools. Feedback :.The critical incidents along the scale make clear what to look for in terms of superior performance. BARS seems to have some advantages :1. 2. in that different raters appraisals of that same person tend to be similar.
.Systematically clustering the critical incidents into five or six performance should help to make the performance dimensions more independent of one another. Clearer standards :.ADVANTAGES :. Consistency :. 5.
Disadvantages 1. A specific deficiency is that the behaviors used are activity oriented rather than results oriented.
.It is time consuming and expensive to create BARS. 2.
• MBO methods of performance appraisal are resultsoriented i.MANAGEMENT BY OBJECTIVES
• The use of Management By Objectives was first widely advocated in the 1950s by the noted management theorist Peter Drucker. they seek to measure employee performance by examining the extent to which predetermined work objectives have been met.e.
Ideally.. time lines for completion.. etc. Management by Objectives (MBO) was first outlined by Peter Drucker in 1954 in his book 'The Practice of Management'. It aims to increase organizational performance by aligning goals and subordinate objectives throughout the organization. Peter Drucker put the significance of this organization management method into perspective. when he said: "It's just another tool.In the 90s. 90% of the time you don't Management by objectives (MBO) is a systematic and organized approach that allows management to focus on achievable goals and to attain the best possible results from available resources. employees get strong input to identify their objectives. MBO includes ongoing tracking and feedback in the process to reach objectives.
. It is not the great cure for management inefficiency. Management by Objectives works if you know the objectives.
Develop overall organizational goals
plans and maintain self-control
specific goals for various departments subunits and individuals
1. Develop overall organizational Goals: - The first step in the process of MBO in an organization is to establish verifiable objectives which are based on the mission and vision of the organization . These are the strategic goals which are set by the top management and address the targets to be achieved by the whole organization. 2. Establish specific goals or objects for various Departments and Individuals: - The goals are set for the various positions at various levels. In this stage the superiors formulate the objectives that they plan to achieve in their own department. Most of the times the organization follow the top –down approach just described, some organizations even go for the bottom up approach, in which goals are suggested by the lower levels what they believe they can achieve.
3.Formulate Action Plans: - An action plan describes what is to be done, where, when, how and by whom to achieve the objectives. Action plan helps in accessing the feasibility of achieving the goals. Subordinates usually develop themselves with the support of their supervisors. 4.Implement and maintain self- control :- When the goals are set and action plans determined , individuals should be given enough freedom to carry out their activities. But supervisors need to be kept informed about the progress and any difficulty that arise. 5.Review Progress Periodically: - MBO ensures periodic meetings between the superiors and the subordinates to review the progress towards the accomplishment of targets of the subordinate. It is important that the plans are implemented and the targets will be achieved.
6.Appraise Performance :- The appraisal focuses on what extent the goals are achieved as well as on the shortfalls . It also ponder what are the reasons of not accomplishing the expected goals and what measures can be taken to overcome them. Goals and plans for the next cycle may also be discussed at this point.
Strengths of MBO • MBO aids in planning by making managers establish their own goals. • MBO helps in Improving the communication between both management and employees, because both can express their views on what objectives they can and cannot accomplish. •MBO helps in making everybody aware of the organization's goals. • With MBO the evaluation process becomes fairer because people are measured on specified targets and their performance in achieving goals of the organization.
• Managers will have clearer idea of the vital areas of their responsibility and the standards that are required. suggestions from all levels of management can be obtained.
. In this way. Hence. •It provides a practical approach to analyze training needs and opportunities for growth on the basis of measurement of performance against standards. allowing them to focus and utilize their resources. • MBO creates a participatory work environment to help employees become more involved.•With specific objectives laid out. every subordinate in the organization is more motivated.
and it is easily stalled by authoritarian managers. placing pressure for performance at the expense of employees. • Generally the main barrier to effective MBO is lack of support from top-management. objectives and energy to implement the whole system effectively. effort and paperwork in setting goals.
. • Some managers set unrealistic objectives.Weaknesses • MBO process requires too much time.
managers may be inadequately trained to set goals and coach employees when necessary.•Before MBO can be implemented. many changes have to be done in the organization. •There is too much emphasis on short term performance and losing sight of long-term objectives.
. It may tend to introduce inflexibility in the organization. • The support needed to achieve goal achievement is too often not enough for some managers. including the control procedures and the general style of the management. •It is difficult to establish measurable objectives for certain jobs. It is may be used by some supervisors as a control devise that intimidates rather than motivates subordinates.
In 360 degree appraisal a gap analysis is conducted to examine the areas for which there are large discrepancies between self – perceptions and the perceptions of others.360 – Degree Feedback System A 360. supervisor and customers and self.
.degree feedback system is most helpful when it is used for developmental purposes only and not for administrative purposes. These systems are called 360 degree systems because information is gathered from individuals all around the employee.degree feedback. The 360. system collects performance information from multiple parties including one’s subordinates Peers.
Individuals who are high on self efficacy are more likely to improve their performance based on feedback received from peers compared to individuals low on self efficacy. react positively to feedback.360 degree make them aware of that there is a problem with a competency is a very good first step. 360 degree feedback systems are not necessarily beneficial for all individuals and organizations.degree feed back system also provides concrete suggestions about what to do to improve competencies. believe change is feasible.
. Example :. but a good 360. and take concrete actions that lead to performance improvement. The effect of receiving feedback from multiple sources is most beneficial for individuals who perceive there is a need to change their behavior . set appropriate goals to improve their performance.
In terms of organizational characteristics , 360 degree system Work best in organizations that have cultures that support open and honest feedback. These systems work best in organizations that have participatory , as opposed to authoritarian , leadership style in which giving and receiving feedback is the norm and is regarded as valuable. Example :- Patent Office of UK
The most comprehensive type of multi-source feedback is 360-degree feedback, which involves an employee’s customer , peer, direct reports, self and manager. The other degrees are represented Peer/Co-workers Manager Customer Direct Reports/Subordinates Extent of multi-source feedback Organizations often choose the source of feedback based on the criticality of performance interaction. This is also based on the strategy and values of the organization. IBM, for example, opts to use customer feedback as opposed to using all sources to provide additional inputs. In an organization where teamwork may be critical, the inputs of peers often Become necessary and are used extensively.
90° (Assessment by manager) Most companies with a performance management system in place use this mode of Feedback 180° (Assessment by manager and peer) · Tata Communications · ICICI · Coca Cola 270° (Assessment by manager, peer and direct report) · Wipro InfoTech
360° (Assessment by manager, peer, direct report and customer) · ITC
EXAMPLE 360° system, designed for employees in supervisory roles , includes information on the following competencies : 1. Communication ( listen to others , processes information, Communicates effectively ) 2. Leadership (instills trust, provides direction, delegates Responsibility ) 3. Adaptability (adjusts to circumstances, thinks creatively ) 4. Relationships ( builds personal relationships, facilitates team success) 5. Task management ( works efficiently, works competently ) 6. Production ( takes action , achieves results) 7. Development of others ( cultivates individual talent, motivates successfully). 8. Personal development ( displays commitment, seeks improvement)
Forces inflexible managers to initiate self – change. Unearths truths about organizational culture and ambience.
. Creates an atmosphere of teamwork and improvement.MERITS Reveal strengths and weaknesses in management style. Decreased Possibility of biases Increased awareness of expectations :.Employees become very aware of others expectations about their performance.
Increased commitment to improve Improved self – perceptions of performance Reduced undiscussables Employee enabled to take control of their careers
. The system can be used to humiliate people. 3. Linking findings to rewards can prove to be unfair.DEMERITS 1. 2. it may be easy for the employee being rated to identify who the raters are. When very few raters are providing the information. 4. 2 or 3 . Negative feedback can hurt an employee’s feelings . particularly if those giving the feedback do not offer their comments in a constructive manner.
WHAT IS PERFORMANCE PLANNING Performance planning may be defined as a systematic outlining the activities that the manager is expected to undertake during a specified period so that he is able to make his best contribution to developmental and organizational outcomes. some of which include :
. PLANNING INDIVIDUAL PERFORMANCE THROUGH PERFORMANCE APPRAISAL Annual performance appraisal exercises provide good opportunities for performance planning. and requires time at once a year.KPA’S AND PERFORMANCE PLANNING
Performance planning fixes accountability. It also helps the manager to understand and analyze his contributions and increases his responsibility for continuous performance. helps better time management. These provide many ways in which individual performance can be planned. sets role boundaries.
If the following questions are answered positively after the exercise the KPAs are well identified :1. Together. are expected to do )? 2. subordinate etc.setting exercises
KPAS AND PERFORMANCE PLANNING :Identifying KPAs and setting quantifiable targets wherever possible is the only way of planning one’s performance. do they cover a large part his job and include all significant contributions expected from his role?
Task analysis Key performance areas (KPAs) Key Result Areas (KRAs) Task and target identification Activity plans/action plans Goal. Organizations would do better by trying to inculcate a planning orientation and role clarity through KPAs than improving objectivity. Do the KPAs and targets emphasize /indicate what the manager (appraisee ) is expected to do by himself ( rather than what his department.
Do they take into consideration realistically the conditions under which the appraisee is expected to function during the year? 8. If all KPAs are well done . Do they specify the standards of performance expected from the appraisee ? 7. Do they satisfy both the appraisee and the appraiser ? 9.3. Are the targets set challenging and stretch the capabilities of the appraisee moderately rather than being routine ? 6. Do they indicate the priority areas of work for the appraisee during the year? 4. Has adequate time been spent on the process of identifying KPAs and gaining role clarity ?
. can the appraisee be labelled as a good performer? 5.
Identifying product improvements 2. Contacting potential customers 2. Development of new products 3. Attending to customer complaints.
For a R& D Manager 1.
EXAMPLES OF SALES OFFICER
For a Sales Officer 1.KPAs As Mechanisms of Role Clarity and Development
Key performance areas may be defined as the important or critical categories of functions to be performed by any role incumbent. etc
. 3. Market survey for new products. Testing of samples. These functions should specify what the employee would be doing rather than what results are expected from him. These categories of functions should be so defined that the performance of any employee can be assessed meaningful for any given period of time. over a given period of time.
The group should then sit together and make an exhaustive list of all the asks the role incumbent is expected to undertake. hat can be considered to be his unique contributions by virtue of occupying is position? his performance is to be rated as excellent in the next 6 months / one year hat he have done as this role incumbent ? Etc
In the next step all these activities may be grouped into meaningful ategories of functions
. his group should consist of two categories of people :. ow much of his time goes for each of these activities.ROCESS TO IDENTIFY KEY PERFORMANCE AREAS FOR A GIVEN ROLE.
A small group consisting of 4 or 5 persons may be involved in this process. In making such a list of asks the following questions may be useful :
hat are the main activities in which the role incumbent is involved? hat exactly does he do in these activities.those who are erforming that role at present and those who performed that role in the past nd are new supervising those performing that role now.
A rating of 2 may indicate that the PA is quite important but is not central. Thus a weightage of 3 could indicate that the particular PA is very central and important to that role. After the performance areas are identified they could be given weightages for their relation importance to that role. A weightage of 1 may indicate that the performance area is important. 6. The areas selected or identified should be the areas which the appraisee and the appraiser consider as significant dimensions on which the appraisee’s contributions should be assessed for that year.4.
. After such an exercise is done the Performance Areas for different roles could be listed and made available to employees in the form of a directory of performance areas. 5.
2. Have a clear understanding of the importance of each of these activities and what exactly is expected to be done by the appraisee. Have a clear and common understanding of the various activities to be performed under each KPA by the appraisee. 3.
. In the process of agreeing on the KPAs for the assessment period both the appraiser and the appraisee should aim at the following:1.The appraiser and the appraisee may also determine the weight ages of each of these areas. Have an understanding of the expected problems and support required by the appraisee from the appraiser as well as others in the organization and the support the appraiser can give to the appraisee.
. but should be time bound and should specify the level of acceptable performance to obtain high performance ratings. Have an understanding of the level of performance expected in relation to each of the KPAs and the possible ratings associated with different performance levels.4. PERFORMANCE TARGETS : ADDING OBJECTIVITY Identify performance targets under each KPA. The performance targets may be qualitative or quantitive .
2 To personally contact a random group of 10 major customers from each district and get their feedback on the products.EXAMPLES
1. 3. Role : Marketing Manager KPA : Introducing a new product X in the region assigned to him.
. Complete training programme for all district representatives to ensure readiness for distribution of product X within the next three months. Performance Targets 1. Evolve a marketing strategy by the end of the year to increase sales of the product in consultation with district representatives.
. Role : Manager . Complete write up and acceptance of the company’s cost reduction manual and distribute it to all managers by the year end. Collect information about the development oriented appraisal system in use from 10 different organizations in the City and suggest a system for the organization. Collect 10 suggested cost reduction ideas per month from each of six operating managers.Role : Manager ( Finance) KPA : Cost reduction ( Weightage -3) Performance Targets 1. HRD KPA : Introducing a new system of development oriented performance appraisal Performance Targets 1. 2.
Identification of the factors that have helped the appraisee reach the level of performance he achieved in relation to various KPAs. The performance equation = Ability *Motivation *Organizational support +or – chance factors. These are called as hindering factors. OBJECTIVES Performance analysis should lead to the following :1. 3. 2. These are called facilitating factors.
. Understanding the constituents of performance by breaking it into various elements and understanding the factors that cause performance is called performance analysis. Identification of the factors would suggest action plans for the appraisee as well as for the appraiser. targets and various other functions associated with his job.PERFORMANCE ANALYSIS Performance analysis is an important component of appraisal. Identification of the factors that have prevented the appraisee from doing better or those that hindered his performance.
. Gaining a better understanding about the appraisee. he should note it down. Whenever he experiences failure or runs into difficulties or feels prevented from doing better. The appraisee should periodically keep reflecting about how well he is progressing in his work and in relation to KPAs and other dimensions. 3. 4. his role requirements and the situation in which he is working and also share with him the expectations and understanding the appraise so that the communication between them is increased. In the performance period whenever the employee comes across success experiences . 2.4. METHODOLOGY 1. 5. he should note the factors that are causing it. Identifying developmental needs for better performance on critical functions associated with the present role. At the end of the performance period the appraisee considers his own performance on each of the KPAs and other dimensions.
d. Similarly he should list down all the factors that have prevented him from doing better or that have become constraints on his better performance. b. 6. c) Inhibiting factors attributable to subordinate staff
. he should start listing down all the factors in detail that have helped him in accomplishing whatever he accomplished. After assigning himself such ratings.After listing down the facilitating and hindering factors exhaustively the appraisee should then classify these factors into the following categories :FACILITATING FACTORS a.5. FIS (Individual facilitating factors) FROs (Facilitating factors attributable to the reporting officer ) FOS ( Facilitating factors attributable to the organization and its system) FS ( Facilitating factors attributable to the subordinate) FE (Facilitating factors attributable to external environment)
INHIBITING FACTORS a) Inhibiting factors attributable to the individual b) Inhibiting factors attributable to the reporting officer. e. c.
e) Inhibiting factors attributable to the organization and its system 7. The individual should also reflect on the support that could be extended by his reporting officer. 8. additions to the factors identified and performance review and counseling discussions. He then should pass on his performance analysis to his reporting officer for his comments.
. After such an analysis.d) Inhibiting factors attributable to the environment. an individual (appraisee ) may reflect about facilitating factors he could like to maintain or further strengthen and the inhibiting factors that he would like to overcome in future. 9.