performance management system

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 session 1-2:what is performance? definitions; performance planning & criticality of
bell-curve

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 performance is what is expected to be delivered by an individual or a set of individuals
within a time frame

what is expected to be delivered could be stated in terms of results or effort, tasks

and quality, with specification of conditions under which it is to be delivered

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 o most effective way align HR to strategy is through performance management system
(PMS)

o whereas, performance management is a process by which the overall performance of an

organization is improved by improving the performance of individuals within a
team/group/function or business unit

o includes goal setting, performance appraisal, performance review discussion (PRD),

reward, coaching and training. It’s an ongoing process

o performance appraisal is a part of performance management system which is used in

evaluating an employee’s performance relative to her performance standards 4
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 o performance management cycle:

Plan

Reward Monitor

Rate Develop

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o performance planning: FAST Goals

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profmrin Source: Sull, D., & Sull, C. (2018). With goals, FAST beats SMART. MIT Sloan Management Review, 59(4), 1-11.
 criticality of bell curve

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 o normal distribution or the ‘bell curve’, introduced by GE

o assumes that in any work force population, performance will follow the normal
distribution (majority of the employees tending towards the average, a few above
it and a few below)

o implies that performance is relative and not absolute

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Rayport-Jaworski Performance Dashboard and Strategy Framework

o Performance Dashboard - intended to reflect the health of the

business
o The Strategy Framework Drives the Necessary Metrics
 Six critical steps
 opportunity assessment
 business-model metrics
 customer-interface design
 market communications and branding
 implementations
 financial

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 session 3-4:Performance Assessment: Goal Setting; Linking Individual, Team,
Organization’s objectives

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 o Line managers need to have the tools, skills and understanding to manage
performance effectively (Armstrong, & Baron, 2005)

o Performance management success, or failure, depends on the line managers

o If they recognise the value of performance management in enabling them to

manage their staff well and meet their targets and objectives, they are likely to be
more positive about it

o Provide clear guidance, instruction, advice or coaching for the job

o Where appropriate, aim for inclusivity - enabling staff to input ideas, and consulting
on change and development
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 o Setting standards and parameters

o Be clear about expectations for quality, accuracy, timeliness of work expected

from the team

o Be clear about what authority/decision-making is delegated to individuals in

your group and providing autonomy to do so

o Be clear about expectations for standards of behaviour and the ethics that
apply to the type of work (such as standards of good research practice)

o Managing team/individual failures; Under performance should be dealt with

early and not wait for annual appraisal

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 Goal-setting Employees want to see how their work contributes to larger
corporate objectives, and setting the right targets makes this connection explicit
for them, and for you, as their manager. Goal-setting is particularly important as a
mechanism for providing ongoing and for providing feedback. By establishing and
monitoring targets, you can give your employees real-time input on their
performance while motivating them to achieve more

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 Principles of goal-setting:

o Connect employee goals to larger company goals

o Make sure goals are attainable but challenging

o Create a plan for success

o Monitor progress

o When things go wrong

o What about individual goals?

o When goals aren't met

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 the shift: from accountability to development

“Appraisals can be traced back to the U.S. military’s “merit rating” system, created
during World War I to identify poor performers for discharge or transfer. After
World War II, about 60% of U.S. companies were using them (by the 1960s, it was
closer to 90%). Though seniority rules determined pay increases and promotions
for unionized workers, strong merit scores meant good advancement prospects
for managers. At least initially, improving performance was an afterthought”
(Cappelli & Tavis, 2016)

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 new trends in performance management

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 1. agile methodology in performance management

o Traditional: Goals and decision rights flow downward, with the most powerful
governance bodies at the top

o Operate through linear planning and control to capture value for shareholders

o Although such a structure can be strong, it is often rigid and slow moving

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 o In contrast, agile methodology is designed for both stability and dynamism

o Working in agile sprints

o Network of teams within a people-centered culture featuring rapid learning and

fast decision cycles enabled by technology

o Guided by a powerful common purpose to co-create value for all stakeholders

o Allow for quick and efficient reconfigurations of strategy, structure, processes,

people, and technology toward value-creating and -protecting opportunities

o Agile organizations thus add velocity and adaptability to stability, creating a

critical source of competitive advantage VUCA

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 Source: Darino, L., Sieberer, M., Vos, A., & Williams, O. (2019). Performance management in agile 20
profmrin organizations. Mckinsey. com.
 session 5-6: balanced scorecard approach to performance management

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 balanced scorecard (BSC) perspective
examines performance from four perspectives:

o financial: includes measures such as operating income, sales growth and return on
investment

o customer: looks at customer satisfaction and retention

o Internal: at how business processes are linked to strategic goals

o learning & growth: assesses employee satisfaction and retention, as well as

information system performance
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 key Indicators: measures/metrics

o there are two different types of indicators: Lead & Lag

o in general, leading indicators can be thought of as drivers

o lagging indicators can be thought of as outcomes

o an in-depth exploration of what both leading and lagging indicators are and why
leading indicators are so vital for business
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 lagging Indicators
 
to understand leading indicators, we need to first understand lagging indicators. Lagging
indicators offer the most concrete way to understand if we’ve accomplished our goals or not.
We can come up with solid lagging indicators that tell us what happened for that goal over the
last quarter or the last year by examining our outputs and outcomes. Lagging indicators aren’t
predictors of what is going to happen, but they’re great at telling you what did happen. When
we create lagging indicators, we need to consider what a good predictor for our goals might be.
What are the processes or inputs that lead to that result? These are important elements to
understand.
 
Here are a few examples of lagging indicators:
 
Profits
Revenue
Expenses
Number of Customers
Percent Renewal
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 contrarily, leading indicators (or driver) forces us to ask yourself, “What process or
variables will make me achieve this goal better or faster? What do I need to do well in order
to improve my outcome measure or my goal?”

once we understand the lag indicators (which help us understand if we’ve met our goal),
we move to the predictors, which allow us to look forward: our leading indicators. Lead
indicators ask, “What are the best things we can do to help us get to our future goals
and targets?”
 

leading indicators are different based on the goal (KRA/KPI)

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