Performance Management

Prof. Nishit Sinha

OB – HRM, IIM I
Three Stonecutters …..
Distinguish
 Assumptions underlying PMS
• Underlying desire for growth
• With varying degree
• Individual growth is in the best interest of organization
• Organization should maintain the supportive role
• Performance appraisal, feedback & review, counseling, job enrichment, job
rotation, potential appraisal are some of the useful ways to promote
employees
• A carefully designed and administered PMS can be instrumental in
creating healthy climate & higher motivation
• Individual contribution is valued
Vroom’s Theory of Expectancy

4-minute mile:
Roger Bannister Effect
Performance Appraisal and Performance Management

PA is largely one-time, one-way report card, PM is a two-way,

continuous process of observation, thinking, planning, & coaching that
occurs throughout the year

PM helps in companies improve Employee Performance, and

Organizational performance.
 Goal Setting
• Role Clarity

Assessment by/of Employee

• Understanding Strengths and Weaknesses
Objectives of • Identifying Training and Development Needs
Performance • Continuous feedback

Management Succession Planning

• Identifying Potential
• Recognizing Achievements

Two-way communication process

• Better Understanding between Appraiser and Appraisee

Improved Organizational Performance

Performance Management (PM)
Empowering rather
Integrates with financial
than merely evaluative Identify both skill
and strategic goals of
(though appraisal is deficits and new skill
the corporation for all
remains fundamental for future
employees
part of it)

Integrates appraisal of
employees’
Promotes behavioral
performance with two-
change
way feedback,
development
 Benefits of PM

Organization Appraiser Appraisee

• Improved Org • Relationship • Opportunity to

performance management work
• Improved • Departmental independently
teamwork objectives • Relationship
• Identification of • Delegation of tasks • T & D needs
Leadership • Org. expectation is
clear
PM Process
• Performance Management is the “continuous process of identifying,
measuring, and developing the performance of individuals and teams
and aligning their performance with the organization’s goals (Dessler &
Varkkey, 2016)

Assign goals to
Continuously
Set Company’s departments,
Assess Goal
Strategic Goals teams, and
Attainment
individuals

Report Goal
attainment to
Take corrective MBO Method
action as required
mgmt., teams and
in Real Time
individuals
PM Process Flow-chart
Methods of Appraisal
• Graphic Rating Scale method
• Simple to use
• Easy relative Comparison
• Multiple formats possible
(behavior based, competency
based)
• Recency effect
• Critical Incident Method
• Focus upon behavior
• Recorded year-long activities
• No recency effect
• Time and efforts consuming
• No relative ratings
 Methods of Appraisal
• Forced Distribution method • Paired Comparison
• Jack Welch made it popular (20-70-10)
• Stacked Ranking, Rank and yank, Vitality
model
• Prevents ‘central tendency’
• Removes Manager’s subjectivity
• Helps in Succession planning

• Pre-determined number of people in each

group
• Force fitting to attain normal curve
 Methods of Appraisal
• Alteration Ranking Method • Behaviorally Anchored Rating Scale
 Behaviorally
Anchored
Rating Scale

Develop
Write Critical Re-allocate Scale the Develop the
Performance
Incidents incidents incidents scale
Dimensions
Potential Issues
• Biases
• Halo / Horn effect
• Central Tendency
• Too strict / too lenient
• In-group bias
• Unclear standards
• Good / Average