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Noida Institute of Engineering and Technology, Greater

Noida

Introduction to Performance Management

Unit:1

Subject Name
Performance and Reward Management Vijaylaxmi
AMBAHR0411 Department of MBA

Course Details
MBA 3rd Semester

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Index/ Content

S. No. Index
1.
Name of Subject with code, Course and Subject Teacher

2.
Brief Introduction of Faculty member with Photograph

3. Evaluation Scheme
4. Syllabus
5. Branch wise Application
6. Course Objective(s)
7. Course Outcome(s)
8. Program Outcomes
Vijaylaxmi
(POs)
AMBAHR0313 - PRM Unit 1

9. Cos and POs Mapping


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Index/ Content
S. No. Index
10. Program Specific Outcomes (PSOs)
11. COs and PSOs Mapping
12. Program Educational Objectives (PEOs)
13. Result Analysis
14. End Semester Question paper Templates
15. Prerequisite/Recap
16. Brief Introduction about the subject with Video links
17. Unit Contents
18. Unit Objectives
19. Topic/ Session Objectives

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Index/ Content

S. No. Index
20. Lecture related to topic
21. Daily Quiz
22. Weekly Assignment
23. Topic Links
24. MCQs
25. Glossary questions
26. Old question papers
27. Expected questions
28. Recap of Unit

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Evaluation Scheme

    End
      Periods Evaluation Scheme Semester    
No Code Subject Total Credit
L T P CT TA PS Total TE PE

1 AMBA0301 Strategic Management 3 0 0 30 20 0 50 100 0 150 3


Corporate Governance, Values
2 AMBA0302 & Ethics 3 0 0 30 20 0 50 100 0 150 3
Specialization Group -1
3   Elective -1 3 1 0 30 20 0 50 100 0 150 4
Specialization Group -1
4   Elective- 2 3 1 0 30 20 0 50 100 0 150 4
Specialization Group -1
5   Elective- 3 3 1 0 30 20 0 50 100 0 150 4
Specialization Group -2
6   Elective- 1 3 1 0 30 20 0 50 100 0 150 4
Specialization Group -2
7   Elective -2 3 1 0 30 20 0 50 50 0 150 4
Summer Internship Project
8 AMBA0351 Report 0 0 4     50     100 150 2
GRAND TOTAL 1200 28

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Syllabus

UNIT-I Introduction to Performance Management 08 Hours

Introduction to Performance Management System :Meaning, Uses and purpose of


Performance Management, Performance Management vs Performance Appraisal,
Performance management and its challenges in current scenario, Performance
management as a System and Process, Establishing Performance Criterion of
developing an Effective Appraisal System, Criteria (KRA, KSA VS KPI). Case Studies
UNIT -2 Managing Performance 08 Hours
Managing Performance: Methods of managing performance of all the levels of
Management, 360 degree Performance Appraisal, MBO and Performance analysis for
Individual and organizational development. Human Resource Development:
Introduction, Concept & Definition, Features, Objectives & Essentials HRD at Micro
and Macro levels , Significance of HRD Distinction between Personnel Function and
HRD , Instruments or Mechanism of HRD, Implementation of HRD, HRD in Indian
Industry, HRD Strategies. Case Studies

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Syllabus
UNIT-3 Competency Mapping 08 Hours
Contemporary Issues: Potential appraisal, Competency mapping ,Competency mapping
approaches & its linkage with Career Development and Succession planning, Balance score
card: Introduction and Applications, Advantages and limitations. Benchmarking.
UNIT-4 Reward System 08 Hours
Reward System: Compensation- Definition, Function, and significance. Job evaluation:
Methods of job evaluation, Inputs to job evaluation, Practical implication for technical/non-
technical and executive/managerial positions and significance of wage differentials. Case
Studies

UNIT-5 Compensation System 08 Hours


Compensation: Method of pay and Allowances, Pay structure: Basic Pay, DA, HRA, Gross
Pay, Take home pay etc. , Calculation of :PF, ESI, BONUS and Gratuity , Cost To Company.
Incentive schemes; Methods of payment: Time and piece rate. Fringe benefits & other
allowances: Overtime, City compensatory, Travelling etc. Regulatory compliance:
Introductions, Wage and Pay commissions, Overview of minimum wages Act- 1948 and
Equal Remuneration Act-1976. Profit Sharing options; Case Studies.

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Applications in MBA

• In the present scenario, the biggest challenges before the


organisations are to attract the right kind of human capital and to
motivate them to develop and perform in a way that increases
shareholders value.
• The moment unless their reward and compensation system
accomplishes these two objectives, most organizations cannot be
affected in a highly competitive business environment. Just in case,
simply spending a large amount of money is not enough; the money
must be spent in ways that attract, retain and motivate the right
people.
• Top Job Profiles: Human Resource Manager, Human Resource
Generalist, Staffing Director, Technical Recruiter, Employee
Relations Manager, Director of HR Training and Development.

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Course Objective

 To gain an understanding on the strategic management process,


strategic management model and its components and limitations of
strategic management
 To develop knowledge on strategy formulation, formulation of
company vision, mission and goals, portfolio models and SWOT
analysis
 To gain an insight into the concept of human resource strategy, its
approaches, role of HRM in formulating corporate strategy etc.
 To gain understanding about the importance of human resources in
strategic decisions, human resources sorting, HRS and HRIS etc.

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Course Outcome

  Knowledge of Performance Management and (Understand) K2


CO 1 Performance Appraisal

  Competency to understand the importance of (Understand) K2


CO 2 importance of Performance Management
  Knowledge about the Compensation and (Understand) K2
CO 3 Reward Systems
CO 4 Competency to implement the effective reward (Evaluate) K5
systems in the organization
CO 5 Ability to explain the relevance of competency (Apply) K3
mapping and understanding its linkage with career
development

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Program Outcomes

PO1: Knowledge of Management theories and practices

PO2: Analytical & Critical thinking abilities

PO3: Value based leadership

PO4: Understand, analyze and communicate all aspects of


business

PO5: Achievement of Organizational goals

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CO-PO and PSO Mapping
Sr. No Course PO1 PO2 PO3 PO4 PO5
Outcome

1 CO 1  3     3  
2 CO 2 3 2 3 3

3 CO 3 3 2     2

4 CO 4 3  2     3

5 CO 5 3 2 2  2

Avg 2.4 1.8 0.4 1.6 2

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Program Educational Objectives

PEO1: Conceptual Knowledge to adapt in rapidly changing environment


and learn new skills and demonstrate application of management
principles in professional work setting.

PEO2: Apply appropriate tools for decision making for solving complex
managerial problems in local or global
context.
PEO3: Exhibit Integrity, social responsibility and teamwork.

PEO4: Exhibit ethics, communication skills, leadership qualities and


entrepreneurial mindset.

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Result Analysis

Subject 40>65 65>75 75>90 90


Total Avg % of
Name & (%) of (%) of (%) of & Above Backlog
Students Passed Students
Code Students Students Students (%) of
%
Students

PRM
AMBAHR 42 100 3 7 26 6 NIL 73.93
0411

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End Semester Question Paper Template

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End Semester Question Paper Template

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End Semester Question Paper Template

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Prerequisite

1.Knowledge of Human Resource Management.


2. The Scope of HRM.

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Brief Introduction about the Subject

PRM is concerned with the relationship between HRM and employees


performance in an organization. Performance and reward management
is an approach which relates to decisions about the nature of
employment relationship, recruitment, training, development,
performance management, reward and employee relations intended to
enable the firm to achieve it performance goals’.

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Subject Videos

• https://youtu.be/VNE6INpW3o8

• https://www.youtube.com/watch?v=MngvFQrLsPY

• https://www.youtube.com/watch?v=xSsuG1xaQfE

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Unit Content

• Introduction to Performance Management System: Meaning,


Uses and purpose of Performance Management, Performance
Management vs Performance Appraisal
• Performance management and its challenges in current
scenario, Performance management as a System and Process
• Establishing Performance Criterion of developing an
Effective Appraisal System, Criteria (KRA, KSA VS KPI).
Case Studies

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Objectives of the unit

 To understand the meaning, uses, and purpose of Performance and


reward
 To distinguish between Performance Management vs Performance
Appraisal,
 To know Performance management and its challenges in current
scenario
 To understand Performance management as a System and Process,
Establishing Performance Criterion of developing an Effective Appraisal
System, Criteria (KRA, KSA VS KPI).

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Prerequisite and Recap

• Basic knowledge of HRM functions and Scope

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Objective of Topic

To enable the students with basic understanding of Introduction to


Performance Management System :Meaning, Uses and purpose of
Performance Management, Performance Management vs Performance
Appraisal

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Unit 1
Introduction

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Performance management defined

Performance management is an ongoing process of communication between


a supervisor and an employee that occurs throughout the year, in support of
accomplishing the strategic objectives of the organization.

Performance management system is a tool


• to communicate the organizational goal to the employees individually
• To allot individual accountability towards that goal and tracking of the
progress in the achievement of the goals assigned
• to evaluate their individual performance
• To keeps track of all the employees of the organization

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Objectives of PM

•Align the objectives of the individual with those of the business

•Improve Organizational Performance through assessment of the current

performance and creating plans for improvement

•Provide adequate resources and basis for personal development

•Inform contribution/performance pay decisions

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Unit 1
Difference between PA and PM

Performance Appraisal Performance Management


Emphasis on relative evaluation of Emphasis on performance
individuals and generation of rating improvement of individuals ,teams and
organization
Annual Exercise through periodic Continuous process with quarterly
evaluation performance review
Reward and recognition of good Defining and setting performance
performance is an important standards is an integral part
component

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Difference between PA and PM Contd…

Performance Appraisal Performance Management

Designed and monitored by HR Designed by HR dept but monitored by


department respective depts. themselves .
Developmental needs are identified Development needs are identified in
at the end of the year on the basis of the beginning of the year on the basis
appraisal of competency gaps of the competency requirements for the
coming year
Linked to promotions , rewards , Linked to performance improvements
training and development and through them to other HR
interventions and placements. decisions as and when necessary.

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Performance management cycle

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PROCESS OF PM

1. Develop a strategic plan


2. Identify organizational goals
3. Translate organizational goals into measurable employee goals
Goals must be S.M.A.R.T.
Specific – what are you going to do? How are you going to do it?
Measurable – establish criteria to measure progress
Attainable – identify goals that are important to you and realistic
to achieve
Relevant – the goal should help you achieve your ultimate goal
Time-bound – set a time frame for the goal to be achieved
4. Review employee progress on an ongoing basis
5. Identify specific training and development needs

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Contd……

6. Conduct formal progress reviews at mid-year


7. Annual performance review
• Review performance results;
• Identify accomplishments and areas for improvement
8. Establish development activities for the coming year
9. Rate employee performance

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Performance Management System

• Performance Management System is the tool that helps the managers to


manage their resources and eventually result in the success of the
organization.
• Performance management system is a very broader and complicated
function of HR.
• It includes activities such as joint goal setting, frequent
communications, continuous progress review, feedback of the
performance and rewarding the achievements.

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Purpose

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Unit 1
Purpose
1. Feedback Mechanism.
Performance appraisals must convey to employees how well they
have performed on established goals. It’s also desirable to have
these goals and performance measures mutually set between the
employees and the supervisor. Without proper two-way feedback
about an employee’s effort and its effect on performance, we run
the risk of decreasing his or her motivation.
2. Development Concern
Once the development needs of employees are identified,
appraisals can help establish objectives for training programs. It
refers to those areas in which an employee has a deficiency or
weakness, or an area simply could be better through effort to
enhance performance.

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Unit 1
Purpose
3. Documentation Concern
A performance evaluation system would be remiss if it did not concern
itself with the legal aspects of employee performance. The job related
measure must be performance supported when an Human Resource
Management (HRM) decision affects current employees. For instance,
suppose a supervisor has decided to terminate an employee. Although
the supervisor cites performance matters as the reason for the
discharge, a review of this employee’s recent performance appraisals
indicates that performance was evaluated as satisfactory for the past
two review periods. Accordingly, unless this employee’s performance
significantly decreased (and assuming that proper methods to correct
the performance deficiency were performed), personnel records do
not support the supervisor’s decision.

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Unit 1
Purpose
This critique by HRM is absolutely critical to ensure that employees
are fairly treated and that the organization is “protected”. Because
documentation issues are prevalent in today’s organizations, HRM
must ensure that the evaluation systems used support the legal
needs of the organization.
4. Diagnoses of Organizational Problems:
As a result of proper specifications of performance levels,
appraisals can help diagnose organizational problems. They do so
by identifying training needs and the knowledge, abilities, skills,
and other characteristics to consider in hiring, and they also
provide a basis for distinguishing between effective and ineffective
performers.

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Unit 1
Purpose
5. Employment Decisions :
Appraisals provide legal and formal organizational justification for
employment decisions to promote outstanding performers; to
weed out marginal or low performers; to train, transfer, or
discipline others; to justify merit increases ( or no increases); and
as one basis for reducing the size of the workforce. In short,
appraisals serve as a key input for administering a formal
organizational reward and punishment system.

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Unit 1
Noida Institute of Engineering and Technology,
Greater Noida

Unit:1 Topic 2

Performance management and its challenges in


current scenario,
Performance management as a System and Process

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Objective of Topic

To understand Performance management and its challenges in


current scenario, Performance management as a System and Process

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Challenges faced by PM

• Inconsistent engagement levels of different managers : Failure to


communicate strategy to stakeholder and staff.
• Building a highly developed strategy and measuring the progress of
your team timely.
• Tying rewards to key compensation objectives to drive motivation
• Creating a system that adequately distinguishes between high
performers and average performers
• Effectively using limited budgets
• Providing your team adequate tools and authority to accomplish task.

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Performance management as a system :

• Developing clear job descriptions and employee performance plans

• Selection of right set of people by implementing an appropriate selection

process.

• Negotiating requirements and performance standards for measuring the

outcome and overall productivity

• Providing continuous coaching and feedback during the period of

delivery of performance.

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Unit 1
Performance management as a system :

• Identifying the training and development

• Holding quarterly performance development discussions and evaluating

employee performance on the basis of performance plans.

• Designing effective compensation and reward systems

• Providing promotional/career development support and guidance to the

employees.

• Performing exit interviews for understanding the cause of employee

discontentment and thereafter exit from an organization.


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PMS Includes

1. Work plan – A document that describes the work to be completed by an


employee within the performance cycle, the performance expected, and
how the performance will be measured.

2. Corrective action plan – A short-term action plan that is initiated when


an employee’s performance fails to meet expectations. Its purpose is to
achieve an improvement in performance.

3. Individual development plan – An action plan for enhancing an


employee’s level of performance in order to excel in the current job or
prepare for new responsibilities.

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PMS Includes…

4. Performance appraisal – A confidential document that includes the


employee’s performance expectations, a summary of the employee’s actual
performance relative to those expectations, an overall rating of the
employee’s performance, and the supervisor’s and employee’s signatures.

5. Performance documentation – A letter, completed form, or note on


which the supervisor indicates the extent to which the employee is currently
meeting expectations and provides evidence to support that conclusion.

6.Fair appraisal – Appraising employees in a manner that accurately


reflects how they performed relative to the expectations defined in their
work plan and in a manner that is not influenced by factors irrelevant to
performance.

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Performance management as a Process

• Performance management process is a systematic process of


managing and monitoring the employee’s performance against their
key performance parameters or goals.

• It is regarded as a process for driving the individual and


organizational performance management.

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Performance management as a Process

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Performance management as a Process

Stage 1:    Pre- Requisites


• It is necessitate defining the purpose clearly for existing and new
employees/ staff, departments in order to make integrate all teams to
meet company’s target.
• There are three primary stages where the company defines their long
term and short term goals.
• The first stage is at the organization level, where the management
describes the holistic view and defines overall objective of
formulation of the company, what are their long term vision, what are
the values on which they stands for, and what is the mission the
company is chasing.
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Performance management as a Process

• The second stage perquisites at department level, where the


management assign targets to each department to achieve overall
organization objective. At this stage, the management strategizes the
processes and allocate targets to each department.
• The third level is at Team Level,
Within the department, the targets are then distributed across the
teams. The tasks needed, methodologies, knowledge, skills required for
each specific job are further identified in the form of a job description.

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Performance management as a Process

Stage 2:   Performance Planning


• There are three important attributes of performance planning:
1. Results
2. Behaviors
3. Development Plan
1. Results: the yardstick of performance management is used to
measure employees and department performance. It provides the
information about the performance gaps and achievements. Hence, it
evaluates how well the individual employee has performance against
his assign targets
2. Behaviour: measuring the employees behaviours are one of the most
challenging and difficult task basis on performance standards. The
human behaviour can only be measured through observation and close
monitoring by his supervisors or human resources department.

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Performance management as a Process

3. Development plan: development plan is the third stage of performance


planning. At this stage, we develop the plans to improve employees
knowledge, skill and attitude (K, S, A). It allows employee to take his
professional standards to next level with the support of development tools
and plans
Stage 3:   Performance Execution
• Performance execution is considered as most important stage because the
whole exercise of creating performance management systems and
building up standards would rely on it.
• The primary responsibility and ownership of performance execution is
with employee, which is followed by department and then organization.
• Hence, it is considered as a chain or process, in which the performance of
individual employees would result department performance.

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Performance management as a Process

Stage 4:   Performance Assessment


• Performance assessment is the next stage followed by performance
execution. In this phase, the employee and manager both are responsible
to measure and assess the performance of employee against his targets.
The process should comprise to the extent of individual targets, behaviors
or attitude and special achievements during the performance appraisal
cycle.
Stage 5:   Performance Review
• The performance review stage is a platform where the subordinate and
superior exchange performance feedbacks and review performances
against given  targets or goals to individual.
• To make the performance review successful, the involvement and
exchange of dialogue are equally essential between employee  and his
manager. Apart from performance review, they also discuss about the
development plans, trainings to improve skills and knowledge, next year
goals and targets and expectations of employee and manager both.
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Performance management as a Process

Stage 6:  Performance Renewal and Reconstructing


•  The performance management process is an ongoing continuous
process. Once the performance has been reviewed and end, then the
cycle starts for the next performance appraisal.
• It should be again align with next year organization mission, goals
and objective and integrated with departments goals.
• In facts, it is a process which starts all over again which needs to be
discuss, design, develop , executed and review again.

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Noida Institute of Engineering and Technology,
Greater Noida

Unit:1 Topic 3

Performance Criterion for an Effective Appraisal System


KRA, KSA VS KPI

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Objective of Topic

To establish Performance Criterion of developing an Effective


Appraisal System, Criteria (KRA, KSA VS KPI)

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Characteristics of Effective Performance Appraisal

1. The system must be bias-free:


The evaluator must be objective and the methods of appraisal must be
fair and equitable. The atmosphere must be that of confidence and trust.
2. It must be relevant:
It should only measure behavior that are relevant to the successful job
performance and not any other personal traits.
3. It should be acceptable to all:
The performance standards as well as the appraisal methods should be
developed by joint participation and joint collaboration.
4. It should be reliable; dependable; stable and consistent:
High reliability is essential for correct decision-making and validation
studies. It should be sufficiently scientific, so that if an employee is
evaluated by two different evaluators, then the result should be
significantly the same.
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Characteristics of Effective Performance Appraisal

5. It must be able to objectively differentiate between a good


employee and an ineffective employee:
Rating an employee average does not adequately indicate the degree of
effectiveness. So the technique must be sufficiently sensitive to pick up
the difference between an effective and an ineffective employee.
6. It must be practical, sound, clear and unambiguous so that all
parties concerned understand all its implications.

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Key Result Areas (KRA)

• Definition: Key result areas or KRAs refer to the general metrics or


parameters which the organization has fixed for a specific role. The
term outlines the scope of the job profile, and captures almost 80%-
85% of a work role.
• Description: Key result areas (KRAs) broadly define the job profile for
the employee and enable them to have better clarity of their role. KRAs
should be well-defined, quantifiable, and easy to measure. It also helps
employees to align their role with that of the organization.
• A manager who is working in a manufacturing firm would have to
focus on maintaining the budget of the department, safety of the
employees, coordination with different departments, training, reporting
as well as introducing new technologies to improve productivity.

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Benefits of KRA

• It is helpful as it clarifies the role of each individual.


• It helps employees align their profile in line with the broader
strategies of organization
• It focuses on result rather than on processes
• It helps employees arrange their activities in priorities and improve
the management time.
• It covers almost 80% of the work of an organization.

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KRA flow chart

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KNOWLEDGE, SKILL, ABILITIES (KSA)

• The KSA framework is applied in the context of job descriptions or


recruiting requirements, and it is used to compare candidates in
making a final selection.
• An additional application of the Knowledge, Skills and Abilities
approach is to assess the need for training and coaching in an
existing workforce. 
1. Knowledge focuses on the actual understanding of particular
concepts
2. Skills reflect capabilities or proficiencies developed through
training
3. Abilities are those innate capabilities that you bring to a particular
task or situation.

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Strengthening KSA

• The areas of knowledge and skills are best developed through


training activities that incorporate both theoretical learning
(textbook) plus hands on application of the key concepts and tools.
• Strengthening natural abilities is primarily a coaching challenge,
where observation, feedback and improvement or development
planning are all applied to particular behaviours. 

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Challenges with the KSA Approach:

The general criticisms of using a KSA framework for job applications or


candidate evaluation tool include:
1. Long, complex and sometimes redundant job descriptions.
2. Complex application processes that frustrate candidates.
3. Confusion over the differences between the terms, especially skills
and abilities. 

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Key performance Indicator KPI

• A Key Performance Indicator (KPI) is a measurable value that


demonstrates how effectively a company is achieving key business
objectives.
• Organizations use key performance indicators at multiple levels to
evaluate their success at reaching targets.
• High-level KPIs may focus on the overall performance of the
enterprise, while low-level KPIs may focus on processes or
employees in departments such as sales, marketing or a call center.

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Importance of KPI

• They allow companies to clearly communicate to their employees


which goals are most important
• They provide an easy way to monitor the progress of employees,
especially in relation to the most important goals
• They keep the right people within an organization informed of how
their departments are doing
• They track the impact of initiatives, which gives the company
valuable insight into which initiatives they should be pursuing
• They highlight weaknesses within an organization
• They bridge the gap between vision and reality
• They give companies a competitive advantage

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KPI for HR Manager

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Recap

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Quiz

1. Explain how can we strengthen KSA .

2. State the challenges faced by Performance Management.


3. state the benefits of KRA.

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Weekly Assignment

1. Differentiate between Performance Management & Performance


Appraisal . CO1
2. Design KPI for a Sales Manager in your company. CO1
3. Discuss the stages for Performance Management to be a process. CO1
4. Describe performance management as process and as system. CO1

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Topic Link

https://youtu.be/lLKyuUqtwuA

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MCQs
1. _______ is defined as the record of outcomes produced on a specific job
function or activity during a specific time period.
• (A) Performance
• (B) Work function
• (C) Evaluation
• (D) None of the above
2.  ______ is the personnel activity by means of which the enterprise
determines the extent to which the employee is performing the job
effectively.
• (A) Job evaluation
• (B) Work evaluation
• (C) Performance evaluation
• (D) None of the above

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MCQs
4. The Recognition may be shown in the form of
• (A) A pat on the back of employee
• (B) Promotion
• (C) Assignment of more interesting tasks
• (D) All of the above
5. What is a Key Performance Indicator?
• A way to assess employee behavior.
• A synopsis of a business' digital marketing.
• A measurable value for tracking business goals.
• A look back at all the previous year's objectives.

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Glossary Questions

A/An ______ is a vertical move in rank and responsibility.


(A) Increment
(B) Appraisal
(C) Promotion
(D) None of the above

KPIs should follow the rules for SMART objectives. In SMART, what
does the ''S'' represent?
A. Sanctioned
B. Sales
C. Specific
D. Stock

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Old Question Papers

http://www.aktuonline.com/papers/mba-3-sem-performance-an
d-reward-management-kmbhr02-2020.html
http://www.aktuonline.com/papers/mba-3-sem-performance-an
d-reward-management-rmbhr-02-2018-19.html

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Old Question Papers

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Old Question Papers

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Old Question Papers

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Old Question Papers

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Old Question Papers

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Old Question Papers

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Old Question Papers

http://www.aktuonline.com/papers/mba-3-sem-performance-an
d-reward-management-kmbhr02-2020.html
http://www.aktuonline.com/papers/mba-3-se-performance-and
-reward-management-rmbhr-02-2018-19.html

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Expected Questions

• “Performance management is a process”. Justify the statement.


• Discuss the context of performance management as a system and
performance management as a process?
• Describe the importance of KPI for an organization. Explain the
concept and usefulness of KPI for a company.
• Define performance management.
• Illustrate any two selection criteria of Key Performance Indicators
(KPI).
• Discuss the criteria of developing an effective performance appraisal
system.
• Analyze the uses and purpose of performance management.

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RECAP OF UNIT

This unit gives a clear picture of performance management and its


distinguishing features from performance appraisal
It also tells us different criteria that are used for measuring performance
of people in an organization.
It proves that performance management is a process and again a
complete system.

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