Performance Management Systems

Refresher

Agenda
SEC 1: THE CONTEXT FOR PMS SEC 2: THE PMS PROCESS SEC 3: DESIGN & IMPLEMENTATION SEC 4: PMS: EMPLOYEE DEVELOPMENT

Performance Management Systems

Performance Management
Continuous process of identifying, measuring and developing the performance of individuals and teams and aligning the performance with the strategic goals of the organizations

Performance Management Systems in Context

Purpose of PMS
Strategic purpose (To help achieve objectives) Administrative purpose (To decide) Informational purpose (For employees) Developmental purpose (To improve) Org. maintenance purpose (To replenish) Documentation purpose (For record)

Performance Management Systems in Context

Advantages of a Good PMS
Increased motivation, self-esteem Performance-Reward link made clear Goal Achievement clarified Managers gain insight Self-insight and development enhanced Supervisors views communicated more clearly Org. change is facilitated

Performance Management Systems in Context

Disadvantages of badly administrated PMS
(Unfair standards and ratings, emerging biases, unclear rating systems) Lowered self-esteem, wasted time and money Damaged relationships, decreased motivation to perform Increased turnover, use of misleading info. Employee burnout, job dissatisfaction Increased risk of litigation, unsatisfied demands on resources

Performance Management Systems in Context

Characteristics of PMS
Strategic congruence Practicality Specificity Reliability Acceptability Openness Standardized -- Thoroughness -- Meaningfulness -- Ethicality -- Validity -- Fairness, Inclusiveness -- Correctability

PMS: Relevant Theories

Adams Equity Theory Vrooms Expectancy Theory McClelland's Achievement Motivation Theory Hollands Job Characteristics Model

PMS PROCESS

Performance Management Process

Process
Prerequisites Performance Planning Performance Assessment

Performance Appraisal/ Review

Performance Renewal & Recontracting

Feedback

Prerequisites of PMS Knowledge of strategic goals Knowledge of jobs in question

PMS - Strategic Planning

Linking Performance Management to Strategic Plan Unit Strategic Plan
Mission Vision Goals Strategies

Individual and Team Performance

Results Behaviors Developmental Plan

Org. Strategic Plan

Mission Vision Goals Strategies

Job Description
Tasks Knowledge Skills Abilities

Performance Management Process

Performance Planning
Results, Behaviors, Development Plan

Performance Execution
Employees Commitment to goal achievement Ongoing performance feedback and coaching Managers Observation and documentation Updates

Communication with supervisor

Collecting and Sharing supervisor data Preparing for performance reviews

Feedback
Resources Reinforcement

Performance Management Process

Performance Assessment
Both employees and managers are responsible for evaluating the extent to which desired behaviors have been displayed/desired results achieved

Performance Appraisal/Review
Performance Appraisal/Review is systematic description of employees strengths and weaknesses and is developmental in nature

Performance Renewal and Re-contracting

Acts as feedback and sets goals for next cycle

PMS DESIGN & IMPLEMENTATION

Defining performance and choosing a measurement

Defining performance
About behavior and what employees need to do

Determinants of performance
Declarative Knowledge (Info about facts and things: task requirements, principles, goals) Participative Knowledge (Info of knowing what to do and how to do it: cognitive, physical , interpersonal skills) Motivation (Choice to expend effort, level of effort, choice to persist)

Defining performance and choosing a measurement

Performance Dimensions
Task performance (Basic requirement) Contextual performance (Additional/Peripheral)

Approaches to performance management

Approach Trait Approach What is measured Traits of employees When is it used Less used. Used when allocation of personnel based on traits needs to be done

Behavior Approach
Results Approach

What employees do on the job

Results on the job

Link between behavior and results not clear, Outcomes distant, Poor results due to uncontrollable factor
Skilled workers, behaviors and results related, results show improvement over time, many ways to do the job correctly

Measuring Results and Behaviors

Measuring Results (The results approach)
Need to ask the questions
Where all should the person focus? What are the expected objectives in each area? How do you measure the results success?

Determining accountabilities
How is time divided across accountabilities? The importance of each accountability?

Measuring Results and Behaviors

Determining objectives
Accomplishment of objectives will ensure success for accountabilities To be useful, objectives need to be:
Specific and Clear Agreed Upon
Prioritized Achievable Flexible

Challenging Significant
Time-bound Fully communicated Limited in number

Measuring Results and Behaviors

Determining performance standards
Standards need to be set Can be set according to quantity, quality, time Good performance standards need to be:
Related to the position Concrete Specific Measureable Practical to measure Meaningful Realistic Achievable Reviewed regularly

Measuring Results and Behaviors

Measuring Behaviors (The behavior approach)
Need to assess competencies Indicators prove whether competency is present or not Two types of systems: Comparative and Absolute
Absolute Essays Behavior Checklists Critical Incidents Graphic Rating Scales Comparative Simple Rank Order Alternation Rank Order Paired Comparisons Forced Distribution

Measuring Results and Behaviors

Measuring Behaviors (The behavior approach)
Comparative Systems: Mostly compare with others and with standards Easy to explain, resulting data easy to interpret Employees usually compared on overall scores rather than in specific categories Hence, feedback is usually less useful

Measuring Results and Behaviors

Measuring Behaviors (The behavior approach)
Absolute Systems:
Essays: Difficult to quantify, produce useful and detailed feedback Behavior Checklists: Easy to use and understand, scale points are arbitrary, rendering same point differences nonconsistent across the scale Critical incidents: Allows supervisors to focus on actual job behaviors rather than on vaguely defined traits; can be timeconsuming, BARS is an off-shoot Graphic Rating Scales: Most frequently used, requirement: meaning of each response category should be clear, dimension should be defined clearly, individual should be able to tell what response was intended

Objectives of BARS
Assess performance in terms of specific behaviors that are critical to the job, rather than in terms of general traits or abstract constructs. Eliminate the use of potentially misleading numerical and volume measures that are not readily interpretable. Reduce rater bias and error by anchoring the rating with specific behavioral examples based on job analysis information. Minimize evaluators' impreciseness, subjectivity and failure to identify the essential functions of the job.

BARS Scale : Communication Skills

Gathering Performance Information

Appraisal forms
Basic employee info Accountabilities, objectives and standards Competencies and indicators Major achievements and contributions Developmental achievements, needs, plans and goals Stakeholder input Employee comments Signatures

Gathering Performance Information

Determining Overall Rating
Judgmental (Subjective) : Consider all aspects and using essay type summary Mechanical (Objective): Uses weightages and scores related on goal/performance dimensions
Sources of information
Supervisors Peers Subordinates Self Customers To ensure objectivity, it should be decided as to which source should rate what dimension

 Planning a Performance Management System

Communication Plan
Information regarding PMS is widely disseminated across organization Answers FAQs about the PMS, such as how it fits into the strategy, how it works, how is it linked to other initiatives To remove biases, one should: involve employees, understand their needs, provide facts, be quick, put it in writing, use multiple channels of communication, credible communicators

Implementing a Performance Management System

Appeals Process
Important for addressing disagreements in ratings or decisions Increases perceived fairness Possible issues: Judgmental (Based on validity of rating) and administrative (Whether policies and procedures were followed)

 Planning a Performance Management System

Training Programs
Areas for including in training programs How to minimize rating errors How to conduct an appraisal interview How to train, counsel and coach Reasons for implementing training programs Info on appraisal form and system mechanics How to identify and rank job activities How to observe, record and measure performance

Implementing a Performance Management System

Unintentional errors occur due to the complexity of task Rater error training Frame of reference training Behavioral observation training Self-leadership training

Implementing a Performance Management System

Reasons for rating distortion (done on purpose)
Rating Inflation Rating Deflation

Maximize the merit rewards

Encourage employees Avoid creating a written record Avoid a confrontation Promote undesirable out of department Make manager look good

Shock employees
Teach rebellious employee a lesson Send a message to make the employee leave Build a record of poor performance

Such grievances can be cause of attrition or degenerative conflicts leading to loss of productivity Transparency and Openness should be there in the system to identify issues and rectify them

Implementing a Performance Management System

Planning a Performance Management System
Pilot Testing Used to remove potential glitches Corrective action to be taken Results are not recorded to employees records Monitoring and Evaluation Measurement system needed for evaluation Measures such as confidential employee surveys Other measures such as: Quantity of individuals evaluated, quality of information gathered, user satisfaction with system, cost/benefit ratio

Normalization
Normalization using forced distribution curve
To differentiate clearly between different levels of performance To control the compensation budgets

Normalization across raters

Different raters in the organizations may rate same performance differently (some give higher scores, some less)

Example of Normalization using forced distribution

First step is determination of the distribution E.g.
Rating 1 - 10% of employees Rating 2 - 30% Rating 3 40% Rating 4 - 20%

It can be the responsibility of either the department manager or the HR or both to moderate the initial ratings of appraisal and redistribute the ratings to get the decided normal distribution Redistribution or moderation is done by thorough reevaluation of the candidates and the ratings given

Example of Normalization across raters

Say there are 2 teams, one rated by A, other by B A rates 5 people below him as : 3, 5, 4, 3, 4 B rates 4 people below him as : 2, 3, 2, 4 Rater Normalization Process: Rating Average of A = 19/5=3.80 Rating Average of B = 11/4=2.75 Overall Average=30/9=3.33 Normalization factor for A=(3.33/3.80)=0.876 Normalization factor for B=(3.33/2.75)=1.211 Normalized ratings for team A : 2.68, 4.38, 3.5, 2.68, 3.5 Normalized ratings for team B : 2.42, 3.63, 2.42, 4.84

PMS FEEDBACK & DEVELOPMENT

PMS: Feedback and Employee Development

Personal Developmental Plans
Specify course of action to improve performance Developmental Plan Objectives
Improve performance in current job Sustain performance in current job Prepare employees for advancement Enrich employees work-ex

Content of Plan
Specific objectives to be reached, description of steps to be taken, duration, how supervisor will know

Developmental Activities
Summary list of developmental activities Courses Mentoring Getting a degree Temporary assignments OJT training Self-guided reading Attending a conference Job rotation Membership/leadership roles

PMS: Feedback and Employee Development

360-Degree Feedback Systems
Advantages

Decreased possibility of biases Increased commitment to improve

Improved performance

Increased awareness of expectations Improved self-perceptions of performance

Reduces undiscussables

Employees are enabled to take control of their careers

Disadvantages
Negative feedback may hurt feelings
Anonymity may be compromised in case of small no. of raters Only once will not work Characteristics of a good system Anonymity Observation of performance Feedback of interpretation Follow-up Used for developmental purposes only Avoidance of survey fatigue Emphasis on behaviors Raters go beyond ratings Raters are trained

System requires user comfort

Raters may be overloaded

PMS: Coaching
Coaching
Collaborative, ongoing process Involves directing, motivating and rewarding employee behavior Coaching Styles: Driver, Persuader, Amiable and Analyzer
Major functions Give advice Give support Promote greater competence Provide guidance Give confidence Key behaviors Establish objectives Document performance Give feedback Develop employees Communicate effectively Motivate employees Diagnose performance problems

 Coaching process
Set Developmental goals
Identify Developmental Resources and Strategies

Implement Strategies

Observe and Document Developmental behavior

Feedback

Recommendations for documentation Be specific Use adjectives and adverbs Balance positives Focus on job-related info

Be comprehensive

Standardize procedures
Frequent Private

Describe observable behavior

Feedback should be Specific Consequential Verifiable Descriptive, then evaluative

Timely Consistent

Related to performance continuum

Based on identifiable patterns of performance

Confidence builder

Tool for generating advice and ideas

Thank You