1.

Performance Management System

Performance appraisal is an ongoing communication process, undertaken in partnership between an employee and his or her immediate Appraiser for achieving the ultimate goal of IMPROVED PERFORMANCE. It is the process of evaluating how well employees perform in their jobs when compared to a set of standards, and then communicating the information to employees.
Purpose

To create role clarity, and clarify performance expectations and measures at Individual, Group & Organizational levels. To provide on the job guidance, feedback and counseling to build on strengths and areas of improvement, so as to bridge the gap between performance and expectations. To build a positive work relationship between the Appraiser and the employee through a two way communication process. Base performance evaluation on explicit performance criteria that broadly defines desired behavior To provide a basis of future compensation , reward & recognition, promotion, succession planning and career planning mechanism Encourage collaborative and team work To identify the training & developmental needs of employees. To unleash the creative capabilities of our employees. To encourage superior performance through stretch goals. To promote a performance driven culture, A Culture of Excellence. To give employees regular feedback so that they are fully aware ( and not taken by surprise) of what are the companies expectations from them , where they stand in terms of performance and how much they have to improve/achieve to reach their target within a given time . Identify remedial actions for non-performers Promote equity & transparency Deploy organization wide strategic and operational planning Enhance accountability

Challenges Performance Evaluation leave people bitter, despondent , dejected , depressed, , unfit for work for weeks after rating unable to interpret why they are inferior ------DEMINGS
A Performance Management System is not an easy process. Why do it? Intense pressure on organizations to meet the global economic changes Individual departmental goals may not be in tune with the total needs of the business Redesigning HR processes to suit the total business plans of the organization Formation of Cross functional teams who were not bounded by narrow job definitions and are flexible in nature Developing a multi skilled workforce. Finding the right fit between organizations and people. Developing an attitude within the organisation that is committed to quality and productivity When properly carried out, it can reduce the amount of time Appraisers need to spend on guiding employees for fighting forest fires. By helping employees understand what Appraisers expect, it allows them to work more independently with less day-to-day supervision. By identifying factors affecting performance, it can improve productivity. Performance management benefits employees by ensuring they know what they are supposed to be doing, what they should do to do their jobs well, why their job tasks are important. It also helps everyone who wants to improve his or her performance to do so. Properly done, performance management helps employees work towards the goals and needs of the company through effective planning. It also builds a performance driven culture, where the religion is performance and career progress also depends on it. YOU GET WHAT YOU MEASURE.

Appraisal Procedure

There are 9 steps approach to Performance Management System

The nine steps are: 1. Performance planning 2. Coaching 3. The performance review meeting 4. Recognition 5. Development needs 6. Personal Action Plan 7. Career Plan The performance appraisal form serves as a formal written document to assure a mutual understanding of what is expected and how well those expectations are being met. The first stage of the performance management process is planning. Planning consists of setting goals, objectives, standards and direction.

Components of the planning stage

A. Development of performance plan. B. Update the plan as priorities/ goals change.

Development of the Performance Plan

The performance plan involves: Identifying Key result areas. Setting key result areas

The Appraiser and the employee list KRAs for the upcoming year to increase the employees effectiveness. These goals are based upon the Organizational objectives, the department/ unit objectives and the interests of the employee.
KRAs

Are areas of responsibility in which an employee is expected to produce results. Give direction to a persons job and help focus on important job areas. Provide a basis for appraisal, counseling and feedback. Increase mutual job understanding with Superiors.

KRAs may be activities that are/ relate to: Routine- Describing regular, ongoing activities. Problem solving- Activities designed to remedy deficiencies. Innovative- Describing activities that create or expand capabilities. Personal growth- Describing activities that enhance professional development. Job enrichment- Expanding the current job with different activities. The employee and the Appraiser together set the KRAs and mutually agree on the same. It is the Appraisers responsibility to help the employee understand that the KRAs need to be consistent with organizational objectives.

Identifying KRAs
1. List all the main activities usually undertaken as part of the job/ role. 2. Ensure that there is no overlap between the KRAs of two different people to prevent duplication of roles. 3. Give weightages to each KRA based on their relative importance. 4. Write specific activities against each KRA. These should be SMART (Specific, Measurable, Achievable, Review able and Time Bound) and measure Quality, Quantity, Time Bound and Cost. The activities should answer these questions WHAT specifically so you want to improve or accomplish? By HOW MANY or HOW MUCH? By WHEN? 5. Finalize the list. Try to limit them to a few (say 5-7). These are your KRAs. Supporting and Monitoring KRA achievement Appraiser should provide the employee with assistance or special resources he/ she may need to meet KRAs.

HR Sl.N o. 1 KRAs (in order of priority) Introduction of PMS a) KRA setting b)Pms-workshop c)Pms 2 Competency Mapping a) Identifying & Map key positions b) Skill Gap Analysis c) Trg Calendar Facilitate Communication a)Bottom up i)Quality Circle ii)CFT iii)SGA b) Top Down i) CDIL News Employee Retention 1)SOP on Resourcing a) Benchmark colleges b) Benchmark salaries c) Streamline bond d)Recruit key positions e)Streamline procedures & forms f) Psychometric Testing 2) SOP induction 3) Actionise Exit Interview data 4) Expectation Analysis 5 Streamline welfare system a) Loans & Adv b) Medical c) Canteen d)Standing Order All Emp All Emp All Emp All Emp Jan,02 Jan,02 Aug,02 Dec,02 Measure of Performance Result Time of completion Weightage (Total should be 100) 35 Support Required

Major / Key changes likely to happen

All Functional / Dept Heads

All Dept/All Emp All Dept All Dept

16.10.02 16.10.02 monthly, wef oct,2k2 20 All Functional/Dept Heads

Introduction and implementation of KRA based PMS To be evaluated monthly

52 positions All Dept All Dept

5.8.2002 5.10.02 5.10.02 5.10.02 20 All Functional /Dept Heads

Competency based skill gap analysis, training, resourcing , etc

Performance based evaluation system which is transparent and based on SMART objectives Laying the foundation for a scientific approach recruitment, Profiling etc

1 per Dept 2 per Dept 5 per Dept 2000 nos All Dept All India Cos as per list All Engineers 60 days QSP Related Key positions New inductees Resigned emp Employees

Dec,02 June,02 June,02 Oct,02 20 Dec,02 Nov,02 Nov,02 Sept,02 Dec,02 Nov,02 Dec,02 July,02 Nov,02 Mar,03 05 All Functional/Dept Heads All Functional/Dept Heads

Flow of communication Top down and bottom up

Encourage Transparency ,Breeds commitment through involvement

1) Quality recruitment on time

Streamline Resourcing Based on competency required at CDIL

Streamlining of Welfare system & Corporate & factory Discipline for All 5 factories

a)Employee retention b)Enforcing discipline

Responsibilities The Coaching process is broken down into two distinct steps:

Coaching for improved performance

1. Analyzing- the reasons why unsatisfactory performance is occurring. 2. Coaching- the face-to-face discussion you conduct to help the employee improve.

Coaching for enhanced effectiveness

1. Exploring- To help employee identify opportunities and strengths 2. Enhancing Performance- Prepare action plan including activities, time allocations and support required to enhance performance and make an impact.

Coaching styles and strategies

Coaching is most effective when Appraiser demonstrated a genuine or sincere interest in helping the employee, while at the same time empowering him/ her to solve job-related problems and challenges. While coaching for improved performance: 1. Describe the problem in a friendly manner. 2. Ask the employees help in solving the problem. 3. Discuss the causes of the problem. 4. Identify and write down possible solutions. 5. Decide on a specific action to be taken by each of you. 6. Agree upon a specific follow up date. While coaching for enhanced effectiveness: 1. Outline opportunities and strengths. 2. Ask the employee to come out with ways to draw on the strengths and opportunities. 3. Highlights how these strengths and opportunities can enable the employee excel in performance. 4. Identify and write down the possible areas in which the employee can utilize these strengths. 5. Decide on a specific action plan to be taken by each of you to help employee leverage on the same. 6. Agree on a specific follow up date. The Coaching feedback will promote change if it:

Addresses behaviors that can be changed Focuses on only one or two issues at a time.

Employees are primarily responsible for their own professional development. But it is crucial for the Appraiser to assume a coaching role and accept the responsibility of building & enhancing talent in his team. Appraisers are responsible for coaching their employees on an ongoing basis to help them successfully meet and exceed performance expectations.

It also intends to help:

The employee meet targets realize his/ her potential and understand himself/

herself better. Generate alternatives for dealing with various problems. Facilitate better understanding between the Appraiser and the employee through enhanced communication.

A.

Preparing for the Appraisal meeting

Being prepared ensures comfort during the performance discussion. You can do the following to enhance the effectiveness of the meeting:

Set a time and date that will be mutually convenient. Never cancel or delay- its as important as almost anything else you do. Both should know that the purpose of the meeting is to provide performance feedback and set KRAs for the next year. 2 hours of time should be set aside, without interruptions such as ringing telephones or drop-in visitors. The appraisal should be conducted in the office or some other room where you can talk in private without being disturbed. Preparing to rate the performance

A.

Before rating the level of performance, the Appraiser should consider two factors: 1. Performance documentation 2. Using Critical success factors 3. Rating errors. 1. Using Performance Documentation Performance documentation helps you rate the level of performance. Throughout the year, you have monitored your employees performance, making notes and communicating to them about what they have done well and things they can improve. You should have records of these meetings and your discussions. This, in a sense, is your homework for a meaningful annual review. You should not have to scratch your head to come up with examples of work well done or work that needed improvement. You should have records to draw upon. For example: The Highlights diary of the Appraiser and the Performance Diary of the Employee and also copies of the written performance plan done earlier in the year. Make sure both parties carry documentation generated through the year for the appraisal meeting. 2. Critical Success Factors & Creating Behavioral Rating scale

These are measures that focus on how the job is to be accomplished and include skills, knowledge and/ or behavioral competencies that improve job effectiveness/ performance.

Behavioral Rating Approach To Assesses employees behaviors create series of scales created by: Identifying important job dimensions Creating statements describing a range of desired and undesirable behaviors

Types of Behavioral scales are:Behaviorally anchored rating scales (BARS) Behavioral observation scales (BOS Behavioral expectation scales (BES)
3. Avoiding Ratings Errors

Performance documentation helps measure job performance. It makes the process objective, but rating errors can still occur.
Here are some common tendencies which one should avoid when rating performance. 1) Halo Effect- Rating (positively or negatively) on one trait or factor and letting that rating influence ratings for all the other traits. This problem often occurs with employees who are especially fairly strong (or weak in one skill. To avoid the halo effect, evaluate on one performance factor before going to another factor. This way the evaluation is based on the factors, more than an overall impression of one individual. 2) Leniency or harshness errors- When raters see everything as Good, they are lenient raters. When they see everything as Bad, they are harsh raters. 3)Quarter Peek Pear Equivalent (QPPE): Work extra hard just before the appraisal which might influence rating. Ratings should be examined for a leniency or harshness tendency. If this tendency is present, a normal distribution can be used: 10 percent of employees- outstanding, 20 percent- Very Good, 40 Percent- Good, 20 Percent- Improvement Needed and 10 percent- Unsatisfactory. 4) Central tendency-Some raters avoid using high or low ratings. Central tendency describes what happens when they tend to put everyone in the middle of the road and rate everyone as Good.

The problem with this tendency is that it fails to discriminate between employees and offers little information for subsequent decisions. One must remember that this kind of rating will not help in assessing training needs or making decisions .
5) Personal bias-This occurs when a rater gives a higher rating because the employee has qualities similar to him or her (or a lower rating because the employee has dissimilar qualities). Also, raters can simply like certain employees better than others. Some employees are aware of this tendency and will temporally change their performance when they know a review is about to take place. Continuous documentation and coaching will ensure that, the evaluation is based on the employees performance during the entire time period.

Ra tingErrorsExa le mp
Halo
Job Rating Scale EXCELLENT on all factors Job Rating Scale Employee A EXCELLENT Job Rating Scale Employee A AVERAGE Job Rating Scale Employee B EXCELLENT Job Rating Scale Employee B AVERAGE Job Rating Scale Employee C SUPERIOR Job Rating Scale Employee C AVERAGE Job Rating Scale Employee D EXCELLENT Job Rating Scale Employee D AVERAGE

Leniency

Central Tendency Recency Bias

Job rating scale behavior during the last month has been POOR.

B.

Rating Performance

Its a good idea to use the comments section to document and justify ratings. Any ratings of :Outstanding or Unacceptable performance must be justified in the comments section. Adding comments makes the ratings more meaningful.
This way the employee will have a specific example of what the appraiser had in mind when rating him or her. This example may either be praise or a suggestion for improvement. Additional documents can be attached if needed. Rating has to be done on two sections: a) Performance Evaluation Go through each KRA asking how employee felt it went and come to an agreement on the score against the same. Ask about particular barriers/ difficulties faced, work to identify solutions for next year, and ask if help is required from the Appraiser. Any support for performance improvement promised to the employee by the Appraiser should be recorded in the space provided. b) Critical Success Factors Discuss the Critical Success Factors one by one and come to an agreement on the evaluation against each one. In the space provided for comments, the APPRAISER MAY RECORD INSTANCES TO Support the ratings.

Overall performance evaluation

This collates the scores given in Performance Evaluation and assessment on critical success factors. You may also want to add comments to explain your rating.

Rating scale
The following scale should be used to arrive at the rating on Critical Success Factors & Overall Performance.

Unsatisfactory/Poor: Fails to achieve results expected, deficient in meeting minimum expectations. Improvement needed to reach competent level. Required more than expected supervision. 2 Average/Improvement Needed: Meets basic standard. Never surpasses expectations. Improvement is necessary in many work related areas. 3 Good : Meets basic standards and requirements consistently. Do not surpasses expectations in quality and deliverance of work 4 Very Good: Meets basic standards and requirements consistently. Occasionally surpasses expectations in quality and deliverance of work. 5 Excellent/Outstanding: Achievements consistently exceed expectations. Makes significant contributions well beyond job responsibilities. Other than the pay, there are a number of other factors that can motivate employees and contribute to exemplary performance. The important ones are: Career Planning Professional growth and development opportunities- Employees may be provided opportunities to participate in educational programs or other activities that will expand their skills/ knowledge. Employees would benefit by developing new skills and the additional expertise they bring to the job would further benefit the organization. This activity is generally coordinated and supported by the HR department. Praise/ recognition Praise and recognition have consistently been found to be among the most important motivators. Employees want to be recognized and feel that their contributions are noticed and valued. Simple actions like sincerely thanking employees verbally and/ or in writing for their specific contributions, can work as great motivators.

Challenging Assignments Employees can be encourages taking on new/ challenging assignments, whenever an opportunity arises. This created a sense of involvement on the initiatives being taken by the organization, and builds new excitement and challenges in their jobs. They could be included in special teams and task forces and provide them a platform to exhibit their abilities to a larger group. Beyond these stated benefits, the most visible benefit is the comfortable and happy office environment. This is a result of the open communication and shared focus created by clear planning and constant coaching. The trust and partnership created leads to higher performance of the individuals and the organization, thus creating a lasting and mutually beneficial relationship.

Please note that variable pay is not an end to itself. It merely tells at best that they should focus on the job. Rewards play the role of a rein forcer rather than an instigator. Thus one needs to have an integrated performance management system, which has all the measures and metrics to gauge performance on SMART Objectives. Thus necessary measures and metrics will be needed in terms of developing key potentials, nurturing them and providing them greater perspective by giving key leadership criterion and support them for their development and advancement. On the other hand a constant 10% will be available every year at the bottom line who are non performing and might go through the exit door. Thus one has a distribution of: 10% as Excellent - Scoring in between 90 to 100 30% as .Good - Scoring in between 76 to 89

50% as Average /Improvement Needed 51 to 75 10% as Poor /Unsatisfactory- Scoring below 50

The Performance Management System will also include improving the

Quality of supervision Involvement to breed commitment Transparency Communication Appreciation and Recognition Work place support Working Conditions Job Quality