Performance Management

Shuaib Mohamed MIC-KDF-HRM122

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Contents
1. KPI & Competence ............................................................................................................................... 3
The Proper Use of Key Performance Indicators: ...................................................................................... 3
competence .................................................................................................... Error! Bookmark not defined.
Benefits of Competencies ......................................................................................................................... 4
2. Performance Management & performance Appraisal........................................................................... 4
Performance Management ........................................................................................................................ 4
Performance appraisal ............................................................................................................................... 5
3. Employees performance management cycle ............................................................................................. 5
Performance Planning ............................................................................................................................... 6
Ongoing Monitoring ................................................................................................................................. 6
4. Methods of performance management ...................................................................................................... 7
Graphic Rating Scales ............................................................................................................................... 7
Management by Objectives....................................................................................................................... 7
Forced Ranking ......................................................................................................................................... 8
The 360 Approach..................................................................................................................................... 8
The Unstructured Format .......................................................................................................................... 8
5. Common errors and how can those be eliminated .................................................................................... 9
Halo Effect ................................................................................................................................................ 9
Central Tendency Error............................................................................................................................. 9
Recency Error ........................................................................................................................................... 9
Similar-to-me Error ................................................................................................................................... 9
Favoritism ............................................................................................................................................... 10
Guilt by association................................................................................................................................. 10
References ................................................................................................................................................... 10

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 1. KPI & Competence

Key performance indicators, also known as KPI or Key Success Indicators, help managers and
employees gauge the effectiveness of various functions and processes important to achieving
organizational goals.(Reh, 2017)

The Proper Use of Key Performance Indicators:

A properly developed and implemented KPI program incorporates regular review processes
where managers and other stakeholders assess the meaning of the results. Improvement in
employee engagement and customer satisfaction measures are positive, but diligent managers
will assess the causes and impact of the improvements then decide how to continue to strengthen
in these areas.

Similarly, a decline in sales results from the prior period or same period last year might be
reasonably assessed as negative.

However, the measures alone don't tell you what happened or how to improve. A set of proper
sales-focused KPIs will include measures that showcase where conditions deteriorated and how
likely they are to improve. Armed with these insights, sales team members can take action to
strengthen the leading indicators and drive improved future results. (Reh, 2017)

Competence

Competence is the ability of an individual to do a job properly. A competency is a set of defined

behaviors that provide a structured guide enabling the identification, evaluation and development
of the behaviors in individual employees. The term "competence" first appeared in an article
authored by R.W. White in 1959 as a concept for performance motivation.

Competency is also used as a more general description of the requirements of human beings in
organizations and communities.

Competency is sometimes thought of as being shown in action in a situation and context that
might be different the next time a person has to act. In emergencies, competent people may react

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to a situation following behaviors they have previously found to succeed. To be competent a
person would need to be able to interpret the situation in the context and to have a repertoire of
possible actions to take and have trained in the possible actions in the repertoire, if this is
relevant. Regardless of training, competency would grow through experience and the extent of
an individual to learn and adapt.

Benefits of Competencies

Competency models can help organizations align their initiatives to their overall business
strategy. By aligning competencies to business strategies, organizations can better recruit and
select employees for their organizations. Competencies have been become a precise way for
employers to distinguish superior from average or below average performance. The reason for
this is because competencies extend beyond measuring baseline characteristics and or skills used
to define and assess job performance. In addition to recruitment and selection, a well sound
Competency Model will help with performance management, succession planning and career
development.

2. Performance Management & performance Appraisal

Performance Management

Performance management is the process of creating a work environment or setting in which

people are enabled to perform to the best of their abilities. Performance management is a whole
work system that begins when a job is defined as needed.

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It ends when an employee leaves your organization.

Performance management defines your interaction with an employee at every step of the way in
between these major life cycle occurrences. Performance management makes every interaction
opportunity with an employee into a learning occasion.

Performance management is not an annual appraisal meeting. It is not preparing for that
appraisal meeting nor is it a self-evaluation. It's not a form nor is it a measuring tool although
many organizations may use tools and forms to track goals and improvements, they are not the
process of performance management.(Heathfield, 2016)

Performance appraisal
The performance appraisal is the process of assessing employee performance by way of
comparing present performance with already established standards which have been already
communicated to employees, subsequently providing feedback to employees about their
performance level for the purpose of improving their performance as needed by the organization.

As said above the very purpose of performance uprising is to know performance of employee,
subsequently to decide whether training is needed to particular employee or to give promotion
with additional pay hike. Performance appraisal is the tool for determining whether employee is
to be promoted, demoted or sacked ( remove ) in case of very poor performance and no scope for
improvement.

Every corporate sector uses performance appraisal as a tool for knowing about the employee and
take decisions about particular employee. for the purpose of performance appraisal of employees
there are different methods under the category of traditional methods and modern methods which
are discussed in following chapters.(Mayo, n.d.)

3. Employees performance management cycle

The performance management cycle (see below) shows the stages involved in the process of
planning, monitoring and evaluating employee performance.

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Performance Planning

The planning stage provides an opportunity for one-on-one goal setting between the supervisor
and employee based on work unit objectives that are aligned with organizational goals. It is a
way to ensure individual action plans and performance expectations are linked to the
organizational results you want to achieve. It is also a way to foster ongoing open
communication concerning expectations and employee needs.

Ongoing Monitoring

Performance management should be a dynamic process. Progress on objectives must be

monitored with continual appropriate feedback and discussion throughout the year.

Feedback on performance can come from a variety of sources such as the work itself, the
employee, the supervisor, clients, as well as other employees involved in the same work. Regular
monitoring of activities is a systematic way to determine whether the plans and methods to
achieve objectives are working as intended. Organizational changes (e.g., budgeting, business
priorities) may occur that affect the employees ability to achieve the original objectives,
possibly resulting in a requirement to adjust the employees performance plan.

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4. Methods of performance management

Performance management is an integral part of the workplace as it provides a platform for

supervisors and managers to measure employee performance and determine whether employees
are meeting the company's expectations. The method of performance measurement varies
according to the work environment, type of business and, to some extent, the employee's
occupation.(Mayhew, 2016)

Employee appraisal methods are a tricky and complex aspect of HR (Human Resources) and
business management. Also consider doing performance appraisals that float up the chain of
command as well as down. This means that employees and junior managers get the opportunity
to evaluate their bosses as much as the bosses evaluate them.(Antariksa, 2012)

Graphic Rating Scales

Graphic rating scales are ideal for production-oriented work environments, as well as for other
workplaces that move at a fast pace, such as those found in the food and beverage industry. A
rating scale consists of a list of job duties, performance standards and a scale usually from 1 to 5
for rating employee performance. This method for measuring employee performance requires
preparation just like other methods; however, it can be completed relatively quickly, which is a
plus for supervisors who manage large departments or competing assignments in an environment
that leaves little time for workforce management duties.

Management by Objectives

Management by objectives, or MBOs, are useful for measuring the performance of employees in
supervisory or managerial positions. MBOs start with identifying employee goals, and from that
point the employee and her manager list the resources necessary to achieve those goals. The next
section of MBOs consists of the timelines for achieving each goal. Throughout the evaluation
period, the employee and her manager meet periodically -- quarterly is best -- to discuss the
employee's progress and to reset goals for which the employee needs additional time or resources
to complete. The employee's performance is measured by how many of her goals she
accomplished within the designated time frame.

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Forced Ranking

Forced ranking earned a bad name from the time this method became popular during the reign of
GE's former CEO, Jack Welch. Welch advocated supervisors and managers ranking employees
into three groups. The top performers comprise roughly 20 percent of the workforce, average
performers 70 percent and the lowest-performing employees make up about 10 percent of the
workforce. Forced ranking measures employees' achievements against those of their peers,
instead of comparing the employee's current evaluation period against the employee's own past
performance. For this reason, forced ranking lends itself to creating a very competitive work
environment.(Mayhew, 2016)

The 360 Approach

The 360 Approach appraisal system is not just for employers, but is used by and for all
employees and managers of a firm. Most appraisal methods are designed using variables that
employers find significant, such as total revenue generated.

The 360 approach uses standards that other employees might find important.

In this case, appraisal comes from the overall function of the department, such as sales, rather
than just what a boss might find useful. Employees are considered as part of a structure that
functions only if all employees are on the same page and work together well.

The Unstructured Format

The unstructured format is a common method where evaluators use an essay or short answer to
grade employees. The benefit here is that any and all variables are used, from the most
quantitative to the most informal. This is similar to the essay format, where appraisals are done
through a free form writing of an essay which tries to capture all aspects of employee
performance.

Ultimately, all unstructured appraisals are meant to be open ended and all
encompassing.(Antariksa, 2012)

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5. Common errors and how can those be eliminated
Performance appraisals that contain errors or are constructed from a supervisors biased
viewpoint can affect an employees working relationship. Employees whose performance is
ranked incorrectly or inaccurately may be on the verge of losing their jobs, or they may become
disillusioned and exhibit signs of low morale and poor job satisfaction. Eliminating bias and
error in performance appraisals is a critical responsibility for supervisors, managers and human
resources staff.(Mayhew, n.d.)

Halo Effect
Halo Effect is when a raters overall positive or negative impression of an individual employee
leads to rating him or her the same across all rating dimensions.(PATRICIA, 2015)

Central Tendency Error

Central tendency error is the raters tendency to avoid making extreme judgments ofemployee
performance resulting in rating all employees in the middle part of a scale.(PATRICIA, 2015)

This can happen either when a manager is not comfortable with conflict and avoids low marks to
avoid dealing with behavioral issues or when a manager intentionally forces all employees to the
middle of the scale.

Recency Error
Recency error is the raters tendency to allow more recent incidents (either effective or
ineffective) of employee behavior to carry too much weight in evaluation of performance over an
entire rating period.

Similar-to-me Error
Similar-to-me error is when the raters tendency is biased in performance evaluation toward
those employees seen as similar to the raters themselves. We can all relate to people who are
like us but cannot let our ability to relate to someone influence our rating of their employee
performance.

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Since human biases can easily influence the rating process, it is important to create objective
measures for rating performance. Observing behaviors and using available technology to help
track performance can take some of the biases out of the rating process.(PATRICIA, 2015)

Favoritism
Overlooking the flaws of favored or "nice" employees, especially those whom everyone
likes.(Armstrong, 2012)

Guilt by association
Rating someone on the basis of the company they keep, rather than on the work they
do.(Armstrong, 2012)

References
Antariksa, Y., 2012. methods-for-fair-employee-performance-appraisals. [Online]
Available at: https://cbpowerandindustrial.wordpress.com/2012/09/26/5-methods-for-fair-
employee-performance-appraisals/
[Accessed 26 September 2012].

Armstrong, S., 2012. HR and Employment Law News. [Online]

Available at: http://hr.blr.com/HR-news/Performance-Termination/Performance-Employee-
Appraisal/zn-10-Rating-Errors-Avoid-in-Performance-Reviews/
[Accessed 11 April 2012].

Heathfield, S. M., 2016. Performance Management. [Online]

[Accessed 31 October 2016].

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Mayhew, R., 2016. types-methods-used-measure-performance. [Online]
Available at: http://smallbusiness.chron.com/three-types-methods-used-measure-performance-
23612.html

Mayhew, R., n.d. How to Eliminate Bias and Error in Performance Appraisals. [Online]
Available at: http://smallbusiness.chron.com/eliminate-bias-error-performance-appraisals-
11187.html

Mayo, G. E., n.d. whatishumanresource/performance-appraisal. [Online]

Available at: https://sites.google.com/site/whatishumanresource/performance-appraisal

PATRICIA, 2015. 6 Errors Managers Make on Performance Appraisals. [Online]

Available at: https://smartchurchmanagement.com/performance-appraisal-rater-errors/
[Accessed 14 October 2015].

Reh, F. J., 2017. www.thebalance.com. [Online]

Available at: https://www.thebalance.com/key-performance-indicators-2275156

Weber, A., 2005 . www.computerised-maintenance-management-systems.com. [Online]

Available at: http://www.computerised-maintenance-management-systems.com/articles/KPIs.pdf

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