PERFORMANCE MANAGEMENT

Basic Concepts in Performance Management and Appraisal

Comparing Performance Appraisal and Performance Management

Performance Appraisal:
Setting work standards, assessing performance, and providing feedback to employees to motivate, correct, and continue their performance.

Performance Management:
An integrated approach to ensuring that an employees performance supports and contributes to the organizations strategic aims.

Buiding blocks of PM system

Direction sharing Role clarification Goal setting and planning

Goal alignment

Developmental goal setting

Ongoing performance monitoring

Ongoing feedback

Coaching and support

Performance assessment (appraisal)

Rewards, recognition, and compensation Workflow, process control, and return on investment management

Difference
Appraisal
Primary focus Assessing performance and potential for performance Designing appraisal programme Build employee database Directional, evaluative

Management
Improve employee performance & development Set of HR activities designed and executed to assess and improve performance Facilitative, coaching

Activities involved

Leadership

Frequency

Yearly, six monthly

Often, can be ongoing

Degree of formality

High

Low

Need for Performance Appraisal

Why Appraise Performance?
1

Is basis for pay and promotion decisions. Plays an integral role in performance management.

2 3

Helps in correcting deficiencies and reinforcing good performance.

Is useful in career planning.

Administrative, Development, Organisational objectives, Documentation purposes

Appraising Performance
Steps in Appraising Performance
1 2 3

Objectives of Performance Appraisal Establish job expectations/standards

Design appraisal programme (formal Vs.Informal, who are the raters, what to evaluate, methods to use) Appraise performance Performance Interview Archive Appraisal data Using appraisal data for appropriate purpose

5
6 7

Defining the Employees Goals and Work Standards

Guidelines for Effective Goal Setting

Assign Specific Goals

Assign Measurable Goals

Assign Challenging but Doable Goals

Encourage Participation

SMART Goals

What to Measure?
Work output (quality and quantity)

Personal competencies
Goal (objective) achievement Timeliness

Cost effectiveness
Need for supervision Interpersonal impact

Community service

Who Should Do the Appraising?

Immediate Supervisor Self-Rating

Peers

Potential Appraisers

Subordinates

Rating Committee

360-Degree Feedback

Performance Appraisal Methods

Appraisal Methodologies
1 Graphic Rating Scale Method Alternation Ranking Method Paired Comparison Method Forced Distribution Method Critical Incident Method 6

Assessment Centre Behaviorally Anchored Rating Scales (BARS) Management by Objectives (MBO)
360 degree feedback Checklist Appraisal Annual Confidential Report (ACR)

2
3 4 5 6

8
9 910 11

Essay Method or Narrative Forms

12

Graphic Rating Scale

Easy to understand but subjectivity high

Paired Comparison Method

Used to identify the best candidate for a promotion or special assignment but demotivates others

Note: + means better than. means worse than. For each chart, add up the number of +s in each column to get the highest-ranked employee.

Critical Incident Method

Supervisor keeps a written record of incidents (including dates, people involved, actions taken) that show positive and negative ways an employee has acted. At the time of the appraisal, supervisor reviews the record to evaluate an employees behavior. During the appraisal interview, a supervisor gives employee a chance to offer his views of each incident recorded. Advantages & Disadvantages: Time consuming & important incidents could be overlooked Supervisors tend to record negative events more than positive ones

Contd.Critical Incident Method

Continuing Duties Targets Critical Incidents

Schedule production for plant

90% utilization of personnel and machinery in plant; orders delivered on time

Minimize inventory costs while keeping adequate supplies on hand No shutdowns due to faulty machinery

Instituted new production scheduling system; decreased late orders by 10% last month; increased machine utilization in plant by 20% last month

Supervise procurement of raw materials and inventory control Supervise machinery maintenance

Let inventory storage costs rise 15% last month; overordered parts A and B by 20%; underordered part C by 30% Instituted new preventative maintenance system for plant; prevented a machine breakdown by discovering faulty part

Assessment Centre
Central location where employee come together to participate in job-related exercises evaluated by trained observers. Assessed : Assertiveness

Persuasive ability
Communicating ability Planning and organisational ability Self-confidence Resistance to stress Decision making

Assessment Centre
Activities include :

In-basket training
Computer simulations Role playing

Work groups without leaders

Companies using : Modi Zeroz

Crompton Greaves
Ranbaxy Tata

Behaviorally Anchored Rating Scale (BARS)

Developing a BARS
1. Generate critical incidents
2. Develop performance dimensions 3. Reallocate incidents 4. Scale the incidents 5. Develop a final instrument

Advantages of BARS
Less subjective and overcome rater errors Clearer standards Feedback

Disadvantages
Expensive Time consuming

Title

Management by Objectives (MBO)

Goal directed approach in which workers and supervisors set goals together for the upcoming evaluation period and also measure the extent to which goals have been met. Steps involved: 1. Setting of organizations goals. 2. Setting of departmental goals. 3. Discussion of departmental goals. 4. Defining expected results (setting individual goals). 5. Conducting periodic performance reviews. 6. Providing performance feedback. Advantages: Employee knows what is expected and a supervisor focuses on results rather than more subjective criteria

Problems with MBO

Setting unclear objectives Time-consuming appraisal process

Problems with MBO

Conflict with subordinates over objectives

Checklist Appraisal
Contains series of questions about an employees performance. A supervisor answers yes or no to the questions. There is a key for scoring the items on the checklist; the score results in a rating of an employees performance. Advantages & Disadvantages: Easy to complete but difficult to prepare. Each job requires a different set of questions.

360 Degree Feedback

Multiple raters or stakeholders are involved in evaluating performance about how an employee does the job immediate supervisors, team members, customers, peers, self

Advantages & Disadvantages: Employee can compare himself with others perception about him Skills like interpersonal skills, team skills can be identified. Drawback : Difficult to select rater, designing questionnaire and analysing data Rater may have a fear to assess employee

Contd.Checklist Appraisal

Appraising Performance: Problems

Appraisal Problems

Unclear Standards

Halo Effect

Restriction of range error

Personal Bias on the basis of race, age, gender

Severity error

Central Tendency
error

Leniency error

Appraising Performance: Solutions

How to Avoid Appraisal Problems

Know Problems

Use the Right Tool

Train Supervisors

Control Outside Influences

Keep a Diary

THANKS