Lecture Notes - Performance Management

 

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PERFORMANCE MANAGEMENT Lecture Notes by : Prof. M. K. Ravi

Unit-1 Introduction to Performance Management and Appraisal Modern Appraisal Performance appraisal may be defined as structured formal interaction between a subord sub ordina inate te an and d sup superv erviso isor. r. Th That at usu usuall ally y tak takes es the for form m of a per period iodic ic int interv erview iew (Annually or semi annual).With a view to identify weaknesses and strength as well as opportunities for improvement and developments of skills. The link to rewards (Bannister and Balkin, 1990) greater acceptance of the appraisal process and feel more satisfied with it, when the process directly linked to rewards. Goal settings Is the foundation for a good performance management system “Key Result Area” (KRA’s) Regular Review Review gives timely feed back to the individuals. It gives the individual opportunity to discuss his or her achievement during the given period and to look at areas of  improvement. Annual Appraisal:Confidential Report Report is written cy supervisor not shown to the individuals. Report by Supervisor  Shown or given to the individuals and discussed. Self-Appraisal by Individual  

 

 

Linkage to Reward system:Linkage to process such as compensation, rewards, progression and succession planning. Dr. Deming in his book, “out of the crisis” mentions the important of taking system variables in to accountant while dealing with the performance. Performance Management Basics Performance management is ongoing, continuous process of communicating and clarifying clari fying job resp responsi onsibilitie bilities, s, prior priorities ities and perfo performanc rmance e expe expectati ctations ons in order to ensure ens ure mut mutual ual und unders erstan tandin ding g bet betwee ween n sup superv erviso isorr and emp employ loyee. ee. Per Perfor forman mance ce management involves clarifying the job duties, defining performance standards, and documenting. Evaluating and discussing performance with each employee.

 

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Objective of performance management management are: are:1. Inc Increa rease se two two-wa -way y com commun munica icatio tion. n. 2. Clarif Clarify y missio mission, n, goals goals,, respon responsibil sibilities, ities, pri prioritie orities s and expectation expectation.. 3. Ident Identify ify and resol resolve ve perfo performanc rmance ep proble roblems. ms. 4. Rec Recogn ognize ize q qual uality ity pe perfo rforma rmance nce.. 5. Provi Provide de a basic for admi administr nistrative ative dec decision ision suc such h as promot promotion, ion, suc success cession. ion. Principles of Developing a Performance Managemen Managementt Plan 1. Perfo Performanc rmance e Manag Management ement is c consid onsidered ered a pro process cess,, not an eve event. nt. 2. The per performa formance nce ma manage nagement ment Pla Plan n is prima primarily rily a comm communica unication tion too tool. l. 3. Elem Element ent for di discus scussion sion an and d eval evaluating uating shou should ld be job spec specific. ific. 4. Docu Documenta mentation tion : The pr process ocess o off creati creating ng a pape paperr trail to reco record rd data. 5. Ob Obje ject ctiv ives es or re resu sult lt : St Stat atem emen entt of wh what at an emp emplo loye yee e is su supp ppos osed ed to achieve. 6. Ongo Ongoing ing Perfo Performanc rmance e Comm Communic unication: ation: NO SURP SURPRISSE RISSES S 7. Pe Perf rfor orma manc nce e Re Revi view ew : Re Refe fers rs to a me meet etin ing g to re revi view ew an and d ev eval alua uati ting ng performance. 8. Perfo Performanc rmance e Appra Appraisal isal : Th The e regu regular(us lar(usual ual an annual) nual) p proces rocess s

Performance Management Process of defining what employee should be doing, on going communication during the year. Performance Planning The process of communication between manger and employee that results in i n mutual understanding of what the employee is to be doing during the next period of time. ti me. Technological Changes How does a manager asses the performance of a home worker when there is a little or no personal contact between the two.

 

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Unit- 2 Concept of Performance Management Introduction Perfor Per forman mance ce man manag ageme ement nt rem remind inds s us tha thatt bei being ng bus busy y is not the producing results.

sam same e as

Performance management should also be focus on:The organization Departments Processes Programme Products and services Projects Teams or groups       

Exploring organizational effectiveness:The phrase, “organizational effectiveness” is commonly referred to when discussing organization that has achieved maximum performance. Suggested capacities for organizational effectiveness Latt, Lat t, Rya Ryan n and Gro Gross ssman man(19 (1998) 98) sug sugges gestt five five key cap capac acitie ities s for org organi aniza zatio tional nal effectiveness 1. Ad Adop optiv tive ec cap apac acit ity y : it is the ability of a organization to maintain the focus on the ext extern ernal al env enviro ironme nment nt of the org organi anizat zation ion,, thr throug ough h att attent ention ion to assessment, collaborating and networking, assessments and planning. 2. Le Lead ader ersh ship ip C Cap apac acit ity y : It is ability to set direction for the organisation and its resources and also guide activities to follow that direction through to vision vis ion,, est establ ablish ishing ing goa goals, ls, dir direct ection ion,, mot motiva ivatio tion n , mak making ing dec decisi ision on and solving problems. 3. Ma Mana nage geme ment nt C Cap apac acity ity :  : It is the ability to ensure effective and efficient use of the recourses in the organisation through coordination of resources. 4. Tec echn hnic ica al Cap apac acit ity y : It is the abili ability ty of the orga organis nisati ation on to pos positiv itively ely charge its external environment. Key Terms in Terms in performance management: 1. Review organisational goals 2. Specify desired result. 3. Ensure the domain’s desired result. 4. Weight, or prioritize, desired result. 5. Measures to evaluate. 6. Identify standards. 7. Documents a performance. 8. Ongoing observations. 9. Exchange ongoing feedback. 10. Conduct a performance appraisal. 11. If performance meets, reward for performance.

 

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A View of Performance Measure Measurement: ment: Look for Domains (or Areas of Focus) in the Organization: Swanson suggests four  performance domains in organizations Mission Process Critical Performance    

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Four Types of Assessments of Outcomes Outcomes:: Swanson designed a two-row, four- cell matrix to depict four types of drivers. Basic : Basic  : Outcomes are known in advance expected to occur soon. Type1:: Improvement efforts are rather straightforward, but take a longer time. Type1 Type2:: Pe Type2 Perf rfor orma manc nce e resu result lt ma may y ap appe pear ar an anyw ywhe here re an and d ta take ke to lo long nger er to appear. Type3:: Result are less predictable. Type3   

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UNIT 3 Process of Performance Management Introduction Performance measurement is process of assessing toward achieving predetermined goals 1. Performance planning where goals and objectives are determined. 2. Performance coaching where a manager intervenes to give feedback and adjust performance. 3. Performance appraisal where individual performance is formally documented and feedback delivered. Application Applicatio n Perfo Performan rmance ce Mana Manageme gement nt   (APM (APM)) re refe fers rs to th the e di disc scip iplin line e wi with thin in system management that focuses on monitoring. Business Performance Management (BPM) Management  (BPM) set of processes that help business discover efficient use of their business units. Operational Performance Management Management (OPM)  (OPM) focus is on creating methodical and predictable ways. Planning : Planning refers to setting performance expectations and goals for groups and individual to channelize their efforts toward achieving organizational objectives. Monitoring  : Mon Monitoring  Monito itorin ring g wel welll mea means ns con consis sisten tently tly mea measu surin ring g per perfor forman mance ce and providing ongoing feedback to employees and work groups. Developing : Developing in this instance means increasing the capacity to perform throug thr ough h tra traini ining, ng, giv giving ing ass assign ignmen mentt tha thatt int introd roduc uce e ne new w ski skills lls or hig higher her lev levels els of  responsibility, improving work processes, or other methods. Rating  : Rat Rating  Rating ing mea means ns eva evalua luatin ting g emp employ loyee ee or gro group up per perfor forman mance ce ag again ainst st the elem elemen ents ts an and d st stan anda dard rd in an em empl ploy oyee ee’s ’s pe perf rfor orma manc nce e pl plan an an and d as assi sign gnin ing g a summary rating of record. Rewarding  : Re Rewarding  Rewa ward rdin ing g me mean ans s reco recogn gniz izin ing g em empl ploy oyee ees, s, in indi divi vidu dual ally ly an and d as members of groups, for their performance and know edging their contribution to the agency’s mission. Corporate Corporat e Perfo Performan rmance ce Manag Managemen ementt  : Cor Corpor porate ate per perfor forman mance ce man manage agemen mentt (CPM) is a concept concept intro introduce duced d by Gartn Gartner er resear research ch in 2001, wh which ich is “all of the pr proc oces esse ses, s, me meth thod odol olog ogie ies, s, me metr tric ic an and d syst system em ne need eded ed to me meas asur ure e an and d th the e performance of an organisation”.

 

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UNIT-4 Business Process and Performance Management Framework

Introduction  Introduction  Performance management methodology was made popular by Kaplan and Norton in their excellent book  The Balanced Scorecard in  1996. Six Sigma is about locating and rectifying defects in progress to improve efficiency and therefore performance. Corporate Corp orate perfo performan rmance ce mana manageme gement: nt: Integ Integrate rated d with busi business ness intel intelligen ligence ce (BI) strategy scorecard, corporate budgeting and planning. Line of Business Performance Management Integrated with operational system such as ERP. Operational Performance Management  Management  Process- oriented business activity monitoring. Operational Performance Management Operat Ope ration ional al per perfor forman mance ce man manage agemen mentt tod today ay inc includ ludes es ope operat ration ional al das dashbo hboard ards, s, operational reports well as BAM, alerts and automated recommendations. recommendations.  

 

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UNIT-5 Performance Appraisal Platforms

Introduction Performance appraisal, known as employee appraisal, is a method by which the performance of an employee is evaluated (generally in terms of quality, quantity, cost and time). The main aim of the evaluation is to identify the performance gap when performance does not meet the standard set by the organisation as a acceptable. The main aim of the feedback system is to inform the employee about the quality of  his or her performance. Benefits of Appraisal Motivation and Satisfaction. Training and Development. Recruitment and Introduction. Employee evaluation.  

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Appraisal Methods Locher and Teel Teel (1997) found the thre three e most common ap appraisal praisal methods in general rating scale (56%) essay methods (25%) results- oriented or MBO methods(13%). Rating scale  scale  Rating scale method offers a high degree of structure for appraisal ranging fro “poor” to “excellent”. Traits  ass Traits  assess essed ed on the sca scale le inc includ lude e emp employ loyee ee att attrib ribute utes s suc such h as coo cooper perati ation, on, communication ability, initiative, punctuality and technical competence.  A peer review program may be designed by a task force of three to six workers, set the goals, benefits, and objectives of the program. Self review are review are based on the idea that employee are most familiar with their work. Self review tend to have low halo error and little paperwork for managers. Upward assessments may assessments may be run with managers who have three or more direct reports.

 

 

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UNIT-6 Performance Appraisal Methods Performance Appraisal Methods: written essay, the simplest essay method, is a written narrative assessing an employee’s strength, weakness, past performance. Potential, and provides recommendations for improvements. 1. Comparative standards or Multi- person Comparison  Compares one employee’s performance with that of one more others. Individual ranking the supervisor lists employee from highest to lowest. Paired comparison the supervisor compares each employee with every other employee in the group and rates each as either superior or weaker  of the pair. 

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2. Cr Crit itic ical al In Inci cide dent nts s   The superviso supervisor’s r’s atte attention ntion is ffocus ocused ed on sp specific ecific or critic critical al separate effective from ineffective performance.

beha behaviour viour th that at

3. Graphic Rating Scale: Scale : This method lists a set of performance factors such as  job knowledge, work quality, cooperation that the supervisor uses to rate employee performance using an incremental scale.] 4. Behaviourally Anchored Rating Scales (BARS) This combines critical incident and graphic rating scale approaches. 5. Man Manage agemen mentt by Obj Object ective ive MBO evaluates how an employee has accomplished objectives determined to be critical in job.   6. 360 Degree feedback This multi-source feedback method provides a comprehensive perspective of  performance by utilizing feedback from the circle of people with whom the employee interacts supervision, subordinates and co-workers. Appraisal Judgement The Th e ha halo lo ef effe fect ct is a rati rating ng erro errorr th that at oc occu curs rs wh when en ra ratt tter er’s ’s kn know owle ledg dge e of an employee empl oyee’s ’s perfo performanc rmance e on one favourab favourable le or unfav unfavourab ourable le incid incident ent coll collars ars the rating on all others The equal employment opportunity to avoid discrimination based on sex, race, color, religion, age, or national origin. Traditional Methods Essay Appraisal Method : Method : Known as “Free From method” involves a description of  performance of an employee by his superior. Straig Str aight ht Ran Rankin king g Met Metho hod d  : Ol Olde dest st simp simple lest st te tech chni niqu ques es ap appr prai aise serr ra rank nks s th the e employees from the best to the poorest on the basis of their overall performance. Paired Comparison : Comparison : Method compares each employee with all others in the group, one at a time.

 

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Critical Incidents Methods : Methods  : Evaluator rates the employee on the basis of critical events and how the employee behaved during those incident. Includes both negative and positive points. Reduce the superior personal bias. Checklist Method : Method : The rate is given a checklist description of the behaviour of the employees on job. Graphic Rating Scale : Scale : An employee’s quality and quantity of work is assessed in a graphic scale indicating different degrees of a particular trait. Job knowledge may be  judged on range of average, average, above avera average, ge, outstanding or unsa unsatisfactory. tisfactory. Forced Distribution : Distribution : To eliminate the element the bias from the ratter’s rating. The ratter choose the appropriate fit for the categories on his own discretion. Feedback Seeking: Larson(1989) has described a social game played by poor performers the game is called feedback-see feedback-seeking. king.

 

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UNIT-7 Performance Appraisal by Data Management

Introduction Traditional approach of performance appraisal is characterised characterised by by  

Mere evaluation. Being linked to financial reward and sanctions. Excludes participation of the employee being assessed.

Employee would desire that the appraisal system should should aim  aim at  at   

Their personal development. Their work satisfaction.  Their involvement in the organization.

Performance appraisal serves the purpose the  purpose of   of    

Providing information about human resources and their development. Measuring compensation packages to employee. Maintaining organisational control.

Approaches and Techniques in Performance Management 

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Intuitive approach : approach : supervisor or manager judges employee based on their  perception of the employee’s behaviour. Self appraisal approach  approach   : Employee is evaluated their own performance using a common format. Group approach : approach : The employee evaluated by a group of persons. Trait approach : approach : Conventional approach, supervisor evaluates the employee on the bas basis is of obs observ ervabl able e dim dimens ension ions s of per perso sonal nality ity,, int integr egrity ity,, ho hones nesty, ty, dependability, punctuality. Behavioura Behav iourall meth method od   : foc focuse used d on obs observ erved ed beh behavi aviour our and obs observ ervabl able e critical incident.

Appraisal Techniques Essay Essa y appr appraisal aisal metho method d  : Br Brie ieff es essa say y pr prov ovid idin ing g an as asse sess ssme ment nt of th the e strengths weakness and potential of the subject. 

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Graphic rating method : Graphic scale ‘assesses a person on the quality of  his or her work (average, above average, outstanding outstanding,, or unsatisfactory) Field review method : method : They inadvertently introduce bias in their ratings. Forced-choice Forced-ch oice ratin rating g metho method d  : forced forced-ch -choic oice e met metho hod d doe does s not inv involv olve e discussion with supervisors.

 

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Critical incident appraisal method  method   : supervisor describes critical incidents giving details of both positive and negative behaviour of the employee. Management by Obje Management Objective ctive   : th the e em empl ploy oyee ee ar are e as aske ked d to se sett th thei eirr ow own n performance goals. management establishes the goals openly an and d Work Standard approach approach   : management sets targets against realistic output standard.

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Alteration rank Alteration ranking ing metho method d  : altera alteratio tion n ran rankin king g met metho hod d usual usually ly inv involv olves es rating by more than one assessor. Paired comparison : comparison : every individual in the group is compared with all others in the group. Person to person rating : rating  : Names of the actual individuals known to all the assessors are used as a series of standards. Standard may be defined as lowest, low, middle, high and highest performers. Checklist method  method  : the assessor is furnished with checklist of rescaled of  behaviour. Behaviour Behavi ourall ally y Anc Anchor hored ed Rat Rating ing Sca Scales les (BA (BARS) RS) : Co Cons nsis ists ts of se sets ts of  behavioural statements describing good or bad performance with respect to import imp ortant ant qua qualiti lities. es. The These se qua qualiti lities es ref refer er to int inter er per perso sonal nal rel relati ations onship hips, s, planning and organizing abilities, adaptability and reliability. Assessment centres  centres  : Technique is used to predict future performance of  employees were they to be performed.

This bias must inevitably leads to a distortion of the appraisal process.