Human Resource Management (PGDM-‐ 3T Sec B) PERFORMANCE MANAGEMENT SYSTEM Things to remember 1. Difference between performance & potential 2. Difference between performance management system and performance appraisal 3. Process of appraisal 4. Methods of performance appraisal 5. Errors in appraisal DIFFERENCE BETWEEN POTENTIAL & PERFORMANCE: • • • • People may be able to perform to a very high standard but within the context of the given role. May not be capable of moving up a level Performance is about NOW & potential is about performance in the FUTURE The real damage is done when the high performance employee is promoted to a managerial level, is uncomfortable and struggles in the new role, resulting in high levels of stress and anxiety causing him/ her to quit. Potential appraisal is the process of tracking unrevealed skills & abilities in aperson that he himself is unaware of; to identify people for higher positions & responsibilities. ! ! ! ! Appraisal of the hidden qualities of an employee which might be not known to employee also. On the basis of future job he can handle. ! For hidden development ! skill Future oriented Potential Appraisal ! ! Evaluation of the employee performance. On the basis of the work done by the employee. For practical development skill Based on past & present. Performance Appraisal Dr. Pallavi srivastava 6 Prepared by Prof. Pallavi Srivastava, Jaipuria Lucknow for internal circulation only 1 Human Resource Management (PGDM-‐ 3T Sec B) Potential appraisal is included as part of performance appraisals in organizations. Gap Analysis: Used to compare the difference between actual performance and potential or desired performance. Date: _______________ S. No. 1. 2. 3. 4. KRA Employee Name: ________________________________ Current Standing Deficiency Action Plan FIGURE 1 GAP ANALYSIS FORMAT The Performance & Potential Matrix (The 9-‐box Model or Inverted-‐L Model): The performance and potential matrix, commonly referred to as “the nine box”, is a simple yet effective tool used to assess talent in organizations. It assesses individuals on two dimensions – their past performance and their future potential. Prepared by Prof. Pallavi Srivastava, Jaipuria Lucknow for internal circulation only 2 typically performed annually by a supervisor for a subordinate. and continue their performance. Prepared by Prof. Jaipuria Lucknow for internal circulation only 3 . correct.Human Resource Management (PGDM-‐ 3T Sec B) FIGURE 2 NINE BLOCK MODEL PERFORMANCE MANAGEMENT SYSTEM (PMS): • A strategic and integrated approach to delivering sustained successs to organizations by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors. PERFORMANCE APPRAISAL: • • A process. and providing feedback to employees to motivate. performance appraisal. and development into a single. • A process that consolidates goal setting. the aim of which is to ensure that the employee’s performance is supporting the company’s strategic aims. common system. Includes Setting work standards. Pallavi Srivastava. assessing performance. v. Communication & involvement. team and individual effectiveness.Human Resource Management (PGDM-‐ 3T Sec B) PURPOSE OF PMS i. retention. Enhance employee motivation: Employee acknowledgment & praise reinforces desirable behaviours & outcomes. promotion. Pallavi Srivastava. Alert organization to deficiencies in overall level & focus of employee skills vii. iii. Determine appropriate rewards & compensation: Salary. iv. Prepared by Prof. Jaipuria Lucknow for internal circulation only 4 . ii. Performance improvement: in order to achieve organizational. & bonus decisions. Assess individual & team strengths & weaknesses. Employees must understand & accept performance feedback system. Developing the core competences of the organization and the capabilities of individuals & teams. Facilitate legal compliance: Documentation is strong defense against charges of unlawful bias vi. Facilitate employee development: Determine specific training & development needs. Facilitate HR planning process. To create a climate in which a continuing dialogue between managers & team members to define expectations & share information on organization’s mission. values & objectives. ROLE OF HR DEPARTMENT: • • • • Serves in the policy making and advisory role Provides advice & assistance regarding the appraisal tool to use Train supervisors to improve their appraisal skills Monitors the appraisal system effectivenss & compliance with relevant laws & guidelines. Jaipuria Lucknow for internal circulation only 5 . Prepared by Prof. Pallavi Srivastava.Human Resource Management (PGDM-‐ 3T Sec B) FIGURE 3 STRATEGIC CHOICES IN PERFORMANCE EVALUATION WHO EVALUATES? a) Traditionally. the immediate supervisor • • • • • Problems with immediate supervisors conducting performance evaluations: Lacking appropriate information to provide informed feedback on employee performance Insufficient observation of employee’s day-‐to-‐day work to validly assess performance Lack of knowledge about technical dimensions of subordinate’s work Lack of training or appreciation for evaluation process Perceptual errors by supervisors that create bias or lack of subjectivity in evaluations. Human Resource Management (PGDM-‐ 3T Sec B) b) Peers • Only effective when political considerations & consequences are minimized. not what s/he actually does 2.g. • Peers included because of growth of project teams. Pallavi Srivastava. • Can be very time-‐consuming • More performance data collected. Jaipuria Lucknow for internal circulation only 6 . Traits measures: Assessment of how employee fits with organization’s culture. employees. greater overall facilitation of assessment & development of employee • Costly to collect & process • Consistent view of effective performance relative to strategy WHAT TO EVALUATE? 1. KRAs): Focus on accomplishments or outcomes that can be measured objectively Prepared by Prof. & employees have sense of trust c) • • • Subordinates Insights into interpersonal & managerial styles Excellent measures of individual leadership capabilities Same political problems as peer evaluations d) Customers • Feedback most free from bias e) Self-‐evaluations • Allow employees to participate in critical employment decisions • More holistic assessment of performance f) Multi-‐rater systems or 360-‐degree feedback systems • Seeks performance feedback from supervisors. customers and the like evaluate the individual. Behaviour-‐based measures: Focus on what employee does correctly & what employee should do differently 3. • Used by approximately 90% of the Fortune 1000 firms • Due to delayering supervisors have greater work responsibility & more people reporting directly to them hence difficult to know each employee extensively. Results-‐based measures (e. peers. Results sometimes beyond employee’s control iii. or ignore means by which results were obtained b. METHODS OF PERFORMANCE APPRAISAL/ EVALUATON Methods Rating Graphic rating Scales Behaviourally Anchored Rating Scales (BARS) Ranking Alternation Ranking Method Paired comparison Forced Ranking/ Distribution Annual Conhidential Reports (ACR) Narrative Management By Objectives (MBOs) Essays Critical Incident Method FIGURE 4 DIFFERENT METHODS OF PERFORMANCE EVALUATION Prepared by Prof. outside employee control.Human Resource Management (PGDM-‐ 3T Sec B) a. Fails to tap some critical performance areas HOW TO EVALUATE? I. Ignores means or processes iv. Problems occur when results measures are difficult to obtain. Relative assessment: Measured against other employees & ranked on distance from next higher to next lower performing employee Ranking allows for comparison of employees but does not shed light on distribution of performance. Limitations: i. Jaipuria Lucknow for internal circulation only 7 . Difficult to obtain results for certain job responsibilities ii. Pallavi Srivastava. Absolute measurement: Measured strictly by absolute performance requirements or standards of jobs II. • Combines the benefits of narratives. critical incidents. GRAPHIC RATING SCALES: • Simplest and most popular performance appraisal technique. BEHAVIOUARLLY ANCHORED RATING SCALES (BARS) • A technique that generates critical incidents and develops behavioural dimensions of performance. FIGURE 5 GRAPHIC RATING SCALE II. they are typically not anchored in terms of behaviours and often have items that measure only traits. • Unfortunately. • A scale is used to list a number of traits and a range of performance for each. and quantified scales. Prepared by Prof. by anchoring a scale with specific behavioural examples of good or poor performance. Jaipuria Lucknow for internal circulation only 8 .Human Resource Management (PGDM-‐ 3T Sec B) I. then the employee is rated by identifying the score that best describes his/her performance level for each trait. Pallavi Srivastava. Generate critical incidents 1. Scale the incidents 4. Reallocate incidents 3. Develop a final instrument FIGURE 6 AN EXAMPLE OF BARS Prepared by Prof. • Reduces rating errors DEVELOPING A BARS 1. Develop performance dimensions 2. Jaipuria Lucknow for internal circulation only 9 . • Time consuming. but the points are of actual behaviour on the job rather than general descriptions or traits.Human Resource Management (PGDM-‐ 3T Sec B) • The appraiser rates the employees based on items along the continuum. Pallavi Srivastava. Jaipuria Lucknow for internal circulation only 10 .Human Resource Management (PGDM-‐ 3T Sec B) FIGURE 7 AN EXAMPLE OF A BARS FOR THE DIMENSION "SALESMANSHIP SKILLS" Prepared by Prof. Pallavi Srivastava. then lowest.Human Resource Management (PGDM-‐ 3T Sec B) III. Jaipuria Lucknow for internal circulation only 11 . ALTERNATION RANKING METHOD • Where employees are ranked from best to worst on a particular trait. until all are ranked FIGURE 8 ALTERNATION RANKING IV. Pallavi Srivastava. choosing highest. PAIRED COMPARISON METHOD • Involves ranking employees by making a chart of all possible pairs of employees for each trait and indicating which is the better employee of the pair Prepared by Prof. FORCED RANKING/DISTRIBUTION Where predetermined percentages of appraisees are placed in various performance categories. similar to grading on a curve. is often associated with a 20-‐70-‐10 distribution: the top 20 percent is rewarded for best performance. results-‐driven culture EXAMPLE Jack Welch. General Electric’s former CEO. the middle 70 percent is rated ‘average’ and the bottom 10 percent is coached for improvement. V.Human Resource Management (PGDM-‐ 3T Sec B) FIGURE 9 PAIRED COMPARISON RANKING Note: + means “better than. Arguments in favour of forced ranking ü Best way to identify highest-‐performing employees ü Data-‐driven bases for compensation decisions ü Forces managers to make & justify tough decisions Arguments critical of forced ranking ü Can be arbitrary.” For each chart. Pallavi Srivastava. Jaipuria Lucknow for internal circulation only 12 . & expose organization to lawsuits ü Inherent subjectivity Forced rankings tend to be more effective in organizations with high-‐ pressure. unfair. The ‘rank-‐and-‐yank’ system.” – means “worse than. add up the number of +’s in each column to get the highest-‐ranked employee. Prepared by Prof. also associated with Jack Welch. potential and suggestions for improvement. A descriptive appraisal used for promotions and transfers. weaknesses. Focuses on evaluating rather than developing the employee It covers the strengths. ANNUAL CONFIDENTIAL REPORT (ACR) • • • • • • • Traditional form of appraisal used in most government organizations. weaknesses. main achievement and failure. Pallavi Srivastava. Involves subjectivity.Human Resource Management (PGDM-‐ 3T Sec B) automatically terminates employees in the bottom category. ESSAY M ETHOD • Simplest method where an appraiser writes a narrative describing an employee’s strengths. VII. FIGURE 10 FORCE DISTRIBUTION CURVE VI. allowing organizations to purge the worst performers. the employee being appraise never knows his weaknesses and the opportunities available for overcoming them. No feedback provided to the employee being appraised. personality and behaviour of the employee. Prepared by Prof. Jaipuria Lucknow for internal circulation only 13 . A confidential report prepared by the employee’s immediate superior. past performance. • Judge behaviour rather than personalities. • Time consuming. • The rater writes down anecdotes describing what the employee did that was especially effective or ineffective. • Difficult to compare individuals as they produce qualitative data. Jaipuria Lucknow for internal circulation only 14 . MANAGEMENT BY OBJECTIVES (MBOS) • Includes mutual objective setting and evaluation based on the attainment of the specific objectives. Pallavi Srivastava. • A “good” or “bad” is impacted by a rater’s writing skills.Human Resource Management (PGDM-‐ 3T Sec B) • Strength lies in its simplicity which requires no complex forms or extensive training to complete. • Unstructured hence it is difficult to compare and rank individuals across organizations. VIII. much of which can be easily fed back and understood by the employee. provides specific information. CRITICAL INCIDENT APPRAISAL • Focuses on the key behaviours that make the difference between doing a job effectively or ineffectively. FIGURE 11 EXAMPLES OF CRITICAL INCIDENTS FOR PLANT MANAGERS IX. Prepared by Prof. identifying the activities necessary to accomplish the objectives. Pallavi Srivastava. Feedback: corrective action is initiated when behaviour deviates from the standards established in the goal setting phase. Prepared by Prof. their time requirements. can exercise self-‐ direction. resources needed. and threats of punishments to motivate them to work towards their objectives. 3. 4.Human Resource Management (PGDM-‐ 3T Sec B) • Requires the manager to set specific measurable goals with each employee and then periodically discuss his/her progress toward these goals. and do not require external controls. • MBO Philosophy: employees can be responsible. STEPS IN MBOS: 1. 2. Periodic reviews & Self Control: systematic monitoring & measuring of performance-‐ by having the employee review his or her performance. Goal Setting: organization’s overall objectives are used as guidelines to set departmental & individual objectives and performance standards for each employee. in 1970s by companies like Madura coats. Action Planning: The means are determined for achieving the ends established in goal setting. Jaipuria Lucknow for internal circulation only 15 . • Introduced in India. Difficult to develop. Standards may be unclear. forces supervisor to evaluate subordinates on an ongoing basis. Dr. leniency. THE APPRAISAL INTERVIEW : An interview in which the supervisor and subordinate review the appraisal and make plans to remedy deficiencies and reinforce strengths. bias can also be problems. Pallavi srivastava STEPS IN PERFORMANCE EVALUATION Defining the job Setting standards Appraising Performance Providing feedback I. IV. Avoids central tendency and other problems of rating scales. Employees’ appraisal results depend on your choice of cutoff points. Alternation ranking Simple to use (but not as simple as graphic rating scales). Critical incident method Helps specify what is “right” and “wrong” about the employee’s performance.Human Resource Management (PGDM-‐ 3T Sec B) Important Advantages & Disadvantages of Appraisal Tools Tool Advantages Disadvantages Graphic rating scale Simple to use. in fact. II. halo effect. provides a quantitative rating for each employee. Prepared by Prof. Can cause disagreements among employees and may be unfair if all employees are. Difficult to rate or rank employees relative to one another. GUIDELINES F OR T HE I NTERVIEW : • • • • Talk in term of objective work related data Donot get personal Encourage the person to talk Donot tiptoe around While criticizing employees: • Do it in a manner that lets the person maintain his or her dignity and sense of worth. Pallavi Srivastava. MBO Tied to jointly agreed-upon performance objectives. Forced distribution method End up with a predetermined number or % of people in each group.” BARS is very accurate. excellent. central tendency. Time-consuming. III. Jaipuria Lucknow for internal circulation only 16 . BARS Provides behavioural “anchors. No thorough discusson of causes of performance problems. REASONS WHY EMPLOYEE APPRAISALS FAIL. Never say the person is “always” wrong. both to your own boss and (if needed) to the courts. Be objective and free from biases FORMAL WRITTEN WARNINGS PURPOSE OF A WRITTEN WARNING • To shake your employee out of bad habits. Jaipuria Lucknow for internal circulation only 17 . • Indicate employee’s prior opportunity for correction. Rating personality rather than performance. Prepared by Prof. Managers may not be able to observe performance or have all the information. Overemphasis on uncharacteristic performance. Inappropriate time span (either too long or too short). The halo effect. or some other perceptual bias.. Organizational politics or personal relationships cloud judgements. • Make clear that employee was aware of the standard.. • To help you defend your rating. contrast effect. Performance standards may not be clear. No follow-‐up and coaching after the evaluation. A WRITTEN WARNING SHOULD: • Identify standards by which employee is judged. Inflated ratings because the managers donot want to deal with “bad news”. Pallavi Srivastava. • Specify deficiencies relative to the standard. Manager may not be trained at evaluation or giving feedback. • • • • • • • • • • • • • • • Inadequate preparations on the part of the manager Employee is not given clear objectives at the beginning of performance period.Human Resource Management (PGDM-‐ 3T Sec B) • • • • Criticize in private and do it constructively Give daily feedback so that the review has no surprises. Subjective or vague language in written appraisals. Inconsistency in ratings among supervisors or other raters. outcome or consideration to influence other measures of performance 2. moving away from rigid rankings into more fluid systems. Microsoft. employees get frequent “check-‐ins” with their managers. Halo effect: Rater allows single trait.Human Resource Management (PGDM-‐ 3T Sec B) PERCEPTUAL ERRORS OF RATERS 1. GE once notorious for its “Rank or Yank” policy is rolling out a process that focusses on employees goals rather than their grades. Central tendency error: Evaluator avoids higher & lower ends of rating in favour of placing all employees at or near middle of scales 5. Pallavi Srivastava. Amazon ensures that employees can get feedback anytime from managersa nd colleagues rather than just once a year. Personal biases & organizational politics: Have significant impact on ratings employees receive from supervisors RECENT TRENDS IBM. Stereotyping: Rater makes performance judgments based on employee’s personal characteristics rather than employee’s actual performance. Leniency or strictness errors: Evaluator’s tendency to rate all employees above (leniency) or below (strictness) actual performance level 6. Jaipuria Lucknow for internal circulation only 18 . Accenture and Deloitte are some of the companies that are doing away with their annual performance review process. Similarly at Adobe. instead of annual rating and ranking. Prepared by Prof. 3. Recency error: Recent events & behaviours of employee bias rater’s evaluation of employee’s overall performance 4. The approach is developmental where employees can gain access to their feedback (called “insights”) through an app called PD&GE which is available on mobiles and other platforms. Jaipuria Lucknow for internal circulation only 19 .Human Resource Management (PGDM-‐ 3T Sec B) Prepared by Prof. Pallavi Srivastava. Human Resource Management (PGDM-‐ 3T Sec B) Prepared by Prof. Pallavi Srivastava. Jaipuria Lucknow for internal circulation only 20 .
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