Notes on Performance Management System.pdf



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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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