Performance ManagementProfessor Lucia Miree American University in Bulgaria Performance Management Management = getting work done through others Manager’s performance is only as good as his/her employee’s performance Manager’s job = performance management of others Performance Management Organizational system Focusing on employee performance Consistently applied throughout organization With a supporting structure Names of Systems Performance Management Performance Appraisals Evaluation Systems Job Review Systems Feedback Systems . Performance Management Ensuring appropriate performance by all employees through: -Reinforcement -Rewards -Modeling -Coaching -Training -Development Using a consistent feedback system . Working of Performance Management Managers Speaks with Employee re: performance Continuously Once per Year Formal goals Organizational Reporting System Tied to Organizational Outcomes . Examples of System Output Words and What They Mean Exceptionally well qualified Made no major errors yet Active socially Parties & drinks too much Family is active socially Family drinks too much Plans for advancement Buys drinks for all of the boys Aggressive Obnoxious Uses logic on difficult jobs Gets someone else to do it Expresses himself well Speaks the local language Has Leadership qualities Is tall or has a loud voice Keen sense of humour Knows lots of dirty jokes Career-minded Back-stabber Relaxed attitude Sleeps at work Work is first priority Too ugly to get a date Independent worker Nobody knows what he does Good communication skills Talks on phone lots Loyal Can’t get another job . learning interest.PERFORMANCE = Doing present job at a certain level (high or low) as measured by a formal system POTENTIAL = Includes future service. motivation level . PROBLEM = Deviation from expectations Do something in different way Not do something Do something not expected/needed . Opportunity Reinforce/Reward Behavior Change Behavior Model Behavior Establish Culture . and collection of data -Value of feedback reinforced -Facilitates benchmarking . continuous collection.PERFORMANCE MANAGEMENT -Based on Scientific Management concepts -Focus on observable performance -Goal directed -Planning required and formalized -Consistent. analysis. evolving process .Performance Management Trends Shift from viewing financial figures as main criteria to one of multiple indicators More weight on indicators of efficiency and effectiveness Change to viewing PM as on-going. feedback.Principles of Performance Management Supports business-oriented strategy Is values based Communicates organizational mission Fulfills responsibilities to organizational members Enables employees to manage own performance Manages expectations (clarifies roles and responsibilities) Creates partnership between management and employee Emphasizes importance of measurement. and reinforcement Empowers employees Natural extension of management . Associated Costs Staff Costs Production and Processing Costs Training Costs Action Costs Opportunity Costs . 4. 3. 5. 2. Why assess performance What performance to asses How to assess performance Who do assess performance When to assess performance How to communicate performance assessment .Key PM Questions 1. 6. career dev) -Facilitate Decision-Making (counseling.The WHY of Performance Management Systems -Administer Salary & Wages -Correct Performance/Behavior -Plan for Future (promotion. transfer. terminations) -Facilitate Human Resource Planning -Create Culture -Building Good Relationships -Increase Organizational Loyalty -Determine Effectiveness of Selection and Placement Methods . WHAT to Assess Skills/Abilities/Needs/Traits of Individuals That Interact with the Organization to Produce Behaviors Which Result in Outcomes . Skills/Abilities/ Needs/Traits Job Knowledge Strength Behaviors Perform Tasks Obey Instructions Results Sales Production Levels Coordination Report Problems Production Quality Business Knowledge Maintain Equipment Scrap/Waste Desire to Achieve Follow Rules Accidents Dependability Creativity Leadership Submit Suggestions Follow-up Write Reports Equipment Repairs Customers Served Customer Satisfaction Honesty Completes Reviews Feedback . Measures Focus Consistent indicators across industry or similar organizations Comparison of indicators over time in organization Comparisons with pre-determined standard . Approaches to PM Comparative Attribute Behavioral . HOW to Assess Performance Traditional Management-by-Objective Assessment Center Peer Review Panel Critical Events Upward Feedback 360 Degree . Techniques of PM Essay (open-ended) Management by Objective Ranking Paired Comparisons Forced Choice Forced Distribution Ratings: -Checklist -Scales -Behaviorally Anchored Ratings (BARS) Critical Incidents . Essay Technique Describe in detail the quantity and quality of the employee’s performance during the past twelve months. Describe the employee’s strength and weakness. How do you describe the employee’s potential within the company? What leadership skills does the employee bring to the job? What future development activities do you recommend for the employee? Morgan Stanley’s Essay System Consider objectives identified in prior year’s Summary as well as this year’s objectives. Evaluation: Strengths 1. 2. 3. Development Areas 1. 2. 3. Comments Comments Examples of essays on PMs…. His men would follow him anywhere, but only out of curiosity. I would not suggest breeding for this person. When she opens her mouth, it seems that it is only to change the foot that was previously there. He has carried out each of his duties to his entire satisfaction. He would be out of his depth in a car park puddle. This person is like a gyroscope: always spinning at a fast pace, but not really going anywhere. This person has delusions of adequacy. Since my last report. the sooner he starts.Continued examples…. In my opinion. he has reached rock bottom and is digging. This person works well under constant supervision and when cornered. the better. This person should go far. And. She sets low personal standards and then consistently fails to meet them. this pilot should not be authorized to fly below 250 meters. This man is depriving a village somewhere of its idiot. . He has the wisdom of youth & the energy of old age. the employee will evaluate the effectiveness of the advertisements placed during the year.5percent.Management-by-Objective Examples Employee will contribute to organizational profit margin by lower costs in department by 3. . To implement new recruitment system. etc.Ranking Example Manager ranks all employees from best to worst: Overall performance On specific criteria (communication. customer relations skills.) . Paired Comparisons Example Rank each employee grouping overall or on a characteristic: Employee A and Employee B Employee B and Employee C Employee A and Employee C Employee C and Employee D Employee D and Employee A Employee D and Employee B etc. . Forced Distribution Example Pace each of the employees in your department in the following categories based upon overall or specific category performance: Top 10 percent: 50 – 89 percent: 10-49 percent: Bottom 10 percent: Outstanding: Average: Good: Below Average: Unacceptable: . General Electric’s Distribution The Vitality Curve High Promotability Medium Limited Top Performers 10% Highly Valued 70% Least Effective 20% . _____ 8. Cross-references to improve reporting. Fails to meet deadlines. _____ 2. _____ 5. Requires excessive instruction to produce work. Provides detailed. Produces summaries which lead to good reports. _____ 10. Omits important info from summaries. Unable to reduce data to manageable form. _____ 6. _____ 7. Protects confidentiality of information. . _____ 3. Communicates well with peers on reports.Ratings Example: Checklists Program Auditor: _____ 1. professional work. Unable to separate important from irrelevant data. _____ 9. _____ 4. Excellent Good Fair Poor N/A 4 3 2 1 ___ Reasoning ability Decisiveness in Decision-making Imagination & originality Ability to plan and control Cooperation with peers Cooperation with management Professionalism Interpersonal skills 4 4 4 4 4 4 4 4 3 3 3 3 3 3 3 3 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 ___ ___ ___ ___ ___ ___ ___ ___ .Ratings Example: Scales Rate the employee’s behavior on the scale provided. Citibank’s Performance Scorecard Measurements Standards Leadership. Ethics/Integrity Customer Interaction Community Involvement Contribution to Overall Business People Performance Teamwork Training & Development Employee Satisfaction Control Audit Legal Regulatory Auditors’ standards Manager’s assessment Manager’s assessment Below Par Par Above Par . Measurements Customer Satisfaction Strategy Implementation Households Cross-sell. splits..Citibank’s Performance Scorecard. mergers Retail asset balances Market share External company survey Goal of 80% Objective standards Below Par Par Above Par Financial Revenue Expense Margin Objective stadards . Citibank’s Link to Compensation Ratings “Above Par” Bonus 30% “Par” “Below Par” 15% 0% . meets most or all objectives.0 =Does not meet minimum requirements in critical aspects of job .5 =Exceeds position requirements. precedent setting results 4. successful in all objectives 3 =Meets position requirements and expectations.5 =Consistently exceeds all requirements & expectations work highly valued 4 =Consistently exceeds position requirements and expectations.5 =Falls below performance standards and expectations.0-2. has performance deficiencies 1. work often noteworthy 3. needs some development for quality 2.Microsoft’s PA System Overall Employee Rating: 5 = Exceptional performance rarely achieved. Microsoft: Adding Distribution to Rankings 4.0 or lower = 35% of employees 40% of employees 25% of employees .5 = 3.0 + = 3. Ratings Example: BARS Indicate the appropriate level of performance on each factor: Quantity of work Volume low & erratic Satisfactory steady volume Volume above expectations Quality of work Results always accurate. solves problems. analytical. model work Results accurate and thorough Results generally inaccurate and not thorough Judgment Systematic. difficulty with assessing relative value of factors Does not always show good judgment. good with complex problems Practical judgment. problem analysis not always adequate . integrates & assimilates highly complex info across broad. assessing impact. drawing reasonable conclusions Learns new skills & ideas rapidly Level 3 Analyzes.Microsoft Competency Toolkit FACTOR: COMPETENCY: Individual Excellence Intellectual Horsepower (is bright. draws informed conclusions Level 2 Analyzes & organizes complex info from specific content area. learns quickly on the job Rapidly learns & assimilates complex info involving unfamiliar situations & circumstances Rapidly learns new concepts & ideas. intellectual sharp. With guidance. identifying key issues. multi-functional content areas Picks up new skills & understands ideas when structured Learns effectively from experience Quickly adjusts thinking for new info or ideas Is able to apply & explain logic related to problems . explains & draws logical conclusions based upon complex data from multiple content areas Level 4 Rapidly identifies the significance of info & insightfully determines strategic action. learns quickly) Level 1 Structures basic info accurately. and is an advocate for them when opportunities for advancement occur . and feedback to enhance individual performance) Level 1 Assigns challenging tasks and assignments that will help people develop their skills Provides direction in correct performance of tasks and assignments Level 2 Takes time to learn about and understand direct reports.Microsoft Competency Toolkit FACTOR: COMPETENCY: Long-term Approach Developing people (provides job-relevant learning. career goals Provides stretch jobs and assignments for direct reports to help them develop their skills Level 3 Actively coaches direct reports how to get the most learning from their current assignments Gives direct reports candid. developmental exercises. thoughtful feedback on their strengths and weaknesses Level 4 Holds managers accountable for developing people in their group/ organization Identifies key people in his/her organization to assume high-level management responsibilities. Critical Incident Example Employee Name:___________________________________ Date of Incident:__________________ Type of Incident:___________________________________ Individuals Involved: Description of Incident: Outcome of Incident: Recommendations: Date Discussed with Employee:____________ Supervisor Signature:______________________________ Employee Signature: ______________________________ . Focus Time orientation Method Judgmental Past performance Improving performance by changing behavior through rewards Developmental Preparation for future performance Improving performance by selflearning & personal growth Supervisor’s Role Subordinate’s Role Judge who appraises Listener. helps. encourages & guides Actively involved in charting future plans . reactor to. defender of past performance Counselor who listens. Criteria for Performance Measures Relevant Reliable Discriminating Practical . Problems with Performance Measures Controllability Motivational impact “Fallout” Role Modeling Impact Reliability Relevance Control . WHO Should Assess Performance Superior Only Subordinate(s) Peers/Coworkers Self Customers Others . assigned date. set date for all) Semi-annually For Cause On-going As needed .WHEN to Assess Performance Probation Period Annually (anniversary date. How to Communicate PM Info Orally In Writing Formally Informally Public Private Moderated . Handling Performance Issues What to do Where to start How to do it . PROBLEM = Deviation from expectations Do something differently Not do something Do something not expected/needed . com/site/articles/performance_management.htm . From : Why people do not get fired: the psychology of discipline avoidance .workrelationships.http://www.Performance Problems Research shows that there is a huge performance gap between high and low performers in any organisation – between 30%-50% for unskilled jobs and up to 100% for highly technical ones. PROBLEM ID PRELIMINARY SCAN What shouldn’t be happening? Impact of this? Worth pursuing? ORGANIZATIONAL SCAN Match strategic plan? Critical functions missing? Culture and performance gaps? FUNCTIONAL JOB ANALYSIS Specific job deficiencies? Job knowledge and training? . CAUSAL ANALYSIS ID: When problem began What else has changed PARETO’S LAW: Rule of 20/80 “80% of any problem is caused by 20% of possible causes.” . CAUSES OF PERFORMANCE PROBLEMS -Lack of ability -Low motivation -Poor work ethic -Substance abuse -Personal problems -Lack of time -Poor peer relationships -Unfamiliarity with equipment or process . PERFORMANCE OPPORTUNITIES No/Low Knowledge High Knowledge . PERFORMANCE OPPORTUNITIES --OK Training Org Development No/Low Knowledge High Knowledge . low) RANK IN ORDER . hire new 3.ALTERNATIVE SOLUTIONS 1. Reassign or isolate RATE EACH BY: -Contribution to Objectives (high. medium. low) -Cost to fix and to ignore (high. Fire. medium. Return to old system 2. Train 4. transfer. Training & Development Definition: planned. TRAINING: provide learners with knowledge & skills for job DEVELOPMENT: prepare organization and employees to keep pace with industry and fields of expertise . continuous effort by management to improve employee competency levels and org performance. Skill requirements change with more work complexity Workers more educated Workers more diverse Org restructuring continues Training often outsourced More technology use in Training Training Departments = Brokers J-I-T and J-W-I-N Training Grow Increase on human performance T & D TRENDS . Factors Influencing T & D Top management support Commitments from Specialists and Generalists Technological Advances Organizational Complexity Behavioral Science Knowledge Learning Principles Performance of Other Human Resource Functions . TRAINING & DEVELOPMENT METHODS Coaching Business Games Mentoring Case Studies Role Playing In-Basket Training Job Rotation Videotapes Internships Computer-based . Methods (continued) Cyberlearning: -Internet/Intranet -Virtual Reality -Distance Learning -Video Conferencing Classroom Programs Corporate Universities Colleges & Universities On-the-Job Training Apprenticeship Training Simulators Vestibule Training . BEHAVIORAL -supervision -peer relationships -values & attitudes -personality -individual goals & priorities .DEVELOPMENT 1. SOFTWARE -policies & procedures -reward systems -communication systems -structure 3. HARDWARE -equipment -people -space -money -transportation 2. invest . orientation to lower job. training to prevent loss. divest WORKHORSES: Training stressing improvement. programs and funds to maximize value. demotions or removal. therapeutic or corrective dev plan. divest STARS: Special effort. orientation or maintaining skills. career counseling on limits PROBLEM CHILDREN: Remedial.EMPLOYEES PERFORMANCE : CATEGORIES AND STRATEGIES DEADWOOD: No training. remedial work. IMPLEMENTATION PLAN Priorities Options Budget Development Selection of Methods Plan with Benchmarks Pilot Program Evaluation Adjustments and New Plan Full Implementation On-Going & Periodic Evaluations (Is it working? If no. why not?) . Why PM Is Difficult Job/Outcomes not quantified Personal relationships with employees Unable to give criticism Personality biases Poor communication Conflicting Goals Playing God . Errors in Performance Measurement Strictness or Leniency Central Tendency Halo Error Recency Error Supervisor Bias Overall Ratings . Correcting PM Errors Isolate Job Areas Observe Regularly Minimize Number of Ratings Completed Train Raters Define Dimensions Better Give Feedback Use Continual Feedback Include Other Sources Decrease Generalities. Include Specifics . not blame Serve to increase productivity & satisfaction System used by organization .Effective PM Systems System acceptable to employees Managers use system regularly & correctly Perception of being treated fairly by system Useful feedback provided Focus on problem solving. not individual Use specific examples Share control Make it a year-round process .Training for PM Interviews Have documentation Be objective judge job. Training….continued Solicit & give feedback -Clear -Constructive -Descriptive. not judgmental Avoid arguments Strive for consistency Get it down in black and white By-the-book Listen . PRIOR TO PM INTERVIEW Decide on best time Decide on best place Prepare facilities Gather info and materials Prepare employee Plan the opening Plan the approach Plan the conclusion . punish (follow through) Review regularly . reward.After PM Interview Meet deadlines Solicit input Reinforce. How to Destroy PM System Do not follow policies Be inconsistent in application Treat it as unimportant Do not follow-up Reprimand in public. Reward in private Conduct when angry Be late . The WHY of Performance Management Systems -Administer Salary & Wages -Correct Performance/Behavior -Plan for Future (promotion. transfer. career dev) -Facilitate Decision-Making (counseling. terminations) -Facilitate Human Resource Planning -Create Culture -Building Good Relationships -Increase Organizational Loyalty -Determine Effectiveness of Selection and Placement Methods .