1. pcm unit - ii.pptx

7/30/2019 1. PCM Unit - II.pptx

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Concept & Process of Performance Management


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Performance management

Performance management is a means of getting better results from the

organization, teams, and individuals by managing performance in line with

organizational strategy. It requires: Knowing what priorities managers and

their employees should be focusing on;

Having clear targets and goals that focus on priorities;

Measuring actual performance against agreed targets and goals; and

Identifying and remedying performance problems.

Performance management may be defined as a planned and systematicapproach to managing the performance of individual ensuring their

personal development and contribution towards organizational goals.


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Objectives of performance management

Broadly classified as:

1. Strategic : Comprises the role of managing strategy implementation andchallenging assumption e.g. Formulate strategy determining what the

objectives of the organization are and how the organization plans to

achieve them.

2. Communication : Comprises the role of checking position, complying

with the non-negotiable parameters, communicating directions,providing feedback, and benchmarking e.g communicate direction to

the rest of the employees, by passing on information about what are

the strategic goals individuals are expected to achieve.

3. Motivational : Comprises the role of evaluating and rewarding

behavior, and encouraging improvement and learning e.g encourage

improvement and learning at all levels and across the organization

by nurturing talents of employees for building their capabilities to

demonstrate success in a fair and objective manner


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Importance & benefits of PM

1.Help in clarifying mission, vision, strategy, and values of the

organization

2. Helps in improving business process

3.Helps in attracting and retaining talents

4. Assist management in validating their recruitment & selection process

5. Facilitates in competency mapping

6. Helps in organizational change by finding the GAP between potential

capabilities & present abilities


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7. Helps in making a shift from Industrial Relation to Individual

Relation.

8. Helps in aligning individual performance expectations with the

organizations

mission & strategy

9.Hepls employees in evaluating their competencies

10 Helps in integrating the organizations ethics into an individuals

inherent value system through reinforcement and counseling methods

Importance & benefits of PM


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Performance Management Process

Performance PlanningPhase I

Performance ExecutionPhase II

Performance AssessmentPhase III

Performance ReviewPhase IV

Performance DevelopmentPhase V

Performance AuditPhase VI


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Phase I Performance planning

Key accountability ofsubordinates job is discussed for the upcoming

year

Major areas in which subordinate id responsible for getting results

Specific objectives the subordinate will achieve with in each

accountability area Standards that will be used to evaluate how well the subordinate has

achieved the each objective

The performance factors, competencies or behavior that will be

critical in determining how results will be achieved

The elements of development plan that subordinate will complete

during the year


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Phase II Performance Execution

During this phase the supervisor is responsible for on going

feedback and coaching.

Phase III Performance Assessment

Appraiser and appraisee independently evaluate the degree towhich the different elements of the plan were achieved. The

manager completes the assessment of the subordinates

performance and typically get it reviewed and approved by

senior management and HR personnel prior to discuss it with the

subordinate.


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Phase IV Performance Review

Now appraiser and appraisee meet to review their appraisal.

they discuss the results that were achieved and the

performance factors that contributed to their

accomplishment. It includes

Results achieved

Performance and behavioral effectiveness

Overall performance

Development plan and progress


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Performance Appraisal

It is a method of evaluating behavior of employee in the

work spot, normally including both the quantitative and

qualitative aspects of job performance.

It is a systematic and objective way of evaluating bothwork-related behavior and potential of employee.

It is a process that involves determining and

communicating to an employee how he or she is

performing the job and ideally, establishing a plan of

improvement.


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Performance appraisal

Employee Assessmentthe assessment of an employee's

effectiveness, usually as undertaken at regular intervals. It

may be defined as a structured formal interaction between

a subordinate and supervisor in which the work

performance of the subordinate is examined and

discussed with a view to identifying weaknesses and

strengths as well as opportunities for improvement and

skills development


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Why Have Performance Appraisal ?

Performance Appraisal offers several advantages at thelevel of the:

Individual

Recognition of past effort

Developmental requirements can be uncovered

Team

Alignment of effort with objectives

Motivation of team members

Organization Development of staff

Achievement of key objectives

Best and focused utilization of human resources


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Objectives of Performance Appraisal

Compensation decisions

Promotion decisions

Training and development programmes Feedback to the employee

Personal growth and development

To explore hidden potential


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Characteristics of an Effective Appraisal System

Job-related criteria Performance expectations

Standardization

Trained appraisers Continuous open communication

Performance reviews


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Who can Appraise ?

Supervisor

Peers

Subordinates

Self Appraisal

Users of services

Consultants


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Performance Management Vs. Performance Appraisal

Strategic

Long-run Goals

Forward looking

Constant

Process

Integrated

Holistic

Manager Owned

Focus on individual's growth

Practical and effective

Can be linked to total rewards

Operational

Short to mid-run goals

Retrospective

Episodic

System

Isolated from business needs

Individualistic

HR Owned

Focus on individual past

mistakes and behavior

Linked to financial rewards

Performance Management Performance Appraisal


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Performance Appraisal Process

Establishing performance standards

Communicating standards and expectations

Measuring the actual performance

Comparing with standards

Discussing results (providing feedback)

Decision making (taking corrective actions)

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6


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STEP 1 : ESTABLISHING PERFORMANCE STANDARDS

The first step in the process of performance appraisal is the setting up

of the standards which will be used to as the base to compare the actual

performance of the employees. This step requires setting the criteria to

judge The performance of the employees as successful or unsuccessful

and the degrees of their contribution to the organizational goals and

objectives. The standards set should be clear, easily understandable and

in Measurable terms. In case the performance of the employee cannot be

measured, great Care should be taken to describe the standards.


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STEP 2 :COMMUNICATING THE STANDARDS:

Once set, it is the responsibility of the management to

communicate the standards to all the employees of the

organization. The employees should be informed and the standards

should be clearly explained to the. This will help them to

understand their roles and to know what exactly is expected from

them. The standards should also be communicated to the appraisers

or the evaluators and if required, the standards can also be

modified at this stage itself according to the relevant feedback

from the employees or the evaluators.


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STEP 3 : MEASURING THE ACTUAL PERFORMANCE :

The most difficult part of the Performance appraisal process is

measuring the actual performance of the employees that is the

work done by the employees during the specified period of time.

It is a continuous process which involves monitoring the

performance throughout the year. This stage requires the careful

selection of the appropriate techniques of measurement, taking

care that personal bias does not affect the outcome of theprocess and providing assistance rather than interfering in an

employees work.


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STEP 4 : COMPARING THE ACTUAL WITH THE DESIRED

PERFORMANCE

The actual performance is compared with the desired or the

standard performance. The comparison tells the deviations in

the performance of the employees from the standards set.

The result can show the actual performance being more than

the desired performance or, the actual Performance being

less than the desired performance depicting a negative

deviation in the organizational performance. It includes

recalling, evaluating and analysis of data related to the

employees performance.


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STEP 5 : DISCUSSING RESULTS

The result of the appraisal is communicated and discussed with

the employees on one-to-one basis. The focus of this discussion

is on communication and listening. The results, the problems and

the possible solutions are discussed with the aim of problem

solving and reaching consensus. The feedback should be given

with a positive attitude as this can have an effect on the

employees future performance. The purpose of the meeting

should be to solve the problems faced and motivate the

employees to perform better.


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STEP 6 : DECISION MAKING

The last step of the process is to take decisions which can

be taken either to improve the performance of the

employees, take the required corrective actions, or the

related HR decisions like rewards, promotions, demotions,

transfers etc.


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Methods of Performance appraisal

Individual Evaluation

Methods

Multiple-person

evaluation methods

Other Methods

1. Confidential Report

2. Essay evaluation

3. Critical incidents

4. Checklist

5. Graphic rating scale

6. Behaviorally anchored

rating scales

7. Forced choice

methods

8. MBO

1. Ranking

2. Paired Comparison

3. Forced Distribution

1. Group Appraisal

2. Assessment

Centre

3. 360 degree

feedback


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Individual evaluation methods

1. Confidential report :- It is a descriptive report prepared,

generally at the end of every year, by the employees immediate

superior. The report highlights the strengths and weakness of

the subordinate.

2. Essay Evaluation :-This method asked managers / supervisors

to describe strengths and weaknesses of an employees

behavior. This technique is normally used with a combination

of the graphic rating scale. Its an non-qualitative technique. Therater consider the following factors : 1 Job knowledge 2.

Employee relations with co-workers 3. Employees planning &

organizing ability 4. Employees attitude & perceptions


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3. Critical incident technique : Under this, the manager prepares lists

of statements of every effective and ineffective behavior of an

employee. The manager maintains logs on each employee, whereby

he periodically records critical incidents of the workers behavior.

Example :

July12 the sales officer patiently attended to customers complaint. He

is polite, prompt, enthusiastic in solving the customers problem.

OR

July12 The sales officer stayed 45 min. over on his break during the

busiest part of the day. He failed to answer the store managers call

thrice. He is lazy, negligent, stubborn and uninterested in work.



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4. Checklist: It represents a set of objectives or descriptive

statements about the employee and his behavior. Example


Statements Response

Is he respected by his colleagues Yes / No

Does he respect his superiors Yes / No

Does he make mistakes frequently Yes/No

Is the employee really interested in the task assignedYes / No


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5. Graphic rating scale: In this a printed form is used to evaluate

the performance of an employee. A variety of traits may be used

in these types of rating devices, the most common being the

quality and quantity of work. In the below example the rater

will have to use a scale of1 unsatisfactory to 5 outstanding


Parameters 1 2 3 4 5

Quality of work

Neatness, thoroughness and accurate

Knowledge of jobA clear understanding of the factors connected

with the job

Cooperation

Willingness and ability to work with others


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6. Behaviorally anchored rating scale : It is a combination of

rating scale and critical incident technique. The criticalincidents serve as anchor statements on a scale and the rating

form usually contains six to eight specifically defined

performance dimensions. Following are the steps:

1. Collect critical incidents

2. Identify performance dimensions

3. Reclassification of incidents

4. Assigning scale values to the incidents

5. Producing final statements


B h i ll A h d R i S l


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Behaviorally Anchored Rating Scales

Uses specific descriptions of actual behaviors to rate various levels of

actual performance


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7. Forced choice methods : The primary purpose of the forced

choice method is to correct the tendency of a rater to give

consistently high or low ratings to all the employees. The rater

is asked to indicate which of the four phrases is the most and

least descriptive of a particular worker. In the preparation of

sets of phrases an expert is needed and as such the methods

becomes very expensive.


I di id l l ti th d


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S.N Forced Choice items

1

Least Most

A Does not anticipate difficulties A

B Grasps explanation easily and quickly B

C Does not waste time C

D Very easy to talk to D

2

Least Most

A Can be a leader A

B Wastes time on unproductive things B

C At all times, cool and calm C

D Smart Worker D


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8. Management by objectives : MBO requires the management to

set specific, measurable goals with each employee and then

periodically discuss the latters progress towards these goals. This

technique emphasis participatively set goals that are tangible,

verifiable and measurable.

It is a process whereby the superior and subordinate manager of

an organization jointly identify its common goals, define each

individuals major areas of responsibility in terms of the results

expected of him, and use these measure for operating the unit and

assessing the contribution of each of its members.

INDIVIDUALEVALUATIONMETHODS


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Characteristics of MBO

Superiors and subordinate get together and jointly agree upon the list of

principal duties and areas of responsibilities of the individual

The subordinate sets his own short-term department goals in co-

operation with his superior.

They agree upon the criteria for measuring and evaluating performance.

Superiors and subordinate collectively evaluate progress towards the

agreed-upon goals. And if needed the goals can be modified for rest of

the periods

In this method the superior plays a supportive role, who helps the

subordinate to achieve the goals and provide counseling and coaching.


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Process of MBO

1. Set the organizations goals

2. Set departmental goals

3. Discuss departmental goals

4. Define expected results (Individual)

5. Performance Review

6. Provide Feedback


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Multiple-person Evaluation Techniques

9. Ranking Method : In this method the ranking of an

employee in a work group is done against that of

another employee. The relative position of each

employee is expressed in terms of his numerical rank.The evaluator is asked to rate employees from highest

to lowest on some overall criterion. When a large

number of employees are working, ranking of

individual becomes a difficult issue.


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10. Paired comparison method : Each employee is

compared with all other employees. Ranking becomes

easier and more reliable under the paired comparison.

For every trait employee is to be compared with all

other employees.


M l i l E l i T h i


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11. Forced distribution method : The rater is asked to appraise

the employee according to a predetermined distribution scale.

Normally two criteria used here for rating are the job

performance and promotability. Further, a five point

performance scale is used without any mention of descriptive

statements. Employees are placed between two extreme of good

and bad performance. For e.g. all top grade workers should go

to the highest 10% grade; 20% employees should go to the

next highest grade and so on.


O h M h d


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Other Methods

12. Group Appraisal :- An employee is appraised by a group of

appraisers. This group is consist of the immediate supervisor of

the employee, other supervisor who have close contact with the

employee work, manager or head of the department and

consultants. This group uses one of the multiple techniques

discussed earlier. The immediate supervisor enlightens other

members about job characteristics, demand, standards of

performance, etc. then the group appraises the performance of the

employee, compares the actual with standards, find deviations,

discuss the reasons and suggest ways for improvement.


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13. Assessment Centre : - This is not merely a technique of performance

appraisal by itself. In fact it is a system or organization, where

assessment of several individuals is done by various experts using

various techniques. In this approach, individual from various

departments are brought together to spend two or three days working

on individual of group assignments similar to the ones they would be

handling when promoted. It includes the activities and methods like,

in-basket, role playing, case studies, simulation exercises etc. Theobserver rank the performance of each and every participants in order

to merit. These centers are basically meant for evaluating the potential

of candidate to be considered for promotion, training & development.

Other Methods


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Other Methods

14. 360-Degree Feedback System: This system collects

performance information from multiple parties, including

ones subordinates, peers, supervisor and customer.

Generally done for development rather than for pay

raises. Upward and peer feedback may or may not have

positive effects on behavior. Introducing a 360-degree

system into a culture not prepared for it can have

disastrous effects

d f d i 360 d i l


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Procedure for conducting 360-degree appraisal

Determining Objectives

Deciding the receiver and

giver of feedback

Establish performance

Criteria

Mode of collecting data

Finalize the method of data

Analysis

Evaluation and

communication

To identify T&D needs

For determination of compensation

Succession Planning or Performance Mgt.Decide about employees whose

performance are to be evaluated and who

will be the evaluator

The areas of work and behavior on which

feedback will be gathered

Development of questionnaire

Analysis may include performance dimensions

summary, individual item rating, individual

strength & weaknesses etc.

After the feedback is collected the data

should be communicated very carefully to

the all those concerned.

Execution of feedback The process of gathering the feedback shouldbe initiated


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Problems with Performance appraisal

Judgment Errors

Primacy Effect (First Impression)

Halo

Horn Effect

Leniency

Stereotyping

Recency effect

Poor Appraisal Forms

Lack of raters preparedness

Ineffective organization policies


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Potential Appraisal


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Potential appraisal

The potential appraisal refers to the appraisal i.e.

identification of the hidden talents and skills of a person.

The person might or might not be aware of them. Potential

appraisal is a future oriented appraisal whose main

objective is to identify and evaluate the potential of the

employees to assume higher positions and responsibilities

in the organizational hierarchy. Many organizations

consider and use potential appraisal as a part of the

performance appraisal processes.


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In organizations that subscribe to HRD, the potential (career-

enhancement possibilities) of every employee is assessed

periodically.

Such assessment is used for development planning as well as

for placement.

Every year or two, the supervisor of a group of employee

assesses the potential of each of them to perform different

(usually higher level) functions on the basis of the

supervisors observations and experiences during that period.

Potential appraisal


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Potential appraisal can serve the following purposes:

To advise employees about their overall career development and

future prospects

Help the organization to chalk out succession plans

Motivate the employees to further develop their skills and

competencies.

To identify the training needs.

S f P i l A i l


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PotentialAppraisal

Datastorage

Manpowerplanning

Job rotation

andenlargement

Training &development

Feedback

andcounseling

Careerplanning anddevelopment

Scope of Potential Appraisal


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How do companies appraise potential

Problem

EmployeesStars

Planned

Separation

Solid

Citizens

Performance

Potential

Low

High

High


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Potential appraisal Criteria

Conceptual effectiveness (includes business orientation,

vision, entrepreneurial orientation, sense of reality)

Interpersonal effectiveness (includes network directedness,

negotiation power, personal influence, verbal behavior)

Operational effectiveness (includes result orientation,

individual effectiveness, risk-taking, control)

Achievement Motivation (drive, professional ambition,

innovativeness, stability)


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Steps of performance appraisal

1. Role descriptions

2. Quality needed to perform the roles

3. Rating mechanisms (rating by others, tests, games,

records)

4. Organizing the system weightage setting for

performance dimensions)

5. Feedback

1. pcm unit - ii.pptx

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