performance management
TRANSCRIPT
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Performance ManagementOverview Definition
Expectancy theory Why do it?
The process Agreeing objectives
Appraisal Reward management
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Performance Management
…Strategic management technique that links business objectives to individual goals, performance
appraisal and rewards through a defined process.
(Sparrow & Hilltrop, 1994)
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Performance Management
1. Agree goals
2. Appraise performance
3. Reward
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EXPECTANCY THEORY
Skills clear objectives
Effort Performance
Resources
Perceived Reward
Fairness
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EXPECTANCY THEORY - IMPLICATIONS
• Tailor rewards to the individual• Establish clear relationship between effort -
performance - reward• Establish clear procedures for evaluating
performance• Pay attention to intervening variables• Minimise undesirable outcomes which may
be perceived to result from high level of performance
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The Performance Management Loop
Establish objectives& standards
Communicate EvaluateResults performance
Take corrective CompareAction performance
with objectives
Decide on appropriate action
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Why do it?
Motherhood & AP
Competitive advantage
Win-win
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Underlying Principles
1. Clear objectives effective performance
2. Communication is good (2-way)3. Involvement commitment4. Everyone’s work should relate to the
organisation’s work5. People need feedback6. Responsibility and autonomy enrich
jobs
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‘Good’ Performance Management
• Tailor-made - culture/mission compatible
• Defines performance success• Clarifies accountabilities• Systematic reviews against criteria• PRP system• Integrated approach to motivation &
commitment
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Mission & Value Statements
Objectives
Performance Agreement
Continuous Performance Management
Performance Review
Development Performance rating& training
Performance related pay
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The Process
- Consult in design
- Commitment of top
- Top-down, bottom-up
- Separate pay from performance review
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Performance Management
…an integrated process of defining, assessing, and reinforcing employee
work behaviours and outcomes.
Agree goalsReward
Appraise performance
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Contextual Factors
• Business Strategy• Workplace Technology• Employee Involvement
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Individual Objectives
• Not too many• Jointly agreed• Related to personal objectives• Revisable• Clear & challenging• Identify time scales, milestones,
constraints & review dates
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Purposes of Appraisal
- Performance measurement- Feedback
- Performance improvement- Identification of potential
- Succession planning- H.R. planning
- Communication
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Objectives of Performance Appraisal
EvaluativeDevelopmental
* Compensation * Feedback* Staffing decisions * Direction for
future* Evaluate selection * Identify
T&D needs
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Performance Appraisal
- Analyse the job- Decide on criteria- Choose method- Convey expectations & criteria in
advance- Establish feed-back system- Review
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Performance Appraisal
…systematic approach to evaluating performance with a view to pay, promotion, development, and motivation.
* Informal – daily* Formal – dedicated period
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Objectives of Performance Appraisal in Ireland
Improve future performance 98%Provide feedback 96%Agree key objectives 95%Identify training needs 95%Strength motivation 89%Improve communication 84%Assess promotion potential 82%
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Appraisal
Benefits to Managers:• Opportunity to hear employees hopes, fears
etc.• Chance to clarify and reinforce priorities• Mechanism for measuring change in
employees Performance• Recognise achievement motivation• Overlap/ambiguities
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Benefits to Company:• Improved performance• Succession planning• HRP – competence analysis• Link employee performance to
business objectives• Communication
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Benefits to Employee:• Feedback give/take• Discuss career options• Training & development• See “ big picture”
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The Appraisal Interview
* Adequate notice * Constructive* Focus on behaviour * Clarify
action* 2-way communication
1. Tell & sell2. Tell & listen
3. Problem solving
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Common ‘Rater’ Errors
• Supervisory bias• ‘Halo’ effect• Central tendency• Leniency• Strictness• Recency effect• Overall ratings - consistency
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Performance Appraisal Techniques
Rating (2)Ranking
Paired-comparisonCritical IncidentFree-form (3)
Objectives – oriented (1)Development Centre
Self-assessment
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Common Pitfalls
Failure to collect evidenceHalo/Horn effect
Leniency/StrictnessCentral tendencyPrimacy/RecencyContrast effects
Straying from the facts
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Reward Systems
Intrinsic ExtrinsicChallenge, job satisfaction pay,
incentives,Feedback benefits
Enhance performance& satisfaction
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Factors
• Availability • Timeliness• Performance contingency• Durability • Equity• Visibility
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PRP Schemes
1. Individual payment related to performance
2. Merit pay
3. Team or group performance payment
4. Financial participation
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Performance Related Pay
The principle of paying people according totheir contribution appeals to a sense of fairness in all of us however…
…there is an absence of evidence that PRPschemes improve productivity despite
absorbing significant amounts of management time and creating employee discontent.
Pfeffer (1999)HBR
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There is no such thing as a good pay system, there is only a series of bad ones. The trick is to choose the
least bad one.
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Reward PackageEmployee Objectives: Purchasing power Felt fair Rights Relativities Recognition
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Employer Objectives Prestige/P.R. Competition Control Motivation & performance Cost