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Chapter 04 Performance

Management

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Definition of Performance:

The degree to which individuals and organizationsachieve the organizations goals with effectiveness

and efficiency.

Performance = Results + Behavior

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Performance Standards:

It makes explicit the quantity and/or quality of

performance expected in the basic tasks set forth in thejob description.

Standards should be SMART

Specific -- clearly state the desired results.Measurable-- answering how much.

Attainable-- not too tough or too easy.

Relevant-- whats to be achieved.

Timely--reflecting deadlines and milestones

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Performance Management:

Performance Management is a continuousprocess of identifying, measuring, anddeveloping the performance of individuals andteams and aligning performance with thestrategic goals of the organization.

By Herman AguinisStrategic goals

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AIMS AND OBJECTIVES OF PERFORMANCE

MANAGEMENT

Developmental Purpose- Managers can use feedback.

Organizational Maintenance Purpose

- Talent inventories management

Documentation Purpose.

- It helps to find the skilled labor.

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CHARACTERISTICS OF AN IDEAL PM SYSTEM

Strategic Congruence Thoroughness

Practicality Meaningfulness

Specificity

Identification of effective and ineffective performance

Reliability (Consistent and free of error)

Validity (Include valid contents for the evaluation) Acceptability and fairness

Openness

Correctability

Standardization

Ethical

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Impact of Performance Management

Impact on the individual Impact on the organization

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Performance Appraisal Methods

Graphic rating scale

Alternation ranking method Paired comparison method

Forced distribution method

Check list

Essay Method Critical Incidents

360- degree feedback

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Scales that list a number of factors, including general

behaviors and characteristics, on which an employee israted by the supervisor.

Unsatisfactory SatisfactoryConditional Above Satisfactory Outstanding

LEVEL OF PERFORMANCE

ATTENDANCE

APPEARANCE

DEPENDABILITY

QUALITY OF WORK

QUANTITY OF WORK

RELATIONSHIP

JOB KNOWLEDGE

Graphic Rating Scale

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Figure 93

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Note:For example, what exactly is meant by

good, quantity of work, and so forth?

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Ranking employees from best to worst on a particular

trait, choosing highest, then lowest, until all areranked.

Alternation Ranking Method

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Under this approach, the rater is presented with a list of

positive or negative adjectives and is asked to check offall those that apply to the person being rated.

- Cooperation with Coworkers

- Keeps workstation neat & Clean

- Can be expected to complete work

on time

- Maintains detailed records

- Reluctant to ever work overtime

- Can not accept constructive criticism

Check List Method

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Similar to grading on a curve; predetermined percentages of

ratees are placed in various performance categories.

Grading the curve The employee force is ranked into a 20-70-10 bucket.

Where 20 percent are rated as 'excellent

70 percent as the vital - back bone of the company

10 percent as bottom-feeders

Bell Curve/Forced Distribution Method

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It seems rigid and impractical, especially for small/medium.

It may reduce organizational flexibility.

It does not promote 'performance adjustments'

It makes 'extreme raters" skeptical since it does not allowthem to rate as they wish causing anxiety or

discontentment.

It may be difficult to simulate/follow since outstandingperformers or weak performers may not essentially be10%-20% , year-on- year.

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Unethical: Forcing a certain section of employees everyyear is unethical says Praneet Mehrish, Country HumanResource Director, ST Microelectronics Ltd.

Subjective:Since the bell curve is applied, not across all the

employees, but to individual department / team / function,there is a good chance that the worst in the high performinggroup may be better than the best in an average performinggroup. Finally, the company may be left with lowperformers, while losing some good ones, says Hari

Mohan Jha, VP (HR), ITC Welcome Group Hotels

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Not compatible for small teams: Logically too, such amodel cannot work for a very small group of extremelyhigh or low performers for the simple reason that it force-

fits them into predefined compartments. If it works, it canwork only for a large, randomly selected sample, saysMadhukar Shukla, Professor, XLRI

Dysfunctional work environment: Bell curve methodmay increase productivity and pave growth opportunitiesfor good performers, it also creates a sense of fearamong those who remain behind says Ed Lawler ofEnron

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The appraiser writes a free-form essay describing the

subordinates performance in a number of broadcategories.

The employeespromotability

Jobs the employee can currently perform The employees strength and limitations

Additional training needs

Essay Method

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In this method the appraiser keeps the record offavorable and unfavorableoccurrences of an employees

work.

Examples:Employee stayed late at work plant.

Employee did not follow the safety measures.

Critical Incidents:

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In this method performance is evaluated by peers, direct

reports and supervisors, as well as including selfassessment and appraisal by customers and suppliers.

90

360- Degree Feedback

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360- Degree Feedback

The Feedback Comes From

Subordinates

Peers

Managers

Self

Other Colleagues

Supervisors

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720o Performance Evaluation

The 720 degree review starts with a review of the leaderscontributions to the business, competences and other factors

Next, major customers are identified and their representatives askedto be part of the review.

After program training, the 720 degree service provider, an objectivethird party, interviews the customer to determine the quality of therelationship with the executive

All internal and external input is compiled, analyzed and presented tothe executive.

The executive, with support from the 720 degree service provider,develops measurable goals and a detailed action plan to makechanges.

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Both 360and 720appraisal system provides alternativesto the traditional appraisal system.

They are both useful in Learning Organization.

Both systems involve more than one evaluator,

The 360and 720appraisal mechanisms are morereliable.

They are capable of re-assessment which is the oppositeof what happens with the traditional system.

Both systems have confidentiality, unlike the traditional

appraisal system.

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The 720 appraisal system is more focused on thecustomersfeedback on specific position in the organizationsuch as directors, managers and other higher or mid levelmanagers and is therefore reliant on the Voice of theexternal customers while the 360 appraisal system is

focused on the internal customers feedback on employeeperformance.

The 720 appraisal system is more focused onManagement/ Higher level staffs while the 360 appraisalsystem is general.

The 360has a Single evaluation cycle while the 720 hasdual evaluation cycles.

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Provides improved collaboration

on employee commitments andthe review of those commitmentswithout requiring face-to-facemeetings.

Reduces the amount of timerequired to complete employeereviews.

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Specific performance goals are jointly determined by

employees and managers. Progress toward accomplishing goals is periodically

reviewed.

Rewards are allocated on the basis of progress towards

the goals.

Key elements of MBO:

Goal specificity, participative decision making, an

explicit performance/evaluation period, feedback

MANAGEMENT BY OBJECTIVES (MBO)

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1. The organizations overal l object ives and strategiesare

formulated.

2. Major objectives are allocated among divisio nal anddepartmental units.

3. Unit managers co l laborat ively set specif ic object ivesfor their

units with their managers.

4. Specific objectives are collaboratively set with al l department

members.

5. Ac tion p lans, defining how objectives are to be achieved, are

specified and agreed upon by managers and employees.

6. The action plans are implemented.

7. Progress toward objectives is per iodical ly reviewed, andfeedbackis provided.

8. Successful achievement of objectives is reinforced by

performance-based rewards.

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Not as effective in dynamic environmentsthat requireconstant resetting of goals.

Overemphasis on individual accomplishmentmay

create problems with teamwork.

Allowing the MBO program to become an annualpaperwork shuffle.

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An appraisal method that uses quantified scale with

specific narrative examples of good and poorperformance.

Developing a BARS:

Generate critical incidents

Develop performance dimensions

Reallocate incidents

Scale the incidents

Develop a final instrument

Behaviorally Anchored Rating Scale

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Contemporary Performance ManagementMethods

Online performance Management

SAP (Systems Applications and products)

ERP ( Enterprise Resource Planning)

Oracle based Softwares Visual Basic and C++

HRIS

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Similar to Me (Projection)

Halo and Horn Effect

Primacy: PA is influenced by initial phase of review period. First Impression

Contrast

Stereotype

Negativity Recency:Information gathered during the last portion of

review period.

Spillover:Score of previous review period influence ofcurrent PE.

Unintentional Rating Errors

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Leniency (Inflation) Severity (Deflation)

Central tendency

Common Errors in Performance Management

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Increased Turnover Use of Misleading Information

Lowered Self-Esteem

Wasted Time and Money

Damaged Relationships

Decreased motivation to perform

Employee burnout and job dissatisfaction

Increased risk and litigation

Emerging biases