Performance Performance ManagementManagement

The meaning of “Performance”

“It’s a multi-dimensional construct, the measurement of which varies, depending on a variety of factors.”

Integration of performance management

• Vertical integration• Functional

integration• HR integration• Integration of

individual needs with that of the organization.

Purpose of Performance Management

• Better results from organization, teams & individuals -> by understanding and managing performance within an agreed framework of planned goals, standards & competence requirements.

• Process of shared understanding of what needs to be achieved -> an approach to managing & developing people in a way that increases the profitability that will be achieved in the short & long term.

Concerns of performance management

• Performance improvement

• Employee development• Satisfying the

expectations of the organization’s stakeholders

• Communication and involvement

The Appraisal Process

Performance Appraisal

Performance appraisal involves the identification, measurement, and management of human performance in organizations.

Identification means determining what areas of work the manager should be examining when measuring performance.

Measurement, the centerpiece of the appraisal system,

entails making managerial judgments of how good or bad

employee performance was.Management is the overriding goal of any

appraisal system. Appraisal should be more than a past-oriented activity that criticizes or praises workers for their performance in the preceding year. Rather, appraisal must take a future oriented view of what workers can do to achieve their potential in the organization. This means that managers must provide workers with feedback and coach them to higher levels of performance.

Performance Appraisal Process

Performance management is concerned with improving individual and team performance

The process

Performance appraisal is planned, developed and implemented through a series of steps:

• Establish performance standards.• Communicate the standards.• Measure actual performance.• Compare actual performance with

standards and discuss the appraisal.• Taking corrective action, if necessary.

“The Supervisor’s

Role”

Who Conducts Performance

Appraisal

The appraiser may be any person who has thorough knowledge about the job content, contents to be appraised, standards of contents and who observes the employee while performing the job. The appraiser should be capable of determining what is more important and what is relatively less important. He should prepare reports and make judgments without bias.

• Supervisors• Peers• Sub-ordinates• Self-appraisal• Users of services• Consultants

Performance appraisal is a means of getting better results from the organization, teams and individuals by understanding and managing performance within an agreed framework of planned goals, standards and competence requirements. It is a process for establishing shared understanding about what is to be achieved, and an approach to managing and developing people in a way that increases the probability that it will be achieved in the short and longer term.

• Employer perspective• Employee perspective

The Uses Or Benefits Of Performance

Appraisal

Problems with performance appraisal

The problems inherent in performance appraisal may be listed thus:Judgment errors poor appraisal forms Lack of rater preparedness Ineffective organizational policies and practices

Judgment errors: people commit mistakes while evaluating people and their performance. Biases and judgment errors of various kinds may spoil the show. Bias here refers to inaccurate distortion of a measurement. A few of them are:

• first impressions (primary effect)• halo• horn effect• leniency• central tendency• stereotyping• recency effect

Lack of rater preparedness: the raters may not be adequately trained to carry out performance management activities. This becomes a serious limitation when the technical competence of a ratee is going to be evaluated by a rater who has limited functional specialization in that area.

Ineffective organizational policies and practices: if the sincere appraisal effort put in by a rater is not suitably rewarded, the motivation to do the job thoroughly finishes off. Sometimes, no rating given by raters are viewed negatively by management-as a sign of failure on the part of rater or as an indication of employee discontent

poor appraisal forms: the appraisal process might also be influenced by the following factors relating to the forms that are used by raters

The rating scale may be quite vague and unclear.

The rating firm may ignore important aspects of job performance.

The rating firm may contain additional, irrelevant performance dimensions.

the forms may be too long and complex

Essential Characteristics Of An Effective Appraisal

SystemPerformance appraisal system should be effective as a number of crucial decisions are made on the basis of score or rating given by the appraiser, which in turn, is heavily based on the appraisal system. Appraisal system, to be effective, should possess the following characteristics:

• Reliability and validity• Job relatedness• Standardization• Practical viability• Legal sanction• Training to appraisers• Open communication• Employee access to results• Due process

Performance appraisal should be used primarily to develop employees as valuable resources. Only then it would show promising results. When management uses it as a whip or fails to understand its limitations, it fails. The key is not which form or which method is used

Appraisal Methods

Performance appraisals are used for

many purposes, including:

• deciding promotions• determining transfers • making termination decisions • identifying training needs • identifying skill and

competency deficits • providing employee feedback • determining reward

allocations

Key factor of Appraisal System

The performance appraisal system should:

• be correlated with the organizational

mission, philosophies and value system;

• cover assessment of performance as well as potential for development;

• take care of organizational as well as individual needs; and

• help in creating a clean environment by

• - linking rewards with achievements,- generating information for the growth of the employee as well as of the organization, and

- suggesting appropriate person-task matching and career plans.

Classification

Performance Appraisal methods can

be broadly classified as :-

• Measuring Traits• Behaviors• Results

Contd.

• Trait Method- It is a more popular system despite its inherent subjectivity.

• Behavioral Approach- It provides more action oriented information to employees & therefore may be best for development.

• Results-oriented Approach- Its gaining popularity because it focuses on the measurable contribution that employees make to the organisation.

Graphic rating – scale method

• A trait approach to performance appraisal whereby each employee is related according to a scale of characteristics.

• Space should be provided for comments which improves the accuracy of the appraisal.

Knowledge of work:Understanding of all phases of work & related matters

REMARKS:

Needs instruction or guidance

Has required knowledge of own & related work

Has exceptional knowledge

Initiative:Ability to originate or develop ideas & to get things started

REMARKS:

Lacks imagination Meets necessary requirements

Unusually resourceful

Application:Attention & application to work

REMARKS:

Wastes time. Needs improvement

Steady & willing worker

Exceptionally industrious

Quality of work:Thoroughness, neatness & accuracy of work

REMARKS:

Needs improvement

Regularly

Meets

Standard

Consistently maintains

Highest

quality

Volume of work:Quantity of acceptable work

REMARKS:

Should be

increased

Regularly meets recognized

standards

Unusually

High

output

Appraise employee’s performance in present

assignment

Mixed – Standard Scale Method

• A trait approach to performance appraisal similar to other scale methods.

• Based on comparison with (better than, equal to, or worse than) a standard.

Example of a mixed – standard scale

DIRECTIONS: Please indicate whether the individual’s performance is above(+), equal to (0), or lower (-) than each of the following standards.

1. ( ) Employee uses good judgement when addressing problems & provides workable alternatives; however at times does not take actions to prevent problems.( medium PROBLEM SOLVING)

2. ( ) Employee lacks supervisory skills; frequently handles employees poorly & is at times argumentative. (low LEADERSHIP)

3. ( ) Employee is extremely cooperative; can be expected to take the lead in developing cooperation among employees ; completes job tasks with a positive attitude. (high COOPERATION)

4. ( ) Employee has effective supervision skills; encourages productivity, quality & employee development. (medium LEADERSHIP)

Contd…5. ( ) Employee normally displays an

argumentative or defensive attitude toward fellow employees & job assignments. ( low COOPERATION)

6. ( ) Employee is generally agreeable but becomes argumentative at times when given job assignments; cooperates with other employees as expected. (medium COOPERATION)

7. ( ) Employee is not good at solving problems; uses poor judgement & does not anticipate potential difficulties. ( low PROBLEM SOLVING)

8. ( ) Employee anticipates potential problems & provides creative, proactive solutions; has good attention to follow up. (high PROBLEM SOLVING)

9. ( ) Employee displays skilled direction; effectively coordinates unit activities; is generally a dynamic leader & motivates employees to high performance. (high LEADERSHIP)

Forced – Choice Method

• A trait approach to performance appraisal that requires the rater to choose from statements.

• The statements are designed to distinguish between successful & unsuccessful performance.

• The statements may be equally favorable or equally

unfavorable.

E.g: forced – choice pairs might include

the following:

1. ( ) a- Works hard

( ) b- Works quickly

2. ( ) a- Shows initiative

( ) b- Is responsive to customers

3. ( ) a- Produces poor quality

( ) b- Lacks good work habits

Essay Method

“A trait approach to performance appraisal that requires the rater to compose a statement describing employee behavior.”

Behavioral Methods

• Behavioral methods have been developed to specifically describe which actions should (or should not) be exhibited on the job.

• Useful for providing employees with developmental feedback.

Contd….• For many jobs, performance is so

broadly defined or so conceptual in nature

• — such as ensuring public safety in the police de partment—that it is hard to come up with reliable performance measures.

• In such cases, desirable behaviors can be identified and assessed in the belief that such behaviors lead to successful performance.

• Such behavior-focused assessment encourages employees to adopt desirable behavioral patterns in the workplace

Critical Incident Method

• Unusual event that denotes superior or inferior employee performance in some part of the job.

• A critical incident occurs when employee behavior results in unusual success or unusual failure in some part of the job.

• As behavioral incidents are specific they can facilitate employee feedback & development.

Behavioral Checklist Method

• One of the oldest appraisal techniques.

• The rater checks those statements on a list that he/she believes are characteristics of the employee’s performance or behavior.

A checklist developed for computer sales persons might

include a number of statements like the following

• ( ) Is able to explain equipment clearly.

• ( ) Keeps updates of new developments in

technology.• ( ) Tends to be a steady

worker.• ( ) Reacts quickly to customer

needs.• ( ) Processes orders correctly.

Behaviorally Anchored Rating Scale (BARS)

• Behaviorally Anchored Rating Scales (BARS) is a performance appraisal technique developed by Smith and Kendall for assessing the performance of an employee as part of an appraisal process.

• It consists of a series of vertical scales.

• One for each important dimension of job performance.

StepsThe technique consist out of 4 steps:

• Break down the job into its key performance dimensions (tasks).

• Identify a range of possible behaviors that can be displayed by an employee when he is undertaking the task.

• Place these behaviors on a scale ranging from ineffective to excellent performance. The approach uses ratings to communicate different levels of proficiency requirements. Planning and organizing requirements might be rated a "4" on a five point scale for a manager and rated a "2" for the administrative assistant. Behaviorally anchored rating scales are constructed that give typical examples of the types of activities or behaviors performed at each rating point.

• Assess the employee against these scales for each of the task.

Behavior Observation Scale (BOS)

1. A behavioral approach to performance appraisal that measures the frequency of observed behavior.

2. Companies such as AT&T, Dayton – Hudson prefers BOS over BARS for:

3. Maintaining objectivity4. Distinguishing good from poor

performers5. Providing feedback 6. Identifying training needs

Sample Items from BOS

For each behavior observed , use the following scale:

• 5 represents almost always 95-100%

• 4 represents frequently 85-94%

• 3 represents sometimes 75-84%

• 2 represents seldom 65-74%

• 1 represents almost never 0-64%

Sales Productivity

1. Reviews individual productivity results with manager

1 2 3 4 5

2. Suggests to peers ways of building scales

1 2 3 4 5

3. Formulates specific objectives for

each for each contact

1 2 3 4 5

4. Focuses on product rather than customer problem

1 2 3 4 5

5. Keeps account plans updated 1 2 3 4 56. Keeps customer waiting for service

1 2 3 4 5

Results method

• It is a method used by organizations which evaluate employee accomplishments – the results they achieve through their work.

• E.g – sales figures, production output

• Results appraisal gives employees responsibility for their outcomes.

• It is empowerment in action.

Productivity measures

• Sales people – sales volume• Production workers – no. of

units produced, scrap rate, no. of defects detected

• Executives – company profits, growth rate

• Thus helps in aligning employee & organization goals

Management by objectives (MBO)

• This philosophy was proposed by Peter Drucker in 1954

• Philosophy of management that rates performance on the basis of employee achievement of goals

• These goals are set by mutual agreement of employee & manager

Performance Appraisal under an

MBO Program• Step 1: Organization goals & metrics

• Step 2: Department goals & metrics• Step 3A: Superior lists goals for

subordinates• Step 3B: Subordinate proposes

goals• Step 4: Mutual agreement of goals• Step 5A: Inappropriate goals

deleted• Step 5B: New inputs are then

provided (interim review)• Step 6: Final review• Step 7: Review of organization

performance

Appraisal Performance(Problems & Solutions)

Problem areas

• Recent performance most influential

• Focus on outstanding events

• Personal feelings - halo effect

• Lack of yardsticks• Rater attitudes• Leniency/stringency error• Similar-to-me error

Problem Areas (Continued)

• Central tendency error • First impression error• Racial bias• Focus on longevity• Complacency of

managers

Avoiding Appraisal Problems

Evaluating individual job performance as a basis for making objective personnel decisions.

Making Performance Appraisals Legally Defensible

1. Use job analysis to develop the appraisal system.

2. Check that the appraisal system is behavior-oriented, not trait-oriented.

3. Have evaluators follow specific written instructions when conducting appraisals.

4. Have evaluators review results with the ratees.

Performance Appraisal (cont’d)

• Alternative Performance Appraisal Techniques

– Goal setting (MBO)– Written essays– Critical incidents– Graphic rating scales

• Behaviorally anchored rating scales (BARS)

– Weighted checklists– Rankings and comparisons– Multirater appraisals– 360-degree review

360 Degree Performance

ReviewsSupervisor

SubordinatesSelf

Potential sourcesOf performance

appraisals

CustomersOr clientPeers