HUMAN RESOURCE DEVELOPMENT

Future Oriented Methods

1. Management By Objectives: It means management by objectives and the
performance is rated against the achievement of objectives stated by the management.
MBO process goes as under.
Establish goals and desired outcomes for each subordinate
Setting performance standards
Comparison of actual goals with goals attained by the employee
Establish new goals and new strategies for goals not achieved in previous year.
Advantage It is more useful for managerial positions.
Disadvantages Not applicable to all jobs, allocation of merit pay may result in setting
short-term goals rather than important and long-term goals etc.
2. Psychological Appraisals: These appraisals are more directed to assess employees
potential for future performance rather than the past one. It is done in the form of indepth interviews, psychological tests, and discussion with supervisors and review of other
evaluations. It is more focused on employees emotional, intellectual, and motivational and
other personal characteristics affecting his performance. This approach is slow and costly
and may be useful for bright young members who may have considerable potential.
However quality of these appraisals largely depend upon the skills of psychologists who
perform the evaluation.
3. Assessment Centers: This technique was first developed in USA and UK in 1943. An
assessment center is a central location where managers may come together to have their
participation in job related exercises evaluated by trained observers. It is more focused on
observation of behaviors across a series of select exercises or work samples. Assessees are
requested to participate in in-basket exercises, work groups, computer simulations, role
playing and other similar activities which require same attributes for successful
performance in actual job. The characteristics assessed in assessment center can be
assertiveness, persuasive ability, communicating ability, planning and organizational ability,
self confidence, resistance to stress, energy level, decision making, sensitivity to feelings,
administrative ability, creativity and mental alertness etc. Disadvantages Costs of
employees traveling and lodging, psychologists, ratings strongly influenced by assessees
inter-personal skills. Solid performers may feel suffocated in simulated situations. Those
who are not selected for this also may get affected.
Advantages well-conducted assessment center can achieve better forecasts of future
performance and progress than other methods of appraisals. Also reliability, content
validity and predictive ability are said to be high in assessment centers. The tests also
make sure that the wrong people are not hired or promoted. Finally it clearly defines the
criteria for selection and promotion.
4. 360-Degree Feedback: It is a technique which is systematic collection of
performance data on an individual group, derived from a number of stakeholders like
immediate supervisors, team members, customers, peers and self. In fact anyone who has
useful information on how an employee does a job may be one of the appraisers. This
technique is highly useful in terms of broader perspective, greater self-development and
multi-source feedback is useful. 360-degree appraisals are useful to measure interpersonal skills, customer satisfaction and team building skills. However on the negative
side, receiving feedback from multiple sources can be intimidating, threatening etc.
Multiple raters may be less adept at providing balanced and objective feedback.

Behaviorally anchored rating scale (BARS): This method combines the

graphic rating scale and the critical incident method. It determines in
advance the critical areas of the performance and the most effective

behavior to achieve the results. Then the actual job behavior of an

employee is evaluated against the predetermined behavior.
The

following

steps

are

used

for

constructing

BARS.

1. Supervisor and other persons well acquainted with a job are asked to
described specific critical incidence of effective performance behavior
2. Then these persons categorized the incidents into sets of performance
dimensions

and

each

set

is

then

defined.

3. These people then reallocate the original critical incidents. They are given
the cluster definition and critical incidents and are asked to re-design each
incident to the dimensions that describes it the best. A critical incidents is
retain only a some percentage that is usually between 50 80 percent of
this group assigns the incidents to the same cluster as was done by the
earlier

group.

4. The second group then rates each incident on a 7 9 point scale where
the rating is done on the basis of how well the behavior described in the
incidents represented the performance on the appropriate dimensions.
5. A sub set of incidents is used as behavior anchors for the performance
dimensions.
HUMAN RESOURCE ACCOUNTING METHOD
Human Resource Accounting is a method to measure the effectiveness of personnel
management activities and the use of people in an organization.HRA is the process of
Assigning, budgeting, and reporting the cost of human resources incurred in an organization,
including wages and salaries and training expenses.
Human resources are valuable assets for every organization. Human resource accounting
method tries to find the relative worth of these assets in the terms of money. In this method
the Performance appraisal of the employees is judged in terms of cost and contribution of the
employees. The cost of employees include all the expenses incurred on them like their
compensation, recruitment and selection costs, induction and training costs etc whereas their
contribution includes the total value added (in monetary terms). The difference between the
cost and the contribution will be the performance of the employees. Ideally, the contribution of
the employees should be greater than the cost incurred on them.

Open Appraisal - where the appraisee and their manager discuss any
issues they deem appropriate drawn from their experience over the
appraisal period. An example of this is the system which has been used in
a number of universities which involves a career development discussion
but does not incorporate evaluative judgements being made. This may be
referred to as a career development staff appraisal.

Closed Appraisal - where there are a number of categories on which the

appraisee's performance is rated, including an overall performance rating.

These categories should be identified through a proper analysis of the job

being carried out.

Key Result Areas

Key Result Areas or KRAs refer to general areas of outcomes or outputs for which the
department's role is responsible. A typical role targets three to five KRA.
------------------------------------------------Value of KRAs.
Identifying KRAs helps individuals:
- Clarify their roles
- Align their roles to the organisations business or strategic plan
- Focus on results rather than activities
- Communicate their roles purposes to others
- Set goals and objectives
- Prioritize their activities,
-and therefore improve their time/work management
- Make value-added decisions
Key Result Area
Key = crucial/main
Result = outcome/end/consequence
Area = space/range

KEY RESULT AREA = crucial outcome space

Point to note
-KRA is not the result.
-KRA is the area identified as important or crucial where a result will assist in the
achievement of the set objectives or goal.
-KRA defines what a job is expected to accomplish.
-KRAs might fall within the scope of Key Performance Areas (KPA)

----------------------------------------------------------------- --------Description of KRAs

Key result areas (KRAs) capture about 80% of the department's work role. The remainder of
the role is usually devoted to areas of shared responsibility (e.g., helping team members,
participating in activities for the good of the organisation).
A key result area has three qualities:
1. It is clear, specific, and measurable. You can determine exactly if the result has been
achieved, and how well.
2. It is something that is completely under your control. If you do not do it, it will not be done
by someone else. If you do it, and do it well, it can contribute significant value to your
business and to your career.
3. It is an essential activity of the business. A key result is an important output that then
becomes an input to the next key result area, or to the next person.
================================================== =============== =
CORE KRAs of HR DEPARTMENT
-RECRUITMENT/ SELECTION
-WORKFORCE PLANNING/
-DIVERSITY MANAGEMENT
-PERFORMANCE MANAGEMENT
-REWARD MANAGEMENT
-WORKPLACE MANAGEMENT
-INDUSTRIAL RELATIONS
-SAFETY AND HEALTH WORKPLACE
-BUILDING CAPABILITIES AND ORGANIZATION LEARNING
-EFFECTIVE HR MANAGEMENT SYSTEMS , SUPPORT AND MONITORING
============================================-=======
KRAs [ KEY RESULT AREAS are managed by
-KPAs [ KEY PERFORMANCE AREAS]
-KPIs [KEY PERFORMANCE INDICATORS]
===================================
KEY PERFORMANCE AREAS
These are the areas within the HR DEPARTMENT, where an
individual or group, is logically responsible / accountable
for the results. Key Performance Area

Key = crucial/main
Performance = Achievement/Attainment
Area = space/range/field of operation
KEY PERFORMANCE AREA = Main achievement space
Point to Note
-KPA is the overall scope of activities that an individual on a job role has to perform.
-KPA is not always result focused.
-KPAs can be inclusive of KRAs
In organizations, each role or job has a Job Description (JD) which consist of all the
responsibilities the person on job has to perform. All the activities listed in JD falls in two
categories:
Category A List of functions and activities crucial or critical for the job role. These activities
form the KRA of the job.
Category B List of functions and activities associated with the job role but not truly critical
for the role. These functions are important for overall performance of the team, department or
organization as a whole and form the KPA for the job

To manage each KRA/ KPAs, a set of KPI are set .

KRA and hence KPI is attributed to the department which
can have effect on the business results and is
self measured where applicable.
THE IMPORTANCE AND WEIGHTAGE OF THESE ELEMENTS
KRAs/KPAs/ KPIs ARE GUIDED BY THE
*VISION STATEMENT
*MISSION STATEMENT
*CORPORATE OBJECTIVES
*CORPORATE STRATEGY
*CORPORATE BUSINESS UNITS/ DEPARTMENTAL PLANS/STRATEGY.
FOR THE BUDGET PERIOD, WHICH IS USUALLY 12 MONTHS.

================================================== ======
HERE IS AN EXAMPLE, WHICH YOU CAN USE TO DEVELOP
OTHERS FOR YOUR ORGANIZATION.
CORPORATE OBJECTIVE / STRATEGY
-improve the company competitive positioning and productivity
by 10%.
HR DEPARTMENT'S OBJECTIVE
-Achieve high productivity level in all activities [ say by 10%]

------------------------------------------------------KRA 1
-RECRUITMENT/ SELECTION
KPA --RECRUITMENT
KPI ----reduce average time taken to fill vacancies by 15%
KPI ----reduce average cost per recruit by 10%
------------------------------------------KRA 2
-WORKPLACE MANAGEMENT
KPA -labour turnover
KPI ---reduce the labor turnover by 20%
KPI ----benchmark total HR COSTS externally.
-----------------------------------------------KRA 3
-SAFETY AND HEALTH WORKPLACE
KPA ---workplace accidents
KPI ----reduce workplace accidents by 10%
--------------------------------------------KRA 4
-BUILDING CAPABILITIES AND ORGANIZATION LEARNING
KPA ----TRAINING
KPI --- ALL WORKFORCE below middle management should
receive a minimum of 4 days of training.
Example :
Role Product Manager
Goal Ensuring delivery of quality product within schedule.
Key Result Area
1.

Customer Satisfaction.

2.

Product Management.

3.

Operational Cost Control.

4.

Quality Check.

5.

. Record keeping.
Key Performance Areas

1.

Maintaining good working condition in plant.

2.

Optimum Resource Utilization.

3.

Process Improvement.

4.

Safety and Prevention planning and control.

5.

Working within the companys SLA(Service Level Agreement), GRC(Governance,

Risk Management and Compliance) policies

MANAGERIAL APPRAISAL
Harold Koontz has developed a concept of managerial appraisal i.e., appraising managers.
According to this concept the managers attain the organizational objectives by performing the
basic managerial functions, viz., planning, organizing, leading, motivating, staffing and
controlling. Each of these functions can be performed by performing a number of or series of
activities.
For example, performing staffing function requires performing a series of activities like analyzing
jobs of his department, planning for human resources, deciding upon internal and external
recruitment, developing sources and recruitment techniques. Thus, each function and subfunction of manager is elaborated into a series of activities. These activities, in this model are
taken as behavior and standards of performance. The checklist containing the questions in these
areas is prepared with a five degree rating scale, i.e., extremely poor performance, neither poor
nor fair performance and extremely fair performance.

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 organisations consider and use potential appraisal as a part of the performance
appraisal processes. The purposes of a potential review are:
1.
2.
3.
4.

to inform employees of their future prospects;

to enable the organisation to draft a management succession programme;
to update training and recruitment activities;
to advise employees about the work to be done to enhance .their career
opportunities.

Techniques of potential appraisal:

1.
2.
3.
4.
5.
6.
7.

Self appraisals
Peer appraisals
Superior appraisals
MBO
Psychological and psychometric tests
Management games like role playing
Leadership exercises etc.

Potential appraisal helps to identify what can happen in future so that it can be guided and
directed towards the achievement of individual and organizational growth and goals.
Therefore, potential should be included as a part of the Performance appraisal in
organisations.
The appraisers rate performance of managers by assessing weights to the scale and appraise

only those areas which are clear and are supported by adequate knowledge. Thus, this
technique measures the performance of managers in managing organizational environment.

Ethics involved in Performance appraisals

Having ethics as a manager doing performance appraisals is very
important for many reasons. These appraisals can be highly subjective, which can
impact the relationships between the managers and the employee being
reviewed. There are many different ways that a meeting can do from ethical to
unethical. Listed are some of the general appraisal characteristics and an
understanding on how it can be unethical:

Rewards, punishments and threats

These should be used in a positive way. If they are negatively used, it can affect

the morale of the employee

An appraiser should not be able to reward an employee that he/she likes more

than another, when the other is more qualified

Reliability and validity
The appraiser should provide consistent, reliable, and valid information
Job Relatedness
Standardization
The performance appraisal process, forms, administration techniques, and ratings

should be standardized so it affects all employees of the group. For example, if

they provide one form or rating system for one employee, they must provide the
same for another.

Legal Sanction

Rater Errors
Rater Bias
The person filling out the forms and rating the other employee or manager may
distort the information by using their own values or prejudices.
Similar-to-me/Different-from-me Error
This is where the rater creates a bias for a person whose characteristics are
similar or different from their own. Instead of measuring the individuals job
performance, they end up measuring the individual against another person

Training and Appraisers

Providing training for the appraisers will help familiarize them with the different
rating errors which can improve the rater performance. If they are unaware, they
may make these unethical errors during the appraisal

Employee Access to Results

Feedback is necessary for growth or change to occur. Keeping any results away
from the employees is unethical

Confidentiality
The feedback that the appraiser provides should be confidential. Leaking it to
unnecessary employees is unethical
Potential errors in pm

1.
1.

Leniency

1.

Occurs when a managers ratings are grouped at the positive end

instead of being spread throughout the performance scale

2.
1.

Central tendency
Tendency of a manager to rate most employees performance
near the middle of the performance scale

3.
1.

Recency
Tendency of a manager to evaluate employees on work
performed most recently, usually one or two months prior to evaluation

4.

These errors make it difficult to compare ratings from different raters

11-

2.

Potential Errors In Performance Appraisals

1.
1.

2.

Halo effect
Occurs when a rater allows a single prominent characteristic of an
employee to influence his or her judgment on each separate item in the performance
appraisal
Results in employee receiving approximately same rating on

every item

2.

Personal preferences, prejudices, and biases can also cause errors in

performance appraisals

1.

Managers with biases or prejudices tend to look for employee

behaviors that conform to their biases

2.

Appearance, social status, dress, race, and sex have influenced

many performance appraisals

3.

of an employee

Managers have also allowed first impressions to influence later judgments

1.

People tend to retain these impressions even when faced with

contradictory evidence
3. Providing Feedback Through the Appraisal Interview
1. In addition, the manager should remember several basic guidelines in
conducting the interview:
1. Manager must know the employees job description

2. Evaluation must be based on employees performance and not on

his or her personality
3. Manager must be positive and build on the employees strengths
4. Manager must be candid and specific
5. Manager must listen to the employee as well as presenting her or
his own views
6. Manager must elicit employee feedback on how to improve
performance
114. Factors Influencing Success or Failure of Appraisal Interviews
1. More the employees are allowed to participate in the appraisal process,
the more
1. Satisfied they will be with the appraisal interview
2. Satisfied they will be with the manager
3. Likely they will be to accept and meet performance improvement
objectives
2. More a manager uses positive motivational techniques, the more satisfied
the employee is likely to be with appraisal interview and with manager
3. Manager and employee mutually setting specific performance
improvement objectives results in better performance than when
managers use a general discussion or criticism
Performance appraisal as Career Development leads to the recognition of
the work done by the employees,
many a times by the means of rewards and appreciation etc. It plays the role of
the link between the organization
and the employees personal career goals. In organizational development OD), the
study of career development looks at:
How individuals manage their careers within and between organizations and,
How organizations structure the career progress of their members, it can also
be tied into succession
planning within some organizations. Performance appraisal & career development
includes the area of career development, which is an extremely
interesting and important area of occupational psychology and one which offers a
great deal of job satisfaction. Career development and performance appraisal can
be more meaningful for organizations and their employees
when each system draws on the strength of the other the now orientation of
performance appraisal and the
future orientation of career development. To accomplish this mutually
strengthening process, the two systems

must be viewed as contributing to the same goal talent development. Talent

development involves promoting

Shubhangi Sharma et. al / VSRD International Journal of Business & Management

Research Vol. 2 (1), 2012
Page 15 of 16

employees' skills and knowledge and can best be achieved by displaying concern
for current performance as
well as future contributions. More and more, workers join organizations with an
eye toward making ongoing and increasing contributions. Organizations can
cultivate this by using data about current performance to help in
plans for future development.

Bi-directional Performance Management

Bi-directional performance management recognizes that for performance to
improve, both manager and employee must receive feedback on how well they
are fulfilling their obligations to the organization and to each other. It also
recognizes that each staff member and his/her manager must clarify and
negotiate expectations regarding each other's roles on a regular basis.
And perhaps, most critically, bi-directional performance management is designed
for a single purpose: to improve the performance of the organization. It's not to
determine pay, it's not to affix blame, it's not to put more paper in the personnel
files. Pure and simple, it is to improve performance.
The Nuts & Bolts
A nice characteristic of bi-directional performance management is that it requires
very little additional work. It "fits" in with existing mandatory systems quite well,
unlike something like the much broader 360 appraisal methods which are
unwieldy, expensive and difficult.
The core of bi-directional performance management is the performance planning
phase. While traditional performance management systems focus on what the
employee should be doing during the next period, and establishing standards of
performance, bi-directional performance management adds the additional
component of clarifying the manager's obligations and responsibilities to ensure
that the employee can achieve his or her objectives and standards. So each
performance planning episode will contain:
dialogue to establish and define the job tasks of the employee.
dialogue to establish what the employee needs from the boss to achieve those
goals
Note that both of these are negotiated through cooperative dialogue.
From the manager's point of view, what kinds of questions would we need to
have answered to capture this second component? You can probably think up
many on your own, but here are some examples:
What barriers do you see to achieving your objectives (goals, standards), and
what can I do now and in the future to help you overcome them?
More specifically:
Do you have the physical resources to do this task?
Do you have the skills needed to do these tasks?
Do you have the proper authority to do these tasks?

Is there anything you need me to do "upstairs" that would help?

If you are lacking the skills or resources, what can I do to help you get what you
need?
At the end of the performance planning episode, the employee should have some
form of action plan for each task or project. And, so should the manager.
On the appraisal side, (actually we should call it the feedback side), the process
is again similar to traditional methods. Rather than manager giving feedback to
the employee, the employee also has the opportunity to give feedback to the
manager on how effective s/he was in fulfilling the obligations outlined n the
planning phase. Once this bi-directional feedback process is completed, the
planning process begins again. We set up a continuous planning-feedback loop.
So, what we have done is begun to recognize the bi-directional effects that affect
performance. We are putting both manager and employee on the same side for
the purpose of making the organization more effective.
Some Caveats
Bi-directional performance management isn't going to cure all the ills in your
existing performance management system -- it is more a Band-Aid than anything
else. That is because there are many other reasons why standard performance
management methods are failing in many workplaces. However, since the reality
is that most organizations require some sort of traditional system, the question
shifts to "How can we make the best of this, and at least get some benefit from
having to do it?"