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Performance management is the systematic process by which an agency involves its employees,
as individuals and members of a group, in improving organizational effectiveness in the
accomplishment of agency mission and goals.
The revisions made in 1995 to the Government wide performance appraisal and awards
regulations support sound management principles. Great care was taken to ensure that the
requirements those regulations establish would complement and not conflict with the kinds of
activities and actions practiced in effective organizations as a matter of course.
It should incorporate:
Armstrong and Baron stress that at its best performance management is a tool to ensure that
managers manage effectively; that they ensure the people or teams they manage:
It is also about ensuring that managers themselves are aware of the impact of their own behavior
on the people they manage and are encouraged to identify and exhibit positive behaviors.
Over time, the focus and emphasis of performance has shifted away from individual output to
inform development or pay decisions, to individual contribution to organisational objectives
through output, behaviour and capability. As such, performance management is now as much
about driving engagement and collecting information and data to provide better insight into the
drivers of performance as it is about providing information about individuals.
See our recent publications which review how the practice of performance management has
evolved since the early ‗90s and look at the current trends and practice.
The primary performance management objectives include uncovering the strengths and
weaknesses of employees and departments and finding ways to remedy shortcomings. This can
be done by having quarterly or annual evaluations of employee output as well as the company's
overall ability to meet goals. Often, after an evaluation, there will be widespread company
meetings where managers and employees can discuss concerns and solutions to problems.
One of the main performance management objectives is to discover where a company and its
employees are falling short. This can be done by looking at profits earned, new clients acquired,
and which employees contributed the most to making these things happen. Workers who have
not contributed enough may be counseled on how to improve performance.
Performance management objectives also include the overall evaluation of a company and its ability to
follow through with setting and reaching goals.
Where PM is applied
The PM approach is used most often in the workplace, can apply wherever people interact —
schools, churches, community meetings, sports teams, health setting, governmental agencies, and
even political settings - anywhere in the world people interact with their environments to produce
desired effects. Armstrong and Baron (1998) defined it as a ―strategic and integrated approach to
increasing the effectiveness of organizations by improving the performance of the people who
work in them and by developing the capabilities of teams and individual contributors.‖
It may be possible to get all employees to reconcile personal goals with organizational goals and
increase productivity and profitability of an organization using this process. It can be applied by
organisations or a single department or section inside an organisation, as well as an individual
person. The performance process is appropriately named the self-propelled performance process
(SPPP).
First, a commitment analysis must be done where a job mission statement is drawn up for each
job. The job mission statement is a job definition in terms of purpose, customers, product and
scope. The aim with this analysis is to determine the continuous key objectives and performance
standards for each job position.
Following the commitment analysis is the work analysis of a particular job in terms of the
reporting structure and job description. If a job description is not available, then a systems
analysis can be done to draw up a job description. The aim with this analysis is to determine the
continuous critical objectives and performance standards for each job.
Benefits
Managing employee or system performance facilitates the effective delivery of strategic and
operational goals. There is a clear and immediate correlation between using performance
management programs or software and improved business and organizational results.
For employee performance management, using integrated software, rather than a spreadsheet
based recording system, may deliver a significant return on investment through a range of direct
and indirect sales benefits, operational efficiency benefits and by unlocking the latent potential in
every employees work day (i.e. the time they spend not actually doing their job). Benefits may
include:
Grow sales
Reduce costs
Stop project overruns
Aligns the organization directly behind the CEO's goals
Decreases the time it takes to create strategic or operational changes by communicating the
changes through a new set of goals
Motivated workforce
Optimizes incentive plans to specific goals for over achievement, not just business as usual
Improves employee engagement because everyone understands how they are directly contributing
to the organisations high level goals
Create transparency in achievement of goals
High confidence in bonus payment process
Professional development programs are better aligned directly to achieving business level goals
It is a powerful tool to calibrate, refine and reward the performance of the employee. It helps to
analyze his achievements and evaluate his contribution towards the achievements of the overall
organizational goals.
Performance appraisal process focuses on the goal setting approach throughout the
organization.
Performance appraisal helps the clarity and understanding of the roles and responsibilities
of the employees.
The performance appraisal processes have the potential positive effects on recruitment
To judge the gap between the actual and the desired performance.
To diagnose the strengths and weaknesses of the individuals so as to identify the training
and development needs of the future.
To judge the effectiveness of the other human resource functions of the organization such
as recruitment, selection, training and development.
Almost all organizations practice performance appraisal in one form or another to achieve certain
objectives. These objectives may vary from organization to organization or even within the same
organization from time to time. It has been found that there are two primary objectives behind
the use of this methodology. One is to use it as an evaluation system and second,
The aim of the evaluation system is to identify the performance gap. This means that it helps
determine the gap between the actual performance of the employee and that required or desired
by the organization.
The aim of the feedback system is to inform the employee about the quality of his work or
performance. This is an interactive process by which the employee can also speak about his
problems to his superior.
From the organizational view point a performance appraisal should generate manpower
information, improve efficiency and effectiveness serve as a mechanism of control and provide a
rational compensation structure. In short the appraisal system establishes and upholds the
principle of accountability in the absence of which organization failure is the only possible
outcome.
Finally, talking about mutual goals, the emphasis is on growth and development, harmony,
effectiveness and profitability.
To judge the gap between the actual and the desired performance.
To judge the effectiveness of the other human resource functions of the organization such as
recruitment, selection, training and development.
Helps to strengthen the relationship and communication between superior – subordinates and
management – employees.
TECHNIQUES IN PERFORMANCE APPRAISAL
Encourage Discussion
Research studies show that employees are likely to feel more satisfied with their appraisal result
if they have the chance to talk freely and discuss their performance. It is also more likely that
such employees will be better able to meet future performance goals.
Employees are also more likely to feel that the appraisal process is fair if they are given a chance
to talk about their performance. This is especially so when they are permitted to challenge and
appeal against their evaluation.
Constructive Intention
It is very important that employees recognize that negative appraisal feedback is provided with a
constructive intention, i.e., to help them overcome present difficulties and to improve their future
performance. Employees will be less anxious about criticism, and more likely to find it useful,
when the believe that the appraiser's intentions are helpful and constructive.
In contrast, other studies have reported that "destructive criticism" - which is vague, ill-
informed, unfair or harshly presented - will lead to problems such as anger, resentment, tension
and workplace conflict, as well as increased resistance to improvement, denial of problems, and
poorer performance.
The useful of goals as a stimulus to human motivation is one of the best supported theories in
management. It is also quite clear that goals which are "...specific, difficult and accepted by
employees will lead to higher levels of performance than easy, vague goals (such as do your
best) or no goals at all."
Appraiser Credibility
It is important that the appraiser (usually the employee's supervisor) be well-informed and
credible. Appraisers should feel comfortable with the techniques of appraisal, and should be
knowledgeable about the employee's job and performance.
When these conditions exist, employees are more likely to view the appraisal process as accurate
and fair. They also express more acceptances of the appraiser's feedback and a greater
willingness to change
METHODS OF PERFORMANCE APPRAISAL
In order to achieve the objectives, a variety of performance appraisal methods have been
developed. The choice of method depends on organizational ethos, its objectives, size, product
and technology.
1. Traditional method
2. Modern method
Traditional method
ESSAY METHOD
In the essay method approach, the appraiser prepares a written statement about the employee
being appraised.
The statement usually concentrates on describing specific strengths and weaknesses in job
performance. It also suggests courses of action to remedy the identified problem areas.
The statement may be written and edited by the appraiser alone, or it be composed in
collaboration with the appraisee.
Advantages
The essay method is far less structured and confining than the rating scale method. It permits the
appraiser to examine almost any relevant issue or attribute of performance. This contrasts sharply
with methods where the appraisal criteria are rigidly defined.
Appraisers may place whatever degree of emphasis on issues or attributes that they feel
appropriate. Thus the process is open-ended and very flexible. The appraiser is not locked into an
appraisal system the limits expression or assumes that employee traits can be neatly dissected
and scaled.
Disadvantages
Essay methods are time-consuming and difficult to administer. Appraisers often find the essay
technique more demanding than methods such as rating scales.
The techniques greatest advantage - freedom of expression - is also its greatest handicap. The
varying writing skills of appraisers can upset and distort the whole process. The process is
subjective and, in consequence, it is difficult to compare and contrast the results of individuals or
to draw any broad conclusions about organizational needs.
It is the oldest and the simplest method of performance appraisal, by which the man and his
performance are considered as an entity by the rater. That is the ranking of a man in a work
group is done against that of another. The relative position of each man is tested in terms of his
numerical rank. It may also be done by ranking a person on his job performance against that of
another member of a competitive group by placing him as number one or two or three in total
group i.e. persons are tested in order of merit and placed in a simple grouping.
This is the simplest method of separating the most efficient from the least efficient: and
relatively easy to develop and use. But there are also some limitations to it:
In practice it is very difficult to compare a single individual with human beings having varying
behavior.
The method only tells us how a man stands in relation to the others in the group but odes not
indicate how much better or worse he is than another.
PAIRED COMPARISON
A better technique of comparison than the straight ranking method, this method compares each
employee with all others in the group, one at a time. After all the comparisons on the basis of the
overall comparisons, the employees are given the final rankings.
This is an improvement over the straight ranking method. By this technique, each employee is
compared with all other persons in pairs one at a time. With this technique, judgment is easier
and simpler than with the ordinary ranking method. The number of times each individual is
compared with another is tallied on a piece of paper. These numbers yield the rank order of the
entire group. For example, if there are five persons to be compared, then A‘s performance is
compared to B‘s and decision is arrived at as to whose performance is better. Then A is
compared to C, D, E… in that order. Next B is compared with all the others individually. Since
he has already been compared with A, he is compared only with C, D, and E. A similar
comparison is made in respect of other personnel. Thus, by this method, we arrive at ten
decisions, and only two are involved in each decision. The number of decisions is determined by
the formula N (N-2), where N represents the number of persons to be compared.
In this method of Performance appraisal, the evaluator rates the employee on the basis of critical
events and how the employee behaved during those incidents. It includes both negative and
positive points. The drawback of this method is that the supervisor has to note down the critical
incidents and the employee behavior as and when they occur this method was developed
following research conducted by the armed forces in the United States during World War II. The
essence of this system is that it attempts to measure worker‘s performance in terms of certain
‘events‘ or ‗episodes‘ that occur in the performances of the rate‘s job. These events are known as
Critical incidents. The basis of this method is the principle that ‖there are certain significant acts
in each employee‘s behavior and performance which make all the difference between success
and failure on the job‖. The supervisor keeps a written record of the events (either good or bad)
that can easily be recalled and used in the course of a periodical or formal appraisal. Feedback is
provided about the incidents during performance review session. Various behaviors are recorded
under such categories as the type of job, requirements for employees, judgment, learning ability,
productivity, and precision in work, responsibility and initiative. Say for example, a sales
manager may be trained to look for and recognize the following critical incidents in a sales
agent's performance: He treated a customer in a markedly impolite fashion; He helped a buyer to
prepare an unusually difficult purchase order He rejected a customer who was asking for a
discount for bulk purchase He failed to return an important phone call; and These critical
incidents are discovered after a thorough study of the personnel working on a job. The collected
incidents are than ranked in order of frequency and importance.
FIELD REVIEW
In this method, a senior member of the HR department or a training officer discusses and
interviews the supervisors to evaluate and rate their respective subordinates. A major drawback
of this method is that it is a very time consuming method. But this method helps to reduce the
superiors‘ personal bias.
CHECKLIST METHOD
The rater is given a checklist of the descriptions of the behaviour of the employees on job. The
checklist contains a list of statements on the basis of which the rater describes the on the job
performance of the employees.
GRAPHIC RATING SCALE
In this method, an employee‘s quality and quantity of work is assessed in a graphic scale
indicating different degrees of a particular trait. The factors taken into consideration include both
the personal characteristics and characteristics related to the on-the-job performance of the
employees. For example a trait like Job Knowledge may be judged on the range of average,
above average, outstanding or unsatisfactory.
FORCED DISTRIBUTION
To eliminate the element of bias from the rater‘s ratings, the evaluator is asked to distribute the
employees in some fixed categories of ratings like on a normal distribution curve. The rater
chooses the appropriate fit for the categories on his own discretion. broad conclusions about
organizational needs.
Modern method
The modern approach to performance development has made the performance appraisal process
more formal and structured. Now, the performance appraisal is taken as a tool to identify better
performing employees from others, employees‘ training needs, career development paths,
rewards and bonuses and their promotions to the next levels.
Appraisals have become a continuous and periodic activity in the organizations. The results of
performance appraisals are used to take various other HR decisions like promotions, demotions,
transfers, training and development, reward outcomes. The modern approach to performance
appraisals includes a feedback process that helps to strengthen the relationships between
superiors and subordinates and improve communication throughout the organization.
The use of management objectives was first widely advocated in the 1950s by the noted
management theorist Peter Drucker.
MBO is a process in which managers and their employees jointly set objectives for the
employee, periodically evaluate the performance, and reward according to the results
Once an objective is agreed, the employee is usually expected to self-audit; that is, to identify the
skills needed to achieve the objective. Typically they do not rely on others to locate and specify
their strengths and weaknesses. They are expected to monitor their own development and
progress.
Advantages
The MBO approach overcomes some of the problems that arise as a result of assuming that the
employee traits needed for job success can be reliably identified and measured. Instead of
assuming traits, the MBO method concentrates on actual outcomes. If the employee meets or
exceeds the set objectives, then he or she has demonstrated an acceptable level of job
performance. Employees are judged according to real outcomes, and not on their potential for
success, or on someone's subjective opinion of their abilities.
The guiding principle of the MBO approach is that direct results can be observed, whereas the
traits and attributes of employees (which may or may not contribute to performance) must be
guessed at or inferred.
The MBO method recognizes the fact that it is difficult to neatly dissect all the complex and
varied elements that go to make up employee performance.
MBO advocates claim that the performance of employees cannot be broken up into so many
constituent parts - as one might take apart an engine to study it. But put all the parts together and
the performance may be directly observed and measured.
Disadvantages
MBO methods of performance appraisal can give employees a satisfying sense of autonomy and
achievement. But on the downside, they can lead to unrealistic expectations about what can and
cannot be reasonably accomplished.
Supervisors and subordinates must have very good "reality checking" skills to use MBO
appraisal methods. They will need these skills during the initial stage of objective setting, and for
the purposes of self-auditing and self-monitoring.
Unfortunately, research studies have shown repeatedly that human beings tend to lack the skills
needed to do their own "reality checking". Nor are these skills easily conveyed by training.
Reality itself is an intensely personal experience, prone to all forms of perceptual bias.
One of the strengths of the MBO method is the clarity of purpose that flows from a set of well-
articulated objectives. But this can be a source of weakness also. It has become very apparent
that the modern organization must be flexible to survive. Objectives, by their very nature, tend to
impose a certain rigidity.
Of course, the obvious answer is to make the objectives more fluid and yielding. But the penalty
for fluidity is loss of clarity. Variable objectives may cause employee confusion. It is also
possible that fluid objectives may be distorted to disguise or justify failures in performance.