UNIT -III

Meaning Of Performance Management

Performance management is an ongoing, continuous process of communicating and clarifying job responsibilities, priorities and performance expectations in order to ensure mutual understanding between supervisor and employee. It is a philosophy which values and encourages employee development through a style of management which provides frequent feedback and fosters teamwork.

It focuses on adding value to the organization by promoting improved job performance and encouraging skill development. Performance Management involves clarifying the job duties, defining performance standards, and documenting, evaluating and discussing performance with each employee.

Process of Performance Management

Why Performance Management

Performance management is considered a process, not an event. It follows good management practice in which continual coaching, feedback and communication are integral to success. The Performance Management Plan is primarily a communication tool to ensure mutual understanding of work responsibilities, priorities and performance expectations.

Elements for discussion and evaluation should be job specific The major duties and responsibilities of the specific job should be defined and communicated as the first step in the process. Performance standards for each major duty/ responsibility should be defined and communicated. Employee involvement is encouraged in identifying major duties and defining performance standards.

Evaluating an employees current & past performance relative to his performance standard.

Performance appraisal

According to Flippo- performance appraisal is the systematic, periodic and an impartial rating of an employees excellence in the matters pertaining to his present job and his potential for a better job
It is a powerful tool to reward the performance of the employee.

L& T was the first company in India to use a systematic performance appraisal system in India.

Performance Appraisal
The process by which an employees contribution to the organization during a specified period of time is assessed.

Performance Feedback
Lets employees know how well they have performed in comparison with the standards of the organization

Objectives Of Performance appraisal:

To review the performance of the employees over a given period of time. To judge the gap between the actual and the desired performance. To help the management in exercising organizational control. To provide feedback to the employees regarding their past performance. Provide information to assist in the other decisions in the organization like training needs, transfers, promotion

To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development.

Uses of P.A
Training & Carrer Development Recruitment

P A
Selection

Compensation

Promotion & transfer

Why PA May Fail

Unclear Language Mgr not taking PA seriously Lack appraisal skills Mgr not prepared

Mgr not honest or sincere

No on-going feedback Ineffective discussion Mgr Lacks Infor.

Insuff. Rewards

Alternative Sources of Appraisal

SUPERIOR
CUSTOMERS

PEERS

TEAM SELF
SUBORDINATES

Errors in PA byAppraisers
Error of Central Tendency Leniency or Strictness Error Similar-to-Me Error
Common Appraisal Errors to Address in Training

Recency Error

Contrast Error

METHODS of PERFORMANCE APPRAISAL

Confidential Report
Descriptive report
Prepared at the end of the year Prepared by the employees immediate supervisor The report highlights the strengths and

weaknesses of employees
Prepared in Government organizations Does not offer any feedback to the employee

Essay Evaluation
The rater is asked to express the strong as well as

weak points of employees behavior

The rater considers the employees : Job knowledge and potential

Understanding of companys programs,

policies, objectives etc Relation with co-workers and supervisors Planning, organizing and controlling ability Attitude and perception

Essay Evaluation
This method has the following limitations:
Highly subjective
Supervisor may write biased essay Difficult to find effective writers A busy appraiser may write the essay hurriedly without assessing properly the actual performance of the worker If the appraiser takes a long time it becomes uneconomical from the view point of the firm

Critical Incident Technique

Manager prepares lists of statements of very effective and ineffective behavior of an employee These critical incidents represent the outstanding or poor behavior of the employees The manager periodically records critical incidents of employees behavior

Example:

July 20 - Sales clerk patiently attended to the

customers complaint. He is polite, prompt, enthusiastic in solving the customers problem

July 20 - The sales assistant stayed 45 minutes

beyond his break during the busiest part of the day. He failed to answer store managers call thrice. He is lazy, negligent, stubborn and uninterested in work

Critical Incident Technique

Limitation of this technique are:
Negative incidents may be more noticeable than positive incidents. Results in very close supervision which may not be liked by the employee. The recording of incidents may be a chore for the manager concerned who may be too busy or forget to do it.

Checklist
A checklist is a set of objectives or descriptive statements about the employee and his behavior. Under weighted checklist, value of each question may be weighted. Example: Is the employee really interested in the task assigned? Yes / No Is he respected by his colleagues? Yes / No

Graphic rating

Graphic rating scales are one of the most common methods of performance appraisal. Graphic rating scales require an evaluator to indicate on a scale the degree to which an employee demonstrates a particular trait, behavior, or performance result. Rating forms are composed of a number of scales, each relating to a certain job or performance-related dimension, such as job knowledge, responsibility, or quality of work. Each scale is a continuum of scale points, or anchors, which range from high to low, from good to poor, from most to least effective, and so forth. Scales typically have from five to seven points, though they can have more or less. Graphic rating scales may or may not define their scale points.

Forced Distribution Methods

Forced distribution is a form of comparative evaluation in which an evaluator rates subordinates according to a specified distribution.

Use of the forced distribution method is demonstrated by a manager who is told that he or she must rate subordinates according to the following distribution: 10 percent low; 20 percent below average; 40 percent average; 20 percent above average; and 10 percent high. In a group of 20 employees, two would have to be placed in the low category, four in the below-average category, eight in the average, four above average, and two would be placed in the highest category.

The proportions of forced distribution can vary. For example, a supervisor could be required to place employees into top, middle, and bottom thirds of a distribution. Forced distribution is primarily used to eliminate rating errors such as leniency and central tendency, but the method itself can cause rating errors because it forces discriminations between employees even where job performance is quite similar. For example, even if all employees in a unit are doing a good job, the forced distribution approach dictates that a certain number be placed at the bottom of a graded continuum. For this reason, raters and ratees do not readily accept this method, especially in small groups or when group members are all of high ability.

Step 1: Org. goals

PA under a MBO Program

Step 3: Spvr lists goals .

Step 5a: Inappropriate goals/metrics deleted

Step 2: Dpt. Goals

Step 5b: New inputs are then provided

Step 7: Review org. performance

Step 3: Sbt. proposes Goals

Step 4: Mutual agreement

Step 6: Final review

Step 5: Interim review

Management by Objectives
Management by objectives (MBO) involves setting specific measurable goals with each employee and then periodically discussing his/her progress toward these goals. The term MBO almost always refers to a comprehensive organization-wide goal setting and appraisal program that consist of six main steps:

1. Set the organizations goals. Establish organizationwide plan for next year and set goals.

2. Set departmental goals. Here department heads and their superiors jointly set goals for their departments

Discuss and allocate department goals. Department heads discuss the department's goals with all subordinates in the department (often at a department-wide meeting) and ask them to develop their own individual goals; in other words, how can each employee contribute to the department's attaining its goals 4. Define expected results (set individual goals). Here, department heads and their subordinates set shortterm performance targets. 5. Performance review and measure the results. Department heads compare actual performance for each employee with expected results. 6. Provide feedback. Department heads hold periodic performance review meetings with subordinates to discuss and evaluate progress in achieving expected results.

Multiple Person Evaluation Methods

Ranking method
The evaluator rates the employee from highest to lowest on some overall criteria

Paired comparison method

Each worker is compared with all other employees in a group For several traits paired comparisons are made, tabulated and then rank is assigned to each worker This method is not applicable when the group is large

360o Appraisal System

360 degree feedback, also known as 'multi-rater feedback', is the

most comprehensive appraisal where the feedback about the employees performance comes from all the sources that come in contact with the employee on his job. Subordinates appraisal gives a chance to judge the employee on the parameters like communication and motivating abilities, superiors ability to delegate the work, leadership qualities etc. Also known as internal customers, the correct feedback given by peers can help to find employees abilities to work in a team, co-operation and sensitivity towards others.

CUSTOMER

ANY OTHER

SUPERVIS OR

360 DEGREE SELF SENIOR

SUBORDIB ATES

PEERS

Communication

Example

Leadership

Personal Development

Adaptability

Development of Others

Relationships

Production

Task Management

Appraisal Interview and Feedback - Let the Employee Know Where He Stands
To help employees do a better job by clarifying what is expected of them To plan opportunities for development and growth To strengthen the superior-subordinate working relationship by developing mutual agreement of goals To provide an opportunity for employees to express themselves on performance related issues