Performance Development and employee Development- Module -3

Performance Management and Employee Development: Overview

Personal Developmental Plans Direct Supervisors Role 360 degree feed back as a developmental tool performance management & reward systems performance linked remuneration system performance linked career planning & promotion policy

 Personal Development plans specify courses of action to be taken to improve performance. Development plan can be created for every job, ranging from entry level to the executive level. Development plan can be designed on each of the performance dimension evaluated.

Personal Developmental Plans answer:

How can I continuously learn and grow in the next year? How can I do better in the future? How can I avoid performance problems of the past?

Stakeholders in the Development Process

Employees
Help plan their own development Improve their own performance

Managers
Help guide the process of development Support success of process

Specify actions necessary to improve performance Highlight employees Strengths Areas in need of development

Personal Developmental Plans: Overview

Developmental Plan Objectives Content of Developmental Plan Developmental Activities

Overall Developmental Plan Objectives Encourage:

Continuous learning Performance improvement Personal growth

Specific Developmental Plan Objectives Improve performance in current job Sustain performance in current job Prepare employee for advancement Enrich employees work experience

Content of Developmental Plan 1. Developmental objectives

New skills or knowledge Timeline

2. How the new skills or knowledge will be acquired

Resources Strategies

Content of Developmental Plan

3. Standards and measures used to assess achievement of objectives 4. Based on needs of organization and employee

Content of Developmental Plan (continued) 5. Chosen by employee and direct supervisor 6. Taking into account
Employees learning preferences Developmental objective in question Organizations available resources

Developmental Activities On the job On-the-job-training Mentoring Job rotation Temporary assignments

Developmental Activities In addition to on the job Courses Self-guided reading Getting a degree Attending a conference Membership or leadership role
in professional or trade organization

Direct Supervisors Role:

Explain what is necessary Refer employee to appropriate developmental activities Review & make suggestions regarding developmental objectives
Check on employees progress Provide motivational reinforcement

 All employees have a plan All employees are entitled to development opportunities on an ongoing basis. Involvement of Managers The development plan becomes an integral part of PMS. The performance of managers is evaluated, in part, based on how well they manage the development process for their employees.

Factors Promoting Successful implementation of personal Development plan

360 DEGREE PERFORMANCE APPRAISAL

360-degree Feedback Systems Tools to help employees improve performance by using performance information gathered from many sources
Superiors Peers Customers Subordinates The employee

Necessary organizational norms include:

Cooperation Openness and trust Input and participation valued Fairness

Advantages of 360-degree Feedback Systems Decreased possibility of biases Increased awareness of expectations Increased commitment to improve Improved self-perception of performance Improved performance Increased employee control of their own careers

Risks of 360-degree Feedback Systems Unconstructive negative feedback hurts. Are individuals comfortable with the system? (User acceptance is crucial.) If few raters, anonymity is compromised. Raters may become overloaded.

Characteristics of a Good 360-degree Feedback System

Confidential Observation of employee performance Avoidance of survey fatigue Raters are trained

Characteristics of a Good 360-degree Feedback System

Used for developmental purposes only Raters go beyond ratings Feedback interpretation Follow-up

Quick Review
Personal Developmental Plans Direct Supervisors Role 360-degree Feedback Systems

Reward Systems

Reward Systems

Definition
Set of mechanisms for distributing Tangible returns
and

Intangible or relational returns

As part of an employment relationship

Reward Systems

Tangible returns
Cash compensation
Base pay Cost-of-Living & Contingent Pay Incentives (short- and long-term)

Reward Systems

Tangible returns (continued)

Benefits, such as
Income Protection Allowances Work/life focus

Reward Systems

Intangible returns
Relational returns, such as
Recognition and status Employment security Challenging work Learning opportunities

Returns and Their Degrees of Dependency on the Performance Management System

Returns with Low Dependency on the Performance Management System

Cost of Living Adjustment Income Protection Base Pay

Returns with Moderate Dependency on the Performance Management System

Work/Life Focus Allowances Relational Returns

Returns with High Dependency on the Performance Management System

Contingent Pay Short-term Incentives Long-term Incentives

NEED FOR Performance Management & REWARD SYSTEMS

Attracting & retaining best talent

Boosting the morale-motivational tool

Creating competitive environment for better performance Permeating a healthy organizational culture.

Traditional Pay Salary and salary increases are based on

Position Seniority

Performance linked Remuneration system

Pay for performance, also known by term Contingent pay, incentive Pay, or performance related pay, is a practice in which the employee compensation has a variables component that can be linked to either individual, department, or organizations performance in term of reaching or exceeding certain targets. Pay for performance, means that individual are rewarded based on how well they perform on the job. Thus employees receive increased in pay based on wholly or partly on the job performance.

Reasons for Introducing CP (1) Performance management is more effective when rewards are tied to results CP Plans force organizations to:
Clearly define effective performance Determine what factors are necessary

Reasons for Introducing CP (2)

Supervisors and employees are better able to understand what really matters
CP plans enhance employee motivation to accomplish goals that match organizational needs

Reasons for Introducing CP (3) CP plans help to recruit and retain top performers CP plans project good corporate image

CP plans help improve motivation when:

Employees see clear link between their efforts and resulting performance (Expectancy) Employees see clear link between their performance level and rewards received (Instrumentality) Employees value the rewards available (Valence) motivation = expectancy x instrumentality x valence

Types of Pay for Performance

Individual incentives: they link individual effort to pay. Group incentives: they link pay to the overall performance of the entire group. Organization-wide incentives: here employees are rewarded on the basis of the success of the organization over a specified time period.

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Individual Incentive Plans

Halsey plan: Here the worker gets a guaranteed wages based on the time, irrespective of whether the assigned work is completed or not. If the worker is able to finish the task in less than the standard time, he or she is entitled to get fifty (in some cases one third) per cent of time saved at time rate in addition to normal time wages. Rowan plan: It assures minimum time wages. Bonus is paid on the basis of time saved. But unlike a fixed percentage , it is calculated thus Bonus = Time saved/Standard time X Time taken X hourly rate Gantt task and bonus plan: Here time wages are guaranteed. Standard time for each task is fixed. Workers, who fail to finish the job within the time limits, get time wages. A worker who reaches the standard is paid time wage plus bonus at a fixed percentage (20 per cent)of normal time wages. If a worker exceeds the standards, he is paid a high piece rate.

Compensation Administration

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Individual Incentive Plans

Bedeaux plan: In this plan every operation is expressed in terms of standard minutes called as B's representing one minute. A worker gets time wages for 100 % performance; ie, finishing the job exactly as per standards set. If actual performance exceeds the standard performance in terms of B's then 75% of the wages of time saved is paid to worker as bonus and 25% is given to the foreman. Haynes manit plan: It is more or less like the bedeaux plan. Here the bonus is only 50 per cent as against 75 per cent, being paid to the efficient worker. Of the remaining 50 per cent, 10% goes to the foreman and the rest to management. Emerson's efficiency plan: If the worker achieves 67% efficiency, he gets bonus at a given rate. The rate of bonus increases gradually from 67% to 100%. Above 100% bonus will be at 20% of the basic rate plus 1% for each increase in efficiency. Accelerate premium bonus plan: Here the premium is paid at varying rates for increasing efficiency.

Compensation Administration

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Group or Team Based Incentive Plans

Here all team members receive an incentive bonus payment when production or service standards are met or exceeded. Methods in this category include Preistmans production bonus, Rucker plan, Scanlon plan, Towne plan and Co partnership. Under co partnership, the worker gets his usual wages, a share in the profits of the company and a share in the management of the company as well.

Compensation Administration

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Organisation Wide Incentive Plans

These plans reward employees on the basis of the success of the organisation over a specified time period.

Profit sharing: Here the organisation agrees to pay a particular portion net profits (given in cash or in the form of shares) to eligible employees.

of

Gain sharing: It is based on a mathematical formula that compares a baseline of performance with actual productivity during a given period. When productivity exceeds the base line an agreed upon savings is shared with employees. Unlike profit sharing plans which have deferred payments, gain sharing plans are current distribution plans. These are based on individual performance and are distributed on a monthly or quarterly basis. Employee stock ownership plan: It provides a mechanism through which certain eligible employees (based on length of service, contribution to the department etc) may purchase the stock of the company at a reduced rate.

Compensation Administration

Problems with performance linked remuneration Motivation is influenced by factors other than pay. Employees may focus only on certain objectives Rewards are not considered significant. Financial constraints may limit performance linked
remuneration-

Poorly implemented management system is in place. Managers are not accountable

Recommendations
Define and measure performance first, then allocate rewards Use only rewards available Make sure that all employees are eligible Make rewards visible Make rewards contingent Make rewards timely

Questions to be answered before installing

performance linked remuneration system Will the proposed scheme motivate people? Is there an effective performance management process in place? Can managers be trained to rate performance fairly and equitably? Will there be enough money available to provide worthwhile rewards?

Performance linked career planning

A frequently neglected component of an effective performance management process is employee career development. The opportunity to grow and develop is cited by employees as one of the factors most important to them in the workplace. So, a good career development process works to develop staff, retain your best employees, and attract talented people to your organization.

Performance linked career planning

Based on Performance appraisal , add development plans and individual goal settings to an employee.

Career Planning Process

Based on Performance Management Performance management system system Identify
Your Strengths (e.g., creativity, leadership, communication)

identify
Your Needs (e.g., income, growth, personal fulfillment)

Your Interests (e.g., people, numbers)

Identify Career Possibilities

Evaluate/Select a Career

Performance linked promotion policy

Performance appraisals are a management-evaluation process that provides feedback on employee performance. This evaluation and documentation of employee performance provides a basis for merit raises and promotions.
An organization seeking to promote its workers may choose to do so based on seniority to take advantage of the employees' experience with the organization and to reward them for their service. Another option is to promote based on merit, a measure of the employees' contributions based on performance.

Merit as a Basis of Promotion

Merit is taken to denote an individual employees skill, knowledge, ability efficiency and aptitude as measured from educational, training and past employment record. The merits of merit system of promotion are:

The resources of higher order of an employee can be better utilized at higher level. It results in maximum utilization of human resources in an organization. Competent employees are motivated to exert all their resources and contribute them to the organizational efficiency and effectiveness. It works as golden hand-cuffs regarding employee turnover. Further it continuously encourages the employees to acquire new skill, knowledge etc., for all-round development.

Disadvantage
Measurement or judging of merit is highly difficult. Many people, particularly trade union leaders, distrust the managements integrity in judging merit. The techniques of merit measurement are subjective. Merit denotes mostly the past achievement, efficiency but not the future success. Hence, the purpose of promotion may not be served if merit is taken as sole criteria for promotion.