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PERFORMANCE MANAGEMENT

PERFORMANCE MANAGEMET
A process that consolidates goal setting, performance appraisal and development into a single, common system, the aim of which is to ensure that the employees performance is supporting the companys strategic aims. 1. Defining performance 2. Appraisal Process 3. Measuring Performance 4. Feedback and coaching

PERFORMANCE APPRAISAL

Evaluating an employees current and or past performance relative to his or her performance standards. Appraisal plays an integral role in the employers performance management process Appraisal lets the boss and the subordinate develop a plan for correcting any deficiencies the appraisal might have unearthed and to reinforce things the subordinate does correctly. Serves as a useful career planning purpose by providing opportunity to review the employees career plans in the light of his or her exhibited strengths and weakness. Serves as an important tool to determine the employees salary rise and promotional decisions.

Strategic importance of Performance Management


Consistency between organizational strategy and Job Behavior Consistency between Organizational Values and Job Behavior

Functions of Performance Assessment- Developmental Use


Goal Setting Reinforcing and sustaining performance Improving performance Determining career progression Determining Training needs

Functions of Performance Assessment- Administrative Use


Linking Rewards to performance Evaluating HR Policies and Programs

Types of Performance to Measure


Trait Based Approach Behavior based Approach Results based Approach

Trait based Approach

Trait based approach is used to assess the personality or personal characteristics of employees such as ability to make decisions, loyalty to the company, communication skills, level of initiative. This approach focus on what a person is but relatively little about what he or she does, and as such concerns who performs the job. Disadvantage is difficulty to define accurately the different frames of reference used by different raters make agreement among raters unlikely.

Behavior based approach

Behavior measures are appropriate when the process used to accomplish the job is very important, and thus behavior measures are used to emphasize how a job is done. For e.g. the sales person should greet customers as they enter the store, help them find what they are looking for, take their payment promptly and thank them for their business.

Result based Appraisal


This approach measures the results of the work behavior. For e.g. how many cars an employee sold? How much profit the employee got in for the organization during the month? Despite their intuitive appeal, this approach pose questions of practicality, contamination and deficiency. Result based measures are difficult to obtain in some jobs for e.g. how do you assess the performance result of a high school teacher? Results are necessarily based on the individual employee. It can hamper team work as each employee is preoccupied to meet his/her individual results.

PERFORMANCE MANAGEMENT CYCLE


SET CLEAR, MEASURABLE PERFORMANCE GOALS AND MAKE DEVELOPMENTAL PLANS

ADMINISTRATIVE DECISIONS: 1. PROMOTIONS 2. TRANSFER 3. DISCIPLINE 4. PAY

MONITOR GOAL PROGRESS, UNDERTAKE DEVELOPMENT

ANNUAL APPRAISAL AGAINST GOALS, ADJUST GOALS AND PLAN FOR THE NEXT YEAR

COACHING BY SUPERVISOR THROUGHOUT THE YEAR

MONITOR GOAL PROGRESS, UNDERTAKE DEVELOPMENT

METHODS OF APPRAISAL

GRAPHIC RATING SCALE METHOD: A scale that lists a number of traits and a range of performance for each. The employee is then rated by identifying the score that best describe his or her level of performance for each trait.

4- Excellent (Exceeds Standards) 3 - Good (Fully Meets Standards)

2 Acceptable (Usually Meets

Standards) Standards

1 Unsatisfactory (Fails to Meet

METHODS OF APPRAISAL
ALTERNATION RANKING METHOD: Ranking employees from best to worst on a particular trait, choosing the highest to the lowest, until all are ranked. PAIRED COMPARISON METHOD: Ranking employees by making a chart of all possible pairs of employees for each trait and indicating which is the better employee of the pair.

FORCED DISTRIBUTION METHOD: is similar to grading on a curve. Predetermined percentages of ratees are placed in various performance categories. For e.g. you may decide to distribute employees like

15% high performers 20% low average performers 20% high-average performers 15% low performers 30% Average performers The proportion in each category need not be

FORCED DISTRIBUTION METHOD

10% 20%
POOR Below Average

40%
Averag e

20%
Above Average

10%
Excellent

CRITICAL INCIDENT METHOD: A supervisor keep a log of positive and negative examples of a subordinates work related behavior. Every six months, supervisor and subordinate meet to discuss the latters performance using the incidents as example. This method have several advantages. It provides actual incidents of good and poor performance the supervisor can use to explain the persons rating. The ratings does not just reflect the employees recent performances.

Narrative Forms of AppraisalBEHAVIORAL ANCHORED RATING SCALE

An appraisal method that aims a combination of the benefits of narrative critical incidents and quantified ratings by anchoring a quantified scale with specific narrative examples of good and poor performance.

BARS( behaviorally Anchored rating scale)


Step 1 Identify critical incidents Step 2. Select performance dimension Step 3. Retranslate the incidents Step 4. Assign scales to incidents Step 5. Develop final instrument

MBO- MANAGEMENT BY OBJECTIVES


MBO involves setting specific measurable goals with each employee and then periodically reviewing the progress made. It consists of six steps 1. Set the organizations goal 2. Set departmental goal 3. Discuss departmental goal 4. Define expected results 5. Performance reviews 6. Provide feedback

360 DEGREE ASSESSMENT


All round. A system where in the feedback is provided by not just the supervisors, but also by the peers, subordinates and the customers (internal and external). The methodology used for 360 degree is 1. questionnaire 2. interviews

CUSTOMER EVALUATION

This is method of assessing the performance from the feedback of the customers.

SELF MANGED TEAMS

COMPUTERIZED AND WEB BASED PERFORMANCE APPRAISAL

Using technology, Managers, keep note of subordinates performance through the year and then electronically rate them on a series of performance traits. There is a series of evaluation dimensions, including dependability, initiative, communication, decision making, leadership, judgment, planning and productivity.

Potential Rating Scale problem


Unclear standards, as in Graphic rating scale. The standards are too open for interpretation. Halo Effect: in performance appraisal the problem that occur when a supervisors rating of a subordinate on one trait biases the rating of that person in other traits. For e.g. supervisor often rate unfriendly employee lower on all traits rather that just for the trait gets along well.

Potential Rating Scale problem


Central Tendency: A tendency to rate all the employees in the same way, such as rating them all average. For e.g. if the rating scale is between 1 and 6, there is a tendency to rate employees between 3 and 5 , by avoiding 1 and 6 which are the low and the highs. Hence it will not provide useful data for the purpose of promotion, salary or counseling purpose. Leniency or Strictness: Supervisors tend to rate all their subordinates consistently high or low.

Who should be appraising


1.

2.
3. 4. 5.

The immediate supervisor Peer Appraisal Rating committee Self Ratings Appraisal by subordinates

Performance criteria for executives


For top managers 1. Return on capital employed 2. Contribution to community development 3. Degree of upward communication from for middle-level executives 4. Degree of growth and expansion of enterprise

For middle level managers 1. Departmental performance 2. Coordination among employees 3. Degree of upward communication from supervisors 4. Degree of clarity about corporate goals and policies

For supervisors 1. Quality and quantity of output in a given period 2. Labor cost per unit of output in a given period. 3. Material cost per unit in a given period 4. Rate of absenteeism and turnover of employees 5. No of accidents in a given period

Review
1. How would you design a performance appraisal system based on behaviors, outcomes or both? Why would you design it this way?

Excercise
Of the companies that are consistent top performers, none use forced rank system. Proponents of the forced ranking see the system as a means of quick exchange of personnel in a way that lifts the average level of performance level of the organization. Critics see this approach as a possibility of damaging the culture and camarderie in the organization

1.

2. 3.

What is the expected impact of forced ranking system on the performance of the organization? What would be impact on the culture of the organization? Is it better to exchange a poor performer or try to develop and improve the worker?

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