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NAME: NEELAM ASWAL

ROLL NUMBER: 521131210

LEARNING CENTER: 02882

SEMESTER: 4th

SUBJECT NAME: Performance Management and

Appraisal

MODULE NO. : SET-2

DATE OF SUBMISSION

AT THE LEARNING CENTRE: 10th Dec 2012

FACULTY SIGNATURE:

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Master of Business Administration- MBA Semester 4

MU0016 Performance Management and Appraisal(Book ID: B1337)

Assignment Set-2

Q1. What are the aims of

Performance Management.

Ans.

One of the important objectives of performance management is identifying thestrengths and weaknesses of employees and finding ways to overcome theirshortcomings. This is done by evaluating employee output and the companysoverall ability to meet the goals by having quarterly or annual audits. Often, afteran evaluation, there will be widespread company meetings where managers andemployees discuss concerns and solutions to problems.

Another objective is to discover where employees and the company are fallingshort. This is done by going through details such as profits earned, new clientsacquired and the contribution of employees to make these things happen.Employees whose contribution are minimal or not up to the mark are counselledon how to improve performance.

The evaluation of an employees performance is based on their work output andthe amount of time spent by them on the project. Although time spent in an officeis not an accurate way of measuring performance, most companies still have thenotion that better employees put in longer hours of work. A better way ofmeasuring employee productivity would be to measure the output of work and theaccuracy of work completed.

Overall evaluation of a company and its ability to set and reach goals is anotherimportant objective of performance management. Increasing revenue is the overallgoal of any company. Other goals may be to acquire more or specific clients,develop new products or hire new talent. It is very easy to determine which ofthese goals have been met, because these are things that can be seen or calculated.

The inability of a company to meet the goals is mainly due to poor leadership,poor planning, poor implementation or poor employee performance. Economicfactors also play a major role, but it is better for companies to concentrate onfactors that are within their control. The best way of improving a companysoverall output is motivating the employees and improving their performance.

To identify and remedy situations that hinder company performance is anotherimportant objective of performance management. This includes replacingunderperforming employees, gaining new clients, developing new strategies forreaching the goals and discussing strategies that have worked in the past.

In order to meet the objectives of performance management and improve theoverall performance of a company, every employee must work with the teammembers to develop new techniques and implement changes.

The aims of performance management can be summarised into the following points.

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The aims of performance management are: To assist in the achievement of enhanced standards of work

performance of an employee or class of employees.

To assist employees to identify the knowledge and skills to performtheir jobs efficiently. o To ensure that the employees work towardsthe defined goals.

To ensure that the employees receive regular feedback on performance. To assist the employees to achieve personal growth through acquiring

relevant knowledge and skills and attitudes. To evaluate the company and its ability to set and reach goals. To identify and remedy situations that are hindering company performance.

Q2. What are the features of aPerformance management framework?

Ans.The Performance Management Framework is a group of performance-relatedprocesses and methodologies, sequenced and integrated to effectively raiseorganisational awareness of performance management. A good performancemanagement system helps organisations achieve their aims and objectives. Thetwo important business processes that help in performance management are

focusing on team performance and motivation.The focus on team is very important, because on a wider perspective, the entireorganisation is nothing but a big team, trying to achieve a common goal that isprofit for the organisation. Understanding how a team works and usingmethodologies to improve team performance leads to organisational growth andsuccess. In this unit, we will discuss the various aspects of improving teamperformance.

Motivation is another important factor for organisational success. The employeesare the biggest asset of an organisation. Motivation helps to make employees workto their full potential, which in turn leads to individual as well as organisationalgrowth. Managers should understand the process of motivation and use them

effectively. In this unit, we will discuss the process of motivation and the linkbetween performance and motivation.

Learning Objectives

After studying this unit, you should be able to:

describe the importance of focusing on teamperformance. discuss motivation andperformance management. explain theprocess of motivation.

Focussing on Team Performance

A team consists of two or more individuals. These individuals have specific role

assignments. They must perform specific tasks and must interact or coordinate to

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achieve a common goal or outcome. In addition, teams make decisions, havespecialised knowledge and skills and often work under conditions of highworkload. Teams can be distinguished from small works groups on the basis of thefact that teams have unique requirements for coordination and taskinterdependency. Teamwork normally involves team members adjusting to eachother either sequentially or simultaneously in order to achieve team goals.

The need for shift

In the past, the focus was on performance management of individuals. But,today, organisations have realised that results are achieved by team effortsalthough individuals are also important. Individual focused performancesystems will only propagate divisiveness and may even hamper teamwork.

The changed global scenario has brought in a new era which is called thecompetence era. This competence era further perpetuates individualperformance management rather than team performance management. This ismainly because of the pressure to differentiate. The various sources ofpressure are:

Differentiated paypackets. Need for

competentmanagers.

Willingness of some organisations to pay any amount for competent individuals.

Enhanced salary structure forcing every organisation to compute return oninvestment on each employee or value addition of each employee.

With all these influences, it is understandable that the corporate sectorcontinues to focus on individual performance.The following realities indicatethe need for refocusing performance management on group or teamperformance in addition to individual performance:

Strategic thinking, employee motivation, leadership, development and teammanagement competencies are critical at higher organisational levels and make alot of difference. The performance management indicators are most often teamperformance based rather than individual performance. The team performance oroutput is an indicator of the individual leaders competence and there could beseveral cases where the team performs in spite of the leader and not necessarilydue to the leader. In such cases, the team should be given adequate importance andteam performance should not be merely attributable to the leader.

It becomes very difficult to quantify and measure the performance of individualsenior managers. Since performance indicators are qualitative and cannot bereduced to numbers, the measuring instruments fail to measure performance ofmanagers.

Managers often blame the team for poor performance. They say that they havedone their best as individuals, but the team has not performed at its best. Some ofthem say that they have done their best but there are many factors beyond theircontrol.

Organisations have to develop team chemistry and leadership has to help makeit work. Team chemistry could be managed better if team performance isfocused. By focusing on team performance, the organisation is creating someenablers for the team leader to be effective. Combined performance andoverall outcomes are likely to be better if the focus is on the team, rather thanon the individual.

Measuring team performance is easier and is more objective thanmeasuring the individual performance at higher levels.

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Focusing on team performance allows tackling many dimensions simultaneously,as compared to individual performance.

Team performance is always closer to the organisational performance ratherthan individual performance.

Top level performance can be measured mainly in terms of team performance.

The above considerations make it necessary to recognise the importance ofteam performance management besides managing individual performance.

Q3. Explain the two psychosomatic approaches of the

reward system within an organisation.

Ans.The reward system within an organisation follows either of the two

psychosomatic approaches towards reward.

Operant Conditioning: Harvard psychologist B.F. Skinner was a master in the fieldof behaviorismin the late 1930s and continued his contributions through the mid-

1970s. Operant conditioning is one of the key concepts of this school ofpsychology. Skinner called his brand of conditioning as operant conditioning, todistinguish it from classical conditioning the conditioning theory developed by theRussian physiologist Ivan Pavlov. Operant conditioning is a term used to explainbehaviour, which has been encouraged by reward or discouraged throughpunishment. For example, if a mother wants her son to clean his room then shemay give him some sweets every time he cleans it. Given an adequate amount of

time, the boy will start to clean his room more frequently, since he knows that hewill get some sweets in return. As a result, the boys behaviour (cleaning his room)is modified (conditioned) because he has learnt to associate that behaviour with areward.

Although this may sound similar in principle to classical conditioning (discussedbelow) it is in fact diverse, because operant conditioning entails actions on the partof the learner.

Classical conditioning: It is a term used to explain learning, which has beenacquired throughexperience. You are well aware that in order to learn something,you first need to experience it at the level of sensation through your five senses, as

without your senses learning would be virtually impossible. For example, yourfriend teaches you how to play cricket. However, later you get a qualified coachwho improves and changes your technique for betterment.

Once an organisation rolls out the reward system, many of the antagonists ofreward management and system often refer to some examples that haveconfirmed that rewarding can affect organisational performance negatively.

For example, Heinz Company decided to pay a bonus to its managers, if theymanaged to improve the profits as compared to the previous year. As a result, themanagers started to manipulate returns and profits by hastening or acceleratingdeliveries to customers. By performing this, the managers compromised on thequality of the deliverables which in turn, affected the long-term growth as well as

the brand value of the company.

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Similarly, another example is at Maruti Suzuki mechanics working for a car repairbusiness were rewarded according to the income produced through repairsrequested by customers. As a result, mechanics started making unnecessary andpointless repairs. This led to temporary closing of all the Maruti Suzuki car repairshops in the country.

The above examples illustrate that, all too frequently, organisations see rewardingas a quick fix, without investigating the possible contradictory results or sub-optimal effects, which might be inherent in some reward systems. Nevertheless, it

is an established fact that a good reward system, which takes the organisationalgoals as well as the employees preferences into account, will certainly direct theemployees to better their performance. The following is a good example:

Tyco laboratories decided to have an incentive compensation plan that is directedtowards improving and maintaining the commercial spirit, drive and originality ofmanagers, who think and act like owners. To make this happen and keep themanagers motivated, the company follows a tangible incentive plan, which isdirectly tied to each business units performance in terms of profits. This has workedvery well for the company.

Q4. State the four essential components of 360 degree appraisal.

Ans.

The 360 degree appraisal works on four essential components:

Self appraisal: Self appraisal gives a chance to the employee to compare his/herabilities,limitations, success with others and judge ones own performance. Selfevaluation is an essential part of 360 degree appraisals and therefore contributionof employees to 360 degree performance systems is large and also has a powerfuleffect on attitude and performance. It provides a "360-degree evaluation" of theemployees performance and is measured to be one of the most realisticperformance appraisal methods.

Superior appraisal: Superiors appraisal outlines the traditional thought of

performance appraisal,where the employees tasks and actual presentation is ratedby the superior. This form of assessment involves the evaluation of individuals bysupervisors on pre- determined parameters in an employees performance record,as well as the evaluation of team and work scenario by senior managers.

The superiors (supervisors and senior managers) have the authority to change andmodify an employees or a teams work on the basis of the assessment of theindividual and the team. Subordinate appraisal: Subordinates feedback involvesthe evaluation of an individual on parameters like communication and convincingabilities, superiors ability to assign the work, team leading qualities and so on.

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Subordinate appraisal: Subordinate appraisal is most advantageous whendevelopmental needsare considered. It can also be used in the evaluation of recordsheets, but measures should be taken to make sure that subordinates areappraising parameters of which they have knowledge. The subordinates feedbackis effective, mainly in evaluating the supervisors interpersonal skills. However, it

may not be as proper or convincing for measuring task-oriented skills.

Peer appraisal: Peers usually have an exclusive point of view on a colleagues jobperformance andindividuals are generally very friendly to the idea of rating eachother. Peer ratings are considered when the individuals capability is known or theresult of the performance can be computed. There are both considerable assistanceand serious consequences that must be cautiously considered before including thistype of feedback in an all-round appraisal program.

Taken as an effective developmental tool and conducted periodically, a 360 degreeapplication can prove to be highly useful in keeping the track of alterations in others

perceptions about the employees. A 360 degree appraisal is generally moreappropriate at the managerial level, as it helps in evaluating their leadership andsupervision styles. This method is being successfully used around the globe forimproving performance. Some of the companies that have been successfullyfollowing 360 degree appraisals are TCS, Microsoft and Wipro Technologies.

Q5. What are the steps to be followed while

building an ethical organizational culture?

Ans.An ethical organisation culture is one which supports and promotes ethicalbehaviour within the organisation. The building of an ethical organisationculture requires:

o A clear definition of the core values of theorganisation. o Selection of the most aptpersonnel.

o Rewarding of excellent ethicalbehaviour. o Keeping a check onunethical behaviour.

o This section will give us an insight into the guidelines for building suchorganisation cultures keeping in mind the performance practices followed inIndia.

Let us first look into the ethics strategy involved to create an ethical organisation.

The ethics strategy must be concerned with ensuring that all the organisationalactivities are ethical, legal, and within all the prescribed regulatory guidelines. Theactions, be it right or wrong, generally arise from character. An ethics strategyshould provide the road map to guarantee the ongoing development of both theindividual as well as the organisational character. This can be achieved through theintroduction of ethics programs to train the employees. It is important that the

ethics strategy provides for monitoring and policing organisational activities so as

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to reduce and thus prevent ethical and legal violations. Ethics programs havebecome increasingly important, because a recent case law states that individualboard members can be held liable for ethical lapses, in case ethical plans andprograms are not incorporated.

While developing an ethics strategy, regulatory requirements should be the primeconsideration, as they impose a minimal, de facto ethical standard on everyorganisation. The plans and programs that are to be established should ensure thatthe organisation is in complete agreement with all these regulatory requirements.

Once these regulatory requirements have been addressed, organisations can thenwork towards the enhancement of their corporate character.

The ethics program should consist of a series of ethical training modules that isdesigned in such a way to educate and build ethical character on an individualbasis. The ethics programs and training lay the necessary foundation required toensure a continuous and deepening response to ethical issues as they arise foremployees on the job.

Eight steps to be followed while building an ethical organisational culture:

1.The right leader: An organisation can never be ethical unless the managers arerole models forethical behaviour and set the standards. They need to be clear about

their values and exhibit them in actions as well as words.

2.A clear purpose and strategy: Three differences between companies thatachieved highperformance levels over long time spans and companies that failedwhen they reached a certain size were that the companies:

Aimed on short term gains, and not on thelong term value. Did not have a clear strategy.Badly mismanaged risk.

A focus on doing the right thing: For an ethical culture to prevail, it is important for theemployees to feel responsible and accountable for their actions. Creating an environment

where employees can stand up for what they believe is right and take responsibility isessential. Without it there cannot exist an ethical culture as small and large dailywrongdoings will tend to go unchecked. It is the regular employees who are aware of whatgenerally goes on. The negative aspects are generally hidden from the management. Hence,the organisation has to create a strong culture of speaking up and standing up for what theybelieve is right.

4.Hire the right people: It is important to hire people with the right values, skills andknowledge.Interviews and assessment programs should be designed such that they helpthe managers to explore what people have done in certain situations and should be ableto ask them about their rationale for their actions.

5.Fire the wrong people: If you do not fire employees for wrongdoing, you may be sendingout awrong message that behaving ethically does not matter all that much. Actions, as weall know, speak louder than words and people become very sceptical if they see their seniormanagers advocate one thing and do another.

6.Run training courses on values and ethics: It is very difficult to spot an ethical situationin thefirst place, then only comes advocating the best way to handle it. All employeesshould be educated with the required knowledge and skills so as to identify and tackleethical situations. Running mandatory ethics training for everyone in the company willconvey the message that ethics is of high priority.

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7.Reward people for doing the right thing and challenge them when they do the wrongthing: Itrequires a lot of courage to raise concerns about the actions of colleagues. Peopleshould be encouraged to do so by rewarding them. This could be in the form ofappreciation from the management which could include a positive mark in theirperformance appraisal. People often do not question the wrongdoing for fear of isolationfrom colleagues and management. Hence, care should be taken to see that they are activelyencouraged to do so.

8.Do not tolerate mistakes: Generally, when people are afraid to make mistakes they tendto eitheralways play it safe or cover up any errors for the fear of punishment.

As seen, each of the systems is inter-linked. Neither of the four are independents.This just goes on to show how ones success is dependent on the other, that is, theyare all inter-related. And how, all these together can lead to the success of theorganisation as a whole.

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Q6. The HR department of a software company reviewed the

performance of the employees. The HR Manager wants to

provide feedback of the performance review to the

employees. Describe the factors that have to be looked into

while providing performance review feedback.

Ans.

Performance Appraisal Feedback Models help us to achieve what is knownas a meaningful performance feedback. Meaningful performance feedback,as we know, is best achieved through proper communication between thefeedback giver and the feedback receiver. Irrespective of who provides thefeedback to the receiver, there are certain perceptual barriers that thesecommunications have to travel through. These barriers act as filters andthus affect the actual message that is heard.

Different variables of performance feedback have been incorporated into afeedback model. We see that the variable for both the giver and the receiverof feedback is determined by the perceptions of the participants.

GIVER P RECEIVER

E

Biases R Receptivity

Security C Growth

Experience E Commitment

Communications

P

Goals

Sensitivity

T

Self-Esteem

Expectations

I

Motivators

Values

O

Values

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N

S

The above chart lists only a few of the endless list of possible variables thatthese perceptions can create.

Reading further will help us to get a clear understanding of how perceptionsof different participants affect the feedback.The Said/Heard Meant/Felt Feedback Matrix

The Said/Heard Meant/Felt Matrix, should help give more clarity to theconcepts introduced in the above chart.

Heard

Said Meant

Felt

The Said/Heard Meant/Felt Matrix can be used in any way or direction. Thisimplies that the matrix can be applied vertically, horizontally, counterclockwise, and clockwise. It can be used either by the giver or the receiver ofperformance feedback or both. The aim of the matrix can be achieved onlywhen all the participants in the performance feedback process use it.

To illustrate how the matrix can be put to work, let us begin by usingthe matrix in a clockwise direction starting at the 9:00 oclock position.From this point we begin with what is Said.Let us label the four quadrants A, B, C, and D as shown in Figure 10.3.

Heard

A B

Said Meant

C D

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Felt

Now, let us look at how the matrix can used during a typical performance review.

In Quadrant A, the feedback giver has said, You could have contributedmuch more to the project. This is where the challenge arises, wherein the

statement must now pass through the perception barrier that has beenrepresented as the vertical axis of the matrix.

Let us now look into what has been heard by the receiver.

After passing through the receivers perceptual barrier, you can see inQuadrant B that what was heard was I have not done my part well. Now,we must understand that this may or may not have been what thefeedback giver would have actually meant.

Quadrant C, the giver now clarifies to the receiver the intended meaning ofhis message shown in the Quadrant A statement.In Quadrant C, it is observed that the feedback givers meaning was very

different when compared to what was perceived by the receiver.Now the receivers feeling towards this feedback has been illustrated in Quadrant D

in Figure 10.7.

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A

Giver: You could have contributed much more to the project.

Said

D

Receiver: If I work hard, I can grow well in the company

P

B

E

Receiver: I have

not done my part

R well

C

E Meant

P

T

C

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I

Giver: You have

performed well, but

O there is lot more you

can do, given your

Npotential

S

Felt

Utilising the matrix, We observe that there is a dramatic contrast between what thereceiver perceived the performance feedback message to be in Quadrant B versus

what the message actually meant in Quadrant D. The issue with many performancereview sessions is that the communications end at Quadrant B. Thesemisinterpretations can be very counterproductive and will not support the goalsand objectives of providing feedback. Hence, by using the matrix, the giver of thefeedback can understand how the feedback has been perceived by the receiver andthen try to clear the misunderstandings. The matrix can also be used by the receiverto get clarification on points that were not made clear during the performancereview.