UNIT -III

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.

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.

According to Flippo- “performance appraisal is the systematic, periodic and an impartial rating of an employee’s 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.

The process by which an employee’s contribution to the organization

during a specified period of time is assessed.

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

Performance Feedback

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.

Recruitment

Selection

Training & Carrer Development

Compensation

Promotion & transfer

PPAA

Unclear Language

Mgr not taking PA seriously

Mgr not prepared

No on-going feedback

Mgr not honest orsincere

Ineffective discussion

Lack appraisal skills

Mgr Lacks Infor.

Insuff. Rewards

SUPERIORSUPERIOR

CUSTOMERSCUSTOMERS

TEAM

SUBORDINATESSUBORDINATES

PEERS

PEERS

SELFSELF

Leniency or Strictness Error

Similar-to-Me Error

Contrast Error

Error of Central Tendency Recency Error

Common Appraisal Errors

to Address in Training

Common Appraisal Errors

to Address in Training

Descriptive report

Prepared at the end of the year

Prepared by the employee’s immediate

supervisor

The report highlights the strengths and

weaknesses of employees

Prepared in Government organizations

Does not offer any feedback to the

employee

The rater is asked to express the strong as

well as weak points of employee’s behavior

The rater considers the employee’s :

Job knowledge and potential

Understanding of company’s programs,

policies, objectives etc

Relation with co-workers and supervisors

Planning, organizing and controlling ability

Attitude and perception

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

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 employee’s 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

manager’s 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.

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 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 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

Step 1:Org. goals

Step 2:Dpt. Goals

Step 2:Dpt. Goals

Step 5:Interimreview

Step 5:Interimreview

Step 5b:New inputs are then

provided

Step 5b:New inputs are then

provided

Step 5a:Inappropriate goals/metrics

deleted

Step 5a:Inappropriate goals/metrics

deleted

Step 4:Mutual

agreement

Step 4:Mutual

agreementStep 3:

Sbt. proposes Goals

Step 3:Sbt. proposes

Goals

Step 3:Spvr lists

goals .

Step 3:Spvr lists

goals .

Step 7:Review org. performance

Step 7:Review org. performance

Step 6:Final

review

Step 6:Final

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 organization-

wide 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 short-term 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.

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

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,

superior’s 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.

RelationshipsRelationships

AdaptabilityAdaptability

LeadershipLeadershipCommunicationCommunication

PersonalPersonalDevelopmentDevelopment

DevelopmentDevelopmentof Othersof Others

ProductionProduction TaskTaskManagementManagement

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