PERFORMANCE MANAGEMENT

WHAT IS PERFORMANCE?

 Performance is what is expected to be delivered by an individual or a group

of individuals within a time frame.

It can be in terms of Results, Task and quality with specifications and

conditions under which it is to be delivered.

PERFORMANCE EQUATION

It is a factor of three sets of factors:

Ability or Competence to perform various tasks that leads to performance
Motivation to carry on each of these tasks
Organisational Support

DIMENSIONS OF PERFORMANCE

Output or Result: measurable dimension, describes the consequence of

inputs in a summary form, or a final or semifinal product form or service
form

Input: Activities or tasks accomplished by the individuals, individual

abilities and traits

Time: Performance management is time-bound

PERFORMANCE MANAGEMENT

Performance Management is an integrated process of defining, assessing and

reinforcing employee work behaviour and outcome.

PM is a continuous process of identifying, measuring and developing

performance of individuals and teams and aligning performance to the
strategic goals of the organisation.
PERFORMANCE APPRAISAL
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 It involves collecting and disseminating performance data to improve work

outcomes.

It is a systematic process of assessing work-related achievements, strengths

and weaknesses.

Performance appraisal systems usually do not extensive and ongoing

feedback that an employee use to improve his performance.

I does not include strategic business consideration.

It is a once-a-year event that is driven by HR department whereas PM is a
year-round process.

CONTRIBUTION OF PERFORMANCE MANAGEMENT SYSTEM

 Motivation of performance is increased.

Self-esteem is increased.
Managers gain insight about subordinates.
The definition of job and criteria are clarified.
Self-insight and development are enhanced.
Administrative actions are fair and appropriate.
Organisational goals are made clear.
Employees become more competent.
Timely identification of poor and good performers.
Supervisors' views of performance are communicated more clearly.
Organisational change is facilitated.

DISADVANTAGES OF POORLY IMPLEMENTED PMS

Increased turnover
Use of false or misleading information
Lowered self-esteem
Wasted time and money
Damaged relationships
Unjustified demands on managers resource
Varying and unfair standards of ratings
Emerging biases
Decreased motivation to perform
Employees job burnout and job dissatisfaction
PURPOSES SERVED BY A PMS

Strategic: To help the top management achieve strategic business objective

Administrative: To furnish valid and useful information for making
administrative decisions about employees

Informational: To inform employees about how they are doing and about the
organisations and supervisors expectations

Developmental: To allow the managers to provide coaching to their

employees

Organisational Maintenance: To provide information to be used in

workplace planning and allocation of human resources

Documentation: To collect useful information that can be used for various

purposes (e.g., test development, administrative decisions).

PERFORMANCE MANAGEMENT PROCESS

COMPONENTS OF PERFORMANCE MANAGEMENT PROCESS

Prerequisites
Performance Planning
Performance execution
Performance assessment
Performance review
Performance renewal and recontracting
PREREQUISITES

Knowledge of organisations mission and strategic goals

Knowledge of the job in question
Job Analysis
Information regarding the task and KSAs (Knowledge, Skill and Ability)

EXAMPLE OF KSA

Knowledge: A body of information, usually of a factual or procedural nature,

that makes for successful performance of a task (e.g., Knowledge of the
development, scoring and application of employee performance appraisal
system)

Skill: An individuals level of proficiency or competency in performing a

specific task (e.g., Skill in using a bank proof machine to process 50 checks
per minute without error.).

Ability: Refers to having the physical, emotional, intellectual and

psychological aptitude to perform the work (e.g., for a truck driver- physical
and spatial abilities needed to turn narrow corners).
PERFORMANCE PLANNING

It includes the consideration of results and behaviour as well as the

developmental plan.
PERFORMANCE EXECUTION

It includes the following factors Commitment to goal achievement

Ongoing performance feedback and coaching
Communication with supervisor
Collecting and sharing performance data
Preparing for performance review
PERFORMANCE ASSESSMENT

 In the assessment phase, both the employees and the manager are
responsible for evaluating the extent to which the desired behaviours have
been displayed, and whether the desired results have been achieved.
PERFORMANCE REVIEW

The performance review stage involves the meeting between the employee
and the manager to review the assessments.

Employee receives feed back on his performance.

It should include employees developmental progress as well as palns for the
future.
PERFORMANCE RENEWAL AND RECONTRACTING

This is identical to the performance planning stage.

Additionally, it uses information gathered during the review period to make
adjustment as needed.
APPROACHES TO MEASURING PERFORAMNCE
TRAIT APPROACH

Measures the extent to which employees possess traits or characteristics like

dependability, creativity, initiative, leadership etc.

A trait approach emphaises individual traits that remain fairly stable

throughout an individuals life span (e.g., cognitive abilities or personality).

The approach is base on the assumption hat the positive relationship is found
between abilities and personality traits and desirable work -related
behaviour.

RESULTS APPROACH

A results approach emphasises the outcomes and results produced by

employees.
BEHAVIOUR APPROACH

A behaviour approach emphasises what employees do (i.e., how work is

done).

DISADVANTAGES OF TRAIT APPROACH

Traits are not under control of the individual.

Traits may not reflected in productive behaviour.

RESULTS APPROACH

It is based on
Goal Setting
Performance Appraisal
Rewards Systems
MEASURING RESULTS

Determining Accountabilities
Determining Objectives
Determining Performance Standards
DETERMINING ACCOUNTABILITIES

Accountabilities are the various areas in which an individual s expected to

focus.

Accountabilities are determined considering Job analysis and unit and

organisation level strategic priorities.

Relative degree of importance of the accountabilities are determined.

DETERMINING OBJECTIVES

Objectives are statements of an important and measurable outcome that

when accomplished, will help ensure success of the accountability.

Objectives are set for each accountability.

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CHARACTERISTICS OF GOOD OBJECTIVES

Specific and clear

Challenging
Agreed upon
Significant
Prioritized
Bound by time
Achievable
Fully communicated
Limited in number

DETERMINING PERFORMANCE STANDARDS

These are yardsticks designed to help people understand to what extent the
objective has been achieved.

Standards can refer to various aspects of a specific objectives, including

quality, quantity and time.

Standards must include an action, the desired result, a due date, and some
type of quality or quantity indicator.

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 Reduce overtime from 150 hours/month to 50 hours/month by December 1,

2009 at a cost not to exceed Rs. 12,000/-.

Standard usually describe fully satisfactory performance.

Minimum performance and outstanding performance are to be mentioned.

Minimum Performance- Reduce overtime from 150 hours/ month to 75
hours/month by December 1, 2013 at a cost not to exceed Rs. 12,000/-.

Outstanding Performance: Reduce overtime from 150 hours/ month to 40

hours/month by October 1, 2013 at a cost not to exceed Rs. 12,000/-.

CHARACTERISTICS OF GOOD PERFORMANCE STANDARDS

Related to the position

Concrete, specific and Measurable
Practical to measure
Meaningful
Realistic and achievable
Reviewed regularly
MANAGEMENT BY OBJECTIVES

MBO is a process whereby the superior and subordinate managers of an

organisation jointly identifies its common goals, define each individuals
major areas of responsibility in terms of results expected of him, and use
these measures to guide the operations of units and assessing the
contribution of its members.

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MANAGEMENT BY OBJECTIVES

Five basic steps:

Set organisational goals
Joint goal setting
Performance Review
Set checkpost
Feedback
MANAGEMENT BY OBJECTIVES

Advantages:
Focus on performance
Supervisors play more supportive roles
Employees actively participate in goal setting
Increases employee motivation
Reduces role conflicts and role ambiguity
It provides more objective appraisal criteria
MBO forces and aids in planning
MBO is developmental

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 Disadvantages:
All leadership styles may not be compatible with the participative culture
advocated by MBO.

All jobs do not fit in with the philosophy advocated by MBO.

Each person will have different sets of goals of non-comparable complexity
and degree of accomplishment.
MEASURING BEHAVIOUR

Identify Competencies (Critical Attributes)

These are measurable clusters of KSAs that are critical in identifying how
results will be achieved.

Identify indicators ( behavioural manifestations) of underlying competencies

(Critical Attributes).

Choose an appropriate measurement system, either absolute or comparative.

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COMPARATIVE AND ABSOLUTE BEHAVIOURAL MEASUREMENT

SYSTEMS

COMPARATIVE
Simple Rank Order
Alternation Rank Order
Paired Comparison
Forced Distribution
ABSOLUTE
Essays
Behaviour Checklist
Graphic Rating Scale
Critical Incidents
Ranking Method

Employees are ranked from best to the worst.

Relatively easy and inexpensive.

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Paired Comparison Method

The appariser ranks the employees by comparing one employee with all
other employees in the group, one at a time.

FORCED DISTRIBUTION METHOD

Evolved by Joseph Tiffin

Requires the rater to appraise an employee according to a pre-determined
distribution rating scale.

Rated only on two factors: Job Performance and Promotability

A five-point performance scale is used without any descriptive statement.
Employees are placed in certain ranked categories.
This method eliminates central tendency and leniency biases.
This method is based on rather questionable assumption that all groups of
employees have the same distribution of excellent, average and poor
performers.

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ESSAY OR FREE FORM APPARISAL

The method requires the manager to write a short essay describing each
employees performance during the rating method.

Emphasises evaluation of overall performance.

Time consuming
Not amenable for evaluation and analysis

CHECKLIST METHOD

The checklist is a rating technique in which the supervisor is given a list of

statements or words and asked to check the statements representing the
characteristics and performance of each employee.

Simple checklist
Weighted checklist
Forced Choice Method
WEIGHTED CHECKLIST

It involves giving weights to different items in the checklist, having a series

of statements about an individual, to indicate some are more important than
others.

Often weights are not given to the supervisors who complete the appraisal
process.

Performance ratings of the employee is multiplied by the weights of the

statement.

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FORCED CHOICE METHOD

A large number of statements in groups are prepared.

Each group consists of two favourable and two unfavourable statements.
The actual weightages of the statements are kept secret.

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 Instructions: Out of each five statements check the one that best describes
the employee and one that least describes the employee.

Would be very difficult to replace

Very valuable in a new operation
Alert to new opportunities for the company
Good for routine supervisory job
Tends to delegate things that will not reflect credit on them
Graphic Rating Scale

Measures to an absolute standard

Judgements are recorded on a scale
Rated on the basis of quality and volume of work, job knowledge,
dependability, attitude etc.

Simple, low design cost.

Subjectivity, low reliability
CRITICAL INCIDENT TECHNIQUE

Focuses on certain critical behaviour of an employee that makes all the

difference between success and failure on a job.

Such incidents are recorded by the individual as and when they occur.

Advantage: Evaluation is based on actual job behaviour. Providing feedabck

is easy.

Reduces the recency bias.

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 Based on objective behaviour rather than subjective points of opinions

Disadvantages:
Definition of critical incidents may be different to different supervisors
Recording critical incidents continually over a period of time may be
resented by the raters.
REVISED VERSIONS OF CRITICAL INCIDENT TECHNIQUE

Summarizing critical incidents and giving them to supervisors in the form of

scales (e.g., Behaviour Checklist)

Behaviourally Anchored Rating Scales

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BEHAVIOURALLY ANCHORED RATING SCALE

Combines elements of traditional rating scales and critical incident

techniques

How to Construct BARS:

Collect critical incidents
Identify Performance dimensions
Reclassification of the statements
Assigning scale values to the incidents
Producing the final instrument

GATHERING PERFORMANCE INFORMATION

WHO SHOULD PROVIDE PERFORMANCE INFORMATION

Supervisors
Peers
Subordinates
Self
Customers
SUPERVISOR

STRENGTHS
In the best position to evaluate performance in relation to strategic
organisational goals.

Has responsibility to manage the subordinates

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 Has the opportunity to observe, direct and control the subordinate

continuously

WEAKNESSES
Emphasise certain aspects and neglect others
May manipulate their decisions to justify their previous decisions on pay
increases or promotions
PEERS

STRENGTHS
Able to judge interpersonal skills- communication, initiative, contribution to
the group project

WEAKNESSES
Friendship or animosity may result in distortion of evaluation
All raters may join together to rate each other high
Linked to reward-chance of conflict
Halo effect is more
SUBORDINATES

STRENGTHS
Useful in assessing employees ability to communicate, delegate work,
allocate resources, disseminate information, resolve interpersonal conflict

Appropriate when used for developmental purposes

WEAKNESSES
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 Fear of reprisal
Computer giant Dell uses this upward feed back system using Tell Dell
surveys.

SELF-APPRAISAL

STRENGTHS
Improve motivation
Opportunity to participate in the evaluation process
Useful when it is associated with goal-setting
Effective when executive development is the purpose

WEAKNESSES
More biased

USERS OF SERVICE/ CUSTOMERS

Useful for jobs that require a high degree of interaction with the public
Costly and time-consuming process
360 DEGREE PERFORMANCE APPRAISAL

Appraisal made by superiors, peers, subordinates and clients

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DISAGREEMENT AMONG SOURCES

When different dimensions are evaluated across sources, ratings may be

different.

It is not necessarily a problem.

If overall score is needed that considers all sources, then a weighting
mechanism is needed.

It is important to provide 360 degree feedback to employees.

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