CHAPTER I

PERFORMANCE MANAGEMENT

LEARNING OBJECTIVES
Definition, The PM Contribution, aims and Role of PM systems, Characteristics of an Ideal
PM System, PM Process, PM and Strategic Planning
PERFORMANCE MANAGEMENT
Srinivas Kandula defines performance management as process of designing and executing
motivational strategies, interventions and drivers with an objective to transform the raw potential
of human resource into performance. We can say that Performance Management is a
systematic process by an Organisation to improve and evaluate the performance of its employees
as individuals as well as groups.
In broader view, an organisational goal can only be achieved with the people in the organisation
aligning their goals to them. The individuals goal often relates to the improvement of skills and
knowledge he possess. If the individuals knowledge and skills can be improved through
motivation or training or any other methods, the organisational performance increases and easier
to attain the goal. The tough task is to make the employee understand the needs of his own self.
A successful performance management is Where the employees interests are understood by the
employer and renders his helping hand to develop employees career as well as his performance
and the employee understanding the requirements of the organisation, cooperating and accepting
the helping hand of employer to increase his performance levels and thus also his self.
Performance Management is conducted and understood on two classifications
1. Performance of the employees in the organization
2. Performance of the organisation, which is often the net result of the total performance of
all the employees put together.

PRINCIPLES OF PERFORMANCE MANAGEMENT

Performance management can bring quality and effectiveness only when certain basic and
fundamental principles are followed. These include:
Transparency
The system should be transparent, free from partiality, bias and discrimination among the
employees. If not, the base of the system itself will not be strong to build anything above that.
For example, work allocation, promotions, transfers, incentives, and bonus if based on
Performance management, then the system should be transparent and gives no room for
employees to complaint.
Employee Empowerment
Participative and empowered employees take the responsibility well. They develop the
belongingness towards the organisation. Recognizing and rewarding the employees brings them
together to work and achieve.
Organisational Values and Culture
A fair treatment and ensuring due satisfaction to the employees, empathy and trust, respect and
treating people equally are all the foundations for the development of the Culture and values of
the organisation, which reflects in overall output.
Amicable Workplace
A work environment which attracts the employee rather than expecting the week end to be away
from the workplace is the principle. The workplace should be congenial, warm and amicable to
the employees. This helps in improving the quality of work life and balancing the work life
Performance management is a complex concept that encompasses different dimensions of the
organisation and the people. Hence, the performance management has some pre requisites that
should be included while designing a system.

CHARACTERISTICS OF AN IDEAL PERFORMANCE MANAGEMENT

Performance management is a complex concept that encompasses different dimensions of the
organisation and the people. Hence, the performance management has some pre requisites that
should be included while designing a system.

1. Clarity of organisational goals the managers need to clearly and precisely lay down
the organisational goals, objectives and ensure that these are well informed to the
managees and other employees and make them to realize what the organisation expects
from them. The organisational goals need to be translated into individual, team and
departmental/ divisional goals.
2. Evaluation the individual, team, department/ divisional performance needs to be
evaluated on continuous basis. The organisation should develop an evaluation system and
process, which is designed and developed on scientific lines.
 3. Cooperation but not control the managers should nurture the practice of getting work
done through the system of obtaining managees consensus rather than through control or
coercion.
4. Self-management teams the management need to encourage the individual and teams
for self-management of their performance. This procedure creates in the managees a
sense of responsibility and develops a spirit to work with commitment and evaluate
his/her strengths and weaknesses from time to time and plan for reducing the
performance gaps.
5. Leadership development the managers need to identify such of the managees who
have leadership potential and apart from sincerity and honesty to ensure better and
effective two-way communication between the managers and the managees.
6. System of feedback the organisation must have a foolproof feedback system of
managees/ individuals/ teams/ departments performance. It should be monitored
continuously and generate feedback loops for better performance management. There
must be a system that would help to monitor and measure all performance against the set
standards and the managees need to be informed of their shortcomings. The evaluation
system should be made transparent so as to repose managees faith in the system.

SCOPE OF PM
The PM should conform to broad organisational framework. It should provide for managers and
managees shared experiences, knowledge and vision. It encompasses all formal and informal
measures and procedures adopted by organisations to increase corporate, team and individual
effectiveness. Managees/ employees should be enabled continuously to develop knowledge, skill
and capabilities. PM has got to be understood in totality of the organisation but not in various
parts. PM is designed and operated to ensure the interrelationship of each of these processes in
the organisation. PM assumes that the managers and team members share accountability for
performance by jointly agreeing on common set of goals i.e., what they need to do and how they
need to do it. They jointly implement the agreed plans and monitor outcomes.

PM CONTRIBUTION
The Performance Management Contribution There are many advantages associated with the
implementation of a performance management system. A performance management system can
make the following important contributions:
1. Motivation to perform is increased. Receiving feedback about ones performance
increases the motivation for future performance. Knowledge about how one is doing and
recognition of ones past successes provide the fuel for future accomplishments.
2. Self-esteem is increased. Receiving feedback about ones performance fulfils a basic
need to be appreciated and valued at work. This, in turn, is likely to increase employees
self-esteem
3. Managers gain insight about subordinates. Direct supervisors and other managers in
charge of the appraisal gain new insights into the person being appraised. The importance
of knowing your employees is highlighted by the fact that the Management Standards
Centre has recognised that developing productive relationships with colleagues is a key
competency for managers (www.management-standards.com, Standard D1: Develop
productive working relationships with colleagues). Gaining new insights into a persons
performance and personality will help the manager build a relationship with that person.
Also, supervisors gain a better understanding of each individuals contribution to the
organisation. This can be useful for direct supervisors as well as for supervisors once
removed.
4. The job definition and criteria are clarified. The job of the person being appraised may
be clarified and defined more clearly. In other words, employees gain a better
understanding of the behaviours and results required of their specific position. Employees
also gain a better understanding of what it takes to be a successful performer (i.e., which
criteria define job success).
5. Self-insight and development are enhanced. The participants in the system are likely to
develop a better understanding of themselves and of the kind of development activities of
value to them as they progress through the organisation. Participants in the system also
gain a better understanding of their strengths and weaknesses, which can help them better
define future career paths.
6. Personnel actions are more fair and appropriate. Performance management systems
provide valid information about performance, which can be used for personnel actions
such as merit increases, promotions and transfers, as well as terminations. In general, a
performance management system helps ensure that rewards are distributed on a fair and
 credible basis. In turn, such decisions based on a sound performance management system
lead to improved interpersonal relationships and enhanced supervisorsubordinate trust.
7. Organisational goals are made clear. The goals of the unit and the organisation are
made clear, and the employee understands the link between what he or she does and
organisational success. This is a contribution to the communication of what the unit and
the organisation are all about and how organisational goals cascade down to the unit and
the individual employee. Performance management systems can help improve employee
acceptance of these wider goals (i.e., organisational and unit level).
8. Employees become more competent. An obvious contribution is that the performance of
employees is improved. In addition, there is a solid foundation for developing and
improving employees by establishing developmental plans.
9. There is better protection from lawsuits. Data collected through performance
management systems can help document compliance with regulations (e.g., equal
treatment of all employees regardless of sex or ethnic background). When performance
management systems are not in place, arbitrary performance evaluations are more likely,
resulting in an increased exposure to litigation.
10. There is better and more timely differentiation between good and poor performers.
Performance management systems allow for a quicker identification of good and poor
performers. Also, they force supervisors to face up to and address performance problems
on a timely basis (i.e., before the problem is too costly and cannot be remedied)
11. Supervisors views of performance are communicated more clearly. Performance
management systems allow managers to communicate to their subordinates their
judgements regarding performance. Thus there is greater accountability in how managers
discuss performance expectations and provide feedback. Both assessing and monitoring
the performance of others are listed as key competencies for managers by the
Management Standards Centre (www.management-standards.com, Standard D6: Allocate
and monitor the progress and quality of work in your area of responsibility). When
managers possess these competencies, subordinates receive useful information about how
their performance is seen by their supervisor.
12. Organisational change is facilitated. Performance management systems can be a useful
tool to drive organisational change. For example, assume an organisation decides to
 change its culture to give top priority to product quality and customer service. Once this
new organisational direction is established, performance management is used to align the
organisational culture with the goals and objectives of the organisation to make change
possible. Employees are provided with training in the necessary skills, and are also
rewarded for improved performance so that they have both the knowledge and the
motivation to improve product quality and customer service. This is precisely what IBM
did in the 1980s when it wanted to switch focus to customer satisfaction: the performance
evaluation of every member in the organisation was based, to some extent, on customer
satisfaction ratings regardless of function (i.e., accounting, programming, manufacturing,
etc.).4 For IBM, as well as for numerous other organisations, performance management
provides tools and motivation for individuals to change, which, in turn, helps drive
organisational change.

PM PROCESS
Performance measurement is process of assessing toward achieving predetermined goals -
1. Performance planning where goals and objectives are determined.
2. Performance coaching where a manager intervenes to give feedback and adjust performance.
3. Performance appraisal where individual performance is formally documented and feedback
delivered.
PM is concerned with everything that people do at work. It deals with what people do (their
work), how they do it (their behavior) and what they do it (their result). PM data generated by the
appraising process is used primarily for deciding rewards. Including performance related pay.
However, it is not the integral part of PM process.

Application Performance Management (APM) refers to the discipline within system

management that focuses on monitoring.
Business Performance Management (BPM) set of processes that help business discover
efficient use of their business units.
Operational Performance Management (OPM) focus is on creating methodical and
predictable ways.
Planning : Planning refers to setting performance expectations and goals for groups and
individual to channelize their efforts toward achieving organizational objectives.
Mentoring: Mentoring can also include briefing the managee before each training and
development activity both on the job and off the job. Briefing focuses on the managee learning
agenda. Debriefing the managee crystallize his/her learning achieved during the training.
Monitoring : Monitoring well means consistently measuring performance and providing
ongoing feedback to employees and work groups.
Developing : Developing in this instance means increasing the capacity to perform through
training, giving assignment that introduce new skills or higher levels of responsibility, improving
work processes, or other methods.
Rating : Rating means evaluating employee or group performance against the elements and
standard in an employees performance plan and assigning a summary rating of record.
Rewarding : Rewarding means recognizing employees, individually and as members of groups,
for their performance and know edging their contribution to the agencys mission.
PM and Strategic Planning
There is a very important relationship between strategic planning and performance
management. Performance management is really about setting and achieving goals at the
employee level, and identifying and fixing barriers related to achieving those goals. But where
do the goals come from?

That's where strategic planning comes in. Strategic planning (and also tactical planning), are
methods a company, and its individual work-units define their goals and objectives. In turn, those
goals and objectives are used to determine and analyze the goals and objectives of each
employee in a work unit. This is called cascading of goals.

When done properly, setting employee goals should rely on the goals of the particular work-unit,
which gets its goals from the planning done by the next bigger work unit, and so on.

That's why the setting of individual goals and objectives should be done once the goals and
objectives of the work-unit are established.
A. The strategic Plan of the organization should give answers to the following questions

1. Does your strategic plan have appraisal systems lied in?

2. Are the employees aware of the strategic plan?

3. Is the strategic plan measurable with clear objectives?

4. Do employees understand their role in obtaining the measurable outcomes?

5. Do ethe employees understand how they ultimately benefit from successful outcomes of
the strategic plan?

6. Are employees given feedback on their performance specific to the strategic goals?

B. In the second stage, the fixation of accountability is important. The definite process is
required to keep team members accountable for their commitments on the strategic plan,
their focus will be on the urgent tasks at hand.

both accountability and metrics require regularly sitting down as a team and assessing
progress. What do the metrics tell you? Where is performance sluggish? Are you on the
wrong road or do you just need to make some adjustments to the plan?

C. Results and behaviours evaluation is an important phase. Start by evaluating system and
strategic plan that are in place. Assess the impact of the work you have done and also
know that it is having the desired effect.
 CHAPTER II

PERFORMANCE APPRAISAL SYSTEM IMPLEMENTATION

LEARNING OBJECTIVES

Defining Performance
Determinants of Performance
Dimensions of performance
Approaches to Measuring Performance
Diagnosing The causes of poor performance
Differentiating Task from Contextual Performance
Choosing a Performance Measurement Approach
Measuring Results and behaviours
Gathering Performance Information
Implementing PMS

PERFORMANCE
The first step is to know performance. The literary meaning of performance is an act of
staging or presenting a play, concert or other form of entertainment. Also, performance goes
synonymous with accomplishment and Fulfillment. In context to Business administration,
we can define performance as the accomplishment of a given task with the set standards,
precision, quality and completeness.
Popular industrial psychologist Campbell defines Performance as behaviour of an individual
towards the given task.
Job and Performance
When we see the meaning of job, it goes as special task, specific work. Even though Job and
Performance are used in many ways, as two different actions or sometimes both together, like
job is performed, job performance has to be evaluated, it can be considered that when an
employee understands and accomplish a given job, he performs, a sort of good job. He improves,
involves, fulfills and gets satisfaction when he performs the job, than just doing the job. When
we talk about the job of a singer, i.e. singing, we say the singer performs. The emphasis being
the job artistically done, accomplished with heart and soul involved in the job, may be because
he is passionate towards the singing. Hence, the employee in an organisation can also perform
the same way, like a singer performs, with involvement and quality improving by every day.
DETERMINANTS OF PERFORMANCE
Performance is determined by a combination of three factors and all three determinants of
performance must be present for performance to reach satisfactory (and better) levels:
Declarative knowledge: information about facts and things including information
regarding a given tasks requirements, labels, principles, and goals.
Procedural knowledge: combination of knowing what to do and how to do it includes;
cognitive, physical, perceptual, motor, and interpersonal skills.
Motivation: willingness to perform ~expend effort, level of effort, persistence in the
expenditure of that level of effort
Performance = Declarative Knowledge X Procedural Knowledge X Motivation

Three factors of performance must be present for performance to reach high levels
o Performance=Declarative knowledge X Procedural Knowledge X Motivation
o If any of the factors have a small value then performance will also have a low
level
 To achieve high performance one must devote large number of hours to thoughtful
practice
o Approach performance with the goal of getting better and better
o As you are performing focus on what is happening and why you are doing things
the way you do
o Once your task is finished, seek performance feedback from expert sources (the
more sources the better)
o Build mental models of your job, your situation, and your organization
o Repeat steps 1-4 continually and on an ongoing basis

Suggestionsfor Addressing Performance Problems:

managers must find information that will allow them to understand whether the source of
the problem is declarative knowledge, procedural knowledge, motivation, or some
combination of these three factors
performance management systems need to measure performance plus information about
the source of any performance deficiencies
Factors Influencing Determinants of Performance:
Affected by the employee (abilities/previous experience), HR practices, and the work
environment
Three individual characteristics that determine performance
o Procedural knowledge
o Declarative knowledge
o Motivation
HR practices and the work environment can affect performance

When addressing performance problems managers first need to identify which of these factors is
hampering performance and then help the employee improve his or her

DIMENSIONS OF PERFORMANCE

Performance is multidimensional so consider many different types of behaviors to understand

performance. Two types of behaviors or performance factors stand out and are important
dimensions to take into account because organizations cannot function properly without both:
Task performance

o Specific activities required by ones job ~ mainly influenced by abilities and skills
 activities that transform raw materials into the goods and services that are produced by
the organization
activities that help with the transformation process by replenishing the supply of raw
materials, distributing its finished products or providing important planning,
coordination, supervising, or staff functions that enable the organization to function
effectively and efficiently
Contextual performance (also known as prosocial behaviors or organizational
citizenship behaviors) is defined as those behaviours that contribute to the organizations
effectiveness by providing a good environment in which task performance can occur.
o Not role prescribed but is typically expected without making them explicit and
mainly influenced by personality ~ activities required to be a good
organizational citizen.
Fairly similar across functional and hierarchical levels: all employees, regardless of
job title, function, and responsibilities, are equally responsible to carry out task
activities that are not formally part of the job
Behaviors that contribute to the organizations effectiveness by providing a good
environment in which task performance can occur
Persisting with enthusiasm and exerting extra effort as necessary to complete ones
own task activities successfully
Volunteering to carry out task activities that are not formally part of the job
Helping and cooperating with others
Following organizational rules and procedures
Endorsing, supporting, and defending organizational objectives
Voice behavior: different because its not conformist in nature: type of behavior that
emphasizes expression of constructive challenge with the goal to improve rather
than merely criticize, it challenges the status quo in a positive way, and it is about
making innovative suggestions for change and recommending modifications to
standard procedures even when others, including an employees supervisors
disagree.

Both task and contextual performance dimensions should be included in a performance

management system:
Additional reasoning to include task performance and contextual performance into the
system is that all organizational members are given an opportunity to demonstrate their
 value-added to the organization regardless of different behaviors, styles, and cultural
values and norms.
Both should be considered because both dimensions contribute to organizational success,
and each behavior should be defined clearly so that employees understand what is
expected of them
Task Performance Contextual Performance
Varies across jobs Fairly similar across jobs
Likely to be role prescribed Not likely to be role prescribed
Antecedents abilities and skills Antecedent personality

APPROACHES TO MEASURING PERFORMANCE

Keep in mind that employees do not perform in a vacuum-they work in an organizational context
engaging in certain behaviors that produce certain results. Three approaches can be used to
measure performance: behavior, results, and trait.
Behavior Approach: emphasizes what employees do on the job and does not consider
employees traits or the outcomes resulting from their behaviors. Process-oriented approach
that emphasizes how an employee does the job. The behavior approach is most appropriate
under the following circumstances:
o The link between behaviors and results is not obvious
o Outcomes occur in the distant future
o Poor results are due to causes beyond the performers control
A Behaviour approach may not be the best choice if most of these conditions are not present. In
most situations, however the inclusion of at least some behavior based measures is beneficial.
Results Approach: emphasizes the outcomes and results produced by the employees. It
does not consider the traits that employees may possess or how employees do the job. This is
a bottom-line approach - not concerned about employee behaviors and processes but, instead
focuses on what is produced. It is also cost effective data resulting from a results approach
are objective and intuitively appealing. The results approach is most appropriate under the
following circumstances:
o Workers are skilled in the needed behaviors
An emphasis on results is appropriate when workers have the necessary knowledge and
skills to do the work. In such situations, workers know what specific behaviours are
needed to achieve the desired results and they are also sufficiently skilled to know that to
do to correct any process related problems when the desired results are not obtained.
Consider the example of basket ball player. A free throw is an unhindered shot made
 from the foul line which is given to one team to penalize the other team for committing a
foul. Free throw shooting can make the difference between winning and losing in a close
basketball game. Professional players know that there is really no secret to becoming a
great free throw shooter, just hours and hours of dedicated practice besides actual
basketball play. In assessing the performance of professional basketball players, the free
throw shooting percentage is a key results oriented performance indicator because most
players have the skills to do it will.
o Behaviors and results are obviously related
In some situations, certain results can be obtained only if a worker engages in certain
specific behaviours. This is the case of jobs involving repetitive tasks such as assembly
line work or newspaper delivery. Take the case of a person delivering newspapers.
Performance can be measured adopting a results approach: whether the newspaper is
delivered to every customer within a particular time frame. For the employee, requires to
pickup the papers on time and use the most effective delivery route. If this behaviours
are not present the paper will not be delivered on time.
o Results show consistent improvement over time
When results improve consistently over time, it is an indication that workers are aware of
the behaviours needed to complete the job successfully. In these situations, it is
appropriate to adopt a results approach to assessing performance.
o There are many to do the job right
When there are different ways in which one can do the tasks required for a job, a results
approaches are mutually exclusive. In fact, measuring both behavior and results is the
approach adopted by many organizations.
Trait Approach: emphasizes the individual performer and ignores the specific
situation, behaviors, and results. Raters evaluate relatively stable traits. This approach is
justified based on the positive relationship found between abilities and personality traits and
desirable work-related behaviors. The trait-oriented approach can be most useful as:
o part of a business strategy to anticipate drastic structural changes for reorganization of
most functions and the resulting reallocation of employees
o CHALLENGES/DISADVANTAGE: traits are not under the control of individuals
and in most cases they are fairly stable over ones life span. They are not likely to
change even if an individual is willing to exert substantial effort to do so
(development of these traits are beyond their control). The fact that an individual
 possesses a certain trait does not mean that this trait will necessarily lead to desired
results and behaviors.
Job Performance Context

A Performer Engages in certain

[individual or team behaviours
with certain traits
In a given work That produce
Situation various results

The relative emphasis given to each of these approaches to measuring performance should be
influenced by the organizations business strategy.

DIAGNOSING THE CAUSES OF POOR PERFORMANCE

The fact that performance is affected by the combined effect of three different factors has
implications for addressing poor performance problem. In this situation, managers must find
information that will allow them to understand whether the source of the problem is declarative
knowledge, procedural knowledge, motivation or some combination of these three factors. If an
employee lacks motivation but the manager believes the source of the problem is declarative
knowledge, the manager may send the employee to a company sponsored training program so he
can acquire the knowledge that is presumably lacking. This would obviously be a waste of time
and resources for the individual manger, and organization, in some cases the lack of motivation
and not lack of declarative knowledge, causing poor performance. This is why performance
management systems need not only to measure performance but also to provide information
about the source of any performance deficiencies.

DIFFERENTIATING TASK FROM CONTEXTUAL PERFORMANCE

Task performance relates to transforming raw materials into the goods and services which are
specific to the job, the core technical skill. Contextual performance concerns aspects of an
individuals performance which maintains and enhances an organisations social network and the
psychological climate that supports technical tasks. Borman and Motowidlo, contend that it is the
contextual dimensions of job performance, rather than the technical components, that can be
predicted from personality constructs and Borman et.al. conclude that personality
(Conscientiousness and Dependability) correlates more highly with organisational citizenship
behaviours than with task performance. It appears that, conversely, cognitive abilities are more
relevant for the prediction of task performance. Other research asserts that when the personality
variables used in the prediction of performance are derived through job analysis, they predict
task-related performance, as well as contextual job performance go on to state that in order to
predict narrow aspects of performance, narrow traits (more specific, primary or facet level)
should be used rather than broad global traits such as the FFMs Openness to Experience,
Conscientiousness, Extraversion, Agreeableness and Neuroticism.
Task Vs. Contextual
If we recall different types of jobs and the various tasks that are embedded in these jobs, we
realize that it is not that easy to find an overall definition of performance that is applicable across
situations. Task or in-role performance is relevant for every job and is defined as those officially
required outcomes and behaviors that directly serve the goals of the organization. Among other
things, task performance includes meeting company objectives and effective sales presentations
Every employee also displays extra-role behaviors.

Contextual or extra-role performance or citizenship behavior is defined as discretionary

behaviors on the part of an employee that are believed to directly promote the effective
functioning of an organization without necessarily directly influencing the employees
productivity proposed that contextual performance is the best term for describing such activities.
Contextual performance is defined as actions that go beyond what is stated in formal job
descriptions and that increase organizational effectiveness highly depends on such extra-role
actions. One promising approach that has gained increased attention in the literature is to
explicitly differentiate forms of citizenship according to the intended beneficiary. Examples of
such conceptualizations are Williams and Anderson, who suggested that citizenship behaviors
can be directed toward the benefit of other individuals, or toward the benefit of the organization
as a whole. Another example is Organs taxonomy, who (originally) proposed that organizational
citizenship behavior consists of altruism, courtesy, conscientiousness, civic virtue, and
sportsmanship which are all parts of an overall helping dimension. A third example is that of
Rupp and Cropanzano (2002), who suggested that employees might also direct their citizenship
behavior toward their supervisor. Several studies have shown that task and contextual
performance can be differentiated empirically, who measured overall levels as well as episodes
of task and contextual performance using the scale of Goodman and Svyantek, further supported
previous findings on the empirical distinction between these two traits. Like in the current study,
task performance was measured with items that assessed employees current performance (e.g.,
Achieves the objectives of the job, Plans and organizes to achieve objectives and meet
deadlines) and promotion expectations (e.g., Appears suitable for a higher level role, Meets
criteria for promotion), while contextual performance was measured with the scale of altruism
(e.g., Helps others when their workload increases, Takes initiative to orient new employees
to the department even though not part of his/her job description), which represents citizenship
behavior toward individuals.

CHOOSING A PERFORMANCE MEASUREMENT APPROACH

There exist several approaches that determine how to do performance evaluation, each of which
has its own strengths and weaknesses. In order to achieve its strategic business goals, an
organization can choose to adopt a particular approach or blend many of these approaches for the
sake of implementing an effective performance management system. This system needs to
evaluate both the performance results as well as the behaviors that the employee has
demonstrated to achieve the organizations business goals (step 4 above). The approaches that
are discussed in this post include the comparative approach, the behavioral approach, the results
approach, the attribute approach, and the quality approach.

The Comparative Approach

This approach involves comparing and ranking an individuals performance with respect to
others in a given group. A straightforward technique would be to simply rank employees from
the highest performer to the lowest performer. Another technique, called Forced Distribution
system, involves ranking employees in category groups like for example a group of top
performers constituting 10% of the employees, another group of average performers constituting
40%, another group of good performers constituting 30%, and finally a group of low performers
constituting 10%.

A major advantage of the forced distribution system is that it aligns employee performance and
compensation with the organizations performance by ensuring top performers are rewarded,
given proper training, and developed for higher managerial positions while poor performers are
given chances for improvement or dismissed if their performance is not getting better. Their
dismissal will consequently allow the recruitment of a new talent into the organization.

A major disadvantage of the forced distribution system is that it yields inappropriate results when
for example all members of a workgroup are top performers, yet only 10% need to be in this
category. The system ranks employees based on certain categorization rules rather than on their
performance and employees with higher rankings would then receive better incentive pay than
those with lower rankings. In addition it might not be easy to categorize employees especially
when the ranking criteria is not clearly defined within the organizations HR system. Finally, the
forced distribution system might cause negative repercussions on an employees self-confidence
and might be considered illegal and unethical if not communicated clearly across the
organization.

Another technique worth mentioning here is the Paired Comparison whereby the rater compares
a performer with every other performer in a group and assigns a score of 1 for the higher
performer. The final performance score would then be the summation of the winning points from
all comparisons. Yet this technique becomes tedious for large groups as the rater would need to
make 36 comparisons for a group of 9 employees or 45 comparisons for a group of 10
employees.

The Attribute Approach

This performance management approach evaluates performers against a predefined set of traits
or characteristics such as teamwork, problem solving, judgment, creativity, etc. One of the most
common techniques for this approach is the Graphic Rating Scale which defines a numbered
rating scale (from 1 to 5 points for example). The evaluator would then select the rating that he
believes the performer has demonstrated for each characteristic or performance dimension.

Another technique which improves on the Graphic Rating Scale is the Mixed-standard Scale.
The idea is to define a set of performance levels (for example High, Medium, Low) and then
prepare a statement that describes the qualities or behavior required to achieve each performance
level for a given characteristic or performance dimension. The evaluator would then go through
each statement and determine whether the performer is above (+), equal (0), or below (-) the
statement. A predefined legend scoring key would then be utilized to calculate the final score for
each performance dimension.

The Behavioral Approach

This approach includes several techniques that define and shape the right behaviors of employees
for an effective performance. The first technique, Behaviorally Anchored Rating Scale (BARS),
defines behaviors, which serve as guides for the rater, associated with different levels of
performance for a given performance dimension or trait. For each of these performance
dimensions, the evaluator would rate the performer by associating him with the behavioral level
that fits his performance. A major disadvantage of this technique is that managers tend to
remember only behaviors that closely relate to those defined in the performance scale which
leads to biased rating.

Another technique, Behavioral Observation Scale (BOS), is a variation of BARS with two more
features. First, it includes a larger number of behaviors to provide a more specific and accurate
description of the employee behavior for an effective performance. Second, the rater would need
to rate the frequency that this behavior is seen to be exhibited by the performer. The overall score
would then be the average of all these frequency ratings. A major drawback of this technique is
the big load of information about employee behaviors that needs to be remembered and
processed by managers especially when they are responsible for rating a considerable number of
employees.

Another technique is the use of Competency Models which provide descriptions of competencies
that are common for a particular occupation or organization. By definition, competencies
represent the skills and abilities required to perform a certain job. Teams across the entire
organization should work together to come up with a list of competencies for each job and a
weighting given for each competency for performance evaluation. These models also need to be
periodically reviewed to make sure they stay relevant to the organizations goals.

The Results Approach

This approach focuses on removing the subjectivity from the measurement process by evaluating
objectives based on employee performance results. Its more like a black and white answer (you
either meet or you do not meet the given objective). Strategic goals should be established by the
top management team (TMT) which then feed to more specific goals down the organizational
hierarchy. Managers and their subordinates should participate together to come up with a set of
SMART goals that would link back to the strategic goals. Two techniques use the objective
system: the Balanced Scorecard and the Productivity Measurement and Evaluation System
(ProMES).
The balanced scorecard consists of four perspectives for performance management including
financial, customer, internal or operations, and learning and growth. The financial perspective
centers around increasing the shareholder value, the customer perspective focuses on creating
value for customers in terms of service and quality improvement, the internal and operations
perspective defines the business processes that would ensure customer satisfaction, and the
learning and growth perspective achieves the organizations vision and focuses on innovation
and continuous improvement. Employees across the organization need to understand and be
aware of these perspectives which define the strategic objectives and how they are translated
down and mapped into business unit and employee objectives.

Though it is time consuming to develop, the ProMES system is effective in motivating

employees towards increasing productivity and in measuring and feeding back productivity
information. It primarily consists of four steps; the first step involves identifying the
organizational objectives or products to be achieved, the second step provides measurements of
how well these objectives or products are made, the third step evaluates how effective these
measurements are in terms of their level of evaluation, and the fourth and final step feeds back to
employees their level of performance on each of these measurements. An overall productivity
score is finally computed as a summation of the performance scores on all the measurements.

The Quality Approach

The aim of this approach is to improve customer satisfaction by reducing production defects and
by achieving continuous service improvement. The quality philosophy advocates that employees
should not be held accountable for results that are not completely under their control (which are
polluted or affected by environmental or system conditions); otherwise this would result in
employee demotivation and would inflict the continuous improvement process. Thus the quality
ideology considers both person and system factors in its performance measurement system.
Besides, quality proponents articulate that regular feedback is needed from managers, customers
(internal and external), and peers on the personal characteristics of the employee as well as on
the quality of his work activities in order to resolve performance issues. Hence the quality
approach is more like a combination of the results and attribute approaches for performance
evaluation.

The quality approach also recommends the use of Kaizen process in order to continuously
improve business processes and outcomes. Kaizen, the Japanese word of improvement, is one of
the principles applied in Lean manufacturing and Total Quality Management (TQM) and it
focuses on applying Demings iterative Plan-Do-Check-Act (PDCA) method to achieve
continuous improvement.

Finally there are plentiful of statistical process control techniques that can be used to identify and
resolve problems. These include cause-and-effect (Fishbone or Ishikawa) diagrams, Pareto
charts, control charts, process-flow analysis, histograms, and scattergrams.

MEASURING RESULTS AND BEHAVIOURS

While measuring results, one needs to ask the following key questions:

1. what are the different areas in which this individual is expected to focus efforts(key
accountabilities)?

2. Within each area, what are the expected objectives?

3. How do we know how well the results have been achieved? (performance standards)

Key Accountabilities

Key accountabilities are broad areas of a job for which the employee is responsible for
producing results. A discussion of results also includes specific objectives that the employee
will achieve as part of each accountability.

For determining accountabilities is required to collect information about the job. The job
description that has results from job analysis and a consideration of unit and organization
level strategic priorities are helpful in determining the accountability. The Job description
provides information on the tasks performed. Tasks included in the Job description can be
grouped into clusters of tasks based on their degree of relatedness.

After the accountabilities have been identified, we need to determine their relative degree of
importance. We need to ask some questions for this:-

1. What percentage of the employees time is spent performing each accountability?

2. If the accountability were performed inadequately, would there be a significant impact on

the work units mission?

3. Is there a significant consequence of error? Could inadequate performance of the

accountability contribute to the injury or death of the employees or others, serious
property damage, or loss of time and money?

Determining Objectives

Objectives are statements of important and measurable outcomes. The purpose of

establishing objectives is to identify a limited number of highly important results that, when
achieved, will have a dramatic impact on the overall success of the organization. After
objects are set, employees should receive feedback on their progress toward attaining the
objective. Rewards should be allocated to those employees who have reached their
objectives.
The objectives should be SMART objective- Specific, measurable, achievable, results based
and time specific.

Determining Performance Standards

A performance standard is a yardstick used to evaluate how ell employees have achieved
each objective. Performance standards provide information on acceptable and unacceptable
performance. Eg. Regarding quality, quantity, cost and time.

Quality : how well the objective has been achieved. This can include usefulness,
responsiveness, effect obtained, acceptance rate, error rate, and feedback from users or
customers.

Quantity: how much has been produced, how many, how often and what cost.

Time: due dates, adherence to schedule, cycle times, deadlines. Eg. Timetables, progress
reports.

Standards usually describe fully satisfactory performance. As soon as a standard has been
created, one can create standards that describe minimum performance and outstanding
performance.

MEASURING BEHAVIOURS

A behavior approach to measuring performance includes the assessment of competencies.

Competencies are measurable clusters of knowledge, skills and abilities that are critical in
determining how results will achieved.

We can consider two types of competencies: first, differentiating competencies, which are
those that allow us to distinguish between a average and superior performers; and second,
threshold competencies, which are those that everyone needs to display to do the job to a
minimally adequate standard.
Competencies should be defined in behavioural terms. Eg. A professor teaching an online
course, an important competency could be communication. This competency is defined as
the set of behaviours that enables a professor to convey information so that students are able
to receive and understand it.

In describing a competency, the following components must be present :

1. Definition of competency

2. Description of specific behavioural indicators that can be observed when someone

demonstrates a competency effectively.

3. Description of specific behaviours that are likely to occur when someone doesnt
demonstrate a competency effectively.

4. List of suggestions for developing the competency in question.

In contrast to the measurement of results, the measurement of competencies is intrinsically

judgmental. Competencies are measured using data provided by individuals who make a
judgment regarding the presence of the competency. In other words, the behaviours
displayed by the employees are observed and judged by raters the direct supervisor, but raters
might also include peers, customers, subordinates and the employee himself.

Two types of systems are used to evaluate competencies: Comparative systems and absolute
systems.

Comparative systems base the measurement on comparing employees with one other. In
comparative system of measuring there are different methods such as

Simple ranking method

Alteration rank order procedure
Paired comparison
Forced distribution
Absolute system bases the measurement on comparing employees with a pre specified
performance standard. In simplest absolute system, a supervisor writes an essay describing
each employees strengths and weaknesses and makes suggestions for improvement. One
advantage of the essay system is that supervisors have the potential to provide detailed
feedback to employees regarding their performance. On the other hand essays are almost
totally unstructured, so some supervisors may choose to be more detailed than others.
A second type of absolute system involves a behavior checklist, which consists of a form
listing behavioural statements that are indicators of the various competencies to be measured.

GATHERING PERFORMANCE INFORMATION

An important component of the performance measurement is the use of appraisal forms.

These forms are instruments used to document and evaluate performance. Information on
performance is collected by using forms, which can be filled out on paper or electronically.
Components of Appraisal forms
Appraisal Forms should contain following information:
1. Basic Employee Information - Job title, division, department, employee number, pay
grade or salary classification. Also dates of evaluation period, number of months and
years the latter has supervised or worked with the employee, an employees starting date
with the company, date of the next scheduled evaluation, etc.
2. Accountabilities, Objectives, and Standards - If a Result Approached is used: name
and description of each Accountability, Objectives agreed upon, extent to which the
objectives have been achieved. Also a subsection describing conditions under which
performance was achieved (this will explain why the performance is high or low). Eg.
Circumstances for low performance could be recession, introduction of new line of
products.
3. Competencies and Indicators- If a Behavior Approach is used: Definition of various
Competencies to be assessed and their behavioral Indicators.
4. Major Achievements and Contributions May be two major achievements during the
evaluation period. This could refer to Results or Behavior or both.
5. Developmental Achievements -How far have the Developmental Goals set earlier have
been met.
 Summary of activities such as workshops/seminars attended, courses taken, new skills
learned, exposure tours.
6. Developmental Needs, Plans and Goals -This is for the future. Hence includes
information about Specific Goals and Timetables in terms of employee development.
7. Stakeholder Input-For Example: Stakeholders such as Customers with whom the
employee interacts. Stakeholders are people who have firsthand knowledge of and are
affected by the employees performance.
8. Employee comments: This will ensure Fairness of the system to the employee and also
take care of the legal issues.
9. Signatures
Characteristics of a good Appraisal Form

1. Simplicity easy to understand, easy to administer, quick to complete, clear, and

concise. Too long and complicated forms are not effective.
2. Relevancy should include information directly related to the task and responsibilities of
the job. Else they become an administrative burden.
3. Descriptiveness so that even an outsider has a clear understanding of the performance
information conveyed.
4. Adaptability Good forms allow managers in different functions and departments to
adapt them to their particular needs and situation. This will encourage widespread use of
them.
5. Comprehensiveness include all major areas of performance for a particular position for
the entire review period.
6. Definitional Clarity Desirable competencies and results are clearly defined for all
raters so that everyone evaluates the same attributes. Providing consistency of ratings
across raters and levels of the organization.
7. Communication the meanings of each component should be clearly communicated to
all people participating in the evaluation process.
8. Time Orientation should not just the past but also the future.
Who should provide Performance Information?
Supervisors:
Advantages- Best position to evaluate performance vs. strategic goals Make decisions about
rewards Able to differentiate among performance dimensions
Disadvantages- Supervisor may not be able to directly observe performance. E.g. Teaching,
Law Enforcement, Field Salesmen etc. Evaluations may be biased

Peers
Advantages- Assess teamwork
Disadvantages -Possible friendship bias and may not be readily accepted. Peers may be less
discriminating among performance dimensions than superiors (eg. If one is rated high on one
dimension, one is likely to rate all other dimensions also high) Context effects: (eg. If there is a
conflict peer might rate others low compared to a routine assessment).

Subordinates
Advantages Information is more accurate when used for developmental purposes rather than
administrative purposes. Good position to assess some competencies such as Leadership, etc.
Disadvantages Information tends to be inflated when used for administrative purposes (e.g.,
whether manager should be promoted). Subordinates may fear retaliation if they give low scores.
Hence confidentiality is key if subordinates are to be used as a source of performance
information

Self
Advantages- Increased acceptance of decisions Decreased defensiveness during appraisal
interview Good position to track activities during review period
Disadvantages- May be more lenient and biased

Customers (external and internal)

Advantages Employees become more focused on meeting customer expectations
Disadvantages- Time and Money

Implementing PMS
Performance Management System (PMS) is a system used to enhance employees productivity
through managing their performance. The main aim of PMS is to improve service delivery within
the service. Specifically, PMS intends to improve accountability, performance, communication,
efficiency and productivity among servants.

Implementation of a PMS

Preparation

Need to gain system buy-in through communication plan regarding PMS, including appeals
process. Training programs for raters is required to be arranged. Necessary to establish Pilot
testing system and ongoing monitoring and evaluation system.

Communication Plan

Communication plan should be able to give answers for following questions

What is PM? Objective

How does PM fit in our strategy? Strategic Planning

Whats in it for me? Benefits to all

How does it work? Process and time line

What are our roles and responsibilities?Role and responsibilities of all

How does PM relate to other initiatives? Training, Promotion, succession planning

Some cognitive biases affect communication effectiveness like selective exposure, selective
perception, and selective retention. To minimize these biases,

involve employees in system design

show how employee needs are met.

emphasize the positive

o use of credible communicators,
 o strike first-create positive attitude and
o provide facts and conclusions.

Repeat, document , be consistent

o Put it in writing
o Use multiple channels of communication
o Say it, and then-say it again

Appeals Process

Promote employee buy in to PMS- Amicable/ Non retaliatory and resolution of

disagreements. Increase perception of the system as fair.

Employees can question two types of issues

Judgemental- may not reflect to actual performance [validity of evaluation]

Administrative- may argue about never conduct meeting with his employees[ whether
policies and procedures were followed]

Appeals Process

Level 1-

HR reviews facts, policies, procedures

HR reports to supervisor/employee

HR attempts to negotiate settlement

Level 2

-- Arbitrator (panel of peers and managers) and/or

High-level manager final decision

Rater Training Programs

Content areas to include

1. Information
2. Identifying, Observing, Recording, Evaluating
3. How to Interact with Employees
Choices of Training Programs to implement
 Rater Error Training (RET)
Frame of Reference Training (FOR)
Behavioral Observation (BO)
Self-leadership Training (SL)

CONTENT
A. Information- How the system works, reasons for implementing PMS, Information to be
gathered through the appraisal form and system mechanism.
B. Identifying, observing, recording and evaluating performance. It includes how to identify
and rank job activities, how to observe record and measure performance, how to
minimize rating errors.
C. How to interact with employees when they receive performance information, it includes
how to conduct an appraisal interview and to to train, counsel and coach.

Choices of Training programme

a) Rater Error Training (RET)- Makes raters aware of types of rating errors and also help raters
to minimize errors and increase rating accuracy.

b) Frame of Reference Training (FOR) Rater develop common frame of reference for
observing performance and evaluating performance. The expected results of FOR are raters
should provide consistent, more accurate ratings. Raters should help employees design effective
development plans.

c) Behavioral Observation Training (BO) Goals of BO focus on behavior which should

minimize unintentional rating errors. Improve rater skills by focusing on how raters observe
performance, store information about performance, recall information about performance, use
information about performance.

d) Self-leadership Training (SL)- Goals of SL are to improve rater confidence in ability to

manage performance , to enhance mental processes and to increase self efficacy.

Pilot Testing

Pilot testing provides ability to discover potential problems and fixation of problems. Pilot
testing is beneficial in following way
 Gain information from potential participants
Learn about difficulties/obstacles
Collect recommendations on how to improve
Understand personal reactions
Get eary buy-in
Get higher rate of acceptance.
For implementing a pilot testing, rol out test version with sample group like staff and jobs
generalizable to organization, then full implement the planned system.

Ongoing Monitoring and Evaluation

When system is implemented decide first how to evaluate system effectiveness, how to measure
implementation and to measure results.
 CHAPTER III
CONDUCTING STAFF APPRAISALS

LEARNING OBJECTIVES
Introduction
Need
Skills required
The role of the Appraiser
Appraisal methods
Raters errors
Data Collection
Conducting an Appraisal interview
Follow Up and Validation

INTRODUCTION

Performance evaluation is a part of performance management system. But, it gets more

importance that implementation of all other supporting processes of the system. Performance
evaluation is also called as job evaluation and more often called as performance appraisal
system. Performance Appraisal is the systematic evaluation of the performance of employees
and to understand the abilities of a person for further growth and development. Performance
appraisal is generally done in systematic ways which are as follows:
The supervisors measure the pay of employees and compare it with targets and plans.

The supervisor analyses the factors behind work performances of employees.

The employers are in position to guide the employees for a better performance.

The main objective of performance review for employees is to give them a feedback for their
work, record their work to give them a few organizational rewards and to provide further
development opportunities for their careers. These methods of employee performance evaluation
are also useful to help them improve their performance through coaching and training sessions
provided by the management of the organization. No matter what field it is, there are a few
common assessment techniques followed by the management to improve the work experience of
employees.

DEFINITION OF PERFORMANCE APPRAISAL

Performance appraisal is the key ingredient of performance management. In a work group

members, consciously or unconsciously, make opinion about others. The opinion may be about
their quality, behaviors, way of working etc, such an opinion becomes basis or interpersonal
interaction. In the same way, superiors form some opinions about their subordinates for
determining many things like salary increase, promotion, transfer, etc. in large organizations, this
process is formalized and takes the form of performance appraisal.

Concept of performance Appraisal

Appraisal is the evaluation of worth, quality or merit. In the organization context, performance
appraisal is a systematic evaluation of personnel by superiors or others familiar with their
performance. Performance appraisal is also described as merit rating in which one individual
is ranked as better or worse in comparison to others. The basic purpose in this merit rating is to
ascertain an employees eligibility of promotion. However, performance appraisal is more
comprehensive term for such activities because its use extends beyond ascertaining eligibility of
promotion. Such activities may be training and development, salary increase, transfer, discharge,
etc, besides promotion. A formal definition of performance appraisal is as follows:

Edwin Flippo,Performance appraisal is the systematic, periodic and an impartial rating of an

employees excellence in matters pertaining to his present job and his potential for a better job.

According to Cummings, The overall objective of performance appraisal is to improve the

efficiency of an enterprise by attempting to mobilise the best possible efforts from individuals
employed in it. Such appraisals achieve our objectives including the salary reviews the
development and training of individuals, planning job rotation and assistance promotions.
According to Wendell French-- Performance appraisal and review in the formal ,systematic
assessment of how well employees are performing their jobs in relations to establish standards
and the communication of that assessment to employees.
Someone has defined, it (performance appraisal) is the process of evaluating the performance
and qualifications of the employees in terms of the requirements of the job for which he is
employed, for the purposes of administration including placement, selection for promotion,
providing financial rewards and other actions which require differential treatment among the
members of a group as distinguished from actions affecting all members equally.
Beach bas defined performance appraisal as follows:
Performance appraisal is the systematic evaluation of the individual with regard to his or her
performance on the job and his potential for development.
Thus, performance appraisal is a systematic and objective way of judging the relative worth or
ability of an employee in performing his bob. It emphasizes on two aspects; systematic and
objective. The appraisal is systematic when it evaluates all performances in the same manner,
utilizing the same approaches so that appraisal of different persons is comparable. Such an
appraisal is taken periodically according to plan; it is not left to chance. Thus, both raters and
rates know the system of performance appraisal and its timing. Appraisal has objectivity also. Its
essential feature is that it attempts at accurate measurement by trying to eliminate human biases
and prejudices.
CHARACTERISTICS OF PERFORMANCE APPRAISAL
1. A Process:
Performance appraisal is not a one- act play .It is rather a process that involves several acts or
steps.
2. Systematic Assessment:
Performance appraisal is a systematic assessment of an employees strengths and weakness in
the context of the given job.
3. Main Objective:
The main objective of it is to know how well an employee is going for the organisation and what
needs to be improved in him.
4. Scientific Evaluation:
It is an objective, unbiased and scientific evaluation through similar measure and procedures for
all employees in a formal manner.
5. Periodic Evaluation:
Systematic (i.e., formal) appraisal of an individual employee is likely to occur at certain intervals
throughout that persons history of employment (say quarterly ,six monthly, annually, etc.)

The following are the main purposes of performance appraisal.

1. Appraisal Procedure:
It provides a common and unified measure of performance appraisal, so that all employee are
evaluated in the same manner. It gives an in discriminatory rating of all the employees.
2. Decision Making: Performance appraisal of the employees is extremely use fooling the
decision making process of the organization. In selection, training, promotion,pay in crement and
in transfer, performance appraisal is very useful tool.
3. Work Performance Records: Performance appraisal gives us a complete information in the
form of records regarding very employee. In the case o find us trial disputes even arbitrator
accepts these records in the course of grievance handling procedure.
4. Employees Development:
Performance appraisal guides the employees in removing their effects and improving their
working .The weaknesses of the employee recorded in the performance appraisal provide the
basis for an individual development programme. If properly recorded and used ,the performance
appraisal gives the fair opportunities to employees to correct and rectify their mistakes.
5. Enables Supervisors to be More Alert and Competent:
Performance appraisal enables supervisor to be more alert and competent and to improve the
quality of supervision by giving him a complete record of employee's performance. He can guide
an employee, where he is prone to commit mistakes.

OBJECTIVES OF PERFORMANCE APPRAISAL

As discussed earlier, performance appraisal is undertaken for a variety of reasons.
Review of organizational practices shows that orgainsations undertake performance appraisal
exercises to meet certain objectives which are in the form of salary increase , promotion,
identifying training and development needs, providing feedback to employees and putting
pressure on employees for better performance.
1. Salary increase. Performance appraisal plays a role in making decision about salary increase.
Normally salary increase of an employee depends on how he is performing his job. There is
continuous evaluation of his performance either formally or informally. In a small organization,
since there is a direct contact between the employee and the one who makes decisions about
salary increase, performance appraisal can be an informal process. However, in a large
organization where such contact hardly exists, formal performance appraisal has to be
undertaken. This may disclose how well and employee is performing and how much he should
be compensated by way of salary increase.

2. Promotion. Performance appraisal plays significant role where promotion is based on merit.
Most of the organizations often use a combination of merit and seniority for promotion,
performance appraisal discloses how an employee is working in his present job and what his
strong
and weak points are. In the light of these, it can be decided whether he can be promoted to the
next higher position and what additional training will be necessary for him. Similarly,
performance appraisal can be used for transfer, demotion and discharge of an employee.

3. Training and Development. Performance appraisal tries to identify the strengths and
weaknesses of an employee on his present job. This information can be used for devising training
and development programmes appropriate for overcoming weaknesses of the employees. In fact,
many organizations use performance appraisal as means for identifying training needs of
employees.

4. Feedback. Performance appraisal provides feedback to employees about their performance. It

tells them where they stand. A person works better when he knows how he is working; how his
efforts are contributing to the achievement of organizational objectives. This works in two ways.
First, the person gets feedback about his performance and he may try to overcome his
deficiencies which will lead to better performance. Second, when the person gets feedback about
his performance, he can relate his work to the organizational objectives. This provides him
satisfaction that his work is meaningful. Thus, given the proper organizational climate, he will
try his best to contribute maximum to the organization.

5. Pressure on Employees. Performance appraisal puts a sort of pressure on employees for

better performance. If the employees are conscious that they are being appraised in respect of
certain factors and their future largely depends on such appraisal, they tend to have positive and
acceptable behaviour in this respect. Thus, appraisal can work automatically as control device.
 PERFORMANCE MANAGEMENT SKILLS

Delivering feedback. The ability to give feedback is a key skill. It is important to find a
balance between positive and negative feedback. Remember to keep negative feedback factual
(based on your direct observations wherever possible) and non-judgemental, focussing on what
the individual can do to improve.
Giving praise. Recognition for a job well done is a powerful motivator, which helps keep
your team engaged and performing well. You should aim to give a mixture of formal and
informal praise, which can be verbal (thanking your team at a meeting) or written (an email or a
card).

Asking the right questions. Being able to ask appropriate questions is central to
effective performance discussions. Using a range of questioning techniques (open and probing
questions) will encourage your team members to open up, and allow you to discuss performance
issues in a constructive way.

Listening. For performance management processes to be effective, two-way

communication and understanding is essential. Employees need to be able to voice their views
and concerns with you, therefore the ability to listen and focus on what your team members are
saying will help you focus on their needs.

Identifying areas for development. To help your team develop, you need to be able to
find appropriate new challenges which will stretch their skills and help them to grow. You should
hold regular development discussions with each team member to seek their input on possible
development areas. It is important to strike the right balance between broadening their horizons
and providing adequate support and guidance when it is needed.

Recognising learning and development opportunities. Employees often become

demotivated and disengaged by a lack of learning and development opportunities. You should
aim to discuss and agree upon a range of development options with your team, which can be
tailored to suit their needs. Opportunities might include shadowing more experienced colleagues,
undertaking a new project or attending a formal training course.

Setting performance objectives. A key aspect of the performance review process is the
establishment of clear, achievable objectives or performance targets. You may find it helpful to
use SMART objectives, which link individual goals to your departments goals and wider
organisational objectives.

Demonstrating positive behaviours. As a manager, you should aim to establish a

positive performance culture, where individuals take responsibility for their own performance.
Your team members will take their cue from how you behave, so an awareness of the impact of
your behaviour on others and an ability to identify and demonstrate positive behaviours is
essential.

THE ROLE OF THE APPRAISER

The evaluation process should include assessment of whether individual performance is tied back
to corporate goals in a way that is clear to the individual. If not, the fault may well be an
organizational one; inadequate senior management buy-in. thus, the importance of the
performance appraisal system to the organization plays an important role in how successful the
appraiser will be. Do senior managers subscribe to the importance of the performance appraisal
system or do they merely provide lip service.

Ongoing training in use of the appraisal system is essential to its effectiveness and carries a
message of its importance in the organization. There must be an appreciation of the work
involved in doing performance appraisals properly, including recording keeping throughout the
year and careful preparation for the feedback session. Incentives should be designed to
recognize excellence in this important function and to provide penalties for late or poor
performance.

Unless these supports for the performance appraisal are in place, given the heavy workloads that
are common today, managers may understandably choose to shortchange this responsibility. The
following questions should be addressed by evaluators. Are managers adequately trained to
 provide feedback and refreshed annually on the appraisal system? Are incentives and
consequences in place to encourage appraisers to do this job with care?

TECHNIQUES / METHODS OF PERFORMANCE APPRAISALS

Numerous methods have been devised to measure the quantity and quality of performance
appraisals. Each of the methods is effective for some purposes for some organizations only. None
should be dismissed or accepted as appropriate except as they relate to the particular needs of the
organization or an employee.

Broadly all methods of appraisals can be divided into two different categories.

Past Oriented Methods

Future Oriented Methods

Past Oriented Methods

1. Rating Scales: Rating scales consists of several numerical scales representing job related
performance criterions such as dependability, initiative, output, attendance, attitude etc. Each
scales ranges from excellent to poor. The total numerical scores are computed and final
conclusions are derived. Advantages Adaptability, easy to use, low cost, every type of job can
be evaluated, large number of employees covered, no formal training required. Disadvantages
Raters biases
2. Checklist: Under this method, checklist of statements of traits of employee in the form of
Yes or No based questions is prepared. Here the rater only does the reporting or checking and HR
department does the actual evaluation. Advantages economy, ease of administration, limited
training required, standardization. Disadvantages Raters biases, use of improper weighs by HR,
does not allow rater to give relative ratings
3. Forced Choice Method: The series of statements arranged in the blocks of two or more are
given and the rater indicates which statement is true or false. The rater is forced to make a
choice. HR department does actual assessment. Advantages Absence of personal biases
because of forced choice. Disadvantages Statements may be wrongly framed.
4. Forced Distribution Method: here employees are clustered around a high point on a rating
scale. Rater is compelled to distribute the employees on all points on the scale. It is assumed that
the performance is conformed to normal distribution. Advantages Eliminates Disadvantages
Assumption of normal distribution, unrealistic, errors of central tendency.
5. Critical Incidents Method: The approach is focused on certain critical behaviors of
employee that makes all the difference in the performance. Supervisors as and when they occur
record such incidents. Advantages Evaluations are based on actual job behaviors, ratings are
supported by descriptions, feedback is easy, reduces recency biases, chances of subordinate
improvement are high. Disadvantages Negative incidents can be prioritized, forgetting
incidents, overly close supervision; feedback may be too much and may appear to be
punishment.
6. Behaviorally Anchored Rating Scales: statements of effective and ineffective behaviors
determine the points. They are said to be behaviorally anchored. The rater is supposed to say,
which behavior describes the employee performance. Advantages helps overcome rating errors.
Disadvantages Suffers from distortions inherent in most rating techniques.
7. Field Review Method: This is an appraisal done by someone outside employees own
department usually from corporate or HR department. Advantages Useful for managerial level
promotions, when comparable information is needed, Disadvantages Outsider is generally not
familiar with employees work environment, Observation of actual behaviors not possible.
8. Performance Tests & Observations: This is based on the test of knowledge or skills. The
tests may be written or an actual presentation of skills. Tests must be reliable and validated to be
useful. Advantage Tests may be apt to measure potential more than actual performance.
Disadvantages Tests may suffer if costs of test development or administration are high.
9. Confidential Records: Mostly used by government departments, however its application in
industry is not ruled out. Here the report is given in the form of Annual Confidentiality Report
(ACR) and may record ratings with respect to following items; attendance, self expression, team
work, leadership, initiative, technical ability, reasoning ability, originality and resourcefulness
etc. The system is highly secretive and confidential. Feedback to the assessee is given only in
case of an adverse entry. Disadvantage is that it is highly subjective and ratings can be
manipulated because the evaluations are linked to HR actions like promotions etc.
10. Essay Method: In this method the rater writes down the employee description in detail
within a number of broad categories like, overall impression of performance, promoteability of
employee, existing capabilities and qualifications of performing jobs, strengths and weaknesses
and training needs of the employee. Advantage It is extremely useful in filing information gaps
about the employees that often occur in a better-structured checklist. Disadvantages It its
highly dependent upon the writing skills of rater and most of them are not good writers. They
may get confused success depends on the memory power of raters.
11. Cost Accounting Method: Here performance is evaluated from the monetary returns yields
to his or her organization. Cost to keep employee, and benefit the organization derives is
ascertained. Hence it is more dependent upon cost and benefit analysis.
12. Comparative Evaluation Method (Ranking & Paired Comparisons): These are
collection of different methods that compare performance with that of other co-workers. The
usual techniques used may be ranking methods and paired comparison method.
Ranking Methods: Superior ranks his worker based on merit, from best to worst. However
how best and why best are not elaborated in this method. It is easy to administer and explanation.
Paired Comparison Methods: In this method each employee is rated with another employee
in the form of pairs. The number of comparisons may be calculated with the help of a formula as
under.
N x (N-1) / 2

Future Oriented Methods

1. Management By Objectives: It means management by objectives and the performance is
rated against the achievement of objectives stated by the management. MBO process goes as
under.
Establish goals and desired outcomes for each subordinate
Setting performance standards
Comparison of actual goals with goals attained by the employee
Establish new goals and new strategies for goals not achieved in previous year.
Advantage It is more useful for managerial positions.

Disadvantages Not applicable to all jobs, allocation of merit pay may result in setting short-
term goals rather than important and long-term goals etc.

2. Psychological Appraisals: These appraisals are more directed to assess employees potential
for future performance rather than the past one. It is done in the form of in-depth interviews,
psychological tests, and discussion with supervisors and review of other evaluations. It is more
focused on employees emotional, intellectual, and motivational and other personal characteristics
affecting his performance. This approach is slow and costly and may be useful for bright young
members who may have considerable potential. However quality of these appraisals largely
depend upon the skills of psychologists who perform the evaluation.
3. Assessment Centers: This technique was first developed in USA and UK in 1943. An
assessment center is a central location where managers may come together to have their
participation in job related exercises evaluated by trained observers. It is more focused on
observation of behaviors across a series of select exercises or work samples. Assessees are
requested to participate in in-basket exercises, work groups, computer simulations, role playing
and other similar activities which require same attributes for successful performance in actual
job. The characteristics assessed in assessment center can be assertiveness, persuasive ability,
communicating ability, planning and organizational ability, self confidence, resistance to stress,
energy level, decision making, sensitivity to feelings, administrative ability, creativity and mental
alertness etc. Disadvantages Costs of employees traveling and lodging, psychologists, ratings
strongly influenced by assessees inter-personal skills. Solid performers may feel suffocated in
simulated situations. Those who are not selected for this also may get affected.
Advantages well-conducted assessment center can achieve better forecasts of future
performance and progress than other methods of appraisals. Also reliability, content validity and
predictive ability are said to be high in assessment centers. The tests also make sure that the
wrong people are not hired or promoted. Finally it clearly defines the criteria for selection and
promotion.
4. 360-Degree Feedback: It is a technique which is systematic collection of performance data
on an individual group, derived from a number of stakeholders like immediate supervisors, team
members, customers, peers and self. In fact anyone who has useful information on how an
employee does a job may be one of the appraisers. This technique is highly useful in terms of
broader perspective, greater self-development and multi-source feedback is useful. 360-degree
appraisals are useful to measure inter-personal skills, customer satisfaction and team building
skills. However on the negative side, receiving feedback from multiple sources can be
intimidating, threatening etc. Multiple raters may be less adept at providing balanced and
objective feedback.
RATERS ERRORS
1. Halo Effect
Halo effect is when an employee is rated the same across all performance dimensions due
to a positive or negative rater impression. This typically is when the rater either likes or
dislikes the employee and allows those feelings to influence their performance rating of
them.
2. Leniency Error
Managers who over-emphasize either negative or positive behaviors make leniency errors.
This is when employees are rated either at the low end of the scale (negative leniency) or at
the positive end (positive leniency).
3. Central Tendency Errors
Managers who are uncomfortable with making "extreme" judges of performance tend to
rate their employees in the middle of the scale. This central tendency error happens with
managers who don't deal well with behavioral issues and avoid conflict.
4. Recency Error
Recency error happens when a manager allows recent incidents of employee behaviors to
influence the performance rating over the entire rating period. This can be extreme on
either end of the spectrum where by an employee has had a successful project or a negative
event right before the performance evaluation. Keeping accurate performance records
during the year helps to provide evaluation data for the rating period.
5. First Impression Error
Managers who allow their first impressions of employee performance to influence their
evaluation make the first impression error. New employees tend to have a "honeymoon"
period and perform at high levels but often lose some of that momentum over tim
6. Similar-to-me Errors
Everyone relates to people who are like them but that should not influence the evaluation of
employee performance. Managers who are biased toward employees who are similar to
themselves make this similar-to-me rater error.
It is important to have objective measures for rating performance because of these natural
human biases. Using data gathered over an entire rating period can help minimize these
errors. But most importantly, performance appraisals should be used to reflect on employee
 performance, course correct when needed, celebrate successes and strategize employee
development. If done well, the process can be a positive one and beneficial for both the
employee as well as the manager.

DATA COLLECTION
To collect performance data from a variety of sources in order to provide yourself with an
objective picture of the extent to which team member has met their performance goals and
displayed the competencies expected of their role.
For this purpose, required to creat a separate individual files, this can be physically or an
electronic one.

Enter the data into a spreadsheet for each individual member and for the team as a whole as this
will give you a quick reference point for assessing performance. This also enables us to quickly
compare performance across your team so you can easily identify areas or people who are under
performing. Without valid and thorough performance data you will be unable to offer
constructive feedback and relevant coaching to help them to improve.
Types of data to collect
There are a wide variety of options available to you as a manager for collecting data on the
performance of each of your team members. These can be broadly categorized into four areas as
shown in below diagram.
These categories are not exclusive, eg. A significant incident could demonstrate that a team
member possessed a required competency as specified in the role description, but it could also
have contributed to the attainment of a goal.
When using job descriptions be sure to rate each item in terms of its contribution to the
organization rather than in terms of the one that has the most responsibility or is the most time
consuming. This offers the perfect opportunity to regularly clarify and reinforce the
organizations objectives.
Data collection should be continuous activity, to increase overall effectiveness for several
reasons.
It will enables to collate the team.
Regular meetings with each team member provide the ideal opportunity to give clear and
specific feedback regarding their performance.
The data collection process encourages to engage with team members regularly which
will create positive impact on their motivation and morale.
It increases ability to make better and more informed decisions as a result of using
accurate and current data. Such decisions being more readily accepted and understood.
Goal Progress
In this method, the portion of the performance data collection is delegated to each team member
in terms of their regular reporting. Define these reports as part of the goals set, or as a part of a
business function that the individual is responsible for or contributes to.
This will help to know what kind of objective data is most relevant to team and what helps us in
reporting.
Generic Data
This data is related to the attitude of an individual towards their role and the organization.

Eg.
Is the person absent frequently< are the absences affecting their performance?
Does the individual follow organizational policies and procedures?
Did they complete assignments in a timely manner and follow up appropriately?
How ell does the individual demonstrate an ability and willingness to cooperate and
work effectively with others, including supervisors, co-workers, customers, suppliers
and the broader community?
To what extent does the person seek out new assignments or additional
responsibilities?
Does the person show a commitment to safety at work in their performance?
All these generic ways to measure performance need to be judged according to the persons job
description and their contribution to the organizations success. It is also important to view any
personnel data such as absenteeism, sickness and accidents as potential indicators of poor
performance.
Third Party Feedback
The first two methods of gathering performance of data generally relate to the working
relationship with the individual, but this only provide you with a narrow view of their
performance. To gain a true appreciation of how well a person is performing and contributing to
the organization, required to gather data the individuals relationship with third parties.
The data which to be collected from these third parties will vary depending on the nature of your
team and the individuals role. Examples include production schedules, product sales reports,
geographical returns report, customer feedback, and peer evaluations. Be mindful of the
individuals personal contribution to such data and view it as supplementary to your team
leaders own performance data because of the subjective elements that are likely to be included.

Thus, collect performance data from a variety of sources in order to provide yourself with an
objective picture of the extent to which each team member has met their performance goals and
displayed the competencies expected.
Collected the data based on progress towards goals, third party feedback and observed
competencies, as well as generic data like attendance.

CONDUCTING AN APPRAISAL INTERVIEW

A performance appraisal interview is the first stage of the performance appraisal process and
involves the employee and his or her manager sitting face to face to discuss threadbare all
aspects of the employees performance and thrash out any differences in perception or
evaluation. The performance appraisal interview provides the employee with a chance to defend
himself or herself against poor evaluation by the manager and also gives the manager a chance to
explain what he or she thinks about the employees performance.

In a nutshell, the performance appraisal interview precedes the normalization process and is
subsequent to the employee filling up the evaluation form and the manager likewise doing so.
The interview is the stage where both sides debate and argue the employees side of the story as
well as the managers perception.

FOLLOW UP AND VALIDATION

After collection of data, suitable action plan will be formulated and implemented. With a view to
monitor the progress and for providing feedback, establish definite review points. A document
detailing performance progress against planned performance targets. Level of achievement
needs to be indicated against performance indicators and evidence must be attached to validate
performance status.
 CHAPTER IV
PERFORMANCE CONSULTING

LEARNING OBJECTIVES
Need
Role of the Performance
Consulting
Designing and using Performance Relationship Maps
Contracting for Performance Consulting Services
Organizing Performance Improvement Department

MEANING AND DEFINITION

Performance consulting is a process in which a client and consultant partner to accomplish the
strategic outcome of optimizing workplace performance in support of business goals.
Jim and Dana Robinson
NEED
The strategy of performance consulting not only improves the performance but also
brings positive improvement in the performance introducing the changed measurement
strategy, developing employees and also ensuring performance based employee selection.
It helps to identify and achieve performance excellence.
The role of performance consultants is just like keys and locks. It means it cannot work
unless it fits. Thus, the performance consulting process helps organizations to bring
positive change in the work environment.
There are three types of performance consulting-organizational development,
professional development and personal coaching. Organizational development
perspective helps to improve the overall effectiveness of the organization. Professional
development emphasizes on the effectiveness of people, and coaching trains people to
become more effective both at the personal level and at the level of workplace.
ROLE OF PERFORMANCE CONSULTANTS
Performance consulting is the transfer of new skills and competencies acquired through on the
job training focusing on the performance needs of employees. The idea behind is to improve the
overall performance. The responsibilities of performance consultants are as below.
To attain a balance between the needs of the organization and the employees
To create synergy and teamwork
To identify and solve the problems of the employees
To assess and measure the actual performance of the employees
To identify and improve the internal and external factors affecting the performance of
the employees
To motivate and support the employees
To review and give performance feedback to facilitate performance improvement
CONSULTING
It includes
Organizational assessment
Change management
Performance improvement
Process improvement
Performance measurement
Strategy implementation
Performance consultants take a holistic approach to assessing an organizations performance.
They evaluate organization structure, workforce capabilities, organizational processes, available
tools and technologies, and culture as a system, each component impacting one another and
driving performance. The assessment starts with artifact reviews and interviews with leadership
to understand the organizations mission and priorities and discuss the performance challenges
the organization is experiencing. Then they may survey and interview the staff thats executing
to baseline and current state and identify gaps between actual and desired performance. Using
their expertise, consultants analyze performance gaps, diagnose root causes and put together a
comprehensive, executable plan to sustainably improve performance.
Functions and process Reengineering is a vital task for organizations those saddle themselves
with poorly designed functions and operating processes, those organizations not only perform
below their potential capabilities but also risk demotivating and losing critical employees as a
result. Consultants help to design new processes, map existing processes ad identify
opportunities for improvement, and reengineer processes and functions to enable the greater
success of the staff and organization.

For performance measurement and improvement, they help to identify the key drivers of
organizations performance, define data driven KPIs and metrics that tie back to your strategy
and mission, develop monitoring and reporting systems and provide you with tools to evaluate
your results and use the information to drive change and transform the business.

Consultants understands that for the capabilities of individual staff or teams to evolve into
sustained performance for the organization, learning and development must be more than one
time or limited time events. They partner with clients to develop performance improvement
tools like real time job aids to reinforce learning and enable employees to succeed
Strategic planning is critical to setting an organization up for success but its true value is only
realized if the strategy is implemented successfully. Consultants helps to not only develop long
term strategic plan but also ensure that organizational structure, workforce, processes, tools and
technologies and culture are aligned with the mission and strategy to enable successful execution
of plan.

DESIGNING AND USING PERFORMANCE RELATIONSHIP MAPS

Performance relationship map is used by performance consultants to focus data collection effort.
It identifies what information must be collected when analyzing business, performance, training
and work environment needs, way to display data.
The design of an organization allow the goals to be met. The main tool used is a relationship
map that looks at the flows among major groups, rather than specific activities. That is, it creates
a broad picture of the organization. The map is constructed by identifying the various units,
functions, departments, or individuals expected to participate in or impact the process.
Relationship map used to help understand how the work is currently getting done so that
disconnects can be discovered and fixed. Disconnects are missing, confusing, unneeded, or
misdirected inputs or outputs.

CONTRACTING FOR PERFORMANCE CONSULTING SERVICES

Contracting involves setting mutual expectations, negotiating time resources and developing
ground rules for working together.
Guidelines for contracts
1. They are based upon trust
2. They articulate mutually shared expectations
3. They are living agreements that are continually renegotiated
4. They are critical to the success of any project
5. They require the performance consultant to perform in the role of guide, while the
client has the role of decision maker.
Performance Consulting services contract are of two types
Contract for Assessment
Contract for performance Implementation

Contract for Assessment

Initial project meeting provide an opportunity to raise the clients awareness that more
information is required before proceeding. The desired outcome from an initial project meeting
is the agreement or contract to conduct a performance assessment.
Performance assessment contracts include negotiated agreements in four areas
Deliverables This is a clear articulation of the purpose of the performance assessment
and of each of the reports that will be generated throughout the assessment. It also an
agreement about the types of decisions that can and must be made as a result of each of
these reports.
Processes to be used in accomplishing deliverables
 This is a mutual understanding of the data sources and processes used in obtaining any or
all of the following a] SHOULD data 2] IS data and 3] CAUSE data
Roles and Responsibilities
The roles of the Performance Consultant and the client team are clarified here.
Typically, Performance Consultants are the doers. They develop the data collection
instruments such as interview guides and questionnaires. In addition, they collect the
majority of the data, tabulate the data and form the report of findings, which can include a
performance model and identification of training and work environment needs.
Time Frame and Cost of the assessment
The time frame and cost of the assessment together with the assumptions used to derive
each of those items.
Contract for Performance Implementation
The process of contracting for implementation begins in the data feedback meeting when clients
begin to define the actions that will be required to change performance. Implementation
contracts specifically identify the desired performance and operational results that form the
deliverable portion of the contract. Implementation contracts also indication the actions that will
be taken to achieve this desired performance. Actions typically include some or all of the
following:
Communication plans
Training actions
Work environment actions
Formation of a performance management system or modification of an existing one
The role of the performance consultant during the implementation phase will vary and is
dependent upon the scope of the project, the type of actions being taken, and the client consultant
relationship that has been formed. However, the Performance consultant is typically a part of the
team of people chartered to lead the implementation effort.

ORGANIZING PERFORMANCE IMPROVEMENT DEPARTMENT [PID]

There is difference between traditional training and development department and PID :-
One companys training department operates on a charge back system, meaning that
internal customers must pay for the services they receive from the department, but no
 fees are incurred for completing the performance consulting services, such as developing
performance models, identifying performance gaps and causes, and measuring the
performance and operational results from invention. This system encourages delivery of
training [which yields fees] and not provision of performance services [which does not]
We experience that trainers are often at a lower lvel in the organization than the clients
they are to support. The performance measures for a member of the training department
in another organization are based upon the number of training programs conducted and
favourable ratings on the reaction evaluation forms. There are no measures for the
quality of the client consultant relationship or the contribution to performance and
operational impact.
The mission statement of training department is
we support the mission and business plan of our company by developing the skills,
enhancing the knowledge, and expanding the perspectives of all employees
The mission of PID is
We provide consulting, training, assessment, and measurement services that ensure
continuous individual and organizational performance improvement in support of our
business plan.
Training departments offers following functions
o Identifying training needs
o Designing and developing training programs and other structured learning
experiences
o Devlivering structured learning experiences
o Training trainers and assuring the quality of the training delivered by others
o Evaluating training programs at the reaction and learning levels
PID delivers following services
o Forming performance and competency models
o Identifying performance gaps
o Determining the causes of performance gaps
o Measuring the impact of training and non training actions that are taken to change
performance
 o Consulting with management on business and performance needs
o Proactively identifying performance implications for future business goals and
needs
Functions of PID
1. Client liasion
PID Partners with management for the purposes of identifying and contracting for
performance improvement initiatives that address business needs.

2. Performance analyst
Identifies the ideal and actual performance required to meet business needs and
determines the causes of performance discrepancies.
3. Performance Consultant
Assists and guides management in taking actions in support of performance improvement
initiatives.
4. Impact evaluator
Identifies and reports the impact of an intervention on individual performance and
organizational effectiveness.