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Performance Management

Performance Management
Performance Management:1) An agreed framework of planned goals, standards and attribute competence requirements. ( Managing Expectations) 2) Process to manage performance improvements and to achieve the delivery of results. 3) Shared Understanding 4) Achievement of job related success for individuals for best use of their abilities, realize their potential & maximize their contribution to the success of the organisation 5) An approach to managing and developing people How managers & team leaders work effectively with those around them How individuals work with their managers & teams How individuals can be developed to improve their knowledge, skills, & expertise and their levels of competence and performance.

Performance Management is to establish a culture in which individual & group take responsibility for the continuous improvement of business processes & their own skills & contributions. Integration to achieve PM: Reward- Driven integration Development- Driven integration.

Implications of PM

HRM (PM is interrelated processes of work, management, development & reward.) - Achieve high levels of performance from the organization's human resource - develop people to their full capacity & potential - establish an environment in which the latent potential of employees can be realized. - reinforce or change the organization's culture Continuous Development - Continuous learning for self development Team working

How Performance Management Works


High Performance
* Reinforce through Praise/
Recognition/ Increased responsibility Improvement Performance

Performance Effectiveness

Low Performance
* Coaching / Counseling
Actual Performance

Performance Monitoring & Review against Performance Agreement Agreement

Main Performance Review End year

Start Year

Stages of Performance Management

A Conceptual Model of Performance Management :

The organization has a shared vision of its objectives, or a mission statement, which it communicates to all its employees. The organization sets individual performance management targets which are related both to operating unit & wider organizational objectives It conducts a regular, formal review of progress towards these targets It uses the review process to identify training, development & reward outcomes. It evaluates the effectiveness of the whole process & its contribution to overall performance to allow changes and improvements to be made.

Application of the Basic Model:Principles of effective performance management1) That it is owned & driven by line management & not by the HR Department. 2) That there is an emphasis on shared corporate goals & values 3) That performance management is not a package solution, it is something that has to be developed specifically & individually for the particular organization. 4) That it should apply to all staff, not just part of the managerial group.

The Performance Management Process

Performance Rating Mission & Objectives Value Statements Performance Agreement Continuous Performance Management Preparation for Review Performance Review

Performance related pay

Feedback

Feedback

Development & Training

Corporate, Departmental And team Objective and Plan The Performance Management Cycle

Performance Agreement

Performance Review

Action

Performance Plan

Monitor Feedback and Review

Conceptual Framework for PM


Corporate strategies and objectives Preparation of mission and values statements linked to business strategy Definition of corporate & functional or departmental objectives Performance agreements & Plans Agreement of accountabilities, tasks, objectives, knowledge, skill & competence requirements and performance measures the performance agreement or contract. Agreement of work plans & personal development and performance improvement action plans (these can form part of a performance agreement). Continuous management of performance throughout the year Regular feedback Interim progress reviews Formal performance reviews Preparation by the manager & the individual for the formal review. The annual performance review, which leads to new performance agreement. Development & Training Formal development & training programs prompted by the performance review Less formal development throughout the year will be taking place in the shape of coaching, counseling, on-the-job raining & self development activities. Rating Rating or ranking performance although usual, not an inevitable PM activity Performance related pay (PRP) Not always associated with PM however, decisions on PRP may be made at a separate time from the performance review so as not to prejudice the essential developmental nature of the performance management process

Define mission, values, strategies and objectives

Understand and agrees objectives

Define tasks, Standards and Performance measures

Understands and Agrees tasks, Standards and Performance measures

Monitors, organizational team and individual performance

Monitors own performance

Develop team and Individual performance

Develop own performance

The contribution of the organizational and the individual in performance management

Introduction
Employees generally see performance evaluations as having a direct effect on their work lives. The performance management systems need to include:
decisions about who should evaluate performance what format should be used how the results should be utilized

Performance Management Systems


Purposes of a Performance Management System
Feedback - let employees know how well they have done and allow for employee input. Development identify areas in which employees have deficiencies or weaknesses. Documentation - to meet legal requirements.

Performance Management Systems


Difficulties in Performance Management Systems
Focus on the individual: Discussions of performance may elicit strong emotions and may generate conflicts when subordinates and supervisors do not agree.

Performance Management Systems


Difficulties in Performance Management Systems
Focus on the process: Company policies and procedures may present barriers to a properly functioning appraisal process. Additionally, appraisers may be poorly trained.

Performance Management and EEO


HRM practices must be bias free, objective and job-related. Valid performance appraisals are conducted at established intervals and are done by trained appraisers.

The Appraisal Process

The Appraisal Process


Establishment of performance standards
Derived from companys strategic goals. Based on job analysis and job description.

Communication of performance standards to employee.

The Appraisal Process


Measurement of performance using information from:
personal observation statistical reports oral reports written reports

Comparison of actual performance with standards.

The Appraisal Process


Discussion of appraisal with employee. Identification of corrective action where necessary.
Immediate action deals with symptoms. Basic corrective action deals with causes.

Appraisal Methods
Three approaches: Absolute standards Relative standards Objectives

Appraisal Methods
Evaluating absolute standards: An employees performance is measured against established standards. Evaluation is independent of any other employee.

Appraisal Methods
Evaluating absolute standards:
Essay Appraisal: Appraiser writes narrative describing employee performance & suggestions. Critical Incident Appraisal: Based on key behavior anecdotes illustrating effective or ineffective job performance.

Appraisal Methods
Evaluating absolute standards:
Checklist Appraisal: Appraiser checks off behaviors that apply to the employee. Adjective Rating Scale Appraisal: Appraiser rates employee on a number of job-related factors.

Appraisal Methods
Evaluating absolute standards:
Forced-Choice Appraisal: Appraisers choose from sets of statements which appear to be equally favorable, the statement which best describes the employee.

Appraisal Methods
Evaluating absolute standards: Behaviorally Anchored Rating Scales (BARS): Appraiser rates employee on factors which are defined by behavioral descriptions illustrating various dimensions along each rating scale.

Appraisal Methods
Relative standards: Employees are evaluated by comparing their performance to the performance of other employees.

Appraisal Methods
Relative standards: Group Order Ranking: Employees are placed in a classification reflecting their relative performance, such as top onefifth.

Appraisal Methods
Relative standards:
Individual Ranking: Employees are ranked from highest to lowest. Paired Comparison:
Each individual is compared to every other. Final ranking is based on number of times the individual is preferred member in a pair.

Appraisal Methods
Using Achieved Outcomes to Evaluate Employees
Management by Objectives (MBO) includes mutual objective setting and evaluation based on the attainment of the specific objectives

Appraisal Methods
Using Achieved Outcomes to Evaluate Employees
Common elements in an MBO program are:
goal specificity participative decision making an explicit time period performance feedback

Effectively increases employee performance and organizational productivity.

Factors that can Distort Appraisals

Factors that can Distort Appraisals


Leniency error
Each evaluator has his/her own value system. Some evaluate high (positive leniency) and others, low (negative leniency).

Halo error: Evaluator lets an assessment of an individual on one trait influence evaluation on all traits.

Factors that can Distort Appraisals


Similarity error: Evaluator rates others in the same way that the evaluator perceives him or herself. Low appraiser motivation: Evaluators may be reluctant to be accurate if important rewards for the employee depend on the results.

Factors that can Distort Appraisals


Central tendency: The reluctance to use the extremes of a rating scale and to adequately distinguish among employees being rated. Inflationary pressures: Pressures for equality and fear of retribution for low ratings leads to less differentiation among rated employees. Inappropriate substitutes for performance: Effort, enthusiasm, appearance, etc. are less relevant for some jobs than others.

Factors that can Distort Appraisals


Attribution Theory Evaluations are affected based on whether someones performance is due to
internal factors they can control external factors which they cannot

If poor performance is attributed to internal control, the judgment is harsher than when it is attributed to external control.

Factors that can Distort Appraisals


Impression management: If employee positively influences the relationship with the supervisor, he/she is likely to receive a higher rating.

Creating More Effective Performance Management Systems


Use Behavior-Based Measures: Measures based on specific descriptions of behavior are more job-related and elicit more inter-rater agreement than traits, such as loyalty or friendliness.

Creating More Effective Performance Management Systems


Combine Absolute and Relative Standards: Absolute standards tend to be positively lenient; relative standards suffer when there is little variability. Combining the standards tends to offset the weaknesses of each.

Creating More Effective Performance Management Systems


Provide Ongoing Feedback: Expectations and disappointments should be shared with employees on a frequent basis.

Creating More Effective Performance Management Systems


Use Multiple Raters: Increasing the number of raters leads to more reliable and valid ratings.
Use peer evaluations: Coworkers offer constructive insights and more specific evaluations. Upward appraisals allow employees to give their managers feedback. 360-Degree appraisals: Supervisors, peers, employees, team members, customers and others with relevant information evaluate the employee.

Creating More Effective Performance Management Systems


Rate Selectively
Appraisers only evaluate in those areas about which they have sufficient knowledge. Appraisers should be organizationally as close as possible to the individual being evaluated. More effective raters are asked to do the appraisals.

Creating More Effective Performance Management Systems


Train Appraisers: Untrained appraisers who do poor appraisals can demoralize employees and increase legal liabilities.

Creating More Effective Performance Management Systems

International Performance Appraisal


Who performs the evaluation?
Different cultural perspectives and expectations between the parent and local country may make evaluation difficult. Evaluation forms may not be translated accurately. Quantitative measures may be misleading.

International Performance Appraisal


Evaluation Formats
May make sense to use different forms for parent-country nationals and host-country nationals. Performance criteria for a particular position should be modified to fit the overseas position and site. Include a current expatriates insights as part of the evaluation.