CONTENT

DEFINITION OF PERFORMANCE MANAGEMENT HISTORY OF PERFORMANCE MANAGEMENT PERFORMANCE MANAGEMENT IN ISLAMIC CONTEXT OBJECTIVE OF PERFORMANCE MANAGEMENT DISADVANTEGE OF POORLY IMPLEMENTED PERFORMANCE MANAGEMENT PERFORMANCE MANAGEMENT PROCESS KPI DEFINING PERFORMANCE APPRAISAL PERFORMANCE APPRAISAL OBJECTIVE PERFORMANCE APPRAISAL PROCESS WHEN ? HOW OFTEN ? WHO EVALUATE ? EVALUATION TECHNIQUE LIMITATIONS

PERFORMANCE MANAGEMENT
Performance management is the process by which executives, managers, and supervisors work align employee performance with the firm goals. (Ivancevich and Konopaske, 2013) A strategy which relates to every activity of the organisation set in the context of its human resources policies, culture, style and communications systems. The nature of the strategy depends on the organisational context and can vary from organisation to organisation (CIPD,1992)

Performance management is a continuous process of identifying, measuring and developing performance in many organization by lining each individuals performance and objective to the organizations overall mission and goals. (Aguinis, 2011) Performance management is action, based on performance measures and reporting, which results in improvements in behaviour, motivation and processes and promotes innovation. (Fryer et al., 2009)

Performance Management is the process of defining clear objectives and targets for individuals and teams, and the regular review of actual achievement and eventual rewarding for target achievement. (Callaghan, A., 2005)

Performance management is the process of identifying measuring, managing and developing performance of human resource in organization

http://www.analytix.co.za/Training/Courses/StrategyPerformanceManagement.aspx

HISTORY
FROM PERFORMANCE APPRAISAL TO PERFORMANCE MANAGEMENT

Performance management has been around in the language of HR and people management since the 1980s (CIPD) Performance appraisal can be traced back for thousand years - In Bible Moses selected men who were known to be most skilled craftsmen from the tribes of Israel to build and furnish the tabernacle of the Lord in about 1350 BC

HISTORY
DEFINITION OF PERFORMANCE APPRAISAL VS PERFORMANCE MANAGEMENT (Dessler, 2008)

PERFORMANCE APPRAISAL
Evaluating an employees' current or past performance relative to his/her performance standards. (provide employees with feedback, development and incentive required to help the person eliminate performance deficiencies or to continue perform above par)

PERFORMANCE MANAGEMENT
An integrated process that consolidates goal setting, performance appraisal and development into single common system.

HISTORY
OBJECTIVE OF PERFORMANCE APPRAISAL VS FERFORMANCE MANAGEMENT

PERFORMANCE APPRAISAL
To improve employee performance by identifying weakness of an employee to guide for formulation of suitable training and development program (Tripati, 2005)

PERFORMANCE MANAGEMENT
To achieve capacity of the employees to the full potential in favor of both employee and the organization (Toppo L. and Pristy T., 2012)

HISTORY
CRITICS ON PERFORMANCE APPRAISAL
Problems with performance appraisal :
1. Employees need and want regular feedback 2. Manager cannot typically judge an entire year of work from an individual at one time 3. Manager-employee relationship is not 1:1 like they use to be(Some employee work with many leaders and peers during the year, one person cannot adequately rate them without lots of peer input) 4. While some employees are poor performer, these issues should be addressed immediately, not at the end of the year 5. Some companies really do have a lot of high performers, forced ranking eliminates great people Josh, Bersin 6. Appraisal process is almost always negative and Founder and Principal at Bersin by Deloitte destructive

Why companies are still practicing performance appraisal? 1. Need a fair and validated way to distribute compensation 2. Need record of low performance when let someone go (Sources : Bersin, Josh. 3. Need to capture performance data in an employees (2013). Time To profile for future promotion and other talents review, Scrap Performance development plans and career migration Appraisal? Forbes 4. Need a way to make sure managers are doing their jobs Magazine.) well

How to overcome?
1. Develop a feedback-rich culture and set of tools (online, formal or informal) that encourage all employees to give each other feedback. Eg, Achiever software 2. Focus managers on hiring the best, so that they build a team which strive for 100% high performers. (reduce cost on assessment) 3. Enable managers to assess performance regularly

Josh, Bersin Founder and Principal at Bersin by Deloitte

PERFORMANCE MANAGEMENT IN ISLAMIC CONTEXT

Islam recognises rewards and punishment in worldly life and the Hereafter. Whoever doth wrong, him shall We punish; then shall be sent back to his Lord, and He will punish him with a punishment unheard of [before]. But whoever believes, and work righteousness, he shall have a goodly reward, and easy will be his task as We order it by Our command.

[SURAH AL KAHF 18:87-88]

A true Muslim believes in the Day of Judgment, the Resurrection, man's presence in the divine court, and the acceptance of reward or punishment. He believes that the record of all actions of a man in this world is preserved and will be presented on the day of Resurrection. (Ahmad, 1995) Not an atom's weight, or less than that or greater escapes Him in the heavens or in the earth but it is in a clear record. That He may reward those who believe and do good works. For them is a provision and a rich provision.

SURAH AL-MAIDAH [39:3-5]

Ways of Almighty's Assessment of Performance

(Ali, 2005)

CONTRACTUAL ARRANGMENT

And fulfil engagement (promise), for the engagement will be enquired into *17:34+ Both the company and its employees have expectations that must simultaneously be fully met

SELF RESPONSIBILITY

Nay, man is a witness against himself. *75:14+ one does is solely his or her responsibility and no one should be held responsible for the mistakes of others Employees are expected to have a moral duty to monitor their own performance and work for selfdevelopment

Evaluation Method (Ali, 2005)

Judgment based approach

Use statement related to trait Example : kindness, responsibility, maturity, reliability, dedication

Behavioral based approach

Based on criteria included in job selection Example : Honestly and competence (two attributes that make one an excellent employee

PURPOSE OF PERFORMANCE MANAGEMENT SYSTEM

(Aguinis H. , (2011) STRATEGIC ADMINISTRATIVE PURPOSE INFORMATION PURPOSE DEVELOPMENT PURPOSE To help top management achieve the strategic business objective To furnish valid and useful information for making administrative decision about employees. (promotion, retention, termination, poor performer, layoff) Provide information on specific areas that may need improvement Develop the gap between manager expectation and employees performance

ORGANIZATIONAL Allow organization to allocate human resource where they can MAINTENANCE do the most good PURPOSE
DOCUMENTATION Can be useful in case of litigation PURPOSE

PURPOSE OF PERFORMANCE MANAGEMENT SYSTEM

(Ivancevich and Konopaske, 2013) DEVELOPMENT Can determine which employees need more training Can evaluate the results of training program Encourage supervisor to observe subordinate behavior Encourage initiative, develop sense of responsibility, and stimulates effort to perform better

MOTIVATION

HUMAN RESOURCE Serve as valuable input to skill inventories and human EMPLOYMENT resource planning PLANNING COMMUNICATIONS basis for ongoing discussion between superior and subordinates about job related matter LEGAL COMPLIANCE HRM RESEARCH Serve as legally defensible reason for promotions, transfers, rewards, and discharge Can be used to validate selection tools such as testing program

DISADVANTAGE OF POORLY IMPLEMENTED PM

(Aguinis H., 2011) Employees may quit due to results False or misleading information may be used. Self-esteem may be lowered. Time and money are wasted. Relationships are damaged. Motivation to perform is decreased. Employees suffer from job burnout and job dissatisfaction. There is increased risk of litigation (expensive lawsuit from dissatisfied employee). Unjustified demands are made upon managers resources (take up managers time). Standards and ratings vary and are unfair. Biases can replace standards. Mystery surrounds how ratings were derived. (employees may not know how their ratings are generated or hoe ratings are translated to reward.)

(Akrani G., 2011)

 Example of Georgia Institute of Technology performance and talent management

Source : http://www.ohr.gatech.edu/sites/default/files/ers/PER FORM(Quick%20Reference%20Guide2012_1).pdf

Example of Georgia Institute of Technology performance and talent management cycle

Performance management process

(Pulakos, 2004)

ROLES AND RESPONSIBILITIES

(Georgia Technology Institution)

HR REPRESENTATIVE
Assist and creating environment that promotes effective performance management
Champion performance best practices Encourage managers to establish and build trust relationship with their employees Provide guidance and coaching to employees and managers throughout the process Ensure every eligible classified employee and manager has a performance discussion at least once a year

MANAGERS
Build trust relationship with employees
Create opportunity of feedback session throughout the year

Have an annual conversation with each employee on the past years performance
Complete review on time

Establish goals and expectation with each employee in order for a plan to success
Provide timely and constructive feedback and ongoing coaching and development opportunities

EMPLOYEES
Seek continuous feedback from manager

Participate in annual conversation regarding past performance

Establish career development goals to discuss with manager Determine areas for improvement and potential development opportunities Be prepared for the one on one performance review meeting Work with managers to set goals to set target dates for goal completion Continue to seek feedback throughout the year
http://www.ohr.gatech.edu/sites/default/files/ers/PERFORM(Quick%20Reference%20Guide2 012_1).pdf

KEY PERFORMANCE INDICATOR (KPI)

Key Performance Indicators (KPIs) are quantitative and qualitative measures used to review an organisation's progress against its goals. These are broken down and set as targets for achievement by departments and individuals. The achievement of these targets is reviewed at regular intervals. (Wasserman,2013)

CHARACTERISTIC OF KPI
RELEVENT REPRESENTATIVE TIMELY SPECIFIC MEASURABLE UNDERSTOOD ATTAINABLE USE TO IDENTIFY TRENDS AGREED

REPORTED

GOVERNED

ASSESSED

Source : Public Record Office Victoria (2010)

How to set performance objective and the relationship between setting objective and performance management

CHALLENGES ON IMPLEMENTING PERFORMANCE MANAGEMENT

CHALLANGE HOW TO OVERCOME

Financial system limitation (Brown, 2008)

Focus managers on hiring the best, so that they build a team which strive for 100% high performers (Bersin, 2013)

Chicken Manager Syndrome Audit Data Sources (to ensure Manager gives all his member the credibility and transparency excellent ratings (Harikumar, of data). (Brown, 2008) 2012)

PERFORMANCE APPRAISAL
Performance appraisal is a systematic evaluation of the employee's performance at work. It is done by the superiors or other experts (Akrani, 2011)
Performance appraisal is the systematic, periodic and an impartial rating of an employees excellence in the matters pertaining to his present job and his potential for a better job (Flippo, 2001)

Performance appraisal is a process for establishing shared understanding about what is to be achieved, and an approach for managing and developing people in a way which increases the probability that it will be achieved in the short or long-term. (Fisher, 1996)

Appraisal is the analysis of the successes and failures of an employee and the assessment of their suitability for training and promotion in the future and Performance Appraisal was introduced in the early 1970s in an attempt to put formal and systematic framework on what was formerly a casual issue (Maund, 2011)

Performance appraisal is the process of evaluating the gap between employee performance and company expectation

OBJECTIVE OF PERFORMANCE APPRAISAL

(Arora and Arora, 2010) To identify the performance gap To inform the employee about the quality of his or her performance
(Torrington and Hall,1998) To improve current performance To increase motivation To identify training needs To award salary increase

PERFORMANCE APPRAISAL PROCESS

(Lucier and Hendon, 2012)

FORMAT OF EVALUATION
(Ivancevich and Konopaske, 2013 )

1. Establish performance standard for each position and criteria for evaluation 2. Establish performance evaluation policies (when to rate, how often to rate, and who should rate). 3. Have raters gather data for employees 4. Have raters evaluate employees performance 5. Discuss the evaluation with the employees 6. Make decisions and file the evaluations

WHEN? HOW OFTEN?

Formal performance evaluation are usually prepared in specific interval (annually or semiannually) (Lucier and Hendon, 2012)

Can be in a sigle day or more (Ivancevich and Konopaske, 2013 ) Example : lecturer - Evaluation starts at the beginning of the semester and end at the end of semester

ESTABLISH CRITERIA
(Ivancevich and Konopaske, 2013 )

RELIABILITY

The measurement must be consistent

RELEVANCE

A measure of performance must be related to actual output of an incumbent as logically as possible Able to reflect difference between high and low performers The criterion must be measurable, and data collection cannot be inefficient or disruptive

SENSITIVITY

PRACTICALITY

WHO SHOULD ASSESS?

(Lucier and Hendon, 2012)

Self evaluation

customer

Peers

subordinates

Supervisor

Employee performance evaluation

360-degree

SUPERVISOR
Supervisor should be the person who know employee the best. Problems : - What if supervisor dont see the employee frequently? - What if there are personality conflict? - what if supervisor does not know what employees are supposed to do in their jobs? How to avoid problems? - Do assess performance - Use multiple measures to make performance more accurate (eg. Use various method to overcome personal bias) - Use several supervisor (Ivancevich and Konopaske, 2013)

PEERS
Peers interact and communicate with employee more frequent Often know the job of individual employees more than manager does More directly affected by the employees action Can evaluate the ability of the individual to interact with others successfully in a group or team setting Problems : - Validity of peer evaluation is really unclear (personality conflict, personal bias) How to avoid problems? - Organization can adjust rating value when necessary

SUBORDINATES
Typically use for manager-level employees Gives good insight into managerial practices and potential missteps of people who control employees Problem : - Potential of bias especially from subordinate who have been disciplined by supervisor - May be a personal conflict or bias - May inflate the capabilities of manager (due to lack of understanding of manager task and duties) How to avoid problems? - Throw away outliner who providing extremely high or low marks - Ensure that subordinates evaluations must be confidential

SELF
Employees are required formally to assess themselves
Problem : - People tend to underestimate or over estimated their job performance How to avoid problems? - Even if the evaluations may be under or overestimated, their perception is extremely useful in management process including plans for training and development opportunity

CUSTOMER
Refer to the people outside the organisation (customer, supplier) Can also be people from other department Problems : - Use simple rating scale (very subjective) - Not trained to do accurate assessment (bias- too positive or too negative) How to avoid problems? - Adjusting the result (use ratio of positively and negatively comments to determine successful and less successful employees) - Although it is an imperfect measure, but it still provide value to the organization

360-DEGREE EVALUATION
Use multiple appraisers Information is collected and feedback is provided in circular fashion (top to bottom and bottom to top) Problem : incur a lot of time and money

Positive and negative features of 360-degrees program (Ivancevich and Konopaske, 2013 )
Positive features Negative features

Multiple perspective of persons performance are provided

Ratings can evaluate person based on actual contact and observation

Feedback from all sources can be overwhelming

Rater can hide in group of rater and provide harsh evaluation

Feedback is provided from multiple directions above, below, peer

Anonymous, upward feedback results in full participation

Conflicting ratings can be confusing and frustrating

Providing feedback that is constructive requires a plan and well trained raters. This is not typically found in organizations

Learning about weaknesses and strengths is motivational

WHO DO WE CHOOSE ?
(Lucier and Hendon, 2012)

Combination or 360-degree is the best However not all suitable with 360-degree method Example :
Salesperson (self- assesment) Housekeeping (customer)

Selected evaluation techniques (Ivancevich and Konopaske, 2013 )

Individual evaluation method

Graphic rating scale Forced choice Essay evaluation Critical incident technique Checklist and weighted checklist Behavioral observation scales

Multi-person evaluation method

Ranking Paired comparison Force distribution

Graphic Rating Scale

Is a performance appraisal checklist which manager simply rates performance on a continuum Advantage : - Requires minimum time, effort, cost and training Disadvantage : - Not a very accurate measure

Example of graphic rating scale

Source : http://www.whatmakesagoodleader.com/Performance-Appraisal-Forms.html

Forced Choice
Rater must choose from a set of descriptive statements about employee. Prepared by HR specialist Supervisors or other familiar with the ratee performance will evaluate how applicable the statement is. They will rank the employee from most to least descriptive

Essay Evaluation
The rater may be asked to describe the strong and weak aspect of employees behavior Can be open ended but most cases, there are guidelines on the topics to be covered Can be used for superiors, peers or subordinates of the employees that being evaluated

Source : http://2012books.lardbucket.org/books/beginning-management-of-humanresources/section_15/40f2e5c9997479ac2d6f3a90c1fa5d6b.jpg

Critical Incident Technique

Requires raters to maintain a log behavioral incidents that represent either effective or ineffective performance for each employee being rated

Checklist And Weighted Checklist

Set of objectives or descriptive statement If the raters believe that the employees posses a trait listed, the raters check the item; if not, the rater leave it blank Can be used by evaluators who are superiors, peers or subordinates

Source : http://www.american nursetoday.com/articl e.aspx?id=7496

Behaviorally Anchored Rating Scales (BARS)

Performance appraisal that provides description of each assessment along the continuum How do BARS different with graphic ? - BARS provide actual description of the performance rating scale and bars form rather than only use the word (excellent, good, etc) - More objective and accurate

Disadvantage - More expansive and need expertise to developed

Example of BARS scales

Source : http://www.experts mind.com/topic/ind ividual-evaluationmethods/behaviourl y-anchored-ratingscale-94309.aspx

Ranking
Ranking ask supervisor to generate a list of subordinate in order on some overall criterion Can be difficult to do if the supervisor is asked to rank a large number of subordinates In this approach, the evaluators pick the top employee first, then the bottom employee next, followed by the second best employees and the second worst (alternate)

Multiple-person evaluation methods

Paired Comparison
More reliable and easier when there are many people to rank

1st H 2nd B 3rd G 4th A 5th J Source : http://www.managersnet.com/pairedcomparis ons.html

Forced Distribution
The rater has been given a quotas on grading the ratee Regardless how well the employee is, the rater must follow the quotas Disadvantage : - Leads to unhealthy competition

Management By Objective (MBO)

MBO evaluates how well an employee has accomplished objectives determined to be critical in job performance. This method aligns objectives with quantitative measures such as sales, profits, zero-defect units produced. Deming critics that MBO emphasize on detecting problem and too little emphasize on preventing them

WHICH TECHNIQUE TO USE?

(Ivancevich and Konopaske, 2013 )

The most widely used : 1) Graphic ratting scale 2) Essay method 3) Checklist other method such as forced choice, critical incident, BARS, MBO used are only 5%

MBO method are more suitable for managerial, professional and technical, not production and office personnel

Limitations of Performance Appraisal Techniques Akrani G. (2011)

Halo effect The rater may base the full appraisal on the basis or one positive quality which was found out earlier. For e.g. If a person is evaluated on one quality i.e. emotional stability and if he scores very high in the case of emotional stability, then the rater may also give him high scores (marks or grades) for other qualities such as intelligence, creativity etc., even without judging these characteristics. Problem of Leniency or Strictness Many raters are too lenient (not strict) in their ratings. High scores may be given to all employees, even if they have no merit. Also a reverse situation may take place, where all employees are rated very strictly and very low scores are given. Central Tendency Sometimes a rater gives only middle range scores to all individuals. Extremely high or low scores are avoided. This is called Central Tendency.

Personal Bias Performance appraisal is affected by personal bias of the rater. If the rater has good relations with the ratee (an employee who is getting rated), he may give higher scores to the ratee, even though the ratee does not deserve such high scores. So personal bias may lead to favoured treatment for some employees, and bad treatment to others. Fear of Spoiling Relations Performance appraisal may also affect superior-subordinate relations. An appraisal makes the superior more of a judge than a coach. So, the subordinate may have a feeling of suspicion and mistrust, about the superior Evaluate performance not person The rater should evaluate the performance such as output, new ideas, extraordinary effortsand not the person. In reality, the person is evaluated and not his performance. It should be noted that failure is an event and a not a person.

Horn Effect Sometimes the raters may evaluate on the basis of one negative quality. This results in overall lower rating of the particular employee Spillover Effect the present performance appraisal is greatly influenced by past performance. A person who has not done a good job in the past is considered (assumed) to be bad for doing present work. Latest Behaviour Effect The rating is also influenced by the most recent behaviour. The rater may ignore an average behaviour during the full appraisal period.

Thank you
-amirazureena-