Performance Management System

ROHIT KUMAR
Performance Management

Performance management is a means of

getting better results from the organization,
teams and individuals by understanding
and managing performance within an
agreed framework of planed goals,
standards and competence requirements.

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 Performance Management Cycle

Role profile
Plan
Performance
agreement

Performance Personal development Act

Review review planning

Performance

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 Elements of Performance Management
System
Define Performance

To energise
Encourage employee Facilitate
performance performance performance

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 Performance Appraisal

• The process of determining and communicating to an

employee how he or she is performing on the job and,
ideally, establishing a plan of improvement.

• Performance evaluation is the systematic evaluation of the

individual with respect to his performance on the job & his
potential for development

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Purpose of Performance Appraisal

Employ
ment
decision
Diagno
sis of p l o y ee
organiz
at i Em
ck
problem onal fe e d b a
purpose

Cr
o r ms t e s i t e ri a
e f ra tv
t i v rog al i i n
j ec g p da
tio
Ob inin n
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Requirements of Effective Appraisal
System

Relevance Acceptability

Reliability

Practicality
Sensitivity

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 The Appraisal Process
Establish performance standards

Communicate performance expectations to employee

Measure actual performance

Compare actual performance with the standards

Discuss the appraisal with the employee

Take corrective action if necessary

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Components of Appraisal Evaluation

WHO WHY

WHAT WHERE

WHEN HOW

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 Performance Appraisal Methods

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Category Rating Methods
• Graphic Rating Scale
– A scale that allows the rater to indicate an employee’s
performance on a continuum.
• Job criteria scales
• Behavioral scales
– Drawbacks
• Restrictions on the range of possible rater responses
• Differences in the interpretations of the meanings of scale items and
scale ranges by raters
• Poorly designed scales that encourage rater errors
• Rating form deficiencies that limit the effectiveness of the
appraisal

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 Typical Graphic Rating
Scale

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 Category Rating Methods
• Checklists
– A performance appraisal tool that uses a list of statements or work
behaviors that are checked by raters.
• Can be quantified by applying weights to individual checklist items.
– Drawbacks
• Interpretation of item meanings by raters
• Weighting creates problems in appraisal interpretation
• Assignment of weights to items by persons other than the raters

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Sample Checklist Questions

Yes No

1. Does the employee lose his or her temper in public? _____ _____

2. Does the employee play favorites? _____ _____

3. Does the employee praise employees in public when

they have done a good job? _____ _____

4. Does the employee volunteer to do special jobs? _____ _____

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Comparative Methods
• Ranking
– Listing of all employees from highest to lowest in
performance.
– Drawback
• Does not show size of differences in performance between
employees
• Implies that lowest-ranked employees are unsatisfactory
performers.
• Becomes an unwieldy process if the group to be ranked is
large.

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Comparative Methods
• Forced Distribution
– Performance appraisal method in which ratings of
employees are distributed along a bell-shaped curve.
– Drawbacks
• Assumes a normal distribution of performance.
• Resistance by managers to placing individuals in the lowest
or highest groups.
• Providing explanation for placement in a higher or lower
grouping can be difficult.
• Is not readily applicable to small groups of employees.

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Forced Distribution

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 Sample Set of Forced-Choice Statements
Instructions: Rank the following statements
according to how they describe the manner in which
this employee carries out duties and responsibilities.
Rank 1 should be given to the most descriptive, and
Rank 5 to the least descriptive. No ties are allowed.

Rank Description
_____ Is easy to get acquainted with.
_____ Places great emphasis on people.
_____ Refuses to accept criticism.
_____ Thinks generally in terms of money
_____ Makes decisions quickly.

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Narrative Methods
• Critical Incident
– Manager keeps a written record of highly favorable
and unfavorable employee actions.
– Drawbacks
• Variations in how managers define a “critical incident”
• Time involved in documenting employee actions
• Most employee actions are not observed and may become
different if observed
• Employee concerns about manager’s “black books”

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Narrative Methods (cont’d)
• Essay Method
– Manager writes a short essay describing an employee’s
performance.
– Drawbacks
• Depends on the managers’ writing skills and their ability to express
themselves.
• Field Review
– Outside reviewer interviews the manager about the performance
of each employee and develops a rating for the employees from
the interview notes.

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Behavioral/Objective Methods
• Behavioral Rating Approach
– Assesses employees’ behaviors instead of other characteristics
– Consists of a series of scales created by:
• Identifying important job dimensions
• Creating statements describing a range of desired and undesirable
behaviors (anchors)
– Types of behavioral scales
• Behaviorally anchored rating scales (BARS)

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BARS Example of a Behaviorally Anchored Rating Scale

Scale Values Anchors

7[ ] ExcellentDevelops a comprehensive project plan, documents it well, obtains required
approval, and distributes the plan to all concerned.
6[ ] Very
Source: C. goodPlans,
E. Schneier communicates,
and R. W. Beatty, and observes
“Developing Behaviorally milestones;
Anchored Rating
60.
states
Scales (BARS),” week
Personnel by week
Administrator, where
August 1979, p. the

project stands relative to plans. Maintains up-to-date charts of project accomplishments and
backlogs and uses these to optimize any schedule modifications required.
Experiences occasional minor operational problems but communicates effectively.
5[ ] GoodLays out all the parts of a job and schedules each part; seeks to beat schedule and will
allow for slack.
Satisfies customers’ time constraints; time and cost overruns occur infrequently.
4[ ] AverageMakes a list of due dates and revises them as the project progresses, usually adding
unforeseen events; investigates frequent customer complaints.
May have a sound plan, but does not keep track of milestones; does not report slippages in
schedule or other problems as they occur.
3[ ] Below Plans are poorly defined, unrealistic time schedules are common.
averageCannot plan more than a day or two ahead, has no concept of a realistic project due
date.
2[ ] Very poorHas no plan or schedule of work segments to be performed.
Does little or no planning for project assignments.
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1[ ] UnacceptableSeldom, if ever, completes project, because of lack of planning, and does not
seem to care.
Management by Objectives
• Management by Objectives
– Specifying the performance goals that an individual and his or
her manager agree to try to attain within an appropriate length of
time.
• Key MBO Ideas
– Employee involvement creates higher levels of commitment and
performance.
– Encourages employees to work effectively toward achieving
desired results.
– Performance measures should be measurable and should define
results.

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 The MBO Process

Job
JobReview
Review and
andAgreement
Agreement

Development
Development of
of Performance
PerformanceStandards
Standards

Guided
Guided Objective
ObjectiveSetting
Setting

Continuing
Continuing Performance
PerformanceDiscussions
Discussions
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 360 Degree Feedback

Supervisor

Team

Peers

Self
Customers

Subordinates
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Balanced Scorecard

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Performance Diagnosis

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Types of Appraisal Interviews

Appraisal
Appraisal Interview
Interview Formats
Formats

Tell
Telland
andSell
Sell --persuasion
persuasion

Tell
Telland
andListen
Listen-- nondirective
nondirective

Problem
Problem solving-
solving- focusing
focusingthe
the
interview
interview on
on problem
problem resolution
resolution
and
and employee
employee development
development
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 Reasons for failure of Performance
Appraisal
Manager
Manager
lacks Lack
Lackofof
lacks appraisal
information
information appraisal
Insufficient
Insufficient skills
skills
reward
rewardfor
for
performance Manager
Managernot
not
performance taking
taking
appraisal
appraisal
seriously
seriously
Performance
Performance
Unclear appraisals
Unclear appraisalsfail
fail
language
language because…
because…
Manager
Managernot
not
prepared
prepared
Ineffective
Ineffective
discussion Employee
Employee
discussion
ofofemployee not
not
employee Manager
Managernot
not
development receiving
receiving
development being
being ongoing
ongoing
honest
honestoror
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feedback
sincere
sincere
Rater Errors
• Error of Central Tendency
– A rating error in which all employees are rated about
average.
• Leniency or Strictness Error
– A rating error in which the appraiser tends to give all
employees either unusually high or unusually low
ratings.
• Recency Error
– A rating error in which appraisal is based largely on an
employee’s most recent behavior rather than on
behavior throughout the appraisal period.

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Rater Errors
• Contrast Error
– A rating error in which an employee’s evaluation is
biased either upward or downward because of
comparison with another employee just previously
evaluated.
• Similar-to-Me Error
– An error in which an appraiser inflates the evaluation
of an employee because of a mutual personal
connection.

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Suggestions for improving Appraisals
• Measure performance
• Multiple raters
• Trained appraisers
• Post appraisal interview
• Continuous feedback
• Rating the rater
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Suggestions
•

Measure performance
Multiple raters
 Trained appraisers
 Post appraisal interview
 Continuous feedback
 Rating the rater
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?
Thank you