Performance Management

MODULE 3

Performance management: Introduction, meaning, need, purpose, objectives, Performance Appraisal - contents of PAS, appraisers and different methods of appraisal, uses of performance appraisal, limitations and problems of performance appraisal, 360 degree Appraisal, post appraisal feedback.

Introduction

Performance means achievement of an employee against the expectations from his role along clearly defined targets constitute the individual performance. While defining individual performance it is important to understand the following

- organizational requirements based on company goals

- role areas of the individual position

Performance Management

Meaning

performance refers to the degree of accomplishment of the task that make up an individual’s job. It indicate how well an individual is fulfilling the job demand. The process is summarized below

Planning Monitoring

Developing

Rating

Rewarding

Process of Performance Management

1. To provide information about performance rank to deal with salary fixation, confirmation, promotion, transfer, demotion.

2. Provide feedback about level of achievement and behavior. This helps to rectify performance deficiency and to set new standards of work

3. Provides information for counseling 4. Provide information to diagnose deficiency in

employee regarding skill, knowledge, determining, training and development needs and to prescribe the means for employee growth

5. To prevent grievances and disciplinary actions

Need for performance appraisal

Increase two-way communication between supervisors and employees

Clarify mission, goals, responsibilities, priorities and expectations

Identify and resolve performance problems Recognize quality performance Provide a basis for administrative decisions such as

promotions, succession and strategic planning, and pay for performance

The overall goal of PM is to ensure that the organization or its sub system( processes, departments, team, employees) are working together in an optimum fashion to achieve the results desired by the organization

Objectives of performance management

Every organization has to decide upon the content to be appraised . Generally the content to be appraised is determined on the basis of job analysis. The content to be appraised may vary with the purpose of appraisal and type and level of employee.

some of the content to be appraised for an executive may be ability to work with others, leadership style and abilities, initiative, technical ability/ knowledge/ skill, ability to reason, creativity, judgment skills, integrity, honesty and sincerity, capability to assume responsibility, etc.

Contents of performance appraisal system

Performance appraisal is an objective assessment of an individual’s performance

against well defined benchmarks.

Definition:

It is the systematic evaluation of the individual with respect to his or her performance on the job and his or her potential for development. ..Dale S Beach.

Performance Appraisal

Appraisal Process

Objectives of Performance Appraisal

Establish Standards

Communicate standards to Employees

Measuring Actual Performance

Comparing Actual with Standards

Discuss Report with Employees/interview

Take Corrective Actions

Use Appraisal Data for Appropriate Purposes

Methods of Performance Appraisal1. Traditional Methods:

a) Confidential Report

b) Graphic Scales

c) Straight Ranking

d) Paired Comparisons

e) Grading System

f) Forced Distribution

g) Check list method

h) Critical incident method

i) Free Essay method

j) Group Appraisal

k) Field Review

l) Work sample tests

2.Modern Methodsa) Assessment Centre Methodb) 360 Degree Performance Appraisal c) Human Resource Accounting d) Management by Objectivese) Behaviourally Anchored Rating Scales

2.a. Assessment center method

This method was first applied in German army in 1930.This is a system where assessment of several individual is done by various experts using various techniques including role playing, case studies, transactional analysis, etc.

The individuals from various departments are brought together to spend 2 or 3 days working on individual or group assignments related to higher responsibilities. Their performance is ranked in order of merit. The assesses are given equal opportunities and the evaluators are also trained and independent ,this system commands better acceptability among employees and it is also very effective.

2.b. 360 Degree Performance Appraisal

This system was developed by T.V. Roa and others at IIM, Ahmedabad as a fact finding and self correction technique in mid 80s.Presently this system has been adopted by most of the corporates to discover home truths about their managers.

In this system performance information is collected from multiple parties which include the subordinates, peers, supervisor and customers. A major advantage – feedback comes from multiple sources. Since the feedback is offered anonymously, the subordinates feel free even in giving negative ratings.

360 degree appraisal system.

Merits1.Evaluates methods applied to

achieve targets2.Reveals strength and

weaknesses in management style.

3.Forces inflexible managers to initiate self-change.

4.Creates atmosphere of team work & improvement.

5.Unearths truths about organisational culture & ambience.

Demerits1.Ignores performance in terms of

reaching goals.2.Colleague’s responses tend to

be biased.3.Assessees deny the truth of

negative feedback.4.The system can be used to

humiliate people.5.Linking findings to rewards can

prove to be unfair.

Uses of Performance AppraisalEffective tool to decide on compensation,

confirmation, promotion, transfer etc.Performance counselingAssess level of performance (behaviour and

achievement), rectify deficiencies & set new standards.

To determine performance gaps (in KSAs) to determine T&D needs

The major problem in performance appraisal is Rating biases which include

a) Halo effect b) The error of central tendency c) Leniency and strictnessd) Personal prejudicee) The recency effect

Failure of supervisor in conducting performance appraisal and post performance appraisal interview

Most part of the appraisal is based on subjectivity Less reliability and validity of the performance

appraisal techniques

Limitations and Problems of PA

Negative rating affect Inter-personal Relations and Industrial Relations System

Influence of external environmental factor and uncontrollable internal factor

Feedback and post appraisal interview may have a setback on production

Management emphasis on punishment rather than development of an employee in performance appraisal

Some ratings, particularly about the potential appraisal, are purely based on guess work

The post appraisal interview is most helpful to the employees as well his supervisor. Main objectives are:

- To let the employee know where they stand- To help employee to do better job by clarifying what is

expected of them- To plan opportunities for development and growth- To strengthen the superior-subordinate working

relationship by developing a mutual agreement of goals- To provide an opportunity for employees to express

themselves on performance related issues

Post Appraisal Feed-back