Module7 PA
Transcript of Module7 PA
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Module-7
Performance
Management &
Appraisal
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Performance Appraisal :
Performance Appraisal (PA) refers to all those
procedures and standards that are used to evaluate
the personality, performance, potential, of members
and groups.
It is an objective assessment of performance against
well defined benchmarks. Builds employee database
It is directional ,evaluative ,periodical and formal.
Appraisal data is archived and used for
organizational development.
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Performance Management
Performance management involves
designing and executing a set of HR activities to assess and improve
performance.
It is ongoing ,facilitative and less formal.
It improves and employee performance and
development.
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Nature of Performance
Management Performance Management
Processes used to identify, encourage, measure,
evaluate, improve, and reward employee
performance Provide information to employees about their
performance.
Clarify organizational performance expectations.
Identify the development steps that are needed toenhance employee performance.
Document performance for personnel actions.
Provide rewards for achieving performance
objectives.
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Performance Performance Management Management
Linkage Linkage
Figure 11±1
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C omponents of EffectiveC omponents of Effective
Performance Performance
Management Management
Figure 11±2
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Difference Between Performance
Management and Performance Appraisals
Performance
Management
Processes used to
identify, encourage,measure, evaluate,
improve, and reward
employee performance.
Performance
Appraisal
The process of evaluating
how well employees perform their jobs and
then communicating that
information to the
employees.
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Relationship between job analysis
and performance appraisal:
Job analysis performance performance
standards appraisal
Describes work
& Personnel
Requirement
Of a particular
job
Translate job
Into levels of
To acceptable
Or unacceptable
performance
Describes the
Job relevant
strengths andweakness of
Each individual
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Characteristics
It is a step by step process
It examines the employee strengths andweaknesses
Scientific and objective study
Ongoing and continuous process Secures information for correct employee
related decision-making.
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Needs and Objectives:
Provides feedback about employees
Helps in building performance database Diagnose the Strengths & Weaknesses of
individuals
Provides coaching, counseling, career
planning to subordinates Develop positive relation building and
reduces grievance
Facilitates research in personnel management
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Appraisal Benefits
Appraisals offer
employees:Direction
Feedback
InputMotivation
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Appraisal Benefits(Contd.) Appraisals offer the company:
Documentation
Employee Development
Feedback
Legal protection
Motivation system
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Why Appraisals Are Important
�Recognize accomplishments
�Guide progress
�Improve performance
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Why Important (cont.)
Review performance
Set goals
Identify problems
Discuss career advancement
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Steps in performance appraisal
Establishing job standards
Designing an appraisal programme
Appraise performance
Performance interview
Use appraisal data
For appropriate purpose
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Process of PASetting
performance
standardsTaking corrective
measures
Discussingresults
Comparing
standards
Measuringstandards
Communicating
standards
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Uses of Performance Appraisal
organizational planning
Human Resource Planning Organizational Effectiveness
Compensation Management
Placement adjustment decisions
To identify training and development
needs of the employees
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C onflicting Uses for Performance Appraisal C onflicting Uses for Performance Appraisal
Figure 11±4
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Developmental Uses of
Performance Appraisal
PerformancePerformance
AppraisalAppraisal
Giving PerformanceGiving Performance
FeedbackFeedback
Administering WagesAdministering Wages
and Salariesand Salaries Identifying StrengthsIdentifying Strengths
and Weaknessesand Weaknesses
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Ty pical Division of HR Responsibilities: PerformanceTy pical Division of HR Responsibilities: Performance
Appraisal Appraisal
Figure 11±5
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Issues in appraisal system
Appraisal Design
Formal and informal
Whose performance?
Who are the raters?
What problems?
How to solve?
What to evaluate?
When to evaluate?
What methods?
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How PA contribute to firm¶s
competitive advantagesImproving
performance
Making correctdecision
Ensuring legal
competenceMinimizing dissatisfaction
And turnover
Values and behavior
Competitive
advantage
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Problems in performance appraisal
1. Errors In rating
Halo effects Stereotyping
Central tendency
Leniency and Strictness/severity error
Contrast error Personal bias
Recency effect
False attribution
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2. Incompetence
3. Negative approach4. Multiple objectives
5. Resistance
6. Lack of knowledge
Problems in performance appraisal
(Cont¶d)
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Essentials of an effective appraisal system
Mutual trust
Clear objectives
Standardizations Training
Job relatedness
Documentation
Feedback and participation Individual differences
Post appraisal review
Review and appeal
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Appraisals and Discrimination
Appraisal Discrimination Act and other fair
employment Laws are applicable to PA on- Failure to communicate standards
Failure to give timely feedback
Failure to allow employees to correct performance
Inconsistency in measuring performance
Failure to document performance objectively
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Appraisal Forms
Define performance expectations
Describe measurement tools Use a rating system
Cover specific examples
Set measurable goals
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Measure Performance
Measurement systems need to be:
Specific Fair
Consistent
Clear
Useful
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Measure Performance (cont.)
Systems can be:
Numerical Textual
Management by Objective (MBO)
Behavior oriented
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Set Goals«.
Based on job requirements
Realistic Measurable
Observable
Challenging
Prioritized
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Types of feedback
Formal appraisals
Informal appraisals Open communication
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R ecognize Good Performance
Verbal
Public Tangible
Monetary
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Identif y Poor Performance
Act early
Take the right approach Deal with employee reaction
Handle continued poor performance
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Discipline Poor Performance
Recognize problems
Talk with employee Follow company policy
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Performance Appraisal Methods1 .Individual Evaluation Methods
Confidential report
Essay evaluation Critical incidents
Checklists
Graphic rating scale Behaviorally anchored rating scale
MBO
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Methods of Performance Appraisal
Traditional Methods
Graphic R ating Scales(GRS)-Individual performance is compared to an absolutestandard and is recorded on a scale.This method is also known as linear /simple ratingscale.
R anking Method(R M)-Under this method employees are ranked as best or worst on the basis of some characteristics.
Paired Comparison Method(PCM)-It is a simple method under which appraiser compares one employee in the group with other employees one at a time.
Forced Distribution Method(FDM)-Under this method the raters spread their employee evaluations in a prescribed distribution on a bell-shaped curve.
Checklist Methods (Simple,Weighted or forced)-Under this method the rater checksthe checklist consisting of a number of statements concerning employee behaviour.
1. In a simple checklist the employee performance is rated on the basis of the number of positive checks while negative checks are ignored.
2. Weighted checklist involves assigning different weightage to different items in thechecklist in accordance of their importance in comparison to each other
3. Forced choice/checklist It involves preparation of a large number of statements ingroups,each group consisting of four descriptive statements(tetrad) concerning employee behaviour.Two are favourable and the remaining two are unfavourable statements.Therater will not be informed about the favourable and unfavourable statements to avoid
appraiser prejudice
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Methods of Performance Appraisal Critical incident method records the critical incidents of
exceptional or poor performance of the employees incomparison with the preset standards
Essay or free form appraisal ± Under this methodmanagers write short essays describing the performanceof the employees during the rating period.
Group appraisal ± Under this method employee is
appraised by a group of appraisers consisting of supervisor of the employee and other supervisors whohave close contact with the working of the employee.
Confidential R eports ± Under this method the superior ,confidentially appraises the subordinates based on his
observations,judgment and intuitions .
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360 Degree Performance
Appraisal System
360 degree PA system is a multi-source
appraisal system under which employees
are appraised by -
Superiors
subordinates
Team members/peers
Employees¶ self-appraisal
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Multisource Appraisal Multisource Appraisal
Figure 11±7
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Critical Incident methodEx: A fire, sudden breakdown, accident
Workers reaction scale
A informed the supervisor immediately 5
B Become anxious on loss of output 4
C tried to repair the machine 3
D Complained for poor maintenance 2
E was happy to forced test 1
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Checklist method
�Simple checklist method
�Weighted checklist method
�Forced choice method
Simple checklist method:Is employee regular Y/ N
Is employee respected by subordinate Y/ N
Is employee helpful Y/ N
Does he follow instruction Y/ N
Does he keep the equipment in order Y/ N
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Weighted checklist method
weights performance rating
(scale 1 to 5 )
Regularity 0.5Loyalty 1.5
Willing to help 1.5
Quality of work 1.5
Relationship 2.0
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Forced choice method
Criteria Rating
1.Regularity on the job Most Least
�Always regular
�Inform in advance for delay
� Never regular
�Remain absent� Neither regular nor irregular
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Graphic R ating Scale� Continuous Rating Scale
� Discontinuous Rating Scale
Employee name_________ Deptt_______
Rater¶s name ___________ Date________
------------------------------------------------------------------------
Exc. Good Acceptable Fair Poor
5 4 3 2 1 _
Dependability
InitiativeOverall output
Attendance
Attitude
Cooperation
Total score Continuous R ating Scale
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Discontinuous R ating Scale
Attitude
No
Interest
Indifferent
Interested
Enthusiastic
Very
enthusiastic
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BARS( Behaviorally Anchored R ating Scale)
Step 1. Identify critical incidents
Step 2. Select performance dimension
Step 3. Retranslate the incidents
Step 4. Assign scales to incidents
Step 5. Develop final instrument
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MBO Process
Set organizational goals
Defining performance target Performance review
feedback
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2.Group Appraisal
Ranking Paired comparison
Forced distribution
Performance tests Field reviewtechnique
Performance Appraisal Methods
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Ranking method
Employee Rank
A 2
B 1
C 3
D 5
E 4
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Paired comparison method
A B C D E Final Rank
A - - - + + 3
B + - - + + 2
C + + - + + 1
D - - - - + 4
E - - - - - 5
No of Positive evaluation
Total no. of evaluation
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Forced Distribution method
10% 20% 40% 20% 10%
poor Below
average
average good Excellent
No.
of
employees
Force distribution curve
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Field review methodPerformance subordinate peers superior customer
Dimension
Leadership ^ ^
Communication ^ ^
Interpersonal skills ^ ^
Decision making ^ ^ ^
Technical skills ^ ^ ^
Motivation ^ ^ ^
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3 .Assessment Center Under this method performance of the individuals is appraised using several
techniques like in basket, role playing,case studies,simulation exercises
,structured in sight, transactional analysis,etc.
4 . Human R esource Accounting
This deals with the cost of the employees and their contributions to the
organizations.Cost of the employees includes cost of manpower
planning,recruitment , selection , induction ,placement ,training
,development, wages and benefits ,etc. and contribution is the money value of
employee service measured in terms of labour productivity.5. Psychological Appraisal
This is conducted to appraise the employee¶s potential.It consists of in-depth
interviews, psychological tests, consultations and discussions with
employees,supervisors,sub-ordinates and peers ,reviews of other evaluations
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Performance criteria for executives
For top managers
Return on capital employed
Contribution to community development
Degree of upward communication from
middle-level executives
Degree of growth and expansion of enterprise.
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For middle level managers
Departmental performance
Coordination among employees
Degree of upward communication from
supervisors
Degree of clarity about corporate goals and
policies
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For supervisors
Quality and quantity of output in a given period
Labor cost per unit of output in a given period
Material cost per unit in a given period Rate of absenteeism and turnover of employees
No of accidents in a given period
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Performance Appraisal System or
Process Establish Performance Standards
Communicate standards/expectations to the employees
Measure actual performance Adjust actual performance to the environmental influence
Compare the adjusted performance with that of previous
performances
Find deviations Communicate actual performance to employees
concerned
Suggest changes in job analysis and standards
Follow-up performance appraisal report.
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Performance Coaching and
Counselling Performance Coaching is a form of directive or non-
directive coaching. Directive Coaching involves the busy
Manager who sometimes acts as a Coach: telling,instructing, giving advice, offering guidance, giving
feedback, making suggestions etc. Non-Directive
Coaching involves helping someone to solve their own
problems.
The directive style of coaching has been adopted as themodel for coaching for performance, such as;
helping provide people with direction, guiding them in
how to master new skills, procedures, tasks and meet
performance goals etc
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Career Planning and
Development Career is a sequence of separate but related work
activities that provide continuity , order and meaning in a
person¶s life. Career planning is the process by which one selects career
goals and path to these goals.
Career development refers to the improvements one
undertakes to achieve a personal career plan.
Career management is the process of designing and
implementing goals, plans and strategies to enable the
organization to satisfy employee needs while allowing
individuals to achieve their career goals.
Process of Career Planning and
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Process of Career Planning and
Development
Analysis of individual skills,knowledge, abilities,aptitudes,etc.
Analysis of career opportunities both within and outside the organization.
Analysis of career demands on the incumbent in terms of
skills,knowledge,abilities,aptitude,etc.and in terms of qualifications,
experience and training received,etc.
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Need for Career Planning To attract competent persons and to retain them in the organization
To provide suitable promotional opportunities
To ensure employee development in order to facilitate them to meet
future challenges
To increase utilization of managerial reserves within an organization
To correct employee placement
To reduce employee dissatisfaction and turnover
To boost the morale of the employees and to motivate them
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Steps involved in Career
Development Assessment of Training needs
Linking the career needs with the
organizational vision.
Preparing an action plan to achieve the
vision
Career development programme should be
integrated with the organizational MDPs in
order to achieve results
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Advantages of CP&D Individuals get career guidance.
It facilitates employees to choose a career to suite their
life-style,family environment and scope of development Helps organizations in identifying internal employees
who can be promoted.
CD boosts the morale of the employees resulting in
increased job satisfaction. Secures employee commitment and loyalty.
Improves employees performance by fulfilling his esteem
needs.
Career Management through
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Career Management through
Internal Mobility
Promotions-It involves advancement of the employees to a
better job with greater responsibility,more prestige or
status,greater skill and increased pay.
Transfer- It is a lateral shift causing movement of individuals from one position to another usually without
involving any marked change in duties, responsibilities,
skills needed or compensation.
Demotion is reassignment of an employee to a lower level
job with delegation of responsibilities and authority
required to perform that lower level job with a lower pay.
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Types of PromotionVertical promotion/Dry Promotion-
Under this method employee is moved to higher level in the
organizational hierarchy with greater responsibility , authority ,pay
and status.
U p gradation- Under this, job is upgraded in the organizational hierarchy
offering employees more salary, higher authority and responsibility.
Bases of Promotion-
Merit-Based on skill knowledge, ability, efficiency and aptitude and
is measured on the basis of educational training and past employment
record.
Seniority- Based on length of service in the same job in the same
organization.
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Advantages and Disadvantages of Merit System
Advantages Disadvantages
Resources of higher order
of employees can be
better utilized.
Difficult to judge merit
Competent employeesare motivated to
contribute to
organizational
efficiency and
effectiveness.
May involve personal biasor prejudice
Golden hand-cuff to stopemployee turnover
Techniques of measurement are
subjective
Facilitates all-round
development of the
employee
Merit denotes past
achievement and does
not ensure future
success.
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Merits and Demerits of Seniority as a basis of Promotion
Merits Demerits
Measuring length of service
is relatively easy
Demotivates young and
more competent employees
Trade Unions support thissystem and it reduces
grievances and conflicts
It kills zeal and interest todevelop as everybody will
get promoted .
No scope for favoritism and
judgment
Un dynamic and old blood
diminishes organizational
effectiveness
There is an element of
certainty regarding
promotions
Distinguishing between job
seniority ,company
seniority,zonal senioriy ,etc
becomes difficult.
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Benefits of Promotion Promotions facilitate better utilization of the skills and knowledge of
the employees
It secures employee commitment
It boosts the morale of the employees thereby increasing their job
satisfaction
It improves organizational health
Problems with PromotionSome employees refuse promotion
Promotions disappoint some employees when favoritism is involved.
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Principles of Promotion Promotion policy should be uniform
It should be fair and impartial
It should be systematic
Should provide equal opportunities to all
It should contain clear cut norms for judging criteria,merit, length of
service,etc
Appropriate authority should be entrusted with the task of making a
final decision
Favoritism should not be taken as a basis for promotion.
It should contain promotional counselling,encouragement,guidance
and follow-up regarding promotional opportunities,etc.
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Types of Transfers Production Transfer-due to changes in production
R eplacement Transfer-due to replacement of long
standing employees in the same place. R otation Transfer- In order to increase the versatility of
the employees
Shift Transfer-Transfer of an employee from one shift to
another. R emedial Transfer-To correct wrong placements
Penal Transfer-initiated as a punishment or in
disciplinary action
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Reasons for Transfer To meet organizational requirements
To satisfy employees¶ needs
To utilize employee skill,knowledge,etc. To correct inter-personal conflicts
To give relief to employees who are indulged in
overburdened work for sometime.
As a measure of punishment to erring employees To minimize fraud or bribery which will result due to
permanent stay and contact of an employee with
customers
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Principles of Demotions Specifying circumstances under which employees will be demoted
like reduction in operations , in disciplinary cases ,etc.