Performance Management Note

DR.RAKESH.R.PILLAI

Assistant Professor, Department of Management Studies, G.K.M College of Management & Technology (GKMCMT),

University of Kerala,Thiruvananthapuram.

FIRST EDITION

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PERFORMANCE MANAGEMENT

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1st Edition

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PERFORMANCE MANAGEMENT,

DR.RAKESH.R.PILLAI

Welcome to the first edition of Performance Management. This book is intended to help you become more effective at managing human performance in organizations. The topic of performance management involves more than simply the evaluation of performance. Performance Management, at its best, is working in partnership with workers in order to improve future performance. Of course, future improvement requires accurate assessment of past and current performance. You have to evaluate where you are in terms of performance in order to have realistic and meaningful expectations for future performance. However, effective performance management involves far more than simply assessing the performance of workers.

Performance Management includes providing meaningful feedback, collaborating with workers to solve performance problems, and developing improved levels of performance. Performance Management should involve the manager in diagnosing the sources of performance difficulties and in helping to find the solutions to those problems. Managing performance requires understanding of factors that influence performance, from ability and motivation to factors external to the worker. A manager also needs to understand the various options that might be employed as potential means to improve performance. Effective performance management requires far more than simply completing the annual appraisal form.

The framework of this book is meant to provide you with both increased understanding and improved skill in managing performance. Each chapter of this book begins with an overview of a part of the performance management process. The purpose is to provide you with conceptual understanding of the topic area. Understanding the contextual factors can help students and managers carry out performance management more effectively.

DR.RAKESH.R

PREFACE

Authoring a book is an accomplishment for which the authors usually owe thanks to a great many people. This book is no exception. I would like to thank and acknowledge my colleagues and many people who supported me in the preparation of this text. I would like to thank my parents, for instilling me the values of hard work, education, empathy and integrity. I also thank my family members, friends and well wishers for their constant support and encouragement for this endeavour. I also thank one and all who have directly or indirectly helped or supported me in my work.

My sincere thanks to Dr.Ashok Yakkaldevi, of “Laxmi Publications” for his involvement to make this publication successful. Thank you Dr.Ashok, for your continued support.

I invite readers, both students and teachers to offer their valuable suggestions as a feedback to me so as to improve the book in its future editions.

ACKNOWLEDGEMENTS

I hereby declare that the above information furnished by me is true to the best of my knowledge.

Yours Sincerely,

Dr. Rakesh.R

Thiruvananthapuram

DECLARATION

CONTENTS

1. PERFORMANCE MANAGEMENT……………………………………

1

2. PERFORMANCE MANAGEMENT PROCESS………………………

57

3. JOB EVALUATION…………………………………………………….

96

4. MEASURING PERFORMANCE……………………………………….

137

5. DEVELOPING AND MAINTAINING PERFORMANCE MANAGEMENT…………………………………………………………

172

CASE STUDIES…………………………………………………………..

198

BIBLIOGRAPHY ……………………………………….……………… 216

Chapter-1


The role of Human resource in the present scenario undergone

a tremendous change and its focus is on evolving such functional

strategies which enable successful implementation of the major

corporate strategies. In a way, corporate strategies and Human

resource function in alignment. Today, Human resource works

towards facilitating and improving the performance of the employee

by building a conductive work environment and providing maximum

opportunities to the employees for participating in organizational

planning and decision making process. Nowadays, all the major

activities of human resource are driven towards development of high

performance leaders and fostering employee motivation. Thus, it can

be interpreted that the role of human resource has evolved from merely

an appraiser to a facilitator and an enabler. Performance management is the current buzzword and is the

need in the current times of cut throat competition and the

organizational battle for leadership. Performance management is a

very broader and a complicated function of human resource as it

encompasses activities such as joint goal setting, continuous progress

review, feedback and frequent communication, and coaching for

improved performance, implementation of employee development

programs and rewarding achievements. Thus, the performance


1

management process starts with the joining of a new incumbent in a

system and ends when the employee quits the organization.Performance management can thus be regarded as a

systematic process by which the overall performance of the

organization can be improved by improving the performance of the

employees within a team framework. It is a means for promoting

superior performance by communicating objectives or expectations,

defining roles within a required competence framework and

establishing achievable benchmarks.According to Baron and Armstrong (1998), Performance

Management is both a strategic and an integrated approach to

delivering successful results in organizations by improving the

performance and developing the capabilities of individuals and teams.

The term performance management gained its popularity in early

1980's when total quality management programs received utmost

importance for achievement of superior standards and quality

performance. Tools such as job design, leadership development,

training and reward system received an equal impetus along with the

traditional performance appraisal process in the new comprehensive

and a much wider framework. Performance management is an

ongoing communication process which is carried between the

supervisors and the employees throughout the year. The process is

very much cyclical and continuous in nature.Performance management is the process of creating a work

environment or setting in which people are enabled to perform to the

best of their abilities. Performance management is a whole work

system that begins when a job is defined as needed. It ends when an

employee leaves the organization. Many writers and consultants are

using the term “performance management” as a substitution for the

traditional appraisal system.


2

PERFORMANCE MANAGEMENT – DEFINITION

“Performance management is a process of designing and

executing motivational strategies, interventions and drivers with an

objective to transfer the raw potential of human resource into

performance”. All human beings possess potential within themselves

in a few or more functional areas. However, utilization and conversion

of this potential into deliverable performances is often suboptimal due

to a variety of reasons. Performance management acts as an agent in

converting the potential into performance by removing the

intermediate barriers as well as motivating and rejuvenating the

human resources.

A performance management system includes the following actions:

·Develop clear job descriptions.·Select appropriate people with an appropriate selection process.·Negotiate requirements and accomplishment-based performance

standards, outcomes, and measures.· Provide effective orientation, education, and training.· Provide on-going coaching and feedback.· Conduct quarterly performance development discussions.· Design effective compensation and recognition systems that reward

people for their contributions.· Provide promotional/career development opportunities for staff.· Assist with exit interviews to understand WHY valued employees

leave the organization.

BENEFITS OF PERFORMANCE MANAGEMENT

1.PM focuses on results, rather than behaviors and activities

A common misconception among supervisors is that behaviors

and activities are the same as results. Thus, an employee may appear

extremely busy, but not be contributing at all toward the goals of the

3


organization. An example is the employee who manually reviews

completion of every form and procedure, rather than supporting

automation of the review. The supervisor may conclude the employee

is very committed to the organization and works very hard, thus,

deserving a very high performance rating.

2.Aligns organizational activities and processes to the goals of the

organization

Performance Management identifies organizational goals,

results needed to achieve those goals, measures of effectiveness or

efficiency (outcomes) toward the goals, and means (drivers) to

achieve the goals. This chain of measurements is examined to ensure

alignment with overall results of the organization.

3.Cultivates a system-wide, long-term view of the organization

Richard A. Swanson, in Performance Improvement Theory

and Practice (Advances in Developing Human Resources, 1, 1999),

explains an effective performance improvement process must follow a

systems-based approach while looking at outcomes and drivers.

Otherwise, the effort produces a flawed picture. For example, laying

off people will likely produce short-term profits. However, the

organization may eventually experience reduced productivity,

resulting in long-term profit loss.

4.Produces meaningful measurements

These measurements have a wide variety of useful

applications. They are useful in benchmarking, or setting standards for

comparison with best practices in other organizations. They provide

consistent basis for comparison during internal change efforts. They

indicate results during improvement efforts, such as employee

training, management development, quality programs, etc. They help

4


ensure equitable and fair treatment to employees based on

performance.

Other Benefits of Performance Management

?Performance management helps you think about what results you

really want. You're forced to be accountable, to "put a stake in the

ground".

?Depersonalizes issues. Supervisor's focus on behaviors and

results, rather than personalities.

?Validates expectations. In today's age of high expectations when

organizations are striving to transform themselves and society,

having measurable results can verify whether grand visions are

realistic or not.

?Helps ensure equitable treatment of employees because

appraisals are based on results.

?Optimizes operations in the organization because goals and

results are more closely aligned.

?Cultivates a change in perspective from activities to results.

?Performance reviews are focused on contributions to the

organizational goals, e.g., forms include the question "What

organizational goal were contributed to and how?”

?Supports ongoing communication, feedback and dialogue about

organizational goals. Also supports communication between

employee and supervisor.

?Performance is seen as an ongoing process, rather than a one-

time, snap- shot event.

5


?Provokes focus on the needs of customers, whether internal or

external.

?Cultivates a systems perspective, that is, focus on the

relationships and exchanges between subsystems, e.g.,

departments, processes, teams and employees. Accordingly,

personnel focus on patterns and themes in the organization, rather

than specific events.

?Continuing focus and analysis on results helps to correct several

myths, e.g., "learning means results", "job satisfaction produces

productivity", etc.

?Produces specificity in commitments and resources.

?Provides specificity for comparisons, direction and planning.

?Redirects attention from bottom-up approaches (e.g., doing job

descriptions, performance reviews, etc., first and then "rolling

up" results to the top of the organization) to top-down

approaches (e.g., ensuring all subsystem goals and results are

aligned first with the organization's overall goals and results).

CONCERNS ABOUT PERFORMANCE MANAGEMENT

Typical concerns expressed about performance management

are that it seems extraordinarily difficult and often unreliable to

measure phenomena as complex as performance. People point out that

today's organizations are rapidly changing, thus results and measures

quickly become obsolete. They add that translating human desires and

interactions to measurements is impersonal and even heavy handed.

CONCERNS OF PERFORMANCE MANAGEMENTThe following are the main concerns of performance management:

6


Concern with output, outcomes, process and inputsPerformance management is concerned with outputs (the

achievement of results) and outcomes (the impact made on

performance). But it is also concerned with the processes required to

achieve these results (competencies) and the inputs in terms of

capabilities (knowledge, skill and competence) expected from the

teams and individuals involved.

Concern with planningPerformance management is concerned with planning ahead

to achieve future success. This means defining expectations expressed

as objectives and in business plans.

Concern with measurement and review'If you can't measure it you can't manage it'. Performance

management is concerned with the measurement of results and with

reviewing progress towards achieving objectives as a basis for action.

Concern with continuous improvementConcern with continuous improvement is based on the belief

that continually striving to reach higher and higher standards in every

part of the organization will provide a series of incremental gains that

will build superior performance. This means clarifying what

organizational, team and individual effectiveness look like and taking

steps to ensure that those defined levels of effectiveness are achieved.'Establishing a culture in which managers, individuals and

groups take responsibility for the continuous improvement of business

processes and of their own skill, competencies and contribution'.

(Amstrong & Murlis)

Concern with continuous developmentPerformance management is concerned with creating a culture

in which organizational and individual learning and development is a

continuous process. It provides means for the integration of learning

and work so that everyone learns from the successes and challenges

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inherent if their day-to-day activities.

Concern for communicationPerformance management is concerned with communication.

This is done by creating a climate in which a continuing dialogue

between managers and the members of their teams takes place to

define expectations and share information on the organization's

mission, values and objectives. This establishes mutual understanding

of what is to be achieved and a framework for managing and

developing people to ensure that it will be achieved.

Concern for stakeholdersPerformance management is concerned with satisfying the

needs and expectations of all the organization's stake holders –

owners, management, employees, customers, suppliers and the

general public. In particular, employees are treated as partners in the enterprise

whose interests are respected, whose opinions are sought and listened

to, and who are encouraged to contribute to the formulation of

objectives and plans for their team and for themselves. Performance

management should respect the needs of individuals and teams as well

as those of the organization, recognizing that they will not necessarily

coincide.

Concern for fairness and transparency4 ethical principles that should govern the operation of the

performance management process have been suggested by

Winstanley and Stuart-Smith. These are:

?Respect for the individual?Mutual respect?Procedural fairness?Transparency of decision making

8


SCOPE OF PERFORMANCE MANAGEMENT SYSTEM

?Identifying the parameters of Setting performance standards?performance and stating them very clearly;?Planning in participative ways where appropriate, performance

of all constituents?Identifying competencies and competency gaps that contribute/

hinder to performance?Planning performance development activities?Creating ownership?Recognizing and promoting performance culture

OBJECTIVES OF PERFORMANCE MANAGEMENT

Performance management is the process of identifying,

evaluating and developing the work performance of employees so that

the company's objectives and goals are more effectively achieved.

Effective performance management is designed to enhance

performance, identify performance requirements, and provide

feedback relevant to those requirements and assist with career

development.

The primary objectives of performance management are:

?To assist in the achievement of enhanced standards of work

performance of an employee or class of employees. ?To assist employees to identify knowledge and skills to perform

their job efficiently. ?For employees to work towards defined goals.?For employees to receive regular feedback on performance; and?For employees to achieve personal growth through acquiring

relevant knowledge and skills and attitudes.

PHASES OF PERFORMANCE MANAGEMENT SYSTEM

Phase-1

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Setting expectations for employee performance

?Supervisors shall meet with their employees, establish

expectations regarding their employees' performance, specify

how employees' actual performance will be measured and their

success determined, and impart to them an understanding of how

meeting these expectations will contribute to the achievement of

the organization's mission.?Performance expectations shall be written at the “meets

expectations” level (the midpoint of the state rating scale)and

shall be documented on a form defined by the company- the

“work plan”.?Work plans shall be signed and dated by both the supervisor and

the employees.

Phase-2Maintaining a dialogue between supervisor and employee to

keep performance on track

Employee shall be responsible for meeting their performance

expectations.Progress toward meeting expectations shall be measured, reported,

discussed, and documented throughout the work cycle.Supervisors are expected to use appropriate techniques to support

employee efforts to meet or exceed their performance expectations.When expectations change during the course of the work cycle,

supervisors shall communicate these changes and modify work plans

as necessary. Modifications shall be signed and dated by both the

supervisor and the employee.

Stage -3Maintaining a dialogue between supervisor and employee to

keep performance on track

At the end of the work cycle, supervisors shall evaluate employees'

10


performance during the past year compared to their performance

expectations. They shall use verifiable information collected and

documented throughout the cycle to determine the extent to which

actual performance has met the expectations defined in the work plan.

The evaluation shall be documented on a standard form defined by the

company – the “appraisal form”.

The annual performance appraisal shall use a 5-level rating scale for

reporting overall performance. A rating at the midpoint of the scale

shall indicate that an employee's performance has met expectations.

Prior to discussing a completed performance appraisal. (i.e., an

appraisal containing ratings and descriptions of actual performance)

with an employee, a supervisor shall review the appraisal with the

next-level manager to ensure that ratings are appropriate and

consistent.

Supervisors shall discuss the appraisals with their employees. Both

supervisor and employee shall sign and date the completed

performance appraisal indicating that the discussion has taken place.

PERFORMANCE APPRAISAL AND PERFORMANCE

MANAGEMENT – DIFFERENCE

11


Performance Appraisal Performance Management

1. top-down assessment 1. joint process through dialogue

2. annual appraisal meeting 2. continuous review with one or more formal reviews

3. use of ratings 3. ratings less common

4. monolithic system 4. flexible process

5. focus on quantified objectives 5. focus on values and behaviors as well as objectives

6. often linked to pay 6. less likely to be a direct link to pay

7. bureaucratic- complex paper work 7. documentation kept to a minimum

8. owned by the HR department 8. owned by line managers

FEATURES OF AN EFFECTIVE ORGANIZATION

The following are some of the characteristics and practices of

an effective organization:

I. Overall Organization ?Has a clear mission statement that is known to its board, staff and

clients and which informs all its programming ?Has a written policy of inclusiveness concerning board, staff and

clients

?Has written policies for board, staff and clients prohibiting

discrimination and harassment

?Has all necessary Policies and Procedures manuals that are

relevant to current programming

?Has a current Strategic Plan and is pursuing it

?Actively engages with the broader community through

coalitions, advocacy efforts, etc.

?Has written succession policies concerning the executive

director, members of the board and key program staff

?Has its own 501 (c)(3) Internal Revenue Service determination

II. Board ?Board numbers a minimum of five voting members ?Board includes representatives of the communities served by the

organization ?Board members are free from conflicts of interest regarding

organization's staff and operations ?Board exerts active oversight of the financial affairs of the

organization

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?Board has as one of its main charges to fundraise for the

organization ?Client representatives sit on the agency's board

III. Staff ?Staff is reflective of the population served by the agency

?Staff has necessary qualifications and/or characteristics to run

programs

?There are written job descriptions that are current and if a new

program is being launched, the necessary and appropriate staff

requirements have been thought out and are delineated

?Staff should have competitive salary and benefits packages

?Appropriate and ongoing training is available to all staff

IV. Programs ?Programs clearly fit within the agency's mission statement

?Agency has investigated similar programs run by other agencies

and can clearly state the need for its particular programming and

what specific niche(s) it serves

?Staff input has been sought when developing programs

?Client input has been sought when developing programs

?Specific program goals have been developed and results are

reviewed regularly

?Systems appropriate to the nature of the organization are in place

to safeguard client confidentiality

?Feedback is sought on a regular basis from staff, clients and

13


community on whether or not current programs are serving their

stated purposes

?When appropriate, clients are connected to additional appropriate

services

?Data collection systems are in place to appropriately:?Track client demographics?Track client development/improvement?Track program goals ?Program has support from the community

V. Finance ?Agency can supply accurate budgets (for both agency and

program) and explain budget detail

?Agency spends at least 65% of its total expenses on program

activities

?Agency spends no more that 35% of related contributions on fund

raising

?Agency has an accounting system adequate to its program needs

?Agency files an annual tax return, or, if required, has an annual

audit on a timely basis

?Agency has a development plan adequate to its program needs

?Agency has diversified its funding base

?Fundraising efforts are in accord with the stated agency mission

HISTORY OF PERFORMANCE MANAGEMENT

Employee Performance Management is a process for

establishing a shared workforce understanding about what is to be

14


achieved at an organization level. It is about aligning the

organizational objectives with the employees' agreed measures, skills,

competency requirements, development plans and the delivery of

results. The emphasis is on improvement, learning and development in

order to achieve the overall business strategy and to create a high

performance workforce.Performance Management began around 60 years ago as a

source of income justification and was used to determine an

employee's wage based on performance. Organizations used

Performance Management to drive behaviors from the employees to

get specific outcomes. In practice this worked well for certain

employees who were solely driven by financial rewards. However,

where employees were driven by learning and development of their

skills, it failed miserably. The gap between justification of pay and the

development of skills and knowledge became a huge problem in the

use of Performance Management. This became evident in the late

1980s; the realization that a more comprehensive approach to manage

and reward performance was needed. This approach of managing

performance was developed in the United Kingdom and the United

States much earlier than it was developed in Australia. In recent decades, however, the process of managing people

has become more formalized and specialized. Many of the old

performance appraisal methods have been absorbed into the concept

of Performance Management, which aims to be a more extensive and

comprehensive process of management. Some of the developments

that have shaped Performance Management in recent years are the

differentiation of employees or talent management, management by

objectives and constant monitoring and review. Its development was

accelerated by the following factors:?The introduction of human resource management as a strategic

driver and integrated approach to the management and

development of employees; and

15


?The understanding that the process of Performance Management

is something that's completed by line managers throughout the

year - it is not a once off annual event coordinated by the

personnel department.

DEVELOPMENTS IN PERFORMANCE MANAGEMENT

Extensive research carried out in the UK and USA has

established that new perspectives on performance management have

emerged with the following characteristics:

?An emphasis on front-end planning rather than back-end review

?A broader definition of performance that focuses on more than

narrowly defined job responsibilities

?An emphasis on ongoing dialogue rather than forms and rating

scales

?The recognition that there are many factors contributing to

performance outcomes.

THE ROLE OF PERFORMANCE MANAGEMENT IN

ORGANIZATIONS

Performance management is a quickly maturing business

discipline. Like its better known siblings—sales and marketing,

human resources, supply chain management, and accounting and

finance—performance management has a key role to play in

improving the overall value of an organization. Wayne Eckerson of

The Data Warehouse Institute defines Performance Management as “a

series of organizational processes and applications designed to

optimize the execution of business strategy.” The fitness program outlines a strategy for following certain

recommended exercises and healthy habits, helping you to achieve

16


your objectives (e.g., becoming stronger, lighter, etc.), and leading

towards your goal of becoming more fit. Throughout the program,

there may be certain targets to strive for, such as 20 more pushups a

month, or completing that 20-minute treadmill run at a higher average

rate of speed. Your trainer also uses the program to record your

progress from visit to visit, providing feedback on your overall

performance and determining whether you are on track towards

meeting specific objectives.Feedback is important to us, because it helps us to further

understand why we may or may not be meeting specific targets.

Feedback can also be used to modify our expectations, and to set new

objectives over the course of the program. In business, a similar

process takes place:

1.Planning what we would like to happen, based on insights from

analysis of trends in our industry and events that impact our business.2.Executing, by making decisions and taking action, based on the

outcomes of planning activities.3.Monitoring our progress towards a certain time-limited target or

objective.4.Analyzing further to understand why we may or may not be on-track

to meet a specific target or objective.5.Forecast what we think will happen, based on what we have

analyzed. Here we build one or more scenarios to help us predict

certain outcomes. These outcomes help us to confirm or refute our

choice of tactics to meet our objectives.

THE PERFORMANCE MANAGEMENT PROCESS

The performance management process is the sequence of

actions supervisors take when interacting with employees about their

job performance and includes: determining the key elements of the

job, developing performance expectations, providing an interim

review of job performance, and providing an annual performance

17


appraisal. Interaction between supervisor and employee is required at

each step of the process.

1.Key Elements of the JobBefore realistic performance expectations can be established,

the work to be performed needs to be clearly articulated and prioritized

based on the importance of each task and its value to the university.

Duties and responsibilities for employees are determined by the

appropriate supervisor and normally include:

a.Routine tasks/assignments. These are tasks that are "assigned" on a

regular basis and affect the goals and objectives of the university.b.Special projects and assignments. These are non-routine tasks that

the employee and the supervisor have mutually developed in priority

order.

The employee's job description and the organizational goals

for the department or office serve as important source documents in

identifying the key elements of every job.

2.Performance ExpectationsAt the beginning of each annual performance cycle, each

classified employee will meet with his/her supervisor to jointly

develop performance expectations, which identify minimum

acceptable levels (meets expectations) of performance for the

employee. The supervisor is expected to:

a.Explain the performance management process to the employee so

that the employee understands the importance of his/her role in the

process as well as of the supervisor and the reviewer (supervisor's

supervisor).b.Take the lead in developing and subsequently updating performance

expectations at the beginning of each annual performance cycle.c.Provide the employee a signed and dated copy of the performance

expectations (work plan).

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d.Use the techniques of modeling, coaching, and reinforcing

throughout the cycle to sustain good performance and improve poor

performance.

3.Interim Performance Review (Work plans)The interim review is conducted at the midpoint of the

Performance Management Cycle and provides the opportunity for the

supervisor to meet the employee and informally review the

employee's progress in meeting the performance expectations

established for each significant task and to make appropriate

modifications, if appropriate. The supervisor is expected to:

a.Take the lead in meeting with the employee to discuss

performance as measured against expectations.

b.Communicate an interim rating of actual performance for

each significant task of the employee.

c.Provide guidance for improving performance, as

appropriate.

d.Communicate an interim overall rating to the employee.

e.Continue to model, reinforce, and coach the employee.

4.Annual Performance Appraisal

Annually, at the end of the Performance Management Cycle,

every supervisor will meet with the employees supervised to review

each employee's actual performance as compared to the expectations

established at the beginning of the evaluation period. In conducting

the performance appraisal, the supervisor is expected to:

a.Discuss how well the work was performed, identify good

performance, and identify performance that needs to be

19


improved.

b.Determine, communicate, and explain the rating of each

significant task in terms of meeting, exceeding, or failing to

meet the established expectation.c.Discuss the overall performance rating and develop, where

appropriate, a plan to improve overall performance and

performance for each expectation, which has not been rated

on the "meets expectations" level.

d.Record the results of the performance evaluation and

performance interview on the Performance Management

Appraisal Form.

The Performance Management Appraisal Form is to be signed

and dated by the employee, supervisor, and reviewer (supervisor's

supervisor).

COMPONENTS OF THE PERFORMANCE MANAGEMENT

SYSTEM

The university's system of performance management will

include the following components:

1. An individual work plan prepared annually for each classified (SPA)

employee which includes performance expectations and incorporates

an interim review of performance.

In completing the work plan, performance competencies and

behavioral competencies are included and further broken down into

significant job responsibilities for which performance expectations

are developed using indicators which measure both results and

behaviors such as quality, quantity, timeliness, manner of

performance, cost effectiveness, and quantity. Each supervisor is

expected to identify at least three (3) workplace behavioral

20


competencies, of which one must be "customer service" for

incorporation into each employee's work plan.Information about the employee's performance is obtained

from reports, observations, customer feedback, review of the work

products, etc. Performance expectations are written to establish the

minimum acceptable level of performance. This should provide the

motivated employee an opportunity to exceed expectations.Performance expectations for classified (SPA) supervisors and

managers must include expectations for the significant tasks of

Performance Management and Equal Opportunity.Performance expectations are to be established for

probationary employees and reviewed at end of the probationary

period to determine if the employee will be given permanent status.

The work plan will be completed, signed, and dated by the employee,

supervisor and supervisor's supervisor, after which a copy will be

given to the employee and the Office of Human Resources for the

employee's personnel file.

2. An overall performance rating scale of Five levels is defined as

follows:

Outstanding Performance (5): Performance is far above the defined

job expectations. The employee consistently does outstanding work,

regularly going far beyond what is expected of employees in this job.

Performance that exceeds expectations is due to the effort and skills of

the employee. Any performance not consistently exceeding

expectations is minor or due to events not under the control of the

employee.

Very Good Performance (4): Performance meets the defined job

expectations and in many instances, exceeds job expectations. The

employee generally is doing a very good job. Performance that

exceeds expectations is due to the effort and skills of the employee.

21


Good Performance (3): Performance meets the defined job

expectations. The employee generally performs according to the

expectations and is doing a good job. The employee is doing the job at

the level expected for employees in this position. The good

performance is due to the employee's own effort and skills.

Below Good Performance (2): Performance may meet some of the

expectations but does not meet the remainder. The employee

generally is doing the job at minimal level, and improvement is needed

to fully meet the expectations. Performance is less than a good job.

Lapses in performance are due to the employee's lack of effort or

skills.

Unsatisfactory Performance (1): Performance generally fails to

meet the defined expectations or requires frequent, close supervision

and/or the redoing of work. The employee is not doing the job at the

level expected for employee in this position. Unsuccessful job

performance is due to employee's own lack of effort or skills.

3. A performance appraisal (Performance Management Appraisal

Form) is completed on every employee annually (no less than every 12

months).A development plan will be included as part of the

performance appraisal.

In completing the Performance Management Appraisal Form,

the supervisor is expected to meet with the employee to ensure the

accuracy of the primary job responsibilities and significant task

performance expectations as recorded on the work plan form. The supervisor's evaluation of the individual significant tasks

and the overall performance is then completed, after which a

performance interview is held with the employee. The employee is

provided an opportunity to comment on the supervisor's evaluation.

22


NOTE: The Appraisal Form is to be dated and signed by the

supervisor and the employee and may be sent to the reviewer

(supervisor's supervisor) before being discussed with the employee by

the supervisor. If the employee refuses to acknowledge that a review

and discussion occurred by signing the appraisal, the supervisor will

have a third party to acknowledge the employee's refusal sign and

forward the appraisal to the reviewer. The reviewer is to sign and date

the appraisal and provide the employee a copy of the completed

Performance Appraisal.

The content of appraisals is considered to be "information

personal in nature" and such is releasable only on a "need-to-know"

basis.

No information contained in a completed evaluation may be

changed without the employee's knowledge. Changes require the date

and initials of the employee, supervisor and reviewer.

As part of the evaluation process, the employee and supervisor

are expected to:

?Discuss strengths and identify areas for further improvement /

development.

?Agree on a plan for improvement/development and record the

plan in the section of the Appraisal Form established for

developmental planning.

This will serve as an action plan for maintaining good

performance and improving performance determined to be in need of

improvement.The plan is to include the knowledge and skills that the

employee needs to acquire or improve and time frames for completion

or demonstrated improvements.

23


4. An education/training program to provide information and skills

necessary for employees, supervisors, and managers to effectively

operate the system of performance management.This program will be carried out by the Training and Staff

Development Specialist, under the guidance of the Director of Human

Resources.

5. A dispute resolution procedure using the established grievance

procedures for classified (SPA) employees.

This procedure will be used for reviewing and resolving

disputes concerning performance ratings and/or performance salary

decisions.

Relationship of Performance Management to Other Personnel

SystemsPerformance Management is an integral part of the overall

management of the university. Information from the Performance

Management System pertaining to classified (SPA) employees will be

one of the factors considered in making other personnel management

decisions. Decisions concerning promotions, transfers, training and

staff development, discipline, and other personnel actions are

influenced by information from performance appraisals. Performance

salary increase decisions come directly from annual performance

appraisals.In order to achieve internal consistency in personnel

administration, the following requirements apply:

?A current Performance Appraisal must be on file for an

employee before any of the favorable personnel actions listed

above can be approved.

�Favorable personnel actions must be consistent with an

employee's current performance appraisal.

24


?Personnel action requests that are inconsistent with an

employee's current performance appraisal will require a request

and written justification for exception to policy.

Trainees and probationary employees are required to have a

work plan completed within thirty (30) calendar days from the date of

employment. Trainees and probationary employees who are

employed on or before the first day of an annual Performance

Management Cycle and who hold a permanent appointment by the last

day of the cycle will be considered to have worked the entire cycle.

Employees whose duties and responsibilities change (either in

their current position or in a new position) must have a new work plan

form completed within thirty (30) days of the new assignment.

A performance Appraisal Transfer Form is to be completed

prior to the last day of work for employees who transfer within State

Government. The employee, supervisor, and reviewer are required to

date and sign the form.

RESPONSIBILITIES

The Chancellor is responsible for ensuring the Performance

Management System is developed and implemented in accordance

with the requirements of the Legislature and the State Personnel

Commission and is approved by the State Personnel Director. The

Chancellor is also responsible for determining sanctions to be levied if

all provisions of this policy are not met.

THE IMPORTANCE OF PERFORMANCE MANAGEMENT

IN BUSINESS

Your employees are an integral and indispensable part of

running your business smoothly and efficiently. That's why, keeping in

mind the crucial role of your employees, a recent trend known as

25


Performance Management has come into practice. Using performance

management, you can ensure that your employees not only fulfill their

responsibilities, but do so to the best of their abilities and up to your

expectations.

Performance management allows you to tap the full potential

of your staff. In short, it can be described as a comprehensive process

starting from monitoring and developing the desired traits to rating

their progress and rewarding them for their achievements.

Involve Employees in the Planning Stage The mere making of plans alone will not help you to run your

business successfully. You must also focus on the appropriate ways to

get business tasks done. One way of doing this efficiently is to involve

your employees in the planning process. This will not only boost their

morale and confidence, but also help you avoid any communication

gaps in the process.

Additionally, it will also help in providing them with a clear

picture of what you expect from them and what they need to

accomplish.

Monitoring the Progress of Your Employees Just as revision of business plans is sometimes necessary for

the success of your business, measuring the performance of every

employee is also important. This ensures that tasks are efficiently

completed on time and on or under budget. It also points out to you any

shortcomings of either your staff or business plans, and helps you to

take the appropriate corrective actions.

Ensuring All Around Development of Employees Performance management gives you the tools to instill the

desired qualities in your employees in order to get the job done.

Development is not limited to only individuals in your workplace, but

also addresses the performance of the team as a whole. All around

26


employee development not only ensures the personal and professional

growth of your employees, but also the expansion and improvement of

your business.

Evaluation of Individual Performance Evaluating and rating the performance of your employees on

an individual basis is essential. This gives them a clear picture of

where they presently stand, areas that they need to work on and what

they are good at. This way, they can focus more on their weakness and

work to strengthen those areas.

As a manager, you should make it company policy to issue

performance reviews while providing your employees with the

feedback that they need to perform better at their jobs. Remember-

just as it is important to point out your employees' weaknesses and

shortcomings, it is also essential to commend them on their strength.

Rewarding your employees Rewarding and appreciating your employees' efforts ensure

that their level of performance and consequently the performance of

your business is not compromised. It ensures optimum productivity,

performance and maximum profitability.

Rewarding your staff for a job well done not only enhance their

performance but also serves as a tool to keep them motivated.

Therefore, performance management is an effective system that

allows you to achieve the financial goals of your small business.

PERFORMANCE APPRAISAL

According to Wendell French, 'Performance appraisal is the

formal, systematic assessment of how well employees are performing

their jobs in relation to established standards, and the communication

of that assessment to employees'.

27


According to Flippo, 'Performance appraisal is the systematic,

periodic and an impartial rating of an employee's excellence in matters

pertaining to his present job and his potential for a better job'.

According to Dale Yoder, 'performance appraisal includes all

formal procedures used to evaluate personalities and contributions

and potentials of group members in a working organization. It is a

continuous process to secure information necessary for making

correct and objective decisions on employees'.

According to C.D.Fisher, L.F.Schoenfeldt and J,B.Shaw,

'Performance appraisal is the process by which an employee's

contribution to the organization during a specified period of time is

assessed'.

These definitions make it clear that performance appraisal

refers to the method of evaluating the behaviour of employees in the

workplace, usually incorporating both the quantitative and qualitative

aspects of job performance. It is a systematic and objective way to

evaluate both work-related behaviour and potential of employees. It is

a process to determine and communicate to an employee how he is

performing the job and ideally establishing a plan of improvement. It

emphasizes individual development. Now, it is used to evaluate the

performance of all the human resources working at all levels of

organization. It evaluates the performance of technical, professional

and managerial staff.

Performance Appraisal is the systematic evaluation of the

performance of employees and to understand the abilities of a person

for further growth and development. Performance appraisal is

generally done in systematic ways which are as follows:

?The supervisors measure the pay of employees and compare it

with targets and plans.

28


�The supervisor analyses the factors behind work performances

of employees.

?The employers are in position to guide the employees for a

better performance.

OBJECTIVES OF PERFORMANCE APPRAISAL

Performance appraisal plans are designed to meet the needs of

the organization and the individual. It is increasingly viewed as central

to good human resource management. Performance appraisal could be

taken either for evaluating the performance of employees or for

developing them. The evaluative purpose has a historical dimension

and is concerned primarily with looking back at how employees have

performed over a given time period, compared with required standards

of performance. The developmental purpose is concerned with the

identification of employee's training and development needs. The

appraisal of employees' serves several useful purposes such as:

?Providing feedback: it serves as a feedback to the employee. It

tells him what he can do to improve his present performance and

go up the organizational ladder'. The appraisal thus facilitates

self-development. It also makes the employee aware of his key

performance areas.

?Providing inputs for compensation: it provides inputs to

system rewards. The approach to compensation is at the heart of

the idea that raises should be given for merit rather than for

seniority.

?Providing a database: it provides a valid database for personal

decisions concerning placements, pay, promotion, transfer, etc.

Appraisal also makes the employee aware of his key performance

areas. Permanent performance appraisal records of employees

29


help management to do planning without relying upon personal

knowledge of supervisors who may be shifted.

?Helping personal development: performance appraisal can help

reveal the causes of good and poor employee performance.

Through discussions with individual employees, a line manager

can find out why they perform as they do and what steps can be

initiated to improve their performance.

?Facilitating training and development programme: by

identifying the strengths and weaknesses of employee, it serves

as a guide for formulating a suitable training and development

programme to improve his performance. It can also inform

employees about their progress and tell them what skills they

need to develop to become eligible for pay rises and /or

promotions.

?Providing a basis for promotion: it can serves as a useful basis

for job change or promotion. By establishing whether the worker

can contribute still more in a different or a higher job it helps in his

suitable promotion and placement. If relevant work aspects are

measured properly, it helps in minimizing feelings of frustration

of those who are not promoted.

?Improving supervision: the existence of a regular appraisal

system tends to make the supervisors more observant of their

subordinates because they know that they will be expected

periodically to fill out rating forms and would be called upon to

justify their estimates. This improves supervision.

Performance appraisal helps to have comparative worth of

employees. Appraising employee performance is, thus useful for

compensation, placement and training and development purposes. In

the words of M.W.Cummings, 'the overall objective of performance

30


appraisal is to improve the efficiency of enterprise by attempting to

mobilize the best possible efforts from individual employed in it. Such

appraisals achieve four objectives including the salary reviews, the

development and training of individuals, planning job rotation and

assistance promotions'. The information can also be used for

grievance handling and keeping the record. It helps in improving the

quality of supervision and better the employee-employer relationship.Performance Appraisal can be done with following objectives in mind:

?To maintain records in order to determine compensation

packages, wage structure, salaries raises, etc.

�To identify the strengths and weaknesses of employees to place

right men on right job.

?To maintain and assess the potential present in a person for

further growth and development.

�To provide a feedback to employees regarding their

performance and related status.

�To provide a feedback to employees regarding their

performance and related status.

?It serves as a basis for influencing working habits of the

employees. ?To review and retain the promotional and other training

programs.

ADVANTAGES OF PERFORMANCE APPRAISAL

Performance appraisal is an investment for the company

which can be justified by the following advantages:

1.Compensation: performance appraisal helps in chalking out

31


compensation packages for employees. Merit rating is possible

through performance appraisal. Performance appraisal tries to give

worth to a performance. Compensation packages which include

bonus, extra benefits, high salary, allowances and pre-requisites are

dependent on performance appraisal. The criteria should be merit

rather than seniority.

2.Promotion: performance appraisal helps the supervisors to chalk

out the promotion programs for the efficient employee. In this regards,

inefficient workers can be dismissed or demoted in case.

3.Employee Development: the systematic procedure of performance

appraisal helps the supervisors to frame training policies and

programs. It helps to analyze strengths and weakness of employees so

that new jobs can be designed for efficient employees. It also helps in

framing future development programs.

4.Selection Validation: Performance Appraisal helps the supervisors

to understand the validity and importance of the selection procedure.

The supervisors come to know the validity and thereby the strengths

and weaknesses of selection procedure. Future changes in selection

methods can be made in this regard.

5.Communication: For an organization, effective communication

between employees and employers is very important. Through

performance appraisal, communication can be sought for the

following ways:

?Through performance appraisal, the employers can understand

and accept skills of subordinates.

?The subordinates can also understand and create a trust and

confidence in superiors.

?It also helps in maintaining cordial and congenial labour

32


management relationship.

?It develops the spirit of work and boosts the morale of employees.

?All the above factors ensure effective communication.

6.Motivation: Performance appraisal serves as a motivation tool.

Through evaluating performance of employees, a person's efficiency

can be determined if the targets are achieved. This very well motivates

a person for better job and helps him to improve his performance in the

future.

Uses of Performance Appraisal

Performance Appraisal is a significant element of the

information and control system in organization. Performance

appraisal has the following uses:

?It provides valuable information for personnel decisions such as

pay increases, promotions, demotions, transfers and

terminations. The information provided forms the basis for

suitable personnel policies.

?It provides feedback about the level of achievement and

behaviour of subordinates, rectifying performance deficiencies

and to set new standards of work, if necessary. It also identifies

individuals with high potential who can be groomed up for higher

positions.

?It tells a subordinate how he is doing and suggesting necessary

changes in his knowledge, behaviour and attitudes. It thus

provides information, which helps to counsel the subordinate. It

also serves to stimulate and guide employee's development.

?It analyses training and development needs. These needs can be

33


assesses because performance appraisal shows people who

require further training how to remove their weakness. By

identifying the weakness of an employee, it serves as a guide for

formulating a suitable training and development programme to

improve his performance in his present work.

?It serves as means for evaluating the effectiveness of devices used

for the selection and classification of employees. It therefore

helps to judge the effectiveness recruitment, selection, placement

and orientation systems of the organization.

?It facilitates human resource planning and career planning,

permanent performance appraisal records of employees help

management to do human resource planning without relying

upon personal knowledge of supervisors.

?It promotes a positive work environment, which contributes to

productivity. When achievements are recognized and rewarded

on the basis of objective performance measures, there is

improvement in work environment. Performance appraisal

therefore, provide the rational foundation for incentives, bonus,

etc. The estimates of the relative contributions of employees

helps to determine the rewards and privileges rationally.

?It tends to make the supervisors and executives more observant of

their subordinates as they are aware that they would be expected

periodically to fill out rating forms and would be called upon to

justify their estimates. This knowledge results in improved

supervision.

?It records protect management from charges of favouritism and

discrimination. Employee grievance can also be reduced as it

helps to develop confidence among employees.

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PURPOSE OF PERFORMANCE APPRAISAL

Organizations use performance appraisals for three purposes:?Administrative: it commonly serves as an administrative tool

by providing employers with a rationale for making many

personnel decisions, such as decision relating to pay increases,

promotions, demotions, terminations and transfers.

�Employee development: it provides feedback on an employee's

performance. Appraisal data can also be used for employee

development purposes in helping to identify specific training

needs of individuals.

?Programme assessment: programme assessment requires the

collection and storage of performance appraisal data for a

number of uses. The records can show how effective

recruitment, selection and placement have been in supplying a

qualified workforce.

It is generally accepted that performance appraisals serve one or more

of the following purposes:

?To create and maintain a satisfactory level of performance

?To meet an individual's development needs

?To bring about better operational or business needs

?To facilitate fair and equitable compensation based on

performance

?To help the superiors to have a proper understanding about their

subordinates

?To provide information useful for manpower planning by

identifying employees with a potential for advancement; and

35


?To facilitate for testing and validating selection tests, interview

techniques through comparing their scores with performance

appraisal ranks.

Process of Performance Appraisal

Performance Appraisal is planned, developed and

implemented through a series of steps as shown in the following

figure. The steps are explained as follows:

Step-1: Job analysis, job description and job specification:

performance appraisal is a process not to be undertaken in isolation of

various human resources functions. It begins with job analysis, job

description and job specification. These help in establishing the

standard performance.

Step-2: establishing standards of performance: appraisal system

require performance standards, which serve as benchmark against

which performance is measured. The standards set for performance

must be clearly defined and unambiguous. It should be attainable by

every employee. To be useful, standards should relate to the desired

results of each job. Performance standards must be clear to both the

appraiser and the appraise. The performance standards or goals must

be developed with the supervisors to ensure that all the relevant factors

have been included. Where the output can be measured, the personal

characteristics, which contribute to employee performance, must be

determined.

Goals must be written down. They must be measurable within certain

time and cost considerations.

36


Figure: Process of Performance Appraisal

Step-3: communicating performance standards to employees

Performance appraisal involves atleast two parties; the

appraiser who does the appraisal and the appraisee whose

37


Job Analysis, Job description and job

specification

Establishing standards of performance

Communicating

performance standards to

employees

Measuring actual performan ce

Comparing actual performance with

standards & discuss the appraisal with

Initiating corrective action, if necessary

performance is being evaluated. The performance standards specified

in the second step above are to be communicated and explained to the

employees (both appraiser and appraisee) so that they know what is

expected of them.

Feedback should also be given so that there is no confusion or

misunderstanding. Through feedback the manager knows that the

information has reached the employees. If necessary, the standards

may be revised or modified in the light of feedback obtained from the

employees and evaluators. As pointed out by DeCenzo and Robbins,

'Too many jobs have vague performance standards and the problem is

compounded when these standards are set in isolation and do not

involve the employee'.

Step-4: measuring actual performance

After the performance standards are set and accepted, the next

step is to measure actual performance. This requires choosing the right

technique of measurement, identifying the internal and external

factors influencing performance and collecting information on results

achieved. It can be affected through personal observation, written and

oral reports from supervisors. The performance of different

employees should be so measured that it is comparable. Performance

measures, to be helpful must be easy to use, be reliable and report on

the crucial behaviours that determine performance.

Performance measures may be objective or subjective.

I.Objective Performance measures: Objective Performance

measures are indications of job performance that can be

verified by others and are usually quantitative. Objective

criteria include:?Quality of production?Degree of training needed?Accidents in a given period

38


?Absenteeism?Length of service?

II.Subjective performance measures: Subjective

performance measures are ratings that are based on the

personal standards of opinions of those doing the evaluation

and are not verifiable by others. Subjective criteria include:?Ratings by supervisors?Knowledge about overall goals?Contribution to socio-cultural values of the

environment

It should be noted here that objective criteria could be laid

down while evaluating lower level jobs, which are specific and

defined clearly. This is not the case with middle level and higher-level

positions that are complex and vague.

Step-5: Comparing actual performance with standards and

discuss the appraisal with employees

Actual performance is compared with the predetermined

performance standards. Actual performance may be better than

expected and sometimes it may go off track. Deviations, if any, from

the set standards are noted. Along with the deviations, the reasons

behind them are also analyzed and discussed. Such discussions will

enable an employee to know his weakness and strengths. The former

are discussed so that the employee is motivated to improve his

performance. The assessment of another person's contribution and ability is

not an easy task. It has serious emotional overtones as it affects the

self-esteem of the appraise. Any appraisal based on subjective criteria

is likely to be questioned by the appraise and leave him quite dejected

and unhappy when the appraisal turns out to be negative.

39


Step-6: Initiating corrective action, if necessary

The last step in the process is to initiate corrective action

essential to improve the performance of the employee. Corrective

action is of two types:

?The employee, can be warned so that he himself can make

necessary attempts to improve his performance. But this is not

enough or proper.

�Through mutual discussions with employees, the steps required

to improve performance, are identified and initiated. The

reasons for low performance should be probed, is taken the

employee into confidence and motivated for better

performance. Training, coaching, counseling etc. are examples

of corrective actions that help to improve performance.

DIFFERENT METHODS OF PERFORMANCE APPRAISAL

HR records provide information regarding the utilization of human

resources in an objective way. However, in most cases, these are not

sufficient. A critical evaluation of manpower programmes is required

to identify the areas where improvements are needed and to set thing in

order.

Audit is an important aspect of managerial control. It involves

examination and verification of policies, programmes and procedures

in the area of HR management. It is a periodic review to measure the

effectiveness of HR management and also to determine further steps

for a more effective use of human resources.

An audit is a review and verification of completed transactions

to see whether they represent a true state of affairs of the business or

not. Thus, an HR audit refers to:

40


?The measurement of the effectiveness of the HR management's

mission, objectives, strategies, policies, procedures, programmes

and activities; and?The determination of what should or should not be done in the

future.

HR audit involves a formal, systematic and in-depth analysis,

investigation and comparison. The primary aim of HR audit is to

determine whether the personnel policies and practices are consistent

with organizational objectives. It also determines how effectively the

personnel policies and programmes have been implemented.Human resource audit is well practiced in developed countries. In

India, we do not have a full audit like financial audit of the human

resource activities in an organization.

Objectives of Human Resource Audit

According to Gray R.D, “The primary purpose of personnel

audit is to know how the various units are functioning and whether

they have been able to meet the policies and guidelines which were

agreed upon; and to assist the rest of the organization by identifying

the gap between objectives and results. The end product of an

evaluation should be to formulate plans for corrections and

adjustments”.

The objectives of HR audit are:

?To review the whole system of management programmes in

which a management develops, allocates and supervises Hr in

an organization with a view to determine the effectiveness of

these programmes. In other words, HR audit reviews the system

of acquiring, developing, allocating and utilizing human

resource in the organization;

41


�To evaluate the extent to which line managers have

implemented the policies and programmes initiated by top

management and the HR department;

?To review the HR system in comparison with other

organizations and modify them to meet the challenges of human

resource management;

�To locate the gaps, lapses, shortcomings in the implementation

of the policies, procedures, practices, directives of the HR

department and to know the areas where non implementation

and /or wrong implementation has hindered the planned

programmes and activities;

�To evaluate the effectiveness of various HR policies and

practices;

? To evaluate the HR Staff; and

?To seek answers to such questions as “what happened?” “why it

happened?” or “why it did not happen?” while implementing

policies, practices and directives in managing human resources.

Need for HR Audit

Though there is no legal obligation to audit HR policies and

practices, some of the modern organizations do pursue it for the

following reasons:

?To increase the size of the organization and personnel in several

organizations.

?To change the philosophy of management towards HR

?To increase the strength and influence of trade unions

41


?To change the HR management philosophy and thereby

personnel policies and practices throughout the world, and

?To increase the dependence of the organization on the HR system

and its effective functioning.

Qualitative and quantitative indicators of HR Audit

The following Table outlines the most commonly used

qualitative and quantitative indicators of effectiveness classified by

major functions.

41


Table: Quantitative and Qualitative indicators for HR Audit

Source: P.C.TRIPATHI 'Personnel Management and Industrial

Relations' Sultan Chand and Sons, New Dehi (1999) pp. 126-127.

Significance of HR Audit

Though there is no legal obligation to audit personnel policies

and practices, informed employers voluntarily use it as a tool for

evaluation and control of personnel function. Therefore, HR audit is

used widely to check the organizational performance in the

management of human resources. The significance of HR audit lies in

the following:

42

Major Functions Qualitative Indicators Quantitative Indicators

1. Procurement Personnel inventory, Replacement tables, organization planning, job descriptions and specification, source evaluation, exit interviews, induction programmes.

Turnover rates, selection rates, retrenchment, dismissal and lay offs, recruitment time-lag and recruitment ratios

2. Utilization Identification of merits Capacity utilization, idle time statistics, extra-time statistics, backlogs, turnover per employee, profits per rupee of personnel expenses, etc.

3. Training & Development Training programmes, supervisory and management development programmes, systematic promotions, career planning, formal appraisals.

Time taken in training, apprentice ratios, scrap losses, productivity increases

4. Compensation Job evaluation programme, wage and salary surveys, complaint from employees about wage and sal;aries.

Wage and salary differentials, benefit range and cost, number of employees earning bonus in excess of standard rate

5. Integration and Maintenance House organ, employee handbook, employee voluntary participation in optional service programmes

Measured morale, measured communication, absenteeism and turnover rates, number of grievances, suggestionrations, accident rates.

6. Labour Relations Labour-management committees, contract interpretations, no strike clause

Work stoppages, grievances and their settlement, arbitrations, costs.


?The management now feels that employee participation in

organizational activities is essential for the success of the

organization.

�It provides the required feedback

?Rising labour costs and increasing opportunities for

competitive advantage in human resource management.

�It can be used to avoid the intervention of the government to

protect employee interests.

Benefits of HR Audit

Kaith Davis summarized the benefits of HR Audit in the

following ways:?It identifies the contributions of the HR department.

?It improves the professional image of the HR Department

?It encourages greater responsibility and professionalism amongst

the members of the HR Department.

?It classifies the HR Department's duties and responsibilities

?It stimulates uniformity of personal policies and practices

?It identifies critical personal problems

?It ensures timely complaints with legal requirements

?It reduces human resource costs

Scope of HR Audit

The HR audit has a very wide scope. It assumes that the

43


management of human resources involves much more than the

practice of recruiting, hiring, retaining and firing employees. It

examines the concept of 'people management' by supervisors at all

levels. It covers areas like HR Philosophy, policies, programmes,

practices and personnel results. The National Industries Conference

Board of the United States states, “the top management is interested in

auditing all the programmes relating to employees, regardless of

where they originate, or the channels through which they are

administered”.

The major areas of HR Auditing include:

?Programming, forecasting and scheduling to meet organization

and personnel needs

�Ares of recruitment, selection, careers, promotions, training and

development

?Areas of leadership, welfare, grievances, performance

appraisal, employee mobility, and industrial relations.

HR Audit ProcessThe HR Audit should do a thorough probe, evaluating HR

policies, programmes, philosophy, practices and concepts and

comparing with standards and with those of the personnel records of

the said organization and other organizations.

The level and depth of the audit should be decided in advance.

Rao has included the following in an HR audit process.

?Identify indices, indicators, statistical ratios and gross numbers

in some cases

�Examine the variations in time-frame in comparison with a

similar previous corresponding period.

44


?Compare the variations of different departments during

different periods

�Examine the variations of different periods and compare them

with similar units and industries in the same region.

�Draw trend lines, frequency distributions and calculate

statistical correlations.

?Prepare and submit a detailed report to the top management and

to the managers and at appropriate level for information and

necessary action.

Audit of HR ResultsThe real test of HR policies and programmes lies in the results

achieved. Comprehensive policy statements and elaborate procedural

manuals are useless unless they yield good results. In the audit of

results, the HR audit may calculate ratios and percentages from

personnel statistics. Such measurement will reveal useful trends in

man power utilization.

HR audit is a comparatively new area of audit. Therefore, the

HR auditor has no body of laws, regulations and standard practices to

guide him. The HR auditor has to depend upon his own judgement and

records available within the organization. Moreover, HR audit may

become a fault-finding exercise. For example, wherever certain

deficiencies are detected, the management and workers may start

blaming each other. To avoid such situations, a forward looking

approach is required.

Audit ReportAfter examining various aspects of human resource

management, the HR auditor complies his observations, analysis,

findings and recommendations in the form of a report. There is no

45


prescribed format of the report in case of HR audit. The audit has to

examine the various HR reports, personnel policies and practices. HR

Audit report is meant mainly for the top management. However,

certain aspects of the report, e.g. attitude survey and safety survey may

be made available to employees. The report should be based solely on

the findings it should be submitted within a reasonable time after the

audit work is over. The following items should be contained in the

report:

?Table of contents

?Preface, giving a brief statement of the objectives

?Executive summary, in which the entire report is summarized for

the top executives; this should also contain the recommendations

along with factual information or findings.

?The report proper, in which a major division is covered as a

special section; a clear and in-depth analysis of the data and

information, furnished area-wise or department-wise. Each

section should be complete, and should contain as many

supporting data as are practical without making it too

voluminous. Other data should be include in the appendix.

?Summary, which is general in nature and is relevant to all persons

concerned. This is more detailed than the summary and

conclusion at the end of the report.

?Appendix, this includes supporting data and information which is

not necessary in the main part of the report.

?Bibliography, which refers to important books and journals

which are necessary for future reading is included at the end.

?Audit report should be signed by all members making the audit.

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Critical Incident MethodCritical Incident Method is a method used for many sectors.

An incident is crucial when it illustrates what the employers has done

or failed to do. The critical incidents for performance appraisal are a

method in which the manager writes down positive and negative

performance behaviour of employees throughout the performance

period. Each employee will be evaluated as such and one's

performance appraisal will be based on the logs that are put in the

evaluation form.

The manager maintains logs on each employee, whereby he

periodically records critical incidents of the worker behaviour. At the

end of the rating period, these recorded critical incidents are used in

the evaluation of workers' performance. The critical incidents file of

performance appraisal is a form of documentation that reflects all data

about employee performances.

Disadvantaged of Critical Incident?Critical incidents technique of evaluation is applied to evaluate

the performance of superiors rather than of peer of subordinates.

?Negative incidents may be more noticeable than positive

incidents

?It results in very close supervision which may not be liked by the

employee.

?The recording of incidents may be a chore for the manager

concerned, who may be too busy or forget to do it.

?The supervisors have a tendency to unload a series of complaints

about incidents during an annual performance review session.

Performance ranking method Ranking is a performance appraisal method that is used to

47


evaluate employee performance from best to worst. Manager will

compare an employee to another employee, rather than comparing

each one to a standard measurement.

Rating scale of ranking ?Much better – 5 points?Slightly better – 4 points?Equal- 3 points?Slightly worst – 2 points?Much worst – 1 point

Process of ranking ?The scaled comparison asks a rater or evaluator to compare the

performance of two individuals.

?Continue comparison to other two employees.

?Total points to each employee.

?Give point to employee, for example, A is slightly better – 4

points so that B is slightly worst – 2 points.

Related documents ?Performance appraisal methods?Performance appraisal examples?Self appraisal sample?Performance appraisal handbook

PERFORMANCE MANAGEMENT PROCESS

A performance management process sets the platform for

rewarding excellence by aligning individual employee

accomplishments with the organization's mission and objectives and

making the employee and the organization understand the importance

of a specific job in realizing outcomes. By establishing clear

performance expectations which includes results, actions and

48


behaviors, it helps the employees in understanding what exactly is

expected out of their jobs and setting of standards help in eliminating

those jobs which are of no use any longer. Through regular feedback

and coaching, it provides an advantage of diagnosing the problems at

an early stage and taking corrective actions.To conclude, performance management can be regarded as a

proactive system of managing employee performance for driving the

individuals and the organizations towards desired performance and

results. It's about striking a harmonious alignment between individual

and organizational objectives for accomplishment of excellence in

performance.

Performance management should be regarded as a flexible

process, not as a 'system'. The use of the term 'system' implies a rigid,

standardized and bureaucratic approach, which is inconsistent with

the concept of performance management as a flexible and

evolutionary, albeit coherent, process that is applied by managers

working with their teams in accordance with the circumstances in

which they operate.

49


As such, it involves managers and those whom they manage

acting as partners, but within a framework that sets out how they can

best work together. This framework has to reduce the degree to which

performance management is a top-down affair and it has to be

congruent with the way in which the organization functions.

Performance management has to fit process-based and flexible

organizations. In these circumstances, which are increasingly the

norm, it has to replace the type of appraisal system that only fits a

hierarchical and bureaucratic organization.

The process of performance management consists of: ?Planning: agreeing objectives and competence requirements and

producing performance agreements and performance

improvement and personal development plans.

?Acting: carrying out the activities required to achieve objectives

and plans.

?Monitoring: checking on progress in achieving objectives.

?Reviewing: assessing progress and achievements so that action

plans can be prepared and agreed.

Management by objectives (MBO)

Management by objectives (MBO) is a process of defining

objectives within an organization so that management and employees

agree to the objectives and understand what they need to do in the

organization.The term "management by objectives" was first popularized

by Peter Drucker in his 1954 book 'The Practice of Management'.The essence of MBO is participative goal setting, choosing course of

actions and decision making. An important part of the MBO is the

measurement and the comparison of the employee's actual

50


performance with the standards set. Ideally, when employees

themselves have been involved with the goal setting and choosing the

course of action to be followed by them, they are more likely to fulfill

their responsibilities.According to George S. Odiorne, the system of management

by objectives can be described as a process whereby the superior and

subordinate managers of an organization jointly identify its common

goals, define each individual's major areas of responsibility in terms of

the results expected of him, and use these measures as guides for

operating the unit and assessing the contribution of each of its

members.

Unique Features and Advantages of the MBO process

The principle behind Management by Objectives (MBO) is for

employees to have a clear understanding of the roles and

responsibilities expected of them. They can then understand how their

activities relate to the achievement of the organization's goal. MBO

also places importance on fulfilling the personal goals of each

employee.

Some of the important features and advantages of MBO are:

?Motivation – Involving employees in the whole process of goal

setting and increasing employee empowerment. This increases

employee job satisfaction and commitment.

�Better communication and Coordination – Frequent reviews

and interaction between superiors and subordinates helps to

maintain harmonious relationships within the organization and

also to solve many problems.

?Clarity of goals

51


�Subordinates tend to have a higher commitment to objectives

they set for themselves than those imposed on them by another

person.

�Managers can ensure that objectives of the subordinates are

linked to the organization's objectives.

Limitations

There are several limitations to the assumptive base

underlying the impact of managing by objectives, including:

?It over-emphasizes the setting of goals over the working of a

plan as a driver of outcomes.

� It underemphasizes the importance of the environment or

context in which the goals are set. That context includes

everything from the availability and quality of resources, to

relative buy-in by leadership and stake-holders. As an example

of the influence of management buy-in as a contextual

influencer, in a 1991 comprehensive review of thirty years of

research on the impact of Management by Objectives, Robert

Rodgers and John Hunter concluded that companies whose

CEOs demonstrated high commitment to MBO showed, on

average, a 56% gain in productivity. Companies with CEOs

who showed low commitment only saw a 6% gain in

productivity.

?Companies evaluated their employees by comparing them with

the "ideal" employee. Trait appraisal only looks at what

employees should be, not at what they should do.

When this approach is not properly set, agreed and managed

by organizations, self-centered employees might be prone to distort

52


results, falsely representing achievement of targets that were set in a

short-term, narrow fashion. In this case, managing by objectives

would be counterproductive.

The use of MBO must be carefully aligned with the culture of

the organization. While MBO is not as fashionable as it was before, it

still has its place in management today. The key difference is that

rather than 'set' objectives from a cascade process, objectives are

discussed and agreed upon. Employees are often involved in this

process, which can be advantageous.

A saying around MBO – "What gets measured gets done",

'Why measure performance? Different purposes require different

measures' – is perhaps the most famous aphorism of performance

measurement; therefore, to avoid potential problems SMART and

SMARTER objectives need to be agreed upon in the true sense rather

than set.

Arguments against

MBO has its detractors, notably among them W. Edwards

Deming, who argued that a lack of understanding of systems

commonly results in the misapplication of objectives. Additionally,

Deming stated that setting production targets will encourage resources

to meet those targets through whatever means necessary, which

usually results in poor quality.

Deming's key principles encourage managers to abandon

objectives in favour of leadership because he felt that a leader with an

understanding of systems was more likely to guide workers to an

appropriate solution than the incentive of an objective. Deming also

pointed out that Drucker warned managers that a systemic view was

required and felt that Drucker's warning went largely unheeded by the

practitioners of MBO.

53


Critical Incident Technique

The Critical Incident Technique (or CIT) is a set of procedures

used for collecting direct observations of human behavior that have

critical significance and meet methodically defined criteria. These

observations are then kept track of as incidents, which are then used to

solve practical problems and develop broad psychological principles.

A critical incident can be described as one that makes a significant

contribution—either positively or negatively—to an activity or

phenomenon. Critical incidents can be gathered in various ways, but

typically respondents are asked to tell a story about an experience they

have had.

CIT is a flexible method that usually relies on five major areas.

The first is determining and reviewing the incident, then fact-finding,

which involves collecting the details of the incident from the

participants. When all of the facts are collected, the next step is to

identify the issues. Afterwards a decision can be made on how to

resolve the issues based on various possible solutions. The final and

most important aspect is the evaluation, which will determine if the

solution that was selected will solve the root cause of the situation and

will cause no further problems.

Principal uses

CIT can be used in a wide variety of areas. In general it is most

useful in the early stages of development of large scale tasks and

activity analysis within existing projects. This is mainly due to the

method's ability to quickly separate out major problem areas that

reside in a system.

In healthcare CIT is used in situations where direct

examination of clinical staff and researchers can help them better

understand their roles and help them solve practical problems. CIT

54


allows clinical staff to better understand their roles in the clinical

setting. Another advantage is that it helps them gain better knowledge

about their interactions with patients and other clinicians. It also helps

clinical staff better understand their practice from a variety of roles

(e.g., physician, nurse, clinical educator, nurse informatician, faculty

member). In healthcare research, CIT can be a good resource in

identifying the experiences of a patient in the healthcare setting,

exploring the dimensions of patient–provider interactions and

determining patient responses to illnesses and treatments.

CIT is also widely used in organizational development as a

research technique for identification of organizational problems. CIT

is used as an interview technique, where the informants are

encouraged to talk about unusual organizational incidents instead of

answering direct questions. Using CIT deemphasizes the inclusion of

general opinions about management and working procedures, instead

focusing on specific incidents.

Advantages and Disadvantages

By identifying possible problems associated with major

user–system or product complications, CIT recommendations try to

ensure that the same type of situations do not result in a similar loss.

There are both advantages and disadvantages to using this method, as

shown below. In all, however, CIT has been demonstrated to be a

sound method since first presented in 1954. Relatively few

modifications have been suggested to the method in the more than 50

years since it was introduced, and only minor changes have been made

to Flanagan's original approach. This indicates a certain robustness.

Advantages

?Flexible method that can be used to improve multi-user systems.

55


?Data is collected from the respondent's perspective and in his or

her own words.

?Does not force the respondents into any given framework.

?Identifies even rare events that might be missed by other methods

which only focus on common and everyday events.

?Useful when problems occur but the cause and severity are not

known.

?Inexpensive and provides rich information.

?Emphasizes the features that will make a system particularly

vulnerable and can bring major benefits (e.g. safety).

?Can be applied using questionnaires or interviews.

Disadvantages

·A first problem comes from the type of the reported incidents. The

Critical Incident Technique will rely on events being remembered by

users and will also require the accurate and truthful reporting of them.

Since critical incidents often rely on memory, incidents may be

imprecise or may even go unreported.·The method has a built-in bias towards incidents that happened

recently, since these are easier to recall.·Respondents may not be accustomed to or willing to take the time to

tell (or write) a complete story when describing a critical incident.

MERIT RATING

Introduction

Merit-rating is associated with performance appraisal of an

employee. This is a systematic approach for evaluating the

56


performance of an employee on the job, which he performs. This is

also called as performance appraisal, personnel rating and employee

evaluation.Merit-rating is a formal, objective procedure for evaluating

personality, contributions and potentials of employees in a working

organization.

Job Evaluation Vs Merit Rating

Job-evaluation and merit-rating are compared in the following ways:

56

Job Evaluation Merit Rating

It evaluate a job or work It evaluate a worker

It is for the purpose of fixing base-wage for a job

It is for the purpose of deciding reward for exceptional merit of worker.

1. It is independent of operator or worker. It is impersonal in nature.

It is independent of job. It is impersonal in nature.

2. Useful for decision regarding wage and salary administration, skill match, etc.

Useful for decision regarding training, placement, promotion, counseling, etc.


Chapter-2

A performance management process sets the platform for rewarding excellence by aligning individual employee accomplishments with the organization's mission and objectives and making the employee and the organization understand the importance of a specific job in realizing outcomes. By establishing clear performance expectations which includes results, actions and behaviors, it helps the employees in understanding what exactly is expected out of their jobs and setting of standards help in eliminating those jobs which are of no use any longer. Through regular feedback and coaching, it provides an advantage of diagnosing the problems at an early stage and taking corrective actions.

To conclude, performance management can be regarded as a

proactive system of managing employee performance for driving the

individuals and the organizations towards desired performance and

results. It's about striking a harmonious alignment between individual

and organizational objectives for accomplishment of excellence in

performance.

Performance management should be regarded as a flexible

process, not as a 'system'. The use of the term 'system' implies a rigid,

standardized and bureaucratic approach, which is consistent with the

concept of performance management as a flexible and evolutionary

process that is applied by managers working with their teams in


57

accordance with the circumstances in which they operate. It involves

managers and those whom they manage acting as partners, but within a

framework that sets out how they can best work together. This

framework has to reduce the degree to which performance

management is a top-down affair and it has to be congruent with the

way in which the organization functions.

Performance management has to fit process-based and flexible

organizations. In these circumstances, which are increasingly the

norm, it has to replace the type of appraisal system that only fits a

hierarchical and bureaucratic organization.

The process of performance management consists of:

¡Planning: agreeing objectives and competence requirements

and producing performance agreements and performance

improvement and personal development plans.

¡Acting: carrying out the activities required to achieve objectives

and plans

¡Monitoring: checking on progress in achieving objectives

¡Reviewing: assessing progress and achievements so that action

plans can be prepared and agreed.

Performance management is a natural process of management.

According to William Deming, it consists of the following activities:Plan – decide what to do and how to do it.

¡Act – carry out the work needed to implement the plan

¡Monitor – carry out continuous checks on what is being done

and measure outcomes in order to assess progress in

implementing the plan.


58

¡Review – consider what has been achieved and, in the light of

this, established what more needs to be done and any corrective

action required if performance is not in line with the plan.

Figure 2.1 The Performance Management Cycle

Similar to our fitness program, where progress is monitored

and analyzed in areas such as weight loss or number of repetitions for a

given exercise, performance management involves monitoring key

performance indicators (KPIs) that measure whether an organization

is meeting its objectives and overarching strategy. A KPI in this sense

is a measure defined by a business that allows for observation of actual

values, as they may emerge from line-of-business (LOB) applications

and their comparison to established targets (or budgeted values).

If a KPI reveals an actual value that deviates too far from (or in

many cases, closely approaches) a pre-defined target, then further

59


analysis is warranted. Discoveries made during analysis should help

us plan our next steps, set new (or adjust existing) expectations, and

predict what may happen based on our decisions. In larger

organizations, data from multiple LOB systems are often centralized

within “a single version of the truth” business intelligence (BI) system

to optimize KPI monitoring, detailed analysis, and performance

reporting. BI systems often (but not always) consist of several layers

that work together, helping businesses to:

?Integrate and refine data from a variety of applications, systems,

and documents into a centralized data mart or data warehouse.?Analyze refined data to gain insight into current performance

(monitoring KPIs), potential causes for specific KPI variances (or

deviations of actual values from target values).?Report past, current, or forecast conditions to stakeholders.

The goal of a BI system is to ultimately help business people

make better, faster decisions. Classically, such decision-making has

occurred at higher levels of an organization and been limited to a

relatively small number of individuals. However, corporate culture

has changed significantly over the last decade, and themes of

transparency, accountability, and empowerment have emerged.

Performance management frameworks, like Kaplan and Norton's

Balanced Scorecard method, build on these notions by making all

steps in the cycle (illustrated in Figure 2.1) occur at executive,

departmental, and operational layers of the modern organization.

THE DEMING CYCLE

The Deming cycle, or PDSA cycle, is a continuous quality

improvement model consisting of a logical sequence of four repetitive

steps for continuous improvement and learning: Plan, Do, Study

(Check) and Act. The PDCA cycle is also known as the Deming Cycle,

or as the Deming Wheel or as the Continuous Improvement Spiral. It

60


originated in the 1920s with the eminent statistics expert Mr. Walter A.

Shewhart, who introduced the concept of PLAN, DO and SEE. The

late Total Quality Management (TQM) guru and renowned statistician

Edwards Deming modified the Shewart cycle as: PLAN, DO,

STUDY, and ACT.

Along with the other well-known American quality guru-

Joseph Juran, Edwards Deming went to Japan as part of the occupation

forces of the allies after World War II. Deming taught a lot of Quality

Improvement methods to the Japanese, including the usage of

statistics and the PLAN, DO, STUDY, ACT cycle.

The graphic above shows Deming's Plan-Do-Check-Act

(PDCA) cycle. (Deming himself called it the 'Shewhart Cycle' but

Deming's work in Japan has lead to it commonly being named after

him.) In BPE, everything is done with the discipline of PDCA. At all

levels of the organization we:

61


?Plan what we are going to do. In this step we assess where we are,

where we need to be, why this is important, and plan how to close

the gap. Identify some potential solutions.

?Do try out or test the solutions (sometimes at a pilot level).

?Check to see if the countermeasures you tried out had the effect

you hoped for, and make sure that there are no negative

consequences associated with them. Assess if you have

accomplished your objective.

?Act on what you have learned. If you have accomplished your

objective, put controls into place so that the issue never comes

back again. If you have not accomplished your objective, go

through the cycle again, starting with the Plan step.

Frequently, a particular project will define sub-objectives, run

thorough the PDCA cycle one or more times to accomplish the sub-

objective, then define the next objective and go through the cycle

again. Thus, many projects end up "turning the wheel" many times

before completion. In ongoing management activities, we find a

similar use of the cycle.

What we are trying to avoid by using the PDCA discipline is

the "Ready, Fire, Aim" fallacy where people jump to the solution

without identifying the problem and assessing if their proposed

solution fixes it, or even results in another problem. The Act step

makes sure we don't have to fix it again in a couple of years.

PROBLEMS WITH DEMING CYCLE

The Deming Cycle's application was intended for quality

control purposes and proposed continuous improvement in quality of

products/experiments.[4] The simple cycle works well in this

application, but it is debatable that it should be applied to major

62


organizational improvement. ISO recognized the need to provide

better guidance in this regard and published the ISO standard ISO

9004:2000, which replaced the use of the term continuous

improvement with continual improvement. The change is not trivial, it

recognizes that organizational quality system performance

improvement requires significant effort and needs pauses to

consolidate change (hence continual and not continuous

improvement) (ISO 9004:2000).

The Deming Cycle has an inherent circular paradigm, it

assumes that everything starts with Planning. Plan has a limited range

of meaning. Shewart intended that experiments and quality control

should be planned to deliver results in accordance with the

specifications (see meaning above), which is good advice. However,

Planning was not intended to cover aspects such as creativity,

innovation, invention or Complex Adaptive Systems. In these aspects

particularly when based upon imagination, it is often impossible or

counterproductive to plan (see referenced Wikipedia pages for why

this is so). Hence, PDCA is inapplicable in these situations.

The Deming Cycle approaches often do not get to the root

cause of a problem, especially in adaptive situations which call for an

experiential approach but demand much more rigour in analysis and

data collection. An adaptive challenge exists where there are no visible

solutions to problems, and can exist, for example in areas where chaos,

uncertainty, and ambiguity exists, such as new frontiers, and existing

complex systems such as Healthcare.

Do and Act have the same meaning in English. Dictionaries

(Shorter Oxford) provide the following relevant definitions:

?Do: verb 1 perform or carry out (an action). 2 achieve or complete

(a specified target). 3 act or progress in a specified way. 4 work on

(something) to bring it to a required state.

63


?Act: verb 1 take action; do something. 2 take effect or have a

particular effect. 3 behave in a specified way.?

The 'Act' in the Deming Cycle is meant to be interpreted to have a

different meaning to 'Do', otherwise it could be as easily have been

PDCD or PACA. In PDCA, 'Act' is meant to apply actions to the

outcome for necessary improvement (see meaning above), in other

words 'Act' means 'Improve' (applying PDCA to itself could result in

PDCI).

The Deming Cycle is a set of activities (Plan, Do, Check, Act)

designed to drive continuous improvement. Initially implemented in

manufacturing, it has broad applicability in business. First developed

by Walter Shewhart, it is more commonly called the Deming cycle in

Japan where it was popularized by Edwards Deming. Deming Cycle is

also known as Shewhart cycle, PDCA, Plan-Do-Check-Act PERFORMANCE MANAGEMENT SEQUENCE

64

Role definition

Competence

requirements

Performance &

development

agreement

Performance

standards

Performance &

development plan

Action

Continuous monitoring

& feedback

Formal review

Competence

Evidence

Performance measures

Non-f inancial

reward

Rating Financial reward


PRINCIPLES OF PERFORMANCE MANAGEMENT

The origins of Human Performance Systems Analysis can be

traced from the late 1950's and early 1960's. These were times of

activism and social reform in the United States. The field, initially

called behavior technology, was a product of that spirit. In the early

1960's a number of behavioral scientists and their graduate students

made the decision to take what they had learned in their learning

laboratories and apply those lessons to real world issues of learning

and performance. Business, markets and society have changed. But by

and large, the principles of management, the methods and concepts of

leadership and performance management have not. Rigid sales quotas,

fixed performance targets, "pay for performance" and micro-

management from the top are still widely established standards.There is no lack of criticism of these traditional methods – both

in practice and in the business literature. One thing is clear: we need a

new understanding of motivation, performance, and responsibility.

The problems companies face today can't be solved using the thinking

and the processes that created them in the first place. A more

productive approach is to define what the 'right' things are, and thus to

examine root of the problem, rather than just treat the symptoms. To

take this road, we need to put into question and possibly overcome an

entire set of existing convictions.Most of us work in organizations within the traditional model

of command and control. This system may be budget control, target

negotiation and subsequent top-down setting, employee evaluations,

organizational diagrams, guidelines and policies, central departments,

or employee questionnaires. These have been used for decades.It is, therefore, often difficult to appreciate the amount of

talent, time, and money that is wasted through these tools. Mutual

trust, employee involvement, intrinsic motivation, and voluntary

willingness to perform are being eroded. To question the traditions and

to look for alternatives means pioneering work with a model beyond

65


command and control.

KEY PRINCIPLES

1. Do a Performance Improvement Analysis

First, measure the frequency of behavior (what the individual

says or the physical movements made) and the outputs (the physical

evidence of completed work produced by those behaviors) prior to any

management change. This analysis can be done for just one behavior

and output or for many by job category, department and organization.

Through this analysis, one measures present performance, establishes

standards, specifies why behavior is deficient, calculates the net

economic value of improvement after the cost of solutions, and places

them in priority order. The result of this analysis is identification of

potentially high-payoff behaviors and outputs that can be improved -

an important first step, because, surprisingly, key behaviors and

outputs are often overlooked or undervalued in organizations. Then,

introduce the procedures used in Performance Management and

quantify the amount of change that occurs in specific time periods.

Because the investment in changing behavior is often very low and the

economic payoffs may be high, the potential high return on investment

usually excites top management

2. Be Specific

Describe and communicate desired performances and the

standards for judging them in terms that are measurable, observable

and objective. A description of the events that are signals prompting

the response should be included. In training, coaching, measuring

performance, feeding back performance data, conducting a

performance appraisal, writing procedures, and delivering positive

reinforcement, it is essential to be specific. Alas, if the language used is

vague, the desired behavior may not occur.

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3. Measure

For any performance shown by the analysis to have sufficient

economic value to an organization, measure the frequency of the

performance against the desired standards. While most organizations

measure some performance, there are, unfortunately, many key

outputs and behaviors that are not measured.

4. Give Feedback

Provide feedback on performance to the individual involved

and to the individual's manager, supervisor, or group leader, rapidly-

preferably immediately-with sufficient information to allow for self-

correction. Too often, feedback systems for many key behaviors and

outputs are either absent or flawed.

5. Deliver Positive Consequences

Deliver to each individual positive consequences immediately

after completion of the performance of the desired behaviors and

outputs. The frequency of an individual's behavior is affected by the

consequences that follow it. If the consequences are positive to that

individual, the behavior tends to increase; if they are negative, the

behavior tends to decrease. Consequences should be delivered for as

long as the performance is desired, or until naturally occurring

consequences are strong enough to support the behavior. How

frequently you provide positive consequences is determined by how

often the behavior occurs, the phase of behavior change you are in

(causing the first new behavior to occur, changing its frequency, or

maintaining it) and the pattern of responses you desire (steady,

maximum output, peak for certain periods, etc. Unfortunately, in many organizations the wrong consequence

system is in place. Consequences of desired behavior are often

negative or neutral. Undesired behavior may be rewarded. The rein

67


forcers are badly delayed. They are delivered only on a group basis

(annual company-wide profit sharing). The rewards are short-lived for

behavior that is desired long-term. And almost always the positive

reinforcement is too infrequent.

HR Role in Performance Management in an Organization

HR Plays a key role in designing the Performance

Management Framework. There are multiple examples of the

different HR roles in the PMS exercise in both design and execution.

Some of the key HR contributions in the Organization PMS

exercise :?Philosophy of the PMS system

?Defining KRAs

?Defining Competencies and the assessment matrices

?PMS Operating System

?Choose the rating scale for the performance to be measured

?Methodology of executing the PMS

?Development Needs Identification System

The role of HR Manager or the HR Role per say is critical in the

execution of Performance Management system. From design to

execution, HR role is manifold and each of these roles well played can

be highly beneficial to the organization. Some of the world's best

organizations who have highly developed and world class

Performance management system, often acknowledge their HR

managers/HR leaders for having such a system in place.

The design element of the PMS process is important, no doubt,

68


but where HR really can add value is during the execution of this

system. It is a sensitive exercise and one needs to keep the following in

mind while implementing this key HR Initiative?Prevailing culture and core values of the organization

?If multiple business are there, nuances of each business with the

respective groups of people in each business

?Actualization of first time appraises and appraisers to the PMS

exercise

?Integration of core competencies of each role and its linkage to

the PMS exercise

Some of the established HR teams /HR Functions across the

organizations have meaningful contributions during he execution of

PMS process in the organization and many roles that HR plays may be

bucketed in three broad categories. These roles may be chosen by HR

members depending upon the life stage of HR function in that

particular organization:

?Role of a facilitator

�Role of a Business Partner

?Role of a Employee Development Champion

�Role of a Facilitator

The role of a facilitator may be described as follows:

?Help desk to provide support during the exercise, not of much of

decision making but provide support for smooth execution.

?Query resolutions of various nature raised by different employee

groups, clarifying the appraisal forms, methodology etc.

69


?Assist Appraisers to objectively assess their respective team

members minimizing personal biases, provide details of

employees wherever required.

?Help Appraisers to understand “What is in it for them” by clear

communication and dissemination of key information during

various stages of execution.

2.Role of Business Partner

In many organizations where the HR function is evolved and

well aligned to the business teams, HR Managers play the role of much

more than facilitators and often go a step further and provide the

necessary value add for an effective and business-aligned PMS

exercise. HR then

?provides key insights of the business and establish linkages to the

people agenda

?Cull out strategic and relevant dashboards to help business

managers make objective assessment of their people with respect

to business performance keeping in mind the forecasts of people

requirements

?Help identify critical people and provide solutions to ring fence

critical talent

?Drive the need for a sharper performance distribution curve to

keep different performance level of people in mind

?Demonstrate equal degree of ownership of the process as their

business counterparts

?Establish the key strategic link between “Business Performance”

and Employee Assessment Distribution.”

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3.Role of an Employee Development Champion

Companies that view the PMS system as a Organization

Development initiative seek HR Managers to play the role of

Employee Development Champions and the expectations from the

HR Team/HR Function is to execute the PMS system as a

development tool. In such an environment, HR role may be outlined as

?Position and Implement the PMS process as a employee

development tool in the organization

?Focus on more on competency and performance assessment

rather than only performance evaluation

?Use PMS process to identify “Employee Development Needs” in

context to Organization roadmap and related skill and

competency requirement

?Sketch patterns of individual/collective organization

development inputs

?Study trends of skill and competency development over a period

of time and use them as references in the current exercise.

These are the key HR Roles that HR Managers may choose

from depending on the organization requirement and play them

effectively to make a difference. As an HR Manager, you may choose

which one is the most suitable role for your organization and strive to

graduate to the next level in the next exercise. Depending on the HR

Agenda, the manager may be expected to play a dual role also at times.

WHAT IS PERFORMANCE MANAGEMENT PLANNING?Performance management planning refers to the creation and

setting forth of strategic plans for managing the workforce in order to

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achieve organizational success. Having a clear plan for how human

capital can best be managed is vital to the success of an organization.

In addition, having a performance management plan in place supports

the overall mission and objectives of a company.

Putting a performance management plan into place often

involves looking at the organization from the employee level up. As

each employee brings unique talents and abilities to the table, the skills

of each work-team need to be inventoried so that goals can be met

more efficiently. It's also important to determine what gaps exist

within employee groups so that plans can be designed to meet those

needs for the betterment of the entire organization and its ability to

reach long term goals.

Another aspect of performance management planning

involves putting a workforce training program into place to develop

existing employees who have potential for greater performance. This

enhances the company as a whole so that work gets done more

effectively, which increases company profitability. The better

employees perform, the better the company can operate and grow.

Performance management planning also involves designing

assessment procedures. Having a clear set of objectives for each

employee to achieve is vital to the success of work teams and

departments. Performance management plans can be designed for

each individual employee to make sure he or she is performing up to

standards during set time periods. Generally, performance plans

consist of performance evaluations done during the first ninety days of

employment and then annually.

When designing performance management plans, human

resources officers will generally meet with various members of

management to determine the overall goals of each department or

division. Then a plan will be drafted to best meet the needs of the

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departments as they relate to the existing and future employees. Goals

for the performance plan should be measurable, achievable and

enforceable to produce the most favorable results.

Once performance management planning takes place, a formal

document can be created for each department to follow when

assessing current employee talents and shortcomings. This plan

should be discussed with each employee and an individual

performance management plan can be designed for each individual

employee. Once this is established, employees will understand what is

expected from them and performance levels should improve with

careful monitoring.

WHAT IS EMPLOYEE PERFORMANCE MANAGEMENT?

Employee Performance Management is a process for

establishing a shared workforce understanding about what is to be

achieved at an organization level. It is about aligning the

organizational objectives with the employees' agreed measures, skills,

competency requirements, development plans and the delivery of

results. The emphasis is on improvement, learning and development in

order to achieve the overall business strategy and to create a high

performance workforce.

How Annual Appraisals are different but part of Performance

Management

Most organizations have some type of employee appraisal

system, and many are experiencing the shortcomings of manual staff

evaluation systems. When discussing workforce performance the

most commonly asked question is "How does Performance

Management differ from performance appraisals or staff reviews"?

Performance Management is used to ensure that employees' activities

and outcomes are congruent with the organization's objectives and

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entails specifying those activities and outcomes that will result in the

firm successfully implementing the strategy (Noe et al. 2000, p.55).

An effective Performance Management process establishes the

groundwork for excellence by:

?Linking individual employee objectives with the organization's

mission and strategic plans. The employee has a clear concept on

how they contribute to the achievement the overall business

objective,

?Focusing on setting clear performance objectives and

expectations through the use of results, actions and behaviors,

?Defining clear development plans as part of the process, and

?Conducting regular discussions throughout the performance

cycle which include such things as coaching, mentoring,

feedback and assessment.

Performance appraisal properly describes a process of judging

past performance and not measuring that performance against clear

and agreed objectives. Performance Management shifts the focus

away from just an annual event to an on-going process. Figure 2.2 is a

process diagram that provides a graphical view of the major

differences between the two processes.

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Misdirected Bonuses This situation has been illustrated many times where

employees and managers have received favorable reviews and

bonuses and yet the organization has not achieved its goals. The

organization may be losing millions of dollars and yet still paying out

bonuses to its managers and employees.

Too Painful, Emotionally Charged High stress levels for both managers and employees also

become a factor. They both know they will be judged on the outcome

of the appraisal and the fallout is often destructive rather than

constructive. The reasoning behind this is that there are rarely any pre-

defined mesaures or objectives and the employee review is not based

on any considered evaluation criteria. The employees' remuneration

and future are at stake and the goodwill of the managers future

resources are also at stake. This leads to high stress in the case of both

individuals and this is a poor emotional state in which to have a

thorough discussion about employee performance.

Poor Understanding of Expectations Where the appraisal system is poorly communicated, both the

employee and manager enter these discussions with low confidence

levels. This is due to a lack of "rules" as to how to go about the

appraisal process and a lack of understanding of the expected

outcomes. As this process is infrequent, it is viewed by the employee

as an opportunity to discuss remuneration, promotion prospects and

other issues related to the employee. This means the discussion is

dominated by employee content rather than what the manager needs

the employee to do for the next year. This leads to vague definition of

performance goals and perpetuates the system of poorly defined and

executed appraisals.

As an annual staff review is so infrequent, both managers and

employees find it difficult to remember what actually happened during

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the year. Both typically come to the meeting ill prepared with little

meaningful content to discuss. This makes the appraisal more difficult

and frustrates both the employee and manager.

Bad Timing More often than not, the annual appraisal is executed on the

employees' anniversary which does not coincide with any particular

performance period. If appraisals are conducted annually on the

anniversary date, it is only possible to align at best only 50% of your

staff with future objectives, assuming there is an even distribution of

start dates across the employee workforce. Given that most appraisal

systems are not automated, there is poor reporting and therefore low

visibility as to who did or did not achieve their objectives.

Subjective Manager Opinion This means that an employees' future is wholly dependent on

their manager's highly subjective opinion. The CEO or other executive

management does not have clear vision as to who achieved their

objectives and who did not. The outcome for the CEO is that they do

not have the ability to see failure as it is occurring. Instead, they see

failure after the fact and radical adjustments are then required to repair

the situation. By using standalone appraisal systems, the outcome for

the line manager is that they have additional pressure applied to them,

to fix a problem which has become a major issue and which could have

been otherwise identified and fixed in a very timely fashion. Performance Not Aligned to Promotions

Given that annual appraisals are only conducted once yearly,

most line managers only seriously think and plan once a year. The

consequences are poor resource management, put-out-the-fire

management and costly and reactive problem fixing on the fly. Given

that most appraisal systems are manual and on paper, the data arising

from an excellent performance typically does not find its way into the

succession planning process. Employees are therefore often

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disillusioned to find that they have been passed over for further

development or a promotion when they have performed strongly for

several years.

Poor Development Opportunities This is a primary cause for employees leaving the

organization. Most appraisal systems do not feature a competency

assessment or an active development plan that both the employee and

manager have mutually agreed to. Staffs often get disillusioned and

leave the organization if they can see no personal development

prospects or if personal development has not occurred in practice for

the last several years, despite numerous promises.

No Consequence for Non-Participation Given that most appraisal systems are manual, reporting is

weak and therefore compliance reporting is not visible. This

inevitably means that managers learn that they do not have to perform

reviews and therefore they don't because there is no negative

consequence for them. Equally, employees learn that there is no

consequence to not being reviewed, they lose faith in management and

invariably look for somewhere else to work. Most manual appraisal

systems suffer from sub 30% compliance and can get to this point after

only 18 months of operation i.e. roughly one to one and a half

performance terms.

Typical Outcomes from Performance Management If Performance Management is implemented correctly with

specific objectives tied to the strategic and operational plan,

organizational performance outcomes will likely increase very

quickly. For example, if the CEO asked for a 3% increase in gross

margin, this objective would be cascaded down to every department,

team and individual who can influence the increase in gross margin.

Those who are successful at achieving this objective will get a

favorable review, those that could not, will get an unfavorable

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performance evaluation in the absence of extenuating circumstances.

The process of Performance Management therefore drives

organizational performance outcomes. Employees that achieve the

organisational goals are rewarded with favourable reviews and

bonuses in line with their performance and contribution to the

organisation.

Communication Improves The employee and manager communicate more frequently and

agree on changed objectives to suit continuing changes in conditions

and priorities. This is an inclusive and collaborative process, which

ensures that the employee has input and does not feel they have wasted

the year. The employee works towards specific objectives that are

relevant. If the organization is using a Performance Management

product that has a performance diary, both the manager and employee

attend the review meeting with copies of their performance diary

notes. This contains content from the performance period to be

reviewed. Given that both have content, they feel much better

prepared and stress is lower than if they were attending a meeting not

aware of the subject matter.

Everyone Knows the Rules Where there is a well structured Performance Management

system that is effectively communicated, both the employee and

manager enter the process with better levels of confidence as there are

"rules" that clearly stipulate what is being assessed and how.

Employees are assessed on achievement of objectives that have been

clearly identified and agreed to. Managers have a better framework to

assess an employees' performance as they are familiar with the criteria

to assess the employee. The outcome is that both individuals have an

informed discussion and focus on achievement of both personal and

business objectives, not on issues that are irrelevant.

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Better Recording Opens Up Communication If the organization has a system with a performance diary, then

both parties are prepared with relevant content to discuss. They have

diary notes that relate to performance during the entire performance

period. This raises confidence and reduces stress levels. Both parties

feel more comfortable and they can have a content rich and factual

discussion about performance.

Frequent Communication Reduces Stress Given that these performance reviews happen more

frequently, the discussion centers on performance of objectives rather

than being dominated by the employees' needs. The needs of the

business are discussed more frequently to achieve specific

performance outcomes. This means both the employee and manager

communicate more effectively and achieve better outcomes.

Emotionally charged discussions tend to be displaced by business

focused discussions on achievement of objective outcomes.

As expectations are modified when a Performance

Management system is introduced, most organizations switch to

defined performance periods. This means that strategic and

operational objectives are set at the beginning of the performance

period. Formal performance reviews are then conducted quarterly or

half yearly and enable management to direct and fine tune effort in

relation to the objectives.

Appraisals Become Relevant for Everyone By conducting more frequent reviews, objectives can be

adjusted and modified to suit changing business conditions. This

dramatically increases the probability that the objectives are relevant

and are able to be acted upon during the performance period.

By performing frequent performance reviews, visibility is

increased dramatically. Areas of non performance receive much more

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focus and attention and problems can be acted upon much quicker.

Most Performance Management systems provide reporting as to who

has or has not achieved their objectives (departments and individuals).

Adjustments to objectives or strategy can then be made to ensure

expectations can be met. Alternately, expectations can be modified as

appropriate. By reviewing more frequently, all managers and

employees start to plan and execute to clearly thought out objectives.

This results in better resource management and enables managers to

work on the business, not in the business.

Employee Learning and Development Starts to Happen Given that most Performance Management systems require

managers and employees to commit to a development plan, employees

experience real personal development and become more engaged with

the organization. They feel part of the organization and start to

understand that they and the organization are interdependent. The

organization is developing the employee and the employee is working

towards developing the organization by achieving its goals. The

majority of Performance Management systems are able to provide

graphical compliance reports. Therefore, the setting of objectives and

development plans for employees can no longer be ignored.

Employees see real planning, are involved in setting meaningful

objectives and have input into personal development plans which

benefit both themselves and the organization. In all, this results in an

engaged workforce who are extremely committed to achieving real

outcomes for the organization.

PERFORMANCE MANAGEMENT RESEARCH

Several studies have been conducted in Australia that indicates

the predominant method of assessing employees in Australia is

appraisal. During 2004, Associate Professor Alan Nankervis of Royal

Melbourne Institute of Technology conducted a study of 992

Australian organisations. One of the outcomes was that only 2.4% of

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organisations reviewed their employees against objectives, the

remaining 97.5% were a combination of some type of appraisal.

Furthermore, The Performance Management Institute of

Australia conducted a survey of Australian employees' attitudes

towards Performance Management in the workplace . Approximately

450 employees responded from a wide variety of businesses and

enterprises. The research found that, over 59% of employees received

performance reviews once per year or less. This implies that the

majority of Australian managers are failing to properly engage their

employees. Effective management requires a continual goal setting

and review process which gives employees regular feedback of

management expectations and frequent praise for achievement of

desired goals.

Australian Managers Still Doing Standalone Appraisals What the survey results imply is that Australian managers are

performing appraisals, not performance reviews and objective setting.

The results may also mean that managers are not targeting their teams

to achieving strategic goals which are at all time-bound. Usually,

employees who are not formally reviewed for a year or more are

expending work effort in a manner or direction which is not readily

visible to their manager. This lack of employee engagement is leading

to disaffection from the employees who can make and want to make a

difference to the organisation. In our view, appraisals add very little

value to the performance of an organisation and in some

circumstances may actually be detrimental to organisations who wish

to move towards Performance Management. A contributing factor

may be that line managers who have been conducting appraisals have

also seen little, if any, impact on departmental or team performance as

a consequence of conducting these appraisals.

PeopleStreme conducted several research studies in focus

groups over the last four years and during seminars on Performance

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Management. To summarise the findings, 87% of organisations have

some type of appraisal system. However, this is usually referred to as

the Performance Management system. Of the 87% that have these

systems, 95% were manual systems without performance objectives

or development plans. It was clear from the research that many

organisations incorrectly view manual annual appraisal systems as

Performance Management systems. Organisations are increasingly

adopting Performance Management systems. However, organisations

in both Australia and the USA are experiencing 100% to 300% yearly

increases in organisations acquiring Performance Management

systems exceeding the existing forecast rate.

In contrasting Performance Appraisal with Performance

Management, it suggests that performance appraisals are indeed an

evaluation of an employees work. However, Performance

Management reflects the continuous nature of performance

improvement and employee development, recognizing the

importance of effective management, work systems and team

contributions.

BENEFITS OF A PERFORMANCE MANAGEMENT SYSTEM

A good performance management system works towards the

improvement of the overall organizational performance by managing

the performances of teams and individuals for ensuring the

achievement of the overall organizational ambitions and goals. An

effective performance management system can play a very crucial role

in managing the performance in an organization by:

?Ensuring that the employees understand the importance of their

contributions to the organizational goals and objectives.

?Ensuring each employee understands what is expected from them

and equally ascertaining whether the employees possess the

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required skills and support for fulfilling such expectations.

?Ensuring proper aligning or linking of objectives and facilitating

effective communication throughout the organization.

?Facilitating a cordial and a harmonious relationship between an

individual employee and the line manager based on trust and

empowerment.

Performance Management practices can have a positive influence

on the Job satisfaction and employee loyalty by:

?Regularly providing open and transparent job feedbacks to the

employees.

?Establishing a clear linkage between performance and

compensation

?Providing ample learning and development opportunities by

representing the employees in leadership development

programmes, etc.

?Evaluating performance and distributing incentives and rewards

on a fair and equated basis.

?Establishing clear performance objectives by facilitating an open

communication and a joint dialogue.

?Recognizing and rewarding good performance in an

organization.

?Providing maximum opportunities for career growth

?An effectively implemented performance management system

can benefit the organization, managers and employees in several

ways as depicted in the table given below:

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Clearly defined goals, regular assessments of individual

performance and the company wide requirements can be helpful in

defining the corporate competencies and the major skill gaps which

may in turn serve as a useful input for designing the training and

development plans for the employees.

A sound performance management system can serve two

crucial objectives:

Evaluation Objectives?By evaluating the readiness of the employees for taking up higher

responsibilities.

?By providing a feedback to the employees on their current

competencies and the need for improvement.

?By linking the performance with scope of promotions, incentives,

rewards and career development.

Developmental ObjectivesThe developmental objective is fulfilled by defining the

training requirements of the employees based on the results of the

reviews and diagnosis of the individual and organizational

competencies. Coaching and counseling helps in winning the

confidence of the employees and in improving their performance,

besides strengthening the relationship between the superior and the

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Organization’s Benefits

Improved organizational performance, employee retention and loyalty, improved productivity, overcoming the barriers to communication, clear accountabilities, and cost advantages.

Manager’s Benefits Saves time and reduces conflicts, ensures efficiency and consistency in performance.

Employee’s Benefits Clarifies expectations of the employees, self assessment opportunities clarifies the job accountabilities and contributes to improved performance, clearly defines career paths and promotes job satisfaction.

subordinate.

In a nutshell, performance management serves as an important

tool for realizing organizational goals by implementing competitive

HRM strategies. It helps in aligning and integrating the objectives

with the KPI's in an organization both vertically and horizontally

across all job categories and the levels and thus helps in driving all the

activities right from the bottom level towards one single goal.

Performance Management and Development Performance management and development provides a

framework to value our staff, provides a working environment that

acknowledges their contribution and builds capacity to ensure

organizational effectiveness.

1. Objectives - Policy statement

?Performance management and development provides a

framework to value our staff, provides a working environment

that acknowledges their contribution and builds capacity to

ensure organizational effectiveness.

�Performance management and development is a critical process

in achieving corporate objectives in that it links those objectives

with employee goals and achievements. It focuses on improving

performance through matching outcomes against individual,

team and organizational objectives.

?Performance management and development is an essential

element in the creation of an organizational culture which

promotes high quality performance and the individual

acceptance of responsibility and accountability commensurate

with the individual's position and role.

�Performance management and development is the continuous

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process of reflecting on, negotiating, developing, reviewing and

making decisions about an individual's performance in

achieving organizational goals.

�Performance management and development processes

complement other management practices of providing ongoing

feedback, review and development of staff.

2. Audience and applicability

?This policy applies to all permanent department staff and

temporary staff employed for periods greater than eight weeks

consecutively in any one year.

3. Context

?Conditions of staff employment, including performance

management principles, are contained in various authorities

including legislation, regulations, industrial instruments,

determinations, NSW Government policies, and policies,

procedures, circulars and other administrative documents

issued by the department.

4. Responsibilities and delegations

1. All staffs responsible for:?Participating in a performance management and development

process consistent with this policy and their conditions of

employment as contained in authorities referred to under

"Context".

?Demonstrating and being accountable for their performance in

relation to the implementation of organizational and workplace

goals

?Participating in ongoing review and formal performance review

meetings

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?Participating in appropriate and related professional

development as required.

2. Managers are responsible for:?exercising leadership by working with staff members to

implement the performance management and development

process consistent with the policy and staff members' conditions

of employment

?providing continuing support and feedback to staff members

?assisting in the identification of and participation in appropriate

and related professional development as required.

3. The manager and staff member will identify appropriate goals for

the staff member and ensure appropriate progress towards their

achievement in accordance with the timeframes as outlined in relevant

support and implementation documents.

5. Monitoring, evaluation and reporting requirements

1. The general manager, human resources will monitor the currency of

this policy and will report on its effectiveness annually, or as required,

to the executive.

2. All managers are responsible for the operation of this policy and the

implementation of the procedures for the relevant staff category.

ORGANIZATIONAL LEARNING

Definition

Organization-wide continuous process that enhances its

collective ability to accept, make sense of, and respond to internal and

external change. Organizational learning and is more than the sum of

the information held by employees. It requires systematic integration

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and collective interpretation of new knowledge that leads to collective

action and involves risk taking as experimentation.Organizational learning is an area of knowledge within organizational

theory that studies models and theories about the way an organization

learns and adapts.

In Organizational development (OD), learning is a

characteristic of an adaptive organization, i.e., an organization that is

able to sense changes in signals from its environment (both internal

and external) and adapt accordingly. OD specialists endeavor to assist

their clients to learn from experience and incorporate the learning as

feedback into the planning process. It is of 2 types:

?Single-loop learning

�Double-loop learning

In single-loop learning, individuals, groups, or organizations

modify their actions according to the difference between expected and

obtained outcomes.

In double-loop learning, the entities (individuals, groups or

organization) question the values, assumptions and policies that led to

the actions in the first place; if they are able to view and modify those,

then second-order or double-loop learning has taken place. Double

loop learning is the learning about single-loop learning.

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Single Loop Learning

Take action

Make decision Notice Fedback

Gap between where you are &

Where you want to be

Chris Argyris describes the concept of double-loop learning

(DLL) in which an individual, organization or entity is able, having

attempted to achieve a goal on different occasions, to modify the goal

in the light of experience or possibly even reject the goal. Single-loop

learning (SLL) is the repeated attempt at the same problem, with no

variation of method and without ever questioning the goal.

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Double loop learning

Take action

Make a decision Notice feedback

Gap between where you are &

Where you want to be

Mental models

PDP - PERSONAL DEVELOPMENT PLANNING

PDP is defined as 'a structured and supported process

undertaken by an individual to reflect upon their own learning,

performance and/or achievement and to plan for their personal,

educational and career development'.

Personal development planning is the process of creating an

action plan based on awareness, values, reflection, goal-setting and

planning for personal development within the context of a career,

education, relationship or for self-improvement.

The PDP (personal development plan), also called an IDP

(individual development plan) or PEP (personal enterprise plan),

usually includes a statement of one's aspirations, strengths or

competencies, education and training, and stages or steps to indicate

how the plan is to be realized. Personal development plans may also

include a statement of one's career and lifestyle priorities, career

positioning, analysis of opportunities and risks, and alternative plans

(Plan B), and a curriculum vitae.

In higher education, personal development plans typically

include a portfolio containing evidence of the skills gathered over a

particular timeframe. It is presumed in education that undertaking

PDP will assist in creating self-directed independent learners who are

more likely to progress to higher levels of academic attainment. It is

also used in Human resource management.

Personal developments plans are often a requirement for

employee CVs. Employees who are participating in business training

are often asked to complete a personal development plan. A five year

personal development plan can often be developed by an individual to

organize personal goals and make them achievable within a certain

time period.

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OVERALL GOAL AND FOCUSES OF PERFORMANCE

MANAGEMENT

The overall goal of performance management is to ensure that

the organization and all of its subsystems (processes, departments,

teams, employees, etc.) are working together in an optimum fashion to

achieve the results desired by the organization.

Performance Improvement of the Organization or a

Subsystem is an Integrated Process

Note that because performance management strives to

optimize results and alignment of all subsystems to achieve the overall

results of the organization, any focus of performance management

within the organization (whether on department, process, employees,

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etc.) should ultimately affect overall organizational performance

management as well.

ONGOING ACTIVITIES OF PERFORMANCE MANAGE-

MENT

Achieving the overall goal requires several ongoing activities,

including identification and prioritization of desired results,

establishing means to measure progress toward those results, setting

standards for assessing how well results were achieved, tracking and

measuring progress toward results, exchanging ongoing feedback

among those participants working to achieve results, periodically

reviewing progress, reinforcing activities that achieve results and

intervening to improve progress where needed. Note that results

themselves are also measures.

Note that these general activities are somewhat similar to

several other major approaches in organizations, e.g., strategic

planning, management by objectives, Total Quality Management, etc.

Performance management brings focus on overall results, measuring

results, focused and ongoing feedback about results, and development

plans to improve results. The results measurements themselves are not

the ultimate priority as much as ongoing feedback and adjustments to

meet results.

The steps in performance management are also similar to those

in a well-designed training process, when the process can be

integrated with the overall goals of the organization. Trainers are

focusing much more on results for performance. Many trainers with

this priority now call themselves performance consultants.

Basic Steps

Various authors propose various steps for performance

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management. The typical performance management process includes

some or all of the following steps, whether in performance

management of organizations, subsystems, processes, etc. Note that

how the steps are carried out can vary widely, depending on the focus

of the performance efforts and who is in charge of carrying it out. For

example, an economist might identify financial results, such as return

on investment, profit rate, etc. An industrial psychologist might

identify more human-based results, such as employee productivity.The following steps are described more fully in the topics

Performance Plan, Performance Appraisal and Development Plan,

including through use of an example application. The steps are

generally followed in sequence, but rarely followed in exact sequence.

Results from one step can be used to immediately update or modify

earlier steps. For example, the performance plan itself may be updated

as a result of lessons learned during the ongoing observation,

measurement and feedback step.

NOTE:

The following steps occur in a wide context of many activities

geared towards performance improvement in an organization, for

example, activities such as management development, planning,

organizing and coordinating activities.

?Review organizational goals to associate preferred

organizational results in terms of units of performance, that is,

quantity, quality, cost or timeliness (note that the result itself is

therefore a measure)

?Specify desired results for the domain -- as guidance, focus on

results needed by other domains (e.g., products or services need

by internal or external customers)

?Ensure the domain's desired results directly contribute to the

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organization's results

?Weight, or prioritize, the domain's desired results

?Identify first-level measures to evaluate if and how well the

domain's desired results were achieved

?Identify more specific measures for each first-level measure if

necessary

?Identify standards for evaluating how well the desired results

were achieved (e.g., "below expectations", "meets expectations"

and "exceeds expectations")

?Document a performance plan -- including desired results,

measures and standards

?Conduct ongoing observations and measurements to track

performance

?Exchange ongoing feedback about performance

?Conduct a performance appraisal (sometimes called performance

review)

?If performance meets the desired performance standard, then

reward for performance (the nature of the reward depends on the

domain)

?If performance does not meet the desired performance standards,

then develop or update a performance development plan to

address the performance gap* (See Notes 1 and 2)

?Repeat steps 9 to 13 until performance is acceptable, standards

are changed, the domain is replaced, management decides to do

nothing, etc.

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* Note 1: Inadequate performance does not always indicate a problem

on the part of the domain. Performance standards may be unrealistic or

the domain may have insufficient resources. Similarly, the overall

strategies or the organization, or its means to achieving its top-level

goals, may be unrealistic or without sufficient resources.

* Note 2: When performance management is applied to an employee

or group of employees, a development plan can be initiated in a variety

of situations, e.g.,:

a.)When a performance appraisal indicates performance

improvement is needed, that is, that there is a "performance gap”

b.) To "benchmark" the status of improvement so far in a development

effort

c.) As part of a professional development for the employee or group of

employees, in which case there is not a performance gap as much as an

"growth gap"

d.) As part of succession planning to help an employee be eligible for a

planned change in role in the organization, in which case there also is

not a performance gap as much as an "opportunity gap".

e.) To "pilot", or test, the operation of a new performance management

system

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JOB EVALUATION- CONCEPT

Job evaluation is a systematic way of determining the

value/worth of a job in relation to other jobs in an organization. It tries

to make a systematic comparison between jobs to assess their relative

worth for the purpose of establishing a rational pay structure.Job evaluation needs to be differentiated from job analysis. Job

analysis is a systematic way of gathering information about a job.

Every job evaluation method requires at least some basic job analysis

in order to provide factual information about the jobs concerned. Thus,

job evaluation begins with job analysis and ends at that point where the

worth of a job is ascertained for achieving pay equity between jobs.

Features

The purpose of job evaluation is to produce a defensive

ranking of jobs on which a rational and acceptable pay structure can be

built. The important features of job evaluation may be summarized

thus:

?It tries to assess jobs, not people.

?The standards of job evaluation are relative, not absolute.

JOB EVALUATION

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Chapter-3

?The basic information on which job evaluations are made is

obtained from job analysis.

?Job evaluations are carried out by groups, not by individuals.

?Some degree of subjectivity is always present in job evaluation.

?Job evaluation does not fix pay scales, but merely provides a basis

for evaluating a rational wage structure.

PROCESS OF JOB EVALUATION

The process of job evaluation involves the following steps:

?Gaining acceptance: Before undertaking job evaluation, top

management must explain the aims) and uses of the programme

to the employees and unions. To elaborate the programme further,

oral presentations could be made. Letters, booklets could be used

to classify all relevant aspects of the job evaluation programme.

?Creating job evaluation committee: It is not possible for a

single person to evaluate all the key jobs in an organization.

Usually a job evaluation committee consisting of experienced

employees, union representatives and HR experts is created to set

the ball rolling.

? Finding the jobs to be evaluated: Every job need not be

evaluated. This may be too taxing and costly. Certain key jobs in

each department may be identified. While picking up the jobs,

care must be taken to ensure that they represent the type of work

performed in that department.

?Analyzing and preparing job description: This requires the

preparation of a job description and also an analysis of job needs

for successful performance.

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97

?Selecting the method of evaluation: The most important

method of evaluating the jobs must be identified now, keeping the

job factors as well as organizational demands in mind.

?Classifying jobs: The relative worth of various jobs in an

organization may be found out after arranging jobs in order of

importance using criteria such as skill requirements, experience

needed, under which conditions job is performed, type of

responsibilities to be shouldered, degree of supervision needed,

the amount of stress caused by the job, etc. Weights can be

assigned to each such factor. When we finally add all the weights,

the worth of a job is determined. The points may then be

converted into monetary values.

?Installing the programme: Once the evaluation process is over

and a plan of action is ready, management must explain it to

employees and put it into operation.

?Reviewing periodically: In the light of changes in

environmental conditions (technology, products, services, etc.)

jobs need to be examined closely. For example, the traditional

clerical functions have undergone a rapid change in sectors like

banking, insurance and railways, after computerization. New job

descriptions need to be written and the skill needs of new jobs

need to be duly incorporated in the evaluation process.

Otherwise, employees may feel that all the relevant job factors -

based on which their pay has been determined - have not been

evaluated properly.

For job evaluation to be practicable it is necessary:

?that jobs can be easily identified?that there are sufficient difference between different jobs; and?that agreements no the relative importance or worth of different

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jobs can be negotiated between the enterprise and its employees

and/or their representatives.

Benefits

The pay offs from job evaluation may be stated thus:?It tries to link pay with the requirements of the job.

?It offers a systematic procedure for determining the relative worth

of jobs. Jobs are ranked on the basis of rational criteria such as

skill, education, experience, responsibilities, hazards, etc., and

are priced accordingly.

?An equitable wage structure is a natural outcome of job

evaluation. An unbiased job evaluation tends to eliminate salary

inequities by placing jobs having similar requirements in the

same salary range.

?Employees as well as unions participate as members of job

evaluation committee while determining rate grades for different

jobs. This helps in solving wage related grievances quickly.

?Job evaluation, when conducted properly and with care, helps in

the evaluation of new jobs.

?It points out possibilities of more appropriate use of the plant's

labor force by indicating jobs that need more or less skilled

workers than those who are manning these jobs currently.

JOB EVALUATION METHODS

There are three basic methods of job evaluation:

(1) ranking, (2) classification,

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(3) factor comparison.

While many variations of these methods exist in practice, the

three basic approaches are described here.

RANKING METHOD

Perhaps the simplest method of job evaluation is the ranking

method. According to this method, jobs are arranged from highest to

lowest, in order of their value or merit to the organization. Jobs can

also be arranged according to the relative difficulty in performing

them. The jobs are examined as a whole rather than on the basis of

important factors in the job; the job at the top of the list has the highest

value and obviously the job at the bottom of the list will have the

lowest value. Jobs are usually ranked in each department and then the

department rankings are combined to develop an organizational

ranking. The following table is a hypothetical illustration of ranking of

jobs. The variation in payment of salaries depends on the variation of

the nature of the job performed by the employees. The ranking method

is simple to understand and practice and it is best suited for a small

organization. Its simplicity however works to its disadvantage in big

organizations because rankings are difficult to develop in a large,

complex organization. Moreover, this kind of ranking is highly

subjective in nature and may offend many employees. Therefore, a

more scientific and fruitful way of job evaluation is called for.

CLASSIFICATION METHOD

According to this method, a predetermined number of job

groups or job classes are established and jobs are assigned to these

classifications. This method places groups of jobs into job classes or

job grades. Separate classes may include office, clerical, managerial,

personnel, etc. Following is a brief description of such a classification

in an office.

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a. Class I - Executives: Further classification under this category may

be Office Manager, Deputy office manager, Office superintendent,

Departmental supervisor, etc.

b. Class II - Skilled workers: Under this category may come the

Purchasing assistant, Cashier, Receipts clerk, etc.

c. Class III - Semiskilled workers: Under this category may come

Steno, typists, Machine-operators, Switchboard operator etc.

d. Class IV - Semiskilled workers: This category comprises Dietaries,

File clerks, Office boys, etc.

The job classification method is less subjective when

compared to the earlier ranking method. The system is very easy to

understand and acceptable to almost all employees without hesitation.

One strong point in favour of the method is that it takes into account all

the factors that a job comprises. This system can be effectively used for

a variety of jobs. The weaknesses of the job classification method are: Even when the requirements of different jobs differ, they may be

combined into a single category, depending on the status a job carries. It is difficult to write all-inclusive descriptions of a grade.

The method oversimplifies sharp differences between

different jobs and different grades.

When individual job descriptions and grade descriptions do

not match well, the evaluators have the tendency to classify the job

using their subjective judgments.

FACTOR COMPARISON METHOD

A more systematic and scientific method of job evaluation is

the factor comparison method. Though it is the most complex method

of all, it is consistent and appreciable. Under this method, instead of

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ranking complete jobs, each job is ranked according to a series of

factors. These factors include mental effort, physical effort, skill

needed, responsibility, supervisory responsibility, working conditions

and other such factors (for instance, know-how, problem solving

abilities, accountability, etc.). Pay will be assigned in this method by

comparing the weights of the factors required for each job, i.e., the

present wages paid for key jobs may be divided among the factors

weighted by importance (the most important factor, for instance,

mental effort, receives the highest weight). In other words, wages are

assigned to the job in comparison to its ranking on each job factor.?The steps involved in factor comparison method may be briefly

stated thus:

?Select key jobs (say 15 to 20), representing wage/salary levels

across the organization. The selected jobs must represent as many

departments as possible.

?Find the factors in terms of which the jobs are evaluated (such as

skill, mental effort, responsibility, physical effort, working

conditions, etc.).

?Rank the selected jobs under each factor (by each and every

member of the job evaluation committee) independently.

?Assign money value to each level of each factor (example:

consider problem solving is one of the factor, what level of

problem solving is required {basic, intermediate or advance})

and determine the wage rates for each key job.

?The wage rate for a job is apportioned along the identified factors.

?All other jobs are compared with the list of key jobs and wage

rates are determined. An example of how the factor comparison

method works is given below:

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After the wage rate for a job is distributed along the identified and

ranked factors, all other jobs in the department are compared in terms

of each factor. Suppose the job of a 'painter' is found to be similar

electrician in skill (15), fitter in mental effort (10), welder in physical

effort (12) cleaner in responsibility! (6) and labourer in working

conditions (4). The wage rate for this job would be (15+10+12+6+4) is

47.

POINT METHOD

This method is widely used currently. Here, jobs are expressed

in terms of key factors. Points are assigned to each factor after

prioritizing each factor in order of importance. The points are summed

up to determine the wage rate for the job. Jobs with similar point totals

are placed in similar pay grades. The procedure involved may be

explained thus:

a. Select key jobs. Identify the factors common to all the identified

jobs such as skill, effort, responsibility, etc.

b. Divide each major factor into a number of sub factors. Each sub

factor is defined and expressed clearly in the order of importance,

preferably along a scale.

The most frequent factors employed in point systems are

(i)Skill (key factor); Education and training required,

Breadth/depth of experience required, Social skills required,

Problem-solving skills, Degree of discretion/use of

judgement, Creative thinking.

(ii) (ii) Responsibility/Accountability: Breadth of

responsibility, Specialised responsibility, Complexity of the

work, Degree of freedom to act, Number and nature of

subordinate staff , Extent of accountabil i ty for

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equipment /p lan t , Extent of accountabi l i ty for

product/materials;

(iii) (iii) Effort: Mental demands of a job, Physical demands

of a job, Degree of potential stress.

The educational requirements (sub factor) under the skill (key

factor) may be expressed thus in the order of importance.

c. Find the maximum number of points assigned to each job (after

adding up the point values of all sub-factors of such a job). This would

help in finding the relative worth of a job. For instance, the maximum

points assigned to an officer's job in a bank come to 540. The

manager's job, after adding up key factors + sub factors points, may be

getting a point value of say 650 from the job evaluation committee.

This job is now priced at a higher level.

d. Once the worth of a job in terms of total points is expressed, the

points are converted into money values keeping in view the

hourly/daily wage rates. A wage survey is usually undertaken to

collect wage rates of certain key jobs in the organisation. Let's explain

this:

Merits and demeritsThe point method is a superior and widely used method of

evaluating jobs. It forces raters to look into all key factors and sub-

factors of a job. Point values are assigned to all factors in a systematic

way, eliminating bias at every stage. It is reliable because raters using

similar criteria would get more or less similar answers. The

methodology underlying the approach contributes to a minimum of

rating error (Robbins p. 361). It accounts for differences in wage rates

for various jobs on the strength of job factors. Jobs may change over

time, but the rating scales established under the point method remain

unaffected. On the negative side, the point method is complex.

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Preparing a manual for various jobs, fixing values for key and sub-

factors, establishing wage rates for different grades, etc., is a time

consuming process, According to Decenzo and Robbins, "the key

criteria must be carefully and clearly identified, degrees of factors

have to be agreed upon in terms that mean the same to all rates, the

weight of each criterion has to be established and point values must be

assigned to degrees". This may be too taxing, especially while

evaluating managerial jobs where the nature of work (varied,

complex, novel) is such that it cannot be expressed in quantifiable

numbers.

Limitations of Job Evaluation

?Job evaluation is not exactly scientific.

�The modus operand of most of the techniques is difficult to

understand, even for the supervisors.

?The factors taken by the programme are not exhaustive.

�There may be wide fluctuations in compensable factors in view

of changes in technology, values and aspirations of employers,

etc.

�Employees, trade union leaders, management and the

programme operators may assign different weightage to

different factors, thus creating grounds for dispute.

PAY STRUCTURE OR SALARY STRUCTURES

Once job analysis has been done, organizations need to decide

upon the pay structures. Pay structures refers to the process of setting

up the pay for a job in an organization. The process deals with internal

and external analysis to estimate the compensation package for a job

profile. Internal equity, External equity and Individual equity are the

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most popular pay structures. Job description provides the in depth

knowledge about the job profile and its worth.

Pay structures are the strong determinant of employee's value

in the organization. It helps in analyzing the employee's role and status

in the organization. It provides for fair treatment to all employees. Pay

structures also include the estimation of incentives.

The level of incentives also depends on the level of job

position in the organizational hierarchy.

Internal EquityThe internal equity method undertakes the job position in the

organizational hierarchy. The process aims at balancing the

compensation provided to a job profile in comparison to the

compensation provided to its senior and junior level in the hierarchy.

The fairness is ensured using job ranking, job classification, level of

management, level of status and factor comparison.

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External EquityHere the market pricing analysis is done. Organizations

formulate their compensation strategies by assessing the competitors'

or industry standards. Organizations set the compensation packages of

their employees aligned with the prevailing compensation packages in

the market. This entails for fair treatment to the employees. At times

organizations offer higher compensation packages to attract and retain

the best talent in their organizations.

What are Pay Structures or Salary Structures?

Pay structures, also known as salary structures, set out the different

levels of pay for jobs, or groups of jobs, by reference to:

?their relative internal value, as established by job evaluation?external relativities, via market rate surveys?where appropriate, negotiated rates for the job

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What are the main characteristics of Pay Structures?

?indicate rates of pay for different jobs

?provide scope for pay progression via performance, competence,

contribution, skill or service

?contain pay ranges for jobs grouped into grades, individual jobs

or job families.

Why do organizations need Pay structures?

?establish a logically-designed framework within which

equitable, fair and consistent reward policies can be implemented

?determine levels of pay for jobs and people

?basis for the effective management of relativities

?help monitor and control the implementation of pay practices

?communicate the pay opportunities available to employees.

The most important types of pay structure, or salary structure,

are:

Graded structures – a sequence of overlapping job grades into which

jobs of broadly equivalent size are allocated. Each grade has a range,

the maximum of which is usually 20 to 50% above the minimum.

Broadband – similar to conventional graded structures, but with far

fewer and far wider bands. The maximum of the band can be 100% or

more above the minimum.

Job Family Structures – Each job family has a different graded

structure. Jobs are allocated to a job family based on activities carried

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out; skills and competencies e.g. Information Technology is a perfect

example of a job family for which there is usually a separate grade

structure.

Performance-Related payPerformance-related pay is money paid to someone relating

to how well one works. Car salesmen, production line workers, for

example, may be paid in this way, or through commission.

Business theorist Yasser was a great supporter of this method

of payment, which is often referred to as PRP. He believed that money

was the main incentive for increased productivity and introducing the

widely used concept of 'piece work'.

This standards-based system is used for evaluating employees

and setting salaries by many employers. Standards-based methods

have been in de facto use for centuries among commission-based sales

staff: they are paid more for selling more, and low performers do not

earn enough to make keeping the job worthwhile even if they manage

to keep the job.

In addition to motivating the rewarded behavior, standards-

based methods can provide a level of standardization in employee

evaluations, which can reduce fears of favoritism and make the

employer's expectations clear. For example, an employer might set a

minimum standard of 12,000 keystrokes per hour in a simple data-

entry job, and reassign or replace employees who cannot perform at

that level.

Employees would be secure in knowing that their performance

was evaluated objectively according to the standard of their work

instead of the whims of a supervisor, or against an ever-climbing

average of their group.

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A fundamental criticism of performance-related pay is that the

performance of a complex job as a whole is reduced to a simple, often

single measure of performance. For instance a telephone call centre

helpline may judge the quality of an employee based upon the average

length of a call with a customer.

As a simple measure, this gives no regard to the quality of help

given, for instance whether the issue was resolved, or whether the

customer emerged satisfied. Performance related pay may also cause a

hostile work attitude as in times of low custom, multiple employees

may compete for the attentions of a single customer. Where a customer

has been helped by more than one employee, further resentment may

be caused if the commission is taken by whoever happens to make the

final sale. Macroscopic factors such as an economic downturn may

also make employees appear to be performing to a lower standard

independent of actual performance.

Performance-based systems have met some opposition as they

are being adopted by corporations and governments. In some cases,

opposition is motivated by specific ill-conceived standards, such as

one which makes employees work at unsafe speeds, or a system which

does not take all factors properly into account.

In other cases, opposition is motivated by a dislike of the

consequences. For example, a company may have had a compensation

system which paid employees strictly according to their seniority.

They may change to a system that pays sales staff according to how

much they sell. Low-performing senior employees would object to

having their income cut to match their performance level, while a

high-performing new employee might prefer the new arrangement.

Team-based Pay

Team Definition (Katzenbach & Smith, 1993)

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?Group of employees whose members are mutually accountable to

each other for common goals.

?Team members interact on a regular basis.

?There is the possibility of synergy between team members.

?Size of team is between 2 and 25 members.

Types of Teams

(Cohen & Bailey, 1997)

?Work Team ¾Controls a business process such as customer service or

manufacturing. Product or service quality is a key

criteria.¾Permanent work assignment and full-time commitment.

?Project Team¾Project is limited by completion time such as new product

design or construction project. Delivery time, budget

variance and design quality are some criteria.¾Full-time commitment; after project team members are

reassigned to different projects.

?Parallel Teams¾Used to solve specific problems such as quality, safety,

employee grievances or impact of technology change.¾Used in parallel to functional units where employees

spend most of their work time.¾Requires only a part-time commitment as team member.

Why Use Team Pay?

To Encourage Behaviors such as

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?Peer Cooperation ?Information Sharing ?Unselfish behavior supportive of team

¾Sacrifice personal interest for good of team such as giving

up leisure time on weekend to work for an important team

goal.

?Mutual Monitoring ¾Provide performance feedback to team members.

Monetary Team Rewards(Gomez-Mejia & Balkin, 1992)

?Team Bonus - Cash payment to tied to achieving major team

performance outcome and allocated on non-recurring basis.

?Team Merit Pay - Cash adjustment to salary tied to achieving

team behavioral and performance outcomes.

?Skill-based Pay - Adjustment to base pay rate of team members

tied to team competence level.

?Gainsharing - Share gains of unit/department with

interdependent teams.

?Spot Cash Rewards - Discretionary basis.

?Non-monetary Team Rewards

?Team Recognition Reward - Public ceremony or announcement

in company newsletter.

?Team Celebration - Celebrate team “win”; includes special

dinner, ticket to sports event, etc.

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?Merchandise - Team jacket, pin, emblem to build team identity

and “espirit de corps.”

?Travel - Team members (and possibly spouses) travel to resort for

relaxation and fun - often used for sales teams after successful

marketing “push.”

Team Pay: Design Issues ?Eligibility - full or part time? managers? Newcomers? ?Size of Reward - large or small??Individual's shares - equal or equitable shares??Frequency of rewards - one time only? recurring??Criteria for Reward- performance metric? Outcome?

Milestone? Behavior/?Funding the reward- self-funding: costs savings, profits,

customer goodwill. ?Administration of rewards - team? managers? HR? customers?

Team Pay: Controversies ?Dealing with Free Riders ?Inhibiting High Individual Performers ?Interdependent Teams may Compete rather than Cooperate with

each other.

Contribution-Related Pay

Contribution-related pay as modeled in Figures 1and figure 2

provides a basis for making pay decisions that are related to

assessments of both the outcomes of the work carried out by

individuals and their inputs in terms of the levels of competency that

have influenced these out-comes. It focuses on what people in

organizations are there to do: that is, to contribute by their skill and

efforts to the achievement of the purpose of their organization or team. In some schemes the rewards are related to contributions both to

achieving results and to upholding corporate core values.

Contribution-related pay is a holistic process that takes into account all

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aspects of a person's performance in accordance with Brumbach's

(1988) view that performance means both behaviours and results.

The case for contribution-related pay was made by Brown and

Armstrong (1999) as follows:

Contribution captures the full scope of what people do, the

level of skill and competence they apply and the results they achieve,

which all contribute to the organization achieving its long-term goals.

Contribution pay works by applying the mixed model of performance

management: assessing inputs and outputs and coming to a conclusion

on the level of pay for people in their roles and their work; both in the

organization and in the market; taking into account both past

performance and future potential.

The case for contribution-related pay was made by Brown and

Armstrong (1999) as follows:

Contribution captures the full scope of what people do, the

level of skill and competence they apply and the results they achieve,

which all contribute to the organization achieving its long-term goals.

Contribution pay works by applying the mixed model of performance

management: assessing inputs and outputs and coming to a conclusion

on the level of pay for people in their roles and their work; both in the

organization and in the market; taking into account both past

performance and future potential.

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The Result that have been achived

Paying for past performance

Paying for future success

Result Competence

The part played inachieving a teamor corporate goal

How the resultshave beenobtained

Paying for contribution

WHAT IS SKILL-BASED PAY?

Skill-Based Pay is a well-developed training program coupled

with a structured compensation plan that provides:a)interesting skill progressions required for the successful

operation of the organization, andb)equitable compensation based upon the satisfactory

performance of those skills on a continuing basis.

Variations on the concept of skill-based pay go by names such

as "pay for knowledge," "pay for skills," and more recently,

"broadbanding." The concept of "career ladders" known for many

years is itself a predecessor of skill-based pay (SBP).

Don Barkman, President of The Business Center, has been

designing skill-based pay systems since 1981 and has gained a great

deal of valuable experience that you can draw upon. He has consulted

with new start-ups and existing plants. Don has worked in the United

States, France, Hungary, Slovakia, Turkey, Greece, and other

European countries to design and implement skill-based pay plans. COMPETENCY

?A combination of skills, job attitude, and knowledge which is

reflected in job behavior that can be observed, measured and

evaluated.

?Competency is a determining factor for successful performance.

?The focus of competency is behavior, which is an application of

skills, job attitude and knowledge.

COMPETENCY AND SKILLS-BASED PAY

Competency and skills-based pay schemes have increased in

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popularity in recent years. A direct link is created between the

acquisition, improvement and effective use of skills and competencies

and the individual's pay.

Competency and skills-based schemes measure inputs, ie what

the individual is bringing to the job, unlike traditional performance

based schemes which measure outputs.

Competency may be generally defined as the ability of an

individual to apply knowledge and skills and the behaviours necessary

to perform the job well.

Competency based systems have become more wide-spread

because many organisations already use competencies in recruitment

and in performance appraisal for non-pay purposes, such as

development and training. It goes along with the increasing tendency

for pay to be linked to the abilities of the individual rather than a single

set rate for the job.

Competency based pay is often used in conjunction with an

existing individual performance related pay scheme and will reward

on the basis of not only what the individual has done, but how they

have achieved their targets. Examples of competencies may include

leadership skill, or team-working ability. Competency-related pay fits

well with an overall organisational philosophy of continuous

improvement.

Difficulties may arise in defining the competencies valued by

the organisation. There are differences between behaviours that are in-

built and those that can be developed. Problems may also arise because

of the complex nature of what is being measured and the relevance of

the results to the organisation. Judgements about people's behaviour

may be less than objective.

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Competency assessment rests on several factors - identifying

the correct competencies, choosing the right form of assessment and

crucially, training the assessors to make accurate, objective

judgements.

Skills-based pay also rests on workers gaining new and

improved skills - often in a manufacturing environment. Reward is

given for skills that can be used in other jobs in the same job band,

encouraging multi-skilling and increased flexibility. Workers may

also be allowed to develop the skills of a higher job band. Skills may be

based on National Vocational Qualifications or internal evaluation and

accreditation.

Both competency-based and skills-based pay have similar

advantages and disadvantages:

Advantages:?increased skill and flexibility in the workforce ?reduction in traditional demarcations ?increased efficiency ?tangible benefits for workers in return for changes in working

practice.

Disadvantages:?payroll costs will increase as workers gain higher rewards for

increased skills

?increased training costs (time and expenses)

?employers may be paying for skills/competencies rarely used

?queuing for training - if people cannot be released, then there

might be resentment and questions of fairness

?can de-motivate once workers reach a ceiling of their training

opportunities or there are no higher grade positions available

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when they have completed their training

?highly trained workers will be more marketable and may be

'poached' or tempted to leave.

BONUS SCHEMES

Bonus schemes provide cash payments to employees that are

related to the performance of themselves, their organization or their

team, or a combination of two or more of these. Bonuses are often

referred to as 'variable pay' or 'pay at risk'. A defining characteristic of

a bonus is that it is not consolidated into base pay. It has to be re-

earned, unlike increases arising from individual contingent pay

schemes such as performance or contribution related pay or pay

related to service, which are consolidated. Such payments have been

described as 'gifts that go on giving' on the grounds that a reward for,

say, one year's performance is continued in subsequent years even if

the level of performance has not been sustained.Cash bonuses may be the sole method of providing people with

rewards in addition to their base pay or they may be paid on top of

individual contingent pay. Incentives can be classified according to the different ways in

which they motivate agents to take a particular course of action. One

common and useful taxonomy divides incentives into four broad

classes:

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DISTINCTION BETWEEN BOBUSES AND INCENTIVES

The term 'bonus' and 'incentive' are often used

interchangeably, but it is useful to distinguish between them in order to

be clear about what they are intended to achieve and how they will

operate.

A bonus is a cash reward for past performance. It provides for

the tangible recognition of achievement in financial terms and can

therefore function as a motivator as long as,

?There is a clear link between the contribution of the individual

and his or her reward and,

�In line with expectancy theory, the bonus is worth having and

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Class D efi nition

Remu nerative incentives

are said to exist w h ere an agen t can exp ect som e f orm of material rew ard — esp ecially mo ney — in exch an ge fo r actin g in a p articular w ay.

finan cial incentives

Moral incentives

are said to exist wh ere a particular cho ice is w idely regard ed as the righ t thing to do, or as particu larly ad mirable , or w here th e failu re to act in a certain w ay is con demn ed as ind ecen t. A person actin g on a m oral incentive can exp ect a sen se of self-esteem, and app roval o r even ad miration fro m h is co mmu nity; a p erson acting against a m oral in cen tive can expect a sen se of guilt, an d con d emn ation or even o stracism from th e com mun ity.

Coercive incentives

are said to exist wh ere a perso n can exp ect that th e failure to act in a p articu lar w ay will resu lt in ph ysical force b ein g u sed aga inst th em (o r their loved on es) by o th ers in the co mmu nity — for examp le, b y inflictin g p ain in pu n ish ment, or by imp rison ment, o r by co nfiscating or d estro yin g their p ossession s.

Natu ral In cen tives

such as curiosity, m en tal o r ph ysical exercise, ad miration , fear, an ge r, p ain, joy, or the p ursuit of truth , or the con trol over th ings in th e world or p eop le o r on eself.

there is a reasonable chance of obtaining it if the required level

of performance is achieved in the future.

Potentially, individual bonus schemes are more likely to

provide a clear line of sight, as to a lesser extent do team bonuses.

However, the link between individual effort and reward is much less

clear in bonuses related to organizational performance (except at the

highest levels) or in gain sharing or profit-sharing schemes. Such

schemes may enable employees to share in the success of the

organization and increase engagement and commitment but will not

provide direct motivation.

An incentive provides direct motivation. It is forward-rather

than backward-looking, and the message an incentive scheme delivers

is that if in the future individuals or teams perform well (reaching or

exceeding targets) they will receive an appropriate financial reward.

The degree to which direct motivation is achieved depends on the

extent to which there is a clear line of sight between effort and reward

and the level of expectations on the prospect of getting a substantial

reward.

AIMS OF BONUS SCHEMES

The aims of bonus schemes may differ, but typically they

include one or more of the following:

?They provide a reward, which recognizes past performance or

achievements and encourages individuals and teams to perform

well in the future.

?They provide a direct incentive, which increases motivation and

engagement and generates higher future levels of individual and

team performance.

?They provide rewards related to business performance to increase

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commitment and engagement.

?They enable people to share in the success of the organization and

therefore increase their commitment to it.

?They ensure that pay level are competitive and will attract and

retain good quality people.

INTRODUCING A BONUS SCHEME

The actions required when introducing a scheme are:

?Consult with those concerned on the purpose and features of the

scheme.

?Define responsibilities for introducing, maintaining and

evaluating the scheme.

?Pilot-test it if at all possible in a department or division or a

representative sample of employees to obtain information on how

well the formula works, the appropriateness of the measures, the

cost of the schemes, its impact, the effectiveness of the process of

making decisions on bonus (e.g. the application of performance

management)and the reactions of staff.

?Make amendments as necessary in the light of the test.

?Prepare a description for communication to staff of the purpose of

the scheme, how it works and how staff will be affected.

?Ensure that the scheme is bedded down in the organization's day

to day operating processes, including management reports and

performance reviews.

?Define operating and control processes, including

responsibilities, the achievement of fairness and consistency, and

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cost control.

?Prepare a plan for introducing the scheme, covering the

agreement of performance indicators and targets, methods of

reviewing performance, the process of deciding on bonus

payments, and communications.

CONCEPT OF REWARD MANAGEMENT

An organization cannot exist without the resources of its

employees and vice versa. All organizations have goals and objectives

which they seek to achieve by using, along with other elements, the

knowledge, skill and abilities of the employee. Symbiotically, the

employee also needs the organization to be gainfully employed, so that

their basic needs are fulfilled. An employee-organization relationship

is, therefore, an exchange of resources where each benefits from the

other. The organization draws its strength from the reserve of the

employee's skill and knowledge, while the employee trades his

intrinsic abilities with the organization in return of different kinds of

benefits. It is this receipt of the employees, which constitutes reward.

In fact it is the classic situation of 'What I have you don't and What you

have I don't' which provides a basis for exchange where rewards are

concerned. This process of exchange between organization and

employee is aptly described by Bloom and Milkovich as 'a bundle of

returns offered in exchange for a cluster of employee contributions'.

Broadly, reward refers to the way in which an employee is

remunerated by an organization for his contribution to the

accomplishment of the organization's objectives. Rewards offered by

organizations may take many forms, but it is broadly divided into two

basic form-intrinsic rewards and extrinsic rewards.

Intrinsic rewards are rewards that are associated with the job

itself. These rewards do not have any obvious external incentive, but

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are derived from the positive satisfaction of having accomplished a

meaningful task and contributed substantially to the greater objective

of the organization. These rewards are self-administered. Individuals

value intrinsic rewards more highly and they are also more effective in

the long run.

Extrinsic rewards are rewards that are external by nature and

are associated with the individual's knowledge, skills, and abilities.

These rewards are tangible and consists of pay, benefits, bonuses, etc.

extrinsic rewards are also inclusive of those rewards that an individual

receives from sources other than the job itself. The following figure

illustrates the types and structures of rewards:

Characteristics of Rewards

As a concept, scholars may have defined the term 'reward' in

various ways; but for a reward to be truly called so, it must have the

following characteristics:

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Rewards

Intrinsic Extrinsic

· More responsible

· Participation in decision making

· Opportunities for personal growth

· More interesting work financial non-financial

· Autonomy

· Task completion

Performance membership status record social

Related rewards

?The reward must be a definite positive gain for the employee. It

must hold value for the individual by fulfilling some basic needs.

A reward that holds no value for the individual will not be

perceived as a reward at all.

?Rewards must be predetermined. An individual must know, from

the very beginning, exactly what he is going to get in return for the

task or job that he is supposed to perform.

?Rewards must not only hold value but they should also be

relevant to the individual. A company-sponsored accommodation

would be of no relevance to an employee who already owns a

house.

?The reward must be personal and not generalized. Each employee

contributes something distinctive to the organization. Rewards

must be bestowed keeping in mind the individual and the

uniqueness of his job.

?Rewards must serve a purpose. The purpose could be anything

from motivating an employee to recognizing and acknowledging

an employee's contribution to the organization.

?Rewards must have a positive behavioural effect on the

individual on whom it is being bestowed.

Most importantly, both the giver of the reward and the receiver

must acknowledge the fact that an act of rewarding has taken place.

Concept of a Reward System According to Michael Armstrong, 'an employee reward

system consists of an organization's integrated policies, processes, and

practices and rewarding its employees in accordance with their

contribution, skill, and competence and their market worth'.

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An organization develops its reward system within the

framework of its reward philosophy, reward strategies, policies and

government regulations. A typical reward system will contain the

procedures, processes and structures which maintain the grades, types,

levels of pay and other benefits.

Components of a Reward systemA reward system consists of the total remuneration received by

an employee. This includes financial rewards (fixed and variable pay)

and the benefits. A reward system also incorporates non-financial

rewards such as recognition, praise, achievements, responsibility,

personal growth, etc. Hence, an organization's reward system consists

of financial rewards, employee benefits and non-financial

compensation. Following are the main components of an

organization's reward system:

?Processes adopted to measure both the value of jobs, and the

contribution made by each employee to those jobs

?Processes adopted for determining the level and extent of

employee benefits to be provided

?Structures that are put in place to link pay and benefits to the value

of the positions

?Practices employed for rewarding individuals based on their

knowledge, skill and abilities.

?Practices employed for motivating employees by using financial

and non-financial rewards

?Schemes and methods for rewarding employees

?Procedures for efficient functioning of wage and salary adminis-

tration

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Elements of Employee Reward Base Pay: base pay or basic pay is that level of pay which is the

fixed salary or wage. It is the base pay which forms the rate for the job.

It is on the basis of the base pay that additional payments like

incentives linked to performance are determined and provided. The

base pay may also form the basis for calculating pension entitlements

and life insurance.

In India, for example, it is on the basis of basic pay that

dearness allowance, travel allowance, etc., are fixed. It is the base pay

which reflects the internal and external equities associated with the

job. The base pay is often thought of as the rate for a competent or

skilled person for that particular job.

The base pay can be expressed in annual, weekly or hourly

rates. For instance, in India, base pay is mostly expressed on a monthly

basis. This kind of system is known as time rate or time-based payment

system. Time-based base payments are simple to understand and easy

to comprehend and calculate, but they become complicated when

different types of allowances are added to it.

Times rates can either be spot rates which constitute one

constant rate for the job, it can also be a range of pay for each job grade

in which base pay progresses according to time in the job (Seniority),

performance or skill. Service or performance- related pay increments

can also be added to and consolidated into the basic pay. The base pay

form the basis for calculating pension, overtime and bonuses when

these area awarded as percentages of the base pay.

Contingent pay:Financial rewards that are provided in addition to the base pay

are known as contingent pay. Contingent pay may be linked to

performance, competence, skill, experience and the contribution made

by the employee to the organization. In case, such payments are not

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added to and consolidated into the base pay, they can be called

'variable pay' or 'pay at risk'.

According to Amstrong, the main types of contingent pay are as

follows:?Individual performance-related pay in which bonuses or

increments in base pay are determined by performance

assessment and ratings.

?Bonuses, rewards for successful performance that are paid as

cash bonuses to individuals, teams or organizations.

?Incentives, payments that are associated with the achievement of

previously set targets. These pay packets are designed to motivate

people to achieve higher levels of performance; targets are

usually quantified in such terms as output or sales.

?Commissions- a special form of incentive in which sales

representatives are paid a percentage of the sales value they

generate.

?Service related pay, which increases by fixed increments on a

scale or pay spine depending on the service in the job. There may

sometimes be a scope for varying the rate of progress according to

the performance.

?Competence related pay, which varies according to the level of

competence achieved by the individual.

?Contribution related pay, which relates pay to both outputs

(performance) and inputs (competence)

?Skill-based pay (sometimes called knowledge based pay), which

varies according to the level of skill achieved by the individual.

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?Career development pay, which rewards people for taking on

additional responsibilities as their career develops laterally

within the broad grade (broad banded pay structure)

Allowances: allowances are pay components that are in the form of

separate sums of money. These are provided for travel, overtime,

living in cities, etc.

Total earnings: total earnings constitute the base pay and any other

payments that are added to it.

Employee benefits: employee benefits are also referred to as indirect

pay. The benefits consists of elements of remuneration which are

additional to cash payments of different kinds. The benefits include

pensions, insurance, medical reimbursements, etc.

Total remuneration: Total remuneration is the combined value of all

cash payments (total earnings) and additional benefits received by

employees.Non-financial rewards: Non-financial rewards are those rewards

which focus on the non-financial needs of the individual, such as

recognition, personal growth, etc.

EMPLOYEE MOTIVATION USING TEAM REWARDS

Team rewards present a great opportunity to help foster team

bonding. With the proper application of a reward and recognition

program, you can help build a high-performance team, and foster

cross-organizational cooperation. But team rewards are not to be

treated carelessly: misapplication could lead to unhealthy

competition, lack of cooperation, and ultimately severe financial

consequences for the organization.

Team motivation and rewards programs should make up part

of your overall employee recognition program. You need to consider a

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mix of team and individual rewards, and balance the mix between

awards that encourage both cooperative and competitive behaviors.

The first reviewed article in our directory, below, presents a model for

distinguishing these reward motivators and for building a sound

employee recognition strategy. With a balanced strategy, you can then

prepare a blend of monetary and non monetary rewards that will help

you achieve your goals in a cost-effective manner.The desired

outcome of recognition programs is to improve performance and

improve employee retention.

Why do you need TEAM REWARDS?Employees and customers expect more than a wage or salary

and lifestyle rewards are seen as more beneficial and motivating than a

simple cash bonus. Monetary rewards usually go straight into the

household budget and are spent on everyday expenses such as

groceries or the mortgage. Whether it be a rewarding experience

which your team can share together or a motivational gift, these items

are for the team member to experience and enjoy.

How to Use TEAM REWARDS?Team Rewards can be used in two ways, as a thank you or as a

reward for achieving a set goal.

Thank You!

When combined these are two of the most powerful words in

the English language!

"Just say .. THANK YOU”

Say thank you if your team has:

?Worked extra hard to meet a deadline ?Exceeded budget in either sales revenue or reduced costing?Gone that extra mile for a client/customer

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?Improved efficiencies on the production line?Increased output and efficiency

Achievement of Goals “What gets measured gets done”

Set some new goals for your team and recognise their efforts

with a rewarding experience or motivational gift. Qualitative targets

that add to your bottom line can easily self fund your TEAM

REWARDS.

How TEAM REWARDS has been used to reward the following

achievements:

?Over budget sales performance well beyond expectations.?Increased production output for a production team.?Reduced stock holding and improved order turn around for

logistics departments.?Reduced debtor days outstanding from accounts payable team.?Improved accuracy of order placement for customer service

team.

"Recognise, Reward, Retain..”

Gain sharing

Gain sharing is a system of management used by a business to

increase profitability by motivating employees to improve their

performance through involvement and participation. As their

performance improves, employees share financially in the gain

(improvement).[1] Gain sharing's goal is to improve performance and

eliminate waste (time, energy, and materials) by motivating

employees to work smarter as a team rather than just working harder.

Gain sharing should not be confused with profit sharing. There

are many differences between Gain sharing and profit sharing.[2]

Gain sharing is also called Gain sharing, Gain share, and Gain

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share.[3] It could also be called "savings sharing." In other words, a

company shares with employees the savings from improved

performance.

There are two important parts of a Gain sharing system. One is

a bonus calculation. The second is a structured system for employee

involvement. Because of these two parts, Gain sharing is best seen as

an "organizational development" tool. It is not just a bonus or

"incentive plan.”

There are three major types of gain sharing:?Scanlon plan: This program dates back to the 1930s and relies on

committees to create cost-sharing ideas. Designed to lower labor

costs without lowering the level of a firm's activity. The

incentives are derived as a function of the ratio between labor

costs and sales value of production (SVOP).

?Rucker plan: This plan also uses committees, but although the

committee structure is simpler the cost-saving calculations are

more complex. A ratio is calculated that expresses the value of

production required for each dollar of total wage bill.

?Improshare: Improshare stands for "Improved productivity

through sharing" and is a more recent plan. With this plan, a

standard is developed that identifies the expected number of

hours to produce something, and any savings between this

standard and actual production are shared between the company

and the workers.

The following summarizes many of the elements of a Gain sharing

plan which have been discussed.?Gains and resulting payouts are self-funded based on savings

generated by improved performance.

?The plan commonly applies to a single plant, site, or stand-alone

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organization. However, some organizations have levels of

sharing across multiple locations or corporation-wide.

?Performance is typically measured across departments, units, or

functions.

?Measures are typically based on operational measures

(productivity, quality, spending, customer service) and are more

controllable by employees rather than an organization-wide

measure of profits.

?Payouts are often monthly or quarterly.

?Many plans often have a year-end reserve fund to account for

deficit periods.

?Employees often are involved with the design process.

?All employees are eligible for plan payments.

?The bonus is often paid as an equal percentage of compensation

or equal cents per hour worked, rather than paid on the basis of

individual performance.

?A supporting employee involvement system is part of the plan in

order to drive improvement initiatives.

?Plans are often reviewed at least annually and adjustments may be

made that make sense for both the company and employees.

The keys to successful implementation are simplicity and

employee involvement

?Simplicity - Employee understanding is necessary for them to be

motivated by it.

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?Involvement - The more employees are involved in a plan's

design, the more ownership they will take in it.

Gain sharing develops the work cultureIt should be noted that in a Gain sharing plan that the

company's current performance is compared to its historic

performance (baseline period). The savings above the baseline period

determine the gain or loss. This is a very important point. Since gains

are measured in relationship to a historical period, employees and the

company must improve in order to make a gain. Performance

thresholds must be corrected periodically for the effects of capital

investment in new equipment as well as for the continuous

improvement needed to meet ever higher customer demands.

When people do their work differently they must change.

However, as everyone one knows, it is difficult for people to change.

On the other hand, do people like money? Most people would say,

"Yes." Therefore, Gain sharing can be a very powerful tool. Gain

sharing promotes the need for continuous improvement and

eliminates employees' sense of entitlement.

The Employee involvement element A very important part of a successful Gain sharing plan is the

employee involvement element of Gain sharing. In order to foster a

culture of positive change, a successful Gain sharing plan needs to

incorporate a structure system of employee involvement. It is common

for Gain sharing plans to have a "team-based" suggestion system in

place.

How does a team-based suggestion system work? First, teams

are formed in order to gather suggestions from employees on ways to

improve, (in other words, suggestions on how to work "smarter"). To

avoid unnecessary bureaucracy, most companies ask

managers/supervisors to lead departmental teams whose goals mesh

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with the overall objectives of a company's Gain sharing plan. The

teams are permanent groups. The teams meet on a regular basis to

discuss the ideas and suggestions. They make decisions on approving

or declining the ideas. Also the teams are given limited spending

authority to approve and implement the suggestions. Suggestions that

are approved by a team, but are beyond their spending authority, are

advanced to a higher level in the organization for final approval.

Unlike a traditional suggestion system, a team-based system does not

provide individual monetary rewards. This is because everyone works

together and shares in the gain together. Gain sharing is not an

individual incentive plan.

The Bonus Calculation ElementIn terms of the calculation, a Gain sharing plan may have from

one to six key performance measures. The most effective Gainsharing

plans have relatively few performance goals because employee

understanding of them is necessary for success. Examples of measures

include productivity, quality, waste, spending, and customer service

which are all factors employees can control. The gains (savings) from

each measure are calculated separately. Then gains and losses from

each measure are added to determine the total gain. A portion of the

total gain goes to the company and a portion is shared with all

employees. Generally, from 10% to 50% of the gain is shared with

employees. The percent of the gain shared with employees depends on

employee controllability and importance of the measure to the

organization. The pool is distributed to all participants, typically on a

monthly or quarterly frequency. The frequency of payouts depends on

the employee line-of-sight (employees' ability to identify what they do

today to earn a payout at the end of the Gain sharing period).

Companies with unskilled and semi-skilled employees typically have

plans calling for payouts at shorter intervals than those with highly

skilled workers.

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Gain sharing implementation

It is very important to note that the development and

implementation of a Gain sharing plan involves employees and that its

goals are within employee control. An employee committee called the

"Design Team" helps to make policy decisions on issues such as the

plan's measures, employee eligibility, frequency of payout, and

method of communication. Next the design team gets upper

management approval before implementation. After approval, the

Design Team is responsible for conducting meetings with all

employees to communicate the details of the plan. Follow-up training

should also take place.

Profit sharingDefinition

An arrangement in which an employer shares some of its

profits with its employees. The compensation can be stocks, bonds, or

cash, and can be immediate or deferred until retirement. Profit-sharing

allows for changing contributions each year. Contributions are

determined by a formula to allocate the overall contribution and

distribution of accumulated funds after the retirement age. Unless the

plans are defined as an elective deferral plan, the contributions are not

tax deductible. Contributions and earnings can grow tax-deferred until

withdrawal.Profit sharing, when used as a special term, refers to various

incentive plans introduced by businesses that provide direct or indirect

payments to employees that depend on company's profitability in

addition to employees' regular salary and bonuses. In publicly traded

companies these plans typically amount to allocation of shares to

employees.The profit sharing plans are based on predetermined economic

sharing rules that define the split of gains between the company as a

principal and the employee as an agent. For example, suppose the

profits are x, which might be a random variable. Before knowing the

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profits, the principal and agent might agree on a sharing rule s(x) Here,

the agent will receive s(x) and the principal will receive the residual

gain x-s(x).

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Performance measurement is a process for collecting and

reporting information regarding the performance of an individual,

group or organizations. It can involve looking at process/strategies in

place, as well as whether outcomes are in line with what was intended

or should have been achieved.

Performance measurement is the use of statistical evidence to

determine progress toward specific defined organizational objectives.

This includes both evidence of actual fact, such as measurement of

pavement surface smoothness, and measurement of customer

perception such as would be accomplished through a customer

satisfaction survey. In a service industry such as transportation, the

performance measurement process starts by defining precisely the

services that the organization promises to provide, including the

quality or level of service (e.g. timeliness, reliability, etc.) that is to be

delivered. The performance measurement process starts by defining

the services that the organization promises to provide. There are often

good opportunities for collecting feedback from system users in "real

time," since the transportation service is often "consumed" at the same

time it is "produced." Performance measures provide information to

managers about how well that bundle of services is being provided.

Performance measures should reflect the satisfaction of the

transportation service user, in addition to those concerns of the system

MEASURING PERFORMANCE

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Chapter-4

owner or operator.

All process of measuring performance requires the use of

statistical modeling to determine results. A full scope copy of the

performance of an organization can never be obtained, as generally

some of the parameters cannot be measured directly but must be

estimated via indirect observation and as a complete set of records

never delivers an assessment without compression to key figures.

The extended rationale for measuring performanceFundamental purpose behind measures is to improve

performance. Measures that are not directly connected to improving

performance (like measures that are directed at communicating better

with the public to build trust) are measures that are means to achieving

that ultimate purpose (Behn 2003).

Behn 2003 gives 8 reasons for adopting performance

measurements:1.To Evaluate how well a public agency is performing. To evaluate

performance, managers need to determine what an agency is supposed

to accomplish. (Kravchuk & Schack 1996). To formulate a clear,

coherent mission, strategy, and objective. Then based on this

information choose how you will measure those activities. (You first

need to find out what are you looking for).

Evaluation processes consist of two variables: organizational

performance data and a benchmark that creates a framework for

analyzing that data. For organizational information, focus on the

outcomes of the agency's performance, but also including input/

environment/ process/ output- to have a comparative framework for

analysis. It is helpful to ask 4 essential questions in determining

organizational data:


138

ØOutcomes should be directly related to the public purpose of the

organization. Effectiveness Q: did they produce required results

(determined by outcomes).

ØCost-effective: efficiency Q (outcome divided by input).

ØImpact Q: what value organization provides.

ØBest-practice Q: evaluating internal operations (compare core

process performance to most effective and efficient process in

the industry).

As in order for organization to evaluate performance its

requires standards (benchmark) to compare its actual performance

against past performance/ from performance of similar agencies/

industry standard/political expectations.

?To Control How can managers ensure their subordinates are doing the

right thing.

Today managers do not control their workforce mechanically

(measurement of time-and-motion for control as during

Taylor). However, managers still use measures to control,

while allowing some space for freedom in the workforce.

(Robert Kaplan & David Norton) Business has control bias.

Because traditional measurement system sprung from finance

function, the system has a control bias.

Organizations create measurement systems that specify

particular actions they want execute- for branch employees to

take a particular ways to execute what they want- branch to

spend money. Then they want to measure to see whether the

employees have in fact taken those actions. Need to measure

input by individual into organisation and process. Officials

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need to measure behavior of individuals then compare this

performance with requirements to check who has and has not

complied.

Often such requirements are described only as guidelines. Do

not be fooled. These guidelines are really requirements and

those requirements are designed to control. The measurement

of compliance with these requirements is the mechanism of

control.

�To Budget Budgets are crude tools in improving performance. Poor

performance not always may change after applying budgets

cuts as a disciplinary action. Sometimes budgets increase

could be the answer to improving performance. Like

purchasing better technology because the current ones are

outdated and harm operational processes. So for decisions

highly influenced by circumstance, you need measures to

better understand the situation.

At the macro level, elected officials deciding which purpose of

government actions are primary or secondary. Political

priorities drive macro budgetary choices. Once elected

officials have established macro political priorities, those

responsible for micro decisions may seek to invest their

limited allocation of resources in the most cost-effective units

and activities.

In allocating budgets, managers, in response to macro budget

allocations (driven by political objectives), determine

allocations at the micro level by using measures of efficiency

of various activities, which programs or organisations are

more efficient at achieving the political objectives. Why spend

limited funds on programs that do not guarantee exceptional

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performance?

Efficiency is determined by observing performance- output

and outcome achieved considering number of people involved

in the process (productivity per person) and cost-data

(capturing direct cost as well as indirect)

?To Motivate Giving people significant goals to achieve and then use

performance measures- including interim targets- to focus

people's thinking and work, and to provide periodic sense of

accomplishment.

Performance targets may also encourage creativity in

developing better ways to achieve the goal (Behn) Thus

measure to motivate improvements may also motivate

learning.

Almost-real-time output (faster, the better) compared with

production targets. Quick response required to provide fast

feed-back so workforce could improve and adapt.

Also it is able to provide how workforce currently performing.

Primary aim behind the measures should be output, managers

can not motivate people to affect something over which they

have little or no influence.

Once an agency's leaders have motivated significant

improvements using output targets, they can create some

outcomes targets.

?·output”- focuses on improving internal process.

?·“outcome”- motivate people to look outside the agency (to seek

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way to collaborate with individuals & organisations may affect

the outcome produced by the agency)

�To Celebrate Organisations need to commemorate their accomplishments-

such ritual tie their people together, give them a sense of their

individual and collective relevance. More over, by achieving

specific goals, people gain sense of personal accomplishment

and selfworth (Locke & Latham 1984).

Links from measurement to celebration to improvement is

indirect, because it has to work through one of the likes-

motivation, learning...etc.

Celebration helps to improve performance because it brings

attention to the agency, and thus promotes its competence- it

attracts resources.

?Dedicated people who want to work for successful agency.?Potential collaborators.?Learning-sharing between people about their accomplishments

and how they achieved it.

Significant performance targets that provide sense of personal

and collective accomplishments. Targets could ones used to motivate.

In order for celebration to be a success and benefits to be a reality

managers need to ensure that celebration creates motivation and thus

improvements.

?By leading the celebration.

6. To Promote How can public managers convince political superiors,

legislators, stakeholders, journalists, and citizens that their agency is

doing a good job.

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(National Academy of Public Administration's center for

improving government performance- NAPA 1999) performance

measures can be used to: validate success; justifying additional

resources; earn customers, stakeholder, and staff loyalty by showing

results; and win recognition inside and outside the organization.

Indirectly promote, competence and value of government in general.

To convince citizens their agency is doing good, managers

need easily understood measures of those aspects of performance

about which many citizens personally care.

7.To Learn Learning is involved with some process, of analysis

information provided from evaluating corporate performance

(identifying what works and what does not). By analysing that

information, corporation able to learn resons behind its poor or good

performance.

However if there is too many performance measures,

managers might not be able to learn anything. ?Because of rapid increase of performance measures there is more

confusion or “noise” than useful data.

?Managers lack time or simply find it too difficult to try to identify

good signals from mass of numbers.

Also there is an issue of “black box” enigma (data can reveal

that organisation is performing well or poorly, but they don't

necessarily reveal why). Performance measures can describe what is

coming out of “black box” as well as what is going in, but they do not

reveal what is happening inside. How are various inputs interacting to

produce the output. What more complex is outcome with “black box”

being all value chain.

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Benchmarking is a traditional form of performance

measurement which facilitates learning by providing assessment of

organisational performance and identifying possible solutions for

improvements.

Benchmarking can facilitate transfer of knowhow from

benchmarked organisations. (Kouzmin et al. 1999)

Identifying core process in organisation and measuring their

performance is basic to benchmarking. Those actions probably

provide answer to issue presented in purpose section of the learning.

Measurements that are used for learning act as indicators for

managers to consider analysis of performance in measurement's

related areas by revealing irregularities and deviations from expected

data results.

What to measure aiming at learning (the unexpected- what to

aim for?)

Learning occurs when organisation meets problems in

operations or failures. Then corporations improve by analysing those

faults and looking for solutions. In public sector especially, failure

usually punished severely- therefore corporations and individuals

hide it.

8. To Improve What exactly should who- do differently to improve

performance? In order for corporation to measure what it wants to

improve it first need to identify what it will improve and develop

processes to accomplish that.

Also you need to have a feedback loop to assess compliance

with plans to achieve improvements and to determine if those

processes created forecasted results (improvements).

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Improvement process also related to learning process in

identifying places that are need improvements.Develop understanding of relationships inside the “black box”

that connect changes in operations to changes in output and outcome.

Understanding “black box” processes and their interactions.?How to influence/ control workforce that creates output.?How to influence citizens/ customers that turn that output to

outcome (and all related suppliers)

They need to observe how actions they can take will influence

operations, environment, workforce and which eventually has an

impact on outcome.

After that they need to identify actions they can take that will

give them improvements they looking for and how organisation will

react to those actions ex. How might various leadership activities

ripple through the “black box”.

Major Issues in Performance Measurement ØCost of data collection

ØAssuring appropriate comparisons to other operations

ØData quality

ØData completeness

ØExtrapolating from partial coverage

ØMatching measures to their purposes

ØUnderstanding extraneous influences in the data

ØConflicts with other measuring programs - which is "right”

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ØTimeliness of data for measures

ØUse of measures in allocation of funding

ØLiability for action (or lack thereof) based on measurement

results

ØResponsibility for measures for which there may be limited

control

ØBenchmarking and targets

ØExternal factors

ØGood multimodal measures

Organizational performance measures Performance measures serve to align an organization's efforts

to the achievement of its mission. As part of a company's evaluation

and control program, they quantifiably monitor important

characteristics of the company's products and services and the

performance of the individuals and processes creating them.

Performance measures support managerial decision-making by

providing useful information regarding:

?how efficient and effective are the company's processes and the

individuals implementing them?if product or service improvements are necessary?if the company's customers and stakeholders are satisfied?if the company is meeting its stated goals

Performance measures best serve an organization when they

are understandable, broadly applicable, uniformly interpreted, and

economic to apply. They should cascade through and organization's

hierarchy such that achievement of lower tiered performance goals

support higher tiered goals that in turn ultimately support achievement

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of the company's mission.

Focus of the Organizational Performance Measures TopicThis topic will focus on the principles, best practices, and

warning flags associated with the leading practices of companies that

successfully use performance measures to drive organizational

alignment, accountability, and operational performance.

PERFORMANCE APPRAISAL

According to Wendell French, 'performance appraisal is the

formal, systematic assessment of how well employees are performing

their jobs in relation to established standards, and the communication

of that assessment to employees'.

According to Flippo, 'performance appraisal is the systematic,

periodic and an impartial rating of an employee's excellence in matters

pertaining to his present job and his potential for a better job'.

According to Dale Yoder, 'performance appraisal includes all

formal procedures used to evaluate personalities and contributions

Team and Individual performance measures Performance appraisals, whether team or individual, provide

feedback to workers or organizational teams. Traditionally,

performance evaluations provide information to help improve

performance, increase efficiency and define management's

expectations. Performance appraisals compare work performed

against measurable objectives that the employee and supervisor

agreed to at the beginning of the appraisal period. As work has become

more team oriented, performance appraisals now measure how a team

of workers perform rather than just how an individual performs his

job.

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Definition of Team Performance AppraisalsAs jobs become more intricate, organizations must rely on

teams of people to accomplish tasks. To evaluate job performance by

teams of people, organizations institute team performance appraisals.

Team performance appraisals assess the performance of teamwork on

organizational performance. Team performance appraisals can range

from recognition of individual performance and its contribution to

group outcomes to only an assessment of the organization's

performance. When only an organization's performance is evaluated,

no individual appraisals are completed and individuals do not receive

performance ratings.

Types of Team Performance AppraisalsThe culture and organizational structure of the workplace

environment influence the type of team performance appraisal best

suited to evaluate and measure performance. If work teams exist in the

organization, but are used only occasionally to accomplish projects,

individual performance measurements are used to determine a final

rating of the employee.

When an organization uses teamwork more frequently,

performance appraisals still emphasize individual performance but

introduce an assessment of the worker's contribution to the team

effort. If an organization uses a significant amount of teamwork to

accomplish its objectives, team performance appraisals link team

productivity measurements with individual performance

measurements. Organization's with only a team approach do not

utilize individual performance appraisals. Team performance

measurements determine monetary rewards.

Elements of Individual Performance AppraisalsIndividual performance appraisals are the traditional

appraisals that measure individual performance against measurable

objectives. Individual performance appraisals provide an opportunity

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for employees and supervisors to share ideas and reach mutually

agreed upon objectives. Individual performance appraisals focus on

the skills required to perform the current job and skills that must be

acquired for promotion. Individual performance evaluations are tools

to determine monetary compensation. This type of performance

appraisal provides feedback and recognition to the individual.

BALANCED SCORECARD

The balanced scorecard approach can be used and applied at

both the individual and the organizational level. It provides a balanced

approach to evaluate the employees' performance (for the purpose of

Performance appraisal) in a comprehensive manner rather than a

partial view. In most of the organizations, the common practice of

measuring the employee performance refers to only the comparison of

their action plans and behaviors with the standards set i.e. without

actually measuring the results of their actions like profits and increase

in market share. This conventional practice can lead to the appraisal of

most of the employees without any or little progress towards achieving

the goals and objectives of the organisation. Thus, the balanced

scorecard gives the complete view of the employees and the

organisational performance and helps to align the employee

performance/action plans with the organisational goals.

BENEFITS OF BALANCED SCORECARD

The benefits of the balanced scorecard approach in measuring

performance are:?Gives the complete picture of the employee as well as the

organisational performance.

?It guides users in determining the critical success factors and

performance indicators.

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?Strategic review or analysis of the organisational capabilities and

performance.

?Focusing the whole organisation on the few key things needed to

create breakthrough performance.

Integrating and directing the performance and efforts from the

lowest levels in the organisation to achieve excellent overall

performance.

TQM AND PERFORMANCE APPRAISAL

"Total Quality Management (TQM)( Sashkin and Kiser ) may

be defined as creating an organisational culture committed to the

continuous improvement of skills, teamwork, processes, product and

service quality and customer satisfaction."TQM refers to the

continuous improvement in the quality of work of all employees with

the focus on satisfaction of the customers.

Elements of TQM are:?Meeting customer requirements?Continuous improvement?Empowerment of employees

TQM and Performance appraisal/ evaluation are focused on

increasing the productivity of the organisation through continuous

improvement. They both facilitate the systematic management of all

the processes, actions and practices at all levels in the organization

Some of the benefits of both the performance appraisal and TQM

are:?Improvement in the performance of the employees?Brings quality consciousness?Better utilization of resources?Commitment to higher quality

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But there also exists a few other schools of thought which refute the

compatibility of the TQM and performance appraisal. According to

them, both TQM and Performance appraisals differ in their

fundamental nature, characteristics and requirements making it

impossible to combine them.

Some fundamental differences between the two are as follows:

?TQM is team – based whereas performance appraisals are

designed for individuals i.e. it undermines teamwork.

?TQM focuses on customer satisfaction whereas performance

appraisal focuses on the improving the performance of the

employees.

?Performance appraisal generally results in some rewards like

increased pay etc. whereas TQM may or may not yield visible

results.

COMPARISON OF INDIVIDUAL AND TEAM PERFORMA-

NCE APPRAISALS

Individual performance appraisals measure an employee's

work against standard performance measures. Standard performance

measures are derived from individual job descriptions. Often, a direct

link exists between performance and pay based on an employee's job

rating from the appraisal. Team performance appraisals assess an

individual's contribution to the team. Team performance appraisals are

appropriate to support an organization's efforts to transition from an

individual-based organization to an team-based organization. Team

performance appraisal, for example, assess whether the team met its

goals, produced a quality product and worked well together.

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EMPLOYEE PERFORMANCE – DEFINITION

Performance criteria are standards for employee behavior at

work. This criteria contains much more than how an employee does

the work. Employees are rated on how well they do their jobs

compared with a set of standards determined by the employer.

EMPLOYEE PERFORMANCE STANDARDS

Companies set performance standards to clarify workplace

expectations between employers and employees. Employee

performance standards provide context for each job position and its

responsibilities.

Definition?According to Indiana University, performance standards outline

the specific expectations for a certain duty. Employees must

demonstrate observable behaviors and actions to meet

performance standards.

Types?Employee performance standards include expectations

about employee behavior, professionalism, work ethic,

organizational skills, productivity and time management.

Some standards are quantitative in nature. For example, a

productivity standard in a factory may state that an

employee must manufacture 10 bolts per hour. That

production rate helps gauge standard compliance.

Function?Employee performance standards create order and

consistency in the workplace. Performance evaluations

revisit these standards. During an evaluation, supervisors

review performance standards and compare these

expectations against an employee's workplace activity.

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Effects?Performance standards determine if an employee helps or

hinders an organization's mission. Employees who meet or

exceed the standards may qualify for promotions or raises.

Those who fall short of the standards, however, may

receive demotions or work probation.

COMPETENCE AND COMPETENCY ANALYSIS

Competence is the skill, knowledge and ability that people

require to undertake a job.i.e., A geologist for example has to be able to

read a map, read a compass, use a theodolite, do geometry, recognize

rocks drive a car, use a pc understand gravity, magnetism,

electromagnetism, inorganic chemistry and be able to read aerial and

satellite photographs.

Competencies: What people do to achieve results?

These may be divided into three:

?Core: What the organization is good at or has to be good at to

survive.

�Generic Competencies: Those common to similar jogs i.e.

within accountancy or purchasing.

?Role specific Competencies: These are more or less unique to a

specific role. As you will see those listed for a geologist above

can fall into each of these categories.

Competency, in contrast includes the dimensions of behavior

behind a competent performance. (How they perform to achieve

results)

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1.Understanding what needs to be done? Critical reasoning? Business know how? Strategic Capability

2.Getting the job done? Achievement and drive?A proactive approach?Flexibility?Persuasion? Influence?Control

3.Taking people with you?Motivation?Interpersonal skills?Concern for output? Persuasion?Influence

Capability: The things that people do effectively. These are measur-

able in terms of results.

In order to analyze Competence, we need to ask:

?What are the components of this job??What does the jobholder have to do??What is an acceptable level of performance??What levels and types of knowledge is required to ensure

capability??How will job holders and managers know that required levels of

performance have been achieved?

In short, competence is what you do, what you know, how you

do it to perform effectively.

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When analyzing Competency, we need to consider:?How do people in this role behave when carrying out their job

effectively??How do they behave when they are ineffective?

Identifying the differentiating behaviors one can identify the

criteria for effectiveness. Other useful measures arise from Critical

Incident Technique.

How we explore?What happened??Why??Why did you make the decisions you did??What did you do subsequently??How did you feel before and after the incident?

An effective performance management system aligns

individual performance with the organization mission, vision and

objectives. I.e. Getting better results from individuals, teams and the

organization as a whole within agreed goals, objectives and standards.Performance management exists to establish a culture where

individuals and groups take responsibility for continuous performance

improvement of business processes and the development of their own

skills and contributions.

?Here managers clarify what they want?Individuals and groups communicate what they should be able to

do?How they should be managed?The levels of support and resources that they will require.

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WHAT IS 360 DEGREE FEEDBACK?

360 Degree Feedback is a system or process in which

employees receive confidential, anonymous feedback from the people

who work around them. This typically includes the employee's

manager, peers, and direct reports. A mixture of about eight to twelve

people fill out an anonymous online feedback form that asks questions

covering a broad range of workplace competencies. The feedback

forms include questions that are measured on a rating scale and also

ask raters to provide written comments. The person receiving

feedback also fills out a self-rating survey that includes the same

survey questions that others receive in their forms.

Managers and leaders within organizations use 360 feedback

surveys to get a better understanding of their strengths and

weaknesses. The 360 feedback system automatically tabulates the

results and presents them in a format that helps the feedback recipient

create a development plan. Individual responses are always combined

with responses from other people in the same rater category (e.g. peer,

direct report) in order to preserve anonymity and to give the employee

a clear picture of his/her greatest overall strengths and weaknesses. 360 Feedback can also be a useful development tool for people who

are not in a management role. Strictly speaking, a "non-manager" 360

assessment is not measuring feedback from 360 degrees since there

are no direct reports, but the same principles still apply. 360 Feedback

for non-managers is useful to help people be more effective in their

current roles, and also to help them understand what areas they should

focus on if they want to move into a management role.

How is 360 Degree Feedback Used? Companies typically use a 360 feedback system in one of two ways:

?360 Feedback as a Development Tool to help employees

recognize strengths and weaknesses and become more effective

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When done properly, 360 is highly effective as a development

tool. The feedback process gives people an opportunity to provide

anonymous feedback to a coworker that they might otherwise be

uncomfortable giving. Feedback recipients gain insight into how

others perceive them and have an opportunity to adjust behaviors and

develop skills that will enable them to excel at their jobs.

�360 Feedback as a Performance Appraisal Tool to measure

employee

Performance Using a 360 degree feedback system for Performance

Appraisal is a common practice, but not always a good idea. It is

difficult to properly structure a 360 feedback process that creates an

atmosphere of trust when you use 360 evaluations to measure

performance. Moreover, 360 feedback focuses on behaviors and

competencies more than on basic skills, job requirements, and

performance objectives. These things are most appropriately

addressed by an employee and his/her manager as part of an annual

review and performance appraisal process. It is certainly possible and

can be beneficial to incorporate 360 feedback into a larger

performance management process, but only with clear

communication on how the 360 feedback will be used.

What a 360 Feedback Survey Measures:?360 feedback measures behaviors and competencies

?360 assessments provide feedback on how others perceive an

employee

?360 feedback addresses skills such as listening, planning, and

goal-setting

?A 360 evaluation focuses on subjective areas such as teamwork,

character, and leadership effectiveness.

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What 360 Feedback Surveys do not assess:?360 feedback is not a way to measure employee performance

objectives (MBOs)

?360 feedback is not a way to determine whether an employee is

meeting basic job requirements

?360 feedback is not focused on basic technical or job-specific

skills

?360 feedback should not be used to measure strictly objective

things such as attendance, sales quotas, etc.

Advantages & Disadvantages of 360 Degree FeedbackCompanies have attempted to improve employee performance

evaluations in the 21st century by expanding feedback to include

peers, subordinates, and internal and external customers, along with

conventional supervisor evaluations, according to the Business

Dictionary definition of 360 degree feedback. This feedback

mechanism gets its name from the all-around feedback on

competence-based performance. Like any evaluation tool, the 360

degree feedback has common advantages and disadvantages.

Advantages:-

? Organization¡According to Star 360 Feedback, "360-degree feedback has

the greatest impact when used to evaluate and improve the

performance of whole organizations." Companies can use

data collected on feedback programs to monitor consistent

patterns or areas of weakness for employees within the

organization. According to the site, organizations develop

more effective training programs targeted at collecting

common areas of weakness for employees throughout the

organization or in specific departments.

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� Individual Growth¡From an individual perspective, an all-around feedback

mechanism helps employees see whether a consistency exists

in the way their performance is viewed by more than just the

manager. "Individuals receive specific information that

allows them to understand how others perceive them," notes

Star 360 Feedback.Some employees are bothered when they

feel unfairly critiqued by managers who may often have little

direct interaction with them. Hearing feedback directly from

colleagues and customers in a safe, anonymous way may help

the employee buy in to the reality of the information.

Disadvantages:-

? Dishonest Feedback

¡In his "360 Degree Feedback" article on the site Amazing

Results, registered psychologist Roland Nagel points out

that one commonly noted disadvantages of 360 degree

feedback is that employees may not feel comfortable

offering honest feedback of supervisors. This same dilemma

could exist in employee-to-employee evaluations. Without

an anonymous system, backlash from supervisors or

retaliation from colleagues could limit workers' willingness

to share true feelings in the feedback process.

�Consistent Interpretation

¡Another major challenge in the 360 degree feedback process

cited by Nagel is the reality that "as each rater sees a different

behavior, how do we know the basis upon which the ratings

are observed?"

Nagel's point is that different employees interact in different ways

with the person being reviewed. Subordinates observe different

behaviors in a supervisor than that supervisor's same-level colleagues

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and his managers. Additionally, customers have a different

perspective on an employee's behaviors.

While, you can gain insight on perceptions of the employee

from all around, a consistent interpretation of positive or negative

behaviors is challenging.

Performance Development Review (PDR)

What is PDR?

The Performance Development Review (PDR) is an opportunity to:?Review the past year, identifying successes and problems

?Plan for the future, taking into consideration the objectives of the

College or Professional Service

?Identify learning and development opportunities.

Benefits of PDR for the Individual?A formal opportunity to review progress and plan for future

activity and development

?An exchange of experience and feedback at both personal and

professional levels

?Clarification of roles and responsibilities

?Opportunity to suggest improvements and changes

?A formal record of experience and learning over time.

Benefits of PDR for the College/Professional Service/Team?Improved communications

?Identification and pursuit of common goals

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?Better planning for learning and development on an individual,

College/Professional Service or University-wide basis.

Performance review skillsPerformance management is well established in most

companies and yet 'doing it' is surprisingly unpopular with managers

and employees alike. Managers say it's hard work and bureaucratic.

Employees say 'it's a pain' and 'a waste of time'.

To manage performance effectively you must be able to

communicate. Done well, the exercise builds confidence, renews

enthusiasm and generates trust. Done poorly, it de-motivates and

destroys.

HR professionals must ensure that they possess the necessary

communication skills to undertake performance appraisals as well as

ensuring that they are able to train and develop line mangers to do the

same for the performance appraisals of their own direct reports.

The key skills required for performance management are

rather obvious, and for that reason generally underrated and

underdeveloped.

?Understanding others ?Asking questions ?Listening ?Giving feedback ?

Some managers will possess and use these skills naturally, just

as some people are naturally better athletes than others. But with

practice and training even the least active of us can learn the necessary

skills and improve performance.

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?Understanding others To the receiver this is often the most easily recognised skill. We

have all felt the empathy of a sensitive teacher or friend and been

struck by it's absence in a boss. Ask Phil's team about his management

style and they'll tell you that they rarely feel praised (or feel other

people are praised), rewarded or recognised.

We are not talking about managers going all mushy, taking on

another's emotions and trying to please everyone. That would make

decisions impossible, damage credibility and result in the kind of

trouble Martin gets into with employees like James. The key skill here

is to recognise employees feelings and take that information into the

decision making on performance.

?Asking questions

I hear – I forget I see – I remember I do – I understand' Confucius

A review is an opportunity to raise awareness about

performance, both good and not so good, so that that

performance can be improved and/ or changed in the future.

The structure of most reviews means that learning by 'doing'

isn't practical so the skilled use of questioning is our best

alternative to aid the learning process.

Telling is a great way of passing on information but is not as

effective at generating commitment and can even generate

resistance. The best reviews happen when a manager moves

from a model of 'I talk – you listen' to 'I ask – I listen – we

discuss'

Asking a question automatically causes us to look for an

answer. By posing a question a manager shifts the focus of the

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conversation and draws the receiver's attention to something

they may not have been consciously aware.

Specific questions (i.e. closed or leading) force the receiver to

come up the answer the questioner is looking for, leaving little

choice. Asking closed questions saves people from having to

think. In performance review this is the manager as 'expert' –

font of all knowledge- but may leave the receiver feeling

manipulated. Using open and/ or clean questions the receiver

has to find and answer for himself or herself. By finding the

answer themselves people become more resourceful,

confident and committed.

?Listening To be listened to, really listened to is a powerful and

empowering experience. People get more confident when they

are listened to; they feel safer, more secure, valued. Most

people don't listen at a very deep level. Day to day pre-

occupations get in the way and focus on what is said, or more

likely on what they believe is said. Deep listening is focusing

not just on what is said but what is felt and done, and in the

hidden meanings of language and behaviour.

?Giving feedback The cornerstone of most reviews, effective feedback:

?Engages the receivers thinking ?Generates ownership ?Uses descriptive not judgmental language (and avoids

defensiveness in the receiver) ?Covers both the result as well as the action/process ?Enables the performer to do something ?Works for the performer not the giver ?Builds self-esteem ?Is specific

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Generating high quality relevant feedback from within the

individual is the key to learning and improvement in a performance

review. The worst feedback is personal and judgemental, whether

3600 or not. There are 4 levels of feedback:

1. Unspecified Criticism E.g. “You're useless”

As feedback it contains nothing helpful and its impact is on

self-esteem and confidence. It is likely to make future performance

even worse.

2 Judgmental E.g. “This work is useless”

Directed at the work not the person it also damages the

performance self-esteem, though less badly. Provides no information

on which the receiver can act to correct it.

3 Information E.g. “The content of your work was clear, but the layout and

presentation were too complicated for its target readership”

Avoids criticism and provides some information on which to act but in

insufficient detail and without ownership.

4 Ownership E.g. “How do you feel about the work?”

Creates ownership but may lead to a non-committal response

or value judgement “its ok” or “fine”. It's useful as an opener but needs

to be followed with specific questions.

E.g. “What is the purpose of the work?”“To what extent does it meet its objectives?”“What other points need to be emphasized?”

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Detailed questioning raises awareness and enables self-

evaluation so that he/she takes responsibility for performance and the

assessment of it.

COACHING VS COUNSELLING

The difference between coaching and counselling arises

frequently. Vanessa has attempted to explain and distinguish the

differences between coaching and counselling:

Both counseling and coaching, when properly done, will

provide you with value and results. However, these two have different

purposes and different methods and are dissimilar regarding at least

the following aspects:1.Motivation: coaching clients choose to work with a coach because

they want to, not because they need to; the client who goes to see a

counselor is usually trying to fix a problem (a disorder or even an

addiction, maybe both or more of them) – the main reason is that this

deficit is impairing to a certain degree his/her normal functioning as an

individual and as a social being by not being able to meet a required

standard of conduct; on the other side, someone would go to coaching

not necessarily for a cure, for a remedy, but for the need for

improvement or excellence in one particular area or in their life as a

whole;

2.Main driver: (or the need to be addressed) is a brake-fix in

counselling and a performance-tuning or performance-upgrading in

coaching;

3.Qualifications: if a therapist is required to have obtained MS or PhD

in Psychology, similar requirements for coaches do not exist, though a

strong set of specific skills are mandatory; a university in Sidney,

Australia is already developing a Coaching Psychology program so

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probably in the future training programs for coaching will increasingly

be developed in academe and will be granted diplomas upon

completion;

4.Power and status in the relationship: unlike the counsellor (who is

supposed to “fix” the client, therefore somehow superior) the coach is

not an expert or a guru of some sort, but a guide, unjudging and equal,

but nevertheless helpful and resourcefull; a coach is needed to posess a

set of skills (and tools) which he/she uses to assist people to set clear

and specific goals that they want to reach in the future, to support them

to achieve their goals and to take control of their professional,

physical, emotional and financial destiny;

5. The spread in time: whereas most often counselling is needs based

and frequently occasional, coaching involves ongoing development

and long-term commitment;

6. The agenda: in therapy the client will follow the steps he would be

required to as part of a specific program chosen or designed by the

counsellor, while in coaching the client sets the agenda;

7. The state of mind: because of the different motivations for stepping

into a counsellor's office or meeting a coach, the mind-set in which one

would approach the session from the very beginning would be quite

different: the client will try to find some comfort, peace and even a

more relaxed state on “the counsellor's coach”, but he will drum up a

lot of energy when being coached, the main idea being that once you

have an unambiguous goal, you need to get-up-and-go and the whole

mindset will be so much more action-oriented.

8. The method: even in behavior modification therapy or in non-

directive counselling, which have lots of common ground with

coaching, there is still enough to differentiate them by: unlike the

counselling, in coaching the focus is always on the step forward and

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taking action, not as much on insight, on self-knowledge in terms of

reflection and getting to understand the reasons behind or the roots of

the client's weaknesses or problems; the first would try to offer you a

better understanding, an explanation of the reasons why you didn't get

the results you wanted, the later would rather focus on how to get them,

on making a plan and following it through, with plenty of motivation

and confidence-building to keep you going and getting what you

planed for.

9. The timeframe: coaching is unlike therapy in that it does not focus

on examining nor diagnosing the past, instead focusing on

encouraging change in a client's current and future behavior;

10. The feed-back: – in counselling you will be frequently advised,

the coach will not advise you nor tell you what to do but rather help you

discover your own goals;

11. The transition process: counselling implies the transition from a

non-functional state to a functional one, while in coaching you would

make the transition from a functional state to an optimum or excellent

one;

12. The solution: the counselor suggests or even provides you a

solution and a path to follow; the coach will assist you in drawing the

path towards the most desirable outcome for you; in coaching the

clients may be seeking solutions, but more often they seek to enhance

their performance (or reach excellence);

13. The results: while is not uncommon to see results very soon after

starting the sessions with a counsellor, it usually takes a quite long

period of time before the healing process really starts producing

visible effects; in coaching tough, because the approach is so action-

oriented, the coachee will start giving up excuses, making changes and

taking real steps forward very soon in the beginning, even right after

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the first couple of sessions;

14. Ownership of the results: when the outcome is not the expected

one (or quite the opposite happens), there is quite often a feeling of

guilt that a counsellor has to deal with, and sometimes (in extreme

cases, like in suicide or other tragic outcomes) that feeling can be very

hard to manage and it can take a long period of time to come to terms

with it, without letting it impair you personally and more likely, your

professional life; there is for sure responsibility in coaching, but the

client owns the results, good or not so much, since the client is in

charge with following through according to the plan and the client is in

control of his own life;

15. Joy and excitement: one will very rarely get out of a couselling

session shouting “I can rule the world! I know how to do it and I know I

can do it”; undoubtedly, one can experience very positive feelings, like

being understood, feeling some relief and being at peace with various

things that happened in the past or with oneself, as a whole being; but

because the main focus in coaching is clearing your goals and

designing your path to them and also because of the ongoing

motivation and confidence building, people many times feel so

empowered, stimulated and clear minded that they do experience a

very pure joy and enthusiasm.

16. The benefits: the counsellor would be the nurse who would

bandage your wounds, the coach would be more like a midwife to your

potential; a counselor will provide you with some sort of remedy,

while a coach will emphasize empowerment, your strength, abilities,

self-confidence and growth.

It's obvious that coaching and counselling are different in

numerous ways, but maybe the most important aspect in general is that

counselling is more reactive, while coaching is more active, even

proactive, since is not only aiming to address problems but also to

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recognize them and to even prevent them from happening.

Those two improvement processes are both so valuable and

they do offer you excellent results when addressing the corresponding

needs, since in peoples' lifelong journey, at different times they need

different support.

PERFORMANCE PROBLEM SOLVING

In a perfect world, everyone on the team gets along and there

are never any problems with performance. Unfortunately, we don't

live in a perfect world. That's even true where I work (shocking, to be

sure).

Yesterday, along with several colleagues, I spent the day with a

delightful consultant, Sue, from Interact Performance. Over the next

twelve months, every manager at AtTask will be going through this

training. My group was the first to start the training (we'll finish up

with another day of instruction next week).

Every day away from work is one day less to accomplish my

goals and objectives, but I enjoyed the discussions and came away

with a different perspective on some foundational skills I had been

taught before. Although I consider myself to be a pretty capable

manager most of the time, I enjoyed looking at some of the things I do

from a different perspective. What's more, the training yesterday will

impact how I interact with my team going forward. Yes, I thought it

was that relevant.

We spent the first half of the day discussing how to effectively

communicate the situation when there is a performance problem. We

identified four foundational principles that are important when

communicating the situation, they are:

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?Be Direct: This doesn't mean abrupt or rude, but avoiding the

problem or beating around the bush doesn't help the situation. I

view it the same way as taking off an band aid. I just rip it off.

Yeah, it hurts, but it doesn't hurt for long. “Jim, we need to talk

about a problem…” The longer it takes to address the issue, the

more difficult and painful it becomes. Be direct.

�Be Specific: It just doesn't make sense to be vague. “Jim, I've

noticed lately that you've failed to update project status on the

last two or three tasks you've completed.” The temptation might

be to try to solve the problem here, but all we need to really do is

identify the problem and give Jim the opportunity to express

himself and offer a solution (I imagine I'll talk more about how

we discussed resolving these problems in future blog posts).

?Be Non-Punishing: “Punishing” might be an awkward word,

but I think the point is to be non-threatening or condescending

when we directly and specifically identify the problem. A

matter-of-fact approach works best. I think it's important that we

assume the best in people. Most people have a reason for why

they do what they do, I think it's important that we listen and

give them an opportunity to respond. When we use a punishing

tone or body language, Jim will immediately get defensive and

we'll usually lose any opportunity we might have to coach or

mentor to improve the behavior.

�Follow Up: Often, once we've addressed a performance

problem, we fail to adequately follow up. “Jim, thanks for your

willingness to stay current on your project status updates. Let's

talk about this again in our next one-on-one and see how things

are improving.” Saying that isn't enough, it's important that in

the next one-on-one meeting with Jim, we actually do follow up

and address any improvement or acknowledge if there is still a

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problem.

At first I thought it was kind of silly to spend so much time

talking about and doing exercises concerning communicating the

situation. I was wrong. Like most things, the first steps are very

important. That applies to how projects are initiated, how the

foundation of home is constructed, and how we address performance

problems on the team.“So, before you can solve the problem, you need to

communicate the situation in a way the other person understands. You

must also describe it in a way that sets a positive tone. Done poorly,

you may create a whole new set of problems.”

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Chapter-5

Setting and clearly communicating performance standards and expectations, observing and providing feedback, and conducting appraisal enables you to achieve the best results through managing employee performance.

To begin the process, you and the employee will collaborate on

the development of performance standards. You will develop a

performance plan that directs the employee's efforts toward achieving

specific results, to support organizational growth as well as the

employee's professional growth. Discuss goals and objectives

throughout the year, providing a framework to ensure employees

achieve results through coaching and mutual feedback. At the end of

the rating period, you will appraise the employee's performance

against existing standards, and establish new goals together for the

next rating period.

As the immediate supervisor, you play an important role; your

closest interaction with the employee occurs at this level.

?Observation and Feedback (Coaching) ?Other Resources ?Performance Appraisal ?Performance Standards ?Training Resources

DEVELOPING AND MAINTAINING PERFORMANCE MANAGEMENT

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1.Observation and Feedback (Coaching)Once performance objectives and standards are established

and clearly communicated, you should observe employees'

performance and provide feedback. You have a responsibility to

recognize and reinforce strong performance by an employee, and

identify and encourage improvement where it is needed. You provide

informal feedback almost every day. By observing and providing detailed feedback, you play a

critical role in the employee's continued success and motivation to

meet your performance expectations. Coaching is a method of strengthening communication

between you and the employee. It helps to shape performance and

increase the likelihood that the employee's results will meet your

expectations. Coaching sessions provide you and the employee the

opportunity to discuss progress toward meeting mutually-established

standards and goals. A coaching session focuses on one or two aspects

of performance, rather than the total review that takes place in a

performance evaluation.

Guiding Principles

Effective coaching can: ?Strengthen communication between you and the employee ?Help the employee attain performance objectives ?Increase employee motivation and commitment ?Maintain and increase the employee's self-esteem ?Provide support

Key Elements of Coaching

To make your coaching session effective, you must understand

the key elements of coaching:

?Coach when you want to focus attention on any specific aspect of

the employee's performance.

DEVELOPING AND MAINTAINING PERFORMANCE .........

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?Observe the employee's work and solicit feedback from others.

?When performance is successful, take the time to understand

why.

?Advise the employee ahead of time on issues to be discussed.

?Discuss alternative solutions.

?Agree on action to be taken.

?Schedule follow-up meeting(s) to measure results.

?Recognize successes and improvements.

?Document key elements of coaching session.

Questions to Consider When Coaching To provide effective feedback you must understand the

elements of performance and analyze marginal performance. Keep

these questions in mind:

?How is the employee expected to perform?

?Does the employee understand these expectations? If not, why

not?

?Does the employee know what successful results look like? How

do you know?

?Does the employee know the performance is marginal? How do

you know?

?Are there obstacles beyond the employee's control? Can you

remove them?

?Has the employee ever performed this task satisfactorily?

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?Is the employee willing and able to learn?

?Does satisfactory performance result in excessive work being

assigned?

?Does unsatisfactory performance result in positive consequences

such as an undesirable task being reassigned?

Coaching Behaviors To make the most of coaching the employee, remember to

practice these coaching behaviors: ?Focus on behavior, not personality.

?Ask the employee for help in problem identification and

resolution. Use active listening to show you understand.

?Set specific goals and maintain communication.

?Use reinforcement techniques to shape behavior.

During the Coaching Session If you conduct a coaching session to provide positive feedback

to the employee, keep the following ideas in mind:

?Describe the positive performance result or work habit using

specific details.

?Solicit your employee's opinion of the same product or behavior.

?Ask the employee to identify elements that contributed to success

(adequate time or resources, support from management or other

employees, the employee's talent and interest in the project).

?Discuss ways in which you and the employee can support

continued positive results.

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?Reinforce for the employee the value of the work and how it fits in

with the mission, vision, values and goals of the work unit or

department.

?Show your appreciation of the positive results and your

confidence that the employee will continue to perform

satisfactorily.

?Document your discussion for the employee's file, as you would

all coaching and counseling sessions, noting day, date, time and

key elements.

When you conduct a coaching session to improve

performance, you may want to use the following format: ?Describe the issue or problem, referring to specific behaviors.

?Involve the employee in the problem-solving process.

?Discuss causes of the problem.

?Identify and write down possible solutions.

?Decide on specific actions to be taken by each of you.

?Agree on a follow-up date.

?Document key elements of the session.

If your coaching session is conducted to address poor work

habits such as continued tardiness, keep these steps in mind:

?Describe in detail the poor work habit observed. ?Say why it concerns you. Tie it to the performance standards and

goals.

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?Ask why it occurred and listen non-judgmentally to the

explanation. Describe the need for change and ask for ideas.

?Discuss each idea and offer your help.

?Agree on specific actions to be taken and set a specific follow-up

date.

?Document results from the session.

Follow-Up Discussion To conduct a follow-up discussion, consider the following steps:

?Review the previous discussion(s).

?Discuss insufficient improvement and ask for reasons why.

?Indicate consequence of continued lack of improvement. (No

threats! This isn't an oral warning.)

?Agree on action to be taken and set a follow-up date, if

appropriate.

?Convey your confidence in the employee.

?Document your discussion.

�Other Resources

?The Performance Management Program

?Relevant personnel policies and collective bargaining

agreements

?UCSF Supervisory Certification Program including "Setting

Performance

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Expectations", and "Coaching for Performance"

?Performance AppraisalThe campus carries out its mission through the individual and

collective contributions of its employees. To do their best, staff

members need to know that those contributions will be

recognized and acknowledged. Overseeing performance and

providing feedback is not an isolated event, but rather an

ongoing process that takes place throughout the year. The

performance appraisal is part of that process, and provides an

excellent opportunity for you to communicate with the

employee about past performance, evaluate the employee's job

satisfaction, and make plans for the employee's future

performance.

Remember that the performance appraisal summarizes the

employee's contributions over the entire appraisal period

(usually one year). It is not a step in the disciplinary process. It

may occur as often as you believe is necessary to acknowledge

the employee for accomplishments and to plan together for

improved performance.

Guiding Principles

The goal of the performance appraisal process is to help the employee

feel: ?Positive about the job ?Motivated to do well and to develop ?Benefited by specific, constructive feedback ?Appreciated for specific contributions ?Informed about current and future performance objectives ?Involved as a participant in the process

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Preparing for the Appraisal Both you and the employee play an important role in creating a

productive performance appraisal process. Here are some suggestions

to get the employee involved:

?Schedule a mutually convenient time and place for the

performance appraisal discussion. Allow enough time and ensure

privacy.

?Explain that you would like the discussion to be a dialog, with

input from both of you included in the final written document.

?Give the employee some options about how to prepare for the

discussion. For example: ¡Ask the employee to prepare a self-evaluation using the

same form you will use for your draft. The employee can

address accomplishments and things that could be done

better. Explain that you will be doing the same and that

you may exchange these documents a few hours before

your meeting

?Give the employee a list of questions to consider to evaluate his

own performance. Sample questions might be: ¡What have been your major accomplishments? ¡What could you have done better? ¡What could I do as your supervisor to help you do your job

better? ¡Would you like to see your responsibilities change? If so,

how?

?Prepare a draft appraisal, making sure you have as much

information as possible, including: ¡job description ¡performance standards ¡previous appraisals

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¡letters of commendation and/or criticism ¡samples of work ¡records of disciplinary action

?Consider the question, What can I do to help the employee do the

job better and achieve developmental goals?

Conducting the Appraisal Discussion Continue the momentum you have established throughout the

year with your ongoing dialog about performance. You want to set the

tone for an open and productive discussion. Here are some steps you

can take to make it as successful as possible:

?Create a supportive environment by stating clearly the purpose of

the discussion. Be as non-threatening and open as possible since

the employee may be tense or uncomfortable.

?Discuss key areas of responsibility and give examples of specific

results. Have the employee go first, based on the self-appraisal or

the questions you provided in advance. Ask lots of questions and

get clarification to make sure you understand the employee's

point of view.

?Discuss what could have been done better. Identify your concerns

and listen to the employee's explanations.

?Ask your employee for help in resolving problems. Focus on

future performance and be sure the employee takes responsibility

for improvement.

?Make sure you and the employee have an understanding the same

understanding of future expectations regarding performance.

?Give positive recognition for performance that reinforces the

goals of the work unit.

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?Discuss the employee's interests and potential new

responsibilities. Discuss both of your roles in achieving new

objectives while maintaining ongoing responsibilities.

?Conclude on a positive note, emphasizing the benefits of your

dialog.

The Final Appraisal Document Record the results of your discussion on the performance

appraisal form. Ask the employee to sign the form, and explain that

this signature acknowledges discussion of the contents, not

necessarily agreement with them. Route to your manager for final

signatures and placement in the employee's departmental personnel

file. Give a copy of the signed appraisal to the employee.

�Performance Standards

Performance expectations are the basis for appraising

employee performance. Written performance standards let

you compare the employee's performance with mutually

understood expectations and minimize ambiguity in providing

feedback.

Having performance standards is not a new concept; standards

exist whether or not they are discussed or put in writing. When

you observe an employee's performance, you usually make a

judgment about whether that performance is acceptable. How

do you decide what's acceptable and what's unacceptable

performance? The answer to this question is the first step in

establishing written standards.

Standards identify a baseline for measuring performance.

From performance standards, supervisors can provide specific

feedback describing the gap between expected and actual

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performance.

Guiding Principles

Effective performance standards: ?Serve as an objective basis for communicating about

performance

?Enable the employee to differentiate between acceptable and

unacceptable results

?Increase job satisfaction because employees know when tasks are

performed well

?Inform new employees of your expectations about job

performance

?Encourage an open and trusting relationship with employees

Key Areas of Responsibility Write performance standards for each key area of

responsibility on the employee's job description. The employee should

participate actively in their development. Standards are usually

established when an assignment is made, and they should be reviewed

if the employee's job description is updated. The discussion of

standards should include the criteria for achieving satisfactory

performance and the proof of performance (methods you will use to

gather information about work performance).

Characteristics of Performance Standards Standards describe the conditions that must exist before the

performance can be rated satisfactory. A performance standard should:

?Be realistic, in other words, attainable by any qualified,

competent, and fully trained person who has the authority and

resources to achieve the desired result

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?Describe the conditions that exist when performance meets

expectations

?Be expressed in terms of quantity, quality, time, cost, effect,

manner of performance, or method of doing

?Be measurable, with specified method(s) of gathering

performance data and measuring performance against standards

Expressing Standards

The terms for expressing performance standards are outlined below:

?Quantity: specifies how much work must be completed within a

certain period of time, e.g., enters 30 enrollments per day.

?Quality: describes how well the work must be accomplished.

Specifies accuracy, precision, appearance, or effectiveness, e.g.,

95% of documents submitted are accepted without revision.

?Timeliness: answers the questions, By when? , How soon? , or

Within what period? , e.g., all work orders completed within five

working days of receipt.

?Effective Use of Resources: used when performance can be

assessed in terms of utilization of resources: money saved, waste

reduced, etc., e.g., the computer handbook project will be

completed with only internal resources.

?Effects of Effort: addresses the ultimate effect to be obtained;

expands statements of effectiveness by using phrases such as: so

that, in order to, or as shown by, e.g., establish inventory levels for

storeroom so that supplies are maintained 100% of the time.

?Manner of Performance: describes conditions in which an

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individual's personal behavior has an effect on performance, e.g.,

assists other employees in the work unit in accomplishing

assignments.

?Method of Performing Assignments: describes requirements;

used when only the officially-prescribed policy, procedure, or

rule for accomplishing the work is acceptable, e.g., 100A Forms

are completed in accordance with established office procedures.

PERFORMANCE MEASUREMENTS

Since one of the characteristics of a performance standard is

that it can be measured, you should identify how and where evidence

about the employee's performance will be gathered. Specifying the

performance measurements when the responsibility is assigned will

help the employee keep track of his progress, as well as helping you in

the future performance discussions.

There are many effective ways to monitor and verify

performance, the most common of which are:

?Direct observation

?Specific work results (tangible evidence that can be reviewed

without the employee being present)

?Reports and records, such as attendance, safety, inventory,

financial records, etc.

?Commendations or constructive or critical comments received

about the employee's work

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APPROACHES TO PERFORMANCE MANAGEMENT TRA-

INING

TrainingPerformance management training complements the

introduction of new or revised performance management systems. A

variety of programs/courses/modules may be necessary to ensure

successful implementation. Training can include business

performance improvement, appraisal techniques, evaluation forms,

discussion and interview methods, objectives, etc.

TRAINING COURSE ALTERNATIVES & TRAINING CONS-

U LTING

?In-House Training or Corporate Training: I n f o r m a t i o n

about the In-house Training or Corporate Training service

where training is conducted specifically for one organization or

groups.

�On-demand training: A new training service that caters for

organizations requiring training for one, two, three or four

people- not enough for in-house training (even a small group).

?Training consulting: explains the range of consulting services

available.

�Training needs Analysis (TNA): explains why training needs

analysis is important and the type of training provided .

�Trainer Training: emphasizes the importance of developing

skills in learning and development - the ability to design and

deliver relevant training programs to employees, staff and

others.

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TRAINING TOPICS

Training topics: links to the subject lists for programs

conducted by Derek Stockley.

Trainer development: explanation of some of the issues and

options for programs to develop skills to train others. Basic, advanced

and specialist training options are explained.

Management development:information about leadership and

management training options.

General training: information about time management/personal

effectiveness, meeting procedure & facilitation, communication,

public speaking, presentation skills, presentation skills

training/coaching, meetings and negotiation training.

Customer service: explanation of customer service training

programs including broader service improvement cultural change

activities.

Human resources: guide to specialist human resources training,

including job search, recruitment and selection, career development

and performance review.

PERFORMANCE MANAGEMENT TRAINING PROGR-

AMMES

Performance management training situations are varied. The

implementation of new or revised schemes often necessitates training. Ongoing training needs also have to be considered, particularly for

new employees or those promoted into team leader or managerial

positions.

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Key staff member training - design/implementation participantsThese involve information sessions on all aspects of

performance management for employees, team leaders and managers

participating in system design or redesign. Often a forerunner to

workshops where the facilitator leads the design and planning process

for the new performance management system.

Employee/staff briefingsFor new or revised performance schemes, briefing sessions for

all participating employees (staff) can answer queries and concerns,

providing a solid foundation for successful implementation.

Performance management content can include the system structure,

corporate rationale, expected benefits, requirements, "how-to"

approaches and the like.

Team leader and manager trainingMore extensive training is required for team leaders and

managers who will conduct the review discussions or interviews. This

can include: identifying and writing performance objectives, adapting

corporate objectives to the individual/team, discussion and

questioning techniques, HR policies (particularly in regard to

compensation, training/education support), handling salary

discussions, equity/legal issues, etc.

Ongoing training and supportEstablishing support materials and training programs so new

employees, team leaders and managers can be trained.

Computer/internet/intranet applications are increasingly being used to

provide "just-in-time" learning programs.

Performance Management Systems DevelopmentAn explanation of performance management systems

development, including the concepts and key features required.

Covers design considerations including the actual performance

appraisal form design and the broader business improvement issues.

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Every business and organization should have a performance

management system. The system's complexity and scope may vary,

but the underlying requirement remains.

Every organization is different. The system should be designed

to meet the unique issues faced, although many systems will have

common elements.

Employee developmentA good performance management system has an employee

development focus. The personal development requirements of

employees and staff members are reviewed and plans are made for

formal and informal learning and training participation.

Salary and compensation reviewIn many organizations, employee compensation (wages,

salary, benefits, etc.) is linked to performance. If this is the case, the

system has to integrate compensation review as part of the overall

process.

Personal performanceMost systems set personal performance objectives and targets

at the start of the review period. These can relate to job tasks, multi-

skilling, responsibility levels, etc. - there are many variables.

Achievement of these objectives can be linked to compensation

review.

Business performance objectives for individuals and teamsSome systems include performance measurement related to

the business objectives and strategy. Relevant corporate goals and

measures are taken directly from corporate strategy documents and

adapted for individuals or teams. These often relate to financial

objectives, market share, sales, etc. Achievement of these objectives

can be linked to compensation review for staff and bonus payments for

teams or groups.

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PERFORMANCE MANAGEMENT SYSTEM DESIGN

Success with performance management systems relies on

good design and implementation.

Many factors need to be considered. They include morale and

organization culture, other HR (human resources) practices and

policies, business competitiveness and market conditions and

employee "readiness" for either a new or a revised performance

system.

New design or redesign?A good performance management system is designed from the

"bottom up" - that is, the organizational context provides the basis for

the framework development.

New systems are easier, i.e. if a performance management

system has not previously operated. There is no negative "baggage".

More often, a redesign is undertaken to overcome problems

that occurred in the previous implementation.

Design or redesign responsibilityIn many organizations, particularly subsidiaries of larger

companies, the system is implemented as a corporate initiative. Local

management and local human resource managers may be charged with

the responsibility for local implementation. Modification to suit local

conditions may or may not be an option.

The better situation is design responsibility established at the

local level based on a corporate framework.

System technologyMany systems are paper based. Others have created a

computerized paperwork system. Others have a technology based

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system, particularly those using 360 degree feedback mechanisms.

Human resource policies/legal frameworkEvery performance management system needs to incorporate

organizational values and statutory requirements, e.g. discrimination

and equity guidelines, etc.

External assistanceManagement and employee involvement in the design/review

of a performance management system is important. Equally important

is "getting it right". The management literature is full of articles about

the failures and problems of performance management

implementations. An external consultant can facilitate the process to

overcome the pitfalls but maintain management and employee

participation, a key factor in achieving "ownership".

PERFORMANCE EVALUATION

What It Is?Performance Evaluation is a tool you can use to help enhance

the efficiency of the work unit. This tool is a means to help ensure that

employees are being utilized effectively. Employees can use it as a

clear indication of what is expected of them before you tell them how

well they are doing, and then as feedback of how well they did.

PurposePerformance Evaluation is a multi-purpose tool used to:

?Measure actual performance against expected performance

?Provide an opportunity for the employee and the supervisor to

exchange ideas and feelings about job performance

?Identify employee training and development needs, and plan for

career growth

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?Identify skills and abilities for purposes of promotion, transfer,

and reduction in force

?Support alignment of organization and employee goals

?Provide the basis for determining eligibility for compensation

adjustments based on merit

?Provide legal protection against lawsuits for wrongful

termination

The primary purpose of Performance Evaluation is to provide

an opportunity for open communication about performance

expectations and feedback. Most employees want feedback to

understand the expectations of their employer and to improve their

own performance for personal satisfaction. They prefer feedback that

is timely and given in a manner that is not threatening.

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?Analyze performance to identify gaps between expected

performance and actual performance

?Analyze the causes of gaps ¡Organization or work environment-related causes¡System or process-related causes¡Personal causes

?Select and design an action plan to close the gaps – a plan that

meets business needs, performance needs, training needs, or

work environment needs

?Implement the plan

?Follow up - Measure and evaluate the impact of the plan on the

performance

?Analyzing Causes of Gaps- Management often assumes

that where actual performance falls short of expected

performance, employees must try harder. However, it is very

important to analyze why a gap exists between expected

performance and actual performance to determine if there is a

cause other than inadequate employee efforts. Most causes will

fall into three categories:

?Organization or Environment-Related – These gaps can stem

from the organizational culture, leadership style or management

practices, organizational structure, reporting relationships or

chain of command, inadequate resources (funds, staff,

equipment, training, information, etc.) and so forth. Some

examples: employee reports to more than one supervisor,

performance expectations were not communicated, or

expectations were not met because the employee was

overburdened due to staff cuts.

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BenefitsMany benefits result from the Performance Evaluation process:

?Control of the work that needs to be done

?Enhancement of employee motivation, commitment, and

productivity

?Identification of goals and objectives for the employee

?Satisfaction of the basic human need for recognition

?Identification of process improvement opportunities

?Identification of employee development opportunities

Steps of Effective Performance Evaluation

¾Review

Look at the previous evaluation for:

?Previous deficiencies in performanceHave they been corrected or do they continue to be a problem?

If deficiencies continue, note them in the evaluation. Omitting a

continued deficiency in subsequent evaluations can be interpreted as a

sign that the deficiency has been corrected.

?Dramatic change in performanceDetermine whether your rating of the employee is consistent or

whether the performance actually has changed. When there is a

significant negative change in performance, the supervisor should

give the employee notice, prior to the annual evaluation, that the next

evaluation will be significantly lower unless substantial improvement

is made.

¾ Analysis

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?System or Process-Related – System or process-related causes

can relate to any process within an organization that becomes a

roadblock to an employee meeting performance expectations.

Some examples: time frames or procedures are burdensome,

procedures conflict, someone else didn't meet their time frames,

or the information reporting system is inadequate.

?Personal – These are gaps that are within the employee's realm of

control. They can, for example, deal with situations that are going

on in home life that affect work performance or depend on the

employee's physical or emotional abilities. Lack of effort,

motivation, or concern for the agency's efficiency can also fall

under this category. Exercise caution when dealing with personal

issues – remember to keep it job related, focusing on how job

performance is affected. If an employee alleges that a medical

condition is the cause of poor performance, contact your human

resource officer or legal counsel at once. Do not attempt to

resolve employees' personal problems.

The cause of a performance gap may overlap a couple

categories. It is imperative that you and your employee communicate

to identify the cause of the gap and arrive at solutions to eliminate or

minimize the gap.

The Evaluation Meeting

Before the performance evaluation meeting:?At least one week in advance, schedule a meeting with the

employee and inform him or her of what to prepare for, i.e. self-

appraisal, etc.

?Complete your review and documentation of the employee's

performance, considering observations, records, and feedback

from others. Focus on what the employee did and didn't do, not

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the employee's character or personality, unless the character or

personality affects job performance and the employee's

effectiveness to the organization.

?Arrange for a private office or room free of distractions for the

meeting.

During the meeting:?Put the employee at ease through informal conversation. This will

enhance the free exchange of information. You can also discuss

the purpose of the meeting and what you hope to accomplish.

?Go through your evaluation. Be specific and candid in presenting

your evaluation. Listen to employee feedback, take notes, and ask

questions.

?Share feedback received from others.

?Explore areas of disagreement and attempt to reach consensus so

that the employee will be motivated to change his or her behavior.

?Discuss areas for improvement and performance expectations for

the next period.

?Establish a realistic and appropriate improvement plan if

performance is below expectations.

?Encourage the employee to record his/her comments about the

evaluation, and have the employee sign the copy to be filed. If the

employee refuses to sign, the agency head or the agency head's

designated representative should, in the presence of the employee

and a witness, indicate on the copy that the employee was shown

the material, was requested to sign acknowledging that the

material was read. By signing the copy, the employee does not

indicate agreement – only that the material has been read.

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?Provide the employee with a copy and place a copy in the

employee's official personnel file.

Strategies and TechniquesNot all performance evaluation methods work equally well in

every organization – one size does not fit all! It is important to consider

the categories of employees to be appraised (i.e. managers Vs non-

managers), the types of jobs performed, the nature of the relationship

between employees and managers, the purpose(s) which the

evaluation is intended to serve. Other factors are the availability of in-

house expertise, developmental costs, and how easy is it to use.

At the core of all successful evaluation formats are clearly

defined and explicitly communicated standards or expectations of

employee performance. Employees must understand what is expected

of them.

You, as a supervisor, should visit with your human resources

officer or a representative from Human Resource Management

Services regarding implementing a strategy or using a technique that

will best serve your needs.

Common Evaluation ErrorsThere are many errors that supervisors unconsciously make

during performance evaluation. A few of the most common are:

?Central Tendency – Rating everyone at or near the middle of the

scale to avoid the need to justify extreme positions.

?Positive/Negative Leniency – Rating higher or lower than the

employee deserves because you want to motivate them to do

better or because you think there is always room for

improvement.

?Halo (or Horns) Effect – A single favorable or unfavorable

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incident colors the evaluator's judgement of the employee's

overall performance.

?Recency Effect – A recent event colors the perception of the

employee's performance for the entire period.

?Similar to Me – The tendency to rate employees similar to

yourself higher and those not similar lower.

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CASE STUDIES

CASE STUDIES

CASE-1

XYZ is a software company, consists of the following 3 departments: �Software Development & Implementation Dept.?Business Development Department.?Service Departments. i.e. Finance, HR & Company affairs.

HRD put in place a corporate strategy aligned performance

management. Though policy framework is sound, pragmatic & well

crafted, the organization is stranded with implementation problems

mainly in anchoring & institutionalizing the system. HRD was alone

made responsible for the execution of the new performance

management & this causes slow & ineffective implementation as the

line mangers like software developers, finance executives were not

actively involved.

Then the management decided to involve all the managers in

institutionalizing the system. All managers made primarily

responsible for pushing the new system.

However, managers are not quite clear how to go about it in

institutionalizing the performance management system.

CASE-2

Designing a performance measurement system: A case study Performance measurement (PM) by means of local

performance indicators (PIs) is developing into performance

management at a company-wide scale. But how should PIs at various

levels in the organization be incorporated into one system that can help

managers, working at levels that range from operational to strategic?

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CASE STUDIES

How do we convince potential users and obtain their support when

starting to develop such a system? How can we aggregate PIs? How do

we present results? This paper addresses these and related questions. It

is based on a case study carried out at the European Operations

department of Nike, a company producing and selling sportswear

worldwide. The study resulted in a prototype system that basically is a

balanced scorecard tailored to the needs of the company. The

empirical findings differ in some ways from the literature on

developing performance measurement systems (PMSs) in Operations.

Discussing these differences provides new theoretical and practical

insights. They relate to the role of parallel initiatives for PM, the role of

standardized metrics, the continuous improvement of PMSs, and the

normalization and aggregation of measures. Our findings suggest that

developing PMSs should to a large extent be understood as a co-

ordination effort rather than a design effort. The lessons learned

cannot have universal validity, but may be helpful in similar kinds of

initiatives.

CASE-3

MANAGING CHANGE THROUGH TRAINING AND DEVE-

LOPMENT

The railway is a vital part of Britain's economy and

infrastructure. More people travel by rail now than since the 1920s,

even though there are 50% fewer rail routes now than in the 1960s.

Every day Network Rail gets three million people to their

destinations. It also moves thousands of tonnes of goods around

Britain. Rail is a 'greener' and safer mode of transport than car so it is

no surprise that passenger numbers have increased by more than 40%

in the past ten years. These numbers are expected to double by 2034.

Network Rail is the business responsible for the tracks, bridges

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CASE STUDIES

and tunnels that make up the British rail network. These, along with

signalling and level crossings, form the railway's infrastructure. Its

responsibility extends to 20,000 miles of track and 40,000 bridges and

tunnels. It also runs 18 of Britain's major rail stations, from Edinburgh

Waverley to London King's Cross.

Network Rail's job is to keep all of these services running both

efficiently and above all safely. Its mission is 'to provide a safe, reliable

and efficient railway fit for the 21st century.’

ChallengesNetwork Rail faced huge challenges when it took on these

responsibilities ten years ago. At the time, the rail network faced a

number of problems. Trains were late, costs were high and there had

been a lack of investment in both people and equipment. These issues

meant that there was low public confidence in the rail network.

Since then, Network Rail has focused on a sustained

programme to bring down costs. New ways of working have reduced

costs by 28%, largely due to economies of scale. Track and equipment

has been renewed and punctuality has risen to over 90%. Major

projects have been delivered on time and to budget, leading to more

public confidence in the service.

Network Rail has changed its focus to 'predict and prevent'

rather than the previous 'find and fix'. This is both more cost-effective

and efficient and helps to avoid delay or disruption to journeys for

passengers. Between 2009 and 2014, Network Rail will have invested

around £12 billion in the rail network. Britain now has the fastest

growing network in Europe. This case study examines the role of

people in improving the rail network and the British economy.

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CASE STUDIES

CASE-4

BUSINESS EXPANSION THROUGH TRAINING AND

DEVELOPMENT

Aldi is a leading retailer with over 8,000 stores worldwide. It

continues to expand in Europe, North America and Australia. The Aldi

brand is associated with value for money. Its stores provide customers

with a wide range of products. There is an emphasis on high quality

products and providing excellent value for customers.

Aldi's slogan is 'spend a little, live a lot'. It works hard to keep

prices low for its customers. The company buys large quantities of

products from carefully selected suppliers. Its buyers are experts who

choose the best quality products at the most competitive prices. The

savings achieved by sourcing products in this way can be passed on to

customers. Aldi keep costs down in other ways. It ensures its

operations are as efficient as possible, for example, store layouts are

kept simple and opening hours focus on the busiest times of the day.

The importance of developing peopleAldi places great importance on how it trains and develops its

employees. Training is the process of providing employees with the

necessary knowledge and skills to perform their tasks and roles

competently. Training not only helps to increase business efficiency

but it can also make staff more motivated by increasing their job

satisfaction.

While training is narrowly focused on helping a company

become efficient and effective in the short term, development is more

about building the long-term capabilities of the workforce. It is about

helping individuals to gain knowledge, learn new skills and develop a

wide range of attributes. Development makes employees more

adaptable and more able to take on a wider range of roles.

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CASE STUDIES

This case study will demonstrate how Aldi's training and development

programmes help ensure its employees have the skills and

competencies that the business requires both now and in the future.

CASE-5

APPRENTICESHIP TRAINING WITHIN THE STEEL

INDUSTRY

Sheffield Forgemasters International Ltd (SFIL) is a steel

producer and engineering company. Based in South Yorkshire, the

heartland of traditional steel production, the company has six

subsidiaries, including operations in America and Europe. It is one of

the biggest private sector employers in the area.

The company manufactures bespoke heavy steel castings and

forgings. SFIL specialises in providing high quality total engineering

packages for its customers. It supplies businesses in many industrial

sectors, with customers in the defence, nuclear, oil and gas

exploration, power generation, marine and construction industries.

Engineering is a highly skilled and specialised profession so

SFIL needs well-trained employees. SFIL offers employees industry-

leading training courses that are tailored to its own needs. It has been

running a highly acclaimed apprenticeship programme since 2005.

The company invests £1 million a year into this programme. It allows

the company to supply its next generation of skilled workers, trained to

its own high standards. Apprentices will form the future backbone of

the business. Some apprentices have progressed to supervisory and

managerial positions. As Graham Honeyman, SFIL's Chief Executive,

explains:

'Our commitment to apprenticeships is evidenced by them

gaining permanent positions and rewarding salaries from day one.’

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CASE STUDIES

ApprenticeshipsApplicants to the programme are usually aged between 16 and

24 years old. This allows SFIL to train young people in the

'Forgemasters Way' and to benefit from government funding.

Apprentices are trained in all areas of the business. They do a variety of

jobs during their apprenticeship and experience the many roles needed

in steel-making and heavy engineering.

The scheme has an excellent reputation. It received the Large

Employer of the Year award at the 2011 National Apprenticeship

Awards. SFIL also features as one of the top 100 apprenticeship

employers in the UK. It is proving attractive for many young people.

As Dan, a 20-yearold apprentice, states:

'I chose this scheme because SFIL has a really good reputation

in my local area and I knew this could lead to a job for life.'

This case study looks in more detail at SFIL's apprenticeship

programme. It draws on the experiences of three current apprentices:

Dan, Kurt and Rebecca. It also considers the broader training

challenge for a modern engineering business such as SFIL

CASE-6

MEETING BUSINESS NEEDS THROUGH TRAINING AND

DEVELOPMENT

ASDA's mission is 'to be Britain's best value retailer exceeding

customer needs, everyday' . This is backed by its purpose - 'to save

everyone money, everyday'. ASDA recognises that these depend on a

commitment always to put customers first in everything ASDA does,

which is achieved through dedicated teams of ASDA colleagues.

ASDA is a private limited company, with its Home Office

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CASE STUDIES

(Head Office) in Leeds. ASDA shares a common culture with its

parent company, the US retailer Walmart and puts value for money at

the heart of its operations. ASDA's beliefs (also known as values) are

lived and communicated to all colleagues and reflected in everything

the business does.

ASDA is always at the heart of the community, often with

many generations of a family working at the same store. ASDA also

supports a strong corporate social responsibility (CSR) ethos. This is

shown through its employment and career opportunities in

communities, its support for customers through low prices, as well as

charity activities and health initiatives.

ASDA is recognised nationally for its low prices and warm and

friendly service. The business has over 500 stores across the UK and

Northern Ireland, including large Supercentres and Superstores as

well as smaller supermarkets found in towns and suburbs. ASDA has

seen significant expansion over the last few years. As well as offering

food and general merchandise, ASDA has diversified into optical and

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CASE STUDIES

pharmaceutical services, as well as mobile phone and financial

services, with more categories launched each year.

There are 25 ASDA Living stores for non-food merchandise,

two Home Shopping stores supporting the online shopping service

and 27 Distribution centres. The George brand overtook Marks and

Spencer in 2009 to become the UK's leading fashion retailer by

volume. ASDA's customer base has increased through its online

services, www.asda.com and ASDA Direct. ASDA's training and

development programmes help its colleagues and managers to grow to

meet these challenges.

Equal opportunitiesASDA is an equal opportunities employer. It supports young

people with careers in retail, for example, its 'Flying the Flag'

programme offers work experience at ASDA for young people for one

or two weeks each year.

Each store 'adopts' two local secondary schools to encourage

young people to consider a career in retail. Each store has a

Community Colleague that works in the local community. He or she

regularly visits schools to talk about the retail sector and their own

experiences of working at ASDA, as well as the varied and numerous

career options available. The company provides development

opportunities to enable ASDA colleagues to reach their potential,

whether as a manager in store or taking a place in the boardroom,

regardless of their starting point.

ASDA employs over 170,000 colleagues and rewards long

service. It focuses on developing an accessible 'family' atmosphere in

the stores. This provides a platform for long-term careers as colleagues

develop within the business. Around 80% of ASDA managers began

their careers in its stores.

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CASE STUDIES

CASE-7

HOW TRAINING AND DEVELOPMENT SUPPORTS BUSI-

NESS GROWTH

Tesco is the largest British retailer and is also the world's third

largest grocery retailer with outlets across Europe, USA and Asia. The

business began in 1919 with one man, Jack Cohen, selling groceries

from a stall in the East End of London. Jack bought surplus stocks of

tea from a company called T.E. Stockwell. T.E. Stockwell and Cohen

combined their names to brand the tea Cohen originally sold TESCO

tea. In 1929, the first Tesco store opened in north London.

Tesco has expanded since then by a combination of acquisition

of new stores, retail services and by adapting to the needs of

consumers. Tesco has net profits (before tax) of around £3 billion.

Tesco's primary aim is 'to serve the customer'. Keeping existing

customers happy is important, as they are more likely to return. This is

more cost effective for the business than acquiring new ones.

In the UK Tesco now has over 2,200 stores ranging from the

large Extra hypermarket style stores to small Tesco Express high street

outlets. Tesco's original product range of grocery and general

merchandise has diversified to include banking, insurance services,

electrical goods as well as telephone equipment and airtime.

This move towards 'one stop shopping' means customers can

meet all their purchasing needs from one place. Tesco has also

expanded its customer base through its Tesco.com website which

attracts one million regular users.

As the company has grown, so has its workforce. From one

man and a stall, Tesco now has approximately 280,000 employees in

the UK and over 460,000 worldwide. To serve its widening markets it

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CASE STUDIES

needs flexible and well-trained staff that can recognise the needs of the

customer.

Tesco's employees work in a wide range of roles in both store

and non-store functions, such as:

?Customer Assistants on the shop floor either directly assisting

customers or preparing orders for delivery to customers who have

ordered online

?Department Managers leading a team of Customer Assistants

?Warehouse employees who help catalogue and store clothing,

food or brown goods in Tesco Distribution Centres or in stores

?Office-based staff working in a range of functions at Head Office,

including Finance, Purchasing, Personnel or Marketing

?Logistics staff who plan and carry out the distribution of products

to stores.

Tesco recognises that increasing knowledge, improving skills

and job satisfaction of employees are all vital to the continued growth

of the company.This case study looks at how Tesco provides training and

developmentopportunities for its employees.

CASE-8

DEVELOPING PEOPLE THROUGH TRAINING-A FORES-

TRY COMMISSION CASE STUDY

The Forestry Commission is a government department,

making it a public sector organisation. Its mission is 'to protect and

expand Britain's forests and woodlands and increase their value to

society and the environment '.

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CASE STUDIES

It is Britain's largest land manager and is responsible for some

of the UK's most spectacular landscapes. Over the last 20 years it has

expanded Britain's woods by an area more than three times the size of

Greater London.

However, that is not the whole story. The Commission's 3,000

staff also:?manage forestry land owned by the government, including

15,000 miles of roads and 2,300 bridges

?support and regulate the use of privately-owned forests and

woodlands

?plant and renew forests

?restore landscapes

?develop open forestry spaces to provide forest walks, concert

venues, bike trails and even wind farm sites

?help to protect Britain's trees from pests and diseases

?contribute to wealth generation by providing jobs and selling

products. For every £1,000 raised from timber and forestry,

another £3,000 is generated to the UK economy from associated

products and services, for example, tourism, paper and food

?represent the UK at international forest-related talks and

negotiations.

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CASE STUDIES

The Forestry Commission has always placed operating in a

'green' manner top of its agenda. It balances four related needs: people,

nature, environment, economy.

The Forestry Commission takes a long-term view about how it

can help create a better environment for everyone in this country. For

example, forests:

?if sustainably managed, provide many benefits. The Forestry

Commission ensures its forests are sustainably managed and

encourages private owners to do so too

?provide extremely low carbon sources of energy and fuel

?provide the lowest energy consuming and carbon-emitting

building materials available

?help to absorb carbon emissions from other industrial activities

?provide a micro-climate for many species of insects and animals

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CASE STUDIES

for example, oak trees support more than 600 species of plants

and animals

?provide recreational outdoor spaces that contribute to healthy

lifestyles. Over 50 million visitors each year to Forestry

Commission sites generate more than £2 billion in revenue

?create employment within the forestry and other industries, such

as construction, tourism and engineering.

The case study will show how training and development is

central to the work of the Forestry Commission and how it benefits the

career development of its people.

It will particularly highlight the work of Julie McMorran, a

civil engineer with the Forestry Commission, for whom training and

development has provided the springboard to promotion.

CASE-9

TRAINING AND DEVELOPMENT AS A STRATEGY FOR

GROWTH

Siemens is a leading technology business and one of the largest

electrical and electronics engineering companies in the world. In the

UK, it employs over 20,000 people and is in the top three electrical and

electronics companies in the world.It has been a pioneer in innovation since 1843 when Siemens installed

the first street light in Godalming, Surrey. In 2006, Siemens UK

invested over £74.4 million on research and development.The company designs and manufactures products and services for

both industrial customers and consumers. It operates in three main

sectors:

?In industry, Siemens develops systems for transport, for example,

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CASE STUDIES

London”s traffic monitoring for its congestion charge scheme. It

is also the second largest provider of trains for major UK rail

companies like FirstGroup. Siemens also provides lighting and

electrical systems for major construction projects.

?In energy, Siemens' work is wide-ranging. It makes systems for

transmitting and distributing power for power companies

including building power stations and wind farms. It also

provides energy metering services, for example, water meters for

businesses and consumers.

?In healthcare, it specialises in equipment to help medical

diagnosis, such as MRI scanners and imaging technology. It also

provides equipment for testing blood in laboratories.

Siemens' technology appears in every aspect of everyday life, for

example:

?the electronic 'eye' (Hawk Eye) helps umpires in tennis and

cricket matches

?9 out of 10 cars contain Siemens products

?20,000 domestic products like toasters are used in homes every

day

?systems such as Pelican crossings keep people safe. Car parking

systems help guide traffic quickly to free spaces, keeping traffic

moving and reducing pollution on the roads

To keep its world-leading position and grow in a competitive

environment, Siemens aims to deliver quality products and services.

To do this, it needs people with first class levels of skill, knowledge

and capability in engineering, IT and business.

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CASE STUDIES

The size and varied nature of its business means that Siemens

requires many different types of people to fill a wide range of roles

across the company. These include skilled factory workers, trade

apprenticeships, designers and managers.

This case study explores how Siemens manages its ongoing

need for skills through training and development.

CASE-10

THE ROLE OF TRAINING AND DEVELOPMENT IN CAR-

EER PROGRESSION

As an Organisation develops, it creates working practices

within the business that reflect its way of doing things. These practices

become embedded in decisions and operations. The way of doing

things guides and influences employees as they carry out their work.

However, when organisations develop a new business strategy this

creates a process of change. This leads to different ways of working.

Company background

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CASE STUDIES

With more than 120 years of heritage, Marks & Spencer is one

of the best-known British retailers. The company has more than 450

stores within the UK and employs more than 65,000 people. It also

operates outside the UK where it has a developing business in places

as far afield as Hong Kong.In recent years, the UK's retailing industry

has been characterised by intense competition. Customers are more

aware of where and how they want to shop. They also know what sort

of shopping experience they require. This has made it much more

difficult for retailers to survive.

Facing the challengesThe result was that Marks & Spencer had to develop a new

business strategy. This created a period of change for the whole

organisation. The period of change involved refocusing the business

upon the basics. This included the three business values of Quality,

Value, and Service.

Marks & Spencer developed a promotional campaign that

emphasised 'Your M&S'. This helped the company to connect

customers with the heritage in the business. It also linked the business

in the minds of customers with its two other values of Innovation and

Trust. The process involved three key features:

?developing products that customers wanted?investing in the environment within stores?providing good customer service to look after customers.

These changes have created a business environment with more

challenges for employees. Managers had to prepare employees for

whatever role they would be asked to undertake in this new

environment. The answer was to develop career paths for the

employees.

This case study looks at the processes of training and

development at Marks & Spencer. It shows how this helped employees

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CASE STUDIES

to cope with the challenges they faced and created a career path for

them.

CASE-11

DEVELOPING SKILLS IN A LARGE ORGANISATION

THROUGH TRAINING AND DEVELOPMENT

National Grid is one of the world's largest utilities. It focuses

on the delivery of energy (gas and electricity) safely, reliably,

responsibly and efficiently. The networks include:

?around 4,500 miles of overhead power lines?340 electricity substations?4,300 miles of high pressure gas pipelines?around 80,000 miles of distribution pipes delivering gas to 11

million meters.

The skills of National Grid employees are at the heart of its

success in reaching world-class safety, operating and financial

performance. Many of the company's roles are complex, requiring

both a wide range and depth of skills. Some examples of activities

carried out in various job areas within the company include:

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CASE STUDIES

This case study focuses on how National Grid manages

training and development within the organisation.

CASE-12

DEVELOPING A CAREER PATH IN RETAIL

'Harrods of London' is a British institution. It is probably the

most well-known and respected retail store in the world. For 162

years, Harrods has built its unique reputation supported by its key

brand values – British; Luxury; Innovation; Sensation; Service.

Harrods employs approximately 5,000 people from 86 different

nationalities who deal with up to 100,000 customers a day at peak

times.Harrods needs employees who can face the challenges that its

reputation and standards bring. It needs people who are looking for an

exciting and rewarding long-term career with responsibility and

prospects. Its challenge is to find (and retain) employees with the right

mix of skills and abilities, who can be developed to become the

managers of the future.To achieve this, Harrods has to counter some of the negative

perceptions about working in retail. Working in a shop has

traditionally been seen as low-skilled – with long hours, poor pay and

little chance of promotion. However, because quality is key at

Harrods, employees are well-paid, respected and have clear career

paths open to them. Senior managers at Harrods have come from all

walks of life and started out with various levels of qualifications. All

have benefited from development opportunities provided by the

company.

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CASE STUDIES

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Performance Management Note

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