PERFORMANCE PLANNING & MANAGEMENT SYSTEM

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d e l i v e r i n g p e r f o r m a n c e

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Objective

The purpose of performance evaluation and employee appraisal is to set common objectives, define individual goals and responsibilities, provide information about the level of achievements compared with the goals agreed upon, identify desired behavior, diagnose deficiency of an employee which enables to plan and focus on providing the right training. This leads to individual employee development and in-turn realization of performance objectives of the organization. All the aforementioned have become relevant beyond question today as the need for ensuring successful outcomes of business objectives has increased by several folds.

This is an essential program designed to meet the expectations of both an individual employee and an organization’s performance. This is done by implementing a meaningful systematic process which enables both the managers and their team members to contribute in their respective functions to improve organization’s success at every level.

This handbook is intended to provide a quick overview on performance planning & management covering the aforementioned points. This guide provides step-by-step explanations on the above mentioned points and also offers an easy-to-refer checklist to standardize the activities and procedures

Planning goals & setting expectations

Managing performance by continuous monitoring

Identifying & developing capabilities to perform

Periodic formal reviews

Rewarding performance

This guide deals with:

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Contents

Guidelines for Effective Performance Planning - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 17

Relationship between Core Values, Vision, Mission, Goals, Objectives - - - - - - - - - - - - - - 18

Goals & Objectives Management - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - 18

Working with SMART Goals - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - 20

Why SMART Goals? - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 20

Understanding SMART Goals - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 20

Specific - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 20

Measurable - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 21

Achievable - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 21

Realistic - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 22

Tangible - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 23

What are the types of Objectives - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 23

How does having goals and objectives help? - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 24

How to create a SMART Goal - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 25

Creating Smart Goals using Goals Worksheet - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 26

Adoption of SMART Goals - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 28

Competencies Management - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 29

What are competencies? - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 29

What is competency profiling?- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 29

What is competency map? - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 30

How is competency map developed?- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 30

Connection between Performance Management and Performance Appraisal - - - - - - - - - - - - 07

Approach to Performance Appraisal - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 08

Performance Appraisal for Decision Making - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 09

Significance of Communication in Performance Appraisal - - - - - - - - - - - - - - - - - - - - - - - - - - - - -10

Performance - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 06

Coverage - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 10

Definitions - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 12

Performance Planning - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 17

General Provisions - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 10

Performance & Process Evaluation - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 12

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Why should we do competency profiling for mapping? - - - - - - - - - - - - - - - - - - - - - - - - - 31

What is competency element?- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 32

What is the advantage of competency mapping?- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 33

Why should Competency be assessed?- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 34

How does Competency Profiling & Mapping benefit? - - - - - - - - - - - - - - - - - - - - - - - - - - - 34

Who will do competency profiling?- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -35

Competencies and Behaviorally Anchored Rating Scale (BARS) - - - - - - - - - - - - - - - - - - - 36

Competency Profiling & Employee Development- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 37

Integrating Competencies into Performance Appraisals - - - - - - - - - - - - - - - - - - - - - - - - - - - 37

Advantages of Including Competency Management in Performance Appraisals- - - - - 38

360 Degree Appraisal - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 39

Types of 360 Degree Appraisa - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 39

Purpose of 360 Degree Appraisal - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -40

Integrating SMART Goals & Competency Assessment in Performance Appraisal - - - - - - - 40

Performance Appraisal for Bridging Performance Gaps- - - - - - - - - - - - - - - - - - - - - - - - - - - - 42

Performance Appraisal for Decision Making- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -40

Goals/Objective setting - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 43

Employee/Manager prepares performance plan - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -44

Setting –up Employee Specific Performance Plan - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -44

Managing Performance - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 45

Continuous Feedback - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 46

Continuous Feedback and Organizations culture- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -47

Monitoring Performance - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 48

Performance Monitoring and Continuous Feedback - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -50

Tracking Progress of Goals/Objectives- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 51

Employee’s preparation for Performance Appraisal. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 51

Individual Development Plan (IDP): - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 54

Why IDP? -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -55

Who requires IDP? -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 55

When to initiate IDP? - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 55

What to Focus on when developing an IDP? - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 55

IDP process. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -56

Who is responsible for developing IDP?- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -57

What are Employee’s Responsibilities? - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -57

What is Primary Manager or Appraiser’s Responsibilities?- - - - - - - - - - - - - - - - - - - - - - - -58

What activities cover under developmental activities?- - - - - - - - - - - - - - - - - - - - - - - - - - -58

What is HR Responsibilities? - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -59

What IDP should not be used fo - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -59

IDP Metrics

Linking Performance Reviews to Training & Development - - - - - - - - - - - 52

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Performance Improvement Plan (PIP) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 61

What is Performance Improvement Plan? - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 61

Who requires PIP? - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 61

Why does an employee require PIP?- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 62

Outcomes of PIP? - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 62

PIP Process? - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 63

When to Initiate PIP?- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 64

How much of specific time frame or period is required to be provided? - - - - - - - - - - - 64

What is Primary Manager or Appraiser’s Responsibilities? - - - - - - - - - - - - - - - - - - - - - - 64

What the Primary Manager Should Do?- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 65

What the Primary Manager Should Avoid Doing?- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 65

What is Employees Responsibilities? - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 67

What is HR Responsibilities?- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 67

What are the outcomes of a PIP?- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 68

PIP Metrics - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 68

Employee Reward Systems - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 69

Guiding Principles to Rewards and Recognitions - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 68

Compensation is directly proportional to accomplishment - - - - - - - - - - - - - - - - - - - - - - 69

Rewards should support desired behavior- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 70

Rewards should tie passion and purpose - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 70

Instantly Reward to Reinforce desired behavior - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 70

Merits & Pitfalls - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 71

Monetary - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 71

Merit pay or Differential pay for performance - - - - - - - - - - - - - - - - - - - - - - - - - - - - 71

Performance Incentives- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 72

Variable Pay or Organization Performance Bonus - - - - - - - - - - - - - - - - - - - - - - - - - 73

Team or Work-unit Bonus - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 73

Pay for Performance & Base Pay - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 73

Advantages of linking compensation to performance- - - - - - - - - - - - - - - - - - - - - - - - - - 75

Creating a Performance Pay Culture - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 75

Merit Promotions - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 75

How Performance Appraisals help in Promotion Decisions - - - - - - - - - - - - - - - - - - 76

Reassignments -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 76

Performance Awards- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 77

Purpose of Recognition System - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 77

Linking Performance Reviews to Reward and Recognition Systems - - - - 68

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Performance Management

Performance management aims at identifying, measuring, managing and developing the performance of the most important component in any organization – The Human Capital. A robust performance management system facilitates candid communication around organizational goals, individual goals and expectations and establishes responsibility & accountability. All of which aligns an employee’s day-to-day activities.

Employee Performance Appraisal is an essential component to

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Connection between Performance Management and Performance Appraisal

Performance appraisal is the vital component of Performance Management. In the traditional system performance appraisal was a rigid, subjective & once a year review/assessment of performance against predefined performance standards. This made the process backward looking and therefore was considered ineffective.

With the evolution of Performance Management, the approach and perspective of performance appraisal has had a paradigm shift. It is now the strategic linkage connecting different isolated processes components to facilitate bilateral dialogue for feedback and increase source of ideas for potential solutions.

Performance appraisal is now considered as an ongoing and continuous process to observe behavior, identify gaps, communicate action plans, monitor progress to provide feedback for course corrections and improve focus on goals and employee engagement. Therefore the success of performance management vests on having a solid concrete performance appraisal process.

Approach to Performance Appraisal

systematically measure, evaluate and improve individual employee performance to achieve the organizations’ goals.

Performance Appraisal is now the keystone for effectiveness of the Performance Management & Talent Management Strategy of every organization. It plays a crucial role in:

Identifying Capabilities of Existing Talents through the use of

structured reviews

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Establishing Talent needs of future recruits

Establishing Training Plans

Create positive impact on employees job performance

Establishing Personnel Policies

Transparent & honest bilateral communication

Identifying & Breaking down goals into Department, Team and

Individual Goals and communicating them effectively

Ensure Shared understanding of where we are and what is required

to improve

Encourage individual performance

Establishing simple & clear performance plans that ensures issues

are resolved

Continuous Feedback that provides direction, drives focus &

coaching to achieve solutions and values

Focus on development

The approach to Performance appraisalshould focus on

Performance appraisal

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Performance Appraisal for Decision Making

This figure illustrates how an effective feedback mechanism can influence perception and impact status quo. For example, an organization’s mission & vision determines the objectives which can influence an individual employee’s goals and performance standards. At the same time it can also impact the employee’s development plans.

Employee challenges, Employee T&D plans and job analysis information can be gathered only through rigorous feedback & evaluation process which involves:

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These can play a significant role in understanding the problem early before it manifests into serious issues. These inputs can help the management take tough but necessary decisions.

A robust performance management system would consider a fluidic performance appraisal process central to its objectives that focus on decision making for deliverance of desired behavior.

One of the primary reasons to have performance appraisal is to create an opportunity for communication. All of us know intuitively that success of communication vest on it being bilateral. Few of the advantages of having a transparent & honest bilateral communication are;

Information gathered from relevant data points

Information collected from informal communication

Common weakness identification and its enumeration

Let know the perception and belief about ones contribution and

performance

Unearth issues that inhibit performance and requires to be fixed

Unearth issues that requires remedy and prevention

Other factors like – training need, requirement of a tool etc.,

Understand conflicts in thoughts in workgroups

Significance of Communication in Performance Appraisal

a. Performance evaluation aims at objective measurement. Employee performance appraisal includes both objective and subjective assessment of how well an employee performed during the period of review. The appraisal system should be individualized objective

General Provisions

towards meeting organizational goals, subjective, qualitative and oriented towards problem solving.

b. Performance will be rated for each element covered under different Sections of Goals, Competencies & Others reflected in the appraisal form. These elements or attributes should clearly specify the objective and its measure of standard.

c. The results of performance appraisal is used as the basis for determining & granting Performance Awards, Trainings, Job Rotation, Reassigning, Probation Confirmation, Promotion, Demotion, Compensation Revisions, Retaining & Removing employees.

d. The appraisal period is the one-year period coinciding with the financial cycle. In case of changes the same would be notified establishing and defining an alternate appraisal cycle.

e. As deemed appropriate by the Department Head, appraisal cycles can be created for performance evaluation for his Department Team Members. There is no restrictions w.r.t creation of the appraisal cycles. Example “Weekly, Fortnightly, Monthly, Quarterly, Half-yearly or Annual etc.,

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Performance & Process Evaluation

Definitions

Managers & above will periodically evaluate their team members for their effectiveness and provide them with critical feedback to improve their focus and efficiency.

Typically indicates all those who are currently on

the company payroll.

The Human Resource Team in coordination with the Department Heads will analyze & evaluate the performance appraisal process and recommend modifications as necessary.

Active Employees:

Typically indicates those who are Retired, Laid-Off

and Voluntary & Involuntary terminated staff.

Inactive employees:

Refers to the process of evaluation and providing feedback

to the appraisee.

Appraisal:

Refers to the specific dates that mark the beginning

and end of an appraisal period.

Appraisal Cycle:

The specific period for which performance will be

reviewed and the feedback will be published.

Appraisal Period:

Refers to the immediate supervisor or manager who is

involved in review of progress towards goals and competencies of his

team member and provides his developmental feedback.

Appraiser:

Refer to the person who reviews and approves the

rating and recommendation provided by the appraiser. He/she is

usually the Department Head or the HR.

Approval Official:

Refers to the employee who is being reviewed and

appraised about his performance.

Appraisee:

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Refers to the person who performs some of tasks of the

Primary Manager. They can be assigned to any team member. They act

as Mentor or as Project Manager and on case-to-case basis will be able

to provide their appraisal and also have access to employee details like

Skills, Competencies, Development Needs, Work History and

Experience.

Co-Manager:

Refers to behaviors demonstrated when performing

ones function or task by applying a related set of skills, knowledge,

ability and experience one has acquired to successfully achieve the

desired outcome in a defined work setting.

Competencies:

Refer to the building blocks of competencies

and indicates the major skills required to carry out a task.

Competency Elements:

Refers to the process of identifying and initiating

actions to close performance gaps. They can be broadly classified as:

Development Plan:

Refers to a catalogue i.e. a collection of

observable and demonstrable skills, behavior and attitude that

collectively defines the capabilities required to perform successfully in

each and every job role or function in an organization.

Competency Library:

Refers to the process of identification of

competencies required to successfully perform a particular job

function or undertake a set of tasks as required by that job function at

a given time.

Competency Mapping:

Refers to the systematic process of assessing

to identify whether an employee possesses the required knowledge,

skills, attitudes and behaviors required to be successful in a particular

job function or fulfil a task. This involves assessment of position profile

and employee profile.

Competency Profiling:

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This addresses skill gaps which impede

achievement of goals.

Needs Improvement:

This addresses opportunities which can be provided

to an employee to enhance job-related skills and performance.

Enhance Skills:`

This addresses opportunities to explore and

provide career advancement through cross-training or mentoring.

Career Advancement:

These are broad generic statements depicting the end result or

the final outcomes which incorporates everything one must

accomplish.

Goals:

Refers to a systematic approach to

develop competencies and bridge skill gaps with a vision to improve

performance in present role and prepare an employee for new

responsibilities arising due to either job rotation or promotion.

Individual Development Plan:

Refers to the person to whom the employee

reports for all administrative purposes. He reports directly to him. An

employee can have only one Primary Manager.

Primary Manager:

Refers to all recorded parameters or attributes

(goals, competencies and other critical elements) and standards that

identify expected performance for an individual employee and for the

organization and the action plans to meet the objectives. An employee

would be evaluated against his/her performance plan.

Performance Plan:

Refers to the duties and tasks that must be carried out

by a particular job position.

Job Function:

Refers to the weightage average rating. Overall Score:

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Refers to the set of knowledge,

skills, behavioral characteristics and stated objectives which are

critically required to fulfil the job functions and for accomplishment of

individual and organizational goals. These are associated with the job

function and the job position.

Performance Attributes/Criterion:

Refers to the results expected of a job

function and provides the benchmark against which to evaluate work

performance.

Performance Expectation:

Is a systematic process of measuring the

difference between the present status of goals and the actually

planned goals.

Performance Gap:

Refers to the scale used to rate various performance

attributes.

Rating Scale:

Refers to the definition used for scoring each of

the performance attribute an employee is reviewed for.

Rating guidelines:

IRefers to a systematic approach to

develop competencies and bridge skill gaps with a view to improve

performance in present role.

Performance Improvement Plan:

Refers to the process of developing

performance expectations, developing goals & objectives and identify

performance attributes applicable for the positon being appraised.

Performance Planning:

Refers to performance thresholds(s),

requirement(s) and expectation(s) that must be met. It includes factors

like Quality, Quantity, and Timelines etc. The job requirement dictates

the performance standard. They can include recurring & non-recurring

goals which can be modified / adjusted as the job changes.

Performance Standard:

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Refers to the person who reviews the feedback provided

by the appraiser. He can also be the Approval Official.

Reviewer:

Refers to all the persons who provide their

performance feedback to the appraisee.

Review Group:

Refers to the person to whom the Primary

Manager of an employee reports to.

Skip Level Manager:

Refers to the process of goal setting which encourages

in identifying objectives and establishing them in a manner that they

are Specific, Measurable, Assignable, Relevant and Tangible to ensure

successful outcomes.

SMART Goals:

Refers to a multi-rater feedback system where

an individual is assessed by a number of assessors including Primary

Manager, Co-Manager, Peers, Direct Reporters and Customers both

Internal & External. that they are Specific, Measurable, Assignable,

Relevant and Tangible to ensure successful outcomes.

360 Degree Feedback:

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It is the underlying beliefs, principle and standards for

which one stands for. Values are the personal characteristics which are

stable and can be displayed in how one behaves.

Core Values:

Is the concise statement which is clear & comprehensive in

providing the big picture of where we want to be and what we want to

achieve. These are created to provide us the direction and purpose and

both are strong motivators. They are usually long term and of strategic

importance.

Vision:

Performance reviews and management is an ongoing process and are critical components of performance planning, review and development both organizational and employee. This involves both the employee and his manager and requires them to create an employee-manager relationship to identify common goals and link it with higher organizational goals. While performance reviews helps in assessment of the progress towards the goals; performance management helps to emphasize achievement of the goals by developing action plans to overcome deficiencies.

Guidelines for Effective Performance Planning

Before we get into performance planning and its management we have to broadly understand these terminologies and the relationships that exist between them.

Relationship between Core Values, Vision,Mission, Goals, Objectives

PERFORMANCE PLANNING

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Is a general but a direct action statement on how one will

achieve the vision. The mission statements are often modified over a

period of time to calibrate the progress towards the vision. They are

more tactical and short term.

Mission:

These are the stepping stones to make the vision or mission

a reality. They deal with what needs to be accomplished and helps in

creating action plans which enhance one’s conviction behind an idea

and motivates them to pursue it. Another crucial factor is goal setting

that enables to track and monitor milestones which are critical for

measuring the actual progress towards achieving the vision.

Goals:

These are structured and specific plans which enable

one to achieve the goals. Developing or Creating statements around Core Values, Vision &

Mission helps organizations to create shared perspective about what is

important and demonstrate behaviors in-line with it and speak about:

Answers to these questions also provide people with an identity which

helps them to get involved and essentially makes them think and to live

up to that identity. This improves agreements over decision making.

The words goals & objectives are often confused and used

Objectives:

Who are We

What are we doing

Why are we doing

How are we doing it

when will be get there

Relationship between Core Values, Vision,Mission, Goals, Objectives

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interchangeably. Both describe what is required to be achieved or in

other terms define what an individual employee or the organization is

trying to achieve, but relative terms are different concepts; they are

related, yet separate.

Because goals are broad and not necessarily clearly outlined or

measurable, objectives act as a great tool for executing the goals. As is

evident in the table above they are used at different stages of business

planning.

As can be derived from the comparison above and as it has been said,

“Goals without Objectives can never be achieved and Objectives

without Goals will never get you where you want to be”.

Effective goals and objectives management ensures employees

understand how their contribution is linked to overall success of the

organization.

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S.M.A.R.T is an acronym provided by George T. Doran to organize Goals

& Objectives which helps to channelize efforts to improve chances of

success. This is the most popular goals-setting technique. It prompts

people to act with clarity from the goal setting stage that are Specific,

Measurable, Assignable, Relevant and Tangible.

Working with SMART Goals

S.M.A.R.T Goals helps to clearly define goals (where we want to be) &

objectives (the steps needed to get there) as we set them thus

reducing the risk of creating abstract or vague goals which is most

likely not to going to be achieved. SMART goals are meant to be

targets that are realistic for an employee to achieve. These are written

using verbs like plan, produce etc., they are meant to provide guidance

and help an employee maintain focus on what matters most among a

plethora of tasks performed by him or her. Once the goals have been

set it is easy to refer them and update progress towards achieving

them.

Why SMART Goals?

S.M.A.R.T goals are most popular because they are not just easy to

understand but also because it establishes clarity w.r.t what needs to

be done and when. Let’s start with:

Understanding SMART Goals

A specific goal or a target has a much greater chance of

accomplishment. This defines what is expected to be done.. Greater

detailing ensures clarity and avoids generality and ambiguity. To set a

Specific

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This provides the criteria for measuring achievements and maintain

track towards progress of the established goals. This deals with stated

measures like quality, quantity, timeliness, cost etc. This enables

experience a sense of satisfaction on reaching key milestones as per

planned schedules towards the progress of the goals. This requires

answering the following “H”:

Measurable

This enables to plan and remain action-oriented by channelizing one’s

strength, efforts and requesting for support as and when required.

While considering if a goal is actionable and achievable when

assigning, it is also necessary to consider the employees total set of

Achievable

specific goal the following “W” requires answers:

As can be noticed, the answer to the “W” provides clarity & direction to

the employees enhancing focus and engagement.

Who– Who is involved or who will do it?

What – What are the possible constraints, what is required to be

accomplished, what milestones are required to be met along the

way and what quality standards to be achieved?

Why – Purpose & benefit of accomplishing the goal/objective

When – Time frame within which the task or goal is required to be

achieved or completed.

Which - Resources required to overcome the obstacles or

constraints

H – How much is to be achieved?

H – How success will be determined?

H – How will I and others know what has been accomplished?

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This refers to the state of result for it to be relevant and to be able to

achieve within the given resources. This requires answers for the

following “R”:

It is essential for the goals to be relevant, realistic and rewarding as

they induce a sense of acceptance, willingness to participate and

motivate to work.

Realistic

goals and the employee’s authority and capability. If the goals assigned

to an employee is more than he is capable of the chances of its

completion cannot be expected. This requires answers for:

The time & effort required

Resources required and a grounding commitment to provide the

same

Relevant Knowledge, Skills & Competencies

Recognize or identify what have to be done to the create

conditions to achieve the goal – in other words how the objective

have to be accomplished, this may include resources, capabilities

required etc.

Relevant – Alignment with the organization’s mission, vision,

values and principles, how important is it to undertake an objective

as it would be one of the key factors for diversion of the resources

to display a grounding commitment to help the team member in his

efforts on completion of the goal. Wherever possible it will be

appropriate to link the goal to a higher departmental goal to ensure

that the employee understands how his action contributes to the

achievement of the organizational goal.

Rewarding – To feel a sense of accomplishment when able to

complete within the established time frame

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Goals are the most direct means of understanding the expectations

and what is required to be delivered. They should be set in such a way

that it provides clarity and should gain and incorporate feedback in

planning on “how to get close to and deliver the expectations”. It is

essential for the goals to be tangible to improve the chances of it

becoming specific, measurable and achievable.

Tangible

From the above we can infer, there are two types of objectives

incorporated into goals to measure performance; Process Objective &

Outcome Objective

Process Objective: This makes an employee accountable for

completing all the activities. This provides the platform to measure

participation, interaction and activities.

What are the types of Objectives

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Goals and objectives provide motivation and remind an employee on

what is required to be achieved. A clearly specified goal helps to:

It is not always mandatory that a goal should contain a numerical

measurement; few objectives can be setup to improve knowledge,

skills or attitude (competencies). These are called Impact Objectives

which are written to describe the degree of expectation. They should

be described in a manner which invokes a general consensus as to its

meaning.

How does having goals and objectives help?

An effective goal setting process starts with an analysis of all aspects

of the goals including the reason for pursuing a goal. The foremost

consideration is to ensure that the set Goals provide shared

understanding of the expectations and removes subjectivity out of the

goal setting process. The following critical elements are required to be

considered:

Outcome Objectives: This makes an employee responsible for the

outcome of the results for the work done.

How to create a SMART Goal

Create perspective of what is required to be achieved

Maintain focus

Establish Priorities

Improve Performance

Achieve satisfaction in job

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Goals and objectives provide motivation and remind an employee on

what is required to be achieved. A clearly specified goal helps to:

It is not always mandatory that a goal should contain a numerical

measurement; few objectives can be setup to improve knowledge,

skills or attitude (competencies). These are called Impact Objectives

which are written to describe the degree of expectation. They should

be described in a manner which invokes a general consensus as to its

meaning.

How does having goals and objectives help?

An effective goal setting process starts with an analysis of all aspects

of the goals including the reason for pursuing a goal. The foremost

consideration is to ensure that the set Goals provide shared

understanding of the expectations and removes subjectivity out of the

goal setting process. The following critical elements are required to be

considered:

Outcome Objectives: This makes an employee responsible for the

outcome of the results for the work done.

How to create a SMART Goal

Create perspective of what is required to be achieved

Maintain focus

Establish Priorities

Improve Performance

Achieve satisfaction in job

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Goals are the stepping stones to convert the vision into reality. It is

therefore essential to get to as much detailing as possible to avoid

confusion, ambiguity and frustration. At the same time it provides

direction and enables one to create action plans and processes to

accomplish the objectives. This also enhances one’s conviction behind

the idea and motivates them to pursue the goal. Another crucial factor

is goal setting that enables to track and monitor milestones which are

Creating Smart Goals using Goals Worksheet

Goal Description: Clearly specifies the goal.

Intended Result or Performance outcome: Clearly specifies what

is expected and clarifies the steps or activities.

Measure or criteria: Clearly specifies the levels of performance,

which may include quality, quantity, timeliness etc.,

Bottlenecks: Clearly specifies the anticipated bottlenecks, which

enables to plan ahead of time to overcome the same to ensure the

objectives are accomplished.

Resources: Clearly specifies the identified resources that are

responsible to support the cause of efforts to ensure objectives are

met.

Performance Outcome

Measure or criteria

Conditions

Conditions: Clearly specifies the constraints and its alignment with

the organizational vision, mission, values and principles. There are

essentially three elements which qualifies a goal into a SMART Goal.

They are:

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critical for measuring the actual progress towards achieving the vision.

The illustration below is an example of creating a goal from the

organization’s vision.

Goals and Objectives are clearly stated

Responsibility and accountability is defined, ownership is ensured

Logically arrived goals sound reasonable and achievable and are

easily accepted

Improves participation in the goal setting process

Performance reviews become objective and meaningful

By setting goals as illustrated above, the following are achieved:

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One of the major reasons to adopt SMART Goals is its focus on

outcomes or results and is easy for the employee to clearly understand

the expectation w.r.t the levels of contribution to the organization’s

success.

SMART Goals are developed in a consultative approach with the

employees focusing on the outcomes but it essentially enables one to

plan the steps or activities required to be completed, to ensure

accomplishment of the goals. This improves participation,

self-evaluation and provides the employees an opportunity to grow

Adoption of SMART Goals

Progress towards vision can be tracked as milestones are discerned

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Competencies Management

What are competencies?Competencies are often defined as behaviors demonstrated when

performing ones function or task by applying a related set of skills,

knowledge, ability and experience one has acquired to successfully

achieve the desired outcome in a defined work setting.

What is competency profiling?Competency profiling is the systematic process of identifying and

defining the knowledge, skills, attitudes and behaviors required to

fulfil a task. This process leads to the creation of competency

The fact that competencies are modelled around behavior, enables to

initiate conversations around what people do, how it adds value and

what they need to do to enhance their ability in terms of training which

would improve and increase productivity and also for their career

progression.

As can be inferred from all the above mentioned, competency is more

than skills, includes knowledge and experience, can be linked or

mapped with performance in a given job function and is something

which can be continuously improved.

Competencies also serve the purpose of skill standardization on the

levels of knowledge, experience and abilities needed to perform

successfully in a particular job function. In addition to this they also

serve the purpose of providing guidelines to easily relate, identify and

establish levels of performance expected or demonstrated by an

employee. During performance appraisals it helps to differentiate an

exceptional performer from an average performer.

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Competency maps are prepared specific for each industry taking into

consideration the organization’s strategic purpose, specific job

functions and roles and map it to individual employees.

What is competency map?

It is done by conducting a job analysis by breaking down the job into its

constituent tasks or activities to identify the competencies and

categorize them into individual and workplace competencies.

How is competency map developed?

dictionary specific to organizations which provide the foundation for

recruitment and selection strategies.

Individual competency: deals with Employee background

Technical competency: demonstration of specialised

knowledge, skills and experience in the relevant function - Know

Personal Effectiveness Competency

Practical competency – demonstrate application of

relevant knowledge to contribute positively – Know how

Professional competency – demonstrate values like

Continuous learning, receptive to feedback etc.,

Social competency – demonstrate ability to build organic

productive relationships – builds harmonious relationships

with colleagues and customers.

Workplace Competencies: deals with employee attitude - latent

capacity

Adaptability

Result Orientation

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Competency profiling for mapping enables an existing employee to

specifically know what knowledge, skill and behavior is required. They

are also used to achieve various objectives as given below:

Competency profiling for mapping enables an existing employee to

specifically know what knowledge, skill and behavior is required. They

are also used to achieve various objectives as given below:

This process enables to identify competencies across different job

functions in an organization, categorize and cluster them as per its

relevance to the categories and sub categories which provides a

structural view and improves possibilities of its use as tools for various

applications in the organization’s context.

Why should we do competency profiling for mapping?

Identify responsibility, provide clarity to establish accountability

It plays a vital role in defining job description, its key functions &

formulating guidelines for selection & recruitment of the right

candidates ensuring organizational fit.

It helps to set clear performance expectations to ensure employee

success in a given job functions.

It helps conduct performance evaluation based on behaviors

displayed or not displayed.

Provides a precise roadmap for employee development w.r.t

performance.

Helps to evaluate competency gaps and identify an individual’s and

groups training needs for development.

Plays a vital role in differentiating performance; develop growth

plans & retention strategies.

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Competency elements refer to the building blocks of competency and indicate the major skills required to carry out a task. Typically competency elements are the description of:

What is competency element?

These can be used to clearly communicate and establish performance expectations in a job function.

Competency elements for recruitment purposes would additionally

include:

Competency Name: Customer Orientation & Service Focus

Competency Definition: Understands customer needs and

demonstrates concerns for satisfying requirements and

expectations.

Competency description or behavior:

Recognizes customer requirements and acts on present issues.

Is conversant with contingency plans and acts quickly at times of

crisis by drawing appropriate resources with experience to

quickly address the situation.

Takes action to address the situation and to capitalize the

opportunity. Looks for ways to deliver greater results or add

value.

Is able to identify challenges which can turn into potential

problems and responds quickly to solve them and improve

situation.

Is able to anticipate concerns and take actions to improve

satisfaction. He coaches others and gets them involved in

Technical Competency: This includes educational credentials and

experience

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There are several advantages to this; let’s examine it from the

perspective of 3 main stake holders

What is the advantage of competency mapping?

Workplace Competency: Demonstration of adaptability & result

orientation

Competencies provide clarity and shared understanding w.r.t criticality

of what skills, what knowledge and which behavior is demonstrated

has a greater chance of successful outcomes. This provides direction to

an employee to apply those criteria’s. It also provides them with an

opportunity to introspect in cases of performance deficiencies and

aspire for work towards achieving higher levels of productivity.

Why should Competency be assessed?

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It enables managers to observe, have objective discussions by being specific in cases of performance deficiencies and suggest methods to improve performance and productivity. It enables to create a balance between what is done and how it was done, which takes care of organization’s strategy and long term plans.

Competency Profiling essentially involves two critical components, Position Profiling & Employee Profiling

How does Competency Profiling & Mappingbenefit?

Competency mapping serves a number of purposes:

Competency profiling provides insights into:

Helps maintain a catalogue of competencies for future planning

Helps provide Role Clarity

Sets measurable benchmarks for developing and evaluating

performance

Ensures agreement on performance criteria

Position Profiling: Deals with the Knowledge, Skills, Experience,

Attitude, Behavior etc.

Employee Profiling: Deals with the assessment of position profiling

relative to employee to identify the degree of fit. This in other words is

the gap analysis for the employee against the position requirements.

Competency ratio: When correlated with position competencies

indicates if the person is fit to function in a particular role

Company average on each competencies: If found low, is a

confirmation of training needs to catch-up with the position

requirements.

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Everyone in the organization who is directly involved in assisting an employee to undertake tasks and perform in his job role. This is the appraisal process.

Who will do competency profiling?

BARS provide broad definition for the competencies and concise statement for different levels of performance. They help minimize subjectivity during assessment. It provides both the employees and their managers with the yardstick to use during performance assessment. They can be easily aligned with the rating scales to make the assessment relevant and to improve reliability. During performance appraisal period makes it easy for the managers to observe behavior within each of the key competency elements to emphasize and reinforce the desired behavior.

Competencies and Behaviorally Anchored Rating Scale (BARS)

Perform Competency-Gap analysis

Helps conduct training needs analysis and develop training plans

Plan Job rotation for skills enhancements & learning experience

Succession planning and promotions

Streamline Recruitment process both external and internal

90° - Employee and his Manager

180° - Employee, his manager & Peers

360° Internal - Employee, his manager, peers & Subordinates

360° Full - Employee, his manager, peers, subordinates and

customers

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Integrating competencies into training provides valuable system for employees to improve in areas where development needs have been identified. The same model can be used for employee development w.r.t career progression. This would require all employees to focus on competencies for both performance management and professional development. Competency profiling provides the foundation for employee development and kicks start IDP.

Competency Profiling & Employee Development

Performance management involves more than performance measurement i.e., goal setting and year-end review of achievements. Individual Performance apart from market uncertainties, competition and volatilities are also impacted by competencies.

Integrating competencies into performance appraisals facilitates discussions on how the tasks were performed and the opportunity can

Integrating Competencies into Performance Appraisals

Emphasizes importance of competencies:

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It enables employees to align easily with the desired behavior’s in their pursuit of key goals and objectives to be accomplished. It enables organizations to reinforce desired behavior’s which can lead to exceptional levels of performance.It enables organizations to measure how a goal/objective was accomplished apart from just considering what was accomplished.

be used effectively for assisting the employees to understand how performance could be enhanced. This is apart from having a discussion on what was accomplished.

Advantages of Including Competency Management in Performance Appraisals

VIncreases employee Input or efforts

A competency model encourages employee engagement and focusses on goals. It can immunise organization’s productivity from volatile external conditions. For example, rewards or an incentive system is focused on the output or the results and there is no evidence of its link or impact on results in a weak market condition. On the other hand a competency-based assessment focuses on superior levels of inputs or efforts by an employee which has the potential to substantially influence results even in a weak market condition.

Recognition & Rewards : Focus is on “How” of the results and not “What” of the results. This motivates employees to work hard to improve and enhance their competencies which invariably end in better results and better organizational performance. This enables organizations to plan merit pay and merit promotions. Because the focus is on building competencies and enhancing capabilities it helps organizations to build bench strength for future requirements.

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360 Degree Appraisal

Types of 360 Degree Appraisal

This is a systematic process for collection of feedback from a variety of people with whom the employee interacts regularly. The feedbacks are usually collected from the Employee, his Manager, Peers and Subordinates and in few cases even from the Customers and focuses on competencies and behavior’s.

360 Degree Appraisal is primarily focused on Knowledge, Skills and Behavior of an employee and helps to determine how an employee undertakes and completes his task and his ability to be effective in his job function in a dynamic environment.

This is considered to be a comprehensive and reliable system because the combined responses enable to easily identify and determine the strengths and weaknesses of an employee. The results are difficult to ignore because the perspectives comes from different sources which actually is the perception due to the behavior and attitude displayed by the employee during his interaction.

There are two types of 360 Degree Appraisal:

360 Deg. Internal: This involves Self-Feedback, Manager Feedback,

Peer Feedback and Subordinate Feedback

360 Deg. Full: This process apart from those involved in 360 Deg.

Internal also involves the customers of the employee.

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Purpose of 360 Degree AppraisalOrganizations use 360 Degree Appraisal for two reasons

Performance Appraisal: In the event of this process being used/applied in Performance appraisal or reviews, its applicability is restricted to evaluation and perspectives on competencies and behavior only and not for measuring the progress towards the performance objectives or for assessing if the employee is meeting the threshold job requirements.

Development Tool: When used as a development tool, it helps assess an employee’s effectiveness across a wide range of behavior, attitude and competencies. For example; Leadership Skills, Communication, Interpersonal Relationship, Attitude towards others, Time Management etc., As can be noticed the assessments are focused on traits and attributes which improves personal and social effectiveness and not on the technical skills. From the organizations perspective this process can be used to measure employee satisfaction.

This is an effective tool as it provides the individual an opportunity to improve effectiveness by adjusting behavior after gaining insights into how and what other feel and perceive about them. The best part

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Integrating SMART Goals & Competency Assessment in Performance AppraisalA robust Performance planning system involves integrating two

key elements:

Objectives: The goal’s statements are derived from the strategic business plan, which is further broken down to department, unit and individual goals to ensure responsibility and accountability. The focus is on the job requirements’ outcome, the basic skills required and the key actions that are linked to the accomplishment of the goals.

Competencies: `These are derived from the organizations’ mission & vision, which is then further narrowed down to department or unit and job specific behavior. The focus is on what is required to do the job, how the job has to be done (key behaviors) and the ability to make an impact on the outcomes or results.

Evaluation of employees on results and their behavior opens up the space to analyze employee strengths and plan methods to enhance capabilities in order to close gaps. This invariably means integrating goals & competencies in performance appraisal enables to implement, support and promote the third crucial element and dimension for organizations i.e. Employee Development. Employee development benchmarks the process and its related outcomes.

This enhances and provides the depth to initiate a robust performance management strategy that is comprehensive.

when used as a development tool is the opportunity to provide anonymous feedback which encourages the review group members to be honest and provide direct feedback. At the same time this approach benefits the employee with feedbacks which he might otherwise not have received due to fear of negative repercussions.

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Performance management requires a multi-faceted approach which apart from the above would require and involve aspects like recruitment and selection, HR policies and trainings also. The first significant step towards this is to integrate assessment of both goals & competencies; focus on the outcomes and also on how well a job was done. Importantly this approach encourages a greater sense of ownership and commitment from both the organizations and the employees.

Overall a robust performance management practice is the process of integrating - Goals Statements and Key Actions that are required for successful outcomes to improve performance benchmark and organizations’ effectiveness.

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Performance Appraisal for Bridging Performance GapsA performance appraisal process starts with the establishment of the goals and objectives at the start of the year for the employee that are aligned with the strategic business plan and the competencies along-with the organizations’ vision, mission and values. Failure to meet few objectives will be revealed by evaluation of the critical competencies for that positon and by evaluation of the results would reveal the bottle necks or constraints. Focusing on common constraint list which includes both competency deficiencies and constraints with respect to tools and resources would help to create a support system for improvements in those areas and enhance possibilities of achieving the organizations’ objectives.

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Goals/Objective setting Manager is to setup an appointment with the employee for the goal setting meeting.

Performance Appraisals provide insights, identify and manage high impact areas by establishing feedback loops. This helps to make evidence based informed and intelligent decisions to prioritize plans and actions to achieve the desired outcomes. The following steps are involved in making informed and intelligent decisions:

This process enables one to get organized, analyze data meaningfully and plan actions to uncover the employee potential to achieve desired results.

Collection of data

Creating Constraint List and mapping it to priority areas

Plan and implement actions to overcome the constraints

Track progress

Build reports to visualize data

Manager to clearly define the performance expectations w.r.t

Goals, Skills, Behavior and any other critical & non-critical

attributes which warrants assessment and the standards to be

delivered for each Performance Attribute.

The performance standard for each attribute should be

understandable, specific and measurable. It is not always

necessary that it should contain a numerical measurement but

should invoke a general consensus as to its meaning (Impact

Objectives).

Identify key responsibilities of the employee for the upcoming

year, which includes critical tasks, activities and duties, projects

and goals.

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Employee/Manager Prepares Performance`Plan

Setting –up Employee Specific Performance Plan

The performance plan should be prepared in conjunction with the Job Function and Positional responsibility. It should support and be linked to the organizational goals and objectives.

The Performance Plan is a written document which specifies Goals, Competencies, Personal Attributes and other attributes including their performance measures & standards, which would contribute to the employee success in his/her job function. The form may be divided into several sections to categorize the performance attributes.

A quick start to initiate the process would be from the previous year Goals & Objectives (if available).

During the meeting, manager and his team member have to reach an agreement on those specific performance objectives, expectations and the position responsibilities.

Employees prepares their performance plan by setting the goals or

major responsibilities in line with the agreed upon expectations for

performance with their manager in Section1.

Employees include the competencies required to perform their

function satisfactorily in Section2. This should be available in the

job description as performance statements.

Section2 may also include personal attributes that are critical and

affects the job performance.

Section2 can comprise other attributes which would contribute to

the employees’ success in their current position.

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Managing Performance

Managing Performance

There are several major activities or components involved in managing employee performance:

This involves continuous performance monitoring and providing

on-going feedback through coaching and mentoring on a regular

basis throughout the appraisal period.

Day-to-day tracking of employee progress towards achieving

performance expectations

Conducting Interim formal reviews to ensure focus on goals and

objectives to address improvement areas and ensure achievement

of goals.

Conduct year-end performance review and appraisal at the end of

the appraisal cycle.

This involves continuous performance monitoring and providing

on-going feedback through coaching and mentoring on a regular

basis throughout the appraisal period.

Day-to-day tracking of employee progress towards achieving

performance expectations

Conducting Interim formal reviews to ensure focus on goals and

objectives to address improvement areas and ensure achievement

of goals.

Conduct year-end performance review and appraisal at the end of

the appraisal cycle.

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Continuous FeedbackAn important dimension to managing performance is to plan, act, review and adjust continuously. This continuous review of actions and adjustment of action plans enables to uncover and unleash the complete potential of the employees and enhances the possibility of accomplishment of the goals.

The advantage of this model is that it breaks down the barriers to communication which is unlike as observed in the ritualistic annual performance reviews. The disadvantage of the annual performance reviews is that it provides static data which doesn’t allow to reflect the impact of implementation of a change. Continuous Feedback enables to have continuous snapshots of the progress which improves the process of tracking and measuring progress towards the objectives. It helps to create action plans based on the present situational assessment which ensures continuous progress and development to accomplish the objectives. This model encourages ongoing continuous bilateral communication between an employee and his manager. This increases the levels of interaction and

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Few of the notable advantages of this model are:

and attention, which improves proximity between the managers and their team member which enhances trust, collaboration and creativity.

Enables to improve the process of tracking, and measuring

progress towards the objectives which helps to create action plans

to ensure continuous progress and development.

Enables to continuously assess and gain an understanding on the

strength and weakness of an employee, which provides an

opportunity to coach and mentor to reinforce focus, gain skills and

desired behavior.

Because feedbacks are instant, based on the observations; it is easy

for the receipt to quickly relate and adapt to the situation.

Enables the feedback provider to remain objective while providing

his feedback and implement changes quickly whenever required to

manage expectations.

Understand the constraints and the landscape in which

performance is expected to be delivered.

Enables to quickly observe what is working and what is not and

leverage and fine tune what’s working to ensure desired outcomes.

Enables to quickly acknowledge the work environment and fix

issues or course correct to address the issues quickly before it goes

out of control.

Creates an environment where there is mutual agreement on

performance.

Enables incremental improvement across the entire performance

management cycle.

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Interaction between employees and leaders is an essential mechanism to create solutions. Small organizations have short lines of communication. However, in a large organization which is also spread across multiple geographies have too many layers of communication which creates a void in the channel of communication. Continuous feedback enables to bridge this void and can be effectively used to create informal channels of communications to interact and improve participation of employees. Because each observation is discussed at the time of its occurrence, enables to guide, nurture and develop team members and also creates a portfolio of events or critical incident log. This incident log enables to maintain the link between the job requirements, what is evaluated and the expectation which improves focus and productivity and at the same time identify, quantify and prioritize the risks which enable development of appropriate plans. These plans act as a guide to manage the current risks effectively and also in the advent of a repeat occurrence in the future. This “Critical Incident Diary” can be referred to during the performance appraisal to eliminate recency error enabling both the manager and his team members to provide accurate feedbacks and remain objective which improves trust and cooperation.

Continuous Feedback and Organizationsculture

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Monitoring Performance

Periodic formal performance progress follow-up meetings should take place throughout the year after the initial goal setting meeting. Each employee must receive and should have at least one documented progress review meeting once in every 3 months. This saves time, as it is easier to remember accomplishments and goals achieved also plan improvements needed and focus on the areas for the rest of the year. These meetings provide an opportunity to:

Continuous feedback focuses on development of knowledge, skills, attitude, behavior, empathy, and innovation which improves ones’ ability to work as a team.

Listen to employees’ responses w.r.t challenges and assess Coach

and advice to provide insights about strengths and weaknesses and

where to focus

Provide positive reinforcement and recognize achievements

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Performance Monitoring and Continuous Feedback

Note: Periodic progress meetings are time to discuss formally the employee performance. They are not a substitute for the ad-hoc spontaneous day-to-day feedback and guidance that is provided to an employee to reinforce a desired behavior or address a specific issue.

However, Performance monitoring is essentially not a formal discussion. It is required to be done as an ongoing process for which it can be integrated with continuous feedback to ensure day-to-day active involvement. Continuous feedback is required for improving employee effectiveness, for effective planning and management of the objectives which improves the possibility of accomplishment of the goals. This makes the process agile.

Focus and take corrective actions before they go out of hand

Adjust goal expectations as priorities change to keep pace with the

business needs

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Tracking Progress of Goals/Objectives

Employee’s Preparation for Performance Appraisal

The various methods to keep track of progress towards goals &

objectives are:

Visual observationsAccomplishment logs and notes kept by the employees and the managers based on SMART GoalsWork logs kept by the employeesPeriodic progress review meetings Customer feedbacks

Employee will be appraised at the end of the appraisal period.

Employee updates progress-to-date on goals/responsibilities along with any accomplishments and provides his self-assessment on performance against expectations and how he demonstrated competencies and desired behavior which contributed to his achievements.

Employees are advised to maintain records and notes related to their achievements, initiatives and how it impacted their team. It saves time and accurately assesses levels of performance and productivity.

Take the opportunity to discuss specific issues or constraints if any; and inform the manager about it ahead of the meeting, so he can come prepared.

Skill gaps as perceived and specific skills that you want to work on developing to be more effective.

Short and long range plans and resources required to accomplish them.

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Appraisers Preparation for PerformanceAppraisalThe appraiser will verify the completeness of self-assessment and accuracy of goals achieved and accomplishments before providing his/her feedback.

Revising Performance Plan during the Appraisal CycleA Performance Plan may at times require to be modified during the appraisal cycle due to changes in work assignment or achievement of team objectives or due to the organization environment which renders the plan and standards inappropriate. In such cases again Manager and his team members should get involved in revising or redefining the performance attributes and standards.

Linking Performance Reviews to Training & DevelopmentPerformance Assessment and Training are closely linked to each other and have the same focus. For an organization to achieve its objectives it is essential to train and develop its employees. Training programs for the subsequent year are finalized based on the skill-gap assessment conducted during the appraisal cycle.

In case of 360 degree feedback, appraiser will verify that all the assessors have provided their feedback before providing his assessment.

The performance appraisal discussion should assess the plan with the context of the organizational goals; clarify job requirements and developmental opportunities.

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have made significant contributions towards the organizations’ goals & objectiveshave the potential to make important contributions going aheadwhose performance does not meet the standards established

Performance Appraisal is used as a tool to identify the organizations training needs, set priorities, plan budgets, schedule trainings and at the end of the training evaluate training effectiveness.

The foregoing provides an opportunity and enables both the organization as-well-as the individuals to draw up Personal Development Plans for their own long & short term development.

Performance appraisal plays an important role in Human Resource

Planning. It helps to identify individuals who:

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Individual Development Plan (IDP)

Individual Development Plan (IDP)

IDP is an effective tool to develop workforce to meet future needs.

It is the road map for an employee’s career development that

specifies:

Competencies that is required to improve performance in present role and to prepare for new responsibilities arising due to either job rotation or promotion (immediate and long range development needs)Estimate and identify the resource(s) and coach/mentor required Directs the Appraiser to guide development and evaluate the progress towards established objectivesHelps the Line Manager & HR Team to schedule and manage employee’s development

Employees Benefits:

Enhanced KnowledgeEnhanced skillsEnhanced experiencePrepares for future job function changes

IDP is a win-win strategy for both the employees and the organization. It’s a personalized action plan for every employee jointly agreed by the employees and their managers, which identifies both immediate and long-term career plan of an employee and is stitched to the Organizations’ mission and objectives. It identifies training and experience needs that benefit both an employee and the organization.

This collectively helps them achieve both professional and individual goals.

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Organizations Benefits:

Improved Employee CapabilityBetter HR PlanningHigher employee morale contributes to higher levels of productivity

The Performance AppraisalTraining Needs AnalysisCareer Development PlansCore competencies required to align with the career plansTime frame within which the competencies are required to be developed and demonstrated to plan & develop the IDP for an employee.

Who requires IDP?Any employee who is required to improve and develop existing and additional competencies to help him/her prepare for new responsibilities arising due to either job rotation or promotion will require IDP.

When to initiate IDP?IDP can be prepared at the end of the annual appraisal cycle for those employees who require it. It can be initiated any time after the employee requiring IDP has been identified. However, timing will play an important factor as it involves taking into account a combination of the:

What to focus on while developing an IDP?The key to take a balanced approach, weighing both on the employee and the organizations needs focusing on:

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IDP process:

Leveraging an employee’s strength Providing new knowledge and skills that will help an employee perform betterIdentifying immediate and long-range goals, determining development objectives and activities to achieve themShould be allowed for development on unused or underdeveloped competencies

Counselling employees, concerning career development and opportunitiesAssurance on systematic development and encouraging itDiscuss critical skill requirements and job responsibilitiesEstablish the knowledge and skills required to perform the jobEvaluate current competencies and Identify skill gaps and development needsCreate an action plan with schedule and resources required to develop specific competenciesPeriodically evaluate training effectivenessPeriodically review to track progress towards the development needs

This process involves similar activities like mentioned earlier in the performance plan:

Note: Managers who promote the use of IDP conveys a clear message that they view professional development as a priority.

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Who is responsible for developing IDP?

List down strengths to carry out specific tasks or dutiesList down weaknesses to carry out specific tasks or dutiesUnderstand what managerial or technical competencies are required to perform satisfactorily and improve performance in current position w.r.t those specific tasksExpress desire to undertake certain responsibilities or assignments which aligns with professional growth aspiration

Both the primary manager and an employee are responsible for developing the IDP. Both are expected to work in lockstep and systematically to meet/fulfil the IDP objective. The authority to approve performance attributes are given to the primary manager as he is responsible for performance improvement.

What are Employee’s Responsibilities?Evaluate past performances, job description, performance attribues and standards to introspect to determine:

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What is Primary Manager or Appraiser’s Responsibilities?

What activities cover under developmental activities?

What are HR Responsibilities?

The Primary Manager is expected to play different roles:

Coach: Provide insights about the employee skills w.r.t strengths and weakness and suggest ways to develop them both through (training and non-training) and where to focus efforts

Advisor: Shares knowledge about his personal experience performing a particular activity or tasks

Appraiser: Reviews and evaluates employee IDP and extracts the best out of an employee to improve performance which also includes revising performance standards

Facilitator: Assign tasks or responsibilities, assign resources to support, approve & coordinate for training programs

Job ShadowingOn-the-job-trainingSpecial Projects/assignmentsRotational assignmentResearchMentoringInternal Regular and Computer-based-trainingExternal Training Programs

What kind of training would be required to enable strong competencies which is required to undertake the new assignment

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The HR should play the role of an administrator and take accountability to ensure the process is approached professionally and all the processes are followed. The responsibility of the HR includes;

Analyse objectives, reasons and purpose for the IDP to ensure all employees are treated fairly and given opportunity

Skills & expertise to keep up with advancing technologyJob duties are changed recently, requiring new skillsEmployee striving for increased competenceCertain areas require improvementEncouraging flexibility to allow for future job function changesOrganization restructuring – retooling for future opportunities – present job may be eliminated

Ensure clear categorisation and justification are available for the reason of IDP:

Provide stakeholders details of their (HR) analysisProvide relevant information to Line Managers and to the EmployeesFacilitate the performance of an employee by organizing identified training needsEnsure the employee is provided with the necessary tools and resources to fulfil the requirementsEnsure close monitoring & periodic constructive discussions happen between the employee and his manager/supervisor

What IDP should not be used for?IDP provides the developmental opportunity for an employee. It is a systematic process to improve one’s capability to perform and pursue career goals.

Compensation Revisions: An IDP is not used for determining compensation revision or for other monetary benefits.

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Total % of employees in IDP against the total no. of employeesTotal % of employees in probation on IDPTotal % of employees reassigned to another department or function but required IDPTotal % of employees in IDP recommended for and listed in Promotion PanelTotal % and number of employees in IDP preparing for organization restructuringTotal % of IDP cases in each Department & FunctionTotal % of employees in IDP under each Line Managers Total number of employees who requested for IDP under each Line Manager

IDP MetricsHR will also maintain & analyze the metrics of IDP, which includes:

Job Function Clarification: IDP should not be used as a platform for clarifying any discrepancies arising on job function or responsibilities.

Does not Guarantee: Initiation of IDP is purely discretionary. It does not guarantee its approval, which may be based on factors such as budget, timing and organization’s priority. In similar lines, it does not guarantee immediate career advancement/promotion or reassignment to another position.

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Performance Improvement Plan (PIP)For most employees, the three most terrible words they dislike to hear at the end of a performance appraisal is PIP. Many Employees, Managers, HRs & Corporate attorneys knows that it is a bad news. 99% employees consider it as a warning to face termination and an evil plot to create a paper trail to justify termination of an employee. It is also considered as an evidence for the organization to claim that they did all they could do to help an employee. That’s why we often hear employees say PIPs might involve setting unrealistic objectives that are so vague and subjective to apply measures, they have no control over or do not have the resource to accomplish. Very few employees come out successful at the conclusion of the PIP and those who come out successful pray they could never deal with it again.

PIPs on the other hand are great opportunities for helping team members improve their performance and make them gather those crucial additional evidences; will have a far more rewarding experience and provide a great sense of accomplishment for the managers.

What is Performance Improvement Plan?

Who requires PIP?

PIP is an effective tool to develop workforce in areas identified as inadequate performance demonstration. It establishes the path employees need to follow to boost their performance to meet expected standards. A properly designed PIP can enable an employee to reach his expected performance levels, which is the key for achieving optimum business performance.

Any employee who has been struggling consistently to meet the expected levels or standards of performance.

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Why does an employee require PIP?

Any employee who has been struggling consistently to meet the expected levels or standards of performance. Any employee whose performance is determined as unacceptable in one or more critical elements linked to successful outcomes. Behavior related concerns

He or she might not have received appropriate levels of training.He or she might not have understood the expectations of the job.Other unforeseen challenges or roadblocks To correct workplace behaviors affecting performance and staff relationshipTo provide an opportunity to an employee to correct the situation rather than implementing a more serious action like termination of employment.

This gives employees an opportunity to succeed while holding them responsible for their past performance.

There can be numerous reasons, few of them may be:

The exact reason might always not be clear. It therefore becomes critical to determine the exact reason which can happen either through an open dialogue or feedback between the Manager and his team member or through observation over a specific period of time to identify the issue. The reason can also be identified by providing necessary tools and resources to address the reason of the failure.

Outcomes of PIP:PIPs may have different outcomes like the ones mentioned below:

Recognizing training gapsImprovement in overall organization’s performance

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PIP Process?

Employment actions such as

Identify critical gaps in competency or behavior to be corrected with specific examplesDescribe the acceptable level of performance or behaviorDiscuss critical skill requirements and job responsibilities which are required to address the gapsEstablish the knowledge and skills required to perform the jobProvide clear expectations and metrics about the work to be performedCreate an action plan with schedule and resources required to develop specific competenciesState the support that will be provided (training) to assist the employee to improve Explain the specific period of time that an employee has been given to demonstrate improvement Explain the Employees responsibilitiesExplain the Managers / supervisors responsibilities Explain the consequences of failing in order to improve to an acceptable levelEstablish review date(s) to track progress towards the plan and provide formal feedback

TransferDemotionTermination

This process involves similar activities like mentioned in the IDP:

Note: Depending on the nature of the job and the employee’s experience, it will be appropriate to offer assistance. It can be as simple things like pairing with another employee, providing a checklist,

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When to Initiate PIP?

offering training or given closer supervision.

We usually observe this initiated after the recently concluded annual review. However, PIP can be initiated at any point of time after a performance discussion with the employee immediately after the manager or supervisor has recognized there is a performance or behavior issue which requires correction.

How much of specific time frame or period is required to be provided?There is no standard time frame in the existing model. The time frame can vary depending on the competency required to undertake the task and complexity or the nature of the task/assignment. Most organizations provide a window of 60-90 days for an employee to demonstrate improvement to acceptable levels. This window is also extended on a case-to-case basis.

Who is responsible for developing PIP?Both primary manager and employee are responsible for developing the PIP. Both of them are expected to work in lockstep and systematically to meet/fulfil the PIP objective. The authority to approve performance attributes rests with the primary manager as he is responsible for performance improvement.

What is Primary Manager or Appraiser’s Responsibilities?The Primary Manager is expected to:

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Implement closer supervision and counsellingProvide formal training, on-the-job training, peer coaching, demonstration etc.,Provide frequent feedbacksCoordinate for Trainings to develop knowledge, skills and competenciesIn case the employee fails to improve to the acceptable level , the Manager / Supervisor can recommend transfer, demotion or termination

The Primary Manager should:

Be Considerate to the employee’s feelingPlan ahead to cope with any problems that might occur during the PIP conversationsClearly and fairly answer the questions of the employeeMake sure the employee is fully aware of what is expected

Note: Managers & Supervisors should stick to oral & written warning options to correct behavior. Investing time early is always time well spent and it is an effective way to prevent problems from getting worse.

What the Primary Manager Should Do?

The Primary Manager should refrain from:

Being evasive to the response of the employeeBeing ignorant on providing them direct answers Being threat to the employee by using PIP as a tool

What the Primary Manager Should AvoidDoing?

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Express desire to undertake certain responsibilities or assignments which aligns with professional growth aspirationWhat kind of training would be required to enable strong competencies which is required to undertake the new assignment

The HR should play the role of an administrator and take accountability to ensure the process is approached professionally and all the processes are followed. The responsibility of the HR includes;

Analyse motives, reasons and purpose for the PIP to ensure employee is treated fairlyCategorise the reason for PIP – Poor skill set, lack of will or attitude issueHandle employee appeals Provide stakeholders details of their(HR) analysisProvide relevant information to Line Managers and to the EmployeesFacilitate the performance of an employee by organizing identified training needsEnsure the employee is provided with the necessary tools and resources to fulfil the requirementsEnsure close monitoring & periodic constructive discussions happen between the employee and his manager/supervisor

What are HR Responsibilities?

List down strengths to carry out specific tasks or dutiesList down weaknesses to carry out specific tasks or dutiesUnderstand what managerial or technical competencies are required to perform satisfactorily and improve performance in current position w.r.t those specific tasks

Evaluate past performances, job description, performance attributes and standards to introspect to determine:

What are Employees Responsibilities?

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HR will also maintain & analyse the metrics of PIP, which includes:

Total % of employees in PIP against the total no. of employeesTotal % of employees successfully cleared against Total employees in PIPTotal % of employees reassigned to another department or function against total employees in PIPTotal % of employees terminated through PIP against the total no. of employeesTotal % of employees demoted through PIP Total % of employees who resigned after demotion through PIPTotal % of PIP cases in each Department & FunctionTotal % of employees in PIP under each Line Managers

PIP Metrics

What are the outcomes of a PIP?

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Linking Performance Reviews to Reward and Recognition SystemsPerformance Assessment and Rewarding employees are closely linked to each other and have the same focus of creating an engaged and aligned workforce. It is therefore an integral part of performance appraisal. A carefully structured Reward and Recognition system is a successful strategy which provides the sense of accomplishment to the employee and at the same time, it helps to retain top performers, improve workforce morale, build employee loyalty for the organization and build a strong performance culture.

A reward system therefore is a structured system of compensating employees to encourage and reinforce actions taken which resulted in superior organization performance and achieving better financial results.

Recognition system on the other hand needs to be viewed separately. It’s a method of valuing an employee and his contribution. They may or may not be monetary in nature. It helps to trigger passion in an employee. Without recognition it is extremely difficult to develop and maintain creativity. Employee recognition programs should be developed to recognize every contribution needless to say in particular when a job is done exceptionally well.

Both recognition and reward systems are very important with or without a monetary tag attached to the programs. Both systems focus on acknowledging the contribution of an employee which will benefit both the employee and the organization.

Total number of employees who appealed when recommended for PIP for each Line ManagerTotal number of employees who appealed against the PIP recommendation which resulted in termination of employment

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Employee Reward SystemsEmployee rewards and recognition system helps to change work habits and key behaviors that encourages continuous improvement and commitment which benefits the organization. There are several methods to reward and recognize an employee’s contributions.

Guiding Principles to Rewards and RecognitionsWorkforce capabilities and motivation are two factors which are required to be considered and organizations should focus on to ensure the strategy drives attraction and retention of the workforce.

Compensation is directly proportional to accomplishmentIt is important to establish a clear association between organizations

Most organizations on their pursuit to retain their top performers and to improve workforce morale, explore and apply more than one of the above listed methods to avoid trade-offs. It is a double edged sword which can motivate employees in order to explore more effective ways to do their jobs or completely demotivate and discourage them.

Monetary

Merit PromotionReassignmentsPerformance Awards – Star PerformerBenefits – Paid Vacations

Merit Pay or Differential Pay-for-PerformancePerformance Incentives Variable Pay or Organization Performance BonusBase Pay Manipulation

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priorities and what employees are rewarded for. In other words remuneration and other benefits are linked to accomplishment of performance objectives.

This makes it imperative for an employee to know and understand his goals and work towards the common objectives.

This also makes it imperative for the employees, managers and the management to support the employee in performance planning and overcoming roadblocks which delay progress towards goals and meeting the objectives.

Rewards should support desired behavior It is important to tie an employee’s behavior to contribute towards the strategic goal. Recently, the term performance is used to designate demonstration of ethics & values and also contributions towards improving the Top and Bottom line.

Rewards should connect passion and purposePassion & Purpose when ignited are powerful motivators to lead work towards mission and common objectives. When employees feel the sense of purpose and usefulness of their work they are more likely to be engaged and more likely to stay in their job. Passion & Purpose also provide a more sustainable platform to maintain consistent performance than compensation.

Instantly Reward to reinforce desired behaviorReward and Recognitions should be acknowledged immediately on demonstration of a desired behavior. It helps an employee quickly

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Merits & Pitfalls

relate to and helps him/her to understand why he is being rewarded. This should also enable him to understand what behaviors are being appreciated.

Every method to reward & recognize an employee has its own merits & pit falls. Therefore each company must identify what reward model exactly influences their employee’s behavior in the context of the environment to drive attraction, retention and performance.

Let’s explore them to understand why most organizations today resort to and apply more than one method

MonetaryMonetary Compensation is one of the key strategies to retain top performers and drive organization’s performance to meet and exceed expectations.

This simply means higher the performance higher the compensation. This is a very successful model to attract and retain top talents and motivates employees to focus on the organizations’ priorities to achieve higher levels of performance. One of the monetary strategies most organizations apply is assurance of top-of-the market pay to attract the best talents.

This is however, is a very complicated system where pay varies significantly even in employees in the same level and is influenced by guidelines on rating distribution and other factors like global economy, market fluctuations, reduced pay, increased budgets and incentive pools over all of which neither employees nor organizations have any

Merit pay or Differential pay for performance

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control over. In addition to that, there is very less distinction that is applied relatively between a good and an average performer. Finally, one of the key drawbacks of this system is it does not take into account a crucial element behind the success of the employee - Team Work.

The decision for revision of compensation solely relies on the ranking in the manager’s hand. While few employees may feel motivated and have a positive experience most employees might feel the pay increase was just an inflationary correction.

Performance IncentivesThis is a very traditional method and focuses on cash grant to induce and motivate employees to perform well and encourage them to continue deliver high results. This system is usually prevalent and applied in organizations and departments where water tight monitoring is required for example sales. The incentive pay-out decision is made based on the outcomes of the performance measures.

If due diligence is not exercised in planning incentives it becomes difficult to get employees walk that extra mile or at times even get them to do their basic responsibilities.

If due diligence is not exercised in planning incentives it becomes difficult to get employees walk that extra mile or at times even get them to do their basic responsibilities.

The decision for incentive pay-out is made based on the achievement of the goals/ objectives.

The usual complaint of employees in this type is actual performance was not interpreted and the accomplishment of objectives was hindered by other factors including unplanned price increase midway through the fiscal year. Another striking observation is employees held back performance to avoid ratcheting up of their targets in the next year because target setting is linked to an employee’s prior performance.

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Variable Pay or Organization PerformanceBonusThis is also called gainsharing. This method originally was intended to attract top talent by adjusting the compensation by directly measuring current business and employee performance. This has however resulted in negative consequences, such as higher turnover and lower engagement levels due to unpredictable pay that is imperfectly linked to the actual performance of the employee. This method also increasingly shifts the risk of the business performance on the employees in particular during market recessions and during normal market conditions the goals and objectives are stretched far too wide. If the objectives are achieved the organization pays the variable pay component to all the employees in the business unit.v

Team or Work-unit BonusIs one of the effective ways to reward team efforts. In this each business unit is set a specific performance objective by the management which is reviewed. This is usually provided when a Business Unit achieves its objectives. This method encourages team spirit, improves cooperation and effective team working at all levels.

When offered as cash grant it is usually divided equally among all the team members. Most widely accepted practice of dispensing the pay-out is usually every quarter or on completion of the project.

In addition to the models explained above there are three other alternate models which primarily deal with manipulation of the base pay to optimize pay for performance. Many organizations are shifting to one of these models because pay for performance and variable pay are difficult to implement because defining performance, quantifying

Pay for Performance & Base Pay.

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quantifying its measures and determining what to pay is a complex exercise. Base pay is a strong motivator and employees’ value base pay over variable pay and a study by Mercer shows that employee retention is also more responsive to base pay over variable pay.

Promotion Focused Model: This model deals with opportunities that come to an employee in the form of career advancement. Here the compensation varies with hierarchical level and not on performance. The likelihood of promotions are characterised by relative performance to decide who gets promoted. The employee who performs well earns more via promotions.

Membership Model: This model deals with attracting potential employees by offering above market compensation and makes it imperative for employees to perform at high standards to retain employment with the organization. Those who perform are generously rewarded with perks and benefits to ensure retention. But, those who do not meet the threshold performance standards are discontinued of their services.

Bonding Model: This model deals with offering employees a below market compensation levels. But once the performance is credibly demonstrated the pay increase is sharp. With the increase in tenure and continuous employment with the organization the compensation revisions are characterised by steep upward trajectory with the intention to motivate employees and to retain them to preserve industry specific knowledge.

Each of the above models has its advantages and disadvantages and what works best for your organization depends on what factors are required to be addressed.

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Advantages of linking compensation toperformance

Creating a Performance Pay CulturePerformance reviews are critical to managing and maintaining the levels of performance and to implement and support a pay-for-performance system. Establishing a review process and quantifying the objectives and measures are critical to successful implementation of Performance Pay Culture.

This is considered a very useful tool to unlock employee potential, one of the strongest motivator and helps retain the top performers. Few of the advantages of linking promotions to performance are:

Organizations have to apply multiple approaches to compensate an employee for his contributions at the same time they also have to establish a relationship with performance. For example the annual salary increase can be linked to organizational goals and an incentive can be planned on individual goals driven approach. This enables an employee to understand the relationship between salary and incentives. This approach requires aligning employees with the goals and creating a shared understanding of the organizations’ objectives. This approach makes it easy to create a fair and consistent policy.

Merit Promotions

Motivates employees to align with the organizational goalsImproved participation – productivity, engagement, commitment and satisfaction Decreased attrition rate – lower recruitment cost and savings in low loss of productivity due to open position.Recognizes individual and team contribution Facilitates building a performance-driven culture

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How Performance Appraisals help in Promotion DecisionsPromotion decisions can be based on evidence when using historical performance appraisal data. In addition to that they can also be instrumental in revealing:

ReassignmentsThis is considered as a very useful tool in the career advancement of an employee. This is of great interest to employees who continuously seek to enhance their knowledge and skills and a great tool for the organization to fulfil career aspirations without having to guarantee promotions or level advancement. Here again performance appraisals plays an important role in identifying the work related skills and the developmental need of the employee and marry it with the organizations’ requirement. This strategy may be applied particularly after an employee would have qualified for the next higher position or grade but vacancy does not exist.

It allows to directly align employees’ objectives with that of organizational goals. This ensures that employees develop and share a mutual responsibility, remains motivated, highly productive and focused on achieving organizations’ priorities. Managers monitor progress towards goals and offer immediate support and reinforcement to maintain performance on track. This enriches an employee’s potential by unlocking his capabilities which results in accomplishments of goals as planned. This strategy helps with both talent management and succession planning objectives.

If the employee has the right skills and knowledge for the jobCo-workers get a strong sense of merit based promotion – tied to better performance

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Performance AwardsThis provides a psychological sense of accomplishment to the employee. It is an excellent tool to motivate as it emphasis excellence and clearly establishes distinction from an average performance. Recognizing performance motivates employees and helps in establishing benchmarks which other employees can strive to reach and surpass. Although many elements of Rewarding & Recognizing employees are similar – the primary factors which differentiate them are:

How much of specific time frame or period is required to be provided?

They may be monetary or not by nature Is intended to provide a psychological feelingFocus is on excellence and not merely on the competency required to perform a job role

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d e l i v e r i n g p e r f o r m a n c e

Purpose of Recognition SystemA recognition system is designed to recognize as many people as possible which enable an organization to achieve sustainable growth, gain competitive advantage and share fundamental values.

Helps reinforce desired behaviorMotivates employees to achieve higher performance levels and deliver quality output Helps recognize individual and team contributionsFacilitates a performance cultureHelps creates better work environmentEnhances commitment of the employees Retain top performersDevelop strong belief in values of the organization