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PERFORMANCE PLANNING &
REVIEW
Submitted to: Submitted by:
Mr. Gaurav Ashesh Shakti Singh
(Assistant Professor) Yaman Dhingra
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WHY DO ORGANIZATIONS NEED A PERFORMANCE PLANNING AND
REVIEW SYSTEM?
A Performance Planning and Review System (PP&R), when used regularly on an annual or
semi-annual basis, provides your organization with a means of managing the performance of
your staff and answers the three most basic questions we all have as employees: What am I
supposed to be doing? How well am I doing it? And does it matter to the organization?
With careful planning and implementation, a PP&R system answers these questions for your
staff and provides your organization with:
1. Systematic Performance Planning: To identify critical performance objectives for
each staff member so that they clearly understand their duties, what is expected of them, and how
their work is linked to the overall goals of the organization?
2. Systematic Performance Review: To review an employees overall achievement,
based on a clear understanding of his or her previously established performance objectives, with
constructive feedback, both positive and negative.
3. Objective information: While the performance review does not serve automatically as a
salary review, the information which results from the PP&R process will guide management
decisions on salary and merit awards, promotions, transfer, work assignments, and staff
development needs.
4. Knowledge: Where the overall performance strengths and weaknesses are in the
organization and where changes are needed.
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IMPORTANT FEATURES OF A PP&R SYSTEM
Management commitment to the concepts of performance planning and review Emphasis on communication between supervisor and staff member Focus on joint work planning Job duties linked to the goals of the organization Performance objectives are set for employees at all levels of the organization including
senior management
Performance objectives are specific, realistic, measurable, and time-bound Emphasis on developing employee motivation, skills, and career paths Performance as the basis for management decisions
ADVANTAGES OF A PERFORMANCE PLANNING AND REVIEW
SYSTEM
If implemented effectively, a PP&R system can:
Reinforce your organizations goals and priorities Communicate your organizations work values Define the work which people do and how it is related to the organizations mission Provide information to all employees on expected level of performance Provide performance information for career and compensation decisions
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360-DEGREE FEEDBACK
In human resources or industrial/organizational psychology, 360-degree feedback, also known as
multi-rater feedback, multisource feedback, or multisource assessment, is feedback that comes
from all around an employee. "360" refers to the 360 degrees in a circle, with an individual
figuratively in the centre of the circle. Feedback is provided by subordinates, peers, and
supervisors. It also includes a self-assessment and, in some cases, feedback from external sources
such as customers and suppliers or other interested stakeholders. It may be contrasted with
"upward feedback," where managers are given feedback by their direct reports, or a
"traditional performance appraisal," where the employees are most often reviewed only by
their managers.
The results from 360-degree feedback are often used by the person receiving the feedback to
plan training and development. Results are also used by some organizations in making
administrative decisions, such as pay or promotion. When this is the case, the 360 assessment is
for evaluation purposes, and is sometimes called a "360-degree review." However, there is a
great deal of controversy as to whether 360-degree feedback should be used exclusively for
development purposes, or should be used for appraisal purposes as well (Waldman et al., 1998).
There is also controversy regarding whether 360-degree feedback improves employee
performance, and it has even been suggested that it may decrease shareholder value (Pfau &Kay, 2002).
360 degree feedback allows each individual to understand how his effectiveness as an employee,
co-worker, or staff member is viewed by others. The most effective 360 degree feedback
processes provide feedback that is based on behaviours that other employees can see.
The feedback provides insight about the skills and behaviours desired in the organization to
accomplish the mission, vision, and goals and live the values. The feedback is firmly planted in
behaviours needed to exceed customer expectations.
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How is 360 Degree Feedback Used?
Companies typically use a 360 feedback system in one of two ways:
1. 360 Feedback as a Development Tool to help employees recognize strengths
and weaknesses and become more effective
When done properly, 360 is highly effective as a development tool. The feedback process gives
people an opportunity to provide anonymous feedback to a co-worker that they might otherwise
be uncomfortable giving. Feedback recipients gain insight into how others perceive them and
have an opportunity to adjust behaviours and develop skills that will enable them to excel at their
jobs.
2. 360 Feedback as a Performance Appraisal Tool to measure employee
performance
Using a 360 degree feedback system for Performance Appraisal is a common practice, but not
always a good idea. It is difficult to properly structure a 360 feedback process that creates an
atmosphere of trust when you use 360 evaluations to measure performance. Moreover, 360
feedback focuses on behaviours and competencies more than on basic skills, job requirements,
and performance objectives. These things are most appropriately addressed by an employee and
his/her manager as part of an annual review and performance appraisal process. It is certainly
possible and can be beneficial to incorporate 360 feedback into a larger performance
management process, but only with clear communication on how the 360 feedback will be used.
What a 360 Feedback Survey Measures
360 feedback measures behaviours and competencies. 360 assessments provide feedback on how others perceive an employee. 360 feedback addresses skills such as listening, planning, and goal-setting. A 360 evaluation focuses on subjective areas such as teamwork, character, and leadership
effectiveness.
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What 360 Feedback Surveys do not assess:
360 feedbacks is not a way to measure employee performance objectives (MBOs). 360 feedback is not a way to determine whether an employee is meeting basic job
requirements.
360 feedback is not focused on basic technical or job-specific skills. 360 feedback should not be used to measure strictly objective things such as attendance,
sales quotas, etc.
Critical Factors for Success
In order for the 360 degree feedback system to be successful there must be employee acceptance
of the system. Both perceived accuracy and justice are considered critical factors for system
acceptance. If the system is unjust or has errors, it will be dismissed for obvious reasons.
Fortunately, reputable providers of 360 degree feedback have often delivered hundreds of
thousands of ratings, and are experienced in maximizing the likelihood of system acceptance.
There are three key steps to using the 360 degree feedback system successfully:
1.
make it fit into the organization;2. make it psychometrically sound;3. Use with care.
Make it Fit
Try to make the 360 feedback fit into the culture of the organization. In doing so it will appear
less threatening and more fair.
Increase Employee Participation
To increase the perception of justice, employees should be encouraged to be active participants
in the evaluation. A multiple source feedback works best in an environment that is team-oriented
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and cooperative. Giving individuals the opportunity to voice their opinions about the system's
construction, process, and results will increase employee buy-in, acceptance, and will yield
useful suggestions.
Train Feedback Providers
It is also important to train the feedback providers to be sensitive, respectful and polite. Treating
employees in a friendly and respectful manner, and offering constructive advice will make them
more open to accepting the performance appraisal system.
Communication is Key
People tend to be suspicious of things they do not understand. Thus, it is important to
communicate to the employees the precise way in which ratings are to be combined, as well as
the purpose, benefits and procedures of the 360 degree feedback system. It is particularly
important to communicate the intended uses of the information.
Make it Psychometrically Sound
Ensure that the Instrument is Applicable
A good assessment should be reliable and valid. It must measure what it proposes to measure,
consistently and accurately. The 360 degree feedback system only works effectively if it
measures the relevant job performance, knowledge, skills, abilities and personality
characteristics necessary for high levels of job performance. Thus, the first step is to identify,
define, and incorporate these job performance behaviors, knowledge, and skills into the appraisal
system.
Increase Rater Familiarity
Select raters who are well acquainted with the employee. Rater familiarity is linked to accuracy
and fairness in performance ratings. To evaluate rater familiarity, some 360 degree feedback
systems include a rating for familiarity and provide the option of indicating "inadequate
opportunity to observe" for performance characteristics. To increase reliability and decrease the
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impact of individual biases a large sample of raters should be selected. Reliability continues to
increase when up to twenty raters are included, but adequate reliability can be obtained using 6
or more raters.
Promote Rater Accuracy
Both 'self' and 'other' appraisal accuracy should be promoted and rewarded. The nature of the 360
degree feedback system should reduce the problem of rater accuracy, as the use of multiple raters
will average out individual biases. Furthermore, there is an apparent tradeoff when using either
'self' or 'other' ratings. Other-ratings are perceived to be more accurate, however, they may also
be perceived by the employee to be less fair. The inverse is true for self-ratings. Clearly, both
rating methods have advantages and disadvantages; thus, a performance appraisal system that
combines both 'self' and 'other' ratings will be the most beneficial.
Use with Care
When implementing the 360 degree feedback system it is important to be consistent across
employees (all of the employees should have an equal opportunity to participate in the system),
and administered frequently. A consistent system will be perceived as more accurate and fair. A
one-time 360 feedback exercise is not recommendedthey are best when at least a three to five
term is planned. Furthermore, evaluating performance over time provides employees with
benchmarks for development.
360 Degree Feedback: The Good, the Bad, and the Ugly
The Good about 360 Degree Feedback
These features will manifest themselves in well-managed, well-integrated 360 degree feedback
processes.
Improved Feedback From More Sources: Provides well-rounded feedback from peers,
reporting staff, coworkers, and supervisors. This can be a definite improvement over feedback
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from a single individual. 360 feedback can also save managers time in that they can spend less
energy providing feedback as more people participate in the process. Coworker perception is
important and the process helps people understand how other employees view their work.
Team Development: Helps team members learn to work more effectively together. (Teams
know more about how team members are performing than their supervisor.) Multirater feedback
makes team members more accountable to each other as they share the knowledge that they will
provide input on each members performance. A well-planned process can improve
communication and team development.
Personal and Organizational Performance Development: 360 degree feedback is one of the
best methods for understanding personal and organizational developmental needs.
Responsibility for Career Development: For many reasons, organizations are no longer
responsible for developing the careers of their employees, if they ever were. Multirater feedback
can provide excellent information to an individual about what she needs to do to enhance her
career.
Additionally, many employees feel 360 degree feedback is more accurate, more reflective of
their performance, and more validating than prior feedback from the supervisor alone. This
makes the information more useful for both career and personal development.
Reduced Discrimination Risk: When feedback comes from a number of individuals in various
job functions, discrimination because of race, age, gender, and so on, is reduced. The "horns and
halo" effect, in which a supervisor rates performance based on her most recent interactions with
the employee, is also minimized.
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Improved Customer Service: Especially in feedback processes that involve the internal or
external customer, each person receives valuable feedback about the quality of his product or
services. This feedback should enable the individual to improve the quality, reliability,
promptness, and comprehensiveness of these products and services.
Training Needs Assessment: 360 degree feedback provides comprehensive information about
organization training needs and thus allows planning for classes, cross-functional
responsibilities, and cross-training.
The Bad and the Ugly about 360 Degree Feedback
The down side is important because it gives you a roadmap of the things to avoid when you
implement a 360 degree feedback process. Following are potential problems with 360 degree
feedback processes and a recommended solution for each.
Exceptional Expectations for the Process: 360 degree feedback is not the same as a
performance management system. It is merely a part of the feedback and development that a
performance management system offers within an organization.
Additionally, proponents may lead participants to expect too much from this feedback system in
their efforts to obtain organizational support for implementation. Make sure the 360 feedback is
integrated into a complete performance management system.
Design Process Downfalls: Often, a 360 degree feedback process arrives as a recommendation
from the HR department or is shepherded in by an executive who learned about the process at a
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seminar or in a book. Just as an organization implements any planned change, the
implementation of 360 degree feedback should follow effective change management guidelines.
A cross-section of the people who will have to live with and utilize the process should explore
and develop the process for your organization.
Failure to Connect the Process: For a 360 feedback process to work, it must be connected with
the overall strategic aims of your organization. If you have identified competencies or have
comprehensive job descriptions, give people feedback on their performance of the expected
competencies and job duties.
The system will fail if it is an add-on rather than a supporter of your organizations fundamental
direction and requirements. It must function as a measure of your accomplishment of your
organizations big and long term picture.
Insufficient Information: Since 360 degree feedback processes are currently usually
anonymous, people receiving feedback have no recourse if they want to further understand the
feedback. They have no one to ask for clarification of unclear comments or more information
about particular ratings and their basis.
For this reason and for the points listed in the several bullet points following this one,
developing 360 process coaches is important. Supervisors, HR staff people, interested managers
and others are taught to assist people to understand their feedback. They are trained to help
people develop action plans based upon the feedback.
Focus on Negatives and Weaknesses: At least one book, First Break All the Rules: What the
World's Greatest Managers Do Differently, advises that great managers focus on employee
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strengths, not weaknesses. The authors said, "People don't change that much. Don't waste time
trying to put in what was left out. Try to draw out what was left in. That is hard enough."
Rater Inexperience and Ineffectiveness: In addition to the insufficient training organizations
provide both people receiving feedback and people providing feedback, there are numerous ways
raters go wrong. They may inflate ratings to make an employee look good. They may deflate
ratings to make an individual look bad. They may informally band together to make the system
artificially inflate everyones performance. Checks and balances must prevent these pitfalls.
Paperwork/Computer Data Entry Overload: Need we say much more here? Traditional
evaluations required two people and one form. Multirater feedback ups the sheer number of
people participating in the process and the consequent organization time invested.
There are minuses with the 360 degree feedback processes. As with any performance feedback
process, it can provide you with a profoundly supportive, organization-affirming method for
promoting employee growth and development. Or, in the worst cases, it saps morale, destroys
motivation, enables disenfranchised employees to go for the jugular or plot and scheme revenge
scenarios.
360 degree feedback can increase positive, powerful problem solving for customers or set
people off on journeys to identify the guilty - the feedback provider who rated their performance
less than perfect.
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Management by Objectives (MBO)
"MBO is one of the rational school of management's successful products." The Economist
Motivating people by aligning their objectives with the goals of the organization
For many people working in modern business environments, it's hard to remember a time when
non-managerial employees weren't involved with, and interested in, corporate strategy and goals.
We are regularly reminded about the corporate mission statement, we have strategy meetings
where the "big picture" is revealed to us, and we are invited to participate in some decisions. And
we're aware of how our day-to-day activities contribute to these corporate goals.
This type of managing hasn't been around forever: It's an approach called Management by
Objectives; a system that seeks to align employees' goals with the goals of the organization. This
ensures that everyone is clear about what they should be doing, and how that is beneficial to the
whole organization. It's quite easy to see why this type of managing makes sense when the
parts work in unison the whole works smoothly too. And by focusing on what you're trying to
achieve, you can quickly discriminate between tasks that must be completed, and those that are
just a waste of valuable time.
Background:
Management by Objectives was introduced by Peter Drucker in the 1950s and written about in
his 1954 book, The Practice of Management. It gained a great deal of attention and was widely
adopted until the 1990s when it seemed to fade into obscurity.
Partly, the idea may have become a victim of its own success: It became so much a part of the
way business is conducted that it no longer may have seemed remarkable, or even worthy of
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comment. And partly it evolved into the idea of the Balanced Scorecard, which provided a more
sophisticated framework for doing essentially the same thing.
Using Management by Objectives
Peter Drucker outlined the five-step process for MBO shown in figure 1, below. Each stage has
particular challenges that need to be addressed for the whole system to work effectively.
Figure 1: Five Step MBO Process
These steps
Review
These steps are explained below:
Start of MBO
Process
Set OrganizationalObjectives
Cascade Objective
to Employees
MonitorEvaluate Performance
Reward
Performances
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1. Set Organizational Objectives
MBO starts with clearly defined strategic organizational objectives. If the organization isn't clear
where it's going, no one working there will be either.
2. Cascading Objectives Down to Employees
To support the mission, the organization needs to set clear goals and objectives, which then need
to cascade down from one organizational level to the next until they reach everyone.
To make MBO goal and objective setting more effective, Drucker used the SMART acronym to
set goals that were attainable and to which people felt accountable. He said that goals and
objectives must be:
Specific Measurable Agreed (relating to the participative management principle) Realistic Time related
Notice the "A" in SMART is "agreed." This is sometimes referred to as "achievable" but, with
MBO, agreement about the goals is a critical element: It's not enough for the goals and objectives
to be set at the top and then handed down. They must flow, or trickle, down through various
stages of agreement. The only goal that is going to be met is one that is agreed on. How much
easier is to get buy in when the person responsible for achieving the goal had a hand in
developing it?
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For each objective, you need to establish clear targets and performance standards. It's by using
these that you can monitor progress throughout the organization. These are also important for
communicating results, and for evaluating the suitability of the goals that have been set.
3. Encourage Participation in Goal Setting
Everyone needs to understand how their personal goals fit with the objectives of the
organization. This is best done when goals and objectives at each level are shared and discussed,
so that everyone understands "why" things are being done, and then sets their own goals to align
with these.
This increases people's ownership of their objectives. Rather than blindly following orders,
managers, supervisors, and employees in an MBO system know what needs to be done and thus
don't need to be ordered around. By pushing decision-making and responsibility down through
the organization, you motivate people to solve the problems they face intelligently and give them
the information they need to adapt flexibly to changing circumstances.
Through a participative process, every person in the organization will set his or her own goals,
which support the overall objectives of the team, which support the objectives of the department,
which support the objectives of the business unit, and which support the objectives of the
organization.
In an MBO system, employees are more self-directed than boss-directed. If you expect this type
of independent performance from employees, you have to give them the tools they need.
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Once you have established what it is that someone is accountable for, you must provide the
information and resources needed to achieve results. You must also create a mechanism for
monitoring progress towards the goals agreed.
4. Monitor Progress
Because the goals and objectives are SMART, they are measurable. They don't measure
themselves though, so you have to create a monitoring system that signals when things are off
track. This monitoring system has to be timely enough so that issues can be dealt with before
they threaten goal achievement. With the cascade effect, no goal is set in isolation, so not
meeting targets in one area will affect targets everywhere.
On the other hand, it is essential that you ensure that the goals are not driving adverse behavior
because they have not been designed correctly. For instance, a call centre goal of finishing all
calls within seven minutes might be useful in encouraging the staff to handle each call briskly,
and not spend unnecessary time chatting. However, it might be that customers' calls were
becoming more complex, perhaps because of a faulty new product, and call centre operators
were terminating the call after 6 minutes 59 seconds in order to meet their target, leaving
customers to call back, frustrated. In this situation, the monitoring process should pick up the
shift in the goal environment and change the goal appropriately.
Set up a specific plan for monitoring goal performance (once a year, combined with a
performance review is not sufficient!) Badly-implemented MBO tends to stress the goal setting
without the goal monitoring. Here is where you take control of performance and demand
accountability.
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Think about all the goals you have set and didn't achieve. Having good intentions isn't enough,
you need a clear path marked by accountability checkpoints. Each goal should have mini-goals
and a method for keeping on top of each one.
5. Evaluate and Reward Performance
MBO is designed to improve performance at all levels of the organization. To ensure this
happens, you need to put a comprehensive evaluation system in place.
As goals have been defined in a specific, measurable and time-based way, the evaluation aspect
of MBO is relatively straightforward. Employees are evaluated on their performance with respect
to goal achievement (allowing appropriately for changes in the environment.) All that is left to
do is to tie goal achievement to reward, and perhaps compensation, and provide the appropriate
feedback.
Employees should be given feedback on their own goals as well as the organization's goals.
Make sure you remember the participative principle: When you present organization-wide results
you have another opportunity to link individual groups' performances to corporate performance.
Ultimately this is what MBO is all about and why, when done right, it can spur organization-
wide performance and productivity.
When you reward goal achievers you send a clear message to everyone that goal attainment is
valued and that the MBO process is not just an exercise but an essential aspect of performance
appraisal. The importance of fair and accurate assessment of performance highlights why setting
measurable goals and clear performance indicators are essential to the MBO system.
Repeat the Cycle
Having gone through this five-stage process, the cycle begins again, with a review of the
strategic, corporate goals in the light of performance and environmental monitoring.
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When you reward goal achievers you send a clear message to everyone that goal attainment is
valued and that the MBO process is not just an exercise but an essential aspect of performance
appraisal. The importance of fair and accurate assessment of performance highlights why setting
measurable goals and clear performance indicators are essential to the MBO system.
Tip 1:
Implemented on a team level, MBO shows itself in clear team briefing, in effective goal setting,
in successful use of reviews, in effective delegation and in the giving and receiving of feedback.
These are many of the key techniques needed for effective team management.
Tip 2:
Implemented on an organizational level, MBO needs the full commitment of the organization,
and an underlying system for tracking goals and performance. Because goals must be transmitted
from level to level with agreement, goal transmission can inevitably be slow. Full
implementations of MBO can therefore be slow and difficult, particularly if non-accounting-
based goals are included. This is perhaps why MBO has evolved into the idea of the Balanced
Scorecard: MBO on its own may too-easily slip into being nothing more than a financial
management mechanism.
Tip 3:
MBO is essentially a managerial process. Don't use it as a substitute for good leadership: The
two should work together!
Tip 4:
There's so much more to motivating people than using MBO! Take our How Good Are Your
Motivation Skills? self-test to find out which aspects of team motivation you can improve on.
Its overarching premise is that of employee empowerment. By empowering employees to take
responsibility for their performance and allowing them to see how their achievements impact the
organization as a whole, you increase people's motivation, dedication, and loyalty. When you
bring that full circle and link performance to evaluation and appraisal, you have a strong system
that supports and values employees and facilitates great performance.
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Problems faced by the MBO program are:
Too much paper work Setting too many objectives may create prioritization problems Difficult to establish measurable objectives for certain jobs. Too much emphasis on short term performance and losing sight of long-term objectives. May be used by some supervisors as a control devise that intimidates rather than
motivates subordinates.
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REFERENCES
http://en.wikipedia.org/wiki/360-degree_feedback http://www.custominsight.com/360-degree-feedback/what-is-360-degree-feedback.asp http://humanresources.about.com/od/360feedback/a/360feedback_2.htm http://www.mindtools.com/pages/article/newTMM_94.htm http://www.sigmahr.com/articles/360bestpractices.asp http://axisbd.org/what-is-management-by-objectives-what-are-its-advantages-and-
disadvantages/