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PERFORMANCE MANAGEMENT

SYSTEMS

Introduction to Performance Management

Unit I, Session 1

18th Aug, 2011

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What is Performance?

Performance is what is expected to be delivered

by an individual or a set of individuals (team(s))

within a time frame.

The expectations may be in terms of,

Results or efforts

Tasks Quality, with specification of conditions under which it

is to be delivered.

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DimensionsofPerformance Management

1. Output or result dimension Measurable dimension

Consequence of inputs in a summary form or a

final or semi-final product form or service form.

Describes the standard

Measurable in terms of figures like targets,

completion of tasks to meet the deadlines,

customer numbers.

These are called as Key Result Areas (KRAs)

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2. Input dimension Activities or tasks to be accomplished by the

individual.

Influential factors for inputs are,

Ability or competence to perform these tasks

Motivation

Organizational support

Performance (o/p) = {work effort(i/p) + [motivation + Support]}

(Intervening Variables)


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3. Time Dimension Performance can be defined for a task, for a day, for a

week, month, year or life

For IT, Banking, Manufacturing companies the timedimension is for quarter / a three-month period.

Normally, individual performance is judged in relationto a role and across a short period.

Some organizations which are project driven are

interested in the individual performance in a projectas well as in a role.

Thus, in context of organization, performancemanagement is time bound as well as role specific.


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4. Focus dimension

Focus may be on profits, market share, new areas

covered, quality, cost or financial dimensions.

5. Input-Output Relationships

Competencies

Interest

Internal environment External environment


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6. Dyadic performance

The role played by the boss or subordinate or team

member in determining performance.

This is normally neglected and less discussed about.

Dyadic performance measured in two aspects

Outcomes measures

Situational variations and are based on assumptions

Process measures

Deals with interpersonal processes

Motivation to other person, extent to which there is

mutuality, help, synergy and learning.


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7. Team Performance It is widely recognized

Often mixed with individual performance.

Finally, Performance of an individual inorganizational setting may therefore be definedas the output delivered by an individual in

relation to a given role during a particular period of time under the set of circumstancesoperating at that point of time.


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ProcessofPerformance

Management

Unit I, Session 2

19th Aug, 2011

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It is an organization wide management

program that provides a structured approach

to:

Communicate business strategy

Establish a shared understanding of what is to be

achieved and how it is to be achieved

Facilitate management of self and others

Measure and motivate performance

(organizational and individual)

Performance Management System

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A process for communicating employee performanceexpectations, maintaining ongoing performancedialogue, and conducting annual performanceappraisals;

A procedure for addressing employee performancethat falls below expectations;

A procedure for encouraging and facilitating employeedevelopment;

Training in managing performance and administeringthe system; and

A procedure for resolving performance pay disputes.

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The performancemanagementcycle

Performanceand

development

agreement

(PLANNING)

Performancereview

(REVIEWING)

Managing

performance

throughoutthe year

(ACTING)

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1. PERFORMANCE AGREEMENTS

Performance Agreements form the basis for Development

Assessment

Feedback in the Performance management process

Performance agreements incorporates Performance improvement plans

Performance development plans

Performance agreements emerge from Analysis of role requirements

Performance review

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Defining role requirements in terms of: Key results expected

What role holders need?

Competencies required Upholding the organizations core values

Objectives

On-going role or work objectives

Targets

Tasks/projects

Behaviour

PERFORMANCE AGREEMENTS

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Criteria for Objectives S = Specific/stretching clear, unambiguous,

straightforward, understandable and challenging.

M = Measurable quantity, quality, time, money. A = Achievable challenging but within the reach of a

competent and committed person.

R = Relevant relevant to the objectives of the

organization so that the goal of the individual isaligned to corporate goals.

T = Time framed to be completed within an agreedtime scale.

PERFORMANCE AGREEMENTS

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2. MANAGING PERFORMANCE THROUGHOUT

THE YEAR

performance management is a continuous

process that reflects,

Direction

Monitoring

Measuring performance

Actions taken

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3. REVIEWING PERFORMANCE

A formal review in an organization takes place

once or twice yearly.

This provides a focal point for the consideration

of key performance and development issues.

This performance review meeting is the means

through which the five primary performance

management elements agreement, measurement, feedback, positive

reinforcement and dialogue can be put to good use.

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The review should be rooted

in the reality of the employees performance.

Concrete

not abstract

it allows managers and individuals to take a

positive look together at how performance can

become better in the future and Problem solving

REVIEWING PERFORMANCE

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Criteriaforassessing performance

The criteria for assessing performance should bebalanced between:

i. achievements in relation to objectives;ii. the level of knowledge and skills possessed and

applied (competences);

iii. behaviour in the job as it affects performance(competencies);

iv. the degree to which behaviour upholds the corevalues of the organization;

v. day-to-day effectiveness.


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Be prepared

W

ork to a clear structure.

Create the right atmosphere

Provide good feedback

Use time productively

Use praise Let individuals do most of

the talking

Invite self-assessment.

Discuss performance notpersonality

Encourage analysis of

performance

Dont deliver unexpected

criticisms

Agree measurable

objectives and a plan of

action

Conductinga performancereviewmeeting:

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Designing Performance

Management Systems

Unit I, Session 3

22nd Aug, 2011

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Introduction

Organizations use strategic planning to,

Identify objectives/ initiatives,

Linking objectives to the organizational vision,

Daily activities

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DesigningofPMS

Performance management systems are not generic or

easily passed from one company to another; their

design and administration must be tailor-made to

match employee and organizational characteristicsand qualities.

PMS should focus on

Employee performance w.r.t supervisors expectation

Employee should know how the performance is viewed.

Communication between employee superior

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Whatshoulda PMS cover?

1. Organizational and employee objectives:

2. Training

3. Frequency of appraisal

4. Maintaining records

5. Measurement systems

6. Conducting the performance appraisal

7. Pay for performance

8. Legal issues

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1. Organizationalandemployeeobjectives:

Effective performance evaluation system is todetermine the organizations objectives.

These are then translated into departmental

and then individual position objectives (KPAs)

personal performance targets. This allows the employee to know up front the

standards by which his/her performance will be

evaluated. This process involves clarifying the job role, job

description and responsibilities to wider goals.

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2. Training

Training should start with a focus on providing the

manager a systematic approach for effective people management.

the process of managing, motivating and evaluatingemployee performance.

Training should include: supervision skills;

coaching and counselling;

conflict resolution;

setting performance standards; linking the system to pay (assuming this is an aim of

the appraisal system);

providing employee feedback (Evans, 1991)

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3. Frequency ofappraisal

Employee reviews should be performed on afrequent and ongoing basis.

By conducting reviews frequently two situations areeliminated:

selective memory by the supervisor or the employee; and

surprises at an annual review.

Frequent reviews also allow for clarification andrevision of objectives

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4. Maintainingrecords

They establish patterns in an employees behaviour that may

be difficult to spot by typical incident-by-incident supervision

(Crane, 1991).

Careful review of the records helps avoid the selective memory

and helps plot appropriate actions.

Well maintained records are essential if the need arises to

discipline, demote or dismiss an employee.

It is particularly helpful if employees are themselves

responsible for part of the process of record-keeping.

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6. Conductingthe performanceappraisal

the front-line supervisor is responsible for conducting the

performance review.

However, a multiple rater system provide a form of

triangulation that results in ratings in which employees and

managers have greater confidence.

With large spans of control, several supervisors may work with

an individual employee. The input from all supervisors about

the employees performance is required to complete athorough performance review.

Appraisal techniques

Self appraisal, rating, ranking, 360-degree feedback

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7. Pay for performance

Research says the link is often unsatisfactorily established

and even less often maintained to the satisfaction of

employees and supervisor/ organization.

Helps motivate and commit the employee to the

appraisal process.

It also allows the employee to distinguish clearly howsuccessful or unsuccessful completion of objectives

affects them directly.

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8. Legalissues

An effective PMS is to make a company

more productive,

profitable and

to let employees know their level of performance,

legal reasons Failure to conduct appraisal properly (failing to

maintain adequate records)

may result in employees (or their trades unions) takinglegal action. It is extremely important that all strengths

weakness be clearly documented in the performancereview and follow up action on unsatisfactoryperformance pursued and be used in case of terminationof an unsatisfactory employee.

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Why PMS Fail?

T

horough knowledge on PMS both employee and supervisor.

Interpreting performance information.

Poor performance should be tackled in a timely manner.

Working practices should be reviewed regularly

Effective staff recruitment, training & development areessential in maximizing organizations performance.

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Implementing PMS

Unit I, Session 4

23rd Aug, 2011

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Implementation Process

Reinforce

Implementation

Practices:

9. delegate decision-makingwith accountability

10. Create incentives

11. Build expertise

12. Integrate management

reforms

STEP 1Define Mission &

Desired Outcomes

Practices:

1. Involve stakeholders

2. Assess environment

3. Align activities, core

processes, &

resources STEP 2Measure Performance

Practices:

4. Produce measures at each

organizational level that

demonstrate results, respond to multiple

priorities, and

link to responsible

programs

5. Collect data

STEP 3Use Performance

Information

Practices:

6. Identify performanceGaps

7. Report information

8. Use information

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Key Lessons Learnedfor Effective Implementation

1. Assess Organizational Readiness involvement,

commitment, and

day-to-day support of enterprise senior managers if they have adequate resources, including staffallocation, skills, time, tools, and use ofconsultants or technical assistance if needed.

Organizational readiness also means makingsure that existing planning and decision makingstructures can accept performance results sothey can be used

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2. Followa Simple Measure Selection Process

Extremely complex

should take a balanced approach to goals,

objectives, and related measures

Should measure, establish baselines and targets,

comparing against benchmarks, and monitoring

progress for continual improvement.

3. Develop Performance Management System

Maturity Over Time

Key Lessons Learnedfor Effective Implementation

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Implementationmistakes

Over criticism of the past and over projection of the new orchanged system

System introduced with fanfare but inadequate effort to help

in its implementation

Lack of organizational support Lack of competencies in HR department

Image of the HR department and inability to promote a sense

of ownership of the system among the line managers

Lack of follow up on the part ofH

R department Top management commitment

Past experience with all the systems

Nature of the system

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Nature of Goals

Goals are written statements of measurable conditions that will exist

when a job is satisfactorily done Goals link actual performance with role responsibilities

Taken together, these constitute the role purpose

Goals describe how accountabilities are actualised

Achievable goals spell out requisites that provide guidance to the goal-

seeker: Person, or the role, which has primary responsibilityfor achieving the goal

Key activities or means for achieving the goal

Measurable indicators, targets or levels of achievement for key-result areas

Completion date

Job Content(Accountabilities)

Performance Requirements

(Goals)

Performanceon the Job

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Writing Performance Goals

A well-written goal has two parts: Operationaland Outcome

Operational partconsists of the accountability, specific activity andtime frame

Outcome parthas measurable standards

Well-written goals respond to following minimum requirements:

Inform what the most important things to do

Inform what the employee is expected to achieve

Specify how all concerned will know whether or not goal has beenachieved

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Three-Step Goal Writing Process

Step 1: Decide which accountability or accountabilities will the goalrespond to

Step 2: Specify activities to be undertaken and the time frame for

execution

Step 3: Provide measurable indicator. Describe it by stating

Outcome meets expectations when

Example: The goal is - Marketing Manager increases company

profit margins, through a 10 per cent increase in return-on-

investment, by end of the performance year. Then,

Marketing Manageris having the primary responsibility.

Increase in return-on-investmentis the means or the key activity.

10 per centis the target, or the measurable indicator.

End of the performance yearis the time-frame or the completion date.

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Actual Goal-Setting Discussion

Goals proposed by the employee reviewed, critiqued, clarified

Their outcome for managers and organisational goals understood

Manager may propose additional or substitute goals

employee goals finalised as proposed or mutually revised

Broad discussion on implementation plan: strategies, methods,approaches

Manager and employee agree on date and agenda for first progressreview meeting

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Performance Measures

Provide evidence of the extent to which goal is achieved

Becomes basis for monitoring, control and feedback on performance

Good-quality performance measures

Relate to results (outputs) not efforts (inputs)

Are within the employees control to achieve Are observable and quantitative for which measurement data are

available

Indicate positive or negative performance

P

ositive standard: What organisation wants that goal toachieve

Negative standard: What organisation doesnt want tosee intermediate or final outcomes that show that thegoal has not been achieved

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Potential Appraisal

Unit I, Session 7

26th Aug, 2011

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Potential Appraisal

In a competitive world, past achievements do not always

guarantee future success.

To face competition, firms need to advance at a highspeed in all areas:

technology, processes, management, finances, quality, costs,

new market creation, new product development, and above all

increased efficiency, motivation and productivity on the part of

employees.

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In the present scenario, organizations have become,

Technology driven,

Market sensitive and customer focused,

Quality centered, cost effective,

Systems driven and

Managerially effective.

To achieve these, it is necessary to have competent

managers in strategic roles.

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Potential Appraisal is a Necessity

Need to constantly identify competent people. Competency requirements, Job profile / tasks, Reliable and valid method of

assessing

Potential Appraisal is an assessment of the extent to which a givenindividual has the potential to perform a new task/job. (Unlike

promoting in the same vertical)

The best way to judge a persons potential and therefore ability tosucceed in the new role is to actually put the person on job andassess him.

However the organization cannot afford to take risks by assigningnew roles.

For this the Assessment Centre methodology gains significance

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Advantages & Disadvantages

Potential is about the future while performance deals with the

past.

Potential should relate to competencies while performance

related to KPAs and other tasks assigned.

It is only fair to create the conditions under which the

individual is likely to perform the now job and test him in

relation with the situation as well as his competencies

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Assessment Centre

An assessment centre is a comprehensive, standardized

procedure in which multiple assessment techniques such as

situational exercises and job simulation (business games,

discussions, reports and presentation) are used to evaluate

individual employees for a variety of decisions.

Most frequently the approach has been applied to individuals

being considered for selection, promotion, placement or

special training and development in management.

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1. Psychometric Tests Aptitude tests (verbal & numerical reasoning)

Ability tests (knowledge, awareness, problem solving)

Personality tests

The tests are selected for assessment taking the

following points into consideration

Objective what needs to be measured;

Reliability and validity;

Length of time

Availability of qualified experts

Cost involved

Tools used in Assessment Centre

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2. Interviews: Background interviews(current / previous jobs)

Situational interviews(hypothetical/job knowledge

Behavior event interviews(BEI)(behavioral description)

3. Leaderless Group Discussion:

Consists of 6 participants to solve a problem(real life) within a

specified time period.

No one is assigned as the chairperson/roles to team


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4. In-basket techniques:

It is a simulation exercise

Day-to-day decision-making situation

Memos, correspondence, telephone messages, notes,

requests, etc. for participants attention. The participant asked to deal with the tasks within a time

period, putting his reaction as much as possible in

writing.

Based on the reactions, his/her activity level, problem

solving, planning, organizing, time management,

delegation, etc. can be assessed.


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5. Management Games/Simulation Exercises:

A real life situation is simulated for an entire group stock

trading, running a manufacturing operation.

Degree of complexity varies in these games.

Often a computer program is used to generate information and

stimulate the game.

Participants are not allowed to use the computer, but a person

acts as a mediator(neutral /observer) between computer and the

group.

The interactive nature of the game provides strategic planning,

team work & skills, leadership, analytical ability, etc.

Assessor training is also very extensive


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6. Role Plays

Method of adopting roles from real situations.

It can be described as method of studying the nature of

certain roles by acting out its concrete details in contrived

situation that permits better and more objective

observation.(Pareek and Rao, 1981) Gains insights on persons attitudes and behavior in a

particular role.

Conflict management, leadership sills, group problem

solving, team skills, flexibility can be evaluated.

This technique minimizes the distortions and magnifies

the situation to focus on certain aspects.

7. Presentations


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