performance management

ConcernsWith the Outputs,Outcomes,Process & InputsOutputs: Achievement of ResultsOutcomes: The impact made on performanceProcess: Process required to achieve these resultsInputs: in terms of capabilities(Knowledge, skill and competencies) expected from team and individuals

ConcernsConcern with planningPlanning ahead to achieve future success ie defining expectationsExpressed as objectives and in business planConcern with measurement and reviewConcern with continuous development and improvement

ConcernsConcern for communicationConcern for Stake holdersEthical concern

Herman Aguinis, University of Colorado at Denver

PM is a natural processIn an effective organizations there will be clear defines about the Importance of defining objectives and of planning to achieve themPursuit of high performance by developing competence

Characteristics of Effective GoalsTime-BoundSMART

Performance Management ProcessDefine performance in behavioral terms

Improved Performance

Measure and assess performanceFeedback for goal setting and planning


PM EvolutionFirst Phase:The origin of performance management can be traced in the early 1960s when the performance appraisal systems were in practice. During this period,Annual Confidential Reports (ACRs)which was also known asEmployee service Recordswere maintained for controlling the behaviors of the employees and these reports provided substantial information on the performance of the employees. Any negative comment or a remark in the ESR or ACR used to adversely affect the prospects of career growth of an employee. The assessments were usually done for ten traits on a five or a ten point rating scale basis. These traits were job knowledge, sincerity, dynamism, punctuality, leadership, loyalty, etc. The remarks of these reports were never communicated to the employees and strict confidentiality was maintained in the entire process. The employees used to remain in absolute darkness due to the absence of a transparent mechanism of feedback and communication.

Evolution cntdSecond Phase:This phase continued from late 1960s till early 1970s, and the key hallmark of this phase was that whatever adverse remarks were incorporated in the performance reports were communicated to the employees so that they could take corrective actions for overcoming such deficiencies. In this process of appraising the performance, the reviewing officer used to enjoy a discretionary power of overruling the ratings given by the reporting officer. The employees usually used to get a formal written communication on their identified areas of improvements if the rating for any specific trait used to be below 33%.

Evolution cntdThird Phase:In this phase the term ACR was replaced by performance appraisal. One of the key changes that were introduced in this stage was that the employees were permitted to describe their accomplishments in the confidential performance reports. The employees were allowed to describe their accomplishments in the self appraisal forms in the end of a year. Besides inclusion of the traits in the rating scale, several new components were considered by many organizations which could measure the productivity and performance of an employee in quantifiable terms such as targets achieved, etc. Certain organizations also introduced a new section on training needs in the appraisal form. However, the confidentiality element was still being maintained and the entire process continued to be control oriented instead of being development oriented.

Fourth Phase:This phase started in mid 1970s and its origin was in India as great business tycoons like Larsen & Toubro, followed by State Bank of India and many others introduced appreciable reforms in this field. In this phase, the appraisal process was more development driven, target based (performance based), participative and open instead of being treated as a confidential process. The system focused on performance planning, review and development of an employee by following a methodical approach. In the entire process, the appraisee (employee) and the reporting officer mutually decided upon the key result areas in the beginning of a year and reviewed it after every six months. In the review period various issues such as factors affecting the performance, training needs of an employee, newer targets and also the ratings were discussed with the appraisee in a collaborative environment.This phase was a welcoming change in the area of performance management and many organizations introduced a new HR department for taking care of the developmental issues of the organization.

Evolution cntdFifth Phase:This phase was characterized by maturity in approach of handling peoples issues. It was more performance driven and emphasis was on development, planning and improvement. Utmost importance was given to culture building, team appraisals and quality circles were established for assessing the improvement in the overall employee productivity.The performance management system is still evolving and in the near future one may expect a far more objective and a transparent system.

MBOPerfomance AppraisalPerformance ManagementApplied to ManagersApplied to All StaffApplied to All staffEmphasis on individual objectivesIndividual Objectives may be includedemphasis on integrating corporate ,team and individual objectivesemphasis onquantified performance measuresSome qualitative performance indicators may also be includedCompetence requirements often included as well as quantified measuresAnnual AppraisalAnnual AppraisalContinous review with one or more formal reviewsTop down system with ratingsTop down system with ratingsJoint process,ratings less commonMay not direct link to payoften linked to payMay not be a direct link to payComplex Paper WorkComplex Paper WorkDocumentation often minimisedOwned by line managers and personnel deptOwned by perssonnel deptOwned by line management

An effective performance management systems aligns individual performance with the organizations mission ,vision and objectives ACABasic Aim of PMTwo simple proposition provide the founadtion upon PM is built

When people (individual and teams) know and understand what is expected of them, and have taken part in forming these expectations, they will use their best endeavors to meet themThe capacity to meet expectations depends on the levels of capability that can be achieved by individuals and teams ,the level of support they are given by management, and the processes, systems and resources made available to them by the organizations


Why PMIt provides structures built round the natural planning, monitoring ad reviewing processes of managementIt provides the impetus for planned and systematic learning activities and events that might otherwise lackingThe skills developed and nurtured by PM are ones everybody can use to their own benefit as well as to that of others


PM PM is communication a manager and a employee arrive together at an understanding of what work is to be accomplished, how it will be accomplished, how work is progressing towards desired results, and finally after effort is expended to accomplish the work, whether the performance has achieved the agreed upon plan. The process recycles when the manager and employees begin planning what work is to be accomplished for the next performance period. Performance management is an umbrella term that includes performance planning, performance review and performance appraisal, Major work plans and appraisals are generally made annually. Performance review occurs whenever a manager and an employee confirm, adjust, or correct their understanding of work performance during work routine work contacts

PMFowlerManagement has always been about getting things done,and good managers are concerned to get the right things done well. The essence of PM the organization of work to achieve the best possible results .PM is not a system or technique, it is the totality of the day to day activities of all managers

PMIPMA strategy which relates to every activity of the organization set in the context of its HR policies ,culture ,style and communication systems. The nature of the strategy depends on the organizational context and can vary from organization to organization


Learning organizationOrgnzn continually improves by rapidly creating and refining the capabilities required for future success


Learning Organization are good at doing 5 thingsSystematic Problem solvingExperimentationLearning from past experienceLearning from othersTransferring knowledge quickly

Organizational LearningLearning orgnztn have to be able to adapt to tneir context and develop their people to match the contextOrganztn Learning: Orgnztns can be describes as continuous learning systemsIts a process of coordinated systems change,with mechanisms built in for individuals and groups to access ,build and use organizational memory, structure and culture to develop long term orgnztnl capacity

Five Principles of Organizational LearningVision of the organization to be communicated and maintained across the workforceNeed to develop strategyFrequent dialogue, communication and conversation are major facilitator for organizational learningTo challenge people within the orgnztn to reexamine what they have doneIt is essential to develop a conducive learning and innovation climate

LearningLearning occurs under 2 conditionsWhen an orgnztn achieves what is intended &When a mismatch between intentions and outcomes is identified and corrected

Single & Double loop LearningArgyris distinguishes between single loop and duoble loopSingle loop learning orgztns define the governing variables ie what they expect to achieve in terms of targets and standards.They then monitor and review achievements , and take corrective action as necessary ,thus completing the loopDouble loop learning occurs when the monitoring process initiates action to redefine the governing variables to meet the new situation,which may be imposes by the external environment

The organization has learned something new about what has to be achieved in the light of changed circumstances and can then decide how this should be achieved,This learning is converted into action

Individual LearningIndividual learn from themselves and from other peopleFor effective learning to take place at the individual level it is essential to foster an environment where individuals are encouraged to take risks and experiments, where mistakes are tolerated, but where means exists for those involved to learn from their experience

Continuous learning & development In Practicable ,learning and work must be integrated .This means that encouragement must be given to all employees to learn from the problems, challenges and success inherent in their day to day activitiesPM is a continous process and this can be achieved in two ways.Performance & development reviews & PDP

PDPIts carried out by individuals with guidance, encouragement and help from their managers as requiredAim: To promote learning and to provide people with the knowledge and portfolio of transferable skills that will help to progress their careerFocus is on Job & Career Development

Responsibility for PDP

It is emphasised that individuals are primarily responsible for progressing the plan and for ensuring that they play their part in implementing itPeople also need encouragement ,guidance & supportTeam leaders are expected to..

Measuring PerformanceAppropriate Performance measurement should haveEnsures Customer requirements have been metProvides standards for establishing comparisonHighlights quality problem and determining which areas require priority attentionGives an indication of the costs of poor qualityJustifies the use of resources Provides feedback for driving the improvement effort

IS WHAT IS BEING DONE WORTH DOING AND HAS IT BEEN DONE WELL

Principles of measurementWhat to measure is ultimately determined by what the customer considers importantThe customers needs are translated into strategic priorities and strategic plan indicating what should be measuredImprovement by providing both team motivation and information on what work and what doesnt work

Measurement issuesYou cant measure creativity but you can measure the impact of itMeasurement fails because they cannot consider things beyond control but measures only indicate changes in the performance levels, they cannot explain changesMeasurement is only possible when results are quantifiable ,they cannot be applied when there is nothing to count, but whenever people are expected to do something you can assess the extent to which they do it

Criteria for Performance Measures Be related to the objectivesFocus on measurable outputs and accomplishmentsBe precise as possibleProvide a sound basis for feedback and actionBe comprehensive

CoachingCoaching is a person to person technique designed to develop individual knowledge ,skills and attitude. It is most effective if it takes place informally as part of the normal process of management or team leadership

Aims of CoachingTo aware of how well they are doingControlled delegation into practice .ie managers can delegate new tasks or enlarged areas of workEnable guidance to be provided on how to carry out specific tasks

Coaching SequenceIdentify the areas of knowledge,skills or capabilities where learning needs to take place to qualify people to carry out the task ,provide for continuous development, enhance transferrable skills or improve performance

Ensure that people understand and accept the need to learn

Discuss with people what needs to be learned and the best way to undertake the learning

Get people to work out how they can manage their own learning while identifying where they will need help from the boss or some one else

Provide encouragement and advice to people in pursuing the self learning programeProvide specific guidance as required where people need your helpAgree how progress be monitored and reviewed

CounsellingWorkplace counselling can be defined as any activity in the workplace where one individual uses a set of skills and techniques to help another individual to take responsibility for and to manage their own decision making whether it is work related or personal IPD

Counselling stagesRecognition & understanding recognizing the existence of problems and issuesEmpowering:enabling employess to recognize their own problems or situation and encouraging them to express it ,work out a solution and take action to implement itResourcing: Managing the problem,which will include deciding on any further help individuals may need from their managers,a specialist or an outside resource

Performance Problem SolvingOrganizations can provide the climate and the process for solving performance problems byCreating a culture in which success is applauded\Developing performance mgmt process that set performance standardsTraining managers in how to handle performance and disciplinary actionsContinuously monitoring performance and analyzing the reason for failure in order to develop organizational solutionsEnsuring that organizational learning is encouragedFoster a double loop learning approach


Approaches to Performance Management TrainingPMT should focus on1.Delivering training on just in time basis to ensure that learning is reinforced2.Define the learning style3.Working on organization climate & culture4.Conducting coaching workshops so that the principles of coaching to improve performance are properly understood5.Working on performance planning6.Conducting performance review7.Working on the consistency of review

Objectives for PMTTo let people know about the whys and why PMWhat does PM consists of How should PM be carried out

To spell out their contributionTo train people in the skills they have to use

Performance Management & PayPaying for performance or for competence ,or both is regarded by many organization as desirable for 3 reasonsIt motivates people to perform better or to develop their skills and competenciesIt delivers the message that performance and competence are importantIt is fair and equitable to reward people differentially according to their performance ,competence or contribution

Approaches to contingency payPRP for individuals or teams &Competence related payOrMix of two-third approach-Mixed Model-Contribution related pay These collectively may be referred to as contingency or discretionary pay,because the reward is dependent on the performance of the individual or team on individual competence and the amount rewarded is at the discretion of the management

PRPIndividual PRP relates pay progression or bonuses to the assessed performance of individualsIt is an effective motivator It conveys a clear message to employees that the organization believes in indeed requires-a high level of performance from everyone and is prepared to pay for itHigh performers should be paid more than low performers

Criteria for Performance PayIndividuals and teams should be clear about the targets and standards of performance requiredThey must be able to measure their performanceThey should understand what rewards they will receive for achieving the end resultThe reward should be worthwileThe results required to generate the reward should be attainableThe basis upon which rewards are made should be communicated positively and should be easy to understand

Developments in PM

FromToSystemProcessAppraisalJoint ReviewOutputsOutputs/InputsPRPDevelopmentTop Down360 degree feedbackDirectiveSupportiveMonolithic FlexibleOwned by HROwned by users

Effective Performance Management System

Definition of PMContinuous Process ofIdentifying Measuring Developing

The performance of individuals and teams

Definition of PM (continued)andAligning performance

with

Strategic Goals of the organization

Contributions of Performance Management

Contributions of Performance Management For EmployeesClarify definitions of jobsuccess criteriaIncrease motivation to perform Increase self-esteemEnhance self-insight and development

Contributions of Performance Management For ManagersCommunicate supervisors views of performance more clearlyManagers gain insight about subordinatesBetter and more timely differentiation between good and poor performersEmployees become more competent

Contributions of Performance Management For Organization/HR FunctionClarify organizational goals Facilitate organizational changeFairer, more appropriate administrative actionsBetter protection from lawsuits

Disadvantages/Dangers of Poorly-implemented PM Systems

For EmployeesLowered self-esteemEmployee burnout and job dissatisfactionDamaged relationshipsUse of false or misleading information


For ManagersIncreased turnoverDecreased motivation to performUnjustified demands on managers resourcesVarying and unfair standards and ratings


For OrganizationWasted time and moneyUnclear ratings systemEmerging biasesIncreased risk of litigation

Reward SystemsDefinitionSet of mechanisms for distributingTangible returnsandIntangible or relational returns

As part of an employment relationship

Reward Systems Tangible returnsCash compensationBase payCost-of-Living & Contingent PayIncentives (short- and long-term)

Reward Systems Tangible returns (continued)Benefits, such asIncome ProtectionAllowancesWork/life focus

Reward Systems Intangible returnsRelational returns, such asRecognition and statusEmployment securityChallenging workLearning opportunities

Purposes of PM Systems: OverviewStrategicAdministrativeInformationalDevelopmentalOrganizational maintenanceDocumentational

Strategic PurposeLink individual goals with organizations goalsCommunicate most crucial business strategic initiatives

Administrative PurposeProvide information for making decisions re:Salary adjustmentsPromotionsRetention or terminationRecognition of individual performanceLayoffs

Informational PurposeCommunicate to Employees:ExpectationsWhat is importantHow they are doingHow to improve

Developmental PurposePerformance feedback/coachingIdentification of individual strengths and weaknessesCauses of performance deficienciesTailor development of individual career path

Organizational Maintenance PurposePlan effective workforceAssess future training needsEvaluate performance at organizational levelEvaluate effectiveness of HR interventions

Documentational PurposeValidate selection instrumentsDocument administrative decisionsHelp meet legal requirements

An Ideal PM System: 14 CharacteristicsCongruent with organizational strategyThoroughPracticalMeaningfulSpecificIdentifies effective/ ineffective performanceReliable

An Ideal PM System: 14 Characteristics (continued)ValidAcceptable and FairInclusiveOpen (No Secrets)CorrectableStandardizedEthical

PM provides information for:Development of training to meet organizational needsWorkforce planningRecruitment and hiring decisionsDevelopment of compensation systemsPM helps for the Integration with other departments & development pgms

*10*Base pay Hourly wagesSalaryCost-of-Living & Contingent PayUsually permanent increases in pay based on either cost of living or performanceCovered in more detail in Module 11

Incentives (short- and long-term)Used to increase performanceE.g., bonuses (short term) or stock options/ownership (long term) Income ProtectionSometimes required under law, such as Social Security (what about unemployment insurance in the USA?)Disability pay, medical insurance, pension plans, savings plans

AllowancesE.g., housing transportation (e.g., company provides car)

*Work/life focus (to help employee balance work/home life)Such as vacation time, flextime and telecommuting, services (e.g., counseling, financial planning, fitness activities)

Relational ReturnsSuch as recognition, status, employment security, challenging work, opportunities to learn, opportunities to form personal relationships*Note: the following is slide used before (some of this is not in Module 1)

Links employee activities with organizations mission and goals

Identifies results and behaviors needed to carry out strategy

Maximizes extent employees exhibit those behaviors and results

Only 13% of organizations use PM to communicate organizational purpose and goals*

performance management

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