Performance Management

Performance Management The greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark. Michelangelo

Performance is essentially what an employee does or does not do What Is Performance Performance is essentially what an employee does or does not do Common elements to performance Quality of output Quantity of output Timeliness of output Presence at work Cooperativeness

Factors That Influence Performance

Performance Management A process that consolidates: Goal setting Performance Appraisal Development of a common system the aim of which is to ensure that employee performance is supporting the company's strategic aims

Purposes for Performance Management Strategic Administrative Developmental

Purposes for Performance Management STRATEGIC Link between employee activity and organizational goals Define the SKA’s necessary for implementing the strategy Develop measurement and feed back system communicate corporate culture and values

Performance Appraisal Performance appraisal is the identification, measurement and management of human performance in organization Identification: knowing what behaviors lead to performance Measurement: anchored tools to provide consistent assessment of performance Management: feedback and goal setting

Difference between Performance Management & Performance Appraisal Efforts to align employee performance with the firm goals Defines performance Facilitates performance Encourages performance Performance Appraisal: Efforts to determine the extent to which an employee performs work effectively Measure performance Evaluate performance Feedback on performance

What is in Performance Appraisal System What is measured Who measure performance When is it measured How is it measure

What is Measured Traits Behavior Task Outcome

Who Measure Performance Supervisor Team Peers Self Customers Subordinates

When is it Measured On demand when required generally as follow Annually Quarterly Monthly Task Oriented

How is it Measure Absolute Standards Relative Standards MBO 360 Degree system

Performance Appraisal Methods Absolute Standards Relative Standards

Measuring an employees performance against some established Standards ABSOLUTE STANDARDS Measuring an employees performance against some established Standards Essay Appraisal Critical Incident Appraisal Checklist Appraisal Adjective Rating Scales Behaviorally Anchored Rating Scales

ABSOLUTE STANDARDS Essay Appraisal It is the simplest method of performance appraisal whereby the appraiser write a narrative describing an employee’s strength, weakness, past performance, potential & suggestion for improvement the weakness of this method is that it is much dependant on rater’s writing skills and provide only the qualitative data

Sample Essay Appraisal Name: Position: Department: Date started on job: Date of last rating: Date of this rating: Appraisal of Performance: ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Suggestions for development ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Prepared By: Position: Manager’s signature: Employee’s signature:

ABSOLUTE STANDARDS Critical incident Appraisal A performance appraisal method that focus on those critical or key behaviors that makes the difference between doing a job effectively or ineffectively. Critical incidents, with their focus on behaviors, judge performance rather then personalities. The weakness of this method is that it require regular incidents writing and on the other hand it suffer the same comparison problem in essay (i.e) Quantification

Sample Critical Incident Appraisal Continuing Duties Targets Critical Incidents Schedule production for plant 90% utilization of personal and machinery in plant: orders delivered on time Instituted new production scheduling system; decreased late orders by 10% Supervise procurement of raw materials and inventory control Minimize inventory costs while keeping adequate supplies on hand Let inventory storage costs rise 15% last month Ordered parts A and B by 20% under ordered C by 30% Supervise machinery maintenance No shutdowns due to faulty machinery Instituted new preventative maintenance system for plant, no break downs

ABSOLUTE STANDARDS Checklist Appraisal A performance appraisal type in which a rater check off those Behaviors of an employee that apply

ABSOLUTE STANDARDS Graphic/Adjective Trait Rating Scale One of the oldest and most popular methods of appraisal is the adjective rating scale in which a rating scale list traits (such as quality, quantity, job knowledge & integrity etc) and range of performance values (from unsatisfactory to outstanding for each traits. The strength of this system is that it provide qualitative analysis that is useful for comparison purpose.

ABSOLUTE STANDARDS Behaviorally Anchored Rating Scales BARS These scales combine major elements from the critical incident and adjective rating scale approaches. The appraiser rates the employees based on items along a continuum, but the points are example of actual behavior on the given job rather then general description or traits

ABSOLUTE STANDARDS Behaviorally Anchored Rating Scales BARS Although the development of Bars is time consuming and technical but it give more accurate gauge and clear standards

BARS Dimensions Quality of Group member input Group Member has read all agreed upon material Group Member participate in discussion, through not always prepare Group members does little work & offer no valuable ideas or feedback 5 4 3 2 1 Effective Ineffective BARS Dimensions Quality of Group member input

BARS for Supervision Effective 5 Can train and develop subordinates 4 Criticize of personnel in front of others Sets a poor example 5 4 3 2 1 Effective Ineffective BARS for Supervision Exhibits respect towards subordinates Does not lead by example

RELATIVE STANDARDS Evaluating an employee’s performance by comparing the employee performance with other employees. Group Order Ranking Individual Ranking Paired Comparison

RELATIVE STANDARDS Group Order Ranking/Forced Distribution The group order ranking method or forced distribution method is similar to grading on a curve and it requires the evaluator to place employee into a particular classification e.g 15 – High Performers 20 – High Average Performer 30 - Average Performer 20 - Low average Performer 15 – Low Performer

RELATIVE STANDARDS Group Order Ranking The main advantage of this method is that it’s avoid the problems of inflating performance in average column but some times when dealing to a small group times excellent performer may be forced to keep in low category

RELATIVE STANDARDS Paired Comparison In paired comparison method for every traits (quality of work, quantity of work, creativity etc) you pair and compare very subordinate. This method become unwieldy when large numbers are being compared

Management by Objective (MBO) MBO involves setting specific measurable goals with each employee and then periodically reviewing the progress made

Performance Appraisal under an MBO Program Management by Objectives

360 Degree Performance Appraisal 360 Degree Performance. Combination of self, peer, supervisor, and subordinate performance evaluation Definition - 360 Degree Performance Appraisal

Benefits of Performance Appraisal For the Management Identification of performers and non-performers and their development. Opportunity to prepare employees for assuming higher responsibilities. Opportunity to improve communication between the employees and the management. Identification of training an development needs. Generation of ideas for improvements. Better identification of potential and formulation of career plans For the Appraisee Better understanding of his role Clear understanding of strengths and weaknesses by employees Increased motivation, job satisfaction, and self-esteem. Opportunity of open discussion regarding work problems & how to overcome them Improved working relationships with the superiors.

Benefits of Performance Appraisal For the Organization Improved performance throughout the organization. Creation of a culture of continuous improvement and success. Conveyance of message that people are valued.

Common Problems in Appraisal Methods Leniency Error A means by which performance appraisal can be destroyed by evaluating employees against one’s own value system Halo & Horn Effect The tendency to let our assessment of an individual on one trait influence our evaluation of that person on other specific traits Central Tendency. The tendency of rater to give average ratings

Common Problems in Appraisal Methods Stereotyping (Rater Biased) A standard mental picture about a person based on person’s Sex, color, caste, age, style of clothing, political view etc Recency Error Recent behavior at evaluation time

Performance Appraisal Interview An interview in which the supervisor and subordinate review the appraisal and make plans to remedy defensives and reinforce strength