Chapter 4 MANAGING EMPLOYEE PERFORMANCE AND PERFORMANCE APPRAISAL

PREVIEW The main components in a performance management system. The benefits of having an effective performance appraisal system. The factors to consider when designing an appraisal system. The requirements for implementing an appraisal system. The types of follow-up action which may be taken after an employee’s performance has been appraised.

WHAT IS PERFORMANCE MANAGEMENT SYSTEM? An employee performance management system is a means to ensure that every employee works in a manner which is aligned with organizational goals and which ensures that the employee reaches his maximum potential on the job.

HR SYSTEMS RELATED TO PERFORMANCE MANAGEMENT Recruitment of workers Training Compensation and reward systems Managing the performance of individual employees

PERFORMANCE MANAGEMENT SYSTEMS An organization’s performance management system is designed by HR specialists. The performance management system is implemented by heads of departments and all managers.

FACTORS AFFECTING EMPLOYEE PERFORMANCE EMPLOYEE’S PERFORMANCE EMPLOYEE’S KNOWLEDGE EMPLOYEE’S SKILL EMPLOYEE’S MOTIVATION WORK ENVIRONMENT

COMPONENTS OF A PERFORMANCE MANAGEMENT SYSTEM Organizational plans, including the setting of objectives which are established for all levels down to the individual worker. Implementation of the work by the individual worker, accompanied by appropriate forms of monitoring by the worker’s manager or supervisor. Appraisal of the work of the individual workers. Follow-up action taken after the appraisal.

Decide on Training Needs PERFORMANCE MANAGEMENT Objectives Set Work Implemented Ongoing Monitoring Coaching Decide on Training Needs Reward Employees Performance Review Take Remedial Action

OBJECTIVES If employees are to perform well, they must: KNOW WHAT they are supposed to do, and KNOW HOW to do the work.

OBJECTIVES (cont.) The objectives/targets/key result areas/key performance indicators established for each employee must be: Capable of achievement by the employee Measurable Accepted by the employee Time-bound

OBJECTIVES (cont.) Performance objectives may relate to: Quantity of output Quality of output Behaviour of employee Development of employee

IMPLEMENTATION OF WORK BY THE EMPLOYEE While the work is being carried out by the employee, the manager must: Monitor; Give feedback regularly; and Coach, if necessary.

BENEFITS OF A PERFORMANCE APPRAISAL SYSTEM Encourages quality performance by rewarding those who do well. Improves current performance by giving workers feedback. Assists in identifying training needs. Provides documentation if disciplinary proceedings are needed. Provides a channel of communication between managers and their subordinates.

EFFECTIVE APPRAISAL SYSTEMS Are integrated into a performance management system. Receive top management support. Are customized to the needs of the organization. Are acceptable and understandable. Are reliable and unbiased as far as possible.

POTENTIAL BIAS IN PERFORMANCE APPRAISAL Recency effect Halo effect Central tendency Prejudice and stereotyping Fatigue

WHO GIVES INPUT INTO AN APPRAISAL? THE MANAGER OTHER PARTIES THE EMPLOYEE COLLEAGUES SUBORDINATES

APPRAISAL METHODS Comparative methods Trait rating scales Essay technique

SKILLS NEEDED FOR EFFECTIVE PERFORMANCE MANAGEMENT Observation of performance Coaching Counselling

AFTER THE APPRAISAL DISCUSSION Follow-up??? Set objectives for next time period Give rewards Provide retraining Institute disciplinary action

DISMISSAL FOR POOR PERFORMANCE Prior to dismissing an employee for poor performance, an employer must: Give warnings to the employee Provide assistance so that he or she can improve Give sufficient time for the employee to improve

REVIEW The main components in a performance management system. The benefits of having an effective performance appraisal system. The factors to consider when designing an appraisal system. The requirements for implementing an appraisal system. The types of follow-up action which may be taken after an employee’s performance has been appraised.