Human Resource Management By Dr. Debashish Sengupta

Performance Management Systems 8 CHAPTER Human Resource Management

Key Terms 3600 Performance Appraisal Method Annual Appraisal Balanced Score Card Checklist Method Core Responsibilities Critical Incident Method Essay Method Graphic Rating Scale Individual Contribution Areas Mid-term Review Paired Comparison Ranking Method The Concept of “fit” The Performance management cycle Traditional Appraisal Method Human Resource Management

Scope of Performance Management Human Resource Management

Performance Management Cycle (PMC) Human Resource Management

Setting Objectives The PMS Cycle (refer figure 8.1) starts with setting objectives for each individual employee which of course have to be aligned with the objectives of the respective teams, department units and consequently with the organization as a whole. These objectives could be classified as Key Result Areas (KRAs), Core Responsibilities (CRs) and Individual Contribution Areas (ICAs). Human Resource Management

Key Result Areas (KRAs) KRAs are identified areas of performance that support the organizational goals & have to be accomplished in the performance year. Core Responsibilities (CRs) CRs are on-going tasks or outcomes based on day to day work of an individual and do not have any pre-determined targets at the beginning of the performance period. Individual Contribution Areas (ICAs) ICAs measure the contributions that go beyond the expected realm of job performance. They are outcome-based and measurable. Human Resource Management

Use of Balanced Score Card (BSC) in Setting KRAs Balanced Score Card (BSC) concept was given by Kaplan and Norton. Over the years balanced score card has found several applications. The application of balanced score card in performance management system (PMS) has primarily been in the form of setting objectives and aligning objectives to that of the firm. Human Resource Management

Four Parameters & Cascading Principle These four parameters typically follow a cascading principle. It goes like this: Human Resource Management

Objective Setting & Cascading Principle The objectives are set around each of these parameters. For example: Human Resource Management

Managerial Role in Setting Objectives The process of setting objectives would typically be completed using the following steps: a) Identifying the KRAs, ICAs and CRs. b) Preparing a performance plan for the performance period. c) Submission of the same to manager, d) Managerial ratification; e) Approval by the reviewer. Human Resource Management

Traditional Appraisal Methods 1. Essay Method: In this method the appraiser (supervisor) writes a description of the employee performance. This method suffers from high degree of subjectivity and possible bias. 2. Ranking Method: In ranking method, the supervisor ranks the employee, reporting to him, from best to poorest. However the method is subjective since the criteria that the rater could choose to come-up with the ranking are ambiguous. Human Resource Management

Doubts on Accuracy of Performance Appraisals Traditional appraisal methods suffer from problems of subjectivity and lack of accuracy. Performance appraisals are an organizational fact of life. Often, however, they are sources of controversy and dissatisfaction within organizations (Williams, Hummert, 1990). Human Resource Management

Contemporary Appraisal Methods Appraising performance according to the nature of the task, matching task nature with performance appraisal format, and designing training programs to increase observational accuracy may improve performance appraisal systems as well as contribute to successful organizational placement and promotion decisions (Lee, 1985). While no system is perfect, and no system perfectly and reliably measures employee performance, managers need to examine why this established process is so painful for all participants (Heathfield, 2007). Human Resource Management

Management by Objectives (MBO) MBO as a concept was given by Peter Drucker in 1954. The critical and integral part of MBO is setting goals or objectives. The rater and ratee decide the goals for the rate that are derived from the organizational goals. The standards and measures for these goals are decided and the ratee is then assessed based on his/her meeting those goals or objectives. Human Resource Management

3600 Performance Appraisal Method 3600 performance appraisal method or the ‘multi-rater’ method was first used by GE (US). 3600method allows both vertical and horizontal assessment of an employee’s performance, besides the self assessment by the employee. The ‘horizontal’ assessment includes the peers and family & friends. The ‘vertical’ assessment includes the superiors, juniors, clients and direct reports. Human Resource Management

Steps in Annual Appraisal Process The various steps in the annual appraisal are as follows: a) Employee complete self-appraisal and submits it to the manager; b) Manager reviews the same with respect to the KRAs, ICAs and CRs; c) Manager determines the KRA, ICA and CR score; d) Manager shares the same with the employee (feedback), discusses the same and clarifies doubts, if any; Human Resource Management

The Appraisal Interview The manager’s or supervisor’s role is very important in the appraisal. As a manager it is important to ensure that it is effective and fruitful for both the employee and the organization. Managers should remember that the appraisal interview is a learning and development exercise and it is neither fault- finding one nor a reward-punishment deciding process. Human Resource Management

Feedback Feedback is a very important element of the entire appraisal process. Its parallel can be drawn with closing the sales in a sales meeting. Performance evaluation is providing employees with performance feedback. Such feedback should reinforce the link between employee performance and employer expectations (Clausen, Jones, Rich, 2008). Human Resource Management

Manager’s Role in Feedback Manager’s role in providing feedback to the employee is significant to his/her receptiveness and probability of acting-upon it. Human Resource Management

Conclusion Performance management systems have been often misunderstood and misinterpreted. Most of the times, they have been equated to year-end appraisals and not seen as an on-going process. Viewing PMS as a continuous process, facilitated by the manager(s) to leverage individual, team and consequently organizational performance is key. Human Resource Management