Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide 12.1 The Treatment of Individual Performance Traditionally centred on the assessment of performance and the allocation of reward Typically viewed as the result of the interaction between individual ability and motivation Planning and enabling performance have a critical effect on individual performance

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide 12.2 Appraisal systems Traditionally provided a formalised process to review employee performance Typically designed on a central basis, usually by HR function Typically requires line managers to appraise performance of their staff Appraisal forms often not living forms but archived in HR areas Issues of performance are often neglected until next appraisal

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide 12.3 What is Appraised Varies between organisations Can cover – personality, behaviour or job performance

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide 12.4 Qualitative Appraisal Can involve writing an unstructured narrative on the general performance of the appraisee Guidance may be provided on areas to assess Can leave important areas unappraised

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide 12.5 What is actually measured Extent the individual conforms to the organisation (Coates, 1994) Some traditional appraisal - personality traits Behaviour and performance on the job Aspects of the job or major headings on the job description Measure job objectives

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide 12.6 Linking Ratings to Behaviour Behaviour anchored rating scales - BARS Behavioural Observations Scales - BOS

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide 12.7 Electronic Surveillance Systems Activity rates of computer operators can be recorded and analysed How calls of telephone staff can be analysed

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide 12.8 Mystery Shoppers Testing the performance of sales staff by sending in assessors acting as customers

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide 12.9 Level of Appraisal IRS Survey, 2003: 79 of 96 very large employers appraised employees

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide Concerns over Appraisal Treated as an administrative exercise Ineffective Does little to improve performance of employees in the future Lack clarity of purpose Expected to deliver in too many areas Used for both development and pay which conflict

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide Common Reasons for Failure – American Research Unclear performance criteria Ineffective rating instrument Poor working relationship with the boss Appraiser lacked information on the manager’s actual performance (Longenecker, 1997)

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide Other Problems Indicated Lack of ongoing performance feedback Lack of focus on management development / improvement Problems with the process Review process lacking substance

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide Who Owns the System? Designed and imposed by HR – little ownership by line managers If forms completed and returned to HR – may be seen as paper filling exercise by the line

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide Performance Management Systems Increasingly seen as a way to manage employee performance Incorporates appraisal/review process A framework where performance can be directed, monitored, and links in the cycle audited (Mabey & Salaman, 1995)

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide Advantages of Performance Management Systems Being tied closely into the objectives of the organisation Represent a more holistic view of performance Appraisal or review is integrated with performance planning Performance is assessed and successful performance rewarded and reinforced (Bevan & Thompson, 1992)

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide Conceptual Foundation of Performance Management Relies on view that performance is more than ability and motivation Clarity of goals is key Goals are seen as motivators – Goal theory

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide Expectancy Theory & Performance Management Individuals motivated to act provided they expect to achieve the goals set Belief that achieving goals will lead to rewards Belief that rewards on offer are valued

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide Development Driven or Reward Driven 85% companies surveyed – linked performance management to pay Armstrong and Baron – found that only 43% of organisations reported such a link 82% had performance related pay IPD Survey 1992

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide Differences Between Performance Management & MBO Performance management Tends to be tailor made Produced in house Emphasis on mutual objective setting & ongoing support MBO An off the peg system Generally involves objectives being imposed on managers from above

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide Characteristics of Performance Management Systems Table 12.1 Characteristics of performance management systems

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide Stages of a Typical Performance Management System Figure 12.1 Stages of a typical performance management system

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide An Objective Setting Cascade Figure 12.2 An objective-setting cascade

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide A Shared View of Expected Performance Individual objectives derived from team objectives An agreed job description jointly devised Objectives are outcome or results oriented Objectives are tightly defined and include measures to be assessed Objectives designed to stretch individuals and offer potential for development

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide SMART Objectives Specific Measurable Appropriate Relevant Timed

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide Delivering & Monitoring Performance The manager’s role – Enabling role while staff are working to achieve the performance agreed Organising resources Organising off-job training Being accessible Providing ongoing coaching Providing support & guidance

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide Reviews Normally informal Need not be part of formal system Can take place as needed Provide a forum for employee reward in terms of recognition of progress

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide Formal Performance Review & Assessment Need to concentrate on development issues to motivate Extent objectives have been met

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide Reward Some systems still include link to money Promotion and development often used as a reward

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide Critique (1 of 2) Needs to be line driven not HR driven Training in the introduction and use of system required System is only as good as the people who operationalise it Integration of activities important

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide Critique (2 of 2) Can suffer from same problems as traditional appraisal systems Managers can be influenced by subjective feelings Performance ratings can be de-motivating SMART targets can cause problems if not reviewed and updated regularly

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide Degree Feedback Whole range of feedback sought from a range of people and sources, e.g.: Peers SubordinatesMore senior managers Internal customers External customers Individuals themselves

Torrington, Hall & Taylor, Human Resource Management 6e, © Pearson Education Limited 2005 Slide Summary Performance management systems include more than appraisals There is conflict in many appraisal and performance management systems Current trends include greater employee ownership and involvement 360 degree feedback is becoming more widely used