1. Lesson-09 Overview of the Performance Management Lesson-09 Presented By: Furqan Ilyas Divisional Manager HR Shahkam Industries (Pvt.) Limited What gets measured gets done and … What gets measured becomes important!

2. Lesson Plan Performance Management Process 30-minutes –Overview of the performance management –What is performance & performance management –Comparing Performance Appraisal & Performance Management –Performance management system and its objectives –Steps in Performance Appraisal –Contribution of Performance Management System –Disadvantages of poorly implemented PM Systems –Article # 01“Purpose of Performance Appraisal” 30-minutes –Article # 02“Feed Back not Appraisal” 30-minutes TEA BREAK 15-Minutes to understand Performance Management & Strategic Planning 45-minutes –linking the system to key organizational objectives characteristics and strategy –Identifying Key Result Areas & Development through PMS –Overall Performance Planning Cycle –Performance & Development Planning (KRA’s & Competence planning) –Linkage of PMS to Consequence Management Performance Management maturity Model Executives Speak out on Performance Management

3. Performance appraisal –Evaluating an employee’s current and/or past performance relative to his or her performance standards once a year without an ongoing effort to provide feedback and coaching. Performance management –Continuous process of identifying, measuring and developing the performance of the individuals/teams and aligning performance with the strategic goals of the Organization. Comparing Performance Appraisal and Performance Management

4. What is performance & performance management Steven covey suggests that we" begin with end in mind”. The goal of performance management is to help employees improve their performance and their effectiveness. Performance is the results accomplishments by the employee in meeting specific objectives or the development of competencies necessary for effectively doing a job. Performance management is a continuous process of supervisors employees working together to; –Set performance expectations linked to Organizational objectives –Establish criteria against which individual and unit performance can be measured –Identify areas for competency improvement –Provide performance feedback –Continually enhance performance

5. PERFORMANCE APPRAISAL SYSTEM “A Process that enhances performance, personal growth and company productivity”

6. Purpose of Performance Appraisal?

7. QUESTIONS 1.Why managers, supervisors, and employees hate the thoughts of traditional Performance appraisal system? 2.What should be the aims of Performance appraisal system in order to make appraisal effective and comfortable? 3.What factors one need to consider in order to ensure Performance appraisals free from bias?

8. Article-02 Feedback, not appraisal By Christopher D. Lee Publisher: H.R Magazine

9.  The article argues against appraisals as an effective tool of performance management.  It also argues that appraisal is by design a one way communication in which the employees have little or no say unlike feedback.  Feedback and appraisal are fundamentally different. The basic differences inferred from the article are as follows: FeedbackAppraisal Provides informationProvides judgement Generally verbalWritten and official Continuous processEvent based (monthly, yearly, etc.) Two way communicationOne way communication

10.  Feedbacks give opportunities to employees to improve their performance as per required benchmarks while the job is being carried out.  More frequent the interaction, the better. However this does not mean that it should be redundant or without any significant agenda.  Criticism can be given in small doses rather than in one big chunk at the end of the year.  The article encourages a new performance management system in which the supervisors act as coaches rather than judges allotting ratings. This will result in effective communication and positive outcomes for the company.

11. Why Appraise Performance? Appraisals provide information for promotion and salary decisions Provides opportunity to review an employee’s work related behavior with the goal of correcting deficiencies Is part of the career-planning process Appraisals help manage and improve your firm’s performance

12. Steps in Appraising Performance Define the Job Appraise Performance Provide Feedback Make sure all agree on duties Compare performance to the standard Discuss progress & make plans

13. Contribution of Performance Management System Motivation to perform is increased-feedback Self esteem is increased-feedback Managers gain insight about subordinates The definitions of job and criteria are clarified Self insight and development are enhanced. Administrative actions are more fair and appropriate Organizational goals are made clear. Employees become more competent There is better protection from lawsuits There is better and more timely differentiation between good and poor performance. Supervisors views of performance are communicated more clearly Organizational change is facilitated Motivation, commitment and intentions to stay in the organization are enhanced.

14. Performance management - The problems  no clear direction, weak values and performance culture.  vague and inequitable objectives.  variable and inequitable appraisal/review leading to lack of improved performance and motivation.  inadequate provision for training and development.  poor communications due to bureaucracy.

15. Disadvantages of poorly implemented PM Systems Increased turn over Use of misleading information –If standardized system is not in place Lowered self esteem –If feedback is provided in an inappropriate way Wasted time and money Damaged relationships Decreased motivation to perform –No Reward linkage Employee burnout and job dissatisfaction Increased risk of litigation Unjustified demands on the managers’ and employees’ resources Emerging biases –personal values, biases are likely to replace Organizational standards Unclear ratings system –because of poor communication

16. Strategy- Based Performance Management Strategic Business Plan Mission/Vision/Values Department/Unit/ Individual Objectives Core Competencies How Competencies What Performance Objectives Employee’s Responsibilities Achieve objective Solicit feedback & coaching Communicate openly Collect & Share Data Prepare for reviews Manager’s Responsibilities Create conditions that motivate Update objectives Provide feedback Provide develop. opportunities Reinforce effective behavior Phase 1: Performance Planning Objectives Competencies IDP’s Phase 3: Evaluation Objectives Competencies IDP’s Phase 2: Monitoring & Coaching Objectives Competencies IDP’s

18. 18 Performance Management System Model Performance Planning Establish and define  Key responsibilities  Objectives  Expected outcomes  Priorities  Behavioral factors Performance Monitoring Timely, relevant feedback  Maintain log  Mid-Year review  Refine responsibilities/objectives  Revisit priorities Performance Appraisal  Compile/review data  Request self-appraisal  Prepare draft appraisal  Review with next-level supervisor  Finalize appraisal  Meet with employee Development & Follow Up  Identify interests and needs to enhance performance  Establish training plan  Review job description  Identify new challenges

19. PMS aims to meet these basic objectives... Drive vision and performance across the company Meet key stakeholder expectations from the PMS  Build Performance Focus  Alignment of individual with corporate goals  Consistency in the performance planning process  Ownership of performance by line  Facilitate process of planning, monitoring & review  Make an objective assessment of performance.  Enable him to provide objective feedback  Enable focus on capability development of appraisee Appraiser Perspective  Provide clear performance definition  Transparency in the process  Clear linkage with rewards & other HR systems Top Mgt. Perspective Appraisee Perspective

20. Characteristics of the “Performance Management” Process Facilitates Quarterly Appraisals Facilitates “mid-course” corrections through monthly reviews for specific departments Defines desired corporate, division and department performance through “Business Planning” Aligns individual performance to corporate, division and department performance Facilitates mid-course corrections through Performance Reviews Links performance on KRAs to a Variable Pay Scheme, to sharpen focus on performance around “business goals” Facilitates a “Balanced view of Performance” through linking KRAs and Routine Responsibilities to “annual increments” Focuses not only on “performance” but also on “development”

21. Definition of Performance Key Responsibility AreasRoutine Responsibilities  KRAs are “Critical Achievements” required to deliver Globals desired business results  The targets for these are derived from the Corporate goals and objectives- these have been derived through the Balanced Scorecard exercise  Routine Responsibilities are “on-going tasks or outcomes that are undertaken or delivered on a day-to-day basis  The targets for these come from the targets on process efficiency that are either set internally in a department/ division or as a part of initiatives like Six Sigma

22. Identifying Key Result Areas –KRAs are directly linked to the business goals and to ensure that alignment, a tool called the “Balanced Scorecard” may be used. Framework for articulation of corporate strategy Development of strategic initiatives along 4 themes - Financial, Customer, Internal Process and Learning & Growth Cascading of strategy to actionable initiatives (KRA’s) at Division & Department levels

23. Development through PMS –A key element of PMS, focusing on building individual capability using Competencies. –Competencies are “Skills and abilities described in behavioral terms that are coachable, observable, measurable, and critical to organizational performance” for e.g., teamwork –No marks assigned - used only for Development –Competency dictionary is under preparation. –Levels of Proficiency and behavioral indicators would be defined for each Competency once established.

24. Key Roles in PMS AppraiseeAppraiserReviewer Every Employee whose performance is assessed in XXXX Every Executive who assesses the performance of one or more Appraisees that report to him/her Your Appraiser’s Appraiser, who is responsible for reviewing the entire performance process  It’s about your Performance  You are the key driver of the process  Will help you manage your performance & provide continuous feedback and coaching  Will ensure Objectivity, Transparency & Consistency

25. Overall Performance Planning Cycle Corporate Performance Planning Session Division Target Setting Session Individual Performance Planning Session Q1: Appraisal review & feedback Q2: Appraisal review & feedback Q3: Appraisal review & feedback Q4: Final Performance Appraisal Mid December End December 14 th January 7 th April 7 th July 7 th October 7 th January Ongoing monthly review and feedback

26. Performance and Development Planning KRAs Routine Responsibilities  Performance Planning Development Planning Competencies Other Skill Gaps 

27. Performance Planning [and linkages to pay-outs] Key Result Areas Routine Responsibilities Average of quarterly “Final Scores” [As depicted above] Based on an understanding of the role (max. 4-5 nos.) Overall Score Will serve as the basis for fixed pay increases or promotional decisions Overall Performance Rating Key Result Areas From Department /BSC (max. 8) covering at least 1 from each category of BSC Final Score Will serve as the basis for variable payout Accentuating performance on key result areas Quarterly [Q1, Q2, Q3 & Q4] Annually [End of Q4] Relative Weightage for KRAs Relative Weightage for Routine Responsibilit ies Simple Average

28. Development Planning Competencies Competencies to be picked from the Competency Master and expected levels applicable to the role to be identified Development Planning Training Needs Developmental Competencies A maximum of 4, to be identified from the list Other Skill Gaps (Behavioural/ Technical) Forms the basis for the Training Calendar drawn by HR. The Appraiser to drive the “learning and development” of the Appraisee throughout the year, based on this Development Plan Development Plan Any number, agreed upon by the Appraiser and the Appraisee, based on the specific needs of the role

29. Assessing Development Plans Rating Competencies* During the year-end appraisal, the Appraiser will rate the Appraisee on the Competencies, based on the 5 point rating scale mentioned below. These ratings will be used only for “Developmental purposes” and will not form a part of the “Overall Score” and will thus not be linked to incentives or increments. Assessing Development Plans Other Skills Career Aspirations* The Appraiser will also assess the achievement of the Development Plan of the Appraisee on Other Skills during the year, on the action plans charted by the Appraisee. This however, will not result in any scoring of any sort Based on the “current performance levels” of the incumbent, the Appraiser, in consultation with the Appraisee, will capture “Career Aspirations” for the Appraisee, if any will provide his/ her assessment of the readiness/ potential of the Appraisee based on the scale mentioned in the next slide.

30. Linkage of PMS to Consequence Management Score on KRA’s Variable Pay component Cumulative Score on KRA’s and Routine Responsibilities Fixed Pay Increments Promotion Decisions Rating on Competencies Development Plan Training Plan

31. Continual Improvement Corporate University Xchange

32. Headlines – Executives Speak out on Performance Management “I use Performance Measurement and Management as a core management tool for myself and my direct reports, and I firmly believe we must all see PM not just as a year- end review process but as a way to manage our individual performance and direct it in the most effective and efficient ways.” “Performance = results + behaviors” “ ” “We have been doing this for 5 years and every year we are getting better at it (and we are light years ahead of the industry).” “Performance Management is a CEO-driven initiative and we have 98% participation throughout the organization.”

33. Assignments Assignment –Performance Appraisal forms –KRA’s & KPI’s for various functions