1. pcm unit - ii.pptx
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Concept & Process of Performance Management
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Performance management
Performance management is a means of getting better results from the
organization, teams, and individuals by managing performance in line with
organizational strategy. It requires: Knowing what priorities managers and
their employees should be focusing on;
Having clear targets and goals that focus on priorities;
Measuring actual performance against agreed targets and goals; and
Identifying and remedying performance problems.
Performance management may be defined as a planned and systematicapproach to managing the performance of individual ensuring their
personal development and contribution towards organizational goals.
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Objectives of performance management
Broadly classified as:
1. Strategic : Comprises the role of managing strategy implementation andchallenging assumption e.g. Formulate strategy determining what the
objectives of the organization are and how the organization plans to
achieve them.
2. Communication : Comprises the role of checking position, complying
with the non-negotiable parameters, communicating directions,providing feedback, and benchmarking e.g communicate direction to
the rest of the employees, by passing on information about what are
the strategic goals individuals are expected to achieve.
3. Motivational : Comprises the role of evaluating and rewarding
behavior, and encouraging improvement and learning e.g encourage
improvement and learning at all levels and across the organization
by nurturing talents of employees for building their capabilities to
demonstrate success in a fair and objective manner
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Importance & benefits of PM
1.Help in clarifying mission, vision, strategy, and values of the
organization
2. Helps in improving business process
3.Helps in attracting and retaining talents
4. Assist management in validating their recruitment & selection process
5. Facilitates in competency mapping
6. Helps in organizational change by finding the GAP between potential
capabilities & present abilities
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7. Helps in making a shift from Industrial Relation to Individual
Relation.
8. Helps in aligning individual performance expectations with the
organizations
mission & strategy
9.Hepls employees in evaluating their competencies
10 Helps in integrating the organizations ethics into an individuals
inherent value system through reinforcement and counseling methods
Importance & benefits of PM
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Performance Management Process
Performance PlanningPhase I
Performance ExecutionPhase II
Performance AssessmentPhase III
Performance ReviewPhase IV
Performance DevelopmentPhase V
Performance AuditPhase VI
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Phase I Performance planning
Key accountability ofsubordinates job is discussed for the upcoming
year
Major areas in which subordinate id responsible for getting results
Specific objectives the subordinate will achieve with in each
accountability area Standards that will be used to evaluate how well the subordinate has
achieved the each objective
The performance factors, competencies or behavior that will be
critical in determining how results will be achieved
The elements of development plan that subordinate will complete
during the year
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Phase II Performance Execution
During this phase the supervisor is responsible for on going
feedback and coaching.
Phase III Performance Assessment
Appraiser and appraisee independently evaluate the degree towhich the different elements of the plan were achieved. The
manager completes the assessment of the subordinates
performance and typically get it reviewed and approved by
senior management and HR personnel prior to discuss it with the
subordinate.
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Phase IV Performance Review
Now appraiser and appraisee meet to review their appraisal.
they discuss the results that were achieved and the
performance factors that contributed to their
accomplishment. It includes
Results achieved
Performance and behavioral effectiveness
Overall performance
Development plan and progress
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Performance Appraisal
It is a method of evaluating behavior of employee in the
work spot, normally including both the quantitative and
qualitative aspects of job performance.
It is a systematic and objective way of evaluating bothwork-related behavior and potential of employee.
It is a process that involves determining and
communicating to an employee how he or she is
performing the job and ideally, establishing a plan of
improvement.
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Performance appraisal
Employee Assessmentthe assessment of an employee's
effectiveness, usually as undertaken at regular intervals. It
may be defined as a structured formal interaction between
a subordinate and supervisor in which the work
performance of the subordinate is examined and
discussed with a view to identifying weaknesses and
strengths as well as opportunities for improvement and
skills development
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Why Have Performance Appraisal ?
Performance Appraisal offers several advantages at thelevel of the:
Individual
Recognition of past effort
Developmental requirements can be uncovered
Team
Alignment of effort with objectives
Motivation of team members
Organization Development of staff
Achievement of key objectives
Best and focused utilization of human resources
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Objectives of Performance Appraisal
Compensation decisions
Promotion decisions
Training and development programmes Feedback to the employee
Personal growth and development
To explore hidden potential
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Characteristics of an Effective Appraisal System
Job-related criteria Performance expectations
Standardization
Trained appraisers Continuous open communication
Performance reviews
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Who can Appraise ?
Supervisor
Peers
Subordinates
Self Appraisal
Users of services
Consultants
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Performance Management Vs. Performance Appraisal
Strategic
Long-run Goals
Forward looking
Constant
Process
Integrated
Holistic
Manager Owned
Focus on individual's growth
Practical and effective
Can be linked to total rewards
Operational
Short to mid-run goals
Retrospective
Episodic
System
Isolated from business needs
Individualistic
HR Owned
Focus on individual past
mistakes and behavior
Linked to financial rewards
Performance Management Performance Appraisal
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Performance Appraisal Process
Establishing performance standards
Communicating standards and expectations
Measuring the actual performance
Comparing with standards
Discussing results (providing feedback)
Decision making (taking corrective actions)
Step 1
Step 2
Step 3
Step 4
Step 5
Step 6
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STEP 1 : ESTABLISHING PERFORMANCE STANDARDS
The first step in the process of performance appraisal is the setting up
of the standards which will be used to as the base to compare the actual
performance of the employees. This step requires setting the criteria to
judge The performance of the employees as successful or unsuccessful
and the degrees of their contribution to the organizational goals and
objectives. The standards set should be clear, easily understandable and
in Measurable terms. In case the performance of the employee cannot be
measured, great Care should be taken to describe the standards.
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STEP 2 :COMMUNICATING THE STANDARDS:
Once set, it is the responsibility of the management to
communicate the standards to all the employees of the
organization. The employees should be informed and the standards
should be clearly explained to the. This will help them to
understand their roles and to know what exactly is expected from
them. The standards should also be communicated to the appraisers
or the evaluators and if required, the standards can also be
modified at this stage itself according to the relevant feedback
from the employees or the evaluators.
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STEP 3 : MEASURING THE ACTUAL PERFORMANCE :
The most difficult part of the Performance appraisal process is
measuring the actual performance of the employees that is the
work done by the employees during the specified period of time.
It is a continuous process which involves monitoring the
performance throughout the year. This stage requires the careful
selection of the appropriate techniques of measurement, taking
care that personal bias does not affect the outcome of theprocess and providing assistance rather than interfering in an
employees work.
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STEP 4 : COMPARING THE ACTUAL WITH THE DESIRED
PERFORMANCE
The actual performance is compared with the desired or the
standard performance. The comparison tells the deviations in
the performance of the employees from the standards set.
The result can show the actual performance being more than
the desired performance or, the actual Performance being
less than the desired performance depicting a negative
deviation in the organizational performance. It includes
recalling, evaluating and analysis of data related to the
employees performance.
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STEP 5 : DISCUSSING RESULTS
The result of the appraisal is communicated and discussed with
the employees on one-to-one basis. The focus of this discussion
is on communication and listening. The results, the problems and
the possible solutions are discussed with the aim of problem
solving and reaching consensus. The feedback should be given
with a positive attitude as this can have an effect on the
employees future performance. The purpose of the meeting
should be to solve the problems faced and motivate the
employees to perform better.
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STEP 6 : DECISION MAKING
The last step of the process is to take decisions which can
be taken either to improve the performance of the
employees, take the required corrective actions, or the
related HR decisions like rewards, promotions, demotions,
transfers etc.
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Methods of Performance appraisal
Individual Evaluation
Methods
Multiple-person
evaluation methods
Other Methods
1. Confidential Report
2. Essay evaluation
3. Critical incidents
4. Checklist
5. Graphic rating scale
6. Behaviorally anchored
rating scales
7. Forced choice
methods
8. MBO
1. Ranking
2. Paired Comparison
3. Forced Distribution
1. Group Appraisal
2. Assessment
Centre
3. 360 degree
feedback
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Individual evaluation methods
1. Confidential report :- It is a descriptive report prepared,
generally at the end of every year, by the employees immediate
superior. The report highlights the strengths and weakness of
the subordinate.
2. Essay Evaluation :-This method asked managers / supervisors
to describe strengths and weaknesses of an employees
behavior. This technique is normally used with a combination
of the graphic rating scale. Its an non-qualitative technique. Therater consider the following factors : 1 Job knowledge 2.
Employee relations with co-workers 3. Employees planning &
organizing ability 4. Employees attitude & perceptions
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3. Critical incident technique : Under this, the manager prepares lists
of statements of every effective and ineffective behavior of an
employee. The manager maintains logs on each employee, whereby
he periodically records critical incidents of the workers behavior.
Example :
July12 the sales officer patiently attended to customers complaint. He
is polite, prompt, enthusiastic in solving the customers problem.
OR
July12 The sales officer stayed 45 min. over on his break during the
busiest part of the day. He failed to answer the store managers call
thrice. He is lazy, negligent, stubborn and uninterested in work.
Individual evaluation methods
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4. Checklist: It represents a set of objectives or descriptive
statements about the employee and his behavior. Example
Individual evaluation methods
Statements Response
Is he respected by his colleagues Yes / No
Does he respect his superiors Yes / No
Does he make mistakes frequently Yes/No
Is the employee really interested in the task assignedYes / No
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5. Graphic rating scale: In this a printed form is used to evaluate
the performance of an employee. A variety of traits may be used
in these types of rating devices, the most common being the
quality and quantity of work. In the below example the rater
will have to use a scale of1 unsatisfactory to 5 outstanding
Individual evaluation methods
Parameters 1 2 3 4 5
Quality of work
Neatness, thoroughness and accurate
Knowledge of jobA clear understanding of the factors connected
with the job
Cooperation
Willingness and ability to work with others
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6. Behaviorally anchored rating scale : It is a combination of
rating scale and critical incident technique. The criticalincidents serve as anchor statements on a scale and the rating
form usually contains six to eight specifically defined
performance dimensions. Following are the steps:
1. Collect critical incidents
2. Identify performance dimensions
3. Reclassification of incidents
4. Assigning scale values to the incidents
5. Producing final statements
Individual evaluation methods
B h i ll A h d R i S l
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Behaviorally Anchored Rating Scales
Uses specific descriptions of actual behaviors to rate various levels of
actual performance
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7. Forced choice methods : The primary purpose of the forced
choice method is to correct the tendency of a rater to give
consistently high or low ratings to all the employees. The rater
is asked to indicate which of the four phrases is the most and
least descriptive of a particular worker. In the preparation of
sets of phrases an expert is needed and as such the methods
becomes very expensive.
Individual evaluation methods
I di id l l ti th d
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Individual evaluation methods
S.N Forced Choice items
1
Least Most
A Does not anticipate difficulties A
B Grasps explanation easily and quickly B
C Does not waste time C
D Very easy to talk to D
2
Least Most
A Can be a leader A
B Wastes time on unproductive things B
C At all times, cool and calm C
D Smart Worker D
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8. Management by objectives : MBO requires the management to
set specific, measurable goals with each employee and then
periodically discuss the latters progress towards these goals. This
technique emphasis participatively set goals that are tangible,
verifiable and measurable.
It is a process whereby the superior and subordinate manager of
an organization jointly identify its common goals, define each
individuals major areas of responsibility in terms of the results
expected of him, and use these measure for operating the unit and
assessing the contribution of each of its members.
INDIVIDUALEVALUATIONMETHODS
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Characteristics of MBO
Superiors and subordinate get together and jointly agree upon the list of
principal duties and areas of responsibilities of the individual
The subordinate sets his own short-term department goals in co-
operation with his superior.
They agree upon the criteria for measuring and evaluating performance.
Superiors and subordinate collectively evaluate progress towards the
agreed-upon goals. And if needed the goals can be modified for rest of
the periods
In this method the superior plays a supportive role, who helps the
subordinate to achieve the goals and provide counseling and coaching.
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Process of MBO
1. Set the organizations goals
2. Set departmental goals
3. Discuss departmental goals
4. Define expected results (Individual)
5. Performance Review
6. Provide Feedback
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Multiple-person Evaluation Techniques
9. Ranking Method : In this method the ranking of an
employee in a work group is done against that of
another employee. The relative position of each
employee is expressed in terms of his numerical rank.The evaluator is asked to rate employees from highest
to lowest on some overall criterion. When a large
number of employees are working, ranking of
individual becomes a difficult issue.
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10. Paired comparison method : Each employee is
compared with all other employees. Ranking becomes
easier and more reliable under the paired comparison.
For every trait employee is to be compared with all
other employees.
Multiple-person Evaluation Techniques
M l i l E l i T h i
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11. Forced distribution method : The rater is asked to appraise
the employee according to a predetermined distribution scale.
Normally two criteria used here for rating are the job
performance and promotability. Further, a five point
performance scale is used without any mention of descriptive
statements. Employees are placed between two extreme of good
and bad performance. For e.g. all top grade workers should go
to the highest 10% grade; 20% employees should go to the
next highest grade and so on.
Multiple-person Evaluation Techniques
O h M h d
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Other Methods
12. Group Appraisal :- An employee is appraised by a group of
appraisers. This group is consist of the immediate supervisor of
the employee, other supervisor who have close contact with the
employee work, manager or head of the department and
consultants. This group uses one of the multiple techniques
discussed earlier. The immediate supervisor enlightens other
members about job characteristics, demand, standards of
performance, etc. then the group appraises the performance of the
employee, compares the actual with standards, find deviations,
discuss the reasons and suggest ways for improvement.
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13. Assessment Centre : - This is not merely a technique of performance
appraisal by itself. In fact it is a system or organization, where
assessment of several individuals is done by various experts using
various techniques. In this approach, individual from various
departments are brought together to spend two or three days working
on individual of group assignments similar to the ones they would be
handling when promoted. It includes the activities and methods like,
in-basket, role playing, case studies, simulation exercises etc. Theobserver rank the performance of each and every participants in order
to merit. These centers are basically meant for evaluating the potential
of candidate to be considered for promotion, training & development.
Other Methods
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Other Methods
14. 360-Degree Feedback System: This system collects
performance information from multiple parties, including
ones subordinates, peers, supervisor and customer.
Generally done for development rather than for pay
raises. Upward and peer feedback may or may not have
positive effects on behavior. Introducing a 360-degree
system into a culture not prepared for it can have
disastrous effects
d f d i 360 d i l
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Procedure for conducting 360-degree appraisal
Determining Objectives
Deciding the receiver and
giver of feedback
Establish performance
Criteria
Mode of collecting data
Finalize the method of data
Analysis
Evaluation and
communication
To identify T&D needs
For determination of compensation
Succession Planning or Performance Mgt.Decide about employees whose
performance are to be evaluated and who
will be the evaluator
The areas of work and behavior on which
feedback will be gathered
Development of questionnaire
Analysis may include performance dimensions
summary, individual item rating, individual
strength & weaknesses etc.
After the feedback is collected the data
should be communicated very carefully to
the all those concerned.
Execution of feedback The process of gathering the feedback shouldbe initiated
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Problems with Performance appraisal
Judgment Errors
Primacy Effect (First Impression)
Halo
Horn Effect
Leniency
Stereotyping
Recency effect
Poor Appraisal Forms
Lack of raters preparedness
Ineffective organization policies
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Potential Appraisal
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Potential appraisal
The potential appraisal refers to the appraisal i.e.
identification of the hidden talents and skills of a person.
The person might or might not be aware of them. Potential
appraisal is a future oriented appraisal whose main
objective is to identify and evaluate the potential of the
employees to assume higher positions and responsibilities
in the organizational hierarchy. Many organizations
consider and use potential appraisal as a part of the
performance appraisal processes.
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In organizations that subscribe to HRD, the potential (career-
enhancement possibilities) of every employee is assessed
periodically.
Such assessment is used for development planning as well as
for placement.
Every year or two, the supervisor of a group of employee
assesses the potential of each of them to perform different
(usually higher level) functions on the basis of the
supervisors observations and experiences during that period.
Potential appraisal
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Potential appraisal can serve the following purposes:
To advise employees about their overall career development and
future prospects
Help the organization to chalk out succession plans
Motivate the employees to further develop their skills and
competencies.
To identify the training needs.
S f P i l A i l
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PotentialAppraisal
Datastorage
Manpowerplanning
Job rotation
andenlargement
Training &development
Feedback
andcounseling
Careerplanning anddevelopment
Scope of Potential Appraisal
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How do companies appraise potential
Problem
EmployeesStars
Planned
Separation
Solid
Citizens
Performance
Potential
Low
High
High
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Potential appraisal Criteria
Conceptual effectiveness (includes business orientation,
vision, entrepreneurial orientation, sense of reality)
Interpersonal effectiveness (includes network directedness,
negotiation power, personal influence, verbal behavior)
Operational effectiveness (includes result orientation,
individual effectiveness, risk-taking, control)
Achievement Motivation (drive, professional ambition,
innovativeness, stability)
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Steps of performance appraisal
1. Role descriptions
2. Quality needed to perform the roles
3. Rating mechanisms (rating by others, tests, games,
records)
4. Organizing the system weightage setting for
performance dimensions)
5. Feedback