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Amity Business School

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MBA-Gen 3rd Semester

Performance Management System

Prof (Dr.)Parul Jhajharia

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Story of an ambitious girl

Rashi is a sweet looking but very ambitious girl who

wants to get her first break in IBM, her dream companyas management trainee. She is in her 2nd year of herpost graduate programme in Business Management, shefeels that she needs to polish herself both in terms of her

job knowledge and soft skills to get the job. She knows

that she has to work very very hard for it!!!

Kindly help her to create her KPAs so that she can plan outher course of action.

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Hence, Performance means

It is what is expected to be delivered by an individual or

a set of individuals within a time frame

What is expected to delivered could be stated in terms of

results or efforts, tasks and quality, with specification ofconditions under which it is to be delivered.

The performance equation:

Individual performance= Ability*Motivation*Organizational

support+ or Chance factors.

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Performance improvement isharder today.

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Every employee has already experienced

almost every performance improvement

programs and philosophy!!!

But Still

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Individuals performance can be improved ifwe dont look at the individual as a problem,

instead look at his/ her problem!!!

There are ten truism related to performance:

Truism 1: No one takes a job to fail

Truism 2:People are motivated by two things

fear of punishment

Hope of reward

Truism 3: Small performance problems that are not addressed early,

becomes big problems and can spread to good performers.

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Truism 4 :If you do what you always do,

you will get what you have always got.

Truism 5 :Every body is good at

something, the trick is to find out what

each person is good at.

Truism 6 :Sometimes the best course ofaction is no action at all.

Truism 7 : Catch people doing something

right.

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Truism 8: You get better performance

shoulder to shoulder, rather than standing

over someone.

Truism 9: It takes different strokes for

different folks

Truism10: You just cant talk the talk, you

must walk the walk.

:

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Performance Management involves

thinking through various facets of

performance, identifying critical

dimensions of performance, planning,

reviewing and developing and enhancing

performance and related competencies.

Its commonsensical and enjoying!!!

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An employee on an average works for - 9 hrs

In a week he works for45- 54 hrs

In a month he works for 180-216 hrs

In a year, he works for 2160-2592 hrs

Suppose the employees CTC is 4 lakhs annually

Hence, per hour cost is Rs. 200

And he will be expected to deliver an output ranging from

3-10 times his cost to the company

i.e. opportunity cost of an employee drawing a salary of4

lakhs ranges from Rs 600-2000

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If the employee cost is Rs. 40 lakhs, his opportunity cost/

hr to the company will be Rs 6000-20000/-

If we take the minimum, the per hour cost to company of

an ordinary manager is likely to be Rs 1600 and above

and the opportunity cost can be 16000 and above.

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Glimpse of conversation L&T managers had

with TV Rao, Udai Pareek and their team

The managers insisted that before appraisals

are being done, there are certain things which

need to be done:

First clarify the individual of what he means

by his performance.

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Given this kind of a cost, imagine the

benefits the organization will derive if the

individuals become aware of how he useshis time and tries to ensure that the input

he provides yields the desired output.

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should be told of what he is expected toperform, not at the time of appraisal but at thebeginning of the year.

He Its the responsibility of the boss to tell thesubordinate so that he can correct himselfand improve his performance.

If a person is not performing well, he should

be told in the middle of the year itself ratherthan wait till the end.

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You need to have a system of giving feedback to thesubordinates, it should be made mandatory.

Appraisee should be given a chance to make a

presentation about what he has done and what he has

failed to do before the boss makes up his mind and

assesses him.

Later, the appraisee should know exactly the

assessment of his boss so that he can improve himself.

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And then, the tool came out to be

Performance planning

Analysis Development

Review

Identification of developmental needs

Participatory planning Culture building

Competence building

Upward appraisal.

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Introduction to PMS- its Philosophy

To build a culture of performance by

aligning and organizational objectives and

encouraging open communication andcontinuous feedback.

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Its Objectives

To accomplish the overall organizational vision and

mission by linking individual performance to company

objectives. To cascade companys strategic goal to individual goal.

To promote professional excellence

To encourage two way communication between theexecutives and the reporting officer and bring about

transparency in the performance assessment process.

To evaluate the potential of the executive to assume

higher responsibility in the organization.

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To provide a source of talent for meeting the

organizations growth requirements through a process of

mapping the competencies and potential of executives

To translate future skills requirements of the organization

into individual developmental plans.

To identify high performers and recognize them through

rewards and incentives

To facilitate fulfillment of individual aspirations.

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A simple flow of PMS

Performance planning

Mid Year Review

Annual Assessment

Normalization

Feedback, Coaching and counseling.

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The details of the tool

Defining performance taking into account all the

complexities (KPAs)

Planning performance both in terms of the input, output,

conditions under which they are to take place.

Measuring performance and understanding the

limitations in measuring performance.

Analyzing performance and understanding what caused

it or contributed to it. Positively? or negatively?

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Developing capabilities to perform or the capability togive inputs, possess competencies to convert the inputs

into desired outputs.

Monitoring and reviewing it (performance review

discussions)

Recognizing various dimensions of performance and

rewarding it where appropriate.

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In precise, it can be put as:

Task and target setting Managerial & behavioral Qualities

Self Appraisal

Performance Assessment

Performance Review Discussions

Development plan

Final Assessment

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Focus Dimensions

The focus of performance can be on many

dimensions, it could be on:

Quality

Cost/ Financial dimensions.

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Forward Linkages of PMS

Its linkages with Training and

Development

Its linkage with Reward system

Linkage with Career development system.

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Objectives of performance

Appraisals The past To control employee behavior by using it as an

instrument for rewards, punishments and threats.

To make decisions regarding salary increases and

promotions.

To place people to do the right kinds of jobs.

To identify the training and developmental needs of the

employees.

.

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Insights provided by behavioralsciences researches in the past.

Employees would work hard when they feel that they are

wanted in the organization.

They would work better when they are clear about what

they are expected to do.

The would work better when they start experiencing

success in the tasks they are performing.

The would work better when they feel that the

organization is providing them an opportunity to develop

and utilize their capabilities to a large extent.

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Hence, the new objectives of

performance Appraisals They can help each employee to be more aware and

clear about his role.

They can help in identifying the developmental needs of

each employee with respect to his role.

They can be instruments in helping each employee to

understand his/her own strengths and weakness withrespect to his role and functions in the company.

They can increase mutuality between each employee

and his superior so that there is a congenial environment

for a better performance.

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And a few more..

Communications patterns increases not only in thedyadic relationships, but also in other relationshipsexisting in the organization.

It acts as a tool for introspection for realistic goal setting.

It also plays a role in internalizing the cultures, norms

and values of the organization. It also helps in developing employees for performing

higher levels jobs by continuously reinforcing thedevelopment of behaviors an qualities required for higherlevel job positions in the organizations.

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Vrooms Expectancy theory of

Motivation

It is also called as the VIE theory

Valence

Instrumentality

Expectancy

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Equity theory of work motivation

This theory argues that a major input intojob performance and satisfaction is the

degree of equity( or inequity) that people

perceive in their work situation.

It is another cognitively based motivation

theory.

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Components of an effective PMS.

Direction sharing

Role clarification

Goal setting and planning

Goal alignment

Developing goal setting

Ongoing performance monitoring

Ongoing Feedback

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Coaching and support

Performance Assessment

Rewards, Recognition and Compensation

Workflow and process control and return and

investment management

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PMS at L&T Ltd.

It was introduced in 1976. This system was

based on the philosophy of the company that themain strength of the company is its human

resources and there should be continuous

efforts made to develop them and their

capabilities.The main purpose of the Appraisal systems is to

help an employee improve his performance and

develop himself.

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Objectives of the PerformanceAppraisal systems

1. To obtain data, as free from bias as possible, in order

to:a) Identify strengths and weakness of the employees so asto contribute to his growth and development by:

(i) Self appraisal ;

(ii) Feedback and guidance from superior

(iii) Training(b) Provide inputs for Administration of rewards such as

salary, promotions, additional responsibilities.

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() To have employees set objectives for the year inconsultation with his superior for the purpose of:

a) Setting realistic goals and improving performance

b) Helping the employee plan his activities and work forthe year

c) Enabling the employees to see how his individual

goals are derived from, and contribute to overalldepartment /organizational goals.

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Objectives and target setting

the first month of each financial year, every appraisee sets his job Inrelated objectives ( not more than five to six) in consultation with his

immediate superior. The purpose of this task is to give a sense of direction to ones work

efforts.

These targets so decided has should correspond to the majorsareas of one responsibilities.

As far as possible, every appraisee should determine and writedown his objectives along with targets before discussing with hissuperior.

Before identifying and setting objectives, it is recommended that allappraisee and appraiser should study the guidelines for setting theguidelines.

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Targets are expressed in terms of standards of

performance and deadlines., and as far as possible they

should be quantified targets.

If such is not possible, the performance can be

evaluated by reviewing the accomplishment of specific

activities with time schedule for completion as agreed

between appraisee and the appraiser.

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Action by the Appraisee (15th of the month)should fill in Part A and relevant portion of Part B and

hand over the form to his immediate superior.

Action by the immediate Superior- he ensuresthat all appraisees under him submit their PA forms duly

filled in by the given date. On the receipt, he will arrange

for appraisal interviews and would discuss the

appraisees performance, strengths, weakness and waysof development.

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Pre-Interview Preparation: done all the necessary work athis end to make the interview effective and successful.

During the interview: After discussing all the relevant and

necessary action, the immediate superior enters his rating andremarks in the Part B at the time of interview, after having discussed

the ratings and remarks.

He will fill in independently his ratings and remarks against overall

performance and behavioral attributes in Part C, after the interview

is over, but will discuss strengths and weakness with the appraisee

before filling Part C.

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Action after the completion of forms: He will take note of the remarks

given and will retain the copy of Summary of the Training Needs

form to monitor the progress of T&D of the appraisees under him,

and will forward all the forms along with the copy of Summary of the

form to the HRD Dept by 15th Jan.

HRD Dept, after scrutiny will forward the performance appraisals to

Manager, staff Administration, who will examine the correlation

between appraisal and recommendation for promotion or an

increment. Thereafter, the forms will be filed in the employees file.

HRD Dept will retain the Summary of Training Needs form and plan

the training programms accordingly.

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