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PERFORMANCE MANAGEMENT AND

COMPETENCY MAPPING

PROF. SHWETA MITTAL


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EVOLUTION OF PERFORMANCE APPRAISAL

There are early references to performance appraisal in America going

back over a hundred years. The federal Civil Service Commissions

merit rating system was in place in 1887. Lord & Taylor introduced

performance appraisal in 1914.

Before World War II, however, very few organizations conducted

any formal performance appraisals.

In the 1950s Peter Druckers novel idea of management by

objectives (MBO) and Douglas McGregors book The Human Side ofEnterprise, which introduced his notions of Theory X and Theory Y,

gained a lot of attention.

A few companies moved from a mere trait assessment to the

development of a procedure that concentrated on goal setting andmade the appraisal process a shared responsibility between the

individual and the manager. From the work of Drucker and McGregor,

the performance appraisal procedure has grown to the point where a

huge majority of companies now have a formal appraisal system.


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Effective development of managers, McGregor wrote in a 1957

Harvard Business Reviewarticle, does not include coercing them

(no matter how benevolently) into acceptance of the goals of the

enterprise, nor does it mean manipulating their behavior to suit

organizational needs.

Rather, it calls for creating a relationship within which a man can

take responsibility for developing his own potentialities, plan for

himself, and learn from putting his plans into action.


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Druckers initial proposal of an MBO process to replace trait appraisals

and McGregors integration of a Theory Y approach into the

appraisal process produced a change in the way organizations went

about assessing the contributions of their members.

General Electric was singled out by McGregor as an example of a

company that was using an MBO/Theory Y approach to performance

appraisal.

GE conducted a truly scientific study in the early 1960s to test theeffectiveness of its annual, comprehensive appraisal approach.

It found that:

Criticism has a negative effect on achievement of goals.

Praise has little effect one way of the other.

Performance improves most when specific goals are established.


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Coaching should be a day-to-day, not a once-a-year activity.

Mutual goal setting, not criticism, improves performance.

Interviews designed primarily to improve a mans performance should not

at the same time weigh his salary or promotion in the balance.

Participation by the employee in the goal-setting procedure helps produce

favorable results.

These findings remain today as valid as they were when GE first developed

them.

Performance appraisal as a management tool spread quickly in the 1950s,

when about half of 400 employers surveyed reported using appraisal

systems.

Today, depending on the survey, somewhere between

three-quarters and nine-tenths of all companies use a formal performance

appraisal procedure.


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Armstrong and Baron (2004) observe that performance management

establishes a shared understanding about what is to be achieved and anapproach to leading and developing people which will ensure that it is

achieved.

Performance management is a systematic and holistic approach toidentify critical dimensions of performance and to carry out activities

necessary to ensure that the missions , objectives , goals , vision , and

values of the organization are being met in an effective and efficient

Manner.


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According to Armstrong, PfM is a means of getting better results from

the organizations, teams and individuals by understanding and managing

performance within the agreed framework of planned goals and

competency requirements. It is a process for establishing sharedunderstanding about what is to be achieved and an approach to

managing and developing people.

PfM Integrated Approach

Armstrong and Baron, defines PfM as a strategic and integrated approachin delivering sustained success to organizations by improving

performance of people by developing the capabilities of teams and

individuals. These experts consider PfM as a strategic tool since it is

concerned with achievement of long-term organizational goals and

effective functioning of organizations in its external environment.


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PfM effects four types of integrations namely,

Vertical Integration :- Aligning objectives at organizational , individual ,

and team levels and integrating them for effective performance.

Functional integration :- It deals with focusing functional energies , plans,

Policies , and strategies onto tasks at different levels and parts of the

organization.

Human resource integration :- This ensures effective integration ofdifferent subsystems of HR management to achieve the organizational goals

with optimum performance.

Goal integration :- It focuses on arriving at a congruence between the needs,

Aspirations, and goals of the managers with that of the goals and objectivesof the organization.


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Performance management is a continuous process of identifying ,

measuring, and developing the performance of individuals and teams

and aligning performance with the strategic goals of the organization.

EXAMPLES :- In Merrill Lynch , employees and managers set

employee objectives in the month of January.

Mid year reviews are taken.

Finally end of the year review incorporates feedback from several

sources, evaluates progress towards objectives and identifies areas

that need improvement. Managers also get extensive training on how toset objectives and conduct reviews.

At Siemens , the performance management system is based

on three pillars : setting clear and measurable goals, implementing

concrete action, and imposing rigorous consequences.

A survey conducted by the consulting firm Watson Wyatt showed that

only 3 in 10 employees believe their companys performance review

system actually helped them improve their performance.


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Performance Managementis NOT

performance appraisal


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PM is NOT performance appraisal

Performance Management Strategic business considerations

Driven by line manager Ongoing feedback

So employee can improve performance


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PM is NOT performance appraisal

Performance Appraisal Driven by HR

Assesses employee Strengths & Weaknesses

Once a year

Lacks ongoing feedback


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PERFORMANCE MANAGEMENT SYSTEM

Performance management involves thinking through variousfacets of performance , identifying critical dimensions ofperformance, planning, reviewing and developing and enhancingperformance and related competencies.

It is simple, commonsensical and enjoyable.

Performance has many dimensions:-1. Output or result dimensions

2. Input dimension

3. Time dimension

4. Focus dimension

5. Quality dimension

6. Cost dimension


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Result and Output :- The most acceptable and visible as well as

measurable dimension of performance is result or the output. The sales

figures, customers numbers, financial targets etc are all stated in result

form. They are called key result areas.

Input Dimension :- The input dimension deals with the activities or tasks to

be accomplished by the individual. Performance equation says that any

individuals is a function of three sets of factors : ability or competence to

perform various tasks that lead to performance, motivation to carry on eachof these tasks or work efforts to carry out the tasks and the organizational

support one gets to carry out these tasks.

Time Dimension :- Performance can be defined for a task, for a day , for a

week, for a month , year or for life. The time period for performance is

important. Performance management is time bound as well as role specific.


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Focus :- The performance of a sales executive focus can be on market

Share , profits or new areas covered .


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Difference between Performance Appraisal Systems and PMS

PAS PMSFocus is on performanceappraisal and generation ofratings.

Emphasis is on relativeevaluation of individuals.

Annual Exercise

Emphasis is on ratings and

Evaluation.

Focus is on performancemanagement.

Emphasis is on performanceimprovements .

Continuous process.

Emphasis is on performance

planning, analysis , review,development and

improvements.


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PAS PMS

Rewards and recognition of

good performance is animportant component.

Designed and monitored bythe HR department.

Ownership is mostly with theHR department.

Defining and setting

performance standards is anintegral part.

Designed by the HRdepartment but could bemonitored by the respectivedepartments themselves.

Ownership is with line

managers, HR facilitates itsimplementation.


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PAS PMS

KPAs or KRAs are used asplanning mechanisms.

Developmental needs areidentified in the beginning ofthe year on the basis of the

competency requirements forthe coming year.

There are review mechanisms

essentially to bringperformance improvements.

KPAs and KRAs are used

for bringing in objectivity.

Developmental needs are

identified at the end of the

year on the basis of the

appraisal of competency

gaps.

There are review

mechanisms to ensureobjectivity in ratings.


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

a set of individuals within a time frame. What is expected to be

delivered could be stated in terms of result or effort, tasks and

quality , with specification of condition under which it is to be

delivered.


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PERFORMANCE MANAGEMENT CONSISTS OF THE

FOLLOWING :-

1.Defining performance taking into account all thecomplexities.

2.Planning performance both in terms of the input, output,

conditions under which these are to take place.

3.Analyzing performance and understanding what caused it

or contributed to it . Positively ? Negatively ?.

4. Developing capabilities to perform or the capability to give

inputs , possess competencies to convert the inputs intodesired output.

5. Monitoring and reviewing it.

6.Recognizing various dimensions of performance andrewarding it where appropriate.


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OBJECTIVES OF PERFORMANCE APPRAISAL THE

PAST

The appraisal system in most organizations are designedtoday to meet the following objectives :

1. To control employee behavior by using it as an instrumentfor rewards, punishments and threats.

2. To make decisions regarding salary increases andpromotions .

3. To appraise people confidentially and generate dataabout employee for placement and promotion.

4. To identify the training and developmental needs of theemployees.


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NEW OBJECTIVES OF PERFORMANCE

APPRAISALPerformance appraisal systems can serve the following purposes, if

designed properly:-

1. They can help each employee to understand more and more about

his role and become clear about his functions.

2. They can be instruments in helping each employee to understand his

own strengths and weaknesses with respect to his role and functions

in the company.

3. They can help in identifying the developmental needs of each

employee with respect to his role and functions.

4. They can increase mutuality between each employee and his

supervising officer.

5. They can be mechanisms of increasing communication between

employee and his supervising officer.


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6. They can be instruments to provide an opportunity for the employee for self

reflection and individual goal setting so that individual planned and monitored

development takes place.

7. They can play a role in helping every employee internalize the culture , normsand values of the organization .

8. They can help in preparing employees for performing higher level jobs.

9. They can be instruments in the creation of a positive and healthy climate in

the organization that drives to give their best and enjoy doing so.


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A SUGGESTED FORMAT

In order to achieve these objectives the appraisal

format should have the following components:-1. Identification of key performance areas and target

setting through periodic discussions between each

employee and his boss.

2. Identification of qualities required for the present andfuture jobs in the company.

3. Self appraisal by the appraisee.

4. Performance analysis to identify factors that have

facilitated and factors that have hindered performance.

5. Performance discussion and counseling to understand

each other and assist each other.


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6. Identification of training needs.

7. Action planning and goal setting for future.

8. Final assessment by the supervising officer for administrative purposes.

SEQUENTIAL STEPS

The following sequences of activities is suggested for using the components

outlined so far :

1. In the beginning of the year every employee sits with his supervisor and

identifies his individual KPAs and sets challenging targets for the next year.

2. At the end of the year the employee appraises his performance on these

KPAs and targets as well as pre identified behaviors included in the

appraisal format.

3. He then passes on his form to his supervisor. His supervisor reflects about the

performance of his appraisee and make his notes and comments. He then calls

the appraisee for the discussion.


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4. During the performance discussion they exchange notes, comments, etc and try to

understand and help each other. They also identify the development needs of the

appraisee and set goals for the next period.

5. The supervisor then gives his final ratings and recommends about thedevelopmental needs. He shows these to the appraisee and takes his comments if

needed and passes these on to the personnel department through his supervisor.

6. The personnel or HRD department uses these for training , rewards and other

activities.


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THE PERFORMANCE MANAGEMENT AND REWARD

SYSTEMS

A performance management system can make the following

important contributions :-

Motivation to perform is increased Self esteem is increased Managers gain insight about subordinates :- Developing

productive relationships with colleagues is a key competencyfor managers.

The definitions of job and criteria are clarified

(behavior and results )

( Specific criteria) Self insight and development are enhanced Administrative actions are more fair and appropriate. Organizational goals are made clear.


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Employees become more competent.

There is better and more time differentiation between goodand poor performers.

Supervisors views of performance are communicated more

clearly. ( There is greater accountability in how managersDiscuss performance expectations and provide feedback. Both

assessing and monitoring the performance of others are listed

as key competencies for managers)

Organizational change is facilitated. e.g :- IBM (1980s)

Motivation commitment and intentions to stay in the

organization are enhanced.


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COMMENT ON THIS STATEMENT

Randy Pennington , president of Pennington Performance

Group . The truth is that the culture change is driven by achange in performance. An organizations culture cannot be

installed. It can be guided and influenced by policies,

practices , skills and procedures that are implemented and

reinforced. The only way to change the culture is to changethe way individuals perform on the daily basis.


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DISADVANTAGES /DANGERS OF POORLY

IMPLEMENTED PM SYSTEMS

The negative consequences associated with low quality and

poorly implemented systems are :-1. Increased turnover :- They can leave physically or withdraw

psychologically.

2. Use of misleading information

3. Lowered self esteem

4. Wasted time and money5. Damaged relationships

6. Decreased motivation to perform

7. Employee burn out and job dissatisfaction

8. Unjustified demands on managers and employees resources.

9. Varying and unfair standards and ratings

10. Emerging biases

11. Unclear rating system


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Purposes of PM Systems:

Overview

Strategic

Administrative

Informational

Developmental

Organizational maintenance

Documentational


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Strategic Purpose

Link individual goals with

organizations goals

Communicate most crucial business

strategic initiatives


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Administrative Purpose

Provide information for making decisions

re:

Salary adjustments

PromotionsRetention or termination

Recognition of individual performance

Layoffs


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Informational Purpose

Communicate to Employees:

Expectations

What is important

How they are doing

How to improve


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Developmental Purpose Performance feedback/coaching

Identification of individual strengths and weaknesses

Causes of performance deficiencies

Tailor development of individual career path

Feedback is an important component of a well implemented performance management system.

Organizations should strive to create a feedback culture that reflects support forfeedback , including feedback that is non threatening and is Focused on behaviors andcoaching to help interpret the feedback provided.


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ORGANIZATIONAL MAINTENANCE PURPOSE :- Important

component of workforce planning effort is the talent inventory,

which is information on current resources ( e.g., skills, abilities,

promotional potential, and assignment Histories of current

employees). Performance management systems are the

primary means through which accurate talent inventories can be

assembled.

DOCUMENTATIONAL :-PMS allow for the documentation of

important administrative decisions.


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An Ideal PM System:

14 Characteristics

1. Congruent with organizational strategy

2. Thorough

3. Practical

4. Meaningful

5. Specific

6. Identifies effective/ ineffectiveperformance

7. Reliable


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An Ideal PM System:

14 Characteristics (continued)

8. Valid

9. Acceptable and Fair

10.Inclusive

11.Open (No Secrets)

12.Correctable

13.Standardized14.Ethical

C t ith i ti l


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Congruent with organizational

strategy

Consistent with organizations strategy

Aligned with unit and organizational

goals


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Thorough

All employees are evaluated

All major job responsibilities are

evaluated

Evaluations cover performance for

entire review period

Feedback is given on both positive and

negative performance


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Practical

Available

Easy to use

Acceptable to decision makers Benefits outweigh costs


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Meaningful

Standards are important and relevant

System measures ONLY what employee cancontrol

Results have consequences Evaluations occur regularly and at

appropriate times

System provides for continuing skill

development of evaluators


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Specific

Concrete and detailed guidance to

employees

Whats expected

How to meet the expectations

Identifies


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Identifieseffective and ineffective

performance Distinguish between effective and

ineffective

Behaviors

Results

Provide ability to identify employees

with various levels of performance


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Reliable

Consistent

Free of error

Inter-rater reliability


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Valid

Relevant (measures what is important)

Not deficient (doesnt measure

unimportant facets of job)

Not contaminated (only measures what

the employee can control)


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ACCEPTABILITY AND FAIRNESS :-

Distributive justice , which includes perception of the

performance evaluation received relative to the workperformed, and perceptions of the rewards received

relative to the evaluation received.

Procedural justice :- It includes perceptions of theprocedures used to determine the ratings as well as the

procedures used to link ratings with rewards.

Good systems are inherently disdiscriminatory.


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Acceptable and Fair

Perception of Distributive Justice Work performed Evaluation received

Reward

Perception of Procedural Justice

Fairness of procedures used to:

Determine ratings

Link ratings to rewards

I l i


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Inclusive

All participants must be given a voice in

the process of designing andimplementing the system.

Represents concerns of all involved When system is created, employeesshould help with deciding

What should be measured

How it should be measured

Employee should provide input onperformance prior to evaluation meeting


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Open (No Secrets)

Frequent, ongoing evaluations and feedback

2-way communications in appraisal meeting

Clear standards, ongoing communication

Communications are factual, open, honest


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Correctable

Recognizes that human judgment is

fallible

Appeals process provided


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Standardized

Ongoing training of managers to

provide

Consistent evaluations across

People

Time


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Ethical

Supervisor suppresses self-interest

Supervisor rates only where she has

sufficient information about the

performance dimension

Supervisor respects employee privacy


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PERFORMANCE MANAGEMENT

PROCESS

There are six steps involved in the performance

management process :-1.Prerequisites

2.Performance planning3.Performance execution

4.Performance Assessment

5.Performance Review

6.Performance Renewal & Recontracting


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erformance Management Processerformance Management Process

PerformanceReview

PerformanceRenewal

andRecontracti

ng

PPerformance

Assessment

PPerforman

ceExecution

PerformancePlanning

Prerequisites

1 P i it Th t i it th t i d b f


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1. Prerequisites :- There are two prerequisites that are required before a

performance management system is implemented :-

A) Knowledge of the organizations mission and strategic goals

B) Knowledge of the job in question

Strategic planning allows an organization to clearly define its purpose or reason for

existing, where it wants to be in future, the goals it wants to achieve, and the

strategies it will use to attain these goals.

The important objective of any PMS is to enhance each employees contribution tothe goals of the organization.

The second important prerequisite is to understand the job in question. This is

primarily done by job analysis.

As a result of a job analysis, we obtain information regarding the tasks carried outand the knowledge, skills, and abilities (KSAs ) required of a particular job.


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Job descriptions are a key prerequisite for any performancemanagement system because they provide the criteria

(i.e. yardsticks) that will be used in measuring performance.


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2. Performance Planning :- In the beginning of each performance

cycle, the supervisor and the employee meet to discuss , andagree upon , what needs to be done and how it should be done.

This performance planning discussion includes a consideration of

both results and behaviors as well as a developmental plan.

Results refer to what needs to be done or the outcomes an employee

must produce. A discussion of results needs to include key

accountabilities, specific objectives for each accountability and

performance standards.

Performance Planning:


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Results

Key accountabilities

Specific objectives

Performance standards


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Key Accountabilities

Broad areas of a job for which

the employee is responsible

for producing results


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Specific Objectives

The objectives are that the

employee will achieve as part of

each accountability.Objectives are statements of

important and measurable

outcomes.


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Performance Standards

Yardstick to evaluate how wellemployees have achieved each

objective

Information on acceptable andunacceptable performance.



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Behaviors

How a job is done



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Competencies

Measurable clusters of KSAs

Critical in determining how results will beachieved

Examples of competencies are customerservice , written or oral communication,creative thinking and dependability



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Development Plan

Areas for improvement

Goals to be achieved in each area

of improvement


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3. Performance Execution :- At the performance

execution stage , the following factors must be

presented :-

Employee Responsibility

Commitment to goal achievement

Ongoing performance feedback and coaching

Communication with supervisor

Collecting and sharing performance data.

Preparing for performance reviews


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Supervisory have primary responsibility over the following

issues :-

Observation and documentation

Updates

Feedback

Resources

Reinforcement

EXAMPLE L kh d M ti C ti PMS i l d


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EXAMPLE :- Lockheed Martin Corporation , PMS includes

the active participation of both employees and their

supervisors.

Employees write their own performance management

objectives based on organization and unit objectives. Then ,

managers approve the objectives and are encouraged to give

ongoing feedback about the progress toward meeting theobjectives.


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4. PERFORMANCE ASSESSMENT :- In the assessment phase, both the employee

and the manager are responsible for evaluating the extent to which the desired

behaviors have been achieved.

There are many sources to collect performance information

( e.g. peers, subordinates ), in most cases the direct supervisor provides the

information.

Multiple Assessments Are


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Multiple Assessments Are

Necessary

Employee involvement in the process is

used for the following purposes :-

Increase employee ownership

Increase commitment

Provide informationEnsure mutual understanding

Performance Review


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Overview of Appraisal Meeting

The performance review stage involves the meeting

between the employee and the manager to review theirassessments.

Past

Behaviors and results

Present Compensation to be received

Future New goals and development plans

Performance Renewal and


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Performance Renewal and

Recontracting

Same as/different from Performance

Planning

Uses insights and information from

previous phases

Cycle begins again


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Phase I Planning

Setting Performance Objectives

Employees and managers meet to clarify expected outcomes

for the year and set objectives that link the employees job to

department and campus objectives. Objectives define what

employees are expected to accomplish. Managers andemployees should aim to define S.M.A.R.T. objectives.

Specific

Measurable

AttainableRelevant

Timely


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Phase II Check-In

Once performance objectives are set, managers shouldcheck in regularly with employees to discuss the status of

objectives and to provide feedback based on observations

of an employees performance. It is equally important to

provide feedback on areas of success as on those

requiring improvement.

Phase III Assessment

The performance assessment summarizes the employee's

contributions over the entire appraisal period (usually oneyear). It may occur as often as is necessary to

acknowledge the employee for accomplishments and to

plan together for improved performance

DEFINING PERFORMANCE AND CHOOSING A


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MEASUREMENT APPROACH

Performance management systems usually include

measures of both behaviors ( what an employeedoes ) and results ( the outcomes of an employeesbehavior ). The definition of performance does notinclude the results of an employees behaviors, butonly the behaviors themselves.

The characteristics of the behaviors are :-

1. Evaluative :- It means that such behaviors can bejudged as negative , neutral or positive for individualand organizational effectiveness.

2. Multidimensional :- It means that there are manydifferent kinds of behaviors that have the capacity toadvance ( or hinder ) organizational goals.

EXAMPLE


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EXAMPLE

Consider a set of behaviors that can be grouped under the

general label contribution to effectiveness of others in thework unit.

This set of behaviors can be defined as follows :

Works with others within and outside the unit in a manner

that improves their effectiveness; shares information and

resources; develops effective working relationships: builds

consensus; constructively manages conflict.


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1 Choice to expend effort


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1. Choice to expend effort.

2. Choice of level of effort

3. Choice to persist in the expenditure of that level of efforts.

The three determinants have a multiplicative relationship,

Such that,

Performance = Declarative knowledge * Procedural knowledge*Motivation.

Deliberate practice involves the following 5 steps:-

1. Approach performance with the goal of getting better

and better.2. While performing , focus on what is happening and why u are

Doing things the way u do.

3. When the task is finished, seek performance feedback


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3. When the task is finished, seek performance feedback

from expert sources and the more sources the better.

4. Build mental models of your job, your situation andyour organization.

5. Repeat steps1-4 continually and on an ongoing basis.

IMPLICATIONS FOR ADDRESSING PERFORMANCE PROBLEMS

Performance management system need not only to measure

performance but also to provide information about the source of

any performance deficiencies.

PERFORMANCE = declarative knowledge * Procedural knowledge * Motivation


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PERFORMANCE = declarative knowledge Procedural knowledge Motivation

FACTORS DETERMINING PERFORMANCE

Declarativeknowledge

Proceduralknowledge

Motivation

Facts Cognitive skill Choice to

performPrinciples Psychomotor

skillLevel toeffort

Goals Physical skill Persistenceof effort

Interpersonal

skill

PERFORMANCE DIMENSIONS


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Performance is multidimensional .It means that there is a need to

consider many different types of behaviors to understand performance.

Two types of behaviors or performance facets stand out :

Task performance

Contextual performance

Task performance is defined as :-

Activities that transform raw materials into the goods and services that

are produces by the organization.

Activities that help with the transformation process by replenishing the

supply of raw materials , distributing its finished products, or providingimportant planning , coordination , supervising, or staff functions that

enable the organization to function effectively and efficiently.


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Contextual performance is defined as those behaviors that

contribute to the Organizations effectiveness by providing a

good environment in which task performance can occur.

Contextual performance includes behaviors such as the following :-


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Persisting with enthusiasm and exerting extra effort as necessary to

complete ones own task activities successfully.

Volunteering to carry out task activities that are not formally part of the

job.

Helping and cooperating with others.

Following organizational rules and procedures.

Endorsing , supporting , and defending organizational objectives.TASK PERFORMANCE CONTEXTUAL PERFORMANCE

VARIES FAIRLY SIMPLE

ROLE PRESCRIBED NO ROLE PRESCRIBED

ANTECEDENT:KSA PERSONALITY

The reasons why both task and contextual performance


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dimensions should be included in performance management

System :-

1. Global competition is raising the levels of efforts required

of employees.

2. There is a need to offer outstanding customer service.

3. Many organizations are forming employees into teams.

Interpersonal cooperation is a key determinant of team

effectiveness.

4. Both task and contextual performance in the performance

management system provides an additional benefit.


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EXAMPLE :- TRW Automotive Inc., one of the worlds largest

automotive suppliers and one of the top financial performers

in the industry.The majority of the TRW behaviors actually focus on

contextual performance.

Specifically , the TRW behaviors emphasize many of the

elements of contextual performance including trust and

teamwork.

The case of O2 Ireland, Irelands second largest mobile

phone operator. Headquartered in Dublin. O2s PMS includes

Task related facets centered in hard metrics regardingproductivity as well as contextual related facets such as

involvement in staff socialization and contribution to team

Development.


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O2 concluded that this focus on both task and contextual

performance has led to higher levels of customer service andemployee satisfaction.

Job Performance in Context


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Job Performance in Context

Aperform

er(individu

al orteam)

In a

givensituation

Engagesin

certain

behaviors

Thatproduce

variousresults

TRAIT BEHAVIOR RESULTS

Approaches to Measuring


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pp g

Performance

Trait Approach

Emphasizes individual traits of

employees

Behavior Approach

Emphasizes how employees do the job

Results Approach

Emphasizes what employees produce

Trait Approach


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Trait Approach

Emphasis on individual

Evaluate stable traits

Cognitive abilities

Personality

Based on relationship

between traits & performance

Trait Approach (continued)


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a t pp oac (co t ued)

Appropriate if

Structural changes planned for organization

Disadvantages

Improvement not under individuals control

Trait may not lead to

Desired behaviors or

Desired results

Behavior Approach


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Behavior Approach

Appropriate if

Link between behaviors and results

is not obvious

Outcomes occur in the distant future

Poor results are due to causes

beyond the performers control

Not appropriate if above conditions are not present

Results Approach


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Results Approach

Advantages:

Less time

Lower cost

Data appear objective

RESULTS APPROACH


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The result approach is most appropriate under the following circumstances :-

Workers are skilled in the needed behaviors :- An emphasis on results is

appropriate when workers have the necessary knowledge and skills to do the work.

Behaviors and result are obviously related :- Certain results can be

obtained only if a worker engages in certain specific behaviors.

Results show consistent improvement over time :- When results improveconsistently over time, it is an indication that workers are aware of the behaviors

needed to complete the job successfully.

There are many ways to do the right job :- When there are different ways in

which one can do the tasks required for a job, a result approach is appropriate.


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Shaping the Bell Right

Vitality Curve


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Vitality Curve The Normal Distribution Curve is used as tool in

measuring human capacities, Pioneered by theleader Jack Welch former CEO of GE

It is a differentiation tool used to assess an

employees performance and promotability Jack called it as Vitality Curve'. Also known as

- Dead mans Curve

- Forced ranking- Rank and yank

- Up or Out

Grading the curve


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Grading the curve

The employee force is ranked into a 20-70-10 bucket.

Where 20 percent are rated as 'excellent

70 percent as the vital - back bone of

the company

10 percent as bottom-feeders

Cont


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Cont..

Illustratively, it is to show appraisers that,

1. Not more than 10% should be promoted

in each department

2. Least 10% must be weeded out for low

performance;

3. The rest being rated from average, good

to very good.


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Also referred to as 9 Block


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Also referred to as 9 Block

Advantages of Vitality Curve in


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PAM

It brings objectivity to the PAM process

It helps in normalization of the appraisal process

It lends itself to predictable performance patterns

It guides appraisers on how to follow an uniformrating process/pattern

It helps management in planned attrition and inpredicting promotions/job enlargements/job

enrichments/rewards/incentives, etc.

Cont


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Cont..

It systematically identifies high performers forcommensurate rewards and identifies low/weak

performers for training/forced attrition.

On a predictive index, it provides a bird's eye

view of the uniform, systematic performance

patterns across grades/levels/functions in the

organization.

Disadvantages of Vitality Curve in


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PAM

It seems rigid and impractical, especially forsmall/medium. It may reduce organizationalflexibility.

It does not promote 'performance adjustments'

It makes 'extreme raters" skeptical since it doesnot allow them to rate as they wish causing anxietyor discontentment

It may be difficult to simulate/follow since

outstanding performers or weak performers maynot essentially be 10%-20% , year-on- year.

Cont


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Cont..

The methodology may not be easily understoodby all appraisers

Training inadequacy in appraisers may yielddisastrous results

Implementation may be difficult since HR has toensure constant compliance.

Being a 'forced-distribution' method, it may facedissent from appraisers

It may not adjust well with skill/managerialdemand-supply situations

Arguments against the use of


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vitality curve in PAM

Unethical- Forcing a certain section of employeesevery year is unethical says Praneet Mehrish, CountryHuman Resource Director, ST Microelectronics Ltd.

Subjective- Since the bell curve is applied, not acrossall the employees, but to individual department / team/ function, there is a good chance that the worst in thehigh performing group may be better than the best inan average performing group. Finally, the company may

be left with low performers, while losing some goodones, says Hari Mohan Jha, VP (HR), ITC WelcomeGroup Hotels

Cont


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Cont..

Not compatible for small teams - Logically too, such amodel cannot work for a very small group of extremelyhigh or low performers for the simple reason that itforce-fits them into predefined compartments. If itworks, it can work only for a large, randomly selected

sample, says Madhukar Shukla, Professor, XLRI

Dysfunctional work environment - Bell curve methodmay increase productivity and pave growth

opportunities for good performers, it also creates asense of fear among those who remain behind says EdLawler of Enron


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Balanced Scorecard


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Balanced Scorecard

A new approach to strategic management wasdeveloped in the early 1990's by Drs Robert Kaplan


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developed in the early 1990's by Drs. Robert Kaplan

(Harvard Business School) and David Norton. The

balanced scorecard approach provides a clearprescription as to what companies should measure in

order to 'balance' the financial perspective.

Balanced Scorecard is the Management System that

enables organisation to clarify their vision and strategy

and translate them into action.It provides feedback onboth internal process abd external outcomes in order to

continously improve strategic performance and results.

Kaplan and Norton describe Balanced Scorecard


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p

as: Balanced scorecard retains traditional financial

measures. But financial measures tell the story of

past events, an adequate story for industrial age

companies for which investments in long-term

capabilities and customer relationships were not

critical for success. These financial measures areinadequate, however, for guiding and evaluating the

journey that information age companies must make

to create future value through investment in

customers, suppliers, employees, processes,technology, and innovation.


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Financial Perspectives

Customer

Perspectives

Learning and Growth

perspectives

Business Process

PerspectivesVision and

Strategy

Explanation of the 4 perspectives


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Financial Perspectives: Revenue Growth, Profit

Cost Reduction

Productivity Improvement

Asset Utilization

Investments


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Business Process Perspective


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Critical internal process in which organization must deal. Theseprocesses enable to deliver the value propositions to customers

and satisfy stake holders expectations.Innovation Process

- Product Design

- Product Development

- Process Implementation Operating Process

- Manufacturing

- Marketing

- After Sale Service

Customer Perspective


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p

Due to increasing realization of customer focused

and customer satisfaction in any organizationtherefore developing the metrics for satisfaction

customers should be analyzed in terms of kind of

customers and kind of processes for which we are

providing a product or service to those customersgroups.

In todays business scenario Customer is the king

Customer perspective

C t S ti f ti


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Customer Satisfaction

Customer Retention

New Customer Acquisition

Customer Profitability

Market Share

Measures of value Proposition to customer

- Short Lead Time

- On Time Delivery

- Innovative Products

- Anticipating Needs

Customer Perspective Core Measure


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Market Share

Customer

Profitability

Customer

Satisfaction

Customer

Acquisition

Customer

Retention

Summary


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Financial

Perspective

Customer

Perspective

Internal

Process

Learning and

Growth

Revenue

CustomerLoyalty

On TimeDelivery

Process QualityProcess Cycle

Time

Employee Competitiveness

SL.NO. PERSPECTIVEMEASURES

1 FINANCIAL * Return on Investment

* Revenue per employee


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2 CUSTOMER * Customer Satisfaction

* Customer Loyalty

* Total cost to customer* Price relative to competition

* Hours spent with customer

* Market Share

3 INTERNAL PROCESS * Response time (From Reception to Bed)

* Quality of services rendered.

* Bill Processing time

* Bill Processing accuracy

* Cost of unutilized capacity.

4 LEARNING & GROWTH * Absenteeism

* Turnover rate* Employee Productivity

* Training Hours

* Leadership Development

* Percentage of employees with advanced degrees.

* Average years of service

* Number of cross-trained employees

* Internal communication rating

Challenges in Executing Strategy


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Challenges in Executing Strategy

Financial Management

ToolsBalance Sheets

Income Statements

Statement of Cash Flow

People Management

Tools

MBOTraining Programs

HRIS

360 Feedback

Customer Management

ToolsC R M

Customer Segment AnalysisCustomer Surveys

Process Management

ToolsSix Sigma

Supply Chain Management

TQM

Strategy Management

Tools

???

The Balanced Scorecard


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Train and Communicate Strategy

The Balanced Scorecard

Set goals, select performance measures and link

measures to incentives

Set target for each goal and re-deploy resources to

activities and initiatives to achieve targets

Provide feedback on performance and

learn from results

Feed

Forward

Learning


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Balanced Scorecard Perspectives


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p

A. FinancialHow do we succeed financially?

B.B. CustomerCustomer

How do we appear to our customers?

C.C. Internal ProcessInternal ProcessAt what processes must we excel?

D.D. Learning and GrowthLearning and Growth

How do we sustain our ability to change and grow?

We Use the Scorecard to Articulate Strategic

Hypotheses in Cause effect Terms


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Knowledge, Skills, Systems, and ToolsKnowledge, Skills, Systems, and Tools

FinancialFinancialResultsResults

To Build the Strategic Capabilities..

Needed to Deliver UniqueSets of Benefits to Customers...

To Drive FinancialSuccess...

And Realize

the Vision

Equip our People...

InternalInternal

CapabilitiesCapabilities

CustomerBenefits

Hypotheses in Cause-effect Terms

Balanced Scorecard Perspectives


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p

How do we Objectives Measures Targe

appear to our

Stockholders?

Financial

How do we O b jec tivesM easu res Targe ts In itia tive

app ear to our

Cus tomers?

C u s t o m e r At what internal Objectives Mprocesses must

we excel?

Internal Busi

Vision

&Strategy

How do we O b jec tives Measu res Ta

sus tain our

ab ility to ch ange

Learning and Gro w

Cascading Scorecards

to B ild Alignment


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to Build Alignment

Organization

BusinessUnit

BusinessUnit

BusinessUnit

Teams

Individual Contributors

FinancialSound

Fiscal Budgeting

Long-Term

Investment


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Financial FiscalMgmt

Budgeting Investment

Strategy

Customer The Value

Proposition

Internal Process

Learning & Growth

The Value Proposition

Product/Services

Price Selection

Quality Availability

Relationship

Partnership

Services

Brand

Image

Innovation

New learning

Partnerships

Future needs

Operational Excellence

Admin excellence

Network of supplier for

Products & services

Adaptability

Customer Mgmt

Deepen Knowledge

about customer

Attract

Retain

Grow Relationship

Climate for Action

Personal Growth

Competencies

Functional Excellence

Leadership Skills

Strategic Readiness

Scorecard Information


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Information Type Are. Example is

Strategies High Level Goals Increase Market Share

Objectives Measures of action plans Increase CustomerSatisfaction

Measures Indicates success orfailure

Average Customer Rating(scale of 1-10)

Targets Desired level ofperformance for ameasure

Achieve 9.9 of 10 AverageCustomer Rating

Initiatives Management actionstaken to achieve target

Train CSR Staff in ProblemResolution Skills

Perspective: Financial / Customer / Internal Process / Learning&Growth


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The TCS Model

Source: Human Capital Vol.9 No.12 May 2006 Redefine the HR Agenda

Vision


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Global Top 10 by 2010 in the IT Industry

Mission

Customer delight by providing best-in-class consulting, IT solutions & services and also delivering value and joy to all stakeholders.

Shareholder

ValueFINANCIAL PERSPECTIVE


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Human Capital

Effectiveness

Human Resource

Efficiency

Employee

delight

Customer

delight

Manage Operating

efficiency

Manage Customer

relationships

Deliver world

class services

Team

Integration

Leadership

Competencie

sCultural Climate

Strategic Alignment

/Motivation

Work Capability

CUSTOMER PERSPECTIVE

INTERNAL PROCESS PERSPECTIVE

LEARNING & GROWTH PERSPECTIVE

Keys to Success


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y

Educate your Executive and Teams Devise the right metrics

Follow through to completion

Start smallsmall! Report immediately

Dont over measure

Getting Started Customize Your BSC


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1. Describe the strategy burning platform? Strategy Map

2. Measure the strategy

Develop the measures; critical data points

3. Manage the strategy

Gather detailed information about the measureand initiative

The Successful Scorecard


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Is a dynamic process continues to set higher targets and achieves them

Define jobs strategically

from the perspective of where it fits in with the

strategic business goals

Supports joint decision

making about what you do/dont do based on strategic

goals


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Questions?


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PERFORMANCE

APPRAISAL METHODS

What to Evaluate?


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Traits Measures

Are an assessment of what the employee is, not what

the employee actually does.

Behavior-based measures

Focus on what an employee does and what the

employee should do differently.

Results-based measures

Focus is on accomplishments or outcomes that can be

measured objectively. Problems occur when results

measures are difficult to obtain, outside employee

control, or ignore the means by which the results were

obtained.

How to Evaluate?


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Relative Assessment

Employees are measured against other

employees and ranked on their distance from

the next higher to the next lower performingemployee.

Absolute Measurement

Employees are all measured strictly byabsolute performance requirements or

standards of their jobs.

Apprais

Comparative Ranking

Paired Comparison

Comparative Ranking

Paired Comparison


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Appraisal

Methods

p

Forced Distribution

Absolute Critical Incident

Narrative Essay

Checklist

Graphic Rating Scale(GRS)

Behaviorally AnchoredRating Scales (BARS)

Behavioral ObservationScales (BOS)

Forced Choice

Objectives

Paired Comparison

Forced Distribution

Absolute

Critical Incident

Narrative Essay

Checklist Graphic Rating Scale(GRS)

Behaviorally Anchored

Rating Scales (BARS) Behavioral Observation

Scales (BOS)

Forced Choice

Ob ectives

COMPARATIVE METHODS
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Ranking

Alternation Ranking

Paired Comparison

Forced Distribution

Alternation ranking


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ADVANTAGES


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Its advantages include ease of administration and

explanation.

DISADVANTAGES

The how and why u have rated A better than B is not

questioned.

There is no attempt to fractionalize what is being appraised

into component elements.

It is subject to the halo and recency effects.

PAIRED COMPARISON METHOD


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The paired comparison method is a systematic method

where each employee is compared with all other employeesin the group, for each trait, one at a time.

PAIRED COMPARISON:

For the trait Creativity


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_+++EESHWAR

+_++DILIP

_++_CHARLES

____BHAVANA

__++ARUP

EESHWARDILIPCHARLESBHAVANAARUP

MERITS

Simplest method


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Simplest method

Need no specialist knowledge or skill

Complete ranking of all employees

Demerits

Time consuming and cumbersome for appraisers.

Suitable for small organization with limited number of

employees.


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FREE ESSAY


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It is a narrative appraisal method and is based on

absolute standards

It describes an employee's actions rather than

indicating an actual rating

The intent is to allow the rater more flexibility than

other rating methods do.

The Process


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A job is broken up into various generaldimensions. Each dimension is followed by some

space where the rater has to write an essay on

that dimension

These essays concentrate on performance

strengths and weaknesses, identify

developmental needs and also suggest courses

of remedial action These essays can either be composed alone or

in collaboration with the appraisee

Narrative Forms


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Final appraisalsare frequentlywritten in a

narrative form Supervisor rates

employee bydescribing thebehaviour relatedto each factor

The appraiser takes note of these factors :-

1. Job knowledge and skills exhibited by the appraisee


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g y pp

while performing his job.

2. Appraisees relationship with other employees and Manager.

3. Appraisees personality traits and attitude toward his job,

peers , manager and the organization.

4. Appraisees understanding and commitment to organizations

goals and objectives; and

5. Appraisees potential for future organizational roles.

MERITS

1 More closed evaluations of employees work and performance


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1. More closed evaluations of employee s work and performance.

2. Employee performance and work behaviors are documented

in detail.3.Facilitates design of performance improvement programme

with ease given ready availability of performance records.

DEMERITS

1. Incorrect sentence construction can give a different

impression.

2. Maintaining a diary for noting performance of employees

on regular basis increases cost of supervision and reduced

time for performing critical managerial activities.

3. Honesty of appraiser in recording and reporting employee

performance is central to the effectiveness of this method.


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CRITICAL INCIDENT METHOD


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Critical incidents are behaviors that result in good orpoor job performance.

The rater records all such incidents and the ratees

involvement in it.

The rater plays the role ofObserver rather thanJudge.

For eg.

I saw Mishra closing the steam line valve at the

instant the pipeline burst. We could save a lot of

lives due to the above factor.

The critical incident method makes the supervisor think about

the subordinates appraisal all during the year

(so the rating does not reflect the employees most recent


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(so the rating does not reflect the employee s most recent

performance).

The critical incident method provides the list which has

numerous examples of what specifically the subordinate

can do to eliminate deficiencies.

The downsize of this method is that without numerical rating ,

this method is not too useful for comparing employees or for

salary decision.

RECORDING CRITICAL

INCIDENTS


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INCIDENTS

Should be Specific Focus on Observable behaviours that

have been exhibited on the job

Describe the Context in which thebehaviour occurred

Indicate the Consequences orOutcomes

of the behaviour


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LIMITATIONS

1.Negative incidents are generally more noticeable than


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g g y

positive ones.

2. The recording of incidents is a chore to the supervisor and

may be put off and easily forgotten.

3. Overly close supervision may result.

4. Managers may unload a series of complaints about

incidents during an annual performance review session.


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STEPS IN CONSTRUCTION Generate a large no of behavioural


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Generate a large no. of behavioural

statements relevant to work These should represent all levels of

effectiveness

Rules to follow

Express only one thought per statement

Use understandable terminology

Eliminate double negatives

Express thoughts simply and clearly

MERITS

1 It is economical


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1. It is economical.

2. It is easy to do the administration.3. The rater doesn't require much of the training.

4. It is standardized.

DISADVANTAGES

1. It doesn't allow the rater to give up relative ratings

2. The use of improper weights.

3. Misinterpretations of checklist items.


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GRAPHIC RATING SCALE

(GRS)


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(GRS)

In a Graphic Rating Scale, the rater assesses aratee on performance-related characteristics and

personality characteristics,

ie. factors like quantity of work, dependability, job

knowledge, cooperativeness, ability to lead,

interpersonal skills, etc. by using a rating scale.

A graphic rating lists traits ( such as quality and reliability ) and

a range of performance values ( from unsatisfactory

to outstanding ) for each trait


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to outstanding ) for each trait.

The supervisor rates each subordinate by circling or checking

the score that best describes his or her performance for each

trait. The assigned values for the traits are then totaled.


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Issues in constructing GRS


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Selecting the characteristics to evaluate

Deciding the number of points on the scale

Scaling the characteristics

Providing descriptions for each criteria andeach point on the scale

MERITS

1. It is easy to use.


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y

2. It is easy to understand

3. Many employees can be evaluated.

DEMERIT

1. The rater can be biased.2. There is an implication that a high score on one factor

can compensate for a low factor on another.


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FORCED CHOICE SCALE

What is the Forced Choice

Method ?


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A rating technique specially designed to increaseobjectivity and to decrease biasing factors inratings.

It comprises of the use of statements that are

grouped into sets according to certain statisticalproperties.

Rater is forced to select from each group of

statements a subset (usually 2) of thosestatements that are most descriptive of eachratee.


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Forced-Choice Format


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Items for forced-choice scales are arrangedaccording to two statistical properties of each of

the statement.

Favourability Index (FI)

Discriminability Index (DI)

Discriminability Index DIFavorability Index - FI


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FI = Indicates the extent to which a statement reflects theniceness, attractiveness, orsocialdesirabilityof the

behaviour or characteristic it describes.

DI = Reflects the extent to which a statement describes a

behaviour or a characteristic that distinguishes superior

employees from others.

Forced Choice Scale


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A tetrad of four statements is provided

In the tetrad all the 4 statements have equal

favourability

2 statements have significantly greater

discriminating power than the other 2.

DI & FISTATEMENT DI FI

At ease before class 0 53 2 35


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At ease before class 0.53 2.35

Conducts class in orderly manner 1.20 2.22Repeats questions to whole class beforeanswering

0.57 2.29

Aim of lesson is clearly presented 1.14 2.38

STATEMENT DI FI

Is patient with slow learners 1.15 2.82

Lectures with confidence 0.54 2.75

Keeps interest and attention of class 1.39 2.89

Acquaints class with lesson objective inadvance

0.79 2.85

Advantages of the method


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Difficulty in deliberately distorting ratings infavor of or against particular individuals

because raters have no idea which statements

of each group will ultimately result in higher (or

lower) ratings.

Research has proved that ratings from thismethod were a more valid measure of real

worth than ratings from other formats usedearlier.

Why is it not popular among

raters?


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Raters prefer other methods as with this method

they cannot determine whether they are rating

their best people high or their worst people low.

Inability to make an evaluation or a direct rating

can be frustrating to raters.

ASSESSMENT CENTRE METHOD

Thi th d i d t t t did t i i l it ti


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This method is used to test candidates in social situation,

using a variety of procedures and number of assessors. Themost important feature of the assessment centre is job

related simulations.

Assessment centers are used for the following purposes:-

1. To measure the potential for first level supervisors, sales

and upper management positions, and also for higher levels

of management for development purposes.

2. To determine the individual training and development needsof employees.

3. To select recent college students for entry level positions.

4. To make an early determination of potential.


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6. To assist in implementing affirmative action goals.

MANAGEMENT ASSESSMENT CENTRES

A management assessment centre is a two to three day

simulation in which 10 to 12 candidates perform realistic


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simulation in which 10 to 12 candidates perform realistic

management tasks under the observation of experts whoappraise each candidates leadership potential.

Typical simulated exercise include :-

The in- basket

Leaderless group discussion

Management games

Individual presentations

Objective testsThe interview

DEMERITS

1. Assessment centers are costly.

2 Assessment centre staff are often infl enced b s bjecti e


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2. Assessment centre staff are often influenced by subjective

elements such as personality of the candidates.3. The approach involves real hazards i.e. examination

taking syndrome.

4. Employees who receive a poor report from the centre may

react in negative ways.

A well conducted assessment centre can and does achieve

better forecasts of future performance and progress than other

methods of appraisal.

The reliability, content validity , and predictive are said to behigh in the assessment centers.


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BARS Dimension:Quality of GroupBARS Dimension:Quality of Group


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Member InputMember Input

Group member does little work and offersno valuable ideas or feedback

Effective

Ineffective

Group member has read all agreed-uponMaterial and gives valuable ideas.

Group member participates in discussions,though not always prepared

5

4

3

2

1

Group member has read some agreed-upon material

Group member does not attend any meeting

The Steps in BARS development


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GENERATE CRITICAL INCIDENTS : Askpersons who know the job (job holders,

supervisors) to describe specific illustrations of

effective and ineffective performance.

DEVELOP PERFORMANCE DIMENSIONS :

Have them cluster the incidents into a smaller

set of 5 or 10 performance dimensions, and

define each dimension.

The Steps in BARS development

(contd.)


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REALLOCATE INCIDENTS : Another group ofpeople who also know the job then reallocate the

original critical incidents.

They get the cluster definitions and the critical

incidents in a jumbled manner

They reassign each incident to the cluster they think

it fits best.

A critical incident is retained if some percentage(usually 50% to 80%) of this second group assigns it

to the same cluster as did the first group.


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ADVANTAGES :- While more time consuming than other

appraisal tools, BARS seems to have some advantages :-

1. A more accurate gauge :- People who know and do the job


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and its requirements better than anyone develop the BARS.

This should produce a good gauge of job performance.

2. Clearer standards :- The critical incidents along the scale

make clear what to look for in terms of superior performance, average

performance , and so forth.

3. Feedback :- The critical incidents make it easier to explain the

ratings to appraises.

4. Independent dimensions :- Systematically clustering the critical

incidents into five or six performance should help to make theperformance dimensions more independent of one another.

5. Consistency :- BARS based evaluation seem to be relatively

reliable , in that different raters appraisals of that same person tend

to be similar.


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MANAGEMENT BYOBJECTIVES


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The use of Management By Objectives was firstwidely advocated in the 1950s by the noted

management theorist Peter Drucker.

MBO methods of performance appraisal are results-oriented i.e., they seek to measure employee

performance by examining the extent to which

predetermined work objectives have been met.

In the 90s, Peter Drucker put the significance of this organization

management method into perspective, when he said: "It's just another tool.

It is not the great cure for management inefficiency... Management by

Objectives works if you know the objectives, 90% of the time you don't


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Management by objectives (MBO) is a systematic and organized approach

that allows management to focus on achievable goals and to attain the

best possible results from available resources.

It aims to increase organizational performance by aligning goals and

subordinate objectives throughout the organization. Ideally, employees getstrong input to identify their objectives, time lines for completion, etc. MBO

includes ongoing tracking and feedback in the process to reach objectives.

Management by Objectives (MBO) was first outlined by Peter Drucker in

1954 in his book 'The Practice of Management'.


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1. Develop overall organizational

goals

MBO PROCESS


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2.

Establish specific goals for variousdepartments subunits and individuals

3. Formulate action plans

4. Implement plans and maintain self-control

5. Review progress periodically

6. Appraise performance

1. Develop overall organizational Goals: - The first step in the

process of MBO in an organization is to establish verifiable

objectives which are based on the mission and vision of the

organization These are the strategic goals which are set by


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organization . These are the strategic goals which are set by

the top management and address the targets to be achievedby the whole organization.

2. Establish specific goals or objects for various Departments

and Individuals: - The goals are set for the various positionsat various levels. In this stage the superiors formulate the

objectives that they plan to achieve in their own department.

Most of the times the organization follow the top down

approach just described, some organizations even go for

the bottom up approach, in which goals are suggested by

the lower levels what they believe they can achieve.

3.Formulate Action Plans: - An action plan describes what is

to be done, where, when, how and by whom to achieve the

objectives. Action plan helps in accessing the feasibility of

achieving the goals Subordinates usually develop themselves


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achieving the goals. Subordinates usually develop themselves

with the support of their supervisors.

4.Implement and maintain self- control :- When the goals are

set and action plans determined , individuals should be

given enough freedom to carry out their activities. Butsupervisors need to be kept informed about the progress and

any difficulty that arise.

5.Review Progress Periodically: - MBO ensures periodic

meetings between the superiors and the subordinates toreview the progress towards the accomplishment of targets

of the subordinate. It is important that the plans are

implemented and the targets will be achieved.

6.Appraise Performance :- The appraisal focuses on what

extent the goals are achieved as well as on the shortfalls .

It also ponder what are the reasons of not accomplishing

the expected goals and what measures can be taken to


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the expected goals and what measures can be taken to

overcome them.

Goals and plans for the next cycle may also be discussed

at this point.

Strengths of MBO

MBO aids in planning by making managers establish their

own goals


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own goals.

MBO helps in Improving the communication between both

management and employees, because both can express their

views on what objectives they can and cannot accomplish.

MBO helps in making everybody aware of the organization's

goals.

With MBO the evaluation process becomes fairer

because people are measured on specified targets and

their performance in achieving goals of the organization.

With specific objectives laid out, suggestions from all levels

of management can be obtained.

Managers will have clearer idea of the vital areas of their


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Managers will have clearer idea of the vital areas of their

responsibility and the standards that are required. Hence,allowing them to focus and utilize their resources.

MBO creates a participatory work environment to help

employees become more involved. In this way, everysubordinate in the organization is more motivated.

It provides a practical approach to analyze training needs

and opportunities for growth on the basis of measurement of

performance against standards.

Weaknesses

MBO process requires too much time, effort and paperwork

i tti l bj ti d t i l t th


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in setting goals, objectives and energy to implement the

whole system effectively.

Some managers set unrealistic objectives, placing pressure

for performance at the expense of employees.

Generally the main barrier to effective MBO is lack of

support from top-management, and it is easily stalled by

authoritarian managers.

Before MBO can be implemented, many changes have to be done in theorganization, including the control procedures and the general style of the

management.

The support needed to achieve goal achievement is too often not enough


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The support needed to achieve goal achievement is too often not enough

for some managers. managers may be inadequately trained to set goalsand coach employees when necessary.

It is difficult to establish measurable objectives for certain jobs.

There is too much emphasis on short term performance and losing sightof long-term objectives.

It is may be used by some supervisors as a control devise that intimidates

rather than motivates subordinates.

It may tend to introduce inflexibility in the organization.


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360 Degree Feedback System

A 360- degree feedback, system collects performance


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information from multiple parties including ones subordinatesPeers, supervisor and customers and self. These systems are

called 360 degree systems because information is gathered

from individuals all around the employee.

In 360 degree appraisal a gap analysis is conducted toexamine the areas for which there are large discrepancies

between self perceptions and the perceptions of others.

The 360- degree feedback system is most helpful when it isused for developmental purposes only and not for

administrative purposes.

360 degree make them aware of that there is a problem witha competency is a very good first step, but a good 360- degree

feed back system also provides concrete suggestions

about what to do to improve competencies.


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360 degree feedback systems are not necessarily beneficial

for all individuals and organizations.

Example :- Individuals who are high on self efficacy are more

likely to improve their performance based on feedback

received from peers compared to individuals low on

self efficacy.

The effect of receiving feedback from multiple sources is

most beneficial for individuals who perceive there is a need

to change their behavior , react positively to feedback,believe change is feasible, set appropriate goals to improve

their performance, and take concrete actions that lead to

performance improvement.

In terms of organizational characteristics , 360 degree system

Work best in organizations that have cultures that support

open and honest feedback.


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These systems work best in organizations that haveparticipatory , as opposed to authoritarian , leadership style in

which giving and receiving feedback is the norm and is

regarded as valuable.

Example :- Patent Office of UK

The most comprehensive type of multi-source feedback is360-degree feedback, which involves an employees customer

, peer, direct reports, self and manager.

The other degrees are represented


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g p

Peer/Co-workers Manager

Customer Direct

Reports/Subordinates

Extent of multi-source feedback

Organizations often choose the source of feedback based

on the criticality of performance interaction. This is also based

on the strategy and values of the organization. IBM, for

example, opts to use customer feedback as opposed to usingall sources to provide additional inputs. In an organization

where teamwork may be critical, the inputs of peers often

Become necessary and are used extensively.

90 (Assessment by manager) Most companies with aperformance management system in place use this mode of

Feedback


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180 (Assessment by manager and peer) Tata Communications

ICICI

Coca Cola

270 (Assessment by manager, peer and direct report) Wipro InfoTech

360 (Assessment by manager, peer, direct report and customer)

ITC

EXAMPLE

360 system, designed for employees in supervisory roles ,

includes information on the following competencies :


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1. Communication ( listen to others , processes information,Communicates effectively )

2. Leadership (instills trust, provides direction, delegates

Responsibility )

3. Adaptability (adjusts to circumstances, thinks creatively )4. Relationships ( builds personal relationships, facilitates

team success)

5. Task management ( works efficiently, works competently )

6. Production ( takes action , achieves results)

7. Development of others ( cultivates individual talent,

motivates successfully).

8. Personal development ( displays commitment, seeks

improvement)

MERITS

Reveal strengths and weaknesses in management style.


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Forces inflexible managers to initiate self change.

Creates an atmosphere of teamwork and improvement.

Unearths truths about organizational culture and ambience.

Decreased Possibility of biases

Increased awareness of expectations :- Employees become

very aware of others expectations about their performance.

Increased commitment to improve

Improved self perceptions of performance


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Reduced undiscussables

Employee enabled to take control of their careers

DEMERITS

1. The system can be used to humiliate people.


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2. Linking findings to rewards can prove to be unfair.

3. Negative feedback can hurt an employees feelings ,

particularly if those giving the feedback do not offer their

comments in a constructive manner.

4. When very few raters are providing the information. 2 or 3 ,

it may be easy for the employee being rated to identify

who the raters are.

KPAS AND PERFORMANCE PLANNING

Performance planning fixes accountability, sets role boundaries, helps better

time management, and requires time at once a year. It also helps the manager to


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g , q y p g

understand and analyze his contributions and increases his responsibility forcontinuous performance.

WHAT IS

student pmcm 1

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