SM815 - Performance Management

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SM815 - Performance Management

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SYLLABUS

Introduction- performance appraisal vs performance management- PFM theatre-


planning for manager’s performance and development-monitoring and mentoring-
annual stocktaking- appraisal for recognition and reward organizational effectiveness-
high performing teams.


Michael Armstrong & Angela Baron, Performance Management: The New Realities, Jaico Publishing House, New
Delhi, 2002.

T.V.Rao, Appraising amd Developing Managerial Performance, TV Rao Learning Systems Pvt Limited, Excel Books,
2003.

David Wade and Ronad Recardo, Corporate Performance Management, Butter Heinemann, New Delhi, 2002.

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Each business and organization works with several factors of production i.e. men,
machine, material, finances etc. Among these is men who can help provide a
competitive advantage to the organization by offering skills, capabilities, systems,
culture, speed, innovativeness etc.


HRM is a process of bringing people and organisations together so that the goals of
each one are met, effectively and efficiently.

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Scope of HRM

Personnel aspect-This is concerned with manpower planning, recruitment,
selection, placement, transfer, promotion, training and development, layoff and
retrenchment, remuneration, incentives, productivity etc.


Welfare aspect- It deals with working conditions and amenities such as canteens,
crèches, rest and lunch rooms, housing, transport, medical assistance, education,
health and safety, recreation facilities, etc.


Industrial relations aspect-This covers union-management relations, joint
consultation, collective bargaining, grievance and disciplinary procedures,
settlement of disputes, etc.

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Performance
The accomplishment of a given task measured against pre-set known
standards of time, cost and action.


Management
The process of dealing with or controlling things or people.

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Though performance management is often considered to be a concept within
management accounting.

Performance management system in human resource management (PMS in HRM)
is an interdisciplinary subfield deriving concepts from management accounting,
organizational theory, organizational behavior, and strategic management in a
single integrated form.

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PERFORMANCE MANAGEMENT


Performance Management is a Continuous process that aims at Identifying,
Evaluating and Developing the performance of Individuals as well as teams
working in an organization along with Aligning the performance ( of individuals
and teams ) in line with the Strategic goals of an organization.


It’s a Systematic process for improving Organizational performance.

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Armstrong and Baron, 1995

“ Performance Management is a strategic and integrated approach to delivering


sustained success to organizations by improving the performance of the people who
work in them and by developing the capabilities of teams and individual
contributors. ”

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SHRM

There is increasing research evidence indicating that employees are more
productive if

1. They are loyal to the company, informed about its mission, strategic and current
levels of success.

2. Involved in teams which collectively decide how things are to be done and

3. Are trusted to take the right decisions rather than be controlled at every stage by
managers above them.

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Performance Management is conducted and understood on two classifications

People PfM - The management of the people within an organisation, with the aim
of ensuring that their performance contributes to the strategic goals of the
organisation as a whole.

Corporate PfM - A set of management processes that help the organisation define
and execute its strategy, and to measure and monitor performance in order to
inform strategic decision making and learning.

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Guiding Principles of PM

Not just delegating but empowering employees.

Creating accountability.

Offering regular feedback – Maintaining a continuity.

Offering directions when needed but not controlling.

Control should only be exercised by exception.

Taking timely actions.

Aim at correcting deviations for achieving the strategic goals of an organization.

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Aim and Objectives of PM

Empowering, motivating and rewarding employees.

Making sure employees not only do right things but also do things right.

Managing and improving performance.

Best and judicious use of resources.

Identifying needs for training.

Ensuring role clarity.

Aligning individual and organizational goals.

Defining standards for managing performance.

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Management By Exception

“ Trying to control everything may end up in controlling nothing. ”

MBE is a “ policy by which management devotes its time to investigating only
those situations in which actual results differ significantly from planned
results. ”

Propounded by Frederick Winslow Taylor.

Attention and priority is given only to material deviations requiring investigation
and correction. It is a part of motivational and control techniques.

Its objective is to facilitate management’s focus on really important tactical and
strategic tasks.
Scope of PM

Providing employees a better understanding of their role and responsibilities.

Increase the confidence of the employees through recognizing their strengths.

Identifying training needs to overcome the weak areas.

Improve the relationships in the working areas

Improve communication between superior and subordinates

Succession planning through grooming subordinates to future managers

Providing a better work environment and work place

Providing space for personal reflections

Providing a platform for personal development

Providing assistance to achieve personal career goals

Providing counselling to make work life balance

Improving the overall organisational work culture

Creating qualitative work environment
Succession planning

It is “the process of ensuring a suitable supply of successors for current and future
senior or key jobs arising from business strategy, so that the careers of individuals
can be planned and managed to optimise the organisations’ needs and the
individuals’ aspirations.”


Identifying the critical roles .

Selecting and developing key talents.

Ensure continuity.
W.L.B
Corporate culture

Company culture is the collection of attitudes, values, goals and practices that
characterize an organization and its members. It serves as the underlying
framework that guides how employees work and interact, reflecting the company’s
vision, ethics and norms, and often plays a crucial role in attracting and retaining
talent.

Corporate culture serves as a blueprint for how business is done within the
organization and influences the overall work environment and employee
experiences.
Performance Management Process

➔ Prerequisites
➔ Performance Planning
➔ Performance Execution
➔ Performance Assessment
➔ Performance Review
➔ Performance Renewal and Recontracting
Prerequisites

Knowledge of the organization’s mission and strategic goals

Knowledge of the job

What tasks need to be done

How they should be done

What KSAs are needed
Vision

Long term

Highlights: why we are here?

Irrespective of environmental changes, vision stays intact

Inspires employees with an understanding on why they need to be here
Mission

Comparatively short term, particularly about the present for a bright future

Highlights: What to do in the short run?

Guides the team on what needs to be done

Mission statement is what the company is doing right now, while vision statement
is what it hope to achieve in the future – where you are in this moment versus where
you’re going.
Knowledge of Mission and Strategic Goals

Strategic planning

Purpose or reason for the organization’s existence

Where the organization is going

Organizational goals

Strategies for attaining goals

Cascade effect throughout organization
➔ Organization  Unit  Employee
Knowledge of the Job

Job analysis :


Helps in finding out the abilities or skills required to do the jobs efficiently. A detailed
study of jobs is usually made to identify the qualifications and experience required
for them.

Job analysis include two things :

Job description

Job specification
A task is a identifiable work activity
Job Tasks carried for a specific purpose. Eg.,
Typing a letter

A duty is a larger work segment


consisting of several tasks (which are
JOB related by some sequence of events)
Job Duties
ANALYSIS that are performed by an individual.
Eg., Pick up, sort out and deliver
incoming mail.

Job Job responsibilities are obligations to


Responsibilities perform certain tasks and duties.
Methods of Job Analysis

Job Performance

Personal Observation

Critical Incidents - Qualitative approach, used to obtain behaviorally focused descriptions

Interview

Panel of Experts

Diary Method

Questionnaire Method
– Position Analysis Questionnaire (PAQ)
– Management Position Description Factors (MPDF)
– Functional Job Analysis (FAJ)
Job description

It is a written statement of what the job holder does, how it is done, under what conditions it is
done and why it is done.

It describes Job content , environment, and conditions of employment

Contents: A Job description usually covers the following information
➔ Job title : Tells the job title, code number and the department where it is done.

➔ Job Summary : A brief write up about what the job is all about
➔ Job activities : A description of the tasks done, facilities used, extent of supervisory help,
etc.,
➔ Working conditions : The physical environment of job in terms of heat. Light, noise and
other hazards.
➔ Social environment : Size of work group and interpersonal interactions required to do the
job.
Job specification

Job Specification specifies information about the skills or qualities required for
doing the job.

Job Specification is also called as Man or Employee Specification. Job
Specification is prepared on the basis of Job Description.

Job Specification is a statement which tells us minimum acceptable human qualities
which helps to perform a job.

Job specification translates the job description into human qualifications so that a
job can be performed in a better manner.

Job specification helps in hiring an appropriate person for an appropriate position.
Performance Planning

At the beginning of each performance cycle, the supervisor and the employee meet
to discuss and agree upon what needs to be done and how it should be done.

This performance planning discussion includes a consideration of ;

Results

Behaviors

Development plan

Results

Key accountabilities
Broad areas of a job for which the employee is responsible for
producing results.

Specific Objectives
Statements of outcomes – Important & Measurable

Performance Standards
“Yardstick” to evaluate how well employees have achieved each
objective
Information on Acceptable and Unacceptable performance

Behaviors

How a job is done

Competencies
Measurable clusters of KSA
Critical in determining how results will be achieved

Development Plan
Areas for improvement
Goals to be achieved in each area of improvement
Performance Execution

Employee’s Responsibilities
– Commitment to goal achievement
– Ongoing requests for feedback and coaching
– Communication with supervisor
– Collecting and sharing performance data
– Preparing for performance reviews

Manager’s Responsibilities
– Observation and documentation
– Updates
– Feedback
– Resources
– Reinforcement
Performance Assessment

Manager Assessment

Self-Assessment

Other sources ( Peers, Customers, ....)
Performance Review

Past
– Results – What was done
– Behaviors – How it was done

Present
– Compensation to be received

Future
– New goals and development plans

Six Steps for Conducting Productive Performance Reviews
– Identify what the employee has done well and poorly
– Solicit feedback
– Discuss the implications of changing behaviors
– Explain how skills used in past achievements can help overcome any
performance problems
– Agree on an action plan
– Set a follow-up meeting and agree on behaviors, actions, and attitudes to be
evaluated
Performance Renewal and Recontracting

Identical to Performance planning, Except
– Uses insights and information from previous phases
– Restarts the performance management cycle
Reward Systems

Set of mechanisms for distributing Tangible and Intangible / Relational Returns as
part of an employment relationship.

Tangible Returns
– Cash Compensation

Base pay

Cost-of-living and Contingent pay

Incentives ( Short and Long term )
– Benefits such as;

Income Protection

Allowances

Work/life focus

Intangible / Relational return

Recognition and status

Employment security

Challenging work

Learning opportunities
Return Degree of Dependency
Cost of Living adjustment
Low Dependency
Income Protection
Work/Life Focus
Allowances
Moderate Dependency
Relational Returns
Base Pay
Contingent Pay
High Dependency Short-term Incentives
Long-term Incentives
Contributions of PM

For Employees

Clarify definitions of job and success criteria

Increase motivation to perform

Increase self-esteem

Enhance self-insight and development

For Managers

Communicate supervisors views of performance more clearly

Managers gain insight about subordinates

Better and more timely differentiation between good and poor performers

Employees become more competent

For organization / HR function

Clarify organizational goals

Facilitate organizational change

Fairer, more appropriate administrative actions

Better protection from lawsuits
Disadvantages / Dangers of poorly implemented PMS

For Employees

Lowered self-esteem

Employee burnout and job dissatisfaction

Damaged relationships

Use of false or misleading information

For Managers

Increased turnover

Decreased motivation to perform

Unjustified demands on managers resources

Varying and unfair standards and ratings

For Organization / HR function

Wasted time and money

Unclear rating system

Emerging biases

Increased risk of litigation
Performance Appraisal

Performance appraisal is defined as any procedure that involves (1) Setting work
standards (2) assessing the employee’s actual performance relative to those
standards (3) providing feedback to the employee with the aim of motivating him
or her to eliminate performance deficiencies or to continue to perform above far.


It’s simply a systematic description of an employee’s strength and weaknesses. It is
restricted to evaluating an employee’s performance either once or twice a year, and
is not at all an ongoing process that offers regular feedback for aligning the
individual goals with goals of an organization.
Performance Appraisal Vs. Performance Management


The key differences between performance appraisal and performance management
as proposed by Armstong and Baron ( 1998 ) are ;
Performance Appraisal Performance Management
Top-down assessment Joint process through dialogue
Annual Appraisals Continuous reviews
Use of ratings Rating less common
Monolitic system Flexible system
Focus on Quantified values Focus on values, behaviors and objectives
More likely linked to pay Less likely to only linked to pay
Complex paperwork Paperwork minimum
Owned by HR department Owned by line managers

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