ASSIGNMENT- 1

Q1. Differentiate between Performance Management and Performance Appraisal?

Ans. Here’s how to differentiate performance appraisal from performance management:

Performance Appraisal Performance Management

Managing and developing employee

Evaluating the performance and potential of
1 performance to foster growth within the
employees typically to determine compensation
organisation

2 Once or twice year Ongoing process

Conducted by HR department along with direct Multiple stakeholders are involved as the
3
managers process is ongoing

4 Corrections are made retrospectively It is a forward looking process

5 Performance appraisal is a system Performance management is a process

6 Typically inflexible Completely flexible

7 More of an individualistic approach Can adopt according to the team’s values

Considered as an operational tool to improve the

8 Primarily considered as a strategic tool
employee efficiency

Q2. Discuss various complications of Performance Management with Examples?

Ans. There are various complications of performance management-

1. Leadership Buy in-

Lack of leadership support can be one of the hardest challenges to overcome.
HR leaders sharing performance management success stories with other
company leaders can make difference. Being able to give some concrete
 examples of the program's results, along with feedback from leaders and
employees, can help sell it to others within the company.

2. Employee motivation and morale-

Employees likely feel stressed and overworked, and they might feel that
performance management is one more item to add to their to do-list list. This
perception increases if their company hasn't clearly articulated the details of the
performance management program and its benefits for employees.

3. Limited budget-
HR leaders can work with other higher-ups to look for software that's less
expensive, even if it doesn't meet all the organization's requirements.
Another option is to take a less formal approach and encourage leaders to
regularly provide verbal feedback and use the tools the company already
has, such as an employee recognition platform.

4. Software challenges-

If the software for the review process doesn't work as expected, it can negatively impact
the whole program. For example, if employees encounter problems logging into the
review platform, it could sour their view of the process from the start.

The vendor might be able to fix the problem or find a workaround until the problem is
resolved. Communicating and being upfront with employees about some of the
challenges and potential workarounds is essential.

5. Lack of HR tech skills-

A successful performance management program requires the proper skill sets on the
HR team. For example, an employee must lead the program design, while another must
configure the application, another must communicate about and sell the program
internally, and another must train employees and leaders. The same employees could
perform some of these tasks, but HR staff must be able to take care of all the tasks
needed to carry out a successful performance management review program.
Depending on the timeline, HR leaders may be able to arrange training for HR
employees. Another option is to hire an external consultant to support the team in areas
where skills are lacking.

Q3. Discuss –

a) KRA (Key Result Areas)

Ans. Key Result Areas (KRA) are a set of goals and objectives that each organization assigns
for their employees at the beginning of their evaluation period. They are expected to perform a
fixed number of tasks based on which their performance evaluation is conducted. An employee’s
KRAs depend on their department and functional role. They also help employees direct their
efforts solely towards achieving predetermined goals while also helping the company fulfill its
business objectives.

1. Key Result Area can be described as the essential areas of business that requires excellent
performance to obtain the favourable result, to survive and grow in the industry. On the
other hand, Key Performance Indicator, or otherwise called as KPI is a performance
metric, used by the organization to ascertain how effectively the firm is performing.
2. Key result area is a strategic business unit, wherein great efforts are needed to achieve
success. As against, the key performance indicator is a metric that gauges the level to
which business goals are achieved.
3. KPI is a quantifiable measure, meaning that it gauges the performance of a product,
service or the business unit in the market, in quantitative terms. On the contrary, KRA is
qualitative in nature, in the sense that it determines the areas that can help in attaining
high value for the organization.
4. The key result area is used to find out the scope of a particular product or unit. In
contrast, key performance indicator measures the success of the organization towards
goals at various levels.

b) KPI-
Ans. Key Performance Indicators (KPIs) are metrics used by organizations to measure
their employees’ efforts and suggest improvements. Every company gives their employee
a fixed number of tasks at the beginning of their evaluation period. It is essential to
evaluate their performance against those duties during or after the completion of that
period. It also helps the management understand their employees’ contribution to overall
organizational goals and suggest course corrections if required.

Types of Key Performance Indicators for Organizations

Companies used different types of KPIs to evaluate their own performance. These organizational
KPIs are shared both with internal and external (Example: Shareholders) stakeholders. Examples
of Organizational KPIs could be financial metrics like profit and loss, revenues, cost, or sales
volume. It could also be based on customer-centric issues like Customer lifetime value,
satisfaction, and retention or customer feedback. Product/service issues like quality concerns,
customer feedback on changes in product/ service, or Human Resource indicators like employee
satisfaction and productivity, employee turnover, etc. are also important KPI metrics for
companies.

Types of Key Performance Indicators for Employees

The KPIs for employees depends on – their job role and the department to which they belong.
Eventually, the growth of an employee depends on both fulfillment of department goals and
scores against individual KPIs. A KPI-based evaluation framework helps companies reward top
performers and also provide meaningful feedback.

Revenue Growth

Revenue growth is a KPI that monitors the performance of sales over a period of time. It is an
important metric to calculate and measure profitability which is the barometer of success of a
business. It helps to know the negative growth that may require immediate action. Also, it is one
of the key metric to look for in a candidate’s profile when hiring sales executive.

Income Sources

The income source metric is a KPI that helps to know the sources of revenue and the
performance of each revenue source. Companies can use this metric to calculate revenue
generated per client or on every product sold to get a clearer picture of the company’s growth
trajectory.

Profitability Over Time

It is the most critical KPI as it helps the company to track income and expenses that can be
compiled to know the profit or loss the company may have incurred. It helps in analyzing the
business over a period of time. It helps to know areas where expenses can be reduced. This helps
in eliminating unnecessary expenses.

Working Capital
Working capital is the day-to-day fund needed to run the business operations in the company. It
is another important metric because it ensures that the organization has enough funds to carry out
all essential activities.

c) KSA (Knowledge, Skills And Abilities)

Ans. KSAs are knowledge, skills, and abilities that a person must possess in order to
perform the duties of his or her position. KSAs are listed on each position's job
description and serve as a guide for applicants, employees, and departments to
evaluate and assess a person's likelihood for success in a job.

A KSA statement is a description of qualifications written by a

prospective candidate to describe their knowledge, skills and abilities
as they relate to an open role. It helps employers quickly screen the
candidates that are most suitable for each job. The KSA model was
introduced as a hiring tool by the government, but the federal hiring
managers are slowly discontinuing their use of it.

The KSA framework is often presented as a supplement to the job

application and requires candidates to craft answers to job-specific
questions, usually in the form of a one-page essay. Each answer is
evaluated on a scale from 1 to 100 as to how closely it matches the
qualification needed for the job.While KSAs in the form of essays or
narratives may no longer be listed as requirements, they should not be
dismissed. Employers may call it by other names, such as professional
technical qualifications (PTQs) or quality ranking factors (QRFs). Some
government agencies still use the form of a written essay or narrative
assessment in the selection process, and some businesses require a
KSA form as a method to identify the best-suited candidates to fill job
listings.