1.

Explain the Process of Performance Management

Performance measurement is the process of assessing progress toward achieving
predetermined goals. Performance management is building on that process,
adding the relevant communication and action on the progress achieved against
these predetermined goals.

Process of Performance Management

Performance management is the systematic process by which an agency involves its employees,
as individuals and members of a group, in improving organizational effectiveness in the
accomplishment of agency mission and goals.

Managing Performance Effectively: In effective organizations, managers and employees have

been practicing good performance management naturally all their lives, executing each key
component process well. Goals are set and work is planned routinely. Progress towards these
goals is measured and employees get feedback. High standards are set, but care is also taken to
develop the skills needed to reach them. Formal and informal rewards are used to recognize the
behavior and results that accomplish the mission. All five component processes working together
and supporting each other achieve natural, effective performance management.

3.2.1 Planning

In an effective organization, work is planned out in advance. Planning refers to setting

performance expectations and goals for groups and individuals to channelize their efforts toward
achieving organizational objectives. Getting employees involved in the planning process will
help them understand the goals of the organization, what needs to be done, why it needs to be
done, and how well it should be done.

The regulatory requirements for planning employees’ performance include establishing the
elements and standards of their performance appraisal plans. Performance elements and
standards should be measurable, understandable, verifiable, equitable, and achievable. Through
critical elements, employees are held accountable as individuals for work assignments or
responsibilities. Employee performance plans should be flexible so that they can be adjusted for
changing program objectives and work requirements. When used effectively, these plans can be
beneficial working documents that are discussed often, and not merely paperwork that is filed in
a drawer and seen only when ratings of record are required.

3.2.2 Monitoring

In an effective organization, assignments and projects are monitored continually. Monitoring

well means consistently measuring performance and providing ongoing feedback to employees
and work groups on their progress toward reaching their goals.

Regulatory requirements for monitoring performance include conducting progress reviews with
employees where their performance is compared against their elements and standards. Ongoing
monitoring provides the opportunity to check how well employees are meeting predetermined
standards and to make changes to unrealistic or problematic standards. And by monitoring
continually, unacceptable performance can be identified at any time during the appraisal period
and assistance provided to address such performance rather than wait until the end of the period
when summary rating levels are assigned.

3.2.3 Developing

In an effective organization, employee developmental needs are evaluated and addressed.

Developing in this instance means increasing the capacity to perform through training, giving
assignments that introduce new skills or higher levels of responsibility, improving work
processes, or other methods. Providing employees with training and developmental opportunities
encourages good performance, strengthens job-related skills and competencies, and helps
employees keep up with changes in the workplace, such as the introduction of new technology.

Carrying out the processes of performance management provides an excellent opportunity to

identify developmental needs. During planning and monitoring of work, deficiencies in
performance become evident and can be addressed. Areas for improving good performance also
stand out, and action can be taken to help successful employees improve even further.

3.2.4 Rating

From time to time, organizations find it useful to summarize employee performance. This can be
helpful for looking at and comparing performance over time or among various employees.
Organizations need to know who their best performers are.

Within the context of formal performance appraisal requirements, rating means evaluating
employee or group performance against the elements and standards in an employee’s
performance plan and assigning a summary rating of record. The rating of record is assigned
according to procedures included in the organization’s appraisal program. It is based on work
performed during an entire appraisal period. The rating of record has a bearing on various other
personnel actions, such as granting within-grade pay increases and determining additional
retention service credit in a reduction in force.
Note: Although group performance may have an impact on an employee’s summary rating, a
rating of record is assigned only to an individual, not to a group.

3.2.5 Rewarding

In an effective organization, rewards are used well. Rewarding means recognizing employees,
individually and as members of groups, for their performance and acknowledging their
contributions to the agency’s mission. A basic principle of effective management is that all
behavior is controlled by its consequences. Those consequences can and should be both formal
and informal and both positive and negative.

Good performance is recognized without waiting for nominations for formal awards to be
solicited. Recognition is an ongoing, natural part of day-to-day experience. A lot of the actions
that reward good performance – like saying "Thank you" – don’t require a specific regulatory
authority. Nonetheless, awards regulations provide a broad range of forms that more formal
rewards can take, such as cash, time off, and many non-monetary items. The regulations also
cover a variety of contributions that can be rewarded, from suggestions to group
accomplishments.

2. Briefly Explain Different Performance Appraisal Methods

Performance Appraisal Methods

Performance appraisals take many forms. Written essays, the simplest essay method, is a written
narrative assessing an employee’s strengths, weaknesses, past performance, potential, and
provides recommendations for improvement. Types of performance appraisal methods include
comparative standards (such as, simple ranking, paired comparison, forced distribution) and
absolute standards (such as, critical incidents, BARS, MBO).

· Comparative Standards or Multi-person Comparison. This relative, as opposed to absolute

method, compares one employee’s performance with that of one or more others.

In group rank ordering the supervisor places employees into a particular classification such as
"top one-fifth" and "second one-fifth". If a supervisor has ten employees, only two could be in
the top fifth, and two must be assigned to the bottom fifth.

– In individual ranking the supervisor lists employees from highest to lowest. The difference
between the top two employees is assumed equivalent to the difference between the bottom two
employees.

– In paired comparison the supervisor compares each employee with every other employee in
the group and rates each as either superior or weaker of the pair. After all comparisons are made,
each employee is assigned a summary or ranking based on the number of superior scores
received
· Critical Incidents: The supervisor’s attention is focused on specific or critical behaviors that
separate effective from ineffective performance.

· Graphic Rating Scale: This method lists a set of performance factors such as job knowledge,
work quality, cooperation that the supervisor uses to rate employee performance using an
incremental scale.

· Behaviorally Anchored Rating Scales (BARS): This combines elements from critical incident
and graphic rating scale approaches. The supervisor rates employees according to items on a
numerical scale.

· Management by Objectives: MBO evaluates how well an employee has accomplished

objectives determined to be critical in job performance. This method aligns objectives with
quantitative performance measures such as sales, profits, zero-defect units produced.

· 360 Degree Feedback: This multi-source feedback method provides a comprehensive

perspective of employee performance by utilizing feedback from the full circle of people with
whom the employee interacts: supervisors, subordinates and co-workers. It is effective for career
coaching and identifying strengths and weaknesses.

Performance Appraisal Software

Software-aided performance management gives supervisors online Human Resources expertise

and real-time tools to help them track and evaluate performance. For example KnowldegePoint’s
software Performance Appraiser walks supervisors through the evaluation process, taking them
past the blank page and turning observations into valuable feedback. The automated performance
review system removes many of the barriers that have traditionally undermined the performance
review process. In KnowledgePoint’s HR Library white paper, Software-Aided Performance
Management Supporting Best Practices, a comparison is made of traditional reviews and
automated reviews. It has been adapted in the table below.

Typical Pitfalls of Traditional

Reviews
Unclear and often legally
inappropriate wording.
Poor documentation.
Inconsistent evaluations.
Biased ratings.
Automated Reviews
Models clear language for
supervisors.
Provides a basis for developing
narrative portion of review.
Identifies legally sensitive language.
Helps supervisors to track and
document performance throughout the
review period.
Provides consistent criteria and a
systematic method
of evaluating performance.
Discourages rating biases.
Rigid forms. Allows organizations to centrally
Too general. define performance
criteria and standards, or lets
supervisors create review
practices specific to their business
objectives.
Does not stress feedback between Encourages supervisors to give
reviews. regular feedback.
Provides online advice and coaching
ideas.
Difficult to track and analyze results. All performance data is available for
analysis.
Late, infrequent reviews. Step by step process and just-in-time
learning
reduces writing time, removes
common barriers
to completion.
High administrative cost. Reduces time-spent drafting and
rewriting reviews,
allowing more time for supervisor-
employee interaction.
Reduces training costs.
Frees HR from "policing" the process.

Appraisal Judgments

The performance appraisal represents a LEGAL communication to an employee and should be

supported by objective reasoning. Appraisal judgments can be objective or subjective. Objective
factors are observable and measurable results. They include quantities, errors, and attendance
records. Subjective factors are opinions. They are difficult to measure or document and invite
bias or charges of bias. Included, as subjective factors, are personality traits, such as
dependability, initiative, and perseverance. To remain objective, the supervisordouble checks
ratings to be sure he or she doesn’t favor one employee or make unsupported judgments.
Supported judgments have documented critical incidents of employee performance to illustrate
ratings.

The halo effect is a rating error that occurs when the rater’s knowledge of an employee’s
performance on one favorable or unfavorable incident colors the ratings on all others. Most
employees do some tasks better than others and their ratings should vary from one performance
dimension to another. The halo effect can be lessened by rating and comparing all employees’
performance on a single factor before going on to another factor.

The equal employment opportunity laws establish and regulate the ways in which performance
can be evaluated. The Equal Employment Opportunity Commission is charged with protecting
employee rights. To avoid discrimination based on sex, race, color, religion, age, or national
origin, the supervisor should base the appraisal on the job that the employee is expected to do.

3. What Mistakes Lead to Ethical dilemma in Case of Appraisal. Explain

Mistakes that lead to ethical dilemma

Mistake #1: Waiting For the Performance Appraisal: To Give Feedback

this is the biggie, and all too common. It is where a manager fails to give someone adequate
feedback on their performance during the year, and then dumps it on them in the performance
appraisal meeting.

Unfortunately, the feedback is almost always negative, so the employee ends up sitting there in
shock — at best, wondering why his or her manager did not say something sooner; at worst
feeling unjustly victimized. And he wonders – how can a manager expect an employee to do the
right things, the right way, if the manager has not provided any guidance or feedback all year?

The solution: It should be made a habit to tell employees if they have done a good or poor job,
and if it is a poor job, it should be explained how they can do things better in the future.

There should be no surprises in the performance appraisal!

Mistake #2: Overemphasizing Recent Performances

It is all too human to remember, and give greater weight, to recent events rather than earlier
events. However, this can lead to an inaccurate and unfair assessment when it comes to
reviewing an employee’s performance. To avoid overemphasizing an employee’s recent work,
notes are to be taken of the employee’s work throughout the year.

Mistake #3: Being Too Positive or Negative

Some managers feel uncomfortable giving negative feedback and consequently, can omit to give
employees the constructive criticism they need to improve. And there are other managers who
are instinctively too negative, leaving the employee wondering if they can do anything right!
While, as a manager appraising someone’s performance he should give his honest opinion, he
also wants his employee to understand and appreciate what he is saying. So instead of being too
positive or negative — which can result in the employee not believing what is being said,
managers should think about the impact on the employee he wants, and communicate his
feedback accordingly.

Mistake #4: Being Critical without Being Constructive

Following on from Mistake #3, some managers can be too critical and neglect to provide any
constructive advice on how an employee can improve. This does not help the employee or the
manager. Even if the criticisms all have merit, if it is not explained how the employee can
improve, he or she is likely to miss the validity of what is being said and simply think he or she
is being victimized. Not to mention the fact that his or her performance will not actually
improve.

Mistake #5: Talking and not listening

The final big mistake that managers make in performance appraisals is doing too much talking
and not enough listening. These meetings are supposed to be interactive — where the manager
does not simply relay his or her own appraisal of the employee’s performance during the year,
but also listens to the employee’s viewpoint.

If, for example, an employer has criticized the individual’s performance, it is not only fair, but
important, to get the employee’s response as to why he or she may have underperformed.

Moreover, a key objective of the performance appraisal is to agree on goals for the following
year. How can there be true agreement and commitment to such goals, if employer does not learn
the employee’s point of view?

Set 2

Q.1 Explain different perspectives of performance Management

Performance management reminds us that being busy is not the same as producing results. It
reminds us that training, strong commitment and lots of hard works alone are not results. The
major contribution of performance management is its focus on achieving results – useful
products and services for customers inside and outside the organization. Performance
management redirects our efforts away from being busy towards effectiveness.

Recently, organizations have been faced with challenges like never before. Increasing
competition from businesses across the world has meant that all businesses must be much more
careful about the choice of strategies to remain competitive. Everyone (and everything) in the
organization must be doing what they are supposed to be doing to ensure strategies are
implemented effectively.

Perspectives of Performance Management

Despite the recent attention to achieving maximum performance, there is no standard

interpretation of what it means or what it takes to get it. Still, you should be aware of the various
views and be able to choose your own. Information in this subsection will orient you to what
people are suggesting that it takes for organizations to achieve maximum performance.

Exploring Organizational Effectiveness

The phrase, “organizational effectiveness,” is commonly referred to when discussing

organizations that have achieved maximum performance. Perhaps one of the best overviews of
the concept of organizational effectiveness is provided by Herman and Renz (2002). The authors
identify nine fundamental propositions about organizational effectiveness. Their propositions
were written about nonprofit organizations. However, they also apply to organizations in general
and, thus; their descriptions are modified in the following paragraphs to apply to organizations in
general.

1. Organizational effectiveness is always a matter of comparison

When determining the effectiveness of an organization, to what are you comparing the
organization to conclude whether it is effective or not? For example, are you comparing to a
certain set of best practices or to another highly respected organization?

2. Organizational effectiveness is multi-dimensional

Organizational effectiveness cannot be measured by one indicator. For example, a budget surplus
or a strong product outcome does not guarantee that the organization has achieved overall
maximum organizational effectiveness.

3. Boards make a difference in organizational effectiveness, but how is not clear

There is a correlation between effective boards and effective organizations. However, it is not
clear that one necessarily causes the other.

4. Organizational effectiveness is a social construction

The concept of organizational effectiveness lies “in the eyes of the beholder.” One person might
have a completely different interpretation than another person.

5. More effective organizations are more likely to use correct management practices

The authors are careful to point out that the reverse is not necessarily true – that organizations
that use correct management practices will be judged as being effective. (The correct practices
were identified during focus groups in various studies.)

6. Claims about “best practices” warrant critical evaluation

The authors explain that the results of their study do not agree with the wide assertion that
certain practices, for example, automatically produce the best Boards.
7. Measures of responsiveness may offer solutions to differing judgments

This proposition reframes the concept of effectiveness for an organization to be about how well
that organization is doing in responding to whatever is currently important.

8. It can be important to distinguish different types of organizations

This is true to make progress in understanding the practices, tactics and strategies that may lead
to organizational effectiveness.

9. Network effectiveness is as important to study as organizational effectiveness

This proposition recognizes that the effectiveness of an organization might depend to a great
extent on the effectiveness of the wide network of organizations in which the particular
organization operates.

Q.2. Discuss Operational Performance Management

Operational Performance Management

Operational performance management today includes operational dashboards, operational

reports, as well as BAM, alerts and automated recommendations. This is an area of performance
management that is growing but is still in limited deployment mainly because companies are still
rolling out business process management. Operational performance management has typically
been associated with BAM. Some mainstream BI vendors offering CPM solutions have now
stepped into the BAM market, which I believe is a good sign in that it indicates that operational
PM and corporate PM have a good chance of coming together. A good example of this is
Cognos. Cognos has launched their Cognos Now! Product as part of the wider performance
management product set. The pros and cons of operational performance management are as
follows:

Pros

· Real-time event-driven operational performance monitoring for proactive alerting and

automated actions.

· It means operational problems and opportunities can be rapidly identified and dealt with.

· May even mean that problems and/or opportunities can be predicted.

· Can deliver significant return on investment, e.g., reduction of operational costs.

Cons
· Process management BAM vendors often have no business intelligence to understand the
significance of an operational event.

· BAM vendors struggle to understand operational organization structure to cater for problem
escalation.

· No tie back to strategic or tactical performance management.

Having looked at these different types of performance management, the problem we face is that
they are not integrated. The requirement is that we need the whole solution to work from top to
bottom so that performance management is deployed to the masses to make everyone
performance aware and execute on a common business strategy. So it raises the question of what
an enterprise-wide performance management system should do. First and foremost, a
performance management system is the control system for the enterprise. It should be the system
that allows you to manage the business at all levels from strategic down to everyday operations.
It should, therefore, support all types of performance management – strategic, tactical (LoB) and
operational. In addition, everyone in the enterprise should be accountable for managing “their
part” of the business and for contributing toward common objectives and common goals. Also,
everyone should have access to common BI and performance management that fits with their
role in the enterprise.

Figure 5 shows what I mean here, which is to get enterprise business strategy execution and
integrated performance management at all levels.

Figure 5

Notice that there are objectives, KPIs, targets, owners, budgets, plans, alerts and
recommendations at all levels here. This is like driving. If you turn the steering wheel at the top
of the enterprise, how long does it take for the enterprise to turn? However, if there are steering
wheels at all levels, then the decisions made at lower levels all help to turn the wheel at a
strategic level. It is back to the power of the masses again. All of this implies a hierarchy (or
hierarchies) of some sort to tie it all together so that all levels contribute toward execution of a
common business strategy (see Figure 6).
Figure 6

What is the dominant hierarchy? There are several, but the employee management hierarchy
must be recognized here because it identifies roles, contact details, immediate reports, etc. The
reporting structure of who reports to who needs to be understood. But just looking at the
employee management hierarchy implies others because each manager in the hierarchy needs to
have:

· Objectives

· KPIs and KPI targets

· Action initiatives to be carried out to achieve his or her objectives

– Plans, i.e., planned activities

– Budget allocation by activity

· Process activities and/or whole processes to monitor in their area of responsibility

· BI to guide them including some combination of reports, guided analysis, alerts and
recommendations

This implies that many different performance management hierarchies need to be linked to
employee roles and reporting structure (see figure 7).
Figure 7

Some products like IBM Workplace for Business Strategy Execution (WBSE) already support
this concept. However, in exploring elements of performance management such as plans at lower
levels in the enterprise, I have found again and again that the technology use at lower levels for
planning operational initiatives is not the same as the performance management tools found at
strategic levels. What I keep bumping into for operational planning is Microsoft Project. In a
recent presentation at the BI conference in Rome, I thought I would check out my findings to
validate whether this is, in fact, commonplace. To my surprise, about 80% of the audience raised
their hands confirming the dominance of Microsoft Project in business planning at lower levels
in the enterprise. Therefore, as you go down the levels of the enterprise, integration of
performance management software with project management software is very much required.

As a regular speaker at portal conferences, I have however realized something else about this
link between performance management and project management, and that is that project
management software (that holds plans) is now heavily integrated with Web 2.0 collaborative
workspaces in portal software. Portal vendors like BEA, IBM, Microsoft and Vignette are all
capable of collaborative project management today in their portal products. This point about PM,
project management and Web 2.0 collaborative workspaces is important in answering the
question of how to empower the masses with respect to performance management. I already
mentioned the Tapscott/Williams book on how mass collaboration changes everything.

Enterprise Wide Performance Management Requirements

Looking at what we have discussed so far, it is clear that the scope of performance management
needs to change to become capable of leveraging other infrastructure. Performance management
needs to include:

· Traditional scorecards, dashboards, budgeting, planning, forecasting

· Hierarchies of linked objectives, KPIs, KPI targets, plans, budgets and alerts

· Integration with Office for “what-if” planning and analysis

· Integration with BI for KPI rollup and drill down (OLAP cubes)
· Integration with BI reporting

· Integration with process management (e.g., via XPDL import) to view and change process
models

· Business activity monitoring to monitor the efficiency of business processes and to drive
automatic alerts and recommendations

· Activity-based costing to monitor the cost of business processes and to create costed plans since
plans are at an activity level

· Integration with project management to link to lower level plans and to import/export plans in
this form

· Integration with portals for role-based PM.

· BI and PM services to integrate on-demand intelligence and recommendations with operational

applications and processes.

· Integration with Web 2.0 collaborative workspaces to share information and collaborate.

In addition, many of my clients have said to me that performance management will never
achieve maximum effectiveness if we don’t link performance to individual employee appraisals.
In other words, we need to hold people accountable for performance. For this to happen,
performance management needs to access HR applications. The HR-XML Consortium proposes
“standard” services and XML content that ERP HR systems should expose to get employee
performance information into and out of ERP systems.

This whole set of wider requirements suggests that performance management needs to become a
composite application sitting above an enterprise service bus in a service-oriented architecture
(see Figure 8).

Figure 8
Looking at this in the context of a SOA architecture diagram just confirms the fact that
performance management is set to become a composite application leveraging other services and
infrastructure software to empower the masses in order to create the performance-aware
intelligent enterprise. This is shown in Figure 9.

Q. 3. Describe the Characteristics of Appraisal System

Characteristics of an Appraisal System

Performance appraisal is a management tool which is helpful in motivating and effectively

utilizing human resources

Performance appraisal cannot be implemented successfully unless it is accepted by all

concerned. There should be a common and clear understanding of the distinction between
evaluation and appraisal. As Patten (1982) argues, evaluation aims at ‘objective’ measurement,
while appraisal includes both objective and subjective assessment of how well an employee has
performed during the period under review. Thus performance appraisal aims at ‘feedback,
development and assessment.’ The process of performance appraisal should concentrate on the
job of an employee, the environment of the organization, and the employee himself. These three
factors are inter-related and inter-dependent. Therefore, in order to be effective, the appraisal
system should be individualized, subjective, qualitative and oriented towards problem-solving. It
should be based on clearly specified and measurable standards and indicators of performance.
Since what is being appraised is performance and not personality, personality traits which are not
relevant to job performance should be excluded from the appraisal framework.

Some of the important considerations in designing a performance appraisal system are:

· Goal: The job description and the performance goals should be structured, mutually decided
and accepted by both management and employees.

· Reliability and consistency: Appraisal should include both objective and subjective ratings to
produce reliable and consistent measurement of performance.
· Practicality and simplicity of format: The appraisal format should be practical, simple and aim
at fulfilling its basic functions. Long and complicated formats are time consuming, difficult to
understand, and do not elicit much useful information.

· Regularity and routine nature: While an appraisal system is expected to be formal in a

structured manner, informal contacts and interactions can also be used for providing feedback to
employees.

· Participatory and openness: An effective appraisal system should necessarily involve the
employee’s participation, usually through an appraisal interview with the supervisor, for
feedback and future planning. During this interview, past performance should be discussed
frankly and future goals established. A strategy for accomplishing these goals as well as for
improving future performance should be evolved jointly by the supervisor and the employee
being appraised. Such participation imparts a feeling of involvement and creates a sense of
belonging.

· Rewards: Rewards – both positive and negative – should be part of the performance appraisal
system. Otherwise, the process lacks impact.

· Feedback should be timely: Unless feedback is timely; it loses its utility and may have only
limited influence on performance.

· Impersonal feedback: Feedback must be impersonal if it is to have the desired effect. Personal
feedback is usually rejected with contempt, and eventually de-motivates the employee.

· Feedback must be noticeable: The staff member being appraised must be made aware of the
information used in the appraisal process. An open appraisal process creates credibility.

· Relevance and responsiveness: Planning and appraisal of performance and consequent rewards
or punishments should be oriented towards the objectives of the programme in which the
employee has been assigned a role. For example, if the objectives of a programme are directed
towards a particular client group, then the appraisal system has to be designed with that
orientation.

· Commitment: Responsibility for the appraisal system should be located at a senior level in the
organization so as to ensure commitment and involvement throughout the management
hierarchy.