Performance Management

The fulfillment of a given task measured against preset known standards of accuracy, completeness, cost, and speed.

The term management has different meanings. It is important to understand different definitions MANAGEMENT as a PROCESS MANAGEMENT as a DISCIPLINE MANAGEMENT as PEOPLE MANAGEMENT as a CAREER

MANAGEMENT as a PROCESS

Management is a process involving certain functions and activities that managers must perform. Managers also use principles in managing which are generally accepted tenets that guide their thinking and action.

This is what managers do.

MANAGEMENT as a DISCIPLINE

Classifying Management as a discipline implies that it is an accumulated body of knowledge that can be learned.

Thus Management is a subject with principles, concepts and theories.

MANAGEMENT as PEOPLE

It implies people who guide, direct, and thus manage organizations. The perspective of management as people refers to, and emphasizes the importance of the employees who managers work with and manage in accomplishing an organization's objectives.

MANAGEMENT as a CAREER

People who devote their working lives to the process of management actually pursue management as a career.

MANAGEMENT is a process undertaken by one or more persons to coordinate the activities of other persons to achieve results not attainable by any one person acting alone.

Four Functions of Management

- Planning - Organizing - Directing/Leading - Controlling

Planning
Setting goals: long-term goals, intermediate goals, short-term goals Developing strategies: how to reach the goals? Determining resources: capital and manpower Setting standards: target, e.g. cross $1million.

Organizing
Allocating resources, assigning tasks, establishing procedures Preparing organization chart Recruiting, selecting, training and developing employees Matching the job with employees: effectiveness and efficiency

Directing/Leading

Guiding and motivating Giving assignments Explaining routines Clarifying policies Providing feedback

Controlling

Establishing standards Measuring results Monitoring performance Taking corrective action

Management Functions
Organizing Determining what needs to be done, and who is to do it. Leading
Directing and motivating all involved parties and resolving conflicts

Planning Achieving the Performance

Defining goals, establishing strategy, and developing sub plans to coordinate activities

Controlling
Monitoring activities to ensure that they are accomplished as planned

Scenario

Definition of Performance Management (PM)

1. Continuous Process of
Identifying Measuring Developing

The performance of individuals and teams

Definition of PM (continued)
and

2. Aligning performance
with

Strategic Goals of the organization

Concepts of PM

1.

deals with two components : Continuous Process :

Ongoing, never-ending process of setting goals and objectives, observing performance, and giving and receiving feedback

2. Strategic Goals and Mission :

Ensure employees activities and outputs should matched with organizations goals and consequently, help the organization to gain competitive business advantage. PM therefore creates a direct link between employee performance and organizational goals / employee contribution to the organizational goals.

An Ideal PM System: 14 Characteristics

1.

2.
3. 4. 5. 6. 7.

Congruent with organizational strategy Thorough Practical Meaningful Specific Identifies effective/ ineffective performance Reliable

An Ideal PM System: 14 Characteristics (continued)

8. 9. 10.

11.
12. 13.

14.

Valid Acceptable and Fair Inclusive Open (No Secrets) Correctable Standardized Ethical

Congruent with organizational strategy

Consistent with organizations strategy Aligned with unit and organizational goals

Thorough
Steps All employees are evaluated (including Managers) All major job responsibilities are evaluated (including behaviors and results) Evaluations cover performance for entire review period Feedback is given on both positive and negative performance

Practical
Available Easy to use (User friendly software) Acceptable to decision makers Benefits outweigh costs (time, effort and money)

Meaningful

Standards are important and relevant System measures ONLY what employee can control Results have consequences Evaluations occur regularly and at appropriate times System provides for continuing skill development of evaluators

Specific
Concrete and detailed guidance to employees Whats expected How to meet the expectations

Identifies effective and ineffective performance

Distinguish between effective and ineffective

Behaviors Results

Provide ability to identify employees with various levels of performance

Reliable
Consistent Free of error For eg If two supervisor provides ratings for the same employee and performance dimensions, ratings should be similar on basis of their judgement

Valid
Relevant (measures what is important) Not deficient (doesnt measure unimportant facets of job) Not contaminated (only measures what the employee can control)

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

Inclusive
Represents

concerns of all

involved
When system is created, employees should help with deciding
What should be measured How it should be measured

Employee should provide input on performance prior to evaluation meeting

Open (No Secrets)

Frequent, ongoing evaluations and feedback 2-way communications in appraisal meeting Clear standards, ongoing communication Communications are factual, open, honest

Correctable
Recognizes that human judgment is fallible Appeals process provided

Standardized
System Ongoing training of managers to provide Consistent evaluations across

People Time

Ethical
Supervisor suppresses self-interest Supervisor rates only where she has sufficient information about the performance dimension Supervisor respects employee privacy

Role of PM

Strategic Purpose
Link

individual goals with organizations goals Communicate most crucial business strategic initiatives

Administrative Purpose
Provide

information for making decisions re:

Salary adjustments Promotions Retention or termination Recognition of individual performance Layoffs

Informational Purpose
Communicate to Employees: Expectations What is important How they are doing How to improve

Developmental Purpose
Performance

feedback/coaching Identification of individual strengths and weaknesses Causes of performance deficiencies Tailor development of individual career path

Organizational Maintenance Purpose

Plan

effective workforce Assess future training needs Evaluate performance at organizational level Evaluate effectiveness of HR interventions {For eg Whether employees perform
at higher levels after participating in training program me }

Documentation Purpose
Validate

selection instruments Document administrative decisions Help meet legal requirements

Significance of PM
Employee

Employers

Dept/Organization
Better knowledge of talent pool Coaching, Training, & Development needs Succession planning HR planning to achieve Universitys strategic goals as they evolve. Adapt more quickly and easily to change A more engaged and focused work force A fair way to link performance to rewards. Retain top performers Greater department morale and community spirit Learn more about the effectiveness of our selection procedures. Administer fair incentives

Clear sense of what you are to do and why youre doing it Capitalize on your strengths

Greater communication

Better employee relations Awareness of employee career interests and strengths Determine progression to roles that better utilize skills Enhanced effort in quality and productivity Less absenteeism Have a more unified team

Know what you need to do differently

Understand how you contribute to the department and organization Recognition and appreciation of your contributions More engaged in what you do Are possibly happier at work Further your career interests Increased job satisfaction Clearly defined expectations

Less costly turnovers Improved leadership skills Know what kind of help your employees need from you Good grasp of workloads Historical record and comparisons

Focus on future goals and development

Significance of PM
Actual Performance
(Where you are)

GAP

Optimal Performance
(Where you want to be)

Performance Management

Performance appraisal

Performance appraisal is the process whereby an individuals performance is reviewed against: previously agreed goals, and where new goals are agreed which will develop the individual and improve performance over the forthcoming review period.

The Process of Appraisal

Factors involved in Performance during interview process

Parameters to evaluate Performance Management

Parameters to evaluate Performance Management

Parameters to evaluate Performance Management

Parameters to evaluate Performance Management

Parameters to evaluate Performance Management

Parameters to evaluate Performance Management

Parameters to evaluate Performance Management

Parameters to evaluate Performance Management

Parameters to evaluate Performance Management

PM is NOT performance appraisal

Performance Appraisal
Focus is on top down assessment

Performance Management
Stresses on mutual objective setting through a process of joint dialogue

Performed annually Usage of ratings is very common

Focus is on traits

Continuous reviews are performed Usage of ratings is less common

Focus is on quantifiable objectives, values and behaviors Ongoing feedback Is not directly linked with pay Driven by Line Manager

Lacks ongoing feedback Are very much linked with pay Driven by HR

Performance Management Process

Planning the Performance
Agreeing to job deliverables and performance expectations

Rewards

Needs Development

Supporting the Performance

Delegation Empowerment Coaching

Reviewing the Performance (Ongoing & Cyclic)

Informal & formal feedback against performance

Employee Evaluation Tools

Annual Statement of Achievements and Results

List the WORK Describe RESULTS Concrete EXAMPLES

Performance Factors

List the WORK Describe RESULTS Concrete EXAMPLES

Performance management and strategic planning linkages.

Strategic Planning

Is a process that involves describing the organizations destination (goals), assessing barriers that stand in the way of destination, and selecting approaches for moving forward.

Main goal of strategic planning is to allocate resources in a way that provides organizations with a competitive advantage. Strategic plan is a blueprint that defines how organization will allocate resources in acheving its goals.

Strategic Plan : Purposes

Helps to define organizations identity i.e. WHO THEY ARE AND WHAT IS PURPOSE Helps organizations to prepare for the future (Knowing where organization wants to go is a key first step in planning HOW TO GET THERE) Enhances ability to adapt to environmental changes (Knowledge) Provides focus and allows for better allocation of resources (Improved allocation of resources to stimulate growth and improve profitability)

Strategic Plan : Purposes (Contd.)

Produces and organization culture of cooperation (Common goal can be set and organization culture is a key competitive advantage) Allows for the consideration of new options and opportunities (Corporate eye-opener and new opportunities such as expanding to new markets or offering new products) Provides employees with information to direct daily activities (helps in identifying behaviors and results)

Strategic plan provides a critical information to be used in performance management system

Process of linking Performance Management to the Strategic Plan

Organizations Strategic Plan
Mission, Vision, Goals, Strategies

Units Strategic Plan

Mission, Vision, Goals, Strategies

Critical to involve all levels of management

Job Description
Critical to involve all employees
Tasks, KSAs

Individual and Team Performance

Results, Behaviors, Developmental Plan

Strategic Planning : Steps

1. 2.

3.
4. 5.

Environmental Analysis Mission Vision Goals Strategies

Environmental Analysis
Identifies external and internal trends
To understand broad industry issues To make decisions using big picture context

External trends
Opportunities:

environmental characteristics that can help the organization succeed

Threats:

environmental characteristics that can prevent the organization from being successful

External trends Factors to Consider

Economic Political/legal Social

Technological Competitors Customers Suppliers

Internal Trends
Strengths:

internal characteristics that the organization can use for its advantage
Weaknesses:

internal characteristics that can hinder the success of the organization

Internal trends Factors to Consider

Organizational

structure Organizational culture Politics Processes Size

Gap Analysis
Analyzes:
External environment
(opportunities and threats)

vis--vis

Internal environment
(strengths and weaknesses)

Gap analysis determines:

Opportunity + Strength = Leverage

Opportunity + Weakness = Constraint

Threat + Strength = Vulnerability

Gap analysis - Activity

Consider the organization you are currently working or
had worked past.

Try to identify one leverage, one problem, one constraint and one vulnerability. Based on analysis of opportunities, threats, strength and weaknesses. What was situation like? What were the results?

Mission

A good mission statement answers: Why does the organization exist? What is the scope of the organizations activities? Who are the customers served? What are the products or services offered?

Mission Statement contains:

A. Information on organizations Basic product/service to be offered (What?) Primary market/customer groups (Whom?) Unique benefits and advantages of product/services (What?) Technology to be used Concern for survival through growth and profitability

Mission Statement may contain:

B. Information on organizations values and beliefs Managerial philosophy Public image seek by organization Self-concept of business adopted by
Employees Stockholders

Vision
Statement

of future aspirations (about 10 years in future) Focuses attention on what is important Provides context for evaluating
Opportunities Threats

A Good Vision Statement is:

Brief (easy to remember)

Focused (three four

organizations performance to be highlighted)

Verifiable (Eg : One of the most

desirable companies to work for in our industries, focusing on establishing work atmosphere in which our employees can excel ?)

Understandable
Straightforward)

(Clear &

Bound by a Timeline

Inspiring (Feel Good)

A stretch (Reality. For eg :
OLD VERSION : Putting a computer on every desk and every home

Current (Outdated statement

NOT USEFUL, but updated ongoing basis )

NEW VERSION : Putting a computer in every car and very pocket)

Examples: Mission and Vision Statements

Otis Elevator
Our mission is to provide any customer a means of moving people and things up, down, and sideways over short distances with higher reliability than any similar enterprise in the world.

Our Vision - We intend to be the recognized leader in service excellence among all companiesnot just elevator companies worldwide

Examples: Mission and Vision Statements

Avis Rent-a-Car
Our business is renting cars. Our vision is total customer satisfaction.

Goals
Purpose of Setting Goals

Formalize expected achievements (organization hopes to

achieve medium to long range period i.e. next 3 years and so on)

Provide motivation (Source) Provide tangible targets Provide basis for good decisions (By keeping desire
outcomes in mind)

Provide basis for performance measurement (allow for

comparison what needs to be achieved versus what each unit, group and individual is achieving )

Strategies

Create strategies or Game Plans or How to procedures to address issues of: Growth Survival Turnaround Stability Innovation Leadership

How the HR Function contributes:

Communicate knowledge of strategic plan : eg Mission, Vision and Goals to all employees Provide knowledge of KSAs needed for strategy implementation : Job Analysis, Job descriptions, Types of employees should be hired and What types of plans should be put in place to develop needed KSAs internally Propose reward systems : Motivate employees to support strategic plan