Performance management

Introduction
Performance management is the process through
which managers ensure that employee activities and
outputs are congruent with the organization's goals.
Performance Appraisal is the process through which
an organization gets information on how well an
employee is doing his or her job.
Performance Feedback is the process of providing
employees information regarding their performance
effectiveness.
 An Introduction to Appraising
Performance
Why Appraise Performance?

1 Is basis for pay and promotion decisions.

2 Plays an integral role in performance management.

3 Helps in correcting deficiencies and reinforcing good

performance.
4 Is useful in career planning.
 Purposes of Performance
Management

Strategic
Administrative Developmental
 Purpose for performance appraisal
Developmental
 Provide performance feed back
 Identify individual
strength/weakness
 Recognize individual
performance
 Assist in goal identification
 Evaluate goal achievement
 Identify individual trg needs
 Determine org trg needs
 Allow employees to discuss
concerns
 Improve communication
Administrative
 Document personnel decisions
 Determine promotion candidates
 Determine transfers and
assignments
 Identify poor performance
 Decide retention or termination
 Decide on layoffs
 Validate selection criteria
 Meet legal requirements
 Evaluate training programs /
progress
 Personnel planning
 Make reward/ compensation
decisions
Appraisal factors used in India
 Performance Appraisal Roles
 Supervisors
 Usually do the actual
appraising.
 Must be familiar with basic
appraisal techniques.
 Must understand and avoid
problems that can cripple
appraisals.
 Must know how to conduct
appraisals fairly.
Performance Appraisal Roles (cont’d)
 The HR Department
 Serves a policy-making and advisory role.
 Provides advice and assistance regarding the
appraisal tool to use.
 Trains supervisors to improve their appraisal skills.
 Monitorsthe appraisal system effectiveness and
compliance with policy.
 Stages of the PM/ Steps
Specify relevant
aspects of
performance

Apprise performance

Provide Problem solving

performance
feedback Rewards
 Manager
lacks Lack of
information appraisal
Insufficient skills
reward for
performance Manager not
taking
appraisal
seriously
Performance
Unclear appraisals
language fail
because…
Manager not
prepared
Ineffective
discussion of
Employee
employee
Manager not not receiving
development
being ongoing
honest or feedback
sincere
Reasons for the
failure of PM
Alternative
Alternative Sources
Sources of
of
Performance
Performance Appraisal
Appraisal
Supervisor

Team

Peers

Self
Customers

Subordinates
Performance Appraisal Methods
Performance Appraisal Methods

Appraisal Methodologies
1 Graphic Rating Scale Method 6 Management by Objectives (MBO)

2 Confidential reports 7 360 degree feedback

3 Paired Comparison Method 8 Assessment center

4 Critical Incident Method

5 Behaviorally Anchored Rating Scales (BARS)

 Graphic scales
 A rating scale lists traits and range of performance
values for each trait. The supervisor rates each
subordinate by circling or checking the scores that best
describes his performance for each trait. The assigned
value is then totaled.
 Adv: easy to understand ,easy to use and permits a
statistical tabulation of scores of employee.
 Disadv: impose a heavy burden upon the supervisor,
difficult to decide about relative Weightage of different
traits and it may be difficult to ensure uniformity as
rating would differ with different raters.
 Confidential report
 Used In government and pubic enterprises.
 Differ from dept to dept and level to level.
 Written for unit of one yr
 Relates to performance, ability and char of the
employee during that yr.
 Not data based
 subjective. No feed back is provided.
 Focus on evaluating rather than developing.
 Eg: Banks
 Paired comparison
 Every person is compared trait wise with other
persons one at a time.
 The no of times one person is compared with
other is tallied on a piece of paper.
 These no help in yielding rank order of
employee
 Suitable only when the no of persons is small.
FIGURE 9–7Ranking Employees by the Paired Comparison Method
 Critical incident method
 Attempts to measure workers performance in terms of
certain events or incidents that occur in the course of
work.
 Assumption in this method is that the performance of
the employee on the happening of critical incident
determines his failure or success.
 The supervisor keeps record of critical incidents at
different times and then rates him on this basis.
 Avoids recency bias as raters record ratings throughout
rating period.
TABLE 9–1 Examples of Critical Incidents for a Plant Manager

Continuing Duties Targets Critical Incidents

Schedule production 90% utilization of Instituted new production

for plant personnel and scheduling system; decreased late
machinery in plant; orders by 10% last month;
orders delivered on increased machine utilization in
time plant by 20% last month

Supervise Minimize inventory Let inventory storage costs rise

procurement of raw costs while keeping 15% last month; overordered parts
materials and adequate supplies on “A” and “B” by 20%; underordered
inventory control hand part “C” by 30%

Supervise machinery No shutdowns due to Instituted new preventative

maintenance faulty machinery maintenance system for plant;
prevented a machine breakdown
by discovering faulty part
 BARS
 Combines the benefit of critical incidents and graphic
rating scales by anchoring a scale with specific behavioral
examples of good or poor performance.
 Steps in developing BARS
 Generate critical incidents
 Develop performance dimensions
 Reallocate incidents
 Scale incidents
 Develop final instrument
 FIGURE 9–9
Example of a
Behaviorally
Anchored Rating
Scale for the
Dimension
Salesmanship Skills
Examples Of A Bars For Municipal Fire Companies

FIREFIGHTING STRATEGY: Knowledge of Fire Characteristics.

 MBO
 Philosophy of management that rates performance on
the basis of employee achievement of goals set by
mutual agreement of employee and manager.
 Refers to a comprehensive org wise goal setting and
appraisal programme.
 Steps
 Set org goals
 Set dept goals
 Discuss departmental goals
 Define expected results
 Performance reviews: measure the results
 Provide feedback
Performance Appraisal under an MBO Program
Management by Objectives
 360 degree
 Involves a systematic collection of performance
data on an individual or group, derived from a no
of stake holders.
 Any one who has useful info may be one of the
appraisers . The appraiser should be capable of
determining what is more important and what is
relatively less important.
 Provides a broader perspective about an employee
performance.
 720 degree feedback
 720 degree feedback is the name given by some
companies to the process of running a 360 degree
feedback instrument twice – the first time and then some
nine to twelve months after. This gives a pre- and a post-
intervention result. The pre-intervention result sets the
baseline. The development intervention is then done to
improve the participant’s behavior (e.g., training,
coaching). The post-intervention survey then shows the
amount of improvement in the results
 Assessment centers
 the managers may come together to participate in job related exercises evaluated
by trained observers.
 The idea is to evaluate managers over a period of time, by observing and later
evaluating their behavior across a series of a select exercises or work samples.
 Managers are asked to participate in in basket techniques, work groups, computer
stimulations, role playing and other activities. Which requires attributes for
successful performance as on actual job.
 After recording their observations the raters meet to discuss these observations
 Self appraisal and peer evaluation are also used for final rating.
 Generally measures interpersonal skills, communication skills, ability to plan and
organize, self confidence, resistance to stress, mental alertness.
 Time consuming and expensive method.
Common rater-related errors

Error of central tendency

Leniency or strictness errors

Similar-to-me errors

Recency errors

Contrast and halo errors

 Improving Performance Feedback
 Feedback should be given every day, not once a year.
 Create the Right Context for Discussion.
 Ask employees to rate their performance before the
session.
 Encourage the subordinate to participate in the session.
 Recognize effective performance through praise.
 Focus on solving problems.
 Focus feedback on behavior or results, not on the person.
 Minimize criticism.
 Agree to specific goals and set a date to review progress.