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Performance ManagementPerformance ManagementSutapa Bhattacharjee, GPHR

Assistant ProfessorIBA, DU

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PERFORMANCE MANAGEMENTPERFORMANCE MANAGEMENT

• Performance management is an ongoing processof communication between a supervisor and anemployee that occurs throughout the year, insupport of accomplishing the strategic objectives ofthe organization.

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What PAS entail?What PAS entail?@ Individual level:

o Give feedback on performance

o Identify training as well as growth potential

o Help improve, not simply evaluate pastperformance

(cont.)

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@ Administrative level:

o sound basis for validation and

evaluation

oaccountability and obligations can be

met

o objective, job related standards

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Performance ReviewPerformance Review GOALSGOALS

• Assessment of past performance• Feedback• Management of subordinates• Identifying potential for promotion or

transfer• Improvement of managers’

motivation5

• Training and development needsassessment

• Strengthening of relationships• Assist and encourage employee

initiative• Maintenance of performance levels

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• Wage and salary administration• Grievance communication• Checking effectiveness of other HRM

policies• Identification and removal of obstacles• Establishment and development of job

competencies

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The Appraisal ProcessThe Appraisal Process

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The Goal Setting ProcessThe Goal Setting ProcessPERFORMANCE PLANNINGPerformance planning fixes

accountability, sets role boundaries,helps better time management andrequires time at least once a year.

It also helps a manager to understandand analyse his contributions andincrease his responsibility for continuousperformance.

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Dimensions of PMSDimensions of PMSThe challenges within the framework: In the context of organization, performance

management is time bound as well as rolespecific. Maximum output is a relative term. Appraisal score is affected by the

performance of comparable individuals. (theinput-output relationship). Extraneous factors affect individual

performance (Dyadic performance,technical guidance, resource allocation,autonomy etc).

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Provides aframework

forperforming the role.

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PERFORMANCE PLANNING

Performance planningPerformance planning

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In the absence of an upper echelon guideline,managers set new goals for the dept. How did we perform last year? What influenced our performance? How can we improve? What new challenges can we undertake? What will be different this year? How do we improve our quality? What new process, technology or system do we

introduce?

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KPAKPA

The idea behind KPA is to inculcatea planning orientation and roleclarity.

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1. Do the identified KPAs indicate what theincumbent is expected to do (as opposed todept)?

2. Do these include all significant contributionsexpected form his role?

3. Do these indicate the priority areas of work?4. If all KPAs are well done, can the appraisee be

labeled a good performer?5. Are the targets set challenging? Do these

stretch the incumbent’s capabilitiesmoderately (than being routine)?

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6. Are these comprehensive?7. Do these specify the standards of

performance?8. Do these take into consideration realistically

the conditions under which the appraisee isexpected to function?

9. Do these satisfy both appraiser and appraisee?10. Has adequate time been spent on the process

of identifying KPAs and gaining role clarity?

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A major challenge in designing KPAsfor a job includes: the CONTEXT.The ‘role’ is affected by the dynamic

changes in business process and growth inresponse to environmental challenges.

The role changes with time.

The role is affected by stakeholdersexpectations.

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•Main activities?•Exactly what he does?•Time spent?•Unique contribution of the post?•Rating vs performance

•LM & incumbent•Context of

position holders

Job - KPAs List oftasks Weights Appraisal

•Weights onpriorities

•Actual perf.challenges

KPA-SETTING PROCESS

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The outcome?KPAs serve as anchors with the help of whichindividual employee may gain insights intohis own performance – capabilities anddevelopmental needs.

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Appraisal MethodsAppraisal Methods

Three approaches:• Relative standards

• Absolute standards

• Objectives

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Relative standards:• Employees are evaluated by comparing

their performance to the performance ofother employees.

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Evaluating absolute standards:

• An employee’s performance is measuredagainst established standards.

• Evaluation is independent of any otheremployee.

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Evaluating absolute standards:

• Behaviorally Anchored Rating Scales(BARS): Appraiser rates employee onfactors which are defined by behavioraldescriptions illustrating various dimensionsalong each rating scale.

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Observation & DataObservation & DataCollection for AppraisalCollection for Appraisal

• Measurement of performance usinginformation from:o personal observationo statistical reportso oral reportso written reports

• Comparison of actual performance withstandards.

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Performance AnalysisPerformance Analysis –– for Counseling &for Counseling &

development needs Identificationdevelopment needs Identification

Increasing self awareness.Appraiser / appraisee… understanding

each other’s expectations, difficulties andperceptions, and grow close in theprocess of planning for improvingperformance.Identifying development needs.

Some needs attended by training division (job rotation, trainingprograms etc)

Other needs by appraisers – more guidance, on-the-job training anddiscussion with appraisee

Lastly, by appraisee himself – self-study etc25

FactorsFactors that canthat can DistortDistortPMSPMS

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• Leniency error• Each evaluator has his/her own value

system.

• Some evaluate high (positive leniency) andothers, low (negative leniency).

• Halo error: Evaluator lets an assessment ofan individual on one trait influence evaluationon all traits.

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• Similarity error: Evaluator rates others inthe same way that the evaluator perceiveshim or herself.

• Central tendency: The reluctance to usethe extremes of a rating scale and toadequately distinguish among employeesbeing rated.

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• Inflationary pressures: Pressures forequality and fear of retribution for low ratingsleads to less differentiation among ratedemployees.

• Inappropriate substitutes for performance:Effort, enthusiasm, appearance, etc. are lessrelevant for some jobs than others.

• Recency error: The recent performanceevents become overriding factors ofconsideration for the entire year.

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• Impression management:• If employee positively influences the

relationship with the supervisor, he/she islikely to receive a higher rating.

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Attribution Theory (and Error)• Evaluations are affected based on whether

someone’s performance is due to internal factors they can control external factors which they cannot

• If poor performance is attributed to internalcontrol, the judgment is harsher than when itis attributed to external control.

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Creating an EffectiveCreating an EffectivePerformance AppraisalPerformance Appraisal

SystemSystem

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Creating An Effective PerformanceCreating An Effective Performance

Management SystemManagement System

Use Behavior-Based Measures:• Measures based on specific descriptions of

behavior are more job-related and elicit moreinter-rater agreement than traits, such as“loyalty” or “friendliness”.

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Combine Absolute and Relative Standards:• Absolute standards tend to be positively

lenient; relative standards suffer when there islittle variability.

• Combining the standards tends to offset theweaknesses of each.

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Provide Ongoing Feedback:• Expectations and disappointments should

be shared with employees on a frequentbasis.

• Coaching is an integral part of performancemanagement. Feedback need not beformal and annual!

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Use Multiple Raters:• Increasing the number leads to more reliable

and valid ratings.

o Peer evaluations.

oUpward appraisals.

o 360-Degree appraisals.

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Train Appraisers:• Untrained appraisers who do poor

appraisals can demoralize employees andincrease legal liabilities.

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Why performance appraisalWhy performance appraisalprograms failprograms fail

• Lack of top management support• Lack of skill in conducting• Role conflict• Lack of commitment and ownership of

employee• Lack of supervisor interest• Ritual• Perceived fairness and organisational politics

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