A STUDY OF PERFORMANCE MANAGEMENT PRACTICES ADOPTED BY VARIOUS NATIONS

PERFORMANCE

MANAGEMENT

ASSIGNMENT

ASSIGNMENT : A STUDY OF PERFORMANCE

MANAGEMENT PRACTICES ADOPTED BY

VARIOUS NATIONS

SUBMITTED BY: SHERYL MEHRA

BATCH: 2012-15

DIVISION: C

UNITED STATES OF AMERICA

The strong individualistic nature of U.S culture is manifested in PMSs as a conviction that

employee ought to be evaluated on their individual performance and contributions. As such,

performance evaluation in the U.S. is largely focused on the performance of individual

employees rather than the performance of teams or work units. As a capitalist country,

workers in the US largely expect that their rewards will be a direct result of their individual

contributions. As a result, there are competitive aspects to many PMSs in which only the top

performing employees receive the greatest rewards. Capitalism has also created fierce

competition for organisations & the people in them to be industry leaders . Pressure from

stockholders, leaders and boards of directors generate organizational climates that are results-

oriented and driven to be highly successful and profitable. At the same time, as a democratic

country in which everyone has a voice in government, citizen expect fair & transparent

systems and processes. For employees, this translates into the expection that PMSs will be

administered in a fair & transparent manner & that employees will also have input into how

their performance is evaluated. This expection is reinforced by the U.S legal syetem, which

allows employees to easily seek redress if they feel they have been treated unfairly.

Uses of PM in THE U.S.

Currently, most U.S. organisations use their PMSs for decision –making(e.g. for pay,

bonuses, promotion, assignments, reductions in force). Fewer use PM to guide employee

development, including training, mentoring, and other experiences to help employees

develop their capabilities. The choice of whether to use a system for decision-making or

development is a critically important one that has implications for the system’s design and

implementation.

Tools used for measuring PM in U.S

a) Six Sigma

One key innovation of Six Sigma implementation in American Companies involves the

absolute "professionalizing" of quality management functions.

For them, Six Sigma programs are a kind of elite ranking terminology to define a

hierarchy that kicks across all business functions and levels.

CEO and other Top Managers are responsible for setting up a vision for Six Sigma

implementation. They also empower the other role holders with the freedom and

resources to explore new ideas for breakthrough improvements.

Employees are evaluated on the basis of their highest certification in Six Sigma (Black,

Green, Yellow, etc.), or the extent of application of Six Sigma Certifications in daily work

processes.

b) Benchmarking:

This method improves performance by identifying & applying best demonstrated

practices to operations & sales. Managers compare the performance of their employees

externally with those of competitors.

Its objective is to find examples of superior performance and to understand the processes

and practices driving that performance in employees.

Companies then improve their performance by tailoring and incorporating these best

practices into their own operations.

Most managers use it to improve employee performance, understand relative cost position

per employee, gain strategic advantage, and increase the overall rate of organizational

learning.

Key Factors impacting PM in the U.S.

Whether used for decision-making, development, or both, three key factors that are so

pervasive that they impact essentially all performance management systems in the U.S. are:

1. A focus on results

2. Implementation of automated human resource systems, and

3. A legal environment that allows challenges of employment practices.

Key challenges facing effective PM in the U.S.

PM is often referred to as the ‘Achilles heel’ of HRM. A survey by Watson Wyatt showed

that only 30% of workers felt that their company’s PMS helps to improve performance. Less

than 40% said their systems established clear performance goals, generated honest feedback,

or used technology to streamline the process. While these attitudes might be attributed to

poorly designed systems, it is usually not poorly developed tools and processes that cause

difficulties with PM. Rather, difficulties arise because, at its core, PM relies on human

interactions and is an extremely difficult process to implement effectively. While ther are

many challenges associated with implementing effective PMSs in the U.S. three are

problematic:

Organizational members view PM as an administrative burden to be minimized rather

than an effective strategy to obtain business results,

Managers and employees are reluctant to engage in candid performance discussions, and

Judgment and time factors impede accurate performance assessment.

MEXICO

Economic development in Mexico over the last two decades has contributed to an attractive

environment for business investment and growth. As one of the world’s largest economies,

Mexico enjoys regional economic and political power among other Latin American countries

and is home to major multinational corporations such as Cemex (cement), Cinepolis (movie

provider), Nemak (autoparts), Gruma (tortilla maker) and Bimbo (bakery). Contrasting with

the endemic economic instability and crises of the past, Mexico experiences a rather stable

economic environment today. Nevertheless, for business to succeed in this setting, leaders

need to be aware of its particular management style.

Setting the Stage

To be effective, PM systems tend to be complex, require significant amounts of

resources and entail a redefinition of the roles of human resources (HR) vs. front-line

managers.

PM systems fulfill a strategic role in organizations and their implementation requires

paying particular attention to the establishment of work goals, performance

measurement, work evaluation and appraisal, and feedback processes. PM practices

can also have notable benefits for individual workers, because they provide relevant

information about training and development needs, while helping define rewards and

recognition opportunities. Finally, PM systems potentially enable companies to set

standards for attracting and retaining key human talent.

In Mexico, the main challenge faced by HR executives is how to design strategies

that link individual and organizational performance in practice. Developing

innovative strategies for managing this link requires the development of specific

competencies. For example, there is a need to design and use instruments that

measure different types of performance, and to manage a diverse range of PM tools.

Managing a diversity of tools tests front-line managers’ work, especially when it

comes to giving and receiving feedback on employees’ performance.Example: The

case of CompuSoluciones, a medium-size IT company often ranked top in the Great

Places to Work rakings. CompuSoluciones devotes much effort to manage the

strategic positioning of its PM systems.

Understanding this post-evaluation process could explain much of the typical negative

behavior and rejection of unfavorable appraisal, and contribute to more effective

evaluation outcomes.

PM Instruments and Tools

Because of the diverse meanings that organizational members grant to performance

nowadays, there are different models and tools available according to the

organizational level at which performance is appraised. The best-known appraisal

tools in Mexico are: Management by Objectives, Economic Value Added, Balanced

Scorecard, 360-degree Evaluation, Critical Incident Method, and Top Talent Ranking

(forced curve).

a) Management by Objectives (MBO)

It is a process whereby the superior and the immediate subordinate of an organization

jointly identify the common goals, define each individual's areas of responsibility and use

these measures as guides for operating the unit.

It is used widely as a performance appraisal technique, as it is easy to measure whether

the stated objectives have been achieved or not.

The Mexican theory of using this method is that when the goals of the individual & the

organization are aligned, the employee contributes effectively to the organization, thereby, improving the overall efficiency.

b) Top Talent Ranking (Forced Curve)

This method operates under the assumption that an employee's performance can be

plotted in a bell-shaped curve.

Mexican Companies use this method as it helps them classify the employee workforce in

an effective manner, and gives them those key employees who are fit to take senior

positions in the future.

It is used widely because it helps to identify & retain the key talent in the firm.

c) Critical Incident Method

It involves identifying & describing specific events where the employee did something

really well or something that needs improvement.

It's a technique based on the description of the event, and does not rely on the assignment

of ratings or rankings.

This method is useful as it helps employees improve since the information in this method

is more detailed & specific than in rating methods.

Mexicans believe in this system as they think if the Critical Incidents are caught, the

employees’ whole scenario can be well made out.

UNITED KINGDOM

Introduction

In the context of UK, PMS is considered as a strategic process that is aligned to the

organization’s wider objectives and long-term direction.

It is integrative in nature, not only aligning organizational objectives with individual

objectives but also linking together different aspects of HRM like HRD, employee

reward, organizational development, etc.

In UK, Performance Management is based on an agreement b/w a manager & an

individual, shared understanding of and continuing dialogue about an individual’s goals,

standards expected, competencies needed, etc.

Tools used for measuring PM in U.K

a) Balanced Scorecard

This method seeks to integrate financial & non-financial performance measures for a

particular employee & identify key ones that link to strategy.

It involves establishing major objectives for each of the four perspectives, translating

each objective into targeted performance measures and comparing actual performance

measures with the target measures.

The UK Assumption of this approach is that each performance measure is part of a cause-

and-effect relationship involving a linkage from strategy formulation to financial

outcomes.

When all employees are evaluated through this approach, managers get a clear picture of the

key talents of the company & where one particular employee lack & needs improvement.

b) 360 Degree Appraisal

It is a process where multiple raters are involved in evaluating performance.

In this method an employee's performance is evaluated by his supervisor, subordinates,

peers and customers.

It is the most widely accepted & applied as it provides the feedback on an employee from

all angles of his work performance.

c) Quantitative Models for Performance Measurement Systems (QMPMS)

This approach uses cognitive maps, cause and effect diagrams, tree diagrams, and the

analytic hierarchy process, to quantify the effect of factors on performance of the various

employees.

A problem of this approach is that PM usually involves identification of many factors

affecting performance. So, the number of pair wise comparisons is huge; and managing

them is exhausting and time consuming.

d) The Last Planner System and Lean-based Process Measures

These measures are mostly implemented in the UK construction projects with varying

levels of success, to increase the reliability of planning, improve production performance,

and create a predictable workflow.

Through this, project teams commit to complete assigned tasks in a given week. Some LC

practitioners refer to percentage plans complete (PPC) as a metric for commitment

reliability.

At each weekly meeting, time is given to learn and understand why certain tasks were not

completed as planned in the previous week, before creating a new weekly plan to be

executed.

The concepts of TQM and JIT Manufacturing are often used to compliment this approach

for efficient results.

Key Challenges in PM in the U.K.

1. Concerns about the link between PA scores & the length of hours worked (i.e. work-

life balance issues and rater bias)

2. An increasingly diverse domestic workforce (in terms of immigration and ethnic

groups)

3. The recent introduction of age discrimination legislation in the U.K. and concerns for

the absence of bias

Germany

Some researchers have found evidence that the german HRM model is in a process of change. While for a long time after World War II the economic conditions were more or less stable & characterized by growth, enabling the development of a social market economy, recently

external factors inducing change have emerged. Among there are German reunification & the opening of new markets for labor as well as for products in central & eastern Europe & of

course the worldwide encompassing phenomenon of globalization

a) Individual Characteristics

First of all the fact that an employee’s performance is evaluated should be associated

with age for several reasons.

Risk averse individuals try to avoid situations in which they are faced with income

uncertainty. Since systematic performance appraisals are often a precondition for

performance pay, we conclude that the willingness to take risks is positively

associated with being in a job with systematic appraisals.

One may argue that women are less willing to task risk or have a lower expected

tenure due to parental leaves, which may influence compensation and PA.

There are no expect direct effects of an employee’s education on the probability that

her or his performance is appraised but rather an indirect effect.

Better educated employees should work in different jobs and, as we will argue in the

next subsection, the job status and hierarchical level should have an impact on the use

of performance appraisals.

b) Job-based and Firm Characteristics

There should be a strong impact of firm size on the probability that an appraisal

system is used for several reasons: In small owner-managed firms the employer

knows most of his or her employees directly and observes their actual performance

continuously even without systematic appraisals.

Moreover, in larger firms it becomes more necessary to compare the performance of

employees across departmental boundaries, which makes standardized methods to

appraise performance more important.

Furthermore, setting up a formal appraisal system causes fixed costs and, hence, the

benefits of such systems are more likely to exceed the costs in larger firms.

Finally, large firms typically offer more formal training so that the presence of PA

systems is more likely to determine specific training needs.

Tools used for measuring PM in Germany:

a) Activity-based Costing

An efficient cost accounting system is of vital importance for the corporate management

& for several PM approaches.

For the Germans, the main idea of ABC is to directly measure the cost of resources used

to perform organizational activities.

TURKEY

Performance evaluation is one of the most challenging HR functions in Turkish organizations.

There are mainly three reasons for that. First, although 72 percent of companies reported that they had a performance evaluation

system with a standard evaluation form, it is difficult to obtain `objective’ appraisals. One-third of the organizations reported that they evaluated performance on the basis of

competencies and behavioral criteria. There is no evidence of anyscientific validity of the measures developed to assess these criteria.

Evaluators do not receive training prior to performance evaluation.

Another problem is related to the evaluation process. As would be expected in a high power distance culture, a majority of organizations (80 percent) conduct performance evaluations as a one-way process whereby subordinates are evaluated by their superiors

only.

Moreover, self-assessment did not yield reliable outcomes, as people tend to rate themselves lower than the ratings they received from their supervisors.

Tools used for measuring PM inTurkey:

a) Total Quality Management (TQM)

It is a firm-wide management philosophy of continuously improving the quality of the

products by focusing on customers’ needs & expectations to enhance their satisfaction &

firm’s performance.

Most Turkish Manufacturing companies and Industry use it for improving customer

satisfaction, quality of products and/or services, productivity, employee performance,

QWL, market share, etc.

However, most of these Turkish firms face some obstacles in its efficient application like

Employee Involvement, Inadequacy of the firm structure, Lack of firm’s resources,

Illiteracy & unawareness among employees, etc.

b) ERP Applications

In most Turkish organizations dealing with production planning, supplies, sales,

distribution, accounting & customer service, ERP system is standard software that

manages these functions by integrating them all together.

For the employees, there are two types of criteria used to measure their performance;

financial criteria and market criteria. This includes ROI, Sales profit margin sales

growth, market share, etc.

As all such metrics & information is shared & discussed using the ERP Systems,

Managers can easily look into the detailed performance of their employees on the

mutually agreed goals & instilled metrics.

All employees are given a proper training on how to use the ERP Application effectively.

They then keep uploading, measuring & keep a track of their achievements as recorded

by the ERP System.

c) Key Performance Indicators (KPIs)

It is a measurement based PMS that translates the vision of the Turkish firms to strategies,

and converts them & the mission into performance measures.

It is used mostly in sync & in accordance with the implemented ERP Systems of the

organizations. KPIs are installed primarily by employees & then modified.

These Indicators help the managers to develop & use Performance Metrics.

INDIA

Performance management is the practice of actively using performance data to improve

an organization’s performance. It involves strategic use of performance measures &

standards to establish performance targets & goals.

It is also needed to prioritize and allocate resources, inform managers about the needed

adjustments or changes in policy or program directions to meet goals, frame reports on

the success, and improve the overall quality of work.

PMS is a complete work system that begins when a job is defined as needed and ends

when the employee performs according to the standards laid by you.

It aims to achieve the company mission and vision. An effective PMS sets new

employees up to succeed, so they can help your organization succeed.

Tools used for measuring PM in India:

a) KRA Oriented Measurement

It is the method of evaluating an employee’s performance on the basis of Key Result

Areas framed mutually among him & his manager.

These KRAs are often framed at the year’s starting, revised throughout the year based on

the changing conditions, and measured accordingly at year end.

It gives a clear picture to an employee of where does he lack & needs to improve.

b) 360 Degree Appraisal

It is a process where multiple raters are involved in evaluating performance.

In this method an employee's performance is evaluated by his supervisor, subordinates,

peers and customers.

It is the most widely accepted & applied as it provides the feedback on an employee from

all angles of his work performance.

c) Total Quality Management has organization-wide efforts to install & instill a climate in

which an organization continuously improves its ability to deliver high-quality products

and services to customers.

d) Benchmarking

It is the process of comparing one's business processes and performance metrics to

industry bests or best practices from other companies.

It is used to measure performance using a specific indicator (cost per unit of measure,

productivity per unit of measure, etc.) resulting in a metric of performance that is then

compared to others.

It allows organizations to develop plans on how to make improvements or adapt specific

best practices.

CHINA

Performance management is an elusive concept meaning different things to differentpeople.

The concept may be narrowly defined as a process incorporating various modern

management tools and techniques. Focusing on performance management in its narrow or

strict sense, we may say that virtually all components of performance management can be

found in practice in one place or another in China. These include not only management tools

such as strategic management, performance measurement, programme evaluation, total

quality management, quality accreditation (such as ISO 9000), and public-private

partnerships, but also management tools that may more appropriately be seen as fads, such as

best practice benchmarking, business process re-engineering, balanced score-cards, and

service delivery innovations applied mainly in the public sector (for example, one-stop

shopsand the Citizen’s Charter initiative). Performance management may also be defined as

“managing for performance”, or the systematic and integrated efforts to

improveorganisational performance. In addition to the set of tools and techniques mentioned

above, performance management in this broad sense also covers a variety of activities

ranging from reorganisation of public agencies to service delivery reforms.

Tools used for measuring PM in India:

a) Balanced Scorecard

The BSC model is a strategic measurement tool and management system that translates

an organization’s mission and strategy into a balanced set of integrated performance

measures.

The Chinese companies however incorporate this method differently.

The employees & managers primarily decide & set mutually the Key Performance

Indicators (KPIs) at the Employee’s joining or at year’s starting.

Then, according to the framed KPIs, the employees are allocated the different measures to

fit their performance into the BSC Model.

The Chinese believe that such a system result in an efficient & specialized workforce.

And as they with their managers clearly know the expectations & metrics of performance,

evaluation becomes easy.

b) Six Sigma

The changing nature of business and the industry China is working in; means there needs

to be a quality level for each company’s processes.

More and more Chinese Companies today focus on the Six Sigma relevance while

measuring their employees’ performances.

The idea behind its inculcation is improving the quality of services provided.

Modern Improvements

Most Chinese firms are adopting best practice approaches today for the design and

deployment of their enterprise PMS, by articulating their organizational value drivers

before getting into debates about what & how to measure.

They are also stressing the importance of communication in their theories of how their

organizations work. Employees are being encouraged to suggest & develop new models

of communication to enhance transparency.

Employees are also being encouraged to test and challenge the causal models. Using the

data they collect through their Enterprise PMS, Chinese firms can test the validity of their

theories about their business’ value drivers.

Most Chinese firms today are investing in developing the skills of their people and the

infrastructure, thereby ensuring they have the organizational capability to make best use

of their Enterprise PMS.

SOUTH KOREA

Performance Management Process

Setting performance targets

- Delineating the mission and strategic objectives of the organization

- Defining quantitative and/or non-quantitative performance indicators - Choosing targets for indicators Designing the program

- Designating who is in charge of the program

- Designing the service delivery system - Planning human and financial resources

- Drawing up evaluation plans Implementing the program

- Delivering service with inputs of human and financial resources

- Measuring performance indicators Assessing the performance - Performance monitoring - Program evaluation

Tools for performance assessment

a) Performance monitoring

• Measures the program performance with a predetermined set of indicators.

• Can produce information on outputs and outcomes in a frequent and timely manner

at relatively low costs.

• By itself, can rarely explain the causality between inputs and outputs or outcomes.

b) Program evaluation

• Addresses the question of why and how the program produced certain outputs and

outcomes.

• Employs analytical tools with varying degrees of sophistication.

• Usually requires large amounts of money and time, and cannot be performed on all

programs.

JAPAN

Initially formulated in the 1920’s and 1930’s and modeled on the American’s

performance management system.But the Japanese version since then has followed its

own course of development, taking on its present features, which are significantly

different from those of the American system.

Japan had adopted an ‘ability –based personnel management’ approach which took into

account various employee ability measures such as judgement, planning ability,

negotiating skills, leadership etc.

Tools used for measuring PM in Japan:

a) Check-list Approach

The checklist method is a behaviorally based approach to performance appraisal that

requires raters to observe employees' behavior and record performance‐related

judgments about these behaviors. In this approach to performance appraisal, a list of

job‐relevant behaviors is developed. Raters are asked to record:

(a) whether or not each behavior has been performed by the employee

(b) the degree to which each item describes the person being evaluated.

b) Rating Scales

o A graphic rating scale lists a series of traits that the company considers to

be valuable for effective performance, and the rater rates the employee along

a scale depending upon how well the employee has exhibited the trait. These

types of appraisals are pretty easy to design and use. They allow employers

to make quantitative comparisons between the scores achieved by different

employees.

AUSTRALIA

INTRODUCTION

For most Australian firms, PMS is just a bureaucratic system that everyone thinks

they have to go through. It doesn’t correlate to increased productivity.

PMS is more like a formality with firms using ‘outdated’ Performance Management

tools as they have adopted traditional approaches.

Tools used for measuring PM in Australia:

a) Dashboards

It is a PM System that is more practical and powerful than the balanced scorecard (BSC);

DASHBOARD brings together agreed categories of measurement and the various KPIs

for the board, CEO, managers and staff.

It also provides PM tools that enable reporting against KPIs and the provision of data &

information to the board & management, enabling them to make timely & informed

decisions.

In most Australian Companies, Dashboard is customized & implemented as a facilitated

process; assisting people to understand & operate their KPIs.

Employees do not only set their KPIs after discussing them with their managers, but also

can operate them on a real – time basis.

b) Balanced Scorecard

It is a strategic planning and management system that is widely applicable to all

Australian organizations regardless of size or type of business.

It facilitates the development and ongoing review of an organization’s vision and

strategy, provides a method of aligning the organization’s business activities with that

strategy, etc.

It is also beneficial for measuring employee performance as it facilitates the clear &

ongoing development of organization’s strategies, develops practical measures & targets,

encourages completely transparent reporting & is completely adaptable.

FRANCE

INTRODUCTION

The business set up in France is egalitarian (equal) and to ensure successful cross cultural

management, it is important to remember to treat each and every person with equal

respect & deference.

French businesses have a very formal and reserved orientation and the behaviour of

professionals is also formal and professional.

Communication mechanisms in France may be both formal and informal, depending upon

the person you are dealing with & the relationship with you.

PERFORMANCE MGT TECHNIQUES:

a) Financial Performance Metrics

Most French companies belong to an industry which have remained very basic in their

PMS, and are highly dependent on day-to-day operations.

Such a method applies & attracts low to average skilled employees, where the

Performance Metrics are considered basic, commonly understood and are a well tested

way to manage performance because they have the ability to produce information which

is easily understandable by all employees.

They also use non financial metrics like retention, training and they also focuses on customer

surveys and customer complaints which is customer oriented.

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