PIA Performance Evaluation System

The Performance Evaluation System: A Case study of

Pakistan International Airlines (PIA)

IntroductionPakistan International Airlines is one the

biggest airline in Pakistan having both National and International transportation routes across the world.

PIA has been as air travel pioneer since its inception in 1955.

PIA being a national carrier, and a publicly owned organization, has a culture geared towards maintaining linkages for the country, creating employment for the public and presenting national image to the outside world.

Problem Identification

At PIA, since last one decade management has changed the performance management system thrice. Firstly they had ACR system, then Forced Distribution Ratting System (FDRS) also known as Bell Curve System. Than again is on cross roads to restore the ACR system.

We have focused on the reasons for the failure of Forced Distribution Ratting System (FDRS)

PERFORMANCE MANAGEMENT SYSTEMEffective performance management systems require

employees and supervisors to work together to set performance expectations, review results, assess organizational and individuals’ needs and plan for the future.

Performance

Appraisal

Feedback

Setting

Objectives

Identify

Training

Needs

Career

Development

Standardize

Performance

Motivation

KEY FEATURES OF PERFORMANCE MANAGEMENT SYSTEM (PMS)Section Explanation

Job Review To be filled by appraisee at the end of review period

Part A (Objectives) This part shall be filled by incumbent in consultation of reporting officer and superior

reporting officer at the start of review period. Part A carries weightage of 70% for non

customer focused areas and 30% weightage for customer focused areas.

Part B1 (Skills and

Abilities)

This part is meant for employees working in customer focused areas. This part carries

70% weightage in computation of the final score for all the employees.

Part B1 (Skills and

Abilities)

This part meant employees working in non customer focused areas . this carries 30%

weightage in computation of final score for all the relevant employees.

Part C (Assessment &

Ranking)

This part consolidates the data/assessments written in pervious sections. It consist of

seven sub parts. here employees is ranked and his/her comments are recorded.

Level of Performance and EvaluationLevel Rating Abbreviation Scale Measure Score

Level-1 Outstanding OS 5% T0p Performance far exceeds the

performance standards i-e excel in all

scales of the work

4.6-5.0

Level-II Very Good VG 20% Remaining

Top

Performance frequently exceeds the

performance standards i-e excel in some

important scales of the work and meet

all other aspects.

3.6-4.5

Level-III Good GD 50% Remaining

Top

Performance consistently meets all the

standards of the work.

2.6-3.5

Level-IV Needs

Improvement

NI 20% Remaining

Top

Performance doesn’t meet performance

standards in some important aspects of

the work.

1.6-2.5

Level-V Inadequate

performance

IP 5% Last

Remaining

Performance is well below the standards

of the work.

1.0-1.5

Forced Distribution Ranking System (FDRS)

Forced Distribution Ranking System (FDRS)Forced ranking is a controversial workforce management tool that

uses intense yearly evaluations to identify a company's best and worst performing employees.

Managers rank workers into three categories: The top 20 percent are the "A" players, the people who will lead

the future of the company. They're given raises, stock options, and training.

The middle 70 percent are the "B" players, steady-eddies who are given smaller raises and encouraged to improve.

The bottom 10 percent are the "C" players, who contribute the least and may be meeting expectations but are simply "good" on a team of "greats." They're given no raises or bonuses and are either offered training, asked if they'd be happier elsewhere, or fired.

Forced ranking systems direct managers to evaluate their employees' performance against other employees, rather than the more common (and often grade inflated) measure of evaluating performance against pre-determined standards. The result of such a process is often brutally blunt.

Forced ranking is also used by General Electric, Cisco Systems, EDS, Hewlett Packard, Microsoft, PepsiCo, Caterpillar, and Sun Microsystems, to name only a few well-known employers.

Forced Distribution Ranking System (FDRS) …

FDRS System at PIAGrading employees as under:

4.6-5.0 Outstanding or Exceptional Performance

3.6-4.5 Very Good Performance 2.6-3.5 Good Performance 1.6-2.5 Needs Improvement 1.0-1.5 Inadequate

Performance

Failure of FDRS at PIA

Cultural AspectsThe organization is highly people oriented. Along with

giving competitive salaries, PIA takes care of its employees by providing lots of benefits like medical, passage, pension and gratuity etc. Most importantly, people feel very secure about their jobs which make them complacent. This is one of the reasons why FDRS failed at PIA.

Since no job analysis is ever done in the organization, work activities cannot be described as either team or individual based. People do work in teams but the sense of competition and achievement is lacking. This may be because team based reward system is absent and even if one person is capable enough to raise team’s performance.

Failure of FDRS at PIA… BiasesA low performing department may

have employees in the top 5% category and thus would still be eligible for reward. This practice overlooks the need for improvement and nurturing the best people.

The goals are not set high enough, then almost anybody can get a superior rating.

Failure of FDRS at PIA…Political InvolvementBeing a government organization, there is

strong political involvement is still the part PIA and also corruption is playing positive role. Many of political parties have their staff unions in PIA and all have their own vested interest.

Such political involvement will never support a performance evaluation system like FDRS.

Appraiser’s AttitudePerformance grading which is done as

per Behaviorally Anchored Ranking Scale (BARS) at PIA is not normally taken very seriously by some departments.

At PIA, appraisal forms are generally filled without careful planning and in a hurry (just to get rid of this excess burden).

Failure of FDRS at PIA…

Lack of Knowledge

The appraisers’ and appraise is totally lacking knowledge regarding the benefits of FDRS system and there ratings disrupts the bell curve.

Failure of FDRS at PIA…

Subjectivity The appraisal form used by the organization

is highly subjective and performance grading depends heavily on reporting officer’s whims and repartee’s relationship with his / her boss.

A forced ranking system often incorporates the subjectivity of department heads, which can Institutionalize bias and devalue older workers. Interestingly

Failure of FDRS at PIA…

Inflated RatesManagers don’t want to give bad news to their

people. This might result in inflated ratings and may distort the shape of the bell curve.

The essence of FDRS is sacrificed if managers are given autonomy to change the shape of the bell curve. This is exactly what is being practiced at PIA and instead of keeping employees motivated, has resulted in aggravating the situation as PIA employees give much consideration to comparing themselves with each other

Failure of FDRS at PIA…

Inadequate Pay Grade wise ComparisonFDRS requires that for comparison there should be

a homogeneous group of adequate number of people. At PIA, even within one department, people of similar pay grades are doing completely different jobs and their cross comparison is irrelevant.

In some departments, there may not be enough number of people to compare against each other. In this case, if these employees are compared over and above their department level, their good performance may show up as inadequate and causes de-motivation

Failure of FDRS at PIA…

Revisit the Key Performance Indicators.

Separate complaint management cell be established handled by a separate team. The monthly report of each department will be circulated and also the on backend have complete details along with particular employee details. This cell shall also circulate the hard hitters across the board in order to motivate them. The same must be included in annual appraisal.

Recommendations

Recommendations…The personal and professional factors in appraisal form

must be evaluated separately. The 50% of the professional score includes from Competency level. The complaints during the year must be the part of appraisal system.

Re shuffling of employees. The placement of right person at right place according to their designation and pay scale. This will suffice the purpose of comparison

Incase if any have reservations against the annual appraisal, he/she can consult with HR department where this must be headed by head of Human Resources

The annual appraisal form must include the need for training and development

In order to avoid the same pay level problems, the employees with pay scale from Group I to V rate more than the Group VI to V. Mean strong evaluations required for higher level employees.

The final ratings must also be compared with the overall performance of the department. The complaints must be the part of annual appraisals

Management shall try to reduce the political involvement. The bell curve must be for management employees.

The extensive training programs shall be arranged order to facilitate employees to participate in annual appraisal to implement bell curve system successfully.

Recommendations…

PIA management shall revisit the ratting structure. Below is

the proposed ratting structure. 4.6-5.0 Outstanding or Exceptional Performance 3.6-4.5 Very Good Performance3.1-3.5 Good Performance2.1-3.0 Average Performance (Needs Improvement)

1.0-2.0 Poor Performance

The bonuses shall be awarded to employees comes under the Good performance and above in following manner:Good Performance One Basic SalaryVery Good performance Two Basic Salaries Outstanding Performance Three Basic Salaries

Recommendations…

We recommended basic salaries because PIA management is already giving lots of benefits to their employees in terms of tickets as well as other facilities.

outstanding performers as per PIA current practice shall be posted on higher level upon availability they may also be posted in PIA’s foreign office based on the job requirements.

The promotions shall also based on the ratings. PIA management shall also introduce promotion approval committee with each member from every department (Departmental Head), GM Human Resource, Head of Performance Management Evaluation Cell, Head of Complaint Management Cell, a judge of high court (As in all government entities), Government representative, it could be the Defense Minister or his/her nominee (As it comes under ministry of Defense) and Managing Director PIA. The MD PIA shall head the committee.

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Recommendations…

PIA management shall separately introduce the department for performance management system and evaluations under the direct report of General Manager Human Resource, Managing Director PIA.

Apart from annual evaluations, midyear reviews shall be introduced that create the habit among employees to understand the advantages of evaluation system ad also know the proper way of ratting.

Recommendations…

T HANK YOU

FOR YOUR ATTENTION