PMCMfinal-224

8/8/2019 PMCMfinal-224

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PERFORMANCE MANAGEMENT AND

COMPETENCY MAPPING

PROF. SHWETA MITTAL


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Effective development of managers, McGregor wrote in a 1957

Harvard Business Reviewarticle, does not include coercing them

(no matter how benevolently) into acceptance of the goals of the

enterprise, nor does it mean manipulating their behavior to suit

organizational needs.

Rather, it calls for creating a relationship within which a man can

take responsibility for developing his own potentialities, plan for

himself, and learn from putting his plans into action.


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Druckers initial proposal of an MBO process to replace trait appraisals

and McGregors integration of a Theory Y approach into the

appraisal process produced a change in the way organizations went

about assessing the contributions of their members.

General Electric was singled out by McGregor as an example of a

company that was using an MBO/Theory Y approach to performance

appraisal.

GE conducted a truly scientific study in the early 1960s to test the

effectiveness of its annual, comprehensive appraisal approach.

It found that:

Criticism has a negative effect on achievement of goals.

Praise has little effect one way of the other.

Performance improves most when specific goals are established.


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Coaching should be a day-to-day, not a once-a-year activity.

Mutual goal setting, not criticism, improves performance.

Interviews designed primarily to improve a mans performance should not

at the same time weigh his salary or promotion in the balance.

Participation by the employee in the goal-setting procedure helps produce

favorable results.

These findings remain today as valid as they were when GE first developed

them.

Performance appraisal as a management tool spread quickly in the 1950s,

when about half of 400 employers surveyed reported using appraisal

systems.

Today, depending on the survey, somewhere between

three-quarters and nine-tenths of all companies use a formal performance

appraisal procedure.


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Armstrong and Baron (2004) observe that performance managementestablishes a shared understanding about what is to be achieved and an

approach to leading and developing people which will ensure that it is

achieved.

Performance management is a systematic and holistic approach to

identify critical dimensions of performance and to carry out activities

necessary to ensure that the missions , objectives , goals , vision , and

values of the organization are being met in an effective and efficient

Manner.


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According to Armstrong, PfM is a means of getting better results from

the organizations, teams and individuals by understanding and managing

performance within the agreed framework of planned goals andcompetency requirements. It is a process for establishing shared

understanding about what is to be achieved and an approach to

managing and developing people.

PfM Integrated Approach

Armstrong and Baron, defines PfM as a strategic and integrated approach

in delivering sustained success to organizations by improving

performance of people by developing the capabilities of teams and

individuals. These experts consider PfM as a strategic tool since it is

concerned with achievement of long-term organizational goals and

effective functioning of organizations in its external environment.


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PfM effects four types of integrations namely,

Vertical Integration :- Aligning objectives at organizational , individual ,

and team levels and integrating them for effective performance.

Functional integration :- It deals with focusing functional energies , plans,

Policies , and strategies onto tasks at different levels and parts of the

organization.

Human resource integration :- This ensures effective integration of

different subsystems of HR management to achieve the organizational goals

with optimum performance.

Goal integration :- It focuses on arriving at a congruence between the needs,

Aspirations, and goals of the managers with that of the goals and objectivesof the organization.


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Performance management is a continuous process of identifying ,

measuring, and developing the performance of individuals and teams

and aligning performance with the strategic goals of the organization.

EXAMPLES :- In Merrill Lynch , employees and managers set

employee objectives in the month of January.

Mid year reviews are taken.

Finally end of the year review incorporates feedback from several

sources, evaluates progress towards objectives and identifies areas

that need improvement. Managers also get extensive training on how to

set objectives and conduct reviews.

At Siemens , the performance management system is based

on three pillars : setting clear and measurable goals, implementing

concrete action, and imposing rigorous consequences.

A survey conducted by the consulting firm Watson Wyatt showed that

only 3 in 10 employees believe their companys performance review

system actually helped them improve their performance.


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Performance Management

is NOT

performance appraisal


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PM is NOT performance appraisal

Performance Management

Strategic business considerations

Driven by line manager

Ongoing feedback

So employee can improve performance


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PM is NOT performance appraisal

Performance AppraisalDriven by HR

Assesses employee Strengths &

Weaknesses

Once a year

Lacks ongoing feedback


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PERFORMANCE MANAGEMENT SYSTEM

Performance management involves thinking through variousfacets of performance , identifying critical dimensions ofperformance, planning, reviewing and developing and enhancingperformance and related competencies.

It is simple, commonsensical and enjoyable.

Performance has many dimensions:-

1. Output or result dimensions

2. Input dimension

3. Time dimension

4. Focus dimension

5. Quality dimension

6. Cost dimension


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Result and Output :- The most acceptable and visible as well as

measurable dimension of performance is result or the output. The sales

figures, customers numbers, financial targets etc are all stated in result

form. They are called key result areas.

Input Dimension :- The input dimension deals with the activities or tasks to

be accomplished by the individual. Performance equation says that any

individuals is a function of three sets of factors : ability or competence to

perform various tasks that lead to performance, motivation to carry on eachof these tasks or work efforts to carry out the tasks and the organizational

support one gets to carry out these tasks.

Time Dimension :- Performance can be defined for a task, for a day , for a

week, for a month , year or for life. The time period for performance is

important. Performance management is time bound as well as role specific.


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Focus :- The performance of a sales executive focus can be on market

Share , profits or new areas covered .


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Difference between Performance Appraisal Systems and PMS

PAS PMS

Focus is on performance

appraisal and generation of

ratings.

Emphasis is on relative

evaluation of individuals.

Annual Exercise

Emphasis is on ratings and

Evaluation.

Focus is on performance

management.

Emphasis is on performance

improvements .

Continuous process.

Emphasis is on performanceplanning, analysis , review,

development and

improvements.


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PAS PMS

Rewards and recognition ofgood performance is an

important component.

Designed and monitored by

the HR department.

Ownership is mostly with the

HR department.

Defining and setting

performance standards is an

integral part.

Designed by the HR

department but could be

monitored by the respective

departments themselves.

Ownership is with linemanagers, HR facilitates its

implementation.


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PAS PMS

KPAs or KRAs are used as

planning mechanisms.

Developmental needs are

identified in the beginning of

the year on the basis of thecompetency requirements for

the coming year.

There are reviewmechanisms essentially to

bring performance

improvements.

KPAs and KRAs are used

for bringing in objectivity.

Developmental needs are

identified at the end of the

year on the basis of theappraisal of competency

gaps.

There are review

mechanisms to ensureobjectivity in ratings.


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Performance is what is expected to be delivered by an individual or

a set of individuals within a time frame. What is expected to be

delivered could be stated in terms of result or effort, tasks andquality , with specification of condition under which it is to be

delivered.


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PERFORMANCE MANAGEMENT CONSISTS OF THE

FOLLOWING :-

1.Defining performance taking into account all thecomplexities.

2.Planning performance both in terms of the input, output,

conditions under which these are to take place.

3.Analyzing performance and understanding what caused it

or contributed to it . Positively ? Negatively ?.

4. Developing capabilities to perform or the capability to give

inputs , possess competencies to convert the inputs intodesired output.

5. Monitoring and reviewing it.

6.Recognizing various dimensions of performance and

rewarding it where appropriate.


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OBJECTIVES OF PERFORMANCE APPRAISAL THE

PAST

The appraisal system in most organizations are designedtoday to meet the following objectives :

1. To control employee behavior by using it as aninstrument for rewards, punishments and threats.

2. To make decisions regarding salary increases andpromotions .

3. To appraise people confidentially and generate dataabout employee for placement and promotion.

4. To identify the training and developmental needs of theemployees.


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NEW OBJECTIVES OF PERFORMANCE

APPRAISAL

Performance appraisal systems can serve the following purposes, if

designed properly:-

1. They can help each employee to understand more and more

about his role and become clear about his functions.

2. They can be instruments in helping each employee to understandhis own strengths and weaknesses with respect to his role and

functions in the company.

3. They can help in identifying the developmental needs of each

employee with respect to his role and functions.

4. They can increase mutuality between each employee and hissupervising officer.

5. They can be mechanisms of increasing communication between

employee and his supervising officer.


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6. They can be instruments to provide an opportunity for the employee for self

reflection and individual goal setting so that individual planned and monitored

development takes place.

7. They can play a role in helping every employee internalize the culture , norms

and values of the organization .

8. They can help in preparing employees for performing higher level jobs.

9. They can be instruments in the creation of a positive and healthy climate in

the organization that drives to give their best and enjoy doing so.


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A SUGGESTED FORMAT

In order to achieve these objectives the appraisalformat should have the following components:-

1. Identification of key performance areas and target

setting through periodic discussions between each

employee and his boss.

2. Identification of qualities required for the present and

future jobs in the company.

3. Self appraisal by the appraisee.

4. Performance analysis to identify factors that have

facilitated and factors that have hindered performance.

5. Performance discussion and counseling to understand

each other and assist each other.


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6. Identification of training needs.

7. Action planning and goal setting for future.

8. Final assessment by the supervising officer for administrative purposes.

SEQUENTIAL STEPS

The following sequences of activities is suggested for using the components

outlined so far :

1. In the beginning of the year every employee sits with his supervisor and

identifies his individual KPAs and sets challenging targets for the next year.

2. At the end of the year the employee appraises his performance on these

KPAs and targets as well as pre identified behaviors included in theappraisal format.

3. He then passes on his form to his supervisor. His supervisor reflects about the

performance of his appraisee and make his notes and comments. He then calls

the appraisee for the discussion.


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4. During the performance discussion they exchange notes, comments, etc and try to

understand and help each other. They also identify the development needs of the

appraisee and set goals for the next period.

5. The supervisor then gives his final ratings and recommends about the

developmental needs. He shows these to the appraisee and takes his comments if

needed and passes these on to the personnel department through his supervisor.

6. The personnel or HRD department uses these for training , rewards and other

activities.


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THE PERFORMANCE MANAGEMENT AND REWARD

SYSTEMS

A performance management system can make thefollowing important contributions :-

Motivation to perform is increased

Self esteem is increased

Managers gain insight about subordinates :-Developing productive relationships with colleagues isa key competency for managers.

The definitions of job and criteria are clarified

(behavior and results )

( Specific criteria)

Self insight and development are enhanced

Administrative actions are more fair and appropriate.

Organizational goals are made clear.


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Employees become more competent.

There is better and more time differentiation between good

and poor performers.

Supervisors views of performance are communicated more

clearly. ( There is greater accountability in how managersDiscuss performance expectations and provide feedback. Both

assessing and monitoring the performance of others are listed

as key competencies for managers)

Organizational change is facilitated. e.g :- IBM (1980s)

Motivation commitment and intentions to stay in the

organization are enhanced.


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COMMENT ON THIS STATEMENT

Randy Pennington , president of Pennington PerformanceGroup . The truth is that the culture change is driven by a

change in performance. An organizations culture cannot be

installed. It can be guided and influenced by policies,

practices , skills and procedures that are implemented and

reinforced. The only way to change the culture is to changethe way individuals perform on the daily basis.


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DISADVANTAGES /DANGERS OF POORLY

IMPLEMENTED PM SYSTEMS

The negative consequences associated with low quality andpoorly implemented systems are :-

1. Increased turnover :- They can leave physically or withdrawpsychologically.

2. Use of misleading information

3. Lowered self esteem

4. Wasted time and money5. Damaged relationships

6. Decreased motivation to perform

7. Employee burn out and job dissatisfaction

8. Unjustified demands on managers and employees resources.

9. Varying and unfair standards and ratings

10. Emerging biases

11. Unclear rating system


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Purposes of PM Systems:

Overview

Strategic

AdministrativeInformational

Developmental

Organizational maintenanceDocumentational


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Strategic Purpose

Link individual goals with

organizations goals

Communicate most crucial businessstrategic initiatives


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Administrative Purpose

Provide information for making

decisions re:

Salary adjustments

Promotions

Retention or termination

Recognition of individual performance

Layoffs


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Informational Purpose

Communicate to Employees:

Expectations

What is importantHow they are doing

How to improve


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Developmental Purpose

Performance feedback/coaching Identification of individual strengths and weaknesses

Causes of performance deficiencies

Tailor development of individual career path

Feedback is an important component of a well implemented performance management system.

Organizations should strive to create a feedbackculture that reflects support for feedback ,including feedback that is non threatening and isFocused on behaviors and coaching to helpinterpret the feedback provided.


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ORGANIZATIONAL MAINTENANCE PURPOSE :- Important

component of workforce planning effort is the talent inventory, which

is information on current resources ( e.g., skills, abilities,

promotional potential, and assignment Histories of currentemployees). Performance management systems are the

primary means through which accurate talent inventories can be

assembled.

DOCUMENTATIONAL :-PMS allow for the documentation ofimportant administrative decisions.


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An Ideal PM System:

14 Characteristics

1. Congruent with organizational strategy

2. Thorough

3. Practical

4. Meaningful

5. Specific

6. Identifies effective/ ineffectiveperformance

7. Reliable


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An Ideal PM System:

14 Characteristics (continued)

8. Valid

9. Acceptable and Fair

10.Inclusive11.Open (No Secrets)

12.Correctable

13.Standardized

14.Ethical


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Congruent with organizational

strategy

Consistent with organizations strategy

Aligned with unit and organizational

goals


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Thorough

All employees are evaluated

All major job responsibilities are

evaluated Evaluations cover performance for

entire review period

Feedback is given on both positive andnegative performance


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Practical

Available

Easy to use

Acceptable to decision makers Benefits outweigh costs


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Meaningful

Standards are important and relevant

System measures ONLY what employee cancontrol

Results have consequences Evaluations occur regularly and at

appropriate times

System provides for continuing skill

development of evaluators


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Specific

Concrete and detailed guidance to

employees

Whats expected How to meet the expectations

Id tifi


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Identifies

effective and ineffective

performance

Distinguish between effective and

ineffective

Behaviors

Results

Provide ability to identify employees

with various levels of performance


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Reliable

Consistent

Free of error

Inter-rater reliability


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Valid

Relevant (measures what is important)

Not deficient (doesnt measure

unimportant facets of job) Not contaminated (only measures what

the employee can control)


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ACCEPTABILITY AND FAIRNESS :-

Distributive justice , which includes perception of theperformance evaluation received relative to the work

performed, and perceptions of the rewards received

relative to the evaluation received.

Procedural justice :- It includes perceptions of theprocedures used to determine the ratings as well as the

procedures used to link ratings with rewards.

Good systems are inherently disdiscriminatory.


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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


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Inclusive

All participants must be given a voice inthe process of designing andimplementing the system.

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 onperformance prior to evaluation meeting


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Open (No Secrets)

Frequent, ongoing evaluations and

feedback

2-way communications in appraisalmeeting

Clear standards, ongoing

communication

Communications are factual, open,

honest


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Correctable

Recognizes that human judgment is

fallible

Appeals process provided


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Standardized

Ongoing training of managers to

provide

Consistent evaluations across People

Time


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Ethical

Supervisor suppresses self-interest

Supervisor rates only where she has

sufficient information about theperformance dimension

Supervisor respects employee privacy


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PERFORMANCE MANAGEMENT

PROCESS

There are six steps involved in the performance

management process :-1.Prerequisites

2.Performance planning3.Performance execution

4.Performance Assessment

5.Performance Review

6.Performance Renewal & Recontracting


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Performance Management ProcessPerformance Management Process

Performance

Review

Performance

Renewal and

Recontracting

PPerformance

Assessment

P Performance

Execution

Performance

PlanningPrerequisites


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1. Prerequisites :- There are two prerequisites that are required before a

performance management system is implemented :-

A) Knowledge of the organizations mission and strategic goals

B) Knowledge of the job in question

Strategic planning allows an organization to clearly define its purpose or reason for

existing, where it wants to be in future, the goals it wants to achieve, and the

strategies it will use to attain these goals.

The important objective of any PMS is to enhance each employees contribution tothe goals of the organization.

The second important prerequisite is to understand the job in question. This is

primarily done by job analysis.

As a result of a job analysis, we obtain information regarding the tasks carried outand the knowledge, skills, and abilities (KSAs ) required of a particular job.


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Job descriptions are a key prerequisite for any performancemanagement system because they provide the criteria

(i.e. yardsticks) that will be used in measuring performance.


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2. Performance Planning :- In the beginning of each performancecycle, the supervisor and the employee meet to discuss , and

agree upon , what needs to be done and how it should be done.

This performance planning discussion includes a consideration of

both results and behaviors as well as a developmental plan.

Results refer to what needs to be done or the outcomes an employee

must produce. A discussion of results needs to include key

accountabilities, specific objectives for each accountability andperformance standards.

P f Pl i


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Performance Planning:

Results

Key accountabilities

Specific objectives

Performance standards


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Specific Objectives

The objectives are that the

employee will achieve as part of

each accountability.

Objectives are statements of

important and measurable

outcomes.


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Performance Standards

Yardstick to evaluate how wellemployees have achieved each

objective

Information on acceptable andunacceptable performance.

P f Pl i


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Behaviors

How a job is done

P f Pl i


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Competencies

Measurable clusters of KSAs

Critical in determining how results willbe achieved

Examples of competencies arecustomer service , written or oralcommunication, creative thinking anddependability

P f Pl i


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Development Plan

Areas for improvement

Goals to be achieved in each area

of improvement


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3. Performance Execution :- At the performance

execution stage , the following factors must be

presented :-

Employee Responsibility

Commitment to goal achievement

Ongoing performance feedback and coaching

Communication with supervisor

Collecting and sharing performance data.

Preparing for performance reviews


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Supervisory have primary responsibility over the following

issues :-

Observation and documentation

Updates

Feedback

Resources

Reinforcement


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EXAMPLE :- Lockheed Martin Corporation , PMS includes

the active participation of both employees and their

supervisors.

Employees write their own performance management

objectives based on organization and unit objectives. Then ,

managers approve the objectives and are encouraged to give

ongoing feedback about the progress toward meeting theobjectives.


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4. PERFORMANCE ASSESSMENT :- In the assessment phase, both the employee

and the manager are responsible for evaluating the extent to which the desired

behaviors have been achieved.

There are many sources to collect performance information

( e.g. peers, subordinates ), in most cases the direct supervisor provides the

information.

M lti l A t A


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Multiple Assessments Are

Necessary

Employee involvement in the process is

used for the following purposes :-

Increase employee ownership

Increase commitment

Provide informationEnsure mutual understanding

Performance Review


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Performance Review

Overview of Appraisal Meeting

The performance review stage involves the meeting

between the employee and the manager to review theirassessments.

Past

Behaviors and results

Present Compensation to be received

Future New goals and development plans

P f R l d


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Performance Renewal and

Recontracting

Same as/different from Performance

Planning

Uses insights and information from

previous phases

Cycle begins again


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Phase I Planning

Setting Performance Objectives

Employees and managers meet to clarify expected outcomes

for the year and set objectives that link the employees job to

department and campus objectives. Objectives define what

employees are expected to accomplish. Managers and

employees should aim to define S.M.A.R.T. objectives.

Specific

Measurable

AttainableRelevant

Timely


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Phase II Check-In

Once performance objectives are set, managers shouldcheck in regularly with employees to discuss the status of

objectives and to provide feedback based on observations

of an employees performance. It is equally important to

provide feedback on areas of success as on those

requiring improvement.

Phase III Assessment

The performance assessment summarizes the employee's

contributions over the entire appraisal period (usually oneyear). It may occur as often as is necessary to

acknowledge the employee for accomplishments and to

plan together for improved performance

DEFINING PERFORMANCE AND CHOOSING A


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DEFINING PERFORMANCE AND CHOOSING A

MEASUREMENT APPROACH

Performance management systems usually includemeasures of both behaviors ( what an employeedoes ) and results ( the outcomes of an employeesbehavior ). The definition of performance does notinclude the results of an employees behaviors, but

only the behaviors themselves.The characteristics of the behaviors are :-

1. Evaluative :- It means that such behaviors can bejudged as negative , neutral or positive for individualand organizational effectiveness.

2. Multidimensional :- It means that there are manydifferent kinds of behaviors that have the capacity toadvance ( or hinder ) organizational goals.


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EXAMPLE

Consider a set of behaviors that can be grouped under the

general label contribution to effectiveness of others in the

work unit.

This set of behaviors can be defined as follows :

Works with others within and outside the unit in a manner

that improves their effectiveness; shares information and

resources; develops effective working relationships: builds

consensus; constructively manages conflict.


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DETERMINANTS OF PERFORMANCE

A combination of 3 factors allows some people to perform at

higher levels than others :1.Declarative knowledge

2. Procedural knowledge

3. Motivation

Declarative knowledge is information about facts and things ,

including information regarding a given task's requirements , labels

, principles, and goals.

Procedural knowledge is a combination of knowing what to do and

how to do it and includes cognitive, physical , perceptual, motor ,

and interpersonal skills.

Motivation involves 3 types of choices


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1. Choice to expend effort.

2. Choice of level of effort

3. Choice to persist in the expenditure of that level of efforts.

The three determinants have a multiplicative relationship,

Such that,

Performance = Declarative knowledge * Procedural knowledge*Motivation.

Deliberate practice involves the following 5 steps:-

1. Approach performance with the goal of getting better

and better.

2. While performing , focus on what is happening and why u are

Doing things the way u do.


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3. When the task is finished, seek performance feedback

from expert sources and the more sources the better.

4. Build mental models of your job, your situation andyour organization.

5. Repeat steps1-4 continually and on an ongoing basis.

IMPLICATIONS FOR ADDRESSING PERFORMANCE PROBLEMS

Performance management system need not only to measure

performance but also to provide information about the source of

any performance deficiencies.


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PERFORMANCE = declarative knowledge * Procedural knowledge * Motivation

FACTORS DETERMINING PERFORMANCE

Declarative

knowledge

Procedural

knowledge

Motivation

Facts Cognitive skill Choice to

perform

Principles Psychomotor

skill

Level to

effort

Goals Physical skill Persistenceof effort

Interpersonal

skill

PERFORMANCE DIMENSIONS


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Performance is multidimensional .It means that there is a need to

consider many different types of behaviors to understand performance.

Two types of behaviors or performance facets stand out :

Task performance

Contextual performance

Task performance is defined as :-

Activities that transform raw materials into the goods and services that

are produces by the organization.

Activities that help with the transformation process by replenishing the

supply of raw materials , distributing its finished products, or providingimportant planning , coordination , supervising, or staff functions that

enable the organization to function effectively and efficiently.


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Contextual performance is defined as those behaviors that

contribute to the Organizations effectiveness by providing agood environment in which task performance can occur.

Contextual performance includes behaviors such as the following :-


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Contextual performance includes behaviors such as the following :

Persisting with enthusiasm and exerting extra effort as necessary to

complete ones own task activities successfully.

Volunteering to carry out task activities that are not formally part of the job.

Helping and cooperating with others.

Following organizational rules and procedures.

Endorsing , supporting , and defending organizational objectives.

TASK PERFORMANCE CONTEXTUAL PERFORMANCE

VARIES FAIRLY SIMPLEROLE PRESCRIBED NO ROLE PRESCRIBED

ANTECEDENT:KSA PERSONALITY

The reasons why both task and contextual performance


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The reasons why both task and contextual performance

dimensions should be included in performance management

System :-

1. Global competition is raising the levels of efforts required

of employees.

2. There is a need to offer outstanding customer service.

3. Many organizations are forming employees into teams.

Interpersonal cooperation is a key determinant of team

effectiveness.

4. Both task and contextual performance in the performance

management system provides an additional benefit.


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EXAMPLE :- TRW Automotive Inc., one of the worlds largest

automotive suppliers and one of the top financial performers

in the industry.The majority of the TRW behaviors actually focus on

contextual performance.

Specifically , the TRW behaviors emphasize many of the

elements of contextual performance including trust and

teamwork.

The case of O2 Ireland, Irelands second largest mobile

phone operator. Headquartered in Dublin. O2s PMS includes

Task related facets centered in hard metrics regardingproductivity as well as contextual related facets such as

involvement in staff socialization and contribution to team

Development.


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O2 concluded that this focus on both task and contextual

performance has led to higher levels of customer service andemployee satisfaction.


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Job Performance in Context

A performer

(individual or

team)

In a given

situation

Engages in

certain

behaviors

That

produce

variousresults

TRAIT BEHAVIOR RESULTS

Approaches to Measuring


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Approaches to Measuring

Performance

Trait Approach

Emphasizes individual traits of

employees

Behavior Approach

Emphasizes how employees do the job

Results Approach

Emphasizes what employees produce

Trait Approach


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Trait Approach

Emphasis on individual

Evaluate stable traits

Cognitive abilities Personality

Based on relationship

between traits &

performance

Trait Approach (continued)


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Trait Approach (continued)

Appropriate if Structural changes planned for

organization

Disadvantages Improvement not under individuals

control

Trait may not lead to Desired behaviors or

Desired results

Behavior Approach


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Behavior Approach

Appropriate if Link between behaviors and results is

not obvious

Outcomes occur in the distant future Poor results are due to causes

beyond the performers control

Not appropriate if above conditions are not present

Results Approach


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Results Approach

Advantages: Less time

Lower cost

Data appear objective

RESULTS APPROACH


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RESULTS APPROACH

The result approach is most appropriate under the following circumstances :-

Workers are skilled in the needed behaviors :- An emphasis on results isappropriate when workers have the necessary knowledge and skills to do the work.

Behaviors and result are obviously related :- Certain results can be

obtained only if a worker engages in certain specific behaviors.

Results show consistent improvement over time :- When results improveconsistently over time, it is an indication that workers are aware of the behaviors

needed to complete the job successfully.

There are many ways to do the right job :- When there are different ways in

which one can do the tasks required for a job, a result approach is appropriate.


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Shaping the Bell Right


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Vitality Curve

The Normal Distribution Curve is used as tool inmeasuring human capacities, Pioneered by the

leader Jack Welch former CEO of GE

It is a differentiation tool used to assess an

employees performance and promotability Jack called it as Vitality Curve'. Also known as

- Dead mans Curve

- Forced ranking- Rank and yank

- Up or Out


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Grading the curve

The employee force is ranked into a 20-

70-10 bucket.

Where 20 percent are rated as 'excellent

70 percent as the vital - back bone of

the company

10 percent as bottom-feeders


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Cont..

Illustratively, it is to show appraisers that,

1. Not more than 10% should be promoted

in each department

2. Least 10% must be weeded out for low

performance;

3. The rest being rated from average, good

to very good.


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The Dead Mans Curve


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Also referred to as 9 Block

Advantages of Vitality Curve in


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Advantages of Vitality Curve in

PAM

It brings objectivity to the PAM process

It helps in normalization of the appraisalprocess

It lends itself to predictable performancepatterns

It guides appraisers on how to follow anuniform rating process/pattern

It helps management in planned attrition and inpredicting promotions/job enlargements/jobenrichments/rewards/incentives, etc.

C


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Cont..

It systematically identifies high performers for

commensurate rewards and identifies low/weak

performers for training/forced attrition.

On a predictive index, it provides a bird's eye

view of the uniform, systematic performance

patterns across grades/levels/functions in the

organization.

Disadvantages of Vitality Curve in


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Disadvantages of Vitality Curve in

PAM

It seems rigid and impractical, especially forsmall/medium. It may reduce organizationalflexibility.

It does not promote 'performance adjustments'

It makes 'extreme raters" skeptical since it doesnot allow them to rate as they wish causinganxiety or discontentment

It may be difficult to simulate/follow sinceoutstanding performers or weak performers maynot essentially be 10%-20% , year-on- year.

C t


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Cont..

The methodology may not be easily understoodby all appraisers

Training inadequacy in appraisers may yielddisastrous results

Implementation may be difficult since HR has toensure constant compliance.

Being a 'forced-distribution' method, it may facedissent from appraisers

It may not adjust well with skill/managerialdemand-supply situations

Arguments against the use of


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Arguments against the use of

vitality curve in PAM Unethical - Forcing a certain section of employees

every year is unethical says Praneet Mehrish, CountryHuman Resource Director, ST Microelectronics Ltd.

Subjective - Since the bell curve is applied, not acrossall the employees, but to individual department / team/ function, there is a good chance that the worst in thehigh performing group may be better than the best inan average performing group. Finally, the company may

be left with low performers, while losing some goodones, says Hari Mohan Jha, VP (HR), ITC WelcomeGroup Hotels

C t


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Cont..

Not compatible for small teams - Logically too, such amodel cannot work for a very small group of extremelyhigh or low performers for the simple reason that itforce-fits them into predefined compartments. If itworks, it can work only for a large, randomly selectedsample, says Madhukar Shukla, Professor, XLRI

Dysfunctional work environment - Bell curve methodmay increase productivity and pave growth

opportunities for good performers, it also creates asense of fear among those who remain behind says EdLawler of Enron

B f B ll th C


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Before you Bell the Curve..

Use objective parameters for the performanceappraisal system.

Confront the employee. There could be reasonfor his / her poor performance.

Shift the onus of improvement onto theemployee, but offer your assistance if needed.

Follow up frequently.

Finally, document all performance-related

conversations you have had with the employeein order to have important evidence on yourside if he or she contests the termination.


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Balanced Scorecard

A new approach to strategic management was


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A new approach to strategic management was

developed in the early 1990's by Drs. Robert

Kaplan (Harvard Business School) and DavidNorton. The balanced scorecard approach

provides a clear prescription as to what

companies should measure in order to

'balance' the financial perspective.Balanced Scorecard is the Management

System that enables organisation to clarify

their vision and strategy and translate them

into action.It provides feedback on bothinternal process abd external outcomes in

order to continously improve strategic

performance and results.

Kaplan and Norton describe Balanced Scorecard


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Kaplan and Norton describe Balanced Scorecard

as: Balanced scorecard retains traditional financial

measures. But financial measures tell the story ofpast events, an adequate story for industrial age

companies for which investments in long-term

capabilities and customer relationships were not

critical for success. These financial measures areinadequate, however, for guiding and evaluating the

journey that information age companies must make

to create future value through investment in

customers, suppliers, employees, processes,technology, and innovation.


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Financial Perspectives

Customer

Perspectives

Learning and Growth

perspectives

Business Process

PerspectivesVision andStrategy

Explanation of the 4 perspectives


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Explanation of the 4 perspectives

Financial Perspectives:

Revenue Growth, Profit

Cost Reduction

Productivity Improvement

Asset Utilization

Investments

Learning and Growth perspective


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Learning and Growth perspective

Learning and growth constitute the essentialfoundation for success of any knowledge-worker organization.

Employee training and corporate cultural

attitude related to both individual andcorporate self-improvement.

It includes things like mentor and tutors,within the organization as well as ease ofcommunication among workers that allowsthem to readily get help on a problem when itis needed.

It includes technological tools highperformance work system

Learning and growth Perspective


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Core Measurement

Enablers

Staff

Competencies

Technology

InfrastructureClimate of

Action

Results

Employee

Retention

Employee

Productivity

Employee

Satisfaction

Business Process Perspective


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p

Critical internal process in which organization must deal. Theseprocesses enable to deliver the value propositions to customersand satisfy stake holders expectations.

Innovation Process

- Product Design

- Product Development

- Process Implementation Operating Process

- Manufacturing

- Marketing

- After Sale Service

Customer Perspective


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Customer Perspective

Due to increasing realization of customerfocused and customer satisfaction in any

organization therefore developing the metrics

for satisfaction customers should be analyzed

in terms of kind of customers and kind ofprocesses for which we are providing a

product or service to those customers groups.

In todays business scenario Customer is the

king

Customer perspective


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Customer Satisfaction

Customer Retention

New Customer Acquisition

Customer Profitability

Market Share

Measures of value Proposition to customer

- Short Lead Time

- On Time Delivery

- Innovative Products

- Anticipating Needs

Customer Perspective Core Measure


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Customer Perspective Core Measure

Market Share

CustomerProfitability

Customer

Satisfaction

CustomerAcquisition

CustomerRetention

Summary


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Summary

FinancialPerspective

Customer

Perspective

Internal

Process

Learning and

Growth

Revenue

CustomerLoyalty

On TimeDelivery

Process QualityProcess Cycle

Time

Employee Competitiveness

SL.NO. PERSPECTIVE MEASURES

1 FINANCIAL * Return on Investment

* Revenue per employee


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2 CUSTOMER *Customer Satisfaction

*Customer Loyalty

* Total cost to customer

* Price relative to competition

* Hours spent with customer

*Market Share

3INTERNAL PROCESS

* Response time (From Reception to Bed)* Quality of services rendered.

* Bill Processing time

* Bill Processing accuracy

*Cost of unutilized capacity.

4 LEARNING & GROWTH * Absenteeism

* Turnover rate* Employee Productivity

* Training Hours

* Leadership Development

* Percentage of employees with advanced degrees.

* Average years of service

* Number of cross-trained employees

* Internal communication rating

Challenges in Executing Strategy


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Challenges in Executing Strategy

Financial Management

ToolsBalance Sheets

Income Statements

Statement of Cash Flow

People Management

Tools

MBOTraining Programs

HRIS

360 Feedback

Customer Management

ToolsC R M

Customer Segment AnalysisCustomer Surveys

Process Management

ToolsSix Sigma

Supply Chain Management

TQMStrategy Management

Tools

???

The Balanced Scorecard


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Train and Communicate Strategy


Set goals, select performance measures and linkmeasures to incentives

Set target for each goal and re-deploy resources to

activities and initiatives to achieve targets

Provide feedback on performance and

learn from results

Feed

Forward

Learning



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A robust tool but keep it simple!

Makes strategy tangible everyones job!

Tracks whats important hits and misses

Measurement-lead management

Provides feedback for short-term course

corrections and long-term learning

Balanced Scorecard Perspectives


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A. Financial

How do we succeed financially?

B.B. CustomerCustomer

How do we appear to our customers?

C.C. Internal ProcessInternal ProcessAt what processes must we excel?

D.D. Learning and GrowthLearning and GrowthHow do we sustain our ability to change and grow?

We Use the Scorecard to Articulate Strategic


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Knowledge, Skills, Systems, and ToolsKnowledge, Skills, Systems, and Tools

FinancialFinancialResultsResults

To Build the Strategic Capabilities..

Needed to Deliver UniqueSets of Benefits to Customers...

To Drive FinancialSuccess...

And Realizethe Vision

Equip our People...

InternalInternal

CapabilitiesCapabilities

CustomerBenefits

Hypotheses in Cause-effect Terms



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How do we Objectives Measures Targets Init iatives

appear to our

Stockholders?

inancial

How do we Objectives Measures Targets Initiatives

appear to our

Customers?

sto erAt what internal Objectives Measures Targets Initiatives

processes must

we excel?

nternal B siness ProcessVision

&

Strategy

How do we Objectives Measures Targets Initiatives

sustain our

ability to change

& grow?

earning and ro t

Cascading Scorecards


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to Build Alignment

Organization

Business

Unit

Business

Unit

BusinessUnit

Teams

Individual Contributors

Sound Long-Term


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FinancialSoundFiscalMgmt

BudgetingLong-TermInvestment

Strategy

Customer The Value

Proposition

Internal Process

Learning & Growth

The Value Proposition

Product/ServicesPrice SelectionQuality Availability

RelationshipPartnershipServices

BrandImage

InnovationNew learningPartnerships

Future needs

Operational ExcellenceAdmin excellenceNetwork of supplier for

Products & servicesAdaptability

Customer MgmtDeepen Knowledgeabout customer

AttractRetainGrow Relationship

Climate for ActionPersonal Growth

CompetenciesFunctional ExcellenceLeadership SkillsStrategic Readiness

Scorecard Information


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Information Type Are. Example is

Strategies High Level Goals Increase Market Share

Objectives Measures of actionplans

Increase CustomerSatisfaction

Measures Indicates success or

failure

Average Customer Rating

(scale of 1-10)

Targets Desired level of

performance for ameasure

Achieve 9.9 of 10 Average

Customer Rating

Initiatives Management actions

taken to achieve target

Train CSR Staff in Problem

Resolution Skills

Perspective: Financial / Customer / Internal Process / Learning&Growth


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The TCS Model

Source: Human Capital Vol.9 No.12 May 2006 Redefine the HR Agenda

Vision


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Vision

Global Top 10 by 2010 in the IT Industry

Mission Customer delight by providing best-in-

class consulting, IT solutions & services

and also delivering value and joy to all

stakeholders.

Shareholder

ValueFINANCIAL PERSPECTIVE


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Human Capital

Effectiveness

Human Resource

Efficiency

Employee

delight

Customer

delight

Manage Operating

efficiency

Manage Customer

relationships

Deliver world

class services

Team

Integration

Leadership

Competencie

sCultural Climate

Strategic Alignment

/Motivation

Work Capability

CUSTOMER PERSPECTIVE

INTERNAL PROCESS PERSPECTIVE

LEARNING & GROWTH PERSPECTIVE

Keys to Success


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Keys to Success

Educate your Executive and Teams

Devise the right metrics

Follow through to completion

Start smallsmall! Report immediately

Dont over measure

Getting Started Customize Your BSC


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Getting Started Customize Your BSC

1. Describe the strategy burningplatform?

Strategy Map

2. Measure the strategy Develop the measures; critical data points

3. Manage the strategy

Gather detailed information about themeasure and initiative

The Successful Scorecard


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The Successful Scorecard

Is a dynamic process

continues to set higher targets and achieves them

Define jobs strategically

from the perspective of where it fits in with thestrategic business goals

Supports joint decision

making about what you do/dont do based on

strategic goals


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Questions?


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PERFORMANCE

APPRAISAL METHODS

What to Evaluate?


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Traits Measures Are an assessment of what the employee is, not

what the employee actually does.

Behavior-based measures

Focus on what an employee does and what theemployee should do differently.

Results-based measures

Focus is on accomplishments or outcomes that can

be measured objectively. Problems occur when

results measures are difficult to obtain, outside

employee control, or ignore the means by which

the results were obtained.

How to Evaluate?


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How to Evaluate?

Relative Assessment

Employees are measured against other

employees and ranked on their distance from

the next higher to the next lower performing

employee.

Absolute Measurement

Employees are all measured strictly byabsolute performance requirements or

standards of their jobs.

Comparative

Ranking

P i d C i


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Appraisal

Methods

Paired Comparison

Forced Distribution Absolute

Critical Incident

Narrative Essay

Checklist Graphic Rating Scale (GRS)

Behaviorally Anchored Rating Scales

(BARS)

Behavioral Observation Scales (BOS) Forced Choice

Objectives

Management By Objectives (MBO)

COMPARATIVE METHODS


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COMPARATIVE METHODS

Ranking

Alternation Ranking

Paired Comparison

Forced Distribution

Alternation ranking


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g

ADVANTAGES


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Its advantages include ease of administration and

explanation.

DISADVANTAGES

The how and why u have rated A better than B is not

questioned.

There is no attempt to fractionalize what is being appraised

into component elements.

It is subject to the halo and recency effects.

PAIRED COMPARISON METHOD


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The paired comparison method is a systematic method

where each employee is compared with all other employeesin the group, for each trait, one at a time.

PAIRED COMPARISON:

For the trait Creativity


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For the trait Creativity

_+++EESHWAR

+_++DILIP

_++_CHARLES

____BHAVANA

__++ARUP

EESHWARDILIPCHARLES

BHAVANA

ARUP

MERITS


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Simplest method

Need no specialist knowledge or skill

Complete ranking of all employees

Demerits

Time consuming and cumbersome for appraisers.

Suitable for small organization with limited number of

employees.


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FREE ESSAY


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It is a narrative appraisal method and is

based on absolute standards

It describes an employee's actions ratherthan indicating an actual rating

The intent is to allow the rater more flexibility

than other rating methods do.

The Process


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A job is broken up into various general

dimensions. Each dimension is followed by

some space where the rater has to write an

essay on that dimension

These essays concentrate on performance

strengths and weaknesses, identify

developmental needs and also suggest courses

of remedial action These essays can either be composed alone or

in collaboration with the appraisee

Narrative Forms


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Final appraisalsare frequentlywritten in a

narrative form Supervisor rates

employee bydescribing thebehaviour relatedto each factor

The appraiser takes note of these factors :-

1 Job knowledge and skills exhibited by the appraisee


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1. Job knowledge and skills exhibited by the appraisee

while performing his job.

2. Appraisees relationship with other employees and Manager.

3. Appraisees personality traits and attitude toward his job, peers

, manager and the organization.

4. Appraisees understanding and commitment to organizations

goals and objectives; and

5. Appraisees potential for future organizational roles.

MERITS

1 M l d l ti f l k d f


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1. More closed evaluations of employees work and performance.

2. Employee performance and work behaviors are documentedin detail.

3.Facilitates design of performance improvement programme

with ease given ready availability of performance records.

DEMERITS

1. Incorrect sentence construction can give a different

impression.

2. Maintaining a diary for noting performance of employees

on regular basis increases cost of supervision and reduced

time for performing critical managerial activities.

3. Honesty of appraiser in recording and reporting employee

performance is central to the effectiveness of this method.


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CRITICAL INCIDENT METHOD


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Critical incidents are behaviors that result in goodor poor job performance.

The rater records all such incidents and the

ratees involvement in it.

The rater plays the role ofObserver rather than

Judge.

For eg.I saw Mishra closing the steam line valve at

the instant the pipeline burst. We could save a

lot of lives due to the above factor.

The critical incident method makes the supervisor think about

the subordinates appraisal all during the year


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(so the rating does not reflect the employees most recent

performance).

The critical incident method provides the list which has

numerous examples of what specifically the subordinate

can do to eliminate deficiencies.

The downsize of this method is that without numerical rating ,

this method is not too useful for comparing employees or for

salary decision.


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ADVANTAGES


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1. The evaluation is based on actual job behavior. The approach

has descriptions in support of particular ratings of an employee.

2. Job related feedback to the ratee is also easy.

3. It also reduces the recency bias, if raters record incident

throughout the rating period.

4. This approach can increase the chances that the subordinate

will improve because they learn more precisely what is

expected of them.

LIMITATIONS

1 Negative incidents are generally more noticeable than


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1.Negative incidents are generally more noticeable than

positive ones.

2. The recording of incidents is a chore to the supervisor and

may be put off and easily forgotten.

3. Overly close supervision may result.

4. Managers may unload a series of complaints about

incidents during an annual performance review session.

CHECKLIST & WEIGHTED

CHECKLIST


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CHECKLIST

This method requires the rater to select

statements or words that describe the

employees performance or characteristics.

Checklists consist of groups of statements that

pertain to a given job.

Raters check statements most representative

of the characteristics and performance of anemployee.

STEPS IN CONSTRUCTIONGenerate a large no of beha io ral


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Generate a large no. of behavioural

statements relevant to work These should represent all levels of

effectiveness

Rules to follow

Express only one thought per statement

Use understandable terminology

Eliminate double negatives

Express thoughts simply and clearly

MERITS


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1. It is economical.

2. It is easy to do the administration.3. The rater doesn't require much of the training.

4. It is standardized.

DISADVANTAGES

1. It doesn't allow the rater to give up relative ratings

2. The use of improper weights.

3. Misinterpretations of checklist items.

When points are allotted to the checklist , the technique

becomes a weighted checklist.


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GRAPHIC RATING SCALE

(GRS)


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(GRS)In a Graphic Rating Scale, the rater assesses a

ratee on performance-related characteristics and

personality characteristics,

ie. factors like quantity of work, dependability, job

knowledge, cooperativeness, ability to lead,

interpersonal skills, etc. by using a rating scale.

A graphic rating lists traits ( such as quality and reliability ) and

a range of performance values ( from unsatisfactory


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to outstanding ) for each trait.

The supervisor rates each subordinate by circling or checking

the score that best describes his or her performance for each

trait. The assigned values for the traits are then totaled.


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Issues in constructing GRS


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Selecting the characteristics to evaluate

Deciding the number of points on the scale

Scaling the characteristics

Providing descriptions for each criteria andeach point on the scale

MERITS

1 It is easy to use


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1. It is easy to use.

2. It is easy to understand3. Many employees can be evaluated.

DEMERIT

1. The rater can be biased.2. There is an implication that a high score on one factor

can compensate for a low factor on another.


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FORCED CHOICE SCALE

What is the Forced Choice Method

?


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?

A rating technique specially designed to increaseobjectivity and to decrease biasing factors inratings.

It comprises of the use of statements that aregrouped into sets according to certain statisticalproperties.

Rater is forced to select from each group of

statements a subset (usually 2) of thosestatements that are most descriptive of eachratee.

For eg.


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Aim of lesson is clearly presented Repeats questions to whole class before

answering

Conducts class in orderly manner

At ease before class

Is patient with slow learners

Lectures with confidence Keeps interest and attention of class

Acquaints class with lesson objective inadvance

Forced-Choice Format


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Items for forced-choice scales are arrangedaccording to two statistical properties of each of

the statement.

Favourability Index (FI)

Discriminability Index (DI)

Discriminability Index DI

Favorability Index - FI


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y

FI = Indicates the extent to which a statement

reflects the niceness, attractiveness, orsocial

desirabilityof the behaviour or characteristic it

describes.

DI = Reflects the extent to which a statement

describes a behaviour or a characteristic that

distinguishes superior employees from others.

Forced Choice Scale


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A tetrad of four statements is provided

In the tetrad all the 4 statements have equal

favourability

2 statements have significantly greater

discriminating power than the other 2.

DI & FISTATEMENT DI FI


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At ease before class 0.53 2.35

Conducts class in orderly manner 1.20 2.22

Repeats questions to whole class before

answering0.57 2.29

Aim of lesson is clearly presented 1.14 2.38

STATEMENT DI FI

Is patient with slow learners 1.15 2.82

Lectures with confidence 0.54 2.75

Keeps interest and attention of class 1.39 2.89

Acquaints class with lesson objective in

advance0.79 2.85

Advantages of the method


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Difficulty in deliberately distorting ratings in

favor of or against particular individuals

because raters have no idea which statements

of each group will ultimately result in higher (or

lower) ratings.

Research has proved that ratings from thismethod were a more valid measure of real

worth than ratings from other formats usedearlier.

Why is it not popular among

raters?


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Raters prefer other methods as with this method

they cannot determine whether they are rating

their best people high or their worst people low. Inability to make an evaluation or a direct rating

can be frustrating to raters.

ASSESSMENT CENTRE METHOD


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This method is used to test candidates in social situation,using a variety of procedures and number of assessors. The

most important feature of the assessment centre is job

related simulations.

Assessment centers are used for the following purposes:-

1. To measure the potential for first level supervisors, sales

and upper management positions, and also for higher

levels of management for development purposes.

2. To determine the individual training and development needs

of employees.

3. To select recent college students for entry level positions.

4. To make an early determination of potential.


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4. To make an early determination of potential.

6. To assist in implementing affirmative action goals.

MANAGEMENT ASSESSMENT CENTRES

A management assessment centre is a two to three day


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simulation in which 10 to 12 candidates perform realistic

management tasks under the observation of experts whoappraise each candidates leadership potential.

Typical simulated exercise include :-

The in- basket

Leaderless group discussion

Management games

Individual presentations

Objective testsThe interview

DEMERITS

1. Assessment centers are costly.


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y

2. Assessment centre staff are often influenced by subjective

elements such as personality of the candidates.

3. The approach involves real hazards i.e. examination

taking syndrome.

4. Employees who receive a poor report from the centre may

react in negative ways.

A well conducted assessment centre can and does achieve

better forecasts of future performance and progress than other

methods of appraisal.

The reliability, content validity , and predictive are said to behigh in the assessment centers.

BEHAVIORALLY ANCHORED

RATING SCALES (BARS)


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Developed by Patricia Cain Smith and LorneKendall

A series of continuous graphic rating scales

arranged vertically

Behavioural descriptions exemplifying various

degrees of each dimensions serve as anchors

on the scale

Designed to allow superiors to be morecomfortable while giving feedback

BARS Dimension:Quality of GroupBARS Dimension:Quality of Group


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y p

Member Input

y p

Member Input

Group member does little work and offersno valuable ideas or feedback

Effective

Ineffective

Group member has read all agreed-uponMaterial and gives valuable ideas.

Group member participates in discussions,though not always prepared

5

4

3

2

1

Group member has read some agreed-upon material

Group member does not attend any meeting

The Steps in BARS development


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GENERATE CRITICAL INCIDENTS :Ask

persons who know the job (job holders,

supervisors) to describe specific illustrations of

effective and ineffective performance.

DEVELOP PERFORMANCE DIMENSIONS :

Have them cluster the incidents into a smaller

set of 5 or 10 performance dimensions, and

define each dimension.


(contd.)


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REALLOCATE INCIDENTS :Another group ofpeople who also know the job then reallocate

the original critical incidents.

They get the cluster definitions and the critical

incidents in a jumbled manner

They reassign each incident to the cluster they think

it fits best.

A

critical incident is retained if some percentage(usually 50% to 80%) of this second group assigns it

to the same cluster as did the first group.


(contd.)


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SCALE THE INCIDENTS : the second group

then rates the behavior described by the

incident as to how effectively or ineffectively it

represents performance on the dimension ( 7-to 9-point scales are typical)

DEVELOP A FINAL INSTRUMENT : choose

about 6 or 7 of the incidents as the dimensions

behavioral anchors.

ADVANTAGES :- While more time consuming than other

appraisal tools, BARS seems to have some advantages :-

1 A more accurate gauge :- People who know and do the job


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1. A more accurate gauge :- People who know and do the job

and its requirements better than anyone develop the BARS.This should produce a good gauge of job performance.

2. Clearer standards :- The critical incidents along the scale

make clear what to look for in terms of superior performance, average

performance , and so forth.

3. Feedback :- The critical incidents make it easier to explain the ratings

to appraises.

4. Independent dimensions :- Systematically clustering the critical

incidents into five or six performance should help to make theperformance dimensions more independent of one another.

5. Consistency :- BARS based evaluation seem to be relatively reliable

, in that different raters appraisals of that same person tend to be

similar.

Disadvantages

1 A specific deficiency is that the behaviors used are activity


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1. A specific deficiency is that the behaviors used are activity

oriented rather than results oriented.

2.It is time consuming and expensive to create BARS.

MANAGEMENT BY

OBJECTIVES


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The use of Management By Objectives was first

widely advocated in the 1950s by the noted

management theorist Peter Drucker.

MBO methods of performance appraisal are

results-oriented i.e., they seek to measure

employee performance by examining the extent

to which predetermined work objectives have

been met.

In the 90s, Peter Drucker put the significance of this organization

management method into perspective, when he said: "It's just another tool.

It is not the great cure for management inefficiency... Management by

Objectives works if you know the objectives 90% of the time you don't


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Objectives works if you know the objectives, 90% of the time you don t

Management by objectives (MBO) is a systematic and organized approach

that allows management to focus on achievable goals and to attain the

best possible results from available resources.

It aims to increase organizational performance by aligning goals and

subordinate objectives throughout the organization. Ideally, employees get

strong input to identify their objectives, time lines for completion, etc. MBO

includes ongoing tracking and feedback in the process to reach objectives.

Management by Objectives (MBO) was first outlined by Peter Drucker in

1954 in his book 'The Practice of Management'.

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1. Develop overall organizational

goals

MBO PROCESS


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2. Establish specific goals for variousdepartments subunits and individuals

3. Formulate action plans

4. Implement plans and maintain self-control

5. Review progress periodically

6.Appraise performance

1. Develop overall organizational Goals: - The first step in the

process of MBO in an organization is to establish verifiable

objectives which are based on the mission and vision of the


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organization . These are the strategic goals which are set bythe top management and address the targets to be achieved

by the whole organization.

2. Establish specific goals or objects for various Departments

and Individuals: - The goals are set for the various positionsat various levels. In this stage the superiors formulate the

objectives that they plan to achieve in their own department.

Most of the times the organization follow the top down

approach just described, some organizations even go for

the bottom up approach, in which goals are suggested by

the lower levels what they believe they can achieve.

3.Formulate Action Plans: - An action plan describes what is

to be done, where, when, how and by whom to achieve the

objectives. Action plan helps in accessing the feasibility of

hi i th l S b di t ll d l th l


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achieving the goals. Subordinates usually develop themselve

with the support of their supervisors.

4.Implement and maintain self- control :- When the goals are

set and action plans determined , individuals should be

given enough freedom to carry out their activities. Butsupervisors need to be kept informed about the progress and

any difficulty that arise.

5.Review Progress Periodically: - MBO ensures periodic

meetings between the superiors and the subordinates toreview the progress towards the accomplishment of targets

of the subordinate. It is important that the plans are

implemented and the targets will be achieved.

6.Appraise Performance :- The appraisal focuses on what

extent the goals are achieved as well as on the shortfalls .

It also ponder what are the reasons of not accomplishing


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the expected goals and what measures can be taken toovercome them.

Goals and plans for the next cycle may also be discussed

at this point.

Strengths of MBO

MBO aids in planning by making managers establish their


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own goals.

MBO helps in Improving the communication between both

management and employees, because both can express their

views on what objectives they can and cannot accomplish.

MBO helps in making everybody aware of the organization's

goals.

With MBO the evaluation process becomes fairer

because people are measured on specified targets and

their performance in achieving goals of the organization.

With specific objectives laid out, suggestions from all levels

of management can be obtained.

M ill h l id f th it l f th i


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Managers will have clearer idea of the vital areas of their

responsibility and the standards that are required. Hence,

allowing them to focus and utilize their resources.

MBO creates a participatory work environment to help

employees become more involved. In this way, everysubordinate in the organization is more motivated.

It provides a practical approach to analyze training needs

and opportunities for growth on the basis of measurement of

performance against standards.

Weaknesses

MBO process requires too much time, effort and paperwork


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in setting goals, objectives and energy to implement thewhole system effectively.

Some managers set unrealistic objectives, placing pressure

for performance at the expense of employees.

Generally the main barrier to effective MBO is lack of

support from top-management, and it is easily stalled by

authoritarian managers.

Before MBO can be implemented, many changes have to be done in the

organization, including the control procedures and the general style of the

management.


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The support needed to achieve goal achievement is too often not enoughfor some managers. managers may be inadequately trained to set goals

and coach employees when necessary.

It is difficult to establish measurable objectives for certain jobs.

There is too much emphasis on short term performance and losing sightof long-term objectives.

It is may be used by some supervisors as a control devise that intimidates

rather than motivates subordinates.

It may tend to introduce inflexibility in the organization.


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360 Degree Feedback System

A 360- degree feedback, system collects performance


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g , y p

information from multiple parties including ones subordinatesPeers, supervisor and customers and self. These systems are

called 360 degree systems because information is gathered

from individuals all around the employee.

In 360 degree appraisal a gap analysis is conducted to

examine the areas for which there are large discrepancies

between self perceptions and the perceptions of others.

The 360- degree feedback system is most helpful when it isused for developmental purposes only and not for

administrative purposes.

360 degree make them aware of that there is a problem with

a competency is a very good first step, but a good 360- degree

feed back system also provides concrete suggestions

about what to do to improve competencies.


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about what to do to improve competencies.

360 degree feedback systems are not necessarily beneficial

for all individuals and organizations.

Example :- Individuals who are high on self efficacy are more

likely to improve their performance based on feedbackreceived from peers compared to individuals low on

self efficacy.

The effect of receiving feedback from multiple sources is

most beneficial for individuals who perceive there is a need

to change their behavior , react positively to feedback,believe change is feasible, set appropriate goals to improve

their performance, and take concrete actions that lead to

performance improvement.

In terms of organizational characteristics , 360 degree system

Work best in organizations that have cultures that support

open and honest feedback.


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These systems work best in organizations that have

participatory , as opposed to authoritarian , leadership style in

which giving and receiving feedback is the norm and is

regarded as valuable.

Example :- Patent Office of UK

The most comprehensive type of multi-source feedback is

360-degree feedback, which involves an employees customer

, peer, direct reports, self and manager.

The other degrees are represented


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The other degrees are represented

Peer/Co-workers Manager

Customer Direct

Reports/Subordinates

Extent of multi-source feedback

Organizations often choose the source of feedback based

on the criticality of performance interaction. This is also based

on the strategy and values of the organization. IBM, for

example, opts to use customer feedback as opposed to usingall sources to provide additional inputs. In an organization

where teamwork may be critical, the inputs of peers often

Become necessary and are used extensively.

90 (Assessment by manager) Most companies with a

performance management system in place use this mode of

Feedback


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180 (Assessment by manager and peer) Tata Communications

ICICI

Coca Cola

270 (Assessment by manager, peer and direct report)

Wipro InfoTech

360 (Assessment by manager, peer, direct report and customer)

ITC

EXAMPLE

360 system, designed for employ

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