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8/3/2019 PMRS-1,2- Introduction
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Performance Managementand Reward Systems
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INTRODUCTION: PMSR-1,2
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Caselet
One of the employees, who reports to you, Sunamika, is over confident
and seems to think she is destined for great things at the companywhere you work. The problem is that you dont agree with Sunamikasassessment of her potential. Nor does your boss. Sunamika has anoutgoing personality and generally gets along well with people.However, she has a tendency to get on everyones nerves in thedepartment with her hour-long personal phone calls. She also has a
tendency to blow events out of proportion. For example, she was quiteupset with the comments you made during her last performancereview. You reviewed a number of her shortcomings concerning misseddeadlines and substandard work, yet she had an excuse for everyexample offered. Since that discussion, she has avoided talking to youon matters that do not require your direct approval. Recently anotherstaff member has informed you about what Sunamika has been
spreading about you to others that you feel threatened by her and havereacted by giving her an unfair performance review. You are concernedabout the news and feel that it is just another example of Sunamikaslack of readiness for promotion. Of particular concern is that of late herwork has been slipping and she no longer is motivated to do her best.
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Caselet: Siemens Standard Drives
Employs 430 people in the Electronic Control equipment business (design &
manufacturing)
Its change programme involved process re-engineering over a 9 month
period.
The new management team and HR manager restructured the
organisation
Operations are now based on 9 production teams of 20 peopleeach
Each of the 9 teams is accountable for its output and operation
If a team member is under-performing, the team leader is empowered to remedythe situation (counsellingdismissal). 10% of employees left voluntarily The team leaders role is vital. They are in charge of:
team building running quality meetings and morning briefing meetings selection, training & appraisal of team members
Team working values: openness, honesty, trust, respect.
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Siemens Standard Drives-Contd.
The team leader s job involves performancemanagement
setting individual performance objectives for teammembers
two way dialogue
explains to each member how they can make progressthrough the performance-related pay structure
Employees who do not add value are held accountable:
disciplinary procedures (including dismissals) are seen tooperate
Efficiency & customer responsiveness haveimproved.
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Even today:
Majority of organizations employ a basic process
This approach produces significant organizational gaps:
Historically organizations defined strategy and objectives
and the measurement of employee and organizational
performance as completely separate processes
Little connection between learning and developmental
functions and the people management processes
Integrated Performance Management System is a key component
of emerging requirement to tie the strategy and organizational
processes to HR processes
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Annual Performance Appraisal of workers began with adventofIndustrial Revolution in late 18th century, when idea of
division of labor was recognized
Gained prominence from Scientific Management perspective
S
ole purpose of performance appraisal was to assess theproductivity of a worker retrospectively with a view to find
ways of improving individual performance
PA process was primarily judgmental and practical in nature-
no attention paid to human aspect of worker
Approach changed after Hawthorne studies, which
established that the relationship between fellow workers
played a significant role at work
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Gradually, it was felt that productivity of workers can be increased by skillfully
maneuvering both:
External factors, including organizational structure
Internal factors- the psychological wellbeing of workers
MBO approach advocated by Peter F. Drucker gained much popularity- as it took both factorsinto consideration and claimed to have overcome the trait rating problem
1970S- Renewed interest in revising performance appraisal process- practitioners
frustrated by negative effect of both: Merit rating- focused on aspects that individual could not change,(such as personality traits)
MBO (focus on the end results-objectivity)
On account of subjectivity, inconsistency etc and exclusion of the process in between such as
communication, and training
Nickols (2000)- advocated the scrapping of the formal performance appraisal
system because an honest, fair, valid and objective assessment of all employees
is literally impossible
Concept ofPerformance Management(M. Beer and R. A. Ruh-1976) gradually
evolved, addressing both performance appraisal and consequently training and
development measures
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Conceptual evolution of performance management between 1991
and 1997
System
Appraisal
outputs
Reward oriented
Ratings common
Top down
Directive
Monolithic owned by HR professionals
Profession/cadre based
FROM
TO
Process
Joint review
Outputs/inputs
Development oriented
Less rating
360 degrees feedback
Supportive
Flexible owned by users
Service based
Adapted from: Armstrong and Baron (2000)
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Employees were forced to endure a once-a-year paperwork exercise of
performance appraisals Not very effective
Dreaded by employees and managers alike
According to Healthfield(2000)- Second only to firing an employee, managers citeperformance appraisal as the task they dislike the most
Healthfield believes that the process of performance appraisal, as traditionallypracticed, is fundamentally flawed for the following reasons:
o Incongruence with value based, vision driven, participative work environment
o Smacks top down, autocratic mode of management
o Biased mostly with recent events
o Mostly based on hunches and opinions
o Managers usually delay appraisals because they find it uncomfortable- subordinates feelde motivated because their annual rise, normally tied to appraisals gets delayed
o Managers avoid giving honest feedback, because they will need to justify both wayextremes, which they find uncomfortable
o The appraisee becomes defensive because he views his performance, normally muchabove than actually appraised
o Tendency of managers to rate mostly outstanding, because performance appraisals tied
to salary increases
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Stephen Mouten: Performance Appraisals are administered byhuman beings, most of whom are not experts in giving and receiving
feed back His reasons, why performance reviews are so disliked by managers and
managees alike:1) Fundamental premise: PA system based on work of behavioral scientists
conducting tests on rats, dogs and pigeons. Unlike the animals, people think,develop their own logic, have their own views of life- there is no comparison
2) one size fits all: one or two forms- do not fit for all kind of skills and jobsituations
3) The rating system: higher ratings given to maintain a positive work groupclimate
4) Supervisor as judge and jury: natural resistance of people to be judged byothers
5) They are waste of time
Employees and managers were evaluated on traits such as:yDependability
yPunctualityyLoyalty
not on their accomplishments
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Other common problems and complaints:
Appraisal events take away too much of the appraiser managersproductive time- not seen as part of normal managerial function, but asimposition from HR department
Appraisals are poor instruments for managee comparison- making HR
decisions and actions inconsistent and inequitable- an arguments getsrooted that personnel appraisals are carried out subjectively
Value and biases of appraising managers tend to function as standards Managees dont know what constitutes performance- what precisely is
expected of them
Performance Appraisal versus Performance Management
Ongoing porocesses used to
identify, encourage, measure,
evaluate, improve, and reward
employee performance
Performance ManagementPerformance Appraisal
Periodic process of evaluating how
well employees perform their jobs
and then communicating that
information to the employees
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THENE
WAPPROACH
Personality trait
rating forms have
been replaced
with more
objective
measures of
performance
focusing on job-
related outcomes
and behaviors
Employees and
supervisors
jointly list specific
objectives to be
accomplished
during the
appraisal period
Performance
measurement
levels (Meet and
Exceed) are
defined
How PfM is different from appraisals?Pfm operationalizes supervisory role of a managerto maximize performanceNot something that line managers have to do in
addition to normal choresProperly implemented, it saves managerial timeWhat is new in PfM?PfM is another way of envisioning the totality ofmanagers function
oProvides systematic dimension to managerialactivities- highlighting their mutual inter-relatedness and interdependence
PfM:oHolistic as a systemoRelevant sub systems are in place andacceptedoOrg. philosophy and human environment isconducive of high moraleoManager is oriented and equipped with high
performing attitudes and leadership skillsoRepresents concrete form of participatingdyadic relationship
Effective PfM can set into ,motion:oA tremendous ripple effect releasingproductive managee enthusiasmoHigh retention
oImproved client satisfaction
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Performance means outcomes achieved or accomplishments at work- the
actual contribution of an individual or teams to organizations strategic goals
oLike shareholders satisfactionoClean image
oEconomical sustainability
J.V.Campbell (1990) believes that performance as behaviors, should be
distinguished from its outcomes, which can be facilitated or hindered by
systemic factors
G.B. Brumbach (1988):o views performance by encompassing both behavior and results
oConsiders behaviors and outcomes in their own right, which can be judged apart
from results. Performance is an impact
Managers role can be seen in three parts:
oBeing: concerns the competencies of managee relevant to performance- meansmanagee has prepared his/her mind
oDoing: focuses on managee activities that are variably effective at different levelsin the organization
Ideas are funny little things. They wont work unless you do
oRelating: emphasizes the nature of relationships with members, the role network-vertical, horizontal or otherwise
Performance: realizing ones potential
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Performance Framework
Managee Potential- is determined when a set of tasks is allocated to a
managee, or certain performance expectations are otherwise set Task related activities and contents: are what a managee or her
supervisor indulge in to achieve the allocated tasks or meet theexpectations in the given task environment
Managee performance or effectiveness, is what the managee actually
achieves. Performance in a role is the extent to which a manageeachieves the purpose for which the role has been created
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Framework to Understand Role Performance
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According to Carkhuff(1983): The great source of an age of
Productivity is human processing or thinking. Human
productivity will expand in direct proportion to the processingcapabilities of the human brain. Human processing
emphasizes not only what we knew but how we come to
know it and we grow by sharing it.
A
n organizations productivity is a function of integrationbetween organizational productivity systems and individual
performance systems
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Performance management is the process through which managers ensure that
employees activities and outputs contribute to organizational goals - (Louis R.Gomez & David B. Mejia 1999)
Performance management is a strategic and integrated process that delivers
sustained success to organizations by improving the performance of the people
who workin them and by developing the capabilities of individual contributors
and team - (MichaelArmstrong 2000)
Performance management involves thinking through various factors of
performance, identifying critical dimensions of performance, planning, reviewing,
and developing and enhancing performance and related competencies - ( Dr. T.V.Rao2004)
Performance management may be defined as a planned and systematic approach
to managing the performance of individuals ensuring their personal development
and contribution towards organizational goals- (Ronnie Malcom 2007)
Competency based Performance Management System may be defined as a
preferred strategy that critically assess competencies and links competencies,
enable assessment of skills required for the successful performance of a given job
and helps managers to conduct better evaluation by rating specific behaviors
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It is the systematic process by which an agency involves itsemployees, as individuals and members of a group, in
improving organizational effectiveness in the accomplishmentof an agencys mission and goals.
It is about performing-not just appraising- emphasizes the
reality of a managers work life, rather than concepts ofmanagement
Most organizations have begun to define and assess manageeperformance through measurable indices and visiblebehaviors that spell high performance
They also emphasize development of managee potential interms of systematically analyzed competencies that areessential for effective job performance- present as well asfuture
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Performance ManagementPfM is an integrated set of techniques designed to improve employees
performance through:
1. Setting clear objectives for individual employees that link to strategic goals2. Formal monitoring and review of progress toward these objectives
3. (a) Reinforcing desired behaviour through rewards
(b) Identifying training & development needs
The Performance Management Cycle
Stage 1. Set objectives
Stage 2. Measure performance
Stage3. Feed back results
Stage 4. Process outputs(e.g. training & development,
rewards)
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Continuous: having three subsystems:
Planning managee performance and development Monitoring managee performance and mentoring managee development
Annual stocktaking, sequentially feeding, sometimes overlapping eachother
Flexible: Manager and managee have sufficient flexibility to designtheir own process
Future oriented: rather than retroactive Participatory: to address performance as well as development
needs
Aim at measuring managers delivered performance againstplanned: targets, standards and performance measures orindicators
Developmental: concerns with managers personal attributes andbehavior as critical inputs to performance process
Provides framework- in which managers must support theirmanagees to succeed and to win
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Performance Planning
Identifying relevant accountabilities and standards
Selecting measures and indicators
Setting performance criteria (or objectives or expectations or standards ore goals or targets) Communicating expectations
Getting employee commitment
Refers to setting performance criteria (or objectives or expectations or standards or goals or targets)
Performance Managing
Refining indicators and defining measures
Assessing organizational resource allocation
Ensuring optimal utilization of organizational resources
Refers to working towards the performance expectations determined at performance planning level. Means resources required to
perform as per planning , is available and ensuring optimal utilization of organizational resources
PerformanceAppraisal
Analyzing performance data
Evaluating performance of employees against performances plans
Administration of performance based rewards
Refers to systematic evaluation of the employees performance on the job and his potential for development. An objective
method of judging the relative worth or ability of an individual employee in performing his task against performance plans Performance Monitoring
Providing feedback and counseling
Problem solving
Developing a regular reporting and monitoring cycle
Providing appeal mechanism
Annual stock taking
Refers to continuous overseeing of employee performance, giving feedback of results, and providing support and carrying out
correctional and developmental activities in order to ensure continual alignment with set performance objectives as identified atplanning level
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The Performance Management Process
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Parts of PfM: - occur in definite sequence Planning: done at beginning of the year
Managing: measurement, resource allocation Monitoring and mentoring: right through the year
Stock taking/apprising: at end of the year
All of the phases are dynamic and they continuously interact- they also work in actionresearch mode Plans are made at the outset- reviewed periodically to be reality- tested for relevance and feasibility in
changing context
Criteria and standards used during appraisal, while stocktaking, are largely developed and rehearsed
during the year
Individual roles, their description, indices for monitoring performance and performancestandards naturally cascade from organizational mission, goals, strategy and operationalplans
Since PfM attempts to improve quality of collaboration among people in the organization-role wise performance plans and expectations must flow from both
Managee performance and development plans feed into the monitoring and mentoring
activities Managees potential for the assigned role reveal itself on performance: here manager can
determine, what combination of individual managees unique competencies and skills willhelp him develop and grow in the organization and where the critical gaps oropportunities for helping the managee realize full potential, are
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Ties individual performance objectives to the
Organizations goal
Promotes partnership between supervisor and
employee Promotes ongoing open communication
Promotes professional development
Establishes framework for future growth
Provides employee with ongoing written feedback
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Performance Management System (PMS)
Consistent with the
strategic mission
Beneficial as a
development tool
Effectively documents
performance
Viewed as fair by
employees
Useful as an
administrative tool
Is legal and job
related
Effective
PerformanceManagement
System
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PerformancePerformance
ManagementManagement
LinkageLinkage
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Purposes of Performance Management
Three broad purposes include: Strategic purposes: helps the
organization achieve itsbusiness objectives
Administrative purposes: theways in which the
organization uses the systemto provide information forday-to-day decisions aboutsalary, benefits, andrecognition programs
Developmental purposes:
serves as a basis fordeveloping employeesknowledge and skills
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What t
houghts,questions, challenges,
or ideas do you have?