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Performance Management System

1. Business role

- job description

- Job skills / knowledge

- Individual skills / knowledge

- Team business /objectives

2. Performance planning

3. Performancedevelopment

4. Performancemeasurement

Plan

Action

Evaluation

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Performance Management

A process that significantly affects

organizational success by having managersand employees work together to setexpectations, review results, and rewardperformance.

A means whereby employees work

behaviours are aligned with the

organizations goals.

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Performance appraisal

A formal system of periodic review and evaluation

of an individuals or teams job performance. Source: Mondy, W., Noe,R.,and Premeaux,S.,(2002) Human Resource

Management, Prentice Hall

the process by which an employees contribution to

the organization during a specified period of time isassessed.

Fisher, C., Schoenfeldt,L., and Shaw,J., Human Resource

Management,(1996),pp. 450, Houghton Mifflin Company

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Performance appraisal and performancemanagement

One current problem which performance appraisal faces is

that the term is often used synonymously with that of

"performance management (NHS Scotland,1993). Yet

performance management is clearly more than a new

name for performance appraisal.

Fletcher defines performance management as:

an approach to creating a shared vision of the purpose and

aims of the organisation, helping each individual employee

understand and recognise their part in contributing tothem, and in so doing manage and enhance the

performance of both individuals and the organization.

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performance management therefore implies the

integration, at both conceptual and practical

levels, of what are experienced currently as a

series of quite diverse initiatives. These include:

business planning;

benchmarking;

non-pay rewards; competence-based education and training;

clinical audit;

performance-related pay;

performance indicators; use of assessment and development centres.

Plus, of course, performance appraisal.

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Most appraisal processes havethree parts:

Defining performance- it is preferable tolink individual performance to

organizational objectives

Measuring performance: this may includemultiple types of performance criteria.

Feedback and coaching: employees need

feedback on their past performance andhelp to meet the next performance targets.

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Purpose of performance appraisal

improvement in the communication between

boss and subordinate through the use offeedback between them

Aids human resource planning

Performance assessments may be useful in

predicting the performance of job applicants Identifies training needs

Aids career planning and development

Employed to determine reward andremuneration

Linked to employee relations decisions

Assess employee potential

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Performance appraisal methods

1. 360-degree feedback A multirater evaluation thatinvolves input from multiple levels within the firm andexternal sources as well.

2. Rating scales Employees are rated according to

defined factors.

3. Critical incident consists of a written record of highlyfavourable and highly unfavourable employee work.

4. Essay the rater records a brief narrative describing anemployees performance.

5. Work standardsemployees performance is compared

to a predetermined standard level of output.

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Performance appraisal methods

1. Ranking [alternation] the rater places theappraisees in rank order of overall performance.

2. Paired comparison every employee to be rated ispaired with and compared to every other subordinate

on each trait.

3. Forced distribution the rater is required to assignindividuals in a work group to a limited number ofcategories similar to a normal frequency distribution.

4. Forced-choice the rater is given a series ofstatements about an individual and indicates whichitems are most or least descriptive of the employee.

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5. 360-degree feedback A multirater evaluation

that involves input from multiple levels within

the firm and external sources as well.

6. Behaviourally Anchored Rating Scales thiscombines elements of the traditional ratingscale and critical incident methods.

7. Results based systems [Management byObjectives (MBO)] the manager and thesubordinate jointly agree on objectives forthe next appraisal period.

8. Assessment centres -

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Problems in Performance appraisal

Lack of objectivity

Halo error

Leniency / strictness

Central tendency

Recent behaviour bias

Personal bias

Manipulating the evaluation

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Individual performance in context

There is a growing recognition that the work

performance of people in organizations comesprimarily from within, but is also powerfully

affected by the social, economic and political

environment in which people work.

Moncrieff has expressed this in the formula:

Individual performance = energy ability motivation x external factors (Murphy andCleveland, 1995)

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The Appraisal interview

Preparing for the interview (preview job description /appraisals)

Scheduling the interview (date, time, duration,

venue)

Employees role

Interview structure

Purpose, aims and objectives /qualitative /quantitative

Overview of the process

Meeting skills, procedures and practice

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The Appraisal interview cont.

Use of praise and criticism

Computer software

Concluding the interview

- review process and meeting

Source: Mondy, Wayne, Noe, Robert, and Premeaux, Shane, Human Resource

Management,pp.301 - 303, Prentice Hall 2002, Dessler,Gary, A Framework for HumanResource Management, pp.175 175 Prentice Hall, 2001 and Mabey, Christopher, Salaman,Graeme, and Storey, John, Human Resource Management,pp.131 150, Blackwell 1998

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Use of praise and criticism

- Emphasize the positive aspects of performance

- Criticise the actions, not the person- Avoid making any criticism destructive or too personal

- Do not surprise the employee by bringing up a problem that

should have been dealt with previously

- Ask the employee how he or she would change things to

improve the situation

- Avoid supplying all the answers

- Be specific and give alternatives for the criticised behaviour

- When criticising, concentrate on developing the employee

- Try to turn the interview into a win-win situation so that allconcerned gain.

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TQM proponents usually argue for the elimination ofperformance appraisals. They claim that the organisationis a system of interrelated parts and that an employees

performance is more a function of factors such astraining, communication, tools, and supervision than ofhis or her own motivation.

A TQM-based performance system would include:- An appraisal scale that contains relatively few performance

categories and avoids a forced distribution(Lawler,1994).

- Objective ways to measure results, avoiding subjective criteria suchas teamwork and integrity (Markowich, 1995).

- A determination about whether any performance deficiency is aresult of employee motivation, inadequate training, or factors such

as poor supervision that are outside the employees control.- 360-degree feedback from a number of different sources, not just

supervisors but internal and possibly external customers of theemployee as well (Antonioni, 1994).

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A case study of Hoshin Kanri practice at Xerox (UK) reveals therelationship between organisational strategy and appraisals(Barry Witcher and Rosie Butterworth ,1999) .

Hoshin Kanri is a form of TQM-based strategic management; it

provides a link between strategic intent and its implementationin daily management.

Xerox is an exemplar of Hoshin Kanri best practice. Key featuresinclude Xerox's use of vital few programmes:

1. the link with employee appraisals

2. an active role for a network of quality managers3. a participative form ofdeployment4. a mature form oftotal quality management5. the use of a self-assessment model to manage the

business

5. a structured system ofreview.

While implementation has been difficult, key benefits have beentransparency and a common language for involving everybody inthe management of strategy.

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The stages of strategic managementFAIR and PDCA.

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The Xerox Management Model

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Dell case

Overall, and it holds 28.8% of the U.S. consumer market(2005), up

from 28.2% a year ago, according to researcher IDC. However, asagging reputation could slow sales, jeopardizing the company'splan to reach $80 billion in revenues by 2008. In the most recentQuarter(2005), Dell missed its sales target, one reason its stockhas dropped 18%, to $34, since the start of the year.

In the last three months of 1991 Dell produced 49,269 personalcomputers. In 2004 ,during peak demand, they could exceed thatnumber by lunchtime.

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Executives study the assembly process on a regular basis. They

wheel in video equipment to examine a work team's every

movement, looking for any extraneous bends or wasted twists.

Designers give one another high-fives for eliminating even a

single screw from a product, because that represents a saving ofroughly four seconds per machine built - the time they've

calculated it takes an employee, on average, to use the pneumatic

screwdriver dangling above his or her head.

Computer software clocks the assembly-line performance of

workers, whether they're putting together PC's or the servers andstorage equipment that Dell sells to large companies. The most

able are declared "master builders" and then videotaped so that

others may watch and learn. The weak are told that it takes a

special set of talents to cut it on the Dell factory floor - and shown

the door.

"I tell employees all the time that we're in a race on costs," said

Dick Hunter,the Dell executive who oversees manufacturing in the

United States. "When we lose the race on costs to Asia or

wherever, that puts our own security in jeopardy."

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This year (2004), their goal was a 30 percent increase in the

number of machines that the company's factories spit out.

Among the recent changes was a rerouting of cable so that it no

longer had to be laced over and under other parts, and the

decision to replace L-shaped tables with a single workbench, to

avoid time-consuming twists. A decision was also made to apply

one fewer sticker per machine. "We're going to get there by saving

four seconds here, and four seconds there," Mr. Myhand (day-shiftmanager of Dell's flagship factory, AustinTexas) said. Thelabour costs of a PC are "roughly 10 bucks," Mr. Rollins (Dell's chief

executive ) said, meaning that payroll costs account for maybe 2

percent of the overall cost of the typical Dell PC. Five years ago, it

took two workers 14 minutes to build a PC; it now takes a singleworker roughly five minutes to do the same.

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Internal support systems

In 2000, when the company's flagship plant opened, nostructure in it was more than maybe 10 feet high. Fouryears later, the plant is now laced with triple-deckerconveyor belts that rise as much as 40 feet above thefactory floor. Black bins filled with parts are dispatchedvia these belts and then lowered mechanically to any

one of the hundreds of employees who assemble themachines according to each customer's specifications.The completed machines are then transported byconveyor belt to a shipping area, where they are boxed

- largely by robots, which were installed only recentlyand routed to dozens of idling big trucks. Typically, thetrucks drive away with full loads 30 minutesafter theyarrive.

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Vertical co-ordination

A dozen years ago, Dell stored roughly 30 daysof inventory - the outer casings, motherboards,

Intel chips and other components needed to

feed the beast - in warehouses around theAustin area. The company, based just north of

Austin in Round Rock, Tex., no longer operates

any warehouses; instead, it requires suppliersto stock 8 to 10 days' worth of goods no further

than 90 minutes from its assembly plants.

http://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=INTChttp://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=INTC

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Questions

Define performance appraisal and briefly discuss its basic

Purposes

What are the basic steps in the performance appraisal

process?

What aspect of a persons performance should anorganisation evaluate?

Who should be involved in performance appraisals and

why?

Outline the various problems associated with performance

appraisal?

What are the characteristics of an effective appraisal

system?

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Conducting an effective appraisal is always important.

However, an appraisal can have life and death implications

when you are dealing with unstable employee, particularly

those who must be dismissed. An employee of a U.S. PostalService station was recently terminated. The employee

returned and shot and killed several managers who had

been instrumental in the former employees dismissal. It

transpired this person had a history as a troublemaker and

that many clues regarding his unstable nature over many

years had been ignored.

1. Could a company with an effective appraisal process have missed so many

signals of instability over several years? Why or why not?

2. What safeguards would you build into your appraisal process to avoidmissing such potentially tragic signs of instability and danger?

3. What would you do if confronted during an appraisal interview by someone

who began making threats regarding his or her use of firearms?

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ReferencesDessler ,Gary(2001),A Framework For human Resource Management,Prentice Hall.

Fisher, C., Schoenfeldt,L., and Shaw,J., Human Resource Management,(1996),pp. 450, Houghton Mifflin Company.

Mondy, W., Noe,R.,and Premeaux,S.,(2002) Human Resource Management, Prentice Hall.

Performance Management/Appraisal: Good Practice Guide, NHS inScotland/Management Development Group, Edinburgh, 1993.Fletcher, C., "Performance management: its nature and research base", Developing a Performance-

oriented Culture, Association for Management Education and Development, 1992.

Moncrieff, J., "Empowering people to perform", Developing a Performance-oriented Culture, Association

for Management Education and Development, London, 1992

Murphy, K.R., Cleveland, J.N., 1995, Understanding Performance Appraisal: Social, Organizational and

Goal-Based Perspectives, Sage, Thousand Oaks, CA.

Murphy, K.R., Constans, J.I., 1987, "Behavioral anchors as a source of bias in rating", Journal of Applied

Psychology, 72, 523-79.

Wiese, Danielle and Buckley, Ronald (1998) The evolution of the performance

appraisal process, Volume: 4 Number: 3 Page: 233 249Barrett, R.S., 1967, Performance Rating, Science Research Associates, Inc., Chicago.

Witcher, Barryand and Butterworth, Rosie (1999) Hoshin Kanri: how Xerox managesVolume 32, Issue 3 , June 1999, Pages 323-332Rivlin, Gary (2004)Who's Afraid of China?,nytimes.com, December 19Boudreaux, Greg(1994) Response:What TQM Says About Performance Appraisal,

Compensation and benefits Review,(May / June):20 -24Lawler, Edward 111(1994), Performance Management:The Next Generation,

Compensation and Benefits Review (May June)Antonioni, David(1994) Improve the Management Process Before Discontinuing

Performance Appraisals, Compensation and benefits Review,(May / June):30

Markowich ,Michael (1995) Response: We Can Make Performance Appraisals Work,

Compensation and benefits Review,(May / June):26

Coo k, Mark (1995)Performance appraisal and true performance, Journal ofManagerial Psychology, Volume: 10 Number: 7 Page: 3 7

http://docserver.emeraldinsight.com/rpsv/cgi-bin/linker?ext=i&ref=15804cd1-38http://docserver.emeraldinsight.com/rpsv/cgi-bin/linker?ext=i&ref=15804cd1-38http://docserver.emeraldinsight.com/rpsv/cgi-bin/linker?ext=i&ref=15804cd1-38http://docserver.emeraldinsight.com/rpsv/cgi-bin/linker?ext=i&ref=15804cd1-38http://docserver.emeraldinsight.com/rpsv/cgi-bin/linker?ext=i&ref=15804cd1-38http://www.sciencedirect.com/http://www.sciencedirect.com/http://www.sciencedirect.com/science?_ob=IssueURL&_tockey=%23TOC%235817%231999%23999679996%23137132%23FLA%23display%23Volume_32,_Issue_3,_Pages_291-383_(June_1999)%23tagged%23Volume%23first%3D32%23Issue%23first%3D3%23Pages%23first%3D291%23last%25%20http://www.sciencedirect.com/science?_ob=IssueURL&_tockey=%23TOC%235817%231999%23999679996%23137132%23FLA%23display%23Volume_32,_Issue_3,_Pages_291-383_(June_1999)%23tagged%23Volume%23first%3D32%23Issue%23first%3D3%23Pages%23first%3D291%23last%25%20http://www.sciencedirect.com/http://www.sciencedirect.com/http://docserver.emeraldinsight.com/rpsv/cgi-bin/linker?ext=i&ref=15804cd1-38http://docserver.emeraldinsight.com/rpsv/cgi-bin/linker?ext=i&ref=15804cd1-38http://docserver.emeraldinsight.com/rpsv/cgi-bin/linker?ext=i&ref=15804cd1-38http://docserver.emeraldinsight.com/rpsv/cgi-bin/linker?ext=i&ref=15804cd1-38http://docserver.emeraldinsight.com/rpsv/cgi-bin/linker?ext=i&ref=15804cd1-38http://docserver.emeraldinsight.com/rpsv/cgi-bin/linker?ext=i&ref=15804cd1-38http://docserver.emeraldinsight.com/rpsv/cgi-bin/linker?ext=i&ref=15804cd1-38http://docserver.emeraldinsight.com/rpsv/cgi-bin/linker?ext=i&ref=15804cd1-38

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Appendix 1.

A tag too far (09/06/05)

Workers who supply goods to companies such asTesco,Sainsbury and Boots are being fitted with electronic

tags that effectively reduce them to battery farm workers,

a new report from union GMB has claimed. Tags are attached to the

wrist or fingers of staff in distribution centres to direct them to stock and

ensure the correct items are picked. The GMB claims the devices aredehumanising as they calculate what breaks the workers need and

how long they need to go to the toilet. Examples of employers using

the tags cited in the report include logistics firm Tibbett & Britten and

retail group Peacock.

Source:http://www.humanresourcesmagazine.com/news/index.cfm?fus

eaction=fulldetails&newsUID=adad6679-eac3-4fab-994f-

2ec17c528b0b