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This document provides an introduction to performance management. It discusses the evolution of performance management from focusing on profits to integrating performance evaluation with other management processes. The aims of performance management are to evaluate employee and company performance, provide feedback, assist in achieving goals, and identify issues hindering performance. Key principles include identifying performance standards, enhancing performance, and assisting career development. Performance is measured on dimensions like output, time, quality, and cost. The neglected dimensions are dyadic performance between individuals and team performance.

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100% found this document useful (1 vote)

1K views306 pages

Mu 0016

Performance Management and Appraisal

Unit 1

HIGH

A once-a-year event 1

An ongoing process 2

Competency based 3

Integrated 4

Major culture change 5

Impact on the Organisation

LOW

Integration/managerial capabilities

HIGH

Figure 1.1: Evolution of Performance Management

1.3 Aims of Performance Management

One of the important objectives of performance management is identifying the strengths and weaknesses of employees and finding ways to overcome their shortcomings. This is done by evaluating employee output and the companys overall ability to meet the goals by having quarterly or annual audits. Often, after an evaluation, there will be widespread company meetings where managers and employees discuss concerns and solutions to problems. Another objective is to discover where employees and the company are falling short. This is done by going through details such as profits earned, new clients acquired and the contribution of employees to make these things happen. Employees whose contribution are minimal or not up to the mark are counselled on how to improve performance. The evaluation of an employees performance is based on their work output and the amount of time spent by them on the project. Although time spent in an office is not an accurate way of measuring performance, most companies still have the notion that better employees put in longer hours of work. A better way of measuring employee productivity would be to measure the output of work and the accuracy of work completed.
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Overall evaluation of a company and its ability to set and reach goals is another important objective of performance management. Increasing revenue is the overall goal of any company. Other goals may be to acquire more or specific clients, develop new products or hire new talent. It is very easy to determine which of these goals have been met, because these are things that can be seen or calculated. The inability of a company to meet the goals is mainly due to poor leadership, poor planning, poor implementation or poor employee performance. Economic factors also play a major role, but it is better for companies to concentrate on factors that are within their control. The best way of improving a companys overall output is motivating the employees and improving their performance. To identify and remedy situations that hinder company performance is another important objective of performance management. This includes replacing underperforming employees, gaining new clients, developing new strategies for reaching the goals and discussing strategies that have worked in the past. In order to meet the objectives of performance management and improve the overall performance of a company, every employee must work with the team members to develop new techniques and implement changes. The aims of performance management can be summarised into the following points. The aims of performance management are: To assist in the achievement of enhanced standards of work performance of an employee or class of employees. To assist employees to identify the knowledge and skills to perform their jobs efficiently. To ensure that the employees work towards the defined goals. To ensure that the employees receive regular feedback on performance. To assist the employees to achieve personal growth through acquiring relevant knowledge and skills and attitudes. To evaluate the company and its ability to set and reach goals. To identify and remedy situations that are hindering company performance.
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Activity 1: Visit the HR department of any organisation and identify the performance management objectives of that organisation. Hint: Evaluating the performance of employees. Self Assessment Questions 1. The process of identifying, evaluating and developing the work performance of employees in order to achieve the goals and objectives of an organisation is called as_______________. 2. _________________ approach pointed out that creation of shareholder value had an impact on the way companies were managed. 3. An employees performance is based on their _________ and _____________.

1.4 Purpose of Performance Management

The aim of a performance management strategy is to provide the means through which better results can be obtained from the individuals, teams and the organisation--by understanding and managing performance. Performance management involves the development of processes for establishing a shared understanding of the goal that has to be achieved and an approach to manage and develop people in a way that the probability of achieving the goal is increased. A major concern of performance management is performance improvement in order to achieve organisational, team and individual effectiveness. Performance improvement cannot be achieved unless there are effective processes of continuous development. This addresses the core competence of the organisation and the capability of individuals and teams. Performance management is concerned with satisfying the expectations of all the stakeholders of the organisation. The stakeholders of an organisation are the owners, the management, the employees, the customers, the suppliers and the general public. Performance management has to respect and cater to the needs of individuals and teams as well as those of the organisation. A performance management strategy is also concerned with communication and involvement. It should create a climate in which a continuous dialogue

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between the manager and the team takes place to define expectations and share information on the organisations values, objectives and mission. Performance management contributes to a high-involvement organisation by getting teams and individuals to define their objectives and the means to achieve them. The purpose of performance management can be broadly classified into driving results, building capability and growing talent. Let us explain them in detail: Driving results: The purpose of performance management is to drive improvement in business results through individual, group and enterprise goal alignment, measurement, performance coaching and performance information sharing. A performance management process developed to drive the achievement of key business results is designed to make sure that the goals and expectations of the organisation, team and individual are clearly defined, are focused on key priorities and are well connected to the drivers of results. Building capabilities: Performance management drives organisational and individual capability development by clarifying role-specific goals and competencies, creating an environment of constructive feedback, and using formal developmental coaching or mentoring. A performance management process intended to drive capability development is developed to make employees understand what they need to learn and how they would go about doing it. Employees are expected to be in a constant growth and learning mode. Coaching and mentoring helps employees to learn the skills, behaviours and knowledge that are critical to the organisations ability to execute its business strategy. Growing talent: Another important purpose of performance management is to motivate and retain high performers by providing career development programs that include motivation and reward strategies, challenging work assignments and other on-the-job learning initiatives that will lead to career advancement and job satisfaction. A performance management process for identifying and rewarding talent is developed to assess performance. The results of these assessments can be used to make decisions involving work assignments, career advancement and recognition.
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1.5 Basic Principles of Performance Management

Every organisation has its own principles for performance management. Let us now discuss some key principles of performance management that are common to all organisations. Effective organisations need effective performance management. Organisational effectiveness is not possible without performance management. Performance management helps to achieve the following: o To facilitate the integration of individual and organisational objectives and values and develop a performance-orientated culture. o To identify and meet individual development needs and to identify those employees with a good growth potential. o To identify poor performers. o To provide a basis for valuing people. o To improve the quality of management. Performance management deals with performance across the entire range from A (poor) to Z (excellent). Performance management is often misunderstood to be a device that deals with difficult people at point A of the scale. However, in reality, it aims at identifying standards of performance and understanding where every employee of the organisation is located across the range. Managers ability to deliver has an impact on performance management. Effective Performance management needs managers who not only have an open and honest management style, but who also provide support and direction through: o Having a thorough understanding of their institutional strategy and the big picture and being vary of any assumptions they may hold about their employees interest in such matters before engaging with them on such issues. o Recognising that appraisal is not about supervision, but is more concerned with helping individuals set strategic goals for themselves that are consistent with those of the organisation. Performance management is not a fixed event; it is a cyclic process centred on learning and development. Performance management does not just happen, as is often assumed, at an annual event set up for the purpose. Formal appraisal is but a single aspect of the process.
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Performance management is about learning and development, which is a continuous and ongoing activity. It is more effective if it is planned in advance, experienced, reviewed and evaluated on a regular basis. Feedback on progress and achievement is an important aspect of the learning cycle, and in this respect, employees are no different to students. We all need high-quality regular feedback if we are to develop. Indeed, conventional wisdom tells us that any feedback, even if negative, is better than none at all. Managers, then, need to be not only particularly skilled in this regard, but they must also seek every opportunity to provide feedback to the team members. Performance management is not a system. It is a natural process of managing people. Performance management is the way an organisation views its employees. This may not necessarily entail following best practices, but rather doing what is best for the organisation. Either way, the focus will, or should, invariably be on changing behaviour, not paperwork, and should focus on the process, rather than the system. Performance management works best and succeeds most when it is aligned with the culture, climate, aspirations and values of the organisation. It is perceived to be an artificial implant grafted on to the existing system. Activity 2: Discuss the performance management system of your organisation or any friends organisation and check if it meets the purpose of performance management with respect to driving results, bulilding capabilities and growing talent . Hint: Purpose of performance management. Self Assessment Questions 4. Performance improvement cannot be achieved unless there are effective processes of continuous development (True/False)? 5. The purpose of performance management can be broadly classified into driving results, building capability and _____________. 6. Performance management is not a fixed event; it is a cyclic process centred on___________ and _____________.

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1.6 Performance Management and its Dimensions

Performance management involves thinking through various aspects of performance, identifying the critical dimensions of performance, planning, reviewing, developing and enhancing performance and related competencies. Performance has many dimensions. In this section we will discuss the following dimensions of performance. Output or result dimension. Input dimension. Time dimension. Focus dimension. Quality dimension. Cost dimension. 1.6.1 Output or result dimension Output or result dimension is the most acceptable, visible and measurable dimension of performance. It describes the consequence of inputs in a semifinal, final or summary form. It describes the standards in an easily measurable form. For example-- salary figures, customer numbers, financial targets, completion of targets to meet some deadlines, production targets and so on are all stated in a result form. These are also known as key result areas. 1.6.2 Input dimension This dimension deals with the activities or tasks to be accomplished by the individual. The nature of activities to be undertaken by the individual, the time frame, the quality of inputs to be given and so on, constitute the input dimension. Performance can be managed better, if the nature of inputs required to be put in can be conceived without mistakes, planned properly and implemented. The performance equation comes into picture at this point. It says that any individuals performance is a function of three sets of factors, they are: The ability or competence to perform various tasks. The motivation to carry on each of these tasks or work effort to carry out the tasks. The organisational support one gets to carry out these tasks. If any one of these is less, the performance is bound to be poor.
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Many a times, such data is not easily available with respect to managers, though it is easier to get such data for blue collar workers whose physical labour can be easily measured. Since managerial performance is highly interdependent and dynamic, it becomes difficult to set standards and also to measure. 1.6.6 Cost dimension Cost is another dimension of performance. Costs may be financial, or with respect to time and effort. For example, consider a salesman who wants to increase his profit by 50%. He will have to spend more time and effort in understanding new ways of convincing customers. Similarly, if the overall performance target of an organisation is to double the profit, then every member in the organisation will have to put in more effort and time and the organisation will have to finance research and development of new products or to identify potential customers. Self Assessment Questions 7. ________________is the most acceptable, visible and measurable dimension of performance. 8. ______________ dimension deals with the activities or tasks to be accomplished by the individual. 9. In the context of organisation, performance management is time bound as well as _____________.

1.7 Neglected Dimensions of Performance Management

Performance management in the past was limited to individuals. It was considered that it is each individuals business to be a good performer. The role played by the boss or the subordinate in determining performance was completely ignored. The cumulative performance of an employee and his superior together is called as dyadic performance. The term dyad is used to represent the two with equal status. A team working in any department is expected to deliver some results, similarly each dyad is expected to provide certain inputs and deliver certain results. In organisations, a manager and their boss together constitute a dyad and have some responsibility to provide inputs. As dyadic performance contributes substantially to an individuals performance, it deserves some attention.
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There are two ways of measuring dyadic performance. Outcome measures take into consideration the situational variations and are based on assumptions, and process measures essentially deal with interpersonal processes. They include the extent to which each person is a source of motivation to the other person, the extent to which joint effort yields results that are higher than the sum of individual efforts and the extent to which there is mutuality, help and learning. A measure of dyadic performance: The following items of a questionnaire are used to measure dyadic performance. The sum of the scores will give the dyadic performance index. 1. I enjoy working with this person. 2. He provides me the guidance and support required to do my job well. 3. He provides the information and support required to do my job well. 4. He is a great motivator. I feel motivated to work with him. 5. He gives me feedback that is empowering. 6. He complements and supplements my own effort. 7. We work well as a dyadic team. 8. I get a lot of clarity about my job and what is expected out of my job. Consider manager A, who has a motivating value uniformly with each one of his six subordinates (dyads). If we rate the motivational value he has on a five-point scale and assign five to each, then he has a 30 point score on his dyadic performance. His average dyadic performance with respect to his subordinates is 30 divided by 6 = 5. Another manager B has a good equation with three of his subordinates. Performance value = 3 x 5 = 15 points. He has a de-motivating influence on one of his subordinates, hence the performance value = 0 and with the other two he has an average motivational influence. Hence performance value = 2 x 3 = 6. His total dyadic performance value is 21(15 6 + 0) and average is 3.5. Consider another manager C who motivates only one of his five subordinates while the other four avoid him and consider him of no help. He has a total dyadic performance score of five and an average of one. Thus A, B, C have different levels of performance in terms of their dyadic performance vis--vis their subordinates. Now consider their dyadic
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performance with each of their bosses. A and B have one boss each. A has greatly productive relationships with his boss and has a dyadic performance rating of 5 while B has a somewhat strained relationship and has a rating of 2 on a five-point scale. C has two bosses and he has a greatly productive relationship with one of them and poor relations with the other. Value = 5 with one and 2 with the other averaging out to be 3.5. A has three colleagues who depend on his work (peers); B has three colleagues who also depend on his work. C has five colleagues who depend on his work. Let us assume that the average dyadic performance scores of the three are 4.0 for A, 4.O for B and 2.5 for C with respect to their colleagues. The totals appear to be as follows in the table. Table 1.1 shows a dyadic performance table.
Table 1.1: Dyadic Performance Table Dyadic score with Subordinates Seniors (Boss) Colleagues Total dyadic score Manager A 5.0 5 4 14 Manager B 4.25 2 4 10.25 Manager C 1.0 3.5 2.5 7.0

Table 1.1 indicates the total overall dyadic performance score. It is assessed based only on relationship. This is only one dimension of dyadic performance. There are a variety of other dimensions like support provided, problems solved, autonomy, and ability to provide technical guidance and so on. These parameters may vary from organisation to organisation and are significant determiners of individual performance in terms of the output. This is what needs to be identified and measures developed. Another dimension of performance which is misunderstood is team performance. Team performance has been widely recognised. However, it is most often mixed with individual performance. For example, general managers and unit heads are normally assessed for their performance in terms of the number of units produced and sales figures achieved, products manufactured, profit made and so on. These are treated as individual accomplishments, while in reality these are group performance indicators. In the recent past, Internal Customer Satisfaction Surveys, Departmental Surveys, Employee Satisfaction Surveys have been treated as team performance indicators.
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1.8 Role of Appraisal in Performance Management

Performance Appraisal is the assessment, at regular intervals, of an employee's performance at work. Appraisals are a part of performance management. Performance management is a continuous process while appraisals are periodic activities. Appraisal is a static process, whereas performance management is a dynamic process. If the management involves improvements, the moment an organisation is assessed to determine where it stands, there is an appraisal taking place. Managing an organisation becomes difficult without some form of appraisal. Appraisals are not reducing the performance of individuals and dyads or teams to a five-point scale or a number. It is the reduction of annual performance into a number and equating one number with another. Since appraisal scales are not calibrated and equated, the numbers generated from the appraisal process are not comparable across functions, levels, departments and organisations. Some organisations use liberal scales, some use conservative scales and some use no scales but merely feelings. Performance appraisal should lead to increased performance. However, in most organisations, performance appraisals have lead to decreased performance. This is because of de-motivation. When appraisals are linked to rewards and when fewer people are rewarded than those expecting them, those who are not rewarded get de-motivated. If those who expect to be rewarded exceed the number of those who actually get rewards, the net outcome of performance appraisal may be negative. If people continue to perform in spite of appraisals, and they do not have a positive attitude to appraisals, then the organisation is spending more psychological energy. Using appraisal systems should make the performance management process more effective and productive. Appraisal systems help managers manage their performance. Managers should view it as aids for performance management. Managers should not be overwhelmed with appraisals and appraisal outcomes and should not ignore the most important aspects of performance management performance improvements and competency building. This happens when the concerns get focused on appraisals rather than improvements or on ratings and rewards rather than performance enhancement and development. Managers need to learn to enjoy the

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performance management process itself, as it occurs round the year and is not blocked by appraisals as they occur once in a while. Performance management systems with an appraisal component built into them should lead to improved performance and more motivated and competent people. Self Assessment Questions 10. In an organisation, a manager and their boss together constitute a ________________. 11. Team performance has been widely recognised. However, it is most often mixed with ________________. 12. Appraisals are not a part of performance management. (True/False)?

1.9 Summary
Performance management includes activities to ensure that an organisations goals are consistently being met in an effective and efficient manner. Performance management can focus on the performance of an Organisation, a department, employee, or even the processes to build a product or service, as well as many other areas. The objectives of performance management are identifying the strengths and weakness of employees, finding ways to overcome the shortcomings evaluating the overall ability of a company to set and reach goals and identifying and remedying situations that are hindering company performance. The purpose of performance management can be broadly classified into driving results, building capability and growing talent. Driving results is to drive improvement in business results through individual, group and enterprise goal alignment, measurement, performance coaching and performance information sharing. Building capability is to drive organisational and individual capability development by clarifying rolespecific goals and competencies, creating an environment of constructive feedback, and using formal developmental coaching or mentoring. Growing talent is to motivate and retain high performers by providing career development programs, which includes motivation and reward strategies, challenging work assignments and other on-the-job learning initiatives that will lead to career advancement and job satisfaction.

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There are various principles of performance management, some which are discussed in this unit. The various dimensions of performance are output or result dimension that describes the consequence of inputs in a semi-final, final or summary form, input dimension that deals with the activities or tasks to be accomplished by the individual, time dimension that deals with performance measurement based on time and focus dimension that describes the focus of performance. Quality dimension ensures that the outcome of performance is of a good quality and cost dimension explains the various costs of performance. Performance appraisal is a part of performance management, Performance appraisal is usually considered to be the process and time when manager and employee sit down to review the employee's performance over the last year, or month, or even shorter time spans.

1.10 Glossary
Term Competence Calibrate Continuum Description Cluster of related abilities, commitments, knowledge and skills that enable a person to act effectively in a job or situation. To check, adjust, or determine by comparison with a standard A continuous extent, succession, or whole, no part of which can be distinguished from neighbouring parts except by arbitrary division. Combined performance of two individuals.

Dyadic Performance

1.11 Terminal Questions

1. 2. 3. 4. 5. Discuss the evolution of performance management. What are the aims of performance management? What is the purpose of performance management? Discuss the various dimensions of performance management. Discuss the role of appraisal in performance management.

1.12 Answers
Answers to Self Assessment Questions 1. Performance management 2. Value-Based Management
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3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Work output and the amount of time spent working. True Growing Talent. learning and development Output or result dimension Input Role specific Dyad Individual performance False

Answers to Terminal Questions 1. Refer section 1.2 Evolution of Performance Management. 2. Refer section 1.3 Aims of Performance Management. 3. Refer section 1.4 Purpose of Performance Management. 4. Refer section 1.6 Performance Management and its Dimensions. 5. Refer section 1.8 Role of Appraisal in Performance Management.

1.13 Case Study

Implementation of a Transparent EPM System ABC is a company that provides performance management solutions to its clients. ABCs new client is a fast-growing international retailer. It wants to redesign its employee performance management (EPM) system. The EPM system used by the retailer was overly complex, time consuming and inconsistently applied across the stores. The retailer sought to have the EPM approach redesigned, simplified and relaunched. The new system was to be used by several thousand staff members within some 150 retail outlets. While building the new EPM system, ABC applied a 3-perspective framework -- Employee Behaviours, Activities and Results. This framework was used to identify balanced employee performance descriptors and measures appropriate to different employee positions. This client had been hugely successful to date, expanding from its country of origin to build profitable operations across Europe, Africa, the Middle East and Asia. The foundation for this success was a differentiated product and service offering, underpinned by a distinctive
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family culture and branding. Growth had not been without cost however; the consistency of the offer was being eroded and the culture was at risk of dilution. The client believed that an objective and transparent EPM system would be crucial to maintaining company standards, and staff attitudes and behaviours at their historical high levels. ABCs solution was to build a set of performance evaluation criteria for the companys four employee levels. These were Regional Directors, Store Managers, Assistant Managers and Shop-Floor staff. Questions: 1. Assume that you are a member of the team from ABC that is working for the new client. How would you go about helping the employees to identify, prioritise and choose employee personal objectives and their measures? Hint: You will have to think from a managers perspective. 2. Do this for all the four employee levels Hint: The four employee levels are Regional Directors, Store Managers, Assistant Managers and Shop-Floor staff. This case study is based on the content from the following link. http://www.slideshare.net/Jackie72/case-study-employeeperformance-management

References Bob Poladino (2007), Five Key Principles of Corporate Performance Management, John Wiley and Sons. Michael Armstrong. (2000), Strategic Human Resource Management: A Guide to Action, Kogan Page Limited. T Venkateswara Rao (2004), Performance Management and Appraisal System, Sage Publications Limited. E-references http://www.slideshare.net/Jackie72/case-study-employee-performancemanagement http://www.financeglossary.net/definition/3570Value_Based_Management_VBM

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Practices in Performance Management System

Structure: 2.1 Introduction Learning Objectives 2.2 Performance Management System 2.3 Performance Management System and Appraisal Practices in India and Other Countries Performance management system and appraisal practices in India Performance management system and appraisal practices in some Asian countries Performance management and appraisal practices in North and Central America and the Pacific RIM 2.4 Performance Management from System to Spiritual Approach Latest trends in the performance management systems 2.5 Summary 2.6 Glossary 2.7 Terminal Questions 2.8 Answers 2.9 Case Study

2.1 Introduction
By now you must be familiar with the concept of Performance Management. A Performance Management System is at the heart of any people management process in an organisation. Organisations exist to perform. If people do not perform, organisations don't survive. If people perform at their peak level, organisations can compete and create waves. This unit will familiarise you with performance management systems. Performance management is a continuous process in this unit we will discuss the cycle of performance management. A system is basically a set of interacting components we will discuss the components of a Performance Management System in detail. This unit will also familiarise you with some of the performance management systems and appraisal practices followed in India and other countries like Japan, Singapore, Malaysia, and United States of America and so on. It will also introduce you to the changing approach to Performance Management.
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Learning Objectives After studying this unit, you should be able to: explain a performance management system. list out the performance management system and appraisal practices in India and other countries state a shift in viewing performance management as a system approach to a spiritual approach.

2.2 Performance Management System

About 30 percent of the organisations still use appraisals only for controlling and regulating employee behaviour. About 10 percent of the organisations seem to use appraisals mainly for development purposes.

A fairly high percentage of the organisations seem to use one or more components of appraisal discussed above. Table 2.1 presents the percentage of organisations using different components as a part of the appraisal system that is being followed.
Table 2.1: Components of Performance Management used in different Organisations Components Some form of agreement between a boss and the subordinate on tasks or targets or functions forming a basis of appraisal. Appraisal discussions aiming at helping the employee to recognise his strengths. Appraisal discussions aiming at helping the employee to recognise his weaknesses. Appraisal feedback (written or verbal) to tell the employee the areas he needs to improve. Self-appraisal to communicate to the boss the accomplishments of an employee Appraisal on managerial qualities required to perform any managerial job, for example leadership, co-ordination and so on. Identification of training and developmental needs Appraising potential for promotions Identification of factors affecting performance and communicating them to the boss for his assistance and future action Signature by subordinates on the form after assessment by the boss. Confidential ratings by an officer one level above or reporting officer. Confidential ratings by an officer at least two levels above the employee being assessed. % reporting its use 62 49 53 69 44 73 87 78 44 33 71 40

This table shows a trend in the performance appraisal systems being used by different organisations in India. Particularly, the performance review feedback which helps the employee recognises their strengths and
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weaknesses, use of appraisal for identification of training needs, basing the appraisal on mutually agreed tasks, targets or functions and self-appraisal seems to characterise about half of the organisations. All these components, if monitored well, are likely to facilitate employee development. In spite of this trend, it appears that in a large number of organisations the final assessment appears to be that of a confidential nature. Let us now discuss some examples of performance management systems in India. The system used in Allahabad Bank aims at helping officers to identify their strengths and weaknesses and encourage improvement of performance on the job. In this system officers are assessed in three specific areas: Job performance. Job knowledge/skills and personal characteristics. Potential ability and development.

The appraisal is to be initiated by the employee with a self-appraisal. In the self- appraisal, the employee gives details like the training courses attended, job performance contributions made in the job during the year, achievements, deficiencies pointed out, training needs, areas of aptitude and interest for future work, efforts made for self-development and efforts proposed to be made and so on. Ratings are then given by the reporting officer of the employee on factors relating to job performance, job knowledge/skills and personal characteristics and potential ability and development. A self-appraisal on, customer service, internal administration, business growth and training requirements in great detail is given by the branch manager in the appraisal system of the Indian Overseas Bank .The reporting officer makes comments on each of these areas and gives the final assessment using a five-point scale on seven factors. These factors are general intelligence, job knowledge, managerial ability, business development public relations/customer service, expenditure control and dependability. Along with the assessment for branch managers, the regional manager is also expected to send branch inspection report. Vishakhapatnam steel plant of the Rashtriya Nigam Ltd has introduced a new development-oriented appraisal system. Its important components are
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target-setting/task assignment, self-appraisal and discussion, periodic performance monitoring and feedback, identification of training and development needs and performance assessment. At Modi Xerox, a leading professionally managed company in India the performance management system is linked to career development, succession planning and management of motivation through rewards. At Modi Xerox, the performance planning and appraisal is based on the companys roles and responsibilities which are filled for every employee. The four goals areas taken are customer satisfaction, employee satisfaction, business results and quality. The performance planning and appraisal also centres on development action planning. Unit Trust of India (UTI) bank which has been recently renamed as Axis bank has adopted an appraisal system whose aim is to primarily develop the boss-subordinate relationship. Broadly the performance appraisal system has three parts, first focuses on self-appraisal of performance, second focuses on confidential aspect of potential as well as traits and third part is a review of the appraisal. Bank of Baroda has an elaborate development-oriented appraisal system. Every employee is expected to initiate the appraisal process through filling a self-performance recording form. In this the employee is expected to indicate: 1. The job responsibilities. 2. The satisfaction with the way the employee has been able to carry them out. 3. Major achievements. 4. An analysis of factors that might have prevented better performance. 5. Factors that may help the employee to be a better performer such as job rotation, training and so on. The reporting officer is expected to rate the employees work performance factors. The situation of performance management system in India The following points characterise the situation of performance management system in India:
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A large number of private and public sector organisations continue to follow trait-based, confidential formats of performance appraisal. Almost all of them, however, are dissatisfied with such forms of appraisals, particularly for assessing managers. Their dissatisfaction arises mainly from the following factors: high subjectivity in appraisals, lack of correlation with job-related factors, employees not having an opportunity to project their performance, employees somehow getting to know about their ratings and diminishing value of appraisal as an instrument of controlling or monitoring employee behaviour. Personnel function has been widely recognised. Some organisations have already begun to experiment with the new systems of appraisal. Such experiments which are taking place both in the private and the public sector are focussing on the role of appraisals as instruments for developing human resources. Some organisations that changed their appraisal format from a closed system to an open system and introduced them without reorienting the managers to the new systems have run into serious difficulties. For example, introducing counselling as a part of appraisal without training the managers in counselling skills, introducing open assessment without having a committed HRD philosophy and so on has resulted in problems forcing a rethink about the new appraisal systems. Managers want open systems of appraisals, and the personnel departments are still struggling to find appraisal models suitable for their organisations. Employees also want open appraisal systems, but they seek it only when the managers assessment of their performance does not work to their disadvantage. Most of them still do not recognise the full potential of good appraisal systems. Even those who recognise the potential of appraisal systems accept the development objective intellectually, but find it difficult to practise it skilfully due to motivational and emotional blocks. A large number of managers still seem to he obsessed with the question what am I going to get from the new appraisal system? rather than
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asking the question how do I use this system to develop my subordinates and to increase my own managerial effectiveness? A large number of senior level executives see the role of developing human resources as mainly that of the personnel or the HRD departments. This lack of recognition of their HRD role prevents most executives from effective use of development-oriented appraisal systems whenever they are being introduced. This managerial culture should change for the new systems to become more useful. Such change is only beginning now and may take time. In some of the organisations, the symbols are taken more seriously than the purpose or the spirit behind these. For example, if the employees are required to sign on the form as an indicator that they had a discussion with the appraiser, the signature becomes more important than the discussion. Similarly, form filling becomes more important than the process of filling it. Personnel departments are still struggling to overcome such problems.

2.3.2 Performance management system and appraisal practices in some Asian countries The Malaysian performance management and appraisal system is somewhat similar to that in India. It varies from annual confidential form of appraisal to a fairly open system practised by multi national companies. The Malaysian government is already in the process of changing its appraisal systems from traditional trait-based reports to a more participative responsibility-oriented and somewhat open system of appraisal. Performance appraisal in Japanese organisations needs to be understood in the context of the Zen philosophy and the Japanese management styles. Performance appraisals are so integrated into organisational life that it is difficult to isolate and talk about appraisal systems and mechanisms. The appraisal of individual performance is underplayed in Japanese organisations and group work and organisational identity are promoted. At the same time, human needs are well attended through a variety of practices like life-long employment, that individual employees need not bother much about the psychological, social and economic needs and focus on their roles and responsibilities.

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In the Philippines several management systems and practices like management by objectives, management information systems, and budgeting financial controls have been introduced. There is a high degree of awareness of the need to introduce professional management in government systems. Even in the government separate functionaries are being appointed to handle the personnel management development functions. For example, the Ministry of Education, Culture and Sports has a separate office to look after the personnel management and development function headed by an Assistant Secretary .Innovative schemes are adopted to promote competence and high performance among employees. Previously performance appraisal in most Singapore companies involved supervisors merely filling out confidential forms. Eventually, the National Productivity Board of Singapore recognised the potential of open appraisal systems and started promoting it through a series of seminars. This type of appraisal system requires a quarterly or half-yearly discussion of the employees performance with the employee with a final end-of-year assessment. During the discussion, the employee is told what is written about them and they are given an opportunity to have their say on their supervisors reports. Strengths and weaknesses are communicated. Both sides agree on the final assessment and joint action plans are drawn up to improve work effectiveness. 2.3.3 Performance management and appraisal practices in North and Central America and the Pacific RIM An exploratory study to review the purposes and practices of performance appraisal in ten countries in North and Central America and Pacific Rim was conducted by Milliaman et al. (2002). The review indicates that the performance appraisals are basically conducted for: Documentation. Development. Giving an opportunity to the subordinates to express themselves. Linking performance appraisal with administrative functions like pay and promotion.

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company objectives. Many companies implement a performance management system to set standards and expectations for employees at all levels in the organisation. Performance planning, performance communication, performance appraisal meetings, performance rewards and performance coaching are the various components of performance management system. Performance management and performance appraisal systems practiced in Indian organisations vary from almost no appraisal to a sophisticated appraisal system. Performance appraisal in Japanese organisations needs to be understood in the context of Zen philosophy and the Japanese management styles. The Malaysian performance management and appraisal system is somewhat similar to that in India. The National Productivity Board of Singapore recognised the potential of open appraisal systems and started promoting it through a series of seminars. The performance management system is not being implemented the way it should have been. Top managements and human resource heads speak a lot about performance management system but fail to implement it. The failure of a system indicates the need for another system and a spirit that ensures its implementation. Spiritual approach requires spirit and spirited people. The system does not provide spirit, spirit is provided by the people. Systems provide opportunities. It is people who have to utilise these opportunities.

2.6 Glossary
Term Competence Closed systems Open systems Pacific RIM Tangible Trait Description Cluster of related abilities, commitments, knowledge and skills that enable a person to act effectively in a job or situation. These are isolated systems that have no interaction with the external environment systems that do not take any input. These are flexible systems that can adapt and change by interacting with the external environment. It refers to Countries and Cities located around the edge of Pacific Ocean. Capable of being touched; discernible by the touch; material or substantial. Component of a persons behaviour that is assumed to serve as an enduring personal characteristic. Page No. 37

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2.7 Terminal Questions

Business Process and Performance Management Framework

Structure: 3.1 Introduction Learning Objectives 3.2 Focussing on Team Performance The need for shift Different types of teams in an organisation Building team performance Managing team performance 3.3 Motivation Definition of motivation The process of motivation Intrinsic and extrinsic motivation Motivation related to attitude Need for plan of action Douglas McGregors theory X and theory Y The Link between motivation and performance 3.4 Summary 3.5 Glossary 3.6 Terminal Questions 3.7 Answers 3.8 Case Study

3.1 Introduction
The Performance Management Framework is a group of performancerelated processes and methodologies, sequenced and integrated to effectively raise organisational awareness of performance management. A good performance management system helps organisations achieve their aims and objectives. The two important business processes that help in performance management are focusing on team performance and motivation. The focus on team is very important, because on a wider perspective, the entire organisation is nothing but a big team, trying to achieve a common goal that is profit for the organisation. Understanding how a team works
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and using methodologies to improve team performance leads to organisational growth and success. In this unit, we will discuss the various aspects of improving team performance. Motivation is another important factor for organisational success. The employees are the biggest asset of an organisation. Motivation helps to make employees work to their full potential, which in turn leads to individual as well as organisational growth. Managers should understand the process of motivation and use them effectively. In this unit, we will discuss the process of motivation and the link between performance and motivation. Learning Objectives After studying this unit, you should be able to: describe the importance of focusing on team performance. discuss motivation and performance management. explain the process of motivation.

3.2 Focussing on Team Performance

A team consists of two or more individuals. These individuals have specific role assignments. They must perform specific tasks and must interact or coordinate to achieve a common goal or outcome. In addition, teams make decisions, have specialised knowledge and skills and often work under conditions of high workload. Teams can be distinguished from small works groups on the basis of the fact that teams have unique requirements for coordination and task interdependency. Teamwork normally involves team members adjusting to each other either sequentially or simultaneously in order to achieve team goals. 3.2.1 The need for shift In the past, the focus was on performance management of individuals. But, today, organisations have realised that results are achieved by team efforts although individuals are also important. Individual focused performance systems will only propagate divisiveness and may even hamper teamwork. The changed global scenario has brought in a new era which is called the competence era. This competence era further perpetuates individual performance management rather than team performance management. This is mainly because of the pressure to differentiate. The various sources of pressure are:
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More consideration has to be given to initial meetings and actions: Initial impression goes a long way. When the likely teams gather around for the first time, members attentively monitor the signals given by others to confirm or dismiss assumptions and concerns. First meetings usually are not the first time the team members would have ever met as a group. But too many potential teams fail to understand the importance of first meetings and instead allow existing habits and operating styles to dominate, including an overemphasis on individual instead of mutual accountability. Creating a code of conduct: All real teams develop rules of conduct to help them achieve their purpose and performance goals. Rules are necessary for focus, commitment, trust and openness. The most crucial rules may be relevant to attendance, confidentiality, contributions, constructive confrontation and end-product orientation. Developing team spirit: Many teams organise urgent small tasks and performance oriented events that bring them together. Potential teams can set such events in motion by immediately establishing a few challenging, yet achievable goals that can be reached early on. The purpose of having such events is to achieve a spirit of being together. Motivating through challenges: New challenges cause a potential team to redefine and enrich its understanding of the performance. They also help the team set clearer goals, shape a common purpose, and improve on its common approach. Potential teams with more permanent, ongoing assignments, on the other hand, easily develop habits that seal access to new information and perspective. New facts often bring such groups into action. Spending time together: Teams must spend a lot of time together, particularly at the beginning. This time spent together can be scheduled or unscheduled. Innovative insights develop when personal bonding takes place. The more successful teams always find a way to spend extra time together.

3.2.4 Managing team performance Identifying where the team is performing well and where it needs further development is the first step in managing team performance. The team performance report survey and associated analysis gives team members an
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objective assessment of how the team is doing. It provides an opportunity to compare the various viewpoints of team members and outsiders and relate them to the team vision and purpose. The common language ensures that everyone is focusing on the significant team performance factors and the measured gaps can then be converted into action plans for improved performance. It is the diagnosis of the problems that is essential. The problem can be easily fixed once it is identified. Bruce Tuckmans "team stages model developed in1965 presented the four stages of teamwork, which are now widely used by work teams throughout the world to assess their progress. The four stages of this model are: 1. Forming: The first step in team building is to form a team. In the initial stages, the individual's behaviour is driven by a desire to be accepted by others, and to avoid controversy or conflict. Everybody is busy finding their place in the team and asking themselves why they are here. The team meets and learns about the opportunities and challenges, and then agrees on goals and begins to tackle the tasks. Team members tend to behave quite independently. This stage is very important because in this stage, the members of the team get to know each other, exchange personal information, and make new friends. This is also a good opportunity to see how each member of the team works as an individual and how they respond to pressure. 2. Storming: People begin to see themselves as part of a team. The team addresses issues such as what problems they are really supposed to solve, how they will function independently and together and what leadership model they will accept. Team members open up to each other and confront each other's ideas and perspectives. The storming stage is necessary to the growth of the team. It can be controversial, unpleasant and even painful to members of the team who are unwilling to conflict. Tolerance of each team member and their differences needs to be emphasised. Without tolerance and patience the team will fail. As the stage title suggests, conflict and confrontation characterise this stage, as differences surface, it may result in some loss of performance or focus on the task, as illustrated in Figure 3.1. 3. Norming: This is the phase where team members get together by establishing the basic rules, developing processes, clarifying roles and
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responsibility. Some team members may have to give up their own ideas and agree with others in order to make the team work. In this stage, all the team members take the responsibility and have the ambition to work for the success of the goals of the team. This phase is characterised by a growing sense of togetherness. 4. Performing: This is the final stage where increased focus is on both the task and team relationships. The teams are able to function as a unit as they find ways to get the job done smoothly and effectively without inappropriate conflict or a need for external supervision. Team members have become interdependent. By this time they are motivated and knowledgeable. The team members are now competent, autonomous and able to handle the decision-making process without supervision. Performance is delivered through people working effectively together. Figure 3.1 illustrates the Tuckmans stages of teamwork.
Performing

Focus on the task

Norming Forming

Storming

Relationship

Figure 3.1: Tuckmans Stages of Teamwork Model

Figure 3.2 explains the process of motivation.

2. Establish Goal

1. Need

2. Take Action

3. Attain Goal
Figure 3.2: The process of motivation

This model describes how individual motivation processes take place. It is based on the motivational theories related to needs (achievements), goals, equity, behaviour modelling (reactance) and expectancy. The model can be used to illustrate a process of motivation, which involves setting of corporate goals that are likely to meet individual and organisational needs and wants and encourage the behaviour required to achieve those goals. Motivation can be understood by understanding human nature. Human nature can be very simple, yet very complex too. An understanding and appreciation of this is a necessity to effectively motivate employees, which leads to effective management and leadership. 3.3.3 Intrinsic and extrinsic motivation An individual can be conceived as a system of psychological motives, biological needs, values and perceptions. This means that an individuals system operates to maintain its internal balance while addressing demands placed upon it by external forces and it develops in response to individuals basic needs so as to solve the problems presented by the external environment. Different individual systems develop with different patterns of needs, values and perceptions and hence each individual system will have unique characteristics. Individual systems are not static, but continue to develop as they encounter new problems and experiences. The two ways by which motivation can take place at work are: Intrinsic motivation: People can motivate themselves by seeking and carrying out work which satisfies their needs or at least leads them to expect that their goals will be achieved.
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Extrinsic motivation: Management can motivate people through methods like pay, promotion, recognition, praise and so on.

The difference between these two types of motivation is that extrinsic motivators can have an immediate and powerful effect, but it may not necessarily last long. Intrinsic motivators are likely to have a deeper and longer-term effect because they are inherent in individuals and not imposed from outside. 3.3.4 Motivation related to attitude For better performance ability, knowledge needs to be multiplied with motivation. Attitude is another important factor. Attitudes are feelings derived from relationships between perceived outcomes and individual values and needs. Motivation is a term that can be applied to the complete class of drives, wishes, desires, needs and similar forces. Subordinates are motivated by managers. Managers do things which they hope will satisfy the subordinates drives and desires and induce them to act in a desired manner. It refers to the drive towards an outcome and the effort to satisfy a want or a goal and finally it results in satisfaction. Thus, needs give rise to wants, which cause tension, giving rise to action, which results in satisfaction. Satisfaction is outcome already experienced. It refers to the contentment experienced when a want is satisfied. Understanding the worth of a goal motivates people to do things to reach that goal. The most valuable resource of any business is human resource, and is, in fact, more valuable than capital or equipment. Unfortunately, it is also the most wasted resource. People can be both the biggest asset and the biggest liability. The concept of Total Quality People refers to people who possess integrity, good character, and values along with a positive attitude. The foundation for success is the right attitude of a person towards the chosen field. Since attitude is such a critical factor in success, it is important to examine how it affects our goals. Attitude can be considered both as a permanent nature of a person and the reaction of a person to situations. Attitude determines reaction to a setback. It can be a stepping stone to success for a positive thinker, whereas for a negative thinker, it can be a
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stumbling block. The primary factors that determine our attitude are environment, experience and education. In a positive environment, the output of a marginal performer goes up, while, in a negative environment, the output of a good performer goes down. Our behaviour changes with respect to our experiences with the people and events in our life. If we have a positive experience with a person, our attitude towards that person becomes positive and if we have a negative experience with a person, our attitude towards that person becomes negative. 3.3.5 Need for plan of action Apart from motivation and a positive attitude, an action plan is essential to achieve results. Before making an action plan, we need to decide as to what we want to achieve, and how we expect and plan to achieve it. Lack of desire, direction, dedication and discipline is the reason that leads to failure of achieving objectives. According to Dewakar Goel, author of the book Appraisal and Compensation Management self motivation can be achieved by following the guidelines given below: Set a goal for yourself. Identify a long-term objective, a short-term goal and specific action. Begin at the beginning, only then will you get things done. Learn a challenging new task every year. Convert one of your weaknesses into your strength. Remember that learning to become a manager does not stop with a masters degree in business administration. Make your job a different one. Set objectives for improving your position. Nurture your imagination to increase your own productivity. Develop an area of expertise built on your strength. Give feedbacks and rewards to yourself.

3.3.6 Douglas McGregors theory X and theory Y In the book The Human side of Enterprise, Douglas McGregor states that employees of an organisation can be managed in two ways. The first is called category X which is basically negative, and the other is basically
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positive, which falls under the category Y. After viewing the way in which the manager dealt with employees, McGregor concluded that a managers view of the nature of human beings is based on a certain grouping of assumptions. The managers behaviour towards subordinates is based on these assumptions. Under the assumptions of theory X: Employees inherently do not like work and whenever possible, will attempt to avoid it. Because employees dislike work, they have to be forced or threatened with punishment to achieve goals. Employees avoid responsibilities and do not work untill formal directions are issued. Most workers place a greater importance on security over all other factors and display little ambition. In contrast, under the assumptions of theory Y: Physical and mental effort at work is as natural as rest or play. People do exercise self-control and self-direction if they are committed to those goals. Average human beings are willing to take responsibility and exercise imagination, ingenuity and creativity in solving the problems of the organisation. Looking at the way the things are organised, the average human beings brainpower is only partly used.

Analysing these assumptions, we can detect that theory X assumes that lower-order needs dominate individuals and theory Y assumes that higherorder needs dominate individuals. An organisation that is run on the lines of Theory X tends to be authoritarian in nature that is such organisations believe that they have the power to enforce obedience and the right to command. In contrast, Theory Y organisations can be described as participative, where the aims of the organisation and of the individuals in it are integrated; individuals can achieve their own goals best by directing their efforts towards the success of the organisation.

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3.7 Answers
Answers to Self Assessment Questions 1. Teamwork. 2. Work groups. 3. High performance team. 4. Norming. 5. Motivation. 6. Attitudes. 7. Intrinsic motivation. 8. Satisfaction. 9. False. Answers to Terminal Questions 1. Refer section 3.2.2 Different types of teams in an organisation. 2. Refer section 3.2.3 Building team performance. 3. Refer section 3.2.4 Managing Team Performance. 4. Refer section 3.3.2 The Process of Motivation 5. Refer section 3.3. 6 Douglas McGregors theory X and theory Y

3.8 Case Study

Employee Motivation In any business organisation, employee motivation is one of the biggest factors that can influence job productivity and workers attitude. This can affect the performance of the company, which in turn influences the bottom line that ultimately determines the success and profitability of the business. XYZ, an Indian steel-making company, did not realise the important of employee motivation and as such, failed to build a working model that encourages and motivates employees to perform their job at the peak of productivity. There is no team spirit among employees at XYZ, which in turn has lead to less productivity. Questions: 1. Assume that you are a manager with XYZ. You are handling a potential team. How would you go about improving team performance? Hint: Use the guidelines given in section 3.2.3. 2. How would you motivate the team to become a high-performing team? Hint: Extrinsic motivation.

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References Goel (2008), Performance Appraisal And Compensation Management: A Modern Approach, PHI Learning Private Limited. Michael M. Beyerlein, Douglas A. Johnson, Susan T. Beyerlein (2000), Team Performance Management, JAI Press. Richard C. Kearney, Evan M. Berman (1999), Public Sector Performance: Management, Motivation and Measurement, Westview Press.

E-references http://www.accenture.com/Global/Research_and_Insights/Outlook/By_Is sue/Y2007/SalesForcePerformance.htm http://business.rediff.com/slide-show/2010/sep/06/slide-show-1-techthis-is-how-infosys-grooms-its-future-leaders.htm

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Process of Performance Management

Structure: 4.1 Introduction Learning Objectives 4.2 Performance Planning Goal setting The performance agreement Planning performance development 4.3 Defining Expectations The process of defining expectations 4.4 Defining Objectives Characteristics of a good objectives 4.5 Measuring Performance 4.6 The Continuous Process of Performance Management 4.7 Reviewing Performance 4.8 Providing Feedback 4.9 Assessing Performance 4.10 Rating Performance 4.11 Coaching 4.12 Documentation 4.13 Summary 4.14 Glossary 4.15 Terminal Questions 4.16 Answers 4.17 Case Study

4.1 Introduction
By now you must be familiar with the concept of performance management. In this unit we will discuss the process of performance management. Performance management system consists of a number of interconnected processes which takes place throughout the year. The performance management process is not only concerned with interactions between managers and employees, but it is also related to what employees do about monitoring and improving their own performance,

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measuring performance and documenting the outcomes of performance management plans and reviews. This unit explains the process of performance management which includes planning, coaching and reviewing. The unit also familiarises you to the continuing process of performance management. Learning Objectives After studying this unit, you should be able to: explain Performance planning. describe how expectations are designed. explain Performance measurement. discuss performance review.

4.2 Performance Planning

Performance planning deals with setting the direction, accepting performance agreements and agreeing personal improvement plans. It covers what has to be done, how it is to be done, and what is to be achieved. It is forward-looking, focusing on what people have to do to achieve their potential, and stretching them to discover what they are capable of. It also motivates people by giving them the opportunity to perform and develop. Performance planning is concerned with improving employee performance by helping them to learn and providing them with the support they need to do well, now and in the future. Performance planning is the first step of an effective performance management process. Performance planning typically involves a meeting of about an hour or so between an appraiser and the employee being assessed. The agenda for performance planning meeting includes: Agreeing upon the individuals key job responsibilities. Developing a common understanding of the goals and objectives that need to be achieved. Identifying the most important competencies that the individual must display in doing the job. Creating an appropriate individual development plan.

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In-depth knowledge of financial procedures and processes. In-depth knowledge of procurement as a discipline. Business plan interpretation. Corporate governance policies and procedures. Leadership. Attention to detail. Maximising performance / drive for results. Highly analytical. Highly numerate. Trustworthy. Planning and organising.

4.4 Defining Objectives

Managing expectations is based upon an agreement between the manager and the employee on the objectives of the job under discussion and how its achievement would be measured. Objectives can be either quantitative or qualitative. Quantitative targets are numerical targets that are achievementbased. Qualitative objectives are expectations of behaviour. Objectives can
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be work-related, referring to the achievement of role requirements. They can also be personal, taking the form of developmental or learning objectives which are concerned with what individuals should do to enhance their knowledge skills and potential and to improve their performance or change their behaviour in specialised areas. The different types of objectives are: On-going role objectives: These objectives are based on roles. In the role profiles, these objectives are defined as key result areas. For example, one of the key result areas for a sales representative could be to build customer satisfaction by responding to customer queries and complaints. Performance will be reviewed and assessed based on this objective. Targets: These are quantifiable results to be attained which can be measured in terms of income, sales output, level of service, reject rates and cost reduction. For example, a customer service target could be to respond to 90 per cent of queries within two working days. Tasks/projects: Objectives can be set for the completion of tasks or projects by a specified date or to achieve a short-term result. Values: There are certain expectations to maintain the core values of the organisation in areas such as quality, innovation, teamwork, customer service, care and consideration for people, environmental concern, and equal opportunities. The aim is to get people to live up to the espoused values. Behaviour: Behavioural expectations are generally mentioned in the competency frameworks, but they may also be defined individually under the framework headings. Competency frameworks may deal with areas of behaviour associated with core values, for example teamwork. Organisations often convert the aspirations contained in value statements into more specific examples of desirable and undesirable behaviour, which can help in planning and reviewing performance. Performance improvement: These objectives determine what has to be done in order to improve performance. Developmental: Developmental objectives specify areas for personal development in the shape of enhanced knowledge and skills.
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Reviews can also provide the basis for rating performance, especially when ratings are required to inform performance-related or contribution-related pay decisions.

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4.8 Providing Feedback

Feedback provides a chance to recognise achievements or to specify areas for improvement or development. It is always based on evidence. It refers to results, events, critical incidents and significant behaviours that have affected performance in particular ways. Feedback should not be based on opinion, it should be based on facts and should be presented in a way that enables individuals to understand and accept it. Interpretation of the facts does happen, but such interpretations should start from the actual situation as reported in the feedback, not from the subjective views expressed by the provider of the feedback. Let us now discuss the various guidelines used to provide feed back. Feedback should be provided on actual results or observed behaviour. It should be backed up by evidence. It should not be based on assumptions about the reason for the behaviour. Feedback should be provided immediately. It should be given as soon as possible after the performance, review so that it makes the most impact. Feedback should not be a judgement. It should be presented as a description of what has happened. The focus of feedback should be on aspects of performance the employee can improve. It is a waste of time to concentrate on areas which the employee can do little or nothing about. Feedback should make employees feel empowered this can be done by pointing out areas where the performance was good along with areas of improvement.

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Figure 4.1 illustrates the sample performance feedback form.

Figure 4.1: Sample performance feedback form

Activity 3: Assume that you are a HR manager who has reviewed an employees performance. How would you go about giving the feedback? Hint: Use the guidelines to provide feedback Self Assessment Questions 10. __________completes and enhances informal or short-term progress reviews.
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11. The objectives of performance reviews are motivation, ______________ and communication. 12. _____________ should be provided on actual results or observed behaviour.

4.9 Assessing Performance

In conventional performance appraisal systems, performance assessment is based on objectives. This involves clarifying with managers the key results and performance standards they must achieve and using systematic performance reviews to measure progress. Progress is measured with reference to the objectives. The recent development in performance management has lead to an understanding that the means are as important as ends. Performance should be assessed not only on achieving objectives, but also on the process of achieving objectives The performance assessment process begins with analysis of results and the reasons for the level of achievement reached. Results are assessed against agreed objectives. The analysis continues to discover any individual behavioural factors that might have influenced performance. This behavioural analysis is conducted with reference to a competency framework supported by evidence that is examples of actual behaviour as agreed by the manager and the individual who contribute to good or not so good performance.

4.10 Rating Performance

Performance appraisal systems almost always included some form of overall rating of performance. The rating-scale format can either be behavioural with examples of good, average and inadequate performance, or graphic which simply presents a number of scale points along a range. The scale points may be defined alphabetically, numerically or by means of abbreviations or acronyms, for example ex for excellent and so on. The scale points may be further described adjectivally for example exceptional, acceptable or unsatisfactory. A typical example of a five-point rating scale, which progresses downwards from highly positive to negative is given in table 4.2.

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Table 4.2: Five Point Rating Scale Rating A B C D E Meaning Outstanding performance Superior performance, significantly above normal job requirements Good all-round performance that meets the normal requirements of the job Performance not fully up to requirements, improvement is required Unacceptable, constant guidance is required and performance of many aspects of the job is below a reasonable standard.

Another popular approach is to have a four-point rating scale that provides positive reinforcement or at least emphasises development needs at every level as given in table 4.3
Table 4.3: Four Point Rating Scale Rating Very effective Effective Meaning Consistently performs in a thoroughly proficient manner beyond normal expectations Achieves required objectives and standards of performance and meets the normal expectations of the job A contribution that is stronger in some aspects of the job than others, where most objectives are met but where performance improvements should still take place. A contribution which indicates that there Is considerable room for Improvement In several definable areas.

Developing

Basic

An alternative approach to rating involves agreement between the manager and the employee on where the employee has to be placed on a matrix or grid. This provides a snapshot of their overall contribution, which is presented visually and hence, provides a better basis for analysis and discussion than a mechanical rating. The assessment of contribution refers both to outputs and to behaviours, attitudes and overall approach.

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Figure 4.2 illustrates performance matrix.

Measures of output

Output is high, some improvement required

Performance is excellent

Requirements are not met

Positive approach, output is low

Behaviors, attitudes and overall approach towards work

Figure 4.2: Performance Matrix

Figure 4.2 shows a performance matrix, in which the matrix is divided into four quadrants. The performance of employees who fall under the first quadrant is not up to the expectations of the role profile. The approach and attitude of employees who fall under the second quadrant is good but needs a lot of improvement. The performance of employees who fall in the third quadrant is good, however, some improvement is required. For example, a sales executive who performs the required job of making 40 sales per day but does not get good customer satisfaction reports some times falls under the third quadrant. The performance of an employee who falls under the fourth quadrant is outstanding and does not need any improvement. Self Assessment Questions 13. Progress is measured with reference to the ______________. 14. The rating-scale format can either be behavioural or ______________. 15. The matrix or grid provides a ________________ of the employees overall contribution.

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4.11 Coaching
The main aim of performance management is to improve performance. This becomes the responsibility of the manager as a coach and support employees in their activities to develop their knowledge and skills. The need for coaching may arise from formal or informal performance reviews, but opportunities for coaching will emerge during the normal day-to-day activities. Every time a manager assigns a new task to an employee, a coaching opportunity is created to help the individual learn any new skills or techniques that are needed to get the job done. Every time a manager provides an individual with feedback after a task has been completed, there is an opportunity to help that individual do better next time. Coaching as part of the normal process of management consists of: Making employees aware of their performance. Making sure that employees are not only aware of what is expected from them, but also understand what they need to know to be able to complete the task adequately. This gives managers an opportunity to provide guidance at the outset, as guidance at a later stage may be seen as interference. Using appropriate situations to promote learning Encouraging people to take up higher-level issues and helping them identify how they would tackle them.

4.12 Documentation
The performance management process is not a mere form-filling activity. It is very important to maintain records of the role profiles, the agreed objectives and the improvements made. This will be of great help during annual performance reviews. Creation of contingent pay schemes also require a record of assessments or ratings and the performance management forms serve as working documents for the same. The forms should record agreements on performance achievements and the actions to be taken to improve performance or develop competence and skills. Performance management forms should be simple and brief with sufficient white space for comments. It should be self explanatory, but it may have notes for guidance. The essential information to be recorded on a form should be:
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The key result areas from the role profile. The objectives agreed for each key result area. The values or competency headings. The assessment of performance against each key result area

Details of any plans for performance improvement and personal development are shown in figure 4.3.

Figure 4.3: Personal Development Plan Sikkim Manipal University Page No. 77

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A great deal of performance data is generated during the performance management process. Recording and analysing this appropriately could result in better understanding of the value of people and their contribution and assist management in taking decisions. Different types of documentation tools such as dashboards or performance indicators are used by organisations. Data obtained from the performance management process is fed into these tools to inform the managers. Activity 4: Do a research and identify the various tools used to document performance data. Hint: http://publib.boulder.ibm.com/infocenter/cicsts/v3r1/index.jsp?topic=/com.i bm.cics.ts31.doc/dfht3/dfht3m0.htm. Self Assessment Questions 16. The need for___________ may arise from formal or informal performance reviews. 17. Encouraging people to take up higher-level issues and helping them identify how they would tackle them is a part of coaching process. (True/ false)? 18. A great deal of ____________is generated during the performance management process.

4.13 Summary
Performance management is an on going process that happens through out the year. Performance planning is the first step of an effective performance management process. Performance planning deals with setting the direction, accepting performance agreements and agreeing personal improvement plans. During this process, key responsibilities of employees are identified and goals are set. The result of the planning process is performance agreement. A personal development plan is prepared and agreed during the performance planning process. Performance management is basically about managing expectations. Expectations should be defined based on a role profile, which sets out the overall purpose of the role and the key result areas it contains. Managing
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expectations is based upon an agreement between a manager and the employee on some objectives and how its achievement would be measured. On-going role objectives, targets, tasks/projects, values, behaviour, performance improvement and development are the different types of objectives. It is very important to know what the current performance is, in order to improve performance. Performance measures or metrics can be classified into finance, output, input, reaction and time. Reviews give managers and the individual members of their teams the opportunity to pause and reflect on the key issues of personal development and performance improvement. The objectives of performance reviews are motivation, development and communication. Feedback provides a chance to recognise achievements or to specify areas for improvement or development. It is always based on evidence. The performance assessment process begins with analysis of results and the reasons for the level of achievement reached. Results are assessed against agreed objectives. Rating employee performance can be done in different ways. It can be done on a four point or a five point rating scale. Another alternative approach to rating involves agreement between the manager and the employee on where the employee has to be placed on a matrix or grid. The main aim of performance management is to improve performance. This becomes the responsibility of the manager as a coach and support employees in their activities to develop their knowledge and skills. It is very important to maintain records of role profiles, agreed objectives and improvements made. This will be of great help during annual performance reviews. Contingent pay schemes require a record of assessments or ratings.

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4.14 Glossary
Term Contingent pay Feed back Competence Description Compensation that is dependent on the achievement of some performance objectives The return of information about the result of a process or activity. An evaluative response. A cluster of related abilities, commitments, knowledge, and skills that enable a person to act effectively in a job or a situation.

4.15 Terminal Questions

1. 2. 3. 4. 5. Explain the process of performance planning. What are the different types of objectives? Explain the continuous process of performance management. What are the different ways of rating performance? Explain the importance of coaching in performance management.

4.16 Answers
Answers to Self Assessment Questions 1. Performance planning. 2. Performance agreement. 3. Development plan. 4. Role profiles. 5. Qualitative. 6. Tasks or projects. 7. Factual evidences. 8. False. 9. Learning. 10. Formal annual reviews. 11. Development. 12. Feedback. 13. Objectives. 14. Graphic. 15. Snapshot. 16. Coaching. 17. True. 18. Performance data
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Answers to Terminal Questions 1. Refer section 4.2 Performance Planning. 2. Refer section 4.4 Defining Objectives. 3. Refer section 4.6 The Continuous Process of Performance Management. 4. Refer section 4.10 Rating Performance. 5. Refer section 4.11 Coaching.

4.17 Case Study

Improvement of Team Performance In recent years, there is a trend in flavour business in Indonesia to merge Indonesian companies with international flavour houses to strengthen their competitiveness. For example -- the merger of International Flavour and Fragrance (IFF) with Bush Boke Allen. XYZ is the largest producer of food ingredients for products like instant noodles, snacks and processed meat, which competes with multi national companies. To beat that competition, XYZ needs to develop appropriate strategies supported with dependable Performance Management Systems both at corporate level as well as individual level. The existing performance management system at XYZ is established through the development process of five years planning based on the Chief Executive Officer's (CEO) direction. These programs, once developed have to be presented in front of the CEO and if the CEO agrees then these documents are signed as Five Years Business Plan for that department. The problem encountered in this current practice is that the system focuses on the annual budget for merely monitoring not for managing strategically. Most of the current strategies and programs are developed separately in each functional department with no linkages among them and the feasibility of the programs is based on the availability of the budget. The human resource department of XYZ conducted a survey and arrived at the conclusion that the employees of XYZ seem to perform well individually but the overall performance of teams is marginal. The survey also revealed that the competencies of the employees were mostly underutilized.

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Questions: 1. Assume that you are a human resource manager at XYZ. How would you go about developing a new performance management system? Hint: Use the various performance management processes discussed in this unit. References Dick Grote, Richard C. Grote (2002), The Performance Appraisal Question and Answer Book: A Survival Guide for Managers, Amacom. Jon Warner (2002), Janus Performance Management by System, HRD Press. Richard Rudman (2004), Performance Planning and Review: Making Employee Appraisals Work, National Library of Australia.E-references E-references http://www.sbm.itb.ac.id/wp-content/uploads/2010/08/Design-ofCorporate-Performance-Management-System_A-Case-Study-at-PT-Xin-Indonesia_-D-Wibisono-etc.pdf http://sawaal.ibibo.com/computers-and-technology/what-aimsobjectives-wipro-technologies-476887.html http://publib.boulder.ibm.com/infocenter/cicsts/v3r1/index.jsp?topic=/com .ibm.cics.ts31.doc/dfht3/dfht3m0.html

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Unit 5
5.1

Performance Management Planning

Introduction Learning Objectives 5.2 Performance Management Planning 5.3 The Planning Process Contents of performance agreement 5.4 Managers' Responsibility in Performance Planning 5.5 Employees Responsibility in Performance Planning 5.6 Drawing up the Plan Performance and development plans Work plans 5.7 Evaluating the Performance Planning Process 5.8 Summary 5.9 Glossary 5.10 Terminal Questions 5.11 Answers 5.12 Case Study

5.1 Introduction
In the previous unit we discussed the performance management process. In this unit, we will discuss the performance planning process in detail. Performance management helps people to get into action, so that they achieve the planned and agreed results. It is a task-and-people related activity that focuses on what has to be done, how it is to be done and what is to be achieved. But it is equally concerned with developing people, helping them to learn and providing them with the support they need to do well, both in the present and in the future. The framework for performance management is provided by the performance and development plan, which is the outcome of performance planning. Performance planning is the first and very important process in performance management. This unit explains the performance management planning process. This unit will also describe the various responsibilities of managers and employees in performance planning and the process of drawing a plan for performance and evaluating the same.

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5.4 Managers Responsibility in Performance Planning

There are six basic responsibilities of a manager. These responsibilities can be classified into two those that the manager has to work on with the employees before the performance planning meeting and those accomplished during the performance planning meeting. Before the meeting, the manager has to: Re-examine the organisations mission statement, or vision and values, and teams goals. Understand the employees job description. Think about the goals and objectives the person needs to achieve in the upcoming appraisal period. Recognise the most important competencies that are expected from the employees in performing the job. Determine what can be considered as fully successful performance in each area.

During the meeting the manager has to: Discuss and come to agreement with the employee on the most important competencies, key position responsibilities, and goals. Discuss and come to agreement on the employees development plan.

A major part of the job involved in effective performance planning happens before the actual meeting. Before the meeting begins, the manager and the employees should review the documents that provide a clear picture of the companys mission statement and the corporate vision and values statement. The organisations strategic goals for the upcoming year, the department or division goals and the individuals job description also have to be reviewed. The manager needs to consider about the goals the individual needs to accomplish over the year and the important competencies or behaviours the manager expects the employees to display in their performance. If there are no goals set for the department, the manager can set the goals before the planning meeting begins. After setting goals for the entire team or department, the manager can encourage each subordinate to set individual goals that help ensure that the overall department goals will be met.

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Some organisations use job descriptions as models of excellence. The job descriptions are useful sources of data that specify areas where the employee needs to concentrate attention over the course of the year. The manager will discuss the goals for the department and the company as a whole during the meeting. The manager works with the subordinates to set significant, quantifiable, and meaningful goals that will help accomplish the departments and the organisations mission. Hence it is important for the manager to have some specific ideas for areas in which the individual should consider setting goals. The manager and the subordinate then review the most important parts of the individuals job and talk about which responsibilities are the most essential to success. Along with the results, outcomes, or products, it is also important to consider factors such as behaviour, competencies or performance factors. Once the goals and responsibilities have been identified and reviewed, the manager and subordinate will need to talk about how the job will be done. If the company has recognised some core competencies that it expects every employee to exhibit, going through these will allow the manager and the individual to identify the ones that are of particular importance in the employees job. If the company hasnt formally identified competencies, then its up to the manager to identify and discuss the behaviours and skills and attributes that is expected from the employees performance. The manager should begin the meeting after thinking about the expectations from the employees role. Apart from job-competencies and results, the managers also have to discuss how performance will be measured. The manager needs to describe what level of performance will be considered to be fully successful. Before the meeting begins, the manager also needs to think about the subordinates development needs. It is the employees responsibility to create and execute a development plan. However, the manager needs to be prepared with suggestions on areas where development will have a payoff. If the manager is well prepared, then 45 to 60 minutes should be sufficient to discuss key responsibilities, set goals, discuss competencies, talk about how performance will be measured, and review the employees ideas about plans for development.
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At the conclusion of the planning phase, the manager should be able to: Understand the employees day-to-day job responsibilities better. Have a clear understanding of how carrying out those responsibilities contributes to the work unit. Be convinced that both the higher authority and the employee have a shared understanding of the job and performance expectations. Have dealt with methods to help the employee succeed and be committed to any actions required to help the employee. Have a few documents of the performance-planning process and decisions made.

Some of the points mentioned above deal with employee performance because the point of the entire process, from planning to reviewing, is to help the employee succeed. The reason underlying this is that if each employee succeeds, the team succeeds, and if the team succeeds, the manager must surely be succeeding. Hence, the planning process focuses on where the employee needs to be and not as much on where the manager needs to be. Self Assessment Questions 5. A major part of the job involved in effective performance planning happens after the actual performance planning meeting. (True/False)? 6. Before the performance planning meeting the manager has to reexamine the _______________, or vision and values, and teams goals. 7. The manager needs to describe what level of performance will be considered to be ______________.

5.5 Employees Responsibility in Performance Planning

Just like the managers, the employees have seven responsibilities which can again be classified into responsibilities before the meeting and responsibilities after the meeting. Before the meeting the employees should: Go through the organisations mission statement and their department or team goals. Review their job responsibilities. description and determine their significant

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Consider their roles and identify the most vital goals they should accomplish in the upcoming appraisal period. Think about what they consider to be fully successful performance in each area.

During the meeting, the employee has to: Confer and come to agreement with the manager on the most important competencies for their job, key position responsibilities, and goals. Discuss with the manager and come to an agreement on their personal development plans. Compose notes on a working copy of the performance appraisal form.

Prior to the meeting, the employees are expected to do the same kind of advance planning that the manager does. The employees have to identify the most important job responsibilities and some possible goals for review during the planning session, think about the important competencies required for accomplishment of their job, and reflect on how job performance will be measured. The primary responsibility of an employee is on development planning. Before the meeting, the employees have to think about their future goals and the development efforts that it will take to accomplish them. While it is the responsibility of the manager to identify the goals, responsibilities and competencies, it is the responsibility of the employee to identify developmental areas and needs. In addition to identifying the common areas where developmental attention will be paid in the next twelve months, the employees should also think about the resources that will be needed to complete the plan. During the meeting, both the manager and the employee will work together to come to an understanding and agreement on the important goals and responsibilities, the competencies, and the individuals development plans for the next twelve months. Performance appraisal form is the best tool used to record all of these agreements and understandings. The employees should use a plain copy of the form and make notes on the goals, competencies and responsibilities that they will be held accountable for over the course of the next twelve months. When the meeting is over, the individual should make a copy of the form with all of the notes and send it to
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the manager. In that way, both the parties will have a full record of the expectations. By the end of the performance planning phase the employees should know: The most important job responsibilities that they need to complete When they must complete the job tasks that is the time allotted to complete the job. How those job responsibilities are related to the goals of the team or department and the company How well or to what level the employees need to perform their job activities The criteria that will be used to review performance during and at the end of the review period Potential barriers to performing the job tasks and possible solutions Any assistance to be expected from the manager towards performing appropriately and overcoming possible performance barriers

These can be called as hard outcomes which are related to the employees understanding of their job and expectations about the job. However, there are other outcomes which can be called as soft outcomes that dont relate directly to getting the job done. These have to do with how the employee perceives the whole process and the relationships between the manager and the company. This is important because it is not enough to pay attention to getting the job done, but also to the motivation and desire of the employee to achieve those goals. When an employee feels that the manager and employee are not on the same side or that they are manipulated by their manager, its likely that the desire to do a good job will decrease. If this occurs and the decline is unchecked, it creates an environment where performance problems arise. Hence, along with the hard job related outcomes, some soft outcomes should also be included in the performance plan. By the end of the performance-planning process, the employee should: Understand that the manager is more interested in creating success than in finding fault later. Sense that the manager is willing to help the employee.
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Understand that the manager recognises that the employee has considerable knowledge and ability to increase productivity and achieve greater success in the job assigned. Have a sense that the employees and the manager are on the same side on the same wavelength and they share similar goals and concerns.

If both these hard and soft outcomes are achieved during planning, little time would be spent on reviewing performance throughout the year. Activity 2: Assume that you are a manager in an organisation. How would you prepare for the performance planning meeting? Hint: Go through the organisations mission statement and team goals.

5.6 Drawing up the Plan

Every organisation has to pay attention to some tasks in order to grow and prosper. For example, the organisation must: Institute a mission and organisational philosophy. Set up policies and procedures. Set objectives and develop plans for carrying out these objectives. Establish measures of performance. Create programs to enable people to achieve the organisations objectives. Inspire or motivate employees to perform. Set an expectation that supervisors and employees can develop themselves to meet changing organisational needs and to grow personally. Provide the necessary information and resources.

The performance or development plan and work plan are two documents intended to help employees in an organisation fulfil these expectations. They help managers to remain focused and execute decisions aimed at achieving the organisations long and short term objectives. These documents help individual employees to focus on their job responsibilities

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The outcome of periodic review meetings are used to prepare performance agreements and plans. These should compare actual performance with the agreed objectives and standards and the outcome and effectiveness of previously agreed development and work plans. Based on these reviews, new agreements and plans can then be made. Reviews may be held, often informally, at any time of the year, especially when new situations or requirements arise that result in previously agreed plans needing to be changed or priorities having to be revised. The initial meetings during the launch of performance management concentrate on the agreement of role definitions, objectives and standards. Some discussion may take place on a performance development plan, but this should be undertaken with care. Such plans should be based on an analysis of performance in relation to previously agreed expectations. It is helpful to document agreements and plans for reference during the year which forms the basis for progress reviews and revision in the light of changing circumstances. The performance agreement is expected to change or needs to be updated during the year, but still it has to retain its value as a basis for setting direction, measuring progress and establishing priorities.
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The evaluation of performance planning process is very essential in order to gauge the progress of employees individually and the organisation as a whole. Activity 3: Assume that you are an employee of RBC Company. You are going for a performance planning meeting with the manager. Prepare a personal development plan. Hint: Include new skills that have to be learnt to do the job better. Self Assessment Questions 11. The outcome of ________________are used to prepare performance agreements and plans. 12. The initial meetings during the launch of performance management concentrate on the agreement of role definitions, objectives and standards. (True/False)? 13. The performance agreement remains the same throughout the year. (True/False)?

5.8 Summary
Performance planning is the starting point of the performance management cycle. The performance agreement that emerges from the planning process is based on the joint discussion and agreement of roles, objectives, performance standards and capability requirements. Performance agreements set the direction and form the basis for measurement, feedback, assessment and development in the performance management process. They define expectations - the results to be achieved and the skills, knowledge, expertise and capabilities required to attain these results. They also identify the measures used to monitor, review and assess performance. Performance agreement is the output of performance planning. The contents of performance agreement are role requirements, objectives and standards of performance, skills and capabilities, performance measures and indicators and corporate core values or requirements. There are six basic responsibilities of a manager. Re-examining the organisations mission statement, understanding the employees job description, recognising the most important competencies and defining
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successful performance are the responsibilities of the manager that have to be performed before the meeting. Discussing and agreeing on important competencies, key position responsibilities and goals and creating the employee development plan are the responsibilities that have to be accomplished during the meeting. An employee has seven responsibilities reviewing the organisations mission statement and job description, thinking about their roles and defining success are the responsibilities to be accomplished before the meeting. The employee discusses with the manager and agrees upon key job responsibilities, personal development plan and composes notes on performance appraisal form during the meeting. The performance or development plan and work plan are two documents intended to help employees in an organisation fulfil these expectations. They help managers to remain focused and execute decisions aimed at achieving the organisations long and short term objectives. These documents help individual employees to focus on their job responsibilities and achieve personal as well as their organisations goals and objectives.

5.9 Glossary
Term Budgetary Control Description Methodical control of an organisation's operations through establishment of standards and targets regarding income and expenditure and a continuous monitoring and adjustment of performance against them. Cluster of related abilities, commitments, knowledge and skills that enable a person to act effectively in a job or a situation. Broad, general, and written statement of a specific job, based on the findings of a job analysis. It generally includes duties, purpose, responsibilities, scope, and working conditions of a job along with the job's title, and the name or designation of the person to whom the employee reports. Job description usually forms the basis of job specification. It is the process of obtaining, analysing and recording information about the relative worth of an employee.

Competence

Job description

Performance appraisal

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Work plans

A work plan is a standard business management tool used for planning tasks during a specific time period. Work Plans commonly summarise different components of a job and how they will be implemented throughout that time span.

5.10 Terminal Questions

1. 2. 3. 4. 5. What is Performance management planning? Explain the performance planning process. What is the managers responsibility in performance planning? What is the employees responsibility in performance planning? Explain development plan and work plan.

5.11 Answers
Answers to Self Assessment Questions 1. Performance management planning 2. Agreement 3. Objectives 4. Behavioural. 5. False. 6. Organisations mission statement. 7. Fully successful 8. Personal development plans 9. Performance appraisal form. 10. False. 11. Periodic review meetings. 12. True. 13. False. Answers to Terminal Questions 1. Refer section 5.2 Performance Management Planning. 2. Refer section 5.3 The Planning Process. 3. Refer section 5.4 Managers' Responsibility in Performance Planning. 4. Refer section 5.5 Employees Responsibility in Performance Planning. 5. Refer to section 5.6 Drawing up the Plan.

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5.12 Case Study

Hybrid Solutions Performance Planning Hybrid Solutions is a gaming applications development company. This company has around 100 employees. The company is a brand new enterprise, established in 2009. The result of a recent survey shows that the company has the potential to compete in the international gaming market, but the potential of the employees has been largely under-utilised. As a lot of new game development soft wares and interfaces are released in the market, Hybrid Solutions has realised the urgent need to train its employees. The human resource department is geared up to revise its organisational objectives and rewrite the organisations vision and mission statements. And hence there arises a need to reintroduce a new and better performance management system. Questions: 1. What are the responsibilities of the managers in the above scenario? Hint: Understand the organisational objectives. 2. What are the responsibilities of the employees in the above scenario? Hint: Prepare a personal development plan. References Dick Grote, Richard C. Grote (2002), The performance appraisal question and answer book: a survival guide for managers. Amacom. Goel (2008), Performance Appraisal and Compensation Management: A Modern Approach, PHI Learning Private Limited. Robert Bacal (2004), The Manager's Guide to Performance Reviews, McGraw-Hill Companies.

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Performance Appraisal

administrative and developmental decisions like: selection, placement, promotion, appraisal rewards, termination and training and development. A schematic view of the human resource cycle is presented in Figure 6.1.

Figure 6.1: The Human Resource Cycle

According to Tichy, Fombrun and Devanne (1982), the organisational context and resources surrounding the employees also determine their performance. According to them the major purpose of performance appraisal is to: Measure employees performance. Differentiate various levels of performance. Identify training needs and development. Validate rewards. Identify capable employees for promotion. Research studies point out that in many Indian organisations formal performance appraisals are non-existent for workers and only managers are
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subjected to a formal appraisal process. According to Saiyadin (1985), the objectives of performance appraisal may vary from culture to culture, organisation to organisation and in the same organisation from time to time. According to researchers, performance appraisal in organisations plays three critical HRM functions. They are: It provides satisfactory feed-back to subordinates to know where they stand, how well they are performing their assigned jobs and what changes in their behaviour are expected. It intends to serve as a basis for improving or changing behaviour towards more effective working habits. It provides data to managers with which they judge future job assignments and compensation. This process ends with recommendations from manager to the higher management for one or more administrative decisions regarding the employee. Administrative decisions include promotion, salary increase and training or any other determinations.

As organisations grow in size and adapt a professional approach to measurement, formal appraisal systems and controls become imperative. Figure 6.2 depicts a cycle of the six-step sequence of appraisal scenario from an organisational perspective. The sequence is significant because it begins and ends with the HRM functions, based on which several administrative decisions are taken for employees. The various steps involved are closely interlinked and cannot operate in isolation, if the systems were to be effective.

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Figure 6.2: The Performance Appraisal Scenario as an Organisational Event

Activity 3: Assume that you are the HR manager of a software company and depict a scenario to explain the role of performance appraisal in the organisation. Justify the scenario with relevant points. Hint: Organisational perspective of performance appraisal.

6.4 The Necessity of Performance Appraisal

Performance appraisal system provides the necessary information to management about an employees performance which is used for succession plan by identifying people with potentialities. It facilitates
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management to take administrative decisions, such as, pay increase, promotions, placement, transfer and lay-off. It also helps supervisors to known their subordinates and gives an opportunity to the subordinates to know where they stand with respect to their career. Williams et al. (1977) found that performance appraisals are used for two broad purposes, like, purposes pertaining to an individual, such as where they stand and how they can improve and develop and also purposes that relate to organisational needs, such as salary review, transfers and promotions. Grider and Toombs (1992) draw attention to the variety of appraisal uses. Practitioners generally agree that results of performance evaluations are used in a variety of organisational functions and this position is supported by authorities in the area of human resource development. Among others, Cherrington (1987) classified five main purposes of performance appraisal. They are: Administrative decisions: Guiding personnel actions such as hiring, firing, promoting, demoting and transferring. Underpinning behaviour through pay increases and other rewards. Assisting individual growth and personnel development. Employee development: Identification of training and developmental needs and performance feedback. Incorporating human resource planning with the total human resource system. Rao and Iqbal (1982) surveyed the appraisal practice of 25 banks and financial establishments. The report states almost all organisations use appraisal for salary and reward administration, though its potential as a development mechanism is not being used by most of the organisations. Bolar (1978) gave a detailed list of functions of employee appraisal which present more or less identical findings. It is more well-defined just by going through a summary of two recent studies conducted by Shetty (1970) and Rudrabasavaraj (1969); the details of the surveys are given in Table 6.1 which captures the prominent issues involved in uses of performance appraisals.

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Table 6.1: The Study of Purposes and Needs of Performance Appraisal System (PAS) in American and Indian companies2
Y.K. Shetty (1970) Purpose of Appraisal American Companies N=12 Promotion and transfer Determining wage increase Training and development Informing the employees about where they stand Follow-up interviews Discovering supervisory personnel Personnel research To help supervisors know their employees 9 (75.0) 12 (100.0) 4 (33.3) 4 (33.3) 6 (50.0) Indian Companies N=9 7 (77.6) 9 (100.0) 1 (11.1) 1 (11.1) 2 (22.2) 5 (83.0) 7 (50.0) 10 (71.0) Rudrabasavaraj (1969) Indian Companies Public Sector N=6 6 (100.0) 5 (83.0) 5 (83.0) 5 (83.0) 1 (17.0) Private Sector N=16 11 (79.0) 11 (79.0) 11 (79.0) 9 (64.0) 3 (21.0)

The table reveals a comparative study of 12 American and 9 Indian companies by Shetty (1970) which shows some interesting similarities in their objectives of performance appraisal. According to the survey, all the 12 American and 9 Indian companies used performance appraisals for determining wage increase. The second rank is given by both samples to promotions and transfers. The third rank is given in both the samples to discovering supervisory personnel. While as the fourth rank is given to training and development and informing employees where they stand, in both cases the total score as reported is (33.3) and (11.1) respectively.
2

Performance Appraisal Management By S. Mufeed Ahmad, Mufeed S. Ahmad

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It can have some disturbing effect when used without a commitment to employee development on the part of the organisation. Thus, to make the appraisals more effective, the approach should not be to criticise the subordinates, and highlight their mistakes and weaknesses. Instead, it should help them to solve their problems at home and at office level and also to remove their deficiencies. Activity 4: Read the article Does performance appraisal benefit anyone? and discuss the critical aspects of performance appraisal. Hint: http://www.itpeopleindia.com/20030310/management1.shtml.

6.5 Characteristics of Performance Appraisal

Some companies recognise the need to render employee feedback regarding performance. One of the methods of providing performance feedback is through a performance appraisal. Organisations that conduct performance appraisals may have written policies in place that refer to time lines, types of performance ratings and clearly defined processes. Some organisations may also require self-appraisals by employees or, even, engage outside consultants to conduct the appraisals. The major characteristics of performance appraisal are: Appraisals match the job descriptions: Performance appraisals must match the job descriptions and standards set for performance objectives. For example, an employee who does data processing should be assessed based on the number of errors and timeliness of work as these are standards set for that particular job. It may be unfair to measure a data processing employee on phone skills if that is not part of the job description. Appraisals are legally compliant: Appraisals must be able to stand legal tests of reliability (questions must yield the same results for all employees if repeated more than once) and validity (does the appraisal measure what it is designed to measure). For this reason, some companies have their appraisals developed by third-party consultants who are specialists in this area.

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Appraisers must be trained: The supervisor or manager conducting the appraisal must be trained in the use of the evaluation tool and conducting the appraisal. For example, dispute may arise if the employee disagrees with the outcome, and knowing how to deal with conflict is an important tool. Explaining the ratings of the appraisal and discussing future plans for improvement with the employee require good communication skills.

Appraisal systems require follow-up: It is important to the organisation and the employee to provide consistent monitoring and follow-up after the formal appraisal is given. For example, if the employee scored high with little need for improvement, do not take that performance for granted. Instead, continue to train the employee and provide mentoring for continuous improvement. The employees who require improvements will need clearly defined plans with regular follow-up and feedback.

Performance appraisal is a data generation system for strategy conceptualisation and implementation. It provides: o Detailed list of types and number of technical and managerial employees. o Age distribution of the workforce. o Skills profile of the workforce by aggregating individual performance appraisals. o Behavioural criteria advise managers on what they have to do to successfully execute strategic plans. Performance appraisal acts as an integrating device for the human resource system. It helps in: o Appraisal as the centrepiece of the HR cycle. o Identification of appropriate characteristics and behaviours. o Recognition of developmental opportunities and weaknesses. o Rationale for distributing rewards. Activity 5: Performance appraisal is the centrepiece of the HR cycle do you agree with the statement and justify your explanation using relevant points and examples. Hint: Performance appraisal in human resource system.
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Self Assessment Questions 1. Performance appraisal is also known as performance _______ or _______. 2. Performance means what is expected to be delivered by an individual or a group of individuals within a time frame. (True/False)? 3. Appraisal process is an agreed action plan that includes ______ and _________ activities that might take off the job. 4. The performance appraisal approach should criticise the subordinates, and highlight their mistakes and weaknesses. (True/False)? 5. The supervisor or manager conducting the appraisal must be trained in the use of the _______ and ______ the appraisal. 6. Performance appraisal serves the traditional purpose of administering a ______, ______ or ______.

6.6 Objectives of Performance Appraisal

Edwards W. Deming, a proponent of Total Quality Management (TQM) considers performance appraisal in its present form as dysfunctional due to the following reasons: It reinforces people with rewards for manipulating the system rather than improving it. It is often self-defeating. It is discrepant with team work. It acts as an alternative for proper management. It is inherently unfair. The above observations are valid but organisations are practising performance appraisal for a number of objectives, in the absence of a reliable, viable and validated alternative performance assessment system. The major objectives of performance appraisal are as follows: Providing feedback on individual performance. Providing a basis for self-evaluation. Establishing and monitoring objectives and targets. Reviewing salary, conditions of service and other rewards. Providing a basis for promotion, dismissal, probation, confirmation, reassignment, transfer and many more. Maintaining fairness in treatment of employees.
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Discovering individual potential. Facilitating succession planning. Monitoring the effectiveness of HR policies. Avoiding trouble through meeting legal or political needs.

6.7 Performance Appraisal Process

After the competencies and expectations of an employee are defined, the need for an effective measurement of the employees ability to both deliver and improve their role is important to the future success and growth of everyone involved. One of the sources of frustration for employees is the lack of communication, particularly with regard to a lack of clarity about what the job entails and on what criteria their performance is evaluated. If the appraisal process is properly designed, these basic questions will be answered and the organisation will move forward and grow. Figure 6.4 illustrates the performance appraisal process.

Figure 6.4: Performance Appraisal Process Sikkim Manipal University Page No. 117

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The seven steps of a performance appraisal system are: 1. Performance objectives: It is the identification and setting quantifiable (measurable) targets so that employees have greater clarity of their activities to be performed. Generally, performance objectives are set together by the employee (appraisee) and their manager (appraiser). 2. Standards of performance: Standards are the established performance criteria based on job description (role description) and job specification. The standards must be clear, concise and must incorporate all relevant factors. 3. Performance measures: These are specific measures that outline how an employee is performing against the set targets or standards. 4. Implementing appraisal: It is the conducting of appraisal by the manager, including conducting of interview and scrutiny of records and reports. 5. Employee performance: It is finding out the actual performance of the employee against standards of performance for finding out deviations. Deviations can be in the form more than required by the standards of performance or vice versa. Also, to find out where the employee stands, the employee performance is compared with their past performance and that with other employees. 6. Performance review and discussions: It is the formal discussion between the employee and the manager on the employees performance for a given period of time. It helps to identify the factors that positively or negatively affect the performance and to prepare action plans to improve the performance using the performance equation. Performance = Ability x Motivation x Organisational Support + or Chance Factors o It is the communication of the actual performance to the employee. o Performance review and discussions requires the following: o General environment of openness, trust and mutuality. o Empathetic attitude of manager. o Complete involvement by the employee in the review and discussions. o Emphasis on work oriented behaviour. o Averting discussion on compensation and related benefits.
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7. Post appraisal actions: It is the means for identifying various human resource decisions in respect of the employee by taking appropriate actions. It is based on the information as revealed by the appraisal. Ultimately, the appraisal records are consigned to the personal file of the employee for future reference. Activity 6: Research on Web and prepare a report on various appraisal processes followed by financial organisations. Hint: http://www.humanresources.hrvinet.com/performance-appraisalprocedure/

6.8 Advantages of Performance Appraisal

Some of the important advantages of performance appraisal are: Organisations can use appraisal as vehicles to publish and promote collective values about work and performance. Emphasis on improved communication at work allows discussion on how the organisation is operated and the impact of management or leadership in its work. Communication between departments can be improved. Accountability for standards and results is more evidently identified. Employees get to know how they are being perceived and where they stand. Employees are better informed about what they are expected to do. Training and development is more likely to be emphasised. Results of training are transferred and monitored easily. More open and receptive working environment can be created. Opportunities for counselling employees on problems related to work are created.

6.9 Disadvantages of Performance Appraisal

Not training employees. Both manager and employee should have the same understanding about why they are doing the appraisal, how it will be done and what is expected. This is because the only way it works is when employee and manager work together, in partnership.

Thinking pressurising managers to get the forms is productive. One reason managers postpone with respect to doing appraisals is that they do not see the point, or see it as a waste of time. There are other reasons, too. Most can be handled by using approaches that take into account the needs of managers. Unfortunately, a goad many HR departments believe it is just a question of ordering, yelling, coercing or begging managers to get them done. That does not answer the reasons why managers arent doing them. If they feel they were useful, they would do them. The key to getting them done is to make them useful.

Playing the appraisal cop. Unfortunately, HR departments get stuck with the responsibility of getting appraisals done by managers. Perhaps it is not their fault, but it is a strong indicator that the system being used has failed because in an accurately functioning system, each manager is assessed on a number of things, one of which will be their fulfilment of the performance management and .appraisal function. The responsibility lies with the management. If a manager is not accomplishing the responsibility, it is his or her boss that should be evaluating the manager. It is a cascading process. No appraisal system will work until each managers boss makes it clear that getting it done is going to be a factor in the managers own appraisal.

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Activity 7: Assume that you are the HR manager of a software development company and suggest some methods to overcome the disadvantages of performance appraisal. Hint: http://www.businessknowhow.com/manage/performance-appraisal. htm. Self Assessment Questions 7. One of the sources of frustration for employees is the lack of ________. 8. Standards are the identification and setting quantifiable targets so that employees have greater clarity of their activities to be performed. (True/False)? 9. Human Performance is finding out the actual performance of the employee against standards of performance for finding out deviations. (True/False)? 10. Edwards W. Deming considers performance appraisal in its present form as dysfunctional. (True/False)?

6.10 Summary
Performance appraisals are necessary for the effective management and evaluation of employees. Appraisals help develop individuals, improve organisational performance and nurture business planning. Formal performance appraisals are normally conducted annually for all employees in the organisation. Each employee is appraised by their manager. Directors are appraised by the CEO, who is in-turn appraised by the chairman or company owners, depending on the size and structure of the organisation. Performance appraisals facilitate management and monitoring of standards, agreeing expectations and objectives, and delegation of responsibilities and tasks. Employee performance appraisals also institute individual training needs and enable organisational training needs analysis and planning. It is sometimes trendy in the 'modern age' to dismiss traditional processes such as performance appraisals as being irrelevant or unhelpful. It is possible that the critics of the appraisal process are the people who can't conduct themselves very well. It's a common human response to want to get
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rid of something that one finds difficult. Appraisals in whatever form have been the mainstay of management for decades, for good reasons.

6.11 Glossary
Term Appraisee Counselling Pitfalls Proponent Scrutiny Description An individual who is being assessed based on performance. It is an opinion or instruction given to employees to direct them towards better performance. The drawbacks/disadvantages An individual who propounds a theory or concept or definition. It is the examination or investigation of performance records and reports.

6.12 Terminal Questions

1. 2. 3. 4. 5. Describe the three phases of evolution of performance appraisal in brief. Discuss the organisational perspective of performance appraisal in brief. What is the need of performance appraisal? Justify. What are the characteristics and objectives of performance appraisal? Briefly explain the advantages and disadvantages of performance appraisal.

6.13 Answers
Answers to Self Assessment Questions 1. Evaluation, review 2. True 3. Training, development 4. False 5. Evaluation tool, conducting 6. Promotion, transfer, reward 7. Communication 8. False 9. True 10. True

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Answers to Terminal Questions 1. Refer section 6.2 Evolution of PA. 2. Refer section 6.3 PA from the Organisations Perspective. 3. Refer section 6.4 The Necessity of PA. 4. Refer section 6.5 and Characteristics of Performance Appraisal and 6.6 Objectives of Performance Appraisal. 5. Refer section 6.7 Performance Appraisal Processes and 6.8 Benefits of Performance Appraisal process.

6.14 Case Study

E-appraisal in Upsilon Bank Upsilon Bank Group is the largest bank, distinguished by its extensive operations in 17 countries. Outside the Asian continent, Upsilon Bank's Wholesale Bank spans 21 countries, with a focus on emerging markets. For the bank, employee performance and their appraisal is the key to its ongoing strategic plan and success. The bank is devoted to an effective learning and development system, which includes developing the leadership competencies and skills of the bank's managers and executives, and a number of initiatives to develop performance appraisal. Because of this commitment, the bank is extremely frustrated since previous performance management solutions failed to meet expectations. To support overall objectives related to performance appraisal, the bank moved from a paper-based process to a computer-based process designed in-house in 2001. This move is considered to ensure that the employee evaluation process is easier to manage and will offer complete reporting information on appraisal data. By implementing its in-house system, the bank hoped to support regulatory compliance, as well as the overall annual review process. After struggling for two years to develop an in-house system, the bank is excited that it was able to implement an eAppraisal system. A trainer spent one week with the bank in training employees, developing end-user training and building the bank's performance appraisal forms. Within a few weeks the first appraisals were under way. Employees adopted the solution and their investment in the system is increasing every year. There is an element of resistance to the idea of
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performance appraisals in the past that HR had to overcome initially, but, in part because of the eAppraisal's ease of use, that issue is being resolved. The bank is continuing to shorten the time it takes to finish its performance appraisals and to further increase its on-time completion rate. The hustle of employee appraisals increased, but perhaps more importantly the quality improved with the eAppraisal. Employees are more comfortable working within the system and using the authoring aids and links to competencies than they were writing everything out by hand. Managers now take the time and use the in-built comment option to provide more constructive feedback to employees. The information is all there for them. As a result, it is easier for managers. They don't need to refer to separate documents. Questions: 1. Why did the bank move from a paper-based process to an in-house computer-based process? Hint: Evaluation process. 2. What are the advantages of an eAppraisal system? Hint: To get over element of resistance. Source: This case is based on an article taken http://www.halogensoftware.com/customers/case-studies/financialservices/study_standardbank.php from

References Tapomoy Deb (2006), Strategic Approach to Human Resource Management, Atlantic Publishers and Distributors. E-references http://www.ehow.com/list_6157246_characteristics-performanceappraisal-systems.html http://www.businessballs.com/performanceappraisalform.pdf http://www.itpeopleindia.com/20030310/management1.shtml http://www.humanresources.hrvinet.com/performance-appraisalprocedure/ http://www.businessknowhow.com/manage/performance-appraisal.htm http://www.halogensoftware.com/customers/case-studies/financialservices/study_standardbank.php
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Performance Appraisal Methods

Structure: 7.1 Introduction Learning Objectives 7.2 Performance Appraisal Methods 7.3 Traditional Methods 7.4 Modern Methods Management by Objectives or Result method Behaviorally Anchored Rating Scales method Human Resource Accounting method Assessment centre techniques 360 degree method Potential appraisal Appraisal by Rater concerns 7.5 Performance Appraisal of Bureaucrats A New Approach 7.6 Summary 7.7 Glossary 7.8 Terminal Questions 7.9 Answers 7.10 Case Study

7.1 Introduction
After studying the previous units you must be familiar with the concept of performance appraisal. This unit introduces you to the various performance appraisal methods. The unit describes the traditional, modern and the latest methods of performance appraisal. For several decades, performance appraisal has been one of the mostdebated management practices, which has created a wide variety of viewpoints. Performance appraisal is an important component of human resource management, as those organisations requires systematic information on how well employees are performing in their jobs. On the other hand, even employees at every level need to have a good idea of what they would be doing and what is expected from them in respect of quantity and quality of output. In addition, most people want to be in a

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position where they can perform better the next time, and a performance appraisal feedback would help them to do so. In many cases, the appraiser is the manager of the person who is to be evaluated. However, companies also use multiple evaluators to evaluate various measures (360 degree appraisal). Subordinate or reverse appraisals and team rating techniques are used by some appraisal systems. Learning Objectives After studying this unit, you should be able to: explain the traditional methods of performance appraisal. list out the modern methods of performance appraisal. discuss the Human resource Accounting Method. state new approaches for performance appraisal.

7.2 Performance Appraisal Methods

The qualitative and quantitative aspects of job performance are measured by performance appraisal methods. An appraisal system evaluates the employee's performance and also their potential for development. The main objectives of an appraisal are to evaluate previous performance, to identify the training needs, to set and prepare on future objectives and goals, and to ease the accomplishment of these goals.

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A general model of performance appraisal methods is given in the fig. 7.1.

Figure 7.1: Performance Appraisal Methods

7.3 Traditional Methods

From the name itself, one can identify that these are the methods that are most commonly used. The traditional methods of performance appraisal are: Essay appraisal method. Straight ranking method. Paired comparison method. Critical incidents method.
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Technical knowledge and skills. Administrative capabilities and qualities. Behavioural capabilities. Conceptual capabilities.

Indicators of qualities: A good potential appraisal system, besides listing down the functions and qualities, should also have various techniques for judging these measures in an individual. Some of the methods for judging these qualities are: Rating by others. Psychological tests. Simulation games and exercises. Performance appraisal records. Organising the system: Once the functions, the qualities needed to carry out these functions, statistics of these qualities, and mechanisms for generating these statistics are clear, the organisation is in a sound position to launch and operate the potential appraisal system. Such establishments require transparency in organisational policies and systematization of its efforts. Potential appraisal feedback: The organisation should attempt to generate a climate of openness if it believes in conducting potential appraisal. Such a climate is necessary for helping the employees to know their strengths and weaknesses and to create developmental opportunities. A good potential appraisal system should provide the results of assessment so as to guide a person to understand the qualities necessary for performing the role they think they could, the techniques used by the organisation to evaluate their potential, and the results of evaluation. A good potential appraisal system always provides opportunities to the employees to know their strengths and weaknesses. These are done through regular analysis and guidance sessions by either the appraisal department or the respective evaluators. This should encourage the employees in developing sensible selfperceptions and plan their career and growth. 7.4.7 Appraisal by Rater concerns Under this method, the individual with the best performance is taken as an ideal employee. Other employees are then ranked against this employee in descending order of comparison on a scale of best to worst ratings. The
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alteration ranking method generally involves evaluation by many evaluators. A relative rank for each member in the group is determined by averaging the points given by each evaluator. Since this is a simple method, it is not used by large groups. In addition, there may be wide variations in ability between ranks for different positions. A dual rating system can reflect the actual performance contributions of the individual being rated more accurately. Consider a case: a highly competent employee completes all of the job responsibilities, but treats colleagues like helpless creatures. In other words, the work gets done but their behaviour towards co-workers is unacceptable. On a rating scale of 1 - 10, ten being the highest, the manager might opt to give the employee nine marks. The rating has been brought down by one point to account for the employees unacceptable behaviour with colleagues. Table 7.1 shows a sample copy of rating sheet with description.
Table 7.1 Appraisal by Rater Concerns Sl. No. 1. RATINGS Outstanding/ Out performing RATING DESCRIPTION People in this category demonstrated exceptional ability to display organisational values. All Job Competence requirements, planned goals and objectives were achieved well above expectations. Accomplishments were made in unforeseen areas. People in this category continuously exceed expectations in most of the organisational values. All requirements were met and goals and objectives were achieved above the established standards. People in this category consistently meet potential and at times exceed them in representing organisational values. The necessities of performance were met and goals and objectives were achieved. An evaluation at this level reflects that the individual is in a development and learning mode in terms of organisational values and/or job competence. Good growth and development are in the process of being achieved. Developmental Page No. 140

Exceeds expectations

Solid Performer

Developing Performer

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goals and skills support will help this individual continue to learn and grow the capabilities. Recently promoted or transferred employees fall into the growth and development mode. Needs support in the form of coaching and feedback to continue making progress. 5 Improvement Required Performance is below expectations for full competence, but some elements of acceptable Performance is exhibited. A rating at this level denotes that improvement is achievable. This rating requires that a performance support Plan should be written. Supervision required Performance is always below expectations. A rating at this level requires that a performance plan must be written.

Unsatisfactory

Activity 5: Consider that you are the supervisor of an organisation. Rate yourself according to the work done with respect to the objective set and the standards of ranking. Hint: ratings Self Assessment Questions 5. Is it necessary to set objectives before starting a project work? (True/False)? 6. Self assessment involves evaluation of an employee on self-basis. (True/False)? 7. 360 degree appraisal method involves an________ assessment. 8. Is filling up the appraisal forms enough for analysing performance? (True/False)? 9. Potential appraisal involves the evaluation of an individuals________. 10. Is feedback from customers an essential component of performance appraisal of employees? (True/ False)?

7.5 Performance Appraisal of Bureaucrats A New Approach

Until now, an annual confidential report, a form of traditional mechanism usually known as ACR, was used to measure the performance of
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bureaucrats, based on which decisions such as salary increase, promotions and so on were taken. The ACR as an independent mechanism used to have a lot of scope for pleasing the dictatorial way of the bosses, giving them the liberty to act as per their thoughts and capabilities. Since it was the bosses who used to fill up these confidential reports, they would practice a lot of favouritism. In order to obtain excellent or remarkable rating from the boss, the subordinates would do anything to please them like flattering the boss, undertaking their personal work, entertaining their family and friends, and so on. The system sustained for a long period of time, giving little exposure to the public sector towards new appraisal techniques. The Indian Government finally decided to get rid of ACR in May 2005 by approving Performance Appraisal Reports (PAR). These reports help the government departments to evaluate the bureaucrats in terms of their performance rather than their relationship with the higher-ups. By the introduction of performance appraisal reports, the new system attaches accountability more strictly with the intention of raising competence and rewarding performances based on the employees ability to generate good results. The PAR is completely different from an ACR in the sense; it does not allow any scope for the personal opinion of the superior. The PAR is not the only document that is being used in conducting the performance appraisal of bureaucrats. It is used in addition to a new system of peer review, which is conducted by an eminent persons group (EPG). The EPG seeks to ascertain the reputation of a civil servant by obtaining inputs from peers, juniors and clients in confidence. It also helps to evaluate the officers reputation in terms of integrity, competence, attitude and other qualities. This type of an assessment is very appropriate for government servants, as it is bound to increase their accountability and efficiency and encourage them to be more pro-active in their work. The appraisal framework has been designed to facilitate a more objective and transparent appraisal of bureaucrats. The PAR takes stock of an officers performance against 15 to 20 indicators such as work output, personal attributes and functional competence. This is followed by a report card with a scale of points 1 to 10, with the overall grade being the median of the score for each indicator. The PAR is divided into four sections. The first section consists of basic information on tax and property returns,
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medical reports and so on. The second section has space for the officer to write their self-appraisal. The third section is meant for peer appraisal, while the fourth and last consist of a numerical grading. Over and above this appraisal, there is also something called an Integrity Certificate. Once the PAR is filled, the next stage, which is the final appraisal, is conducted. A high-level selection committee comprising the Prime Minister of India and the leader of the opposition in the Parliament will select the EPG members. These EPG members will have a five-year term, so as to ensure that they assess an officer only once, in order to eliminate the possibility of bias. The EPG can seek information on the officers from intelligence agencies, but that report will be confidential and will not form part of the PAR. At the beginning of every year, the senior bureaucrat and their junior, in their capacities as the appraiser and the appraisee will prepare an annual work plan, specifying the tasks to be accomplished and attaching priorities to them. Depending upon the events and circumstances, the work plan can be reviewed in between the year. The PAR is filled based on the performance of the officers with respect to the tasks agreed upon in the annual work plan. Thus, the new PAR system has brought in a complete change in the appraisal system of bureaucrats, which can satisfy the expectations of all concerned and act as a link between the common man and the bureaucrats. The primary aim of the PAR system is to facilitate improvement in the performance of those in responsible positions of civil service in the Government of India. Self Assessment Questions 11. ACR refers to ____________________________________. 12. PAR refers to _____________________________________.

7.6 Summary
The appraisal system flows through many guidelines and instructions followed by various methods. Traditional methodologies are used commonly everywhere as a part of performance appraisal. These traditional methods are taken as a general task for measuring the quality aspects. Some of the traditional methods are:
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Essay appraisal method. Straight ranking method. Paired comparison method. Critical incidents method. Field review checklist method. Graphic ratings scale method. Forced distribution method.

The modern approach to performance appraisal is a future oriented approach and is developmental in nature. It recognizes employees as individuals and focuses on their development. Some of the modern methodologies of performance appraisal are: Management by Objectives (MBO). 360 degree Appraisal. Assessment Centre. Behaviorally Anchored Rating Scales. Human Resource Accounting.

7.7 Glossary
Term Discriminatory Reimbursement Simulation Reinforcement Analytical Depicted Heretical Strategy Description Reflecting a difference An area involving compensation and settlement related matters. Initialization of a procedure or a planned strategy. To provide support or back-up. In a logical or practical way Described through the pictures. In a deviating manner. A plan of action designed to achieve a particular goal.

7.8 Terminal questions

1. 2. 3. 4. 5. What are the objectives of performance appraisal methods? What is the role of traditional methods in an organisation? Explain modern approaches to performance appraisal. What are BARS? How are they beneficial? What are the different measures to rate yourself?
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Unit 8

360 Degree Appraisal

Structure: 8.1 Introduction Learning Objectives 8.2 The Impact of 360 Degree Feedback on Organisations 8.3 The Recent Rise in the Popularity of 360 Degree Feedback 8.4 Purpose 8.5 Methodology 8.6 Ratings 8.7 Advantages and Disadvantages of the Method 8.8 The Process of 360 Degree Feedback 8.9 Operating 360 Degree Appraisal 8.10 Summary 8.11 Glossary 8.12 Terminal Questions 8.13 Answers 8.14 Case Study

8.1 Introduction
After studying the previous units, you must be familiar with the different methods of performance appraisal. This unit discusses the 360 degree appraisal in detail. In 360 degree appraisal, the feedback about an employees performance comes from all the sources that come in contact with the employee on his/her job. Learning Objectives After studying this unit, you should be able to: discuss the impact of 360 degree appraisal on the organisation. tell about the popularity of 360 degree feedback. explain the purpose, methodology and rating of 360 degree appraisal. list out the advantages and disadvantages of the 360 degree appraisal method. explain the process of 360 degree feedback.

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performance of both an individual and a group can be calculated. Stakeholders are the sources of data, who answer certain questions about the behavioural attitude of individuals. Here, stakeholders are people who are affected by the individuals performance and also interact with the individual in their day-to-day tasks. Figure 8.1 depicts a 360 degree feedback.

Figure 8.1: 360: Degree Appraisal

Thus 360-degree feedback signifies transition from top-down, singlestakeholder appraisal and results that are much more diverse and related to processes.

8.4 Purpose
A 360 degree feedback helps an organisation to take decisions in the following areas: Self-improvement and individual analysis. Associate training program. Team-construction. Managing performance. Strategic or planned organisation development. Validation of training and other initiatives. Reward management.

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Annual assessment by way of 360 degree feedbacks assists in the management and monitoring of values, approving the prospective goals and assignment of responsibilities and tasks. A 360 degree performance appraisal is usually integrated into the yearly compensation and grading reviews, which normally leads to business planning for the next financial year. A 360 degree performance evaluation commonly reviews every individual's performance against the goals and strategies for the previous financial year that were approved and agreed upon at the previous evaluation sessions. Performance evaluations through 360 degree appraisal are also necessary for developing goals and business strategies - for individuals, critical jobs, and for the association as a whole. Moreover, since a 360 degree feedback provides a proper, confirmed, frequent and regular review of an employee's performance, and objectives for further development, they are essential for staff motivation, bringing in a change in the attitude and behaviour of the employee and discussion and implementation of individual and organisational aims. This will encourage positive connections between the administration and the employees. Following are the tasks that a 360 degree feedback can assist in, when managed appropriately: Performance measurement clear, precise, long term explanation, defining and revising priorities and objectives. Motivation through objective and target approval. Motivation though success and feedback. Educational desires and training needs evaluation and agreement. Identification of individual strength and abilities, including unexploited hidden strengths. Defining the career and growth strategy both individual and managerial. Creating mutual awareness, understanding and relationship. Clarification about the teams role and structure. Assessment and analysis of organisational training needs. Developing a common perspective between individual and manager, removing confusions and errors through interaction and connection.
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Support and communicate organisational theories, ethics, objectives, plans and preferences and so on.

Future prospects and recommendations 360-degree feedback is influential because it makes it easy to collect and account probable feedback about specific issues that are otherwise hard to put a figure on. However, like any other powerful tool, it also needs to be used with concern in order to obtain all the benefits. Here are some suggestions for avoiding problems: Learn about the technology before you apply it. 360 degree feedbacks are changing as rapidly as hardware and software systems. Much is possible now that was a mere dream decades ago. Modernisation in 360degree systems has made feedback easier, more acceptable, more reasonable, more flexible and more diverse than before. On the other hand, all 360-feedback publishers are not innovative with the same pace or in the same course, and this creates a challenge for the inexperienced user who is at the learning stage. However, a systematic, updated review of what is accessible now will ensure you the maximum potential with the least investment. Make sure that the organisation is well-equipped for a 360-degree feedback. Readiness can be improved by addressing the following areas: A climate of trust. Organisational strength. Feedback practices. Development practices. Responsiveness and recognition of 360 degree feedbacks. Availability of computers.

Use well-examined, well-structured research items. A 360-degree process is only as effective as the items that make up the survey. The best research are cautiously structured and locally authorised and the process is made easy by customised survey platforms of modern approach. Protect privacy. People give honest feedback if there is a benefit in doing so. You should set up policies and measures that keep ratings unknown and give supervisors only the data they need.
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Use skilled personnel. People who have experience making this process successful should lead these meetings. A 360 degree feedback alone will not improve performance. It can focus on priority, development requirements and create strong inspiration to change in many people, but individual growth strategy, training and encouragement of developmental actions are essential to obtain optimum results. Self Assessment Questions 5. Stakeholders are people who are performance. (True/false)? (True/false) 7. A 360 degree feedback process is only as effective as the items that make up the survey (True/False)? 8. People give honest feedback if there is a benefit in doing so. (True/False)? affected by an individuals

6. Annual assessment allows managing and monitoring of values.

Peer input can be effectively used for decisions about recognition and awards. The use of peer evaluations can be very time consuming.

Subordinates rating An upward-appraisal process or feedback survey, which is sometimes referred to as a SAM, for Subordinates Appraising Managers is among the most significant. Subordinate ratings can provide immensely valuable data on performance elements concerning managerial and supervisory behaviours of managers. However, there is a natural reluctance concerning implementation of this rating dimension, as employees fear retaliation or even possible vengeance from the managers in case of negative feedback. The feedback from subordinates is particularly effective in evaluating the supervisors interpersonal skills. However, it may not be as appropriate or valid for evaluating task-oriented skills, unless the provider of the feedback is much experienced. The characteristics of subordinate ratings are: Like peer ratings, the ratings of subordinates can be combined to have a comprehensive rating that is averaged. This is one big advantage of subordinate rating as it takes the opinions of multiple subordinates into consideration. The need for discrimination is essential when using subordinate ratings as a source of performance feedback data. Subordinates simply will not participate, or they will give gratuitous, dishonest feedback, if they fear reprisal from their supervisors.

Customers rating Contribution of this rating source are: Customer feedback serves as the proof for almost all other performance factors, as it is customer satisfaction and customers opinion which is the most important aspect of any business venture. Hence, neglecting this feedback can result in not serving the purpose of the business. The value of customer service feedback is most suitable for evaluating team or organisational output and outcomes. This feedback can then be used as part of the appraisal for each member of the team.
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Customers, usually, are better at evaluating outputs. After all, who else can be a better judge to our products and outputs, than the customers who use them? Designing and validating customer surveys are an expensive and timeconsuming process.

Self Assessment Questions 9. Supervisors feedback is one of the most ________ forms of employee feedback. 10. Peer input can be effectively used for determining awards and recognition. (True/false)?

8.7 Advantages and Disadvantages of the Method

This section defines the use of 360 degree feedback in an organisation as a substitute to the traditional performance evaluation techniques. The increased interest in 360 degree feedback technique, which derives information from the employees environment, is now often used as a development or training tool and is usually not linked to salary. It can work wonders for organisations that are moving towards an open, supportive and fair culture. Advantages of 360 degree feedback The advantages of 360 degree feedback are: Collective opinion gives perfect, objective and over-all ideas. Leadership qualities are perfectly judged by peers and subordinates rather than seniors. When a number of colleagues express the same comment, it becomes difficult to ignore. It can lead to positive behavioral change. It can be supportive for people who underestimate themselves. Disadvantages of 360 degree feedback The disadvantages of 360 degree feedback can be summarised as: It is more time-taking and costly, thus the technique is often restricted to managerial level. If too many evaluators are involved, the result could be difficult to work out.
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It can be critical, unless handled carefully and delicately. It can create an environment of doubt, unless managed transparently and sincerely.

8.8 The Process of 360 Degree Feedback

If implemented with care and proper training, a 360 degree feedback can prove to be a highly beneficial addition to your performance management system. It can provide a proper direction to the employees of your organisation and help them to develop their own careers as well as serve the customers better. On the other hand, if you just include it in your appraisal system just because it is the latest trend in organisations and not take care of the nitty-gritty of its implementation, it can prove to be a disaster. A 360 degree feedback is a method and a tool that provides each employee the opportunity to receive performance feedback from his or her supervisor and four to eight peers, reporting staff members, co-workers and customers. Most 360 degree feedback tools are also responded to by each individual in a self assessment. It helps each individual to understand how his/her effectiveness as an employee, co-worker, or staff member is viewed by others. The feedback provides insights about the skills and behaviours desired in the organisation to accomplish the mission, vision, and goals and live the values. The feedback is firmly planted in behaviours needed to exceed customer expectations. The purpose of the 360 degree feedback is to assist each individual to understand his or her strengths and weaknesses, and to provide suggestions regarding the appropriate changes to be brought in for professional development. Following are the steps of the process of 360 degree feedback: Select the feedback tool and process. Select the raters. Use the feedback. Review the feedback. Manage and integrate the process into a larger performance management system.
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8.9 Operating 360 Degree Appraisal

A 360 degree feedback is most useful for measuring the hard-to-quantify aspects of work, such as interpersonal skills. However, it would be a mistake to reward an employee based on the process of work rather than work outcomes. The best way is to use 360 degree feedback for developmental initiatives and not for rewards. On the other hand, individual qualities such as leadership skills, team relations, interactive skills, sales acumen, services, compromising and guiding ability cannot be easily calculated or measured. The best way to get objective about these aspects of presentation is by using a 360-degree feedback. Here are some common mistakes to avoid while implementing a 360 degree appraisal: One of the main reasons for the unsuccessful implementation of a 360degree feedback process is the lack of a clear purpose. This happens when the feedback doesnt address an organisational performance issue or strategic need, but instead its being done because its the latest management trend, because a senior manager thinks its a good idea, or because a recent benchmarking study reports that world-class organisations are doing it. Multi-rater feedback cannot be a substitute for managing a poor performer. It is a tool for helping people gain a rich, accurate perception on how others view their management practices, interpersonal skills and effectiveness. It shouldnt take the place of managers assessing and managing the performance of subordinates. Though feedback from a 360-degree process can help an employee to become aware of their strengths and weaknesses, it cant replace direct communication between the employee and his or her manager. An organisation should not be too ambitious to get immediate results when introducing a 360 degree feedback. This is because introducing a multi-rater system is a major change in an organisation, which is a radical departure from the way people are traditionally given feedback and managed. The concept of upward feedback to a supervisor or manager and collecting information from peers, staff, and customers may be considered radical in top down cultures.
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It is crucial to involve the key stakeholders in the design and implementation of a 360-degree appraisal process. This is because the stakeholders should be aware of the important decisions and the rationale behind them, so that they are able to provide valuable inputs and support in implementing the system. Hence, it is very important to identify the key stakeholders and involve them in the decision making. Complete communication is of utmost importance with 360-degree feedback. Since it may involve a lot of information about the recipients attitude which can be quite sensitive, it is important that its purpose be communicated clearly. To avoid potential misunderstanding or feelings of betrayal, its also essential to communicate clearly about confidentiality issues.

Self Assessment Questions 11. One of the main reasons for the unsuccessful implementation of a 360degree feedback process is the lack of a clear purpose. (True/False)? 12. Multi-rater feedback can work as a very good substitute for managing a poor performer. (True/False)? 13. It is unnecessary to involve the key stakeholders in the design and implementation of a 360-degree appraisal process. (True/False)? 14. Complete communication is of no importance with 360-degree feedback. (True/False)?

8.10 Summary
A broader picture of employee problems and requirements becomes available to supervisors through organised multi-rater feedback session, commonly known as 360 degree appraisal and feedback system. Managers and supervisors get a very contradictory feedback, when they assume that they can satisfactorily be in touch with their employees needs by depending only on an open door policy. A 360 degree feedback helps each individual to understand how his contribution as an employee, is concerned by others. The most powerful 360 degree feedback is based on behaviours that other colleagues can see. The feedback presents a view about not only the skills but also the values and behaviour required for the organisation to attain the target, objectives, and goals. The feedback is strictly planted in behaviour needed to exceed
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customers interest. A 360 degree feedback is mostly used for computing the hard-to-calculate aspects of work, such as an individuals interpersonal skills. A 360 degree appraisal is generally more appropriate at the managerial level as it helps in evaluating their leadership and supervision styles. This method is being successfully used around the globe for improving performance. Managers and others equivalent generally dislike appraisal feedback from subordinates and attempt to avoid them. The process is demoralising and time-taking for these people. Moreover, the process is seen as a tough administrative task and emotionally difficult. While using subordinate evaluation as a basis of performance feedback, one may have to exercise a lot of caution. Subordinates will merely not involve, or will provide unnecessary, unfair feedback, from fear of reprisal. The report should not be provided to the supervisor, if the rating pool for a particular manager contains less than four subordinates. To conclude, 360 degree application is taken as an effective developmental tool, as when conducted periodically, helps in keeping the track of alterations in others perceptive about the employees.

8.11 Glossary
Term Peer appraisal Description In peer appraisal, employees are evaluated by their colleagues who are usually working in the same type of job. Under team appraisal, the performance of a team as a whole is evaluated by a manager or a representative of the clients. An up-ward appraisal is one where the subordinates provide feedback about the performance and skills and capabilities of their reporting manager. A stakeholder of an organisation can be a person who is an employee, customer or an owner/shareholder who has responsibilities towards the organisation and hence has an interest in its success. The set of behaviour such as leadership skills and interpersonal skills, which are expected of a person working at a supervisory level. Page No. 164

Team appraisal

An upward-appraisal

Stakeholders

Supervisory behaviors

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8.12 Terminal Questions

1. Define and explain 360 degree feedback. 2. Discuss the purpose and benefits of 360 degree feedback. 3. Explain the advantages and disadvantages of 360 degree feedback. 4. Enumerate the steps involved in the process of 360 degree appraisal. 5. Explain the common mistakes that are committed while executing a 360 degree appraisal.

8.13 Answers
Answers to Self Assessment Questions 1. 360 degree 2. Truthful 3. True 4. False 5. True 6. Staff inspiration 7. 360-degree 8. Subordinates ratings 9. True 10. Traditional 11. True 12. False 13. False 14. False Answers to Terminal Questions 1. Refer section 8.2 Impact of 360 Degree Feedback. 2. Refer section 8.4 Purpose of Conducting a 360 Degree Feedback. 3. Refer section 8.7 Advantages and Disadvantages of 360 Degree Feedback. 4. Refer section 8.8 The Process of 360 Degree Feedback 5. Refer to section 8.6 Ratings.

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8.14 Case Study

Software Company Implements 360 Degree Feedback For case study let us take the case of a software company which involved 360 Degree Appraisal and deduce its benefits. Jagan was a newly promoted manager with a major software company. With his new position, he also inherited a team of 10 team leads. Most were long-term employees, and John was much younger than most of his direct reports. Many of the team leads thought they deserved the promotion and resented Jagans appointment. He soon discovered that the performance of his team leads was below par. Hence, spent a lot of time working on relationships with each of them, reinforcing service standards and trying to build a cohesive team. Despite his best efforts, Jagan encountered resistance; and performance did not improve. He knew that his juniors were unhappy, but he couldn't get them to talk about their dissatisfaction. When he learned about 360 degree appraisal, he decided to use it to ask for feedback about his leadership practices. He hoped that the information gained would provide a basis for dialogue and team building. He also spoke to the senior management of the company and obtained their permission to go ahead with the Working with a consultant, John selected the behaviors critical to his leadership. The consultant then met with the team and explained how the feedback would be collected. She assured everyone that their responses would be anonymous. After the feedback was collected, the consultant met with Jagan to help him to interpret the data and establish his priorities for action. She also coached him on how to respond to the feedback. Over the next few weeks, Jagan met with his direct reports individually and as a group. He explained and clarified certain aspects of the feedback. He also explained which priority areas he planned to work on first and why he did not plan to alter some behaviors. He saw an immediate change in his team. Resistance decreased, productivity increased and a cohesive and coordinating team to take
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hold. Over time, he was able to build a very good and productive team. They pulled together to become the only team to meet or exceed all established performance goals for the next quarter. They continued to perform well, and within the year Jagan received a substantial promotion. He attributed much of his success to the feedback process and the open dialogue it produced. Questions: 1. What was the problem faced by Jagan? Hint: Lack of communication. 2. How did 360 degree feedback help John to overcome his problem? Hint: Building a productive team. The idea for this case study is taken degreefeedback.com/case_studies.html. E-References http://www.allbusiness.com/human-resources/employeebenefits/567661-1.html http://www.ehow.com/list_6157246_characteristics-performanceappraisal-systems.html http://www.360-degreefeedback.com/case_studies.html. from: http://www.360-

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Improving Quality of Performance Rating

Structure: 9.1 Introduction Learning Objectives 9.2 Types of scales 9.3 Subjectivity and Errors in Rating 9.4 Behaviourally Anchored Rating Scales 9.5 Theoretical Considerations on Factors Affecting Appraisals 9.6 Reducing Rater Biases 9.7 Performance Rating for Development Vs Administrative Decisions 9.8 Summary 9.9 Glossary 9.10 Terminal Questions 9.11 Answers 9.12 Case Study

9.1 Introduction
After studying the previous unit, we came to know about the 360 degree appraisal techniques and its benefits. Now lets concentrate on some facts for improving quality of performance ratings. From the past few years, we have observed a quick advancement of evaluation processes from the traditional ones towards more advanced evaluation strategies. Simple processes have been substituted by typical processes, and paper- tests have been taken over by computerised tests. The custom pass/fail results are upgraded to evaluation standards, and the evaluation of information has been substituted by the evaluation of capability. Efforts have been made to regulate subjective decisions, to create a set of performance measures, to deduce evaluation data from multiple sources, and to interchange the hunt for knowledge with "expression in action" in a working atmosphere. Introduction of new evaluation tools such as the behaviourally anchored rating systems (BARS) and their positive outcomes has had a system-wide effect on professions as well as the business scenario as whole. The normally employed motto that "evaluation forces learning", though definitely true, presents a quite bounded concept. It was thus advised that it should be swapped by a more effective saying: "evaluation enlarges professional boundaries". This signifies the
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essential role of evaluation in exploiting multiple aspects of professionalism. The advanced growth of "quantified tests", restructured evaluation methods, computer case imitations, and the present concentration on the value of the evaluation proof and the employment of the related examined information have been inspiring, and had been helpful in the birth of Best EvidenceBased Evaluation (BEBA). Such evaluations engage a lot of resources and involve a high level of technique. Evaluation allows the key question to be asked and replied. It measures employees success to please external demands, and offers data that can be employed to develop prospectus, and to document success or failures. Evaluation can supply feedback and inspiration for continuous development of individuals, peers, and advanced programme developers. It is essential to be systematic in creating an application of evaluation, to make sure that essential questions are replied and related needs are meet. Thus, we cannot overlook the significance and consequence of the evaluation processes in the real time environment. This "expressive evaluation" employs words to review and explain an employees level of competency on the basis of quantitative evaluation procedures, which produces a score, mainly a number. This unit familiarises you with the concept of improving the quality of performance rating. The different rating scales and the factors that affect rating are explained in this unit. A comparison between performance rating for development and administrative decisions is also discussed in this unit. Learning Objectives After studying this unit, you should be able to: list the different types of rating scales. explain subjectivity and errors in rating. discuss theoretical considerations that affect appraisals. differentiate performance rating for development and administrative decisions.

9.2 Types of Scales

Since we know about the areas to be improved for increasing the quality of performance rating, we should now focus on the types of scales available to measure performance.
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The types of scales that are being followed by organisations across the world can be broadly classified as: Relative standard evaluation system Organisations employ the relative standard performance method to grade employees with respect to one another. The most preferred is the straight grading process, where the overall work performance of an individual is compared to that of others. The employees are graded based on their "total" work performance in descending order from most responsible to least responsible. Another famous process is the forced grading process, where an individuals performance is measured and then graded according to the percentages. According to this process, the top graded employees are remunerated and the bottom graded must cope up with the results (involving possibility of termination). The third and last relative method is the paired comparison process which is exceptional as the combined work performance of paired employees is matched with other employees involved with the similar tasks. Absolute standard evaluation system This evaluation system evaluates individuals under several criteria and rates accordingly. Employees are not compared with each other. For example, the graphic rating scale which is the first absolute process is generally employed by Organisations. Managers employ this process to measure the abilities and success of the employees. Moreover their way of communication, behaviour and consistency is also taken into account. A second process includes documenting the achievements, failings and improvement as well as guidance requirement of the individual. The third one is the weighted checklist process, where records are preserved to display best and worst performance incidents. The supervisor considers the best and worst indications on the record and deduces an average rating of the individual. The fourth and last absolute standard is the critical process, which mainly concentrates on the upper and lower altitudes of the individual's performance. Compared performance is not considered by the supervisor involved with this process. Other advanced evaluation systems While several Organisations persist to employ traditional appraisal methods, others are using more advanced techniques. The behaviourally anchored
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rating scales (BARS) process measures an individual's performance keeping in concern only the behavioural parameters mentioned on the rating scale. The management by objectives (MBO) process concentrates on establishing goals for individuals, moreover, assessing and praising them when achieving the established goals. The 360 degree appraisal process is an assessment based on the evaluation report of several unspecified employees in the Organisation and external customers. Self Assessment Questions 1. Standard performance method grade _________ employees with respect to each another. 2. The forced grading process measures an individuals _________ performance. 3. The graphic rating scale is an absolute_________ process.

9.3 Subjectivity and Errors in Rating

We have understood the processes followed in the different types of evaluation systems. Let us now look at the errors that may occur with these systems. Subjectivity As long as the evaluation and comparison of individuals would be concerned, a definite extent of subjectivity is likely to occur. Subjectivity or biases tend to occur when the grading allotted by any evaluator to any individual is derived more from aspects rather than the presentational or behavioral manner exhibited by individual on the aspects under evaluation. The following are generally recorded events that add to errors and biases in evaluation raising subjectivity: Sometimes evaluators accept or reject some particular acts or attributes of the individual enormously and, thus grade him/her confidently on all other measures (called Halo effect). Some evaluators feel to believe that they should be fair to their appraisee and thus lean to assign them compassionate grades (leniency effect). The other evaluators might adapt a reverse theory while inspecting their appraisee and thus lean to rate them too harshly (Severity effect).

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Some evaluators assign nearly equal grades to their appraisee due to their conscious nature, that is, they lean to grade most of their appraisees around the average (Central tendency and averaging). Some evaluators prefer to favour individuals who are more like them who think on the same lines and thus allot them a higher grade than those who seem to have a different opinion. Some appreciate those who posses uniqueness which the evaluator does not have but would like to incur (called assimilation or differential effects). Comparatively some evaluators make opinion about individuals on account of their first impression and are likely to carry these feelings over a long period of time (First impression errors). Sometimes evaluators allocate grades on account of the current behavior they have noticed in their appraisee without recalling about the past deeds over a period of time (Recency effect). Some evaluators lean to evaluate their appraisee on the basis of their probability and observations made from their own assessment program. We should understand the occurrence of error in rating as it can lead to confusions and misunderstandings. Understanding rating errors As we just discussed in the previous paragraph about subjectivity and its effect, lets see what makes an evaluator to overlook such rating errors. There are several arguments against the weight-age of scores deduced from grades. People being graded may not be presenting in their natural behaviour. The condition or assignment may not draw out normal attitude. Or the graders may have accidentally disfigured the results. Some of the grading effects that have been recognised and considered are: The halo effect. The parody that an evaluator rates an employee on one parameter can contradict his or her notion of that individual on other parameter. For example, in one of the two videos of the same employee, the employee was acting in a friendly manner, while in the other; he was behaving in an arrogant manner. While watching the friendly tape the evaluators graded the employee more positively on appeared qualities, such as body language and sense of behaviour.
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Stereotyping. The parody that an evaluator develops about a whole group can vary when compared with a single member of the group. For example: a manager may discover boldness in a team leader, but then every team leader is required to be bold. Perception differences. The perspectives and previous incidents of an evaluator can influence his/her understanding of ones behaviour. Leniency/stringency error. When an evaluator doesn't have sufficient data to deduce an objective grading, he/ she may manage by allotting grades that are thoroughly higher or lower. Scale shrinking. The end of a scale is not utilised by most of the judges. Activity 1: Get more details about the rating errors on performance appraisal. Hint: http://www.eiu.edu/~humanres/forms/appraisal_handbook.pdf) Hint: www.springerlink.com/index/n1p1652160288642.pdf)

Self Assessment Questions 4. ________ is the parody that an evaluator figures about an employee in the group. 5. _________ is the parody that an evaluator develops about a whole group 6. The end of a scale is not utilised _________ by some of the judges.

9.4 Behaviourally Anchored Rating Scales

From the previous unit we conclude that rating systems were partially effective and also tend to produce rating errors, so now we should look forward for a more formal and effective approach to rate performance. Behaviourally Anchored Rating Scales (BARS) is a comparatively new system which unites the graphic rating scale and critical incidents process. It contains determined key regions of work performance or groups of behavioural reports describing the requirement of essential work presentation qualities, such as inter-personal bonds, flexibility, consistency and work understanding and so on. These assertions are deduced from critical incidents.

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The declaration approach is most accurate when each grader appraises only a few individuals. The biased failure approach is most accurate when fluctuations are predicted in grader consistency. Self Assessment Questions 10. If the grader effect is equal to zero, logical bias appears in the score sheet. (True/false)? 11. Evaluators grade each one being assessed. (True/false)? 12. Problem occurs if, _________ sets of several evaluators are employed.

9.7 Performance Rating for Development Versus Administrative Decisions

In a recent Human Resources Forum poll for organisations, 16 percent of the people responding had no performance appraisal system at all. Supervisory opinions, provided once a year, were the only appraisal process for 56 percent of respondents. Another 16 percent expressed that their appraisals are also based solely on supervisor opinions, but administered more than once a year. If the goal of performance appraisal in your organisation is organisational improvement, consider moving to a performance management system. Place the focus on what you really want to create in your organisation performance management and development. This way, the staff will feel better about participating and the performance management system may even positively affect employee performance.
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Performance appraisal is a part of career development. The latest strategy being followed by organisations across the world is "get paid according to what you contribute". The focus of the organisations is turning to performance management and specifically to individual performance. Performance appraisal helps to rate the performance of the employees and evaluate their contribution towards the organisational goals. Performance appraisal as Career Development refers to the recognition of the work done by the employees. This recognition could be by means of rewards and appreciation and so on. Here, performance appraisal plays the role of the link between the organisation and the employees personal career goals. Potential appraisal is a part of performance appraisal, which helps to identify the hidden talents and potential of the employees. Identifying and nurturing these potential talents can help in preparing the individuals for higher responsibilities and positions in the future. Hence, the performance appraisal process in itself is developmental in nature. Performance appraisal is also closely linked to other HR processes like identifying the training and development needs, promotions, demotions, changes in the compensation and so on. A feedback communicated in a positive manner goes a long way in motivating the employees and helps to identify individual career developmental plans. Based on the evaluation, employees can develop their career goals, achieve new levels of competencies and plan their career progression. Performance appraisal encourages employees to improve their performance by working on the strengths and overcoming the weaknesses. The following steps help in planning and executing a performance development plan: 1. Schedule the Performance Development Planning (PDP) meeting and define pre-work with the staff member to develop the performance development plan (PDP). 2. Ask the staff member to review personal performance, document the self-assessment comments and gather the needed documentation, including 360 degree feedback results, if available. 3. Instruct the supervisor to prepare for the PDP meeting by collecting data including work records, reports, and inputs from others familiar with the employees work.
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4. Schedule and conduct a meeting between the supervisor and the employee, to examine how the employee is performing against all criteria, and to think and decide about areas for potential development. 5. Document and implement the plan. Performance rating for administrative decisions The most obvious purpose of a performance appraisal is a decision aid. Performance appraisals help in deciding who should be given a raise, promoted, or terminated. Promotion decisions are not purely dependent on performance appraisals; they might depend on the prediction of future performance, as much as an evaluation of the past performance. Likewise salary decisions may depend on market forces, as much as they depend on performance rating. However, the importance of having a good performance appraisal system cannot be underrated. The outcomes of performance appraisal do play a very important role in most of the personnel decisions of an organisation. There are basically three ways by which performance appraisal evaluations form the basis for administrative decisions. In lead relationships, decisions are made on the basis of performance assessment. For example, an employee may receive a big hike in the salary, because he/she has been continuously rated as a good performer. Here, we can assume that positive appraisals are the cause of subsequent administrative decisions. In lag relationships, performance appraisals are filled out to justify or strengthen decisions that have already been taken or to make it easier to execute a plan of action that has already been decided upon. Finally, in the third method, performance appraisals and decisions can include both lead and lag elements. For example, a company might decide to fire a poor performing employee. Therefore, the employee may be given low ratings, by following the lag method. These low ratings, in turn, may lead to decisions for remedial training for the employee. In this case, the companys decisions affect the appraisals, which in turn affect some other personnel or administrative decision. Self Assessment Questions 13. Performance appraisal is also closely linked to other HR processes like identifying the training and development needs, promotions, demotions, changes in the compensation and so on. (True/False)?

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14. Performance appraisals do not have a role in an employees career development. (True/False)?

9.8 Summary
From this unit, we came to know about different types of rating scales, the BARS measurement technique, subjectivity and consequences of rating biases, different methods to reduce rating biases, as well as their influence in administrative as well as development decisions. Performance appraisal allows the typical issues with respect to employee performance to be raised and acknowledged. It evaluates individual success to overcome external necessities, and supplies information that can be employed to develop training programs, and to register achievements or downfalls. Relative standard evaluation system One of the most preferred methods under this system is the straight grading process, where individuals are graded respectively from best to worst on the basis of their "total" work performance. Another frequently applied method is the forced grading system, where an individuals performance is compared after evaluation and are then graded based on percentages. Absolute standard evaluation system The complete standard evaluation process evaluates individuals under diverse criteria and measures. Comparison is not made between employees. Supervisors employ this process to measure the skills and success of the employees as well as their way of interaction, behavioural manner and trustworthiness. Other advanced evaluation systems Many Organisations have been using more advanced performance appraisal techniques. The behaviourally anchored rating scales (BARS) process compares an individual's performance based only on behavioural parameters mentioned in the vertical rating scales. Behaviourally anchored rating scales Behaviourally Anchored Rating Scales (BARS) is a comparatively modern approach which joins the graphic rating scale and critical incidents process.

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Today, efforts are being made to mitigate subjectivity and rating bias in performance appraisal systems. Various considerations could be taken into account to alter potentially biased grades provided by multiple sets of different evaluators. In this unit, we also learnt how performance appraisals can be used for both employee developmental purposes as well as administrative purposes.

9.9 Glossary
Term BEBA Analytic Scoring Rubric Benchmark Cut Score Dimension Mean Explicit Replicate Description Best Evidence-Based Evaluation. A type of rubric scoring that separates the whole into categories of criteria that are examined one at a time. A set of printed rules or instructions. Employee performance standards. Score employed to determine the minimum performance level needed to pass a competency test. Aspects or categories in which performance in a domain or subject area will be judged. One of several ways of representing a group with a single, typical score. To exhibit ones quality or behaviour. To reflect the absolute manner.

9.10 Terminal Questions

1. Justify the sentence Performance evaluation is not merely for evaluation but is for accomplishment and improvement of performance. 2. Compare performance evaluation and performance management. 3. What is the difference between performance management and performance evaluation? 4. What are the causes of subjectivity and how does error in rating occur?

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9.11 Answers
Answers to Self Assessment Questions 1. Grade 2. Individuals 3. Absolute 4. Utilised 5. The halo effect 6. Stereotyping 7. True 8. True 9. False 10. False 11. True 12. Multiple 13. True 14. False Answers to Terminal Questions 1. Refer section 9.5 Some Theoretical Considerations of Factors Affecting Appraisals. 2. Refer section 9.2 Types of Scales, 9.3 Subjectivity and Errors in Rating, and 9.7 Performance Rating for Development Reasons Versus. Administrative Purposes. 3. Refer section 9.2 Types of Scales, 9.3 Subjectivity and Errors in Rating, and 9.7 Performance Rating for Development Reasons Versus. Administrative Purposes. 4. Refer to section 9.3 Subjectivity and Errors in Rating.

9.12 Case Study

Performance Appraisal Model Background ADC Company wanted to develop software, which appraises their employees performance by STAR rating system. The higher the performance of the employee the higher the ratings would be. The application was to be designed in such a way that the rating would be considered with STARs. Anybody can rate the performance of the
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employee in the company. At the end, the manager would count the STARs, and if the rating achieves a certain level, the employee would be awarded with a GIFT from giftcard.com. Challenges: Connect with active directory services Create a schedule to update ADS settings to SQL database Create flash certificate Solution: RMS Software Company, which was entrusted with the project, analysed the requirement and planned out a perfect appraisal model. With this application, anyone could give a STAR to anyone and the manager of that person will approve the star. After the star is approved, the employee can view the star. Once the person collects five stars, he/she can claim a gift from giftcard.com. RMS also provided many reports for star allocation, pending stars, claimed stars and gift sending. It also provided flash certificate for star allocation. Results: The application worked wonders, as all employees were very happy to use the product. Also, calculating the performance of the employee became very easy and of course, getting awarded with the gifts is a great idea which was welcomed by one and all. Hint: This case is based on a case study http://www.softwebsolutions.com/cs-all-star-recognition.html found in

References T. Venkateswara Rao (2004), Performance Management and Appraisal System, Sage Publications Limited. E-references http://www.allbusiness.com/human-resources/employeebenefits/567661-1.html http://appraisals.naukrihub.com/appraisal-and-career-development.html http://www.eiu.edu/~humanres/forms/appraisal_handbook.pdf www.springerlink.com/index/n1p1652160288642.pdf http://www.softwebsolutions.com/cs-all-star-recognition.html
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Performance Appraisal Feedback

Structure: 10.1 Introduction Learning Objectives 10.2 Role of Feedback 10.3 Making Performance Feedback Meaningful 10.4 Performance Appraisal Feedback Models 10.5 Performance Appraisal Feedback Perspectives 10.6 Performance Appraisal Feedback Consequences 10.7 Levels of Performance Appraisal Feedback 10.8 Performance Appraisal Feedback Planner 10.9 Self Directed Feedback 10.10 Summary 10.11 Glossary 10.12 Terminal Questions 10.13 Answers 10.14 Case Study

10.1 Introduction
In the earlier units you have studied about different aspects of performance management. The performance appraisal procedure is incomplete without the feedback given to the employee about the appraisal and their performance. Most people would prefer not to receive feedback on how they are performing their job, because we do not like to hear a negative feedback. We transfer our negative feelings about the information we receive to the person who was unlucky enough to be the one who delivered the bad news. This will obviously do little to help the individual receiving the feedback improve their performance and grow personally and professionally. This unit discusses the role of feedback and the process of making the performance appraisal feedback meaningful. It also familiarises you to models, perspectives, and consequences of performance appraisal feedback.

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Learning Objectives After studying this unit, you should be able to: explain the role of feed back in performance appraisal. list out the various performance appraisal feedback models. discuss the perspective of performance appraisal feedback. explain the consequences of performance appraisal feedback.

10.2 Role of Feedback

Performance feedback is, generally, in the form of an annual evaluation, that is, performance reviews are scheduled annually, in which your performance is measured against pre-established criteria. This type of an appraisal review offers both the parties the giver and the receiver, an opportunity for a formal, documented communication. Feedback serves as a cornerstone to help employees to improve their performance in any organisation. For example, the entire salaried merit distribution plan is often based on the annual performance review that people receive from their supervisors. In addition, many career-altering decisions, such as, promotions, transfers, job placements, out-placements, selections, and rejections are typically based on a persons annual performance feedback.

10.3 Making Performance Feedback Meaningful

Making performance feedback meaningful to both the individual and the organisation should be the ultimate objective of any efforts to improve in this area. Let us look at some of the common pitfalls of performance feedback systems. Performance feedback evaluation is conducted annually. Once a year, is usually, just not enough to give people adequate feedback about their performance. People need to hear how they are doing both positive and negative, on a regular basis. Performance feedback should be given on an ongoing basis throughout the year. This is the only way that a person can realistically be expected to grow and develop in their job. A single evaluators feedback determines the outcome of the performance appraisal. The drawback to this approach is that there can be many factors that influence the supervisors perception of the individual that are not related
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to his or her actual job performance. These can include any biases, conflicts, philosophical differences, jealousies, rivalries, and so on that might exist at any level. The supervisors opinion is the primary input for the feedback. If problems such as those mentioned above exist, they become magnified when presented by the supervisor. For example, if a person feels that the supervisor does not like him or her, anything that is presented in the performance evaluation will be filtered through this perception. It doesnt really matter whether the persons perceptions about their supervisors feelings are right or wrong - the message the person hears remains the same. The evaluations turn out to be more of an argument. Defending or justifying the rating given to the individual becomes the main objective rather than providing meaningful feedback. The supervisor spends more time on explaining his or her rationale for rating the person the way he or she did than on anything else during the review. Doing so makes the performance review more negatively based than developmental. Performance feedbacks are negatively interpreted. A supervisor finds something that someone did wrong and saves it to be presented to him or her during their annual performance evaluation. This gives rise to a negative feeling about feedback. Only the formal aspects of job performance are addressed. Annual performance evaluations usually focus on the results of an individuals efforts during the past year. They do not address the behaviours involved in achieving these desired results. Often these are the things that people make the greatest personal sacrifices to achieve and of which they are proudest. These include many extra efforts that too often go unrecognised, such as coming in early to work and staying late, covering for co-workers during their absence, and working through sickness and personal problems. Feedbacks are either coupled to raises or are not. There are as many problems with systems that tie performance evaluations to merit raises as there are in systems that do not. Tying these two systems together has the potential of rewarding and motivating

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people by giving them more money for achieving greater levels of performance. Not specific enough about the individuals performance. People want and need to have specific details about how they are perceived and evaluated. A performance appraisal needs to include very specific information about the individual being evaluated. Formal reviews are generally full of surprises. People should not be surprised by any information presented in their formal performance evaluations. If you as a supervisor have done a good job of communicating performance feedback to your subordinates throughout the year, there really should not be any entirely new information presented during the annual performance review. Summary and review rather than surprise should be your guide in conducting an annual performance review. Limitations on the number of people that can be grouped into various rating categories. The focus of the approach is to prevent too many people from being given the top performance rating. It is believed that if everyone is rated in the top performance category, it will lose its value and significance. The result is that the remaining majority of the people in the evaluation system feel excluded. Activity 1: Assume that you are working as the HR manager of a company named ABC. You have been assigned the task of designing a performance evaluation feedback which is analysed annually. Justify your reason as to why this should not be done on an annual basis. Hint: The drawbacks of the annual feedback system. Self Assessment Questions 1. Once a year is enough to give people adequate feedback about their performance. (True/False)? 2. Performance appraisals should be based on a single evaluators feedback. (True/False)? 3. A performance appraisal needs to include very specific information about the individual being evaluated. (True/False)?
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4. Formal performance reviews should be full of surprises. (True/False)? 5. Making performance feedback meaningful to both the individual and the organisation should be the ultimate objective in any efforts to improve in this area. (True/False)?

10.4 Performance Appraisal Feedback Models

Performance Appraisal Feedback Models help us to achieve what is known as a meaningful performance feedback. Meaningful performance feedback, as we know, is best achieved through proper communication between the feedback giver and the feedback receiver. Irrespective of who provides the feedback to the receiver, there are certain perceptual barriers that these communications have to travel through. These barriers act as filters and thus affect the actual message that is heard. In Figure 10.1, different variables of performance feedback have been incorporated into a feedback model. We see that the variable for both the giver and the receiver of feedback is determined by the perceptions of the participants. Figure 10.1 illustrates the feedback model. GIVER P E Biases Security Experience Communications Sensitivity Expectations Values R C E P T I O N S
Figure 10.1: Feedback Model

RECEIVER

Receptivity Growth Commitment Goals Self-Esteem Motivators Values

Figure 10.1 lists only a few of the endless list of possible variables that these perceptions can create.
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Reading further will help us to get a clear understanding of how perceptions of different participants affect the feedback. The Said/Heard Meant/Felt Feedback Matrix The Said/Heard Meant/Felt Matrix in Figure 10.2 should help give more clarity to the concepts introduced in Figure 10.1.
HEARD

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Self Assessment Questions 6. Meaningful performance feedback is best achieved by understanding the interaction between the ________ and the _________. 7. Regardless of who presents the feedback to the receiver, there are _______ that these communications must pass through.

10.5 Performance Appraisal Feedback Perspectives

Perceptions involve how we interpret the messages we receive, and perspective is how we see these messages. Even the most effective performance feedback systems can have some negative elements. These events can have a dramatic effect on the perspective that people have on performance feedback. Negative feedback Receiving negative feedback about ones job performance is definitely a perspective-changing experience. Negative feedback can be some of the most potentially valuable information about yourself that you might ever receive. It is the feedback that is the most difficult to hear but provides us with the maximum growing opportunity. With negative feedback, you need to keep an open mind and be willing to accept what you hear. Let us look into some of the ways in which a supervisor can use negative feedback in the most positive ways possible. Gain an insight into the individuals performance. Know exactly what performance you are addressing. As with any feedback, be prepared to give examples of the individuals poor performance. Give the person a chance to defend themselves. Do not rush too quickly to judgment before you have heard their side of the story. Listen to the reasons and rationale for the behaviour and performance. Be willing to accept the fact that there might be factors beyond the persons control for these problems. Plan for ways to correct or address these factors to help the person improve on their performance.

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Do not convey a mixed message to the individual. A mixed message is one where you hear two seemingly contradictory things at the same time. If you have a negative message to deliver to someone, then do not try to sugar coat it by wrapping it up in complimentary feedback and sandwiching it in between. This will only serve to confuse the person more. Make it clear what performance needs to be improved and why. Do not have the person leave not knowing if he or she was told that they were doing a good job or a bad one. The feedback should be productive. Negative feedback should be constructive in its purpose. If the reason for delivering negative feedback is anything other than to constructively help the individual, then it should not be delivered. The person should be told the following concerning their unacceptable performance: o Why the performance is not meeting requirements. o What the person must do to improve this performance. o How this performance will be measured and how improvements will be communicated to the person in the future. o When the persons progress made toward the desired performance goals will be reviewed and how frequently. Consequences need to be realised. People seem to fear the worst when they hear negative feedback about their performance. Negative feedback needs to include at least some discussion about its ultimate consequences so that the receiver understands the reason for receiving a negative feedback. Activity 2: Read some articles on: Effective ways to give performance feedback. Hint:http://performance-appraisals.org/experts/perffeedback.htm. Self Assessment Questions 8. The _________ involve how we interpret the messages we receive, and __________ is how we see these messages. 9. A ___________ message is one where you hear two seemingly contradictory things at the same time.

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10. Negative feedback can be some of the most potentially valuable information about yourself that you might ever receive. (True /False)?

10.6 Performance Appraisal Feedback Consequences

Whenever feedback is given to people, especially negative feedback, there are going to be consequences. People can be very sensitive about any type of criticism they receive about themselves. It is important that we think about all the possible consequences to any type of performance feedback we give to people across the organisation. Generally, it is the lack of recognition for the good work that people do, that is the greatest source of dissatisfaction and complaints. Recognition can be formal such as reward programs that honour outstanding performance. They might involve ceremonies, dinners, publicity, plaques and so on. Typically, this type of formal recognition is presented by some higher-ranking official in the organisation to the individuals receiving the honour. Informal recognition includes all those ways people might receive feedback that do not require executive approval in order for it to be provided. Examples could be sending an appreciative mail either only to the person concerned, or with copy to all the employees in the team, having a sort of contest every month, so that the best performers of the month is recognised and so on. Informal recognition can be a very powerful way of providing performance feedback. The Psychological effects of performance feedback The most obvious psychological effect is the potential labelling process that is a result of many performance feedback systems. Most performance appraisal systems have rating categories, typically three to five in number. Not only can this rating assignment system upset those not placed in the highest category, it can also stereotype people.

10.7 Levels of Performance Appraisal Feedback

This section will give you an insight into the different levels of performance feedback. Each organisation should evaluate these various levels of performance feedback and choose the one which is best suited for their type
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of business. The organisation must be able to support the feedback methodologies that are put in place and practised. Each level requires various amounts of involvement and commitment on the part of different people in the organisation.

10.8 Levels of Performance Feedback1

There are six levels of performance feedback. These are: 1. No feedback. 2. No formal feedback or documentation. 3. Formal feedback system including written documentation, but no personalised communications. 4. Formal feedback system including personalised communications from supervisor to subordinate. 5. Formal system, multi-source (for example: 360-degree feedback and team feedback). 6. Self-directed feedback. Level 1 No feedback The only positive aspect of this type of a feedback system is that, it is easier for managers and supervisors to put into practice. The truth is that, not only do most people dislike receiving performance feedback; supervisors do not savour the thought of giving it. However, the absence of formal feedback does not interfere with other personnel-related processes. The drawback of this kind of a feedback system is that, the employees who work in this kind of an environment can only guess how their supervisor feels about their job performance. They are most likely to be told when they do something wrong. Without any formal discussions, written records, or documentation concerning peoples job performance, the organisation might not be in a very justifiable position when it comes to its employment and personnel actions. The biggest drawback of this system is that, without any feedback, people have far fewer opportunities to grow professionally in their jobs.

The Power of Feedback : 35 Principles for Turning Feedback from Others into Personal and Professional Change by Joseph R. Folkman

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Level II No formal feedback or documentation In many of the organisations, some form of performance feedback, even though it might not be formal or documented, is given. Not being formal or documented means that there is no official system in place that regulates the performance feedback process. There are neither standardised forms that are used nor any other written records of performance appraisals of feedback. Another aspect of this level is that the performance feedback is not tied to other personnel systems in any formal way. However, employees are still promoted, given raises, and are demoted or even terminated due to performance. Working in this type of feedback environment, people are probably much more likely to be told when they do something wrong than be given positive feedback about their performance. The drawback in this type of a system is the lack of formal or documented performance feedback will ultimately result in employees being confused about where they stand in the organisation. Thus, the organisation itself suffers as well, as it does not have the ability to properly identify and reward those who are truly the top performers. Level Ill Formal feedback system This kind of a feedback system includes formal feedback systems with documentation, but not personalised communications. Not being personalised means the information is more quantitative in nature rather than being narrative. The quantitative approach of performance feedback might be in the form of a rating scale. This type of performance feedback format is the most common. It relies almost entirely on the information provided on the evaluation form. The advantage of this system is that it has the ability to provide formal feedback to the individual and at the same time can address a great number of performance areas in a crisp manner. Another advantage is that, because of its quantitative design, comparisons in performance can be easily made from one evaluation period to another. The performance evaluation form is a checklist of performance criteria to be reviewed for each person. This format is generally preferred by many supervisors because of its straightforward approach. The format is often
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accompanied by a performance index scale that assigns a rating based on the resulting points assigned to each performance rating area. Level IV Formal feedback system personalised communications This level of feedback combines the quantitative performance measures and personalised feedback. The performance feedback form is designed in such a way that the supervisor is required to personalise certain aspects of the feedback that the individual receives. The more personalised the performance feedback becomes, the more meaning it provides to the individual receiving it. This level of feedback helps in the achievement of the objective of any performance feedback, which is to get the recipient to understand and accept the information about their performance. Level V Formal system, multi-source In each of the four levels of performance feedback, there is one common factor: the supervisor is the source of the performance feedback. But, in level V, of performance feedback, the focus begins to change from this single source (supervisor) to a multiple source. Multiple-source performance feedback provides an individual a number of different perspectives about how others in the organisation see them. This kind of a feedback is predominantly valuable to the individual as it eliminates many of the inherent problems of single-source feedback. Some of the methods adopted to achieve this level of feedback have been mentioned below. Let us look into them in a little detail. 360-Degree feedback In this system of feedback, an individual receives feedback from almost all the people who work around them. Feedback is provided from different directions which include peers, subordinates, supervisors, and even the individual themselves. The objective of this is to give the individual personal feedback from a variety of perspectives, so as to provide the individual a more complete understanding of how others perceive them. 360-Degree feedback systems provide the individuals with feedback from a variety of levels in the organisation. The feedback process includes a standardised questionnaire that looks at a number of dimensions of an individuals job performance. The forms are sent to the individuals
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supervisor, peers, and direct reports, creating the full circle of feedback. This system also includes a form that the individual completes. This would give them an opportunity to express their perceptions. Once the filling up of the forms is completed, a confidential summary report is sent to the individual. We can observe a number of variations of how an individuals job performance might be viewed by different sources. These variations can sometimes provide the greatest insights. The feedback a person receives from a 360-degree feedback system will surely provide an opportunity for the individual to take an honest look at themselves. It helps them to identify both their strengths and weaknesses and thus can develop action plans for both. The information also supplies the individual with an opportunity, wherein they can go back to those who provided them with their feedback and ask for their support so as to help improve their performance. If the feedback indicates the presence of a relationship problem, initiatives to improve the situation can also be inculcated. Team feedback Team feedback, as the name suggests, is provided by the employees team members. An organisation or team generally develops their own form and format to meet their particular needs. The objective of the team feedback system is to improve the effectiveness of the group. Teamwork is not something that always comes naturally to people. Team feedback helps an individual to focus on those aspects of their performance that are most supportive of the needs of the team. By providing this feedback to one another, the team members are actually helping everyone to work more efficiently. There are many ways through which team feedback systems can be administered. Use of e-mail is one such option. The last level of performance feedback, self-directed feedback, will be discussed in detail in the section 10.9. Self Assessment Questions 11. The _____________ systems provide the individuals with feedback from a variety of levels in the organisation.

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12. The objective of __________ systems needs to be focused on improving the effectiveness of the group.

10.8 Performance Appraisal Feedback Planner

Performance Appraisal Feedback Planner is a tool wherein the individual designs the feedback questionnaire format. It is a system that is initiated by the individual rather than the organisation. When people accept ownership of and responsibility for their actions, it has a greater meaning and significance to them. There is no right or wrong method of giving and receiving performance feedback. The most important aspect is that it meets the goals and expectations of an organisation and those participating in the process. While planning your own performance feedback process, care must be taken to see that you do not employ one single source of feedback that you think would be perceived by others as the best. It is important to include what you are comfortable with and what according to you has the greatest potential to help you improve your performance. Everything about the performance feedback planner is designed by you (inside-out). The performance feedback planner will allow you to maximise the potential of the feedback resources that exist in your organisation. Some of these resources might already exist and be part of the feedback systems that are presently in place. Your performance feedback planner can and should incorporate these sources in order to gain the greatest potential benefit from them. The purpose of creating a personal performance feedback mission is to develop a personal statement that identifies what you plan to achieve by your performance feedback planner. It is not something that should be taken lightly or without a great deal of thought. The performance feedback can help you to receive some of the most important communications you ever receive on your job. Activity 3: Design your own performance appraisal feedback planner. Hint: Performance Appraisal Feedback Planner

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10.9 Self Directed Feedback

As the name suggests, self-directed feedback is conducted by the individuals themselves. It is intended to be non-evaluative in its design, similar to the 360-degree and team feedback systems. It should also have no direct impact on other formal performance evaluation systems that are part of other compensation or organisational developmental processes. Selfdirected feedback is intended to help the individuals personal development in such a manner that is most acceptable to them. Self-directed feedback can be one of the best means of identifying and understanding perceptual differences. The main goal of self-directed feedback is to explore the perceptions of others about an individuals performance. The objective is not only understanding these perceptions, but addressing them as well. Like many other aspects of interpersonal communication, awareness is the key to understanding. Self-directed feedback is unique in that it begins from the point of view or perceptions of the receiver of feedback. In Figure 10.8, you can see that the feedback perspective this time begins with the receiver. RECEIVER P E R C E P T I O N S SENDER

Figure 10.8: Self-Directed Feedback Perceptions

Although the difference between the two feedback systems is subtle, it is important. In self-directed feedback, we are not just looking at perceptual differences in the way different people view performance, but we are also beginning to address self-perceptions. Self-perceptions are the most
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important of all, and perhaps those that need the greatest care. Its principal advantage is the level of acceptance the individual will have, concerning the feedback received. Instead of feedback becoming a potential threat to a persons self perceptions, it is instead more of the learning opportunity it is intended to be. To illustrate the benefits of self directed feedback, let us compare it to traditional performance feedback systems using the familiar five questions of Who What? When? Where? and How? Table 10.1 shows a self directed feedback compared to traditional feedback. Table 10.1: Self Directed Feedback Compared to Traditional Feedback2
TRADITIONAL WHO: Who decides person(s) providing feedback? WHAT: What aspects of performance will be included in feedback? WHEN: When will feedback be given? Determined by the System Determined by the form/format SELF-DIRECTED Individual receiving feedback Individual designs own feedback

Schedule is set by the system

Individual sets own feedback schedule within certain parameters All information is in the control of the individual

WHERE: Where does the feedback go after it is provided? HOW: In what way performance feedback administered?

If part of the formal appraisal process, to the persons employment file According to established procedures

Individual develops own procedures

Table 10.1 gives us a study of both the traditional as well as the self directed feedback, by addressing the questions like Who? What? When? Where? And how? Here, we observe that the individual is completely responsible for his feedback. This is because, it is the individual who decides who is to provide the feedback, thereby, reducing the chances of any kind of unfair

Giving and Receiving Performance Feedback by Peter R Garber

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partiality occurring. The individuals design their own feedback and thus have the freedom to decide on the perspectives covered. They can set their own feedback schedule. Most importantly, all the information is in the individuals control. This implies that the individual is responsible for developing his own corrective procedures. Thus, this kind of a feedback helps the individual to grow not just professionally but also as an individual.

10.10 Summary
The performance appraisal process as we have seen is incomplete without the feedback given to the employee about his appraisal and his feedback. The way of giving as well as receiving the feedback varies from person to person as well as their way of handling the issue. It is thus, important to provide a constructive feedback to the employee. It should be given such that it will motivate him to perform better. The highly effective people are able to turn feedback into a real, effective, and long-term change. The feedback models mentioned if adapted will surely work wonders for you. Feedback is an essential part of improving performance regardless of current performance levels. It is needed to maintain high performers, and improve poor performers. Feedback, especially the not-so-positive variety is the most difficult. Yet, it is one of the important factors in any performance appraisal. Thus, this unit by now should have been able to give you a good insight into the feedback appraisal feedback.

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10.11 Glossary
Term Feedback Models Performance Appraisal Perspective Planner Description Information about actions returned to the source of the actions. A problem-solving technique used for problems with which causal modelling does not function well It is an analysis of an employee's recent successes and failures, personal strengths and weaknesses, and suitability for promotion or further training. One's "point of view", the choice of a context for opinions, beliefs and experiences Coordinates the strategic, operational and logistical activities necessary for judging an employees feedback

10.12 Terminal Questions

1. Briefly explain the role of feedback in performance appraisal feedback systems. 2. How can performance appraisal feedback be made meaningful? 3. Explain the giver-receiver performance appraisal feedback model using an example. 4. What are the consequences that performance appraisal feedback can have on its employees? 5. Briefly explain the different levels of performance appraisal feedback systems.

10.13 Answers
Answers to Self Assessment Questions 1. False 2. False 3. True 4. False 5. True 6. feedback giver, feedback receiver 7. perceptual barriers, 8. perceptions, perspective 9. mixed 10. true 11. 360-Degree feedback 12. team feedback
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Answers to Terminal Questions 1. Refer section 10.2 Role of Feedback. 2. Refer section 10.3 Making Performance Appraisal Feedback Meaningful. 3. Refer section 10.4 The Said/Heard-Meant/Felt Feedback Matrix. 4. Refer section 10.6 Performance Appraisal Feedback Consequences. 5. Refer section 10.7 Levels of Performance Feedback.

10.14 Case Study

ABC Banks Effort to Avoid Biased Performance Appraisal In our country, performance appraisal feedback systems are different for both public as well as the private sectors. In this case study, we are going to discuss about the performance appraisal feedback systems relevant to the centralised banking sector. In the banking sector, performance appraisal feedback is conducted mainly by two persons. They are the supervisor, and then the immediate manager. They do not follow the concept of 360-degree feedback system. The drawback of the current system is that, if the employee and the supervisor are not in good terms, then the appraisal feedback is the area wherein the supervisor could give it back to the employee. Even if the supervisor tries to give feedback justly, the result would appear biased to the employee because of their perspective towards the supervisor. This created dissatisfaction among the employees of ABC bank. Hence, the management of ABC bank decided to adopt a situation wherein not just the supervisor, but also the manager was required to give a feedback to the employee. Hence, if the supervisor was truly biased in giving the feedback about an employee, then this would be set right in the managers feedback. Another aspect they decided on was not to link salary appraisals with the performance feedback. It was decided that irrespective of the performance feedback, all employees would be given the same increment. The performance appraisal feedback was to be used only during promotions and the feedback would be just a part of the other factors determining the employees promotion.
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This is how performance appraisal feedback, finds its use in the centralised banking sector. Questions: 1. What were employee perspectives that affected the performance appraisal feedback systems? Hint: Refer section 10.4 and 10.5 2. What were the methods adopted to make the performance appraisal feedback meaningful? Hint: Refer section 10.6 and 10.8.

References Joseph R. Folkman (2006), The Power of Feedback: 35 Principles for Turning Feedback from Others into Personal and Professional Change, John Wiley and sons Peter R Garber (2004), Giving and Receiving Performance Feedback, HRD Press. Peter R Garber (2002), Models and tables adapted from Giving and Receiving Performance Feedback. E-references http://performance-appraisals.org/appraisallibrary/Giving_Employees_Performance_Feedback/ http://performance-appraisals.org/experts/perffeedback.htm.

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Performance Managing and Monitoring

Structure: 11.1 Introduction Learning Objectives 11.2 A Schematic Model of Performance Management 11.3 Performance Management: Underlying Theories Goal Setting theory Expectancy theory 11.4 Measuring Performance Quantitative measure Qualitative measure Appraisal system 11.5 Rewarding Performance 11.6 Feedback and Amendments 11.7 Monitoring Performance 11.8 Assessments and Evaluations 11.9 Summary 11.10 Glossary 11.11 Terminal Questions 11.12 Answers 11.13 Case Study

11.1 Introduction
By now you must be aware that the performance appraisal process is incomplete if the feedback is not given to the employees. You have also learnt how to make a performance feedback meaningful, the various performance feedback models, perspective, consequences and the different level of performance appraisal feedback. It is also important to know how to manage and monitor performance in order to encourage employees and maintain the standards of organisation in all aspects. The key to assess or monitor any employee's performance is the setting of objectives. This unit introduces the performance managing and monitoring process. A schematic model of performance management is explained in this unit. The various performance management theories and measures are also
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discussed in this unit. This unit will also familiarise you to the assessment, evaluation and rewarding process. Learning Objectives After studying this unit, you will be able to: define a schematic model of performance management. state the underlying theories of performance management. assess how to reward performance. comprehend feedback, amendments, assessment, and evaluation.

11.2 A Schematic Model of Performance Management

Do you think there is a need for a model for performance management? Well, presently there is no model that is accepted worldwide or is in use on performance management. There are many ideas and contributions from different management aspects, which come under performance management. We will focus on one of the aspects called as Plan-DoReview-Revise cycle to comprehend the management of performance. The Plan-Do-Review-Revise cycle takes place over different time scales and at many levels. Examples for many levels and different time scales would be a community, corporate, service, team, individual, and so on. Figure 11.1 describes the plan do-review rewise cycle

Figure 11.1: Plan-Do-Review-Revise Cycle

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The stages of Plan-Do-Review-Revise cycle depend on whether you are in an organisation and over what time-scale you are looking at. Following are the stages in the cycle: Plan: This stage: Understands the current performance. Prioritises the work needs to be done. Identifies actions that need to be taken. Plans for improvement. Do: This stage: Ensures that the proper systems and processes are in place to support improvement. Takes action and manages risk. Helps people to achieve better performance. Review: This stage: Understands the impact of your actions. Reviews performance. Speaks to users and stakeholders about their experience. Gets a better picture of varying circumstances. Revise: This stage: Uses the lessons learned from review. Changes the future plans. Ensures that the future action is more appropriate, effective, and efficient. Thus we have understood the schematic model of performance management with the help of Plan-Do-Review-Revise cycle. In the next section, we will be discussing the underlying theories of performance management. Self Assessment Questions 1. _____________________________ is one of the methods used to comprehend the management of performance. 2. ______ stage ensures that the proper systems and processes are in place to support improvement.

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3. _________ stage ensures future action is more appropriate, effective, and efficient. Activity 1: With the help of internet, find out other ideas or concepts used for performance management. Hint: Model of performance management

11.3 Performance Management: Underlying Theories

The use of the term Performance Management has recently grown into popularity even though it was an old concept. Managers have always planned and executed many ways officially or unofficially, to lay down activities, tasks and alterations calculated to secure further developments or improvements. However, concepts of performance management are definite understandable inventions that are founded on well developed theories. Rather, it may be fairer to say that the theoretical case for performance related pay is a formalisation of existing practice, due to which a considerable body of theory has grown up around concepts of performance management in use. Over and over again, the theory is elapsed in favour of searches for immediate solutions to pragmatic problems. However, referring to an underlying theory provides a solid base or understanding and criticising applications of performance measurement. The essence of performance management is to create a framework in which performance of human resources can be refined, motivated, monitored, and directed. In addition, the links in the cycle can be audited. Naturally, the principal hypothetical foundation of performance management is social psychology. This is its detailed consideration of the ways in which people are motivated to perform. The two theories which are particularly applicable to discussions of performance management are: Goal-setting theory. Expectancy theory. 11.3.1 Goal setting theory In a paper published in 1968, Edwin Locke1 established the Goal-setting theory. In this paper, he argued that goals pursued by employees can play
1

http://www.edwinlocke.com/

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an important role in motivating superior performance. While following these goals, people examine the consequences of their own behaviour. They surmise themselves that their goals will not be achieved by their current behaviour; they will have to either modify their behaviour, or choose more realisable goals. In many cases, integration of the wider objectives of the organisation with the behaviour of its employees is observed. Consequently, if managers can interfere to establish the organisations goals or change those for the group or individual then it will be worthwhile for employees to accept. They can bind a source of motivation to perform, and direct it to secure strategic outcomes. Succeeding experimental research into goal-setting has specified more precisely the conditions necessary for organisational goals to be motivating to employees. They are: Goals should be precise, other than general or vague Feedback should be given on performance Goals need to be accepted by employees as enviable. Goal-setting theory has been subjected to a great deal of hypothetical and experimental inspections since it was first advanced. The resulting fact provides a set of meticulously tested principles. These principles offer clear guidance to designers of performance management systems. 11.3.2 Expectancy theory The book Work and Motivation published by Victor Vroom2 in 1964 encouraged an outbreak of research interest in expectancy theory as a framework for understanding motivation at work. Expectancy theory puts forward that it is the probable acceptance of the valued goals, which makes an individual to adjust the behaviour in a way that is most likely to lead them to attain the goals. In fact, while the recognition of expectancy theory is relatively recent, it draws on a tradition which can be traced back to the early utilitarian. Mill and Bentham described a principled system in which people determined their actions by a conscious calculation of the consequences. They expected the actions to bring about the changes. Famous psychologists
2

http://en.wikipedia.org/wiki/Victor_Vroom

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such as Lewin (1938) and Tolman (1932), as advocates of theories of performance by people, believed that performance is administered by expectations concerning future events. They also curved a normative theory of how people should base their actions into a positive theory of how people do behave. The most immediate predecessors of expectancy theory were Georgopoulos (1957) with their path-goal approach. This approach was used for productive performance at work. The path-goal theory stated that if a worker perceives high output as a path leading to the attainment of one or more of his personal goals, he will tend to be a high producer. Equally, if he perceives low output as a path to the achievement of his goals, he will tend to be a low producer. Expectancy theory has been developed from Vrooms early specifications that can be expressed very clearly with a combination of three factors: The persons own evaluation of whether performing in a certain way will result in a quantifiable result. This factor is labelled as expectancy. The perceived probability that such a result will lead to attaining a given reward is known as instrumentality. The third factor is the persons evaluation of the likely satisfaction, or valence associated with the reward. These factors are expressed in a diagrammatic form in the next page as shown in the figure 11.2. As a practice, if a person perceives that performing in a certain way will bring about a reward which he or she values, then this individual is more likely to perform in that way. This person diverts from the concept or relationship between effort and measured performance. Similar to the goal-setting theory, expectancy theory provides some of the key design values, which consultants face in creating systems of performance management.

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Figure 11.2 illustrates the expectancy model.

Figure 11.2: Expectancy Model

Self Assessment Questions 4. The use of the term Performance Management has recently grown popularly even though it was an old concept. (True/False) 5. Edwin Locke did not establish the Goal-setting theory. (True/False) 6. Mill and Bentham described a principled system in which people determined their actions by a conscious calculation of the consequences. (True/False) Activity 2: ABC Company is a huge BPO sector. Assuming you are a manager in ABC Company, would you prefer the goal setting theory or the expectancy theory? Why? Hint: Performance management theories.

11.4 Measuring Performance

How do we measure performance? Well, an organisation can identify the particular dimensions of performance and choose to include only those dimensions in its own performance management system. However, this will create another set of issues as how the dimensions will be measured. As a practice, selecting or choosing objectives and setting measures of performance are often linked. Fowler has suggested that performance dimensions are sometimes chosen not because they are most valued by the
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organisation; because they are the most easily measured. We will discuss about some of the measures used for measuring performance. 11.4.1 Quantitative measure It is important for you to know that most of the organisations use at least some type of quantitative (that is, statistical) indicators to measure their employees performance. This is also done to measure whether the organisation is achieving the goals which were set by them. For example, many organisations will have financial health as one of their objectives. Therefore, they monitor their financial performance very regularly. They are quite likely to cascade this objective down through the organisation. With the help of this they may monitor financial performance against budgets for groups and individuals. In addition, organisations classically generate, or can access, a whole range of quantified data such as productivity, output, sales figures, absenteeism, and so on. It is very important to know that there might be two types of problems arising while choosing quantitative measures in a system of performance management. The first concerns their sufficiency and the second is the quality. A performance management system which has indisputably extracted dimensions of performance to be applied to individuals and groups from its wider strategy, may find that some of the dimensions are not measured by existing indicators. In addition, it may not be available from the current management information system. It is possible, for example, that increasing satisfaction of customer is identified as an outcome to be rewarded and encouraged. However, no satisfactory measure exists to report this. In this case, the organisation must do one of the following two things: Remove the objective from the performance management system. or Develop a way or means to measure the dimension. The other problem which must be addressed with reference to quantitative measures is the organisations quality. Although quantitative measures often have lot of objectives surrounding them and an aura of robustness exists, a closer analysis reveals that they may be rather more objective and arbitrary than expected.

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Though profitability of a team or an individual would seem to be an endeavoured and experienced performance measure, accountants or financial managers often validate that profits are highly subject to decisions made by managers. Managers decision will be based on how to treat costs, revenues, and when to perform the release of paper gains onto the profit and loss account. 11.4.2 Qualitative measure Do you think you can measure all the aspects of performance? Well, the answer is no, as aspects of performance cannot be easily quantified and measured. You may be able to arbitrate whether someone is competent or not, but you will find it difficult to place a precise image on how competent they are or will be. Many aspects of performance identified for inclusion in a performance management system which is to be assessed, not only rely on the quantitative measures, but they also rely on qualitative judgements. It is encouraging to know that the quantitative measures have traditionally enjoyed a higher status. However, it is clear that many instances of hard data, such as accounting information are actually more inconsistent than is commonly supposed. Alternatively, if qualitative assessments of performance are thoroughly audited, and well designed, then their outcomes may be a more valid and accurate reflection of reality than many quantitative measures. As a general rule, the quality of any performance indicator or measure of performance will depend whether it is both reliable and valid. Validity always refers to whether the indicator actually measures what it is supposed to measure. For example, productivity or profitability of a particular group or unit might be taken as an indicator of managerial effectiveness. However, it is likely that aspects outside the managers control could have a greater effect on profitability, and thus it is not a valid indicator of managerial effectiveness. Reliability is a simpler decisive factor. It means that related results will be exposed if the measure is used on the same person or object by different people and/or at different times. Thus, reliability reflects repeatability and validity describes whether you are measuring what you intend to measure. In addition, for practical reasons, an excellent measure needs to be clear-cut to understand and economical to collect. If for instance, when these conditions are not met, a performance management
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system will include flaws which make it depart from the expectancy theory ideal. Organisations always perform the judgements about performance frequently. Most people will have a clear picture of the ability and performance of a colleague with whom they work closely. More often than not, this outlook will rely only in part on formal quantitative measures and to a large extent on a variety of qualitative judgements. Inevitably, whatever measures are used, there is always an element of objective judgement. For example, promotion is a probable element of a performance management system, which is frequently made on the basis of objective assessments of a persons performance and suitability for a new job. The challenge for a performance management system is that its procedures should be auditable, so that it can be verified that the measures being used are fair and effective. This inclines to result in a move to formalise the process of objective performance measurement. The most common and effective way in which this is carried out is via a system of appraisal. 11.4.3 Appraisal system We have understood that the most effective way to manage a performance is the system of appraisal. Appraisal systems can take many forms such as: Annual verbal discussions between the supervisor and the employee. Indicators or systems which may include written reviews from superiors and subordinates, as well as peers. Use of various quantitative performance indicators. The common characteristic of each form is that the employees performance is recorded on a regular basis with an objective assessment. Some question the effectiveness of appraisals as an adequate means of assessing employees performance because they predictably involve objective judgements. One school of thought highlights the social processes that underlie performance appraisals. Their argument is that because these ratings are given by people to other people, it makes it impossible to separate the social influences that may exist, such as: Do the appraisee and appraiser enjoy a social understanding? Do non-relevant aspects of the appraisee influence the awareness which the appraiser has of his/her performance?
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An example of this last point is research conducted in the US, which reveals that employees receive significantly higher ratings from appraisers of their own race. For example, many studies have indicated that womens success rate at traditional mens tasks are often credited to luck or ease of the task rather than the superior performance by women. By and large, appraisers may feel socially uncomfortable about giving appraisal ratings that may be relatively poor. The solution to this may be to gather ratings artificially around the mean, or to give way to a general rating creep by awarding more marks above a suggested mean than below. An increasing number of organisations are using 360 degree feedback to support decisions about resourcing, appraisal and rewards. The apprehension here is that employees in these circumstances can manipulate the process for their own purposes. Another perspective on appraisal comes from the power analysis. Far from being a neutral effect in seeking out the truth, appraisals may be an extremely political process, with the parties involved pursuing their own power ploy through it. For example, an appraisal may signify an ideal vehicle for a boss to merge his or her power over a subordinate. This power is provided by an understanding of performance that is consistent with the one that the appraiser is trying to adopt. One type of solution applied to overcome these problems with the appraisal is to increase the number of appraisers that add to the objective evaluation of an employee. This would tend to take care of any bias in response with respect to particular appraisers. However, it would not address the problem of group bias against racial or gender groups. For example, increasing the number of appraisers to an appraisal might also dilute the social pressure on the appraiser. This will result in allocating too high ratings. For example, a certain proportion of higher grades must be allocated as well as a certain proportion of lower grades. This can also be done numerically by forcing a certain required distribution of ratings onto the actual ratings given by appraisers. Apart from the probability of biased opinions, another problem frequently encountered by organisations is the complexity of the appraisal systems, which makes it bureaucratic and cumbersome. This can lead to the use of undesired resources (favouritism, politics) in the organisation and seen as
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an administrative trouble and therefore not taken seriously by either appraisers or appraisees. More basically, the practical propositions of this aspect of performance management in terms of bureaucracy and formalism may be in direct opposition towards delegation, empowerment, team-work and devolution of previously centralised policies. Self Assessment Questions 7. Profitability of a team or an individual would seem to be an _______________ and experienced performance measure. 8. The quality of any performance indicator or measure of performance will depend on whether it is both _________ and ___________. 9. The most effective way to manage performance is to follow the system of ____________. Activity 3: Do you support the idea of adding more appraisers into the appraisal system of your company? Why/Why not? Hint: Advantages of having more appraisers.

11.5 Rewarding Performance

It is important to know that the performance management systems will not succeed, unless employees consciously act to achieve the objectives. Goalsetting theory and expectancy theory both emphasise on the significance of ensuring self decision making capabilities of employees. However, each theory takes a different route. Expectancy theory specifies that the rewards should be given for performance, which is valued by employees, whereas goal-setting theory stresses on the need for acceptance of the goals by the employees. Rewards which are offered can be divided into intrinsic or extrinsic rewards. Intrinsic rewards take place within the system. For example, the sense of achievement of meeting performance targets may be reward enough for many employees to cause them to endeavour for certain performance outcomes. Extrinsic rewards are added separately to the system and may be financial, such as a cash bonus or non-financial, such as a time off from work.

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Even though performance related pay is extensive, it should not be assumed that performance management is always money driven. From early days, psychological research has debated time after time that pay is variable in its attractiveness to employees. In this regard, goal-setting theory is a useful tool compared to expectancy theory for designers of performance management systems. This is because goal-setting theory places particular importance on the intrinsic motivation associated with accomplishing the performance goals that have been set. This becomes particularly important for organisations in the voluntary sector. The problem for practitioners is always two fold. The first problem is, how to find out which rewards or goals will be valued by employees. A solution to this would be to conduct an initial research among employees to discover their preferences. The second problem arises from individual differences. Within an organisation, different employees may have different preferences for rewards, or views with reference to which goals are valuable. While the ideal solution would be to shape the rewards to meet the preferences of individual employees, this could introduce excessive complexity into a performance management system. As a result, companies should offer a second best system. For managers who design a performance management system, an important guideline is that it is not adequate to choose and integrate goals or rewards that are currently valued by employees. This makes the point very dearly that a performance management system should not be designed and left unchanged during its period of operation. Rather, it must be the subject of continuous review. Activity 4: If you are the program manager of a BPO sector, how would you reward your employees for additional hours of work? Hint: Using intrinsic or extrinsic rewards aspects.

11.10 Glossary
Term Arbitrate Enviable Inevitably Qualitative measure Quantifiable Quantitative measure Surmise Utilitarian Description To judge whether the employee are competent or not under qualitative measure. The goals should not be considered as fortunate by the employees. The measures which are used might sometimes be unavoidable. The measures that involve distinctions based on qualities. The results which are obtained scientifically. The measures quantities. based in quantifiable data or

Guessing of results by oneself with reference to performance. The theories or practices which have the old practical approach.

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11.11 Terminal Questions

1. 2. 3. 4. Define the Plan-Do-Review-Revise cycle of performance management. How to monitor performance? Explain the assessment and evaluation concepts. Explain the performance management underlying theories.

11.12 Answers
Answers for Self Assessment Questions 1. Plan-Do-Review-Revise Cycle 2. Do 3. Revise 4. True 5. False 6. True 7. Endeavoured 8. Reliable, valid 9. Appraisal 10. Extrinsic 11. Feedback, amendments 12. True 13. True 14. False 15. False Answers for Terminal Questions 1. Refer section 11.2 A Schematic Model of Performance Management. 2. Refer section 11.7 Monitoring Performance. 3. Refer section 11.8 Assessments and Evaluations. 4. Refer section 11.3 Performance Management: Underlying Theories.

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11.13 Case Study

Subhadra Bank Avails Professional Help Subhadra bank is a global bank with South Indian roots. It is South Indias largest bank, distinguished by its extensive operations in all four states of South India. For Subhadra bank, employee performance and talent management is key to its ongoing strategic plan and success. To support overall objectives of the bank related to performance management, it moved from a paper-based process to a computer-based process designed in-house in 2009. This move was made to ensure that the employee evaluation process was easier to manage and would offer complete reporting information on appraisal data. However, there were issues with the system it developed. The issues were that The bank was not able to provide the exact appraisal ranking as the options were limited with the use of computer based process. The computer based process did not consider the additional time spent by the employee with reference to work. The computer based process did not consider the additional work of the employee which was performed outside the scope of normal work. The reason the bank faced these sorts of simple issues is because the bank concentrated on inexpensive solutions from the internal resources. The bank came to know about these issues after the first year appraisal, which was done using computer based processes. The bank consulted the ABC solutions company to get the appropriate solutions with reference to their issues. ABC solution quickly fixed the issue and made the performance appraisal of Subhadra bank a cherished one. Questions: 1. What made Subhadra bank to approach its internal resource to build a computer based process with reference to its appraisal system. Hint: Problems faced by the bank 2. If you were approached to provide a solution by Subhadra bank, what would have been your solution Hint: Use the Appraisal system section notes of this unit.

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References Christopher Mabey, Graeme Salaman, John Storey (1998), Human resource management: A Strategic Introduction, Blackwell Publishers Limited. Michael Armstrong (2000), Performance Management: Key Strategies and Practical Guidelines, Clays Limited. Tapomoy Deb (2006), Strategic Approach to Human Resource Management, Atlantic Publishers and Distributors.

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Implementation of Performance Management

Structure: 12.1. Introduction Learning Objectives 12.2 Features of Performance Management Framework 12.3 How are Performance Management Systems Different from Appraisal Systems 12.4 Implementation Mistakes 12.5 Reviewing Performance Management System 12.6 Summary 12.7 Glossary 12.8 Terminal Questions 12.9 Answers 12.10 Case Study

12.1 Introduction
By now you must be aware about the various theories of performance management. You have also learnt how to measure, reward, and monitor performance. You have studied how to provide feedback and how to perform assessments and evaluations. This unit will familiarise you with the process of implementation of performance management. You will also learn how performance management systems and appraisal systems differ from each other. The process of reviewing a performance management system is also explained in this unit. Learning Objectives After studying this unit, you should be able to: explain the features of the performance management framework. differentiate between performance management systems and appraisal systems. discuss implementation mistakes. explain the process of reviewing a performance management system.

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12.2 Features of Performance Management Framework

Before discussing the features of a performance management framework, we will try to understand what exactly a performance management framework is. Performance Management Framework (PMF) is a cutting-edge, complete, best of all present platforms, which facilitates comprehensive and persistent operational performance management across an entire business. 1With the help of a PMF, companies can create a true culture of responsibility, visibility and performance enhancement by the influence of: Personalised end user dashboards. Metric blogging. Print-quality publishing. Mobile alerts. In-depth analytical capabilities. PMF is a fully-incorporated, complete, unique and special solution that fully supports any existing performance management methodology. For example, we can take a Balanced Scorecard (BSC) it has all the functionalities and the tools, which companies require to effectively and efficiently set strategies, converse the plans throughout the organisation, involve all stakeholders in measurement and monitoring, and define related metrics. All of these are done from a single, intuitive, easy-to-access, browser-based environment. Everyone who is part of the organisation is authorised with everything to actively participate in the performance management process. Following figure 12.1 depicts a performance management framework.

Figure 12.1: A Performance Management Framework

http://www.informationbuilders.com/products/webfocus/webfocusPMF.html

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7. An appraisal system is tied to achieve increased organisational performance. (True/False) 8. Under, appraisal systems key result areas are used for bringing in objectivity. (True/False) Activity 2: Do you support the performance management system or the appraisal system? Explain briefly. Hint: Difference between performance management system and appraisal system.

12.4 Implementation Mistakes

Many mistakes are made at the time of implementing performance management systems. Most problems and mistakes in performance management systems have to do with the designing of the implementation process, and these mistakes are called as Design Mistakes. The general problem areas that can be classified under implementation mistakes are: Over condemnation of the past and over protrusion of the new or changed system as a magic potion for all past problems. Big exhibition or fanfare to introduce a system, but eventually, not even half that effort put to help the employees in implementation of the same. Lack of organisational support and competencies in the human resource department. Human resource departments image and inability to promote a sense of ownership of the system among the managers. Lack of follow up on the part of the human resource department. Top management commitment. Past experience with all the systems. Nature of the system.

Now, we will discuss about the design mistakes which are observed at the time of a performance management system. Design mistakes Design mistakes are generally observed in the design of the implementation process of a performance management system. Some of the common design mistakes are:
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Mistake 1: Not having the right emphasis Most performance management systems pretend to be approachable and friendly. However, at the end of the day they actually end up emphasising performance appraisals or ratings. This is the most possible cause of the problem. The moment ratings take priority over performance improvements, an unhealthy competition is generated. Ratings are always deceptively skewed. It is a misconception to think that by having an appropriate rating system, the objective can he achieved. For example, we will compare the ratings on a ten point scale given by different superiors to their subordinates: A rating of seven is given by a conservative materials manager to a wellperforming subordinate. A rating of seven is given by an indulgent IT manager to an average programmer. A rating of seven is given by the human resource manager who is new to the organisation to the only assistant officer. A rating of seven is given by the program manager to a performing assistant manager whose process met all the criteria targets.

The above example shows a similar treatment to all the four employees, though there are so many other factors than just meeting the criteria targets that differentiate them from each other. For this reason, the emphasis on numbers is the first problem in performance management systems. The emphasis should be on the performance and process improvements such as: What are the tasks well done? What are the tasks not so well done? What are the tasks not done at all? What are the tasks that need not to be done? What is a better way of doing these tasks? Could they be completed more cost effectively? Are the competencies of the member of staffs put to the best use? Are there any other better ways of putting them to use? How does one develop work motivation?
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Mistake 2: Multiple components may make it a sophisticated system Similar to objectives, performance management systems can have a number of mechanisms or components. There are at least 10 mechanisms identified in the past such as: Key Performance Areas (KPAs) or Key Responsibility Areas (KRAs). Goal setting. Attributes or competencies. Self appraisal. Performance analysis. Review discussion. Performance ratings. Identification of developmental needs. Potential appraisal. Review by a committee or reviewing officer.

All these must not be overplayed. However, they can become a part of the process. Out of these, the most important components could be performance review, performance planning and communication for competence building. It is useful to simplify and at the same time endorse a good process of performance improvements and performance development. Mistake 3: Over criticism of the past and over projection of the new or changed system as a magic potion for all past problems Most organisations, at the time of pioneering a new system, point out at all the problems of the previous system and specify how the new system is meant to take care of all those problems. Generally, the failure of the previous system is more because of the implementation problems rather than design problems. However, very little effort is applied to tackle the implementation problem. For example, the most important implementation issue may be the lack of inadequate commitment of the top management or managerial time, or lack of guidance available for employees in performance planning. If these issues are not tackled and understood well, then the employees will start assuming that by merely changing the system, the rest of the things could he taken care of. Over criticism of the previous system will automatically raise the expectations from the present system. It may ease or facilitate the introduction of the new subsystem, but may increase
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the chances of disparagement later. It is essential to find out one critical difference either in terms of the process or in terms of objectives and emphasise the same while introducing the new system. These types of single point focus and understanding the implementation issues increases success. Mistake 4: System introduced with a fanfare but inadequate effort to help in its Implementation This is an additional common mistake made by most organisations. Human resource departments usually build good and reasonable budgets for introducing a new system or changing the old system. But, they always forget that the real effort of their work begins after introducing the new system. Once the fanfare is over, the consultants, workshops, internal task forces, new formats, manuals, education programme or skill building workshops are all over, and everything is forgotten. A lot more effort is necessary in the initial years to make the system work. No system works by simply introducing it. A lot of help and guidance is required. For example, a constantly working help line is needed for a human performance related system such as the one we are talking about. It is therefore, necessary to pay sufficient attention to the post-initiation work. Implementation needs to be monitored more meticulously and may take more time than the initiation workshops. It is vital and may even be necessary to have at least one person for every 100 managers to guide and monitor performance management. Help may be required in review, or in performance planning, or in preparing a performance improvement programme at the group levels or at even individuals. Mistake 5: Lack of organisational support Organisational support is one of the main components required for a good performance management system. As seen in many instances, most performance management systems fail to take off, due to lack of organisational support. This kind of lack of support is not as much for the structure as it is for individual workers to enable them to do better. In a competitive world, if any worker has to deliver results, they need to have organisational support, motivation, and competencies. Organisational support may be in terms of basic facilities, resources, work conditions, inputs from internal customers and so on. These get emphasised in any performance management system. It is not appropriate for an organisation
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to keep saying that every employee has to work within the limitations. This is understood without saying; however, the organisation should be prepared to listen to the problems faced by the employees and should try to resolve them. The organisation should also inform the employees or staff members about the efforts being made and thus build credibility and trustworthiness on a continuous basis. The human resource department should act like an organisation development (OD) facilitator. They should develop special components or mechanisms to keep collecting data, providing them to the respective agencies and creating problem solving conditions. Mistake 6: Lack of competencies in Human Resource Department With reference to many scholars experience, it is observed that the human resource departments lack of competencies as the biggest bottleneck in effective implementation of performance management systems. The types of competencies which are required are: Business sense and participation in the main business of the organisation. Information and facts of all the departments and gratitude for each of them and their roles. Interpersonal sensitivity. Performance planning competencies specially like identifying Key Process Areas (KPA) or Key Result Area (KRA) and performing performance review discussions. Organisational diagnosis skills and perseverance Ability to set an example. Counselling skills. Performance orientation. Initiative and proactiveness. System building and monitoring skills. Credibility to carry on monitoring the line staff. Interest in working with the line managers.

12.7 Glossary
Term Condemnation Disparagement Erroneous Fortitude Indulgent Protrusion Glossary Over criticism of previous systems or plan with reference to performance management. Sarcasm shown when a new subsystem is introduced at the time of implementation Incorrect information shared throughout the company Strength observed between the performance management system or appraisal system A lenient supervisor or a line manager Over projection of the new or changed system

12.8 Terminal Questions

1. Describe the features of a Performance Management Framework. 2. Provide any 6 differences of performance management systems and appraisal systems. 3. Explain any three types of Design mistakes.
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4. Mention the main features of a performance management review system.

12.9 Answers
Answers for Self Assessments Questions 1. Performance Management Framework 2. Balanced Scorecard 3. Publish 4. Strategies 5. True 6. False 7. False 8. True 9. Design mistakes 10. Criticism 11. Decentralised 12. Primary 13. True 14. True 15. True 16. True Answers for Terminal Questions 1. Refer section 12.2 Features of Performance Management Framework. 2. Refer section 12.3 Differences Between Performance Management Systems and Appraisal Systems. 3. Refer section 12.4 Implementation Mistakes. 4. Refer section 12.5 Reviewing Performance Management System.

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12.10 Case Study

Xenas Solutions Satyam Bank Association is the foremost service organisation of the banking industry in India. It is a charitable organisation. Satyam Bank Associations vision is To work positively and practically for the growth of a healthy, professional and forward looking banking and financial services industry in a manner consistent with public good. SBA employs close to 100 people and is the only organisation of its kind in India to serve as a policy for association for all the member banks in India and work towards becoming the voice of banking industry in India. Satyam Bank Association had many challenges. It was unable to satisfy its employees at the time of review process. This was mainly due to the inappropriate performance management review system which was used by the Satyam Bank Association. The problem was that the higher authority whoever was supposed to perform the review for all the employees did not have the appropriate objectives, tasks, and standards to talk about as the organisation did not have any one of those. Identification of achievements and strengths of the employee were not monitored appropriately. In order to overcome all these problems, the Satyam Bank Association approached Xena Solutions who are the pioneers in providing the best solutions with reference to performance management review systems. Xena solutions first analysed and studied the review system of Satyam Bank Association and were able to recognise lacking aspects. By closely analysing the problem areas, Xena solutions were able to provide the following solutions for Satyam Bank Association. To have a set standard of objectives, tasks. To identify the achievements, contributions, interests, growth path, and strengths of the employees To chart out a detailed performance management plan To carry out quarterly feedback process for all the employees To check the interests of the employee from time To recognise the employees for their additional contributions apart from their normal designated work
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After implementing the solutions provided by Xena solutions, the Satyam Bank Association was able to satisfy its employees at the time of next performance review time. Questions: 1. What were the problems faced by the Satyam Bank Association? Hint: Refer the Satyam Bank Association challenges section. 2. Name the solutions which were provided by the Xena solutions? Hint: Refer the Xena Solutions analysis and study section. Refernces Kurt Verweire, Lutgart Berghe (2004), Integrated Performance Management: A Guide to Strategy Implementation, SAGE Publications. Richard C. Grote (1996), The Complete Guide to Performance Appraisal, Amacom T. Venkateswara Rao, T. V. Rao (2004), Performance Management and Appraisal Systems: HR Tools for Global Competitiveness, Response Books. E-references http://www.informationbuilders.com/products/webfocus/webfocusPMF.ht ml http://www.accenture.com/Global/Consulting/Finance_and_Performance _Mgmt/Enterprise_Performance_Mgmt/Client_Successes/SwedishFramework.htm http://www.ehow.com/about_6629194_difference-management-systemperformance-appraisal.html http://content.dell.com/in/en/corp/d/corp-comm/cr-diversity-wf-talentmgmt.aspx

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Unit 13

Performance Management through Data Management

Structure: 13.1 Introduction Learning Objectives 13.2 Use of Data for Human Resource Decision Training and development Promotion Career planning Success planning 13.3 Summary 13.4 Glossary 13.5 Terminal Questions 13.6 Answers 13.7 Case Study

13.1 Introduction
After going through the previous units, you must be aware about the process of implementation of performance management. You have also studied how performance management systems and appraisal systems differ from each other and how to review a performance management system. In this unit, you will be introduced to the concept of performance management by data management. This unit also familiarises you to the process of training development, promotion, career planning and success planning with the help of human resource data. Learning Objectives After studying this unit, you should be able to: state the use of data for HR decision. discuss the process of training and development. discuss career planning. explain succession planning.

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5. Preparing for data sceptics Many data users decide the helpfulness of a data by asking some questions like: o What is latest here? How is this distinct from what we already have or know?: As data collectors, we may be providing information which people may have known for years but never worked upon. Part of the solution could be combining these messages with ways of clearing out the mindset that produces such skepticism or complacency in the first place. What do these evidences or reports mean? The complexity of the evidence and reports may draw out the reaction that more work is required just to understand the evidence. This can lead to a lack of interest or disinclination to engage. What are the professed benefits of change? Many individuals time and again tend to avoid change. However, they are also influenced by the obvious benefits of change. As a result, if human resource managers and planners are able to categorise a decisive bunch of active seekers of new ideas, then there are higher chances of success. These active seekers must be favourable to change and even willing to take risks.

6. The power of the Individual Many individuals are key members in taking decisions about how data should or should not be used, since it is the individuals who choose whether to reject or accept new data findings. Even when presented with convincing data, people tend to reject or accept new ideas based upon individual inclination. For example, data from the literature suggests that individual decisions are influenced by a push of personal capacities and qualities that any decision-making process must take into consideration. At the individual level, these factors include: o Convolution of what is being presented. o Beliefs and values as well as current position on certain issues. o Risk awareness, or the level to which an individual avoids change. o Status or position of the individual within the organisation. o Knowledge and skill sets. o Organisational support for change. o Partnership links.
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7. The power of organisation There are several organisational factors that influence the decision-making process. These are: o Organisational culture, values, function, composition, structure, and socioeconomic context. o The nature of staff (gender, age, racial composition), level of training, and degree of skills. o The level to which new thoughts or ideas are welcomed or accepted by management figures, and the kind of support obtainable for improvement of action. o The influence of interest group activity or public opinion on the organisations with human resource related decision-making functions. o The level to which data can generate awareness of authenticity, an atmosphere of trust and mutual partnerships among different members within the same organisation and among the various organisations that need to work together. 8. Navigating difficult conversations Constantly, data will create situations that involve complicated discussions within a team or organisation that can cause chaos or volatility. This generally happens when a new data challenges a particular policy issue or status quo that has been in place for a long time. If the resulting communications are not handled with sensitivity and diplomacy, the situation can easily slip into a sinister team disagreement. Generally speaking, many people are uncomfortable with conflict, and they fear the rise of negative emotions in difficult conversations. Doubts of difficult discussions can frequently lead to avoiding or rescheduling important discussions because people are worried about argument and damage to workplace relationships. Part of the strategy for strengthening data-driven decision-making includes an interactive session that uses an experienced facilitator and a communication-based model and understanding and responding to difficult conversations. One method is to use a humorous, all-inclusive, no threatening communication style and provide plenty of relatable examples to guide groups of decision-makers through potentially difficult conversations that data may generate. This ultimately helps in reaching a mutually beneficial common ground. In most cases, the facilitator does not intend to correct or entail order on the group conversation, instead might point out the
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presence of polarising standpoint and also support some ways to suspend assumptions and steer the conversation toward common ground. A second key factor is to present possible conflict producing data using clear and lenient language, always leaving open the possibility that users might see and hear the data and still make a decision to de-emphasise or even ignore the information. 9. Process and relationships It is observed that people build strategies, plans and data successfully by converting them into policies, practices and results. As such, the nature of bonding between the possible data users within an organisation is one of the most critical dynamics determining success or failure. However, this dynamic is often underrated or even overlooked in the process of datadriven decision-making. This is regrettable because when implemented correctly, the process can: o Fetch core issues to the forefront. o Allow participants to conquer individual, professional and organisational barriers. o Construct a greater sense of joint ownership. o Enhance communication and understanding. o Construct a unified leadership team focused on moving the business of human resource planning and management in the right direction. 10. A Journey, not a destination Many theorists supporting data-driven decision-making argue that evidencebased decision-making is not a onetime answer or a standard tool to be applied at random. Rather, it is an in-progress knowledge-driven process that needs continuous compilation, analysis and sharing of data since it is the only way in which both positive and negative trends can be discovered and acted upon. Data-driven decision-making is also a collaborative, dynamic process. It is a core function that must be implanted into the culture of organisation. It provides decision-makers with the collective ability to: o Tackle the most important human resource questions of the day. o Weigh the available evidence. o Consider several options. o Think both tactically and practically about the decisions that they make.

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business unit and vertical are reviewed and a talent pool of the suitable identified candidates is prepared. Therefore, performance based succession planning aids in creating a necessary talent pool of employees for the future needs of the organisation. Self Assessment Questions 13. ________ is a complex process and requires time and constant effort. 14. ________________ based success planning aids in creating a necessary talent pool of employees for the future needs of the organisation.

13.3 Summary
In this unit, you studied about the usage of data to make the human resource decision. You were also provided with some of the examples to improve the use of data for decision making, which are: Planning how data are used to support a decision. Providing chances for decision makers to experience significant decision making moments, so that they can enhance their skills using the actual data in real-life situations. Advancing communication among users of data. You also studied about the ten fundamental and practical pillars, which assist human resource managers, practitioners and policy analysts in structuring a bridge between human resource data and reports for creating an effective human resource policy and take the right management decisions. Going further, you were also familiarised with the training development, which is nothing but a subsystem of an organisation that guarantees learning or behavioural changes in a structured format. With this, you also studied about the two types of training development, which are Traditional approach. Modern Approach. You also studied about promotions in an organisation and came to know that unconditional promotion can affect organisational units with the virus of envy if not properly handled.

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Later, you studied that career planning is a constant progression, which includes selecting a profession, getting a job, emerging in your job, probably changing careers, and ultimately retiring. In addition, you also studied the different career planning steps with reference to performance management within an organisation. Finally, we concluded this unit, by understanding the succession planning aspect under performance management, where it was discussed that the succession planning is all about guaranteeing the right people in the right place at the right time.

13.4 Glossary
Term Disinclination Fortification Probationary Recompense Description Reluctance towards the evidence or reports during preparation for data sceptics. The probation strengthening of the company in case the Peter Principle occurs. The observation period where the employees attitude, work ethics, performance, and commitment are observed. Promotion given to an employee as a reward.

13.5 Terminal Questions

1. Explain performance management by data management. 2. Mention the ten fundamental and practical pillars which assist human resource managers. 3. What is training development and mention the two approaches of it. 4. What is career planning? 5. Explain succession planning.

13.6 Answers
Answers for Self Assessment Questions 1. Build or gather data and they will use it 2. Context 3. Dynamic 4. Data-driven decision-making 5. True 6. True
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7. 8. 9. 10. 11. 12. 13. 14.

False Virus Higher, six True False True Succession planning Performance, organisation

Answers for Terminal Questions 1. Refer section 13.2 Use of Data Human Resource Decision. 2. Refer section 13.2 Use of Data Human Resource Decision. 3. Refer section 13.2.1 Training and development. 4. Refer section 13.2.2 Career planning. 5. Refer section 13.3.3 Success Planning.

13.7 Case Study

Training Development Schemes at Maharaja Group The following case describes the training development schemes of the Maharaj group from the late 1980s. During late 1980s, the Maharaj group started various training and development programs such as the Parivartan, MALLOP, Spark, e-Gyan, English language training, and BPO training. This case describes each of these schemes in detail and the advantages that the group garnered from all these schemes. In September 1990, the Parivartan was launched in Maharaj Soaps Limited (MSL) to coach new and active employees on a variety of features of business and to inspire them. A need was felt in early 1992 among the top employees of Maharaj to install a performance driven culture in the organisation. Therefore, Maharaj developed a complete and pioneering training program for management trainees and named it Maharaj Accelerated Learning Leadership and Orientation Programme (MALLOP). The objective of MALLOP was to train a beginner and make him/her a professional by giving hands-on project experience and eventually developing a sense of belonging to the company.
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Shortly, in September 1992, Maharaj introduced Spark, a training scheme for managers to help them become efficient coaches. At the end of 1992, E-gyan was introduced in Maharaj to boost the learning prospective of employees. In January 1993, a special human resource program on perfecting the negotiation and interpersonal skills of higher employees was launched. Further, in October 1993, an English language training program was held for base workers of Maharaj and Boyce Manufacturing Company Ltd (MBML), so that they could follow all orders issued in that language autonomously. All the schemes which were introduced by Maharaj were successful and it achieved all the set objectives. Question: 1. Which of the training do you recommend as the vital one if you are the CEO of an Organisation? Hint: Different schemes followed by Maharaj. This case study is based on an article found in http://www.icmrindia.org/casestudies/catalogue/Human%20Resource%2 0and%20Organization%20Behavior/Training%20and%20Development% 20at%20Godrej.htm References Christee Gabour Atwood (2007), Succession Planning Basics, ASTD Press Editorial. Dave Ellis, Doug Toft, Stan Lankowitz, Ed Stupka (2003), Career Planning. Leslie Rae (2000), Effective Planning in Training and Development, Kogan Page Limited. E-references http://en.wikipedia.org/wiki/Peter_Principle http://www.icmrindia.org/casestudies/catalogue/Human%20Resource%2 0and%20Organization%20Behavior/Training%20and%20Development %20at%20Godrej.htm.

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Unit 14

Performance Management Linked to Reward System

Structure: 14.1 Introduction Learning Objectives 14.2 Reward System and Organisational Implication Reward management and reward strategy 14.3 The Reward Management Model 14.4 Reward Drivers 14.5 Developing a Reward System 14.6 Reward System: The Results 14.7 Summary 14.8 Glossary 14.9 Terminal Questions 14.10 Answers 14.11 Case Study

14.1 Introduction
After going through the previous units, you must be familiar with performance management by data management. You have studied how the data is used to make human resource decisions. You also studied about the process of training development, promotion, career planning and success planning. It is important to know that to have an influence on organisational performance, reward systems should be in line with the corporate and business unit strategies. Therefore, in this unit, you will understand how performance management is linked to the reward system. You will study the Reward Management Model, the reward drivers and the process of developing a reward system. You will also study the results of the reward system. Learning Objectives After studying this unit, you should be able to: explain reward system and organisational implication. describe the reward management model.
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identify the reward drivers. explain the process of developing a reward system.

14.2 Reward System and Organisational Implication

What exactly do you understand when you read reward system and organisational implication? Well, it states how well an organisation has integrated the reward system in its customs. The reward system within an organisation follows either of the two psychosomatic approaches towards reward, which are: Operant conditioning. Classical conditioning.

Operant Conditioning: Harvard psychologist B.F. Skinner was a master in the field of behaviorism in the late 1930s and continued his contributions through the mid-1970s. Operant conditioning is one of the key concepts of this school of psychology. Skinner called his brand of conditioning as operant conditioning, to distinguish it from classical conditioning the conditioning theory developed by the Russian physiologist Ivan Pavlov. Operant conditioning is a term used to explain behaviour, which has been encouraged by reward or discouraged through punishment. For example, if a mother wants her son to clean his room then she may give him some sweets every time he cleans it. Given an adequate amount of time, the boy will start to clean his room more frequently, since he knows that he will get some sweets in return. As a result, the boys behaviour (cleaning his room) is modified (conditioned) because he has learnt to associate that behaviour with a reward. Although this may sound similar in principle to classical conditioning (discussed below) it is in fact diverse, because operant conditioning entails actions on the part of the learner. Classical conditioning: It is a term used to explain learning, which has been acquired through experience. You are well aware that in order to learn something, you first need to experience it at the level of sensation through your five senses, as without your senses learning would be virtually impossible. For example, your friend teaches you how to play cricket. However, later you get a qualified coach who improves and changes your technique for betterment.
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Currently, there is a need for a good reward management framework that can assist managers with critical reward decisions. Determining the right pay entails merging the results of the job analysis and job assessment processes and market pay data. Although the pay levels within an organisation reflect external competitiveness and internal impartiality considerations, the decision on the final pay level or the organisations pay policy will be determined by many factors. In addition, it also includes competitive strategy, human resource strategy, reward objectives, organisational design and culture. Reward policies provide procedures and strategies for the implementation of reward strategies and design and management of a reward process. Fundamentally, every employer must follow four major policies such as external competitiveness, internal alignment, management of the pay system, and employee contributions. Internal alignment refers to assessments among jobs or skill levels within an organisation. People and jobs skill is compared in terms of their relative contributions to the organisations business objectives. You may be wondering how? Well, for example, does the work of the programmer compare with the work of the systems analyst, the software architect, and the software engineer? Does one chip in to provide solutions for customer and satisfy shareholders more than another? Internal alignment pertains to the pay rates -- both for employees doing equal work and for those doing dissimilar work. In fact, formulating what is a suitable difference in pay for people performing different work is one of the key challenges facing managers. External competitiveness refers to compensation relationships external to the organisation such as the comparison with competitors. For example, how should an employer place its pay comparative to what entrants are paying? How much do we desire to pay accountants in contrast to what other employers would pay them? What combination of pay forms the base, incentives, stock, and benefits and which will help achieve the compensation objectives? Progressively more organisations argue their pay systems are marketdriven, that is, based approximately and exclusively on what competitors
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pay. However, market driven gets interpreted more into practice in diverse ways. Most of the employers may set their pay levels superior than their competitors, hoping to attract the best applicants. In external competitiveness, the decisions of both how much and what forms have a twofold effect on objectives, such as: To make sure that the pay is adequate to attract and retain employees. If employees do not notice their pay as competitive in comparison to what other organisations are offering for similar work, they may be more likely to leave. To manage labour costs, so that the competitiveness directly affects both competence and fairness. In addition, it must do so in a way that complies with relevant legislation.

We will now discuss an integrated strategic model, which is applicable to all kinds of organisations and is time-independent. In addition, it can be applied to the entire workforce, ranging from supervisory level to directors level, through managers to clerical and even proletarian workers, as also to the most critical jobs or job families. Except the reward strategy, the other building blocks of this model of reward management will be discussed in the rest of this unit as reward strategy is already discussed above. Figure 14.1 illustrates the reward management model.

Figure 14.1: Reward Management Model

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Self Assessment Questions 5. Determining the right pay entails merging the results of the job analysis and job assessment processes. (True/False)? 6. Reward policies provide procedure and strategy for the implementation of reward strategies, design, and management of reward process. (True/False)? 7. In external competitiveness decisions both the how much and what forms have a twofold effect on objectives. (True/False)?

14.4 Reward Drivers

A reward systems success always depends upon the types of reward drivers and analysis of the same. This in turn will determine the reward strategy. The most vital reward drivers are the organisations values, culture, and strategy. In addition, the internal and external environments also play vital roles in establishing the reward strategy. We will discuss about the most vital reward drivers in general. Any values, cultures and strategies followed by employees come from the values, culture, and strategies of the organisation. It is very important to know that the organisations objectives are the first and foremost reward driver. An organisations objectives can be found in the vision and mission of every organisation. While the vision informs the prospect of business path which may not be realistic, the mission is about the present development and definition of the business and its objectives. In this respect, vision and mission are also the bridge between the organisation and its external environment. Therefore, they should also provide information about the organisations stakeholders as well as the organisations objectives towards these stakeholders. As an example, let us look into the vision of Volvo Cars Gent1: What are we ultimately out to achieve? Securing our continued excellence and growth by providing satisfaction to: Our employees.
1

Our customers. Our shareholders. Society.

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market data and multi-sector collective bargaining. In addition, employee benefits are directly linked to tax and social security legislation. Actually, these organisations do not consider reward systems to be a tool for strategy implementation. Thus, we have discussed about the various reward drivers which are very essential to any organisation. Self Assessment Questions 8. Reward systems should also be aligned with the ________________. 9. The organisational structure is a vital reward driver linked to the ___________________. 10. In many organisations, the reward system is driven by the _____________________. Activity 2: Research on the web for any of the companies which uses stock options as reward drivers. Hint: Microsoft http://www.microsoft.com/presspass/press/2003/jul03/0708comppr.mspx.

14.5 Developing a Reward System

Before developing a reward system, managers must look at the encouraging forces that drive their employees to perform. The keys for developing a reward system are as follows: Recognition of organisation or group goals, which the reward system will support. Identification of the required employee performance or behaviours that will strengthen the organisations goals. Determination of key dimensions of the performance or behaviour, based on the individual or group's previous accomplishments. Determination of suitable rewards. Communication of plans to employees.

In order to obtain profits such as increased efficiency and productivity, the entrepreneur who develops a reward system must recognise the organisation goals to be reached. In addition, the entrepreneur should recognise the performance or behaviours that will contribute to the reward
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system development. While this may seem understandable, organisations commonly make the mistake of rewarding achievements or behaviours that either fails to further business goals or actually sabotages them. If teamwork is a business goal, a bonus system that rewards employees who progress their efficiency by themselves or at the expense of another is not logical. Similarly, if quality is a vital issue for an entrepreneur, the reward system that they develop should not emphasise rewarding the quantity of work accomplished by a business unit. Measuring the performance in an appropriate way guarantees that the program pays off in terms of business goals. In view of the fact that rewards have a genuine cost in terms of time or money, small business owners require to ensure that performance has actually enhanced before rewarding it. Once again, the procedures need to relate to small business goals. As Linda Thornburg noted in HR Magazine, "Performance measures in a rewards system have to be linked to an overall business tactic. Most reward systems use multiple measures or procedures, which can include such variables as improved financial performance along with enhanced customer service, customer satisfaction, and reduced defects. When developing a reward system, an entrepreneur should think about matching the rewards to the end result for the organisation. Perfect turnout might merit a different reward than, for example, saving a meagre amount of money for the organisation through improved common negotiation. It is also vital to consider rewarding both individual and group achievements in order to promote both individual proposals and group cooperation and performance. Finally, in order for a reward system to be triumphant, the essentials need to be clearly spelled out for every employee. Motivation depends on the persons ability to understand what is being asked of him or her. Once this has been done, reinforce the original communication with usual meetings or memos promoting the system. Keep your communications simple but recurrent to ensure that the team members are updated about the changes to the system. Self Assessment Questions 11. The entrepreneur who develops a reward system must not recognise the organisation goals to be reached. (True/False)?
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12. Appropriately measuring performance guarantees the programs pays off in terms of business goals. (True/False)? 13. For a reward system to be triumphant, the essentials need not to be clearly spelled out for every employee. (True/False)?

14.6 Reward System: The Results

Obtaining results from a developed reward system is also a vital aspect of any organisation. One of the reasons many dependability and maintenance progress initiatives fail to deliver the expected results is a lack of team work within and between internal branches. It is still frequently seen that the operations and maintenance do not work as a team which they are supposed to be. The engineering branch is sometimes described as the black hole by the maintenance staff. This is where we send drawings to be updated, and we never see them again is one common comment heard from the support staff. It is known that all employees in a plant should work for the identical goal to competitively produce a quality product on time. This could be measured in manufacture reliability or overall manufacture competence or prime cost. If this overall measurement would be applied to all branches and coupled with each branchs measurement and reward systems, then an organisation stands a better chance to work in partnership towards the same goal. However, this is not always the case, so you may be wondering why is it so? Probe yourselves what is the most vital accomplishment for a: Project Manager. Operations Manager. Maintenance Manager. Store room Manager.

A project manager is rewarded if a project is completed on time and at the lowest price. Lowest price does hardly ever include the future total cost of ownership. Additionally, the project manager may be supplied with inferior equipment, no documentation or relevant training in operating and maintaining equipment and so on. This will result in higher operations and maintenance prices. However, it is not the project managers issue!

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An operations manager is rewarded if quality production output is improved with improved reliability and if operations prices are down. However, if the maintenance prices go high due to reasons beyond the operations managers control, how can you blame the operations manager for not keeping the costs down ? A maintenance manager is acknowledged or rewarded when the maintenance prices are going down. Of course everyone knows that the vital thing to do is to keep the apparatus in operation. However, many maintenance managers will agree that they might be in more dilemmas if they overspend the maintenance funds than required. A store room manager is appreciated or rewarded if he or she manages to reduce the account value. This frequently leads to the understanding that the value of what is kept in store is going down. However, as people start keeping their own stores in region, the total cost for spare parts and material will go up. This is hidden in maintenance costs. A better measurement would be to sustain the service level of 98% and reduce inventory value. The above examples are general and these reward systems do not encourage true and necessary partnership between departments. If an organisation is serious about an earlier incorporation between branches, then the reward systems must be developed to drive everybodys performance and actions toward the goal. Results measurements All results are the conclusions of actions. Maintenance, operations, engineering and stores are all rewarded and measured by production reliability and total manufacturing costs. This means: Mean time between breaks for a paper machine. Joint measurement between maintenance and operations. Style of average vibration level. Measures operating practices as well as execution of precision maintenance. Style of average life of common machineries such as motors, pumps. Measures operating practices as well as implementation of accuracy maintenance. Scheduled to unscheduled shut downs. This is not divided by department. Joint measurement between maintenance and operations.
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Maintenance scheduling observance for shut downs and weekly daily joint measurement between operations and maintenance. Measures how well maintenance and operations converse and execute agreed upon disciplines.

Thus, we have discussed how to obtain results from a developed reward system along with the results measurements. Self Assessment Questions 14. All employees in a plant should work for the __________ goal to competitively produce a ___________ product on time. 15. Reward systems must be developed to ______________ and actions toward the goal. drive everybodys

14.7 Summary
In this unit, you studied about the reward system and organisation implication which is nothing but evaluating how well an organisation has implied the reward system in its customs. The reward system within an organisation follows either of the two psychosomatic approaches towards a reward, which are: Operant conditioning. Classical conditioning.

You also understood that organisations should focus on reward very vigilantly and develop a clear reward strategy before moving to implementation as reward management is not easy. With reference to reward management model, you were informed that there is still a need for a good reward management framework that can assist managers with critical reward decisions. Later you understood that a reward systems success always depends upon the types of reward drivers and analysis of the same. The most vital reward drivers are the organisations values, culture, and strategy. On the other hand, the internal and external environments also play vital roles in establishing the reward strategy. You also understood the concept of developing a reward system where managers must look at the encouraging forces that drive their employees to
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perform. Finally, you comprehended that obtaining results from a developed reward system is also vital for any organisation.

14.8 Glossary
Term Antagonists Contradictory Psychosomatic Vigilantly Description Group of people who confirmed that rewarding can affect organisational performance negatively. Possible inconsistent results with certain rewards Emotional reward or psychological approaches towards

A cautious focus on reward system from the organisation.

14.9 Terminal Questions

1. 2. 3. 4. Describe how performance management is linked to reward system. Explain the reward management model. Explain the different types of reward drivers. Elucidate the process of developing a reward system.

14.10 Answers
Answers to Self Assessment Questions 1. Psychosomatic 2. Operant conditioning 3. Classical conditioning 4. Gomez-Mejia 5. True 6. True 7. True 8. Organisational culture. 9. Internal environment. 10. External environment. 11. False 12. True 13. False 14. Identical, quality 15. Performance
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Answers to Terminal Questions 1. Refer section 14.2 Reward System and Organisational Implication. 2. Refer section 14.3 The Reward Management Model. 3. Refer section 14.4 Reward Drivers. 4. Refer section 14.5 Developing a Reward System.

14.11 Case Study

Reward System at Moon Manufacturers Moon manufactures are primarily into manufacturing of cars. These are available in the brand names kons and ikons where kons is the traditional product of Moon manufacturers and ikons is the enhanced version. Kons had a logically good status and the company was comfortable in the market. However, with the entry of the new generation of fuel-efficient cars the company started losing its market. The Moon manufacturers immediately started developing the improved ikons. However, it was too late as the competitors had already strengthened their position in the market. The ikons were yet to gain a foot hold in the market. The company planed their marketing activities in order to get back its market share. Company recruited young sales engineers to launch a strong sales drive. Mr. Ravish James, a MBA holder in marketing was put on the job Mr. Ravish James was given a region to contact the forthcoming customers and to book the orders. The company also introduced a new financial assistance method. Under this method, the customers who prefer to buy ikons were given easy loans. Mr. Ravish James was able to contact people and get the bookings done easily. His performance was good in the first year and in the second year of his service. The company had its own system of rewarding those whose performance happened to be good. They usually arranged a paid holiday trip for the good performers along with the spouse. Mr. Ravish James was accordingly informed by the marketing manager to go to Andaman Islands with his wife on company expenses. Mr. Ravish James asked him
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as to how much it would cost to the company. The marketing manager calculated and told him that it would cost about 50,000/-. He quickly asked him whether he could get that 50,000/- in cash instead of the trip as he had better plans. The marketing manager informed that it would not be possible to give him a cash reward. Mr. Ravish James reluctantly went for the trip and returned. On his return, he was heard complaining to one of his colleagues that he could not enjoy his trip, as he actually needed the money for something more important and of a higher priority for him. The marketing manager and the personnel manager thought he was a bit too fussy about the money and some of his colleagues also thought so. During the subsequent days Mr Ravish James' performance was not all that satisfactory which was evident in his lukewarm attitude towards his job and the subordinates. Questions: 1. According to you was the companys reward system good? Hint: Package trip. 2. What is your recommendation to avoid such situations in future? Hint: Reluctantly going for trip. This case study is based on an article found in http://www.chrmglobal.com/Replies/3543/1/Case-study-RewardSystem.html References James W. Smither, Manuel London (2009), Performance Management: Putting Research Into Practice, Jossey Bass. Michael Armstrong, Helen Murlis, Hay Group (2007), Reward Management: A Handbook of Remuneration Strategy and Practice, Kogan Page. Thomas B. Wilson (2003), Innovative Reward Systems for the Changing Workplace, McGraw-Hill. E-references http://www.microsoft.com/presspass/press/2003/jul03/0708comppr.mspx http://www.chrmglobal.com/Replies/3543/1/Case-study-RewardSystem.html
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Unit 15

Ethics in Performance Appraisal and Performance Practices in India

Structure: 15.1 Introduction Learning Objectives 15.2 Role of HRM in Creating an Ethical Organisation Creating an ethical organisation 15.3 Role of Ethics in Performance Appraisal 15.4 Objectives of the Organisation for Providing Performance Appraisal 15.5 Summary 15.6 Glossary 15.7 Terminal Questions 15.8 Answers 15.9 Case study

15.1 Introduction
After studying the earlier units you must be familiar with the different types of performance appraisal feedback systems and the implications of benefits and rewards on employee performance. Performance appraisal sessions are usually far more significant than the decision made or information conveyed in the session. It is the way the information is conveyed, or the feedback is given, which makes all the difference. Often, when employees due for promotions are informed of the decision that somebody else has been selected, they are not told why. This is because the managers or supervisors do not feel equipped enough to explain the reasons in a systematic and rational way. The overall objective of performance review should be to provide an honest evaluation of performance and to simultaneously develop a plan to improve the employees productivity. This will need you to inform the individuals where they stand. During a performance review, if the person being reviewed feels ignored, their feelings of personal worth will suffer. Performance appraisal feedbacks need to be recognised and treated as an ethical issue of high importance and risk. A performance appraisal feedback which helps the individual to recognise objectives that are closely linked with that of the organisation's, moulds the
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individual to perform at a higher level and the organisation is less likely to lose a valuable employee. The objective of the performance appraisal feedback is to develop the individual and not to threaten their self-esteem. Hence, treatment of people is the most fundamental ethical issue. Thus, performance review is a matter of ethics. This unit familiarises you to the various ethics in performance appraisal and the various performance practices followed in India. Human resource management plays an important role in creating an ethical organisation. This unit also explains the role of ethics in performance appraisal. Learning Objectives After studying this unit, you should be able to: explain the role of human resource management in creating an ethical organisation. tell the role of ethics in performance appraisal. identify the objectives of an organisation in providing performance appraisal.

15.2 Role of HRM in Creating an Ethical Organisation

Now that we have got an introduction into this unit, let us read and find out the role of HRM in the creation of an ethical organisation. We all are aware that ethical dilemma and issues thrive in HR activities. Some of the areas of unethical conduct revolve around issues pertaining to: Employment. Remuneration and benefits. Labour relations. Health and safety. Training and development. As we know, there are certain fixed professional codes of conduct to be followed by the HR persons. However, most of the professionals argue that it is difficult to stick on to these codes because of pressures from political, economic and social groups. This eternal truth is beautifully expressed by 1 Daniel Defoe in the following lines: Wherever God erects a house of prayer
1

www.giga-usa.com/quotes/authors/daniel_defoe_a001.htm

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The devil always builds a chapel there And it will be found upon examination The latter has the largest congregation. Let us look into the figure 15.1 to understand ethics in an organisation.
NORMATIVE ETHICS

PERSONAL ETHICS

ETHICS

SOCIAL ETHICS

PROFESSIONAL ETHICS

Figure 15.1: Components that Comprise Ethics in an Organisation.

Figure 15.1 gives us an illustration of the different components that make up ethics in an organisation. HRM personnel at all times should be guided by the highest principles of integrity and devotion to the welfare of the people. Only then can they succeed in creating an organisation which is humane, comfortable and civilised. It is important that the HR managers be realistic in their approach. The art of management is probably the greatest of all the available skills for the following reasons: Its aim is to create order and logic out of confusion. It behaves as an instrument to create economic growth and banish poverty. It is used to uphold the dignity of man. HRM personnel are the best driving factors for building a strong ethical foundation. An organisation's core values are manifested by its culture. These include the basic ways in which the business is handled, such as, how: Decisions are made. Rewards are distributed.
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Employees learn the ways of performing business by observing their co workers and leaders. Supervisors and managers in organisations are eligible for a level of respect from their employees because of their leadership position. HR professionals are in the leadership roles by virtue of their visibility and authority. Employees look up to their leadership as role models to guide their own behaviour. Employees can learn to trust and respect each other and managers only if they observe characteristics that reflect trust and respect. Human Resources can greatly influence the organisational culture. The HR system is the key to the development and maintenance of ethical culture. Following are some of the steps that the HR managers can adopt: Focus on how ethics and values can be inculcated into the design of key systems, which include performance management and reward systems. Integrate accountability for ethics and values into performance systems, as the implementation of ethical values will add significant value in promotion and compensation decisions. Focus on reward systems, that is, reward excellent ethical behaviour. Unethical conduct must be disciplined consistently and this should be done right from the high levels, so as to send a powerful signal that management is serious about ethics. Focus on how cultural systems can fit together or align in support of ethical conduct. Thus, by following the above mentioned steps, the HRM can create an ethical climate within the organisation. This can be put into implementation by: Developing a all-inclusive code of conduct Providing in-progress ethics training Reinforcing and rewarding ethical behaviour Having top management and other role models behaving ethically. 15.2.1 Creating an ethical organisation Now that we have understood the role of HRM in creating an ethical organisation, let us look into how we can create an ethical organisation. The organisation culture should represent the core values, beliefs and attitudes of an organisation. An ethical organisation culture is one which supports and

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MORAL JUDGEMENT

CODE OF ETHICS

MORAL VALUES

ETHICAL SYSTEM

Figure 15.2: Ethics Code Management Business Strategy Concept Diagram Illustration

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As we see in figure 15.2, each of the systems is inter-linked. Neither of the four are independents. This just goes on to show how ones success is dependent on the other, that is, they are all inter-related. And how, all these together can lead to the success of the organisation as a whole. Self Assessment Questions 1. Most of the HRM professionals argue that it is difficult to stick on to the ethical codes because of pressures from political, economic and social groups. (True/False) 2. Unethical conduct should not be disciplined. (True/False) 3. A clear purpose and strategy are necessary for the overall ethical development of an organisation. (True/False) 4. People should not be encouraged to raise concerns about the unethical actions of colleagues. (True/False) 5. Mistakes should not be forgiven. (True/False) Activity 1: Assume that you are the HR manager responsible for the designing of an ethical organisation. Briefly explain the steps, which, according to you would help in designing the same. Hint: 8 steps to build an ethical organisational culture

15.3 Role of Ethics in Performance Appraisal

Now that we have read on the role of the HRM in creating an ethical organisation, let us look into the role of ethics in Performance Appraisal. Performance appraisal, one of the key design components of an organisations internal environment, is directly linked with the level of ethical behaviours demonstrated within a company. Principles, values and beliefs that define what are right and wrong behaviour is defined as managerial ethics. To abandon or abuse the performance appraisal process is a violation of business ethics. The ethical issues related to performance feedback have caused both the managers and employees at all levels to become frustrated. Most of the ethical questions that arise are from people relationships within the organisation. Managers need to realise that ethics is an ongoing process of deciding and acting. Handling of performance review sessions is usually far more important when compared to the decision made or information conveyed during the feedback session.
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It is not possible to act in accordance with the rituals and surface requirements of performance feedback without inculcating the proper spirit into the feedback process. Most of us are aware of the moral benefits of attention to business ethics. Let us look into some of the roles of ethics in performance appraisal from our countrys perspective. Ethics are directly linked to fairness. The ground rules emphasise that the other persons interests should count as much as the individual himself. Responsibility is more on an individual rather than collective basis. The organisations mandate that the individuals are responsible to themselves. The activities that they perform have a purpose. This purpose acts as a way of operating with high values which in turn ties the organisation to its environment. There exists a clear vision and picture of reliability throughout the organisation. The vision is generally owned and put into practice by the top management. The reward systems are aligned with this vision. The policies and practices too are aligned with the vision. Hence, the outcome is that no mixed messages are conveyed. It is understood and incorporated that every significant management decision has ethical value dimensions tagged to it.

Organisations should manage the ethical issues in their workplace by establishing an ethics management program. 2Brian Schrag, Executive Secretary of the Association for Practical and Professional Ethics, clarifies: "Typically, ethics programs convey corporate values, often using codes and policies to guide decisions and behaviour, and can include extensive training and evaluating, depending on the organisation. They provide guidance in ethical dilemmas." There are various advantages of formally managing ethics as a program. Let us look into what these are. Ethics programs: Establish an organisational role to manage ethics. Schedule an ongoing assessment program based on the ethics requirements.
2

www.scribd.com/.../Business-Ethics-Between-Morality-and-Compulsory

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Establish the required operating values and behaviours. Align the organisational behaviour with its operating values. Develop a sense of awareness and sensitivity towards the ethical issues. Integrate the ethical guiding principles towards decision making. Structure plans to resolve ethical confusions. Facilitate ongoing evaluation and provide updates to the program. Help in convincing the employees that attention to ethics is not just an automatic reaction done to get out of trouble or done just to improve the individuals public image.

Listed below are some of the guidelines that ensure that the ethics management program is operated in a meaningful fashion: Understand that managing ethics is an ongoing process; it involves the incorporation of values and associated behaviours: Values are inculcated through the ongoing process of reflection. The most important aspect from the ethics management program perspective is the process of reflection and discussion that produces these deliverables. The success of an ethics program lies in the accomplishment of fair and just behaviours exhibited at the work place: Practices that generate the lists of ethical values, or codes of ethics, must also be able to generate policies, procedures and training required to translate these values to acceptable behaviours. Occurrence of ethical dilemmas should be avoided: Practices that develop codes of ethics and codes of conduct are important. This is because, the development of such programs educates the employee about the importance of ethical considerations and thus helps to minimise the chances of the occurrence of unethical behaviour in the work place. The decisions, pertaining to ethics, should be collective: The reason being that, decisions made as a group usually produce better quality decisions as this will be inclusive of the diverse interests and perspectives. Such decisions taken generally increase the credibility of the process and in turn benefit the outcome because of the reduced suspicion of unfair bias.
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Ethics management should be integrated along with other management practices: During the stage of strategic planning, while developing the values statement, care should be taken to include the ethical values preferred at the workplace. Develop design policies in such a way that you are able to reflect on what ethical values that you would like to be the most prominent in the organisation's culture. Involve cross-functional teams both during the development and the implementation stages of the ethics management program: It is vital that the employees working in an organisation feel a sense of participation and ownership in the ethics program. This makes it easier to get them to advocate its ethical values. Value forgiveness: The most important ingredient that helps us to remain ethical is in trying to behave ethical. This involves helping people to recognise and address their mistakes. You should be able to continue to support them in their struggle to operate ethically. Trying to operate ethically and making a few mistakes rather than not trying at all: All organisations are made up by persons who need not necessarily be perfect. However, when a mistake is made by any of these individuals, the organisation is the one that suffers. In our society, these organisations may be accused of being deceitful. Hence, most managers are scared to announce an ethics management program. However, this should not be the case. What should matter is the will power to try, success will follow. Depending on the size of the organisation, assigning roles may prove useful in managing ethics: These roles can be either full-time roles or part-time functions. The roles are generally held by someone already in the organisation. The following functions point out the responsibilities that need to be included within the organisation. The organisation's chief executive should be in support of the program. Consider establishing an ethics committee at the board level. Consider establishing an ethics management committee. Consider assigning/developing an ethics officer. Consider establishing an ombudsperson.

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Note that one person must ultimately be responsible for managing the ethics management program. Certain codes of conduct need to be followed to ensure the implementation of the ethics programs. Some of these include: Preferred style of dress. Following instructions of superiors. Being reliable and prompt. Maintaining confidentiality. Not accepting personal gifts from stakeholders as a result of company role. Avoiding discrimination of any form. Complying with laws and regulations. Reporting illegal or questionable activity. Self Assessment Questions 6. To abandon or abuse the performance appraisal process is a violation of _____________. 7. Organisations should manage the ______________ in their workplace by establishing an ethics management program. 8. The success of an __________ lies in the accomplishment of fair and just behaviours exhibited at the work place. 9. Ethics management should be __________along with other management practices. 10. The most important ingredient that helps us to remain ethical is in trying to behave ___________. Activity 2: You are working for an organisation, wherein, they wish to inculcate good work place ethics. You have been asked to draft a mail stating the advantages of the same. Write down your justifications. Hint: Advantages of formally managing ethics as a program.

15.4 Objectives of the Organisation for providing Performance Appraisal

Having understood the role of ethics in performance appraisal systems, let us look into the objectives an organisation should aim at for providing
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performance appraisal. Performance appraisals are considered to be the most significant and indispensable tool for the management as they: Provide useful information towards the decision making concerned with areas of promotion, merit rating and compensation reviews. Link both the information gathering and decision making process. This link behaves as the basis for judging the effectiveness of personnel sub functions which include recruiting, selecting and compensation. Help to identify areas of concerns in the primary systems like marketing, finance and production. Enhance the knowledge required for training and counselling. Almost all organisations practise performance appraisal in one form or another in order to achieve certain objectives. These objectives may vary from organisation to organisation or even within the same organisation from time to time. It has been found that there are two primary objectives behind the use of this methodology. These are to use it as: An evaluation system. A feedback system. The aim of the performance evaluation feedback system is to: Identify the performance gap: It helps determine the gap between the actual performance of the employee and what exactly is required or desired by the organisation. Inform the employee about the quality of their work or performance: It acts as an interactive process, wherein, the employee is given an opportunity to speak about the problems to the superior.

An effective performance appraisal system should emphasise on the individuals objectives, organisational objectives and also mutual objectives. Let us understand as to how each ones objective is different from the other. From the viewpoint of the individual, the performance appraisal should talk about What task the individual is expected to do? How well the individual has done the task? How can his performance be further improved? The reward for doing well.
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From the organisational view point, a performance appraisal should be able to generate manpower information, improve efficiency and effectiveness so as to serve as a mechanism of control and to provide a rational compensation structure. This implies that, the appraisal system should be able to establish and uphold the principle of accountability in the absence of which an organisation failure is the only possible outcome. Finally, the mutual goals emphasise on: Growth Development Harmony Effectiveness Profitability

Figure 15.3 illustrates the factors that contribute to performance ethics.

ETHICS

PERFORMANCE ETHICS

PERFORMANCE

LEADERSHIP

Figure 15.3: Performance Ethics

The figure 15.3 explains how performance ethics is achieved. It is basically a combination of the three factors, namely, performance, leadership and ethics. Doing Performance appraisals without having clear objectives set in advance is a recipe for disagreement, argument and poor morale3. The key purpose of a performance appraisal is to, without any bias, measure what an employee does at work. A successful performance
3

The Key to Successful Performance Objectives-By Josh Greenberg

15.5 Summary
By now you must have understood the various ethics involved in performance appraisal systems and the various performance practices followed in India. We discussed how the human resource management plays a significant role in the creation of an ethical environment. We also learnt the strategies involved in the creation of an ethical organisation. Most importantly, we have understood the role of ethics in the performance appraisal feedback systems in the organisation. This has helped us to understand why we need to inculcate ethics in an organisation. We have also studied the objectives of the organisation for providing performance appraisal feedback. Hence, we can come to the conclusion that Performance objectives must be clear and should be able to guide action. It should be able to lead the company to achieve great heights.

15.6 Glossary
Term De facto Ethics Ombudsperson Resources Description Existing in fact, although not necessarily intended, legal or accepted. A system of accepted beliefs which control behaviour, especially a system based on morals. Someone who works for a government or large organisation and deals with the complaints made against it. A useful or valuable possession of an organisation.

15.7 Terminal Questions

1. Briefly explain the role of HRM in creating an ethical organisation. 2. What are the steps involved in creating an ethical organisation? 3. Explain the role of ethics in performance appraisal.
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4. What should be the objectives of an organisation while providing Performance Appraisal? 5. Briefly explain the criteria involved in successfully planning the performance objectives.

15.8 Answers
Answers to Self Assessment Questions 1. True 2. False 3. True 4. False 5. False 6. Business ethics 7. Ethical issues 8. Ethics program 9. Integrated 10. Ethical 11. Objectives 12. Mutual goals Answers to Terminal Questions 1. Refer section 15.2 Role of HRM in Creating an Ethical Organisation. 2. Refer section 15.2.1 Creating an Ethical Organisation. 3. Refer section 15.3 Role of Ethics in Performance Appraisal. 4. Refer section 15.4 Objectives of the Organisation for Providing Performance Appraisal. 5. Refer section 15.4 Objectives of the Organisation for Providing Performance Appraisal.

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15.9 Case study

The Role of Ethics in Performance Appraisal Mr. ABC became the chief financial officer and a member of the Executive Committee of a medium-sized and moderately successful family-owned contracting business six months ago. He is the only nonfamily member of the company. Soon after ABC started, the company decided for the first time to reduce the headcount to respond to rapid changes in its business. ABC, who had been through this before when he was a senior manager in his previous company, agreed this was good for the long-term health of the 20-yearold company. The CEO was relying on ABC to help him determine how to downsize in an ethical manner. On ABCs recommendation, the company decided to make its lay-off decisions based on the annual performance appraisal scores of the employees. Each department manager was to submit a list of employees ranked by the average score of their last three appraisals. If the employee had been with the company for less than three years, if the score for two employees was identical, or if there was some extraordinary circumstance, the manager would note it and make a decision about where to rank the person. At some point, ABC and the Executive Committee would draw a line, and those below the line would be laid off. As ABC was reviewing the evaluations, he was puzzled to find three departments in which the employee at the bottom of the list had "N/A" where the evaluation score should have been written. When he asked the managers to explain, they told him these employees had been with the company almost since the beginning. When performance appraisals had been instituted six years earlier, the CEO agreed to the long time employees' request that they keep receiving informal evaluations as they always had. The managers told ABC that they had questioned this decision, and the CEO had told them it wasn't their problem. When Frank raised this issue with the CEO, he responded, "Oh, I know. I haven't really evaluated them in a long time, but it's time for them to retire anyway. They just aren't performing the way they used to. The company's been very good to them. They've got plenty of retirement
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stored away, not to mention the severance you've convinced me to offer. They're making pretty good money, so cutting them should let us lower the line a little and save jobs for some of the younger people--you know, young kids with families just starting out. And don't worry about a lawsuit. No way they'd do that." "Do they know they're not performing well?" Frank asked. "I don't know," the CEO responded. "They should. Everybody else in the company does." Questions: 1. What was the drawback of this company? Hint: Refer section 15.3 2. What according to you should be Mr. ABCs initiative to deal with this situation? Hint: Refer section 15.4 Note: Case study has been taken from www.ethicsgovernance.com/.../the-case-of-the-performance-appraisal.html References C. Fernando (2009), Business Ethics: An Indian Perspective, Dorling Kindersley (India) Private Limited. E-references http://bms.co.in/ethics-of-performance-appraisals/ http://www.e-hresources.com/Articles/Apr2.htm http://performance-appraisals.org/experts/succobj.htm www.giga-usa.com/quotes/authors/daniel_defoe_a001.htm www.scribd.com/.../Business-Ethics-Between-Morality-and-Compulsory www.ethics-governance.com/.../the-case-of-the-performanceappraisal.html

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