HRM- Performance, Planning and Review

8/3/2019 HRM- Performance, Planning and Review

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PERFORMANCE PLANNING &

REVIEW

Submitted to: Submitted by:

Mr. Gaurav Ashesh Shakti Singh

(Assistant Professor) Yaman Dhingra


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WHY DO ORGANIZATIONS NEED A PERFORMANCE PLANNING AND

REVIEW SYSTEM?

A Performance Planning and Review System (PP&R), when used regularly on an annual or

semi-annual basis, provides your organization with a means of managing the performance of

your staff and answers the three most basic questions we all have as employees: What am I

supposed to be doing? How well am I doing it? And does it matter to the organization?

With careful planning and implementation, a PP&R system answers these questions for your

staff and provides your organization with:

1. Systematic Performance Planning: To identify critical performance objectives for

each staff member so that they clearly understand their duties, what is expected of them, and how

their work is linked to the overall goals of the organization?

2. Systematic Performance Review: To review an employees overall achievement,

based on a clear understanding of his or her previously established performance objectives, with

constructive feedback, both positive and negative.

3. Objective information: While the performance review does not serve automatically as a

salary review, the information which results from the PP&R process will guide management

decisions on salary and merit awards, promotions, transfer, work assignments, and staff

development needs.

4. Knowledge: Where the overall performance strengths and weaknesses are in the

organization and where changes are needed.


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IMPORTANT FEATURES OF A PP&R SYSTEM

Management commitment to the concepts of performance planning and review Emphasis on communication between supervisor and staff member Focus on joint work planning Job duties linked to the goals of the organization Performance objectives are set for employees at all levels of the organization including

senior management

Performance objectives are specific, realistic, measurable, and time-bound Emphasis on developing employee motivation, skills, and career paths Performance as the basis for management decisions

ADVANTAGES OF A PERFORMANCE PLANNING AND REVIEW

SYSTEM

If implemented effectively, a PP&R system can:

Reinforce your organizations goals and priorities Communicate your organizations work values Define the work which people do and how it is related to the organizations mission Provide information to all employees on expected level of performance Provide performance information for career and compensation decisions


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360-DEGREE FEEDBACK

In human resources or industrial/organizational psychology, 360-degree feedback, also known as

multi-rater feedback, multisource feedback, or multisource assessment, is feedback that comes

from all around an employee. "360" refers to the 360 degrees in a circle, with an individual

figuratively in the centre of the circle. Feedback is provided by subordinates, peers, and

supervisors. It also includes a self-assessment and, in some cases, feedback from external sources

such as customers and suppliers or other interested stakeholders. It may be contrasted with

"upward feedback," where managers are given feedback by their direct reports, or a

"traditional performance appraisal," where the employees are most often reviewed only by

their managers.

The results from 360-degree feedback are often used by the person receiving the feedback to

plan training and development. Results are also used by some organizations in making

administrative decisions, such as pay or promotion. When this is the case, the 360 assessment is

for evaluation purposes, and is sometimes called a "360-degree review." However, there is a

great deal of controversy as to whether 360-degree feedback should be used exclusively for

development purposes, or should be used for appraisal purposes as well (Waldman et al., 1998).

There is also controversy regarding whether 360-degree feedback improves employee

performance, and it has even been suggested that it may decrease shareholder value (Pfau &Kay, 2002).

360 degree feedback allows each individual to understand how his effectiveness as an employee,

co-worker, or staff member is viewed by others. The most effective 360 degree feedback

processes provide feedback that is based on behaviours that other employees can see.

The feedback provides insight about the skills and behaviours desired in the organization to

accomplish the mission, vision, and goals and live the values. The feedback is firmly planted in

behaviours needed to exceed customer expectations.


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How is 360 Degree Feedback Used?

Companies typically use a 360 feedback system in one of two ways:

1. 360 Feedback as a Development Tool to help employees recognize strengths

and weaknesses and become more effective

When done properly, 360 is highly effective as a development tool. The feedback process gives

people an opportunity to provide anonymous feedback to a co-worker that they might otherwise

be uncomfortable giving. Feedback recipients gain insight into how others perceive them and

have an opportunity to adjust behaviours and develop skills that will enable them to excel at their

jobs.

2. 360 Feedback as a Performance Appraisal Tool to measure employee

performance

Using a 360 degree feedback system for Performance Appraisal is a common practice, but not

always a good idea. It is difficult to properly structure a 360 feedback process that creates an

atmosphere of trust when you use 360 evaluations to measure performance. Moreover, 360

feedback focuses on behaviours and competencies more than on basic skills, job requirements,

and performance objectives. These things are most appropriately addressed by an employee and

his/her manager as part of an annual review and performance appraisal process. It is certainly

possible and can be beneficial to incorporate 360 feedback into a larger performance

management process, but only with clear communication on how the 360 feedback will be used.

What a 360 Feedback Survey Measures

360 feedback measures behaviours and competencies. 360 assessments provide feedback on how others perceive an employee. 360 feedback addresses skills such as listening, planning, and goal-setting. A 360 evaluation focuses on subjective areas such as teamwork, character, and leadership

effectiveness.


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What 360 Feedback Surveys do not assess:

360 feedbacks is not a way to measure employee performance objectives (MBOs). 360 feedback is not a way to determine whether an employee is meeting basic job

requirements.

360 feedback is not focused on basic technical or job-specific skills. 360 feedback should not be used to measure strictly objective things such as attendance,

sales quotas, etc.

Critical Factors for Success

In order for the 360 degree feedback system to be successful there must be employee acceptance

of the system. Both perceived accuracy and justice are considered critical factors for system

acceptance. If the system is unjust or has errors, it will be dismissed for obvious reasons.

Fortunately, reputable providers of 360 degree feedback have often delivered hundreds of

thousands of ratings, and are experienced in maximizing the likelihood of system acceptance.

There are three key steps to using the 360 degree feedback system successfully:

1.

make it fit into the organization;2. make it psychometrically sound;3. Use with care.

Make it Fit

Try to make the 360 feedback fit into the culture of the organization. In doing so it will appear

less threatening and more fair.

Increase Employee Participation

To increase the perception of justice, employees should be encouraged to be active participants

in the evaluation. A multiple source feedback works best in an environment that is team-oriented


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and cooperative. Giving individuals the opportunity to voice their opinions about the system's

construction, process, and results will increase employee buy-in, acceptance, and will yield

useful suggestions.

Train Feedback Providers

It is also important to train the feedback providers to be sensitive, respectful and polite. Treating

employees in a friendly and respectful manner, and offering constructive advice will make them

more open to accepting the performance appraisal system.

Communication is Key

People tend to be suspicious of things they do not understand. Thus, it is important to

communicate to the employees the precise way in which ratings are to be combined, as well as

the purpose, benefits and procedures of the 360 degree feedback system. It is particularly

important to communicate the intended uses of the information.

Make it Psychometrically Sound

Ensure that the Instrument is Applicable

A good assessment should be reliable and valid. It must measure what it proposes to measure,

consistently and accurately. The 360 degree feedback system only works effectively if it

measures the relevant job performance, knowledge, skills, abilities and personality

characteristics necessary for high levels of job performance. Thus, the first step is to identify,

define, and incorporate these job performance behaviors, knowledge, and skills into the appraisal

system.

Increase Rater Familiarity

Select raters who are well acquainted with the employee. Rater familiarity is linked to accuracy

and fairness in performance ratings. To evaluate rater familiarity, some 360 degree feedback

systems include a rating for familiarity and provide the option of indicating "inadequate

opportunity to observe" for performance characteristics. To increase reliability and decrease the


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impact of individual biases a large sample of raters should be selected. Reliability continues to

increase when up to twenty raters are included, but adequate reliability can be obtained using 6

or more raters.

Promote Rater Accuracy

Both 'self' and 'other' appraisal accuracy should be promoted and rewarded. The nature of the 360

degree feedback system should reduce the problem of rater accuracy, as the use of multiple raters

will average out individual biases. Furthermore, there is an apparent tradeoff when using either

'self' or 'other' ratings. Other-ratings are perceived to be more accurate, however, they may also

be perceived by the employee to be less fair. The inverse is true for self-ratings. Clearly, both

rating methods have advantages and disadvantages; thus, a performance appraisal system that

combines both 'self' and 'other' ratings will be the most beneficial.

Use with Care

When implementing the 360 degree feedback system it is important to be consistent across

employees (all of the employees should have an equal opportunity to participate in the system),

and administered frequently. A consistent system will be perceived as more accurate and fair. A

one-time 360 feedback exercise is not recommendedthey are best when at least a three to five

term is planned. Furthermore, evaluating performance over time provides employees with

benchmarks for development.

360 Degree Feedback: The Good, the Bad, and the Ugly

The Good about 360 Degree Feedback

These features will manifest themselves in well-managed, well-integrated 360 degree feedback

processes.

Improved Feedback From More Sources: Provides well-rounded feedback from peers,

reporting staff, coworkers, and supervisors. This can be a definite improvement over feedback


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from a single individual. 360 feedback can also save managers time in that they can spend less

energy providing feedback as more people participate in the process. Coworker perception is

important and the process helps people understand how other employees view their work.

Team Development: Helps team members learn to work more effectively together. (Teams

know more about how team members are performing than their supervisor.) Multirater feedback

makes team members more accountable to each other as they share the knowledge that they will

provide input on each members performance. A well-planned process can improve

communication and team development.

Personal and Organizational Performance Development: 360 degree feedback is one of the

best methods for understanding personal and organizational developmental needs.

Responsibility for Career Development: For many reasons, organizations are no longer

responsible for developing the careers of their employees, if they ever were. Multirater feedback

can provide excellent information to an individual about what she needs to do to enhance her

career.

Additionally, many employees feel 360 degree feedback is more accurate, more reflective of

their performance, and more validating than prior feedback from the supervisor alone. This

makes the information more useful for both career and personal development.

Reduced Discrimination Risk: When feedback comes from a number of individuals in various

job functions, discrimination because of race, age, gender, and so on, is reduced. The "horns and

halo" effect, in which a supervisor rates performance based on her most recent interactions with

the employee, is also minimized.


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Improved Customer Service: Especially in feedback processes that involve the internal or

external customer, each person receives valuable feedback about the quality of his product or

services. This feedback should enable the individual to improve the quality, reliability,

promptness, and comprehensiveness of these products and services.

Training Needs Assessment: 360 degree feedback provides comprehensive information about

organization training needs and thus allows planning for classes, cross-functional

responsibilities, and cross-training.

The Bad and the Ugly about 360 Degree Feedback

The down side is important because it gives you a roadmap of the things to avoid when you

implement a 360 degree feedback process. Following are potential problems with 360 degree

feedback processes and a recommended solution for each.

Exceptional Expectations for the Process: 360 degree feedback is not the same as a

performance management system. It is merely a part of the feedback and development that a

performance management system offers within an organization.

Additionally, proponents may lead participants to expect too much from this feedback system in

their efforts to obtain organizational support for implementation. Make sure the 360 feedback is

integrated into a complete performance management system.

Design Process Downfalls: Often, a 360 degree feedback process arrives as a recommendation

from the HR department or is shepherded in by an executive who learned about the process at a


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seminar or in a book. Just as an organization implements any planned change, the

implementation of 360 degree feedback should follow effective change management guidelines.

A cross-section of the people who will have to live with and utilize the process should explore

and develop the process for your organization.

Failure to Connect the Process: For a 360 feedback process to work, it must be connected with

the overall strategic aims of your organization. If you have identified competencies or have

comprehensive job descriptions, give people feedback on their performance of the expected

competencies and job duties.

The system will fail if it is an add-on rather than a supporter of your organizations fundamental

direction and requirements. It must function as a measure of your accomplishment of your

organizations big and long term picture.

Insufficient Information: Since 360 degree feedback processes are currently usually

anonymous, people receiving feedback have no recourse if they want to further understand the

feedback. They have no one to ask for clarification of unclear comments or more information

about particular ratings and their basis.

For this reason and for the points listed in the several bullet points following this one,

developing 360 process coaches is important. Supervisors, HR staff people, interested managers

and others are taught to assist people to understand their feedback. They are trained to help

people develop action plans based upon the feedback.

Focus on Negatives and Weaknesses: At least one book, First Break All the Rules: What the

World's Greatest Managers Do Differently, advises that great managers focus on employee


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strengths, not weaknesses. The authors said, "People don't change that much. Don't waste time

trying to put in what was left out. Try to draw out what was left in. That is hard enough."

Rater Inexperience and Ineffectiveness: In addition to the insufficient training organizations

provide both people receiving feedback and people providing feedback, there are numerous ways

raters go wrong. They may inflate ratings to make an employee look good. They may deflate

ratings to make an individual look bad. They may informally band together to make the system

artificially inflate everyones performance. Checks and balances must prevent these pitfalls.

Paperwork/Computer Data Entry Overload: Need we say much more here? Traditional

evaluations required two people and one form. Multirater feedback ups the sheer number of

people participating in the process and the consequent organization time invested.

There are minuses with the 360 degree feedback processes. As with any performance feedback

process, it can provide you with a profoundly supportive, organization-affirming method for

promoting employee growth and development. Or, in the worst cases, it saps morale, destroys

motivation, enables disenfranchised employees to go for the jugular or plot and scheme revenge

scenarios.

360 degree feedback can increase positive, powerful problem solving for customers or set

people off on journeys to identify the guilty - the feedback provider who rated their performance

less than perfect.


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Management by Objectives (MBO)

"MBO is one of the rational school of management's successful products." The Economist

Motivating people by aligning their objectives with the goals of the organization

For many people working in modern business environments, it's hard to remember a time when

non-managerial employees weren't involved with, and interested in, corporate strategy and goals.

We are regularly reminded about the corporate mission statement, we have strategy meetings

where the "big picture" is revealed to us, and we are invited to participate in some decisions. And

we're aware of how our day-to-day activities contribute to these corporate goals.

This type of managing hasn't been around forever: It's an approach called Management by

Objectives; a system that seeks to align employees' goals with the goals of the organization. This

ensures that everyone is clear about what they should be doing, and how that is beneficial to the

whole organization. It's quite easy to see why this type of managing makes sense when the

parts work in unison the whole works smoothly too. And by focusing on what you're trying to

achieve, you can quickly discriminate between tasks that must be completed, and those that are

just a waste of valuable time.

Background:

Management by Objectives was introduced by Peter Drucker in the 1950s and written about in

his 1954 book, The Practice of Management. It gained a great deal of attention and was widely

adopted until the 1990s when it seemed to fade into obscurity.

Partly, the idea may have become a victim of its own success: It became so much a part of the

way business is conducted that it no longer may have seemed remarkable, or even worthy of


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comment. And partly it evolved into the idea of the Balanced Scorecard, which provided a more

sophisticated framework for doing essentially the same thing.

Using Management by Objectives

Peter Drucker outlined the five-step process for MBO shown in figure 1, below. Each stage has

particular challenges that need to be addressed for the whole system to work effectively.

Figure 1: Five Step MBO Process

These steps

Review

These steps are explained below:

Start of MBO

Process

Set OrganizationalObjectives

Cascade Objective

to Employees

MonitorEvaluate Performance

Reward

Performances


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1. Set Organizational Objectives

MBO starts with clearly defined strategic organizational objectives. If the organization isn't clear

where it's going, no one working there will be either.

2. Cascading Objectives Down to Employees

To support the mission, the organization needs to set clear goals and objectives, which then need

to cascade down from one organizational level to the next until they reach everyone.

To make MBO goal and objective setting more effective, Drucker used the SMART acronym to

set goals that were attainable and to which people felt accountable. He said that goals and

objectives must be:

Specific Measurable Agreed (relating to the participative management principle) Realistic Time related

Notice the "A" in SMART is "agreed." This is sometimes referred to as "achievable" but, with

MBO, agreement about the goals is a critical element: It's not enough for the goals and objectives

to be set at the top and then handed down. They must flow, or trickle, down through various

stages of agreement. The only goal that is going to be met is one that is agreed on. How much

easier is to get buy in when the person responsible for achieving the goal had a hand in

developing it?


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For each objective, you need to establish clear targets and performance standards. It's by using

these that you can monitor progress throughout the organization. These are also important for

communicating results, and for evaluating the suitability of the goals that have been set.

3. Encourage Participation in Goal Setting

Everyone needs to understand how their personal goals fit with the objectives of the

organization. This is best done when goals and objectives at each level are shared and discussed,

so that everyone understands "why" things are being done, and then sets their own goals to align

with these.

This increases people's ownership of their objectives. Rather than blindly following orders,

managers, supervisors, and employees in an MBO system know what needs to be done and thus

don't need to be ordered around. By pushing decision-making and responsibility down through

the organization, you motivate people to solve the problems they face intelligently and give them

the information they need to adapt flexibly to changing circumstances.

Through a participative process, every person in the organization will set his or her own goals,

which support the overall objectives of the team, which support the objectives of the department,

which support the objectives of the business unit, and which support the objectives of the

organization.

In an MBO system, employees are more self-directed than boss-directed. If you expect this type

of independent performance from employees, you have to give them the tools they need.


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Once you have established what it is that someone is accountable for, you must provide the

information and resources needed to achieve results. You must also create a mechanism for

monitoring progress towards the goals agreed.

4. Monitor Progress

Because the goals and objectives are SMART, they are measurable. They don't measure

themselves though, so you have to create a monitoring system that signals when things are off

track. This monitoring system has to be timely enough so that issues can be dealt with before

they threaten goal achievement. With the cascade effect, no goal is set in isolation, so not

meeting targets in one area will affect targets everywhere.

On the other hand, it is essential that you ensure that the goals are not driving adverse behavior

because they have not been designed correctly. For instance, a call centre goal of finishing all

calls within seven minutes might be useful in encouraging the staff to handle each call briskly,

and not spend unnecessary time chatting. However, it might be that customers' calls were

becoming more complex, perhaps because of a faulty new product, and call centre operators

were terminating the call after 6 minutes 59 seconds in order to meet their target, leaving

customers to call back, frustrated. In this situation, the monitoring process should pick up the

shift in the goal environment and change the goal appropriately.

Set up a specific plan for monitoring goal performance (once a year, combined with a

performance review is not sufficient!) Badly-implemented MBO tends to stress the goal setting

without the goal monitoring. Here is where you take control of performance and demand

accountability.


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Think about all the goals you have set and didn't achieve. Having good intentions isn't enough,

you need a clear path marked by accountability checkpoints. Each goal should have mini-goals

and a method for keeping on top of each one.

5. Evaluate and Reward Performance

MBO is designed to improve performance at all levels of the organization. To ensure this

happens, you need to put a comprehensive evaluation system in place.

As goals have been defined in a specific, measurable and time-based way, the evaluation aspect

of MBO is relatively straightforward. Employees are evaluated on their performance with respect

to goal achievement (allowing appropriately for changes in the environment.) All that is left to

do is to tie goal achievement to reward, and perhaps compensation, and provide the appropriate

feedback.

Employees should be given feedback on their own goals as well as the organization's goals.

Make sure you remember the participative principle: When you present organization-wide results

you have another opportunity to link individual groups' performances to corporate performance.

Ultimately this is what MBO is all about and why, when done right, it can spur organization-

wide performance and productivity.

When you reward goal achievers you send a clear message to everyone that goal attainment is

valued and that the MBO process is not just an exercise but an essential aspect of performance

appraisal. The importance of fair and accurate assessment of performance highlights why setting

measurable goals and clear performance indicators are essential to the MBO system.

Repeat the Cycle

Having gone through this five-stage process, the cycle begins again, with a review of the

strategic, corporate goals in the light of performance and environmental monitoring.


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When you reward goal achievers you send a clear message to everyone that goal attainment is

valued and that the MBO process is not just an exercise but an essential aspect of performance

appraisal. The importance of fair and accurate assessment of performance highlights why setting

measurable goals and clear performance indicators are essential to the MBO system.

Tip 1:

Implemented on a team level, MBO shows itself in clear team briefing, in effective goal setting,

in successful use of reviews, in effective delegation and in the giving and receiving of feedback.

These are many of the key techniques needed for effective team management.

Tip 2:

Implemented on an organizational level, MBO needs the full commitment of the organization,

and an underlying system for tracking goals and performance. Because goals must be transmitted

from level to level with agreement, goal transmission can inevitably be slow. Full

implementations of MBO can therefore be slow and difficult, particularly if non-accounting-

based goals are included. This is perhaps why MBO has evolved into the idea of the Balanced

Scorecard: MBO on its own may too-easily slip into being nothing more than a financial

management mechanism.

Tip 3:

MBO is essentially a managerial process. Don't use it as a substitute for good leadership: The

two should work together!

Tip 4:

There's so much more to motivating people than using MBO! Take our How Good Are Your

Motivation Skills? self-test to find out which aspects of team motivation you can improve on.

Its overarching premise is that of employee empowerment. By empowering employees to take

responsibility for their performance and allowing them to see how their achievements impact the

organization as a whole, you increase people's motivation, dedication, and loyalty. When you

bring that full circle and link performance to evaluation and appraisal, you have a strong system

that supports and values employees and facilitates great performance.


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Problems faced by the MBO program are:

Too much paper work Setting too many objectives may create prioritization problems Difficult to establish measurable objectives for certain jobs. Too much emphasis on short term performance and losing sight of long-term objectives. May be used by some supervisors as a control devise that intimidates rather than

motivates subordinates.


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REFERENCES

http://en.wikipedia.org/wiki/360-degree_feedback http://www.custominsight.com/360-degree-feedback/what-is-360-degree-feedback.asp http://humanresources.about.com/od/360feedback/a/360feedback_2.htm http://www.mindtools.com/pages/article/newTMM_94.htm http://www.sigmahr.com/articles/360bestpractices.asp http://axisbd.org/what-is-management-by-objectives-what-are-its-advantages-and-

disadvantages/

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