Lecture 1-Performance Management
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Transcript of Lecture 1-Performance Management
Introduction to Performance Managemen
Lecture # 1
Wonders are many, and none is more wonderful than man
Performance Management in Context: Overview
Definitions related with Performance Management (PM)
The PM Contribution Disadvantages/Dangers of Poorly-implemented
PM systems Definition of Reward Systems Aims and role of PM Systems Characteristics of an Ideal PM system Integration with Other Human Resources and
Development Activities
What is performance?• Performance is the sum of behavior and
results, and cannot be viewed as independent of either component. It is an outcome of effective management.
• Bernadin et al (1995) are concerned that performance should be defined as the outcomes of work because they provide the strongest linkage to the strategic goals of the organization, customer satisfaction, and economic contributions
• Brumbrach (1988):– Performance means both behaviours and
results. Behaviours emanate from the performer and transform performance from abstraction to action. Not just the instruments for results, behaviours are also outcomes in their own right the product of mental and physical effort applied to tasks and can be judged apart from results.
Factors That Influence Performance
What is performance appraisal?
• A system that involves employee evaluations once a year without an ongoing effort to provide feedback and coaching so that performance can be improved
Objectives of Performance Appraisal
• Provide information to assist in the HR decisions like promotions, transfers etc.
• Provide clarity of the expectations and responsibilities of the functions to be performed by the employees.
• To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development.
• To reduce the grievances of the employees.
• Helps to strengthen the relationship and communication between superior – subordinates and management – employees.
Uses of Performance Appraisal
• Counselling performance deficiency • Identifying individual training and development
options • Decisions on changing rewards and/or
remuneration levels • Succession and career planning • Work unit planning and job design/work
allocation • Sessions to gain commitment for new work unit
or corporate objectives
Handbooks / Guidelines
Performance Appraisal Handbook. U.S. Department of the Interior
http://www.doi.gov/hrm/guidance/370dm430hndbk.pdf
• Rating Level Points Assigned
• Exceptional 5 points
• Superior 4 points
• Fully Successful 3 points
• Minimally Successful 2 points
• Unsatisfactory 0 point
Why Appraise Performance?
• Why appraise performance?– Appraisals play an integral role in the employer’s
performance management process.– Appraisals help in planning for correcting deficiencies
and reinforce things done correctly.– Appraisals, in identifying employee strengths and
weaknesses, are useful for career planning– Appraisals affect the employer’s salary raise
decisions.
Performance Management (PM)
• Performance Management (PM) as described here refers to a term coined by Dr. Aubrey C. Daniels in the late 1970s to describe a technology (i.e., science imbedded in applications methods) for managing both behavior and results, the two critical elements of what is known as performance.
Michael Armstrong (2000)
• Performance management is a strategic and integrated process that delivers sustained success to organizations by improving the performance of the people who work in them and by developing the capabilities of individual contributors and teams.
Michael Armstrong (2000). Performance Management. London: Kogan Page Limited
Aguinis (2009) defines:
PM is a continuous process of identifying, measuring and developing the performance of individuals and teams and aligning performance with the strategic goals of the organization
So PM is Continuous Process ofIdentifying performance of individuals and teamsMeasuring performance of individuals and teamsDeveloping performance of individuals and
teams
andAligning performance with the strategic goals of
the organization
An iterative process of goal-setting, communication,
observation and evaluation to support, retain and develop
exceptional employees for organizational success.
Performance Management
CommunicateCommunicate
ObserveObserveEvaluateEvaluate
Set GoalsSet Goals
The Performance Management Cycle
20
Focus of Performance Management
Progress and success
toward goal achievement
PM is NOT performance appraisal
PMStrategic business
considerationsOngoing feedbackSo employee can
improve performanceDriven by line manager
Performance appraisalAssesses employee
Strengths & Weaknesses
Once a yearLacks ongoing feedbackDriven by HR
Comparing Performance Appraisal and Performance Management
• Performance appraisal (PA)– Evaluating an employee’s current and/or past
performance relative to his or her performance standards.
• Performance management (PM)– The process employers use to make sure
employees are working toward organizational goals.
– PA is an important component of PM
Case Study: Merrill Lynch
• Merrill Lynch started the transition from giving employees one PA per year to focusing on one of the important principles of PM.
• Conversation b/w managers and employees in which feedback is exchanged and coaching is given if needed
• In January, managers and employees set employee objectives
• Mid-year reviews assess progress and personal development plans
• End-of-the-year reviews incorporates feedback from several sources, evaluates progress and identifies areas for improvement
Case Study: Siemens
• At Siemens, the PM System is based on three pillars:– Setting clear and measurable goals– Implementing concrete actions– Imposing rigorous consequences
History of PM
• The phrase was first coined by Beer and
• Ruh in 1976.
• But it did not become recognized as a distinctive approach until the mid-1980s
26
Why Do Performance Management?
• Communicate goals, mission, values, purpose
• Improve working relationships• Improve management• Identify and communicate strengths and
areas for improvement• Provide feedback• Develop• Monitor• Support
Why Performance Management?
• Increasing use by employers of performance management reflects:– The popularity of the total quality management
(TQM) concepts.– The belief that traditional performance appraisals
are often not just useless but counterproductive.– The necessity in today’s globally competitive
industrial environment for every employee’s efforts to focus on helping the company to achieve its strategic goals.
Continuous improvement
• A management philosophy that requires employers to continuously set and relentlessly meet ever-higher quality, cost, delivery, and availability goals by:– Eradicating the seven wastes:
• overproduction, defective products, and unnecessary downtime, transportation, processing costs, motion, and inventory.
– Requiring each employee to continuously improve his or her own personal performance, from one appraisal period to the next.
PM Contribution
• Motivation to performance is increased• Self-esteem is increased• Managers gain insight about subordinates• The definitions of job and criteria are clarified• Self-insight and development are enhanced• Administrative actions are more fair and
appropriate• Organization goals are made clear• Employees become more competent
• There is better protection from lawsuits• There is better and more timely differentiation b/w
good and poor performers• Supervisors’ views of performance are
communicated more clearly• Organizational change is facilitated• Motivation, commitment, and intentions to stay in
the organization are enhanced• Management behaviours beat the political
behaviours
Components of an Effective Performance Management
Process• Direction sharing
• Role clarification
• Goal alignment
• Developmental goal setting
• Ongoing performance monitoring
• Ongoing feedback
• Coaching and support
• Performance assessment (appraisal)
• Rewards, recognition, and compensation
• Workflow and process control and return
Disadvantages of poorly implemented PM System
• Increased turnover
• Use of misleading information
• Lowered self-esteem
• Wasted time and money
• Damaged relationships
• Decreased motivation to perform
• Employee burnout and job dissatisfaction
• Increased risk of litigation
• Unjustified demands on managers’ and employees’ resources
• Varying and unfair standards and ratings
• Emerging biases
• Unclear rating systems
• Political behaviours beat the management behaviours
Reward Systems
Reward Systems: Definition
A reward system is a set of mechanisms for distributing both tangible and intangible returns as part of emplacement relationship
Set of mechanisms for distributingTangible returns Intangible or relational returns
Not all types of returns are directly related to PM system, e.g. allocations are based on seniority as opposed to performance
Tangible returns
Cash compensationBase payCost-of-Living & Contingent PayIncentives (short- and long-term)
Benefits, such as Income ProtectionAllowancesWork/life focus
Intangible returns
Relational returns, such asRecognition and statusEmployment securityChallenging workLearning opportunities
Returns and Their Degree of Dependencyon the Performance Management System
Return Cost of Living Adjustment Income Protection Work/life Focus Allowances Relational Returns Base Pay Contingent Pay Short-term Incentives Long-term Incentives
Degree of Dependency• Low• Low• Moderate• Moderate• Moderate• Moderate• High• High• High
Purposes of PM Systems:Overview
StrategicAdministrativeInformationalDevelopmentalOrganizational maintenanceDocumentation
Strategic Purpose
Link employee behavior with organization’s goals
Communicate most crucial business strategic initiatives
Administrative Purpose
Provide information for making decisions re:Salary adjustmentsPromotionsRetention or terminationRecognition of individual performanceLayoffs
Informational Purpose
Communicate to Employees:ExpectationsWhat is importantHow they are doingHow to improve
Developmental Purpose
Performance feedback/coachingIdentification of individual strengths
and weaknessesCauses of performance deficienciesTailor development of individual
career path
Organizational Maintenance Purpose
Plan effective workforceAssess future training needsEvaluate performance at
organizational levelEvaluate effectiveness of HR
interventions
Documentational Purpose
Validate selection instrumentsDocument administrative decisionsHelp meet legal requirements
Characteristics of an Ideal PM System
Congruent with organizational strategy
• Consistent with organization’s strategy
• Aligned with unit and organizational goals
Thorough
• All employees are evaluated
• All major job responsibilities are evaluated
• Evaluations cover performance for entire review period
• Feedback is given on both positive and negative performance
Practical
• Available
• Easy to use
• Acceptable to decision makers
• Benefits outweigh costs
Meaningful
• Standards are important and relevant• System measures ONLY what
employee can control• Results have consequences
Evaluations occur regularly and at appropriate times
• System provides for continuing skill development of evaluators
Specific
Concrete and detailed guidance to employees
• what’s expected
• how to meet the expectations
Identifies effective and ineffective performance
• Distinguish between effective and ineffective– Behaviors– Results
• Provide ability to identify employees with various levels of performance
Reliable
• Consistent
• Free of error
• Inter-rater reliability
Valid
• Relevant (measures what is important)
• Not deficient (doesn’t measure unimportant facets of job)
• Not contaminated (only measures what the employee can control)
Acceptable and Fair
• Perception of Distributive Justice– Work performed evaluation received
reward
• Perception of Procedural Justice– Fairness of procedures used to:
• Determine ratings
• Link ratings to rewards
Inclusive
• Represents concerns of all involved– When system is created, employees
should help with deciding• What should be measured• How it should be measured
– Employee should provide input on performance prior to evaluation meeting
Open (No Secrets)
• Frequent, ongoing evaluations and feedback
• 2-way communications in appraisal meeting
• Clear standards, ongoing communication
• Communications are factual, open, honest
Correctable
• Recognizes that human judgment is fallible
• Appeals process provided
Standardized
• Ongoing training of managers to provide
• Consistent evaluations across– People– Time
Ethical
• Supervisor suppresses self-interest
• Supervisor rates only where she has sufficient information about the performance dimension
• Supervisor respects employee privacy
Integration with other Human Resources and Development activities
PM provides information for:Development of training to meet
organizational needsWorkforce planningRecruitment and hiring decisionsDevelopment of compensation systems
Challenges
• A survey conducted by the consulting firm Watson Wyatt showed that only 3 in 10 employees believe their company’s performance review system actually helped them improve their performance
• A recent survey of almost 1000 HRM professionals in Australia revealed that 96% of companies are currently implementing PMS.
Leading Contributors
• Chris Argyris:Action Science• Benjamin Bloom: Educational Technology• Edward Deming: TQM• Peter Drucker: Management Sciences• Robert Gagne: Instructional System Design• Thomas Gilbert: Behavioural Engineering• Joe Harless: Front-End Analysis• Roger Kaufman: Strategic Planning• Donald kirkpatrick: Evaluation• Malcolm Knowles: Androgogy
• Kurt Lewin: Force Field Analysis• Robert Mager: Instructional Objectives• Douglas McGregor: Theory X & Y• Susan Markle: Programmed Instruction• Geary Rummler: Three levels of Org. Performance• Pater Senge: Learning Orgs• B. F. Skinner: Behaviourism• Fredrick Taylor: Scientific Management• Sivasailam (Thiagi) Thiagarajan: Games and Playfulness• Donald Totsi: Feedback• Marvin Weisbored: Six Boxes for org diagnostic framework
Our Roadmap
Part – I: Strategic and General Considerations
PM and Reward Systems in ContextPM ProcessPM and Strategic Planning
Part – II: System Implementation
Defining performance and choosing a measurement approach
Measuring results and behavioursGathering performance informationImplementing a PM System
Part – III: Employee Development
PM and Employee DevelopmentPM Skills
Part – IV: Reward Systems, Legal Issues, and Team PM
Reward Systems and Legal IssuesManaging Team Performance
References
Text Books
• Aguinis, Herman (2009). Performance Management (2nd ed). New Delhi: Pearson.
• Kirkpatrick, Donald L. (2006). Improving Employee Performance through Appraisal and Coaching (2nd Edition). New York: AMACOM
• Adkins, Tony (2006). Case Studies in Performance Management: A Guide from the Experts. New Jersey: John Wiley & Sons, Inc.
• Carton, Robert B., and Hofer, Charles W. (2006). Measuring Organizational Performance: Metrics for Entrepreneurship and Strategic Management Research. Cheltenham, UK: Edward Elgar Publishing Limited.
• Cokins, Gary (2004). Performance Management. New Jersey: John Wiley & Sons, Inc.
• Muddux, Robert. B. (2004). Performance Appraisal (4th edition). New Delhi: Viva Books Private Limited
• Bacal, Robert (2004). Manager’s Guide to Performance Reviews. New York: McGraw-Hill.
• Hale, Judith (2004). Performance-Based Management: What Every Manager Should Do to Get Results. USA: John Wiley & Sons.
• Rummler, Geary A. (2004). Serious Performance Consulting: According to Rummler. USA: International Society for Performance Improvement.
• Willmore, Joe (2004). Performance Basics. USA: ASTD.• Grote, Dick (2002). The Performance Appraisal
Question and Answer Book: A Survival Guide for Managers. New York: AMACOM.
• Armstrong, Michael (2000). Performance Management Key strategies and practical guidelines (2nd edition). London: Kogan Page Limited.
• Clemmer, J. (1995). Pathways to Performance: A Guide to Transforming Yourself, Your Team, and Your Organization. New Delhi: Prentice Hall.
Handbooks
• Handbook of Applied Behavior Analysis, John Austin & James E. Carr. Context Press. 2000.
• Handbook of Organizational Performance, Thomas C. Mawhinney, William K. Redmon & Carl Merle Johnson. Routledge. 2001.
Journals
• Organizational Behavior Management Network, Dr. John Austin, Dr. Dale Brethower, Dr. Alyce Dickinson. www.obmnetwork.com. 2009.
• Journal of Organizational Behavior Management, Routledge Taylor & Francis Group. Published quarterly. 2009.
1963
• Farson, R. E. (1963). Praise Re-appraised. Harvard Business Review, September – October, p. 61.
1965
• Meyer, H. H., Kay, E., and French, J. R. P. (1965). Split Roles in Performance Appraisal. Harvard Business Review.
1981
• Feldman, J.M. (1981). Beyond Attribution Theory: Cognitive Processes in Performance Appraisal. Journal of Applied Psychology, 66(2), 127-148.
1984
• Shrader, C.B., Taylor, L. and Dalton, D. R. (1984). Strategic Planning and Organizational Performance: A Critical Appraisal. Journal of Management, Vol. 10, No. 2, 149-171 (1984)
1986
• Pearce, J.L., and Porter, L.W. (1986). Employee Responses to Formal Performance Appraisal Feedback. Journal of Applied Psychology, 71(2), 211-218.
1989
• Cleveland, J.N., Murphy, K.R. and Williums, R. E. (1989). Multiple Uses of Performance Appraisal: Prevalence and Correlates. Journal of Applied Psychology, 74(1), 130-135.
1991
• Greenberg, J. (1991). Using explanations to manage impressions of performance appraisal fairness. Employee Responsibilities and Rights Journal, 4(1), 51-60.
1992
• Bretz, R. D., Milkovich, G .T. and Read, W. (1992). The Current State of Performance Appraisal Research and Practice: Concerns, Directions, and Implications. Journal of Management, 18(2), 321-352.
• Folger, R., Konovsky, M.A. and Cropanzano, R. (1992). A Due Process Metaphor for Performance Appraisal. Research in Organizational Behaviour. 14, pp. 129-177
1993
• Ilgen, D.R., Barness-Farrell, and Mckellin, D.B. (1993). Performance Appraisal Process Research in the 1980s: What has it Contributed to Appraisals in Use. Organizational Behaviour and Human Resource Processes, 54, pp. 321-368.
1994
• Rater motivation in the performance appraisal context: a theoretical framework
• Journal of Management, Winter, 1994 by Michael M. Harris
• Woehr, D. J. (1994). Rater training for performance appraisal: a quantitative review. Journal of occupational and organizational psychology, 67(3), pp. 189-205
1995
• Improving Performance: How to Manage the White Space in the Organization Chart, Geary A. Rummler & Alan P. Brache. Jossey-Bass; 2nd edition. 1995.
• The Values-Based Safety Process: Improving Your Safety Culture with Behavior-Based Safety, Terry E. McSween. John Wiley & Sons. 1995.
• Clarkson, M. B. E. (1995). A Stakeholder Framework for Analyzing and Evaluating Corporate Social Performance. Academy of Management Review, 20(1), 92-117.
1996
• Human Competence: Engineering Worthy Performance, Thomas F. Gilbert. Pfeiffer. 1996.
1998
• Performance-based Instruction: Linking Training to Business Results, Dale Brethower & Karolyn Smalley. Pfeiffer; Har/Dis edition. 1998.
1998
• Wiese, D, S., and Buckley, M. R. (1998). The evolution of the performance appraisal process. Journal of Management History, 4(3), 233 - 249
1999
• Mayer R. C.; Davis J. H. (1999). The effect of the performance appraisal system on trust for management : A field quasi-experiment. Journal of applied psychology. 84(1), pp. 123-136
• Bringing out the Best in People, Aubrey C. Daniels. McGraw-Hill; 2nd edition. 1999.
•
2001
• Abraham, S.E., Karns, L.A., Shaw, K. and Mena, M . A. (2001). Managerial competencies and the managerial performance appraisal process. Journal of Management, 20(10), 842-852.