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Performance Management
Learning Outcome
• Distinguishbetweenperformance management andperformance appraisal
• Performance appraisal techniques
• Relationship of performance appraisal torewards
At the endof the sessionyou shouldbe able to answer the following:
-What isPerformance?
• Dimensionsof Performance
• Why shouldPerformance be managed
• Linkagesof PMwithotherHR functions
• How to conductperformance appraisal interview
• Errors to avoid
Performance managementdefined
Performance managementisasystematicprocessforimprovingorganizational performance by
developingthe performance of individualsandteams.Itisa meansof gettingbetterresultsby
understandingandmanagingperformance withinanagreedframeworkof plannedgoals,standards
and competencyrequirements.
As WeissandHartle (1997) commented,performancemanagementis:A processforestablishinga
sharedunderstandingaboutwhatistobe achievedandhow it isto be achieved,andanapproach to
managingpeople that increasesthe probabilityof achievingsuccess.PerformanceManagement
Cycle
Performance Evaluation
Performance Evaluationisthe systematicprocessof identifying,measuring,influencingand
developingjobperformance of the employeesinrelationtothe setnormsand standardsfora
particularperiodof time inorderto achieve variouspurposes.
Evaluation of the effectivenessofthe entire PMsystem inrelation to corporate objectives
Departmental &Individualperformance targetsidentified
Implicationformanagementpolicies
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WhyPerformance Evaluation?
• To communicate the visiontoall employees
• To setindividualandteamtargets
• To identifyindividual‘scurrentlevel of performance andenablesemployeestoimprove their
performance
• To identifyemployeesstrengthandweakness
• To provide abasisfor rewardingemployeesinrelationtotheircontributiontothe organizational
goals
• To motivate individuals
• To identifytraininganddevelopmentneeds•Toidentifypotential performance•To provide
informationforsuccessionplanning
Performance Appraisal
Performance appraisal confersvalueforthe degree of accomplishmentof atask or jobof work
assignedtoindividuals.
Performance appraisal isanimportantfeedforwardandfeedbackcontrol techniqueinhuman
resource managementinrespectof the performance of employees.
Appraisalsregularlyrecordanassessmentof anemployee'sperformance,potential and
developmentneeds.The appraisal isanopportunitytotake an overall view of workcontent,loads
and volume,tolookbackon whathas beenachievedduringthe reportingperiod,andagrees
objectivesforthe next.
What are the objectivesofappraisals?
The objectivesof the appraisal scheme shouldbe determinedbefore the systemisdesignedin
detail.The objectiveswill toalarge extentdictate the methodsandperformance criteriafor
appraisal sotheyshouldbe discussedwithemployees,managersandtrade unionstoobtaintheir
viewsandcommitment.The mainobjectivesof anappraisal systemare usuallytoreview
performance,potential andidentifytrainingandcareerplanningneeds.Inadditionthe appraisal
systemmaybe usedto determine whetheremployeesshouldreceive anelementof financial reward
for theirperformance.
Performance reviews - give managersand employeesopportunitiestodiscusshow employeesare
progressingandtosee what sortof improvementscanbe made or helpgiventobuildontheir
strengthsandenable themtoperformmore effectively.Review of potential anddevelopmentneeds
- predictsthe level andtype of workthatemployeeswill be capable of doinginthe future andhow
theycan be bestdevelopedforthe sake of theirowncareerandto maximize theircontributionto
the organization.
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Rewardreviews - determine the 'rewards'thatemployeeswillgetfortheirpastwork.The reward
reviewisusuallyaseparate processfromthe appraisal systembutthe reviewisoftenassistedby
informationprovidedbythe performanceappraisal.
What are the benefitsofappraisals?
Appraisalscanhelp toimprove employees'jobperformance byidentifyingstrengthsand
weaknessesanddetermininghowtheirstrengthscanbe bestutilizedwithinthe organizationand
weaknessesovercome.Theycanhelptoreveal problemswhichmaybe restricting
employees‘progressandcausinginefficientworkpractices.Some employersmaytalktotheir
employeesregularlyabouttheirproblemsandperformanceatworkand maynot therefore see the
needfora formal appraisal system.Regulardialogue betweenmanagersandtheirstaff aboutwork
performance should,of course,be encouraged.
However,inthe absence of a formal appraisal scheme,muchwilldependonthe attitude of
individualmanagers.Some will give regularfeedbackontheiremployees'performance andpotential
while otherswillneglectthisresponsibility.Anappraisal systemcandevelopagreaterdegree of
consistencybyensuringthatmanagersandemployeesmeetformallyandregularlytodiscuss
performance andpotential.Experienceshowsthiscanencourage better performance from
employees.Appraisalscanalsoprovide informationforhumanresource planningtoassist
successionplanningandtodetermine the suitabilityof employeesforpromotion,forparticular
typesof employmentandtraining.Inadditiontheycan improve communications by giving
employees an opportunity to talk about their ideas and expectationsandtobe toldhow they
are progressing.Thisprocesscanalsoimprove the quality of working life by increasing mutual
understanding between managers andemployees.
Processof Developingan Appraisal Method
• SetOrganizational Objectives
• Decide performance policies
• Determine performancecriteriaandstandards
• Decide Evaluationmethodsandtechniques(QualityScale,Rightstatementmarking,essays,exams,
KPI’s,critical incidents,selfevaluation,MBO,BARS,360 degree appraisal,Balance score card)
• Draft the evaluationform
• Trainthe appraisersandappraises
• Appraise
• Discussappraisedresults
• Store Data
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• Make Decisions
Appraisal Methods/ Techniques
Rating
Thismethodlistsanumberof factorsto be assessedsuchas qualityandoutputof work,whichare
thenratedon a numerical scale accordingto level of performance,forexample:
1 - Outstanding
2 - Exceedsrequirementsof the job
3 - Meetthe requirementsof the job
4 - Showssome minorweaknesses5- Showssome significantweaknesses
6 - Unacceptable.
The rating scalesmethodiseasytoconstruct, use andunderstand.However,itishighlysubjective,
there isoftena tendencytobunchthe ratingsaround the average pointandan overall impression
can influence all the individualassessments.
Comparisonwith objectives
Under thissystem,the employeeandhisorher manageragree objectivesatthe beginningof the
appraisal period.The subsequentappraisal isbasedonhow farthese objectiveshave beenmet.This
methodismore objective thanratingscalesbecause the emphasisisonworkachievement.Itcanbe
more participative becauseitgivesemployeesthe chance toagree theirobjectivesandenables
themto carry out a form of self-appraisal.Onthe debitside there maybe some employeeswhodo
not welcome the elementof self-direction - because theywouldratherbe toldwhatto do.
An importantconsiderationinusingthissystemiswhetherchangesincircumstanceswhichare
beyondthe individual'scontrol,suchasthe economicenvironment,canresultinobjectives
becomingunrealistic.Itisthereforewise totake stock,perhapsmid-waythroughareportingperiod,
and decide whetherthere isaneedtorevise objectivesbecause of unforeseencircumstances.
It isworth stressingthatratingscalesusedalone donotalwaystake full accountof results,while the
objectivesmethodcanlackanalysisof performance.Some organizationstherefore combine the two
methodsintheirappraisal system.
Critical incidents
Usingthis methodthe appraiserisrequiredtorecordincidentsof employees'positiveandnegative
behaviourduringagivenperiod.The appraiserisexpectedtogive feedbackonthisbehaviourwhen
it occurs whetheritisbe to showappreciationof goodperformance ortogive counsellingtohelp
poor performance.
The record of incidentsthroughoutthe yearformsthe basisof the appraisal report.Thismethodof
appraisal encouragesfrequentrecordingandenablesemployees'performance tobe judgedon
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actual incidentsratherthanonsubjective assessments.Italsohelpstoovercome the problemof
annual reportingwhichcanconcentrate undulyoneventsimmediatelypriortothe appraisal.The
critical incidentmethodcan,however,be time consumingandburdensome anditcan resultin
overactive supervision;some employeesmayfeelthateverythingtheydo isbeingobservedand
recorded.Inadditionitmaybe an inappropriate methodof appraisal injobswhere thereislittle
opportunitytoshowinitiative.The critical incidentsmethodissometimesusedtosupplementother
techniques.
BehaviourallyAnchoredRating Scales(BARS)
Thismethodwhichovercomessome of the problemswithconventional ratingscales.
• Meetingsare heldwiththe managerswhowill rate the peopleholdingthe jobinquestion.These
managersare thenaskedtolistseveral keyaspectsof performance inthe particularjob.For
example,foradepartmental retailstore manageraratingscale couldinclude 'handlingcustomer
complaints'and'‗meetingday-to-daydeadlines'
• The same or a differentgroupprovidesexamplesof good,average andpoorperformance foreach
category.For a retail store manager'scategoryinrelationtodeadlines,anexample of verygood
behaviourwouldbe:'couldbe expectednevertobe late inmeetingdeadlines,nomatterhow
unusual the circumstances'.Anexampleof poorbehaviourwouldbe:'Couldbe expectedto
disregarddue datesinorderingandrun outof a major line inhisorher department'
• A numberof suchcategoriesor'anchors' is generatedandeachisgivena value rangingperhaps
from1 (verypoorbehaviour) to7 (outstandingbehaviour).The numberof categoriestobe ratedwill
vary accordingto the nature of the jobbut mostschemeshave between6and9
• Once the scheme iscompletedappraisersuse ittoevaluate the expectedbehaviourof each person
beingrated.Individual ratingscalesare constructedonthe basisof eachjob holder'stypical or
expectedbehaviouroneachscale.
The advantage of BARSis thatthe anchorscalesare directlyapplicable tothe jobbeingevaluated
and are therefore more precise thanthe oftenvague traitsusedinconventional ratingscales.Onthe
otherhand itis costlyandtime consumingtointroduce.
360 Degree appraisal
360-degree feedbackrecognizesthe complexityof managementandthe value of inputfromvarious
sources – it is axiomaticthatmanagersshouldnotbe assessingbehaviourstheycannotobserve,and
the leadershipbehavioursof subordinatesmaynotbe knowntotheirmanagers.
It isusedfor a numberof purposes.Researchconductedbythe Ashridge ManagementResearch
Group (Handyetal, 1996) foundthat typically,360-degree feedbackformspartof a self-
developmentormanagementdevelopmentprogram. The 45 users coveredby the surveyfell into
the followinggroups:
• 71 per centuseditsolelytosupportlearninganddevelopment;
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• 23 percent useditto supporta numberof HR processessuchas appraisal,resourcingand
successionplanning;
• 6 per centusedit to supportpaydecisions.
Parties involvedin360 degree appraisal
Superior- Peers-IndividualCustomers=Subordinates
Summary
• Evaluationmethodsandtechniques(QualityScale,Rightstatementmarking,essays,exams,KPI’s,
critical incidents,self evaluation,MBO,BARS,360 degree appraisal,Balance score card) ,•The
objectivesof the appraisal schemeshouldbe determinedbeforethe systemisdesignedindetail.•
The appraisal isan opportunitytotake an overall view of workcontent,loadsandvolume,tolook
back on whathas beenachievedduringthe reportingperiod,andagreesobjectivesforthe next.
Mini case
Characters: Alice,anewmanagerof Trainingand Developmentinalarge bank Belinda,ateller-
trainee whoisblack
Alice washiredlastyearas a first-line managerinthe TrainingandDevelopmentdepartmentof the
bankwhere she has workedpart-time forseveral yearswhile earningherbachelor’sdegree in
business.Hermainresponsibilityistotrainbanktellers.The bankisverybigon promotionfrom
within,somostpeople startastellers.The bankisalsotryingto hire (andeventuallypromote) more
racial minorities,because there aren’talotof minoritiesonthe staff.Infact,the bankhas beenthe
target of several discriminationlawsuitsthe lastfew yearsandnow wantstochange itsimage of
beinga “racist” organization.
The bank’sclassroom facilityhastrainingworkstationsof tellers’equipment.Whenatrainee is
hired,trainingtakesanentire workweek,andeachtrainee iseitherpassedorfailedatthe endof
the week.Each“class” of newtraineesusuallyconsistsof aboutadozenpeople.Alice hasbeenusing
writtenandaudiovisual materialsdevelopedbythe bank.Also,she tookaclassin Trainingwhile a
student.Consequently,she knowsthatadultslearnmore effectivelywhentheyare givenpositive
reinforcement(fordoingsomething correctly) andconstructive criticism(formakingamistake).So
far, thishasworkedprettywell.Today,however,threedaysintoasession,she hasbeenhitwitha
potentiallyseriouscomplaint.Belindaisablackteller-trainee.She seemstohave averyhard time
learningsome of the material,muchmore sothan some of hercounterparts.All of the other
traineeshappentobe white.Because muchof the traininginvolvesobjective quizzesandhands-on
computerwork,Alice knowsthatBelindareallydidmake alotof mistakes.
Alice hadbeencareful topointoutBelinda’smanymistakesandexplainhow tocorrectthem.
Belinda,however,doesnotappreciate the constructivecriticism.She insiststhatAlice istreatingher
differentlybecause of herrace and wantsto file aformal complaintunlessAlice letsuponher:
“You’re pickingonme because I’mblack.I don't see youpickingonthe white girls.I’dbetterpass
thistraining,oryour companyisin trouble.”
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*This learningresource hasbeencompiledbyJayadevade Silvaforpostgraduate studentsof
businessmanagementatNational school of businessmanagement