PerformanceManagement/ Appraisal

Basic Concepts in PerformanceManagement and Appraisal

• Performance Management:An integrated approach to ensuring that an employee’s performance supports and contributes to the organization’s strategic aims.

• Performance Appraisal:Setting work standards, assessing performance, and providing feedback to employees to motivate, correct, and continue their performance.

Definition

• Performance appraisal is a systematic and objective way of evaluating both work related behaviour and potential of employees.

• Performance appraisal is a method of evaluating the behaviour of employees in the work spot, normally including both the quantitative and qualitative aspects of job performance.

The Purpose of Performance Appraisal

• Clarifies objectives

• Motivating employees through feedback and achievements

• Training needs

• Identification of personal strength and weakness

• Career and succession planning

• Team role clarification

• Resolving confusion

Steps of Performance Appraisal

1) Establish performance standards

2) Communicate the standards

3) Measure actual performance

4) Compare actual performance with standards and discuss the appraisal

5) Take corrective action, if necessary

Traditional and Modern methods of performance management

Traditional

• Graphic Rating Scale Method

• Alternation Ranking Method

• Paired Comparison Method

• Forced Distribution Method

• Critical Incident Method

• Annual Confidential Report (ACR)

• Narrative Forms

Modern

• Behaviorally Anchored Rating Scales (BARS)

• Management by Objectives (MBO)

• Assessment centre

• Cost accounting method

• 360 degree feedback method

Methods of Rating

• Graphic Rating Scale Method- is the simplest and most popular performance appraisal technique. A scale is used to list a number of traits and a range of performance for each, then the employee is rated by identifying the score that best describes his/her performance level for each trait.

Managers must decide which job performance aspects to measure.

Generic dimensions – communication ,teamwork etc

Actual job duties.

Behaviorally recognizable competencies.

A Graphic Rating Scale

Excellent Good Fair Poor

Quality of work

Quantity of work

Creativity

Integrity

Alternation Ranking Method – is where employees are ranked from best to worst on a particular trait, choosing highest, then lowest, until all are ranked.

• Paired Comparison Method – involves ranking employees by making a chart of all possible pairs of employees for each trait and indicating which is the better employee of the pair.

• Forced Distribution Method – is where predetermined percentages of rates are placed in various performance categories; similar to grading on a curve.GE has 20 %(top) 70 % middle and 10% (bottom).

• Critical Incident Method – is where a supervisor keeps a record of uncommonly good and/or undesirable examples of an employee’s work-related behavior. The supervisor and subordinate meets to discuss latter's performance and reviewing it with the employee at predetermined times may be 6 months.

Examples of Critical Incidents for a Plant Manager

Continuing Duties Targets Critical Incidents

Schedule production

for plant

90% utilization of

personnel and

machinery in plant;

orders delivered on

time

Instituted new production

scheduling system; decreased late

orders by 10% last month; increased

machine utilization in plant by 20%

last month

Supervise machinery

maintenance

No shutdowns due to

faulty machinery

Instituted new preventative

maintenance system for plant;

prevented a machine breakdown by

discovering faulty part

• Confidential Report or Descriptive report prepared at the end of the year, prepared by the employee’s immediate supervisor The report highlights the strengths and weaknesses of employees Prepared in Government organizations. Does not offer any feedback to the employee

• Narrative Forms – involve rating the employee’s performance for each performance factor, writing down examples and an improvement plan, aiding the employee in understanding where his/her performance was good or bad, and summarizing by focusing on problem solving

Behaviorally Anchored Rating Scales (BARS)

• Combines the benefits of narratives, critical incidents, and quantified scales, by anchoring a scale with specific behavioral examples of good or poor performance.

The five steps in developing a BARS are: 1) Generate critical incidents for effective and ineffective

jobs2) Develop performance dimensions3) Reallocate incidents ( with another set of experts,

retain the CI if 50 % to 80% agree ) 4) Scale the incidents 5) Develop final instrument.

Advantages of BARS

– A more accurate gauge

– Clearer standards

– Feedback

– Independent dimensions

– Consistency

Management by Objectives (MBO)

• A comprehensive and formal organization wide goal-setting and appraisal program requiring:

1. Setting of organization’s goals.

2. Setting of departmental goals.

3. Discussion of departmental goals.

4. Defining expected results (setting individual goals).

5. Conducting periodic performance reviews.

6. Providing performance feedback.

Cost Accounting Method• Cost Accounting Method : This method evaluates an

employees performance in relation to the contribution of an employee in monetary terms. Here the rater evaluates the employee in terms of cost of retaining the employee and the benefits the organisation derives from him/her.

• The following factors are taken into account in this method :

(1) Cost of training the employee.(2) Quality of product or service rendered.(3) Accidents, damages, errors, spoilage, wastages, etc.(4) The time spent in appraising the employee.

360 Appraisal System

• 360o Appraisal System It is a systematic collection and feedback of performance data on an individual or group, derived from a number of stakeholders. Data is gathered and fedback to the individual participant in a clear way designed to promote understanding, acceptance and ultimately behavior

Problems of Performance Appraisal

Subjective bias and favoritism are real problems.

They focus too much symptoms of poor performance rather than finding the underlying causes.

Managers and employees dislike the process.

Raters have trouble deciding performance levels.

Employees who are not placed in the top performance category experience a reverse motivation effect

KRA and KPA

• Key Result Areas refer to general areas of outputs or outcomes for which the department’s role is responsible.

• Key Performance Areas are the areas within the business unit, for which an individual or group is logically responsible.

• KRA defines the outcome or end result expected to be delivered while KPA defines all the activities, not always result oriented, an individual has to perform being on job.

KEY RESULT AREA

Key Result Area

Key = crucial/main

Result = outcome/end/consequence

Area = space/range

KEY RESULT AREA = crucial outcome space

-KRA is the area identified as important or crucial where a result will assist in the achievement of the set objectives or goal.

-KRA defines what a job is expected to accomplish.

-KRA’s might fall within the scope of Key Performance Areas (KPA)

Key Performance Area

Key = crucial/main

Performance = Achievement/Attainment

Area = space/range/field of operation

KEY PERFORMANCE AREA = Main achievement space

-KPA is the overall scope of activities that an individual on a job role has to perform.

-KPA is not always result focused.

-KPA’s can be inclusive of KRA’s

Example :

Role – Product Manager

Goal – Ensuring delivery of quality product within schedule.

Key Result Area

Customer Satisfaction.

Product Management.

Operational Cost Control.

Quality Check.

Record keeping.

Key Performance Areas

Maintaining good working condition in plant.

Optimum Resource Utilization.

Process Improvement.

Safety and Prevention planning and control.

Working within the company’s SLA(Service Level Agreement), GRC(Governance, Risk Management and Compliance) policies