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PRESENTED BY :
ABHISHEK CHAUDHARY
MBA 1 SEM
097603
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Definition of Performance Management
The role of HR in the present scenario has undergone a sea change and its focus is on
evolving such functional strategies which enable successful implementation of the major
corporate strategies. In a way, HR and corporate strategies function in alignment. Today,
HR works towards facilitating and improving the performance of the employees by
building a conducive work environment and providing maximum opportunities to the
employees for participating in organizational planning and decision making process.
Today, all the major activities of HR are driven towards development of high
performance leaders and fostering employee motivation. So, it can be interpreted that the
role of HR has evolved from merely an appraiser to a facilitator and an enabler.
Performance Management Process Introduction
goals, reinforce individual employee accountability for meeting those goals, and track
and evaluate individual and organizational performance results.
The performance management process involves:
Performance planning;
Monitoring employee performance;
Employee development;
Evaluating employee performance; and
The performance management process is used to communicate organizational strategic
Recognition
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Performance Management Process
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Comprehensive performance management implementation model
Where PM is applied
The PM approach is used most often in the workplace but applies wherever people
interactschools, churches, community meetings, sports teams, health setting,
governmental agencies, and even political settings. PM principles are needed wherever
in the world people interact with their environments to produce desired effects. Cultures
are different but the laws of behavior are the same worldwide. Armstrong and baron
(1998) defined it as A strategic and integrated approach to increasing the effectiveness
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of organizations by improving the performance of the people who work in them and by
developing the capabilities of teams and individual contributors
It is possible to get all employees to reconcile personal goals with organizational goals.
One can turn around any marginal business and increase productivity and profitability
for any organization, with the transparent and hidden forces embedded in this process. It
can be applied by organisations or a single department or section inside an organisation;
as well as an individual person.
The process is a natural, self-inspired performance process and are appropriately named
the self-propelled performance process (SPPP).
It is claimed that the self-propelled performance management system is:
1. the fastest known method for career promotion;
2. the quickest way for career advancement;
3. the surest way for career progress;
4. the best ingredient in career path planning;
5. the only true and lasting virtue for career success;
6. the most neglected part in teachings about management and leadership
principles;
7. the most complete and sophisticated application of performance management;
8. the best integration of human behaviour research findings, with the latest
management, leadership and organisational development principles;
9. the best automated method for organisational change, development, growth,
performance and profit;
10. the surest and fastest way for increased motivation, productivity, growth,
performance and profitability for both the individual and the organisation;
11. the best career builder and career booster for any career; and
12. inspirational, as it gets people moving, makes them self-starters in utilising own
talents and initiative, automatically like magic.
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First of all, deriving from the strategic plan, a commitment analysis must be done, where
a job mission statement is drawn up for each job. The job mission statement is a job
definition in terms of purpose, customers, product and scope. The aim with this analysis
is to determine the continuous key objectives and performance standards for each job
position.
Following the commitment analysis, is the work analysis of a particular job in terms of
the reporting structure and job description. If a job description is not available, then a
systems analysis can be done to draw up a job description. The aim with this analysis is
to determine the continuous critical objectives and performance standards for each job.
Benefits
Managing employee or system performance facilitates the effective delivery of strategic
and operational goals. There is a clear and immediate correlation between using
performance management programs or software and improved business and
organizational results.
For employee performance management, using integrated software, rather than a
spreadsheet based recording system, may deliver a significant return on investment
through a range of direct and indirect sales benefits, operational efficiency benefits and
by unlocking the latent potential in every employees work day i.e. the time they spend
not actually doing their job. Benefits may include :
Direct financial gain
Grow sales
Reduce costs
Stop project overruns
Aligns the organization directly behind the CEO's goals
Decreases the time it takes to create strategic or operational changes by
communicating the changes through a new set of goals
Motivated workforce
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Optimizes incentive plans to specific goals for over achievement, not just
business as usual
Improves employee engagement because everyone understands how they are
directly contributing to the organisations high level goals
Create transparency in achievement of goals
High confidence in bonus payment process
Professional development programs are better aligned directly to achieving
business level goals
A performance management system includes the following actions.
Developing clear job descriptions and employee performance plans which
includes the key result areas (KRA') and performance indicators.
Selection of right set of people by implementing an appropriate selection process.
Negotiating requirements and performance standards for measuring the outcome
and overall productivity against the predefined benchmarks.
Providing continuous coaching and feedback during the period of delivery of
performance.
Identifying the training and development needs by measuring the outcomes
achieved against the set standards and implementing effective development
programs for improvement.
Holding quarterly performance development discussions and evaluating
employee performance on the basis of performance plans.
Designing effective compensation and reward systems for recognizing those
employees who excel in their jobs by achieving the set standards in accordance
with the performance plans or rather exceed the performance benchmarks.
Providing promotional/career development support and guidance to the
employees.
Performing exit interviews for understanding the cause of employee
discontentment and thereafter exit from an organization.
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Performance measurement is the process whereby an organization establishes the
parameters within which programs, investments, and acquisitions are reaching the
desired results.
This process ofmeasuring performance often requires the use ofstatistical evidence to
determine progress toward specific defined organizational objectives.
http://en.wikipedia.org/wiki/Measurementhttp://en.wikipedia.org/wiki/Statisticalhttp://en.wikipedia.org/wiki/Measurementhttp://en.wikipedia.org/wiki/Statistical7/29/2019 Script SHRM
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Any effective performance management system includes the following
components:
1. Performance Planning: Performance planning is the first crucial component of
any performance management process which forms the basis of performance
appraisals. Performance planning is jointly done by the appraisee and also the
reviewee in the beginning of a performance session. During this period, theemployees decide upon the targets and the key performance areas which can be
performed over a year within the performance budget., which is finalized after a
mutual agreement between the reporting officer and the employee.
2. Performance Appraisal and Reviewing: The appraisals are normally
performed twice in a year in an organization in the form of mid reviews and
annual reviews which is held in the end of the financial year. In this process, the
appraisee first offers the self filled up ratings in the self appraisal form and also
describes his/her achievements over a period of time in quantifiable terms. After
the self appraisal, the final ratings are provided by the appraiser for the
quantifiable and measurable achievements of the employee being appraised. The
entire process of review seeks an active participation of both the employee and
the appraiser for analyzing the causes of loopholes in the performance and how it
can be overcome. This has been discussed in the performance feedback section.
3. Feedback on the Performance followed by personal counseling and
performance facilitation: Feedback and counseling is given a lot of importance
in the performance management process. This is the stage in which the employee
acquires awareness from the appraiser about the areas of improvements and also
information on whether the employee is contributing the expected levels of
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performance or not. The employee receives an open and a very transparent
feedback and along with this the training and development needs of the employee
is also identified. The appraiser adopts all the possible steps to ensure that the
employee meets the expected outcomes for an organization through effective
personal counseling and guidance, mentoring and representing the employee in
training programmes which develop the competencies and improve the overall
productivity.
4. Rewarding good performance: This is a very vital component as it will
determine the work motivation of an employee. During this stage, an employee is
publicly recognized for good performance and is rewarded. This stage is very
sensitive for an employee as this may have a direct influence on the self esteem
and achievement orientation. Any contributions duly recognized by an
organization helps an employee in coping up with the failures successfully and
satisfies the need for affection.
5. Performance Improvement Plans: In this stage, fresh set of goals are
established for an employee and new deadline is provided for accomplishing
those objectives. The employee is clearly communicated about the areas in which
the employee is expected to improve and a stipulated deadline is also assignedwithin which the employee must show this improvement. This plan is jointly
developed by the appraisee and the appraiser and is mutually approved.
6. Potential Appraisal: Potential appraisal forms a basis for both lateral and
vertical movement of employees. By implementing competency mapping and
various assessment techniques, potential appraisal is performed. Potential
appraisal provides crucial inputs for succession planning and job rotation.
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The reason for measuring performance
Fundamental purpose behind measures is to improve performance. Measures that are not
directly connected to improving performance (like measures that are directed at
communicating better with public to build trust) are measures that are means to
achieving that ultimate purpose (Behn 2003).
Behn 2003 gives 8 reasons for adapting performance measurements:
1. To Evaluate how well is public agency performing. To evaluate performance,
managers need to determine what agency supposed to accomplish. (Kravchuk & Schack
1996). To formulate a clear, coherent mission, strategy, and objectives. Then based on
this information choose how you will measure those activities. (You first need to find
out what are you looking for).
Evaluation process consists of two variables: organizational performance data and a
benchmark that creates framework for analyzing that data. For organizational
information focus on outcome of agencys performance, but also including input/
environment/ process/ output- to have a comparative framework for analysis. Its helpful
to ask 4 essential question in determining organizational data:
Outcome should be directly related to public purpose of the organization.
Effectiveness Q: did they produce required results (determined by outcomes).
Cost-effective: efficiency Q (outcome divided by input).
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At the macro level, elected officials deciding which purpose of government actions are
primary or secondary. Political priorities drive macro budgetory choices. Once elected
officials have established macro political priorities, those responsible for micro decisions
may seek to invest their limited allocation of resources in the most cost-effective units
and activities.
In allocating budgets, managers, in response to macro budget allocations (driven by
political objectives), determin alloactions at the micro level by using measures of
efficiency of various activities, which programs or organisations are more efficient at
achieving the political objectives. Why spend limited funds on programs that do not
guarantee exceptional performance?
Efficiency is determined by observing performance- output and outcome achieved
considering number of people involved in the process (productivity per person) and cost-
data (capturing direct cost as well as indirect)
4. To Motivate Giving people significant goals to achieve and then use performance
measures- including interim targets- to focus peoples thinking and work, and to provide
periodic sense of accomplishment.
Performance targets may also encourage creativity in developing better ways to achieve
the goal (Behn) Thus measure to motivate improvements may also motivate learning.
Almost-real-time output (faster, the better) compared with production targets. Quick
response required to provide fast feed-back so workforce could improve and adapt.
Also it is able to provide how workforce currently performing.
Primary aim behind the measures should be output, managers can not motivate people to
affect something over which they have little or no influence.
Once an agencys leaders have motivated significant improvements using output targets,
they can create some outcomes targets.
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output- focuses on improving internal process.
outcome- motivate people to look outside the agency (to seek way to
collaborate with individuals & organisations may affect the outcome produced by
the agency)
5. To Celebrate Organisations need to commemorate their accomplishments- such ritual
tie their people together, give them a sense of their individual and collective relevance.
More over, by achieving specific goals, people gain sense of personal accomplishment
and selfworth (Locke & Latham 1984).
Links from measurement to celebration to improvement is indirect, because it has to
work through one of the likes- motivation, learning...
Celebration helps to improve performance because it brings attention to the agency, and
thus promotes its competence- it attracts resources.
Dedicated people who want to work for successful agency.
Potential collaborators.
Learning-sharing between people about their accomplishments and how they
achieved it.
Significant performance targets that provide sense of personal and collective
accomplishement. Targets could ones used to motivate. In order for celebration to be a
success and benefits to be a reality managers need to ensure that celebration creates
motivation and thus improvements.
By leading the celebration.
6. To Promote How can public managers convince political superiors, legislators,
stakeholders, journalists, and citizens that their agency is doing a good job.
(National Academy of Public Administrations center for improving government
performance- NAPA 1999) performance measures can be used to: validate success;
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justifing additional ressources; earn customers, stakeholder, and staff loyalty by showing
results; and win recognition inside and outside the organisation.
Indirectly promote, competence and value of goverement in general.
To convince citizens their agency is doing good, managers need easily understood
measures of those aspects of performance about which many citizens personally care.
(National Academy of Public Administration-NAPA in its study of early performance-
measurement plans under the government performance and results Act) most plans
recognized the need to communicate performance evaluation results to higher level
officials, but did not show clear recognition that the form and level of data for these
needs would be different than that for operating managers. Different needs: Department
head/ Executive Office of President/ Congress. NAPA suggested for those needs to be
more explicitly defined- (Kaplan & Nortan 1994) stress that different customers have
different concerns(1992).
7. To Learn Learning is involved with some process, of analysis information provided
from evaluating corporate performance (identifying what works and what does not). By
analysing that information, corporation able to learn resons behind its poor or good
performance.
However if there is too many performance measures, managers might not be able to
learn anything. (Neves of National Academy of Public Administration 1986)
Because of rapid increase of performance measures there is more confusion or
noise than useful data.
Managers lack time or simply find it too difficult to try to identify good signals
from mass of numbers.
Also there is an issue of black box enigma (data can reveal that organisation is
performing well or poorly, but they dont necessarily reveal why). Performance
measures can describe what is coming out of black box as well as what is going in, but
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they do not reveal what is happening inside. How are various inputs interacting to
produce the output. What more complex is outcome with black box being all value
chain.
Benchmarking is a traditional form of performance measurement which facilitates
learning by providing assessment of organisational performance and identifying possible
solutions for improvements.
Benchmarking can facilitate transfer of knowhow from benchmarked organisations.
(Kouzmin et al. 1999)
Identifying core process in organisation and measuring their performance is basic to
benchmarking. Those actions probably provide answer to issue presented in purpose
section of the learning.
Measurements that are used for learning act as indicators for managers to consider
analysis of performance in measurements related areas by revealing irregularities and
deviations from expected data results.
What to measure aiming at learning (the unexpected- what to aim for?)
Learning occurs when organisation meets problems in operations or failures. Then
corporations improve by analysing those faults and looking for solutions. In public
sector especially, failure usually punished severely- therefore corporations and
individuals hide it.
8. To Improve What exactly should who- do differently to improve performance? In
order for corporation to measure what it wants to improve it first need to identify what it
will improve and develop processes to accomplish that.
Also you need to have a feedback loop to assess compliance with plans to achieve
improvements and to determine if those processes created forecasted results
(improvements).
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Improvement process also related to learning process in identifying places that are need
improvements.
Develop understanding of relationships inside the black box that connect changes in
operations to changes in output and outcome.
Understanding black box processes and their interactions.
How to influence/ control workforce that creates output.
How to influence citizens/ customers that turn that output to outcome (and all
related suppliers)
They need to observe how actions they can take will influence operations, environment,
workforce and which eventually has an impact on outcome.
After that they need to identify actions they can take that will give them improvements
they looking for and how organisation will react to those actions ex. How might various
leadership activities ripple through the black box.
Principles of performance measurement
All significant work activity must be measured.
Work that is not measured or assessed cannot be managed because there is no
objective information to determine its value. Therefore it is assumed that this
work is inherently valuable regardless of its outcomes. The best that can be
accomplished with this type of activity is to supervise a level of effort.
Unmeasured work should be minimized or eliminated.
Desired performance outcomes must be established for all measured work.
Outcomes provide the basis for establishing accountability for results rather than
just requiring a level of effort.
Desired outcomes are necessary for work evaluation and meaningful
performance appraisal.
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Defining performance in terms of desired results is how managers and
supervisors make their work assignments operational.
Performance reporting and variance analyses must be accomplished frequently.
Frequent reporting enables timely corrective action.
Timely corrective action is needed for effective management control.
If we dont measure
How do you know where to improve?
How do you know where to allocate or re-allocate money and people?
How do you know how you compare with others?
How do you know whether you are improving or declining?
How do you know whether or which programs, methods, or employees are
producing results that are cost effective and efficient?
Common problems with measurement systems that limit their usefulness:
Heavy reliance on summary data that emphasizes averages and discounts
outliers.
Heavy reliance on historical patterns and reluctance to accept new structuralchanges (or re-design of processes) that are capable of generating different
outcomes, like measuring the time it takes them to do a task.
Heavy reliance on gross aggregates that tend to understate or ignore
distributional contributions and consequences.
Heavy reliance on static, e.g., equilibrium, analysis and slight attention to time-
based and growth ones, such as value-added measures
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SOURCES
Google search engine.
Google scholar.
Scribd.
Slideshare.
E- books on performance management
Performance Management (2nd Edition) by Herman Aguinis
Performance Management Systems - Google Books(Robert
bacal)
HR- magazine (PMS)
http://www.peoplemanagement.co.uk/pm/subjects/performance-management/
http://aubreydaniels.com/pmezine/
http://www.google.co.in/url?sa=t&rct=j&q=book%20of%20%20performance%20management%20system&source=web&cd=6&cad=rja&ved=0CEwQFjAF&url=http%3A%2F%2Fbooks.google.co.in%2Fbooks%2Fabout%2FGlobal_Performance_Management.html%3Fid%3DRgOSvPhG5VIC&ei=H86TUKnRKMHjrAfbpoHYDg&usg=AFQjCNEplZgUwduoC7Iu4B4cMNal7hzZIghttp://www.google.co.in/url?sa=t&rct=j&q=book%20of%20%20performance%20management%20system&source=web&cd=6&cad=rja&ved=0CEwQFjAF&url=http%3A%2F%2Fbooks.google.co.in%2Fbooks%2Fabout%2FGlobal_Performance_Management.html%3Fid%3DRgOSvPhG5VIC&ei=H86TUKnRKMHjrAfbpoHYDg&usg=AFQjCNEplZgUwduoC7Iu4B4cMNal7hzZIghttp://www.google.co.in/url?sa=t&rct=j&q=book%20of%20%20performance%20management%20system&source=web&cd=6&cad=rja&ved=0CEwQFjAF&url=http%3A%2F%2Fbooks.google.co.in%2Fbooks%2Fabout%2FGlobal_Performance_Management.html%3Fid%3DRgOSvPhG5VIC&ei=H86TUKnRKMHjrAfbpoHYDg&usg=AFQjCNEplZgUwduoC7Iu4B4cMNal7hzZIghttp://www.peoplemanagement.co.uk/pm/subjects/performance-management/http://aubreydaniels.com/pmezine/http://www.google.co.in/url?sa=t&rct=j&q=book%20of%20%20performance%20management%20system&source=web&cd=6&cad=rja&ved=0CEwQFjAF&url=http%3A%2F%2Fbooks.google.co.in%2Fbooks%2Fabout%2FGlobal_Performance_Management.html%3Fid%3DRgOSvPhG5VIC&ei=H86TUKnRKMHjrAfbpoHYDg&usg=AFQjCNEplZgUwduoC7Iu4B4cMNal7hzZIghttp://www.peoplemanagement.co.uk/pm/subjects/performance-management/http://aubreydaniels.com/pmezine/