Performance Management
Performance Management
Performance Management
Questions
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References
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Question. No. 1)
Review briefly the history of performance management?
Answer:
Performance Management is a process of Management contributes to the effective Management
of Individuals and teams to achieve high levels of Organisational Performance. (Performance
management involves thinking through various facets of performance, identifying critical
dimensions of performance, planning, reviewing and developing and enhancing performance
related competencies).(Dr. T.V. Rao 2004).
No one knows precisely when formal methods of reviewing performance were first introduced.
However, where employees were driven by learning and development of their skills, it
failed miserably. The gap between justification of pay and the development of skills and
knowledge became a huge problem in the use of Performance Management. It is said that the
emperors of the wel dynasty (AD 221-265) had an impartial rater whose task it was to evaluate
the performance of the official family. Centuries later, Ignatius Loyola established a system for
formal rating of the members of Jesuit society. The first formal monitoring systems, however,
evolved out of the work of Fredrick taylor and his followers before world war o=1. Rating for
officers in the US armed services was introduced in the 1920s. And this then spread to the UK, as
did some of the factory-based American systems. Merit rating came to the fore in the USA and
the UK in the 1950s, when it was sometimes re-christened performance appraisal. Management
by objective then came and went in the 1960s and 1970s, and experiments were made
simultaneously with the critical incident technique and behaviorally anchored rating scales. A
revised form of result-oriented performance appraisal emerged in the 1970s and still exists today.
The term performance management was first used in the 1970s by beer and Ruh. Their thesis
was that performance is the best developed through practical challenges and experiences on the
job, with guidance and feedback from superiors. However, it did not become a recognized
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process until the latter half of the personal management in 1992, which produced the following
definition of performance management.
A strategy which relates to every activity of the organization set in the context of its human
resource policies, culture, and style and communication systems. The nature of the strategy
depends on the organizational context and can vary from organization to organization. This
became evident in the late 1980s; the realization that a more comprehensive approach to manage
and reward performance was needed. This approach of managing performance was developed in
the United Kingdom and the United States much earlier than it was developed in Australia. It
was suggested that it was describe as a performance management system complied with text
book definition when the organization demonstrated certain characteristics:
It communicated a vision of its objectives to all its employees.
It set departmental and individual performance targets which were related to wider objectives.
It conducted a formal review progress towards these targets.
It used the review process to identify training, development and reward outcomes.
It evaluated the whole process in order to improve effectiveness.
It used formal appraisal procedures as ways of communicating performance requirements which
were set on a regular basis.
The 1992 research found that in the organizations with performance management system, 85%
had performance-related pay and 76% rated performance in 2003. The emphasis was on
objective setting and reviews which, as the authors report noted,
Leaves something of a void when it comes to identifying of development needs on a longer-term
basis
There is a danger with results-oriented schemes in focusing excessively on what is to be
achieved and ignoring the how. It was further noted that some organizations were moving in the
direction of competency analysis, but not very systematically.
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Question No. 2)
Explain and discuss the classification of performance measures?
Answer:
The classification of performance measures
Performance measures or metric can be classified under a number of headings.
Finance income, shareholder value, added value, rates of return, costs.
Output units produced or processed, throughput, sales, new accounts.
Impact attainment of a standard (quality, level of service, etc.), changes in behavior,
completion of work/project, level of take-up of a service, innovation.
Reaction Judgment by others: colleagues, internal and external customers.
Time speed of response of turnaround, achievement compared with timetables, amount of
backlog, time to market, delivery times.
Andy Neeley and Chris Adams identify five distinct but interlocking perspective of performance
which can guide measurement:
1- Stakeholder satisfaction - who are the key stakeholders, and what do they want to need?
2- Strategies what strategies do we have to put in place to satisfy the wants and needs of
these key stakeholders?
3- Processes we critical processes do we require if we are to execute these strategies?
4- Capability what capabilities do we need to operate and enhance these processes?
5- Stakeholder contribution what contribution do we require from stakeholders if we are to
maintain and develop these capabilities?
Guidelines for defining performance measures comprise:
Measures should relate to result and observable behaviors.
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Question No. 3)
How the organizations can create line managers commitment and capability?
Answer:
It is probably the most important issue. If it is not dealt with, performance management will fail.
Eight approaches to achieving commitment and capabilities
1- Provide leadership from the top
Conveying the message that performance management is an integral part of the fabric of
the managerial practices of the organization. This spells out the beliefs that this is what
good management is about.
2- Involve line managers in the design and development of performance management
processes. This could be extended by the use of focus groups and, ideally, general surveys
of opinions and reactions.
3- Use competence in performance management as a key criterion in assessing managers
performance.
4- Use 360-degree feedback or upward assessment to assess the performance management
abilities of line manager, and take corrective action as required. If a full 360-degree
system is not in use, then individuals can be asked specifically to assess how their
managers carried out their performance management responsibilities.
5- Survey the reaction of employees to performance management regularly, and take action
to deal with weakness.
6- Provide system training in the performance management skills managers need to use.
This can be providing HR specialist, although ideally experienced, committed and
competent line managers can be used as coaches and mentors.
7- Provide continuing coaching and guidance to individuals managers to supplement formal
training. HR operating as a business partner alongside line managers so that they
appreciate the significance of performance management and their staff.
Question No. 4)
Why is performance management survey so important? List it contents.
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Answer:
Performance management survey
The aim of the survey was to gather information on what tools and activities practitioners are
using under the banner heading of performance management, and on the thinking behind the
design of performance management processes. The survey was also concerned with obtaining
views on the effectiveness of performance management as a whole and of the various processes
involved and on the impact performance management makes.
Contents of the performance management survey
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Question No. 5)
Explain various methods of measuring human intellectual capital?
Answer:
Methods of Measuring the Intellectual Capital
The interest on managing the Intellectual Capital has caused the development of different
methods of measuring it. There are several groups of methods of measuring the Intellectual
Capital, which can be used in order to evaluate these assets. Some of these methods were
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attempts made by different companies for their internal use rather than the development of a
universal measuring method. But they still exist and are basis to create new methods. According
to Luthy (1998) and Williams (2000) all methods can be divided into four main groups:
1. Direct Intellectual Capital Methods (DICM) estimate the dollar value of intangible assets by
identifying its various components. Once these components are identified, they can be directly
evaluated, either individually or as an aggregated coefficient.
2. Market Capitalization Methods (MCM) calculate the difference between a companys
market capitalization and its stockholders equity as the value of its intellectual capital or
intangible assets.
3. Return on Assets Methods (ROA) average pre-tax earnings of a company and divide them by
the average tangible assets of the company. The result is a company ROA that is then compared
with its industry average. The difference is multiplied by the companys average tangible assets
to calculate average annual earnings from intangibles. By dividing the above-average earnings
by the companys weighted average cost of capital or an interest rate, one can derive an estimate
of the value of its intangible assets or intellectual capital.
4. Scorecard Methods (SC) identify various components of intangible assets or intellectual
capital and indicators and indices are generated and reported in scorecard or as graphs. SC
methods are similar to DIC methods, except that no estimate is made of the dollar value of
intangible assets. The four main approaches for measuring intangibles (Direct Intellectual Capital
Methods, Market Capitalization Methods, Return on Assets Methods and Scorecard Methods)
have various advantages and disadvantages,
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Question No.6)
Differentiate between the process of performance management and talent management?
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Answer:
There is a difference between Talent and Performance management when you look at it this way
.
Performance Management is that discipline used to assess how well employees are doing
against their goals to help drive revenue and growth in the organization, and/or what they
contribute to drive out costs.
Performance Management is consisting of the following:
- Review the performance appraisal like Behavior, Output etc., little bit different than usual
- Show the significant difference between a Star performer and poor
- Rating Analysis based on BARS
- Do the potential appraisal as per the customized need of the organization
- Identification of Training needs and fulfilling the gaps
- Competency development and mapping
- Modernization and normalization
- Identifying Personal Development Plan
- Initiating Performance Improvement Plan
- Developing Transactional Metrics/Operational Metrics / Workforce Analysis
- Developing Business Intelligence
- Developing Leadership skills etc.
Talent Management on the other hand is a broader perspective of disciplines that can be
implemented to help employees drive revenue and growth and/or reduce operating costs.
Performance Management is just one of them. Talent is a collective of these additional
disciplines:
Talent Management is basically, one has to manage to Human Resources i.e. people who are
exists in the organization. When we talk about Management of Talent, we need to take care of the
following :
- Their Compensation and benefits
- Rewards Administration
- Leadership
- Systems and process
- Involving the Talented people in decision making process
- Make them more responsible
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Question No. 7)
Explain and discuss various recognition schemes?
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Answer:
Recognition schemes
The total reward concept is based on understanding the needs and expectations of employees
in order to motivate them and obtain their total co-operation, on the basis that this leads to
financial success for the organization and personal fulfillment for employee. Appropriate
recognition of employees plays a vital role in this. Recognition is about saying thank you
for a job well done, and thereby motivating the recipient to continue those things thats
benefit the organization. Recognition will not necessarily motivate the unmotivated
employees, but it can reinforce the motivated, encourage and reassure those who are trying to
succeed, and prevent previously committed employees becoming demotivated as they think
their efforts are not noted. Performance management process should identify where special
efforts should be made to recognize achievements either during the course of the day-to-day
work or during formal reviews.
At the most basic level, recognition is free. It does not cost the organization or its managers
anything expect for the two minutes it takes to say well done, and thanks, in person or by
email, or the fifteen minutes it takes to write a brief note of appreciation, yet it speaks
volume.
Yet effective recognition rest on the efforts of the manager, some managers managers
apparently effortlessly recognize the contribution of their staff and establish positive working
relationships. Other find it more of a challenge: praise that is given falsely or negatively
thats was great, but worthless. The ability to recognize and reward effort is therefore a
key part of the managers role and should be reflected in their development and training.
Informal recognition
In an organization with a large proportion of comparatively low-paid employees, it is
important to have a relatively informal recognition scheme, with a greater number of
recipients to fairly frequent moderate- low-cost awards. It can be argued that it is always
better to give 1,000 10,000.
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Informal recognition schemes are not competitive. Every person, team or group who meets
the standard or who does an excellent job should benefit. Kohn (1993) argues strongly
against any system that creates winners because for each person who wins, these are many
others who have lost.
Formal recognition
Recognition scheme may involve some form of public recognition, such as through an
intranet, house journal, noticeboard or an employee of the month scheme. Appropriate such
as these tell everyone about particular achievement or effective contribution.
Formal recognition also can provide individuals with tangible means of recognition in the
forms of gifts, vouchers, holidays or trips in the UK or aboard, days or weekends at health
spas, or meals out. The key with formal schemes is to ensure that the awards fits the
achievement, the award is made to the right people, and that it is felt fair. Whereas it is
highly motivating to be formal recognized for a major achievement, it may be demoralizing
and demotivating for someone to feel that recognition has been given elsewhere for
something he or she has accomplished.
Question No. 8)
Explain and discuss balanced scorecard concept that enables managers to view buseiness.
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Answer:
Balance scorecard
A carefully selected balanced set of measures derived from the drivers of strategies that
represent a tool for leaders to use in Communicating strategic direction to the organization
and motivating change.
The balanced scorecard is a strategic planning and management system that is used
extensively in business and industry, government, and nonprofit organizations worldwide to
align business activities to the vision and strategy of the organization, improve internal and
external communications, and monitor organization.
The balanced scorecard concept as originally developed by Kaplan and Norton addresses this
multiple requirement. They take the view that what you measure is what you get and they
emphasis that
No single measure can provide a clear performance target or focus attention on the critical
areas of the business. Managers want a balanced presentation of both financial and
operational measures.
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Kaplan and Norton therefore devised what they call the balanced scorecard a set of
measures that give top managers a fast but comprehensive view of the business. Their
scorecard requires managers to answer four basic questions, which means looking at the
business from four related perspective:
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information:
Corporate objectives, measures and targets
Business unit targets (translated from corporate targets)
Team/individual objectives and initiatives.
Teams and individuals are expected to define how their objectives are consistent with business
unit and corporate objectives, to indicate what initiatives they purpose to take to achieve their
objectives, to list up to five performance measures for each objective, and to set targets for each
measures. This personal scorecard is a method of communicating corporate and unit objectives to
the people and teams performing the whole. It communicates a holistic model that links
individual efforts and accomplishment to business unit objectives. It can be therefore be
incorporated as a performance management process at individual, team, unit and corporate level.
EXAMPLE OF BALANCED SCORECARD
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Question No. 9
Explain and discuss any two of team performance management process.
Answer:
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Performance measures for a team will be related to the purpose of the team and its particular
objectives and standard of performance. Team performance measures in this simple are therefore
mainly concerned with output, activity levels, customer service and satisfaction, and financial
result. Most measures for teams, as for individuals likely to fail into one or more of these
categories.
Team performance management processes
Team performance management activities follow the same sequence as for individual
performance management.
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Agree objectives
Formulate plans to achieve objectives
Implement plans
Monitor progress
Review and assess achievement
Redefine objectives and plans in the light of the review
The key activities of setting work and process objective and conducting team reviews and
individuals reviews
Setting work objectives
Work objectives for a team are set in much the same way as individual objectives. They will be
based on an analysis of the purpose of the team and its accountabilities for achieving results.
Targets and standards of performance should be discussed and agreed by the team as a whole.
These may specify what individual members are expected to contribute. Project teams will agree
project plans which define what has to done, who does it, the standards expected, and the time
scale.
Setting process objectives
Process objectives are also best define by the team getting together and agreeing how they
should conduct themselves as a team under headings related to the list of team performance
measures referred to above, including:
-
Interpersonal relationship
The quality of participation and collaborative effort and decision-making
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an anonymous online feedback form that asks questions covering a broad range of workplace
competencies. The feedback forms include questions that are measured on a rating scale and also
ask raters to provide written comments. The person receiving feedback also fills out a self-rating
survey that includes the same survey questions that others receive in their forms. Managers and
leaders within organizations use 360 feedback surveys to get a better understanding of their
strengths and weaknesses. The 360 feedback system automatically tabulates the results and
presents those in a format that helps the feedback recipient create a development plan. Individual
responses are always combined with responses from other people in the same rater category (e.g.
peer, direct report) in order to preserve anonymity and to give the employee a clear picture of
his/her greatest overall strengths and weaknesses. 360 Feedback can also be a useful
development tool for people who are not in a management role. Strictly speaking, a "nonmanager" 360 assessment is not measuring feedback from 360 degrees since there are no direct
reports, but the same principles still apply. 360 Feedback for non-managers is useful to help
people be more effective in their current roles, and also to help them understand what areas they
should focus on if they want to move into a management role.
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Question No. 11
Define under performers and explain the reasons and reminders for poor performance.
Answer:
The improvement of performance is a fundamental part of the continuous process of
performance management. The aim should be the positive one of maximizing high performance,
although this involves taking steps to deal with under-performance. When managing underperformers, remember the advice given by Handy (1989) that this should be about applauding
success and forgiving failure. He suggests that mistakes should be used as an opportunity for
learning something only possible if the mistake is truly forgiven because otherwise the lesson
is heard as a reprimand and not as an offer of help.
Reasons for poor performance
Individuals may perform badly because of lack of ability or insufficient motivation. But as
William Deming (1986) pointed out, poor performance may not be their fault. It could arise from
a defective system of work, inadequate leadership or guidance, the allocation of inappropriate
task, placement in jobs that are beyond their capabilities or insufficient training.
Manager can play a major and positive part in reducing the task of performance problem by:
-
Allocating work to people which is within their capacity , subject possibly to additional
training. stretch objectives may reasonably be set, but they have to achievable, although
not necessarily easily
Acting as coaches developing the talent of their staff and recognizing that every
occasion when they give someone an instruction or discuss work that has been completed
provides an opportunity for learning. This involves providing guidance on how to carry
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out unfamiliar task or discussing the lesson learned from successful or unsuccessful
accomplishment so that in the former case they can do even better in future, and in the
latter they can avoid repeating the mistake.
-
Using performance management process to help with all the above activities.
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Performance management processes is fit the culture of the organization, the context in
which it operates and the characteristic of its people and work practices.
There is full support from top management
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effectively.
Staff believes that performance management is carried out by the managers effectively.
Performance management processes are integrated with strategic and business planning
processes.
Performance management is integrated with other HR processes.
Performance management processes recognize that there is community of interest in the
Stage 2) Planning
Planning the development and introduction of performance management requires:
The preparation of a summary of the diagnostic review, setting out an analysis of the
situation, the identification of reasons for change and the general approach should be be
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The program should set out a time tables for achieving the aims agreed at the planning
stage covering the various processes of performance management and in detail the
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arrangements for:
Obtaining senior management approval and support
Involving line managers and defining their requirements from performance management,
taking particular account of the need to get them to buy and into the scheme
Involving staff and their representative in the design of the scheme to ensure that they
own it
Obtaining the resources required to develop the scheme
Pilot testing proposed setting the time table for development and introduction
Establishing success criteria
Monitoring and evaluate implementation, including time skills
pay decisions
The use of 360-degree appraisal
Stage 5) pilot test
It is very desirable to pilot test the proposed performance management arrangements,
possibly in one part of the organization. Ideally, the test should extend over a full year of
operation and cover drawing up performance agreements, objective setting, performance
reviews, the preparation of personal development plans and recommendations.
The aims of the test should be define and the criteria used for assessing test result in each
of these areas should be predetermines.
Stage 6) briefing
Ann overall descriptions of the performance management scheme should be issued to all
employees that set out its objectives and method of operations and the benefits it is
expected to provide for all concerned. Some organizations have prepared elaborate and
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lengthy briefing documents, but fairly succinct documents often suffice as long as they
are writing in simple language and are well-produced.
Stage 7) training
The main performance management skills that people have to learn are:
Defining accountabilities and key result areas
Defining objectives
Identifying and using performance measures
Defining and assessing competencies behavioral requirements
Giving and receiving feedback
Questioning and listing
Identifying development needs and preparing and implementing personal development
plans
Diagnosing and solving performance problems
Coaching
Training may be providing by formal courses, but there will be a limit to the amount of time
that can be spared. Containing encouragement, coaching, guidance and support is also
required. This can be provided by HR but it can profitably be supplemented by the use of
experienced line managers as coaches.
Stage 8) maintenance
Performance management processes have to be nurtured. The fundamental mistake many
organizations have made is to believe that all they have to do is to design an elegant system
complete with documentation, to a flourish of trumpets introduce the system with the help of
glossy brochure, run one or two half day training courses and it will all happen as planned.
But it will not. Plans have to be prepared and implemented that provide for line managers to
be encouraged on a continuing basis to carry out their performance management
responsibilities properly and be given any support or guidance they may need to do so.
Employees generally should also be encouraged to play their part and be provided with
support.
Stage 9) evaluation
It is essential to monitor the effectiveness of performance management to evaluate its
effectiveness, ideally once a year. Engelmann and Roesch have suggested the evaluating a
performance system:
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References
hrcouncil.ca Resource Centre
slideshare.com
google.com
text book
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