Performance Management Systems Implementations

Unit - II

Why should you care about managing the performance of your employees ?

Outline
Meaning of Performance Management Purpose of PM Objectives Advantages & Disadvantages Determinants of Performance Factors influencing determinants of performance Performance dimensions (Task & Contextual) Differences Between Task and Contextual Performance Approaches to measuring performance (Trait, Behavior, Result) Choosing a performance measurement approach Measuring Result & Behavior Diagnosing causes of poor performance Gather Performance information

 Because communication between manager and employees is essential for increasing productivity, improving morale and motivation, and allowing coordination of each employees work with the goals of the unit and the organization.

About PMS
Every organisation needs a well-defined and well established system of business measurement, comprehensible at all levels of the organisation. To ensure effective management, every organisation must plan and develop its business and integrate all its elements into one system --performance management system (PMS)

Purpose
To institutionalize the Performance Management System by developing an integrated process of objective setting, assessment and evaluation that will support individual employee, departmental & organizational growth and help create a performance driven culture

Performance management is, in some ways, very simple and , in other ways, very complex. It consists of lots of parts and requires some skills. But if you approach it with the proper mindset, you can make it work and pay great benefits.

OBJECTIVES
To provide a framework for systematic planning of Performance Objectives at the beginning of the year. To ensure that individual objectives are aligned to the organizations goals. To ensure an objective and scientific evaluation of employee performance. To identify gaps in performance and take necessary actions to ensure the achievement of organizational and individual goals. To define a proper career planning process. To provide inputs for determining the Compensation, Rewards & Recognition

PMS aims at
Reinvent and to integrate the company; Create focus; Achieve common enterprise goals; and Meet new regulated customer service standards.

Advantages:
Focused employees on key company goals and aligned these with jobs/continuous reviews. Drove business improvement activities. Improved customer satisfaction. Increased productivity. Aligned operational performance with strategic objectives. Increased employee satisfaction. Improved Energy's reputation.

Disadvantages
Consumed excessive management time. Demanded considerable financial investment. Added bureaucracy with too many measures. Confused users with overcomplicated measures.

Discouraged entrepreneurial intuition.

Determinants of Performance
General Determinants
Adaptability Assertiveness/Motivation Attendance Communication Creativity Customer focus/ customer service Dependability/ Initiative Job Knowledge Judgment Stress tolerance

Inter personal relations Management Skills Planning & Organizing Problem solving & Decision making Productivity Quality of work Resourcefulness Responsibility Safety Time management Work habits

Determinants of Performance
Team Based Factors Consensus Building Team Work Working with others/ cooperation

Cont

Determinants of Performance
SUPERVISORY FACTORS

Cost Effectiveness Delegation & Supervisory Skills Development of subordinates Leadership Performance Appraisal Staff Development Supervising staff Relations
Cont

Bharat Petroleum Cooperation limited Titan Infosys Tisco

Factors Influencing Determinants of Performance:

Individual characteristics
Procedural knowledge Declarative knowledge Motivation

HR practices

Individual characteristics
Declarative Knowledge Information about Facts Labels Principles Goals Understanding of task requirements Motivation Choice to perform Level of effort Persistence of effort

Procedural Knowledge
Knowing What to do How to do it Skills Cognitive Physical Perceptual Interpersonal

Determinants of performance
Performance = Declarative Knowledge X Procedural Knowledge X Motivation

For example: Jane, a salesclerk who works in national clothing retail chain. Jane has excellent declarative knowledge regarding the merchandise. Specifically, she knows all of brands, prices, sizing charts, and sales promotion. We would consider her declarative knowledge is very high. Jane is also intelligent and physically able to conduct all of the necessary task. We would consider Jane's procedural knowledge to be very high. Jane does not, however show motivation to perform when customer enters the store. she does not approach them; instead, she sits behind the cash register and talks on phone. When her managers is in the store, she shows a high level of effort, but her co workers complain that, as soon as the manger leaves, Jane stops working. Her overall performance, therefore is likely to be poor because, although she has the declarative and procedural knowledge necessary to do the job, she is not motivated to apply them to her job when her supervisor is not watching her.

Performance Dimensions
It determines job description and performance standards To determine the critical dimensions and to help assess/describe performance. List of responsibility

Performance Dimensions: Types of multi-dimensional behaviors

Task performance Contextual performance

Task performance
Activities that
transform raw materials help with the transformation process
Replenishing Distributing Supporting

Contextual performance
Behaviors that
contribute to organizations effectiveness
and

provide a good environment in which task performance can occur

Differences Between Task and Contextual Performance

Task Performance
Varies across jobs Likely to be role prescribed Influenced by
Abilities Skills

Contextual Performance
Fairly similar across jobs Not likely to be role prescribed Influenced by
Personality

Why Include Task & Contextual Performance Dimensions in PM system?

1. Global competition 2. Teamwork 3. Customer service

Approaches to Measuring Performance

Trait Approach
Emphasizes individual traits of employees

Behavior Approach
Emphasizes how employees do the job

Results Approach
Emphasizes what employees produce

Cont
Results produced by the employee Example for a salesperson: Amount of sales (Rs.) in the past month Behaviors of the employee Example for a salesperson: Number of sales calls in the past month Traits of the employee Example for a salesperson: Friendliness

Trait-based (trait-oriented)

Cont

Measure the employees personal characteristics Ability to make decisions Loyalty to the company Communication skills Level of initiative This is usually a bad idea for several reasons: Poor reliability & validity of measures of traits Weak relationship between traits and job effectiveness Measurements of traits are more likely to be subject to biases

Behavior-based (behavior-oriented)
Measure the employees behaviors
Good attendance Completes management reports correctly & on time Monitors customers and employees for theft Coaches employees to welcome customers to the store & offer assistance within 3 minutes, and to thank customers as they leave Conducts regular sessions with employees to develop teamwork Makes sense for many jobs Use it where how the employee produces results matters

Cont

Results-based (results-oriented)
Measure the results produced by the employee
Profit Sales of the store Inventory shrinkage Customer satisfaction Makes sense for most jobs Results matter (usually)

Choosing a performance measurement approach

Trait approach is most appropriate when: When organisation structure is not complex Easy to use Inexpensive Link between Trait and result is not obvious

Cont..
Behavior approach is most appropriate When:

Link between behavior and result is not obvious Outcome occur in distant future Poor results due to cause beyond performers control.

Cont..
Result Approach is most appropriate when:
workers skilled in the needed behavior Behavior & results related Results show consistent improvement over time. There are many ways to do a job

Measuring results & Behavior

Result Determine accountabilities Determine objectives Determine performance standard Behavior Define competency- critical KSA Identify indicators Choose measurement system

Key Questions
1. What are the different AREAS in which the individual is Expected to Focus Efforts ( KEY ACCOUNTABILITIES) 2. Within each Areas What are the (EXPECTED OBJECTIVES) 3. How do we know How well the Results have been ACHIEVED?( PERFORMANCE STANDARDS)

Result Determine Accountabilities

These are the broad Areas of a Job for which the employee is Responsible for producing Results. Collect information about job (Job Description) Determine importance of task or cluster of tasks

o % of employees time spent performing

task o Impact on units mission if performed inadequately o Consequences of error

Result

Determining Objectives
Objectives help employees guide their efforts Objectives must have the following characteristics: Specific and clear; ( cut travel cost by 20%) Challengeable; (must not be impossible, should be reachable) Achievable Agreed upon Fully Communicated Significant Flexible Bound by time Limited In Number

Result

Determining Performance Standards

Performance Standards are YARDSTICK designed to help people understand to what extent the Objective has been Achieved. Standards can refer to various ASPECTS of a specific objective, including; QUALITY QUANTITY TIME. Each of these can be considered CRITERIA to be Used in Judging the extent to which an objective has been Achieved.

Result

Determining Performance Standards

Standards must include an -ACTION -DESIRED RESULT -DUE DATE -QUALITY or QUANTITY INDICATOR For example; Reduce Overtime from 150 hours/month to 50 hours/month by December 1, 2009 at a Cost not exceeding Rs.50,000. Minimum Performance Outstanding Performance

Result

Determining Performance Standards

Following are Characteristics that often determine whether one has a useful standard or not:

1. Related to Jobs Key Elements and Tasks and not on Individual Traits or Person to Person Comparisons. 2. Observable 3. Taking into account the Cost, Accuracy, and Availability of needed Data

BEHAVIORS

Identify competencies
It includes Assessment of Competencies. Competencies are Measurable clusters of KSAs Knowledge Skills Abilities That are critical in determining how results will be achieved

BEHAVIORS

Identify competencies
Types of Competencies Differentiating
Distinguish between superior and average performance

Threshold
Those competencies that Everyone Needs to Display to Do the Job to a Minimally Adequate Standard.

BEHAVIORS

Identify Indicators
Used to measure extent to which competencies are present or not.
Each INDICATOR is an Observable Behavior, that if
Displayed shows that the competency is Present.

BEHAVIORS

Choose Measurement System

Comparative system Compares employees with each other Absolute system Compares employees with pre-specified performance standard

BEHAVIORS

Choose Measurement System

Comparative system

Simple rank order Alternation rank order Paired comparisons Forced distribution

BEHAVIORS

Choose Measurement System

Absolute Systems

Essays Behavior checklists Critical incidents Graphic rating scales

Diagnosing Causes of poor performance

Ask poor performance is due to deficiency in declarative or procedural knowledge or motivation? Methods: Interview Observation Questionnaire What can be done to remedy? Draw an action plan Implement Review

Gathering performance information

Study identified jobs Identify major categories of skills

Gather info - Study identified jobs

Identify exhaustive set of job families e.g. accounting, production mgt, ENGG, treasury, mktg, research etc. Obtain role data for identified job families Identify job roles within job families. Prod mgr, cashier Obtain role data for each job Review the job roles for its clarity-job purpose, obj, key responsibilities, critical success factor Review for inadequacies & improve upon role profile form

 Sources Supervisor, Peers, Subordinates, Self, Customers Cont.. Personal observation, questionnaire method, interview, daily dairy, HRD records. Job Description T - Task D - Duties R - Responsibilities

Gather info- Identify major categories of skills

Each job has min skill requirements to establish proficiency level, to perform roles effectively Determine skills required to perform job effectively Assign weights to each of the skills on 5 point scale to establish relative importance Enable each job family & jobs within each job family to gain consistency in skills required for the job. Job Specification: K - Knowledge S - Skills A - Ability