Performance Management Note

DR.RAKESH.R.
PILLAI
Assistant Professor, Department of Management Studies,
G.K.M College of Management & Technology (GKMCMT),
University of Kerala,Thiruvananthapuram.
FIRST EDITION
LAXMI BOOK PUBLICATION
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PERFORMANCE MANAGEMENT
Rs: 250/-
1st Edition
2012 by Laxmi Book Publication, Solapur
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ISBN-978-81-924687-9-2
Published by Laxmi Book Publication, 258/34, Raviwar Peth, Solapur
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PERFORMANCE MANAGEMENT,
DR.RAKESH.R.PILLAI
Welcome to the first edition of Performance Management. This book is
intended to help you become more effective at managing human performance in
organizations. The topic of performance management involves more than simply
the evaluation of performance. Performance Management, at its best, is working
in partnership with workers in order to improve future performance. Of course,
future improvement requires accurate assessment of past and current
performance. You have to evaluate where you are in terms of performance in
order to have realistic and meaningful expectations for future performance.
However, effective performance management involves far more than simply
assessing the performance of workers.
Performance Management includes providing meaningful feedback,
collaborating with workers to solve performance problems, and developing
improved levels of performance. Performance Management should involve the
manager in diagnosing the sources of performance difficulties and in helping to
find the solutions to those problems. Managing performance requires
understanding of factors that influence performance, from ability and
motivation to factors external to the worker. A manager also needs to
understand the various options that might be employed as potential means to
improve performance. Effective performance management requires far more than
simply completing the annual appraisal form.
The framework of this book is meant to provide you with both increased
understanding and improved skill in managing performance. Each chapter of
this book begins with an overview of a part of the performance management
process. The purpose is to provide you with conceptual understanding of the
topic area. Understanding the contextual factors can help students and
managers carry out performance management more effectively.
DR.RAKESH.R
PREFACE
Authoring a book is an accomplishment for which the authors
usually owe thanks to a great many people. This book is no exception.
I would like to thank and acknowledge my colleagues and many
people who supported me in the preparation of this text.
I would like to thank my parents, for instilling me the values of
hard work, education, empathy and integrity.
I also thank my family members, friends and well wishers for their
constant support and encouragement for this endeavour. I also thank
one and all who have directly or indirectly helped or supported me in
my work.
My sincere thanks to Dr.Ashok Yakkaldevi, of Laxmi
Publications for his involvement to make this publication successful.
Thank you Dr.Ashok, for your continued support.
I invite readers, both students and teachers to offer their
valuable suggestions as a feedback to me so as to improve the book in
its future editions.
ACKNOWLEDGEMENTS
I hereby declare that the above information furnished by me is
true to the best of my knowledge.

Yours Sincerely,

Dr. Rakesh.R
Thiruvananthapuram
DECLARATION
CONTENTS
1. PERFORMANCE MANAGEMENT

1
2. PERFORMANCE MANAGEMENT PROCESS

57
3. JOB EVALUATION.

96
4. MEASURING PERFORMANCE.

137
5. DEVELOPING AND MAINTAINING PERFORMANCE
MANAGEMENT

172
CASE STUDIES..

198
BIBLIOGRAPHY . 216

Chapter-1
The role of Human resource in the present scenario undergone
a tremendous change and its focus is on evolving such functional
strategies which enable successful implementation of the major
corporate strategies. In a way, corporate strategies and Human
resource function in alignment. Today, Human resource works
towards facilitating and improving the performance of the employee
by building a conductive work environment and providing maximum
opportunities to the employees for participating in organizational
planning and decision making process. Nowadays, all the major
activities of human resource are driven towards development of high
performance leaders and fostering employee motivation. Thus, it can
be interpreted that the role of human resource has evolved from merely
an appraiser to a facilitator and an enabler.
Performance management is the current buzzword and is the
need in the current times of cut throat competition and the
organizational battle for leadership. Performance management is a
very broader and a complicated function of human resource as it
encompasses activities such as joint goal setting, continuous progress
review, feedback and frequent communication, and coaching for
improved performance, implementation of employee development
programs and rewarding achievements. Thus, the performance
1
management process starts with the joining of a new incumbent in a
system and ends when the employee quits the organization.
Performance management can thus be regarded as a
systematic process by which the overall performance of the
organization can be improved by improving the performance of the
employees within a team framework. It is a means for promoting
superior performance by communicating objectives or expectations,
defining roles within a required competence framework and
establishing achievable benchmarks.
According to Baron and Armstrong (1998), Performance
Management is both a strategic and an integrated approach to
delivering successful results in organizations by improving the
performance and developing the capabilities of individuals and teams.
The term performance management gained its popularity in early
1980's when total quality management programs received utmost
importance for achievement of superior standards and quality
performance. Tools such as job design, leadership development,
training and reward system received an equal impetus along with the
traditional performance appraisal process in the new comprehensive
and a much wider framework. Performance management is an
ongoing communication process which is carried between the
supervisors and the employees throughout the year. The process is
very much cyclical and continuous in nature.
Performance management is the process of creating a work
environment or setting in which people are enabled to perform to the
best of their abilities. Performance management is a whole work
system that begins when a job is defined as needed. It ends when an
employee leaves the organization. Many writers and consultants are
using the term performance management as a substitution for the
traditional appraisal system.
2
PERFORMANCE MANAGEMENT DEFINITION
Performance management is a process of designing and
executing motivational strategies, interventions and drivers with an
objective to transfer the raw potential of human resource into
performance. All human beings possess potential within themselves
in a few or more functional areas. However, utilization and conversion
of this potential into deliverable performances is often suboptimal due
to a variety of reasons. Performance management acts as an agent in
converting the potential into performance by removing the
intermediate barriers as well as motivating and rejuvenating the
human resources.
A performance management system includes the following actions:
Develop clear job descriptions.
Select appropriate people with an appropriate selection process.
Negotiate requirements and accomplishment-based performance
standards, outcomes, and measures.
Provide effective orientation, education, and training.
Provide on-going coaching and feedback.
Conduct quarterly performance development discussions.
Design effective compensation and recognition systems that reward
people for their contributions.
Provide promotional/career development opportunities for staff.
Assist with exit interviews to understand WHY valued employees
leave the organization.
BENEFITS OF PERFORMANCE MANAGEMENT
1.PM focuses on results, rather than behaviors and activities
A common misconception among supervisors is that behaviors
and activities are the same as results. Thus, an employee may appear
extremely busy, but not be contributing at all toward the goals of the
3
organization. An example is the employee who manually reviews
completion of every form and procedure, rather than supporting
automation of the review. The supervisor may conclude the employee
is very committed to the organization and works very hard, thus,
deserving a very high performance rating.
2.Aligns organizational activities and processes to the goals of the
organization
Performance Management identifies organizational goals,
results needed to achieve those goals, measures of effectiveness or
efficiency (outcomes) toward the goals, and means (drivers) to
achieve the goals. This chain of measurements is examined to ensure
alignment with overall results of the organization.
3.Cultivates a system-wide, long-term view of the organization
Richard A. Swanson, in Performance Improvement Theory
and Practice (Advances in Developing Human Resources, 1, 1999),
explains an effective performance improvement process must follow a
systems-based approach while looking at outcomes and drivers.
Otherwise, the effort produces a flawed picture. For example, laying
off people will likely produce short-term profits. However, the
organization may eventually experience reduced productivity,
resulting in long-term profit loss.
4.Produces meaningful measurements
These measurements have a wide variety of useful
applications. They are useful in benchmarking, or setting standards for
comparison with best practices in other organizations. They provide
consistent basis for comparison during internal change efforts. They
indicate results during improvement efforts, such as employee
training, management development, quality programs, etc. They help
4
ensure equitable and fair treatment to employees based on
performance.
Other Benefits of Performance Management
?Performance management helps you think about what results you
really want. You're forced to be accountable, to "put a stake in the
ground".
?Depersonalizes issues. Supervisor's focus on behaviors and
results, rather than personalities.
?Validates expectations. In today's age of high expectations when
organizations are striving to transform themselves and society,
having measurable results can verify whether grand visions are
realistic or not.
?Helps ensure equitable treatment of employees because
appraisals are based on results.
?Optimizes operations in the organization because goals and
results are more closely aligned.
?Cultivates a change in perspective from activities to results.
?Performance reviews are focused on contributions to the
organizational goals, e.g., forms include the question "What
organizational goal were contributed to and how?
?Supports ongoing communication, feedback and dialogue about
organizational goals. Also supports communication between
employee and supervisor.
?Performance is seen as an ongoing process, rather than a one-
time, snap- shot event.
5
?Provokes focus on the needs of customers, whether internal or
external.
?Cultivates a systems perspective, that is, focus on the
relationships and exchanges between subsystems, e.g.,
departments, processes, teams and employees. Accordingly,
personnel focus on patterns and themes in the organization, rather
than specific events.
?Continuing focus and analysis on results helps to correct several
myths, e.g., "learning means results", "job satisfaction produces
productivity", etc.
?Produces specificity in commitments and resources.
?Provides specificity for comparisons, direction and planning.
?Redirects attention from bottom-up approaches (e.g., doing job
descriptions, performance reviews, etc., first and then "rolling
up" results to the top of the organization) to top-down
approaches (e.g., ensuring all subsystem goals and results are
aligned first with the organization's overall goals and results).
CONCERNS ABOUT PERFORMANCE MANAGEMENT
Typical concerns expressed about performance management
are that it seems extraordinarily difficult and often unreliable to
measure phenomena as complex as performance. People point out that
today's organizations are rapidly changing, thus results and measures
quickly become obsolete. They add that translating human desires and
interactions to measurements is impersonal and even heavy handed.
CONCERNS OF PERFORMANCE MANAGEMENT
The following are the main concerns of performance management:
6
Concern with output, outcomes, process and inputs
Performance management is concerned with outputs (the
achievement of results) and outcomes (the impact made on
performance). But it is also concerned with the processes required to
achieve these results (competencies) and the inputs in terms of
capabilities (knowledge, skill and competence) expected from the
teams and individuals involved.
Concern with planning
Performance management is concerned with planning ahead
to achieve future success. This means defining expectations expressed
as objectives and in business plans.
Concern with measurement and review
'If you can't measure it you can't manage it'. Performance
management is concerned with the measurement of results and with
reviewing progress towards achieving objectives as a basis for action.
Concern with continuous improvement
Concern with continuous improvement is based on the belief
that continually striving to reach higher and higher standards in every
part of the organization will provide a series of incremental gains that
will build superior performance. This means clarifying what
organizational, team and individual effectiveness look like and taking
steps to ensure that those defined levels of effectiveness are achieved.
'Establishing a culture in which managers, individuals and
groups take responsibility for the continuous improvement of business
processes and of their own skill, competencies and contribution'.
(Amstrong & Murlis)
Concern with continuous development
Performance management is concerned with creating a culture
in which organizational and individual learning and development is a
continuous process. It provides means for the integration of learning
and work so that everyone learns from the successes and challenges
7
inherent if their day-to-day activities.
Concern for communication
Performance management is concerned with communication.
This is done by creating a climate in which a continuing dialogue
between managers and the members of their teams takes place to
define expectations and share information on the organization's
mission, values and objectives. This establishes mutual understanding
of what is to be achieved and a framework for managing and
developing people to ensure that it will be achieved.
Concern for stakeholders
Performance management is concerned with satisfying the
needs and expectations of all the organization's stake holders
owners, management, employees, customers, suppliers and the
general public.
In particular, employees are treated as partners in the enterprise
whose interests are respected, whose opinions are sought and listened
to, and who are encouraged to contribute to the formulation of
objectives and plans for their team and for themselves. Performance
management should respect the needs of individuals and teams as well
as those of the organization, recognizing that they will not necessarily
coincide.
Concern for fairness and transparency
4 ethical principles that should govern the operation of the
performance management process have been suggested by
Winstanley and Stuart-Smith. These are:
?Respect for the individual
?Mutual respect
?Procedural fairness
?Transparency of decision making
8
SCOPE OF PERFORMANCE MANAGEMENT SYSTEM
?Identifying the parameters of Setting performance standards
?performance and stating them very clearly;
?Planning in participative ways where appropriate, performance
of all constituents
?Identifying competencies and competency gaps that contribute/
hinder to performance
?Planning performance development activities
?Creating ownership
?Recognizing and promoting performance culture
OBJECTIVES OF PERFORMANCE MANAGEMENT
Performance management is the process of identifying,
evaluating and developing the work performance of employees so that
the company's objectives and goals are more effectively achieved.
Effective performance management is designed to enhance
performance, identify performance requirements, and provide
feedback relevant to those requirements and assist with career
development.
The primary objectives of performance management are:
?To assist in the achievement of enhanced standards of work
performance of an employee or class of employees.
?To assist employees to identify knowledge and skills to perform
their job efficiently.
?For employees to work towards defined goals.
?For employees to receive regular feedback on performance; and
?For employees to achieve personal growth through acquiring
relevant knowledge and skills and attitudes.
PHASES OF PERFORMANCE MANAGEMENT SYSTEM
Phase-1
9
Setting expectations for employee performance
?Supervisors shall meet with their employees, establish
expectations regarding their employees' performance, specify
how employees' actual performance will be measured and their
success determined, and impart to them an understanding of how
meeting these expectations will contribute to the achievement of
the organization's mission.
?Performance expectations shall be written at the meets
expectations level (the midpoint of the state rating scale)and
shall be documented on a form defined by the company- the
work plan.
?Work plans shall be signed and dated by both the supervisor and
the employees.
Phase-2
Maintaining a dialogue between supervisor and employee to
keep performance on track
Employee shall be responsible for meeting their performance
expectations.
Progress toward meeting expectations shall be measured, reported,
discussed, and documented throughout the work cycle.
Supervisors are expected to use appropriate techniques to support
employee efforts to meet or exceed their performance expectations.
When expectations change during the course of the work cycle,
supervisors shall communicate these changes and modify work plans
as necessary. Modifications shall be signed and dated by both the
supervisor and the employee.
Stage -3
Maintaining a dialogue between supervisor and employee to
keep performance on track
At the end of the work cycle, supervisors shall evaluate employees'
10
performance during the past year compared to their performance
expectations. They shall use verifiable information collected and
documented throughout the cycle to determine the extent to which
actual performance has met the expectations defined in the work plan.
The evaluation shall be documented on a standard form defined by the
company the appraisal form.
The annual performance appraisal shall use a 5-level rating scale for
reporting overall performance. A rating at the midpoint of the scale
shall indicate that an employee's performance has met expectations.
Prior to discussing a completed performance appraisal. (i.e., an
appraisal containing ratings and descriptions of actual performance)
with an employee, a supervisor shall review the appraisal with the
next-level manager to ensure that ratings are appropriate and
consistent.
Supervisors shall discuss the appraisals with their employees. Both
supervisor and employee shall sign and date the completed
performance appraisal indicating that the discussion has taken place.
PERFORMANCE APPRAISAL AND PERFORMANCE
MANAGEMENT DIFFERENCE
11

Performance Appraisal Performance Management
1. top-down assessment 1. joint process through dialogue
2. annual appraisal meeting 2. continuous review with one or more
formal reviews
3. use of ratings 3. ratings less common
4. monolithic system 4. flexible process
5. focus on quantified objectives 5. focus on values and behaviors as well
as objectives
6. often linked to pay 6. less likely to be a direct link to pay
7. bureaucratic- complex paper work 7. documentation kept to a minimum
8. owned by the HR department 8. owned by line managers

FEATURES OF AN EFFECTIVE ORGANIZATION
The following are some of the characteristics and practices of
an effective organization:
I. Overall Organization
?Has a clear mission statement that is known to its board, staff and
clients and which informs all its programming

?Has a written policy of inclusiveness concerning board, staff and
clients
?Has written policies for board, staff and clients prohibiting
discrimination and harassment
?Has all necessary Policies and Procedures manuals that are
relevant to current programming
?Has a current Strategic Plan and is pursuing it
?Actively engages with the broader community through
coalitions, advocacy efforts, etc.
?Has written succession policies concerning the executive
director, members of the board and key program staff
?Has its own 501 (c)(3) Internal Revenue Service determination
II. Board
?Board numbers a minimum of five voting members
?Board includes representatives of the communities served by the
organization
?Board members are free from conflicts of interest regarding
organization's staff and operations
?Board exerts active oversight of the financial affairs of the
organization
12
?Board has as one of its main charges to fundraise for the
organization
?Client representatives sit on the agency's board
III. Staff
?Staff is reflective of the population served by the agency
?Staff has necessary qualifications and/or characteristics to run
programs
?There are written job descriptions that are current and if a new
program is being launched, the necessary and appropriate staff
requirements have been thought out and are delineated
?Staff should have competitive salary and benefits packages
?Appropriate and ongoing training is available to all staff
IV. Programs
?Programs clearly fit within the agency's mission statement
?Agency has investigated similar programs run by other agencies
and can clearly state the need for its particular programming and
what specific niche(s) it serves
?Staff input has been sought when developing programs
?Client input has been sought when developing programs
?Specific program goals have been developed and results are
reviewed regularly
?Systems appropriate to the nature of the organization are in place
to safeguard client confidentiality
?Feedback is sought on a regular basis from staff, clients and
13
community on whether or not current programs are serving their
stated purposes
?When appropriate, clients are connected to additional appropriate
services
?Data collection systems are in place to appropriately:
?Track client demographics
?Track client development/improvement
?Track program goals
?Program has support from the community
V. Finance
?Agency can supply accurate budgets (for both agency and
program) and explain budget detail
?Agency spends at least 65% of its total expenses on program
activities
?Agency spends no more that 35% of related contributions on fund
raising
?Agency has an accounting system adequate to its program needs
?Agency files an annual tax return, or, if required, has an annual
audit on a timely basis
?Agency has a development plan adequate to its program needs
?Agency has diversified its funding base
?Fundraising efforts are in accord with the stated agency mission
HISTORY OF PERFORMANCE MANAGEMENT
Employee Performance Management is a process for
establishing a shared workforce understanding about what is to be
14
achieved at an organization level. It is about aligning the
organizational objectives with the employees' agreed measures, skills,
competency requirements, development plans and the delivery of
results. The emphasis is on improvement, learning and development in
order to achieve the overall business strategy and to create a high
performance workforce.
Performance Management began around 60 years ago as a
source of income justification and was used to determine an
employee's wage based on performance. Organizations used
Performance Management to drive behaviors from the employees to
get specific outcomes. In practice this worked well for certain
employees who were solely driven by financial rewards. 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. 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.
In recent decades, however, the process of managing people
has become more formalized and specialized. Many of the old
performance appraisal methods have been absorbed into the concept
of Performance Management, which aims to be a more extensive and
comprehensive process of management. Some of the developments
that have shaped Performance Management in recent years are the
differentiation of employees or talent management, management by
objectives and constant monitoring and review. Its development was
accelerated by the following factors:
?The introduction of human resource management as a strategic
driver and integrated approach to the management and
development of employees; and

15
?The understanding that the process of Performance Management
is something that's completed by line managers throughout the
year - it is not a once off annual event coordinated by the
personnel department.
DEVELOPMENTS IN PERFORMANCE MANAGEMENT
Extensive research carried out in the UK and USA has
established that new perspectives on performance management have
emerged with the following characteristics:
?An emphasis on front-end planning rather than back-end review
?A broader definition of performance that focuses on more than
narrowly defined job responsibilities
?An emphasis on ongoing dialogue rather than forms and rating
scales
?The recognition that there are many factors contributing to
performance outcomes.
THE ROLE OF PERFORMANCE MANAGEMENT IN
ORGANIZATIONS
Performance management is a quickly maturing business
discipline. Like its better known siblingssales and marketing,
human resources, supply chain management, and accounting and
financeperformance management has a key role to play in
improving the overall value of an organization. Wayne Eckerson of
The Data Warehouse Institute defines Performance Management as a
series of organizational processes and applications designed to
optimize the execution of business strategy.
The fitness program outlines a strategy for following certain
recommended exercises and healthy habits, helping you to achieve
16
your objectives (e.g., becoming stronger, lighter, etc.), and leading
towards your goal of becoming more fit. Throughout the program,
there may be certain targets to strive for, such as 20 more pushups a
month, or completing that 20-minute treadmill run at a higher average
rate of speed. Your trainer also uses the program to record your
progress from visit to visit, providing feedback on your overall
performance and determining whether you are on track towards
meeting specific objectives.
Feedback is important to us, because it helps us to further
understand why we may or may not be meeting specific targets.
Feedback can also be used to modify our expectations, and to set new
objectives over the course of the program. In business, a similar
process takes place:
1.Planning what we would like to happen, based on insights from
analysis of trends in our industry and events that impact our business.
2.Executing, by making decisions and taking action, based on the
outcomes of planning activities.
3.Monitoring our progress towards a certain time-limited target or
objective.
4.Analyzing further to understand why we may or may not be on-track
to meet a specific target or objective.
5.Forecast what we think will happen, based on what we have
analyzed. Here we build one or more scenarios to help us predict
certain outcomes. These outcomes help us to confirm or refute our
choice of tactics to meet our objectives.
THE PERFORMANCE MANAGEMENT PROCESS
The performance management process is the sequence of
actions supervisors take when interacting with employees about their
job performance and includes: determining the key elements of the
job, developing performance expectations, providing an interim
review of job performance, and providing an annual performance
17
appraisal. Interaction between supervisor and employee is required at
each step of the process.
1.Key Elements of the Job
Before realistic performance expectations can be established,
the work to be performed needs to be clearly articulated and prioritized
based on the importance of each task and its value to the university.
Duties and responsibilities for employees are determined by the
appropriate supervisor and normally include:
a.Routine tasks/assignments. These are tasks that are "assigned" on a
regular basis and affect the goals and objectives of the university.
b.Special projects and assignments. These are non-routine tasks that
the employee and the supervisor have mutually developed in priority
order.
The employee's job description and the organizational goals
for the department or office serve as important source documents in
identifying the key elements of every job.
2.Performance Expectations
At the beginning of each annual performance cycle, each
classified employee will meet with his/her supervisor to jointly
develop performance expectations, which identify minimum
acceptable levels (meets expectations) of performance for the
employee. The supervisor is expected to:
a.Explain the performance management process to the employee so
that the employee understands the importance of his/her role in the
process as well as of the supervisor and the reviewer (supervisor's
supervisor).
b.Take the lead in developing and subsequently updating performance
expectations at the beginning of each annual performance cycle.
c.Provide the employee a signed and dated copy of the performance
expectations (work plan).
18
d.Use the techniques of modeling, coaching, and reinforcing
throughout the cycle to sustain good performance and improve poor
performance.
3.Interim Performance Review (Work plans)
The interim review is conducted at the midpoint of the
Performance Management Cycle and provides the opportunity for the
supervisor to meet the employee and informally review the
employee's progress in meeting the performance expectations
established for each significant task and to make appropriate
modifications, if appropriate. The supervisor is expected to:
a.Take the lead in meeting with the employee to discuss
performance as measured against expectations.
b.Communicate an interim rating of actual performance for
each significant task of the employee.
c.Provide guidance for improving performance, as
appropriate.
d.Communicate an interim overall rating to the employee.
e.Continue to model, reinforce, and coach the employee.
4.Annual Performance Appraisal
Annually, at the end of the Performance Management Cycle,
every supervisor will meet with the employees supervised to review
each employee's actual performance as compared to the expectations
established at the beginning of the evaluation period. In conducting
the performance appraisal, the supervisor is expected to:
a.Discuss how well the work was performed, identify good
performance, and identify performance that needs to be
19
improved.
b.Determine, communicate, and explain the rating of each
significant task in terms of meeting, exceeding, or failing to
meet the established expectation.
c.Discuss the overall performance rating and develop, where
appropriate, a plan to improve overall performance and
performance for each expectation, which has not been rated
on the "meets expectations" level.
d.Record the results of the performance evaluation and
performance interview on the Performance Management
Appraisal Form.
The Performance Management Appraisal Form is to be signed
and dated by the employee, supervisor, and reviewer (supervisor's
supervisor).
COMPONENTS OF THE PERFORMANCE MANAGEMENT
SYSTEM
The university's system of performance management will
include the following components:
1. An individual work plan prepared annually for each classified (SPA)
employee which includes performance expectations and incorporates
an interim review of performance.
In completing the work plan, performance competencies and
behavioral competencies are included and further broken down into
significant job responsibilities for which performance expectations
are developed using indicators which measure both results and
behaviors such as quality, quantity, timeliness, manner of
performance, cost effectiveness, and quantity. Each supervisor is
expected to identify at least three (3) workplace behavioral
20
competencies, of which one must be "customer service" for
incorporation into each employee's work plan.
Information about the employee's performance is obtained
from reports, observations, customer feedback, review of the work
products, etc. Performance expectations are written to establish the
minimum acceptable level of performance. This should provide the
motivated employee an opportunity to exceed expectations.
Performance expectations for classified (SPA) supervisors and
managers must include expectations for the significant tasks of
Performance Management and Equal Opportunity.
Performance expectations are to be established for
probationary employees and reviewed at end of the probationary
period to determine if the employee will be given permanent status.
The work plan will be completed, signed, and dated by the employee,
supervisor and supervisor's supervisor, after which a copy will be
given to the employee and the Office of Human Resources for the
employee's personnel file.
2. An overall performance rating scale of Five levels is defined as
follows:
Outstanding Performance (5): Performance is far above the defined
job expectations. The employee consistently does outstanding work,
regularly going far beyond what is expected of employees in this job.
Performance that exceeds expectations is due to the effort and skills of
the employee. Any performance not consistently exceeding
expectations is minor or due to events not under the control of the
employee.
Very Good Performance (4): Performance meets the defined job
expectations and in many instances, exceeds job expectations. The
employee generally is doing a very good job. Performance that
exceeds expectations is due to the effort and skills of the employee.
21
Good Performance (3): Performance meets the defined job
expectations. The employee generally performs according to the
expectations and is doing a good job. The employee is doing the job at
the level expected for employees in this position. The good
performance is due to the employee's own effort and skills.
Below Good Performance (2): Performance may meet some of the
expectations but does not meet the remainder. The employee
generally is doing the job at minimal level, and improvement is needed
to fully meet the expectations. Performance is less than a good job.
Lapses in performance are due to the employee's lack of effort or
skills.
Unsatisfactory Performance (1): Performance generally fails to
meet the defined expectations or requires frequent, close supervision
and/or the redoing of work. The employee is not doing the job at the
level expected for employee in this position. Unsuccessful job
performance is due to employee's own lack of effort or skills.
3. A performance appraisal (Performance Management Appraisal
Form) is completed on every employee annually (no less than every 12
months).A development plan will be included as part of the
performance appraisal.
In completing the Performance Management Appraisal Form,
the supervisor is expected to meet with the employee to ensure the
accuracy of the primary job responsibilities and significant task
performance expectations as recorded on the work plan form.
The supervisor's evaluation of the individual significant tasks
and the overall performance is then completed, after which a
performance interview is held with the employee. The employee is
provided an opportunity to comment on the supervisor's evaluation.
22
NOTE: The Appraisal Form is to be dated and signed by the
supervisor and the employee and may be sent to the reviewer
(supervisor's supervisor) before being discussed with the employee by
the supervisor. If the employee refuses to acknowledge that a review
and discussion occurred by signing the appraisal, the supervisor will
have a third party to acknowledge the employee's refusal sign and
forward the appraisal to the reviewer. The reviewer is to sign and date
the appraisal and provide the employee a copy of the completed
Performance Appraisal.
The content of appraisals is considered to be "information
personal in nature" and such is releasable only on a "need-to-know"
basis.
No information contained in a completed evaluation may be
changed without the employee's knowledge. Changes require the date
and initials of the employee, supervisor and reviewer.
As part of the evaluation process, the employee and supervisor
are expected to:
?Discuss strengths and identify areas for further improvement /
development.
?Agree on a plan for improvement/development and record the
plan in the section of the Appraisal Form established for
developmental planning.
This will serve as an action plan for maintaining good
performance and improving performance determined to be in need of
improvement.
The plan is to include the knowledge and skills that the
employee needs to acquire or improve and time frames for completion
or demonstrated improvements.
23
4. An education/training program to provide information and skills
necessary for employees, supervisors, and managers to effectively
operate the system of performance management.
This program will be carried out by the Training and Staff
Development Specialist, under the guidance of the Director of Human
Resources.
5. A dispute resolution procedure using the established grievance
procedures for classified (SPA) employees.
This procedure will be used for reviewing and resolving
disputes concerning performance ratings and/or performance salary
decisions.
Relationship of Performance Management to Other Personnel
Systems
Performance Management is an integral part of the overall
management of the university. Information from the Performance
Management System pertaining to classified (SPA) employees will be
one of the factors considered in making other personnel management
decisions. Decisions concerning promotions, transfers, training and
staff development, discipline, and other personnel actions are
influenced by information from performance appraisals. Performance
salary increase decisions come directly from annual performance
appraisals.
In order to achieve internal consistency in personnel
administration, the following requirements apply:
?A current Performance Appraisal must be on file for an
employee before any of the favorable personnel actions listed
above can be approved.
Favorable personnel actions must be consistent with an
employee's current performance appraisal.
24
?Personnel action requests that are inconsistent with an
employee's current performance appraisal will require a request
and written justification for exception to policy.
Trainees and probationary employees are required to have a
work plan completed within thirty (30) calendar days from the date of
employment. Trainees and probationary employees who are
employed on or before the first day of an annual Performance
Management Cycle and who hold a permanent appointment by the last
day of the cycle will be considered to have worked the entire cycle.
Employees whose duties and responsibilities change (either in
their current position or in a new position) must have a new work plan
form completed within thirty (30) days of the new assignment.
A performance Appraisal Transfer Form is to be completed
prior to the last day of work for employees who transfer within State
Government. The employee, supervisor, and reviewer are required to
date and sign the form.
RESPONSIBILITIES
The Chancellor is responsible for ensuring the Performance
Management System is developed and implemented in accordance
with the requirements of the Legislature and the State Personnel
Commission and is approved by the State Personnel Director. The
Chancellor is also responsible for determining sanctions to be levied if
all provisions of this policy are not met.
THE IMPORTANCE OF PERFORMANCE MANAGEMENT
IN BUSINESS
Your employees are an integral and indispensable part of
running your business smoothly and efficiently. That's why, keeping in
mind the crucial role of your employees, a recent trend known as
25
Performance Management has come into practice. Using performance
management, you can ensure that your employees not only fulfill their
responsibilities, but do so to the best of their abilities and up to your
expectations.
Performance management allows you to tap the full potential
of your staff. In short, it can be described as a comprehensive process
starting from monitoring and developing the desired traits to rating
their progress and rewarding them for their achievements.
Involve Employees in the Planning Stage
The mere making of plans alone will not help you to run your
business successfully. You must also focus on the appropriate ways to
get business tasks done. One way of doing this efficiently is to involve
your employees in the planning process. This will not only boost their
morale and confidence, but also help you avoid any communication
gaps in the process.
Additionally, it will also help in providing them with a clear
picture of what you expect from them and what they need to
accomplish.
Monitoring the Progress of Your Employees
Just as revision of business plans is sometimes necessary for
the success of your business, measuring the performance of every
employee is also important. This ensures that tasks are efficiently
completed on time and on or under budget. It also points out to you any
shortcomings of either your staff or business plans, and helps you to
take the appropriate corrective actions.
Ensuring All Around Development of Employees
Performance management gives you the tools to instill the
desired qualities in your employees in order to get the job done.
Development is not limited to only individuals in your workplace, but
also addresses the performance of the team as a whole. All around
26
employee development not only ensures the personal and professional
growth of your employees, but also the expansion and improvement of
your business.
Evaluation of Individual Performance
Evaluating and rating the performance of your employees on
an individual basis is essential. This gives them a clear picture of
where they presently stand, areas that they need to work on and what
they are good at. This way, they can focus more on their weakness and
work to strengthen those areas.
As a manager, you should make it company policy to issue
performance reviews while providing your employees with the
feedback that they need to perform better at their jobs. Remember-
just as it is important to point out your employees' weaknesses and
shortcomings, it is also essential to commend them on their strength.
Rewarding your employees
Rewarding and appreciating your employees' efforts ensure
that their level of performance and consequently the performance of
your business is not compromised. It ensures optimum productivity,
performance and maximum profitability.
Rewarding your staff for a job well done not only enhance their
performance but also serves as a tool to keep them motivated.
Therefore, performance management is an effective system that
allows you to achieve the financial goals of your small business.
PERFORMANCE APPRAISAL
According to Wendell French, 'Performance appraisal is the
formal, systematic assessment of how well employees are performing
their jobs in relation to established standards, and the communication
of that assessment to employees'.
27
According to Flippo, 'Performance appraisal is the systematic,
periodic and an impartial rating of an employee's excellence in matters
pertaining to his present job and his potential for a better job'.
According to Dale Yoder, 'performance appraisal includes all
formal procedures used to evaluate personalities and contributions
and potentials of group members in a working organization. It is a
continuous process to secure information necessary for making
correct and objective decisions on employees'.
According to C.D.Fisher, L.F.Schoenfeldt and J,B.Shaw,
'Performance appraisal is the process by which an employee's
contribution to the organization during a specified period of time is
assessed'.
These definitions make it clear that performance appraisal
refers to the method of evaluating the behaviour of employees in the
workplace, usually incorporating both the quantitative and qualitative
aspects of job performance. It is a systematic and objective way to
evaluate both work-related behaviour and potential of employees. It is
a process to determine and communicate to an employee how he is
performing the job and ideally establishing a plan of improvement. It
emphasizes individual development. Now, it is used to evaluate the
performance of all the human resources working at all levels of
organization. It evaluates the performance of technical, professional
and managerial staff.
Performance Appraisal is the systematic evaluation of the
performance of employees and to understand the abilities of a person
for further growth and development. Performance appraisal is
generally done in systematic ways which are as follows:
?The supervisors measure the pay of employees and compare it
with targets and plans.
28
The supervisor analyses the factors behind work performances
of employees.
?The employers are in position to guide the employees for a
better performance.
OBJECTIVES OF PERFORMANCE APPRAISAL
Performance appraisal plans are designed to meet the needs of
the organization and the individual. It is increasingly viewed as central
to good human resource management. Performance appraisal could be
taken either for evaluating the performance of employees or for
developing them. The evaluative purpose has a historical dimension
and is concerned primarily with looking back at how employees have
performed over a given time period, compared with required standards
of performance. The developmental purpose is concerned with the
identification of employee's training and development needs. The
appraisal of employees' serves several useful purposes such as:
?Providing feedback: it serves as a feedback to the employee. It
tells him what he can do to improve his present performance and
go up the organizational ladder'. The appraisal thus facilitates
self-development. It also makes the employee aware of his key
performance areas.
?Providing inputs for compensation: it provides inputs to
system rewards. The approach to compensation is at the heart of
the idea that raises should be given for merit rather than for
seniority.
?Providing a database: it provides a valid database for personal
decisions concerning placements, pay, promotion, transfer, etc.
Appraisal also makes the employee aware of his key performance
areas. Permanent performance appraisal records of employees
29
help management to do planning without relying upon personal
knowledge of supervisors who may be shifted.
?Helping personal development: performance appraisal can help
reveal the causes of good and poor employee performance.
Through discussions with individual employees, a line manager
can find out why they perform as they do and what steps can be
initiated to improve their performance.
?Facilitating training and development programme: by
identifying the strengths and weaknesses of employee, it serves
as a guide for formulating a suitable training and development
programme to improve his performance. It can also inform
employees about their progress and tell them what skills they
need to develop to become eligible for pay rises and /or
promotions.
?Providing a basis for promotion: it can serves as a useful basis
for job change or promotion. By establishing whether the worker
can contribute still more in a different or a higher job it helps in his
suitable promotion and placement. If relevant work aspects are
measured properly, it helps in minimizing feelings of frustration
of those who are not promoted.
?Improving supervision: the existence of a regular appraisal
system tends to make the supervisors more observant of their
subordinates because they know that they will be expected
periodically to fill out rating forms and would be called upon to
justify their estimates. This improves supervision.
Performance appraisal helps to have comparative worth of
employees. Appraising employee performance is, thus useful for
compensation, placement and training and development purposes. In
the words of M.W.Cummings, 'the overall objective of performance
30
appraisal is to improve the efficiency of enterprise by attempting to
mobilize the best possible efforts from individual employed in it. Such
appraisals achieve four objectives including the salary reviews, the
development and training of individuals, planning job rotation and
assistance promotions'. The information can also be used for
grievance handling and keeping the record. It helps in improving the
quality of supervision and better the employee-employer relationship.
Performance Appraisal can be done with following objectives in mind:
?To maintain records in order to determine compensation
packages, wage structure, salaries raises, etc.
To identify the strengths and weaknesses of employees to place
right men on right job.
?To maintain and assess the potential present in a person for
further growth and development.
To provide a feedback to employees regarding their
performance and related status.
To provide a feedback to employees regarding their
performance and related status.
?It serves as a basis for influencing working habits of the
employees.
?To review and retain the promotional and other training
programs.
ADVANTAGES OF PERFORMANCE APPRAISAL
Performance appraisal is an investment for the company
which can be justified by the following advantages:
1.Compensation: performance appraisal helps in chalking out
31
compensation packages for employees. Merit rating is possible
through performance appraisal. Performance appraisal tries to give
worth to a performance. Compensation packages which include
bonus, extra benefits, high salary, allowances and pre-requisites are
dependent on performance appraisal. The criteria should be merit
rather than seniority.
2.Promotion: performance appraisal helps the supervisors to chalk
out the promotion programs for the efficient employee. In this regards,
inefficient workers can be dismissed or demoted in case.
3.Employee Development: the systematic procedure of performance
appraisal helps the supervisors to frame training policies and
programs. It helps to analyze strengths and weakness of employees so
that new jobs can be designed for efficient employees. It also helps in
framing future development programs.
4.Selection Validation: Performance Appraisal helps the supervisors
to understand the validity and importance of the selection procedure.
The supervisors come to know the validity and thereby the strengths
and weaknesses of selection procedure. Future changes in selection
methods can be made in this regard.
5.Communication: For an organization, effective communication
between employees and employers is very important. Through
performance appraisal, communication can be sought for the
following ways:
?Through performance appraisal, the employers can understand
and accept skills of subordinates.
?The subordinates can also understand and create a trust and
confidence in superiors.
?It also helps in maintaining cordial and congenial labour
32
management relationship.
?It develops the spirit of work and boosts the morale of employees.
?All the above factors ensure effective communication.
6.Motivation: Performance appraisal serves as a motivation tool.
Through evaluating performance of employees, a person's efficiency
can be determined if the targets are achieved. This very well motivates
a person for better job and helps him to improve his performance in the
future.
Uses of Performance Appraisal
Performance Appraisal is a significant element of the
information and control system in organization. Performance
appraisal has the following uses:
?It provides valuable information for personnel decisions such as
pay increases, promotions, demotions, transfers and
terminations. The information provided forms the basis for
suitable personnel policies.
?It provides feedback about the level of achievement and
behaviour of subordinates, rectifying performance deficiencies
and to set new standards of work, if necessary. It also identifies
individuals with high potential who can be groomed up for higher
positions.
?It tells a subordinate how he is doing and suggesting necessary
changes in his knowledge, behaviour and attitudes. It thus
provides information, which helps to counsel the subordinate. It
also serves to stimulate and guide employee's development.
?It analyses training and development needs. These needs can be
33
assesses because performance appraisal shows people who
require further training how to remove their weakness. By
identifying the weakness of an employee, it serves as a guide for
formulating a suitable training and development programme to
improve his performance in his present work.
?It serves as means for evaluating the effectiveness of devices used
for the selection and classification of employees. It therefore
helps to judge the effectiveness recruitment, selection, placement
and orientation systems of the organization.
?It facilitates human resource planning and career planning,
permanent performance appraisal records of employees help
management to do human resource planning without relying
upon personal knowledge of supervisors.
?It promotes a positive work environment, which contributes to
productivity. When achievements are recognized and rewarded
on the basis of objective performance measures, there is
improvement in work environment. Performance appraisal
therefore, provide the rational foundation for incentives, bonus,
etc. The estimates of the relative contributions of employees
helps to determine the rewards and privileges rationally.
?It tends to make the supervisors and executives more observant of
their subordinates as they are aware that they would be expected
periodically to fill out rating forms and would be called upon to
justify their estimates. This knowledge results in improved
supervision.
?It records protect management from charges of favouritism and
discrimination. Employee grievance can also be reduced as it
helps to develop confidence among employees.
34
PURPOSE OF PERFORMANCE APPRAISAL
Organizations use performance appraisals for three purposes:
?Administrative: it commonly serves as an administrative tool
by providing employers with a rationale for making many
personnel decisions, such as decision relating to pay increases,
promotions, demotions, terminations and transfers.
Employee development: it provides feedback on an employee's
performance. Appraisal data can also be used for employee
development purposes in helping to identify specific training
needs of individuals.
?Programme assessment: programme assessment requires the
collection and storage of performance appraisal data for a
number of uses. The records can show how effective
recruitment, selection and placement have been in supplying a
qualified workforce.
It is generally accepted that performance appraisals serve one or more
of the following purposes:
?To create and maintain a satisfactory level of performance
?To meet an individual's development needs
?To bring about better operational or business needs
?To facilitate fair and equitable compensation based on
performance
?To help the superiors to have a proper understanding about their
subordinates
?To provide information useful for manpower planning by
identifying employees with a potential for advancement; and
35
?To facilitate for testing and validating selection tests, interview
techniques through comparing their scores with performance
appraisal ranks.
Process of Performance Appraisal
Performance Appraisal is planned, developed and
implemented through a series of steps as shown in the following
figure. The steps are explained as follows:
Step-1: Job analysis, job description and job specification:
performance appraisal is a process not to be undertaken in isolation of
various human resources functions. It begins with job analysis, job
description and job specification. These help in establishing the
standard performance.
Step-2: establishing standards of performance: appraisal system
require performance standards, which serve as benchmark against
which performance is measured. The standards set for performance
must be clearly defined and unambiguous. It should be attainable by
every employee. To be useful, standards should relate to the desired
results of each job. Performance standards must be clear to both the
appraiser and the appraise. The performance standards or goals must
be developed with the supervisors to ensure that all the relevant factors
have been included. Where the output can be measured, the personal
characteristics, which contribute to employee performance, must be
determined.
Goals must be written down. They must be measurable within certain
time and cost considerations.
36
Figure: Process of Performance Appraisal
Step-3: communicating performance standards to employees
Performance appraisal involves atleast two parties; the
appraiser who does the appraisal and the appraisee whose
37

Job Analysis, Job description and job
specification

Establishing standards of performance

Communicating

performance standards to
employees

Measuring actual performan ce

Comparing actual performance with
standards & discuss the appraisal with
Initiating corrective action, if necessary

performance is being evaluated. The performance standards specified
in the second step above are to be communicated and explained to the
employees (both appraiser and appraisee) so that they know what is
expected of them.
Feedback should also be given so that there is no confusion or
misunderstanding. Through feedback the manager knows that the
information has reached the employees. If necessary, the standards
may be revised or modified in the light of feedback obtained from the
employees and evaluators. As pointed out by DeCenzo and Robbins,
'Too many jobs have vague performance standards and the problem is
compounded when these standards are set in isolation and do not
involve the employee'.
Step-4: measuring actual performance
After the performance standards are set and accepted, the next
step is to measure actual performance. This requires choosing the right
technique of measurement, identifying the internal and external
factors influencing performance and collecting information on results
achieved. It can be affected through personal observation, written and
oral reports from supervisors. The performance of different
employees should be so measured that it is comparable. Performance
measures, to be helpful must be easy to use, be reliable and report on
the crucial behaviours that determine performance.
Performance measures may be objective or subjective.
I.Objective Performance measures: Objective Performance
measures are indications of job performance that can be
verified by others and are usually quantitative. Objective
criteria include:
?Quality of production
?Degree of training needed
?Accidents in a given period
38
?Absenteeism
?Length of service
?
II.Subjective performance measures: Subjective
performance measures are ratings that are based on the
personal standards of opinions of those doing the evaluation
and are not verifiable by others. Subjective criteria include:
?Ratings by supervisors
?Knowledge about overall goals
?Contribution to socio-cultural values of the
environment
It should be noted here that objective criteria could be laid
down while evaluating lower level jobs, which are specific and
defined clearly. This is not the case with middle level and higher-level
positions that are complex and vague.
Step-5: Comparing actual performance with standards and
discuss the appraisal with employees
Actual performance is compared with the predetermined
performance standards. Actual performance may be better than
expected and sometimes it may go off track. Deviations, if any, from
the set standards are noted. Along with the deviations, the reasons
behind them are also analyzed and discussed. Such discussions will
enable an employee to know his weakness and strengths. The former
are discussed so that the employee is motivated to improve his
performance.
The assessment of another person's contribution and ability is
not an easy task. It has serious emotional overtones as it affects the
self-esteem of the appraise. Any appraisal based on subjective criteria
is likely to be questioned by the appraise and leave him quite dejected
and unhappy when the appraisal turns out to be negative.
39
Step-6: Initiating corrective action, if necessary
The last step in the process is to initiate corrective action
essential to improve the performance of the employee. Corrective
action is of two types:
?The employee, can be warned so that he himself can make
necessary attempts to improve his performance. But this is not
enough or proper.
Through mutual discussions with employees, the steps required
to improve performance, are identified and initiated. The
reasons for low performance should be probed, is taken the
employee into confidence and motivated for better
performance. Training, coaching, counseling etc. are examples
of corrective actions that help to improve performance.
DIFFERENT METHODS OF PERFORMANCE APPRAISAL
HR records provide information regarding the utilization of human
resources in an objective way. However, in most cases, these are not
sufficient. A critical evaluation of manpower programmes is required
to identify the areas where improvements are needed and to set thing in
order.
Audit is an important aspect of managerial control. It involves
examination and verification of policies, programmes and procedures
in the area of HR management. It is a periodic review to measure the
effectiveness of HR management and also to determine further steps
for a more effective use of human resources.
An audit is a review and verification of completed transactions
to see whether they represent a true state of affairs of the business or
not. Thus, an HR audit refers to:
40
?The measurement of the effectiveness of the HR management's
mission, objectives, strategies, policies, procedures, programmes
and activities; and
?The determination of what should or should not be done in the
future.
HR audit involves a formal, systematic and in-depth analysis,
investigation and comparison. The primary aim of HR audit is to
determine whether the personnel policies and practices are consistent
with organizational objectives. It also determines how effectively the
personnel policies and programmes have been implemented.
Human resource audit is well practiced in developed countries. In
India, we do not have a full audit like financial audit of the human
resource activities in an organization.
Objectives of Human Resource Audit
According to Gray R.D, The primary purpose of personnel
audit is to know how the various units are functioning and whether
they have been able to meet the policies and guidelines which were
agreed upon; and to assist the rest of the organization by identifying
the gap between objectives and results. The end product of an
evaluation should be to formulate plans for corrections and
adjustments.
The objectives of HR audit are:
?To review the whole system of management programmes in
which a management develops, allocates and supervises Hr in
an organization with a view to determine the effectiveness of
these programmes. In other words, HR audit reviews the system
of acquiring, developing, allocating and utilizing human
resource in the organization;
41
To evaluate the extent to which line managers have
implemented the policies and programmes initiated by top
management and the HR department;
?To review the HR system in comparison with other
organizations and modify them to meet the challenges of human
resource management;
To locate the gaps, lapses, shortcomings in the implementation
of the policies, procedures, practices, directives of the HR
department and to know the areas where non implementation
and /or wrong implementation has hindered the planned
programmes and activities;
To evaluate the effectiveness of various HR policies and
practices;
? To evaluate the HR Staff; and
?To seek answers to such questions as what happened? why it
happened? or why it did not happen? while implementing
policies, practices and directives in managing human resources.
Need for HR Audit
Though there is no legal obligation to audit HR policies and
practices, some of the modern organizations do pursue it for the
following reasons:
?To increase the size of the organization and personnel in several
organizations.
?To change the philosophy of management towards HR
?To increase the strength and influence of trade unions
41
?To change the HR management philosophy and thereby
personnel policies and practices throughout the world, and
?To increase the dependence of the organization on the HR system
and its effective functioning.
Qualitative and quantitative indicators of HR Audit
The following Table outlines the most commonly used
qualitative and quantitative indicators of effectiveness classified by
major functions.
41
Table: Quantitative and Qualitative indicators for HR Audit
Source: P.C.TRIPATHI 'Personnel Management and Industrial
Relations' Sultan Chand and Sons, New Dehi (1999) pp. 126-127.
Significance of HR Audit
Though there is no legal obligation to audit personnel policies
and practices, informed employers voluntarily use it as a tool for
evaluation and control of personnel function. Therefore, HR audit is
used widely to check the organizational performance in the
management of human resources. The significance of HR audit lies in
the following:
42
Major Functions Qualitative Indicators Quantitative Indicators
1. Procurement Personnel inventory,
Replacement tables, organization planning,
job descriptions and specification, source
evaluation, exit interviews, induction
programmes.
Turnover rates, selection
rates, retrenchment, dismissal
and lay offs,
recruitment time-lag and
recruitment
ratios
2. Utilization Identification of merits Capacity utilization, idle t ime
statistics, extra-time statistics,
backlogs, turnover per
employee, profits per rupee of
per sonnel expenses, etc.
3. Training & Development Training programmes, supervisor y and
management development programmes,
systematic pr omotions, career planning,
formal appraisals.
Time taken in training,
apprentice ratios, scrap
losses, productivity increases
4. Compensation Job evaluation programme, wage and salary
surveys, complaint from employees about
wage and sal;aries.
Wage and salary differentials,
benefit range and cost,
number of employees earning
bonus in excess of standard
rate
5. Integration and Maintenance House organ, employee handbook,
employee voluntary participation in optional
service programmes
Measured morale, measured
communication, absenteeism
and turnover rates, number of
grievances, suggestion
rations, accident rates.
6. Labour Relations Labour-management committees, contract
interpretations, no strike clause
Work stoppages, grievances
and their settlement,
arbitr ations, costs.

?The management now feels that employee participation in
organizational activities is essential for the success of the
organization.
It provides the required feedback
?Rising labour costs and increasing opportunities for
competitive advantage in human resource management.
It can be used to avoid the intervention of the government to
protect employee interests.
Benefits of HR Audit
Kaith Davis summarized the benefits of HR Audit in the
following ways:
?It identifies the contributions of the HR department.
?It improves the professional image of the HR Department
?It encourages greater responsibility and professionalism amongst
the members of the HR Department.
?It classifies the HR Department's duties and responsibilities
?It stimulates uniformity of personal policies and practices
?It identifies critical personal problems
?It ensures timely complaints with legal requirements
?It reduces human resource costs
Scope of HR Audit
The HR audit has a very wide scope. It assumes that the
43
management of human resources involves much more than the
practice of recruiting, hiring, retaining and firing employees. It
examines the concept of 'people management' by supervisors at all
levels. It covers areas like HR Philosophy, policies, programmes,
practices and personnel results. The National Industries Conference
Board of the United States states, the top management is interested in
auditing all the programmes relating to employees, regardless of
where they originate, or the channels through which they are
administered.
The major areas of HR Auditing include:
?Programming, forecasting and scheduling to meet organization
and personnel needs
Ares of recruitment, selection, careers, promotions, training and
development
?Areas of leadership, welfare, grievances, performance
appraisal, employee mobility, and industrial relations.
HR Audit Process
The HR Audit should do a thorough probe, evaluating HR
policies, programmes, philosophy, practices and concepts and
comparing with standards and with those of the personnel records of
the said organization and other organizations.
The level and depth of the audit should be decided in advance.
Rao has included the following in an HR audit process.
?Identify indices, indicators, statistical ratios and gross numbers
in some cases
Examine the variations in time-frame in comparison with a
similar previous corresponding period.
44
?Compare the variations of different departments during
different periods
Examine the variations of different periods and compare them
with similar units and industries in the same region.
Draw trend lines, frequency distributions and calculate
statistical correlations.
?Prepare and submit a detailed report to the top management and
to the managers and at appropriate level for information and
necessary action.
Audit of HR Results
The real test of HR policies and programmes lies in the results
achieved. Comprehensive policy statements and elaborate procedural
manuals are useless unless they yield good results. In the audit of
results, the HR audit may calculate ratios and percentages from
personnel statistics. Such measurement will reveal useful trends in
man power utilization.
HR audit is a comparatively new area of audit. Therefore, the
HR auditor has no body of laws, regulations and standard practices to
guide him. The HR auditor has to depend upon his own judgement and
records available within the organization. Moreover, HR audit may
become a fault-finding exercise. For example, wherever certain
deficiencies are detected, the management and workers may start
blaming each other. To avoid such situations, a forward looking
approach is required.
Audit Report
After examining various aspects of human resource
management, the HR auditor complies his observations, analysis,
findings and recommendations in the form of a report. There is no
45
prescribed format of the report in case of HR audit. The audit has to
examine the various HR reports, personnel policies and practices. HR
Audit report is meant mainly for the top management. However,
certain aspects of the report, e.g. attitude survey and safety survey may
be made available to employees. The report should be based solely on
the findings it should be submitted within a reasonable time after the
audit work is over. The following items should be contained in the
report:
?Table of contents
?Preface, giving a brief statement of the objectives
?Executive summary, in which the entire report is summarized for
the top executives; this should also contain the recommendations
along with factual information or findings.
?The report proper, in which a major division is covered as a
special section; a clear and in-depth analysis of the data and
information, furnished area-wise or department-wise. Each
section should be complete, and should contain as many
supporting data as are practical without making it too
voluminous. Other data should be include in the appendix.
?Summary, which is general in nature and is relevant to all persons
concerned. This is more detailed than the summary and
conclusion at the end of the report.
?Appendix, this includes supporting data and information which is
not necessary in the main part of the report.
?Bibliography, which refers to important books and journals
which are necessary for future reading is included at the end.
?Audit report should be signed by all members making the audit.
46
Critical Incident Method
Critical Incident Method is a method used for many sectors.
An incident is crucial when it illustrates what the employers has done
or failed to do. The critical incidents for performance appraisal are a
method in which the manager writes down positive and negative
performance behaviour of employees throughout the performance
period. Each employee will be evaluated as such and one's
performance appraisal will be based on the logs that are put in the
evaluation form.
The manager maintains logs on each employee, whereby he
periodically records critical incidents of the worker behaviour. At the
end of the rating period, these recorded critical incidents are used in
the evaluation of workers' performance. The critical incidents file of
performance appraisal is a form of documentation that reflects all data
about employee performances.
Disadvantaged of Critical Incident
?Critical incidents technique of evaluation is applied to evaluate
the performance of superiors rather than of peer of subordinates.
?Negative incidents may be more noticeable than positive
incidents
?It results in very close supervision which may not be liked by the
employee.
?The recording of incidents may be a chore for the manager
concerned, who may be too busy or forget to do it.
?The supervisors have a tendency to unload a series of complaints
about incidents during an annual performance review session.
Performance ranking method
Ranking is a performance appraisal method that is used to
47
evaluate employee performance from best to worst. Manager will
compare an employee to another employee, rather than comparing
each one to a standard measurement.
Rating scale of ranking
?Much better 5 points
?Slightly better 4 points
?Equal- 3 points
?Slightly worst 2 points
?Much worst 1 point
Process of ranking
?The scaled comparison asks a rater or evaluator to compare the
performance of two individuals.
?Continue comparison to other two employees.
?Total points to each employee.
?Give point to employee, for example, A is slightly better 4
points so that B is slightly worst 2 points.
Related documents
?Performance appraisal methods
?Performance appraisal examples
?Self appraisal sample
?Performance appraisal handbook
PERFORMANCE MANAGEMENT PROCESS
A performance management process sets the platform for
rewarding excellence by aligning individual employee
accomplishments with the organization's mission and objectives and
making the employee and the organization understand the importance
of a specific job in realizing outcomes. By establishing clear
performance expectations which includes results, actions and
48
behaviors, it helps the employees in understanding what exactly is
expected out of their jobs and setting of standards help in eliminating
those jobs which are of no use any longer. Through regular feedback
and coaching, it provides an advantage of diagnosing the problems at
an early stage and taking corrective actions.
To conclude, performance management can be regarded as a
proactive system of managing employee performance for driving the
individuals and the organizations towards desired performance and
results. It's about striking a harmonious alignment between individual
and organizational objectives for accomplishment of excellence in
performance.
Performance management should be regarded as a flexible
process, not as a 'system'. The use of the term 'system' implies a rigid,
standardized and bureaucratic approach, which is inconsistent with
the concept of performance management as a flexible and
evolutionary, albeit coherent, process that is applied by managers
working with their teams in accordance with the circumstances in
which they operate.
49
As such, it involves managers and those whom they manage
acting as partners, but within a framework that sets out how they can
best work together. This framework has to reduce the degree to which
performance management is a top-down affair and it has to be
congruent with the way in which the organization functions.
Performance management has to fit process-based and flexible
organizations. In these circumstances, which are increasingly the
norm, it has to replace the type of appraisal system that only fits a
hierarchical and bureaucratic organization.
The process of performance management consists of:
?Planning: agreeing objectives and competence requirements and
producing performance agreements and performance
improvement and personal development plans.
?Acting: carrying out the activities required to achieve objectives
and plans.
?Monitoring: checking on progress in achieving objectives.
?Reviewing: assessing progress and achievements so that action
plans can be prepared and agreed.
Management by objectives (MBO)
Management by objectives (MBO) is a process of defining
objectives within an organization so that management and employees
agree to the objectives and understand what they need to do in the
organization.
The term "management by objectives" was first popularized
by Peter Drucker in his 1954 book 'The Practice of Management'.
The essence of MBO is participative goal setting, choosing course of
actions and decision making. An important part of the MBO is the
measurement and the comparison of the employee's actual
50
performance with the standards set. Ideally, when employees
themselves have been involved with the goal setting and choosing the
course of action to be followed by them, they are more likely to fulfill
their responsibilities.
According to George S. Odiorne, the system of management
by objectives can be described as a process whereby the superior and
subordinate managers of an organization jointly identify its common
goals, define each individual's major areas of responsibility in terms of
the results expected of him, and use these measures as guides for
operating the unit and assessing the contribution of each of its
members.
Unique Features and Advantages of the MBO process
The principle behind Management by Objectives (MBO) is for
employees to have a clear understanding of the roles and
responsibilities expected of them. They can then understand how their
activities relate to the achievement of the organization's goal. MBO
also places importance on fulfilling the personal goals of each
employee.
Some of the important features and advantages of MBO are:
?Motivation Involving employees in the whole process of goal
setting and increasing employee empowerment. This increases
employee job satisfaction and commitment.
Better communication and Coordination Frequent reviews
and interaction between superiors and subordinates helps to
maintain harmonious relationships within the organization and
also to solve many problems.
?Clarity of goals
51
Subordinates tend to have a higher commitment to objectives
they set for themselves than those imposed on them by another
person.
Managers can ensure that objectives of the subordinates are
linked to the organization's objectives.
Limitations
There are several limitations to the assumptive base
underlying the impact of managing by objectives, including:
?It over-emphasizes the setting of goals over the working of a
plan as a driver of outcomes.
It underemphasizes the importance of the environment or
context in which the goals are set. That context includes
everything from the availability and quality of resources, to
relative buy-in by leadership and stake-holders. As an example
of the influence of management buy-in as a contextual
influencer, in a 1991 comprehensive review of thirty years of
research on the impact of Management by Objectives, Robert
Rodgers and John Hunter concluded that companies whose
CEOs demonstrated high commitment to MBO showed, on
average, a 56% gain in productivity. Companies with CEOs
who showed low commitment only saw a 6% gain in
productivity.
?Companies evaluated their employees by comparing them with
the "ideal" employee. Trait appraisal only looks at what
employees should be, not at what they should do.
When this approach is not properly set, agreed and managed
by organizations, self-centered employees might be prone to distort
52
results, falsely representing achievement of targets that were set in a
short-term, narrow fashion. In this case, managing by objectives
would be counterproductive.
The use of MBO must be carefully aligned with the culture of
the organization. While MBO is not as fashionable as it was before, it
still has its place in management today. The key difference is that
rather than 'set' objectives from a cascade process, objectives are
discussed and agreed upon. Employees are often involved in this
process, which can be advantageous.
A saying around MBO "What gets measured gets done",
'Why measure performance? Different purposes require different
measures' is perhaps the most famous aphorism of performance
measurement; therefore, to avoid potential problems SMART and
SMARTER objectives need to be agreed upon in the true sense rather
than set.
Arguments against
MBO has its detractors, notably among them W. Edwards
Deming, who argued that a lack of understanding of systems
commonly results in the misapplication of objectives. Additionally,
Deming stated that setting production targets will encourage resources
to meet those targets through whatever means necessary, which
usually results in poor quality.
Deming's key principles encourage managers to abandon
objectives in favour of leadership because he felt that a leader with an
understanding of systems was more likely to guide workers to an
appropriate solution than the incentive of an objective. Deming also
pointed out that Drucker warned managers that a systemic view was
required and felt that Drucker's warning went largely unheeded by the
practitioners of MBO.
53
Critical Incident Technique
The Critical Incident Technique (or CIT) is a set of procedures
used for collecting direct observations of human behavior that have
critical significance and meet methodically defined criteria. These
observations are then kept track of as incidents, which are then used to
solve practical problems and develop broad psychological principles.
A critical incident can be described as one that makes a significant
contributioneither positively or negativelyto an activity or
phenomenon. Critical incidents can be gathered in various ways, but
typically respondents are asked to tell a story about an experience they
have had.
CIT is a flexible method that usually relies on five major areas.
The first is determining and reviewing the incident, then fact-finding,
which involves collecting the details of the incident from the
participants. When all of the facts are collected, the next step is to
identify the issues. Afterwards a decision can be made on how to
resolve the issues based on various possible solutions. The final and
most important aspect is the evaluation, which will determine if the
solution that was selected will solve the root cause of the situation and
will cause no further problems.
Principal uses
CIT can be used in a wide variety of areas. In general it is most
useful in the early stages of development of large scale tasks and
activity analysis within existing projects. This is mainly due to the
method's ability to quickly separate out major problem areas that
reside in a system.
In healthcare CIT is used in situations where direct
examination of clinical staff and researchers can help them better
understand their roles and help them solve practical problems. CIT
54
allows clinical staff to better understand their roles in the clinical
setting. Another advantage is that it helps them gain better knowledge
about their interactions with patients and other clinicians. It also helps
clinical staff better understand their practice from a variety of roles
(e.g., physician, nurse, clinical educator, nurse informatician, faculty
member). In healthcare research, CIT can be a good resource in
identifying the experiences of a patient in the healthcare setting,
exploring the dimensions of patientprovider interactions and
determining patient responses to illnesses and treatments.
CIT is also widely used in organizational development as a
research technique for identification of organizational problems. CIT
is used as an interview technique, where the informants are
encouraged to talk about unusual organizational incidents instead of
answering direct questions. Using CIT deemphasizes the inclusion of
general opinions about management and working procedures, instead
focusing on specific incidents.
Advantages and Disadvantages
By identifying possible problems associated with major
usersystem or product complications, CIT recommendations try to
ensure that the same type of situations do not result in a similar loss.
There are both advantages and disadvantages to using this method, as
shown below. In all, however, CIT has been demonstrated to be a
sound method since first presented in 1954. Relatively few
modifications have been suggested to the method in the more than 50
years since it was introduced, and only minor changes have been made
to Flanagan's original approach. This indicates a certain robustness.
Advantages
?Flexible method that can be used to improve multi-user systems.
55
?Data is collected from the respondent's perspective and in his or
her own words.
?Does not force the respondents into any given framework.
?Identifies even rare events that might be missed by other methods
which only focus on common and everyday events.
?Useful when problems occur but the cause and severity are not
known.
?Inexpensive and provides rich information.
?Emphasizes the features that will make a system particularly
vulnerable and can bring major benefits (e.g. safety).
?Can be applied using questionnaires or interviews.
Disadvantages
A first problem comes from the type of the reported incidents. The
Critical Incident Technique will rely on events being remembered by
users and will also require the accurate and truthful reporting of them.
Since critical incidents often rely on memory, incidents may be
imprecise or may even go unreported.
The method has a built-in bias towards incidents that happened
recently, since these are easier to recall.
Respondents may not be accustomed to or willing to take the time to
tell (or write) a complete story when describing a critical incident.
MERIT RATING
Introduction
Merit-rating is associated with performance appraisal of an
employee. This is a systematic approach for evaluating the
56
performance of an employee on the job, which he performs. This is
also called as performance appraisal, personnel rating and employee
evaluation.
Merit-rating is a formal, objective procedure for evaluating
personality, contributions and potentials of employees in a working
organization.
Job Evaluation Vs Merit Rating
Job-evaluation and merit-rating are compared in the following ways:
56
Job Evaluation Merit Rating
It evaluate a job or work It evaluate a worker
It is for the purpose of fixing base-
wage for a job
It is for the purpose of deciding
reward for exceptional merit of
worker.
1. It is independent of operator or
worker. It is impersonal in
nature.
It is independent of job. It is
impersonal in nature.
2. Useful for decision regarding wage
and salary administration, skill match,
etc.
Useful for decision regarding
training, placement, promotion,
counseling, etc.

Chapter-2
A performance management process sets the platform for
rewarding excellence by aligning individual employee
accomplishments with the organization's mission and objectives and
making the employee and the organization understand the
importance of a specific job in realizing outcomes. By establishing
clear performance expectations which includes results, actions and
behaviors, it helps the employees in understanding what exactly is
expected out of their jobs and setting of standards help in
eliminating those jobs which are of no use any longer. Through
regular feedback and coaching, it provides an advantage of
diagnosing the problems at an early stage and taking corrective
actions.
To conclude, performance management can be regarded as a
proactive system of managing employee performance for driving the
individuals and the organizations towards desired performance and
results. It's about striking a harmonious alignment between individual
and organizational objectives for accomplishment of excellence in
performance.
Performance management should be regarded as a flexible
process, not as a 'system'. The use of the term 'system' implies a rigid,
standardized and bureaucratic approach, which is consistent with the
concept of performance management as a flexible and evolutionary
process that is applied by managers working with their teams in
PROCESS
57
accordance with the circumstances in which they operate. It involves
managers and those whom they manage acting as partners, but within a
framework that sets out how they can best work together. This
framework has to reduce the degree to which performance
management is a top-down affair and it has to be congruent with the
way in which the organization functions.
Performance management has to fit process-based and flexible
organizations. In these circumstances, which are increasingly the
norm, it has to replace the type of appraisal system that only fits a
hierarchical and bureaucratic organization.
The process of performance management consists of:
Planning: agreeing objectives and competence requirements
and producing performance agreements and performance
improvement and personal development plans.
Acting: carrying out the activities required to achieve objectives
and plans
Monitoring: checking on progress in achieving objectives
Reviewing: assessing progress and achievements so that action
plans can be prepared and agreed.
Performance management is a natural process of management.
According to William Deming, it consists of the following activities:
Plan decide what to do and how to do it.
Act carry out the work needed to implement the plan
Monitor carry out continuous checks on what is being done
and measure outcomes in order to assess progress in
implementing the plan.
58
Review consider what has been achieved and, in the light of
this, established what more needs to be done and any corrective
action required if performance is not in line with the plan.
Figure 2.1 The Performance Management Cycle
Similar to our fitness program, where progress is monitored
and analyzed in areas such as weight loss or number of repetitions for a
given exercise, performance management involves monitoring key
performance indicators (KPIs) that measure whether an organization
is meeting its objectives and overarching strategy. A KPI in this sense
is a measure defined by a business that allows for observation of actual
values, as they may emerge from line-of-business (LOB) applications
and their comparison to established targets (or budgeted values).
If a KPI reveals an actual value that deviates too far from (or in
many cases, closely approaches) a pre-defined target, then further
59
analysis is warranted. Discoveries made during analysis should help
us plan our next steps, set new (or adjust existing) expectations, and
predict what may happen based on our decisions. In larger
organizations, data from multiple LOB systems are often centralized
within a single version of the truth business intelligence (BI) system
to optimize KPI monitoring, detailed analysis, and performance
reporting. BI systems often (but not always) consist of several layers
that work together, helping businesses to:
?Integrate and refine data from a variety of applications, systems,
and documents into a centralized data mart or data warehouse.
?Analyze refined data to gain insight into current performance
(monitoring KPIs), potential causes for specific KPI variances (or
deviations of actual values from target values).
?Report past, current, or forecast conditions to stakeholders.
The goal of a BI system is to ultimately help business people
make better, faster decisions. Classically, such decision-making has
occurred at higher levels of an organization and been limited to a
relatively small number of individuals. However, corporate culture
has changed significantly over the last decade, and themes of
transparency, accountability, and empowerment have emerged.
Performance management frameworks, like Kaplan and Norton's
Balanced Scorecard method, build on these notions by making all
steps in the cycle (illustrated in Figure 2.1) occur at executive,
departmental, and operational layers of the modern organization.
THE DEMING CYCLE
The Deming cycle, or PDSA cycle, is a continuous quality
improvement model consisting of a logical sequence of four repetitive
steps for continuous improvement and learning: Plan, Do, Study
(Check) and Act. The PDCA cycle is also known as the Deming Cycle,
or as the Deming Wheel or as the Continuous Improvement Spiral. It
60
originated in the 1920s with the eminent statistics expert Mr. Walter A.
Shewhart, who introduced the concept of PLAN, DO and SEE. The
late Total Quality Management (TQM) guru and renowned statistician
Edwards Deming modified the Shewart cycle as: PLAN, DO,
STUDY, and ACT.
Along with the other well-known American quality guru-
Joseph Juran, Edwards Deming went to Japan as part of the occupation
forces of the allies after World War II. Deming taught a lot of Quality
Improvement methods to the Japanese, including the usage of
statistics and the PLAN, DO, STUDY, ACT cycle.
The graphic above shows Deming's Plan-Do-Check-Act
(PDCA) cycle. (Deming himself called it the 'Shewhart Cycle' but
Deming's work in Japan has lead to it commonly being named after
him.) In BPE, everything is done with the discipline of PDCA. At all
levels of the organization we:
61
?Plan what we are going to do. In this step we assess where we are,
where we need to be, why this is important, and plan how to close
the gap. Identify some potential solutions.
?Do try out or test the solutions (sometimes at a pilot level).
?Check to see if the countermeasures you tried out had the effect
you hoped for, and make sure that there are no negative
consequences associated with them. Assess if you have
accomplished your objective.
?Act on what you have learned. If you have accomplished your
objective, put controls into place so that the issue never comes
back again. If you have not accomplished your objective, go
through the cycle again, starting with the Plan step.
Frequently, a particular project will define sub-objectives, run
thorough the PDCA cycle one or more times to accomplish the sub-
objective, then define the next objective and go through the cycle
again. Thus, many projects end up "turning the wheel" many times
before completion. In ongoing management activities, we find a
similar use of the cycle.
What we are trying to avoid by using the PDCA discipline is
the "Ready, Fire, Aim" fallacy where people jump to the solution
without identifying the problem and assessing if their proposed
solution fixes it, or even results in another problem. The Act step
makes sure we don't have to fix it again in a couple of years.
PROBLEMS WITH DEMING CYCLE
The Deming Cycle's application was intended for quality
control purposes and proposed continuous improvement in quality of
products/experiments.[4] The simple cycle works well in this
application, but it is debatable that it should be applied to major
62
organizational improvement. ISO recognized the need to provide
better guidance in this regard and published the ISO standard ISO
9004:2000, which replaced the use of the term continuous
improvement with continual improvement. The change is not trivial, it
recognizes that organizational quality system performance
improvement requires significant effort and needs pauses to
consolidate change (hence continual and not continuous
improvement) (ISO 9004:2000).
The Deming Cycle has an inherent circular paradigm, it
assumes that everything starts with Planning. Plan has a limited range
of meaning. Shewart intended that experiments and quality control
should be planned to deliver results in accordance with the
specifications (see meaning above), which is good advice. However,
Planning was not intended to cover aspects such as creativity,
innovation, invention or Complex Adaptive Systems. In these aspects
particularly when based upon imagination, it is often impossible or
counterproductive to plan (see referenced Wikipedia pages for why
this is so). Hence, PDCA is inapplicable in these situations.
The Deming Cycle approaches often do not get to the root
cause of a problem, especially in adaptive situations which call for an
experiential approach but demand much more rigour in analysis and
data collection. An adaptive challenge exists where there are no visible
solutions to problems, and can exist, for example in areas where chaos,
uncertainty, and ambiguity exists, such as new frontiers, and existing
complex systems such as Healthcare.
Do and Act have the same meaning in English. Dictionaries
(Shorter Oxford) provide the following relevant definitions:
?Do: verb 1 perform or carry out (an action). 2 achieve or complete
(a specified target). 3 act or progress in a specified way. 4 work on
(something) to bring it to a required state.
63
?Act: verb 1 take action; do something. 2 take effect or have a
particular effect. 3 behave in a specified way.
?
The 'Act' in the Deming Cycle is meant to be interpreted to have a
different meaning to 'Do', otherwise it could be as easily have been
PDCD or PACA. In PDCA, 'Act' is meant to apply actions to the
outcome for necessary improvement (see meaning above), in other
words 'Act' means 'Improve' (applying PDCA to itself could result in
PDCI).
The Deming Cycle is a set of activities (Plan, Do, Check, Act)
designed to drive continuous improvement. Initially implemented in
manufacturing, it has broad applicability in business. First developed
by Walter Shewhart, it is more commonly called the Deming cycle in
Japan where it was popularized by Edwards Deming. Deming Cycle is
also known as Shewhart cycle, PDCA, Plan-Do-Check-Act

PERFORMANCE MANAGEMENT SEQUENCE
64

Role definition
Competence
requirements
Performance &
development
agreement
Performance
standards
Performance &
development plan
Action
Continuous monitoring
& feedback
Formal review

Competence
Evidence

Performance
measures
Non-f inancial
reward
Rating Financial
reward
PRINCIPLES OF PERFORMANCE MANAGEMENT
The origins of Human Performance Systems Analysis can be
traced from the late 1950's and early 1960's. These were times of
activism and social reform in the United States. The field, initially
called behavior technology, was a product of that spirit. In the early
1960's a number of behavioral scientists and their graduate students
made the decision to take what they had learned in their learning
laboratories and apply those lessons to real world issues of learning
and performance. Business, markets and society have changed. But by
and large, the principles of management, the methods and concepts of
leadership and performance management have not. Rigid sales quotas,
fixed performance targets, "pay for performance" and micro-
management from the top are still widely established standards.
There is no lack of criticism of these traditional methods both
in practice and in the business literature. One thing is clear: we need a
new understanding of motivation, performance, and responsibility.
The problems companies face today can't be solved using the thinking
and the processes that created them in the first place. A more
productive approach is to define what the 'right' things are, and thus to
examine root of the problem, rather than just treat the symptoms. To
take this road, we need to put into question and possibly overcome an
entire set of existing convictions.
Most of us work in organizations within the traditional model
of command and control. This system may be budget control, target
negotiation and subsequent top-down setting, employee evaluations,
organizational diagrams, guidelines and policies, central departments,
or employee questionnaires. These have been used for decades.
It is, therefore, often difficult to appreciate the amount of
talent, time, and money that is wasted through these tools. Mutual
trust, employee involvement, intrinsic motivation, and voluntary
willingness to perform are being eroded. To question the traditions and
to look for alternatives means pioneering work with a model beyond
65
command and control.
KEY PRINCIPLES
1. Do a Performance Improvement Analysis
First, measure the frequency of behavior (what the individual
says or the physical movements made) and the outputs (the physical
evidence of completed work produced by those behaviors) prior to any
management change. This analysis can be done for just one behavior
and output or for many by job category, department and organization.
Through this analysis, one measures present performance, establishes
standards, specifies why behavior is deficient, calculates the net
economic value of improvement after the cost of solutions, and places
them in priority order. The result of this analysis is identification of
potentially high-payoff behaviors and outputs that can be improved -
an important first step, because, surprisingly, key behaviors and
outputs are often overlooked or undervalued in organizations. Then,
introduce the procedures used in Performance Management and
quantify the amount of change that occurs in specific time periods.
Because the investment in changing behavior is often very low and the
economic payoffs may be high, the potential high return on investment
usually excites top management
2. Be Specific
Describe and communicate desired performances and the
standards for judging them in terms that are measurable, observable
and objective. A description of the events that are signals prompting
the response should be included. In training, coaching, measuring
performance, feeding back performance data, conducting a
performance appraisal, writing procedures, and delivering positive
reinforcement, it is essential to be specific. Alas, if the language used is
vague, the desired behavior may not occur.
66
3. Measure
For any performance shown by the analysis to have sufficient
economic value to an organization, measure the frequency of the
performance against the desired standards. While most organizations
measure some performance, there are, unfortunately, many key
outputs and behaviors that are not measured.
4. Give Feedback
Provide feedback on performance to the individual involved
and to the individual's manager, supervisor, or group leader, rapidly-
preferably immediately-with sufficient information to allow for self-
correction. Too often, feedback systems for many key behaviors and
outputs are either absent or flawed.
5. Deliver Positive Consequences
Deliver to each individual positive consequences immediately
after completion of the performance of the desired behaviors and
outputs. The frequency of an individual's behavior is affected by the
consequences that follow it. If the consequences are positive to that
individual, the behavior tends to increase; if they are negative, the
behavior tends to decrease. Consequences should be delivered for as
long as the performance is desired, or until naturally occurring
consequences are strong enough to support the behavior. How
frequently you provide positive consequences is determined by how
often the behavior occurs, the phase of behavior change you are in
(causing the first new behavior to occur, changing its frequency, or
maintaining it) and the pattern of responses you desire (steady,
maximum output, peak for certain periods, etc.
Unfortunately, in many organizations the wrong consequence
system is in place. Consequences of desired behavior are often
negative or neutral. Undesired behavior may be rewarded. The rein
67
forcers are badly delayed. They are delivered only on a group basis
(annual company-wide profit sharing). The rewards are short-lived for
behavior that is desired long-term. And almost always the positive
reinforcement is too infrequent.
HR Role in Performance Management in an Organization
HR Plays a key role in designing the Performance
Management Framework. There are multiple examples of the
different HR roles in the PMS exercise in both design and execution.
Some of the key HR contributions in the Organization PMS
exercise :
?Philosophy of the PMS system
?Defining KRAs
?Defining Competencies and the assessment matrices
?PMS Operating System
?Choose the rating scale for the performance to be measured
?Methodology of executing the PMS
?Development Needs Identification System
The role of HR Manager or the HR Role per say is critical in the
execution of Performance Management system. From design to
execution, HR role is manifold and each of these roles well played can
be highly beneficial to the organization. Some of the world's best
organizations who have highly developed and world class
Performance management system, often acknowledge their HR
managers/HR leaders for having such a system in place.
The design element of the PMS process is important, no doubt,
68
but where HR really can add value is during the execution of this
system. It is a sensitive exercise and one needs to keep the following in
mind while implementing this key HR Initiative
?Prevailing culture and core values of the organization
?If multiple business are there, nuances of each business with the
respective groups of people in each business
?Actualization of first time appraises and appraisers to the PMS
exercise
?Integration of core competencies of each role and its linkage to
the PMS exercise
Some of the established HR teams /HR Functions across the
organizations have meaningful contributions during he execution of
PMS process in the organization and many roles that HR plays may be
bucketed in three broad categories. These roles may be chosen by HR
members depending upon the life stage of HR function in that
particular organization:
?Role of a facilitator
Role of a Business Partner
?Role of a Employee Development Champion
Role of a Facilitator
The role of a facilitator may be described as follows:
?Help desk to provide support during the exercise, not of much of
decision making but provide support for smooth execution.
?Query resolutions of various nature raised by different employee
groups, clarifying the appraisal forms, methodology etc.
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?Assist Appraisers to objectively assess their respective team
members minimizing personal biases, provide details of
employees wherever required.
?Help Appraisers to understand What is in it for them by clear
communication and dissemination of key information during
various stages of execution.
2.Role of Business Partner
In many organizations where the HR function is evolved and
well aligned to the business teams, HR Managers play the role of much
more than facilitators and often go a step further and provide the
necessary value add for an effective and business-aligned PMS
exercise. HR then
?provides key insights of the business and establish linkages to the
people agenda
?Cull out strategic and relevant dashboards to help business
managers make objective assessment of their people with respect
to business performance keeping in mind the forecasts of people
requirements
?Help identify critical people and provide solutions to ring fence
critical talent
?Drive the need for a sharper performance distribution curve to
keep different performance level of people in mind
?Demonstrate equal degree of ownership of the process as their
business counterparts
?Establish the key strategic link between Business Performance
and Employee Assessment Distribution.
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3.Role of an Employee Development Champion
Companies that view the PMS system as a Organization
Development initiative seek HR Managers to play the role of
Employee Development Champions and the expectations from the
HR Team/HR Function is to execute the PMS system as a
development tool. In such an environment, HR role may be outlined as
?Position and Implement the PMS process as a employee
development tool in the organization
?Focus on more on competency and performance assessment
rather than only performance evaluation
?Use PMS process to identify Employee Development Needs in
context to Organization roadmap and related skill and
competency requirement
?Sketch patterns of individual/collective organization
development inputs
?Study trends of skill and competency development over a period
of time and use them as references in the current exercise.
These are the key HR Roles that HR Managers may choose
from depending on the organization requirement and play them
effectively to make a difference. As an HR Manager, you may choose
which one is the most suitable role for your organization and strive to
graduate to the next level in the next exercise. Depending on the HR
Agenda, the manager may be expected to play a dual role also at times.
WHAT IS PERFORMANCE MANAGEMENT PLANNING?
Performance management planning refers to the creation and
setting forth of strategic plans for managing the workforce in order to
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achieve organizational success. Having a clear plan for how human
capital can best be managed is vital to the success of an organization.
In addition, having a performance management plan in place supports
the overall mission and objectives of a company.
Putting a performance management plan into place often
involves looking at the organization from the employee level up. As
each employee brings unique talents and abilities to the table, the skills
of each work-team need to be inventoried so that goals can be met
more efficiently. It's also important to determine what gaps exist
within employee groups so that plans can be designed to meet those
needs for the betterment of the entire organization and its ability to
reach long term goals.
Another aspect of performance management planning
involves putting a workforce training program into place to develop
existing employees who have potential for greater performance. This
enhances the company as a whole so that work gets done more
effectively, which increases company profitability. The better
employees perform, the better the company can operate and grow.
Performance management planning also involves designing
assessment procedures. Having a clear set of objectives for each
employee to achieve is vital to the success of work teams and
departments. Performance management plans can be designed for
each individual employee to make sure he or she is performing up to
standards during set time periods. Generally, performance plans
consist of performance evaluations done during the first ninety days of
employment and then annually.
When designing performance management plans, human
resources officers will generally meet with various members of
management to determine the overall goals of each department or
division. Then a plan will be drafted to best meet the needs of the
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departments as they relate to the existing and future employees. Goals
for the performance plan should be measurable, achievable and
enforceable to produce the most favorable results.
Once performance management planning takes place, a formal
document can be created for each department to follow when
assessing current employee talents and shortcomings. This plan
should be discussed with each employee and an individual
performance management plan can be designed for each individual
employee. Once this is established, employees will understand what is
expected from them and performance levels should improve with
careful monitoring.
WHAT IS EMPLOYEE PERFORMANCE MANAGEMENT?
Employee Performance Management is a process for
establishing a shared workforce understanding about what is to be
achieved at an organization level. It is about aligning the
organizational objectives with the employees' agreed measures, skills,
competency requirements, development plans and the delivery of
results. The emphasis is on improvement, learning and development in
order to achieve the overall business strategy and to create a high
performance workforce.
How Annual Appraisals are different but part of Performance
Management
Most organizations have some type of employee appraisal
system, and many are experiencing the shortcomings of manual staff
evaluation systems. When discussing workforce performance the
most commonly asked question is "How does Performance
Management differ from performance appraisals or staff reviews"?
Performance Management is used to ensure that employees' activities
and outcomes are congruent with the organization's objectives and
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entails specifying those activities and outcomes that will result in the
firm successfully implementing the strategy (Noe et al. 2000, p.55).
An effective Performance Management process establishes the
groundwork for excellence by:
?Linking individual employee objectives with the organization's
mission and strategic plans. The employee has a clear concept on
how they contribute to the achievement the overall business
objective,
?Focusing on setting clear performance objectives and
expectations through the use of results, actions and behaviors,
?Defining clear development plans as part of the process, and
?Conducting regular discussions throughout the performance
cycle which include such things as coaching, mentoring,
feedback and assessment.
Performance appraisal properly describes a process of judging
past performance and not measuring that performance against clear
and agreed objectives. Performance Management shifts the focus
away from just an annual event to an on-going process. Figure 2.2 is a
process diagram that provides a graphical view of the major
differences between the two processes.
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Misdirected Bonuses
This situation has been illustrated many times where
employees and managers have received favorable reviews and
bonuses and yet the organization has not achieved its goals. The
organization may be losing millions of dollars and yet still paying out
bonuses to its managers and employees.
Too Painful, Emotionally Charged
High stress levels for both managers and employees also
become a factor. They both know they will be judged on the outcome
of the appraisal and the fallout is often destructive rather than
constructive. The reasoning behind this is that there are rarely any pre-
defined mesaures or objectives and the employee review is not based
on any considered evaluation criteria. The employees' remuneration
and future are at stake and the goodwill of the managers future
resources are also at stake. This leads to high stress in the case of both
individuals and this is a poor emotional state in which to have a
thorough discussion about employee performance.
Poor Understanding of Expectations
Where the appraisal system is poorly communicated, both the
employee and manager enter these discussions with low confidence
levels. This is due to a lack of "rules" as to how to go about the
appraisal process and a lack of understanding of the expected
outcomes. As this process is infrequent, it is viewed by the employee
as an opportunity to discuss remuneration, promotion prospects and
other issues related to the employee. This means the discussion is
dominated by employee content rather than what the manager needs
the employee to do for the next year. This leads to vague definition of
performance goals and perpetuates the system of poorly defined and
executed appraisals.
As an annual staff review is so infrequent, both managers and
employees find it difficult to remember what actually happened during
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the year. Both typically come to the meeting ill prepared with little
meaningful content to discuss. This makes the appraisal more difficult
and frustrates both the employee and manager.
Bad Timing
More often than not, the annual appraisal is executed on the
employees' anniversary which does not coincide with any particular
performance period. If appraisals are conducted annually on the
anniversary date, it is only possible to align at best only 50% of your
staff with future objectives, assuming there is an even distribution of
start dates across the employee workforce. Given that most appraisal
systems are not automated, there is poor reporting and therefore low
visibility as to who did or did not achieve their objectives.
Subjective Manager Opinion
This means that an employees' future is wholly dependent on
their manager's highly subjective opinion. The CEO or other executive
management does not have clear vision as to who achieved their
objectives and who did not. The outcome for the CEO is that they do
not have the ability to see failure as it is occurring. Instead, they see
failure after the fact and radical adjustments are then required to repair
the situation. By using standalone appraisal systems, the outcome for
the line manager is that they have additional pressure applied to them,
to fix a problem which has become a major issue and which could have
been otherwise identified and fixed in a very timely fashion.

Performance Not Aligned to Promotions
Given that annual appraisals are only conducted once yearly,
most line managers only seriously think and plan once a year. The
consequences are poor resource management, put-out-the-fire
management and costly and reactive problem fixing on the fly. Given
that most appraisal systems are manual and on paper, the data arising
from an excellent performance typically does not find its way into the
succession planning process. Employees are therefore often
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disillusioned to find that they have been passed over for further
development or a promotion when they have performed strongly for
several years.
Poor Development Opportunities
This is a primary cause for employees leaving the
organization. Most appraisal systems do not feature a competency
assessment or an active development plan that both the employee and
manager have mutually agreed to. Staffs often get disillusioned and
leave the organization if they can see no personal development
prospects or if personal development has not occurred in practice for
the last several years, despite numerous promises.
No Consequence for Non-Participation
Given that most appraisal systems are manual, reporting is
weak and therefore compliance reporting is not visible. This
inevitably means that managers learn that they do not have to perform
reviews and therefore they don't because there is no negative
consequence for them. Equally, employees learn that there is no
consequence to not being reviewed, they lose faith in management and
invariably look for somewhere else to work. Most manual appraisal
systems suffer from sub 30% compliance and can get to this point after
only 18 months of operation i.e. roughly one to one and a half
performance terms.
Typical Outcomes from Performance Management
If Performance Management is implemented correctly with
specific objectives tied to the strategic and operational plan,
organizational performance outcomes will likely increase very
quickly. For example, if the CEO asked for a 3% increase in gross
margin, this objective would be cascaded down to every department,
team and individual who can influence the increase in gross margin.
Those who are successful at achieving this objective will get a
favorable review, those that could not, will get an unfavorable
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performance evaluation in the absence of extenuating circumstances.
The process of Performance Management therefore drives
organizational performance outcomes. Employees that achieve the
organisational goals are rewarded with favourable reviews and
bonuses in line with their performance and contribution to the
organisation.
Communication Improves
The employee and manager communicate more frequently and
agree on changed objectives to suit continuing changes in conditions
and priorities. This is an inclusive and collaborative process, which
ensures that the employee has input and does not feel they have wasted
the year. The employee works towards specific objectives that are
relevant. If the organization is using a Performance Management
product that has a performance diary, both the manager and employee
attend the review meeting with copies of their performance diary
notes. This contains content from the performance period to be
reviewed. Given that both have content, they feel much better
prepared and stress is lower than if they were attending a meeting not
aware of the subject matter.
Everyone Knows the Rules
Where there is a well structured Performance Management
system that is effectively communicated, both the employee and
manager enter the process with better levels of confidence as there are
"rules" that clearly stipulate what is being assessed and how.
Employees are assessed on achievement of objectives that have been
clearly identified and agreed to. Managers have a better framework to
assess an employees' performance as they are familiar with the criteria
to assess the employee. The outcome is that both individuals have an
informed discussion and focus on achievement of both personal and
business objectives, not on issues that are irrelevant.
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Better Recording Opens Up Communication
If the organization has a system with a performance diary, then
both parties are prepared with relevant content to discuss. They have
diary notes that relate to performance during the entire performance
period. This raises confidence and reduces stress levels. Both parties
feel more comfortable and they can have a content rich and factual
discussion about performance.
Frequent Communication Reduces Stress
Given that these performance reviews happen more
frequently, the discussion centers on performance of objectives rather
than being dominated by the employees' needs. The needs of the
business are discussed more frequently to achieve specific
performance outcomes. This means both the employee and manager
communicate more effectively and achieve better outcomes.
Emotionally charged discussions tend to be displaced by business
focused discussions on achievement of objective outcomes.
As expectations are modified when a Performance
Management system is introduced, most organizations switch to
defined performance periods. This means that strategic and
operational objectives are set at the beginning of the performance
period. Formal performance reviews are then conducted quarterly or
half yearly and enable management to direct and fine tune effort in
relation to the objectives.
Appraisals Become Relevant for Everyone
By conducting more frequent reviews, objectives can be
adjusted and modified to suit changing business conditions. This
dramatically increases the probability that the objectives are relevant
and are able to be acted upon during the performance period.
By performing frequent performance reviews, visibility is
increased dramatically. Areas of non performance receive much more
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focus and attention and problems can be acted upon much quicker.
Most Performance Management systems provide reporting as to who
has or has not achieved their objectives (departments and individuals).
Adjustments to objectives or strategy can then be made to ensure
expectations can be met. Alternately, expectations can be modified as
appropriate. By reviewing more frequently, all managers and
employees start to plan and execute to clearly thought out objectives.
This results in better resource management and enables managers to
work on the business, not in the business.
Employee Learning and Development Starts to Happen
Given that most Performance Management systems require
managers and employees to commit to a development plan, employees
experience real personal development and become more engaged with
the organization. They feel part of the organization and start to
understand that they and the organization are interdependent. The
organization is developing the employee and the employee is working
towards developing the organization by achieving its goals. The
majority of Performance Management systems are able to provide
graphical compliance reports. Therefore, the setting of objectives and
development plans for employees can no longer be ignored.
Employees see real planning, are involved in setting meaningful
objectives and have input into personal development plans which
benefit both themselves and the organization. In all, this results in an
engaged workforce who are extremely committed to achieving real
outcomes for the organization.
PERFORMANCE MANAGEMENT RESEARCH
Several studies have been conducted in Australia that indicates
the predominant method of assessing employees in Australia is
appraisal. During 2004, Associate Professor Alan Nankervis of Royal
Melbourne Institute of Technology conducted a study of 992
Australian organisations. One of the outcomes was that only 2.4% of
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organisations reviewed their employees against objectives, the
remaining 97.5% were a combination of some type of appraisal.
Furthermore, The Performance Management Institute of
Australia conducted a survey of Australian employees' attitudes
towards Performance Management in the workplace . Approximately
450 employees responded from a wide variety of businesses and
enterprises. The research found that, over 59% of employees received
performance reviews once per year or less. This implies that the
majority of Australian managers are failing to properly engage their
employees. Effective management requires a continual goal setting
and review process which gives employees regular feedback of
management expectations and frequent praise for achievement of
desired goals.
Australian Managers Still Doing Standalone Appraisals
What the survey results imply is that Australian managers are
performing appraisals, not performance reviews and objective setting.
The results may also mean that managers are not targeting their teams
to achieving strategic goals which are at all time-bound. Usually,
employees who are not formally reviewed for a year or more are
expending work effort in a manner or direction which is not readily
visible to their manager. This lack of employee engagement is leading
to disaffection from the employees who can make and want to make a
difference to the organisation. In our view, appraisals add very little
value to the performance of an organisation and in some
circumstances may actually be detrimental to organisations who wish
to move towards Performance Management. A contributing factor
may be that line managers who have been conducting appraisals have
also seen little, if any, impact on departmental or team performance as
a consequence of conducting these appraisals.
PeopleStreme conducted several research studies in focus
groups over the last four years and during seminars on Performance
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Management. To summarise the findings, 87% of organisations have
some type of appraisal system. However, this is usually referred to as
the Performance Management system. Of the 87% that have these
systems, 95% were manual systems without performance objectives
or development plans. It was clear from the research that many
organisations incorrectly view manual annual appraisal systems as
Performance Management systems. Organisations are increasingly
adopting Performance Management systems. However, organisations
in both Australia and the USA are experiencing 100% to 300% yearly
increases in organisations acquiring Performance Management
systems exceeding the existing forecast rate.
In contrasting Performance Appraisal with Performance
Management, it suggests that performance appraisals are indeed an
evaluation of an employees work. However, Performance
Management reflects the continuous nature of performance
improvement and employee development, recognizing the
importance of effective management, work systems and team
contributions.
BENEFITS OF A PERFORMANCE MANAGEMENT SYSTEM
A good performance management system works towards the
improvement of the overall organizational performance by managing
the performances of teams and individuals for ensuring the
achievement of the overall organizational ambitions and goals. An
effective performance management system can play a very crucial role
in managing the performance in an organization by:
?Ensuring that the employees understand the importance of their
contributions to the organizational goals and objectives.
?Ensuring each employee understands what is expected from them
and equally ascertaining whether the employees possess the
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required skills and support for fulfilling such expectations.
?Ensuring proper aligning or linking of objectives and facilitating
effective communication throughout the organization.
?Facilitating a cordial and a harmonious relationship between an
individual employee and the line manager based on trust and
empowerment.
Performance Management practices can have a positive influence
on the Job satisfaction and employee loyalty by:
?Regularly providing open and transparent job feedbacks to the
employees.
?Establishing a clear linkage between performance and
compensation
?Providing ample learning and development opportunities by
representing the employees in leadership development
programmes, etc.
?Evaluating performance and distributing incentives and rewards
on a fair and equated basis.
?Establishing clear performance objectives by facilitating an open
communication and a joint dialogue.
?Recognizing and rewarding good performance in an
organization.
?Providing maximum opportunities for career growth
?An effectively implemented performance management system
can benefit the organization, managers and employees in several
ways as depicted in the table given below:
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Clearly defined goals, regular assessments of individual
performance and the company wide requirements can be helpful in
defining the corporate competencies and the major skill gaps which
may in turn serve as a useful input for designing the training and
development plans for the employees.
A sound performance management system can serve two
crucial objectives:
Evaluation Objectives
?By evaluating the readiness of the employees for taking up higher
responsibilities.
?By providing a feedback to the employees on their current
competencies and the need for improvement.
?By linking the performance with scope of promotions, incentives,
rewards and career development.
Developmental Objectives
The developmental objective is fulfilled by defining the
training requirements of the employees based on the results of the
reviews and diagnosis of the individual and organizational
competencies. Coaching and counseling helps in winning the
confidence of the employees and in improving their performance,
besides strengthening the relationship between the superior and the
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Organizations
Benefits
Improved organizational performance, employee retention and
loyalty, improved productivity, overcoming the barriers to
communication, clear accountabilities, and cost advantages.
Managers Benefits Saves time and reduces conflicts, ensures efficiency and
consistency in performance.
Employees Benefits Clarifies expectations of the employees, self assessment
opportunities clarifies the job accountabilities and contributes to
improved performance, clearly defines career paths and
promotes job satisfaction.

subordinate.
In a nutshell, performance management serves as an important
tool for realizing organizational goals by implementing competitive
HRM strategies. It helps in aligning and integrating the objectives
with the KPI's in an organization both vertically and horizontally
across all job categories and the levels and thus helps in driving all the
activities right from the bottom level towards one single goal.
Performance Management and Development
Performance management and development provides a
framework to value our staff, provides a working environment that
acknowledges their contribution and builds capacity to ensure
organizational effectiveness.
1. Objectives - Policy statement
?Performance management and development provides a
framework to value our staff, provides a working environment
that acknowledges their contribution and builds capacity to
ensure organizational effectiveness.
Performance management and development is a critical process
in achieving corporate objectives in that it links those objectives
with employee goals and achievements. It focuses on improving
performance through matching outcomes against individual,
team and organizational objectives.
?Performance management and development is an essential
element in the creation of an organizational culture which
promotes high quality performance and the individual
acceptance of responsibility and accountability commensurate
with the individual's position and role.
Performance management and development is the continuous
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process of reflecting on, negotiating, developing, reviewing and
making decisions about an individual's performance in
achieving organizational goals.
Performance management and development processes
complement other management practices of providing ongoing
feedback, review and development of staff.
2. Audience and applicability
?This policy applies to all permanent department staff and
temporary staff employed for periods greater than eight weeks
consecutively in any one year.
3. Context
?Conditions of staff employment, including performance
management principles, are contained in various authorities
including legislation, regulations, industrial instruments,
determinations, NSW Government policies, and policies,
procedures, circulars and other administrative documents
issued by the department.
4. Responsibilities and delegations
1. All staffs responsible for:
?Participating in a performance management and development
process consistent with this policy and their conditions of
employment as contained in authorities referred to under
"Context".
?Demonstrating and being accountable for their performance in
relation to the implementation of organizational and workplace
goals
?Participating in ongoing review and formal performance review
meetings
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?Participating in appropriate and related professional
development as required.
2. Managers are responsible for:
?exercising leadership by working with staff members to
implement the performance management and development
process consistent with the policy and staff members' conditions
of employment
?providing continuing support and feedback to staff members
?assisting in the identification of and participation in appropriate
and related professional development as required.
3. The manager and staff member will identify appropriate goals for
the staff member and ensure appropriate progress towards their
achievement in accordance with the timeframes as outlined in relevant
support and implementation documents.
5. Monitoring, evaluation and reporting requirements
1. The general manager, human resources will monitor the currency of
this policy and will report on its effectiveness annually, or as required,
to the executive.
2. All managers are responsible for the operation of this policy and the
implementation of the procedures for the relevant staff category.
ORGANIZATIONAL LEARNING
Definition
Organization-wide continuous process that enhances its
collective ability to accept, make sense of, and respond to internal and
external change. Organizational learning and is more than the sum of
the information held by employees. It requires systematic integration
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and collective interpretation of new knowledge that leads to collective
action and involves risk taking as experimentation.
Organizational learning is an area of knowledge within organizational
theory that studies models and theories about the way an organization
learns and adapts.
In Organizational development (OD), learning is a
characteristic of an adaptive organization, i.e., an organization that is
able to sense changes in signals from its environment (both internal
and external) and adapt accordingly. OD specialists endeavor to assist
their clients to learn from experience and incorporate the learning as
feedback into the planning process. It is of 2 types:
?Single-loop learning
Double-loop learning
In single-loop learning, individuals, groups, or organizations
modify their actions according to the difference between expected and
obtained outcomes.
In double-loop learning, the entities (individuals, groups or
organization) question the values, assumptions and policies that led to
the actions in the first place; if they are able to view and modify those,
then second-order or double-loop learning has taken place. Double
loop learning is the learning about single-loop learning.
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Single Loop Learning
Take action

Make decision Notice Fedback

Gap between where you are
&
Where you want to be
Chris Argyris describes the concept of double-loop learning
(DLL) in which an individual, organization or entity is able, having
attempted to achieve a goal on different occasions, to modify the goal
in the light of experience or possibly even reject the goal. Single-loop
learning (SLL) is the repeated attempt at the same problem, with no
variation of method and without ever questioning the goal.
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Double loop learning
Take action

Make a decision Notice feedback

Gap between where you are
&
Where you want to be

Mental models
PDP - PERSONAL DEVELOPMENT PLANNING
PDP is defined as 'a structured and supported process
undertaken by an individual to reflect upon their own learning,
performance and/or achievement and to plan for their personal,
educational and career development'.
Personal development planning is the process of creating an
action plan based on awareness, values, reflection, goal-setting and
planning for personal development within the context of a career,
education, relationship or for self-improvement.
The PDP (personal development plan), also called an IDP
(individual development plan) or PEP (personal enterprise plan),
usually includes a statement of one's aspirations, strengths or
competencies, education and training, and stages or steps to indicate
how the plan is to be realized. Personal development plans may also
include a statement of one's career and lifestyle priorities, career
positioning, analysis of opportunities and risks, and alternative plans
(Plan B), and a curriculum vitae.
In higher education, personal development plans typically
include a portfolio containing evidence of the skills gathered over a
particular timeframe. It is presumed in education that undertaking
PDP will assist in creating self-directed independent learners who are
more likely to progress to higher levels of academic attainment. It is
also used in Human resource management.
Personal developments plans are often a requirement for
employee CVs. Employees who are participating in business training
are often asked to complete a personal development plan. A five year
personal development plan can often be developed by an individual to
organize personal goals and make them achievable within a certain
time period.
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OVERALL GOAL AND FOCUSES OF PERFORMANCE
MANAGEMENT
The overall goal of performance management is to ensure that
the organization and all of its subsystems (processes, departments,
teams, employees, etc.) are working together in an optimum fashion to
achieve the results desired by the organization.
Performance Improvement of the Organization or a
Subsystem is an Integrated Process
Note that because performance management strives to
optimize results and alignment of all subsystems to achieve the overall
results of the organization, any focus of performance management
within the organization (whether on department, process, employees,
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etc.) should ultimately affect overall organizational performance
management as well.
ONGOING ACTIVITIES OF PERFORMANCE MANAGE-
MENT
Achieving the overall goal requires several ongoing activities,
including identification and prioritization of desired results,
establishing means to measure progress toward those results, setting
standards for assessing how well results were achieved, tracking and
measuring progress toward results, exchanging ongoing feedback
among those participants working to achieve results, periodically
reviewing progress, reinforcing activities that achieve results and
intervening to improve progress where needed. Note that results
themselves are also measures.
Note that these general activities are somewhat similar to
several other major approaches in organizations, e.g., strategic
planning, management by objectives, Total Quality Management, etc.
Performance management brings focus on overall results, measuring
results, focused and ongoing feedback about results, and development
plans to improve results. The results measurements themselves are not
the ultimate priority as much as ongoing feedback and adjustments to
meet results.
The steps in performance management are also similar to those
in a well-designed training process, when the process can be
integrated with the overall goals of the organization. Trainers are
focusing much more on results for performance. Many trainers with
this priority now call themselves performance consultants.
Basic Steps
Various authors propose various steps for performance
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management. The typical performance management process includes
some or all of the following steps, whether in performance
management of organizations, subsystems, processes, etc. Note that
how the steps are carried out can vary widely, depending on the focus
of the performance efforts and who is in charge of carrying it out. For
example, an economist might identify financial results, such as return
on investment, profit rate, etc. An industrial psychologist might
identify more human-based results, such as employee productivity.
The following steps are described more fully in the topics
Performance Plan, Performance Appraisal and Development Plan,
including through use of an example application. The steps are
generally followed in sequence, but rarely followed in exact sequence.
Results from one step can be used to immediately update or modify
earlier steps. For example, the performance plan itself may be updated
as a result of lessons learned during the ongoing observation,
measurement and feedback step.
NOTE:
The following steps occur in a wide context of many activities
geared towards performance improvement in an organization, for
example, activities such as management development, planning,
organizing and coordinating activities.
?Review organizational goals to associate preferred
organizational results in terms of units of performance, that is,
quantity, quality, cost or timeliness (note that the result itself is
therefore a measure)
?Specify desired results for the domain -- as guidance, focus on
results needed by other domains (e.g., products or services need
by internal or external customers)
?Ensure the domain's desired results directly contribute to the
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organization's results
?Weight, or prioritize, the domain's desired results
?Identify first-level measures to evaluate if and how well the
domain's desired results were achieved
?Identify more specific measures for each first-level measure if
necessary
?Identify standards for evaluating how well the desired results
were achieved (e.g., "below expectations", "meets expectations"
and "exceeds expectations")
?Document a performance plan -- including desired results,
measures and standards
?Conduct ongoing observations and measurements to track
performance
?Exchange ongoing feedback about performance
?Conduct a performance appraisal (sometimes called performance
review)
?If performance meets the desired performance standard, then
reward for performance (the nature of the reward depends on the
domain)
?If performance does not meet the desired performance standards,
then develop or update a performance development plan to
address the performance gap* (See Notes 1 and 2)
?Repeat steps 9 to 13 until performance is acceptable, standards
are changed, the domain is replaced, management decides to do
nothing, etc.
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* Note 1: Inadequate performance does not always indicate a problem
on the part of the domain. Performance standards may be unrealistic or
the domain may have insufficient resources. Similarly, the overall
strategies or the organization, or its means to achieving its top-level
goals, may be unrealistic or without sufficient resources.
* Note 2: When performance management is applied to an employee
or group of employees, a development plan can be initiated in a variety
of situations, e.g.,:
a.)When a performance appraisal indicates performance
improvement is needed, that is, that there is a "performance gap
b.) To "benchmark" the status of improvement so far in a development
effort
c.) As part of a professional development for the employee or group of
employees, in which case there is not a performance gap as much as an
"growth gap"
d.) As part of succession planning to help an employee be eligible for a
planned change in role in the organization, in which case there also is
not a performance gap as much as an "opportunity gap".
e.) To "pilot", or test, the operation of a new performance management
system
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JOB EVALUATION- CONCEPT
Job evaluation is a systematic way of determining the
value/worth of a job in relation to other jobs in an organization. It tries
to make a systematic comparison between jobs to assess their relative
worth for the purpose of establishing a rational pay structure.
Job evaluation needs to be differentiated from job analysis. Job
analysis is a systematic way of gathering information about a job.
Every job evaluation method requires at least some basic job analysis
in order to provide factual information about the jobs concerned. Thus,
job evaluation begins with job analysis and ends at that point where the
worth of a job is ascertained for achieving pay equity between jobs.
Features
The purpose of job evaluation is to produce a defensive
ranking of jobs on which a rational and acceptable pay structure can be
built. The important features of job evaluation may be summarized
thus:
?It tries to assess jobs, not people.
?The standards of job evaluation are relative, not absolute.
JOB EVALUATION
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Chapter-3
?The basic information on which job evaluations are made is
obtained from job analysis.
?Job evaluations are carried out by groups, not by individuals.
?Some degree of subjectivity is always present in job evaluation.
?Job evaluation does not fix pay scales, but merely provides a basis
for evaluating a rational wage structure.
PROCESS OF JOB EVALUATION
The process of job evaluation involves the following steps:
?Gaining acceptance: Before undertaking job evaluation, top
management must explain the aims) and uses of the programme
to the employees and unions. To elaborate the programme further,
oral presentations could be made. Letters, booklets could be used
to classify all relevant aspects of the job evaluation programme.
?Creating job evaluation committee: It is not possible for a
single person to evaluate all the key jobs in an organization.
Usually a job evaluation committee consisting of experienced
employees, union representatives and HR experts is created to set
the ball rolling.
? Finding the jobs to be evaluated: Every job need not be
evaluated. This may be too taxing and costly. Certain key jobs in
each department may be identified. While picking up the jobs,
care must be taken to ensure that they represent the type of work
performed in that department.
?Analyzing and preparing job description: This requires the
preparation of a job description and also an analysis of job needs
for successful performance.
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97
?Selecting the method of evaluation: The most important
method of evaluating the jobs must be identified now, keeping the
job factors as well as organizational demands in mind.
?Classifying jobs: The relative worth of various jobs in an
organization may be found out after arranging jobs in order of
importance using criteria such as skill requirements, experience
needed, under which conditions job is performed, type of
responsibilities to be shouldered, degree of supervision needed,
the amount of stress caused by the job, etc. Weights can be
assigned to each such factor. When we finally add all the weights,
the worth of a job is determined. The points may then be
converted into monetary values.
?Installing the programme: Once the evaluation process is over
and a plan of action is ready, management must explain it to
employees and put it into operation.
?Reviewing periodically: In the light of changes in
environmental conditions (technology, products, services, etc.)
jobs need to be examined closely. For example, the traditional
clerical functions have undergone a rapid change in sectors like
banking, insurance and railways, after computerization. New job
descriptions need to be written and the skill needs of new jobs
need to be duly incorporated in the evaluation process.
Otherwise, employees may feel that all the relevant job factors -
based on which their pay has been determined - have not been
evaluated properly.
For job evaluation to be practicable it is necessary:
?that jobs can be easily identified
?that there are sufficient difference between different jobs; and
?that agreements no the relative importance or worth of different
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jobs can be negotiated between the enterprise and its employees
and/or their representatives.
Benefits
The pay offs from job evaluation may be stated thus:
?It tries to link pay with the requirements of the job.
?It offers a systematic procedure for determining the relative worth
of jobs. Jobs are ranked on the basis of rational criteria such as
skill, education, experience, responsibilities, hazards, etc., and
are priced accordingly.
?An equitable wage structure is a natural outcome of job
evaluation. An unbiased job evaluation tends to eliminate salary
inequities by placing jobs having similar requirements in the
same salary range.
?Employees as well as unions participate as members of job
evaluation committee while determining rate grades for different
jobs. This helps in solving wage related grievances quickly.
?Job evaluation, when conducted properly and with care, helps in
the evaluation of new jobs.
?It points out possibilities of more appropriate use of the plant's
labor force by indicating jobs that need more or less skilled
workers than those who are manning these jobs currently.
JOB EVALUATION METHODS
There are three basic methods of job evaluation:
(1) ranking,
(2) classification,
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JOB EVALUATION
(3) factor comparison.
While many variations of these methods exist in practice, the
three basic approaches are described here.
RANKING METHOD
Perhaps the simplest method of job evaluation is the ranking
method. According to this method, jobs are arranged from highest to
lowest, in order of their value or merit to the organization. Jobs can
also be arranged according to the relative difficulty in performing
them. The jobs are examined as a whole rather than on the basis of
important factors in the job; the job at the top of the list has the highest
value and obviously the job at the bottom of the list will have the
lowest value. Jobs are usually ranked in each department and then the
department rankings are combined to develop an organizational
ranking. The following table is a hypothetical illustration of ranking of
jobs. The variation in payment of salaries depends on the variation of
the nature of the job performed by the employees. The ranking method
is simple to understand and practice and it is best suited for a small
organization. Its simplicity however works to its disadvantage in big
organizations because rankings are difficult to develop in a large,
complex organization. Moreover, this kind of ranking is highly
subjective in nature and may offend many employees. Therefore, a
more scientific and fruitful way of job evaluation is called for.
CLASSIFICATION METHOD
According to this method, a predetermined number of job
groups or job classes are established and jobs are assigned to these
classifications. This method places groups of jobs into job classes or
job grades. Separate classes may include office, clerical, managerial,
personnel, etc. Following is a brief description of such a classification
in an office.
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JOB EVALUATION
a. Class I - Executives: Further classification under this category may
be Office Manager, Deputy office manager, Office superintendent,
Departmental supervisor, etc.
b. Class II - Skilled workers: Under this category may come the
Purchasing assistant, Cashier, Receipts clerk, etc.
c. Class III - Semiskilled workers: Under this category may come
Steno, typists, Machine-operators, Switchboard operator etc.
d. Class IV - Semiskilled workers: This category comprises Dietaries,
File clerks, Office boys, etc.
The job classification method is less subjective when
compared to the earlier ranking method. The system is very easy to
understand and acceptable to almost all employees without hesitation.
One strong point in favour of the method is that it takes into account all
the factors that a job comprises. This system can be effectively used for
a variety of jobs. The weaknesses of the job classification method are:
Even when the requirements of different jobs differ, they may be
combined into a single category, depending on the status a job carries.
It is difficult to write all-inclusive descriptions of a grade.
The method oversimplifies sharp differences between
different jobs and different grades.
When individual job descriptions and grade descriptions do
not match well, the evaluators have the tendency to classify the job
using their subjective judgments.
FACTOR COMPARISON METHOD
A more systematic and scientific method of job evaluation is
the factor comparison method. Though it is the most complex method
of all, it is consistent and appreciable. Under this method, instead of
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ranking complete jobs, each job is ranked according to a series of
factors. These factors include mental effort, physical effort, skill
needed, responsibility, supervisory responsibility, working conditions
and other such factors (for instance, know-how, problem solving
abilities, accountability, etc.). Pay will be assigned in this method by
comparing the weights of the factors required for each job, i.e., the
present wages paid for key jobs may be divided among the factors
weighted by importance (the most important factor, for instance,
mental effort, receives the highest weight). In other words, wages are
assigned to the job in comparison to its ranking on each job factor.
?The steps involved in factor comparison method may be briefly
stated thus:
?Select key jobs (say 15 to 20), representing wage/salary levels
across the organization. The selected jobs must represent as many
departments as possible.
?Find the factors in terms of which the jobs are evaluated (such as
skill, mental effort, responsibility, physical effort, working
conditions, etc.).
?Rank the selected jobs under each factor (by each and every
member of the job evaluation committee) independently.
?Assign money value to each level of each factor (example:
consider problem solving is one of the factor, what level of
problem solving is required {basic, intermediate or advance})
and determine the wage rates for each key job.
?The wage rate for a job is apportioned along the identified factors.
?All other jobs are compared with the list of key jobs and wage
rates are determined. An example of how the factor comparison
method works is given below:
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After the wage rate for a job is distributed along the identified and
ranked factors, all other jobs in the department are compared in terms
of each factor. Suppose the job of a 'painter' is found to be similar
electrician in skill (15), fitter in mental effort (10), welder in physical
effort (12) cleaner in responsibility! (6) and labourer in working
conditions (4). The wage rate for this job would be (15+10+12+6+4) is
47.
POINT METHOD
This method is widely used currently. Here, jobs are expressed
in terms of key factors. Points are assigned to each factor after
prioritizing each factor in order of importance. The points are summed
up to determine the wage rate for the job. Jobs with similar point totals
are placed in similar pay grades. The procedure involved may be
explained thus:
a. Select key jobs. Identify the factors common to all the identified
jobs such as skill, effort, responsibility, etc.
b. Divide each major factor into a number of sub factors. Each sub
factor is defined and expressed clearly in the order of importance,
preferably along a scale.
The most frequent factors employed in point systems are
(i)Skill (key factor); Education and training required,
Breadth/depth of experience required, Social skills required,
Problem-solving skills, Degree of discretion/use of
judgement, Creative thinking.
(ii) (ii) Responsibility/Accountability: Breadth of
responsibility, Specialised responsibility, Complexity of the
work, Degree of freedom to act, Number and nature of
subordi nat e st aff, Ext ent of account abi l i t y for
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equi pment / pl ant , Ext ent of account abi l i t y f or
product/materials;
(iii) (iii) Effort: Mental demands of a job, Physical demands
of a job, Degree of potential stress.
The educational requirements (sub factor) under the skill (key
factor) may be expressed thus in the order of importance.
c. Find the maximum number of points assigned to each job (after
adding up the point values of all sub-factors of such a job). This would
help in finding the relative worth of a job. For instance, the maximum
points assigned to an officer's job in a bank come to 540. The
manager's job, after adding up key factors + sub factors points, may be
getting a point value of say 650 from the job evaluation committee.
This job is now priced at a higher level.
d. Once the worth of a job in terms of total points is expressed, the
points are converted into money values keeping in view the
hourly/daily wage rates. A wage survey is usually undertaken to
collect wage rates of certain key jobs in the organisation. Let's explain
this:
Merits and demerits
The point method is a superior and widely used method of
evaluating jobs. It forces raters to look into all key factors and sub-
factors of a job. Point values are assigned to all factors in a systematic
way, eliminating bias at every stage. It is reliable because raters using
similar criteria would get more or less similar answers. The
methodology underlying the approach contributes to a minimum of
rating error (Robbins p. 361). It accounts for differences in wage rates
for various jobs on the strength of job factors. Jobs may change over
time, but the rating scales established under the point method remain
unaffected. On the negative side, the point method is complex.
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Preparing a manual for various jobs, fixing values for key and sub-
factors, establishing wage rates for different grades, etc., is a time
consuming process, According to Decenzo and Robbins, "the key
criteria must be carefully and clearly identified, degrees of factors
have to be agreed upon in terms that mean the same to all rates, the
weight of each criterion has to be established and point values must be
assigned to degrees". This may be too taxing, especially while
evaluating managerial jobs where the nature of work (varied,
complex, novel) is such that it cannot be expressed in quantifiable
numbers.
Limitations of Job Evaluation
?Job evaluation is not exactly scientific.
The modus operand of most of the techniques is difficult to
understand, even for the supervisors.
?The factors taken by the programme are not exhaustive.
There may be wide fluctuations in compensable factors in view
of changes in technology, values and aspirations of employers,
etc.
Employees, trade union leaders, management and the
programme operators may assign different weightage to
different factors, thus creating grounds for dispute.
PAY STRUCTURE OR SALARY STRUCTURES
Once job analysis has been done, organizations need to decide
upon the pay structures. Pay structures refers to the process of setting
up the pay for a job in an organization. The process deals with internal
and external analysis to estimate the compensation package for a job
profile. Internal equity, External equity and Individual equity are the
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most popular pay structures. Job description provides the in depth
knowledge about the job profile and its worth.
Pay structures are the strong determinant of employee's value
in the organization. It helps in analyzing the employee's role and status
in the organization. It provides for fair treatment to all employees. Pay
structures also include the estimation of incentives.
The level of incentives also depends on the level of job
position in the organizational hierarchy.
Internal Equity
The internal equity method undertakes the job position in the
organizational hierarchy. The process aims at balancing the
compensation provided to a job profile in comparison to the
compensation provided to its senior and junior level in the hierarchy.
The fairness is ensured using job ranking, job classification, level of
management, level of status and factor comparison.
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External Equity
Here the market pricing analysis is done. Organizations
formulate their compensation strategies by assessing the competitors'
or industry standards. Organizations set the compensation packages of
their employees aligned with the prevailing compensation packages in
the market. This entails for fair treatment to the employees. At times
organizations offer higher compensation packages to attract and retain
the best talent in their organizations.
What are Pay Structures or Salary Structures?
Pay structures, also known as salary structures, set out the different
levels of pay for jobs, or groups of jobs, by reference to:
?their relative internal value, as established by job evaluation
?external relativities, via market rate surveys
?where appropriate, negotiated rates for the job
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What are the main characteristics of Pay Structures?
?indicate rates of pay for different jobs
?provide scope for pay progression via performance, competence,
contribution, skill or service
?contain pay ranges for jobs grouped into grades, individual jobs
or job families.
Why do organizations need Pay structures?
?establish a logically-designed framework within which
equitable, fair and consistent reward policies can be implemented
?determine levels of pay for jobs and people
?basis for the effective management of relativities
?help monitor and control the implementation of pay practices
?communicate the pay opportunities available to employees.
The most important types of pay structure, or salary structure,
are:
Graded structures a sequence of overlapping job grades into which
jobs of broadly equivalent size are allocated. Each grade has a range,
the maximum of which is usually 20 to 50% above the minimum.
Broadband similar to conventional graded structures, but with far
fewer and far wider bands. The maximum of the band can be 100% or
more above the minimum.
Job Family Structures Each job family has a different graded
structure. Jobs are allocated to a job family based on activities carried
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out; skills and competencies e.g. Information Technology is a perfect
example of a job family for which there is usually a separate grade
structure.
Performance-Related pay
Performance-related pay is money paid to someone relating
to how well one works. Car salesmen, production line workers, for
example, may be paid in this way, or through commission.
Business theorist Yasser was a great supporter of this method
of payment, which is often referred to as PRP. He believed that money
was the main incentive for increased productivity and introducing the
widely used concept of 'piece work'.
This standards-based system is used for evaluating employees
and setting salaries by many employers. Standards-based methods
have been in de facto use for centuries among commission-based sales
staff: they are paid more for selling more, and low performers do not
earn enough to make keeping the job worthwhile even if they manage
to keep the job.
In addition to motivating the rewarded behavior, standards-
based methods can provide a level of standardization in employee
evaluations, which can reduce fears of favoritism and make the
employer's expectations clear. For example, an employer might set a
minimum standard of 12,000 keystrokes per hour in a simple data-
entry job, and reassign or replace employees who cannot perform at
that level.
Employees would be secure in knowing that their performance
was evaluated objectively according to the standard of their work
instead of the whims of a supervisor, or against an ever-climbing
average of their group.
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A fundamental criticism of performance-related pay is that the
performance of a complex job as a whole is reduced to a simple, often
single measure of performance. For instance a telephone call centre
helpline may judge the quality of an employee based upon the average
length of a call with a customer.
As a simple measure, this gives no regard to the quality of help
given, for instance whether the issue was resolved, or whether the
customer emerged satisfied. Performance related pay may also cause a
hostile work attitude as in times of low custom, multiple employees
may compete for the attentions of a single customer. Where a customer
has been helped by more than one employee, further resentment may
be caused if the commission is taken by whoever happens to make the
final sale. Macroscopic factors such as an economic downturn may
also make employees appear to be performing to a lower standard
independent of actual performance.
Performance-based systems have met some opposition as they
are being adopted by corporations and governments. In some cases,
opposition is motivated by specific ill-conceived standards, such as
one which makes employees work at unsafe speeds, or a system which
does not take all factors properly into account.
In other cases, opposition is motivated by a dislike of the
consequences. For example, a company may have had a compensation
system which paid employees strictly according to their seniority.
They may change to a system that pays sales staff according to how
much they sell. Low-performing senior employees would object to
having their income cut to match their performance level, while a
high-performing new employee might prefer the new arrangement.
Team-based Pay
Team Definition (Katzenbach & Smith, 1993)
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?Group of employees whose members are mutually accountable to
each other for common goals.
?Team members interact on a regular basis.
?There is the possibility of synergy between team members.
?Size of team is between 2 and 25 members.
Types of Teams
(Cohen & Bailey, 1997)
?Work Team
Controls a business process such as customer service or
manufacturing. Product or service quality is a key
criteria.
Permanent work assignment and full-time commitment.
?Project Team
Project is limited by completion time such as new product
design or construction project. Delivery time, budget
variance and design quality are some criteria.
Full-time commitment; after project team members are
reassigned to different projects.
?Parallel Teams
Used to solve specific problems such as quality, safety,
employee grievances or impact of technology change.
Used in parallel to functional units where employees
spend most of their work time.
Requires only a part-time commitment as team member.
Why Use Team Pay?
To Encourage Behaviors such as
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?Peer Cooperation
?Information Sharing
?Unselfish behavior supportive of team
Sacrifice personal interest for good of team such as giving
up leisure time on weekend to work for an important team
goal.
?Mutual Monitoring
Provide performance feedback to team members.
Monetary Team Rewards
(Gomez-Mejia & Balkin, 1992)
?Team Bonus - Cash payment to tied to achieving major team
performance outcome and allocated on non-recurring basis.
?Team Merit Pay - Cash adjustment to salary tied to achieving
team behavioral and performance outcomes.
?Skill-based Pay - Adjustment to base pay rate of team members
tied to team competence level.
?Gainsharing - Share gains of unit/department with
interdependent teams.
?Spot Cash Rewards - Discretionary basis.
?Non-monetary Team Rewards
?Team Recognition Reward - Public ceremony or announcement
in company newsletter.
?Team Celebration - Celebrate team win; includes special
dinner, ticket to sports event, etc.
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?Merchandise - Team jacket, pin, emblem to build team identity
and espirit de corps.
?Travel - Team members (and possibly spouses) travel to resort for
relaxation and fun - often used for sales teams after successful
marketing push.
Team Pay: Design Issues
?Eligibility - full or part time? managers? Newcomers?
?Size of Reward - large or small?
?Individual's shares - equal or equitable shares?
?Frequency of rewards - one time only? recurring?
?Criteria for Reward- performance metric? Outcome?
Milestone? Behavior/
?Funding the reward- self-funding: costs savings, profits,
customer goodwill.
?Administration of rewards - team? managers? HR? customers?
Team Pay: Controversies
?Dealing with Free Riders
?Inhibiting High Individual Performers
?Interdependent Teams may Compete rather than Cooperate with
each other.
Contribution-Related Pay
Contribution-related pay as modeled in Figures 1and figure 2
provides a basis for making pay decisions that are related to
assessments of both the outcomes of the work carried out by
individuals and their inputs in terms of the levels of competency that
have influenced these out-comes. It focuses on what people in
organizations are there to do: that is, to contribute by their skill and
efforts to the achievement of the purpose of their organization or team.
In some schemes the rewards are related to contributions both to
achieving results and to upholding corporate core values.
Contribution-related pay is a holistic process that takes into account all
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aspects of a person's performance in accordance with Brumbach's
(1988) view that performance means both behaviours and results.
The case for contribution-related pay was made by Brown and
Armstrong (1999) as follows:
Contribution captures the full scope of what people do, the
level of skill and competence they apply and the results they achieve,
which all contribute to the organization achieving its long-term goals.
Contribution pay works by applying the mixed model of performance
management: assessing inputs and outputs and coming to a conclusion
on the level of pay for people in their roles and their work; both in the
organization and in the market; taking into account both past
performance and future potential.
The case for contribution-related pay was made by Brown and
Armstrong (1999) as follows:
Contribution captures the full scope of what people do, the
level of skill and competence they apply and the results they achieve,
which all contribute to the organization achieving its long-term goals.
Contribution pay works by applying the mixed model of performance
management: assessing inputs and outputs and coming to a conclusion
on the level of pay for people in their roles and their work; both in the
organization and in the market; taking into account both past
performance and future potential.
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The Result that
have been achived
Paying for past
performance
Paying for future
success
Result Competence
The part played in
achieving a team
or corporate goal
How the results
have been
obtained
Paying for
contribution
WHAT IS SKILL-BASED PAY?
Skill-Based Pay is a well-developed training program coupled
with a structured compensation plan that provides:
a)interesting skill progressions required for the successful
operation of the organization, and
b)equitable compensation based upon the satisfactory
performance of those skills on a continuing basis.
Variations on the concept of skill-based pay go by names such
as "pay for knowledge," "pay for skills," and more recently,
"broadbanding." The concept of "career ladders" known for many
years is itself a predecessor of skill-based pay (SBP).
Don Barkman, President of The Business Center, has been
designing skill-based pay systems since 1981 and has gained a great
deal of valuable experience that you can draw upon. He has consulted
with new start-ups and existing plants. Don has worked in the United
States, France, Hungary, Slovakia, Turkey, Greece, and other
European countries to design and implement skill-based pay plans.

COMPETENCY
?A combination of skills, job attitude, and knowledge which is
reflected in job behavior that can be observed, measured and
evaluated.
?Competency is a determining factor for successful performance.
?The focus of competency is behavior, which is an application of
skills, job attitude and knowledge.
COMPETENCY AND SKILLS-BASED PAY
Competency and skills-based pay schemes have increased in
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popularity in recent years. A direct link is created between the
acquisition, improvement and effective use of skills and competencies
and the individual's pay.
Competency and skills-based schemes measure inputs, ie what
the individual is bringing to the job, unlike traditional performance
based schemes which measure outputs.
Competency may be generally defined as the ability of an
individual to apply knowledge and skills and the behaviours necessary
to perform the job well.
Competency based systems have become more wide-spread
because many organisations already use competencies in recruitment
and in performance appraisal for non-pay purposes, such as
development and training. It goes along with the increasing tendency
for pay to be linked to the abilities of the individual rather than a single
set rate for the job.
Competency based pay is often used in conjunction with an
existing individual performance related pay scheme and will reward
on the basis of not only what the individual has done, but how they
have achieved their targets. Examples of competencies may include
leadership skill, or team-working ability. Competency-related pay fits
well with an overall organisational philosophy of continuous
improvement.
Difficulties may arise in defining the competencies valued by
the organisation. There are differences between behaviours that are in-
built and those that can be developed. Problems may also arise because
of the complex nature of what is being measured and the relevance of
the results to the organisation. Judgements about people's behaviour
may be less than objective.
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116
Competency assessment rests on several factors - identifying
the correct competencies, choosing the right form of assessment and
crucially, training the assessors to make accurate, objective
judgements.
Skills-based pay also rests on workers gaining new and
improved skills - often in a manufacturing environment. Reward is
given for skills that can be used in other jobs in the same job band,
encouraging multi-skilling and increased flexibility. Workers may
also be allowed to develop the skills of a higher job band. Skills may be
based on National Vocational Qualifications or internal evaluation and
accreditation.
Both competency-based and skills-based pay have similar
advantages and disadvantages:
Advantages:
?increased skill and flexibility in the workforce
?reduction in traditional demarcations
?increased efficiency
?tangible benefits for workers in return for changes in working
practice.
Disadvantages:
?payroll costs will increase as workers gain higher rewards for
increased skills
?increased training costs (time and expenses)
?employers may be paying for skills/competencies rarely used
?queuing for training - if people cannot be released, then there
might be resentment and questions of fairness
?can de-motivate once workers reach a ceiling of their training
opportunities or there are no higher grade positions available
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when they have completed their training
?highly trained workers will be more marketable and may be
'poached' or tempted to leave.
BONUS SCHEMES
Bonus schemes provide cash payments to employees that are
related to the performance of themselves, their organization or their
team, or a combination of two or more of these. Bonuses are often
referred to as 'variable pay' or 'pay at risk'. A defining characteristic of
a bonus is that it is not consolidated into base pay. It has to be re-
earned, unlike increases arising from individual contingent pay
schemes such as performance or contribution related pay or pay
related to service, which are consolidated. Such payments have been
described as 'gifts that go on giving' on the grounds that a reward for,
say, one year's performance is continued in subsequent years even if
the level of performance has not been sustained.
Cash bonuses may be the sole method of providing people with
rewards in addition to their base pay or they may be paid on top of
individual contingent pay.
Incentives can be classified according to the different ways in
which they motivate agents to take a particular course of action. One
common and useful taxonomy divides incentives into four broad
classes:
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DISTINCTION BETWEEN BOBUSES AND INCENTIVES
The term ' bonus' and ' incentive' are often used
interchangeably, but it is useful to distinguish between them in order to
be clear about what they are intended to achieve and how they will
operate.
A bonus is a cash reward for past performance. It provides for
the tangible recognition of achievement in financial terms and can
therefore function as a motivator as long as,
?There is a clear link between the contribution of the individual
and his or her reward and,
In line with expectancy theory, the bonus is worth having and
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Class Defi nition
Remunerative
incentives
are said to exist where an agent can expect some f orm of material
reward especially money in exchange for acting in a particular way.
financial
incentives
Moral
incentives
are said to exist where a particular choice is widely regarded as the right
thing to do, or as particularly admirable, or where the failure to act in a
certain way is condemned as indecent. A person acting on a moral
incentive can expect a sense of self-esteem, and approval or even
admiration from his community; a person acting against a moral incentive
can expect a sense of guilt, and condemnation or even ostracism from the
community.

Coercive
incentives
are said to exist where a person can expect that the failure to act in a
particular way will result in physical force being used against them (or
their loved ones) by others in the community for example, by inflicting
pain in punishment, or by imprisonment, or by confiscating or destroying
their possessions.
Natural
Incentives
such as curiosity, mental or physical exercise, admiration, fear, anger,
pain, joy, or the pursuit of truth, or the control over things in the world or
people or oneself.

there is a reasonable chance of obtaining it if the required level
of performance is achieved in the future.
Potentially, individual bonus schemes are more likely to
provide a clear line of sight, as to a lesser extent do team bonuses.
However, the link between individual effort and reward is much less
clear in bonuses related to organizational performance (except at the
highest levels) or in gain sharing or profit-sharing schemes. Such
schemes may enable employees to share in the success of the
organization and increase engagement and commitment but will not
provide direct motivation.
An incentive provides direct motivation. It is forward-rather
than backward-looking, and the message an incentive scheme delivers
is that if in the future individuals or teams perform well (reaching or
exceeding targets) they will receive an appropriate financial reward.
The degree to which direct motivation is achieved depends on the
extent to which there is a clear line of sight between effort and reward
and the level of expectations on the prospect of getting a substantial
reward.
AIMS OF BONUS SCHEMES
The aims of bonus schemes may differ, but typically they
include one or more of the following:
?They provide a reward, which recognizes past performance or
achievements and encourages individuals and teams to perform
well in the future.
?They provide a direct incentive, which increases motivation and
engagement and generates higher future levels of individual and
team performance.
?They provide rewards related to business performance to increase
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commitment and engagement.
?They enable people to share in the success of the organization and
therefore increase their commitment to it.
?They ensure that pay level are competitive and will attract and
retain good quality people.
INTRODUCING A BONUS SCHEME
The actions required when introducing a scheme are:
?Consult with those concerned on the purpose and features of the
scheme.
?Define responsibilities for introducing, maintaining and
evaluating the scheme.
?Pilot-test it if at all possible in a department or division or a
representative sample of employees to obtain information on how
well the formula works, the appropriateness of the measures, the
cost of the schemes, its impact, the effectiveness of the process of
making decisions on bonus (e.g. the application of performance
management)and the reactions of staff.
?Make amendments as necessary in the light of the test.
?Prepare a description for communication to staff of the purpose of
the scheme, how it works and how staff will be affected.
?Ensure that the scheme is bedded down in the organization's day
to day operating processes, including management reports and
performance reviews.
?Define operating and control processes, including
responsibilities, the achievement of fairness and consistency, and
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cost control.
?Prepare a plan for introducing the scheme, covering the
agreement of performance indicators and targets, methods of
reviewing performance, the process of deciding on bonus
payments, and communications.
CONCEPT OF REWARD MANAGEMENT
An organization cannot exist without the resources of its
employees and vice versa. All organizations have goals and objectives
which they seek to achieve by using, along with other elements, the
knowledge, skill and abilities of the employee. Symbiotically, the
employee also needs the organization to be gainfully employed, so that
their basic needs are fulfilled. An employee-organization relationship
is, therefore, an exchange of resources where each benefits from the
other. The organization draws its strength from the reserve of the
employee's skill and knowledge, while the employee trades his
intrinsic abilities with the organization in return of different kinds of
benefits. It is this receipt of the employees, which constitutes reward.
In fact it is the classic situation of 'What I have you don't and What you
have I don't' which provides a basis for exchange where rewards are
concerned. This process of exchange between organization and
employee is aptly described by Bloom and Milkovich as 'a bundle of
returns offered in exchange for a cluster of employee contributions'.
Broadly, reward refers to the way in which an employee is
remunerated by an organization for his contribution to the
accomplishment of the organization's objectives. Rewards offered by
organizations may take many forms, but it is broadly divided into two
basic form-intrinsic rewards and extrinsic rewards.
Intrinsic rewards are rewards that are associated with the job
itself. These rewards do not have any obvious external incentive, but
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are derived from the positive satisfaction of having accomplished a
meaningful task and contributed substantially to the greater objective
of the organization. These rewards are self-administered. Individuals
value intrinsic rewards more highly and they are also more effective in
the long run.
Extrinsic rewards are rewards that are external by nature and
are associated with the individual's knowledge, skills, and abilities.
These rewards are tangible and consists of pay, benefits, bonuses, etc.
extrinsic rewards are also inclusive of those rewards that an individual
receives from sources other than the job itself. The following figure
illustrates the types and structures of rewards:
Characteristics of Rewards
As a concept, scholars may have defined the term 'reward' in
various ways; but for a reward to be truly called so, it must have the
following characteristics:
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Rewards

Intrinsic Extrinsic
More responsible
Participation in decision making
Opportunities for personal growth
More interesting work financial non-financial
Autonomy
Task completion

Performance membership status record social
Related rewards
?The reward must be a definite positive gain for the employee. It
must hold value for the individual by fulfilling some basic needs.
A reward that holds no value for the individual will not be
perceived as a reward at all.
?Rewards must be predetermined. An individual must know, from
the very beginning, exactly what he is going to get in return for the
task or job that he is supposed to perform.
?Rewards must not only hold value but they should also be
relevant to the individual. A company-sponsored accommodation
would be of no relevance to an employee who already owns a
house.
?The reward must be personal and not generalized. Each employee
contributes something distinctive to the organization. Rewards
must be bestowed keeping in mind the individual and the
uniqueness of his job.
?Rewards must serve a purpose. The purpose could be anything
from motivating an employee to recognizing and acknowledging
an employee's contribution to the organization.
?Rewards must have a positive behavioural effect on the
individual on whom it is being bestowed.
Most importantly, both the giver of the reward and the receiver
must acknowledge the fact that an act of rewarding has taken place.
Concept of a Reward System
According to Michael Armstrong, 'an employee reward
system consists of an organization's integrated policies, processes, and
practices and rewarding its employees in accordance with their
contribution, skill, and competence and their market worth'.
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An organization develops its reward system within the
framework of its reward philosophy, reward strategies, policies and
government regulations. A typical reward system will contain the
procedures, processes and structures which maintain the grades, types,
levels of pay and other benefits.
Components of a Reward system
A reward system consists of the total remuneration received by
an employee. This includes financial rewards (fixed and variable pay)
and the benefits. A reward system also incorporates non-financial
rewards such as recognition, praise, achievements, responsibility,
personal growth, etc. Hence, an organization's reward system consists
of financial rewards, employee benefits and non-financial
compensation. Following are the main components of an
organization's reward system:
?Processes adopted to measure both the value of jobs, and the
contribution made by each employee to those jobs
?Processes adopted for determining the level and extent of
employee benefits to be provided
?Structures that are put in place to link pay and benefits to the value
of the positions
?Practices employed for rewarding individuals based on their
knowledge, skill and abilities.
?Practices employed for motivating employees by using financial
and non-financial rewards
?Schemes and methods for rewarding employees
?Procedures for efficient functioning of wage and salary adminis-
tration
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Elements of Employee Reward
Base Pay: base pay or basic pay is that level of pay which is the
fixed salary or wage. It is the base pay which forms the rate for the job.
It is on the basis of the base pay that additional payments like
incentives linked to performance are determined and provided. The
base pay may also form the basis for calculating pension entitlements
and life insurance.
In India, for example, it is on the basis of basic pay that
dearness allowance, travel allowance, etc., are fixed. It is the base pay
which reflects the internal and external equities associated with the
job. The base pay is often thought of as the rate for a competent or
skilled person for that particular job.
The base pay can be expressed in annual, weekly or hourly
rates. For instance, in India, base pay is mostly expressed on a monthly
basis. This kind of system is known as time rate or time-based payment
system. Time-based base payments are simple to understand and easy
to comprehend and calculate, but they become complicated when
different types of allowances are added to it.
Times rates can either be spot rates which constitute one
constant rate for the job, it can also be a range of pay for each job grade
in which base pay progresses according to time in the job (Seniority),
performance or skill. Service or performance- related pay increments
can also be added to and consolidated into the basic pay. The base pay
form the basis for calculating pension, overtime and bonuses when
these area awarded as percentages of the base pay.
Contingent pay:
Financial rewards that are provided in addition to the base pay
are known as contingent pay. Contingent pay may be linked to
performance, competence, skill, experience and the contribution made
by the employee to the organization. In case, such payments are not
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JOB EVALUATION
added to and consolidated into the base pay, they can be called
'variable pay' or 'pay at risk'.
According to Amstrong, the main types of contingent pay are as
follows:
?Individual performance-related pay in which bonuses or
increments in base pay are determined by performance
assessment and ratings.
?Bonuses, rewards for successful performance that are paid as
cash bonuses to individuals, teams or organizations.
?Incentives, payments that are associated with the achievement of
previously set targets. These pay packets are designed to motivate
people to achieve higher levels of performance; targets are
usually quantified in such terms as output or sales.
?Commissions- a special form of incentive in which sales
representatives are paid a percentage of the sales value they
generate.
?Service related pay, which increases by fixed increments on a
scale or pay spine depending on the service in the job. There may
sometimes be a scope for varying the rate of progress according to
the performance.
?Competence related pay, which varies according to the level of
competence achieved by the individual.
?Contribution related pay, which relates pay to both outputs
(performance) and inputs (competence)
?Skill-based pay (sometimes called knowledge based pay), which
varies according to the level of skill achieved by the individual.
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JOB EVALUATION
?Career development pay, which rewards people for taking on
additional responsibilities as their career develops laterally
within the broad grade (broad banded pay structure)
Allowances: allowances are pay components that are in the form of
separate sums of money. These are provided for travel, overtime,
living in cities, etc.
Total earnings: total earnings constitute the base pay and any other
payments that are added to it.
Employee benefits: employee benefits are also referred to as indirect
pay. The benefits consists of elements of remuneration which are
additional to cash payments of different kinds. The benefits include
pensions, insurance, medical reimbursements, etc.
Total remuneration: Total remuneration is the combined value of all
cash payments (total earnings) and additional benefits received by
employees.
Non-financial rewards: Non-financial rewards are those rewards
which focus on the non-financial needs of the individual, such as
recognition, personal growth, etc.
EMPLOYEE MOTIVATION USING TEAM REWARDS
Team rewards present a great opportunity to help foster team
bonding. With the proper application of a reward and recognition
program, you can help build a high-performance team, and foster
cross-organizational cooperation. But team rewards are not to be
treated carelessly: misapplication could lead to unhealthy
competition, lack of cooperation, and ultimately severe financial
consequences for the organization.
Team motivation and rewards programs should make up part
of your overall employee recognition program. You need to consider a
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mix of team and individual rewards, and balance the mix between
awards that encourage both cooperative and competitive behaviors.
The first reviewed article in our directory, below, presents a model for
distinguishing these reward motivators and for building a sound
employee recognition strategy. With a balanced strategy, you can then
prepare a blend of monetary and non monetary rewards that will help
you achieve your goals in a cost-effective manner.The desired
outcome of recognition programs is to improve performance and
improve employee retention.
Why do you need TEAM REWARDS?
Employees and customers expect more than a wage or salary
and lifestyle rewards are seen as more beneficial and motivating than a
simple cash bonus. Monetary rewards usually go straight into the
household budget and are spent on everyday expenses such as
groceries or the mortgage. Whether it be a rewarding experience
which your team can share together or a motivational gift, these items
are for the team member to experience and enjoy.
How to Use TEAM REWARDS?
Team Rewards can be used in two ways, as a thank you or as a
reward for achieving a set goal.
Thank You!
When combined these are two of the most powerful words in
the English language!
"Just say .. THANK YOU
Say thank you if your team has:
?Worked extra hard to meet a deadline
?Exceeded budget in either sales revenue or reduced costing
?Gone that extra mile for a client/customer
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JOB EVALUATION
?Improved efficiencies on the production line
?Increased output and efficiency
Achievement of Goals What gets measured gets done
Set some new goals for your team and recognise their efforts
with a rewarding experience or motivational gift. Qualitative targets
that add to your bottom line can easily self fund your TEAM
REWARDS.
How TEAM REWARDS has been used to reward the following
achievements:
?Over budget sales performance well beyond expectations.
?Increased production output for a production team.
?Reduced stock holding and improved order turn around for
logistics departments.
?Reduced debtor days outstanding from accounts payable team.
?Improved accuracy of order placement for customer service
team.
"Recognise, Reward, Retain..
Gain sharing
Gain sharing is a system of management used by a business to
increase profitability by motivating employees to improve their
performance through involvement and participation. As their
performance improves, employees share financially in the gain
(improvement).[1] Gain sharing's goal is to improve performance and
eliminate waste (time, energy, and materials) by motivating
employees to work smarter as a team rather than just working harder.
Gain sharing should not be confused with profit sharing. There
are many differences between Gain sharing and profit sharing.[2]
Gain sharing is also called Gain sharing, Gain share, and Gain
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share.[3] It could also be called "savings sharing." In other words, a
company shares with employees the savings from improved
performance.
There are two important parts of a Gain sharing system. One is
a bonus calculation. The second is a structured system for employee
involvement. Because of these two parts, Gain sharing is best seen as
an "organizational development" tool. It is not just a bonus or
"incentive plan.
There are three major types of gain sharing:
?Scanlon plan: This program dates back to the 1930s and relies on
committees to create cost-sharing ideas. Designed to lower labor
costs without lowering the level of a firm's activity. The
incentives are derived as a function of the ratio between labor
costs and sales value of production (SVOP).
?Rucker plan: This plan also uses committees, but although the
committee structure is simpler the cost-saving calculations are
more complex. A ratio is calculated that expresses the value of
production required for each dollar of total wage bill.
?Improshare: Improshare stands for "Improved productivity
through sharing" and is a more recent plan. With this plan, a
standard is developed that identifies the expected number of
hours to produce something, and any savings between this
standard and actual production are shared between the company
and the workers.
The following summarizes many of the elements of a Gain sharing
plan which have been discussed.
?Gains and resulting payouts are self-funded based on savings
generated by improved performance.
?The plan commonly applies to a single plant, site, or stand-alone
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organization. However, some organizations have levels of
sharing across multiple locations or corporation-wide.
?Performance is typically measured across departments, units, or
functions.
?Measures are typically based on operational measures
(productivity, quality, spending, customer service) and are more
controllable by employees rather than an organization-wide
measure of profits.
?Payouts are often monthly or quarterly.
?Many plans often have a year-end reserve fund to account for
deficit periods.
?Employees often are involved with the design process.
?All employees are eligible for plan payments.
?The bonus is often paid as an equal percentage of compensation
or equal cents per hour worked, rather than paid on the basis of
individual performance.
?A supporting employee involvement system is part of the plan in
order to drive improvement initiatives.
?Plans are often reviewed at least annually and adjustments may be
made that make sense for both the company and employees.
The keys to successful implementation are simplicity and
employee involvement
?Simplicity - Employee understanding is necessary for them to be
motivated by it.
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JOB EVALUATION
?Involvement - The more employees are involved in a plan's
design, the more ownership they will take in it.
Gain sharing develops the work culture
It should be noted that in a Gain sharing plan that the
company's current performance is compared to its historic
performance (baseline period). The savings above the baseline period
determine the gain or loss. This is a very important point. Since gains
are measured in relationship to a historical period, employees and the
company must improve in order to make a gain. Performance
thresholds must be corrected periodically for the effects of capital
investment in new equipment as well as for the continuous
improvement needed to meet ever higher customer demands.
When people do their work differently they must change.
However, as everyone one knows, it is difficult for people to change.
On the other hand, do people like money? Most people would say,
"Yes." Therefore, Gain sharing can be a very powerful tool. Gain
sharing promotes the need for continuous improvement and
eliminates employees' sense of entitlement.
The Employee involvement element
A very important part of a successful Gain sharing plan is the
employee involvement element of Gain sharing. In order to foster a
culture of positive change, a successful Gain sharing plan needs to
incorporate a structure system of employee involvement. It is common
for Gain sharing plans to have a "team-based" suggestion system in
place.
How does a team-based suggestion system work? First, teams
are formed in order to gather suggestions from employees on ways to
improve, (in other words, suggestions on how to work "smarter"). To
avoi d unnecessary bureaucracy, most compani es ask
managers/supervisors to lead departmental teams whose goals mesh
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JOB EVALUATION
with the overall objectives of a company's Gain sharing plan. The
teams are permanent groups. The teams meet on a regular basis to
discuss the ideas and suggestions. They make decisions on approving
or declining the ideas. Also the teams are given limited spending
authority to approve and implement the suggestions. Suggestions that
are approved by a team, but are beyond their spending authority, are
advanced to a higher level in the organization for final approval.
Unlike a traditional suggestion system, a team-based system does not
provide individual monetary rewards. This is because everyone works
together and shares in the gain together. Gain sharing is not an
individual incentive plan.
The Bonus Calculation Element
In terms of the calculation, a Gain sharing plan may have from
one to six key performance measures. The most effective Gainsharing
plans have relatively few performance goals because employee
understanding of them is necessary for success. Examples of measures
include productivity, quality, waste, spending, and customer service
which are all factors employees can control. The gains (savings) from
each measure are calculated separately. Then gains and losses from
each measure are added to determine the total gain. A portion of the
total gain goes to the company and a portion is shared with all
employees. Generally, from 10% to 50% of the gain is shared with
employees. The percent of the gain shared with employees depends on
employee controllability and importance of the measure to the
organization. The pool is distributed to all participants, typically on a
monthly or quarterly frequency. The frequency of payouts depends on
the employee line-of-sight (employees' ability to identify what they do
today to earn a payout at the end of the Gain sharing period).
Companies with unskilled and semi-skilled employees typically have
plans calling for payouts at shorter intervals than those with highly
skilled workers.
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Gain sharing implementation
It is very important to note that the development and
implementation of a Gain sharing plan involves employees and that its
goals are within employee control. An employee committee called the
"Design Team" helps to make policy decisions on issues such as the
plan's measures, employee eligibility, frequency of payout, and
method of communication. Next the design team gets upper
management approval before implementation. After approval, the
Design Team is responsible for conducting meetings with all
employees to communicate the details of the plan. Follow-up training
should also take place.
Profit sharing
Definition
An arrangement in which an employer shares some of its
profits with its employees. The compensation can be stocks, bonds, or
cash, and can be immediate or deferred until retirement. Profit-sharing
allows for changing contributions each year. Contributions are
determined by a formula to allocate the overall contribution and
distribution of accumulated funds after the retirement age. Unless the
plans are defined as an elective deferral plan, the contributions are not
tax deductible. Contributions and earnings can grow tax-deferred until
withdrawal.
Profit sharing, when used as a special term, refers to various
incentive plans introduced by businesses that provide direct or indirect
payments to employees that depend on company's profitability in
addition to employees' regular salary and bonuses. In publicly traded
companies these plans typically amount to allocation of shares to
employees.
The profit sharing plans are based on predetermined economic
sharing rules that define the split of gains between the company as a
principal and the employee as an agent. For example, suppose the
profits are x, which might be a random variable. Before knowing the
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JOB EVALUATION
profits, the principal and agent might agree on a sharing rule s(x) Here,
the agent will receive s(x) and the principal will receive the residual
gain x-s(x).
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Performance measurement is a process for collecting and
reporting information regarding the performance of an individual,
group or organizations. It can involve looking at process/strategies in
place, as well as whether outcomes are in line with what was intended
or should have been achieved.
Performance measurement is the use of statistical evidence to
determine progress toward specific defined organizational objectives.
This includes both evidence of actual fact, such as measurement of
pavement surface smoothness, and measurement of customer
perception such as would be accomplished through a customer
satisfaction survey. In a service industry such as transportation, the
performance measurement process starts by defining precisely the
services that the organization promises to provide, including the
quality or level of service (e.g. timeliness, reliability, etc.) that is to be
delivered. The performance measurement process starts by defining
the services that the organization promises to provide. There are often
good opportunities for collecting feedback from system users in "real
time," since the transportation service is often "consumed" at the same
time it is "produced." Performance measures provide information to
managers about how well that bundle of services is being provided.
Performance measures should reflect the satisfaction of the
transportation service user, in addition to those concerns of the system
MEASURING PERFORMANCE
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Chapter-4
owner or operator.
All process of measuring performance requires the use of
statistical modeling to determine results. A full scope copy of the
performance of an organization can never be obtained, as generally
some of the parameters cannot be measured directly but must be
estimated via indirect observation and as a complete set of records
never delivers an assessment without compression to key figures.
The extended rationale 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 the public to build trust) are measures that are means to achieving
that ultimate purpose (Behn 2003).
Behn 2003 gives 8 reasons for adopting performance
measurements:
1.To Evaluate how well a public agency is performing. To evaluate
performance, managers need to determine what an agency is supposed
to accomplish. (Kravchuk & Schack 1996). To formulate a clear,
coherent mission, strategy, and objective. Then based on this
information choose how you will measure those activities. (You first
need to find out what are you looking for).
Evaluation processes consist of two variables: organizational
performance data and a benchmark that creates a framework for
analyzing that data. For organizational information, focus on the
outcomes of the agency's performance, but also including input/
environment/ process/ output- to have a comparative framework for
analysis. It is helpful to ask 4 essential questions in determining
organizational data:
138
Outcomes should be directly related to the public purpose of the
organization. Effectiveness Q: did they produce required results
(determined by outcomes).
Cost-effective: efficiency Q (outcome divided by input).
Impact Q: what value organization provides.
Best-practice Q: evaluating internal operations (compare core
process performance to most effective and efficient process in
the industry).
As in order for organization to evaluate performance its
requires standards (benchmark) to compare its actual performance
against past performance/ from performance of similar agencies/
industry standard/political expectations.
?To Control
How can managers ensure their subordinates are doing the
right thing.
Today managers do not control their workforce mechanically
(measurement of time-and-motion for control as during
Taylor). However, managers still use measures to control,
while allowing some space for freedom in the workforce.
(Robert Kaplan & David Norton) Business has control bias.
Because traditional measurement system sprung from finance
function, the system has a control bias.
Organizations create measurement systems that specify
particular actions they want execute- for branch employees to
take a particular ways to execute what they want- branch to
spend money. Then they want to measure to see whether the
employees have in fact taken those actions. Need to measure
input by individual into organisation and process. Officials
139
need to measure behavior of individuals then compare this
performance with requirements to check who has and has not
complied.
Often such requirements are described only as guidelines. Do
not be fooled. These guidelines are really requirements and
those requirements are designed to control. The measurement
of compliance with these requirements is the mechanism of
control.
To Budget
Budgets are crude tools in improving performance. Poor
performance not always may change after applying budgets
cuts as a disciplinary action. Sometimes budgets increase
could be the answer to improving performance. Like
purchasing better technology because the current ones are
outdated and harm operational processes. So for decisions
highly influenced by circumstance, you need measures to
better understand the situation.
At the macro level, elected officials deciding which purpose of
government actions are primary or secondary. Political
priorities drive macro budgetary 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), determine
allocations 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
140
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)
?To Motivate
Giving people significant goals to achieve and then use
performance measures- including interim targets- to focus
people's 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 agency's leaders have motivated significant
improvements using output targets, they can create some
outcomes targets.
?output- focuses on improving internal process.
?outcome- motivate people to look outside the agency (to seek
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way to collaborate with individuals & organisations may affect
the outcome produced by the agency)
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...etc.
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 accomplishments. 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.
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(National Academy of Public Administration's center for
improving government performance- NAPA 1999) performance
measures can be used to: validate success; justifying additional
resources; earn customers, stakeholder, and staff loyalty by showing
results; and win recognition inside and outside the organization.
Indirectly promote, competence and value of government 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.
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.
?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 don't
necessarily reveal why). Performance measures can describe what is
coming out of black box as well as what is going in, but 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.
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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 measurement's
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.
Major Issues in Performance Measurement
Cost of data collection
Assuring appropriate comparisons to other operations
Data quality
Data completeness
Extrapolating from partial coverage
Matching measures to their purposes
Understanding extraneous influences in the data
Conflicts with other measuring programs - which is "right
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Timeliness of data for measures
Use of measures in allocation of funding
Liability for action (or lack thereof) based on measurement
results
Responsibility for measures for which there may be limited
control
Benchmarking and targets
External factors
Good multimodal measures
Organizational performance measures
Performance measures serve to align an organization's efforts
to the achievement of its mission. As part of a company's evaluation
and control program, they quantifiably monitor important
characteristics of the company's products and services and the
performance of the individuals and processes creating them.
Performance measures support managerial decision-making by
providing useful information regarding:
?how efficient and effective are the company's processes and the
individuals implementing them
?if product or service improvements are necessary
?if the company's customers and stakeholders are satisfied
?if the company is meeting its stated goals
Performance measures best serve an organization when they
are understandable, broadly applicable, uniformly interpreted, and
economic to apply. They should cascade through and organization's
hierarchy such that achievement of lower tiered performance goals
support higher tiered goals that in turn ultimately support achievement
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of the company's mission.
Focus of the Organizational Performance Measures Topic
This topic will focus on the principles, best practices, and
warning flags associated with the leading practices of companies that
successfully use performance measures to drive organizational
alignment, accountability, and operational performance.
PERFORMANCE APPRAISAL
According to Wendell French, 'performance appraisal is the
formal, systematic assessment of how well employees are performing
their jobs in relation to established standards, and the communication
of that assessment to employees'.
According to Flippo, 'performance appraisal is the systematic,
periodic and an impartial rating of an employee's excellence in matters
pertaining to his present job and his potential for a better job'.
According to Dale Yoder, 'performance appraisal includes all
formal procedures used to evaluate personalities and contributions
Team and Individual performance measures
Performance appraisals, whether team or individual, provide
feedback to workers or organizational teams. Traditionally,
performance evaluations provide information to help improve
performance, increase efficiency and define management's
expectations. Performance appraisals compare work performed
against measurable objectives that the employee and supervisor
agreed to at the beginning of the appraisal period. As work has become
more team oriented, performance appraisals now measure how a team
of workers perform rather than just how an individual performs his
job.
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Definition of Team Performance Appraisals
As jobs become more intricate, organizations must rely on
teams of people to accomplish tasks. To evaluate job performance by
teams of people, organizations institute team performance appraisals.
Team performance appraisals assess the performance of teamwork on
organizational performance. Team performance appraisals can range
from recognition of individual performance and its contribution to
group outcomes to only an assessment of the organization's
performance. When only an organization's performance is evaluated,
no individual appraisals are completed and individuals do not receive
performance ratings.
Types of Team Performance Appraisals
The culture and organizational structure of the workplace
environment influence the type of team performance appraisal best
suited to evaluate and measure performance. If work teams exist in the
organization, but are used only occasionally to accomplish projects,
individual performance measurements are used to determine a final
rating of the employee.
When an organization uses teamwork more frequently,
performance appraisals still emphasize individual performance but
introduce an assessment of the worker's contribution to the team
effort. If an organization uses a significant amount of teamwork to
accomplish its objectives, team performance appraisals link team
productivity measurements with individual performance
measurements. Organization's with only a team approach do not
utilize individual performance appraisals. Team performance
measurements determine monetary rewards.
Elements of Individual Performance Appraisals
Individual performance appraisals are the traditional
appraisals that measure individual performance against measurable
objectives. Individual performance appraisals provide an opportunity
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for employees and supervisors to share ideas and reach mutually
agreed upon objectives. Individual performance appraisals focus on
the skills required to perform the current job and skills that must be
acquired for promotion. Individual performance evaluations are tools
to determine monetary compensation. This type of performance
appraisal provides feedback and recognition to the individual.
BALANCED SCORECARD
The balanced scorecard approach can be used and applied at
both the individual and the organizational level. It provides a balanced
approach to evaluate the employees' performance (for the purpose of
Performance appraisal) in a comprehensive manner rather than a
partial view. In most of the organizations, the common practice of
measuring the employee performance refers to only the comparison of
their action plans and behaviors with the standards set i.e. without
actually measuring the results of their actions like profits and increase
in market share. This conventional practice can lead to the appraisal of
most of the employees without any or little progress towards achieving
the goals and objectives of the organisation. Thus, the balanced
scorecard gives the complete view of the employees and the
organisational performance and helps to align the employee
performance/action plans with the organisational goals.
BENEFITS OF BALANCED SCORECARD
The benefits of the balanced scorecard approach in measuring
performance are:
?Gives the complete picture of the employee as well as the
organisational performance.
?It guides users in determining the critical success factors and
performance indicators.
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?Strategic review or analysis of the organisational capabilities and
performance.
?Focusing the whole organisation on the few key things needed to
create breakthrough performance.
Integrating and directing the performance and efforts from the
lowest levels in the organisation to achieve excellent overall
performance.
TQM AND PERFORMANCE APPRAISAL
"Total Quality Management (TQM)( Sashkin and Kiser ) may
be defined as creating an organisational culture committed to the
continuous improvement of skills, teamwork, processes, product and
service quality and customer satisfaction."TQM refers to the
continuous improvement in the quality of work of all employees with
the focus on satisfaction of the customers.
Elements of TQM are:
?Meeting customer requirements
?Continuous improvement
?Empowerment of employees
TQM and Performance appraisal/ evaluation are focused on
increasing the productivity of the organisation through continuous
improvement. They both facilitate the systematic management of all
the processes, actions and practices at all levels in the organization
Some of the benefits of both the performance appraisal and TQM
are:
?Improvement in the performance of the employees
?Brings quality consciousness
?Better utilization of resources
?Commitment to higher quality
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But there also exists a few other schools of thought which refute the
compatibility of the TQM and performance appraisal. According to
them, both TQM and Performance appraisals differ in their
fundamental nature, characteristics and requirements making it
impossible to combine them.
Some fundamental differences between the two are as follows:
?TQM is team based whereas performance appraisals are
designed for individuals i.e. it undermines teamwork.
?TQM focuses on customer satisfaction whereas performance
appraisal focuses on the improving the performance of the
employees.
?Performance appraisal generally results in some rewards like
increased pay etc. whereas TQM may or may not yield visible
results.
COMPARISON OF INDIVIDUAL AND TEAM PERFORMA-
NCE APPRAISALS
Individual performance appraisals measure an employee's
work against standard performance measures. Standard performance
measures are derived from individual job descriptions. Often, a direct
link exists between performance and pay based on an employee's job
rating from the appraisal. Team performance appraisals assess an
individual's contribution to the team. Team performance appraisals are
appropriate to support an organization's efforts to transition from an
individual-based organization to an team-based organization. Team
performance appraisal, for example, assess whether the team met its
goals, produced a quality product and worked well together.
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EMPLOYEE PERFORMANCE DEFINITION
Performance criteria are standards for employee behavior at
work. This criteria contains much more than how an employee does
the work. Employees are rated on how well they do their jobs
compared with a set of standards determined by the employer.
EMPLOYEE PERFORMANCE STANDARDS
Companies set performance standards to clarify workplace
expectations between employers and employees. Employee
performance standards provide context for each job position and its
responsibilities.
Definition
?According to Indiana University, performance standards outline
the specific expectations for a certain duty. Employees must
demonstrate observable behaviors and actions to meet
performance standards.
Types
?Employee performance standards include expectations
about employee behavior, professionalism, work ethic,
organizational skills, productivity and time management.
Some standards are quantitative in nature. For example, a
productivity standard in a factory may state that an
employee must manufacture 10 bolts per hour. That
production rate helps gauge standard compliance.
Function
?Employee performance standards create order and
consistency in the workplace. Performance evaluations
revisit these standards. During an evaluation, supervisors
review performance standards and compare these
expectations against an employee's workplace activity.
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Effects
?Performance standards determine if an employee helps or
hinders an organization's mission. Employees who meet or
exceed the standards may qualify for promotions or raises.
Those who fall short of the standards, however, may
receive demotions or work probation.
COMPETENCE AND COMPETENCY ANALYSIS
Competence is the skill, knowledge and ability that people
require to undertake a job.i.e., A geologist for example has to be able to
read a map, read a compass, use a theodolite, do geometry, recognize
rocks drive a car, use a pc understand gravity, magnetism,
electromagnetism, inorganic chemistry and be able to read aerial and
satellite photographs.
Competencies: What people do to achieve results?
These may be divided into three:
?Core: What the organization is good at or has to be good at to
survive.
Generic Competencies: Those common to similar jogs i.e.
within accountancy or purchasing.
?Role specific Competencies: These are more or less unique to a
specific role. As you will see those listed for a geologist above
can fall into each of these categories.
Competency, in contrast includes the dimensions of behavior
behind a competent performance. (How they perform to achieve
results)
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1.Understanding what needs to be done
? Critical reasoning
? Business know how
? Strategic Capability
2.Getting the job done
? Achievement and drive
?A proactive approach
?Flexibility
?Persuasion
? Influence
?Control
3.Taking people with you
?Motivation
?Interpersonal skills
?Concern for output
? Persuasion
?Influence
Capability: The things that people do effectively. These are measur-
able in terms of results.
In order to analyze Competence, we need to ask:
?What are the components of this job?
?What does the jobholder have to do?
?What is an acceptable level of performance?
?What levels and types of knowledge is required to ensure
capability?
?How will job holders and managers know that required levels of
performance have been achieved?
In short, competence is what you do, what you know, how you
do it to perform effectively.
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When analyzing Competency, we need to consider:
?How do people in this role behave when carrying out their job
effectively?
?How do they behave when they are ineffective?
Identifying the differentiating behaviors one can identify the
criteria for effectiveness. Other useful measures arise from Critical
Incident Technique.
How we explore
?What happened?
?Why?
?Why did you make the decisions you did?
?What did you do subsequently?
?How did you feel before and after the incident?
An effective performance management system aligns
individual performance with the organization mission, vision and
objectives. I.e. Getting better results from individuals, teams and the
organization as a whole within agreed goals, objectives and standards.
Performance management exists to establish a culture where
individuals and groups take responsibility for continuous performance
improvement of business processes and the development of their own
skills and contributions.
?Here managers clarify what they want
?Individuals and groups communicate what they should be able to
do
?How they should be managed
?The levels of support and resources that they will require.
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WHAT IS 360 DEGREE FEEDBACK?
360 Degree Feedback is a system or process in which
employees receive confidential, anonymous feedback from the people
who work around them. This typically includes the employee's
manager, peers, and direct reports. A mixture of about eight to twelve
people fill out 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 them 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 "non-manager" 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.
How is 360 Degree Feedback Used?
Companies typically use a 360 feedback system in one of two ways:
?360 Feedback as a Development Tool to help employees
recognize strengths and weaknesses and become more effective
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When done properly, 360 is highly effective as a development
tool. The feedback process gives people an opportunity to provide
anonymous feedback to a coworker that they might otherwise be
uncomfortable giving. Feedback recipients gain insight into how
others perceive them and have an opportunity to adjust behaviors and
develop skills that will enable them to excel at their jobs.
360 Feedback as a Performance Appraisal Tool to measure
employee
Performance
Using a 360 degree feedback system for Performance
Appraisal is a common practice, but not always a good idea. It is
difficult to properly structure a 360 feedback process that creates an
atmosphere of trust when you use 360 evaluations to measure
performance. Moreover, 360 feedback focuses on behaviors and
competencies more than on basic skills, job requirements, and
performance objectives. These things are most appropriately
addressed by an employee and his/her manager as part of an annual
review and performance appraisal process. It is certainly possible and
can be beneficial to incorporate 360 feedback into a larger
performance management process, but only with clear
communication on how the 360 feedback will be used.
What a 360 Feedback Survey Measures:
?360 feedback measures behaviors and competencies
?360 assessments provide feedback on how others perceive an
employee
?360 feedback addresses skills such as listening, planning, and
goal-setting
?A 360 evaluation focuses on subjective areas such as teamwork,
character, and leadership effectiveness.
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What 360 Feedback Surveys do not assess:
?360 feedback is not a way to measure employee performance
objectives (MBOs)
?360 feedback is not a way to determine whether an employee is
meeting basic job requirements
?360 feedback is not focused on basic technical or job-specific
skills
?360 feedback should not be used to measure strictly objective
things such as attendance, sales quotas, etc.
Advantages & Disadvantages of 360 Degree Feedback
Companies have attempted to improve employee performance
evaluations in the 21st century by expanding feedback to include
peers, subordinates, and internal and external customers, along with
conventional supervisor evaluations, according to the Business
Dictionary definition of 360 degree feedback. This feedback
mechanism gets its name from the all-around feedback on
competence-based performance. Like any evaluation tool, the 360
degree feedback has common advantages and disadvantages.
Advantages:-
? Organization
According to Star 360 Feedback, "360-degree feedback has
the greatest impact when used to evaluate and improve the
performance of whole organizations." Companies can use
data collected on feedback programs to monitor consistent
patterns or areas of weakness for employees within the
organization. According to the site, organizations develop
more effective training programs targeted at collecting
common areas of weakness for employees throughout the
organization or in specific departments.
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Individual Growth
From an individual perspective, an all-around feedback
mechanism helps employees see whether a consistency exists
in the way their performance is viewed by more than just the
manager. "Individuals receive specific information that
allows them to understand how others perceive them," notes
Star 360 Feedback.Some employees are bothered when they
feel unfairly critiqued by managers who may often have little
direct interaction with them. Hearing feedback directly from
colleagues and customers in a safe, anonymous way may help
the employee buy in to the reality of the information.
Disadvantages:-
? Dishonest Feedback
In his "360 Degree Feedback" article on the site Amazing
Results, registered psychologist Roland Nagel points out
that one commonly noted disadvantages of 360 degree
feedback is that employees may not feel comfortable
offering honest feedback of supervisors. This same dilemma
could exist in employee-to-employee evaluations. Without
an anonymous system, backlash from supervisors or
retaliation from colleagues could limit workers' willingness
to share true feelings in the feedback process.
Consistent Interpretation
Another major challenge in the 360 degree feedback process
cited by Nagel is the reality that "as each rater sees a different
behavior, how do we know the basis upon which the ratings
are observed?"
Nagel's point is that different employees interact in different ways
with the person being reviewed. Subordinates observe different
behaviors in a supervisor than that supervisor's same-level colleagues
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and his managers. Additionally, customers have a different
perspective on an employee's behaviors.
While, you can gain insight on perceptions of the employee
from all around, a consistent interpretation of positive or negative
behaviors is challenging.
Performance Development Review (PDR)
What is PDR?
The Performance Development Review (PDR) is an opportunity to:
?Review the past year, identifying successes and problems
?Plan for the future, taking into consideration the objectives of the
College or Professional Service
?Identify learning and development opportunities.
Benefits of PDR for the Individual
?A formal opportunity to review progress and plan for future
activity and development
?An exchange of experience and feedback at both personal and
professional levels
?Clarification of roles and responsibilities
?Opportunity to suggest improvements and changes
?A formal record of experience and learning over time.
Benefits of PDR for the College/Professional Service/Team
?Improved communications
?Identification and pursuit of common goals
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?Better planning for learning and development on an individual,
College/Professional Service or University-wide basis.
Performance review skills
Performance management is well established in most
companies and yet 'doing it' is surprisingly unpopular with managers
and employees alike. Managers say it's hard work and bureaucratic.
Employees say 'it's a pain' and 'a waste of time'.
To manage performance effectively you must be able to
communicate. Done well, the exercise builds confidence, renews
enthusiasm and generates trust. Done poorly, it de-motivates and
destroys.
HR professionals must ensure that they possess the necessary
communication skills to undertake performance appraisals as well as
ensuring that they are able to train and develop line mangers to do the
same for the performance appraisals of their own direct reports.
The key skills required for performance management are
rather obvious, and for that reason generally underrated and
underdeveloped.
?Understanding others
?Asking questions
?Listening
?Giving feedback
?
Some managers will possess and use these skills naturally, just
as some people are naturally better athletes than others. But with
practice and training even the least active of us can learn the necessary
skills and improve performance.
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?Understanding others
To the receiver this is often the most easily recognised skill. We
have all felt the empathy of a sensitive teacher or friend and been
struck by it's absence in a boss. Ask Phil's team about his management
style and they'll tell you that they rarely feel praised (or feel other
people are praised), rewarded or recognised.
We are not talking about managers going all mushy, taking on
another's emotions and trying to please everyone. That would make
decisions impossible, damage credibility and result in the kind of
trouble Martin gets into with employees like James. The key skill here
is to recognise employees feelings and take that information into the
decision making on performance.
?Asking questions
I hear I forget
I see I remember
I do I understand' Confucius
A review is an opportunity to raise awareness about
performance, both good and not so good, so that that
performance can be improved and/ or changed in the future.
The structure of most reviews means that learning by 'doing'
isn't practical so the skilled use of questioning is our best
alternative to aid the learning process.
Telling is a great way of passing on information but is not as
effective at generating commitment and can even generate
resistance. The best reviews happen when a manager moves
from a model of 'I talk you listen' to 'I ask I listen we
discuss'
Asking a question automatically causes us to look for an
answer. By posing a question a manager shifts the focus of the
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conversation and draws the receiver's attention to something
they may not have been consciously aware.
Specific questions (i.e. closed or leading) force the receiver to
come up the answer the questioner is looking for, leaving little
choice. Asking closed questions saves people from having to
think. In performance review this is the manager as 'expert'
font of all knowledge- but may leave the receiver feeling
manipulated. Using open and/ or clean questions the receiver
has to find and answer for himself or herself. By finding the
answer themselves people become more resourceful,
confident and committed.
?Listening
To be listened to, really listened to is a powerful and
empowering experience. People get more confident when they
are listened to; they feel safer, more secure, valued. Most
people don't listen at a very deep level. Day to day pre-
occupations get in the way and focus on what is said, or more
likely on what they believe is said. Deep listening is focusing
not just on what is said but what is felt and done, and in the
hidden meanings of language and behaviour.
?Giving feedback
The cornerstone of most reviews, effective feedback:
?Engages the receivers thinking
?Generates ownership
?Uses descriptive not judgmental language (and avoids
defensiveness in the receiver)
?Covers both the result as well as the action/process
?Enables the performer to do something
?Works for the performer not the giver
?Builds self-esteem
?Is specific
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Generating high quality relevant feedback from within the
individual is the key to learning and improvement in a performance
review. The worst feedback is personal and judgemental, whether
3600 or not. There are 4 levels of feedback:
1. Unspecified Criticism
E.g. You're useless
As feedback it contains nothing helpful and its impact is on
self-esteem and confidence. It is likely to make future performance
even worse.
2 Judgmental
E.g. This work is useless
Directed at the work not the person it also damages the
performance self-esteem, though less badly. Provides no information
on which the receiver can act to correct it.
3 Information
E.g. The content of your work was clear, but the layout and
presentation were too complicated for its target readership
Avoids criticism and provides some information on which to act but in
insufficient detail and without ownership.
4 Ownership
E.g. How do you feel about the work?
Creates ownership but may lead to a non-committal response
or value judgement its ok or fine. It's useful as an opener but needs
to be followed with specific questions.
E.g. What is the purpose of the work?
To what extent does it meet its objectives?
What other points need to be emphasized?
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Detailed questioning raises awareness and enables self-
evaluation so that he/she takes responsibility for performance and the
assessment of it.
COACHING VS COUNSELLING
The difference between coaching and counselling arises
frequently. Vanessa has attempted to explain and distinguish the
differences between coaching and counselling:
Both counseling and coaching, when properly done, will
provide you with value and results. However, these two have different
purposes and different methods and are dissimilar regarding at least
the following aspects:
1.Motivation: coaching clients choose to work with a coach because
they want to, not because they need to; the client who goes to see a
counselor is usually trying to fix a problem (a disorder or even an
addiction, maybe both or more of them) the main reason is that this
deficit is impairing to a certain degree his/her normal functioning as an
individual and as a social being by not being able to meet a required
standard of conduct; on the other side, someone would go to coaching
not necessarily for a cure, for a remedy, but for the need for
improvement or excellence in one particular area or in their life as a
whole;
2.Main driver: (or the need to be addressed) is a brake-fix in
counselling and a performance-tuning or performance-upgrading in
coaching;
3.Qualifications: if a therapist is required to have obtained MS or PhD
in Psychology, similar requirements for coaches do not exist, though a
strong set of specific skills are mandatory; a university in Sidney,
Australia is already developing a Coaching Psychology program so
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probably in the future training programs for coaching will increasingly
be developed in academe and will be granted diplomas upon
completion;
4.Power and status in the relationship: unlike the counsellor (who is
supposed to fix the client, therefore somehow superior) the coach is
not an expert or a guru of some sort, but a guide, unjudging and equal,
but nevertheless helpful and resourcefull; a coach is needed to posess a
set of skills (and tools) which he/she uses to assist people to set clear
and specific goals that they want to reach in the future, to support them
to achieve their goals and to take control of their professional,
physical, emotional and financial destiny;
5. The spread in time: whereas most often counselling is needs based
and frequently occasional, coaching involves ongoing development
and long-term commitment;
6. The agenda: in therapy the client will follow the steps he would be
required to as part of a specific program chosen or designed by the
counsellor, while in coaching the client sets the agenda;
7. The state of mind: because of the different motivations for stepping
into a counsellor's office or meeting a coach, the mind-set in which one
would approach the session from the very beginning would be quite
different: the client will try to find some comfort, peace and even a
more relaxed state on the counsellor's coach, but he will drum up a
lot of energy when being coached, the main idea being that once you
have an unambiguous goal, you need to get-up-and-go and the whole
mindset will be so much more action-oriented.
8. The method: even in behavior modification therapy or in non-
directive counselling, which have lots of common ground with
coaching, there is still enough to differentiate them by: unlike the
counselling, in coaching the focus is always on the step forward and
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taking action, not as much on insight, on self-knowledge in terms of
reflection and getting to understand the reasons behind or the roots of
the client's weaknesses or problems; the first would try to offer you a
better understanding, an explanation of the reasons why you didn't get
the results you wanted, the later would rather focus on how to get them,
on making a plan and following it through, with plenty of motivation
and confidence-building to keep you going and getting what you
planed for.
9. The timeframe: coaching is unlike therapy in that it does not focus
on examining nor diagnosing the past, instead focusing on
encouraging change in a client's current and future behavior;
10. The feed-back: in counselling you will be frequently advised,
the coach will not advise you nor tell you what to do but rather help you
discover your own goals;
11. The transition process: counselling implies the transition from a
non-functional state to a functional one, while in coaching you would
make the transition from a functional state to an optimum or excellent
one;
12. The solution: the counselor suggests or even provides you a
solution and a path to follow; the coach will assist you in drawing the
path towards the most desirable outcome for you; in coaching the
clients may be seeking solutions, but more often they seek to enhance
their performance (or reach excellence);
13. The results: while is not uncommon to see results very soon after
starting the sessions with a counsellor, it usually takes a quite long
period of time before the healing process really starts producing
visible effects; in coaching tough, because the approach is so action-
oriented, the coachee will start giving up excuses, making changes and
taking real steps forward very soon in the beginning, even right after
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the first couple of sessions;
14. Ownership of the results: when the outcome is not the expected
one (or quite the opposite happens), there is quite often a feeling of
guilt that a counsellor has to deal with, and sometimes (in extreme
cases, like in suicide or other tragic outcomes) that feeling can be very
hard to manage and it can take a long period of time to come to terms
with it, without letting it impair you personally and more likely, your
professional life; there is for sure responsibility in coaching, but the
client owns the results, good or not so much, since the client is in
charge with following through according to the plan and the client is in
control of his own life;
15. Joy and excitement: one will very rarely get out of a couselling
session shouting I can rule the world! I know how to do it and I know I
can do it; undoubtedly, one can experience very positive feelings, like
being understood, feeling some relief and being at peace with various
things that happened in the past or with oneself, as a whole being; but
because the main focus in coaching is clearing your goals and
designing your path to them and also because of the ongoing
motivation and confidence building, people many times feel so
empowered, stimulated and clear minded that they do experience a
very pure joy and enthusiasm.
16. The benefits: the counsellor would be the nurse who would
bandage your wounds, the coach would be more like a midwife to your
potential; a counselor will provide you with some sort of remedy,
while a coach will emphasize empowerment, your strength, abilities,
self-confidence and growth.
It's obvious that coaching and counselling are different in
numerous ways, but maybe the most important aspect in general is that
counselling is more reactive, while coaching is more active, even
proactive, since is not only aiming to address problems but also to
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recognize them and to even prevent them from happening.
Those two improvement processes are both so valuable and
they do offer you excellent results when addressing the corresponding
needs, since in peoples' lifelong journey, at different times they need
different support.
PERFORMANCE PROBLEM SOLVING
In a perfect world, everyone on the team gets along and there
are never any problems with performance. Unfortunately, we don't
live in a perfect world. That's even true where I work (shocking, to be
sure).
Yesterday, along with several colleagues, I spent the day with a
delightful consultant, Sue, from Interact Performance. Over the next
twelve months, every manager at AtTask will be going through this
training. My group was the first to start the training (we'll finish up
with another day of instruction next week).
Every day away from work is one day less to accomplish my
goals and objectives, but I enjoyed the discussions and came away
with a different perspective on some foundational skills I had been
taught before. Although I consider myself to be a pretty capable
manager most of the time, I enjoyed looking at some of the things I do
from a different perspective. What's more, the training yesterday will
impact how I interact with my team going forward. Yes, I thought it
was that relevant.
We spent the first half of the day discussing how to effectively
communicate the situation when there is a performance problem. We
identified four foundational principles that are important when
communicating the situation, they are:
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?Be Direct: This doesn't mean abrupt or rude, but avoiding the
problem or beating around the bush doesn't help the situation. I
view it the same way as taking off an band aid. I just rip it off.
Yeah, it hurts, but it doesn't hurt for long. Jim, we need to talk
about a problem The longer it takes to address the issue, the
more difficult and painful it becomes. Be direct.
Be Specific: It just doesn't make sense to be vague. Jim, I've
noticed lately that you've failed to update project status on the
last two or three tasks you've completed. The temptation might
be to try to solve the problem here, but all we need to really do is
identify the problem and give Jim the opportunity to express
himself and offer a solution (I imagine I'll talk more about how
we discussed resolving these problems in future blog posts).
?Be Non-Punishing: Punishing might be an awkward word,
but I think the point is to be non-threatening or condescending
when we directly and specifically identify the problem. A
matter-of-fact approach works best. I think it's important that we
assume the best in people. Most people have a reason for why
they do what they do, I think it's important that we listen and
give them an opportunity to respond. When we use a punishing
tone or body language, Jim will immediately get defensive and
we'll usually lose any opportunity we might have to coach or
mentor to improve the behavior.
Follow Up: Often, once we've addressed a performance
problem, we fail to adequately follow up. Jim, thanks for your
willingness to stay current on your project status updates. Let's
talk about this again in our next one-on-one and see how things
are improving. Saying that isn't enough, it's important that in
the next one-on-one meeting with Jim, we actually do follow up
and address any improvement or acknowledge if there is still a
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problem.
At first I thought it was kind of silly to spend so much time
talking about and doing exercises concerning communicating the
situation. I was wrong. Like most things, the first steps are very
important. That applies to how projects are initiated, how the
foundation of home is constructed, and how we address performance
problems on the team.
So, before you can solve the problem, you need to
communicate the situation in a way the other person understands. You
must also describe it in a way that sets a positive tone. Done poorly,
you may create a whole new set of problems.
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Chapter-5
Setting and clearly communicating performance standards
and expectations, observing and providing feedback, and
conducting appraisal enables you to achieve the best results through
managing employee performance.
To begin the process, you and the employee will collaborate on
the development of performance standards. You will develop a
performance plan that directs the employee's efforts toward achieving
specific results, to support organizational growth as well as the
employee's professional growth. Discuss goals and objectives
throughout the year, providing a framework to ensure employees
achieve results through coaching and mutual feedback. At the end of
the rating period, you will appraise the employee's performance
against existing standards, and establish new goals together for the
next rating period.
As the immediate supervisor, you play an important role; your
closest interaction with the employee occurs at this level.
?Observation and Feedback (Coaching)
?Other Resources
?Performance Appraisal
?Performance Standards
?Training Resources
DEVELOPING AND MAINTAINING
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1.Observation and Feedback (Coaching)
Once performance objectives and standards are established
and clearly communicated, you should observe employees'
performance and provide feedback. You have a responsibility to
recognize and reinforce strong performance by an employee, and
identify and encourage improvement where it is needed. You provide
informal feedback almost every day.
By observing and providing detailed feedback, you play a
critical role in the employee's continued success and motivation to
meet your performance expectations.
Coaching is a method of strengthening communication
between you and the employee. It helps to shape performance and
increase the likelihood that the employee's results will meet your
expectations. Coaching sessions provide you and the employee the
opportunity to discuss progress toward meeting mutually-established
standards and goals. A coaching session focuses on one or two aspects
of performance, rather than the total review that takes place in a
performance evaluation.
Guiding Principles
Effective coaching can:
?Strengthen communication between you and the employee
?Help the employee attain performance objectives
?Increase employee motivation and commitment
?Maintain and increase the employee's self-esteem
?Provide support
Key Elements of Coaching
To make your coaching session effective, you must understand
the key elements of coaching:
?Coach when you want to focus attention on any specific aspect of
the employee's performance.
DEVELOPING AND MAINTAINING PERFORMANCE .........
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?Observe the employee's work and solicit feedback from others.
?When performance is successful, take the time to understand
why.
?Advise the employee ahead of time on issues to be discussed.
?Discuss alternative solutions.
?Agree on action to be taken.
?Schedule follow-up meeting(s) to measure results.
?Recognize successes and improvements.
?Document key elements of coaching session.
Questions to Consider When Coaching
To provide effective feedback you must understand the
elements of performance and analyze marginal performance. Keep
these questions in mind:
?How is the employee expected to perform?
?Does the employee understand these expectations? If not, why
not?
?Does the employee know what successful results look like? How
do you know?
?Does the employee know the performance is marginal? How do
you know?
?Are there obstacles beyond the employee's control? Can you
remove them?
?Has the employee ever performed this task satisfactorily?
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?Is the employee willing and able to learn?
?Does satisfactory performance result in excessive work being
assigned?
?Does unsatisfactory performance result in positive consequences
such as an undesirable task being reassigned?
Coaching Behaviors
To make the most of coaching the employee, remember to
practice these coaching behaviors:
?Focus on behavior, not personality.
?Ask the employee for help in problem identification and
resolution. Use active listening to show you understand.
?Set specific goals and maintain communication.
?Use reinforcement techniques to shape behavior.
During the Coaching Session
If you conduct a coaching session to provide positive feedback
to the employee, keep the following ideas in mind:
?Describe the positive performance result or work habit using
specific details.
?Solicit your employee's opinion of the same product or behavior.
?Ask the employee to identify elements that contributed to success
(adequate time or resources, support from management or other
employees, the employee's talent and interest in the project).
?Discuss ways in which you and the employee can support
continued positive results.
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?Reinforce for the employee the value of the work and how it fits in
with the mission, vision, values and goals of the work unit or
department.
?Show your appreciation of the positive results and your
confidence that the employee will continue to perform
satisfactorily.
?Document your discussion for the employee's file, as you would
all coaching and counseling sessions, noting day, date, time and
key elements.
When you conduct a coaching session to improve
performance, you may want to use the following format:
?Describe the issue or problem, referring to specific behaviors.
?Involve the employee in the problem-solving process.
?Discuss causes of the problem.
?Identify and write down possible solutions.
?Decide on specific actions to be taken by each of you.
?Agree on a follow-up date.
?Document key elements of the session.
If your coaching session is conducted to address poor work
habits such as continued tardiness, keep these steps in mind:
?Describe in detail the poor work habit observed.

?Say why it concerns you. Tie it to the performance standards and
goals.
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?Ask why it occurred and listen non-judgmentally to the
explanation. Describe the need for change and ask for ideas.
?Discuss each idea and offer your help.
?Agree on specific actions to be taken and set a specific follow-up
date.
?Document results from the session.
Follow-Up Discussion
To conduct a follow-up discussion, consider the following steps:
?Review the previous discussion(s).
?Discuss insufficient improvement and ask for reasons why.
?Indicate consequence of continued lack of improvement. (No
threats! This isn't an oral warning.)
?Agree on action to be taken and set a follow-up date, if
appropriate.
?Convey your confidence in the employee.
?Document your discussion.
Other Resources
?The Performance Management Program
?Relevant personnel policies and collective bargaining
agreements
?UCSF Supervisory Certification Program including "Setting
Performance

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Expectations", and "Coaching for Performance"
?Performance Appraisal
The campus carries out its mission through the individual and
collective contributions of its employees. To do their best, staff
members need to know that those contributions will be
recognized and acknowledged. Overseeing performance and
providing feedback is not an isolated event, but rather an
ongoing process that takes place throughout the year. The
performance appraisal is part of that process, and provides an
excellent opportunity for you to communicate with the
employee about past performance, evaluate the employee's job
satisfaction, and make plans for the employee's future
performance.
Remember that the performance appraisal summarizes the
employee's contributions over the entire appraisal period
(usually one year). It is not a step in the disciplinary process. It
may occur as often as you believe is necessary to acknowledge
the employee for accomplishments and to plan together for
improved performance.
Guiding Principles
The goal of the performance appraisal process is to help the employee
feel:
?Positive about the job
?Motivated to do well and to develop
?Benefited by specific, constructive feedback
?Appreciated for specific contributions
?Informed about current and future performance objectives
?Involved as a participant in the process
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Preparing for the Appraisal
Both you and the employee play an important role in creating a
productive performance appraisal process. Here are some suggestions
to get the employee involved:
?Schedule a mutually convenient time and place for the
performance appraisal discussion. Allow enough time and ensure
privacy.
?Explain that you would like the discussion to be a dialog, with
input from both of you included in the final written document.
?Give the employee some options about how to prepare for the
discussion. For example:
Ask the employee to prepare a self-evaluation using the
same form you will use for your draft. The employee can
address accomplishments and things that could be done
better. Explain that you will be doing the same and that
you may exchange these documents a few hours before
your meeting
?Give the employee a list of questions to consider to evaluate his
own performance. Sample questions might be:
What have been your major accomplishments?
What could you have done better?
What could I do as your supervisor to help you do your job
better?
Would you like to see your responsibilities change? If so,
how?
?Prepare a draft appraisal, making sure you have as much
information as possible, including:
job description
performance standards
previous appraisals
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letters of commendation and/or criticism
samples of work
records of disciplinary action
?Consider the question, What can I do to help the employee do the
job better and achieve developmental goals?
Conducting the Appraisal Discussion
Continue the momentum you have established throughout the
year with your ongoing dialog about performance. You want to set the
tone for an open and productive discussion. Here are some steps you
can take to make it as successful as possible:
?Create a supportive environment by stating clearly the purpose of
the discussion. Be as non-threatening and open as possible since
the employee may be tense or uncomfortable.
?Discuss key areas of responsibility and give examples of specific
results. Have the employee go first, based on the self-appraisal or
the questions you provided in advance. Ask lots of questions and
get clarification to make sure you understand the employee's
point of view.
?Discuss what could have been done better. Identify your concerns
and listen to the employee's explanations.
?Ask your employee for help in resolving problems. Focus on
future performance and be sure the employee takes responsibility
for improvement.
?Make sure you and the employee have an understanding the same
understanding of future expectations regarding performance.
?Give positive recognition for performance that reinforces the
goals of the work unit.
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?Discuss the employee's interests and potential new
responsibilities. Discuss both of your roles in achieving new
objectives while maintaining ongoing responsibilities.
?Conclude on a positive note, emphasizing the benefits of your
dialog.
The Final Appraisal Document
Record the results of your discussion on the performance
appraisal form. Ask the employee to sign the form, and explain that
this signature acknowledges discussion of the contents, not
necessarily agreement with them. Route to your manager for final
signatures and placement in the employee's departmental personnel
file. Give a copy of the signed appraisal to the employee.
Performance Standards
Performance expectations are the basis for appraising
employee performance. Written performance standards let
you compare the employee's performance with mutually
understood expectations and minimize ambiguity in providing
feedback.
Having performance standards is not a new concept; standards
exist whether or not they are discussed or put in writing. When
you observe an employee's performance, you usually make a
judgment about whether that performance is acceptable. How
do you decide what's acceptable and what's unacceptable
performance? The answer to this question is the first step in
establishing written standards.
Standards identify a baseline for measuring performance.
From performance standards, supervisors can provide specific
feedback describing the gap between expected and actual
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performance.
Guiding Principles
Effective performance standards:
?Serve as an objective basis for communicating about
performance
?Enable the employee to differentiate between acceptable and
unacceptable results
?Increase job satisfaction because employees know when tasks are
performed well
?Inform new employees of your expectations about job
performance
?Encourage an open and trusting relationship with employees
Key Areas of Responsibility
Write performance standards for each key area of
responsibility on the employee's job description. The employee should
participate actively in their development. Standards are usually
established when an assignment is made, and they should be reviewed
if the employee's job description is updated. The discussion of
standards should include the criteria for achieving satisfactory
performance and the proof of performance (methods you will use to
gather information about work performance).
Characteristics of Performance Standards
Standards describe the conditions that must exist before the
performance can be rated satisfactory. A performance standard should:
?Be realistic, in other words, attainable by any qualified,
competent, and fully trained person who has the authority and
resources to achieve the desired result
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?Describe the conditions that exist when performance meets
expectations
?Be expressed in terms of quantity, quality, time, cost, effect,
manner of performance, or method of doing
?Be measurable, with specified method(s) of gathering
performance data and measuring performance against standards
Expressing Standards
The terms for expressing performance standards are outlined below:
?Quantity: specifies how much work must be completed within a
certain period of time, e.g., enters 30 enrollments per day.
?Quality: describes how well the work must be accomplished.
Specifies accuracy, precision, appearance, or effectiveness, e.g.,
95% of documents submitted are accepted without revision.
?Timeliness: answers the questions, By when? , How soon? , or
Within what period? , e.g., all work orders completed within five
working days of receipt.
?Effective Use of Resources: used when performance can be
assessed in terms of utilization of resources: money saved, waste
reduced, etc., e.g., the computer handbook project will be
completed with only internal resources.
?Effects of Effort: addresses the ultimate effect to be obtained;
expands statements of effectiveness by using phrases such as: so
that, in order to, or as shown by, e.g., establish inventory levels for
storeroom so that supplies are maintained 100% of the time.
?Manner of Performance: describes conditions in which an
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individual's personal behavior has an effect on performance, e.g.,
assists other employees in the work unit in accomplishing
assignments.
?Method of Performing Assignments: describes requirements;
used when only the officially-prescribed policy, procedure, or
rule for accomplishing the work is acceptable, e.g., 100A Forms
are completed in accordance with established office procedures.
PERFORMANCE MEASUREMENTS
Since one of the characteristics of a performance standard is
that it can be measured, you should identify how and where evidence
about the employee's performance will be gathered. Specifying the
performance measurements when the responsibility is assigned will
help the employee keep track of his progress, as well as helping you in
the future performance discussions.
There are many effective ways to monitor and verify
performance, the most common of which are:
?Direct observation
?Specific work results (tangible evidence that can be reviewed
without the employee being present)
?Reports and records, such as attendance, safety, inventory,
financial records, etc.
?Commendations or constructive or critical comments received
about the employee's work
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APPROACHES TO PERFORMANCE MANAGEMENT TRA-
INING
Training
Performance management training complements the
introduction of new or revised performance management systems. A
variety of programs/courses/modules may be necessary to ensure
successful implementation. Training can include business
performance improvement, appraisal techniques, evaluation forms,
discussion and interview methods, objectives, etc.
TRAINING COURSE ALTERNATIVES & TRAINING CONS-
U LTING
?In-House Training or Corporate Training: I n f o r ma t i o n
about the In-house Training or Corporate Training service
where training is conducted specifically for one organization or
groups.
On-demand training: A new training service that caters for
organizations requiring training for one, two, three or four
people- not enough for in-house training (even a small group).
?Training consulting: explains the range of consulting services
available.
Training needs Analysis (TNA): explains why training needs
analysis is important and the type of training provided .
Trainer Training: emphasizes the importance of developing
skills in learning and development - the ability to design and
deliver relevant training programs to employees, staff and
others.
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TRAINING TOPICS
Training topics: links to the subject lists for programs
conducted by Derek Stockley.
Trainer development: explanation of some of the issues and
options for programs to develop skills to train others. Basic, advanced
and specialist training options are explained.
Management development:information about leadership and
management training options.
General training: information about time management/personal
effectiveness, meeting procedure & facilitation, communication,
public speaking, presentation skills, presentation skills
training/coaching, meetings and negotiation training.
Customer service: explanation of customer service training
programs including broader service improvement cultural change
activities.
Human resources: guide to specialist human resources training,
including job search, recruitment and selection, career development
and performance review.
PERFORMANCE MANAGEMENT TRAINING PROGR-
AMMES
Performance management training situations are varied. The
implementation of new or revised schemes often necessitates training.
Ongoing training needs also have to be considered, particularly for
new employees or those promoted into team leader or managerial
positions.
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Key staff member training - design/implementation participants
These involve information sessions on all aspects of
performance management for employees, team leaders and managers
participating in system design or redesign. Often a forerunner to
workshops where the facilitator leads the design and planning process
for the new performance management system.
Employee/staff briefings
For new or revised performance schemes, briefing sessions for
all participating employees (staff) can answer queries and concerns,
providing a solid foundation for successful implementation.
Performance management content can include the system structure,
corporate rationale, expected benefits, requirements, "how-to"
approaches and the like.
Team leader and manager training
More extensive training is required for team leaders and
managers who will conduct the review discussions or interviews. This
can include: identifying and writing performance objectives, adapting
corporate objectives to the individual/team, discussion and
questioning techniques, HR policies (particularly in regard to
compensation, training/education support), handling salary
discussions, equity/legal issues, etc.
Ongoing training and support
Establishing support materials and training programs so new
employees, team leaders and managers can be trained.
Computer/internet/intranet applications are increasingly being used to
provide "just-in-time" learning programs.
Performance Management Systems Development
An explanation of performance management systems
development, including the concepts and key features required.
Covers design considerations including the actual performance
appraisal form design and the broader business improvement issues.
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Every business and organization should have a performance
management system. The system's complexity and scope may vary,
but the underlying requirement remains.
Every organization is different. The system should be designed
to meet the unique issues faced, although many systems will have
common elements.
Employee development
A good performance management system has an employee
development focus. The personal development requirements of
employees and staff members are reviewed and plans are made for
formal and informal learning and training participation.
Salary and compensation review
In many organizations, employee compensation (wages,
salary, benefits, etc.) is linked to performance. If this is the case, the
system has to integrate compensation review as part of the overall
process.
Personal performance
Most systems set personal performance objectives and targets
at the start of the review period. These can relate to job tasks, multi-
skilling, responsibility levels, etc. - there are many variables.
Achievement of these objectives can be linked to compensation
review.
Business performance objectives for individuals and teams
Some systems include performance measurement related to
the business objectives and strategy. Relevant corporate goals and
measures are taken directly from corporate strategy documents and
adapted for individuals or teams. These often relate to financial
objectives, market share, sales, etc. Achievement of these objectives
can be linked to compensation review for staff and bonus payments for
teams or groups.
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PERFORMANCE MANAGEMENT SYSTEM DESIGN
Success with performance management systems relies on
good design and implementation.
Many factors need to be considered. They include morale and
organization culture, other HR (human resources) practices and
policies, business competitiveness and market conditions and
employee "readiness" for either a new or a revised performance
system.
New design or redesign?
A good performance management system is designed from the
"bottom up" - that is, the organizational context provides the basis for
the framework development.
New systems are easier, i.e. if a performance management
system has not previously operated. There is no negative "baggage".
More often, a redesign is undertaken to overcome problems
that occurred in the previous implementation.
Design or redesign responsibility
In many organizations, particularly subsidiaries of larger
companies, the system is implemented as a corporate initiative. Local
management and local human resource managers may be charged with
the responsibility for local implementation. Modification to suit local
conditions may or may not be an option.
The better situation is design responsibility established at the
local level based on a corporate framework.
System technology
Many systems are paper based. Others have created a
computerized paperwork system. Others have a technology based
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system, particularly those using 360 degree feedback mechanisms.
Human resource policies/legal framework
Every performance management system needs to incorporate
organizational values and statutory requirements, e.g. discrimination
and equity guidelines, etc.
External assistance
Management and employee involvement in the design/review
of a performance management system is important. Equally important
is "getting it right". The management literature is full of articles about
the failures and problems of performance management
implementations. An external consultant can facilitate the process to
overcome the pitfalls but maintain management and employee
participation, a key factor in achieving "ownership".
PERFORMANCE EVALUATION
What It Is?
Performance Evaluation is a tool you can use to help enhance
the efficiency of the work unit. This tool is a means to help ensure that
employees are being utilized effectively. Employees can use it as a
clear indication of what is expected of them before you tell them how
well they are doing, and then as feedback of how well they did.
Purpose
Performance Evaluation is a multi-purpose tool used to:
?Measure actual performance against expected performance
?Provide an opportunity for the employee and the supervisor to
exchange ideas and feelings about job performance
?Identify employee training and development needs, and plan for
career growth
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?Identify skills and abilities for purposes of promotion, transfer,
and reduction in force
?Support alignment of organization and employee goals
?Provide the basis for determining eligibility for compensation
adjustments based on merit
?Provide legal protection against lawsuits for wrongful
termination
The primary purpose of Performance Evaluation is to provide
an opportunity for open communication about performance
expectations and feedback. Most employees want feedback to
understand the expectations of their employer and to improve their
own performance for personal satisfaction. They prefer feedback that
is timely and given in a manner that is not threatening.
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?Analyze performance to identify gaps between expected
performance and actual performance
?Analyze the causes of gaps
Organization or work environment-related causes
System or process-related causes
Personal causes
?Select and design an action plan to close the gaps a plan that
meets business needs, performance needs, training needs, or
work environment needs
?Implement the plan
?Follow up - Measure and evaluate the impact of the plan on the
performance
?Analyzing Causes of Gaps- Management often assumes
that where actual performance falls short of expected
performance, employees must try harder. However, it is very
important to analyze why a gap exists between expected
performance and actual performance to determine if there is a
cause other than inadequate employee efforts. Most causes will
fall into three categories:
?Organization or Environment-Related These gaps can stem
from the organizational culture, leadership style or management
practices, organizational structure, reporting relationships or
chain of command, inadequate resources (funds, staff,
equipment, training, information, etc.) and so forth. Some
examples: employee reports to more than one supervisor,
performance expectations were not communicated, or
expectations were not met because the employee was
overburdened due to staff cuts.
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Benefits
Many benefits result from the Performance Evaluation process:
?Control of the work that needs to be done
?Enhancement of employee motivation, commitment, and
productivity
?Identification of goals and objectives for the employee
?Satisfaction of the basic human need for recognition
?Identification of process improvement opportunities
?Identification of employee development opportunities
Steps of Effective Performance Evaluation
Review
Look at the previous evaluation for:
?Previous deficiencies in performance
Have they been corrected or do they continue to be a problem?
If deficiencies continue, note them in the evaluation. Omitting a
continued deficiency in subsequent evaluations can be interpreted as a
sign that the deficiency has been corrected.
?Dramatic change in performance
Determine whether your rating of the employee is consistent or
whether the performance actually has changed. When there is a
significant negative change in performance, the supervisor should
give the employee notice, prior to the annual evaluation, that the next
evaluation will be significantly lower unless substantial improvement
is made.
Analysis
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?System or Process-Related System or process-related causes
can relate to any process within an organization that becomes a
roadblock to an employee meeting performance expectations.
Some examples: time frames or procedures are burdensome,
procedures conflict, someone else didn't meet their time frames,
or the information reporting system is inadequate.
?Personal These are gaps that are within the employee's realm of
control. They can, for example, deal with situations that are going
on in home life that affect work performance or depend on the
employee's physical or emotional abilities. Lack of effort,
motivation, or concern for the agency's efficiency can also fall
under this category. Exercise caution when dealing with personal
issues remember to keep it job related, focusing on how job
performance is affected. If an employee alleges that a medical
condition is the cause of poor performance, contact your human
resource officer or legal counsel at once. Do not attempt to
resolve employees' personal problems.
The cause of a performance gap may overlap a couple
categories. It is imperative that you and your employee communicate
to identify the cause of the gap and arrive at solutions to eliminate or
minimize the gap.
The Evaluation Meeting
Before the performance evaluation meeting:
?At least one week in advance, schedule a meeting with the
employee and inform him or her of what to prepare for, i.e. self-
appraisal, etc.
?Complete your review and documentation of the employee's
performance, considering observations, records, and feedback
from others. Focus on what the employee did and didn't do, not
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the employee's character or personality, unless the character or
personality affects job performance and the employee's
effectiveness to the organization.
?Arrange for a private office or room free of distractions for the
meeting.
During the meeting:
?Put the employee at ease through informal conversation. This will
enhance the free exchange of information. You can also discuss
the purpose of the meeting and what you hope to accomplish.
?Go through your evaluation. Be specific and candid in presenting
your evaluation. Listen to employee feedback, take notes, and ask
questions.
?Share feedback received from others.
?Explore areas of disagreement and attempt to reach consensus so
that the employee will be motivated to change his or her behavior.
?Discuss areas for improvement and performance expectations for
the next period.
?Establish a realistic and appropriate improvement plan if
performance is below expectations.
?Encourage the employee to record his/her comments about the
evaluation, and have the employee sign the copy to be filed. If the
employee refuses to sign, the agency head or the agency head's
designated representative should, in the presence of the employee
and a witness, indicate on the copy that the employee was shown
the material, was requested to sign acknowledging that the
material was read. By signing the copy, the employee does not
indicate agreement only that the material has been read.
195
?Provide the employee with a copy and place a copy in the
employee's official personnel file.
Strategies and Techniques
Not all performance evaluation methods work equally well in
every organization one size does not fit all! It is important to consider
the categories of employees to be appraised (i.e. managers Vs non-
managers), the types of jobs performed, the nature of the relationship
between employees and managers, the purpose(s) which the
evaluation is intended to serve. Other factors are the availability of in-
house expertise, developmental costs, and how easy is it to use.
At the core of all successful evaluation formats are clearly
defined and explicitly communicated standards or expectations of
employee performance. Employees must understand what is expected
of them.
You, as a supervisor, should visit with your human resources
officer or a representative from Human Resource Management
Services regarding implementing a strategy or using a technique that
will best serve your needs.
Common Evaluation Errors
There are many errors that supervisors unconsciously make
during performance evaluation. A few of the most common are:
?Central Tendency Rating everyone at or near the middle of the
scale to avoid the need to justify extreme positions.
?Positive/Negative Leniency Rating higher or lower than the
employee deserves because you want to motivate them to do
better or because you think there is always room for
improvement.
?Halo (or Horns) Effect A single favorable or unfavorable
196
incident colors the evaluator's judgement of the employee's
overall performance.
?Recency Effect A recent event colors the perception of the
employee's performance for the entire period.
?Similar to Me The tendency to rate employees similar to
yourself higher and those not similar lower.
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CASE STUDIES
CASE STUDIES
CASE-1
XYZ is a software company, consists of the following 3 departments:
Software Development & Implementation Dept.
?Business Development Department.
?Service Departments. i.e. Finance, HR & Company affairs.
HRD put in place a corporate strategy aligned performance
management. Though policy framework is sound, pragmatic & well
crafted, the organization is stranded with implementation problems
mainly in anchoring & institutionalizing the system. HRD was alone
made responsible for the execution of the new performance
management & this causes slow & ineffective implementation as the
line mangers like software developers, finance executives were not
actively involved.
Then the management decided to involve all the managers in
institutionalizing the system. All managers made primarily
responsible for pushing the new system.
However, managers are not quite clear how to go about it in
institutionalizing the performance management system.
CASE-2
Designing a performance measurement system: A case study
Performance measurement (PM) by means of local
performance indicators (PIs) is developing into performance
management at a company-wide scale. But how should PIs at various
levels in the organization be incorporated into one system that can help
managers, working at levels that range from operational to strategic?
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CASE STUDIES
How do we convince potential users and obtain their support when
starting to develop such a system? How can we aggregate PIs? How do
we present results? This paper addresses these and related questions. It
is based on a case study carried out at the European Operations
department of Nike, a company producing and selling sportswear
worldwide. The study resulted in a prototype system that basically is a
balanced scorecard tailored to the needs of the company. The
empirical findings differ in some ways from the literature on
developing performance measurement systems (PMSs) in Operations.
Discussing these differences provides new theoretical and practical
insights. They relate to the role of parallel initiatives for PM, the role of
standardized metrics, the continuous improvement of PMSs, and the
normalization and aggregation of measures. Our findings suggest that
developing PMSs should to a large extent be understood as a co-
ordination effort rather than a design effort. The lessons learned
cannot have universal validity, but may be helpful in similar kinds of
initiatives.
CASE-3
MANAGING CHANGE THROUGH TRAINING AND DEVE-
LOPMENT
The railway is a vital part of Britain's economy and
infrastructure. More people travel by rail now than since the 1920s,
even though there are 50% fewer rail routes now than in the 1960s.
Every day Network Rail gets three million people to their
destinations. It also moves thousands of tonnes of goods around
Britain. Rail is a 'greener' and safer mode of transport than car so it is
no surprise that passenger numbers have increased by more than 40%
in the past ten years. These numbers are expected to double by 2034.
Network Rail is the business responsible for the tracks, bridges
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CASE STUDIES
and tunnels that make up the British rail network. These, along with
signalling and level crossings, form the railway's infrastructure. Its
responsibility extends to 20,000 miles of track and 40,000 bridges and
tunnels. It also runs 18 of Britain's major rail stations, from Edinburgh
Waverley to London King's Cross.
Network Rail's job is to keep all of these services running both
efficiently and above all safely. Its mission is 'to provide a safe, reliable
and efficient railway fit for the 21st century.
Challenges
Network Rail faced huge challenges when it took on these
responsibilities ten years ago. At the time, the rail network faced a
number of problems. Trains were late, costs were high and there had
been a lack of investment in both people and equipment. These issues
meant that there was low public confidence in the rail network.
Since then, Network Rail has focused on a sustained
programme to bring down costs. New ways of working have reduced
costs by 28%, largely due to economies of scale. Track and equipment
has been renewed and punctuality has risen to over 90%. Major
projects have been delivered on time and to budget, leading to more
public confidence in the service.
Network Rail has changed its focus to 'predict and prevent'
rather than the previous 'find and fix'. This is both more cost-effective
and efficient and helps to avoid delay or disruption to journeys for
passengers. Between 2009 and 2014, Network Rail will have invested
around 12 billion in the rail network. Britain now has the fastest
growing network in Europe. This case study examines the role of
people in improving the rail network and the British economy.
200
CASE STUDIES
CASE-4
BUSINESS EXPANSION THROUGH TRAINING AND
DEVELOPMENT
Aldi is a leading retailer with over 8,000 stores worldwide. It
continues to expand in Europe, North America and Australia. The Aldi
brand is associated with value for money. Its stores provide customers
with a wide range of products. There is an emphasis on high quality
products and providing excellent value for customers.
Aldi's slogan is 'spend a little, live a lot'. It works hard to keep
prices low for its customers. The company buys large quantities of
products from carefully selected suppliers. Its buyers are experts who
choose the best quality products at the most competitive prices. The
savings achieved by sourcing products in this way can be passed on to
customers. Aldi keep costs down in other ways. It ensures its
operations are as efficient as possible, for example, store layouts are
kept simple and opening hours focus on the busiest times of the day.
The importance of developing people
Aldi places great importance on how it trains and develops its
employees. Training is the process of providing employees with the
necessary knowledge and skills to perform their tasks and roles
competently. Training not only helps to increase business efficiency
but it can also make staff more motivated by increasing their job
satisfaction.
While training is narrowly focused on helping a company
become efficient and effective in the short term, development is more
about building the long-term capabilities of the workforce. It is about
helping individuals to gain knowledge, learn new skills and develop a
wide range of attributes. Development makes employees more
adaptable and more able to take on a wider range of roles.
201
CASE STUDIES
This case study will demonstrate how Aldi's training and development
programmes help ensure its employees have the skills and
competencies that the business requires both now and in the future.
CASE-5
APPRENTICESHIP TRAINING WITHIN THE STEEL
INDUSTRY
Sheffield Forgemasters International Ltd (SFIL) is a steel
producer and engineering company. Based in South Yorkshire, the
heartland of traditional steel production, the company has six
subsidiaries, including operations in America and Europe. It is one of
the biggest private sector employers in the area.
The company manufactures bespoke heavy steel castings and
forgings. SFIL specialises in providing high quality total engineering
packages for its customers. It supplies businesses in many industrial
sectors, with customers in the defence, nuclear, oil and gas
exploration, power generation, marine and construction industries.
Engineering is a highly skilled and specialised profession so
SFIL needs well-trained employees. SFIL offers employees industry-
leading training courses that are tailored to its own needs. It has been
running a highly acclaimed apprenticeship programme since 2005.
The company invests 1 million a year into this programme. It allows
the company to supply its next generation of skilled workers, trained to
its own high standards. Apprentices will form the future backbone of
the business. Some apprentices have progressed to supervisory and
managerial positions. As Graham Honeyman, SFIL's Chief Executive,
explains:
'Our commitment to apprenticeships is evidenced by them
gaining permanent positions and rewarding salaries from day one.
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CASE STUDIES
Apprenticeships
Applicants to the programme are usually aged between 16 and
24 years old. This allows SFIL to train young people in the
'Forgemasters Way' and to benefit from government funding.
Apprentices are trained in all areas of the business. They do a variety of
jobs during their apprenticeship and experience the many roles needed
in steel-making and heavy engineering.
The scheme has an excellent reputation. It received the Large
Employer of the Year award at the 2011 National Apprenticeship
Awards. SFIL also features as one of the top 100 apprenticeship
employers in the UK. It is proving attractive for many young people.
As Dan, a 20-yearold apprentice, states:
'I chose this scheme because SFIL has a really good reputation
in my local area and I knew this could lead to a job for life.'
This case study looks in more detail at SFIL's apprenticeship
programme. It draws on the experiences of three current apprentices:
Dan, Kurt and Rebecca. It also considers the broader training
challenge for a modern engineering business such as SFIL
CASE-6
MEETING BUSINESS NEEDS THROUGH TRAINING AND
DEVELOPMENT
ASDA's mission is 'to be Britain's best value retailer exceeding
customer needs, everyday' . This is backed by its purpose - 'to save
everyone money, everyday'. ASDA recognises that these depend on a
commitment always to put customers first in everything ASDA does,
which is achieved through dedicated teams of ASDA colleagues.
ASDA is a private limited company, with its Home Office
203
CASE STUDIES
(Head Office) in Leeds. ASDA shares a common culture with its
parent company, the US retailer Walmart and puts value for money at
the heart of its operations. ASDA's beliefs (also known as values) are
lived and communicated to all colleagues and reflected in everything
the business does.
ASDA is always at the heart of the community, often with
many generations of a family working at the same store. ASDA also
supports a strong corporate social responsibility (CSR) ethos. This is
shown through its employment and career opportunities in
communities, its support for customers through low prices, as well as
charity activities and health initiatives.
ASDA is recognised nationally for its low prices and warm and
friendly service. The business has over 500 stores across the UK and
Northern Ireland, including large Supercentres and Superstores as
well as smaller supermarkets found in towns and suburbs. ASDA has
seen significant expansion over the last few years. As well as offering
food and general merchandise, ASDA has diversified into optical and
204
CASE STUDIES
pharmaceutical services, as well as mobile phone and financial
services, with more categories launched each year.
There are 25 ASDA Living stores for non-food merchandise,
two Home Shopping stores supporting the online shopping service
and 27 Distribution centres. The George brand overtook Marks and
Spencer in 2009 to become the UK's leading fashion retailer by
volume. ASDA's customer base has increased through its online
services, www.asda.com and ASDA Direct. ASDA's training and
development programmes help its colleagues and managers to grow to
meet these challenges.
Equal opportunities
ASDA is an equal opportunities employer. It supports young
people with careers in retail, for example, its 'Flying the Flag'
programme offers work experience at ASDA for young people for one
or two weeks each year.
Each store 'adopts' two local secondary schools to encourage
young people to consider a career in retail. Each store has a
Community Colleague that works in the local community. He or she
regularly visits schools to talk about the retail sector and their own
experiences of working at ASDA, as well as the varied and numerous
career options available. The company provides development
opportunities to enable ASDA colleagues to reach their potential,
whether as a manager in store or taking a place in the boardroom,
regardless of their starting point.
ASDA employs over 170,000 colleagues and rewards long
service. It focuses on developing an accessible 'family' atmosphere in
the stores. This provides a platform for long-term careers as colleagues
develop within the business. Around 80% of ASDA managers began
their careers in its stores.
205
CASE STUDIES
CASE-7
HOW TRAINING AND DEVELOPMENT SUPPORTS BUSI-
NESS GROWTH
Tesco is the largest British retailer and is also the world's third
largest grocery retailer with outlets across Europe, USA and Asia. The
business began in 1919 with one man, Jack Cohen, selling groceries
from a stall in the East End of London. Jack bought surplus stocks of
tea from a company called T.E. Stockwell. T.E. Stockwell and Cohen
combined their names to brand the tea Cohen originally sold TESCO
tea. In 1929, the first Tesco store opened in north London.
Tesco has expanded since then by a combination of acquisition
of new stores, retail services and by adapting to the needs of
consumers. Tesco has net profits (before tax) of around 3 billion.
Tesco's primary aim is 'to serve the customer'. Keeping existing
customers happy is important, as they are more likely to return. This is
more cost effective for the business than acquiring new ones.
In the UK Tesco now has over 2,200 stores ranging from the
large Extra hypermarket style stores to small Tesco Express high street
outlets. Tesco's original product range of grocery and general
merchandise has diversified to include banking, insurance services,
electrical goods as well as telephone equipment and airtime.
This move towards 'one stop shopping' means customers can
meet all their purchasing needs from one place. Tesco has also
expanded its customer base through its Tesco.com website which
attracts one million regular users.
As the company has grown, so has its workforce. From one
man and a stall, Tesco now has approximately 280,000 employees in
the UK and over 460,000 worldwide. To serve its widening markets it
206
CASE STUDIES
needs flexible and well-trained staff that can recognise the needs of the
customer.
Tesco's employees work in a wide range of roles in both store
and non-store functions, such as:
?Customer Assistants on the shop floor either directly assisting
customers or preparing orders for delivery to customers who have
ordered online
?Department Managers leading a team of Customer Assistants
?Warehouse employees who help catalogue and store clothing,
food or brown goods in Tesco Distribution Centres or in stores
?Office-based staff working in a range of functions at Head Office,
including Finance, Purchasing, Personnel or Marketing
?Logistics staff who plan and carry out the distribution of products
to stores.
Tesco recognises that increasing knowledge, improving skills
and job satisfaction of employees are all vital to the continued growth
of the company.
This case study looks at how Tesco provides training and
developmentopportunities for its employees.
CASE-8
DEVELOPING PEOPLE THROUGH TRAINING-A FORES-
TRY COMMISSION CASE STUDY
The Forestry Commission is a government department,
making it a public sector organisation. Its mission is 'to protect and
expand Britain's forests and woodlands and increase their value to
society and the environment '.
207
CASE STUDIES
It is Britain's largest land manager and is responsible for some
of the UK's most spectacular landscapes. Over the last 20 years it has
expanded Britain's woods by an area more than three times the size of
Greater London
.
However, that is not the whole story. The Commission's 3,000
staff also:
?manage forestry land owned by the government, including
15,000 miles of roads and 2,300 bridges
?support and regulate the use of privately-owned forests and
woodlands
?plant and renew forests
?restore landscapes
?develop open forestry spaces to provide forest walks, concert
venues, bike trails and even wind farm sites
?help to protect Britain's trees from pests and diseases
?contribute to wealth generation by providing jobs and selling
products. For every 1,000 raised from timber and forestry,
another 3,000 is generated to the UK economy from associated
products and services, for example, tourism, paper and food
?represent the UK at international forest-related talks and
negotiations.
208
CASE STUDIES
The Forestry Commission has always placed operating in a
'green' manner top of its agenda. It balances four related needs: people,
nature, environment, economy.
The Forestry Commission takes a long-term view about how it
can help create a better environment for everyone in this country. For
example, forests:
?if sustainably managed, provide many benefits. The Forestry
Commission ensures its forests are sustainably managed and
encourages private owners to do so too
?provide extremely low carbon sources of energy and fuel
?provide the lowest energy consuming and carbon-emitting
building materials available
?help to absorb carbon emissions from other industrial activities
?provide a micro-climate for many species of insects and animals
209
CASE STUDIES
for example, oak trees support more than 600 species of plants
and animals
?provide recreational outdoor spaces that contribute to healthy
lifestyles. Over 50 million visitors each year to Forestry
Commission sites generate more than 2 billion in revenue
?create employment within the forestry and other industries, such
as construction, tourism and engineering.
The case study will show how training and development is
central to the work of the Forestry Commission and how it benefits the
career development of its people.
It will particularly highlight the work of Julie McMorran, a
civil engineer with the Forestry Commission, for whom training and
development has provided the springboard to promotion.
CASE-9
TRAINING AND DEVELOPMENT AS A STRATEGY FOR
GROWTH
Siemens is a leading technology business and one of the largest
electrical and electronics engineering companies in the world. In the
UK, it employs over 20,000 people and is in the top three electrical and
electronics companies in the world.
It has been a pioneer in innovation since 1843 when Siemens installed
the first street light in Godalming, Surrey. In 2006, Siemens UK
invested over 74.4 million on research and development.
The company designs and manufactures products and services for
both industrial customers and consumers. It operates in three main
sectors:
?In industry, Siemens develops systems for transport, for example,
210
CASE STUDIES
Londons traffic monitoring for its congestion charge scheme. It
is also the second largest provider of trains for major UK rail
companies like FirstGroup. Siemens also provides lighting and
electrical systems for major construction projects.
?In energy, Siemens' work is wide-ranging. It makes systems for
transmitting and distributing power for power companies
including building power stations and wind farms. It also
provides energy metering services, for example, water meters for
businesses and consumers.
?In healthcare, it specialises in equipment to help medical
diagnosis, such as MRI scanners and imaging technology. It also
provides equipment for testing blood in laboratories.
Siemens' technology appears in every aspect of everyday life, for
example:
?the electronic 'eye' (Hawk Eye) helps umpires in tennis and
cricket matches
?9 out of 10 cars contain Siemens products
?20,000 domestic products like toasters are used in homes every
day
?systems such as Pelican crossings keep people safe. Car parking
systems help guide traffic quickly to free spaces, keeping traffic
moving and reducing pollution on the roads
To keep its world-leading position and grow in a competitive
environment, Siemens aims to deliver quality products and services.
To do this, it needs people with first class levels of skill, knowledge
and capability in engineering, IT and business.
211
CASE STUDIES
The size and varied nature of its business means that Siemens
requires many different types of people to fill a wide range of roles
across the company. These include skilled factory workers, trade
apprenticeships, designers and managers.
This case study explores how Siemens manages its ongoing
need for skills through training and development.
CASE-10
THE ROLE OF TRAINING AND DEVELOPMENT IN CAR-
EER PROGRESSION
As an Organisation develops, it creates working practices
within the business that reflect its way of doing things. These practices
become embedded in decisions and operations. The way of doing
things guides and influences employees as they carry out their work.
However, when organisations develop a new business strategy this
creates a process of change. This leads to different ways of working.
Company background
212
CASE STUDIES
With more than 120 years of heritage, Marks & Spencer is one
of the best-known British retailers. The company has more than 450
stores within the UK and employs more than 65,000 people. It also
operates outside the UK where it has a developing business in places
as far afield as Hong Kong.In recent years, the UK's retailing industry
has been characterised by intense competition. Customers are more
aware of where and how they want to shop. They also know what sort
of shopping experience they require. This has made it much more
difficult for retailers to survive.
Facing the challenges
The result was that Marks & Spencer had to develop a new
business strategy. This created a period of change for the whole
organisation. The period of change involved refocusing the business
upon the basics. This included the three business values of Quality,
Value, and Service.
Marks & Spencer developed a promotional campaign that
emphasised 'Your M&S'. This helped the company to connect
customers with the heritage in the business. It also linked the business
in the minds of customers with its two other values of Innovation and
Trust. The process involved three key features:
?developing products that customers wanted
?investing in the environment within stores
?providing good customer service to look after customers.
These changes have created a business environment with more
challenges for employees. Managers had to prepare employees for
whatever role they would be asked to undertake in this new
environment. The answer was to develop career paths for the
employees.
This case study looks at the processes of training and
development at Marks & Spencer. It shows how this helped employees
213
CASE STUDIES
to cope with the challenges they faced and created a career path for
them.
CASE-11
DEVELOPING SKILLS IN A LARGE ORGANISATION
THROUGH TRAINING AND DEVELOPMENT
National Grid is one of the world's largest utilities. It focuses
on the delivery of energy (gas and electricity) safely, reliably,
responsibly and efficiently. The networks include:
?around 4,500 miles of overhead power lines
?340 electricity substations
?4,300 miles of high pressure gas pipelines
?around 80,000 miles of distribution pipes delivering gas to 11
million meters.
The skills of National Grid employees are at the heart of its
success in reaching world-class safety, operating and financial
performance. Many of the company's roles are complex, requiring
both a wide range and depth of skills. Some examples of activities
carried out in various job areas within the company include:
214
CASE STUDIES
This case study focuses on how National Grid manages
training and development within the organisation.
CASE-12
DEVELOPING A CAREER PATH IN RETAIL
'Harrods of London' is a British institution. It is probably the
most well-known and respected retail store in the world. For 162
years, Harrods has built its unique reputation supported by its key
brand values British; Luxury; Innovation; Sensation; Service.
Harrods employs approximately 5,000 people from 86 different
nationalities who deal with up to 100,000 customers a day at peak
times.
Harrods needs employees who can face the challenges that its
reputation and standards bring. It needs people who are looking for an
exciting and rewarding long-term career with responsibility and
prospects. Its challenge is to find (and retain) employees with the right
mix of skills and abilities, who can be developed to become the
managers of the future.
To achieve this, Harrods has to counter some of the negative
perceptions about working in retail. Working in a shop has
traditionally been seen as low-skilled with long hours, poor pay and
little chance of promotion. However, because quality is key at
Harrods, employees are well-paid, respected and have clear career
paths open to them. Senior managers at Harrods have come from all
walks of life and started out with various levels of qualifications. All
have benefited from development opportunities provided by the
company.
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CASE STUDIES
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