Establishing and operationalising performance management system

measuring performance-results and behavior; conducting performance review discussions; harnessing performance management system for performance improvement.

Measuring performance

Measuring Results Expected from you Measuring Behaviors Expected to be

Measuring Results: Overview

Accountabilities Objectives Performance Standards

Key questions

Where should each individual focus efforts? (Accountabilities) What are the expected objectives? (Objectives) How do we know how well the results were achieved? (Performance Standards)

Accountabilities
Broad areas of a job for which employee is responsible for producing results

Determining Accountabilities

Collect information about job (Job Description) Determine importance of task or cluster of tasks What percentage of employees time is spent performing task / each accountability? Would there be a significant impact on work units mission, if performed inadequately? Is there a significant consequence of error?

Objectives
Statements of important and measurable outcomes

Determining Objectives

Purpose: to identify
Outcomes Limited number Highly important When achieved dramatic impact on overall organization success
After objectives are set Employees should receive feedback on their progress toward attaining objective Rewards allocated Employees who have reached their objective

10 Characteristics of Good Objectives

1. 2. 3.

Specific and Clear (For eg Cut travel cost by 20 %) Challenging (Stretch and but not impossible to achieve) Agreed Upon (Agreement between manager and
employee)

4.

Significant
Prioritized

(Critical Impact on success of organization, Employees performance and goals of organization, Value to organization )
(Unequal, hence tackle one by one)

5.

10 Characteristics of Good Objectives

(continued)
6.
7.

Bound by Time (deadlines) Achievable (doable by employees with their skills and
training. If NOT then resources should be provided)

8.

Fully Communicated (Make a awareness for the other

members of the organization, who are link with the objectives)

9.

10.

Flexible (needs changes with respect to work or business environments) Limited in Number (Few, between 5 and 10 objectives

per review period is manageable number, but can be change based on position and organization in question)

Performance Standards

Yardstick used to evaluate how well employees have achieved objectives

Determining Performance Standards

Standards refer to aspects of performance objectives, such as:

Quality
How well the objective is achieved ? (Usefulness, Responsiveness, Problem-solver, Acceptance rate, Error rate, and feedback from users and customers eg Customer complains and returns)

Quantity
How much has been produced, how many, how often, at what cost

Time
Due dates, schedule, cycle times, deadlines (how quickly), timetables, progress reports

Standards must include:

Action The desired result

A due date Some type of indicator

Quality and/or Quantity

Good Performance Standards: 6 Characteristics

1. 2.

Related to Position (based on job key elements) Concrete, Specific, Measurable (Observable and
verifiable in order to avoid dispute)

3.
4. 5.

Practical to Measure (Efficiency Time, Cost and Accuracy) Meaningful (Important but relevant to job purpose to achieve
organizations mission and objectives)

Realistic and Achievable Reviewed Regularly

(Accomplish but stretchable. Employees should reached the standards within specific time frame) (To determine whether employee has reached the standard and if not, corrective action should be taken)

6.

Measuring Behaviors: Overview

Identify competencies Identify indicators Choose measurement system

Identify Competencies
Measurable clusters of KSAs
Knowledges Skills Abilities

That are critical in determining how results will be achieved

Types of Competencies

Differentiating
Distinguish between superior and average performance

Threshold
Needed to perform to minimum standard

Identify Indicators
Observable behaviors Used to measure extent to which competencies are present or not

Necessary Components for Describing Competencies

Definition Description of specific behaviors

When competency demonstrated When competency not demonstrated

Suggestions for developing the competency

Choose Measurement System

Comparative system
Compares employees with each other

Absolute system
Compares employees with prespecified performance standard

Comparative Systems

Simple rank order

performer)

(Ranking system from best performer to worst

Alternation rank order Paired comparisons Forced distribution

(Best performer + 1 and second best performer + 2, Worst performer 1 and second Worst performer 2 )

Comparative Systems

n = number of employees evaluated) Job Ranking Table

Paired comparisons (n(n-1) / 2,

Comparative Systems

Forced distribution :

Assumption based method, depending upon percentage classification

Advantages of Comparative Systems

Easy to explain Straightforward

distributions) (Easy to see which employees are in

Compare to absolute systems, this is Better control for biases and errors made by rating performance Leniency (Giving high scores to most employees) Severity (Giving low scores to most employees) Central tendency (not giving any above / below
expectations ratings)

Disadvantages of Comparative Systems

Rankings may not be specific enough for Useful feedback Protection from legal challenge
(Employees are not compared based on individual behaviors or individual competencies, but are compared based on overall assessment of performance)

No information on relative distance between employees (Ranking based method)

Specific issues with forced distribution method

(Method is based on assumption some employees performing very high, some poor & majority in between . This assumption may not hold true for all units within the organization )

Absolute Systems

Essays Behavior checklists Critical incidents Graphic rating scales

Essays

Describes employees strength and weakness and makes suggestions for improvement Advantage: Potential to provide detailed feedback Disadvantages: Unstructured and may lack detail Depends on supervisor writing skill Lack of quantitative information; difficult to use in personnel decisions (For eg allocation of rewards)

Behavior checklists

Employers task is to indicate check statements that described employee is being rated Example of Behavior checklist item
The Employee arrives at work on time
1 Never 2 Sometimes 3 Often 4 Fairly Often / Rarely 5 Always

Categories for Behavior checklists Scales

Frequency
Seven-Point Scale
Always Constantly

Amount
Seven-Point Scale
All An extraordinary amount of A great amount of Quite a bit of A moderate amount of Somewhat None

Evaluation

Five-Point Scale
Always Very Often

Five-Point Scale
All An extreme amount of Quite a bit of Some None

Terrible
Unsatisfactory

Often Fairly Often Sometimes Once in a while Never

Fairly Often Occasionally Never

Decent Good Excellent

Behavior checklists

Advantage:
Easy to use and understand

Disadvantage:
Scale points used are often randomly used Difficult to get detailed and useful feedback

Critical incidents

Kind of measurement that involves gathering reports of situations in which employees exhibited behaviors that are especially effective or ineffective in fulfilling their jobs For example, following incident is recorded by a high school principal regarding performance of Tom Jones, the head of disability services office:

Critical incidents

A sophomore with learning disabilities was experiencing difficulty in writing. Her parents wanted a laptop computer for her. Tom Jones ordered a computer and it was deliver to students teacher. No training was provided to the child, her teacher, or her parents. The laptop was never used.

Critical incidents

Example
1 Strongly Agree 2 Agree 3 Undecided 4 Disagree 5 Strongly Disagree

Addresses learning needs of special-needs students efficiently

Critical incidents
Report of specific employee behavior Allows focus on specific behavior Very time-consuming

Competency Adaptability / Flexibility

Graphic rating scales

Clear meaning for each response category

(ratings of behavior)

Consistent interpretation by outside readers

(party)

Supervisor / Employer and employee should have same understanding of rating

Importance of Job

Ratings for Job (Number)

Knowledge (K) Skills (S)

Exceptional (5) : Advanced (4) :

High level of Job Knowledge. Others employees requires training High level of Job Knowledge. Consistently completes all normal tasks. Employee may seek guidance in some areas. Average level of Job Knowledge. Help in completing difficult task Not meeting deadlines or complete tasks require for this job. Does not attempt to acquire new skills or knowledge to improve performance

Abilities (A)

Performance = KSA

Competent (3) :

Improvement Needed (2) :

Performs tasks incorrectly or not at all. Employee has no appreciation for improving performance

Major Improvement Needed (1) :

Example of Graphic rating scales

Project Manager Knowledge of Project Management planning, updating status, working within budget and delivering project on time and within budget Job Rating to be done by students Unaware Or not interested Needs additional training Aware of responsibilities Excellent Knowledge and performance of skills Superior performance of skill; ability to train others

Example of Graphic rating scales

Project Manager Knowledge of Project Management planning, updating status, working within budget and delivering project on time and within budget 2 Unaware Or not interested 2 Needs additional training 3 Aware of responsibilities 4 Excellent Knowledge and performance of skills 5 Superior performance of skill; ability to train others

Graphic rating scales: BARS improvement

Behaviorally Anchored Rating Scales (BARS)

Use critical incidents as anchors Involves multiple groups of employees in development

(First Group) - Identify important job elements (Second Group) - Describe critical incidents at various levels of performance Defined clearly for the rater (Employees and Employers)

Graphic rating scales: BARS improvement

High Point Performance (3) : Shows technical foundation, Application of job, able to identify problems. Mid - point Performance (2) : Can resolve issues, application of fine tuning knowledge, can identify major problem areas. Low - Point Performance (1) : Weak knowledge, Difficulty in identifying problems

Measuring Performance

Several types of methods Differ in terms of:

Practicality (time and effort) Usefulness (quantifiable)

Quick Review

Measuring Results
Identify accountabilities Set objectives Determine standards of performance

Measuring Behaviors
Identify competencies Identify indicators Choose measurement system

Conducting performance review discussions

Performance review stage involves the meeting between employee and manager / employer to review their assessments Such meeting is called appraisal meeting / discussion Appraisal meeting is important because it provides formal setting in which employee receives feedback on his or her performance

Case I Appraisal meeting

Case II Appraisal meeting

Jason is the manager in the large accounting firm, and Susan is one of the employees on his team. He chooses conference room with privacy away from other offices.

Six Steps for Conducting Productive Performance Reviews

1.

Identify what the employee has done well and poorly (about positive and negative behaviors) Solicit feedback
explanations) (Behaviors, Listen for reactions and

2.

3.

Discuss the implications of changing behaviors (Positive feedback is best, but what will
happen if any poor performance continues)

Six Steps for Conducting Productive Performance Reviews

4.

Explain how skills used in past achievements can help overcome any performance problems Agree on an action plan
(Encourage employee to improves his performance by asking questions such as What ideas do you have for and What suggestions do you have for ?)

5.

6.

Set a follow-up meeting and agree on behaviors, actions, attitudes to be evaluated

Harnessing performance management system for performance improvement

Performance improvement objectives define what needs to be done to achieve better results. They may be expressed in a performance improvement plan, which specifies what actions need to be taken by role holders and their managers.

Sequence for Performance Improvement

Identify an organizational problem. Articulate a relationship between the problem and human performance. Determine a quantifiable performance gap between the desired level of performance and the actual level of performance. Conduct an analysis of the root causes to reveal the reasons for the performance gap. Implement a series of solutions to address the root causes.

performance improvement targets for productivity, cost reduction, stock turn etc;