PERFORMANCE PLANNING & REVIEW

Submitted to: Mr. Gaurav Ashesh (Assistant Professor)

Submitted by: Shakti Singh Yaman Dhingra

WHY DO ORGANIZATIONS NEED A PERFORMANCE PLANNING AND REVIEW SYSTEM?

A Performance Planning and Review System (PP&R), when used regularly on an annual or semi-annual basis, provides your organization with a means of managing the performance of your staff and answers the three most basic questions we all have as employees: What am I supposed to be doing? How well am I doing it? And does it matter to the organization?

With careful planning and implementation, a PP&R system answers these questions for your staff and provides your organization with:

1. Systematic Performance Planning: To identify critical performance objectives for

each staff member so that they clearly understand their duties, what is expected of them, and how their work is linked to the overall goals of the organization?

2. Systematic Performance Review: To review an employees overall achievement,

based on a clear understanding of his or her previously established performance objectives, with constructive feedback, both positive and negative.

3. Objective information: While the performance review does not serve automatically as a
salary review, the information which results from the PP&R process will guide management decisions on salary and merit awards, promotions, transfer, work assignments, and staff development needs.

4. Knowledge: Where the overall performance strengths and weaknesses are in the
organization and where changes are needed.

IMPORTANT FEATURES OF A PP&R SYSTEM

Management commitment to the concepts of performance planning and review Emphasis on communication between supervisor and staff member Focus on joint work planning Job duties linked to the goals of the organization Performance objectives are set for employees at all levels of the organization including senior management Performance objectives are specific, realistic, measurable, and time-bound Emphasis on developing employee motivation, skills, and career paths Performance as the basis for management decisions

ADVANTAGES OF A PERFORMANCE PLANNING AND REVIEW SYSTEM

If implemented effectively, a PP&R system can: Reinforce your organizations goals and priorities Communicate your organizations work values Define the work which people do and how it is related to the organizations mission Provide information to all employees on expected level of performance Provide performance information for career and compensation decisions

360-DEGREE FEEDBACK
In human resources or industrial/organizational psychology, 360-degree feedback, also known as multi-rater feedback, multisource feedback, or multisource assessment, is feedback that comes from all around an employee. "360" refers to the 360 degrees in a circle, with an individual figuratively in the centre of the circle. Feedback is provided by subordinates, peers, and supervisors. It also includes a self-assessment and, in some cases, feedback from external sources such as customers and suppliers or other interested stakeholders. It may be contrasted with "upward feedback," where managers are given feedback by their direct reports, or a "traditional performance appraisal," where the employees are most often reviewed only by their managers. The results from 360-degree feedback are often used by the person receiving the feedback to plan training and development. Results are also used by some organizations in making administrative decisions, such as pay or promotion. When this is the case, the 360 assessment is for evaluation purposes, and is sometimes called a "360-degree review." However, there is a great deal of controversy as to whether 360-degree feedback should be used exclusively for development purposes, or should be used for appraisal purposes as well (Waldman et al., 1998). There is also controversy regarding whether 360-degree feedback improves employee performance, and it has even been suggested that it may decrease shareholder value (Pfau & Kay, 2002). 360 degree feedback allows each individual to understand how his effectiveness as an employee, co-worker, or staff member is viewed by others. The most effective 360 degree feedback processes provide feedback that is based on behaviours that other employees can see. The feedback provides insight about the skills and behaviours desired in the organization to accomplish the mission, vision, and goals and live the values. The feedback is firmly planted in behaviours needed to exceed customer expectations.

How is 360 Degree Feedback Used?

Companies typically use a 360 feedback system in one of two ways:

1. 360 Feedback as a Development Tool to help employees recognize strengths and weaknesses and become more effective
When done properly, 360 is highly effective as a development tool. The feedback process gives people an opportunity to provide anonymous feedback to a co-worker that they might otherwise be uncomfortable giving. Feedback recipients gain insight into how others perceive them and have an opportunity to adjust behaviours and develop skills that will enable them to excel at their jobs.

2. 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 behaviours 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 behaviours 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.

What 360 Feedback Surveys do not assess:

360 feedbacks 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.

Critical Factors for Success

In order for the 360 degree feedback system to be successful there must be employee acceptance of the system. Both perceived accuracy and justice are considered critical factors for system acceptance. If the system is unjust or has errors, it will be dismissed for obvious reasons. Fortunately, reputable providers of 360 degree feedback have often delivered hundreds of thousands of ratings, and are experienced in maximizing the likelihood of system acceptance. There are three key steps to using the 360 degree feedback system successfully: 1. make it fit into the organization; 2. make it psychometrically sound; 3. Use with care.

Make it Fit
Try to make the 360 feedback fit into the culture of the organization. In doing so it will appear less threatening and more fair. Increase Employee Participation To increase the perception of justice, employees should be encouraged to be active participants in the evaluation. A multiple source feedback works best in an environment that is team-oriented

and cooperative. Giving individuals the opportunity to voice their opinions about the system's construction, process, and results will increase employee buy-in, acceptance, and will yield useful suggestions. Train Feedback Providers It is also important to train the feedback providers to be sensitive, respectful and polite. Treating employees in a friendly and respectful manner, and offering constructive advice will make them more open to accepting the performance appraisal system. Communication is Key People tend to be suspicious of things they do not understand. Thus, it is important to communicate to the employees the precise way in which ratings are to be combined, as well as the purpose, benefits and procedures of the 360 degree feedback system. It is particularly important to communicate the intended uses of the information.

Make it Psychometrically Sound

Ensure that the Instrument is Applicable A good assessment should be reliable and valid. It must measure what it proposes to measure, consistently and accurately. The 360 degree feedback system only works effectively if it measures the relevant job performance, knowledge, skills, abilities and personality characteristics necessary for high levels of job performance. Thus, the first step is to identify, define, and incorporate these job performance behaviors, knowledge, and skills into the appraisal system. Increase Rater Familiarity Select raters who are well acquainted with the employee. Rater familiarity is linked to accuracy and fairness in performance ratings. To evaluate rater familiarity, some 360 degree feedback systems include a rating for familiarity and provide the option of indicating "inadequate opportunity to observe" for performance characteristics. To increase reliability and decrease the

impact of individual biases a large sample of raters should be selected. Reliability continues to increase when up to twenty raters are included, but adequate reliability can be obtained using 6 or more raters. Promote Rater Accuracy Both 'self' and 'other' appraisal accuracy should be promoted and rewarded. The nature of the 360 degree feedback system should reduce the problem of rater accuracy, as the use of multiple raters will average out individual biases. Furthermore, there is an apparent tradeoff when using either 'self' or 'other' ratings. Other-ratings are perceived to be more accurate, however, they may also be perceived by the employee to be less fair. The inverse is true for self-ratings. Clearly, both rating methods have advantages and disadvantages; thus, a performance appraisal system that combines both 'self' and 'other' ratings will be the most beneficial.

Use with Care

When implementing the 360 degree feedback system it is important to be consistent across employees (all of the employees should have an equal opportunity to participate in the system), and administered frequently. A consistent system will be perceived as more accurate and fair. A one-time 360 feedback exercise is not recommended they are best when at least a three to five term is planned. Furthermore, evaluating performance over time provides employees with benchmarks for development.

360 Degree Feedback: The Good, the Bad, and the Ugly
The Good about 360 Degree Feedback These features will manifest themselves in well-managed, well-integrated 360 degree feedback processes. Improved Feedback From More Sources: Provides well-rounded feedback from peers, reporting staff, coworkers, and supervisors. This can be a definite improvement over feedback

from a single individual. 360 feedback can also save managers time in that they can spend less energy providing feedback as more people participate in the process. Coworker perception is important and the process helps people understand how other employees view their work.

Team Development: Helps team members learn to work more effectively together. (Teams know more about how team members are performing than their supervisor.) Multirater feedback makes team members more accountable to each other as they share the knowledge that they will provide input on each members performance. A well-planned process can improve communication and team development.

Personal and Organizational Performance Development: 360 degree feedback is one of the best methods for understanding personal and organizational developmental needs.

Responsibility for Career Development: For many reasons, organizations are no longer responsible for developing the careers of their employees, if they ever were. Multirater feedback can provide excellent information to an individual about what she needs to do to enhance her career.

Additionally, many employees feel 360 degree feedback is more accurate, more reflective of their performance, and more validating than prior feedback from the supervisor alone. This makes the information more useful for both career and personal development.

Reduced Discrimination Risk: When feedback comes from a number of individuals in various job functions, discrimination because of race, age, gender, and so on, is reduced. The "horns and halo" effect, in which a supervisor rates performance based on her most recent interactions with the employee, is also minimized.

Improved Customer Service: Especially in feedback processes that involve the internal or external customer, each person receives valuable feedback about the quality of his product or services. This feedback should enable the individual to improve the quality, reliability, promptness, and comprehensiveness of these products and services.

Training Needs Assessment: 360 degree feedback provides comprehensive information about organization training needs and thus allows planning for classes, cross-functional responsibilities, and cross-training.

The Bad and the Ugly about 360 Degree Feedback

The down side is important because it gives you a roadmap of the things to avoid when you implement a 360 degree feedback process. Following are potential problems with 360 degree feedback processes and a recommended solution for each.

Exceptional Expectations for the Process: 360 degree feedback is not the same as a performance management system. It is merely a part of the feedback and development that a performance management system offers within an organization.

Additionally, proponents may lead participants to expect too much from this feedback system in their efforts to obtain organizational support for implementation. Make sure the 360 feedback is integrated into a complete performance management system.

Design Process Downfalls: Often, a 360 degree feedback process arrives as a recommendation from the HR department or is shepherded in by an executive who learned about the process at a

seminar or in a book. Just as an organization implements any planned change, the implementation of 360 degree feedback should follow effective change management guidelines. A cross-section of the people who will have to live with and utilize the process should explore and develop the process for your organization.

Failure to Connect the Process: For a 360 feedback process to work, it must be connected with the overall strategic aims of your organization. If you have identified competencies or have comprehensive job descriptions, give people feedback on their performance of the expected competencies and job duties.

The system will fail if it is an add-on rather than a supporter of your organizations fundamental direction and requirements. It must function as a measure of your accomplishment of your organizations big and long term picture.

Insufficient Information: Since 360 degree feedback processes are currently usually anonymous, people receiving feedback have no recourse if they want to further understand the feedback. They have no one to ask for clarification of unclear comments or more information about particular ratings and their basis.

For this reason and for the points listed in the several bullet points following this one, developing 360 process coaches is important. Supervisors, HR staff people, interested managers and others are taught to assist people to understand their feedback. They are trained to help people develop action plans based upon the feedback.

Focus on Negatives and Weaknesses: At least one book, First Break All the Rules: What the World's Greatest Managers Do Differently, advises that great managers focus on employee

strengths, not weaknesses. The authors said, "People don't change that much. Don't waste time trying to put in what was left out. Try to draw out what was left in. That is hard enough." Rater Inexperience and Ineffectiveness: In addition to the insufficient training organizations provide both people receiving feedback and people providing feedback, there are numerous ways raters go wrong. They may inflate ratings to make an employee look good. They may deflate ratings to make an individual look bad. They may informally band together to make the system artificially inflate everyones performance. Checks and balances must prevent these pitfalls.

Paperwork/Computer Data Entry Overload: Need we say much more here? Traditional evaluations required two people and one form. Multirater feedback ups the sheer number of people participating in the process and the consequent organization time invested.

There are minuses with the 360 degree feedback processes. As with any performance feedback process, it can provide you with a profoundly supportive, organization-affirming method for promoting employee growth and development. Or, in the worst cases, it saps morale, destroys motivation, enables disenfranchised employees to go for the jugular or plot and scheme revenge scenarios. 360 degree feedback can increase positive, powerful problem solving for customers or set people off on journeys to identify the guilty - the feedback provider who rated their performance less than perfect.

Management by Objectives (MBO)

"MBO is one of the rational school of management's successful products." The Economist

Motivating people by aligning their objectives with the goals of the organization

For many people working in modern business environments, it's hard to remember a time when non-managerial employees weren't involved with, and interested in, corporate strategy and goals. We are regularly reminded about the corporate mission statement, we have strategy meetings where the "big picture" is revealed to us, and we are invited to participate in some decisions. And we're aware of how our day-to-day activities contribute to these corporate goals.

This type of managing hasn't been around forever: It's an approach called Management by Objectives; a system that seeks to align employees' goals with the goals of the organization. This ensures that everyone is clear about what they should be doing, and how that is beneficial to the whole organization. It's quite easy to see why this type of managing makes sense when the parts work in unison the whole works smoothly too. And by focusing on what you're trying to achieve, you can quickly discriminate between tasks that must be completed, and those that are just a waste of valuable time.

Background: Management by Objectives was introduced by Peter Drucker in the 1950s and written about in his 1954 book, The Practice of Management. It gained a great deal of attention and was widely adopted until the 1990s when it seemed to fade into obscurity.

Partly, the idea may have become a victim of its own success: It became so much a part of the way business is conducted that it no longer may have seemed remarkable, or even worthy of

comment. And partly it evolved into the idea of the Balanced Scorecard, which provided a more sophisticated framework for doing essentially the same thing.

Using Management by Objectives

Peter Drucker outlined the five-step process for MBO shown in figure 1, below. Each stage has particular challenges that need to be addressed for the whole system to work effectively.

Figure 1: Five Step MBO Process

Start of MBO Process

Set Organizational Objectives

Reward Performances

Cascade Objective to Employees

Evaluate Performance These steps Review These steps are explained below:

Monitor

1. Set Organizational Objectives MBO starts with clearly defined strategic organizational objectives. If the organization isn't clear where it's going, no one working there will be either. 2. Cascading Objectives Down to Employees To support the mission, the organization needs to set clear goals and objectives, which then need to cascade down from one organizational level to the next until they reach everyone. To make MBO goal and objective setting more effective, Drucker used the SMART acronym to set goals that were attainable and to which people felt accountable. He said that goals and objectives must be:

Specific Measurable Agreed (relating to the participative management principle) Realistic Time related

Notice the "A" in SMART is "agreed." This is sometimes referred to as "achievable" but, with MBO, agreement about the goals is a critical element: It's not enough for the goals and objectives to be set at the top and then handed down. They must flow, or trickle, down through various stages of agreement. The only goal that is going to be met is one that is agreed on. How much easier is to get buy in when the person responsible for achieving the goal had a hand in developing it?

For each objective, you need to establish clear targets and performance standards. It's by using these that you can monitor progress throughout the organization. These are also important for communicating results, and for evaluating the suitability of the goals that have been set.

3. Encourage Participation in Goal Setting Everyone needs to understand how their personal goals fit with the objectives of the organization. This is best done when goals and objectives at each level are shared and discussed, so that everyone understands "why" things are being done, and then sets their own goals to align with these.

This increases people's ownership of their objectives. Rather than blindly following orders, managers, supervisors, and employees in an MBO system know what needs to be done and thus don't need to be ordered around. By pushing decision-making and responsibility down through the organization, you motivate people to solve the problems they face intelligently and give them the information they need to adapt flexibly to changing circumstances.

Through a participative process, every person in the organization will set his or her own goals, which support the overall objectives of the team, which support the objectives of the department, which support the objectives of the business unit, and which support the objectives of the organization.

In an MBO system, employees are more self-directed than boss-directed. If you expect this type of independent performance from employees, you have to give them the tools they need.

Once you have established what it is that someone is accountable for, you must provide the information and resources needed to achieve results. You must also create a mechanism for monitoring progress towards the goals agreed.

4. Monitor Progress Because the goals and objectives are SMART, they are measurable. They don't measure themselves though, so you have to create a monitoring system that signals when things are off track. This monitoring system has to be timely enough so that issues can be dealt with before they threaten goal achievement. With the cascade effect, no goal is set in isolation, so not meeting targets in one area will affect targets everywhere.

On the other hand, it is essential that you ensure that the goals are not driving adverse behavior because they have not been designed correctly. For instance, a call centre goal of finishing all calls within seven minutes might be useful in encouraging the staff to handle each call briskly, and not spend unnecessary time chatting. However, it might be that customers' calls were becoming more complex, perhaps because of a faulty new product, and call centre operators were terminating the call after 6 minutes 59 seconds in order to meet their target, leaving customers to call back, frustrated. In this situation, the monitoring process should pick up the shift in the goal environment and change the goal appropriately.

Set up a specific plan for monitoring goal performance (once a year, combined with a performance review is not sufficient!) Badly-implemented MBO tends to stress the goal setting without the goal monitoring. Here is where you take control of performance and demand accountability.

Think about all the goals you have set and didn't achieve. Having good intentions isn't enough, you need a clear path marked by accountability checkpoints. Each goal should have mini-goals and a method for keeping on top of each one. 5. Evaluate and Reward Performance MBO is designed to improve performance at all levels of the organization. To ensure this happens, you need to put a comprehensive evaluation system in place. As goals have been defined in a specific, measurable and time-based way, the evaluation aspect of MBO is relatively straightforward. Employees are evaluated on their performance with respect to goal achievement (allowing appropriately for changes in the environment.) All that is left to do is to tie goal achievement to reward, and perhaps compensation, and provide the appropriate feedback. Employees should be given feedback on their own goals as well as the organization's goals. Make sure you remember the participative principle: When you present organization-wide results you have another opportunity to link individual groups' performances to corporate performance. Ultimately this is what MBO is all about and why, when done right, it can spur organizationwide performance and productivity. When you reward goal achievers you send a clear message to everyone that goal attainment is valued and that the MBO process is not just an exercise but an essential aspect of performance appraisal. The importance of fair and accurate assessment of performance highlights why setting measurable goals and clear performance indicators are essential to the MBO system.

Repeat the Cycle Having gone through this five-stage process, the cycle begins again, with a review of the strategic, corporate goals in the light of performance and environmental monitoring.

When you reward goal achievers you send a clear message to everyone that goal attainment is valued and that the MBO process is not just an exercise but an essential aspect of performance appraisal. The importance of fair and accurate assessment of performance highlights why setting measurable goals and clear performance indicators are essential to the MBO system. Tip 1: Implemented on a team level, MBO shows itself in clear team briefing, in effective goal setting, in successful use of reviews, in effective delegation and in the giving and receiving of feedback. These are many of the key techniques needed for effective team management. Tip 2: Implemented on an organizational level, MBO needs the full commitment of the organization, and an underlying system for tracking goals and performance. Because goals must be transmitted from level to level with agreement, goal transmission can inevitably be slow. Full implementations of MBO can therefore be slow and difficult, particularly if non-accountingbased goals are included. This is perhaps why MBO has evolved into the idea of the Balanced Scorecard: MBO on its own may too-easily slip into being nothing more than a financial management mechanism. Tip 3: MBO is essentially a managerial process. Don't use it as a substitute for good leadership: The two should work together! Tip 4: There's so much more to motivating people than using MBO! Take our How Good Are Your Motivation Skills? self-test to find out which aspects of team motivation you can improve on. Its overarching premise is that of employee empowerment. By empowering employees to take responsibility for their performance and allowing them to see how their achievements impact the organization as a whole, you increase people's motivation, dedication, and loyalty. When you bring that full circle and link performance to evaluation and appraisal, you have a strong system that supports and values employees and facilitates great performance.

Problems faced by the MBO program are:

Too much paper work Setting too many objectives may create prioritization problems Difficult to establish measurable objectives for certain jobs. Too much emphasis on short term performance and losing sight of long-term objectives. May be used by some supervisors as a control devise that intimidates rather than motivates subordinates.

REFERENCES
http://en.wikipedia.org/wiki/360-degree_feedback http://www.custominsight.com/360-degree-feedback/what-is-360-degree-feedback.asp http://humanresources.about.com/od/360feedback/a/360feedback_2.htm http://www.mindtools.com/pages/article/newTMM_94.htm http://www.sigmahr.com/articles/360bestpractices.asp http://axisbd.org/what-is-management-by-objectives-what-are-its-advantages-anddisadvantages/