Performance Management

Performance Management
The greater danger for most of us lies not in setting our aim
too high and falling short; but in setting our aim too low,
and achieving our mark.
Michelangelo
 What Is Performance

Performance is essentially what an

employee does or does not do

Common elements to performance

1. Quality of output
2. Quantity of output
3. Timeliness of output
4. Presence at work
5. Cooperativeness
Factors That Influence
Performance
 Performance Management
A process that consolidates:
1. Goal setting
2. Performance Appraisal
3. Development of a common system
the aim of which is to ensure that employee
performance is supporting the company's
strategic aims
 Purposes for Performance
Management

Strategic
Administrative Developmental
Purposes for Performance
Management
STRATEGIC

Link between employee

activity and organizational
goals
Define the SKA’s necessary
for implementing the
strategy
Develop measurement and
feed back system
communicate corporate
culture and values
 Performance Appraisal

Performance appraisal is the identification,

measurement and management of human
performance in organization

Identification: knowing what behaviors lead to performance

Measurement: anchored tools to provide consistent
assessment of performance

Management: feedback and goal setting

Difference between Performance Management
& Performance Appraisal

Performance Performance
Management:
Appraisal:
Efforts to align Efforts to determine the
employee extent to which an
performance with the
firm goals employee performs work
effectively
• Defines performance • Measure performance
• Facilitates
performance • Evaluate performance
• Encourages • Feedback on performance
performance
 What is in Performance
Appraisal System

• What is measured
• Who measure performance
• When is it measured
• How is it measure
 What is Measured

• Traits
• Behavior
• Task Outcome
Who
Who Measure
Measure
Performance
Performance
Supervisor

Team

Peers

Self
Customers

Subordinates
 When is it Measured

On demand when required generally as

follow
• Annually
• Quarterly
• Monthly
• Task Oriented
 How is it Measure

• Absolute Standards
• Relative Standards
• MBO
• 360 Degree system
Performance Appraisal Methods

• Absolute Standards

• Relative Standards
ABSOLUTE STANDARDS

Measuring an employees performance

against some established Standards
• Essay Appraisal
•Critical Incident Appraisal
•Checklist Appraisal
•Adjective Rating Scales
•Behaviorally Anchored Rating Scales
ABSOLUTE STANDARDS

Essay Appraisal
It is the simplest method of performance
appraisal whereby the appraiser write a
narrative describing an employee’s strength,
weakness, past performance, potential &
suggestion for improvement the weakness of
this method is that it is much dependant on
rater’s writing skills and provide only the
qualitative data
 Sample Essay Appraisal
Name:
Position:
Department:
Date started on job:
Date of last rating:
Date of this rating:
Appraisal of Performance:
________________________________________________________________
________________________________________________________________
________________________________________________________________
____________________________________________________________
Suggestions for development
________________________________________________________________
________________________________________________________________
________________________________________________________________
____________________________________________________________
Prepared By: Position:
Manager’s signature: Employee’s signature:
ABSOLUTE STANDARDS
Critical incident Appraisal
A performance appraisal method that focus on
those critical or key behaviors that makes the
difference between doing a job effectively or
ineffectively. Critical incidents, with their focus
on behaviors, judge performance rather then
personalities. The weakness of this method is
that it require regular incidents writing and on
the other hand it suffer the same comparison
problem in essay (i.e) Quantification
 Sample Critical Incident Appraisal

Continuing Duties Targets Critical Incidents

Schedule production for 90% utilization of personal Instituted new production

plant and machinery in plant:
orders delivered on time
Supervise procurement Minimize inventory costs
of raw materials and while keeping adequate
inventory control supplies on hand
scheduling system;
decreased late orders by
10%
Let inventory storage costs
rise 15% last month
Ordered parts A and B by
20% under ordered C by
30%

Supervise machinery No shutdowns due to Instituted new

maintenance faulty machinery preventative
maintenance system for
plant, no break downs
ABSOLUTE STANDARDS
Checklist Appraisal
A performance appraisal type in which a rater
check off those Behaviors of an employee that
apply
ABSOLUTE STANDARDS
Graphic/Adjective Trait Rating Scale
One of the oldest and most popular methods of
appraisal is the adjective rating scale in which
a rating scale list traits (such as quality,
quantity, job knowledge & integrity etc) and
range of performance values (from
unsatisfactory to outstanding for each traits.
The strength of this system is that it provide
qualitative analysis that is useful for
comparison purpose.
 ABSOLUTE STANDARDS

Behaviorally Anchored Rating Scales BARS

These scales combine major elements from the
critical incident and adjective rating scale
approaches. The appraiser rates the employees
based on items along a continuum, but the points
are example of actual behavior on the given job
rather then general description or traits
 ABSOLUTE STANDARDS
Behaviorally Anchored Rating Scales BARS
Although the development of Bars is time
consuming and technical but it give more accurate
gauge and clear standards
 BARS Dimensions
Effective Quality of Group member input
5
Group Member has read all agreed upon
material
4

Group Member participate in discussion,

3
through not always prepare

2
Group members does little work & offer
no valuable ideas or feedback
1
Ineffective
 BARS for Supervision
Effective
5 Can train and develop subordinates

4 Exhibits respect towards subordinates

3 Criticize of personnel in front of others

2 Sets a poor example

1 Does not lead by example

Ineffective
RELATIVE STANDARDS
Evaluating an employee’s performance by
comparing the employee performance with
other employees.

•Group Order Ranking

•Individual Ranking
•Paired Comparison
 RELATIVE STANDARDS
•Group Order Ranking/Forced Distribution
The group order ranking method or forced
distribution method is similar to grading on a curve
and it requires the evaluator to place employee into
a particular classification e.g
15 – High Performers
20 – High Average Performer
30 - Average Performer
20 - Low average Performer
15 – Low Performer
 RELATIVE STANDARDS
•Group Order Ranking
The main advantage of this method is that it’s
avoid the problems of inflating performance in
average column but some times when dealing to a
small group times excellent performer may be
forced to keep in low category
 RELATIVE STANDARDS
•Paired Comparison
In paired comparison method for every traits
(quality of work, quantity of work, creativity etc)
you pair and compare very subordinate. This
method become unwieldy when large numbers are
being compared
Management by Objective (MBO)

MBO involves setting specific measurable goals

with each employee and then periodically
reviewing the progress made
Performance Appraisal under an
MBO Program
Management by Objectives
360 Degree Performance Appraisal

360 Degree Performance. Combination of self,

peer, supervisor, and subordinate
performance evaluation
 Benefits of Performance Appraisal
For the Appraisee For the Management
 Identification of performers
and non-performers and their
 Better understanding of his development.
role  Opportunity to prepare
 Clear understanding of employees for assuming
strengths and weaknesses higher responsibilities.
by employees  Opportunity to improve
 Increased motivation, job communication between the
satisfaction, and self- employees and the
esteem. management.
 Opportunity of open  Identification of training an
discussion regarding work development needs.
problems & how to  Generation of ideas for
overcome them improvements.
 Improved working  Better identification of
relationships with the potential and formulation of
superiors. career plans
Benefits of Performance Appraisal

For the Organization

 Improved performance
throughout the
organization.
 Creation of a culture of
continuous improvement
and success.
 Conveyance of message
that people are valued.
 Common Problems in Appraisal
Methods
• Leniency Error
• A means by which performance appraisal
can be destroyed by evaluating employees
against one’s own value system
• Halo & Horn Effect
• The tendency to let our assessment of an
individual on one trait influence our
evaluation of that person on other specific
traits
• Central Tendency.
• The tendency of rater to give average ratings
Common Problems in Appraisal
Methods
• Stereotyping (Rater Biased)
• A standard mental picture about a person based on
person’s Sex, color, caste, age, style of clothing,
political view etc
• Recency Error
• Recent behavior at evaluation time
 Performance Appraisal Interview

An interview in which the supervisor

and subordinate review the appraisal
and make plans to remedy defensives
and reinforce strength