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Performance Management
- 1. PERFORMANCE MANAGEMENT Concept & Objectives Prerequisites Dimensions of Performance management Factors affecting performance management Performance management & Performance appraisal 1
- 2. Concept Labour – a Factor of production-Scientific management perspective – productivity of each worker could be measured accurately Performance means outcomes achieved, or accomplishments of work- the actual contribution of an individual or team to the organisation’s strategic goals, like stakeholder satisfaction, clean image and economic sustainability. Performance includes both behaviours and results. Performance is about optimally realising one’s potential. 2
- 3. Performance Framework Potential for a role is the input and the performance is the output of the same process. 3 Employee Potential Task related activities Employee Performance
- 4. Changing role of human resources and the importance of their performance Value addition and value creation Sources of Competitive advantage- training (Russel. et. al. 1985), selection (Terpestra & Rozell, 1993), appraisals (Borman, 1991), and compensation (Milkovich, 1992) – Performance of organisation- productivity, turnover, absenteeism, innovation, quality of products /services HR an asset to the organisation Integration of HR policies and practices 4
- 5. Importance of performance Performance of an organisation is ensured by the performance of individuals and teams in the organisation. P=f (abilities, willingness) Organisational culture, values and managerial behaviour also exert a major impact on the achievement of excellence on the individual, team, and organisational performance. Thus, PM emerges as a major element in the field of HR management. 5
- 6. HR PRACTICES QUALITY OF PRODUCTS/ SERVICES CUSTOMER SATISFACTION PRODUCTIVITY ORGANISATIONAL PERFORMANCE EMPLOYEE SATISFACTION EMPLOYEE PERFORMANC E HR CLIMATE EMPLOYEE DEVELOPMENT 6
- 7. Need for managing performance Extraordinary Performance from an ordinary employee can be possible by effectively and systematically managing performance. Extraordinary performance has to be planned, monitored and reinforced. 7
- 8. Historically, organisations defined strategy and objectives, and the measurement of employee and organisational performance as completely separate processes. An integrated performance management system is a key component of the emerging requirement to tie the strategy and the organisational processes to Human resources processes. 8
- 9. Meaning & Definition The term was first used by Beer and Ruh in the year 1976. Performance management is an ongoing dynamic process that articulates organisational vision and objectives, installs performance criteria in light of these objectives, and continuously reviews internal procedures to integrate them with organisational philosophy and culture. 9
- 10. Definitions Armstrong & Baron define performance management as “ a strategic and integrated approach to delivering sustained success to organisations by improving performance of the people who work in them and by developing the capabilities of teams and individual contributors.“ Strategic- long term organisational goals and in the context of external environment Integrated – four dimensions: vertical, functional, human resource, goals. 10
- 11. Definitions.... Performance management is the process through which managers ensure that employee’s activities and outputs contribute to organisational goals. –Louis R Gomez & David B Mejia Performance management may be defined as a planned and systematic approach to managing the performance of individuals ensuring their personal development and contribution towards organisational goals. – Ronnie Malcom. 11
- 12. OBJECTIVES OF PERFORMANCE MANAGEMENT Strategic objectives: Formulate strategy, determining the objectives of the organisation Manage the implementation of strategies Challenging assumptions- ensuring the content is still valid Sustain excellence in performance by motivating employees to setting goals that align with organisational strategies. Monitoring whether the expected performance results are achieved or not Ensuring that the organisation is complying with the minimum legal, environmental requirements. 12
- 13. Communication Objectives : Communicate the direction of organisation so that the strategic goals are achieved by individuals Communicate with external stakeholders Provide feedback to employees on their performance 13
- 14. MOTIVATIONAL OBJECTIVES Evaluate and reward behaviour; motivate them to take actions and make decisions which are consistent with organisational objectives and strategies. Encourage improvement and learning at all levels across the organisation. Assess current management potential for the purpose of succession planning. Empower employees to set their own performance criteria so that achieving these objectives becomes their mission. 14
- 15. PREREQUISITES (CRITERIA) OF PERFORMANCE MANAGEMENT Organisational philosophies Attitudes and skills of those responsible for its implementation Acceptance, commitment and ownership of managers and employees Endorsement of the notions of ‘procedural fairness’ (process equity)and ‘distributive justice’ (association with rewards & recognition) 15
- 16. PREREQUISITES (CRITERIA) OF PERFORMANCE MANAGEMENT Contd..... Commitment and involvement of top management Adequate compensation package Access to resources, tools and skills to employees to do their job Empowerment of managers for need based planning Familiarity of managers and employees with target setting and achievement monitoring Establishing an effective communication system Developing a culture of accountability and openness Strong financial support in the organisation Decentralisation Customer’s pressure and quality assurance. 16
- 17. DIMENSIONS OF PERFORMANCE MANAGEMENT 17
- 18. FACTORS AFFECTING PERFORMANCE MANAGEMENT Process People management capability Motivation Measurement and rewards Role of HR professionals – demonstrate expertise, draw upon relevant theory and research evidence, influence through leaders within the organisation to focus energy on the aspects of performance management. Learning organisation Culture and clarity of purpose. 18
- 19. PERFORMANCE MANAGEMENT & PERFORMANCE APPRAISAL Late 18th century- Industrial revolution- division of labour- scientific management perspective- annual performance appraisals of workers. Sole purpose of appraisal was to assess the productivity of each worker retrospectively with a view to find ways of improving individual performance. It was primarily a judgemental process where human aspects were not considered. 19
- 20. 20 Hawthorne’s experiments brought in a change in the approach, which established that the relationship between fellow workers played a significant role at work and only way to increase their productivity was to motivate them at work. Now the focus shifted to predominantly assessing the personality traits of workers and examining how workers could be motivated to do better. But the approach was still judgmental in nature. As a result in 1950s the merit rating became the dominant way of assessing individual performance.
- 21. 21 Soon Merit rating approach was critised by McGregor (1957) as being too focussed on the personality trait of the individual instead of analysing his behaviour and backward looking instead of forward looking. Napier and Latham (1986) felt that ‘situation’ in which the individual performed was not considered. Gradually, it was felt that individual performance could be improved by skilfully manoeuvring both external factors and the internal factors of an employee. External factors -organisational structure and internal factors- psychological well being of the employee.
- 22. 22 MBO approach proposed by Peter Drucker gained popularity where the employee would set his own objectives at the commencement of the appraisal period and to review the progress at the end of the appraisal period. The negative effects of both merit rating and the MBO approaches frustrated the managers and there was renewed interest in revising the appraisal process. Concept of Performance management slowly evolved and gained increased attention. Training and development was linked to the performance appraisal process.
- 23. Performance appraisal Performance management 1. Performance appraisals are reviews of employee performance over time 2. Top down assessment 3. Annual reviews 4. Use of ratings 5. Massive system 6. Focuses on quantitative objectives 7. Complex paper work 8. Owned by HR managers 9. Retrospective 1. Identifying, measuring, managing, and developing the performance of employees 2. Joint process through dialogue. 3. Continuous process 4. Ratings are less used 5. Flexible process 6. Focuses on values and behaviour also 7. Documentation is minimum 8. Owned by line managers 9. Future orientation 23
- 24. 24
Editor's Notes
- ‘et.al.’ Is a Latin word ‘et alia’ meaning ‘and others’
- Comp. Advtg. may be defined as the advantage over competitors gained by a firm’s ability to create value for the stakeholder most notably the customers, either by low cost or most differentiated position by making use of its superior resources, assets and the distinctive competencies
- Procedural fairness refers to the employees’ perception on overall process equity, and where distributive justices is linked to perceptions of the fairness of associated rewards and recognition outcomes.