Performance management
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Performance management (PM) includes activities which ensure that goals are consistently being met in an effective and efficient manner. Performance management can focus on the performance of an organization, a department, employee, or even the processes to build a product or service, as well as many other areas. PM is also known as a process by which organizations align their resources, systems and employees to strategic objectives and priorities.[1]
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Performance management
- 1. Basic Concepts in Performance Management and Appraisal Performance Appraisal: Setting work standards, assessing performance, and providing feedback to employees to motivate, correct, and continue their performance. Performance Management: An integrated approach to ensuring that an employee’s performance supports and contributes to the organization’s strategic aims. Comparing Performance Appraisal and Performance Management
- 2. 2 Definition of Performance Management Performance management is a strategic and integrated process of setting, tracking and measuring individual performance objectives against organizational goals and competencies to develop the capabilities of individuals and teams to help deliver sustained success to organizations. Components Goal Setting and Expectations 1 Talent Development Opportunities 2 Review Cycle 3 Descriptions Alignment of individual and organizational goals in consideration of individual capabilities, career goals, business function and level Formal and informal learning and development opportunities that support an individual in achieving his or her goals A clear and transparent process for evaluating employees against individual goals and expectations Objectives Key Components of Performance Management Reinforce organizational priorities Communicate clear measures and performance targets Connect jobs to business strategy Improve performance through continuous feedback &development Train managers to be people developers and engage employees Inform decisions about raises, promotions, and transfers Recognize staff accomplishments Career Development
- 3. 3 Objectives of the Performance Appraisal System (PAS) • Help Individuals – Develop Role Clarity – Plan their Work – Understand their Strengths and Weaknesses – Follow Methods to Overcome Weaknesses • Improve Mutuality between Reporting Manager and Reportee • Identify Training and Developmental Needs of an Individual • Provide basis for merit increase and incentives
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- 5. 5 Components of your Performance objectives Performance Area KPI KPI Measure Target Achievement Relative Weightage •Financial •Customer •Process •People • Specific performance goals • Role based • No more than 6-8 performance objectives should be identified • These should measure success against the KPI • should be as objective & measurable as possible • These should highlight what is expected from “On Target” performance • Set by manager and agreed by employee •Based on the criticality of the KPI’s to your role as well as the effort required •Allocated in discussion with your manager The KPI’s should be as objective and measurable as possible and will be created based on a KPI Dictionary available for your reference.
- 6. 6 Drive performance of individual by focusing on results Provide meaningful measurement Effective feedback Design development goals How does it help a Manager?
- 7. 7 Feedback: An employee is interested to know their performance for the year, this is the most important thing for him/her Motivation: Let the employee know what his/her strengths are and help them in reinforcing positive behaviors Trust: Create an environment of trust and openness. Career Planning What does it mean for an employee?
- 8. Performance Appraisal Roles • Supervisors Usually do the actual appraising. Must be familiar with basic appraisal techniques. Must understand and avoid problems that can cripple appraisals. Must know how to conduct appraisals fairly.
- 9. Performance Appraisal Roles (cont’d) • The HR Department Serves a policy-making and advisory role. Provides advice and assistance regarding the appraisal tool to use. Trains supervisors to improve their appraisal skills. Monitors the appraisal system effectiveness and compliance with relevant laws and guidelines.
- 10. Designing the Appraisal Tool • What to Measure? Work output (quality and quantity) Personal competencies Goal (objective) achievement • How to Measure? Generic dimensions Actual job duties Behavioral competencies
- 11. Appraisal Tools Tool Advantages Disadvantages Graphic rating scale Simple to use; provides a quantitative rating for each employee. Standards may be unclear; halo effect, central tendency, leniency, bias can also be problems. BARS Provides behavioral “anchors.” BARS is very accurate. Difficult to develop. Alternation ranking Simple to use (but not as simple as graphic rating scales). Avoids central tendency and other problems of rating scales. Can cause disagreements among employees and may be unfair if all employees are, in fact, excellent. Forced distribution method End up with a predetermined number or % of people in each group. Employees’ appraisal results depend on your choice of cutoff points. Critical incident method Helps specify what is “right” and “wrong” about the employee’s performance; forces supervisor to evaluate subordinates on an ongoing basis. Difficult to rate or rank employees relative to one another. MBO Tied to jointly agreed-upon performance objectives. Time-consuming.
- 12. Management by Objectives (MBO) • A comprehensive and formal organizationwide goal-setting and appraisal program requiring: 1. Setting of organization’s goals. 2. Setting of departmental goals. 3. Discussion of departmental goals. 4. Defining expected results (setting individual goals). 5. Conducting periodic performance reviews. 6. Providing performance feedback.
- 13. 15 Performance Rating Scale The State rating scale includes five performance ratings: Exceeds requirements consistently and/or by a wide margin; nearly ideal Consistently meets and sometimes exceeds requirements Usually meets requirements; Completes requirements as expected Frequently fails to meet requirements; much room for improvement Outstanding Very Good Satisfactory Needs Improvement Poor Fails to meet requirements consistently and/or by a wide margin DRAFT DOCUMENT – FOR DISCUSSION PURPOSES ONLY Manag e Plan Review TIP: The rating should support the comments and examples that demonstrate proficiency, accuracy, and effort in each area. Start by filling out the comments and THEN assign the rating that best reflects the description above. Rating Scales
- 14. 16 Common Rating Pitfalls Letting a good or bad rating on one performance area influence scores in other areas Halo Effect Rating all subordinates’ performance at a similar, average score, regardless of differentiating performance or behavior Central Tendency Scoring a subordinate generously to make the employee feel good or to make the manager look good to leadership Leniency Scoring a subordinate poorly because the manager has extra strict standards or wants to appear tough Scoring a subordinate’s performance relative to teammates rather than individually Strictness Comparative Rating DRAFT DOCUMENT – FOR DISCUSSION PURPOSES ONLY Manag e Plan Review Evaluating based on personal feelings toward the employee rather than on professional performance Relationship Bias Rating performance primarily on most recent tasks rather than across the complete time period Recent Work Focus Rating performance based on his/her physical appearance. If appearance affects work, still focus on the performance. Appearance Bias Rating a subordinate based on the effort put into the job rather than actual results and performance Effort Rating
- 15. Who Should Do the Appraising? Self-Rating Subordinates 360-Degree Feedback Potential Appraisers Immediate Supervisor Peers Rating Committee
- 16. Matching Talent to Reward 1. High potential – Individuals who deliver differential value as evidenced by past performance and have the potential (the ability, engagement, and aspiration) to rise to and succeed in more senior, critical positions Value creation of high potential employees Fast food restaurant Investment banker *Good Managers Focus on Employees' Strengths, Not Weaknesses: Knowledge@Wharton http://knowledge.wharton.upenn.edu/article.cfm?articleid=1223) 2. Critical workforce segments – highly-skilled, highly-trained individuals who drive the highest proportion of revenue growth 3. Natural strengths of all employees – employees are unique individuals who naturally think, feel, and behave in different ways, resulting in divergent strengths and weaknesses. “A great manager is brilliant at spotting the unique differences that separate each person and then capitalising on them”* Specialists Critical Workforce Critical Workforce Segments Segments Flexible Labour Core Workforce 1 2 3 4 5 5 4 3 2 1 Value ( £s) Scarcity of skills Average performers Top performers Average performers Top performers 2X 8X 100 800 Software developer Average performers Top performers Low complexity jobs Medium complexity jobs High complexity jobs – ‘ Productivity increase Profitability increase 12.5% 8.9% Sample size = 90,000 employees Before strength-based intervention After strength-based intervention Source: 2008 Gallup Organization, Princeton, NJ. Gallup Management Journal http://gmj.gallup.com / After identifying the critical employee groups that support strategy and drive business success, their values in the workplace environment and how that impacts commitment and Performance, we identify the appropriate Total Reward levers and principles that apply to these workforce segments and thereby support business strategy and help drive value.
- 17. 19 Tips for the Performance Review Conversation Managers play a critical role in this process, and their approach can have a significant positive or negative impact on results. To ensure successful Performance Review dialogues, managers should: Focus on Strengths Give Specific and Targeted Feedback Remain Positive about Opportunity Areas • Research has shown that focusing on performance strengths during the Performance Review can have a positive impact of more than 36 percent on performance TIP: Don’t confuse performance strengths with personality strengths. Both are important components of the Performance, but try to keep your feedback separate and specific to each component. • By providing specific feedback regarding the outcomes of the formal review, managers can positively impact performance by 6.6 percent TIP: Ensure the feedback you provide is specific and actionable • Addressing performance gaps is critical to managing performance; however, do not over-emphasize. Findings indicate that an emphasis on performance weaknesses during the review can actually reduce employee performance. TIP: When discussing a performance weakness, be sure to provide specific suggestions for improving performance and balance the dialogue with both strengths and weaknesses DRAFT DOCUMENT – FOR DISCUSSION PURPOSES ONLY Manag e Plan Review
- 18. Open and closed questions • Closed – ‘yes’ or ‘no’ answers • Open - respondents open up – What? – Why? – How? – Where? – When? – Who?
- 19. Silent Steve • Ask open questions • Don’t butt in • Give them time to talk
- 20. Non-stick Nigel • Pin him to his performance • Focus on the future • Get him to agree a target
- 21. Bored Betty • Forms – a starting box, not a finishing line • Talk to the person behind the employee • Discuss long term development, not just short term targets
- 22. Defensive Dennis • Leave out the character analysis • Create an informal set-up • Stick to the evidence
- 23. Weepy Wendy • No surprises • Start with something good • Be sympathetic but stick to your guns