1 Discuss the principles and dimensions of Performance Management

Explaining the principles of Performance Management

Explaining the dimensions of Performance Management

Answer: Principles of Performance Management

 Integration of individual and organisational objectives: The first principle is that the
organisations and the individual goals should be aligned and integrated. This is not to
say that all that an individual’s demands have to be met always; but that the individual
objectives have to be aligned with the organisational objectives.
 Specificity: PM should have specificity. PM goals therefore cannot be discussed in
ephemeral or vague terms. That can lead to confusion even though we accept that the
business environment has a lot of uncertainties. More importantly, it has to be specific
to the situation and the cycle of the PM rather than based on some old events or the
actions of an employee in another PM cycle.
 Measurability: PM without clear measurements agreed between the parties in question
often fail because it becomes susceptible to interpretation. Also it becomes difficult to
compare it. Hence without fulfilling this principle, it becomes difficult to adhere to the
first principle of ‘integration’ mentioned above.
 Mutual Agreement: PM stands on ‘mutuality’ and therefore the goals, feedback and so
on must be based on mutual agreement than thrust upon the other party. This
automatically caters for fulfilment of justice. Effective performance management needs
managers who not only have an open and honest management style, but who also
provide support and direction. It implies that the managers should have a thorough
understanding of their institutional strategy & ‘big picture’.
 Continuity: Performance management is not a fixed event; it is a cyclic process centred
on learning and development. Performance management does not just happen, as is
often assumed, at an annual event set up for the purpose. Formal appraisal is but a
single aspect of the process. Feedback on progress and achievement is an important
aspect of the learning cycle since we all need high-quality regular feedback if we are to
develop.
 Customisation: Performance management is a dynamic system. It is a natural process
of managing people. Performance management is the way an organisation views its
employees. This may not necessarily entail following best practices, but rather doing
what is best for the organisation. Either way, the focus will, or should, invariably be on
changing behaviour, not paperwork. It should focus on the process, rather than the
system.
 Flow: Principle of flow demands that PM is a process rather than a system. There has to
be a logical sequencing so that the event unfolds like a story. Thus setting targets may be
the first necessary step, knowing the basis for the targets based on earlier data has to be
defined, the targets set have to complement the resources and so on.

Dimensions of Performance Management

Performance management involves thinking through various aspects ofperformance, identifying
the critical dimensions of performance, planning,reviewing, developing and enhancing
performance and relatedcompetencies. Performance has many dimensions. In this section we
willdiscuss the following dimensions of performance.
 Output dimension: Output dimension or result dimension is the most acceptable,
visible and measurable dimension of performance. It describes the consequence of
inputs. It describes the standards to be achieved in an easily measurable form.
 Input dimension: This dimension deals with the activities or tasks to be accomplished
by the individual. The nature of activities to be undertaken by the individual, the time
frame, the quality of inputs, etc., constitute the input dimension. It includes other
resources required for the output.
  Time dimension: Time is another dimension of performance. Performance can be
measured for a task, for a day, for a week, for a month, a year or for life. The time period
for performance is important. In information technology organisations, performance is
evaluated over a quarter or a three-month period. They may also be defined by tasks or
project and time, i.e., a combination.
 Focus dimension: Performance also has a focus dimension. The focus can be on
anything. For example, a student’s focus could be to learn more or get more marks.
Similarly, in defining the performance of a sales executive, the focus of performance can
be on market share, profits, new areas covered, etc.
 Quality dimension: The outcome of performance should be of a good quality. For
example, a manufacturing company which has a target of 200 pieces per day may reach
the target, but if the quality of the product is inadequate, performance could be a failure
in the ultimate analysis. Thus a quality dimension may be laid down and is usually done,
although today, quality is assumed.
 Cost dimension: Cost is another dimension of performance. Costs may be financial, or
with respect to time and effort. For example, if an organisation wants to reduce its costs
it may do so by giving key result areas (KRA) to manufacturing to reduce waste and/or
giving KRA to the purchase department to reduce the purchasing costs and/or reduce
inventory cost.

2 What are the key contents of a Performance Agreement? Explain

[Explaining the key contents of a Performance Agreement]

Answer: Key contents

1. Role requirements: Every job is intended to fulfil a role. These are defined as key-result
areas (KRAs) of the role. A role holder, i.e. the employee, in the organisation is expected to
accomplish the KRAs. Achieving those KRAs require some competencies. Therefore, the role
profile should define not only the achievements but also the competencies required to achieve
the KRAs. This includes the behaviour, i.e., actual actions that fulfil the role. During PM planning,
the existing role profile is reviewed and changes are made if necessary.

During PM planning, it could emerge that the role may require training and hence these, too, are
planned and defined in the agreement. In sum, the agreement will define the role, KRAs of the
role, the competencies required, behaviour expected and training required, if any, for the same.

2. Objectives and standards of performance: While KRAs give the areas where performance
has to be focused, objectives express what has to be accomplished. Objectives or goals define
what organisations, functions, departments and individuals are expected to achieve over a
period of time, often called the PM cycle (usually one year). Objectives can be either quantitative
or qualitative. Quantitative targets are numerical targets. Qualitative objectives are expectations
of behaviour. Objectives can be work related, referring to the achievement of role requirements.
They can also be personal, taking the form ofdevelopmental or learning objectives, which are
concerned with what individuals should do to enhance their knowledge skills and potential, and
to improve their performance or change their behaviour in specialised areas. In some cases,
where it is not possible to set timebased targets, specific long-term quantifiable objectives-
based performance standards are used as it would happen in a long-term project.

3. Knowledge, skills and capabilities: These are definitions of skills and competencies that
each role holder has to know to be able to perform well and to know how they are expected to
behave in particular aspects of their role. For example, be capable of articulating the
requirements of a project in writing to the client and communicate the organisational values
persuasively to the subordinates.
4. Performance measures and indicators: The performance agreement also contains the
description of measures jointly agreed upon by the manager and the employees to assess the
extent to which objectives and standards of performance have been achieved. Performance is
usually measured using a rating scale. The rating-scale format can either be behavioural with
examples of good, average and inadequate performance or graphic, which simply presents a
number of scale points along a range.

5. Corporate core values or requirements: The performance agreement may also refer to the
core values of the organisation for quality, customer service, team work, employee development
and so on, that employees are expected to maintain while carrying out their work. Some general
operational requirements in areas such as health and safety, budgetary control, cost reduction
and security may also be specified.

3 Assume that you have joined as an HR in an organization. The first task assigned to you
is to conduct the Performance Appraisal Process. What according to you is its purpose?
Describe the entire Performance Appraisal process.
Explain any three purpose of Performance Appraisal
Explain the Performance Appraisal Process

Answer: Purpose of Performance Appraisal

 If organisational goals are converted into objectives and job tasks and these are
executed by employees, it follows that the effectiveness with which tasks are performed
has a direct bearing on organisational effectiveness.
 It helps in giving feedback of the performance, which, in turn, helps in performance
improvement.
 Reduces grievances because it is systematically comparable.
 Gives vital input into strategic decision making since the evidence of existence of high
levels of competency in the organisation encourages investment decisions, expansion
and the like.
 It is important for succession planning.
 It is a vital input to see if recruitment and selection has been effective and gives insight
into the way we create job description, publicise jobs, select and induct.
 It facilitates meeting several statutory requirements and often acts as an important
input in HR-related legal cases.
 And above all, it makes a major difference to the self-worth of the individual, his feeling
of self-efficacy and self-confidence.

Performance Appraisal Process

At the end of the PM cycle, the employee fills a self-appraisal form. Thisprocess involves the
following steps:
 Employee fills the self-appraisal form and submits to the manager: This is done in
format similar to Part II of the PM planning format we saw in the earlier section and is
the starting point of PA. In relation to each objective and KRA, the individual will record
his performance as evaluated by him. The evaluation may be figurative.
 Manager concurs or differs with the self-appraisal: When he/she does not concur, it
is normal to give reasons or site critical incidents to substantiate that. While concurring,
he may agree with the incidents that the employee has cited and may add to them.
 Manager sets up a meeting with the employee: This is done on a one-on-one basis
and, perhaps, will take 45 minutes to one hour. The manager should prepare in advance
about the feedback he has to give.
  They develop a dialogue and jointly evaluate the performance: This is the most
important, yet most hated part of PA. If the employee has performed well on all sides,
then it is fast, easy and comfortable for both. If not, the manager has to give feedback
 The manager fills up the final report of the achievements/shortfalls and gives it to
the employee: This is important because it is linked to reward, promotions and
development. The manager has to be objective.
 Employee concurs or gives a rebuttal: The employee should be given a chance to
rebut the decision of the manager. This is important to meet the ends of justice. The
concurrence and rebuttal should be recorded and signed by both.
 Rebuttal is recorded and responded by the manager: If the employee rebuts the
manager, this should be recorded as evidence. The employee usually will reserve the
right to represent his case to higher levels of management.
 The documents are sent to HR for record: The documents are processed to HR for
post-appraisal actions.

4 Discuss the skills that a line manager require for effective Performance Management.
Listing the skills
Explaining the skills

Answer: Skills the line managers require for effective PM.

 Preparing role profiles, i.e., defining key result areas and competency requirements.
Often this is done by the HR managers without consulting the line managers. The reason
is that there is a particular format in which this has to be done and perhaps the HR
managers, by training, have the ability to do so. However, roles are executed under the
line manager and he can be considered as the subject matter expert (SME) in so far as role
profiling is concerned.
 Defining goals: Often it turns out that the goals received from the top management is
neatly cut into pieces and distributed to the departments and teams. With experience it
may be possible for HR to do this, but getting the employee and the line manager involved
in a dialogue and making them define the goals for themselves will ensure that the line
manager provides support to accomplish the goals. In fact, when so done, the line
manager will take the ownership of the goal along with the employee.
 Identifying and using performance measures: This is yet another area where the tacit
knowledge of the line managers should be fully utilised so that performance measures can
be made in a way the employee and the manager understands it. Often, the line managers
are experts in identifying the key measure that will make an employee deliver. An HR
manager may give the average production as the production expectation or use an
incremental method to set the goal while the line manager can give measures that suit the
employee.
 Giving and receiving feedback: This is indeed one of the major problems for the line
manager. Usually they shy away from it. This is because the line manger feels that he will
hurt the feeling of the employee when he gives a poor performance feedback and that the
employee may have negative feeling which in turn affects production. The reality is vice
versa. Feedback also involves some expertise in managing emotions. Hence the line
managers have to be trained in doing so.
 Taking part in the performance dialogue: This is yet another area which the line
manager cannot address without due training. For a line manager, daily production is the
crucial issue and therefore he often finds that getting involved in a performance dialogue
is a waste of time. However, once he realises that his ability to control production, which
is undoubtedly his focus, is better achieved through performance dialogue, he agrees to
take part in performance dialogue.
  Identifying the learning needs and arranging for learning and development: The line
manager is perhaps most suited to identify the learning requirement of the employee.
Usually, the line manager complains when an employee has to be sent for training as he
loses a working hand; but if he is convinced that the rise in productivity of the employee
more than makes up for the time lost, he would be willing to handle it better and, more
importantly, help the employee to put the new skill into practice.
 Diagnosing and solving performance problems: A line manager is constantly with the
employee and can therefore observe and identify problem of production and rectify these
in time.
 Coaching: A line manager is the person who can act as a coach and mentor to the
employee because of the day-to-day proximity and interpersonal relationship that he
enjoys. It is possible that he does not have the skill to do it; but can be easily trained in it.

5 Define the term ‘Ethics’. Discuss the key factors involved in ensuring Ethics in
Performance Management (PM)
[Definition of Ethics
Explaining the key factors to ensure Ethics in PM]

Answer: Ethics in organisation is about good behaviour in various organisational aspects which
include its dealings with external agencies including customers and internal agencies including
employees. We are all aware that ethical dilemma and issues thrive in organisations.

Key factors to ensure Ethics in PM

Define and describe the ethical standards. Along with ethical standards to handle the
external agencies, it is necessary to define the ethical standards for internal actions, particularly
PM. The PM document should have a chapter containing what is considered ethical and what is
not in the
PM context and the consequences of following these or disobeying them. For example, the
manager makes an assessment which violates the spirit of the critical incident observed, it
should then be perceived as an unethical act. In sum, create the base document of ethics for PM.
It will include issues such as, 1), if you are not sure of any of the qualities to comment on, state
so, 2), the individual should have worked at least for six months directly under you before you
assess the person and so on. Such a code is important because it helps to minimise the chances
of the occurrence of unethical behaviour in the workplace.

Plan the PM well in advance. It is unethical to include goals in retrospect, i.e., you should give
the goals at least a month prior to its being effective so that the employee has a head start.

For example, one cannot consider it ethical if you define goals for the period 1 April to 31 March
of the subsequent year in the first week of May. It should rather be done in the first week of
March. If the person has the same goals as the previous year, this may not affect his
performance much, but if he has new goals and objectives, that person would be in a
disadvantage.

Take collective decisions: The decisions made as a group usually produce better quality
decisions as this will be inclusive of the diverse interests and perspectives. Such decisions taken
generally increase the credibility of the process and in turn benefit the outcome because of the
reduced suspicion of unfair bias.

Record critical incidents frequently (at least once a month) and let the employee know it:
Decisions of performance are often taken on the basis of critical incidents. While it is desirable
to record it as and when it occurs, one must record it at least once in a month. Permit an
employee to have access to the critical incidents on a continual basis. This would act as an
automatic feedback system in some ways. Further, the employee is not surprised when the
annual performance report comes up and sees critical incidents which he may not have
considered as critical.

Ethics during feedback: Give objective and focused feedback. The assumption that frank
feedback is better avoided in the interest of relationship and future performance raises several
ethical issues such as, 1), denial of a frank feedback and opportunity to improve may come in
the way of future promotions and increments, 2), giving a frank feedback to oneperson while
denying it to another, whatever be the premise, militates against justice, 3), not giving frank
feedback and consequent denial of achieving organisational objectives is not ethical from an
organisational perspective.

6 Write short notes on the following:

a)MBO
b)Behaviourally Anchored Rating Scales Method (BARS)

Answer: a) This method involves setting particular calculable goals with each employee and
then respectively discussing his/her progress towards these goals. The term MBO refers to an
inclusive organisation-wide goal setting and appraisal programme that consists of six main
steps
1. Set the organisation’s goals: Create organisation-wide plan for the next year and set goals.
2. Set departmental goals: Here, the heads of each department set goals for their respective
department in consultation with their superiors.
3. Discuss and allocate department goals: The heads of department discuss the organisation’s
goals with all the subordinates in the department and ask them to develop their own individual
goals. In other words, how an employee can contribute to his/her department in achieving its
goals.
4. Define accepted results (set individual goals): Here, the heads of department and their
subordinates set short-term performance targets.
5. Review the performance and evaluate the results: The heads of department compare
actual performance for each employee with expected results.
6. Provide feedback: The heads of department hold periodic performance review meetings
with subordinates to discuss and evaluate the progress level in achieving the expected results.

b) Also known as (BARS), this is a comparatively new technique. It comprises behavioural

statements describing fair or unfair performance with respect to important qualities. These
attributes may refer to inter-personal behaviour, planning and organising capabilities, flexibility
and reliability. These are developed from critical incidents collected both from the evaluator
and the appraisee. BARS are measuring scales, which point to definite and indefinite behaviours.
The scales represent a band of expressive statements of behaviours, ranging from the least to
the most effective, also known to be behaviourally fixed. An evaluator must indicate which point
on the scale best describes an employee's behaviour.

The scale points are specially defined behaviours which differentiate BARS from other rating
scales that are commonly used. Moreover, BARS are designed by the evaluators who are going
to use them.
There are a few steps in the BARS construction process:
1. Listing of all the important aspects of performance for a job.
2. Collection of critical incidents of definite and indefinite behaviour.
3. Classification of definite and indefinite behaviours to appropriate performance dimensions.
4. Assignment of numerical values to each behaviour within each measurement, i.e., scaling of
behavioural anchors.