Performance Management Unit 2 for mba

1. Learning -Theories
Learning
“ Learning is a process by which new behaviors are acquired.It is generally agreed that
learning involves change in behavior ,practising new behaviors & establishing permanency in the
change.”
Mitchell
Nature of learning
 Learning involves change in behavior.
 The behavioral change must be permanent.
 The behavioral change must be based on some practice or experience
 The practice or behavior must be reinforced in order for learning to occur.
Learning-Theories
These are as follows-
1) Classical Conditioning Theory.
2) Operant Conditioning Theory.
3) Cognitive Theory.
4) Social Learning Theory.
5) Laws of Thorndike.
6) Experiential Theory
1.Classical Conditioning Theory
 Russian psychologist Pavlov gave theory in 1920.
 There are four elements in classical conditioning-
1. Unconditioned Stimulus (U.S)
2. Unconditioned Response (U.R)
3. Conditioned Stimulus (C.S)
4. Conditioned Response (C.R)
Before Conditioning
Meat (U.S) Salivation(U.R)
Bell (N.S) No response
During Conditioning
Meat (U.S)+Bell (C.S) Salivation(U.R)
After – Conditioning
Bell (C.S) Salivation (C.R)
 In the experiments when pavlov presented a piece of meat (U.S) to the dog,he
noticed salivation (U.R).

2.  When he rang a bell (neutral stimulus),the dog has no salivation.
 After that the pavlov rang the bell without presenting the meat, this time the dog salivates
to the bell alone which was new neutral stimulus having no effect on behavior. In this
situation dog become conditioned to salivate (C.R) to bell sound (C.S).
Implications-
 It has important implications for understanding human behavior .large portion
of human behavior is learned.
 Performance management strategies such as reward, measurement &
competencies are developed in consonance of this theory.
2. Operant Conditioning Theory
 B.F.Skinner gave this theory.
 According to this theory behavior is a function of it’s consequences.behavior
is determined,produced & controlled by it’s results.
 Behavior is likely to be repeated if consequences are favourable ,it is not repeated
if consequences are unfavourable.
It consist of four elements-
a) Positive Reinforcement:-
 It is a process of encouraging desirable behavior (performance) by way of pairing it
with positive conditions (reward) for the responder is called positive response.
 Behavior that accrues rewards tend to be repeated & grow a habit.
For example-
when good performance (desired behavior) is rewarded, performance behavior get
repeated & the connection between performance & reward gets stronger.
b) Negative Reinforcement:-
A process of encouraging desirable behavior by avoiding negative condition to
responder is called negative reinforcement
Example-
Income tax payers who don’t submit their tax returns timely are required to pay penalty.
c) Punishment:-
It is a process in which a negative consequence to a responder will be used to discourage
undesirable behavior.
Example-
All late submission of tax returns entail penalty.
d) Extinction:-
Process of discouraging a behavior by not associating any positive condition (reward) to
responder is called extinction.
Example-
Person who submit tax returns after due date willnot be entitled for special discount.

3. Implications-
 Most behavior in organisation are learned, controlled & altered by consequences.
 Management can use this process to control & influence the behavior of employees by
designing the suitable reward system.
 It is used in behavior modification & learning management.
 In performance management it is used in reward,competency & measurement based
strategies,interventions .
3. Cognitive –Learning Theory
 It is drawn from the work done by Tolman.
 Cognition refers to the individual’s thoughts, knowledge, interpretations, understanding
or ideas about himself & his environment.
 It focuses on positive aspects of behavior.
 According to this the learner forms a cognitive structure in memory,preserves & organises
information about the various events that occurs in a learning situation.
 In a experiment tolman trained a rat to turn right in a T maze in order to obtain food.Then
he started the rat from the opposite part of maze. Tolman conclude that the rat formed a
cognitive map to figure out how to get the food.
 Stimulus leads to another stimulus.
 Learning consists of relationship between cognitive environment ,expectations & behavior
is goal directed.
Implication:-
Various training programmes are designed to strengthen the relationship between cognitive
cues (organisational, supervisory, job procedures ) and work expectation ( incentives ) for
good performance).
4. Social Learning Theory
 Julian Roter in founder of the theory.
 This theory focuses that personality is shaped by individual interaction with his or her
environment.
 It is also called observational theory.
 Larger the interaction of the person with his environment, more efforts are required to
make change in the person.
Two steps in this process-
 The person observes how others act and then acquires a mental picture of the act & it’s
consequences ( reward & punishment).
 The person acts out the acquired image,if the consequences are positive,he will tend to do
it again,if consequences are negative person willnot do it again.
Essential elements of the theory-
1) Behavioral potential-It is likelihood of person engaging in a particular behavior in a
particular situation.
2) Expectancy-A probability that particular behavior will produce a particular outcome.

4. Key factors in social learning
Social Learning
Attention
Retention
Production process
Reinforcement process
3) Reinforcement value- It refers to desirability of outcome.It tends to be high if
person is attracted to outcome.
4) Predictability - Behavior of a person towards a particular situation.
Implication-
 It is used for development of team & culture based performance management.
5. Laws of Thorndike
 Edward lee Thorndike gave this theory. It explains learning behavior.
There are 3 laws in it.
1. Law of Effect-
It states that responses to a situation that are followed by a rewarding state of affairs, will
be strengthened & became habitual response to a situation.
2. Law of readiness-
A series of response can be obtained together to satisfy a goal. linking incentives to
productivity is based on this principle.
3. Law of exercise-
Association between two or more things get strengthened with practice over a period of
time and become weakened when practice of associating them discontinuous.
For example-
 Repeat production of a stimulus (production rate) response (incentive ) combination would
strengthen relationship between two stimulus.
 Response that is not presented together will be weakened.
Implication-
 These laws contributed towards the development of performance based
compensation & incentive system in organisation.
 It is used in proposing reward & measurement based performance management
strategies, interventions.
6 Experiential Learning Theory
 It takes place when people learn from their experience.

5. Effect of behavioral
consequence on learning
Stimulus
Or event
Behavioral
response
Consequences of behavior
or
response
New behavioral
response
Positive
Negative
Types of Reinforcement
1. Positive Reinforcement:-
 It strengthens & increases
behavior by the presentation of
desirable consequence.
 It is a stimulus which is when added
to a situation,strengthens the
probability of a response.
Stimulus
Desirable
behavior
Presentation of
Attractive
consequence
Repetation of
Desirable behavior
 It can be enhanced by creating an environment in which people can be stimulated to think
& act in ways that help them to make good use of their experience.
 People learn by constucting meaning & developing skills through experience.
Principles of Learning
Principles of Learning
1.Motivation:-
 It is essential for learning because without motivation learning doesnot take place.
2. Knowledge of results:-
 knowledge regarding one’s performance is necessary for learning.
 Feedback about the performance will enable learner to know where he stands & to
remove the deviation between actual & expected performance by taking corrective actions.
3. Schedule of learning:-
 It states that distributed or space practice is superior to continuous practice.
 Example-it is most effective to have short frequent rest periods than one or two long rests.
4. Reinforcement:-
 It is most important principle of learning.
 It increases the strength of response & tends to induce repetations of the
behavior.

6. 2. Negative Reinforcement:-
It increases or strengthens behavior
by threat of use of undesirable
consequence.
Stimulus Desirable
behavior
Removal of
Aversive
consequence
Repetition of desirable
behavior
Th reat of P unctu al No r epri mand Con tinu ed
R epr im and behavior g iven Pu nct uality
F or tardiness
Posi bil it y Hi gh Pay rai se Conti nued
of pay rai se Perfor mance aw ard ed hi gh
Perf orm ance
3. Extrinsic Reinforcement-
 It has no direct relationship with behavior.
 Payment of money to employees for new ideas.
4. Intrinsic Reinforcement:-
 It is natural consequence of behavior.
 It creates a psychologically expected relationship of behavior.
5.Primary Reinforcement:-
 It is to satisfy persons primary motivational drive.
6. Secondary Reinforcement:-
 It depends on the individual & his past reinforcement history.
Administering Reinforcement
1. Selection of Reinforcement-
• Select reinforcers that are powerful to maintain responsiveness.
• Reward system having maximum reinforcing consequences should be selected.
2. Contingent Designing of Reinforcement-
• It should be designed in a way that reinforcing events are made contingent upon the
desired behavior.
• Reward must result from performance ,greater the performance, greater the reward.
• Reward administered is equal to performance of employee.

7. Punishment
Stimulus Undesirable
behavior
Presentation of
Aversive
consequence
Decrease in
Undesirable
behavior
3.. Reinforcement scheduling-
• It should be designed in a way that a procedure for desired response pattern is
established.
Administering Positive Reinforcement-
1) Continuous Reinforcement Schedule
2) Partial Reinforcement Schedule
3) Fixed Ratio Schedule
4) Fixed Interval Schedule
5) Variable Ratio schedule
6) Variable Interval Schedule
Administering Positive Reinforcement
1. Continuous Reinforcement schedule-
Every positive behavior is followed by a reinforcer.It increases positive behavior.
2. Partial Reinforcement Schedule-
Reinforcement doesnot occur after every correct behavior.
3. Fixed Ratio Schedule-
A reinforcer is administered after certain no. of responses.
4. Fixed Interval Schedule-
Reinforcement is given when desired response occurs after the passage of specific time
since the previous one.
5. Variable Ratio Schedule-
A reward is given only after a no. of desired response.
6. Variable Interval Schedule-
The reward is given after randomly distributed length of time.
Administering Negative Reinforcement-
 Punishment is effective in modifying behavior,It forces person to select a desirable
alternative behavior.
 Suppressed behavior cause the person to become fearful & anxious.
 Punishment is more effective if applied timely when undesirable behavior is actually
performed.
Reinforcement as used in behavioral management-
 It is defined as anything that increase the strength & tends to induce repetation of
behavior .
 it is anything person find rewarding.
 It is used for reward management.
Punishment
 It tends to decrease the frequency of undesirable behavior.
 It is presented as an unpleasant consequence of undesirable behavior.
Example-
 In workplace undesirable behavior might include being late, stealing & punishment include
verbal or written reprimands, pay cuts etc.

8. Threat Smoking in office Reprimand Occasional
of given smoking
reprimand
for
smoking in
office
Identification of critical behavior
Measurement of the behavior
Functional Analysis of behavior
Development of Intervention strategy
Evaluation of Performance
 Punishment weakens undesirable behavior and tends to decrease it’s frequency.
 The punished behavior tends to be temporarily suppressed rather than permanently
change.
Behavioral Performance Management or O.B Modification
 It is the practice of altering behavior in organisations by systematically administering
rewards.
 It is systematic application of positive reinforcement principles in organisational setting for
the purpose of raising desirable behavior.
 It places a great emphasis on use of rewards & alternative consequence to sustain
behavior.
 Example- General Electric,General Mills,Weyerhouser.
1.Identification of critical behavior:-
 It is 1st step to identify the critical behavior that make significant impact on
employee performance.
 Critical behavior can be identified through discussion with employee & superior.
 By conducting a behavioral audit jobs are analysed by using job analysis techniques.

9. Functional Analysis of Absenteeism
Behavior
A B C
Antecedent Behaviors Consequences
Lack of transport staying home written reprimand
Family problems working at home Dismissals
2. Measurement of the behavior-
 Measurement of behavior can be through by observing & by existing records.
 It is obtained by determining no. of times behavior is occuring.If rate of occurance is within
the acceptable limit,no action is required.
3. Functional Analysis of Behavior:-
 It involves a detail examination of present behavior of employees to determine what
consequences each of behavior produces.
 It reveals that there are contingencies for every O.B.
4. Development of an Intervention Strategy:-
 It’s main objective is to strengthen desirable behavior & weaken undesirable behavior.
A Positive Reinforcement Strategy-
 It is positive control of behavior,under it person behave in a certain way to receive the
desired consequence.
 It can be anything that increases the performance behavior.
A Punishment- Positive reinforcement Strategy-
 If punishment is necessary ,the desirable alternative behavior e.g (safe behavior) should
be positively reinforced.
5. Evaluation of performance:-
 It is final step to find out whether the intervention strategies are working properly or not.
 Changed behavior can be compared with baseline & deviation can be noted.
 If changes are positive strategies are successful,If not there is need for more appropriate
strategies.
Application of Behavioral Management
1.Employee productivity-
• It is positively affected by behavioral management technique.
2. Absenteeism & Tardiness-

10. • Small monetory incentives or lottery incentive system for attendance.
3. Sales performance-
• Combination of antecedent & consequence interventions are used.
4. Safety & Accident Prevention-
• Manufacturing Organisations focused on safety hazards & increase safe behavior by
using behavioral management techniques (wearing earplugs,hard hats).
Role of Organizational Reward System
Reward Management
Reward management is defined as an integrated reward system that ensures equitable
avenues to employees for fulfillment of their financial & non financial needs & recognition
urge for their contribution to attainment of organizational goals.
Characteristics
Performance stimulated reward system should have following characteristics-
 Reward emphasizes not only financial compensation but also non financial rewards.
 Reward must be offered in proportion to employee contribution.
 Reward must be equitable.
 There must be balance in design & management of reward management strategy.
 Reward should be capable of dual results i.e. fulfillment of motivational needs of employees
& achievement of organizational objectives.
 Reward should be performance driven & create performance excellence.
Significance of Reward in performance Management
1. Organization effectiveness-
It can be obtained from high performing employees. Reward is a means of stimulating
employees to perform well.
2. Organizational medium-
Reward brings organization & its employees together.
3. Motivation-
Reward enhances the intensity of motivation. Enhanced motivation leads to high
performance.
4. Performance Guide-
Reward encourages healthy competition & collaboration among employees to perform well.
5. Differentiation-
Performance of average employees can be enhanced through rewarding high performer &
depriving reward for low performing employees.
6. Employee involvement-
Performance excellence can come from employee who are involved with organization. A
good reward system helps in retention of talented employees.
7. Source of competitiveness-
Organization competitiveness comes from performance capacity of employees. In order to
strengthen it’s competitiveness organization must focus on implementing a suitable reward
strategy.
8. Source of organizational harmony-
A well managed reward system can be a great source of organization harmony.
Types of Rewards

11. Monetary Rewards-
 Traditional monetary reward system as base pay technique & merit pay plan are not
sufficient.
 The new pay plans like pay for performance, pay for customer satisfaction, and pay
for knowledge, skill, and competency have overcome many problems.
Non monetary rewards-
 Good working conditions
 Job Security
 Appreciation Letter
 Challenging assignments
 Work freedom
 Employee participation
 Social recognition
Indirect monetary reward-
 Health insurance
 Company sponsored family picnic
 Retirement benefit
 Club membership