Human Resource Management - G.O.L TEAM by Mr. Sherif Osman


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This is Human Resource Management Training organized by G.O.L and hosted by US Embassy in Cairo

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Human Resource Management - G.O.L TEAM by Mr. Sherif Osman

  1. 1. Part Five: Performance Management This section covers the following information from the Knowledge Base: Behaviors: 06. Monitor completion of performance reviews and development plans 07. Keep records to document employee development and performance Skills & Knowledge: 02. How to give feedback on job performance 04. Policies and techniques for evaluating performance 05. Opportunities for training and development 09. Individual development plans 10. Performance management methods (for example, setting goals, benchmarking, 360-degree feedback, performance incentives) Source: HR Certification Institute
  2. 2. Introduction 55 Management of Performance in the Organization 55 Organizational Values and Goals 55 Performance Standards 56 Performance Management Process 57 Business Results and Employee Growth 59 Organizational Support 60 Individual Performance Appraisals 61 Performance Evaluation Process 62 Individual Development Plans 75 Practice Questions 77
  3. 3. Introduction Performance management is the process of maintaining or improving employee job performance. Organizations perform this process with the following methods: Using performance assessment tools Coaching and counseling Providing continuous feedback This section focuses on two processes: Continuous management of performance within the organization Individual performance appraisals Management of Performance in the Organization The performance management process in an organization allows employees to talk about their performance and development goals with their managers and create a plan for achieving those goals. Development plans and employee actions then contribute to organizational goals and the professional growth of the employee. Organizational Values and Goals Values and goals reflect organizational structure and philosophy. Executives must come to an agreement as to the values and goals of their organization. Once they communicate those values and goals, employees have a sense of purpose and know where to place priorities. © 2014 SHRM 55
  4. 4. Values Management throughout the organization must display behavior that reflects the organizational values. Values are usually expressed in the organization’s mission statement. Values are principles, standards, or qualities considered worthwhile or desirable. It is important that employees always conduct business with the organization’s values in mind. The following values are highly regarded: Putting the customer first Treating employees as well as you treat your customers Conducting business fairly and honestly Showing creativity and innovation Using teamwork to achieve goals Goals Management must also be specific about the organization’s goals. Goals are the standards that reflect the success of the organization. By comparing organizational goals with levels of achievement, management can get a good idea of whether the organization is progressing at the rate desired. Performance Standards Performance standards are the behaviors and results that management expects of the employees. © 2014 SHRM 56
  5. 5. The HR professional needs to consider the following when creating and communicating performance standards: Behaviors. What does the organization want employees to do? These behaviors have to be translated into performance standards. Results. What does the organization want employees to produce? When performance standards are communicated throughout the organization, they must be clearly defined, so all employees understand the expected behavior. Employees must be told what management expects for performance. This instruction can be delivered in a number of ways: Orientation Employee handbooks Company or department meetings Newsletters Performance Management Process In most organizations, the performance management process includes three phases. Each phase has a unique set of activities, considerations, and outcomes. These phases are shown in Figure 2-1. Figure 2-1. Phases of the Performance Management Process © 2014 SHRM 57
  6. 6. Design During the design phase of the performance management process, the following important decisions are made: Who will evaluate? When will evaluations be completed? What criteria will be used? Questions that must be answered during this phase include the following: Purpose o Why do we have a performance management process? o What do we expect from it? Performance criteria o What standards will we use to evaluate employees? Instrumentation o How will the evaluations be done? o What tools will be used? Evaluators o Who will complete the evaluations? Integration/local differentiation o How will the process and performance standards differ in different countries and locations? Implementation The implementation phase involves the following activities: Communicating expectations regarding job performance and how performance will be evaluated Providing training in the performance management process Communicating the performance management process to both employees and managers Providing performance incentives to motivate employees © 2014 SHRM 58
  7. 7. Keeping in close contact with managers and employees during implementation is critical. Respond quickly to questions and feedback from managers and employees by providing solutions to recurring problems and questions if possible. Evaluation The evaluation phase involves identifying and evaluating the results of the performance management process. The following outcomes are evaluated: Overall fit with the organization’s culture and objectives Fairness to employees Effectiveness and extent to which the process supports the organization’s recognition and reward system Business Results and Employee Growth Business results. Organizations will assess the effectiveness of the performance management system by asking certain questions: Are the employees’ behaviors and results what management expected? Is the organization progressing as planned? The business results impact the goals and strategy of the organization. As business goals and strategies change, the performance management system will need to be adjusted. Business results provide value to stakeholders and may affect the following: Financial earnings Business processes Quality outcomes Customer products or services Employee growth. The employee brings certain knowledge and skills to the job but will also grow professionally through experience, performance improvement plans and organizational support. The performance management system must include fair and meaningful recognition and rewards. Job satisfaction surveys © 2014 SHRM 59
  8. 8. have shown that employees do value financial rewards, but the following performance incentives keep employees in an organization: Appreciation/recognition Career growth opportunities Good manager relationships Organizational Support There are several ways an organization can support and enhance its performance management system: Show support of performance management at the executive level. Encourage and promote employee engagement activities. Train managers in performance management. Hold managers accountable for their contributions to the performance management system. Encourage continual feedback from managers, peers and other team members. Make it clear to everyone in the organization that performance management is more than a yearly appraisal. Provide necessary resources and tools. Communicate consistent management practices. © 2014 SHRM 60
  9. 9. Individual Performance Appraisals The typical method of measuring employees’ adherence to performance standards and of providing feedback is the performance appraisal. Performance appraisal is the process that measures the degree to which an employee accomplishes work requirements. According to Gary Dessler in his book Human Resource Management, there are four reasons to appraise employees’ performance: From a practical point of view, most employers still base pay and promotional decisions on the employee’s appraisal. Appraisals play an integral role in the employer’s performance management process. It does little good to translate the employer’s strategic goals into specific employees’ goals, if you don’t periodically review performance. The appraisal lets the boss and employee establish a plan for correcting any deficiencies and to reinforce the things the employee does right. Appraisals should serve a useful career planning purpose. They provide an opportunity to review the employee’s career plans in light of his or her exhibited strengths and weaknesses. (Dessler 2008) © 2014 SHRM 61
  10. 10. What is the difference between performance management and performance appraisal? Performance management is the process of maintaining or improving employee job performance. By communicating and defining performance standards throughout the organization, development plans and employee actions can contribute to organizational goals and the professional growth of the employee. Performance appraisal is the process that measures whether an employee accomplishes work requirements. Performance Evaluation Process Remember, the organization’s goals are the standards that reflect the success of the organization. Managers need to help convert the organization’s business goals, objectives, and performance standards to individual employee goals. This conversion is accomplished when the employee and the performance manager talk about performance goals and create a plan for achieving those goals. This process is called performance evaluation. Figure 2-2 shows the phases of the performance evaluation process. © 2014 SHRM 62
  11. 11. Figure 2-2. Performance Evaluation Process The performance evaluation process is an ongoing communication process between a manager and an employee. Together they do the following: Set goals. Meet regularly to talk about progress on projects, plans and goals. Update goals and plans throughout the year as needed. Document the results and meet to review them annually. Setting Goals The manager and employee decide on performance goals by considering the following: Strategic planning process Organization’s goals and objectives Employee’s job description Past performance Employee’s desired accomplishments and development objectives/goals Performance goals communicate the expected level of performance as well as how performance will be measured in each area of the job description. Some © 2014 SHRM 63
  12. 12. goals relate to the duties of the job and are easy to observe and measure. Other goals relate to the employee’s behavior. Observation The coaching or mentoring that takes place between the employee and a colleague/mentor must be consistent to ensure continual feedback to support the employee’s performance success. Self-Assessment and Manager Assessment This phase includes assessment by both the employee and the manager. Manager assessment. During the period of time between performance reviews, the manager does the following: Reviews information related to employee performance Completes the performance evaluation form Obtains feedback from an HR manager and peers or subordinates The assessment must be objective and focus on actual performance. It must also refer back to any documentation of performance issues. Errors and bias are described in detail in the Errors in Performance Appraisals subsection of this module. Two tools managers commonly use in this effort are performance logs and critical incidents. Performance logs are informal notes listing examples of employee accomplishments and/or deficiencies. A critical incidents tool is a record of positive and negative employee actions. The manager’s ability to talk objectively about issues is critical to the success of the performance evaluation. The more a manager prepares for the evaluation meeting, the more successful the results. © 2014 SHRM 64
  13. 13. Employee’s self-assessment. Some organizations ask employees to complete a self-assessment prior to the evaluation meeting. Employees use a performance evaluation form to complete their self-assessment. This process advances the dialogue between the manager and the employee. Self-assessment and manager assessment combined. If the employee uses a self-assessment, the evaluation is usually structured around these action areas: The employee provides the self-assessment. The manager adds comments about the employee’s assessment. Positive comments are provided first, followed by suggestions for improvement. The manager and the employee talk about problems and agree on steps. Keep in mind that performance feedback should occur frequently. Evaluation After the review, the manager and the employee will agree on new goals in a separate session. The focus is now on setting goals that will affect the employee’s future performance. It is important that the employee sees a direct connection between his or her personal objectives and those of the organization. Involving employees in setting their own goals is key. Being a part of the process leads to greater acceptance. The manager can use the following approach for a successful evaluation process: For long-term objectives, provide short-term milestones that help measure progress along the way. Give employees the support they will need to reach their objectives (for example, tools, training, coaching or special projects). Ensure that objectives do not conflict with each other. Follow up to see how the employee is proceeding and provide timely feedback. Encourage review of successes and obstacles. © 2014 SHRM 65
  14. 14. Evaluation Methods An organization’s decisions about evaluating performance are usually influenced by the industry in which it competes as well as by its culture. A common approach to performance appraisal involves the employee and the direct supervisor. Methods available for conducting an appraisal are described briefly below. 360-Degree Feedback In some company cultures and environments, peers may be asked to provide input on an individual’s performance. This input may be supplied using a 360-degree feedback approach to performance appraisal. The 360-degree feedback approach evaluates performance using self, peers, direct reports, management and sometimes even customers and suppliers. It benefits the employee by providing feedback from a variety of sources and basically serves as a development tool for altering behavior. Benchmarking Jon A. Christopherson, David R. Carino and Wayne E. Ferson define benchmarking as, ―…the process of finding a quantifiable standard against which to measure one’s performance. Benchmarking seeks to determine whether the performance of our investment is than what we could have obtained using a simpler or less costly investment plan.‖ (Christopherson, Carino and Ferson 2009) Category Rating Methods The category rating methods are the easiest to administer and understand. The manager marks an employee’s level of performance on a designated form that is divided into performance categories. The following are three category rating method examples: Graphic scale: This method uses a five-point scale, with ratings ranging from Exceptional to Needs Improvement. © 2014 SHRM 66
  15. 15. Checklist: Check marks are placed next to characteristics describing employee performance. Force choice: Check marks are placed by two of four statements from a combination of positive and negative statements describing what the employee is most like and least like. When dealing with appraisals, always consider cultural differences—grading and scale systems are very different. People understand the rating scales from their own experiences. Here are examples of differing rating scales: Eastern Europe—Russia: 1 (very bad) - 5 (very good) Western Europe—Germany: 1 (very good) - 5 (very bad) US: A (very good) - F (failed) Canada: Level 4 (very good) - Level 1 (passed) At OBI, a 5-scale program has been implemented for appraisals. For more information, visit the following website: helps-make-worldwide-performance-evaluations-consistent. Comparative Methods Comparative methods of evaluation require the manager to compare employees’ performance. The following are three comparative method examples: Ranking of all employees: Employees are ranked from highest to lowest in performance. Paired comparison: Each employee is compared with every other employee, one at a time. Forced distribution: Employee ratings are distributed on a bell curve. © 2014 SHRM 67
  16. 16. Here is an example of a typical competency model that includes behavioral anchors as a three-rating scale: Competency: Deadline Management Description of three rating options: Exceeds expectations: Frequently provides the required performance earlier than the schedule deadlines require. Constantly monitors critical stages in order to ensure that projects are executed in compliance with the time schedule. Meets expectations: Always completes tasks in compliance with schedules or deadlines. Occasionally meets expectations: Does not achieve any on-time service provision. Must often be reminded of compliance with deadline specifications. Behavioral examples for “meets expectations”: Fulfills tasks by the planned deadlines Keeps promises Assumes responsibility Initiates measures in order to ensure that schedules are adhered to. Balanced Scorecard The balanced scorecard is a tool used to evaluate organizational strategies. This tool must accommodate the goals of various strategies. The balanced scorecard approach provides a concise picture of an organization’s performance. Four key areas are assessed in a balanced scorecard: Finance Customers Internal business processes Learning and growth © 2014 SHRM 69
  17. 17. Programs should be piloted before they are formally carried out. Ideally, scorecard use should start at the top of the organization, so people have direction and understanding about the total organizational mission and goals. The balanced scorecard is described in detail in Module 1: HR Administration, Section 1.2 Gathering, Measuring and Reporting HR Data. Additional information about the organizational use of the balanced scorecard can be found at the website of the Balanced Scorecard Institute, Errors in Performance Appraisals No appraisal rating method is entirely foolproof. Figure 2-3 lists some common errors a manager may see when conducting an appraisal of employees and assigning a rating. Performance logs may help reduce these biases. © 2014 SHRM 70
  18. 18. Error Description Halo/horn effect A halo effect may occur when an employee is extremely competent in one area and is rated high in all categories. On the other hand, the horn effect may occur when one weakness results in an overall low rating. Recency A recency error occurs when a manager gives more weight to recent performance and ignores the employee’s earlier performance during the appraisal period. This situation may happen for the following reasons: The manager is unable to remember the employee’s performance from eight or twelve months ago. Many employees may improve their performance just before their performance review occurs. Primacy effect A primacy effect is the tendency to pay more attention at first and then lose attention. A manager may give more weight to the employee’s earlier performance and ignore recent performance. Bias When a manager’s values, beliefs or prejudices have an influence on ratings, the error is due to bias. National origin, age, religion, gender, appearance or other non-job-related factors may influence the manager to alter appraisal information. HR should offer training materials or training for managers regarding biases. Strictness The employees of a strict manager may be performing better than employees in other departments, but their ratings may be lower. This error occurs when these managers believe the standards are too low and higher the standards make these managers more meaningful in their eyes. Figure 2-3. Common Errors in Performance Appraisals (continued to next page) © 2014 SHRM 71
  19. 19. Error Description Leniency A leniency error is the result of managers who don’t want to give low scores, so they give all employees high scores. If an employee is discharged after receiving such an evaluation, the appraisal may contradict the reason for the discharge; therefore, this type of evaluation can cause discontent, and it may be the cause of litigation. In addition, employees who have not received clear, honest feedback have limited opportunity for improvement and future success. That’s why this error does not really help the organization or the employee who is rated. Central tendency Central tendency errors occur when a manager rates all employees within the same range, regardless of their differences in actual performance. Contrast A contrast error occurs when an employee’s rating is based on how his or her performance compares to another employee’s performance instead of on objective performance standards. Although it is legitimate for an employer to rank employees and compare them, their performance must be judged at first against objective standards that are appropriate for them. Figure 2-3. Common Errors in Performance Appraisals (concluded) Appraisal Meeting During the performance appraisal, input from both the employee and manager is necessary for an effective appraisal. Employees need to have a clear understanding of how they are doing in the eyes of their manager and the organization. The appraisal meeting gives the manager an opportunity to talk about the employee’s performance, the rationale behind strengths and weaknesses and suggestions for future development. © 2014 SHRM 72
  20. 20. Guidelines for Giving Feedback The feedback guidelines in Figure 2-4 are helpful for the manager when giving performance feedback. Feedback Guidelines Do’s Do choose a time and place that allows for privacy and lack of interruptions. Do give employees a chance to comment on their own performance (both strengths and weaknesses). Do focus first on strengths and then talk about areas for improvement. Do be specific, not general. (Support feedback with factual information.) Do focus on job behaviors, not the person. Don’ts Don’t focus on a specific event. (Instead, review the entire evaluation period.) Don’t focus only on the negative. Don’t focus on personality issues or traits that are not related to job performance. Don’t do all the talking. Figure 2-4. Feedback Guidelines Action Planning Steps After the review of the employee’s performance, the manager and the employee work together to create a performance improvement plan that will help the employee meet organizational, departmental and individual goals. At this point in the appraisal meeting, the manager and the employee must do the following: Come to an agreement on the appraisal ratings. Set objectives that the employee is to achieve before the next appraisal period. Create a plan for how the employee will meet the objectives. Talk about how the manager will follow up with the employee to see that the objectives are being met. © 2014 SHRM 73
  21. 21. In addition to looking at past performance against agreed-upon objectives, the performance appraisal is the time for the manager and the employee to talk about the following employee needs, so they can plan for long-term development: Training Other developmental needs Employee strengths Interests/ambitions Documentation In some countries, good documentation can make the difference between winning or losing a lawsuit. More importantly, good documentation plays an important role in the overall fairness of the evaluation system. Up-to-date performance information helps the manager explain the comments in the performance appraisal. Documentation of employee performance can show the reasoning that led to positive or negative actions. Two common documentation practices include the following: A performance diary is a record of incidents or tasks performed by the employee. The manager usually keeps the diary. Performance records are notes that contain unit measures, quantity and quality measures and accounting and cost measures, as they relate to the employee. All performance documentation must be specific, objective and accurate. Documentation is not only valuable in protecting an organization from a lawsuit but also can be used for the following purposes: Improve employee performance Communicate with employees Form the basis of training and career development activities Reward and recognize good performance © 2014 SHRM 74
  22. 22. The following guidelines will assist managers in documentation efforts: Document as an event happens. Keep performance notes on all employees. Keep observations job related and be objective. Support your observations with facts. Focus on the deficiencies, not the perceived underlying cause. Avoid emotion; write with respect, regardless of the employee’s performance. Avoid conclusions; provide facts for others to use in reaching logical conclusions. Keep in mind that others may read your comments. Individual Development Plans An individual development plan (IDP) is a natural product of the performance evaluation process. IDPs are a valuable performance enhancement and career development tool. Managers who promote the use of IDPs send a clear message to their employees that each person’s professional development is a priority. An IDP focuses on the following: The employee’s skills and talents for future jobs New skills that will help the employee perform better on the job It requires employees to answer the following questions: What direction is my organization going in the future? What will the organization need from its employees? What positions am I interested in? What are my goals for the next three years? What strengths can I build on? What major weakness could prevent me from reaching my goals? Employees who are involved in a career development process are more likely to stay with the organization. Working together, a manager and an employee can © 2014 SHRM 75
  23. 23. plan ahead to meet the goals of both the employee and the organization. It is very important that these goals are regularly monitored and that the organization supports the employee to enable him or her to achieve these development plans. You will read more information about individual development and career planning in Section 5.3: Career Development. © 2014 SHRM 76
  24. 24. Practice Questions Directions: Choose the best answer to each question. 1. What are the standards that reflect the success of the organization? a. Values b. Goals c. Behaviors d. Results 2. In most organizations, the performance management process includes three phases. Which of the following is not a phase of the performance management process? a. Analysis b. Design c. Implementation d. Evaluation 3. What are career growth opportunities, recognition and good manager relationships? a. Goals b. Values c. Performance incentives d. Performance standards © 2014 SHRM 77
  25. 25. 4. What is the process that measures whether an employee accomplishes work requirements? a. Performance values b. Performance standards c. Performance management d. Performance appraisal 5. Which appraisal method evaluates performance using self, peers, direct reports, management and sometimes customers and suppliers? a. Category rating b. 360-degree feedback c. Management by objectives d. Behaviorally anchored rating scale (BARS) 6. Which performance appraisal error occurs when an employee is extremely competent in one area and is rated high in all categories? a. Central tendency b. Bias c. Horn effect d. Halo effect 7. What plays an important role in the overall fairness of the performance evaluation system? a. Good documentation b. Goal setting c. Employee’s self-assessment d. Performance appraisal errors © 2014 SHRM 78
  26. 26. Practice Question Answers 1. b (p. 56) 2. a (p. 57) 3. c (p. 60) 4. d (p. 61) 5. b (p. 66) 6. d (p. 71) 7. a (p. 74) © 2014 SHRM 80