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Performance management an introduction


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introductin to peformance management

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Performance management an introduction

  1. 1. Introduction to Performance Management AKASH NONIYA JAIPAL DURGESH SUTHAR SHUBAHM
  2. 2. Meaning of performance  The action or process of carrying out or accomplishing an action, task, or function can be termed as performance.  Performance management includes the processes used to manage corporate performance, the methodologies that drive some of the processes and the metrics used to measure performance against strategic and operational performance goals.
  3. 3. What are Performance Standards? Performance Standards are the benchmark against which performance is measured.
  4. 4. Definition of PM  “It is a continuous process of identifying, measuring and developing the performance of individuals and teams and aligning performance with the strategic goals of the organization”.  Performance management focuses on the performance of an organization, a department, employee, or even the processes to build a product or service or any other areas in an organization.
  5. 5. History of PM In the 3rd century AD, the Chinese were using performance appraisal systems for their evaluations of their employees Industrial Revolution of the 18th century made factory managers aware of the importance of their employees’ performance on their production outputs. American researchers and philosophers contributed in the areas of performance evaluation by developing ideas of management by objectives (MBOs) and employee motivation. Spreigel reported in 1962 that by the early 1960s more than 60% of American organizations had a performance appraisal system.The system’s popularity stemmed from the Army’s implementation of a performance management system for its officers.
  6. 6. Contd…  The origin of PM can be traced in early 1960's when performance appraisal systems were in practice.  During this period, Annual Confidential Reports (ACR’s) was also known as Employee service Records were maintained for controlling the behaviors of the employees and these reports provided substantial information on the performance of the employees.
  7. 7. Contd...  In next phase around 1980's, whatever adverse remarks were incorporated in the performance reports were communicated to the employees so that they could take corrective actions for overcoming such deficiencies
  8. 8. Performance managementVs Performance appraisal Performance appraisals, also called performance evaluations, are tools used to measure the effectiveness of an employee; most organizations conduct performance appraisals once a year during an annual evaluation process. A performance management system, however, is much more dynamic. It can use the performance evaluation tool but also incorporates other elements into the performance management cycle.
  9. 9. Purpose of PM system  It serves the strategic purpose of the org.  Provide information for reward system  Facilitates HR decisions  Enabling employees to learn about their performance as against org expectations  It serves as a developmental purpose  Serves org maintenance purpose  Support HR decision to meet legal requirements
  10. 10. P r e r e q u i s i t e s P r e r e q u i s i t e s P e r f o P e r f o PM Process PM PM PM PM PM PM
  11. 11. Phase 1 - Plan The planning phase is a collaborative effort involving both managers and employees during which they will:  Review the employee’s job description  Develop a work plan that outlines the tasks to be completed  Setting expected results and standards that will be used to evaluate performance (Specific Measurable Attainable Realistic Time-bound) Identify training objectives that will help the employee grow his or her skills and knowledge
  12. 12. Phase 2- Monitor  For a effective performance management system employee progress and performance must be continuously monitored.  Assess progress towards meeting performance objectives.  Identify any barriers and help overcome them.  Share feedback on progress relative to the goals.  Identify any changes that may be required to the work plan.
  13. 13. Providing Feedback The main purpose of constructive feedback is to help people understand where they stand in relation to expected and/or productive job and workplace behavior.  Prepare  State the facts  Listen  Agree on an action plan  Follow up
  14. 14. Phase 3- Review An opportunity to review, summarize and highlight the employee’s performance over the course of the review period  Summarize the work accomplished during the previous year  Document challenges encountered during the year and identify areas for training and/or development  Identify and discuss any unforeseen barriers to the achievement of the objectives
  15. 15. 360-Degree Assessment Process 360-degree feedback, also known as 'multi-rater feedback', is employee development feedback that comes from colleagues, peers and managers in the organization, as well as self-assessment, and sometimes sources such as clients, volunteers or other stakeholders. Senior managers are responsible for assessing the performance of other employees but often do not receive adequate feedback themselves. 360-degree feedback allows the individual to understand how his or her effectiveness as an employee, manager, or coworker is viewed by others.
  16. 16. Advantages of PM 1. Direct financial gain  Grow sales  Reduce costs in the organization  Stop project overruns  Aligns the organization directly behind the CEO's goals  Decreases the time it takes to create strategic or operational changes by communicating the changes through a new set of goals
  17. 17. anagement Advantages of PM 2. Motivated workforce  Optimizes incentive plans to specific goals for over achievement  Improves employee participation  Create transparency in achievement of goals  High confidence in bonus payment process  Professional development programs are better aligned directly to achieving business level goals
  18. 18. anagement Advantages of PM 3. Improved management control  Flexible, responsive to management needs  Displays data relationships  Helps audit / comply with legislative requirement  Simplifies communication of strategic goals planning  Provides well documented and communicated process documentation
  19. 19. Problems In Implementation of PM Systems 1.Decreased Performance of individuals and organisations  Lack of training of the individuals and managers  Lack of addressing the change in the culture of the organisations  Subjectivity level to high during evaluations  Performance reviews used as a stick to get back at employees
  20. 20. Problems In Implementation of PM Systems  Lack of addressing the fears of employees and clarification of the whole process and advantages to the employees  Lack of conformity regarding Performance Management in the various departments  Lack of management commitment
  21. 21. Problems In Implementation of PM Systems 2. Degrading of Communication 3. Lack of Management commitment 4. Subjectivity 5. Lack of Rewards 6. Negative Attitudes Development
  23. 23. BUSINESS GOALS STRATEGY, VISION, MISSION & BUDGET ORGANIZATION’S OBJECTIVES DEPARTMENTAL / FUNCTIONAL OBJECTIVES ROLE / INDIVIDUAL OBJECTIVES KEY RESULT AREA (KRAs) The PMS process starts with setting of business goals & organisation’s objectives. In M&M Ltd., organizational goals are set in the month of March every year. After this step, departmental and individual goals are set. Here, in M&M Ltd., Top Down approach is followed for goal setting.
  24. 24. For departmental goal setting, Balanced Score Card approach is adopted. In 1992, Robert S. Kalpan and David P. Norton’s concept of the Balanced Score Card revolutionised conventional thinking about performance metrics. The balanced scorecard measured performance on four perspectives: a.Customer b.Internal processes c.Learning & Development d.Financial The balanced scorecard allows managers to look at the business from these four important perspectives. The scorecard wasn’t a replacement for financial measures; it was their complement. It provides answers to four basic questions: Departmental Goal Setting
  25. 25. a.How do customers see us? (Customer perspective) b.What must we excel at? (Internal processes perspective) c.Can we continue to improve and create value? (Learning and Development perspective) d.How well do we look to our stakeholders? (Financial perspective) In M&M Ltd., weightages are assigned to all four perspectives. The weightages may vary according to the department. Balanced Score Card also depends upon business plans for the particular year.
  26. 26. Individual Goal Setting: After setting Departmental goals, Individual goals are set. Following diagram shows various steps in the process of individual goal setting: Communication Workshop KRA SettingFeedback & Counseling Mid-Term Review Performance Appraisal (Review)
  27. 27. Step 1: Communication Workshop: Communication workshop is conducted in months of May or June every year. It is compulsory for all employees, right from operational level to strategic level. This workshop is conducted for two days. KRA setting and How to conduct appraisal are the topics which are covered on first and second day respectively. It is useful to both appraisers as well as appraisees. It helps appraisers for KRA setting and review meetings.
  28. 28. Step 2: KRA (key result areas) setting: Measurable goals for every individual, linked with the business goals are set before the beginning of the financial year. Each individual has 3 to 5 KRAs. Each KRA set has a weightage and the total of weightages is 100%. All the targets i.e. KRAs are set after discussion between superior i.e. appraiser and subordinate i.e. appraisee. Performance with respect of KRAs forms a basis for the calculation of Performance payout amount for an individual.
  29. 29. Step 3: Mid – Term Review: Mid – term reviews are conducted in the month of October. Mid – term reviews are done with a view to know how much goals the appraisee has achieved. If the appraisee has failed to achieve the targeted level then the superior can have a discussion with the appraisee regarding this and the reason for not achieving the desired level of performance is found out. Step 4: Performance Appraisal (Review): Performance appraisal or reviews are done in the month of May. Appraisees are reviewed on the basis of achievement of KRAs . Performance appraisal is a one to one discussion between the appraiser & the appraisee about *Performance based on goals set & results achieved *Training and the developmental needs for the employee
  30. 30. Step 5: Feedback and Counseling: In M&M Ltd., superior gives the feedback to the subordinate immediately after the final performance appraisal. Following points explain the very purpose of Performance Dialogue: •The appraiser and the appraisee together review overall performance of an individual against agreed targets. • Helps in identifying Areas for Improvement. • Provides development opportunities for the growth of people. • Agree / Generate Data for actions relating to Increments, Promotions, etc.
  31. 31. RESULTS:- PM focuses on results, rather than behaviors and activities. Aligns organizational activities and processes to the goals of the organization Supports ongoing communication, feedback and dialogue about organizational goals. Also supports communication between employee and supervisor.