Development of a performance management system [www.writekraft.com]

Writekraft Research & Publications LLP
(All Rights Reserved)
1
DEVELOPMENT OF
A PERFORMANCE
MANAGEMENT
SYSTEM
(Regd. No. AAI-1261)
Corporate Office: 67, UGF, Ganges Nagar (SRGP), 365 Hairis Ganj, Tatmill Chauraha, Kanpur, 208004
Phone: 0512-2328181
Mobile: 7753818181, 9838033084
Email: info@writekraft.com
Web: www.writekraft.com

10
CHAPTER 1
INTRODUCTION AND DESIGN OF THE STUDY
INTRODUCTION
If you don t measure it, people will know you re not serious about delivering it.‟ ‟
-James Belasco, Teaching the Elephant to Dance
The reality of today s business environment requires organisations to be‟
fast, focused, and adaptable in order to thrive. Booming economy has created
sellers’ market. A successful organisation is one that continually improves by
rapidly creating and refining the capabilities required for the success.
1
Given
these conditions, survival of an organisation largely depends on its work force.
Today s organisation no longer succeeds by frequent introduction of new products‟
or use of first class technology alone. Companies have realized that they must also
seek sustaining competitive advantage from the effective management of human
resources.
2
People make organisations grow and in order to facilitate that,
organisations make their people grow continuously.
The new generation employees display a greater clarity in their own
beliefs coupled with a strong attitude of self-determination.
3
Young professionals
1
D.D.Elash, “Managing Peak Performance”, In: “Performance Management Concepts,
Matrices and Cases”, Raju, P. V. L. [Editor], ICFAI Books, ICFAI University Press, 2003,
p.10.
1. M.Tahvanainen,“Expatriate Performance Management: Decays of Nokia Telecommunications”,
Human Resource Management, 39(2), 2000, p.275.
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

2.Promod Kumar, “Changing the Ground Rules”, Human Capital, 1998(Jan), p.24.
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

11
today are in a hurry and want to make it faster than ever before and also faster
than every one else around not only in their immediate environment, but also in
the entire industry.
4
Performance descriptions and predictions play important
roles in all personnel decisions.
5
It is also widely accepted that through performance appraisals and
feedback, organisations can turn employees potential in to the desired results.‟
Performance appraisals are fundamental requirements for improving the
productivity of any organisation. Appraisals are used for wide range of
administrative purposes such as making decisions on pay, promotions and
recognition.
Traditionally, performance appraisals have been used as a guide for
employee performance. Later, performance appraisal has been supplanted in
many companies with performance management. The internationalization of
work force introduces cultural differences regarding the job design,
performance expectations, and role of performance feedback.
6
In modern
times, the role of a leader in an organisation is to inspire and manage
1. Pradeep Kumar, “Faster, Farther and by Friday”, Human Capital, 1998(Jan), p.28.
2. F.J.Landy and J.L.Farr, “Performance Rating”, Psychological Bulletin, 87(1), 1980 p.72.
3.R. B. Bretz Jr., G.T. Milcovitch, and W. Read, “The Current State of Performance
Appraisals Results and Practice: Concerns, Directions and Implications”, Journal of
Management, 18(2), 1992, p.333.
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

12
performance. When the performance is managed effectively, what else is
there for the manager to manage?
The leader or a manager manages the performance by setting goals
and makes them inspiring for the employees to adopt and own. The leaders
also encourage, motivate, guide the employees to perform. They review the
performance and initiate course corrections at appropriate times and make
winners out of all their employees, while achieving the objectives of the
organisation.
The role is comprehensive and challenging. To manage performance in
this way, the manager needs systems and processes to set goals and targets,
track and report information on the performance, review the performance
and rate the employees on the basis of tracked information on the
performance. He needs a process to measure the efforts put in and get
feedback at the appropriate time to ensure corrections and improvements.
The leader also needs to have the skills to motivate, get the feedback, listen
and observe the performance and efforts and intervene at the right time to
make or help make corrections. He plays the role of a planner and coach and
ensures performance and results, while taking the team along and keeping
them motivated.
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

13
Performance
Performance means defining characteristics of the performer, or defining
behaviour and tasks, or defining the results that are to be achieved, or defining
the situations in which these should happen or, all of the above.
7
Performance is not measured by „what we bring (competencies) or‟
„what we do„, but by „what we produce . It is the outcome and the results of‟
one s efforts. Measuring performance is a matter of measuring outcomes and‟
results – the „output focus – and is fundamental in creating an effective‟
performance management system.
Performance is evaluated in realistic and quantitative terms:
maximizing profit margin, reducing sales expenditure, reducing wastage and
spoilage, rejection rates, achieving sales quota and the like which can be
easily evaluated. These are measurable, quantitative performance standards.
Performance is evaluated in terms of accomplishment of performance in
accordance with standards set in these quantitative terms.
8
10.A. M. Mohrman, Jr.,et al., Designing Performance Appraisal Systems: Aligning Appraisal
and Organisational Realities”, Jossey- Bass, Oxford, 1990, p.110.
11. V.P.Michael, Human Resources Management and Human Relations, Himalaya Publishing
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

14
Standards are the desired or intended levels of achievement that can be
set for performance measures and performance indicators. Setting standards
is rarely straightforward. If they are set too high, then failure to perform to
standard will demotivate people and if set too low, poor performance becomes
acceptable. There is a great deal of misunderstanding and misuse of the
terms, „standards and „targets . A standard is a range of desirable and /or‟ ‟
intended performance.
A target is something to be aimed at and could be above the standard
range. There is a danger in using targets as a way of increasing performance
levels, which may lead to possible fall in quality standards. It is important
that performance standards are set not only for measures of volume of work
but also for the quality factors attached to the activities concerned. In moving
towards a more systematic measurement, managers are recognizing the truth
behind the old cliché, „if you aren t measuring it, you aren t managing it .‟ ‟ ‟
Traditionally, the superior, who was supplied with a list of
performance traits, carried out evaluating performance. The superior is
required to check the employees against the traits on a ratio scale ranging
from unsatisfactory to excellent or outstanding. In this approach, the
superiors are forced to make subjective judgments on an employee s‟
personality, psychological makeup and intentions and thus leading to buy
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

15
degree of subjectivity and errors. The newer method shifted the emphasis
away from inferred traits and focused more on observed behaviour of results
which required a kind of contact between the superior and subordinate where
the objectives are agreed upon and served as a yardstick by which
subordinate s performance is evaluated.‟
Organisations have begun to recognize that, effective performance
management depends upon the precise understanding of performance in all
its aspects and in all parts of the organisation and its processes. Organisations
are now striving to evaluate performance at many levels including 1.
Contributions to the achievements of strategic objectives, 2. Measures of
quality, 3. Measures of quantity and volume, 4. Measures of efficiency and
value for money, and 5. Measures of external and internal customers‟
satisfaction.
Performance Appraisal practices in Indian Organisations
Performance Appraisal practices in Indian organisations is quite varied.
They vary from almost no appraisals to sophisticated multi-purpose, multi-
component based appraisal systems. In some of the small and medium sized
organisations, it is not uncommon to find that there are no formal mechanisms of
appraising performance. Appraisal reports are given by senior officers to the top
management. At the time of promotion decisions, the top management takes the
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

views of appraisers into consideration.
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

16
At the other extreme, there are organisations that have performance
appraisals that aim simultaneously at different objectives like data generation for
personnel decisions like rewards, promotions, job rotations, transfers and creation
of new organisation culture of openness, trust and mutuality, generation of
enabling capabilities and employee development that used different components
(Key Performance Areas, Objective setting, Managerial and behavioural
dimensions, Self assessments, Performance analysis, Counselling, and
Identification of training needs).
Though the importance of Performance Management is well understood
and recognized, at the concept level, this is not one of the aspects typical
organisation s top management is very contented about.‟ The employee is much
more likely to buy into the performance agreement if he or she has had a chance
to contribute to the setting of performance objectives.
9
Performance management
is not really used as an integral system of management, but used as a tool to decide
increments and promotions. Even when it is used as such, it is not used in its true
spirit. Performance management (used synonymously to appraisal) is normally one
of the points to score very badly in many an employee satisfaction survey.
Although drawing up a performance management system is relatively not a
complicated task, implementing it in letter and spirit is specially a sensitive
process.
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

9 L. Branham. “Keeping the People who Keep You in Business: 24 Ways To Hang On To
Your Most Valuable Talent”, American Management Association, New York, 2001, p.55.
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

17
International Development and Engineering Associates Ltd (IDEA-the
organisation on which the research is undertaken) had a typical performance
appraisal system, which was used as a control mechanism as well as a yearly
ritual. The organisation recognized the need for a comprehensive performance
management system, which will tune in the employees with its strategic direction
and facilitate the employees to perform better. The organisation went through a
process of identifying the strengths and weaknesses of the system, examined the
performance appraisal systems in a few other organizations and the industry trends
to develop and implement an appropriate performance management system for
itself.
STATEMENT OF THE PROBLEM
The term performance appraisals are now increasingly being replaced by
performance development, performance planning, development review, work
planning and review, performance analysis and the like.
Traditionally, organisations had just systems to assess performance at the
end of the performance period with the sole objective of rewarding or punishing
the employees. They required a tool to justify the rewards or punishments and
performance appraisals were used as one. It was more of a post-mortem at the end
of the year. Even as a post-mortem, the assessments were more based on
perceptions, since the assessments were not based on clearly drawn key result
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

areas and measurement standards. The systematic tracking of performance
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

18
information was not possible due to the same reasons. Whereas, the modern
organisations realized the need for a comprehensive process which sets
performance goals and standards, measures performance systematically, analyses
the performance issues objectively, offers performance feedback sensitively – with
the over all objective of helping individuals to perform better and the organisation
to perform better consequently.
IDEA indeed was in a similar situation. It had a typical appraisal system. It
was a year-end process and essentially a format. Employees were required to fill in
the format and the supervisors were expected to „assess the performance of the‟
employees on the basis of the information provided in the format and on a‟
specific scale. So it did had all the typical disadvantages of an appraisal system
and was essentially viewed as a ritual, which needed to be complied with, before
increments/promotions were announced. It had very little credibility on helping
the employees to perform better.
IDEA required the performance appraisal system to be a management tool
and process, rather than a staff-driven rating scale and forms. The IDEA s‟
Performance Appraisal System also required a systematic measurement of
„Critical Success Factors instead of measuring generic aspects of people or jobs.‟
It ought to have clarity about the success for individuals, teams, units, and the
company, instead of fastening with the ambiguity and inconsistency around „what
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

it takes to make it in different units, at different levels for different managers. The‟
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

19
most important problem in IDEA was that the performance appraisal system did
not meet its own stated objectives. The real issues in the performance
measurement are: what to measure, how to measure and how to use the results of
performance measurement to improve performance. On the other hand,
Performance Management encompasses the dimensions of performance, goals of
performance and career development, training and development programs,
supervisory performance appraisal, multi-source performance ratings, feedback,
coaching and rewards, with an objective of helping individuals to improve
performance.
To overcome the shortcomings of the IDEA s performance appraisal‟
system, the organisation needed to evolve a Performance System that drives
individual performance and the execution of strategy, resting on the principles of
healthy appraisal practices. Hence the performance appraisal required a transition,
from performance appraisal to performance management.
A detailed study of IDEA s and the various other organisations‟ ‟
Performance Appraisal System was carried out (as case studies), to have more
insights into the process and nature of the appraisal systems, towards development
of a Performance Management System for IDEA.
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

REVIEW OF LITERATURE
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

20
This section presents discussions of research that deal with the aspects
concerning the call for evolving a performance management system. This section
begins with critically reviewing the various research works on performance
appraisal, characteristics of performance appraisal system, and factors affecting
the effective implementation of performance appraisal system, in order to gain
better insight for evolving a new performance management system.
Performance Facets
Research suggests that performance consists of both task-oriented and
contextually oriented facets. It has raised the question of whether the attributes that
lead some applicants to excel in specific aspects of performance (e.g. performing
individual job tasks) could be different from those that lead some applicants to
excel in other aspects of job performance (e.g. working well with others).
Day and Silverman
10
(1989) in their study on “Personality and job
performance: evidence of incremental validity” concluded that there are
differences in the variables that predict task vs. contextual performance.
Motowidlo and Van Scotter
11
(1994) tested the distinction between task and
contextual performance using supervisory ratings of over 400 Air Force mechanics
10
D.V.Day and S.B.Silverman, “Personality and Job Performance: Evidence of Incremental
Validity”, Personnel Psychology, 42(1), 1989, pp.25-36.
11 S.J.Motowidlo and J.R.Van Scotter, “Evidence that Task Performance should be
Distinguished from Contextual Performance”, Journal of Applied Psychology, 79(4), 1994,
pp.75-80.
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

21
in their study “Evidence that task performance should be distinguished from
contextual performance” showed that both task and contextual performance factors
contributed independently to overall performance and showed that personality
variables were more highly correlated with contextual performance in accordance
with their expectations.
Hunt
12
(1996) in his study “Generic work behavior: an investigation into
the dimensions of entry-level, hourly job performance”, using supervisory ratings
from over l8, 000 employees in 42 different entry-level jobs in retail settings,
developed a taxonomy of "generic" work behaviour, or behaviour that contributed
to performance of jobs independent of technical job roles. These included the
following dimensions: Adherence to Confrontational Rules, Industriousness,
Thoroughness, Schedule Flexibility, Attendance, Off-Task Behaviour, Unruliness,
Theft, and Drug Misuse.
Arvey et.al.
13
(1997) in their study “Individual differences in emotionality
as predictors of job performance”, hypothesized that constructs associated with
12 S.Hunt, “Generic Work Behavior: An Investigation into the Dimensions of Entry-level, hourly
Job Performance”, Personnel Psychology, 49(1), 1996, pp.51-83.
13 R.D.Arvey, G.Renz and T.Watson, Individual Differences in Emotionality as Predictors
of Job Performance. in: Research in Personnel and Human Resources Management, ed.
GR Ferris, KM Rowland, Vol. 15. Greenwich, CT: JAI. 1997, p.108.
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

22
individual differences in emotionality might also predict contextual aspects of
performance.
Cascio
14
(1995) in his study “Whither industrial and organizational
Psychology in a changing world of work?” argued that the nature of work was
changing and were the different definitions of what jobs and job performance were
all about. There appeared to be a general move toward more flexible definitions of
work roles and jobs, where jobs were viewed as dynamic and more
interchangeable and were defined with less precision. The focus was on the
personal competencies required to perform various work roles and jobs rather than
a narrow review of specific tasks and duties inherent in fixed jobs and work roles.
There is a growing recognition that counterproductive behaviours that detract from
organisational goals should also be specified and treated as aspects of
performance--perhaps as conditions of employment.
Bommer et.al.
15
(1995) in their meta-analytic study “On the
interchangeability of objective and subjective measures of employee performance:
A meta-analysis”, assessed the relationships between relatively objective and
14
W.F.Cascio, “Whither Industrial and Organizational Psychology in a Changing World of
Work?” American Psychology, 50(11), 1995, pp.928 –939.
15
W.H.Bommer, J.L. Johnson, G.A. Rich, P.M. Podsakoff, and S.B. MacKenzie, “On the
Interchangeability of Objective and Subjective Measures of Employee Performance: A Meta-
Analysis”, Personnel Psychology, 48(3), 1995, pp.587-605.
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

23
subjective measures of employee performance. Using meta-analytic techniques to
summarize the relationships for over 50 independent samples, the overall
corrected mean correlation between the two types of measures was .39 (.32
observed), suggesting that the two measures were significantly and moderately
related but not totally substitutable. Subsequent moderator analyses revealed that
when objective and subjective measures tapped the same construct, their
convergent validity improved substantially and that the measures were reasonably
substitutable, a finding that is not surprising. Their discussion is valuable in that
they summarized arguments that differences between these two types of
measurement might not be as distinctive as once believed (e.g. there is subjectivity
in the choice of objective measures and metrics).
Sources of Rating
Hedge and Borman
16
(1995) in their study “Changing conceptions and
practices in performance appraisal. In The Changing Nature of Work”, suggested
that different rater types (i.e. peers, self, subordinates) would capture different and
valued perspectives in measuring performance, that electronic monitoring devices
16
J.W.Hedge, W.C.Borman, Changing Conceptions and Practices in Performance
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

Appraisal”, In: The Changing Nature of Work, A Howard [Editor], San Francisco: Jossey-
Bass, 1995, pp.451-481.
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

24
might be used for measurement purposes, and that attitudes toward appraisal
systems would be examined more thoroughly.
Viswesvaran et.al.
17
(1996) in their meta analytic study “Comparative
analysis of the reliability of job performance ratings”, reported that supervisory
ratings appeared to have higher interrater reliability than peer ratings (r = 0.52 for
supervisors, r = 0.42 for peers) and that intrarater estimates of reliability (e.g.
coefficient alphas) tended to be higher than interrater estimates. They concluded
that the use of intrarater reliability estimates to correct for measurement error
would lead to potentially biased research results and recommended the use of
interrater reliability estimates. There also appeared to be some evidence for
differential reliabilities depending on which specific job performance dimension
was being used. For example, supervisors rated performance on communication
competence and interpersonal competence less reliably, on average, than that on
productivity or quality. This finding suggests that the contextual performance
factors mentioned above might be less reliably rated dimensions of performance
compared with more task-specific factors.
Schrader and Steiner
18
(1996) in their study “Common comparison
standards: An approach to improving agreement between self and supervisory
17
C.Viswesvaran , D.S.Ones, F.L.Schmidt, “Comparative Analysis of the Reliability of Job
Performance Ratings”, Journal of Applied Psychology, 81(5): 1996, pp.557-574.
18 B.W.Schrader, and D.D.Steiner, “Common Comparison Standards: An Approach to
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

Improving Agreement between Self and Supervisory Performance Ratings”, Journal of
Applied Psychology, 81(6), 1996, pp.813-820.
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

25
performance ratings”, reported the results of a study where they investigated the
impact of different comparison standards on the ratings of supervisors and on self-
ratings. They hypothesized that ratings in which employees were evaluated against
clear and specific objective standards would differ from those in which such
objective criteria were not specified and the standards are ambiguous. Results
supported this proposition. However, ratings made when using internal, relative, or
multiple standards of comparison were not very different from those made under
the more objective conditions both in terms of mean differences and supervisor-
self agreement. Thus, a conclusion that employee standards that involved objective
and specific standards against which to evaluate individuals were the one "best"
method seemed premature given the results of this study. A potential problem with
this study is that it involved dimensions of performance that lent themselves to
precise and objective measurement, a condition that did not generalize many
dimensions of job performance
Saavedra and Kwun
19
(1993) in their study “Peer evaluation in self-
managing work groups”, showed, in a laboratory context, that peer evaluations in
self-managed work groups were conditional on self-other comparisons.
Individuals who were outstanding contributors tended to be the most discerning
evaluators when evaluating their peers.
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

19
R.Saavedra and S.K.Kwun, “Peer Evaluation in Self-managing Work Groups”, Journal of
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

26
Campbell and Lee
20
(1988) in their study “Self appraisal in performance
evaluation: Development versus evaluation”, suggested that the self appraisals
were best suited for developmental rather than evaluative purposes and that self
appraisal could improve further performance by creating a self-fulfilling prophecy.
Raters and Ratees Cognition
Huber, et.al.
21
(1987) in their study “Judgment by Heuristics: effects of
ratee and rater characteristics and performance standards or performance:
related judgments”, reported that raters knowledge of prior performance‟
appeared to affect information processing by framing or anchoring current
judgments.
Steiner and Rain
22
(1989) in their study “Immediate and delayed primacy
and recency effects in performance evaluations”, reported that the order in which
20
D.J.Campbell and C.Lee, “Self Appraisal in Performance Evaluation: Development Versus
Evaluation”, Academy of Management Journal, 13,1988, pp.302-314.
21
V.L.Huber, M.A.Neale and G.B.Norht Craft, “Judgment by Heuristics: Effects of Rate and
Rater Characteristics and Performance Standards or Performance: Related Judgments”,
Organizational Behavior and Human Decision Process, v: 40, 1987,pp.149 – 169.
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

22
D.D.Steiner and J.S.Rain, “Immediate and Delayed Primacy and Recency Effects in
Performance Evaluations”, Journal of Applied Psychology, v: 74, 1989, pp.136 –142.
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

27
good and bad performances were observed affected performance ratings and that
raters biased the judgments on inconsistent extreme performance towards general
impression already held.
Mount and Thompson (1987)
23
in their study “Cognitive categorization and
quality of performance ratings”, examined the effect of prior expectations on
subordinates ratings of managers whose behaviours were either congruent or‟
incongruent with prior expectations. Results indicated that when behaviour was
congruent with expectations, appraisers results were more accurate.‟
Hagen (1987)
24
in his longitudinal study
Performance ratings: A Longitudinal Study”,
performance apparently affected rater s ability‟
categorize information.
“Effects of Prior Expectations on
found that consistency of ratee to
form general impressions and
Hozlowski and Kirsch
25
(1987) in their study “The systematic distortion of
hypothesis, Halo and accuracy: An individual – level analysis”, suggested that
23
M.K.Mount and D.E.Thompson, “Cognitive Categorization and Quality of Performance
Ratings”, Journal of Applied Psychology, v: 72, 1987, pp.240 – 246.
24 E.A.Hagen, “Effects of Prior Expectations on Performance Ratings: A Longitudinal Study”,
Academy of Management Journal, v: 30, 1987, pp.354 –368.
25 S.W.Hozlowski, and M.P.Krisch “The Systematic Distortion of Hypothesis, Halo and
Accuracy: An Individual – Level Analysis”, Journal of Applied Psychology, v: 72, 1987,
pp.252 – 261.
Phone: 0512-2328181
Mobile: 7753818181, 9838033084

28
memory decay affected the ability to recall job and ratee information and resulted
in halo error and subsequent inaccurate ratings.
Smither and Reilly
26
(1987) in their study “True Inter co-relation among
job components, time delay in rating, and rater intelligence as determinants of
accuracy in performance ratings”, concluded that rater intelligence, not rating
delays, affected rating accuracy.
DeNisi, and Peters
27
(1996) in their study “Organization of Information in
Memory and Performance appraisal process: Evidence from the field”, reported
that structured diary keeping and recall increased ratees positive reactions , recall
and accuracy of rating level and discrimination between and within raters.
Robbins and DeNisi
28
(1994) in their study “A closer look at interpersonal
affect as a distinct influence on cognitive processing in performance appraisal”,
showed (In a well-designed laboratory study) how affect toward ratees can
influence the acquisition and processing of performance information. However,
26
J.W.Smither, R.R.Reilly, “True Inter Co-relation Among Job Components, Time Delay in
Rating, and Rater Intelligence as Determinants of Accuracy in Performance Ratings”,
Organizational Behaviors and Human Decision Process, v: 40, 1987, pp.369 – 391.
27
A.S.DeNisi and L.H.Peters, “Organization of Information in Memory and Performance
Appraisal Process: Evidence from the Field”, Journal of Applied Psychology, v.81, 1996,
pp.717-737.
28 T.L.Robbins and A.S.DeNisi, “A Closer Look at Interpersonal Affect as a Distinct Influence
on Cognitive Processing in Performance Appraisal”, Journal of Applied Psychology, 79(3),
1994, pp.341-353.

29
they argued that affect is likely to be a function of how well or poorly a person
performs his or her job and is therefore more likely to represent a valid piece of
information than an irrelevant source of bias.
Rating Errors and Accuracy
Murphy and Balzer
29
(1989) in their study “Rater error and rating
accuracy”, concluded that correlation between rating errors and accuracy was very
near zero and therefore error measures were not good indicators of rating
accuracy. Therefore raters with large observed correlations may accurately rate
performance rather than committing halo errors.
Schoorman
30
(1988) in his study “Escalation bias in performance
appraisals: An unintended consequence of Supervisor participation in hiring
decisions”, reported that supervisors who had a say in the hiring decisions and
who viewed the applicant as favourable, subsequently tended to give lenient
performance ratings, whereas those who participated in hiring but viewed the
applicant as unfavourable, tended to give severe ratings.
29
K.R.Murphy, and W.K.Balzer, “Rater Error and Rating Accuracy”, Journal of Applied
Psychology, 74,1989, pp.619-624.
30 F.B.Schoorman, “Escalation Bias in Performance Appraisals: An Unintended Consequence of
Supervisor Participation in Hiring Decisions”, Journal of Applied Psychology, v.73, 1988,
pp.58 –62.

30
Sulsky and Balzer
31
(1988) in their article “Meaning and measurement of
performance rating accuracy: Some Methodological and Theoretical Concerns”,
stated that accuracy in performance measurements was lacking due to poor
definitions of accuracy, methodological and theoretical limitations of true score
developments, and the absence of cohesive theory of performance.
Ferris et.al.
32
(1994) in their article “Subordinate influence and the
performance evaluation process: Test of a model”, proposed a model wherein
supervisors' affect toward subordinates was a major influence of rated
performance. They tested their model using a sample of 95 staff nurses and 28
nurse supervisors and found a good fit; supervisors' affect toward subordinates
correlated .74 with performance ratings.
Kane
33
(1994) in his study “A model of volitional rating behavior”,
developed a model of the determinants of rater error, hypothesizing that such error
had conscious antecedents where raters made decisions to introduce distortions
into ratings.
31 L.N.Sulsky, and W.K.Balzer, “Meaning and Measurement of Performance Rating Accuracy:
Some Methodological and Theoretical Concerns”, Journal of Applied Psychology, v.73,
1988, pp.497 – 506.
32G.R.Ferris, T.A.Judge. K.M.Rowland and D.E.Fitzgibbons, “Subordinate Influence and the
Performance Evaluation Process: Test of a Model”, Organisation Behaviour and Human
Decision Process, 58,1994, pp.101-35.
33 J.S.Kane, “A Model of Volitional Rating Behavior”, Human Resource Management
Review, 4(3), 1994, pp.83-310.

31
Sumer and Knight
34
(1996) in their study “Assimilation and contrast effects
in performance ratings: effects of rating the previous performance on rating
subsequent performance”, examined the impact of rating previous performances
on ratings of subsequent performances from the framework of contrast effects
(inappropriate high or low ratings because of prior evaluations). Their findings
showed that individuals who reviewed but did not rate the previous performance
demonstrated an assimilation effect by rating a second rating in the direction of the
previous performance
Raters Training
Woehr
35
(1994) in his study “Understanding frame-of-reference training:
the impact of training on the recall of performance information”, stated that the
primary goal of Frame of Reference Training (FOR) is to train raters to share and
use common conceptualizations of performance when making evaluations. He
recommended to identify norms for effective performance behaviours as standard
frame of reference. Frame of Reference training provided examples of good,
average, and poor performers for each behavior dimensions. It helped raters
identify and classify performance correctly.
34
H.C.Sumer and P.A.Knight, “Assimilation and Contrast Effects in Performance Ratings:
Effects of Rating the Previous Performance on Rating Subsequent Performance”, Journal of
35 D.J.Woehr, “Understanding Frame-of-reference Training: the Impact of Training on the Recall
of Performance Information”, Journal of Applied Psychology, 79(4), 1994, pp.525-534.

32
Stamoulis and Hauenstein
36
(1993) in their study “Rater training and Rating
Accuracy: Training for Dimensional Accuracy Vs Training for Ratee
Differentiation”, reported that Frame of Reference training helped distinguish
between dimensions. Rater error training increased accuracy of training
favourability.
Hedge and Kavanagh
37
(1998) in their study “Improving the accuracy of
performance evaluations, Comparison of three methods of performance appraiser
training”, reported that training focused on minimizing rating errors successfully,
reduced leniency and halo but also reduced accuracy. They concluded that rater
training should emphasize observation and decision-making processes rather than
simply error reduction.
Athey and McIntyre
38
(1987) in their study “Effects of rater training on
rater accuracy: Levels-of-process in theory and social facilitation theory
perspectives”, proved that frame-of-reference training improved retention of
information, improved accuracy and decreased halo effect.
36
D.T.Stamoulis, and N.M.A.Hauenstein, “Rater Training and Rating Accuracy: Training for
Dimensional Accuracy Vs Training for Ratee Differentiation”, Journal of Applied
Psychology, v.78, 1993, pp.994-1003.
37
J.W.Hedge and M.J.Kavanagh, “Improving the Accuracy of Performance Evaluations,
Comparison of three Methods of Performance Appraiser Training”, Journal of Applied
Psychology, v.73, 1998, pp.68-73.
38T.R Athey, and R.M McIntyre, “Effects of Rater Training on Rater Accuracy: Levels-of-
Process in Theory and Social Facilitation Theory Perspectives”, Journal of Applied
Psychology, v.72, 1987, pp.567-572.

33
Stamoulis and Hauenstein
39
(1993) in their study “Rater training and rating
accuracy: training for dimensional accuracy versus training for ratee
differentiation”, investigating FOR training for raters evaluating the performance
of job interviewers, found such training to be more effective in terms of some
types of rater accuracy than others.
Goal Setting and Participation
Lathan and Mashall
40
(1982) in their study “The effects of Self –Set ,
Participatively set , and assigned goals on performance of Government
Employees” stated that setting specific , challenging goals resulted in higher
performance than urging people to do their best.
Latham et.al
41
. (1988) in thier study “Resolving scientific disputes by the
joint designs of crucial experiments by the antagonists, applications to the Erez-
Latham Dispute regarding participation in Goal Setting”, stated that goals assigned
without explanations led to lower performance than goals set participatively.
39
D.T.Stamoulis and N.M.A.Hauenstein, “Rater Training and Rating Accuracy: Training for
Dimensional Accuracy Vs Training for Ratee Differentiation”, Journal of Applied
Psychology, v.78, 1993, pp.994-1003.
40 G.P. Latham, and H.A.Marshall, “The Effects of Self –Set, Participatively Set and Assigned
Goals on Performance of Government Employees”, Personnel Psychology, v: 35, 1982, pp.
399-404.
41G.P.Latham, M.Erez and E.Locke, “Resolving Scientific Disputes by the Joint Designs of
Crucial Experiments by the Antagonists, Applications to the Erez-Latham Dispute Regarding
Participation in Goal Setting”, Journal of Applied Psychology, v: 73, 1988, pp.753-772.

34
Latham and Yukl
42
(1976) in their study on “Effects of Assigned and
Participative Goal Setting on Performance and Job satisfaction” stated that
participation in goal setting resulted in setting more difficult goals: this, in turn
increased performance.
Locke
43
(1991) in his study on “The motivation sequence, the motivation hub,
and the motivation core” stated that goal Motivation increased participation in Goal
setting , commitment to goals , and belief that the goals could be achieved .
Latham
44
(2002) on his study on “The Reciprocal Effects of Science on
Practice, The insights from the Practice and science of Goal Setting”, stated that
feedback helped goal achievement.
Ilgen et.al.
45
(1979) in their study on “Consequences of Individual
Feedback on behaviour in Organisations”, reported that feedback focused attention
on goals, helped discover errors, maintained goal direction, and provided
information on capabilities and effort needed for Goal achievement
42
G.P.Latham, and G.A.Yukl, “Effects of Assigned and Participative Goal Setting on
Performance and Job Satisfaction”, Journal of Applied Psychology, v: 61,1976, pp.166-171.
43
E.A.Locke, “The Motivation Sequence, The Motivation Hub, and the Motivation Core”,
Organizational Behavior and Human Decision Processes, v: 50, 1991, pp.288-299.
44 G.Latham, “The Reciprocal Effects of Science on Practice, The Insights from the Practice and
Science of Goal Setting”, Canadian Psychology, v: 42,2002, pp.1-11.
45 D.R.Ilgen. C.D.Fisher, and M.S.Taylor, “Consequences of Individual Feedback on Behaviour
in Organisations”, Journal of Applied Psychology, v: 64, 1979, pp.349 – 371.

35
Antonioni
46
(1994) presented the results of a field study using 38 managers
and their subordinates on “The effects of feedback accountability on upward
appraisal ratings”, showed that subordinates preferred providing appraisal
feedback to their managers anonymously. However, managers viewed upward
appraisals more positively when such feedback was provided under conditions of
accountability or when they were aware of the identity of the subordinates. Under
conditions of accountability, subordinates tended to inflate their rating of
managers, suggesting that ratee identification might influence such feedback
information.
Dorfman et.al.
47
(1986) in their study “Performance appraisal behaviors:
Supervisor perceptions and subordinate reactions”, reported that discussion of pay
and advancements during the performance feedback session led to higher
employee satisfaction with the process but did not influence future performance.
Pearce and Porter
48
(1986) in their study “Employee responses to formal
performance appraisal feedback”, reported that feed back describing an employee
46
D.Antonioni, “The Effects of Feedback Accountability on Upward Appraisal Ratings”,
Personnel Psychology, v: 47, 1994, pp.349-356.
47 P.W.Dorfman,., W.G.Stephen and J.Loveland, “Performance Appraisal Behaviors: Supervisor
Perceptions and Subordinate Reactions”, Personnel Psychology, v: 39,1986, pp.579-597.
48 J.L.Pearce and L.W.Porter, “Employee Responses to Formal Performance Appraisal
Feedback”, Journal of Applied Psychology, v: 71,1986, pp.211-218.

36
as “satisfactory” (as compared to above average or outstanding) led to reduced
organisational commitment and negative attitudes toward the performance
appraisal system.
Russell and Goode
49
(1988) in their study “An analysis of managers‟
reaction to their own performance appraisal feedback”, reported that individuals
who were satisfied with the performance appraisal in general, might not be
satisfied with the feedback provided. Rather, satisfaction with feedback could be a
function of satisfaction with the supervisor and the rating received.
Based on the research review the researcher critically reviewed the various
research works on performance appraisal, characteristics of performance appraisal
system, and factors affecting the effective implementation of performance
appraisal system, and gained better insight for evolving a new performance
management system.
To over come the problem of rating errors and to improve the accuracy of
the rater (self, Peer by superiors) a participatory approach in „goal setting should‟
be carried out, that is both the raters (appraisers) and the ratees (appraisees) should
participatively set the goals, which helps in reducing the poor definition of
accuracy and at the same time, the employees are communicated with their targets
49 J.S.Russell and D.L.Goode, “An Analysis of Managers Reaction to their Own Performance‟
Appraisal Feedback”, Journal of Applied Psychology, v: 73, 1988, pp.63-67.

37
by goals that are to be achieved. All the above, it leads in setting goals that are
achievable/realistic, which are not beyond the employees capability. It also
increases the employee s motivation level. A good feedback system on the‟
employee s performance also increases the motivation level.‟
The rating error can also be significantly reduced by training the raters on
the common conceptualizations of performance evaluation and on the norms of
effective rating system.
The research review on the various aspects of the performance appraisal
process clearly facilitates the development of a new performance management
system and helps in identification of various issues on which adequate care should
be taken while developing the new performance management system.
Any good performance management system should strike a balance
between the objective (task) measures and subjective (contextual) measures. The
researches indicated that the psychic make up influences the performance of an
individual. Hence, the need to include both the objective and subjective measures
of performance becomes significant while developing a performance management
system. The definition and evolvement of an objective and subjective measures
highly impacts the effectiveness of the ratings also. Ambiguous subjective and
objective measures lead to various rating errors which undermines the accuracy of
the rating thus affecting the „normalcy (normal distribution) principle of a good‟
performance against system. More over the rating accuracy is also influenced by

38
the raters influence, memory, affect towards the appraisees (leniency and severity
in rating might take place) and the poor definitions of accuracies as such. The
existing studies dealt with various factors and attributes that influenced the
effectiveness of the performance appraisal system and concluded with
recommendations. But this study focuses on the development, implementation,
and review of a new performance management system, which is exhaustive in
nature. The existing studies on the performance appraisal facilitated the researcher
to gain knowledge on the various issues of a performance appraisal processes and
systems and helped the researcher in framing guidelines (what to do and what not
to do) towards development and implementation of a new performance
management system.
Thus the researcher gained various characteristics of a good performance
management system that are to be considered while developing a new performance
management system.
SCOPE OF THE STUDY
The researcher has chosen a particular organisation (IDEA) to develop
and implement the performance management system for the following
reasons:
1. The researcher was a part of the management team.

39
2. The organisation itself had recognized the need to evolve
a comprehensive performance management system.
OBJECTIVES OF THE STUDY
1. To critically study (using the case study approach) the various
organisations performance appraisal systems as sources of identifying the‟
major constructs towards development of a new Performance Management
System for IDEA.
2. To study the employees (appraisers and appraisees) opinion on IDEA s old‟ ‟
Performance Appraisal System.
3. To find the major dimensions that influences the appraisees and the‟
appraisers satisfaction on the Performance Appraisal System.‟
4. To find out the level of complexity that the appraisers have in appraising‟
the appraisees under various evaluation dimensions(critical factors and
attributes) and
5. To evolve, implement and review a new Performance Management System
for IDEA.
HYPOTHESES
The researcher has framed the following hypotheses in relation to the
objectives of the study:
1. There is no significant difference between the appraisees and the appraisers
opinion on the construct „Goal setting process .‟
opinion on the construct „Appraisal Interview Process .‟

40
opinion on the construct „Training .‟
opinion on the construct „Career Development .‟
opinion on the construct „the System .‟
opinion on the construct „Validity .‟
opinion on „Need for new appraisal system.‟
satisfactions on the „Performance Appraisal System .‟
9. There is no significant difference between the various age groups of
appraisees opinion on various constructs of „Performance Appraisal‟
System .‟
10.There is no significant difference between the experience groups of
appraisees opinion on the various constructs of „Performance Appraisal
System‟
11.There is no significant difference between the various age groups of
appraisers opinion on the various constructs of „Performance Appraisal
System .‟

41
12.There is no significant difference between the experience groups of
appraisers opinion on the various constructs of „Performance Appraisal
System .‟
RESEARCH METHODOLOGY
Method
This chapter explains the research methodology employed for this
study. It begins with separate sub-sections that detail the study design, data
collection, instrument design and statistical test used.
Study Design
The research was based on the “Participatory Action Research”.
Participatory Action Research is a term that brings together a set of assumptions
underlying „new paradigm science, in contrast to those of traditional or „old‟
paradigm science. These new assumptions underline the importance of social and‟
collective processes in reaching conclusions about „what is the case , and what the‟
implications are for change deemed useful by those whose problematic situation
led to the research in the first place. Essentially Participatory Action Research is a
research, which involves all relevant parties in actively examining together current
action (which they experience as problematic) in order to change and improve it.
Most Participative Action Researches are qualitative. Sometimes a mix of
qualitative and quantitative methods is used. This study is also a mix of qualitative
and quantitative methods. The following are the stages through which the research
progressed:

42
Stage One
The Performance Appraisal Systems of five organisations were‟
studied in detail as „Case Studies to analyze the major strengths and‟
weaknesses of those systems and gain comprehensive knowledge on building a
new „Performance Management System for IDEA, qualitative in nature.‟
Stage Two
A self-administered questionnaire was used to measure the perceptions
of IDEA s employees on the old performance appraisal system. The study‟ ‟
made an attempt to analyze the implications of the employees attitudes and‟
hence the survey method was adopted, which is quantitative in nature.
Stage Three
Based on the results obtained from the survey and from the inferences
obtained from the case studies, a new basic model of Performance
Management System was developed for IDEA.
Stage Four

43
Suggestions and constructive criticisms were obtained from the IDEA s‟
senior management employees on the basic model through participative
discussions and meetings.
Stage Five
Based on the learning obtained from the participative meetings, the
basic model was reconstructed to have an improvised Performance
Management System for IDEA, for implementation.
Stage Six
As a final stage the improved model (Performance Management
System) was implemented and keenly observed for further improvements.
Sample Size and Sample Selection
The sample was obtained through Purposive sampling. The researcher,
being the Human Resource Manager for IDEA has established a good rapport with
the employees. This made the employees very cooperative for the survey. Two
groups of employees were studied: the appraisees and the appraisers. Three
hundred and two (302) employees were surveyed for the study, out of which 260

44
employees were of the appraisee group and 42 employees were of the appraiser
group.
The appraisees should have worked for a minimum of two years in IDEA to
be selected as a sample for the study. Three hundred and sixty-six employees
constituted the appraisee group and out of them three hundred and ten employees
(appraisees) were considered for the study and the remaining fifty six employees
were not considered for the study as they did not satisfy the condition. Employees
of IDEA who were authorized to appraise, were grouped as appraisers, who
formed the middle and senior management levels. There were forty-two
employees who were grouped as appraisers.
Instrument Design
An instrument measuring the various factors of the performance appraisal
system was used for the study to solicit the employees response. The survey‟
instrument comprised seven major constructs, consisting of twenty-four statements
for the appraisees and eight major constructs consisting of twenty-nine (24+5)
statements for the appraisers. Except the „evaluation construct for the appraisers‟
the other construct measures were the same for both the groups. (Vide Annexure J,
pp.307-311and K, pp.312-317 for the Questionnaires) A five- point Likert scale
was used for all the statements to solicit the response. Based on literature reviews
the following constructs were considered to design the instrument to measure the
opinion of the employees, on the old performance appraisal system of IDEA:

45
Goal- Setting Process
This construct measured the employees opinion on clarity of their‟
goals to be achieved; their involvement in the goal setting process; and on the
nature of their work (whether the work is focused on the goals that had to be
achieved)
Appraisal Interview Process
This construct measured the employees opinion on the time taken for the‟
appraisal interview; the effectiveness of the appraisal system in providing a swift
feedback on the areas of improvement and the conduciveness of the appraisal
system.
Training
This construct measured the employees opinion on the appraisal system s‟ ‟
effectiveness in identifying employees training needs and implementation of‟
training measures based on the need for identification.
Career Development
This construct measured the employees opinion on the appraisal system s‟ ‟
role in charting their career development and also collected the opinions on the
mentoring system.
System

46
This construct measured the employees opinions on the „transparency of‟
the system , „effectiveness of the system in producing good results , „importance‟ ‟
of an appraisal system , and „the promotional aspects .‟ ‟
Validity
This construct measured the employees opinion on the appropriateness of‟
the appraisal system.
Need for New Appraisal System
This was intended to collect the employees need for a new performance‟
appraisal system.
Satisfaction
This factor measured the overall satisfaction of the employees on the
appraisal system.
Evaluation Factors
This construct was intended to collect the opinions of the appraisers on
their difficulty in evaluating their appraisees on the various job parameters,
namely job knowledge, planning and organizing, team spirit, communication, and
initiation. (Only intended for the appraisers instrument).‟

47
Statistical Tools
Regression Analysis: The general formula for regression analysis is written below
where Y is the dependent variable, and β (beta) represents the slopes of the
independent variables, labeled X. „X represents the factors and „e (epsilon)‟ ‟
represents the unexplained variance.
Yi = β + (β 1 * X1) + (β 2 * X2) + ……. + (β i * Xi) + ei
Equation No:1. General formula for regression analysis.
Regression analysis was used to identity the major factors which influenced
the satisfaction of the appraisees and the appraisers on the performance appraisal
system. Satisfaction was treated as „dependent variable and the constructs goal‟
setting process, appraisal interview process, training, career development, system,
validity, and the need for new appraisal system were treated as independent
variables.
Analysis of Variance (ANOVA): It compares the sum of squares for the
dependent problem with the sum of squares associated with the independent
variables. If this ratio proves significant based on the number of degrees of
freedom, the hypothesis is accepted. This test was performed to find if there is any
dependency between the personal profiles of the employees (age and experience)‟
and the various dimensions of performance appraisal system. This test was
performed for both the appraisees and appraisers group, considering their‟ ‟
personal profiles.

48
Independent Samples t-Test: The „independent-Samples t test‟ tests the
significance of the difference between two sample means. The t-test is used to
compare the values of the means from two samples and test whether it is likely
that the samples are from populations having different mean values. This test was
used to compare the opinion of the appraisees and the appraisers on the seven‟ ‟
dimensions of performance appraisal system.
Mean Ranking: The mean is the most common measure of central tendency. The
mean is computed by summing up all the scores in the distribution (∑X) and
dividing that sum by the total number of scores (N). Mean ranking is a method
used to compare the aggregate scores. It is the simplest form of ranking, where
objects are arranged in some order and the rank of an object is its position in the
order. This ranking method was used to rank the evaluation factors (in the order of
most difficult to least difficult) that the appraisers perceive to have difficulty in
appraising their appraisers
CHAPTERISATION PLAN
Chapter 1: Introduction and Design of the study
This chapter introduces the concept of performance appraisal and
performance management. It defines performance and draws boundaries of
performance management. It details how performance management is more
comprehensive than performance appraisal and discusses the need and importance

49
of an appropriate performance management system and includes detailed research
survey of relevant literature on the subject of performance appraisal, and the
factors affecting the effective implementation of performance appraisal system.
This chapter also dwells on the concept of participatory action research and the
methodology to be adopted in this scheme of research, the study s objectives and‟
its scope.
Chapter 2: Performance Appraisal to Performance Management –
An Overview
This chapter elaborates also the historical background of the performance
management process and evolution in India, the stage, and the various phases
through which a typical organisation tries to move into performance management
oriented one. It also discusses the changing orientation from performance
appraisal to performance management processes, the negatives of performance
appraisal processes and the future of performance management system.
Chapter 3: Analysis of Performance Appraisal Systems- A Case Study
Approach.
This chapter analyses the performance appraisal systems of five different
organisations where the researcher was part of the management. These
organisations belonged to different sectors namely Transport Service, Food
Processing, and Software Development as well as Engineering and Manufacturing
sectors. These systems in various organisations were studied from a neutral
standpoint to understand their respective merits and disadvantages. These analyses

50
were helpful in framing the new system in the subject organisation. In this chapter,
the researcher studies also the performance appraisal system, which existed in the
subject organisation before the research process and makes a neutral analysis and
evaluation of the system. It also includes the leaders opinions on the Performance‟
Appraisal System of the organisation under investigation.
Chapter 4: Employees opinion on the IDEA s Performance Appraisal‟ ‟
System
This chapter includes the analysis and interpretation of the survey
conducted on the employees of IDEA and the summary of findings.
Chapter 5: Evolvement, Implementation, and Review of new Performance
Management System
This chapter explains the importance of the process to follow, while
evolving a new system. There needs to be a participative process so that it gets the
best inputs from various quarters where it has a stake and also will have the
ownership amongst the stakeholders. This chapter describes also the process flow
towards developing the new system in the subject organisation.
This chapter narrates also the developed new model of performance
management process and explains the various steps involved, factors on which the
evaluation takes place for various role holders, common performance
characteristics, the weightages of performance factors as well as performance
characteristics, the process of capturing training needs identification, potential

51
identification, procedure for considering promotions and the decision process and
process of communicating the decision process.
Moreover it deliberates also on the various issues to be handled while
developing and implementing a performance management system such as
openness of the system, tracking and using of performance information, the issue
of normal distribution of ratings, the issue of effort versus results while looking at
performance and the like. This dwells also on the review of the new performance
management system - post implementation
Chapter 6: Performance Management System for IDEA
This chapter describes the newly developed performance management
system of IDEA.
Chapter 7: Summary of Findings and Conclusion
This final chapter describes the learning gained while formulating as well
as implementing the new performance management process. The learning is both
in the process as well as in the finer aspects of implementation.

SUMMARY OF FINDINGS AND CONCLUSION
This chapter details the findings from the study and the process of evolving and
implementation of a Performance Management System for IDEA.
A performance management system should help the individual employee to
improve his performance. It is not just a process which evaluates the employee
performance and links it with reward or punishment. It should also help the
employee to identify the areas where he has performed well (and how) to draw
action plans to consolidate and sustain his good performance. It should also help in
identifying the areas where he has not performed well (and why) to draw action
plans for improving his performance. By helping every individual employee to
perform better, a good performance management system also helps the
organization to perform better. This is essentially an Organization Development
process.
In IDEA, the Performance Appraisal process evaluated employee s‟
performance, (with its inaccuracies) linked with reward and punishment. It was
more like an examination process. It helped in some ways, the individual
employee to improve his performance, if the employee was mature enough to
introspect the evaluation results and draw positive action plans. This was more of

an exception. And most of the times, it ended either with celebration (when the
results were positive) or bitterness (when the results were not positive).
The study on the Performance appraisal systems of various organizations
(as case studies) revealed that the effectiveness of any Performance Appraisal
process is influenced by the goal setting process, performance tracking process,
feedback process, and the extent of the objectivity with reference to figures and
facts. The leaders of IDEA (survey) also concurred with the case findings. In
addition to this, they opined that, addressing the issue of normal distribution,
communication of decision process, and resolving the issue of relative ranking are
the other influencers of the effectiveness of a performance appraisal system. More
over, the IDEA employees survey (appraisees and appraisers) revealed that the‟
employees were not satisfied on their organization s old appraisal system. The‟
appraisees and the appraisers opinions significantly differed on the „appraisal‟ ‟
interview process , „training , and „validity constructs of the IDEA s old‟ ‟ ‟ ‟
performance appraisal system. Both the appraisees and the appraisers have agreed
on the need for evolving a new performance appraisal system.
The appraisees found difficulty while appraising the appraisees on the
various performance facets, because of the „unclear definition/explanations of the
facets. The other major findings was that , „career development , „training need‟
identification and „validity were the major factors that influenced the satisfaction‟ ‟
of the IDEA employees on the Performance Appraisal Process.

The organization (IDEA) successfully graduated from a performance
appraisal system to a comprehensive performance management system, which
comprised the following aspects:
3. Identification of Key Resource Areas for unique roles
4. Goal setting process
5. Performance Tracking
6. Performance Evaluation.
7. Performance Feedback and development
8. Training needs and potential identification
9. Peer and followers feedback
10.Training of appraisers and Appraisees
It also went through a systematic process of evolving this performance
management system. By this, IDEA ensured a certain degree of ownership of this
system amongst it management team and the employees. The system that was
developed and implemented had a successful run. But Performance Management
in an organisation is a journey and not a destination. The factors, which affect the
effectiveness of the systems, are many and dynamic. The expectations from the
employees are also very high and fast changing.So it is a continuous process of
improving the system, skills and spirit of performance management in an
organisation. It is a constant process of acknowledging and identifying the failure
areas and fixing up them. It is also a continuous process of understanding

employees changing expectations from the system and take actions to fine-tune it
and its implementation.
Every year, every six months, it should be bettered and at every time the
organisation should have the humility to appreciate its failure to bring in
perfection. It should also have the courage to completely change the system or go
for an absolutely a new system considering the changing requirements and
expectations.
It should have a process of continuously finding out the employee feed
back and expectations from this vital process of Performance Management and
particularly the appraisees feed back. To make that realty, a structured feed back
process was established and implemented in IDEA to elicit employee views on the
following factors.
4. Consideration given self-Assessment
5. Efforts towards minimizing subjectivity.
6. Willingness to spend required time on this process.
7. Importance given to the process.
8. Objectivity of the system and the extent of facts and information
used.
9. Extent of meritocracy in the organisation.
10. Extent of share qualitative comments citing critical incidents.
11. Extent of providing timely feed back.

12. Assessors ability to discussing areas for improvement with their
assesees.
13. Assessors comfort in their job as assessors.
14. Identification of training needs through this process.
15. Extent of follow up of training needs.
This system was implemented and the results were used for consideration to
fine-tune the system in the next year. This system should serve for a few years to
monitor the performance management process and this also needs to be
rediscovered. IDEA need to take this forward and keep improving and
rediscovering the Performance Management Process in the years to come, keeping
in mind the changing requirements.
At the end, performance management process is the backbone of any
organisation. A good system helps it making this backbone stronger and enduring.
But the spirit behind the use of this system alone gives the life to the organisation.

To Order Full/Complete PhD Thesis
1 Thesis (Qualitative/Quantitative Study with SPSS) & PPT with Turnitin Plagiarism
Report (<10% Plagiarism)
In Just Rs. 45000 INR*
Contact@
Mobile: 7753818181, 9838033084

Development of a performance management system [www.writekraft.com]

Recommended

Recommended

More Related Content

What's hot

What's hot (12)

Similar to Development of a performance management system [www.writekraft.com]

Similar to Development of a performance management system [www.writekraft.com] (20)

More from WriteKraft Dissertations

More from WriteKraft Dissertations (20)

Recently uploaded

Recently uploaded (20)

Development of a performance management system [www.writekraft.com]