Performance Management

Learning Objectives

 Understand effective performance

management process
 Filling out an effective Performance
Appraisal Form
 Conduct meaningful performance
appraisal discussions
 Understand performance appraisal
form & rating scale
 Set effective goals
 What do Employees Expect?

 Clear expectations
 Positive/constructive feedback
on a regular basis
 Involvement in goal setting
 Be treated fairly and consistently
 Sharing of information and
resources
 Job/career enrichment
opportunities
 Why Manage Performance?

 Encourage and reward behaviors that are aligned

with organizational mission and goals
 People want to feel what they do adds value and
understand their contribution to the team
 Curb or redirect non-productive activities
 What is Performance?

 Performance deals with the

outcomes, results and
accomplishments achieved by
a person, group or organization

 Actual Results Vs Desired

Results
 Performance Management

 Performance Management is one of the

key processes that, when effectively
carried out, helps employees know that
their contributions are recognized and
acknowledged. Performance
management is an ongoing process of
communication between a supervisor
and an employee that occurs
throughout the year, in support of
accomplishing the strategic objectives
of the organization. The
communication process includes
clarifying expectations, setting
objectives, identifying goals, providing
feedback, and evaluating results.
 Performance Management

Performance management is the process of

creating a work environment or setting in which
people are enabled to perform to the best of their
abilities to achieve organizational effectiveness
& best possible performance.

Set Goals Communicate

Evaluate Observe
 Performance Management

1. Planning
Set goals and measures 2. Monitoring
Establish and communicate Measure performance
elements and standards Five Key Provide feedback
Conduct progress review
Components
5. Rewarding 3. Developing
Recognize and reward Address poor
good performance performance
Improve good
performance

4. Rating
Summarize performance
Assign the rating of
record
 PP & PI

 A performance problem is any

gap between desired results
and actual results.

 Performance Improvement is
any effort targeted at closing
the gap between actual results
and desired results
Management By Objectives
 Management By
Objectives
Introduction
 MBO first outlined by Peter Drucker
in 1954 in the book ‘The practice of
Management'. Drucker stated that
managers should:
 avoid ‘the activity trap’ - getting so
involved in day to day activities that
they forget their main purpose or
objective
 participate in the strategic planning
process
 Implement a range of performance
systems
 What is Management by
Objectives?
Organizational
Objectives

Divisional
Objectives

Departmental
Objectives

Individual
Objectives
 Management By Objectives

 Management by objectives (MBO) is a

systematic and organized approach
that allows management to focus on
achievable goals and to attain the best
possible results from available
resources. It aims to increase
organizational performance by aligning
goals and subordinate objectives
throughout the organization. Ideally,
employees get strong input to identify
their objectives, time lines for
completion, etc. MBO includes ongoing
tracking and feedback in the process to
reach objective.
 The Nature & Purpose of MBO
 MBO is concerned with goal setting and planning
for individual managers and their units.
 The essence of MBO is a process of joint goal
setting between a supervisor and a subordinate.
 Managers work with their subordinates to
establish performance goals that are consistent
with higher organizational objectives.
 MBO helps clarify the hierarchy of objectives as
a series of well-defined means-ends chains..
 Essential Steps for MBO

 Set Goals
• The most difficult step.
 Develop Action Plan
• For both workgroups and individuals.
 Review Progress/ Take corrective action
• Periodic during the year.
 Appraise Overall Performance
• Review Annual Goals.
MBO introduced the SMART method for
checking the validity of the objectives, which
should be:
 Specific
 Measurable
 Achievable
 Realistic
 Time-bound
 SMART

 Specific – Objectives and standards should let

employees know exactly which actions and results
they are expected to accomplish.
 Measurable – Whenever possible, objectives and
standards should be based on quantitative measures
such as direct counts, percentages, and ratios.
 Attainable – The objective or standard should be
achievable, but challenging, and attainable using
resources available.
 Realistic – Individual goals, objectives and
standards should be in alignment with those of the
unit and the department in support of the
Organization’s mission.
 Timely – Results should be delivered within a time
period that meets the department and organization’s
needs.
 Examples of Objectives

 Implement update of on-line graduate

application program by October 1, 2008
 Reduce telephone expenses by 15% within
the first half of the fiscal year.
 Identify three new funding sources by the
end of FY 2008, and ensure that all grant
requests are written, reviewed, and
submitted to the granting
agency/foundation by the respective
deadlines.
Strategies for Effective
Performance Appraisal
Systems
 Performance Appraisals

 Performance appraisals are useful

tool not only for evaluating the
work of employees but also for
developing and motivating
employees.
 Performance appraisals can be
thought of as means to verify that
individuals are meeting
performance standards that have
been set.
 Strategic Choices

 Managers should decide on the objectives

and purpose for the performance appraisal.
 Managers can choose between formal and
informal procedures for the performance
appraisal.
 Performance appraisal formats can
emphasize more objectivity versus
subjectivity.
 Managers must decide on the frequency of
the performance appraisals.
 Managers must decide who conducts the
performance appraisal.
 Performance Appraisal
Objectives

 To determine who should be promoted,

demoted, transferred, or terminated.
 To determine who needs formal training
and development opportunities.
 To motivate and improve performance.
 Encourage individuals to work together as
a team.
 Types Of Performance Review

 Closed Reporting. A method of performance

review in which the appraisee has very little
input into the discussion.
 Open Reporting. A method of performance
review in which after the reporting is complete
the appraiser listens to the reactions of the
appraisee.
 Coaching. A method of performance review in
which the appraisee evaluates his or her own
performance which the appraiser serves as
coach not a critic.
 Types Of Performance
Appraisal Methods

 Behavioral Performance Appraisal Methods.

 Check lists
 Weighted Check list
 Graphic Rating Scale
 Mixed-Standard Scale
 Critical Incident Method
 Behaviorally Anchored Rating Scale
(BARS)
 Tips for a Successful
Performance Review

 Give the employee fair notice about when the

review is to take place.
 Ask the employee to think and evaluate his or her
own performance prior to the review session.
 Prepare for the review by examining information
and seek additional information if needed.
 Begin the session on a positive tone to set the
employee at ease.
 Explain the format of the performance review
session.
Tips for a Successful Performance
Review

 Make the employee aware of the uses of

performance appraisal results.
 If needed set a second meeting to discuss
non-performance related issues.
 Encourage the employee to participate.
 Review the standards to which the employee
will be compared.
 Make sure to praise the employee for his or
her accomplishments during the evaluation
period.
Tips for a Successful Performance
Review

 High light but do not dwell on areas in

which performance did not meet the
standards.
 Discuss ways to improve performance in
the areas in which the employee was
weak.
 Make sure that the employee fully
understands the appraisal.
 End the discussion on a positive note.
 Perceptual Errors In
Evaluation

 Halo Effect
 Stereotyping
 Attributions
 Recency Effects
 Leniency/Strictness
Errors
 Central Tendency
Errors
 Halo Effect

 The halo effect occurs when the rater

allows one trait or characteristic either
positive or negative of the employee to
override a realistic appraisal of other traits
or characteristics.
 Stereotyping

 Stereotyping occurs when the rater places

an employee into a class or category
based on one or a few traits or
characteristics.
 For example an old worker may be
stereotyped as being slower, more difficult
to train and unwilling to learn approaches.
 Attributions

 Another perceptual error that can effect the

validity of the performance appraisal involves
the attributions the rater makes about
employee behavior.
 Making an attribution means to assign
causation for another's behavior.
 For example attribute an employees good
performance to external or internal causes
such as luck. Holding an easy job, or receiving
help from co workers.
 Recency Effects

 Recency errors occur when performance

is evaluated based on performance
information that occurred most recently.
 Recency errors are most likely to occur
when there is a long period of time
between performance evaluations (such
as a year).
 Leniency/Strictness Error

 These errors occurs when the rater tends to

use one of the extremes of a rating scale.
 In Leniency most of the employees receive
very favorable ratings.
 Strictness error occurs when the rater
erroneously evaluates most employees
unfavorably as raters simply wants to
appear tough or they may have unrealistic
expectations of performance.
 Central Tendency Errors

 Central tendency error occurs when the rater

avoids the extremes of the performance
scale and evaluates most employees
somewhere near the middle of the scale.
 This error results in most employees
being rated as Average.
 Common Problems With Unsuccessful
Performance Appraisal Systems

 A poorly defined appraisal system

 A poorly communicated appraisal system
 An inappropriate appraisal system
 A poorly supported appraisal system
 An unmonitored appraisal system
 Management Guidelines

 Performance appraisals should be based on a

thorough job analysis that is current regarding
both JD & JS
 Performance appraisals should be developed from
the job analysis as input into the performance
appraisal.
 The performance appraisals should evaluate a
number of specific behaviors.
 The performance review discussion should be a
two way communication between the evaluator
and the employee.
 Management Guidelines

 The performance appraisal should be used not

only as a means of evaluating performance but
also as a means of motivating and developing the
employee.
 The purpose of the performance appraisal and the
objectives of the organization must be considered
carefully before deciding on a performance
appraisal method.
 Training programs should be implemented to help
raters avoid common perceptual errors in
evaluation and help raters with their performance
review/feedback skills.
QUESTIONS