HRM333 - Performance Management PDF

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Summary

SU1 Performance Management (PM)  Process of identifying, measuring and developing perf of individual and team, and to align individual perf with org goals  Main purpose is to contribute towards strategic biz objectives by linking individual employee with overarching org goals  Characteristics- on...

Description

SU1 Performance Management (PM)  Process of identifying, measuring and developing perf of individual and team, and to align individual perf with org goals  Main purpose is to contribute towards strategic biz objectives by linking individual employee with overarching org goals  Characteristics- ongoing feedbacks, driven by LMs Performance Appraisal (PA)  System of employee evaluation to gain a determination of individual job perf of a given time  Focused on measuring and documenting individual strengths and weaknesses  Standalone process that provides inputs for a broader PM process  Characteristics- usually occurs once in a year, does not include continuous feedback and coaching  Characteristics- subset of PM, driven by HR Purpose of PM 1. Strategic- individual goals linked to org goals and this helps to reinforce strategic behaviours to achieve org goals 2. Administrative- perf data helps to make employee-related decisions such as pay raise, promotion 3. Informational- PM shows employees impt information about behaviours that the org wants, and show them what strengths & weaknesses they have, and how to improve 4. Developmental- PM helps management to coach employees 5. Organization Maintenance- helps in workforce planning 6. Documentation- perf data can be used to validate new selection tools. PM systems are also used to document HR decisions & employee behaviours Advantages of an effective PM system Employee - Clarifies definition of the job and success criteria by aligning individual goals/needs with org objectives - Increase motivation to perf = increase employee engagement - Increase self-esteem - Enhance self-insight and development. Employee can gain feedbacks about their strengths & weaknesses, and how to improve Manager - PM allows managers to communicate their views on perf more clearly - Help them to gain insights about their subordinates - Allow their subordinates to become more competent - Better & more timely differentiation between good/bad performers Org / HR - Clarifies org goals - Facilitate org changes Function - Fairer, more appropriate admin actions which will increase employee engagement - Better protection from lawsuits

Disadvantages of PM system 1. Timely and costly to implement 2. Reduce motivation to perform if PM is done wrongly as it blurs out the situation further, making it more confusing for employees who are already losing their motivation. Employee might feel that perf is not aligned with rewards 3. Increase employee turnovers as there is a loss of motivation and engagement- employees feel that org does not value them Ideal characteristics of PM system 1. Strategic congruent- PM should be congruent with org strategy and align individual goals with org goals 2. Context congruent- PM system needs to suit the org culture 3. Thoroughness- everyone should be evaluated; all major job responsibilities should be evaluated; evaluation including perf spanning the entire review period, not just the few weeks/months before the review; feedbacks should include both positive & negative review 4. Specificity- should guide the employees clearly 5. Meaningfulness- must be impt and relevant, timely & have consequences 6. Practicality- must suit the org 7. Identification of effective / ineffective perf 8. Reliability- measures of perf must be consistent and free from error 9. Validity- measures should measure what it is supposed to measure and not irrelevant facets of perf 10. Acceptability and Fairness- set clear & consistent rules; PM must be accepted & deemed fair to all employees 11. Openness-everything should be transparent & clearly communicated 12. Inclusiveness – everyone should be given a voice in designing & implementing the PM system to ease them into it 13. Standardization- perf is evaluated consistently across people and time; people in charge of the PM system should be trained consistently 14. Correctability- should include ways to correct mistakes so that system can be continually improved 15. Ethicality- must follow with ethical standards, personal self-interests are set aside during evaluations 6 components in PM system 1. PM prerequisites- process of gathering & recording info before the PM is implemented -

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Knowledge of org mission and strategy - Strategic planning is related to PM system; needs to ensure PM system is aligned with the org strategic direction so that perf is managed to support org Knowledge of the job (KSAs needed, tasks involved) - Helps in clarity of the PM system’s design and implementation - Achieved through JA & JD; knowing info about a job helps to determine the success factors to achieve perf

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JA: Process of identifying the impt tasks of a job, & the KSAs associated with performing the task - JD: Results from job analyses that includes perf standards; used as a tool to measure perf; act as a communication tool between manager and employee on perf expectations - Potential issues: - Rater error during JA i.e. self-serving bias - People might think too much from their perspectives instead of proving on objective view when identifying the job’s KSAs i.e. social projection (tendency to assume others behave same as them), false consensus (tendency to assume others’ values and beliefs are the same as them) 2. PM planning- usually occurs at the start of the calendar / FY; manager and employee come to a mutual agreement about the upcoming objectives and goals - Includes development plan - Includes results & behaviours; areas of improvement & goal setting - Includes results - Results are outcomes that an employee must produce - Involves key responsibilities (areas which employee is responsible in producing); objectives (states the desired level of perf); perf standards (minimum acceptable level of perf) - Include behaviours - Evaluation of behaviours include competencies - Potential issues: - Failure to focus on development - Job perf can be difficult to specify, some jobs do not relate behaviours to results 3. PM execution- employee strive to execute the developmental plan to achieve desired results & behaviours - Employee: - Be committed to goal attainment; should be active participants in goal seeking & perf planning - Feedback & coaching should be constantly provided; employee should be initiative - Needs to communicate with management on problems; provides updates - Manager: -

Observe and document perf regularly, both good & bad Update and review the developmental plan when org goals change Provide feedback Encourage employee and help them with resources e.g. training opportunities to improve 4. PM assessment- carried out by both manager & employee - Direct manager provides perf inputs - Evaluate extent to which developmental plan has been achieved - Include self-appraisal; If manager and employees appraisal differ, it can kick starts motivation and direction for improvement 5. PM review- formal meeting between employee and manager

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Discuss progress in developmental plan and how to improve from it Potential issues: - Manager needs to provide feedbacks concisely and effectively; cannot be afraid to provide negative feedbacks - Managers can be trained in delivering feedbacks 6. PM renewal and contracting - Similar to PM planning but includes what has been learnt from previous components; constantly cycle for improvement SU2 Strategic Planning  Process that includes setting org destination, reviewing obstacles and priortising ways to move forward effectively towards that destination  Org engage in strategic planning to gain completive advantage by maximizing and allocating resources to increase profits and growth Org Strategic Plan- states what the org needs to accomplish as a whole  Tangible statement representing the org mission, vision, goals and strategies - Mission- details org reason for existence, values & beliefs - Vision- org future goals - Goals- tangible targets about how the mission will be implemented within the stipulated period - Strategies- plans on how goals will be attained Purpose of Strategic Planning 1. Clarifies org’s identity 2. Clarifies an org’s future by showing a clearer sense of who the employees are and their purposes 3. Helps org allocate resources towards achieving strategic purposes 4. Gives employee info on how to guide daily work towards an org strategic goal Linking Perf and Strategic Goals  4 different levels- org, departments, workgroup, individual  Impt to align all perf goals to one another in the org- helps to better achieve org strategic goals  PM system is a tool that org uses to implement its vision and mission  JD should be consistent with org priorities as PM system includes the behaviours, results and development plans Achieving alignment between perf and strategic goals through: i. Balanced Scorecards - Purpose is to help the org implement its strategic plan; and to help focus individual employees on critical tasks that improve organisational perf Goal-Setting Theory and Perf Management 1. Link between goals and improve perf - clear and challenging goals help to improve perf instead of ambiguous objectives 2. Challenging goals and self-efficacy are impt inputs in a high perf cycle model

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Challenging goals and self-efficacy affect the direction of action, effort exerted and persistence to attain a goal 3. Goal-specific feedback - Feedback in relations to goal led to higher perf than goal setting alone Importance of the PM Systems in Relation to Business and Organizational Outcomes  PM helps to translate strategies into actions  Division goals from senior management level is cascaded down to developmental goals in middle management level and further cascaded down to department goals for employees and teams Performance  Perf is defined as behaviours because it is easily observed and influenced  Behaviour can be evaluated as having positive/negative value to the org which can be quantify using rating scales i.e. behaviour-based anchors  Behaviours have multiple dimensions which is cluster tgt to influence org goals Multidimensional nature of perf i. Task perf- activities that directly translate raw materials into g&s; tend to be role prescribed and is included in JD ii. Contextual perf- behaviours contributing to org effectiveness through psychological, social and org contexts in the workplace i.e. helping others / being punctual / willing to OT - Helps to create good environment for task perf to occur - Influenced by personality - Prosocial behaviour * impt to include both task & contextual perf as it is fairer- examines all aspects of perf Defining Perf i. Declarative knowledge- facts and info about a tasks/area of knowledge ii. Procedural knowledge- knowledge about how a task is carried out and skills needed to perf the job iii. Motivation- choices related to exerting effort and persistence towards that level of effort Factors that influence determinants (drivers) of perf i. Individual differences- KSAs possessed; past experiences ii. Systems- HR systems and practices (training, policies and budgets) iii. Work environment- can increase/decrease motivation (competitive/collaborative) Measuring Perf i. Behaviour Approach (ignores results and personality traits) - Only focus on how employee performing the job i.e. observable behaviour - Usually used when link between behaviour and results is not transparent and direct, when outcome is too far to assess ii. Results Approach (ignores behaviour and personality traits) - Usually easy and fast to define - Data is more objective as results are measured - More cost-effective as results are easier to track

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iii.

Usually used when employees already have the required KSAs; behaviours and results are obviously related; results are constantly changing; many ways to carry out the job Traits Approach (ignores behaviour and results) - Only measure individual ability (i.e. cognitive ability) and personality traits (i.e. extraversion) - There is a positive r/s between abilities, personality traits and desirable work behaviour - Not advisable to use trait approach because: - Traits are stable over time and employee does not have much control over them - Traits may not necessarily lead to results and desired behaviours - Usually used when emphasise in on individual; positive r/s between abilities, personality traits and desirable work-related behaviours; structural changes in org

Theories relating to social psychological & motivational processes i. Social Comparison Theory- people judge their perf against others and they are more motivated to perform if they feel others perform better than them ii. Equity Theory- people compare themselves to others in terms of inputs and outcomes received. More motivated to perform if they see high performers receive more rewards iii. Feedback Intervention Theory- people are motivated to improve their perf when there is a difference between goals & feedbacks relating to these goals SU3 Results Approach (‘continued) i. Accountabilities- broad areas that employees are responsible for producing results - Relate to inherent purpose of the job - Obtained from JA & JD - Can identify the consequences of performing the tasks at different perf levels; errors made, and percentage of time spent can be observed and documented ii. Objectives- statements of measurable outcomes that guide employee’s effort towards attaining accountabilities - Set between manager and employee - SMART: specific, measurable, attainable, results-based, time-bound - Should not have many objectives so perf can be improved in such areas, and rewards should be allocated for achieving objectives iii. Perf Standards- yardstick to measure extent that employee has achieved predefined objectives - Provides info about what to look out for to determine a perf level has been achieved - Minimally used to determine minimum and outstanding perf Behaviour Approach (‘continued)  Measures behaviour by looking at the competency or cluster of KSAs which are critical in determining how results are derived  Threshold competency: basic competency that individual needs to possess to perform job to a minimum acceptable behaviour i.e. listening skills  Differentiating competency: competency that distinguishes superior perf i.e. leadership skills  A competency is described in behavioural terms; emphasize a person’s observable actions

Competency Framework  Define criteria for perf effectiveness; what is needed for good perf  Collect data by identifying competencies through JA & JD  Purpose is for employee development as competency framework can be developed for diff jobs  Key steps for developing a competency framework: 1. Define perf effectiveness criteria 2. Identify a criterion sample 3. Collect data 4. Analyse data and develop a competency model 5. Validate the competency model 6. Prepare applications of the competency model Measurement System for Evaluating Competencies Comparative System- compare employees with one another Advantages Easy to explain Straightforward Identifies top/low performers Better control for biases & errors found in absolute system (leniency / severity / central tendency)

Disadvantages Rankings may not be specific enough for useful feedbacks – employees are usually compared in an overall category instead of being judged on individual behaviours or competencies No info on relative distance between employees

Types of Comparative Systems: i. Simple Ranking Order- rank employees from best performer to worse performer - #1 can be either good/bad - Advantages: easy to use; results are clear - Disadvantages: judge perf based on 1 perf dimension only; may be difficult to rank similar perf levels; does not specify threshold for acceptable perf ii. Alternation Rank Order - Alternate between the good and bad performer of the list until all the employees have been ranked - Advantages: easy to use; results are clear; anchors are used (good/bad) - Disadvantages: judge perf based on 1 perf dimension only; may be difficult to rank similar perf levels; does not specify threshold for acceptable perf iii. Pair Comparison - Comparing employee with each other - There is explicit comparison made between all employees (diff from simple & alternation rank order) - Number of comparisons increase significantly when there are a lot of employees under the same direct (not practical; waste of time and resources) iv. Relative Percentile - Rater considers the ratees all at the same time & ranks their relative perf on a 100-point scale

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Advantages: simple & easy to use; evaluate specific competencies/overall perf Disadvantages: may be difficult to consider all ratees at the same time; time consuming if several scales or competencies are used Forced Distribution - Employees are put into a fixed band that approximate a normal distribution - Assumes perf cores are normally distributed, BUT, may not be the case if all members are good performers (artificial and unfair when forcing them to be banded) - Advantages: facilitates reward assessment; categorise employees into specific perf groups; facilitate competition which may be good for org perf - Disadvantages: discourages employee from engaging in contextual perf behaviours; difficult to implement in org not experiencing growth (only top performers are left to cut after cutting all low performers); not good for LT implementation

Absolute System- compare employees with a predetermined standard and does not make any comparisons against other employees Types of Absolute Systems: i. Essays- prepared by manager; qualitative written descriptions about employee’s strengths, weaknesses and suggestion for improvement - Advantages: simplest absolute method; individualized for each employee; can be done anytime; potential for detailed feedback - Disadvantages: subjects to manager’s writing skills; unstructured and may lack details; comparison virtually impossible; lack of quantitative info, difficult to use in personnel decisions ii. Behaviour Checklist- a form that lists behavioural statements that are indicators of the competencies to be measured; usually has numerical ratings (usually 5-point scale) - Advantages: easy to use & understand; provides quantitative info; easy to implement/practical; more objective than other systems - Disadvantages: may feel impersonal & disconnected; scale points used are often random; difficult to get detailed and useful feedback iii. Critical Incidents - Gather reports of situations where employee demonstrated particularly effective/ineffective behaviours - Incidents recorded provides a starting point for perf assessment - Can use perf diaries which behaviours are recorded in a structured written format - Advantages: focus on actual job behaviour; provides specific examples; employees identify with ratings - Disadvantages: time consuming to collect critical incidents; quantification is difficult - Improvement: can summarise critical incidents in a form of behavioural scales iv. Graphic Rating Scales - Clearly defined response categorises (ratings of behaviours) and order along a numerical scale - Behaviourally Anchored Rating Scales (BARS) - Uses critical incidents as anchors - Involves multiple groups of employees in development

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Identify impt job elements; describe critical incidents at various level of perf; check for inter-rater reliability Advantages: meanings, interpretations and dimensions being rated are clear; useful and accurate Disadvantages: time consuming and resource-laden to develop; lacks individualized feedback and recommendations

Who provides perf information? Manager Appraisal- directly observes employees and have good knowledge on perf standards  Often the one making decision about rewards wrt perf evaluation  Able to differentiate among diff perf dimensions regardless of the employees’ level of experiences Peers Appraisal  Accuracy of rating depends on friendship bias (i.e. give good ratings if good friends)  Peer evaluation and feedbacks may not be taken seriously Subordinates Appraisal  Good source of info about the manager; good position to evaluate the leadership competencies  Subordinates may hesitate to provide upward feedback-...