Performance management system
- Pulakos (2004) calls the Achilles heel of
HRM.
- Not many paid much attention to this
particular human resource function.
Performance management
- process by which managers, supervisors,
and executives assess the performance
of employees to ensure that it accords
with the company's objectives.
- Armstrong "a systematic process for
improving organizational performance
by developing the performance of
individuals and teams
best way of managing and rewarding
performance based on planned goals.
- Armstrong and Baron a "strategic and
integrated approach to delivering
sustained success to organizations by
improving the performance of the
people who work in them and by
developing the capabilities of teams and
individual contributors"
Performance management is effective if it does
the following:
1. Identify excellent performance
2. Use appropriate appraisal techniques
3. Provide feedback to employees
regarding their performance
4. Evaluate employees fairly
5. Minimize biases
6. Exercises fairness
PERFORMANCE
APPRAISAL
PERFORMANCE MANAGEMENT
AND
Performance appraisal
- often synonymous to performance
management.
- a formal annual assessment of
employees
by
their
immediate
superiors.
Performance management
- a continuous and more comprehensive
process of managing people.
- not exclusive to evaluating employees
annually or periodically.
- about
motivating,
guiding,
and
rewarding employees, thus helping them
hone their potential and improve
organizational performance.
Performance management cycle shows
managing performance as a continuous process.
1. Planning
Setting of performance goals and expectations of
groups (departments or units) and individuals
(subordinates and superiors).
Ensures all efforts work toward the achievement
of company objectives.
Planning covers the following areas which should
be defined clearly and comprehensively as a first
step for a successful performance management
system:
a. Roles
The manager (immediate superior) and the
employee should discuss key result areas and
define their respective roles.
b. Key result areas
The employee at this point should think of the
most important tasks that he/she has been
assigned with and the kind of performance that
is expected from him/her.
c. Technical competencies
The employee should possess the essential
knowledge and skills (e.g., procedural, problemsolving, planning, and communication) to be able
to do his/her tasks well.
d. Behavioral competencies
The manager should discuss the behaviors/traits
expected by the organization.
e. Objectives
The employee and the immediate superior
should agree on the performance objectives
Objectives should be quantifiable and
measurable in terms of sales, income level,
output, cost reduction, etc.
f. Core Values of the Organization
include integrity loyalty, industry, and honesty.
2. Monitoring
- Provides the mechanisms by which
performance will be measured.
- Also entails giving constant feedback to
employees regarding their progress in achieving
the goals of the organization.
Performance measures- established in terms of
output and outcome.
What is quantifiable is an output
what can be visible but cannot be measured in
quantifiable terms is called an outcome
(Armstrong, 2006).
In monitoring performance, a performance plan
using the agreements made during the planning
stage is provided.
Personal development plan is also accomplished
so that the immediate superior can support the
employee's improvement of knowledge and
skills: coaching, mentoring…
3. Reviewing
Performance is reviewed from time to time and
compared with the performance standards,
goals, and expectations which were agreed upon
during the planning stage.
The act of reviewing performance should be a
continuous process.
Reviewing has the
(Armstrong, 2006):
following
objectives
a. Planning
This is the opportunity to find out if there is a
need to revise the performance agreement
between the employee and the immediate
superior.
b. Motivation
This encourages the employee to grow or take
control of his/her performance.
c. Learning and development
an opportunity to further develop the
employee's knowledge and skills and to provide
him/her with learning activities that maximize
his/her potential.
d. Communication
This promotes two-way communication between
the superior and the subordinate. Roles and
performance expectations are clarified and a
relationship between them is built on mutual
trust is developed.
4. Acting
This includes activities based on the
performance review. It means giving an
employee feedback on his/her accomplishment
of organizational goals. Feedback is based on
evidence which should be fair to the employee.
The three R's of performance management and
employee movement are rewards, retention,
and remuneration.
REWARDS
- Tangible manifestations of a job well
done or a good deed. Included in the
scope of performance management
because
conducting
performance
appraisal involves acknowledging the
employees'
contribution
in
the
attainment of the firm's objectives.
Performance appraisal determines whether
employees perform effectively and are on a par
with the company's expectations. It concretizes
and measures performance as an aspect of the
performance management system. Formal
evaluation than informal one is highly preferred
and recommended.
Informal evaluation
observation.
is
done
by
mere
The following are the purposes of performance
appraisal:
a. Needs assessment
The results of performance evaluation provide
relevant information about the specific training
needs of employees.
b. Employee movement
The appraisal helps management decide who will
be promoted aided by concrete evidence of
meritorious performance.
c. Basis for merit increase
In addition, it also justifies merit increases.
d. Legal concerns
If there are issues triggered by certain actions like
termination of employment, the appraisal
document serves as basis of such decision. Other
questions about performance issues include
rewards provision, layoff, and transfer.
e. Development
A series of performance appraisals monitors the
growth of employees. These periodic records can
assist the career pathing and development of
personnel.
f. Channel of communication
This is a good source of enhancing discussions on
performance issues between the employee and
the immediate supervisor. It becomes an avenue
for ironing out differences and articulating
certain career concerns or questions on
performance ratings.
g. Source of motivation
Performance evaluation is one of the best ways
to keep employees motivated.
The following are the different performance
appraisal techniques:
1. Individual Evaluation Methods
a. Graphic Rating Scale
This is the most popular technique. Employees
are rated using a set of traits or characteristics
such as punctuality, quality of work, flexibility,
cooperation, and the like. This technique clearly
defines the core traits needed for the job. It is
very popular because it is very easy to use and
makes comparisons
possible.
between
employees
b. Forced Choice Technique
This is a technique that branched out from the
graphic rating scale. The HR develops a set of
descriptive statements and the supervisors rate
their subordinates based on how they behave on
the job. The HR prepares the following
statements and a rater ranks an employee, for
example, using number 1 for the statement that
best describes the employee and number 6 for
the statement that least characterizes the latter.
There will be no ties when it comes to the scores.
Here are some examples of
statements:
mingles well with co-employees
understands directions quickly
manages time well resourceful
innovative
controls his or her emotions
descriptive
of an employee. There is also a tendency for the
supervisor to merely check the statements
without mulling over all the relevant factors
involved. In such cases, the evaluation becomes
perfunctory.
e. Behaviorally Anchored Rating Scale (BARS)
Patricia C. Smith and Lorne M. Kendall developed
the BARS
There are about nine performance dimensions
with anchor statements of critical incidents in a
scale. The ability of a sales representative to
provide accurate information to customers is an
example of a performance dimension.
This method is advantageous because it
describes a particular aspect of a job in great
detail. It provides more objectivity than the
previous techniques mentioned.
The construction of BARS, however, is too
complicated. Thus, it is not a very popular
evaluation technique because it is timeconsuming.
This method is inexpensive and fairly easy to use.
However, just like the graphic rating scale, the
rater is forced to choose from a number of
statements that may or may not describe an
employee. In this case, the rater can become
subjective
C. Critical incident technique
In this particular technique, the rater or the
immediate supervisor keeps track of all the
critical or relevant behaviors of the subordinates.
A logbook used to record these behaviors
whether good or bad.
However, this technique becomes tedious for the
thereby giving a clear, fair, concrete, and
accurate evaluation. each of his/her
subordinates.
d. Checklists and Weighted Checklists
The HR provides a list of descriptive statements
with corresponding weights. The rater checks the
statements which would likely describe the
employee. Otherwise, he leaves it blank. He can
check as long as they apply to the traits of the
employee concerned
The checklists are simpler than the weighted
checklists because there are no weights. The
supervisor just checks the statements that likely
describe the employee. There are corresponding
scores based on the number of checks.
This technique is not time-consuming and,
therefore, ideal for large organizations. However,
a checklist may not provide all the possible tasks
f. Essay Evaluation
In this technique, the rater discusses in narrative
form all the levels of performance manifested by
his subordinates. Advantageously, the rater can
discuss what he feels is relevant to an employee's
performance without the use of statements to
describe them. However, it is not advisable if the
rater has many direct reports. It is timeconsuming and helpful only to managers who
have a flair for writing. One disadvantage of this
technique is that there is no consistent and
specific criterion by which to gauge
performance.
2. Multiple Person Evaluation Methods
a. Forced Distribution
Allows a supervisor to group subordinates at own
discretion. For example, out of 20 personnel,
20% or 4 personnel will receive outstanding
ratings, 40% or 8 personnel will get above
average, and so on. A problem occurs if more
than 20% of his/her subordinates get
outstanding ratings and he/she will stick to just 4
as an outstanding although they should only be
above average. However, it is controversial
because employees may not fit into the goup
identified by the manager. This technique is very
easy to use, so it is widely popular. the groups
identified by the manager. There may be a thin
line between, say, 20% and 40%.
b. Ranking
In this method, the supervisor rates all the
employees from first to last. A manager can
easily make decisions such as who becomes
employee of the month or who gets laid off. It
also motivates employees to work better since
they will know where they stand in comparison
with the others.
c. Paired Comparison Technique
The supervisor rates employees by pair. Suppose
four employees will be evaluated: Employees A,
B, C, and D. The raters will be given six cards with
the names of the employees in pair.
figure 13- Paired Comparison Technique
The supervisor determines the most preferred
employee based on his/her appearance in the
pairings.
The advantage of this method is that managers
rank employees by pair so assessing them
becomes simpler because it is done two at a
time.
d. Management by Objective (MBO)
This technique allows an employee to set his/her
own goals or objectives by himself/herself.
This technique is ideal because it develops the
work commitment of ratees as members of the
team and, thus, motivate them to further excel
in performance. Moreover, it focuses on results
that are relevant.
However, it is too individual-focused and mainly
based on the goals that have been achieved. The
performance of an individual is not compared
with the performance of other employees. Also,
a goal is only set on a short-term basis.
e. 360-degree Feedback
As the term implies, immediate supervisors are
not the only raters. Other people also evaluate
the employees. This technique is said to be
comprehensive and gives a full-blown evaluation
of the employee or an assessment done in a
circular fashion.
The advantage of this technique is that
employees are provided with a clear picture on
how others see them as performers. It also
increases their awareness of their competencies,
skills, and knowledge because of the more valid
and objective feedback they receive. Howev
disadvantage is that not all employees give
honest feedback. There may be politics involved
as people become subjective and provide
feedback based on their personal biases against
the people being evaluated.
RETENTION
the act of maintaining the employees in the
organization. It entails earning their loyalty. One
of the best ways to do this is to evaluate them
fairly and objectively.
There are certain errors committed by raters
who are usually the employees' immediate
supervisors.
1. Halo Effect
This usually happens when a rater uses one
particular aspect of the employee's good traits.
For example, the employee is always punctual
and never absent. Based on this one factor,. he
also gets high ratings on the quality of his work,
even though he does not really display a type of
performance that merits high ratings in these
areas.
2. Ambiguous Evaluation Standards
Ambiguity occurs if one rater's standard for
outstanding work performance contradicts that
of another rater from a different department.
3. Stereotyping Effect
Stereotypes may influence the rater's decision as
to who will garner a high ranking and who will
earn a low one. For example, raters may not like
employees who belong to a certain religious
denomination or those who come from a
particular region or province.
4. Recency Effect
If recent events prior to the actual evaluation
period are easily remembered and given more
weight than the accumulation of performance
behaviors for the whole evaluation period, the
raters commit the recency effect.
5. Primacy Effect
Raters may have first impressions of the
employees that linger and influence the ratings
they give during an evaluation. For these raters,
first impressions last and become a dominant
assessment criterion.
6. Central Tendency
In statistics, there are measures of central
tendency such as mean, median, and mode. The
central tendency deals mostly with the mean or
average. The rater avoids putting high and low
ratings (e.g., a scale of 1 to 5, where 5 is the
highest and 1 is the lowest, and the rater remains
neutral and puts 3 instead). This error diminishes
the opportunity for subordinates to get the
ratings they deserve.
7. Hard/Easy to Please Tendencies
There are raters who are hard to please and feel
that employees do not meet their expectations
in terms of performance. They set their own high
standards that are not only difficult to meet but
are also beyond the standards set by the firm.
On the other hand, many employees get
outstanding ratings because some raters lower
their standards for outstanding performance.