Managing People and Activities –
Managing Performance (3)
Week 3
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Last week
 Identified key skills necessary to work effectively with
others
 Explained how to deliver work to agreed standards
and within deadlines
 Explored range of appropriate communication
mechanisms useful when working with others
 Accurately defined the principles of flexible working
with reference to work covered within HRM module
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Learning Objectives
By the end of the session, students should be able to: Demonstrate understanding of the benefits of using
best practice appraisal techniques
 Accurately state the statutory steps of the Dismissal,
Disciplinary and Grievance Procedure outlined in the
Employment Act 2002
 Apply the principles of the DDP to a case study
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Activity
Working in groups, and with
reference to work covered in the
HRM module prepare your
definitions of
Performance Management
Appraisal
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Difference between Appraisals and
Performance Review
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Performance Appraisal
Appraisal consists of…..
• Managers judging subordinates on (often subjectively)
– What they achieve
– What they do
– What they are
• Usually categorised into 3 types –
– Performance reviews
– Potential reviews
– Reward reviews
• Historically, a ‘top down’ process run in isolation by personnel
department
Often cited by HR and managers as an area in need of improvement – but if
conducted properly appraisals are an extremely useful management tool
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Performance Management
Performance management consists of….
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Participation, support and coaching at all levels
Consensus rather than control
Shared understanding of what is required for success
Continuous feedback on performance
Performance Management describes WHOLE cycle –
appraisal is just one process of performance management
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
What is Performance Management
Performance management is a cyclical process…..
Managing
Performance
Standards
Determining
performance
expectations
Reviewing and appraising
performance
Supporting
Performance
Source – Torrington
and Hall 1995
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
What is Performance Management
Oxford English Dictionary defines
performance as the ‘accomplishment,
execution, carrying out, working out for
anything ordered or undertaken’ i.e. how
things are done as well as what is done.
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
What is Performance Management
What the academics say….
‘Performance management is the integration of
employee development with results based assessment’
Hannagan, 2002 pa 294
‘Performance management is about managing the
organisation. It is a natural process of management,
not a system or a technique’
Fowler, 1990
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
What is Performance Management
What the academics say…
‘Performance management is a strategic and
integrated approach to delivering sustained
success to organisations by improving the
performance of the people who work in
them and by developing the capabilities of
teams and individual contributors’
Armstrong & Baron, 1998 pa 7
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
What is Performance Management
• Strategic-concerned with broader business issues
• Integrated –
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Vertical – linking team and individual objectives
Functional – linking functional strategies within business
HR Integration – linking organisational and HR development
Individual - linking individual needs with those of the
organisation as much as possible
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
What is Performance Management
Performance management consists of…..
• Appraisal of individual performance
• Objective setting for individuals and
teams
• Related Training programmes
• Performance-related pay
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
What is Performance Management
Principals of performance management…..
• Organisational goals translated and clarified
• Continuous and evolutionary process where
performance improves over time
• Open management style required that allows 2-way
communications
• Continuous feedback required
• All performance measured against jointly agreed goals
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
What is Performance Management
The 3 stone cutters….
• I am making a living
• I am the best stone cutter in the country
• I am building a cathedral
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
How did the concept of Performance Management
Develop?
Performance Monitoring System
development –
Developed during the early 1900’s based on
work by Taylor
•
merit rating scale developed
• early appraisal system developed based on key criteria
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
How did the concept of Performance Management
Develop?
The early pioneers…..introducing merit rating and performance appraisal
• WD Scott – introduced worker rating into US industries pre WW1
based on work of Taylor.
– WD Scott scale modified and used by US Army for rating officers and then
adopted by UK Army in 1950’s.
– Principles of scale developed into merit rating or performance appraisal
during 50’s, but without much further research.
• McGregor 1957 – recommended change of emphasis from
appraisal to analysis
• Rowe 1964 – encouragement to move away from ‘grades’
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
How did the concept of Performance Management
Develop?
Management By Objectives –
Developed during the late 1950’s based on
work by Drucker
•
claims that system overcame problems of merit rating
• inclusion of qualitative performance standards in system
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
How did the concept of Performance Management
Develop?
The early pioneers…..introducing management by objectives
• Drucker 1955 – introduced concept of management by objectives
(MBO)
– Integration of individual and corporate objectives
– Managers able to manage their own performance
• McGregor 1960 – ‘theory y’
– Management by integration and self-control
• Humble 1972 – defined management by objectives cycle
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
How did the concept of Performance Management
Develop?
Performance Appraisals – 1970’s
version
Developed under the influence of the MBO
movement
•
results-orientated
• performance-related pay based on performance ratings in
late 1980’s
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
How did the concept of Performance Management
Develop?
Performance Management
•
first considered in mid 1970’s
• really emerged strongly in the mid 1980’s in the US
• by 1990 part of HRM language
• 1992 Institute of Personnel Management research into PMS
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
How did the concept of Performance Management
Develop?
The early pioneers…..introducing performance management
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Beer and Ruh 1976 – introduced concept of performance management
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Plachy 1987 – first book devoted to subject
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Emphasis on development and evaluation
Use of profile to define individual strengths and development needs
Integration of achieved results
Management by integration and self-control
Fowler 1990 – defined accepted concept of performance management
IPM 1992– research carried out concludes PMS activity
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Why is Performance Management important?
Performance management should
consider what makes organisations,
teams and individuals perform well in
the following areas…..
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Why is Performance Management important?
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Organisational culture
Organisational context
Functionality
Job design
Teamwork
Organisational development
Purpose and value statements
Strategic management
Human resource management
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Why is Performance Management important?
Performance management is a holistic
process that pervades every aspect of
running the business.
It should be treated as a normal
process of management.
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
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Performance Appraisals
Some Facts…
Essential for effective management and evaluation of
staff
Facilitates individual development
Specific individual training needs established resulting in
a realistic training plan that should deliver organisational
objectives
Influence on individual motivation and company loyalty
Analysis of impact of individual contribution to
organisational performance feeding into development of
future business strategy
Contribution to succession planning, HRP and pay
VITAL TOOL for managing performance of people and
organisations
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Performance Appraisals
How are they carried out?
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Usually annual – but may be more frequent
Formal interview
One-to-one, face-to-face
Carried out by line manager
SHOULD be a two-way conversation – not a disciplinary!
Based on PERFORMANCE not subjective management
opinion
• Process should be transparent and clearly explained –
and agreed by all parties
• Variety of mechanisms
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Appraisals will usually cover
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Objectives
Performance against job description
Potential for development
Identification of training needs
Motivational aspects
Factors affecting frequency of appraisals include:• Company policy
• Individual requirements
• Experience
• Nature of work
• Length of service
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Appraisal Mechanisms
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Formal annual review
Informal, frequent performance feedback
Probationary reviews
Informal one-to-one review discussions
Counselling meetings
On-job observation
Skill/job-related tests
Secondment
Assessment centres
360° or 180°feedback
Psychometric tests
graphology
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Activity
• Working in pairs, complete the following analysis of your
individual appraisal systems making notes on the flip paper
provided
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Frequency
Who is involved and what role do they play
How long do they take
Paperwork used
How is the appraisal system perceived by employees?
• No formal appraisal system?
– How do you get feedback on performance?
– What impact does a lack of appraisal have on the workforce in your
opinion?
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Activity
Scenario
Sheila Monkswood, the general office manager at Jaylow Builders Ltd,
a very busy builders merchant, has asked her office supervisor to
attend an urgent meeting at 10.00 at her desk. The office is open plan,
in clear view of the public service counter, with a small board room
used once a month. Last week 2 key members of staff were off sick
and the office supervisor had to cover the counter meaning an urgent
report was not completed. Sheila has been at Jaylows for 2 months,
whilst the office supervisor has been there for 18 months. HR
procedures are sporadic and there is no formal performance review
system in place. Sheila prefers an autocratic management style that has
not proved over popular with the staff. The office supervisor is very
popular with the team and is highly regarded by Cameron Tadcaster, the
founder of Jaylows.
• Watch the role play. Make notes on what you see, particularly –
– What was good
– What was bad
– How would you resolve the problems if you were the line manager?
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Managing the Appraisal Interview
• PREPARATION
– Allow sufficient time
– Notify employee
– Consider previous performance and future
organisational needs
– Book room, prepare paperwork, ensure
work covered so no interruptions
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Managing the Appraisal Interview
• INTERVIEW
– Establish the purpose
– Open the interview
– Ask employee to report and comment on previous
performance
– Offer a performance assessment with reference to
previously agreed targets
– Discuss future business needs and agree individual
tasks that can contribute to the business objectives
– Discuss performance shortfall and agree action/
support required to improve
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Managing the Appraisal Interview
• INTERVIEW CLOSE
– Identify any training and development needs arising
from action plan
– Close on a positive note
– Check understanding by summarising discussion and
targets agreed
– Record and sign agreements
– Inform anyone else involved
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Managing Appraisals – getting it right
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Training – flexibility
Make it a positive experience for everyone
Fair procedures
Be aware of ‘negative’ culture
Encourage ‘informally and often’ approach
Thorough preparation
Professional interview management
Set SMART objectives and a feasible action plan
Record accurately
Check progress regularly
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
ACTIVITY – FIRST CHICAGO BANK
• Take 5 minutes to read through the activity
• Answer the questions as directed
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Benefits of frequent feedback
• WHAT are the benefits…
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Manager better informed
Difficult issues resolved quickly
Help given on demand
Quicker completion of projects
Up-to-date with business direction/objectives
Flexibility to meet objectives
More effective training delivery
Reduction of fear factor
Improved relationships
Better preparation for formal reviews
Reviews are more reliable
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Assignment 2 – carrying out an appraisal interview
• Read through the assignment task checklist
• Ask questions, take notes
• Agree mechanism of communication with appraisee
for completion of pre-appraisal documentation
• Notify Sue of any issues with assignment completion
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Performance Management and Discipline
• If performance management processes are not effective, may need to
leave cycle to enter disciplinary procedure
• Why?
• Negative effect on positive effects of performance management
• Employees may construe PMS used to collect evidence against them
• Performance reviews become threatening instead of mutually beneficial
• Consider other options to disciplinary – e.g. capability
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Disciplinary Quiz – what can you remember??
• You cannot dismiss someone for being off long-term sick
• You do not have to tell someone they are going to have a
disciplinary interview
• Your witness can actively participate in the disciplinary
interview
• What is the name of the process an employee can invoke if
they feel that they have been treated unfairly etc
• Name the 3 steps of the mandatory Dismissal and Disciplinary
Procedure that came in under the EA 2002
• Name the 5 reasons for potentially FAIR dismissal
• List at least 2 reasons for potentially UNFAIR dismissal
• Employers must have at least the statutory minimum DDP in
place
• State 3 offences that would be considered as gross
misconduct
• Disciplinary rules must be in writing and prominently displayed
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Disciplinary Quiz – what can you remember??
• You cannot dismiss someone for being off long-term sick
- FALSE
• You do not have to tell someone they are going to have
a disciplinary interview - FALSE
• Your witness can actively participate in the disciplinary
interview – FALSE unless agreed with management
• What is the name of the process an employee can
invoke if they feel that they have been treated unfairly
etc – GRIEVANCE PROCEDURE
• Name the 3 steps of the mandatory Dismissal and
Disciplinary Procedure that came in under the EA 2002
1. A written note to the employee setting out the allegation and
the basis for it
2. A meeting to consider and discuss the allegation
3. A right of appeal including an appeal meeting
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Disciplinary Quiz – what can you remember??
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Name the 5 reasons for potentially FAIR dismissal
Capability
Conduct
Redundancy
Breach of statute
Some other substantial reason
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Disciplinary Quiz – what can you remember??
• List at least 2 reasons for potentially UNFAIR dismissal
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TU membership/non-membership
Participation in TU activities at appropriate time
Dismissal for seeking TU recognition/de-recognition
Assertion of a statutory right
• Applying for flexible working
• Refusal to work on a Sunday (retail)
• Refusal to work in breach of WTD
• Attempts to enforce NMW
– Maternity/paternity reasons
– Connection with a TUPE transfer
– Certain H&S grounds
– Making a protected disclosure
– Where employer has failed to comply with statutory DDP procedures (since 2003)
– Participating in protected industrial action in certain circumstances
• Dismissal during 1st 12 weeks of protected industrial action
• Dismissal after 1st 12 weeks but employee had ceased to take part within 12
weeks
• Dismissal after 1st 12 weeks, employee still taking part, but employer had not
taken reasonable steps to resolve situation
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Disciplinary Quiz – what can you remember??
• Employers must have at least the statutory minimum DDP in
place - TRUE
• State 3 offences that would be considered as gross
misconduct
• Theft, fraud, deliberate falsification of records
• Fighting, assault on another person
• Deliberate damage to organisational property
• Serious incapacity through alcohol or being under the
influence of illegal drugs
• Serious negligence which causes unacceptable loss, damage
or injury
• Serious act of insubordination
• Unauthorised entry to computer records
• Disciplinary rules must be in writing and prominently displayed
-TRUE
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Handling Disciplinary Interviews
• Facts in advance
• Notice of disciplinary action in accordance with terms and
conditions
• Book room, ensure no disturbances, all parties aware of
time, place, reason for meeting
• State the case clearly
• Allow employees sufficient time to state their case
• Question employees and witnesses
• Allow sufficient time for general discussion, allowing
employees to have final say
See the ACAS
• Sum up emerging points
website for more
• Adjourn meeting if required
on best practice
• Confirm decision in writing
• Right to appeal in writing within 5 working days
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Handling Grievance Interviews
• Provide written facts of grievance in advance
• Notice of grievance action in accordance with terms and
conditions
• Book room, ensure no disturbances, all parties aware of
time, place, reason for meeting
• Allow employees sufficient time to state their case and ask
how they would like to see it resolved
• Allow sufficient time for general discussion, allowing
employees to let off steam and have final say
• Sum up emerging points
• Adjourn meeting if required
• Confirm decision in writing
• Right to appeal
See the ACAS
website for more
on best practice
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Role of the Personnel Practitioner in Performance Management
• Control functions –
– Analysis of key operational indices used to measure goal
achievement
– Monitoring labour performance via performance appraisal system
– Recommending appropriate remedial action to line managers
– Disciplinary procedures
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Role of the Personnel Practitioner in Performance Management
• Advisory Functions –
– Which employees ready for promotion (potential review)
– Who should attend training
– How a grievance procedure should be operated
• Service Functions –
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Keeping personnel records
Organising training
Recruitment and selection
Operating wages systems
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES
Any Questions….
• NEXT WEEK
• Appraisal assignment
Royal Agricultural College Modular Scheme Cirencester
College Foundation Degree in Business 2006/2007
UNIT: MANAGING PEOPLE & ACTIVITIES