Performance Management Systems

Session: 11 Prof: Yasmin

Yasmin

Books for reference

A.S. Kohli, T. Deb Performance management system a holistic approach
B D Singh

Performance management
Herman Aguinis

PMS
R K Sahu

What is PMS?
Process of performance planning (goal setting), Performance monitoring and coaching, Measuring (evaluating) individual performance linked to organizational goals, Giving him/her feedback, Rewarding the individual based on his/her achievements against set performance goals and required competencies And working out a plan for his/her development
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PMS Process Cycle

Performance Planning
Performance Monitoring and Coaching

Performance Linked Reward and Development Plan

Performance Measurement and Feedback

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Yasmin

PMS also facilitates

Career planning Redeployment/ transfers Career counselling Assessment of potential Job redesign Clarity of performance goal and direction

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Performance (definition)
The achievement of an employee against the expectations for his/her role along clearly defined targets for the year. Organizational requirements based on company goals Role areas of the individual position

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Competency (definition)
Its a combination of knowledge, skill and attitude required for an individual to effectively perform in a role Competency definitions in terms of demonstrated behaviors Competency criticality and proficiency requirements for effective performance of a role
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Potential (definition)
The capacity of the individual to handle higher responsibilities based on his overall abilities and current competency levels Overall potential of an individual (capacity) Current competency levels of the individual The competency levels required at the higher levels

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PMS process objective

The Evaluation objective:
Performance evaluation and assessment of the readiness of an individual to take on higher responsibilities To provide feedback to individuals on their performance levels and on current competency levels To generate data required for decisions on salary, bonus and promotions

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PMS process objective

The Development objective:
To counsel and coach subordinates so that they improve their performance and develop competencies To motivate subordinates through recognition and support To strengthen supervisor subordinate relationship To define the training requirements based on individual competency To diagnose individual and organizational competencies, so that actions can be taken on problem areas

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Importance of PMS
A Performance Management System enables a business to sustain profitability and performance by linking the employees' pay to competency and contribution . It provides opportunities for concerted personal development and career growth . It brings all the employees under a single strategic umbrella . Most importantly, it gives supervisors and subordinates an equal opportunity to express themselves under structured conditions Organizations can effectively manage the performance appraisal process with our online performance management system It calls for a high level of co-ordination, channeled information flow, and timely review
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Key outputs of PMS

Individual level expectations and targets Performance status and corrective actions Individual performance evaluation (quantitative and qualitative) Individual competency evaluation Individual development plans- Training Individual potential evaluation
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PMS Steps and linkages

1. Performance planning: under this

2.

step the organizational goals are selected and deployed to the respective divisions, departments and individuals, and individual targets for the year are set Performance monitoring and coaching: this happens during the course of the year. Organizational goals, division/departmental and individual goals are reviewed against current performance, and course correction and coaching is done to enhance performance. Mid term individual review and corrective action planning are also part of this step
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PMS Steps and linkages

3. Individual evaluation: under this step individual level

4.

performance, competencies and development requirements are reviewed and assessed. Feedback on the assessment is given to the individual. Company level moderation and finalization of performance evaluation is also done Linking the evaluation with pay and other areas: under this step the data generated from individual appraisal is used to decide on salary, career progression. Competency development etc. this step also includes feedback & development planning and upgradation.
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Linkage of pms to various other processes

Performance Assessment

Compensation

Upgradations/ Promotions PMS Job Rotations and Transfers Competency Assessment

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Training and Development

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PMS Includes
Work plan A document that describes the work to be completed by

an employee within the performance cycle, the performance expected, and how the performance will be measured.
Corrective action plan A short-term action plan that is initiated when

an employees performance fails to meet expectations. Its purpose is to achieve an improvement in performance.
Individual development plan An action plan for enhancing an

employees level of performance in order to excel in the current job or prepare for new responsibilities.
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PMS Includes
Performance appraisal A confidential document that includes

the employees performance expectations, a summary of the employees actual performance relative to those expectations, an overall rating of the employees performance, and the supervisors and employees signatures.
Fair appraisal Appraising employees in a manner that accurately

reflects how they performed relative to the expectations defined in their work plan and in a manner that is not influenced by factors irrelevant to performance.
Performance documentation A letter, memo, completed form, or

note on which the supervisor indicates the extent to which the employee is currently meeting expectations and provides evidence to support that conclusion.
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Performance management contribution

Motivation to perform is increased Self esteem is increased Managers gain insight about subordinates Self development Administrative actions are more fair and appropriate Organizational goals are made clear Employee become more competent There is better protection from law suits
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Performance management contribution

There is better and more timely differentiation between good and poor performers Supervisors view of performance are communicated more clearly Organizational change is facilitated Motivation, commitment and intentions to stay in the organization are enhanced

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Dangers of poorly managed PMS

Increased turnover Use of misleading information Lowered self esteem Damaged relationship Decreased motivation to perform Unclear rating system

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Dangers of poorly managed PMS

Employee burnout and job satisfaction Increased risk of litigation Unjustified demands on managers and employees resources Varying and unfair standards and ratings Emerging biases

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Case study
One eg of a poorly implemented performance management system resulted in a $1.2 million lawsuit. A female employee was promoted several times and succeeded in the construction industry until she started working under the supervision of a new manager. She stated in her law suit that once she was promoted and reported to the new manager, that the boss ignored her and did not give her the same support or opportunity for training that her male colleagues received. After eight months of receiving no feedback form her manager, she was called into his office, where the manager told her that she was failing, resulting in a demotion and a $20,000 reduction in her annual salary. When she won her sex discrimination law suit a jury awarded her $1.2 million in emotional distress and economic damages

Characteristics of an ideal PMS

Strategic congruence Thoroughness Practicality Meaningfulness Specificity Identification of effective and ineffective performance Reliability Validity Acceptability and fairness
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Characteristics of an ideal PMS

Inclusiveness Openness Correct ability Standardization Ethicality

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