Chapter 1 - Introduction to Performance Management.pdf
- 2. Introduction to Performance Management & Reward System Chapter 1
- 3. Definition of Performance Management (PM) PM is a continuous process of identifying, measuring and developing the performance of individuals and teams and aligning performance with the strategic goals of the organization. i. Continuous process – PM is ongoing. It involves a never ending process of setting goals and objectives, observing performance and giving and receiving ongoing coaching and feedback. ii. Aligning performance with the strategic goals of the organization – PM requires that managers ensure that employees’ activities and outputs are congruent with the organization’s goals and consequently help the organization gain a competitive advantage. PM creates a direct link between employee performance and organizational goals and makes the employees’ contribution to the organization explicit.
- 4. Performance Management is NOT performance appraisal
- 5. • Performance Management PM is a continuous process of identifying, measuring and developing the performance of individuals and teams and aligning performance with the strategic goals of the organization. • Performance Appraisal Performance appraisal emphasizes the assessment of an employee’s strengths and weaknesses and does not include strategic business considerations. It is usually do not include extensive and ongoing feedback that an employee can use to improve his performance in the future.
- 6. PM is NOT performance appraisal • Performance Management • Strategic business considerations • Driven by line manager • Ongoing feedback • So employee can improve performance • Performance Appraisal • Driven by HR • Assesses employee • Strengths & • Weaknesses • Once a year • Lacks ongoing feedback
- 7. Contributions of Performance Management nFor Employees nFor Managers nFor Organization/HR Function Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 1-7
- 8. The Performance Management (PM) Contribution Advantages associated with the implementation of a performance management system: v For employee 1. Increase motivation to perform – receiving feedback about one’s performance increases the motivation for future performance 2. Increase Self-esteem - receiving feedback about one’s performance fulfills a basic human need to be recognized and valued at work. 3. Clarify definitions of job and criteria - The job of the person being appraised may be clarified and defined more clearly. 4. Enhance self-insight and development– The participants in the system are likely to develop a better understanding of themselves and of the kind of development activities that are of value to them as they progress through the organization 5. Voice behavior is encouraged - A well-implemented performance management system allows employees to engage in voice behavior that can lead to improved organizational process.
- 9. The Performance Management (PM) Contribution Advantages associated with the implementation of a performance management system: v For Managers 1. Supervisor’s views of performance are communicated more clearly - performance management systems allow managers to communicate to their subordinates their judgements regarding performance. 2. Managers gain insight about subordinates – Direct supervisors and other managers in charge of the appraisal gain new insights into the person being appraised. 3. Better and more timely differentiation between good and poor performers – performance management systems allow for a quicker identification of good and poor performers. 4. Employees become more competent – An obvious contribution is that employee performance is improved.
- 10. The Performance Management (PM) Contribution Advantages associated with the implementation of a performance management system: v For Organization / HR Function 1. Clarify Organizational goals - The goals of the unit and the organization are made clear, and the employee understands the link between what she does and organizational success. 2. Facilitate Organizational change - performance management systems can be useful too to drive organizational change 3. Fairer and more appropriate administrative actions– Performance management system provide valid information about performance that can be used for administrative actions such as merit increases, promotions and transfers as well as terminations. 4. Better protection from lawsuits – Data collected through performance management systems can help document compliance with regulations such as equal treatment of all employees regardless of sex or ethnic background.
- 11. The Performance Management (PM) Contribution Advantages associated with the implementation of a performance management system: v For Organization / HR Function 5. Minimize employee misconduct – Employee misconduct is an increasingly pervasive phenomenon that has received widespread media coverage. 6. Enhance motivation, commitment and intentions to stay in the organization– When employees are satisfied with their organization’s performance management systems, they are more likely to be motivated to perform well, committed to their organization and not try to leave the organization 7. Enhance Employee engagement – a good performance management system leads to enhanced employee engagement, thus they feel involved, committed, passionate and empowered.
- 12. § Disadvantages of Poorly Implemented PM Systems multiple negative consequences that can arise from the poor design and implementation of a performance management system v For Employee 1. Use of misleading information – If a standardized system is not in place, there are multiple opportunities for fabricating information about an employee’s performance 2. Damage relationships – As a consequence of a deficient system, the relationships among the individuals involved may be damaged, often permanently. 3. Employee burnout and job dissatisfaction – When the performance assessment instrument is not seen as valid and the system is not perceived as fair, employees are likely to feel increased levels of job burnout and job dissatisfaction. 4. Lowered self-esteem – Self-esteem may be lowered if feedback is provided in an inappropriate and inaccurate way.
- 13. Disadvantages of Poorly Implemented PM Systems v For Managers 1. Increased turnover – If the process is not seen as fair, employees may become upset and leave the organization. 2. Decrease motivation to perform – Motivation may be lowered due to the feeling that superior performance is not translated into meaningful tangible i.e pay increase or intangible i.e personal recognition rewards. 3. Unjustified demands on managers’ and employees’ resources – Poorly implemented systems do not provide the benefits provided by well-implemented systems, yet they take up managers’ and employees’ time. 4. Varying and unfair standards and ratings – Both standards and individual ratings may vary across and within units and be unfair.
- 14. Disadvantages of Poorly Implemented PM Systems v For Organization 1. Wasted time and money – performance management systems cost money and quite a bit of time. These resources are wasted when systems are poorly designed and implemented. 2. Unclear rating systems – Because of poor communication, employees may not know how their ratings are generated and how the ratings are translated into rewards. 3. Emerging biases – Personal values, biases and relationships are likely to replace organizational standards. 4. Increased risk of litigation – Expensive lawsuits may be filed by individuals who feel they have been appraised unfairly.
- 15. DEFINITION OF REWARD SYSTEM • Is an employee’s compensation. ØTangible returns ØIntangible returns
- 16. Tangible returns ØCash compensation üBase pay üCost-of-Living & Contingent Pay üIncentives (short- and long-term) ØBenefits, such as üIncome Protection üAllowances üWork/life focus • collectively referred to as compensation, include both cash and benefits.
- 17. Intangible returns Øreferred to as relational returns include: v recognition and status, v v employment security, v challenging work v learning opportunities.
- 18. Returns and Their Degrees of Dependency on the Performance Management System RETURN DEGREE OF DEPENDENCY Cost of Living adjustment (COLA) LOW Income protection (backup to employees’ salaries in the case of disability) LOW Work/Life focus (programs that help employees achieve a better balance between work and nonwork activities Moderate Allowances (car, housing allowances) Moderate Relational returns (recognition & status) Moderate Base pay (given in exchange of work performed) Moderate Contingent pay (merit pay as an addition to the base pay) High Short term incentives (quarterly, annually & not added to base pay, temporary pay) High Long-term incentives(quarter, year i.e cash bonuses, extra day off, ESOS) High
- 19. Purpose of Performance Management Systems PURPOSE DESCRIPTION 1. Strategic To help top management achieve strategic business objectives. PM system reinforce behaviors consistent with the attainment of organizational goal by linking the organization’s goals with individual goals. 2. Administrative To furnish valid and useful information for making administrative decisions about employees, which includes salary adjustment, promotions, employee retention or termination. v Performance Management system served the SIX purposes:
- 20. Purpose of Performance Management Systems PURPOSE DESCRIPTION 3. Informational To inform employees about how they are doing and about the organization’s and the supervisor’s expectations. 4. Developmental To allow managers to provide coaching to their employees. The feedback allows for the identification of strengths and weaknesses as well as the causes for performance deficiencies.
- 21. Purpose of Performance Management Systems PURPOSE DESCRIPTION 5. Organizational Maintenance To provide information to be used in workforce planning and allocation of human resources. 6. Documentational To collect useful information that can be used for several documentation purposes. e.g. test development, administrative decisions
- 22. Characteristics Of An Ideal of Performance Management Systems 1) Strategic congruence Align with unit & organizational goals. 2) Context congruence Congruence with organization’s culture 3) Thoroughness Employees, job responsibilities, performance, feedback must be must be evaluated 4) Practicality System must be effective , efficient & user friendly
- 23. Characteristics Of An Ideal of Performance Management Systems 5) Meaningfulness Standards and evaluation for each job function, performance assessment, regular evaluation, continuous skill development, administrative decision based on result produced. 6) Specificity Provide detail and concrete guidance to employees, and communicate expectations 7) Identification of effective and ineffective performance System should provide information that allows for the identification of effective and ineffecftive performance 8) Reliability The systems should measures of performance consistent and free of error
- 24. Characteristics Of An Ideal of Performance Management Systems 9) Validity Measures all relevant performance facets. 10) Acceptability & fairness The system is acceptable and is perceived as fair by all participants. 11) Inclusiveness The system should include input from multiple sources on an ongoing basis 12) Openness Performance are evaluated frequently and performance feedback is provided on an ongoing basis
- 25. Characteristics Of An Ideal of Performance Management Systems 13) Correctability Any error can be corrected 14) Standardization Performance is evaluated consistently across people and time 15) Ethicality Good systems comply with ethical standa Performance are evaluated frequently and performance feedback is provided on an ongoing basis
- 26. INTEGRATION OF PERFORMANCE MANAGEMENT SYSTEM WITH OTHER HUMAN RESOURCES AND DEVELOPMENT ACTIVITIES Training • Learning & development • Skills gap Workforce planning • Talent Inventory • Recruitment & selection Compensation & rewards decision •Fair PMS As a “Feeder”
- 27. PM Around the World nPM used in United States, Mexico, Turkey, India, Australia, China, and so on nCommon across countries: Need to align individual and organizational goals to enhance the performance of individuals and groups Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 1-27
- 28. PM Around the World (continued) n Yet, different countries emphasize different components of PM • EX 1: PMs in Japan tend to emphasize behaviors to the detriment of results • EX 2: The current challenge among many organizations in South Korea is how to reconcile a merit-based approach with more traditional cultural values Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 1-28
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