Unit 5 - Performance Evaluation and Control Process
Performance management Performance management Performance management - Process through which companies ensure that employees are working toward organizational goals.
It includes practices through which the manager defines the employee s goals and work, develops the employee s capabilities, and evaluates and rewards the person s efforts.
Definition: It is the process of evaluating the performance and qualifications of the employees in terms of the requirements of the job for which he is employed, for purposes of administration including placement, selection for promotions, providing financial rewards and other actions which require differential treatment among the members of a group as distinguished from actions affecting all members equally. - Heyel Performance appraisal It is a managerial process through which an individual employee s behaviour and accomplishments for a fixed time period are measured and evaluated. It is a formal or systematic process by means of which the job relevant strengths and weaknesses of employees are identified, observed, measured, & developed. The most important and valuable workersexecutives, managers, and knowledge workers generally perform jobs that require subjective skills such as analysis, problem solving, creativity, and judgment.
Objectives Making reward decisions Improving performance (training and development needs) Motivating staff (feedback, assessment, setting targets) Succession planning and identifying potential Promoting manager-subordinate dialogue Formal assessment of unsatisfactory performance Purpose
Performance measurement Performance improvement Training & management development needs Compensation decision Placement decision Feedback Career planning & development Human resource planning Communication Deficiencies in staffing process Job design errors Avoidance of discrimination 1
Criteria for a good appraisal system Relevance Reliability Distinguish between good and poor performers Practicability Acceptability Freedom from contamination: it should be able to measure individual performance without being contaminated by external factors that are beyond employee s control like material shortage, inappropriate equipment/procedures. Performance Management vs. Performance Appraisal Performance Management is an approach to managing people that entails planning employee performance facilitating the achievement of work related goals and reviewing performance as a way to motivate employees to achieve their full potential in line with the organizations objectives. It can be regarded as an ongoing process that involves planning, managing reviewing, rewarding and development of performance. Performance Appraisal systems are often no more than a system of measurement, the concept of performance management signifies an attempt to establish performance appraisal as a legitimate and integral part of a manager s job of getting subordinates effectively to achieve the results and goals expected of them. Informal vs. Systematic appraisal An informal appraisal is conducted whenever the supervisor feels it is necessary. The day to day working relationship of a manager and an employee offers an opportunity for the employee s performance to be judged. This judgment is communicated through conversation on the job, or over coffee or on the spot examination of the job. A systematic or formal appraisal is a system set up by the organization to regularly and systematically evaluate employee performance. This appraisal is likely to occur at certain intervals throughout the employee s history of employment.
Who does the appraising? Immediate supervisor Committee of several supervisors Employee s peers Employee s subordinates Self evaluation Someone outside the work station. Evaluation 1. 2. 3. 4. 5. 6.
Process Establish performance standards Measure actual performance Communicate performance expectations to employees If necessary, initiate corrective action Discuss appraisal with employee Compare actual performance with standards
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Appraisal methods Performance Appraisal can be conducted by a number of methods. They can be classified according to the main purpose that the procedure serves. Absolute standard (Developmental purpose) Relative standard (Comparative purpose) Objectives I.
Absolute standard methods: Absolute standards methods allow the evaluator to evaluate performance in relation to trait or behavior criteria. Each employee is evaluated against the standards. Performance is measured on a number of specific dimensions so that employees can be given a more helpful feedback. Common 1. 2. 3. 4. 5. 6. 7.
absolute rating techniques are Grading method Graphic or Linear rating scale Checklist
Free Essay method Critical Incident method
BARS
Forced choice method
method Certain categories of worth are first established and carefully defined. Executives are compared with these grade definitions. Grade definitions A Outstanding B Very good C Fair D Poor
1. Grading
2. Graphic
or Linear rating scale The rater evaluates an employee on each of the several performance dimensions using a continuum made up of clearly defined scale points. He describes an employee as falling at some points in the performance continuum such as unsatisfactory, average or outstanding on each dimension. The scale points can be assigned scores and total score can be computed for an employee by summing the ratings across all dimensions. 3. Check
list The rater or supervisor is given a series of questions or words and asked to check those representing the characteristic of the employee. E.g. (manager): - Is he respected by his subordinates? - Does he give recognition and praise to employees for work done well? Essay method The rater makes a free form, open-ended appraisal in his own words. Puts down his impressions about the employee. It contains subjective evaluation of the reported behavior.
4. Free
5.
Critical Incident method Measures performance in terms of certain events or episodes that occur (critical incidents). Certain significant acts make the difference between success and failure. A written record of the events is kept. 3
6.
Behaviourally Anchored Rating Scale (BARS) The BARS consists of a series of five to ten vertical scales - one for each important dimension of job performance anchored by the incident judged to be critical. Behavioural anchors in the form of statements are established for each dimension Many dimensions of performance are identified in behavior-specific terms
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Forced choice method It is a type of checklist where the rater chooses between two or more statements about the employee being rated. Each statement may be favorable or unfavorable. The appraiser s job is to identify which statement is more descriptive of the individual being evaluated. Each statement is given a weight according to its relevance to the particular job. The employee getting the highest score is judged the better performer
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Other methods i. Assessment center method Testing job-related simulations that managers feel are important to the job success. Assessments are made to determine managerial potential for purpose of promotion. Paper-and-pencil test, interviews and situational exercises.
ii.
360 Degrees Appraisal The subordinates and colleagues of the manager appraise his or her performance. Each of these evaluators rates the manager on certain qualities listed in the Appraisal Format. Managers become keenly aware about the need to have good relations with their subordinates and colleagues.
iii.
540 Degrees Appraisal In this, the customers and suppliers of a manager also evaluate him. General Electric Company, USA, was the first to try out this concept in early 1990s. This practice has found many takers in India too - Reliance Industries, GodrejGE, Godrej Soaps, Tata Steel, Telco, Voltas, Crompton Greaves, Infosys, Wipro, Eicher, American Express, Thomas Cook, and Thermax, to name a few.
iv.
Alternation Ranking Method Ranking employees from best to worst on a trait Alternates between highest and lowest until all employees to be rated have been addressed
II.
Relative rating methods 1. Paired Comparison Method Every subordinate to be rated is paired with and compared to every other subordinate on each trait. The number of comparisons can be calculated using the formula N(N-1)/2 Where, N is the number of people rated. The rater then selects the better employee and the final rank is determined by the number of times the employee was rated higher than the other employees. 4
2.
Forced Distribution Method: It is founded on the principle of bell shaped curve or normal distribution which requires the rater to assign a specific proportion of employees to predetermined performance category. Thus this method assumes the widely known bell shaped curve of performance exist in the given group.
3.
Group order ranking: The rater is required to place the employees into a particular classification like top 10 % or second 10 %. Raters are asked to rank the employees of the same department doing similar jobs on the basis of one or multiple job factors.
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Individual ranking: It includes the rank ordering of individuals according to overall merit or according to other performance factors from the best performer to the worst performer. Raters are asked to select the best performer and worst performer.
III.
Management by Objectives Objectives set at each level should be quantifiable and measurable. Manager and subordinates have to establish specific times when goals are to be reviewed and evaluated. Each employee goal must be accompanied by a description of how that goal will be accomplished.
Web based performance management With electronic performance monitoring (EPM), computer network technology is used to provide managers with access to their employees computer terminals and telephones, Allows managers to determine the pace at which employees are working, their degree of accuracy, log-in and log-off times, and the amount of time spent on breaks Interview: One of the most important uses of appraisal is to provide performance feedback to employees. The feedback interview is the discussion between the supervisor and the employee concerning the employee s past performance and how that performance can be improved in future. Supervisor and subordinate review the appraisal and make plans to remedy deficiencies and reinforce strengths.
Feedback
Purpose Encouraging present behavior Explaining what is expected of employees Communicating results of salary or promotion decision Planning for future performance improvement Improving supervisor subordinate relationship Preparing for the Appraisal Interview First, give the subordinate at least a week s notice to review his or her work, and to read over his or her job description, analyze problems, and compile questions and comments. Next, study his or her job description, compare the employee s performance to his or her standards, and review the files of the person s previous appraisals Finally, choose the right place for the interview and schedule enough time for it. The interview should be done in a private area
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Interview s main aim is to reinforce satisfactory performance or to diagnose and improve unsatisfactory performance Get agreement before the subordinate leaves on how things will be improved and by when. Types of feedback interview approaches Tell and sell approach: The supervisor acts as a judge and persuades the employee to change his or her behavior in a prescribed way
Tell and listen approach: during the first phase of interview the employee s strong and week areas of performance are addressed and in the second phase the focus falls on the employee s feeling about the appraisal. Problem solving approach: The supervisor acts as a helper and facilitator and discusses the problem, needs, innovations dissatisfaction that the employee might have experienced since the last performance review. Common appraisal problems Unclear standards Halo effect Leniency and strictness error Bias Central tendency Contrast error Regency error Similarity or same as me error DO s
Base performance appraisal on job performance only. Use only those rating scales that are relevant to the job itself. Sincerely work at the appraisal interview process. Be problem solving oriented. Encourage the employee to discuss and to address the issues that are in the evaluation process themselves. DON Ts
Don't criticize. Be proactive. Carefully avoid the halo effect and leniency errors. Do not let the conversation stray away from the topic of performance. Avoid general prescriptions to fix performance. Always present concrete and realizable objectives.
Different views
Appraiser: Need to see the total comparative picture of performance for a group. Need to see where employees stand relative to each other. Get all the information they need with 4 to 7 dimensions or broad performance factors. Need retrospective performance data that will back them up when they have to make tough decisions.
Appraisee Need to see information about themselves. Need to see where they stand relative to their manager's performance expectations. 6
Employees benefit more from knowing about their competencies and skills, so they can focus on improvement. A forward-looking dialogue with the manager that focuses on growth and development. Framework for the appraisee Prepare properly: You need to review your job specification to ensure you are meeting expectations, as well as the standards/goals set at the last appraisal, assess your own strengths and weaknesses and know how you want to progress. Listen to what your manager has to say: Be open and receptive to what is being said. Put your own point of view: Ask for examples, where constructive criticism has been made. Plan your progress for the next period: The sign of a successful appraisal is where future standards/objectives are mutually agreed and they are clear, specific and achievable with measurable expectations . SMART rules for appraiser: Specific - Base ratings on explicit performance and targeted to the area you are measuring. Measurable - direction of good and bad must be clearly distinguishable. Achievable -When setting performance goals, they must be easy to understand and can be accomplished by the majority of individuals if given the proper resources. Relevant - Do not measure things that are not important. Timely - The individual knows the time period for which he or she is accountable for and knows when goals must be completed.
Job Change
Promotion, Demotion, Transfer
separation and
of Job change Job changes serve the following purposes: To improve organizational effectiveness To maximize employee efficiency To cope with changes in operation To ensure discipline Purpose
Promotion Promotion is a term which covers a change and calls for greater responsibilities and usually involves higher pay and better terms and conditions of service and therefore a higher status or rank.
It may be defined as an upward advancement of an employee in an organization to another job which commends better pay/wages, better status/prestige, higher responsibilities and more authority. A promotion is the transfer of an employee to a job which pays more money or one of that carries preferred status - Scott and Clothier
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Promotions are usually given: To retain proved skill, training and ability To reduce discontent To attract suitable and competent employees To recognize and reward suitable performance To increase an employees individual & organizational effectiveness To promote job satisfaction among employees To build loyalty and a sense of belongingness among the employee To create among employees a feeling of contentment with their present conditions. Types of promotions Multiple chain promotions: They identify multi promotional opportunities through clearly defined avenues of approach to and exit from each position in the organization. Up or out promotions: in this type of promotion the individual must either earn a promotion or seek employment elsewhere.
Dry promotion: These promotions are given in lieu of increases in compensation. When compensation is increased to keep pace with the cost of living it is called as dry promotion. Elements of Promotion policy Promotion policy statement. - Establish as plan of jobs. - Trace transfer routes. - Prepare employees for advancement through training. - Communicate the policy. - Detail personnel and service records are kept ready. Promotion policy - It helps to state formally the organizations broad objectives and to formulate both the organizations man power and individual career plans - The basic requirement of a promotion policy is a statement of the ratio of internal promotions to external recruitment at each level, the method & procedure of selection and qualification desired.
Requirements of a sound promotion policy It should provide for a uniform distribution of promotional opportunities throughout the organization. It should inform the employees about the various avenues of development There should be definite and clear cut criteria for promotion in the organization It should be fair and impartial It should have a suitable system of follow up counselling and review
Factors considered for promotion The results of performance appraisal Personal records of an employee Skill and proficiency in the existing job Seniority of the employee Ability of employee on other jobs taken till date Medical records of the employee to meet the challenges of higher jobs. Qualification possessed by the employee as per the demands of the higher job.
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Promotion methods: Seniority & Merit Seniority refers to the length of service in the company. Under straight plant wise seniority in all jobs, promotions go to the oldest employees, provided that he is fit for the job. Generally trade unions are of the view the promotions should go on basis of seniority while management prefers merit and ability. Arguments for promotion by seniority systems Simple to understand. Satisfies personal aspirations. System is much more economical than open market recruitment. Reduces employee turnover Builds morale of the employee It is impartial and eliminates feelings of favoritism. Arguments against promotion by seniority systems Necessity of new blood to be infused in organization for up-to-date knowledge. Worth of an individual is Internal sources may be quite inadequate. Not appreciated.
Promotions by Merit Brings rewards for meritorious work Encourages employees to work hard so that they may get an opportunity for advancement in the organization Leads to increased productivity
Demotion Demotion is defined as the assignment of an individual to a job of lower rank and pay usually involving lower level of difficulty and responsibility. It can be called as downward transfer. Causes of demotion Demotions may be caused by factors beyond employees control. When departments are combined and jobs eliminated. Inadequacy on the part of the employees in terms of job performance. Change in technology. Demotion is also used as a disciplinary measure. Demotion policy A clear and reasonable list of rules should be framed. It should be clearly communicated to the employees. If violations are discovered there should be a consistent and equitable application of the penalty. There should be provision for review. A competent authority should be appointed to investigate any violation
Transfer A lateral shift causing moment of individuals from one position to another usually without involving any marked change in duties, responsibility, skills needed and compensation. - Yoder It consists of a reassignment of an employee to another job of equal pay status and responsibility. 9
It is a horizontal move from one job to another it is different from promotion, which is a vertical move in rank and responsibility.
Purposes of transfer To satisfy needs of an organization.- organizational transfer To meet an employees own request. Personal transfer To utilise properly the services of an employee.- Remedial transfer To increase the versatility of the employee.- versatility transfer To adjust the work force of one plant with that of another.- plant transfer To help employees work according to their conveniences so far as timings are concerned. shift transfer Transfer policy Every organization should and must have a just and impartial transfer policy which should be known to each employee. A policy must have the following characteristics: - Specify the type of transfer. - Locate the authority in some officer who may initiate and implement transfers. - Indicate the basis for transfer. - Decide the rate of pay to be given to the transferee. - Intimate the fact of transfer to the person concerned well in advance. - Be in writing and duly communicated to all concerned. - Not to be made frequent.
Types of transfers Personal & organizational transfer Temporary transfer& permanent transfer Intra-departmental transfers & Inter- departmental transfers Separation Separation means cessation of service with the organization for one or other reason. Employee may be separated from the payroll of a company as a result of 1. Resignation. 2. Discharge (or) Dismissal. 3. Suspension. 4. Lay-off 5. Retirement 1. Resignation Resignation may be put in voluntarily by the employees on grounds of health, physical disability, better opportunity elsewhere or maladjustment with the company policy. 2.
Discharge A discharge involves permanent separation of an employee from the payroll for violation of company rules or for inadequate performance. Discharge becomes necessary: -
When the volume of business does not justify the continuing employment of the persons involved. When fails to work according to the requirements of the job either because of incapacity or because he has deliberately slowed down on work. When an individual forfeits his rights to a job because of his violation of a basic policy often involving safety of others. 10
Causes of discharge Frequent causes: inefficiency, dishonesty, carelessness . Infrequent causes: accident, uncleanliness, personal conduct. Other causes: laziness, lack of co-operation, frequent absence without leave Discharge procedure Demonstrate a discharge is justified following evidence need to be produced: - Permanent records of all merit ratings made by the supervisors. - A copy of any warning that had been sent to him. - Letter of discharge, especially if the letter states the cause of the discharge. Suspension This is a serious punishment and is generally awarded only after proper enquiry has been conducted. During suspension, the employee receives a subsistence allowance. Retrenchment means permanent termination of services of an employee for economic reasons in a growing concern. Lay-Off Lay-off refers to an indefinite separation of employee from the payroll due to factors beyond the control of the employer; the employee is expected to be call back in the foreseeable future. These -
factors could be: Breakdown of machinery. Seasonal fluctuation in markets. Accumulation of stocks. Shortage of raw material. Production delays. Other technological reasons.
During a lay-off period a workman ceases to be eligible for lay-off compensation if: He refuses to accept alternative employment at a place within five miles of an establishment from which he has been laid-off. If he does not present himself for work at the appointed time during normal working hours at least once a day. If the lay-off is due to a strike or slowing down of production on the part of workmen in another part of the establishment. Retrenchment It means permanent termination of an employee s services for economic reasons in a growing concern. Termination of services on account of disciplinary action, illness, retirement, or closure of establishment does not mean retrenchment. It creates a sense of insecurity and resentment among the staff.
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Control Process Organizational Control Controlling is a process by which management assures that actual activities confirm to planned activities. It is a managerial process for measuring progress towards planned performance and when required taking corrective action.
Purpose It helps in merging short range and long range plans into a state of greater consistency. It makes certain that the original goals and plans are still being followed over long run. It helps in bringing consistency to the activities and accomplishments throughout the organization in an ends means manner. That is the final outcome of one s work unit becomes the means or input by which the next work unit begins. It can help in bringing individual behaviours in line with organizational goals by monitoring absenteeism, and performance. Importance Adapting to changing situations Minimizing mistakes and errors Coping with organizational complexity Minimizing costs Delegation Control Process Establishing standards: A standard is defined as end state or target against which subsequent performance will be compared. The first step in control process is to establish performance standards to be controlled. Measuring performance Comparing measured performance against standards Evaluate performance and take action Following evaluation the manager has three alternative course of action maintain the status quo, correct the deviation, change the standards. Types of control Preliminary or predictive or feed forward control: It takes place before operations begin and includes development of policies and procedures that are designed to ensure that planned activities will be carried out effectively. Ideally controls should anticipate problems before they actually happen. Concurrent control: it enables to take timely action before larger damage takes place. It guarantees that the plan will be executed at the specified time and under required conditions.
Feed back control: takes place after the activity is done - Problems may already have caused damage or waste - The most popular type of control - Feedback may be only viable form of control available - Feedback has two advantages - Provides meaningful information on the effectiveness of planning - Can enhance employee motivation
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Control Process
Requirements of an effective control system Timeliness Accuracy Objective and comprehensiveness Economically realistic Organizationally realistic Focused on strategic control points Coordinated with the organizational work flow Prescriptive and operational Acceptance Flexible
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Grievance Handling
Discipline It is the force that promotes individuals or groups to observe rules, regulations, standards and procedures deemed necessary for an organization. Discipline can be positive or negative. Positive discipline can also be called as self discipline. Negative discipline is also known as corrective or punitive discipline. Red Hot Stove Rule Mc Gregor has suggested this rule to managers to enforce discipline. The rule is an analogy between touching a hot stove and violating rules of discipline. When a person touches a hot stove: The burn is immediate He had a warning as he knew that he would get burned if he touches it. The effect is consistent. Every one who touches it will get burned The effect is impersonal. The person gets burnt because he touched it and not because who he is. The effect is commensurate with the gravity of misconduct. The person who repeatedly touches it is burnt more than one who touched it only once. Grievance Grievance can be defined as any discontent or dissatisfaction with any aspect of the organization. It is a specific formal written notice of employee dissatisfaction expressed through an identified procedure. It is more formal than a complaint. It must usually be expressed. A complaint is merely an indication of employee dissatisfaction which has not taken the formal grievance settlement route. Management should be concerned with both grievances and complaints as many complaints can become grievances. Complaints are good indicators of potential problems within the workforce. It usually relates to problems of interpretation or perceived non fulfillment of one s expectations from the organizations. Jucius defines a grievance as any discontent or dissatisfaction arising out of anything connected with the company which an employee thinks believes or even feels to be unfair, unjust, or inequitable. It can be individual or group grievance. It may be written or verbal. It arises out of something related to employee s employment contract. It is a feeling of injustice to one s job by the employer or management. If they are not readdressed on time they may give rise to frustration, discontent, poor morale, and low productivity. Need for a grievance procedure Most grievances seriously disturb the employees. They effect their morale, productivity,& their willingness to cooperate with the organization. A grievance handling machinery can properly handle the situation. It is not possible for the supervisor to settle all the complaints of the employees as they may not have the necessary training for the purpose & may lack authority. There may be personality conflicts also. It serves as a check on the arbitrary actions of the management as the supervisors know that employees would like to see their protest reach the higher management. It serves as an outlet for employees discontent & frustrations. The employees are entitled to legislative, executive & judicial protection& they get this through the
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grievance redressal procedure which also acts as a means of upward communication. It provides an established known procedure for processing grievances. It gives an assurance to the employee that there is a mechanism available to consider the grievance in a dispassionate manner. It brings the grievance to the knowledge of the management. It helps in improving the morale & productivity of the employee. Understanding employee grievance The best approach to understand grievance is to anticipate them and tackle them before they assume dangerous proportions. A manager can address grievance as and when they arise. They can understand grievance through the following methods: Exit interview Opinion surveys Gripe boxes Open door policy
Causes of Grievances 1. Grievances arising out of working conditions: Poor physical conditions of workplace Very tight production standards Non availability of proper tools and machines Unplanned changes in schedules and procedures Mismatch of worker with the job Failure to maintain proper discipline Poor relationship with supervisor 2. Grievance arising out of management policy: Wage rates & methods of wage payment Seniority Transfers Promotions Lack of opportunity for career growth Leave Penalties imposed for misconduct 3. Grievance arising out of alleged violations of: The collective bargaining agreement Company rules and regulations Government laws 4. Grievances arising out of personal malpractice: Over ambition Excessive self esteem Impractical altitude in life
Types of grievance Legitimate Grievance: It occurs when there is a reasonable cause to think there has been a contract violation. Misunderstanding of an agreement causes the legitimate grievance. Imagined grievance: This occur when employee believe that the agreement has been violated even though the management is exercising its contract rights reasonably.
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Political grievance: They occur when a complaint is pursued to further someone's political aspirations. These are the most difficult to solve. Grievance procedure It is a formal channel of communication designed to resolve formal complaints (grievance). It normally manifests itself in a document which spells out the steps to be followed when employees have grievances. Purpose/objectives of grievance procedure To serve as an orderly channel for reducing pressures and anxieties of employees To serve as a mechanism for equitable just interpretation and application of negotiated items To prevent arbitrary unreasonable actions against employees. of a grievance procedure Conformity with the prevailing legislation-legal sanctity. Acceptability Timely Clarity Simplicity Promptness Training Follow-up
Pre-requisites
The Grievance Procedure Timely action Accepting the grievance Identifying the problem Collecting the facts Analyzing the cause of grievance Taking decision Implementing the decision Model Grievance Procedure suggested by National Commission on labo ur The grieved employee conveys his grievance to the officer designated verbally. If not satisfied or does not receive answer within 48 hrs. He presents case in writing before departmental head. Grievance committee. Appeal to management Voluntary arbitration.
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