Performance Management

Unit 9
 Example:Return to Office Enters the Desperation
Phase

Post Pandemic, the debate on returning to the office rages on, with off
ices at only 50% of pre pandemic occupancy rates. Some companies
are relying on carrots (for example, Salesforec offering to make a $10
donation to an employee’s preferred charity for each day that person
works from the office) or sticks (making performance reviews continge
nt on attendance) to lure people back to their desks. They’re also touti
ng the benefits of impromptu meetings and in-person conversations.
Other companies are making decisions about remote versus in-perso
n work based on specific role functions. [
NYT]
 Performance appraisal is also referred to
as:-
performance review,
performance evaluation, and
employee (performance) appraisal.
 Performance appraisal
• According to Edwin B Flippo, “Performance
appraisal is a systematic, periodic and so far as
humanly possible, an impartial rating of an
employee’s excellence in matters pertaining to
his present job and to his potentialities for a
better job.”
 Performance appraisal
- Process of evaluating performance of
employees against the standards given and
making important employment decisions
based on it is Performance appraisal.
What is a performance appraisal?
A performance appraisal is a method to regularly evaluate
an employee’s job performance and overall contribution to
the company in order to improve that performance.
What is job performance? A definition

Because Performance Appraisals aim to assess and improve job

performance, it is important to define what job performance is.

Job performance is the degree to which an employee fulfills the

tasks of their job description. People with good job performance

fulfill all the requirements of their job, achieve the objectives of

their jobs, and meet the criteria for performance.

Performance Appraisal process
 Process of Performance Appraisal

1.Establishing performance standards

2.Communicating the standards

3.Measuring the actual performance

4.Comparing actual performance with desired performance

5.Discussing results [Feedback]

What are drawbacks of appraisals
1.Infrequent
2.Rating problem
3.Target setting problem/unclear standards
 Performance management
It is a continuous process of identifying,
measuring and developing the performance of
the individuals and groups in the organization.
 Performance Appraisal Performance
Management
Focus is on generating performance Focus is on improving and
rating enhancing performance

Annual or biannual exercise Continuous

Key role played by HR Key role played by Line managers

Developmental needs are identified at Developmental needs are identified in

the end of the the year based on the beginning of the year on the basis
appraisal of competency gaps of competencies requirement for
coming year
HR humour- Appraisals
Advantages of Performance Appraisal

1. Promotion: Performance Appraisal helps the supervisors to chalk out the

promotion programmes for efficient employees. In this regards, inefficient
workers can be dismissed or demoted in case.
2. Compensation: Performance Appraisal helps in chalking out
compensation packages for employees. Merit rating is possible through
performance appraisal. Performance Appraisal tries to give worth to a
performance. Compensation packages which includes bonus, high salary
rates, extra benefits, allowances and pre-requisites are dependent on
performance appraisal. The criteria should be merit rather than seniority.
3. Employees Development: The systematic procedure of performance
appraisal helps the supervisors to frame training policies and programmes.
It helps to analyse strengths and weaknesses of employees so that new
jobs can be designed for efficient employees. It also helps in framing future
development programmes.
4.Communication: For an organization, effective communication between
employees and employers is very important. Through performance
appraisal, communication can be sought for in the following ways:
1. Through performance appraisal, the employers can understand and
accept skills of subordinates.
2. The subordinates can also understand and create a trust and
confidence in superiors.
3. It also helps in maintaining cordial and congenial labour management
relationship.
4. It develops the spirit of work and boosts the morale of employees.

5.Motivation: Performance appraisal serves as a motivation tool.

Through evaluating performance of employees, a person’s efficiency can
be determined if the targets are achieved. This very well motivates a
person for better job and helps him to improve his performance in the
future.
The ranking system requires the rater to rank his subordinates on overall performance. This
consists in simply putting a man in a rank order.

Under this method, the ranking of an employee in a work group is done against that of
another employee. The relative position of each employee is tested in terms of his
numerical rank. It may also be done by ranking a person on his job performance against
another member of the competitive group.
This is a ranking technique where raters are required to allocate a certain
percentage of rates to certain categories (eg: superior, above average,
average) or percentiles (eg: top 10 percent, bottom 20 percent etc).

The workers of outstanding merit may be placed at top 10 percent of the

scale, the rest may be placed as 20% v good, 40% good, 20% fair and 10%
poor.
Modern methods of appraisal
 MBO
• MBO combines participative goal setting,
deciding the course of action, and evaluation
of the progress. The success of this method
lies in the fact that the employees feel
involved at all the stages of performance
appraisal. They are more committed to
fulfilling the goals that they have outlined.
Example of MBO in Action

Imagine a company where an employee, Savi, works as a marketing manager. The company wants to
increase its market share by 10% in the next year.

1. Goal Setting: During a meeting with her manager, Savi sets the objective of increasing brand
visibility by 15% and generating 20% more leads over the next 12 months. These objectives
align with the broader company goal of increasing market share.
2. Action Plan: Savi plans several marketing campaigns, social media promotions, and
collaborations with influencers to achieve these objectives. She also schedules a monthly
review meeting with her manager to track progress.
3. Performance Monitoring: Over the year, Savi 's manager checks in regularly to see how the
campaigns are progressing and whether Savi is on track to meet the lead generation and
visibility targets. Adjustments are made if necessary.
4. Evaluation: At the end of the year, Savi and her manager review the results. If she successfully
increases brand visibility by 15% and generates 20% more leads, she meets her performance
objectives.
5. Feedback and Future Planning: Based on the evaluation, Savi's manager provides feedback
and discusses what worked well and areas for improvement. They also begin setting new goals
for the next performance cycle.
 MBO Example for Savi: Goal Setting and Rating

During a meeting with her manager, Savi sets the following objectives:

1. Increase Brand Visibility by 15%

2. Generate 20% More Leads Over the Next 12 Months

These objectives are aligned with the company’s goal of increasing market share. Let’s evaluate her performance
on these objectives over the year, using a 5-point rating scale.

Objective 1: Increase Brand Visibility by 15%

● Goal: Increase brand visibility through digital marketing, events, and partnerships.
● Achievement: Savi was able to increase brand visibility by 12%, slightly below the target of 15%.
● Rating: 4/5 (Since 12% is 80% of the goal, the rating reflects solid but not complete achievement of the
objective.)

Objective 2: Generate 20% More Leads

● Goal: Increase lead generation through targeted marketing campaigns, customer outreach, and
advertising.
● Achievement: Savi successfully generated 25% more leads, exceeding the original target of 20%.
● Rating: 5/5 (Savi exceeded the lead generation goal by 5%, demonstrating strong performance.)
 Conclusion:
Savi performed exceptionally well, particularly in exceeding the lead generation target. While she fell slightly short on brand
visibility, her overall performance was very strong, aligning well with the company’s broader goal of increasing market share.
Behaviourally Anchored Rating Scale (BARS)

• BARS use graphic rating scales that use critical incidents as

anchors.
• BARS improve on the graphic rating scales by first having a
group of employees identify all of the important
dimensions of a job.
• Then, another group of employees generates critical
incidents illustrating low, average, and high skills of
performance for each dimension.
• A third group of employees and supervisors takes each
dimension and the accompanying definitions and a
randomized list of critical incidents. They must match the
critical incidents with the correct dimensions. Finally, a
group of judges assigns a scale value to each incident.
How BARS Works:
● Example of Excellent Behavior (Rating 5): Jane, a CSR, quickly understands the
customer's complex billing issue and resolves it within minutes, ensuring that the
customer is satisfied and no further follow-up is required.
● Example of Poor Behavior (Rating 1): John, another CSR, has difficulty understanding
a customer’s basic inquiry about their account. He provides incomplete information and
has to transfer the call to his supervisor, leading to customer frustration.
Example of BARS Rating Calculation for Savi (Customer Service Representative)

Let's assume Savi is being evaluated on three key performance dimensions using a 10-point BARS scale:

1. Customer Interaction Quality

2. Problem-Solving Ability
3. Response Time to Customer Inquiries

Each performance dimension is anchored by specific, observable behaviors, with Savi being rated based on her
actual behaviors.

1. Customer Interaction Quality (BARS Rating: 1 to 10)

● Observed Behavior: Savi consistently provides clear, personalized responses to customer queries. She
builds strong rapport and makes customers feel valued.
● BARS Rating: 9 (Excellent)
Behavior Example: Savi not only answers customer questions but also follows up to ensure their
satisfaction. Customers often give positive feedback about her helpfulness and professionalism.

2. Problem-Solving Ability (BARS Rating: 1 to 10)

● Observed Behavior: Savi quickly understands customer problems and resolves most issues without
needing to escalate them. She demonstrates great analytical and problem-solving skills.
● BARS Rating: 8 (Very Good)
Behavior Example: Savi handles complex customer inquiries efficiently and provides appropriate
solutions, though occasionally seeks help from a supervisor for very challenging cases.
3. Response Time to Customer Inquiries (BARS Rating: 1 to 10)

● Observed Behavior: Savi responds to customer inquiries quickly and within the expected time
frames. However, during peak times, her response time is slightly slower.
● BARS Rating: 7 (Good)
Behavior Example: Savi usually answers customer queries within 30 minutes, but during high
traffic periods, it sometimes takes an hour or more, though her responses remain accurate.

Final BARS Rating Calculation

To calculate Savi’s overall performance score using the BARS method, we take the average of the
ratings for each dimension.

● Customer Interaction Quality: 9

● Problem-Solving Ability: 8
● Response Time to Customer Inquiries: 7

Final BARS Rating: 8/10

This score indicates that Savi’s overall performance is very good, particularly excelling in customer
interaction quality and problem-solving, with a slight area for improvement in response time during peak
periods.
Performance dimension: Customer Service
 360 Degree Appraisal System
• It is a system in which employees will get feedback from all the people
they work with. There are many people who will fill out a form which is
usually a feedback form. The contents of the form may vary from broad
range competencies to work environment. The employee who receives
the feedback will also be required to fill out a self assessment which
again might consist of the same components. This system is used to get
an improved understanding of every one’s strengths and weaknesses.
• There are three general reasons as to why an organization would go in
for a 360 degree appraisal:-

1.To get a better view of the performance and prospective of future

leaders.
2.To have a broad insight of developmental needs of manpower.
3.To collect more feedback so as to ensure justice to the job performed by
the employees.
• In 360 degree appraisal system, the feedback is collected
from managers, peers, subordinates, customers, team
members etc. A survey is conducted to get close
understanding of-on the job performance of the
employees. A 360 degree appraisal has four stages in it:

• Self Appraisal
• Superior’s Appraisal
• Sub-ordinates Appraisal
• Peer Appraisal
• It is not an easy task to implement 360 degree appraisal. For this appraisal to be
effective one needs to bear in mind the following:
• → Right skills to be assessed are determined.
• → Appraiser should be selected properly.
• → He should be well aware of the system, if proper training on the appraisal
system is not given.
• → Elucidate the intention of this kind of appraisal system.
• → Ensure the process to be simple.
• → Follow up.
 Example of a 360-Degree Performance
Appraisal for a Sales Manager
Employee:Akanksha, Sales Manager

1. Self-Assessment:
○ Akanksha's View: Akanksha believes she is doing an excellent job in leading her team
and exceeding sales targets. She feels confident in her ability to manage customer
relationships and motivate her team. However, she acknowledges that she could improve
her time management skills when handling multiple projects.
2. Supervisor's Feedback (Akanksha's Direct Manager):
○ Supervisor's View: Akanksha consistently meets her sales targets and has shown great
leadership skills in managing her team. However, her supervisor feels that Akanksha
could improve her cross-departmental communication, as there are times when her team
works in isolation from marketing and product development.

3. Peer Feedback (Other Department Heads):

● Peers' View: Akanksha's peers in marketing and finance agree that she is very focused on
sales targets, but they sometimes find her unapproachable when it comes to collaborative
efforts on company-wide initiatives. They suggest that she could benefit from being more
inclusive in decision-making processes.
4. Subordinate Feedback (Akanksha's Sales Team):

● Team's View: Akanksha's team appreciates her support and guidance. They find her to be an
inspiring leader who listens to their concerns and helps them achieve their sales goals. However,
a few team members feel that her feedback could be more constructive, especially in challenging
situations.

5. Customer Feedback:

● Customer's View: Key customers appreciate Akanksha’s professionalism and quick response to
their inquiries. They value her problem-solving abilities and report high satisfaction with her
service. However, a few customers mentioned that they would like more proactive updates rather
than having to request information.
Summary of Feedback:

● Strengths:
○ Excellent leadership and team management skills.
○ Strong sales performance and customer relationship management.
○ Great problem-solving abilities with customers.
● Areas for Improvement:
○ Improve cross-departmental communication and collaboration.
○ Provide more constructive feedback to team members.
○ Be more proactive with customer updates and internal processes.

Action Plan Based on Feedback:

Akanksha and her supervisor develop an action plan that includes:

● Participating in a leadership training program focused on cross-functional collaboration.

● Implementing a system for providing more structured, regular feedback to her team.
● Setting up quarterly meetings with marketing and product development to enhance collaboration.
 Final rating of Akanksha
Assuming the rating is on a 5-point scale, feedback from the various sources may look like this:

1. Self-Assessment: 4.0
○ Akanksha rated herself highly in leadership and customer management but recognized
the need to improve her time management skills.
2. Supervisor's Rating: 4.5
○ Akanksha's supervisor rated her highly for achieving sales targets and leading her team,
but noted that she could work on interdepartmental communication.
3. Peer Rating (Department Heads): 3.5
○ Peers rated her lower due to limited collaboration across departments, although they
acknowledged her focus on sales goals.
4. Subordinate Rating (Sales Team): 4.2
○ Akanksha's team gave her a high rating for leadership and support, with a suggestion to
improve the constructiveness of her feedback.

5. Customer Rating: 4.3

● Customers rated Akanksha positively for her professionalism and problem-solving abilities, with
a minor note on needing more proactive communication.
 Calculation of Final Rating
Each stakeholder group might be weighted differently. For example,
the supervisor's rating may carry more weight (40%), while self-
assessment, peers, subordinates, and customer feedback may have
equal weight (15% each).
Let’s assume the following weightings:
●
Supervisor: 40%
●
Self: 10%
●
Peers: 15%
●
Subordinates: 15%
●
Customers: 20%
The final rating can be calculated as follows:
inal Rating: 4.2/5

This score represents Akanksha's overall performance, taking into account feedback from multiple sources. The organization can
then use this rating for performance evaluations, development plans, or even promotions.
extra
Definition
 Dimension: Oral Communication
• Organizes thoughts and expresses them in a
clear and logical manner, quickly
comprehends another's meaning, uses
appropriate vocabulary, correct grammar, and
appropriate non-verbal communication
(gestures, etc.).
 Dimension: PROBLEM ANALYSIS &
RESOLUTION
• Ability to critically evaluate a situation, gather
and analyze relevant information, identify
underlying issues, assess alternative solutions,
and to consider the implications of problems
and potential solutions
• Consider the following BARS for measuring job knowledge:
• Job Knowledge: The amount of job-related knowledge and skills that
an employee possesses. Consider the following BARS which assess one
of 10 performance dimensions identified as important for auditors
• Knowledge of Accounting and Auditing
Standards/Theory: Technical foundation,
application of knowledge on the job, ability to
identify problem areas and weigh theory vs.
practice.
360 Degree Appraisal System