NAME: ROLL NUMBER: LEARNING CENTER: SEMESTER: SUBJECT NAME: Appraisal MODULE NO.

: DATE OF SUBMISSION

NEELAM ASWAL 521131210 02882 4

th

Performance Management and

SET-2

AT THE LEARNING CENTRE:

10 Dec 2012
th

FACULTY SIGNATURE:

Master of Business Administration- MBA Semester 4

MU0016 Performance Management and Appraisal
(Book ID: B1337)
Assignment Set-2

Q1. What are the aims of Performance Management.

Ans.

One of the important objectives of performance management is identifying the strengths and weaknesses of employees and finding ways to overcome their shortcomings. This is done by evaluating employee output and the companys overall ability to meet the goals by having quarterly or annual audits. Often, after an evaluation, there will be widespread company meetings where managers and employees discuss concerns and solutions to problems. Another objective is to discover where employees and the company are falling short. This is done by going through details such as profits earned, new clients acquired and the contribution of employees to make these things happen. Employees whose contribution are minimal or not up to the mark are counselled on how to improve performance. The evaluation of an employees performance is based on their work output and the amount of time spent by them on the project. Although time spent in an office is not an accurate way of measuring performance, most companies still have the notion that better employees put in longer hours of work. A better way of measuring employee productivity would be to measure the output of work and the accuracy of work completed. Overall evaluation of a company and its ability to set and reach goals is another important objective of performance management. Increasing revenue is the overall goal of any company. Other goals may be to acquire more or specific clients, develop new products or hire new talent. It is very easy to determine which of these goals have been met, because these are things that can be seen or calculated. The inability of a company to meet the goals is mainly due to poor leadership, poor planning, poor implementation or poor employee performance. Economic factors also play a major role, but it is better for companies to concentrate on factors that are within their control. The best way of improving a companys overall output is motivating the employees and improving their performance. To identify and remedy situations that hinder company performance is another important objective of performance management. This includes replacing underperforming employees, gaining new clients, developing new strategies for reaching the goals and discussing strategies that have worked in the past. In order to meet the objectives of performance management and improve the overall performance of a company, every employee must work with the team members to develop new techniques and implement changes. The aims of performance management can be summarised into the following points.

 The aims of performance management are: To assist in the achievement of enhanced standards of work performance of an employee or class of employees. To assist employees to identify the knowledge and skills to perform their jobs efficiently. o To ensure that the employees work towards the defined goals. To ensure that the employees receive regular feedback on performance. To assist the employees to achieve personal growth through acquiring relevant knowledge and skills and attitudes. To evaluate the company and its ability to set and reach goals. To identify and remedy situations that are hindering company performance.

Q2. What are the features of a Performance management framework?

Ans.
The Performance Management Framework is a group of performance-related processes and methodologies, sequenced and integrated to effectively raise organisational awareness of performance management. A good performance management system helps organisations achieve their aims and objectives. The two important business processes that help in performance management are focusing on team performance and motivation. The focus on team is very important, because on a wider perspective, the entire organisation is nothing but a big team, trying to achieve a common goal that is profit for the organisation. Understanding how a team works and using methodologies to improve team performance leads to organisational growth and success. In this unit, we will discuss the various aspects of improving team performance. Motivation is another important factor for organisational success. The employees are the biggest asset of an organisation. Motivation helps to make employees work to their full potential, which in turn leads to individual as well as organisational growth. Managers should understand the process of motivation and use them effectively. In this unit, we will discuss the process of motivation and the link between performance and motivation. Learning Objectives After studying this unit, you should be able to: describe the importance of focusing on team performance. discuss motivation and performance management. explain the process of motivation. Focussing on Team Performance A team consists of two or more individuals. These individuals have specific role assignments. They must perform specific tasks and must interact or coordinate to

achieve a common goal or outcome. In addition, teams make decisions, have specialised knowledge and skills and often work under conditions of high workload. Teams can be distinguished from small works groups on the basis of the fact that teams have unique requirements for coordination and task interdependency. Teamwork normally involves team members adjusting to each other either sequentially or simultaneously in order to achieve team goals. The need for shift In the past, the focus was on performance management of individuals. But, today, organisations have realised that results are achieved by team efforts although individuals are also important. Individual focused performance systems will only propagate divisiveness and may even hamper teamwork. The changed global scenario has brought in a new era which is called the competence era. This competence era further perpetuates individual performance management rather than team performance management. This is mainly because of the pressure to differentiate. The various sources of pressure are: Differentiated pay packets. Need for competent managers. Willingness of some organisations to pay any amount for competent individuals. Enhanced salary structure forcing every organisation to compute return on investment on each employee or value addition of each employee. With all these influences, it is understandable that the corporate sector continues to focus on individual performance.The following realities indicate the need for refocusing performance management on group or team performance in addition to individual performance: Strategic thinking, employee motivation, leadership, development and team management competencies are critical at higher organisational levels and make a lot of difference. The performance management indicators are most often team performance based rather than individual performance. The team performance or output is an indicator of the individual leaders competence and there could be several cases where the team performs in spite of the leader and not necessarily due to the leader. In such cases, the team should be given adequate importance and team performance should not be merely attributable to the leader. It becomes very difficult to quantify and measure the performance of individual senior managers. Since performance indicators are qualitative and cannot be reduced to numbers, the measuring instruments fail to measure performance of managers. Managers often blame the team for poor performance. They say that they have done their best as individuals, but the team has not performed at its best. Some of them say that they have done their best but there are many factors beyond their control. Organisations have to develop team chemistry and leadership has to help make it work. Team chemistry could be managed better if team performance is focused. By focusing on team performance, the organisation is creating some enablers for the team leader to be effective. Combined performance and overall outcomes are likely to be better if the focus is on the team, rather than on the individual. Measuring team performance is easier and is more objective than measuring the individual performance at higher levels.

Focusing on team performance allows tackling many dimensions simultaneously, as compared to individual performance. Team performance is always closer to the organisational performance rather than individual performance. Top level performance can be measured mainly in terms of team performance. The above considerations make it necessary to recognise the importance of team performance management besides managing individual performance.

Q3. Explain the two psychosomatic approaches of the reward system within an organisation. Ans.
The reward system within an organisation follows either of the two psychosomatic approaches towards reward. Operant Conditioning: Harvard psychologist B.F. Skinner was a master in the field of behaviorism in the late 1930s and continued his contributions through the mid1970s. Operant conditioning is one of the key concepts of this school of psychology. Skinner called his brand of conditioning as operant conditioning, to distinguish it from classical conditioning the conditioning theory developed by the Russian physiologist Ivan Pavlov. Operant conditioning is a term used to explain behaviour, which has been encouraged by reward or discouraged through punishment. For example, if a mother wants her son to clean his room then she may give him some sweets every time he cleans it. Given an adequate amount of time, the boy will start to clean his room more frequently, since he knows that he will get some sweets in return. As a result, the boys behaviour (cleaning his room) is modified (conditioned) because he has learnt to associate that behaviour with a reward. Although this may sound similar in principle to classical conditioning (discussed below) it is in fact diverse, because operant conditioning entails actions on the part of the learner. Classical conditioning: It is a term used to explain learning, which has been acquired through experience. You are well aware that in order to learn something, you first need to experience it at the level of sensation through your five senses, as without your senses learning would be virtually impossible. For example, your friend teaches you how to play cricket. However, later you get a qualified coach who improves and changes your technique for betterment. Once an organisation rolls out the reward system, many of the antagonists of reward management and system often refer to some examples that have confirmed that rewarding can affect organisational performance negatively. For example, Heinz Company decided to pay a bonus to its managers, if they managed to improve the profits as compared to the previous year. As a result, the managers started to manipulate returns and profits by hastening or accelerating deliveries to customers. By performing this, the managers compromised on the quality of the deliverables which in turn, affected the long-term growth as well as the brand value of the company.

Similarly, another example is at Maruti Suzuki mechanics working for a car repair business were rewarded according to the income produced through repairs requested by customers. As a result, mechanics started making unnecessary and pointless repairs. This led to temporary closing of all the Maruti Suzuki car repair shops in the country. The above examples illustrate that, all too frequently, organisations see rewarding as a quick fix, without investigating the possible contradictory results or suboptimal effects, which might be inherent in some reward systems. Nevertheless, it is an established fact that a good reward system, which takes the organisational goals as well as the employees preferences into account, will certainly direct the employees to better their performance. The following is a good example: Tyco laboratories decided to have an incentive compensation plan that is directed towards improving and maintaining the commercial spirit, drive and originality of managers, who think and act like owners. To make this happen and keep the managers motivated, the company follows a tangible incentive plan, which is directly tied to each business units performance in terms of profits. This has worked very well for the company.

Q4. State the four essential components of 360 degree appraisal.

Ans. The 360 degree appraisal works on four essential components: Self appraisal: Self appraisal gives a chance to the employee to compare his/her abilities, limitations, success with others and judge ones own performance. Self evaluation is an essential part of 360 degree appraisals and therefore contribution of employees to 360 degree performance systems is large and also has a powerful effect on attitude and performance. It provides a "360-degree evaluation" of the employees performance and is measured to be one of the most realistic performance appraisal methods. Superior appraisal: Superiors appraisal outlines the traditional thought of performance appraisal, where the employees tasks and actual presentation is rated by the superior. This form of assessment involves the evaluation of individuals by supervisors on pre- determined parameters in an employees performance record, as well as the evaluation of team and work scenario by senior managers. The superiors (supervisors and senior managers) have the authority to change and modify an employees or a teams work on the basis of the assessment of the individual and the team. Subordinate appraisal: Subordinates feedback involves the evaluation of an individual on parameters like communication and convincing abilities, superiors ability to assign the work, team leading qualities and so on.

Subordinate appraisal: Subordinate appraisal is most advantageous when developmental needs are considered. It can also be used in the evaluation of record sheets, but measures should be taken to make sure that subordinates are appraising parameters of which they have knowledge. The subordinates feedback is effective, mainly in evaluating the supervisors interpersonal skills. However, it may not be as proper or convincing for measuring task-oriented skills. Peer appraisal: Peers usually have an exclusive point of view on a colleagues job performance and individuals are generally very friendly to the idea of rating each other. Peer ratings are considered when the individuals capability is known or the result of the performance can be computed. There are both considerable assistance and serious consequences that must be cautiously considered before including this type of feedback in an all-round appraisal program. Taken as an effective developmental tool and conducted periodically, a 360 degree application can prove to be highly useful in keeping the track of alterations in others perceptions about the employees. A 360 degree appraisal is generally more appropriate at the managerial level, as it helps in evaluating their leadership and supervision styles. This method is being successfully used around the globe for improving performance. Some of the companies that have been successfully following 360 degree appraisals are TCS, Microsoft and Wipro Technologies.

Q5. What are the steps to be followed while building an ethical organizational culture?
Ans. An ethical organisation culture is one which supports and promotes ethical behaviour within the organisation. The building of an ethical organisation culture requires: o A clear definition of the core values of the organisation. o Selection of the most apt personnel. o Rewarding of excellent ethical behaviour. o Keeping a check on unethical behaviour. o This section will give us an insight into the guidelines for building such organisation cultures keeping in mind the performance practices followed in India. Let us first look into the ethics strategy involved to create an ethical organisation. The ethics strategy must be concerned with ensuring that all the organisational activities are ethical, legal, and within all the prescribed regulatory guidelines. The actions, be it right or wrong, generally arise from character. An ethics strategy should provide the road map to guarantee the ongoing development of both the individual as well as the organisational character. This can be achieved through the introduction of ethics programs to train the employees. It is important that the ethics strategy provides for monitoring and policing organisational activities so as

to reduce and thus prevent ethical and legal violations. Ethics programs have become increasingly important, because a recent case law states that individual board members can be held liable for ethical lapses, in case ethical plans and programs are not incorporated. While developing an ethics strategy, regulatory requirements should be the prime consideration, as they impose a minimal, de facto ethical standard on every organisation. The plans and programs that are to be established should ensure that the organisation is in complete agreement with all these regulatory requirements. Once these regulatory requirements have been addressed, organisations can then work towards the enhancement of their corporate character. The ethics program should consist of a series of ethical training modules that is designed in such a way to educate and build ethical character on an individual basis. The ethics programs and training lay the necessary foundation required to ensure a continuous and deepening response to ethical issues as they arise for employees on the job. Eight steps to be followed while building an ethical organisational culture: 1. The right leader: An organisation can never be ethical unless the managers are role models for ethical behaviour and set the standards. They need to be clear about their values and exhibit them in actions as well as words. 2. A clear purpose and strategy: Three differences between companies that achieved high performance levels over long time spans and companies that failed when they reached a certain size were that the companies: Aimed on short term gains, and not on the long term value. Did not have a clear strategy. Badly mismanaged risk. A focus on doing the right thing: For an ethical culture to prevail, it is important for the employees to feel responsible and accountable for their actions. Creating an environment where employees can stand up for what they believe is right and take responsibility is essential. Without it there cannot exist an ethical culture as small and large daily wrongdoings will tend to go unchecked. It is the regular employees who are aware of what generally goes on. The negative aspects are generally hidden from the management. Hence, the organisation has to create a strong culture of speaking up and standing up for what they believe is right. 4. Hire the right people: It is important to hire people with the right values, skills and knowledge. Interviews and assessment programs should be designed such that they help the managers to explore what people have done in certain situations and should be able to ask them about their rationale for their actions. 5. Fire the wrong people: If you do not fire employees for wrongdoing, you may be sending out a wrong message that behaving ethically does not matter all that much. Actions, as we all know, speak louder than words and people become very sceptical if they see their senior managers advocate one thing and do another. 6. Run training courses on values and ethics: It is very difficult to spot an ethical situation in the first place, then only comes advocating the best way to handle it. All employees should be educated with the required knowledge and skills so as to identify and tackle ethical situations. Running mandatory ethics training for everyone in the company will convey the message that ethics is of high priority.

7. Reward people for doing the right thing and challenge them when they do the wrong thing: It requires a lot of courage to raise concerns about the actions of colleagues. People should be encouraged to do so by rewarding them. This could be in the form of appreciation from the management which could include a positive mark in their performance appraisal. People often do not question the wrongdoing for fear of isolation from colleagues and management. Hence, care should be taken to see that they are actively encouraged to do so. 8. Do not tolerate mistakes: Generally, when people are afraid to make mistakes they tend to either always play it safe or cover up any errors for the fear of punishment. As seen, each of the systems is inter-linked. Neither of the four are independents. This just goes on to show how ones success is dependent on the other, that is, they are all inter-related. And how, all these together can lead to the success of the organisation as a whole.

Q6. The HR department of a software company reviewed the performance of the employees. The HR Manager wants to provide feedback of the performance review to the employees. Describe the factors that have to be looked into while providing performance review feedback. Ans. Performance Appraisal Feedback Models help us to achieve what is known as a meaningful performance feedback. Meaningful performance feedback, as we know, is best achieved through proper communication between the feedback giver and the feedback receiver. Irrespective of who provides the feedback to the receiver, there are certain perceptual barriers that these communications have to travel through. These barriers act as filters and thus affect the actual message that is heard. Different variables of performance feedback have been incorporated into a feedback model. We see that the variable for both the giver and the receiver of feedback is determined by the perceptions of the participants. GIVER P RECEIVER

Biases

Receptivity

Security

Growth

Experience

Commitment

Communications

Goals

Sensitivity

Self-Esteem

Expectations

Motivators

Values

Values

The above chart lists only a few of the endless list of possible variables that these perceptions can create. Reading further will help us to get a clear understanding of how perceptions of different participants affect the feedback. The Said/Heard Meant/Felt Feedback Matrix The Said/Heard Meant/Felt Matrix, should help give more clarity to the concepts introduced in the above chart.

Heard

Said

Meant

Felt The Said/Heard Meant/Felt Matrix can be used in any way or direction. This implies that the matrix can be applied vertically, horizontally, counter clockwise, and clockwise. It can be used either by the giver or the receiver of performance feedback or both. The aim of the matrix can be achieved only when all the participants in the performance feedback process use it. To illustrate how the matrix can be put to work, let us begin by using the matrix in a clockwise direction starting at the 9:00 oclock position. From this point we begin with what is Said. Let us label the four quadrants A, B, C, and D as shown in Figure 10.3.

Heard A B

Said C D

Meant

Felt

Now, let us look at how the matrix can used during a typical performance review. In Quadrant A, the feedback giver has said, You could have contributed much more to the project. This is where the challenge arises, wherein the statement must now pass through the perception barrier that has been represented as the vertical axis of the matrix. Let us now look into what has been heard by the receiver. After passing through the receivers perceptual barrier, you can see in Quadrant B that what was heard was I have not done my part well. Now, we must understand that this may or may not have been what the feedback giver would have actually meant. Quadrant C, the giver now clarifies to the receiver the intended meaning of his message shown in the Quadrant A statement. In Quadrant C, it is observed that the feedback givers meaning was very different when compared to what was perceived by the receiver. Now the receivers feeling towards this feedback has been illustrated in Quadrant D in Figure 10.7.

A Giver: You could have contributed much more to the project.

Said

D Receiver: If I work hard, I can grow well in the company

P B E

Receiver: I have not done my part well

Meant

T C

Giver: You have performed well, but there is lot more you can do, given your potential

Felt Utilising the matrix, We observe that there is a dramatic contrast between what the receiver perceived the performance feedback message to be in Quadrant B versus what the message actually meant in Quadrant D. The issue with many performance review sessions is that the communications end at Quadrant B. These misinterpretations can be very counterproductive and will not support the goals and objectives of providing feedback. Hence, by using the matrix, the giver of the feedback can understand how the feedback has been perceived by the receiver and then try to clear the misunderstandings. The matrix can also be used by the receiver to get clarification on points that were not made clear during the performance review.