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Human resource Management Interventions

PERFORMANCE MANAGEMENT

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PERSPECTIVES ON PERFORMANCE
MANAGEMENT
 Performance management involves goal
setting, performance appraisal, and reward
systems that align employee work behavior
with;
 business strategy,
 employee involvement, and
 workplace technology.

 Goal setting describes the interaction between


managers and employees in jointly defining
member work behaviors and outcomes to
support the organization’s strategic objectives
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PERSPECTIVES ON PERFORMANCE
MANAGEMENT
 Goal setting can clarify the duties and
responsibilities associated with a particular job or
work group;
 When applied to jobs, goal setting can focus on
individual goals and can reinforce individual
contributions and work outcomes.
 When applied to work groups, it can be directed at
group objectives and can reinforce members’ joint
actions and overall group outcomes.
 Popular and classic approach to goal setting is
called management by objectives.

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PERSPECTIVES ON PERFORMANCE
MANAGEMENT
 Performance appraisal involves;
a. collecting and disseminating performance data to
improve work outcomes
b. Providing performance feedback to individuals and
work groups
c. Process of jointly assessing work-related
achievements, strengths, and weaknesses
d. Facilitating career counseling, provide information
about the strength and diversity of human resources
and
e. link employee performance with rewards.

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PERSPECTIVES ON PERFORMANCE
MANAGEMENT
 Reward systems are concerned with;
 extracting/getting and reinforcing desired
behaviors and work outcomes through
compensation and other forms of recognition.
 reward systems can be oriented to individual jobs
and goals or to group functions and objectives.
 Several innovative and effective reward systems are
used in organizations today.

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A PERFORMANCE MANAGEMENT MODEL
 A performance management model shows how goal
setting, performance appraisal, and rewards are closely
linked and difficult to separate in practice, but how each
element is distinct and has its own dynamics
 Organizations having well-developed performance
management process often outperform those
without this element of organization design
 As shown in Figure 17.1, performance
management includes;
 practices and methods for goal setting,
 performance appraisal, and
 reward systems.
These practices jointly influence the performance of
individuals and work groups
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A PERFORMANCE MANAGEMENT MODEL
 Goal setting specifies the kinds of performances that
are desired;
 performance appraisal assesses those outcomes;
 reward systems provide the reinforcers to ensure that
desired outcomes are repeated
 Three contextual factors determine how these practices
affect work performance:
1. business strategy,
2. workplace technology, and
3. employee involvement.
 High work performance occurs when goal setting,
performance appraisal, and reward systems are aligned
jointly with these contextual factors.

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A PERFORMANCE MANAGEMENT MODEL
1. Business strategy defines;
 the goals and objectives, policies, and intended
relationships between the organization and its
environment to compete successfully, and
 performance management focuses, assesses, and
reinforces member work behaviors toward those
objectives and intentions.
The above ensures that work behaviors are
strategically driven.

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A PERFORMANCE MANAGEMENT MODEL

2. Workplace technology affects whether


performance management practices should be
based on the individual or the group;
 When technology is low in interdependence and work
is designed for individual jobs,
 goal
setting, performance appraisal, and reward systems
should be aimed at individual work behaviors.
 when technology is highly interdependent and work is
designed for groups,
 performance management should be aimed at group
behaviors

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A PERFORMANCE MANAGEMENT MODEL
3. Level of employee involvement should
determine the nature of performance
management practices;
 In highly bureaucratic organizations, with low levels
of participation, then goal setting, performance
appraisal, and reward systems should be
formalized and administered by management and
staff personnel.
 In high-involvement organizations, employees
participate in all stages of performance
management, and are heavily involved in both
designing and administering its practice
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GOAL SETTING
 Goal setting involves managers and subordinates in
jointly establishing and clarifying employee goals;
 In MBO, it also can facilitate employee counseling and
support
 In balanced scorecard, it generates goals in several defined
categories, at different organizational levels, to establish
clear linkages with business strategy
 The process of establishing challenging (SMART) goals
involves managing the level of participation and goal
difficulty
 Once goals are established, the way they are measured is
an important determinant of member performance
 Goals energize behavior, motivating people to put forth the
best effort to reach the accepted goals, and when goals are
difficult but achievable, goal setting prompts persistence
over time
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GOAL SETTING
Characteristics of Goal Setting:
 Goal setting works equally well in both individual and group
settings
 The research has identified two major processes that affect
positive outcomes:
1. Establishment of challenging goals;
 goals that are perceived as challenging but realistic with high level of
commitment thru employee participation in the goal-setting process
 more difficult goals lead to increased effort and performance, if they are
seen as feasible
 If goals are set too high, they may lose their motivating potential.
 An important method for increasing the acceptance of a challenging
goal is to collect benchmarks or best-practice referents.
 Participation convinces employees that the goals are achievable and
can increase their commitment to achieving them
 there must be a clear “line of sight”/linkage between the business
strategy goals and the goals established for individuals or groups
 when tasks are highly interdependent and work is designed for groups,
group-oriented participative goal setting increases commitment.
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GOAL SETTING
2.Clarification of goal measurement:
 workers perform higher than when they are simply told to “do their
best” or when they receive no guidance
 Specific goals reduce ambiguity about expectations and focus the
search for appropriate behaviors
 To clarify goal measurement, objectives should be operationally
defined
 Clarifying goal measurement requires that employees and
supervisors negotiate the resources necessary to achieve the goals
 Goal specification and clarity can be difficult in high-technology
settings where the work often is uncertain and highly
interdependent;
 Increasing employee participation in goal measurement can give
employees ownership of a nonspecific but challenging goal
 The entire goal-setting process can be managed by employees and
work teams when employee involvement policies and work designs
favor it
 the process of specifying goals is extremely difficult if the business
strategy is unclear.
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APPROACHES TO GOAL SETTING (APPLICATION)
1. Diagnosis:
 The first step is a thorough diagnosis of the job or work
group, of employee needs, and of the three context
factors, business strategy, workplace technology, and
level of employee involvement.
 Theabove provides information about the nature and difficulty
of specific goals, the appropriate types and levels of
participation, and the necessary support systems.
2. Preparation for Goal Setting:
 This step prepares managers and employees to
engage in goal setting by increasing interaction and
communication between managers and employees,
and offering formal training in goal-setting methods.
 Specific
action plans for implementing the program also
are made at this time.
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APPROACHES TO GOAL SETTING (APPLICATION)
3. Setting of Goals:
 challenging goals are established and methods for
goal measurement are clarified.
 Employees participate in the process to the extent that
they are likely to set higher goals than those assigned by
management.
4. Review:
 the goal-setting process is assessed so that
modifications can be made, if necessary.
 to see whether the goals are energizing and
challenging and whether they support the business
strategy

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MANAGEMENT BY OBJECTIVES
 A common form of goal setting used in
organizations is management by objectives (MBO);
 to align personal goals with business strategy by shared
perceptions between the manager and subordinates,
either individually or as a group, and
 by reconciling conflict where it exists
 MBO is characterized by systematic and periodic
manager–subordinate meetings designed to;
 accomplish organizational goals by joint planning of the
work,
 periodic reviewing of accomplishments, and
 mutual solving of problems that arise in the course of
getting the job done

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MANAGEMENT BY OBJECTIVES

 Two roots of MBO;


 Organizational root by Peter F. Drucker
 Developmental root found in the work of McGregor
 The organizational root was developed by Drucker, who
emphasized the need to establish objectives in eight key
areas:
1. market standing;
2. innovation;
3. productivity;
4. physical and financial resources;
5. profitability;
6. manager performance and development;
7. worker performance and attitude; and
8. public responsibility.”
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MANAGEMENT BY OBJECTIVES

 The developmental root reduces role ambiguity by


making goal setting more participative and
transactional, by increasing communication between
role incumbents, and by ensuring that both individual
and organizational goals are identified and achieved;
 This root gives attention to individuals’ personal and career
goals and tries to make those and the organizational goals
more complementary
 This root stresses the qualitative nature of MBO and its use
for employee development and growth on the job and
 attempts to shift emphasis from identifying weaknesses
to analyzing performance in order to define strengths
and potentials
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MANAGEMENT BY OBJECTIVES
 Six basic steps in implementing an MBO
process;
1. Work-group involvement
2. Joint manager–subordinate goal setting
3. Establishment of action plans for goals
4. Establishment of criteria, or yardsticks, of success
5. Review and recycle
6. Maintenance of records

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EFFECTS OF GOAL SETTING AND MBO
 Research prove that goal setting is an effective
OD intervention and plays a key part of an
overall performance management process
 Research results on MBO generally are positive
but less consistent than are the findings on
goal setting;
 top-management support for MBO is the most
important factor in implementing such programs
 MBO’s focus is too much on vertical alignment of
individual and organizational goals and not enough
on the horizontal issues that exist when tasks or
groups are interdependent
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PERFORMANCE APPRAISAL
 Performance appraisal is a feedback system that
involves the direct evaluation of individual or work-group
performance by a supervisor, manager, or peers
 performance appraisal represents an important link
between goal-setting processes and reward systems
 Abundant evidence that organizations do a poor job
appraising employees
 Many organizations have sought ways to improve
performance appraisal;
 Some innovations have been made in (a) enhancing
employee involvement, (b) balancing organizational and
employee needs, and (c)increasing the number of raters

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THE PERFORMANCE APPRAISAL PROCESS
 Performance appraisals are conducted for a variety of purposes,
including affirmative action, pay and promotion decisions, and
human resources planning and development.
 Employees also have a variety of reasons for wanting appraisal,
such as receiving feedback for career decisions, getting a raise,
and being promoted
 Rather than trying to meet these multiple purposes, the new
appraisal approaches are more tailored to balance the multiple
organizational and employee needs
 This is accomplished by actively involving the appraisee,
coworkers, and managers in assessing the purposes of the
appraisal at the time it takes place and adjusting the process to
fit that purpose
 Thus, at one time the appraisal process might focus on pay
decisions, another time on employee development, and still
another time on employee promotability
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THE PERFORMANCE APPRAISAL PROCESS
 Actively involving all relevant participants increase the
chances that the purpose of the appraisal will be correctly
identified and understood and that the appropriate appraisal
methods will be applied
 The new methods expand the appraiser role beyond
managers to include multiple raters, such as the appraisee,
peers or coworkers, and direct reports and others having
direct exposure to the manager’s or employee’s
performance.
 Also known as 360- degree feedback, this broader
approach is used more for member development than for
compensation purposes.
 This wider involvement provides different views of the
appraisee’s performance, leading to a more comprehensive
assessment of the employee’s performance, taking care of
both organizational and personal needs.
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THE PERFORMANCE APPRAISAL PROCESS
 The newer methods also expand the role of the appraisee.
Traditionally, the employee is simply a receiver of
feedback.
 The active involvement increases the likelihood that the
content of the performance appraisal will include the
employee’s views, needs, and criteria, along with those of
the organization;
 This newer role for employees increases their
acceptance and understanding of the feedback process
 Performance measurement is typically the source of many
problems in appraisal because it is seen as subjective
 In newer approaches, validity is not only a legal or
methodological issue but a social issue as well.

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THE PERFORMANCE APPRAISAL PROCESS
 participants are involved in negotiating acceptable ways of
measuring and assessing performance;
 Increased participation in goal setting is a part of this new
approach.
 All participants are trained in methods of measuring and
assessing performance
 It focuses on both objective and subjective measures of
performance, the appraisal process is more understood,
accepted, and accurate.
 Newer approaches increase the frequency of feedback

 The newer approaches to appraisal increase the timeliness


of feedback and give employees more control over their
work.
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PROCESS OF DESIGNING AND IMPLEMENTING A
PERFORMANCE APPRAISAL SYSTEM (APPLICATION)
 OD practitioners have recommended the following six
steps:
1. Select the Right People:
 Failure to recognize PA as part of a complex PMS is the important
reason for design problems.
 Members representing a variety of functions (Legal, HR, senior
managers, appraisees, etc) need to be involved in the design
process.
2. Diagnose the Current Situation:
 Diagnosis the contextual factors (business strategy, workplace
technology, and employee involvement), current appraisal practices
and satisfaction with them, work design, and the current goal-setting
and reward system practices, to define the current system’s
strengths and weaknesses.
3. Establish the System’s Purposes and Objectives:
 Potential purposes can include serving as a basis for rewards, career
planning, human resources planning, and performance improvement
or simply giving performance feedback
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PROCESS OF DESIGNING AND IMPLEMENTING A
PERFORMANCE APPRAISAL SYSTEM (APPLICATION)
4. Design the Performance Appraisal System:
 Given the agreed-upon purposes and the contextual factors,
the appropriate elements of an appraisal system can be
established
 Criteria for designing an effective system include timeliness,
accuracy, acceptance, understanding, focus on critical control
points, and economic feasibility.
5. Experiment with Implementation:
 strongly
suggest using a pilot test to spot, gauge, and correct
any flaws in the design before it is implemented system-wide
6. Evaluate and Monitor the System:
 User satisfaction from HR staff, manager, and employee
viewpoints is an essential input.
 The legal defensibility of the system should be tracked by
noting the distribution of appraisal scores against age, sex,
and ethnic categories

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EFFECTS OF PERFORMANCE APPRAISAL
 Objective feedback as a means for improving
individual and group and has been supported by a
large number of literature reviews over the years.
 It is confirmed that in performance appraisal
interventions, feedback was found to have a
consistently positive effect across studies
 Although most appraisal research has focused on
the relationship between performance and
individuals, several studies have demonstrated “a
positive relationship between group performance
and feedback”

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REWARD SYSTEMS

 rewards are powerful incentives for improving employee


and work-group performance and employee satisfaction
 OD traditionally has relied on intrinsic rewards, like
enriched jobs and opportunities for decision making. Early
interventions were based mainly on the intrinsic
satisfaction derived from performing challenging,
meaningful types of work.
 Recently, OD practitioners have expanded their focus to
include extrinsic rewards: pay; various incentives, such as
stock options, bonuses, and gain sharing; promotions; and
benefits.

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REWARD SYSTEMS

 It is discovered that both intrinsic and extrinsic


rewards can enhance performance and
satisfaction
 Rewards, however, should be congruent with other
organizational systems and practices, such as the
organization’s structure, top management’s
human relations philosophy, and work designs
 Many reward system features contribute to both employee
fulfillment and organizational effectiveness.

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STRUCTURAL AND MOTIVATIONAL FEATURES OF
REWARD SYSTEMS

 A reward system is an important part of an


organization’s design and must be aligned with
the strategy, structure, employee involvement,
and work.
 The design features of a reward system are
summarized in Table on next slide

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5 PREREQUISITES OF REWARDS
1. Availability. For rewards to reinforce desired performance, they must
be not only desired but also available. Too little of a desired reward
is no reward at all.
2. Timeliness. Like effective performance feedback, rewards should be
given in a timely manner.
3. Performance contingency. Rewards should be closely linked with
particular performances. If the goal is met, the reward is given; if the
target is missed, the reward is reduced or not given
4. Durability. Intrinsic rewards, such as increased autonomy and pride
in workmanship, tend to last longer than extrinsic rewards
5. Visibility. To leverage a reward system, employees must be able to
see who is getting the rewards. Visible rewards, such as placement
on a high-status project, promotion to a new job, and increased
authority, send signals to employees that rewards are available,
timely, and performance contingent.
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TYPES OF REWARDS

1. Skill- and Knowledge-Based Pay Systems


2. Performance-Based Pay Systems

3. Gain-Sharing Systems and

4. Promotion systems

can be used to reward individual, team, or


organization performance

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CONCLUSION
 We discussed three types of human resources
management interventions:
 goal setting,
 performance appraisal, and
 reward systems.
 Although all three change programs are relatively new to
organization development, they offer powerful methods
for managing employee and work-group performance.
 They also help enhance worker satisfaction and support
work design, business strategy, and employee
involvement practices.

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Thanks…….

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