Performance Management Pgdba Sem 3

PERFORMANCE MANAGEMENT

A Thought

The conventional definition of management is getting work done through people, but real management is developing people through work. - Agha Hasan Abedi

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PERFORMANCE MANAGEMENT 

It is the technique for beginning with the end in mind.  It involves analyzing the objectives & goals for your Deptt. or work unit and ensuring that they relate to the overall goals of your company.

Why Do Performance Management? Communicate goals, mission, values, purpose Improve working relationships Improve management Identify and communicate strengths and

areas for improvement Provide feedback Develop Monitor Support 4

Focus of Performance Management

Progress and success toward goal achievement

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COMPONENTS OF PERFORMANCE MANAGEMENT

KEY RESULT AREAS KEY PERFORMANCE INDICATORS GOALS

KEY RESULT AREAS “Key Result Areas” or KRA's refer to

general areas of outcomes or outputs for which the department's role is responsible. KRA's is the set of activities on which performances are rated. Key Result Areas or KRA's refer to general areas of outcomes or outputs for which a role is responsible.

KEY PERFORMANCE INDICATORS KPIs serve as the gauges which are used to evaluate how well you have achieved your key results. KPIs split into 2 types:a) Direct Key Performance Indicators – relate directly to a key result area. b) Indirect Key Performance Indicators – apply where it is not possible to directly measure a key result area.

GOALS These are the tools to tell how to achieve

your Key Result as per the desired standards. Goals should be challenging, time-bound & measurable. Goals should be in line with Mission, Vision, KRAs & KPIs.

WHY TO IDENTIFY KRAs? Identifying KRAs helps individuals Clarify their roles. Set goals and objectives. Focus on results rather than activities. Align their roles to the organization’s

business or strategic plan. Prioritize their activities, and therefore improve their time/work management. Communicate their role’s purposes to others Make value-added decisions.

EXAMPLES For Marketing Deptt. :a) If KRA is Sales then KPIs will be : Revenue over a given time.  Units sold. b) If KRA is Profit then KPIs will be : To achieve annual sales.  Annual profit achieved. 

EXAMPLES 

KRAs of Finance & Accounting include :-

2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

Credit referencing Capital expenditure Security Financial analysis Cost control Internal audit Regulatory reporting Credit control Financial records Payroll Cash flow forecasting Budgeting Costing

EXAMPLES 

KRAs of Manufacturing include :-

 

elimination of wastages in production improving throughput efficiency process efficiency etc.



KPI could be



reducing back orders[ nil %] improving targeted delivery date [ 98%]





EXAMPLE 

KRAs of Quality include :Quality

KPIs could be : Measure defects per million.  Knowledge of quality principles demonstrated by team.  Measure quantity of feedback from customers.

EXAMPLE KRAs of Design include :Introduce new products KPIs could be : No. of new products introduced in a given period.  Percent of revenues reinvested in R&D.

EXAMPLE  Manufacturing

KRAs include

Stock control Maintenance Labour relations Waste Reworks Productivity Health and Safety Quality control Record keeping

CONCEPT OF PERFORMANCE MANAGEMENT  Performance management begins with goals.

Goals define the results that people should aim to achieve. Goals are touchstones for performance planning, appraisal, rewards, and improvement.  Goal setting should be a top down process that begins in company strategy. If, for example, the strategic goal is to become the market share leader through rapid product introductions, then unit goals should serve that strategy. And individual goals should be aligned with those of their units.

GOALS VERSUS ACTIVITIES GOALS Increase sales by

10%.

Reduce customer

turnover by 15%.

Launch five new

products this year.

Cut production waste

by 20%.

ACTIVITIES Writing weekly

sales reports. Handling customer complaints and other problems. Meeting weekly to discuss new product development. Participating in quality-control

Characteristics of Effective Goals Recognized as important. Clear Written in specific terms Measurable and framed in time Aligned with organizational strategy. Achievable and challenging Supported by appropriate rewards

Three mistakes to avoid Companies fail to create performance

metrics. They fail to align rewards with company and unit goals Achievement bar is set too low

Get it on paper The date of your meeting. Key points brought up by both parties. The goals the employee has agreed to

pursue. What he or she will do to achieve them. The date on which the employees performance will be formally appraised.

Four Steps to accomplishing goals Break each goal down into specific tasks-

with clear outcomes. Plan the execution of those tasks- with timetables. Gather the resources needed to fulfill each task. Execute the plan

MOTIVATION

THEORIES OF MOTIVATION McGregor’s theory X and theory Y. Maslow’s theory of hierarchy of needs. Elton Mayo’s Hawthorne studies.

What about rewards? Two categories of rewards are there; Extrinsic (external tangible forms of

recognition such as pay hikes, promotions, bonuses and sales prizes) Intrinsic (produce non quantifiable personal satisfaction) Both type of rewards have a place in performance management)

Intrinsic rewards generally motivate best. Herzberg found that extrinsic incentives

such as bigger paychecks and plush offices don’t necessarily make people work harder or better. When such motivators do succeed , the positive effects are shortlived.

EXAMPLE Southwest Airlines- at the entry level,

the carrier is one of the lowest-paying of the major airlines, yet it enjoys remarkable commitment from its people. Here, real motivators such as recognition and team spirit, when combined with adequate pay, have produced a committed workforce and the lowest level of employee turnover in the U.S. airline industry.

Aligning the incentive system Incentive system should create

alignment between desired performance and the rewards that employees value. …. Perfect alignment is impossible! This is because the two elements that must be aligned- performance and “what people value”- are seldom clear and are often hard to measure.

-the uncontrollability problem - the alignment problem - the interdependency problem

Practical tips for motivating  -make jobs complete  - Introduce challenge  - encourage some people to become experts  - drive out fear  - preserve your subordinates dignity  -sack the slackers  - Empower, Don’t micromanage  - hire Self-motivated people  - be a good boss

MONITORING PERFORMANCE -A multistep process for understanding performance

relative to goals. - The why and how of active listening. - Common causes of poor performance.

What is performance?  Performance means outcomes achieved, or

accomplishments at work- the actual contribution of an individual or team to the organization’s strategic goals, like stakeholder satisfaction, clean image, and economic sustainability. The role of any managee can be seen in three parts: Being, Doing, and Relating.  Being concerns the competencies of the managee that are relevant to her performance. Being means that the managee has prepared her mind.  Doing focuses on the managee activities that are variably effective at different levels in the organization: that affect performance of other roles dependent on the managee output, and the organizational performance as a whole.  Relating emphasizes the nature of

Organizational Mission,Goals, Strategy and Operational Plans Individual Role &its Description Indices for Monitoring Performance, Performance Standards Feedbac k

Role-wise Plans And Expectations

Stocktaki ng

Monitoring & Mentoring Activity

Performance-Managed Organization (Hale & Whitlam, 1992)  Performance Management organizations were likely

to express performance targets in terms of measurable outputs, accountabilities and training or learning targets.  More success was likely in organizations stressing the importance of ensuring human resource development activities and relating these to the needs of the organization rather than those where the remuneration dimension dominated performance management.  The challenge for the personnel function is to facilitate the ownership of performance management by line management.  Organizations implementing performance management systems should consider extrinsic needs of employees such as reward packages and intrinsic needs in terms of personal growth.  Training and development can be important motivators, particularly if linked to career

In ANZ Grindlays Bank, the principal aim of

the performance management program (PMP) was to help each one of the managee achieve their own goals while at the same time meeting the Bank’s immediate business objectives and strategic goals. Towards this aim the Bank’s PMP helped each managee clarify for herself Why I am doing what I am doing. According to the bank, ‘ good business principles are the foundation on which we build the business of ANZ Grindlays and PMP should reinforce this’. The bank presents its Performance

Performa nce Planning

Performance Assessment

Performan ce Coaching

Competence vs. Competency  Competence:

An individual’s capacity to perform his or her job functions.  Professional

Competence  The ability to function

effectively in the tasks considered essential within a given profession.

 Competency:

An individual’s actual performance in a particular situation.  The ability to

integrate knowledge and skill to perform a task under the varied circumstances of the real world.

Skill Knowledge Motive Trait Self concept

Competency= Knowledge+ Skill

Skills:

Knowledge:

- material knowledge cable - Colour codes

COMPETENCY =

- dismantle a cable - strip a cable - attach cable lugs - connect a cable - assemble a cable

To be able to connect an energy cable

Attitude: safety: equipment, tools, no tension, firm connections 40

WW – MT versie 18/12/2003

So…Now…What is a competency?..How do we define it? There are various definitions given for the

term competency. Combining the basic ideas embedded in all definitions, competency can be defined as:  “ A combination of knowledge, skills, attitude and personality of an individual as applied to a role or job in the context of the present and future environment, that accounts for sustained success within the framework of Organizational Values.”   Sometimes competencies are also defined as “ cluster of successful behaviors.”

FIVE TYPES OF COMPETENCY CHARACTERISTICS: 1. Motives: the things a person

consistently thinks about or wants that cause action. Motives “ drive, direct, and select” behavior toward certain actions or goals and away from others. E.g. Achievement-motivated people consistently set challenging goals for themselves and use feedback to do better. 2. Traits: physical characteristics and consistent response to situation or information. E.g. reaction time and good eyesight are physical trait competencies of combat pilots.

…contd  3. Self-concept: A person’s attitude, values,

or self-image. E.g. Self-confidence, a person’s belief that he can be effective in any situation is a part of that person’s concept of self.   4. Knowledge: Information a person has in specific content areas E.g. A surgeon’s knowledge of nerves and muscles in the human body.   5.Skill: The ability to perform a certain physical or mental task. E.g. A dentist’s physical skill to fill a tooth without damaging the nerve.

The type or level of a competency has

practical implications for human resource planning. Knowledge and skills tend to be visible and relatively surface, characteristics of people. But attitude, trait and motive competencies are more hidden “deeper” and central to personality. Surface knowledge and skills are relatively easy to develop. But core motive and trait competencies are at the base of the personality iceberg and are more difficult to assess and develop as shown in the figure on the next slide….

Iceberg model contd Skills = a learned ability Knowledge = acquiring information

in a particular field Self-Image = attitudes and values Traits = why and how we behave a certain way Motives = what drives us, i.e., the need to seek achievement, power/influence, affliliation

WHAT IS A COMPETENCY MODEL? A competency model is a set of success

factors (competencies) that include the key behaviors required for excellent performance in a particular role excellent performers on the job demonstrate these behaviors much more consistently than average or poor performers.

A Competency model provides a “road

map” for the range of behaviors that produce excellent performance.

BENEFITS OF COMPETENCY MODELS Competency models have strategic value as performance improvement vehicles.  Benefits include... They make explicit the clusters of knowledge, skills, and personal attributes that lead to high performance in specific jobs and roles.  This information can be transmitted to employees.   They embody the core values of a business, aiding in the communication of these values throughout the organization and helping to shape a business culture and

…contd Competency models are behavior-based

performance standards against which people and units can be measured.  They provide a behavioral vision for the kinds of performance necessary to successfully implement worldwide business strategies.

NEED FOR A COMPETENCY MODEL  Organizations are using competencies in

virtually every human resource domain.   ⇒ ASSESSMENT PERFORMANCE DEVELOPMENT

 STAFFING

 ⇒

⇒

TRAINING AND DEVELOPMENT CAREER MANAGEMENT

⇒

 Competencies are used as the “key criteria”

for implementing each application. Therefore, competencies can be used as a tool to produce results in each of the above areas. All the Integrated Human Resource Practices can be based on competencies.

WHAT IS COMPETENCY MAPPING? Competency Mapping is a process

of identifying key competencies for an organization and/or a job and incorporating those competencies throughout the various processes (i.e. job evaluation, training, recruitment) of the organization.

BUILDING COMPETENCY BASED PEOPLE PROCESSES

1.COMPETENCY BASED SELECTION Competency based selection can be a way

to gain competitive advantage. The market for human talent is imperfect. A firm that knows how to assess competencies can effectively hire the best at a reasonable price, for example hire under priced but highly entrepreneurial MBA’s from lesserknown business schools.  The

person employed performs poorly in a critical job for he lacks the competencies required for that role.  There is high turnover due to high failure rate among new hires.  The organization needs to identify new hires with the potential to become future managers or leaders.  A gap between the competencies needed and what the organization can hire for indicates the training new hires

COMPETENCY BASED PERFORMANCE MANAGEMENT

Performance has two dimensions Achieving business results Developing individual competencies

  These days performance appraisal is

seen by managers and employees as a bureaucratic “paperwork” exercises that they do not take seriously because it has little impact on employee development. Performance appraisals do not address the employees’ questions about skill development or

Competency based performance management would Focus on “HOW” of performance and not on “WHAT” of performance i.e. not on results but how the results are achieved Link to development of the individual and not just rewards  Competency based PMS shift the emphasis of appraisal from organization results to employee behaviors and competencies demonstrated and hence help identify development gaps.

  COMPETENCY BASED TRAINING AND DEVELOPMENT

If the training programs can be aligned to the development needs emerging out of the appraisal system and to the market led training needs they can contribute better to both individual and business objectives.  Firstly there is a need to determine the

competencies for a particular position  Secondly identify the competencies of the person holding that position  By mapping the competencies, gaps can be identified in terms of the competencies for that role and the competencies of the person doing that role to diagnose the training and development needs.  Identify the most appropriate training and

….contd Accordingly, the person can be trained on those competencies only. Competency based training programs clearly tell what should be the competency level of the person entering the program. This would drastically reduce the training cost for the organization  It is also helpful in career planning. Employees can match their proficiency in competencies with the competencies requirements of various jobs. Based on the match employees can apply for a job or consider other job opportunities.

COMPETENCY BASED COMPENSATION Competency based compensation is compensation for individual characteristics, for skills and competencies over and above the pay a job or organizational role commands. Various elements are considered for arriving at compensation increase. Enhancement in competencies has to be one of them. There is a need for competency based compensation system  To attract more competent than average employees  To reward for results and competencies developed  To motivate employees to maintain and enhance

BENEFITS OF IMPLEMENTING A COMPETENCY-BASED APPROACH

For the company Establish expectations for performance

excellence Improved job satisfaction and better employee retention Increase the effectiveness of training and professional development programs by linking them to success criteria Provide a common understanding of scope and requirements of a specific role Provide a common, organization wide standards for career levels that enable

For Managers Identify performance criteria to improve

the accuracy and ease of the selection process Provide more objective performance standards Easier communication of performance expectations Provide a clear foundation for dialogue to occur between the managers and employees and performance, development and career-oriented issues

For employees Identify the behavioral standards of

performance excellence Provide a more specific and objective assessment of their strengths and the tools required to enhance their skills More clear on career related issues

WIPRO CONSUMER CARE AND LIGHTING (WCCLG), BANGALORE (to be distributed in class)

Threshold competencies The characteristics required by a jobholder

to perform a job effectively are called threshold competencies. For the position of a typist it is necessary to have primary knowledge about typing, which is a threshold competency. Other examples?

Differentiating Competencies The characteristics, which differentiate

superior performers from average performers, come under this category; such characteristics are not found in average performers. Knowledge of formatting is a competency that makes a typist to superior to others in performance, which is a differentiating competency.

Generic or Key Competencies Important non-technical abilities and skills

for employment. •Abilities and skills that are transferable – that people could learn and develop in different ways and a wide variety of learning environments. •Abilities and skills that would be transferable to new situations.

Key Generic

Competencies:•Leadership:To direct a team to work towardsa common goal and to motivate teammates.• Teamwork:To cooperate effectively with teammates and to share team responsibilities.• Interpersonal Effectiveness:To fit in with different social situations and to develop relationships with different people. •Communication:To apply oral and writing skills to communicate

 Since the early 1990s, generic competencies –

transferable, multifunctional knowledge, skills and attitudes that people could learn and develop in different ways and learning environments, and apply across a variety of job and life contexts, have been capturing growing attention all over the world. The urgency in developing generic competencies in recent years are mainly fueled by employers from the industry, as fast changes in technology and global competition prompt employers alike to look for allround employees who demonstrate teamwork, problem-solving, flexibility, initiative, and the capacity to undertake many different tasks and information (NCVER, 2003).

Technical Functional Specific competencies which are

considered essential to perform any job in the Organization within a defined technical or functional area of work, i.e. analysis and decision-making,  team leadership,change management, etc. communication, programme execution, processing tools, linguistic, etc. environmental management, industrial process sectors, investment management, finance and administration,

Managerial Competencies Managerial Competencies - Sets of

knowledge, skill, behaviors, and attitudes that a person needs to be effective in a wide range of managerial jobs and various types of organizations

A Model of Managerial Competencies (adapted from Figure 1.1)

Communication Competency

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Teamwork Competency

Planning and Administration Competency

Global Awareness Competency

Strategic Action Competency

Self-Management Competency

Copyright © 2005 by SouthWestern, a division of Thomson Learnig All rights reserved

A Model of Managerial Competencies (adapted from Figure 1.1)

Communication Competency Teamwork Competency

Global Awareness Competency

72

Managerial Effectiveness Self-Management Competency

Planning and Administration Competency

Strategic Action Competency

Copyright © 2005 by SouthWestern, a division of Thomson Learning All rights reserved