Important Question: 1) What is important of Performance Management? 2) How do you align PMS with business?

3) What are Important uses of PMS? 4) What is Goal Setting? 5) What is MBO system and Advantages and Disadvantages? 6) What is 360 degree Appraisal? 7) What is Performance Counselling? short Notes: 1) Difference between PMS and PAS? 2) Reward and Recignation? 3) Performance Life Cycle? 4) Competency Based PMS?

Ans 1)

A good performance management system works towards the improvement of the overall organizational performance by managing the performances of teams and individuals for ensuring the achievement of the overall organizational ambitions and goals. An effective performance management system can play a very crucial role in managing the performance in an organization by:

Ensuring that the employees understand the importance of their contributions to the organizational goals and objectives. Ensuring each employee understands what is expected from them and equally ascertaining whether the employees possess the required skills and support for fulfilling such expectations. Ensuring proper aligning or linking of objectives and facilitating effective communication throughout the organization. Facilitating a cordial and a harmonious relationship between an individual employee and the line manager based on trust and empowerment.

Performance management practices can have a positive influence on the job satisfaction and employee loyalty by:

Regularly providing open and transparent job feedbacks to the employees. Establishing a clear linkage between performance and compensation Providing ample learning and development opportunities by representing the employees in leadership development programmes, etc. Evaluating performance and distributing incentives and rewards on a fair and equated basis. Establishing clear performance objectives by facilitating an open communication and a joint dialogue. Recognizing and rewarding good performance in an organization. Providing maximum opportunities for career growth.

Answer 4) Goal setting involves establishing specific, measurable, achievable, realistic and

time-targeted (S.M.A.R.T ) goals. Work on the theory of goal-setting suggests that an effective tool for making progress is to ensure that participants in a group with a common goal are clearly aware of what is expected from them. On a personal level, setting goals helps people work towards their own objectivesmost commonly with financial or career-based goals. Goal setting features as a major component of personal development literature. It is considered an open theory, so as new discoveries are made it is modified. Studies have shown that specific and ambitious goals lead to a higher level of performance than easy or general goals. As long as the individual accepts the goal, has the ability to attain it, and does not have conflicting goals, there is a positive linear relationship between goal difficulty and task performance Goals are a form of motivation that sets the standard for self-satisfaction with performance. Achieving the goal one has set for oneself is a measure of success, and being able to meet job challenges is a way one measures success in the workplace. It has been said that "Goal setting capitalizes on the human brain's amazing powers: Our brains are problem-solving, goalachieving machines."

Concept
Goals that are deemed difficult to achieve and specific tend to increase performance more than goals that are not.[3] A goal can become more specific through quantification or enumeration (should be measurable), such as by demanding "...increase productivity by 50%," or by defining certain tasks that must be completed. Setting goals affects outcomes in four ways:[4] 1. Choice: goals narrow attention and direct efforts to goal-relevant activities, and away from perceived undesirable and goal-irrelevant actions.

2. Effort: goals can lead to more effort; for example, if one typically produces 4 widgets an hour, and has the goal of producing 6, one may work more intensely towards the goal than one would otherwise. 3. Persistence: someone becomes more prone to work through setbacks if pursuing a goal. 4. Cognition: goals can lead individuals to develop and change their behavior.

Goal setting in business

In business, goal setting encourages participants to put in substantial effort. Also, because every member has defined expectations for their role, little room is left for inadequate, marginal effort to go unnoticed. Managers cannot constantly drive motivation, or keep track of an employees work on a continuous basis. Goals are therefore an important tool for managers, since goals have the ability to function as a self-regulatory mechanism that helps employees prioritize tasks.[5] Also Locke and Latham (2002)[6] The four mechanisms through which goal setting can affect individual performance are: 1. Goals focus attention toward goal-relevant activities and away from goal-irrelevant activities. 2. Goals serve as an energizer: Higher goals induce greater effort, while low goals induce lesser effort. 3. Goals affect persistence; constraints with regard to resources affect work pace. 4. Goals activate cognitive knowledge and strategies that help employees cope with the situation at hand.

Answer 5) Management by objectives (MBO), also known as management by results (MBR), is a process of defining objectives within an organization so that management and employees agree to the objectives and understand what they need to do in the organization in order to achieve them. The term "management by objectives" was first popularized by Peter Drucker in his 1954 book The Practice of Management.[1] The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employees actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities. According to George S. Odiorne, the system of management by objectives can be described as a process whereby the superior and subordinate jointly identify its common goals, define each individual's major areas of responsibility in terms of the results expected of him, and use these measures as guides for operating the unit and assessing the contribution of each of its members

Unique features and advantages of the MBO process

Behind the principle of Management by Objectives (MBO) is for employees to have a clear understanding of the roles and responsibilities expected of them. Then they can understand how their activities relate to the achievement of the organization's goal. Also places importance on fulfilling the personal goals of each employee. Some of the important features and advantages of MBO are:
1. Motivation Involving employees in the whole process of goal setting and increasing employee empowerment. This increases employee job satisfaction and commitment. 2. Better communication and coordination Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the organization and also to solve many problems. 3. Clarity of goals 4. Subordinates tend to have a higher commitment to objectives they set for themselves than those imposed on them by another person. 5. Managers can ensure that objectives of the subordinates are linked to the organization's objectives. 6. Everybody will be having a common goal for whole organisation. That means, it is directive principle of management

Limitations
There are several limitations to the assumptive base underlying the impact of managing by objectives,[citation needed] including: 1. It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes. 2. It under-emphasizes the importance of the environment or context in which the goals are set. That context includes everything from the availability and quality of resources, to relative buy-in by leadership and stake-holders. As an example of the influence of management buy-in as a contextual influencer, in a 1991 comprehensive review of thirty years of research on the impact of Management by Objectives, Robert Rodgers and John Hunter concluded that companies whose CEOs demonstrated high commitment to MBO showed, on average, a 56% gain in productivity. Companies with CEOs who showed low commitment only saw a 6% gain in productivity.[citation needed] When this approach is not properly set, agreed and managed by organizations, self-centered employees might be prone to distort results, falsely representing achievement of targets that were set in a short-term, narrow fashion. In this case, managing by objectives would be counterproductive. The use of MBO must be carefully aligned with the culture of the organization. While MBO is not as fashionable as it was before, it still has its place in management today. The key difference

is that rather than 'set' objectives from a cascade process, objectives are discussed and agreed upon. Employees are often involved in this process, which can be advantageous. A saying around MBO "What gets measured gets done", Why measure performance? Different purposes require different measures is perhaps the most famous aphorism of performance measurement; therefore, to avoid potential problems SMART and SMARTER objectives need to be agreed upon in the true sense rather than se

Answer6) 360-degree feedback

In human resources or industrial psychology, 360-degree feedback, also known as multi-rater feedback, multi source feedback, or multi source assessment, is feedback that comes from members of an employee's immediate work circle. Most often, 360-degree feedback will include direct feedback from an employee's subordinates, peers, and supervisor(s), as well as a self-evaluation. It can also include, in some cases, feedback from external sources, such as customers and suppliers or other interested stakeholders. It may be contrasted with "upward feedback," where managers are given feedback only by their direct reports, or a "traditional performance appraisal," where the employees are most often reviewed only by their managers.
The results from a 360-degree evaluation are often used by the person receiving the feedback to plan and map specific paths in their development. Results are also used by some organizations in making administrative decisions related to pay and promotions. When this is the case, the 360 assessment is for evaluation purposes, and is sometimes called a "360-degree review." However, there is a great deal of controversy as to whether 360-degree feedback should be used exclusively for development purposes,[1] or should be used for appraisal purposes as well. Several studies[12] indicate that the use of 360-degree feedback helps to improve employee performance because it helps the evaluated see different perspectives of their performance. In a 5-year study,[13] no improvement in overall rater scores was found between the 1st and 2nd year, but higher scores were noted between 2nd and 3rd and 3rd and 4th years. Reilly et al. (1996) found that performance increased between the 1st and 2nd administrations, and sustained this improvement 2 years later. Additional studies show that 360-degree feedback may be predictive of future performance.[14]

Some authors maintain, however, that there are too many lurking variables related to 360-degree evaluations to reliably generalize their effectiveness.[15] Bracken et al. (2001b) and Bracken and Timmreck (2001) focus on process features that are likely to also have major effects on creating behavior change. Greguras and Robie (1998) tracked how the number of raters used in each particular category (direct report, peer, manager) affects the reliability of the feedback. Their research showed that direct reports are the least reliable and, therefore, more participation is required to produce a reliable result. Multiple pieces of research[16] have demonstrated that the scale of responses can have a major effect on the results, and some response scales are better than others. Goldsmith and Underhill (2001) report the powerful influence of the evaluated individual following up with raters to discuss their results. Other potentially powerful factors affecting behavior change include how raters are selected, manager approval, instrument quality (reliability and validity), rater training and orientation, participant training, supervisor training, coaching, integration with HR systems, and accountability.[17] Some researchers claim that the use of multi-rater assessment does not improve company performance. One 2001 study found that 360-degree feedback was associated with a 10.6 percent decrease in market value, and concludes that "there is no data showing that [360-degree feedback] actually improves productivity, increases retention, decreases grievances, or is superior to forced ranking and standard performance appraisal systems."[18] Maury Peiperl of Stanford's General Management Department, proposed four paradoxes that explain why 360 evaluations do not elicit accurate data: The Paradox of Roles, in which an evaluator is conflicted by being both peer and the judge; the Paradox of Group Performance, which admits that the vast majority of work done in a corporate setting is done in groups, not individually; the Measurement Paradox, which shows that qualitative, or in-person techniques are much more effective in facilitating change; and the Paradox of Rewards, which shows that individuals evaluating their peers care more about the rewards associated with finishing the task than the actual content of the evaluation itself.[19] Additional studies[20] found no correlation between an employee's multi-rater assessment scores and his or her top-down performance appraisal scores (provided by the person's supervisor), and advised that although multi-rater feedback can be effectively used for appraisal, care should be taken in its implementation.[21] This research suggests that 360-degree feedback and performance appraisals get at different outcomes, and that both 360-degree feedback and traditional performance appraisals should be used in evaluating overall performance.[ Answer7)
Some Notes on Performance Counseling The primary purpose of counseling is to define organizational mission and values, discuss individual job expectations and performance, reinforce good performance/work related behavior, identify and correct problem performance/work related behavior, and enhance the employees ability to set and reach career goals. The best counseling is forward looking, concentrating on the future and what needs to be done better. Counseling should be timely. Counseling should begin with feedback from the employee about his/her performance before giving

your feedback. Answer these questions: What worked? What did not? What would you do differently? Preparation

1. Schedule the counseling session and notify the employee; suggest the employee write down or be ready to discuss expectations and requirements. 2. Get a copy of the employees job description and appropriate counseling checklist & blank evaluation form. 3. Think about how each outcome or critical element of the performance plan supports the mission/objectives of the organization. 4. Decide what you consider necessary for success in each outcome or critical element. Be specific 5. Make notes to help you with counseling.
During The Counseling Session

1. Discuss mission/objectives of organization and how his/her performance contributes to success of organization. 2. Discuss items that require top priority effort (areas of special emphasis)realizing this may change later. 3. Discuss what tasks and level of performance you expect for success. Review employees written input if he/she provides it 4. Discuss competencies needed to perform duties. Ask employee for ideas about what how he/she might perform assigned duties. 5. If you and the employee have different views, discuss them until you both are clear on requirements. Even if the employee disagrees, he/she must understand what you expect. 6. Emphasize the employees positive strengths. Give examples of what excellence performance is to give the employee specifics to aim for. 7. Ask the employee about career goals and training needs.
After Counseling

1. 2. 3. 4.

Summarize key points of the counseling on relevant form Give the employee the form to review/initial. If the employee gave written input, attach it. Give the employee a copy and keep the original to use for the next counseling session.

Short notes Short note answer 2)

Reward and Recognition is typically used either to reward an employee for a behavior or recognize and employee for results. Despite the existence of various programs in the corporate culture, the purpose or goal is not always clearly defined. There is also debate around the most effective means of using the two types [monetary and non monetary (NMR)]. Lastly, there are numerous pitfalls in using various forms of reward and recognition. Based on the research, the assumption that rewards and recognition is necessary is most likely a true one. "There is a definite link between the intention of people to stay at their place of employment and reward/recognition. Indeed, some of our recent lab studies have shown that the correlation between the length of time people intent to stay with their current employers and the recognition given for work that is well done is .27 - a positive and statistically significant relationship. The relationship between monetary rewards and intention to stay also is, but somewhat less so." (MedicalSurveys.net). What is open to debate is the most effective means of reward and recognition. The purposes of many of the Reward and Recognition programs are multilayered. As stated above, associate retention is the generally stated goal. Retaining associates will save the organization money "Cost estimates for turnover range from 33% to 150% of base salary. For a midsized company of 1,000 employees (average base salary $50K) with 10% annual rate of turnover, the cost is $1.7 million/ Society of Human Resources Management) to $7.5 million." (Bureau of Labor Statistics, Abstract). Associate satisfaction with the job and positive environment/morale impact the likelihood of retention. According to McKinsey and Company, 65% of respondents cited not "feeling valued" or "insufficient recognition or reward" for leaving previous employer (War for Talent, 2000). The two types of reward and recognition are easily distinguishable: Monetary, receiving dollar incentives for performance and Non Monetary (NMR), various forms of "soft" recognition. Formal and Spontaneous are additional distinctions of Reward and Recognition. Formal recognition is typically part of a program, put in place to exact a specific result (Service Awards, Sales Campaigns).

Much of the research supports spontaneous NMR as the most effective means to incent employees and reach retention goals. "Recent studies conducted by the business Research Lab (Hauppauge, N.Y.) have shown that the correlation between the length of time people intend to stay with their current employers and "soft" factors - like recognition given for work well done or pride in the employer - is more statistically significant that the longevity/monetary reward correlation" (BCP Handbook). Praise and Recognition in the forms of notes, cards, or public presentation among teammates share the sense of accomplishment. Implementation of this type of Reward and Recognition can be done with minimal effort, minimal cost and with wide associate involvement. According to a Wichita State University study, the top five NMR motivating techniques are:

Personally congratulating employees who do a good job; Writing personal notes about good performance; Using performance as the basis for promotion; Publicly recognizing employees for good performance; and Holding morale-building meetings to celebrate successes.

These techniques, along with others, aren't only necessary from management. Peer initiated recognition is truly appreciated because of the understanding around the particulars of the job (Boswell). Carolyn Sowder, Vice President and Senior Change Consultant with Bank of America, provides information around the Spirit Cards (personal communication, February 11, 2004). Managers or peers recognize associates with a hand written or e-mailed formatted card stating the associates' contribution. In 2003, approximately 13,800 spirit cards were sent within a larger team of 7500-8000 associates. There is a year over year 1% increase to the Sirota Survey question: Rate the extent to which you receive recognition from management when you do a good job (Survey taken Fall 2003). Most organizations will agree that Reward and Recognition is important to associate satisfaction and it is important to have a program in place. Regardless of what is established practice for Reward and Recognition, there are many common pitfalls that develop once the program has rolled out such as: use of programs; competition of multiple programs; true measurement of desired outcome; match the reward and recognition to the recipient; and establish the Return on Investment. Many managers may not use the developed programs because they did not receive recognition or guidance on use themselves. According to Bob

Nelson, (Why Managers Don't Use Non-Monetary Recognition) many of the managers who do not use the NMR were reinforced for this behavior (most notably by their employees) while the low use NMR managers do not know how to effectively provide NMR nor do they feel using NMR would lead to desired outcomes. For the managers who do use it on a regular basis, a positive cycle begins; the desired results are reached by associates. A second factor that can impact the success of a program may be other competing Reward and Recognition programs. For the associate, goals and priorities become blurry. Associates may also struggle with the actual Reward and Recognition itself - which one represents the "most success" the trip to Hawaii or the Spirit Card? The priority is chosen on that basis. And the trip to Hawaii may overshadow the informal form of recognition. A third challenge to reward and recognition is the accuracy of measuring what success or desired outcome is. "Far and away the biggest single factor that determines output is the system and its capability. The systems capability is independent of the people doing the work." (Scholtes). In many cases, there is one number that is defined as the goal. What isn't always reviewed when setting this goal is the various ways it may be attained. For example: A strongly skilled worker (a high performer) is assigned the most difficult and time-consuming tasks in a bucket. However, the associate must complete the same number of tasks as a less skilled worker with less difficult tasks. Potentially, if the less skilled worker meets or exceeds the goals, recognition is given. The high performer will not get recognition for not meeting goals and may also be penalized for it. Furthermore, as the workforce grows more multi-cultural, what is in place today for workers may not be considered reward or recognition by others based on culture, role, need and so forth. The one-size fits all approach needs to be reviewed - with multiple associates in mind. Some cultures do not consider individual success as important. One potential way of overcoming this may be to look at more "work/life" centric forms of R&R. These would consist of things like convenience services, paid time off, wellness/fitness programs. Graph Five, in the overview of the 1999 Survey of Performance-Based Work/Life programs, indicates the overwhelming response of the associate feedback based on this form of recognition.

Answer short notes 4) Competency-based performance management

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Performance management is about achieving results in a manner that is consistent with organizational expectations. Integrating competencies within the performance management process supports the provision of feedback to employees not only on what they have accomplished (i.e., performance goals), but also how the work was performed, using competencies for providing feedback. Assessing competencies as a part of performance management is an important means of assisting employees in understanding performance expectations and enhancing competencies. Multi-source feedback, while not an HR application per se, is a method that is often used in performance management to assess and provide employees with feedback on how they performed their work
Performance Management

Performance management programs are set up to provide feedback to employees on how effectively they are performing in their jobs. Such programs normally include a set of goals or objectives the employee must accomplish within the review period as well as the standards or criteria for determining whether the defined goals have been accomplished. Effective performance management include the following features:

Linking individual goals to the corporate and work unit business plans and goals; Focusing on results, behaviors (competencies) as well as process improvement; Regular reviews and updating of performance plans to address changing demands; Training for both managers and employees on how to effectively give and receive feedback, including providing feedback to employees who experience challenges in performing to the standards required in their jobs / roles; Training for managers on how to provide performance evaluations that are valid, fair and unbiased.

Integrating Competencies in the Performance Management Process

Competencies can be integrated into the regular Performance Management (PM) process in one of two ways:

By defining the competencies needed to perform each Performance Goal / Objective

In this case, the manager and employee identify the key competencies required to achieve each performance goal / objective (typically 1 to 3 competencies per goal / objective). At the end of the performance cycle, the employees performance is evaluated in relation to the performance goals / objectives as well as the key competencies associated with each goal. Using this approach, the competencies included in the employees performance plan may or may not completely coincide with the standard competency profile for the employees role / job. The

advantage of using this method is that the competencies being assessed are entirely consistent with the employees performance goals for the performance review cycle. The disadvantage is that not all competencies within the competency profile for the employees role / job will necessarily be assessed within the cycle.

By integrating the competencies for the employees job into the PM process

In this case, the performance plan includes the performance goals / objectives for the review period as well as the complete set of competencies from the competency profile for the employees role / job. The performance goals / objectives address what must be accomplished during the review period, and the competencies measure how the employee conducted him/herself to accomplish their work. The advantage of this method is that all competencies defined in the competency profile for the employees role / job are evaluated. The disadvantage is that due the specific nature of the performance goals / objectives, key competencies for the effective performance during the review cycle, but not included in the competency profile, will not be assessed. In both cases, feedback provided on the employees competencies typically feeds into the development of a learning or action plan to address gaps in performance and development within or beyond the employees current role / job.
Multi-source / 360 Degree / Upward Feedback

In Multi-source, 360 Degree and Upward feedback, the behavioural indicators for the competencies needed within the target role / job are used as the standard for assessing the performance of the employee. In Multi-source / 360 feedback, different stakeholder groups provide ratings, including the employee, their supervisor, as well as others with whom the employee interacts (e.g., peers, team members, clients both within and outside the organization, reporting employees; etc.). In Upward Feedback, all employees reporting directly and / or indirectly to the supervisor provide feedback on the supervisors performance. The results are compiled and a report is provided to the employee. The report includes the results for all competencies, highlighting both the competencies that are strong as well as those rated lowest by the different stakeholder groups. In almost all cases, individual ratings from others (except for the employees supervisor) are combined in such a way (e.g., averaged ratings) as to protect the anonymity of the individuals providing the feedback. The report is set up to show similarities and differences in ratings across the different stakeholder groups. The results of the process are normally used to develop learning and action plans for improvement (see section on Learning and Development). They can also feed into broader assessment programs (e.g., management assessment centres; development programs) to support employee career development and / or succession management within the organization. Upward and Multi-source / 360 Degree Feedback programs must be managed well in order to protect those providing, as well as those receiving, feedback. The Society for Industrial / Organizational Psychology has published guidelines for the effective development and implementation of Multi-source Feedback.

Short note answer 1) Performance Management vs Performance Appraisal

Performance Management

Performance Management Principles of Performance Management Performance Management Cycle Performance Management Vs Performance Appraisal Benefits of Performance Management 7 Strategies for People and Performance Management

Methods of Performance Management (Refer Performance Appraisal Methods)

Comparison Method Rating Methods Behaviorally Anchored Rating Scales (BARS) Management By Objectives 3600 Performance Appraisal

The terms 'performance management' and 'performance appraisal' are sometimes used synonymously, but they are different. Performance management is a comprehensive, continuous and flexible approach to the management of organisations, teams and individuals which involves the maximum amount of dialogue between those concerned. Performance appraisal is a more limited approach which involves managers making top-down assessments and rating the performance of their subordinates at an annual performance appraisal meeting.

Performance appraisal Top-down assessment Annual appraisal meeting Use of ratings Monolithic system Focus on quantified objectives Often linked to pay

Performance management Joint process through dialogue Continuous review with one or more formal reviews Ratings less common Flexible process Focus on values and behaviours as well as objectives Less likely to be directly linked to pay

Bureaucratic - complex paperwork Owned by the HR department

Documentation kept to a minimum Owned by line managers

We have worked with some of the most advanced organizations in terms of Performance Management Most organizations have some type of employee appraisal or review system and are experiencing the shortcomings of manual Appraisal systems. In talking about Employee Performance Management, the question we are asked most often is what is the difference between Appraisal systems and Performance Management