UNIT 1

Performance management

Meaning: Performance management serves as an essential, dynamic process

that cultivates employees' growth, motivates their performance, and aligns it with
the company's strategic objectives. This process encompasses a myriad of
elements - from feedback, teamwork, goal setting to employee development, and
recognition.
 Performance management is a nurturing and holistic process that seeks to
develop employees with the required skills and competencies to work
towards the overall development of the business.
 It also emphasizes on improving employee performance taking into
consideration the business requirements.
 Performance management involves giving continuous feedback and help the
employee to achieve his career aspirations.
It aims to create a positive work culture where everyone takes accountability
jointly for bringing out the business outcomes, honing their skills and
competencies at the same time. It requires to unleash the employee’s full
potential by communicating the business objectives, performance expectations,
competencies, responsibilities and employee goals. It is good that there are tools
available in the market to automate performance processes. With the help of
an employee performance management software, it has now become easier to
integrate all the departments towards the business to assess employee
performance.

When people hear the words performance management, the fiscal year
evaluation may be their first thought. However, an effective performance
management process involves much more than just the annual evaluation.

Human Resources has established modules to assist in managing employee

performance. Human Resources recommends in addition to setting goals at the
beginning of the evaluation period and evaluating performance at the end of the
evaluation period, that feedback sessions are held throughout the year. These
meetings include:
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  Initial Meeting: Goal Setting and Development Planning – During the first
meeting, at the beginning of the evaluation period, the employee and
supervisor will mutually develop goals that align directly with the goals of
the department, school and university. A development plan that supports
goal completion will also be developed and agreed upon.

 Quarterly Feedback Sessions (October, January, April for the fiscal year
evaluation period) – During the feedback sessions, the employee and
supervisor will discuss the employee’s progress toward goal completion
and any support that may be needed.

 Final Meeting: Evaluation Review – During the final meeting at the end of
the evaluation period, the employee and supervisor will discuss overall
performance and goals and development plan outcomes.

Need for Performance Management

1. Appraisal data can be used to spotlight risk under utilized high performing
employees or low performing employees who are constantly below the
standards.

2. manager can set goals and track the progress of the employees performance.

3. Gold tracking throughout the year helps to improve the productivity levels.

4. Collaborative working environment can be established in the organizations.

5. Helps to build a good relationship between the managers and the employees.

6. Can we use to collect the data and identify the leadership style being followed
in the organization.

7. Automated reminder mails can be sent to employees to improve their

performance throughout the year and more well informed before the appraisal.

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 Principles of Performance Management

Quality and effectiveness of Performance management is a reality in organizations

only when certain basic and fundamental tenets/ principles or practices of
management are followed. These include:

1. Transparency — decisions relating to performance improvement and

measurement such as planning, work allocation, guidance and counseling and
monitoring, performance review etc., should be effectively communicated to the
managees and other members in the organization.
2. Employee development and empowerment — effective participation of
employees/ managees (individuals and teams) in the decision — making process
and treating them as partners in the enterprise. Recognizing employees/
managees of their merit, talent and capabilities, rewarding and giving more
authority and responsibility etc., come under the umbrella this principle.
3. Values — a fair treatment and ensuring due satisfaction to the stakeholders of
the organization, empathy and trust and treating people as human beings rather
than as mere employees form the basic foundation, apart from others.
4. Congenial work environment — the management need to create a conducive and
congenial work culture and climate that would help people to share their
experience knowledge and information to fulfill the managees aspirations and
achieve organizational goals. The managees/ employees should be well informed
about the organizational mission, objectives, values and the framework for
managing and developing individuals and teams for better performance.
5. External environment — effective and contextual management of external
environment to overcome the obstacles and impediments in the way of effective
managerial performance.

Features of Performance Management

1. Clarity of organizational goals — the managers need to clearly and precisely lay
down the organizational goals, objectives and ensure that these are well informed
to the managees and other employees and make them to realize what the
organization expects from them. The organizational goals need to be translated
into individual, team and departmental/ divisional goals.
2. Evaluation — the individual, team, department/ divisional performance needs to
be evaluated on continuous basis. The organization should develop an evaluation
system and process, which is designed and developed on scientific lines.

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3. Cooperation but not control — the managers should nurture the practice of
getting work done through the system of obtaining managees consensus rather
than through control or coercion.
4. Self-management teams — the management need to encourage the individual
and teams for self-management of their performance. This procedure creates in
the managees a sense of responsibility and develops a spirit to work with
commitment and evaluate his/her strengths and weaknesses from time to time
and plan for reducing the performance gaps.
5. Leadership development — the managers need to identify such of the managees
who have leadership potential and apart from sincerity and honesty to ensure
better and effective two-way communication between the managers and the
managees.
6. System of feedback — the organization must have a foolproof feedback system of
managees/individuals/teams/departments performance. It should be
monitored continuously and generate feedback loops for better performance
management.

Scope of Performance Management

1. Recognising and promoting performance culture: It is very important that
employees become use to performing better . If the organisation follows
performance culture every employee would be able to perform and me the goals
and objectives with minimal chances of dissatisfaction error in waste stages
through their performance.

2. Planning performance development activities: To bridge the gaps between

standard and actual performance development activities have to be conducted
and organised in the organisation. These activities can be in the form of on the job
training management games case studies etc

3. Planning performance of all constituents: performance management activities

involve continuous improvement of all processes and people in the organisation.
It advolves a series of steps like setting the performance standard measuring the
standard comparing the standard with the actual performance in providing a
valuable feedback to the employees in a timely manner so I have to improve their
output productivity.

4. Identifying performance parameters: every organisation has multiple rolls and

designations. Every designation has required set of output with specific
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parameters to be accomplished by the employees. It is very important to decide
the parameter of performance so that these parameters are clearly set which are
accomplishble and convey to the employee that will help them to understand
their role better and plan their steps of action in order to reach the goal
effectively and efficiently.

5. Creating ownership: this is one of the most important aspect in the

performance management where the employees should feel accountable and
take the ownership of their work and do justice to the designation in which they
are. Every small step of their contribution help the organisation to achieve the
goals and objectives as planned.

6. Identification of competencies and competency gaps: it is very important to

identify the competency with respect to the skulls for all the employees in the
organisation. The gaps and competency have to be analysed and required training
and development alsatians have to be conducted to the employees to cover the
competency gaps that helps them to learn new skills and technology for their
performance improvement.

7. Setting performance standard: every organisation has to set a specific standard

of output which needs to be achieved by the employees. These parameters have
to be realistic achieuble and town about and conveyed to the employee much in
advance.

Objectives Of Performance Management Systems

1. Setting and defining goals to fulfill company objectives
Goal setting is the most lucrative way for initiating better performance among
employees.
It has been constantly indicated that practical goal setting:
 Allows employees to focus on what's important.
 Aligning individual objectives with the business objectives.
 Optimizes employees' individual performance.
 Helps to identify the key result areas and work upon improving them.
A good performance management system will put goal setting as one of its
main conditions.
As a manager, set goals that benefit both- employee performance and business
performance.

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2. Setting the right expectations for managers and employees
A strong performance management system seeks to establish
clear expectations from managers and employees alike.
As a manager, setting manageable expectations for your employee is critical
– don’t expect a poor performer to start yielding great results from the get-go, or
an excelling performer to stay consistently at the top every week.
Similarly, holding managers to unmanageable standards runs the risk of
bringing in poor management decisions.
In order to set expectations that yield solid results, try to follow this
succession of stages for expectation setting:
 Define the expectations in clear terms. Let your employees know exactly
what is expected from them and provide clarification when needed.
 Explain how the expectations established will help in fulfilling the overall
business objectives; draw the line of sight between their contribution and
the business achieving those objectives.
 Document the expectations. Establish a process that clearly defines and
measures what to do and who is responsible for each task.

Only when employees (and managers) have a clear understanding of their own
roles, responsibilities, and accountabilities, that they are likely to be more
consistent in their results and productive in their work efforts.

3. Effective communication between individuals and teams

Changing workplace dynamics is bringing a cultural shift to today's workplace.
Consequently, communication has played an essential part in it.
 Good communication practices result in employees who are engaged and
happy. It also ensures a smooth alignment of individual objectives with
business objectives.
 Team members must know their peers' goals, succession planning, and
ideas—to work well together.
 A team that lacks communication among its team members lacks the
bonding needed in a high-performing team.

Some tips for building an active communication environment:

 Firstly team leaders or managers should take out the time to indulge in
one-on-one interactions with the team members.
 Continuous feedback and coaching form a workforce with varied skills by
encouraging career development. One way to do this is through
performance appraisals or performance reviews.
 Additionally, conduct frequent team-building activities.

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  Promote collaboration and communication as an essential part of your
workplace culture.
 Also, use appropriate and helpful business communication tools.

4. Set performance standards

The most important objectives of performance management are to set
performance standards.
Setting the right performance standards can help you build a
better performance plan. It, in turn, makes for a smoother evaluation of
employee performance.
Every job has specific performance standards that have to be met.
Failure to accomplish the performance standards can mean the following
things:
 A lack of effort on the employees' part.
 Usually having set more unrealistic standards for the said job.
 Meanwhile, not enough resources were available to complete the task.
 A failure of cooperation or collaboration from the team or manager.

It is impossible to identify reasons for failures in an

individual’s performance without a performance management system.
Performance management systems highlight gaps in contribution, while bringing
attention to the areas that note progress.
One of the greatest objectives of performance management is to identify
the strengths and opportunity areas of your organization, which become more
evident and therefore easier to identify and improve upon with the
established performance standards to measure against.

5. Determining individual training and performance plans

Another vital objective of performance management systems is to identify
the training and development needs of its workforce.
It promotes personal growth and advancement in the employees' careers
by helping them acquire the desired knowledge and skills.
A successful performance plan offers personal growth opportunities for
your people. Your people will be more confident and contribute better.

Here's how you can create an effective employee performance plan to foster
career development:
 Firstly, ask your employees what skills, training, or course they require to
do great work.
 Then create a training plan and budget.

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  Additionally, decide how the new training skills be applied in revamping old
methods.
 Lastly, set up some organizational objectives to apply these newfound skills.

Performance Management Process

The performance management process or cycle is a series of five key steps. These
steps are imperative, regardless of how often you review employee performance.
1. Planning
This stage entails setting employees’ goals and communicating these goals with
them. While these goals should be disclosed in the job description to attract
quality candidates, they should be communicated once again when the candidate
becomes a new hire. Depending on the performance management process in
your organization, you may want to assign a percentage to each of these goals to
be able to evaluate their achievement.
2. Monitoring
In this phase, managers are required to monitor the employees performance on
the goal. This is where continuous performance management comes into the
picture. With the right performance management software, you can track your
teams performance in real-time and modify and correct course whenever
required.
3. Developing
This phase includes using the data obtained during the monitoring phase to
improve the performance of employees. It may require suggesting refresher
courses, providing an assignment that helps them improve their knowledge and
performance on the job, or altering the course of employee development to
enhance performance or sustain excellence.
4. Rating
Each employees performance must be rated periodically and then at the time of
the performance appraisal. Ratings are essential to identify the state of employee
performance and implement changes accordingly. Both peers and managers can
provide these ratings for 360-degree feedback.
5. Rewarding
Recognizing and rewarding good performance is essential to the performance
management process, as well as an important part of employee engagement. You
can do this with a simple thank you, social recognition, or a full-scale employee
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rewards program that regularly recognizes and rewards excellent performance in
the organization.

Advantages of Performance Management

1. Employee improvement:Performance management can help
employees improve their performance and develop professional
development plans.
2. Employee engagement:Performance management can help keep
employees engaged and satisfied, which can lead to increased
productivity.
3. Employee retention:Performance management can help retain top
talent by boosting employee morale and motivation.
4. Training identification:Performance management can help identify
training gaps and where further training is needed.
5. Goal management:Performance management can help organizations
set up long-term goals and individual goals for employees.
6. Workforce planning:Performance management can help improve
workforce planning by managing workloads and delegation

Disadvantages of Performance Management

1. Time-consuming: Writing performance appraisals can be time-consuming,
especially for larger departments or offices.
2. Biases: Personal biases, such as race, gender, or age, can influence
evaluations and lead to unfair treatment.
3. Limited perspective: Performance appraisals are typically based on
evaluating a single individual, such as a supervisor or manager.
4. Discouragement: Performance management can discourage employees.
5. Difficulty remembering: It can be difficult to remember everything an
employee has done

Impact of Organizational Structure on PM

The organizational structure significantly impacts performance
management in various ways. Here are some key aspects to consider:
1. Clarity of Roles and Responsibilities
- Hierarchical Structures: Clearly defined roles can enhance accountability,
making it easier to evaluate performance.
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 - Flat Structures: While they promote collaboration, they may lead to role
ambiguity, complicating performance assessments.

2. Communication Channels
- Centralized Structures: Communication tends to flow through formal
channels, which can slow down feedback processes.
- Decentralized Structures: Encourage open communication, facilitating
quicker feedback and more responsive performance management.

3. Flexibility and Adaptability

- Matrix Structures: Can provide flexibility but may lead to confusion in
reporting relationships, complicating performance evaluations.
- Agile Structures: Support rapid response to changes, allowing
performance metrics to be adjusted quickly to align with goals.

4. Employee Engagement and Motivation

- Team-Based Structures: Promote collaboration, leading to higher
engagement, which can enhance overall performance.
- Rigid Structures: May hinder motivation, as employees feel less
ownership over their work and contributions.

5. Performance Metrics and Evaluation Methods

- Standardized Structures: Often utilize uniform performance metrics,
which can streamline evaluations but may overlook individual
contributions.
- Customized Structures: Allow for tailored performance metrics that
reflect the unique contributions of individuals and teams.

6. Decision-Making Processes
- Top-Down Structures: Decisions made at the top can lead to
misalignment with ground realities, affecting performance outcomes.
- Inclusive Structures: Foster participative decision-making, aligning
individual performance with organizational goals more effectively.

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7. Feedback Mechanisms
- Formal Evaluation Systems: May be more prevalent in hierarchical
organizations, leading to structured but potentially infrequent feedback.
- Continuous Feedback Cultures: Common in flatter organizations,
promoting ongoing dialogue about performance and development.

8. Cultural Alignment
- Alignment with Structure: The structure must support the organization’s
culture for performance management to be effective; misalignment can
lead to resistance or disengagement.

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Strategic Planning
Strategic planning is a systematic process by which organizations define their
future direction and make decisions on allocating their resources to pursue this
strategy. Essentially, it’s about determining where an organization wants to go in
the next few years and how it’s going to get there. It requires a vision of the
future, an understanding of the present circumstances, and the steps required to
bridge the gap between the two.

Strategic planning and performance management are interconnected

1. Alignment of Goals: Strategic planning sets the long-term vision and
objectives of the organization. Performance management ensures that
individual and departmental goals align with these overarching strategies,
creating a cohesive approach across all levels.
2. Resource Allocation: Strategic planning identifies priorities and allocates
resources effectively. Performance management uses these priorities to
guide performance evaluations and resource distribution, ensuring that
critical initiatives receive the necessary support.
3. Performance Metrics: Strategic planning establishes key performance
indicators (KPIs) that reflect the organization's strategic objectives.
Performance management relies on these metrics to assess progress and
make informed decisions.
4. Continuous Improvement: Both processes emphasize the importance of
feedback and adaptation. Strategic planning is revisited periodically based
on performance outcomes, while performance management provides the
data and insights needed for ongoing improvement.
5. Employee Engagement: Clear strategic objectives help employees
understand how their work contributes to the organization's success.
Performance management systems can foster this understanding by linking
individual contributions to strategic goals, enhancing motivation and
engagement.
6. Risk Management: Strategic planning helps identify potential risks and
uncertainties that could impact performance. Performance management
can monitor these risks and ensure that strategies are adjusted as needed
to mitigate negative impacts.

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 7. Decision-Making Framework: A strategic plan provides a context for
decision-making at all levels. Performance management frameworks
facilitate the evaluation of choices against strategic goals, ensuring that
decisions support long-term objectives.
8. Accountability: Strategic planning defines who is responsible for achieving
specific goals. Performance management systems track accountability,
ensuring that individuals and teams are held responsible for their
contributions to strategic objectives.

Benefits of Strategic Planning in Performance Management

1) Clear Direction:- Strategic planning acts as the organization’s compass.

Establishing a distinct vision and set of objectives ensures that all
endeavors, whether big or small, steer towards a common goal. This clarity
eliminates ambiguity and provides purpose to every task, project, or
initiative.
2) Improved Alignment:- In large organizations, it’s easy for departments or
teams to work in silos, potentially pulling in different directions. Strategic
planning bridges this gap. It ensures that individual tasks and departmental
goals resonate with the company’s larger mission, fostering synergy and a
united effort.
3) Enhanced Decision-making:- The presence of a strategic framework aids
decision-makers. Instead of relying on gut feelings or short-term gains, they
have a reference point that aligns decisions with the long-term vision. This
consistency in decision-making ensures that the organization stays on its
intended path and avoids costly detours.
4) Resource Optimization:- Resources, be it time, money, or manpower, are
often limited. Strategic planning ensures that these resources are directed
where they’re needed most, preventing wastage and ensuring that priority
areas receive the attention they deserve.
5) Increased Accountability:- With clear objectives and metrics derived from
strategic planning, every team member can see how their efforts contribute
to the bigger picture. This transparency fosters a culture where individuals
take ownership of their roles, leading to enhanced responsibility and a
drive to meet or exceed set benchmarks.

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 UNIT 2

Performance planningis a company’s formal process to set goals and achieve

them in the coming performance cycle. Employees go through an agreed plan,
keeping in mind the organization’s broader objectives. Performance planning
helps develop skills, identify areas for improvement, and ultimately, improve
performance. In this process, people are provided with the support, resources,
and guidance they need to achieve their individual goals.

For example, if a company set a goal to drive more sales by 80% in a year, each
team and individual would have a slightly separate set of goals but would
ultimately work towards the main goal of the organization. In this period,
managers help employees identify where they can improve and grow. Once the
performance cycle ends, teams and individuals are evaluated and reviewed on
their performance.

Performance management planning includes:

 Evaluating current performance
 Setting new goals and expectations
 Allocating resources like budget, additional training, or software tools
 Monitoring goal progress
 Giving feedback and making goal adjustments if necessary
 Assessing performance after goals are complete

Objectives of performance planning:

Performance planning is specific to each organization’s performance needs. The
main objective of performance planning is to set goals for an organization and
teams to achieve them. The goals set for every individual, team, and department
are aligned with the company’s bigger, long-term goals. There are 5 objectives of
performance planning:

 To define the purpose of the organization

 To set clear employee responsibilities
 To establish clear goals and objectives
 To perform competence mapping
 To create career development plans

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Performance Management Planning Process
1. Set SMART Goals
First, define what employees are working toward with a goal-setting
conversation. SMART goals in performance management are an effective way to
approach setting goals. The acronym stands for:
 Specific
 Measurable
 Achievable
 Relevant
 Timely
Specific and measurable goals ensure that expectations are clear and goal
progress can be tracked. SMART goals are attainable or achievable rather than
unrealistic or out of reach. They serve a current need and are in line with the
most up-to-date business objectives, and their deadlines will be prompt.
2. Develop a Performance Plan
After SMART goals are set, managers and employees work together to create a
performance plan that outlines the actions, resources, and timelines needed for
employees to achieve those goals.
3. Monitor and Evaluate Progress
Goal tracking and performance check-ins help employees stay on track with their
goals and keep managers in the loop about how they’re doing. They also tell
managers if goals need to be adjusted or if their direct reports need additional
support.
4. Provide Feedback and Coaching
Continuous feedback and coaching prevent a situation where employees work
toward their goals without guidance or assistance. Coaching doesn’t just help
employees achieve their goals — it also helps them improve their performance
and grow their skills as they go and gives managers the chance to share their
expertise and recognize employees’ strengths.
5. Review Performance and Adjust the Plan
Performance reviews are an integral part of performance plans. Regular reviews
allow organizations to see if goals are regularly being met or if employees tend to
fall short. On an individual level, reviews establish employees’ performance
history, including their goal achievement records. Regular reviews can show
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whether or not performance management plans helped the employee achieve
their goals.

Flexibility is key when it comes to performance management planning, whether

goals aren’t being met or employees are knocking them out of the park. You may
need to revise goals, change one-on-one cadence, increase resources, or make
other adjustments to your original performance plan. The important part is that
your choices are informed by what the data shows.

Benefits of Performance Planning

Performance planning is an excellent way to enhance your company’s employee
performance management strategy and overall talent management strategy.
These are six of the biggest benefits of performance management planning:
1. Improved performance and productivity
2. Alignment with organizational goals
3. Employee engagement and motivation
4. Clear communication and expectations
5. Identification of strengths and areas for improvement
6. Employee development and career advancement

Performance Management Models

An organization’s management uses various models while creating a Performance
Improvement Plan (PIP) or assessment for a company. The top five models
typically used are as follows:

1. Traditional:-It is also called the annual model and works well for teams with
annual goals and set strategies. This style is appropriate for businesses with high
staff retention rates.

2. Biannual:-The employees are assessed twice a year in this model. It is ideal for
teams that focus on long-term objectives in the organization.

3. Project-Based:-As the name suggests, the project-based model involves

evaluating an employee’s performance on a project-to-project basis. This includes

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looking at the steps that teams take to complete the project, how they overcome
obstacles, and how they attain the goal.

4. Stack Ranking:-Stack ranking is an employee evaluation model where managers

rate staff members as top, average, and low performers based on how they stack
up against their colleagues. It is an older model in which the management rates
employees, encouraging a competitive work environment.

5. High Growth:-It’s based on planning, monitoring, reviewing, and rewarding.

This model allows the managers to conduct annual and biannual performance
review meetings, and smaller periodic ones (such as once a month or once in two
months) as well, with the employees. This is to ensure that the review is extensive
and frequent.

Performance Management Types

1. Traditional Performance Appraisal: This involves periodic evaluations of
employee performance, often conducted annually or semi-annually. Managers
review employee contributions, strengths, and areas for improvement.

2. 360-Degree Feedback: This method gathers feedback from multiple sources—

supervisors, peers, subordinates, and sometimes even clients—to provide a
comprehensive view of an employee’s performance and behavior.

3. Management by Objectives (MBO): This approach sets specific, measurable

goals for employees. Performance is evaluated based on the achievement of
these goals, encouraging alignment between individual and organizational
objectives.

4. Continuous Performance Management: Instead of annual reviews, this model

involves ongoing check-ins, feedback, and goal adjustments. It promotes real-time
communication between managers and employees.

5. Self-Assessment: Employees evaluate their own performance against set

criteria. This encourages reflection and self-awareness, fostering personal
accountability.
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6. Behaviorally Anchored Rating Scales (BARS): This method combines qualitative
and quantitative assessments. Specific behaviors are identified and rated to
provide a more objective measure of performance.

7. Key Performance Indicators (KPIs): Organizations set specific metrics that

employees are expected to meet. Performance is assessed based on the
achievement of these indicators.

8. Peer Reviews: Colleagues assess each other's performance, often used in team-
oriented environments to encourage collaboration and provide diverse
perspectives.

9. Developmental Performance Management: Focused on growth and

development, this approach emphasizes identifying skills gaps and providing
training opportunities rather than just evaluating past performance.

10. Performance Improvement Plans (PIPs): For employees not meeting

expectations, PIPs outline specific performance issues, expectations for
improvement, and timelines for achieving those improvements.

Performance Appraisal
A performance appraisal is a structured and regular review of an employee's job
performance, assessing how well their work aligns with the set job criteria. This
process identifies strengths, areas for improvement, and the employee's overall
value to the organization, while also planning for future growth and development.

Performance appraisals are also called performance evaluations, performance

reviews, development discussions, or employee appraisals.

If you conduct a successful performance appraisal, you can get a handle on what
the employee does best and identify areas that require improvement. Appraisals
also come in handy for deciding how to fill new positions in the company
structure with existing employees.

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 Purpose of Performance Appraisal
• Employer’s side:
• Communicate employer expectations.
• Monitor performance to assess whether job’s requirements are met.
• Document satisfactory and unsatisfactory performance.
• Differentiate system from individual problems.
• Develop plans to maintain & improve performance.
• Employee’s side:
• Communicate employee expectations.
• Career and professional development.
• Reinforcement and feedback.
Use of Performance Appraisal
• Administrative:
• Comparison of performance levels across and within employee.
• Wage and salary adjustments.
• Staffing decisions: promotions, demotions, transfers, layoffs.
• Evaluation of recruitment, selection & placement systems.
• Criterion for validating selection devices.
 Developmental :
• Reinforcing individual’s behavior.
• Career goals within organization.
• Training and development needs assessment.
• Job redesign & TQM.
• Improving manager/employee relationship.

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Performance Appraisal Process

1.Establishing performance standards

The first step in the process of performance appraisal is the setting up of the
standards which will be used to as the base to compare the actual performance of
the employees.
This step requires setting the criteria to judge the performance of the employees
as successful or unsuccessful and the degrees of their contribution to the
organizational goals and objectives. The standards set should be clear, easily
understandable and in measurable terms.
In case the performance of the employee cannot be measured, great care should
be taken to describe the standards.

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2.Communicating the standards
Once set, it is the responsibility of the management to communicate the
standards to all the employees of the organization. The employees should be
informed and the standards should be clearly explained to the employees. This
will help them to understand their roles and to know what exactly is expected
from them. The standards should also be communicated to the appraisers or the
evaluators and if required, the standards can also be modified at this stage itself
according to the relevant feedback from the employees or the evaluators.
3.Measuring the actual performance
The most difficult part of the Performance appraisal process is measuring the
actual performance of the employees that is the work done by the employees
during the specified period of time. It is a continuous process which involves
monitoring the performance throughout the year. This stage requires the careful
selection of the appropriate techniques of measurement, taking care that
personal bias does not affect the outcome of the process and providing assistance
rather than interfering in an employees work.
4.Comparing actual performance with desired performance
The actual performance is compared with the desired or the standard
performance. The comparison tells the deviations in the performance of the
employees from the standards set. The result can show the actual performance
being more than the desired performance or, the actual performance being less
than the desired performance depicting a negative deviation in the organizational
performance. It includes recalling, evaluating and analysis of data related to the
employees’ performance.
5.Discussing results [Feedback]
The result of the appraisal is communicated and discussed with the employees on
one-to-one basis. The results, the problems and the possible solutions are
discussed with the aim of problem solving and reaching consensus. The feedback
should be given with a positive attitude as this can have an effect on the
employees’ future performance. Performance appraisal feedback by managers
should be in such way helpful to correct mistakes done by the employees and
help them to motivate for better performance but not to demotivate.
Performance feedback task should be handled very carefully as it may leads to
emotional outburst if it is not handing properly. Sometimes employees should be
prepared before giving them feedback as it may be received positively or
negatively depending upon the nature and attitude of employees.

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Tips to Convey the Performance Feedback

1) Combine negative & positive

The ideal way of giving feedback to someone who's extremely emotional is to go
for the sandwich method. Sandwich the negative feedback between two layers of
positive feedback. This helps in softening the impact of the negative feedback. By
starting and ending in positive words, you ensure that the negative feedback has
the right impact.
2) Be objective
It is important that you ensure that the person receiving the feedback knows that
the feedback is not personal vendetta. Such kind of fundamental attribution error
the employee may have ,linking the negative feedback to the person giving it. So,
if you ask someone reporting to you the reason for being late, she/he might
interpret that you are a control freak. Sadly, nearly all the time, the attribution
strains the relationship between the two parties.
3) Don't use harsh words
Rather than telling someone outright that they are bad at something, it is better
when you word it in a less harsh manner, and also provide suggestions and
solutions to help them get better at what they are currently bad at. Sometimes,
the most hurtful sentences are perceived in a way which makes it seem
threatening and derogatory. The key is to make the employee feel safe. Only
when s/he feels safe, they will be in a state of mind to understand and appreciate
what you are saying.
4) Importance of feedback
One should begin by highlighting the importance of feedback — both positive as
well as negative — in a professional's life. You could then follow that up with an
example of how constructive feedback has helped you or someone you know, or
the said employee knows, positively and made that person a better professional.
While doing this, always make sure that your tone is calm and soft and like that of
a mentor, rather than a rude, condescending or angry one.

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5) Give feedback in private for sensitive people
With emotional people, it is also important that you always give feedback in
private. Emotions are a result of a person's sensitivity, and negative or
constructive feedback is usually a very sensitive topic with highly emotional
people. Giving feedback to such people in front of a room full of people can have
an adverse impact.
6)Decision-making
The purpose of conducting employee performance appraisal is for making
decisions about employees without any bias by the HR manager. Decision-making
by HR managers about employees rewarding, promotions, demotions, transfers
and sometimes suspensions/dismissal of employees are depended upon the
employee performance appraisal. The decision taken by HR manager should
match exactly with performance appraisal results of employees to avoid grievance
or disturbances in between them, as they affects overall performance of the
organisation.

Ways to Deal with Poor Performer

1) Find the Root Cause :- The first step towards shedding the tag is to dig deep
and find out where the poor performance stems from. Is it lack of skill to do the
job or is it lack of motivation to perform? Once you know and accept why you're
underperforming, it becomes relatively easy to take corrective action.
2) Seek feedback:-Seek constant 360-degree feedback to understand your
shortcomings and work on them. Analysing feedback in a positive manner will
help you grow professionally and personally. Take criticism constructively and
learn from past mistakes.
3) Take Initiative &Deliver:-If it is lack of ability or skill, you must take the
initiative to train yourself on the particular skill you lack. Have an honest
conversation with your manager and let her/him know that you need training to
improve your skills, if that is what you're lacking. When an employee is proactive,
managers are more than happy to help. Once you've been trained, apply your
learnings to the task at hand. Delivering consistently helps you come out of the
shadow of being a poor performer.

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4) Work with High Performers:-While working in teams or on group projects, seek
to work with high performing team members, or those whose work has been
responded to positively in the past. This will help you learn from their
experiences, as well as showcase your work in a positive light.
5) Take Small Steps:-The label of a poor performer comes when you haven't been
delivering over a period of time. It is not easy to get rid of it. However, the
quickest way of doing so is to perform well at smaller tasks that are more short
term in nature. A number of such small wins will help you be known as a good
performer. When you become consistent, it leads to a change in how people see
you.

Performance Appraisal Methods

Merit Rating:
“Merit rating of an employee is the process of evaluating the employee’s
performance on the job in terms of the requirements of the job.”
Merit rating is the systematic method of determining the relative worth of the
workers/employee. It is the qualitative and quantitative assessment of the
workers relating to their performance in his job. It is rather the comparative
appraisal of the individual merit of a worker, i.e., it represents the evaluation of
the merits of the persons and, on the basis of that, they are classified into
respective groups.

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Objectives of Merit Rating are:
(a) It helps to assess an individuals’ merit for better placement, promotion,
increment, etc.
(b) It helps to show the defects of the workers as well as his positive side.
(c) It helps to ascertain the simplified wage structure and an incentive payment.
(d) It also helps to place a right person in a right job.

Process of Merit Rating:

Advantages of Merit Rating:

(i) It eliminates the discrepancies among the workers, reduces labour turnover,
improves employer-employee relation, etc.
(ii) It helps to ascertain fair wages for the workers as per their ratings.
(iii) Promotion, transfer, training etc. may be made on the scientific basis of merit
rating.
(iv) It provides an incentive among the workers to improve themselves and the
productivity.

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Dimensions of Performance
1. Quantity of work :- the quantity or amount of work produced or the sheer
volume of work completed by employees – recognizes hard-working employees

2. Timeliness of work :- timely delivery of work in terms of schedules, meeting

deadlines, etc. – recognizes employees who produce work on-time and meet
deadlines

3. Quality of work :- the quality of work produced in terms of standards, errors,

waste and rework – recognizes employees who produce quality work, work which
meets standards and work with few errors or mistakes

4. Use of Resources/Efficiency :- produces work in an efficient way in terms of

using time, money, materials and other people’s time well – recognises
employees who come in on budget with efficient use of time, materials and
people

5. Customer (External & Internal) Impact/Value Add :- work produced meets the
expectations of customers (external or internal) – recognises employees who do
work that meets/exceeds internal or external customer standards and
expectations

6. Self-Reliance :- recognises employees who produce work without the need for
extensive supervision – requires a reasonable level of support

7. Department Contribution:– the employee is helpful to others in the

department in getting work done and sets a tone of co-operation

8. Productive Work Habits:– the employee has an overall work style which is
effective and productive in terms of time management, setting priorities and
following-up on commitments

9. Adding Skills &Capabilities:– the employee is continuously adding new

capabilities in terms of skills, knowledge, and attitude to get work done in
new/better ways and building for the future

10. Alignment &Compliance:– the employee behaves in a way that is aligned with
the values, culture and mission of the organisation as well as common
organizational practices and procedures.

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Performance Appraisals Used For
Commonly, organizations, team leaders, supervisors, and managers do
performance appraisals to cover the following aspects:

 Setting goals
 Providing feedback
 Allowing employee self-development
 Allocating rewards and giving recognition
 Gathering information to make staffing and business decisions
 Motivating employees to improve productivity
 Developing training programs and development initiatives

Effective Performance Appraisal System

1. Promote Understanding and Alignment:-Managers and staff must grasp the
significance of appraisal systems and how they align with the organization’s
overarching strategy. This understanding fosters a sense of purpose, motivating
employees to contribute their best efforts towards achieving organizational goals.

2. Establish Clear Expectations:-Set clear expectations regarding people

management and the effective utilization of the appraisal system. Transparently
communicate the appraisal process, evaluation criteria, and the importance of fair
and unbiased assessments.

3. Provide Tactical Training:-Equip managers and staff with the necessary skills
for successful appraisals through tactical and aligned training. Training programs
should focus on providing constructive feedback, conducting fair evaluations, and
addressing performance issues professionally.

4. Regularly Review and Reinforce:-Consistently review employee performance

against established expectations, ensuring that appraisals are conducted at
regular intervals. Promptly acknowledge exceptional efforts and address
performance gaps to reinforce the system’s value.

6. Seamless Integration with Business Operations:- Integrate the appraisal

system seamlessly into routine business operations. Embed performance
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 evaluations into day-to-day activities, aligning them with key business
processes to foster a performance-driven culture.

Advantages of Performance Appraisals

1. Documentation: A PA provides a document of employee performance over
a specific period of time. It’s a piece of paper that can be placed in an
employee file. This document can be used as a resource that tells the story
of an en employee and is used when there is a change in leadership.

2. Structure: This process creates a structure where a manager can meet and
discuss performance with an employee. A structured process forces the
uncomfortable conversations that often need to happen and may not
without the formalization of the process.

3. Feedback: Employees crave feedback, and this process allows a manager

the opportunity to provide the employee with feedback about their
performance and discuss how well the employee goals were accomplished.
It also provides an opportunity to discuss employee development
opportunities.

4. Clarify Expectations: Employees need to understand what is expected of

them and the PA process allows for a manager to clarify expectations and
discuss issues with their employees.

5. Annual Planning: It provides a structure for thinking through and planning

the upcoming year and developing employee goals.

6. Motivation: The process should motivate employees by rewarding them

with a merit increase and as part of a comprehensive compensation
strategy.

Disadvantages of Performance Appraisals

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1) Creates Negative Experience: If not done right, the performance appraisal
can create a negative experience for both the employee as well as the
manager. Proper training on processes and techniques can help with this.

2) Time-Consuming: Performance appraisals are very time-consuming and can

be overwhelming to managers with many employees. I’ve known managers
who were responsible for doing an annual PA on hundreds of employees.

3) Natural Biases: Human assessments are subject to natural biases that

result in rater errors. Managers need to understand these biases to
eliminate them from the process.

4) Waste of Time: The entire process can be a waste of time if not done
appropriately. Think about the time investment when the end result is
negative. It is time wasted on all fronts.

5) Stressful Workplace: Performance appraisals can create stressful work

environments for both employees and managers. Proper training can help
to reduce the stress involved in the process.

UNIT 3

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Performance management skillsrefer to the competencies that
managers, HR professionals, and employees need to effectively implement,
participate in, and derive benefits from the performance management process.
These skills encompass a range of abilities that facilitate goal setting, feedback
delivery, performance evaluation, and the overall development of employees.
This contrasts with performance measurement, which can be seen as a passive
approach to performance: you gain insight into the team's achievements but
don't necessarily do something with that insight.

Skills Essential For Successful Performance Management

1. Communication Skills: Clear and open communication is vital. This includes

giving constructive feedback, actively listening, and fostering an environment
where employees feel comfortable discussing performance issues.

2. Goal-Setting Skills: The ability to set SMART (Specific, Measurable, Achievable,

Relevant, Time-bound) goals helps ensure that expectations are clear and aligned
with organizational objectives.

3. Coaching and Mentoring: Managers should be skilled in guiding employees

through their development, providing support, and encouraging growth in both
skills and confidence.

4. Empathy: Understanding and acknowledging employees’ feelings and

perspectives fosters a supportive environment and can lead to more productive
conversations about performance.

5. Analytical Skills: The ability to analyze performance data and feedback helps
identify trends, strengths, weaknesses, and areas for improvement, enabling
informed decision-making.

6. Conflict Resolution: Handling conflicts that may arise from performance issues
requires diplomacy and problem-solving skills to address concerns constructively.

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7. Time Management: Balancing performance evaluations, feedback sessions,
and employee development while managing other responsibilities is crucial for
effective performance management.

8. Adaptability: Being open to change and willing to adjust strategies based on

feedback and evolving team dynamics is essential in a constantly changing work
environment.

9. Motivational Skills: Inspiring and motivating employees to achieve their best

can significantly impact performance and overall morale.

10. Cultural Awareness: Understanding and appreciating diversity in the

workplace enhances interactions and helps tailor performance management
approaches to individual needs.

11. Feedback Skills: Delivering feedback in a way that is constructive and

encouraging rather than critical helps employees improve without feeling
demotivated.

12. Performance Evaluation Skills: Knowing how to effectively assess

performance through various methods—whether qualitative or quantitative—is
essential for fair and accurate evaluations.

Coaching
Coaching in a business environment is about developing employees through one-
to-one conversations, designed to enhance skills, knowledge and performance.
There are many different elements that can be considered part of coaching, but
the following are generally agreed on:

 It is designed to produce optimal performance and improvement at work

 It focuses on specific skills and goals
 It may have an impact on personal attributes, but that is not the main aim
 It is non-directive – employees are encouraged to find solutions for
themselves

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  It is a skilled activity – managers need training to be able to deliver it
effectively

Performance coaching, also known as high-performance coaching, is an ongoing

process that aims to improve an employee’s performance in the workplace. It’s
not about giving advice or being an expert though – it’s about providing support
as a performance coach, sharing feedback, and encouraging continuous
improvement.

Employee performance coaching is a form of continuous performance

management where a coach tracks an employee’s progress towards established
performance goals on an ongoing basis. The focus is on helping and supporting
employees so that they can maximize their potential, rather than teaching.

If employers want their managers to become successful coaches, they need to

invest in training, which specifically focuses on how coaching and performance
management are interconnected.

Successful coaches need to do the following:

1) Listen – it’s vital that line managers take the time to listen to their
employees, understand what they want to achieve and what obstacles
might be in their way. Successful coaches do far more listening than talking,
asking open-ended questions to get discussions started.
2) Encourage creativity – finding the solution to a problem often requires
thinking about things in a different way. Getting employees to come up
with fresh ideas and consider other approaches fosters innovation.
3) Believe in the process – it is no good going through the motions. Line
managers need to commit to coaching and believe it will get results. They
need to be present in the discussions and willing to offer their time and
support whenever it is required.

4) Be adaptable – every employee is an individual. It is crucial that line

managers recognise this and change their approach to suit the learning
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 styles and characteristics of their employees. Failing to do this, could mean
employees become disheartened and disengaged with the process.
5) Create a sense of trust – for employees to honestly evaluate their
performance and be open about what they need to improve, they need to
feel safe to do so. An effective coach needs to create an environment
where employees feel comfortable to share their issues and vulnerabilities.
6) Recognise success – coaching conversations need to focus on what is
working well, just as much as what could be improved. Recognising when
an employee does well is hugely important, reinforcing positive behaviour
and boosting confidence.
7) Set actions and follow them up - coaching conversations are meant to
facilitate change and improve results. To ensure this happens, both the line
manager and the employee need to be sure about what should happen
next. Clear action points need to be set and mutually agreed. This can be
monitored by using a talent management system.

Coaching Process
1. Establishing the Coaching Relationship
 Initial Meeting: Set the tone for the coaching relationship, discussing
expectations and confidentiality.
 Building Rapport: Develop trust and open communication to foster a
supportive environment.
2. Setting Goals
 Identify Objectives: Work together to define clear, achievable goals that
the coachee wants to focus on.
 SMART Criteria: Ensure goals are Specific, Measurable, Achievable,
Relevant, and Time-bound.
3. Assessment
 Self-Assessment: Use tools like questionnaires or surveys to gauge
strengths, weaknesses, and current situations.
 Feedback: Gather input from peers, supervisors, or other stakeholders to
provide a well-rounded perspective.

4. Creating an Action Plan

 Strategize: Develop actionable steps to achieve the set goals.
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  Resources and Support: Identify resources, tools, and support systems that
can aid in the process.
5. Implementation
 Take Action: Begin working on the action plan, with the coach providing
guidance, encouragement, and accountability.
 Regular Check-ins: Schedule sessions to discuss progress, challenges, and
adjustments needed in the plan.
6. Evaluation
 Assess Progress: Periodically evaluate the progress toward the goals.
 Feedback Loop: Use feedback to refine strategies and adjust goals if
necessary.
7. Closure
 Review Achievements: Reflect on what has been accomplished and
celebrate successes.
 Future Planning: Discuss how the coachee can continue their development
independently and any next steps.
8. Follow-Up
 Ongoing Support: Maintain occasional check-ins to provide continued
support and accountability.

How can coaching improve performance

Bringing this into the business context, coaching for performance dedicates time
to intentionally developing employees. Investing in employee growth improves
their performance through different channels, such as the following:

 Immediate constructive feedback: A coaching environment allows

continual opportunities to provide constructive feedback in situations that
are fresh in employees’ minds. Instead of waiting for an annual
performance appraisal, managers can commend employees for successes
and address issues in real time for more impact.
 Skill development: Performance coaching involves identifying
improvement opportunities. Addressing these areas with training or hands-
on experience helps employees develop new skills and fresh perspectives
they can use in their current roles and prepare for future ones.

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  Boosting employee confidence: The accountability that takes place during
coaching builds self-awareness and keeps employees focused on their
goals. During this process, they acquire new capabilities and discover what
makes them tick. As employees understand themselves better and achieve
their objectives, self-confidence builds.
 Greater manager support: Because coaching consists of regular
interactions between employees and their supervisors, there is more two-
way communication. Supervisors get a better understanding of employees’
strengths and preferences and recognize what they’re doing well. When
there are areas that need improvement, they can offer feedback, support,
and solutions. This builds trust in the relationship. The employee knows
their manager isn’t just critiquing their performance but also wants them to
succeed and is willing to help them get there.

Benefits Of Performance Coaching

1) Performance improvement: The main goal of performance coaching is

obviously to improve the work performance of employees. Just as every
person is different, the way to maximize someone’s potential is, too.
Performance coaching enables organizations to personalize their talent
management approach and get the best out of every individual. This has a
positive influence on the performance levels of the organization to help it
reach its business goals.
2) Stronger relationships: In addition to the bonds that form between
managers and employees through coaching, over 70% of coached
employees say they build better relationships with their coworkers. Robust
relationships in the workplace fuel collaboration within teams and across
the organization to enhance its competitiveness.
3) Higher engagement levels: When employees receive personalized
performance coaching, it shows their employer cares about them and
invests in their professional development. Then they have higher morale
and feel more engaged. As a result, they are motivated to improve their
performance and contribute to the organization’s goals.

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4) Better retention rates: The benefit of improved performance, stronger
relationships, and higher engagement levels is that employees will find
more satisfaction in their work and be less likely to leave the organization.

Mentoring

Mentoring is a form of learning and development that involves a relationship

between a more experienced or knowledgeable person (the mentor) and a less
experienced or knowledgeable person (the mentee). The mentor provides
guidance, support, feedback, and advice to the mentee, who seeks to learn,
grow, and achieve their goals. Mentoring can be formal or informal, long-term
or short-term, one-on-one or group-based, depending on the needs and
preferences of the participants and the organization.

Mentoring may come in bits and pieces as needed by the mentee; or it may be
that a mentor and mentee choose to have a standing, weekly meeting time
where they discuss a variety of topics. It depends upon what works best for
both people.

An individual may seek a mentor for a variety of reasons:

 To learn a new technical skill

 To learn or develop a competency
 To develop leadership or management skills
 To assist in career transitions such as: new roles, changing jobs, or
different organization structure
Importance of Mentoring
1. help you create a culture of continuous learning and improvementwhere
employees are motivated to seek and share feedback, learn from mistakes,
and pursue new challenges and opportunities
2. help you develop your employees' skills, competencies, and potential,
which can increase their productivity, quality, and innovation
3. help you foster trust, engagement, and loyalty among your employees,
which can reduce turnover, absenteeism, and conflict.

36
 4. help you align your employees' career aspirations and personal values with
your organizational vision and mission, which can boost their commitment
and satisfaction.

Types of Mentoring
1. Employee Career Mentoring:-Offering formal career development is a tangible
way to show employees that their career trajectory matters. Career mentoring is
by far the most common mentoring program we see in the workplace. This
traditional one-to-one mentoring relationship can last nine to 12 months.
Employees get the opportunity to learn and build skills, which can help grow
their careers, keeping them from feeling stagnant in their roles.
2. Reverse Mentoring:-This format pairs a more senior employee with a more
junior employee. Companies can implement reverse mentoring in a one-to-one
or group setting. The younger employee serves as the mentor, providing senior
members of the organization with up-to-date information on the latest frontline
experiences, technical skills, and workplace culture.
3. Mentoring Circles:-A mentoring circle is a peer-to-peer format, similar to group
mentoring, that enables employees to find peers who share common interests
or learning objectives, and develop together as a group. People from across
departments and generations can learn from one another, expanding
institutional knowledge. Employees can also build cross-functional relationships
with people of similar or diverse backgrounds. Organizations can utilize
mentoring circles for employee resource groups (ERGs) as a way to foster
belonging. Employees of similar backgrounds can find a psychologically safe
space for discussion, solidarity and support, where people can feel free to self-
identify and be their authentic selves.

Design A Mentoring Program

1. Define the purpose, goals, and outcomes of your mentoring program, and
how they align with your performance management objectives and
indicators.
2. Need to identify the roles, responsibilities, and expectations of the mentors
and mentees, and how they will communicate, collaborate, and evaluate
their progress.

37
 3. Need to select and match the mentors and mentees, based on their skills,
interests, personalities, and availability
4. Need to provide training, resources, and support for the mentors and
mentees, to help them develop their mentoring skills and overcome any
challenges or issues
5. Need to monitor and measure the impact of your mentoring program,
using qualitative and quantitative methods, such as surveys, interviews,
tests, observations, and feedback.

Delegation
Delegation is the process of distributing and entrusting work to another person.
In management or leadership within an organisation, it involves a manager aiming
to efficiently distribute work, decision-making and responsibility to
subordinate workers in an organization. Delegation may result in creation of
an accountable chain of authority where authority and responsibility moves down
in an organisational structure. Inefficient delegation may lead
to micromanagement.
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There are a number of reasons someone may decide to delegate. These include:
 to free themselves up to do other tasks in the pace of their own
 to have the most qualified person making the decisions
 to seek another qualified person's perspective on an issue
 to develop someone else's ability to handle the additional assignments
judiciously and successfully
Process Of Delegation
1. Allocation of duties: the delegator communicates to their subordinate the
task which is to be performed. Resources are provided and a time limit is
informed.
2. Delegation of authority: In order for the subordinate to perform the task,
authority is required. The required authority is granted to the employee
when the task is delegated.
3. Assignment of responsibilities: When authority is delegated, the
subordinate is assigned with the responsibility of this task. When someone
is given the rights to complete a task, they are assigned with the
corresponding obligation to perform. Responsibility itself cannot be entirely
delegated; a manager must still operate under equal responsibility to the
delegated authority.
4. Creation of accountability: At the completion of the delegation process, it
is essential that the manager creates accountability, meaning that
subordinates must be answerable for the tasks which they have been
authorised to carry out.

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Reward Management
Reward Management ensures this by incorporating practices that reward
workers, employees, or staff in a fair, consistent, and equitable manner based
upon their value in the organization.
An organization incorporates reward management strategies for
1. Motivating employees
2. Supporting the organization’s strategy
3. Ensuring internal & external equity
4. Recruiting & retaining
5. Strengthening psychological contract
6. Ensuring financial sustainability
7. Complying with legislation
8. Channelizing efficient and productive administration
Reward management policies are also responsible for analyzing and
managing compensation, remuneration, and other benefits of the employees. The
reward structure in an organization may include-
1. Pay policy and practices
2. Executive pay and team reward
3. Salary and payroll administration
4. Minimum wage
5. Total reward, etc.
Intrinsic Rewards in Reward Management

These are understood as the concrete rewards that workers or employees get.
Some of the common intrinsic rewards are bonuses, salary raise, gifts, promotion,
and other similar sorts of tangible rewards.

These rewards are effective in letting employees feel better in the organization.

Extrinsic Rewards in Reward Management

Such sorts of rewards are given to offer personal satisfaction to the employees.
Some of the common extrinsic rewards include feedback, information,
recognition, trust, and empowerment.
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Such rewards focus on improving the performance of employees so they can
attain a certain level.

Rewards At Different Levels

1. Reward Management at an individual level
Planning rewards for individuals revolve around policies related to-
1. Base pay
2. Incentives
3. Benefits
4. Rewards attendance
5. Rewards performance
6. Rewards competence
2. Reward Management at the team level
For rewarding teams, managers need to plan for
1. Team bonus
2. Rewards group cooperation
3. Reward Management at the organizational level
For reward management of the whole organization, managers need to plan for-
1. Profit-sharing
2. Shares
3. Gainsharing

Importance Of Reward Management

1. To minimize the absenteeism %
2. To increase motivation and morale
3. To retain the talented employees in the organization
4. To attract capable and skilled persons from the market into the
organization
5. To increase the productivity of the organization
6. To promote team work and co-ordination
7. To create a better working environment
8. Helps to establish and maintain good employer-employee relationship
9. Helps build a better brand image for the organization in the market
Performance Management Framework
A performance management framework is a collection of principles that
businesses use to help them achieve high levels of success and monitor the
efficiency of their operations or staff. The performance management framework

41
 establishes important performance strategies and financial requirements for
business operations, aligns individual goals and duties, and gathers performance
data from multiple business units.

Employees need to feel appreciated and that their company cares about their
career advancement. In return, managers get engaged and happy employees who
want to perform and meet company goals.

Need for good Performance Management Framework

1. Alignment with Organizational Goals: A performance management framework
ensures that individual and team objectives align with the organization's strategic
goals, fostering a unified direction.
2. Clear Expectations: It provides clarity on performance expectations, roles, and
responsibilities, helping employees understand what is required of them to
succeed.
3. Continuous Feedback: The framework encourages regular feedback and
communication, allowing employees to adjust their performance in real-time
rather than waiting for annual reviews.
4. Development and Growth: It supports employee development by identifying
strengths and areas for improvement, facilitating targeted training and career
development opportunities.
5. Increased Accountability: A structured framework holds employees accountable
for their performance, making it clear that they are responsible for meeting
established goals.
6. Data-Driven Decision Making: By utilizing metrics and KPIs, organizations can
make informed decisions about promotions, rewards, and resource allocation
based on objective performance data.
7. Enhanced Employee Engagement: Regular feedback and recognition can improve
job satisfaction and motivation, leading to higher levels of engagement and
retention.
8. Adaptability: A performance management framework allows organizations to be
agile, enabling them to adjust goals and processes in response to changing
business environments.

Role Of Hr Professionals In Performance Management

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HR plays a pivotal role in the performance management process, acting as a
bridge between employees and organizational goals. HR professionals are
responsible for designing and implementing systems that foster employee
engagement and development. They develop frameworks that outline
performance expectations and assessment criteria, ensure goals are SMART
(Specific, Measurable, Achievable, Relevant, Time-bound) and aligned with
organizational objectives, and provide resources for training and skill
improvement.
 Designing Performance Management Systems: HR develops frameworks
that outline performance expectations and assessment criteria.
 Facilitating Goal Setting: HR ensures that goals are SMART (Specific,
Measurable, Achievable, Relevant, Time-bound) and aligned with
organizational objectives.
 Providing Training and Development: HR identifies training needs and
provides resources to help employees improve their skills and performance.
 Conducting Performance Reviews: HR organizes and oversees regular
performance evaluations, ensuring they are fair and constructive.
 Performance Improvement Plans: HR assists managers in creating plans for
underperforming employees, providing guidance on coaching and support.
 Continuous Feedback: HR encourages a culture of continuous feedback,
helping managers provide timely and relevant input to employees.
 Ensuring Compliance: HR ensures that performance management practices
comply with legal and organizational standards
 Succession Planning: HR plays a role in identifying and developing future
leaders within the organization, ensuring a strong talent pipeline.
 Cultural Alignment: They ensure that performance management practices
reflect and promote the organization’s values and culture, contributing to a
cohesive workplace environment.

Employee Assessment System

An employee assessment system is a process that evaluates an employee's

performance, skills, and potential. The purpose of an employee assessment
system is to help identify areas for improvement, align employee goals with
43
 organizational objectives, and make decisions about training, promotions, and job
assignments.

Types Of Employee Assessments

1. Performance reviews: A performance review is a formal assessment that

supervisors or managers can conduct on a specific frequency or cadence, such
as annually or semi-annually, to discuss an employee's strengths and weaknesses
while addressing concerns. This is also when a manager can share the next steps
and expectations for the employee in the future. Often, managers document this
conversation and submit it to human resources (HR).
2. Skill Assessment: Skill assessments for an employee take inventory of the
individual's current skills, including where they can improve in an area to help
with their work performance. Managers and HR teams can use these results to
create individual training for an employee or develop training programs for the
entire team if there's a common trend.
3. Personality Assessment: Personality assessments are tools used to evaluate an
individual's character traits, behaviors, and tendencies. They can provide valuable
insights for personal development, team dynamics, and hiring processes. This will
help in hiring process, team building, personality development and leadership
building .
4. Aptitude Assessment: An aptitude assessment, also known as a reasoning
analysis test or cognitive ability test, is similar to the skills test. But instead of
measuring a person's general skill set, it highlights someone's skills for a specific
role. Generally, this test can include different formats to help measure skills, such
as a person's prioritization abilities.

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 UNIT 4
Methods of Performance Appraisal

360 Degree Appraisal

A 360-degree assessment is a performance appraisal method that takes feedback

and ratings from various sources like supervisors, staff members, peers, co-
workers, and customers.
It prefers feedback from as many sources as available than a single source of truth.
After collating all the feedback, the manager uses it to gauge the employee’s skills,
strengths, and weaknesses.
When implemented correctly, it paints a fairer picture. Thus, boosting team morale
and performance. It also promotes employees’ self-awareness and upholds more
transparent communication.

Components of a 360-Degree Assessment

 Self-appraisal: It is the part of the process where the employee reflects on
his competencies and performance. It includes self-rating and review.
 Superior appraisal: It is similar to a traditional assessment, where the
manager or other superior provides ratings and feedback on employee
performance.

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  Subordinate appraisal: Subordinates often provide feedback on critical
performance aspects like motivating abilities, communication skills,
leadership qualities, work delegation capabilities, etc.
 Peer review (internal customers): It provides valuable insights on
teamwork, sensitivity towards others, and co-operating behavior.
Advantages of 360 Degree Appraisal

1.Comprehensive Evaluation: Because the feedback comes from so many

resources, it tends to be more accurate. It is easy to recognize patterns from the
various feedbacks received. It also sheds light on more abstract aspects which
are otherwise hard to measure.
2.Collaboration and Coordination: A 360-degree evaluation helps both teams and
individuals understand their strengths and weaknesses. Thus, equipped with this
knowledge, they can collaborate more efficiently and seamlessly.
3.Promotes Self-Awareness and Self Evaluation: They are better aware of their
skills and try to work toward learning new skills and developing existing ones.
They can form a connection between how they perceive themselves and how
others do.
4.Identifies Training and Mentoring Gaps: Skill gaps can hinder an organization’s
progress. A 360-degree performance appraisal helps identify skill gaps across
individuals, teams, departments, and the entire organization.
5.Transparency in Workplace: This feedback method can increase trust between
employees. It can lead to better decision-making, productivity, and knowledge
sharing. All of these can help companies tap into unrealized potential.
6.Eliminates Biases: The 360 degree appraisal is bias-free as the 360 degree
feedback is a multi-rater feedback system. The performance review of
employees is acquired on the basis of their strengths and weaknesses, skills, and
more are evaluated based on the feedback of employers, peers, managers, and
more. Overall it is a 360-degree performance management. Hence it leaves no
room for biases as biased feedback can be filtered out from the actual ones by
referring to the statistics of multisource reviews.
7.Boosts employee Morale: The appraisal and positive feedback from
heterogeneous prominent personnel as well as peers improve the employee’s
morale and encourage them to be more productive. In addition, the adverse

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 feedback too increases the learning capacity of the workforce and makes it a
win-win situation for them in both scenarios.

Appraisal Interview

Appraisal interview is a formal discussion process between an employee and

his/her manager regarding performance and other aspects of job role. It is one of
the best ways for an employee to increase productivity and change work habits.
In appraisal interview, the employer and the employee discuss the performances
of the individual and the key areas of improvement and how the employee can
grow through a feedback mechanism.

Importance of Appraisal Interview

An appraisal interview gives the employee the chance to shield himself/herself
from poor evaluation by the manager. It also gives the manager an opportunity to
spell out his/her reviews.
It helps the employees to determine whether there is a need for training if they
lack in any particular skill and who will be promoted, demoted, retained or fired.

Types of Appraisal Interview

1. Satisfactory-Promotable: The employee’s performance is satisfactory and

there is a promotion ahead. This interview’s objective is to develop is to discuss

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the employee’s career plans and to develop a specific action plan for the
professional development that he/she needs to move up.
2. Satisfactory-Not promotable: The employee’s performance is satisfactory but
there is no possibility for promotion. This interview’s objective is to motivate the
employee enough so that the performance satisfactory.
3. Unsatisfactory-Correctable: The interview’s objective is to find a way to correct
the unsatisfactory performance.
4. Unsatisfactory-Uncorrectable: This interview is usually to warn the employee
about his/her performance. The worst case would be that the employee is fired.

Need for Appraisal Interview

Manager’s Perspective: A manager’s success depends on how well an
employee can carry out his or her tasks. The Appraisal Interview enables the
manager to fulfill his/her leadership role. The manager:-
 Agrees on goals with the employee therefore providing the employee with
a direction to go to
 Facilitates important information regarding the University and/or the
organizational unit
 Evaluates goals together with the employee and conducts causal research
 Receives information regarding himself, his employees and organizational
unit (mutual exchange of expectations and desires)
 Assists and promotes his/her employees
Employee’s Perspective: An employee’s success and career depend on how well
he/ she develops his/her skills and competencies , performance and job
satisfaction as well as how well he/she prepares for possible future tasks and new
requirements. The employee :-
 Receives, via the Appraisal Interview, a guideline on the basis of which
criteria he/she will be evaluated.
 Receives feedback on his/her performance
 Receives information regarding the University and the organizational unit
 Can influence his/her area of work and set goals
 Can get information on possible paths for development, requirements and
training and can also voice his/her wishes regarding training.

Guidelines for conducting Appraisal Interview

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  Begin the interview session by an attempt to put the employee at ease.
 A refreshment and small talk may help break the ice.
 Review the employee’s self-evaluation first, if there is one.
 Ask for reasons for the various ratings.
 Then the supervisor describes his or her evaluation of the employee.
 Start with an overall impression, then explain the contents of the appraisal
forms.
 Most employees are waiting for the “bad news,” so it is probably most
effective to describe areas for improvement first.
 Then describe the employee’s strengths.
 Allow time for the employee to respond to the performance appraisal.
 The employee should be allowed to agree or disagree with the supervisor’s
conclusions, as well as to ask questions.
 It is important for the supervisor to keep an open mind and listen to the
employee.
 After the interview is over, the supervisor continues to appraise
performance.
 Training and coaching for improvement should ensue.
 The follow-up is an ongoing process.

Obstacles to Effective Performance Appraisal

Effective performance appraisal can be hindered by several obstacles. Some
common obstacles to effective appraisal include:
 Lack of clear performance standards: If there are no clear and measurable
performance standards, it can be difficult for both the employee and the
appraiser to evaluate job performance accurately.
 Rater bias: Appraisers may have their biases and perceptions, which can
influence their evaluations. For instance, an appraiser may have a tendency
to rate employees more positively or negatively based on personal factors
like age, gender, or race.
 Poor communication: Communication is key to effective performance
appraisal. If the communication between the appraiser and the employee is
inadequate, it can lead to misunderstandings and inaccurate evaluations.
 Inadequate training: Both appraisers and employees require training to
conduct effective performance appraisals. Without adequate training, the
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 appraiser may not have the skills to evaluate job performance accurately,
and the employee may not know how to receive and act upon feedback.
 Lack of employee involvement: Employees need to be involved in the
performance appraisal process. When employees are not involved in the
process, they may not take ownership of the appraisal outcomes, and it
may not lead to meaningful performance improvements.
 Fear of retaliation: If employees fear retaliation for receiving negative
feedback, they may not be open and honest during the appraisal process.
This can result in inaccurate appraisals, and the employee may not receive
the feedback they need to improve their performance.
 Inappropriate appraisal techniques: Inappropriate appraisal techniques,
such as using a single source of feedback, can result in inaccurate
evaluations. Employers need to use multiple sources of feedback and
appropriate appraisal techniques to ensure that the evaluations are
accurate and fair.
Addressing these obstacles can help create an effective performance appraisal
system that benefits both employees and employers.

Essentials of Effective Performance Appraisal

Effective performance appraisal requires a systematic and well-planned approach.
Here are some essential components of effective appraisal:
 Clear and measurable performance standards: To conduct an effective
appraisal, there should be clear and measurable performance standards
that both the appraiser and the employee understand.
 Appropriate appraisal techniques: Appraisers should use appropriate
techniques, such as 360-degree feedback, objective measures, and
behavioural observations, to evaluate job performance accurately.
 Regular feedback and communication: Effective performance appraisal
involves regular feedback and communication between the appraiser and
the employee. Feedback should be given in a timely manner and focus on
specific behaviours and actions that can be improved.
 Employee involvement: Employees should be involved in the appraisal
process to ensure that they understand the process and have a say in their
performance evaluation.

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  Training: Both appraisers and employees should receive adequate training
to conduct effective appraisals. This includes training on the appraisal
process, techniques, and communication skills.
 Focus on development: Performance appraisal should not just focus on
evaluating past performance, but also on developing employees’ skills and
competencies. It should identify areas for improvement and create a plan
for employee development.
 Fairness and objectivity: Appraisal should be conducted in a fair and
objective manner, with no bias based on factors such as age, gender, race,
or personal relationships.
 Use of technology: Technology can be used to improve the performance
appraisal process, such as by automating data collection and analysis,
providing online feedback, and tracking performance metrics.
By incorporating these essentials, organizations can create an effective
performance appraisal system that leads to improved job performance, job
satisfaction, and overall organizational success.

UNIT 5

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 What is Work Performance?
Work performance is multi-faceted, encompassing productivity, efficiency,
effectiveness, and quality of work output. The key elements include:
 Productivity – This refers to your overall output and volume of work completed
within a set time. How much are you able to accomplish daily, weekly, and
monthly? Maximizing productivity means achieving more in less time.
 Efficiency – How well are you utilizing your time and resources? Efficiency
reflects your ability to avoid waste and complete work optimally.
 Quality – Simply getting more done is pointless without maintaining quality
standards. Work performance also entails producing work that consistently
meets or exceeds expectations for accuracy, completeness, and excellence.
 Timeliness – Work output needs to be delivered on schedule and within
deadlines to be fully effective. Time management abilities are a key component.
 Focus – Being able to tune out distractions and channel concentration enables
you to reach advanced levels of work performance. The mental aspect is just as
important as the physical effort.
Boosting your work performance requires self-assessment of where you can
improve across these areas. The targeted effort is then needed to establish
routines, systems, and habits that increase productivity, efficiency, quality, and
focus.
Why Continuous Work Improvement Matters
Taking a strategic approach to incrementally improving your work performance
over time provides a range of benefits for both employees and organizations.
There are key reasons why continuous progress should be a priority:
For Employees
 Increase Earning Potential – As you become more productive and develop
specialized skills, you become more valuable. This increased value
translates to higher salaries, promotions, and leadership opportunities.
 Gain Job Satisfaction – By constantly learning and challenging yourself,
your job becomes more fulfilling and meaningful. Routine and stagnation
are replaced with variety and growth opportunities.
 Reduce Stress – With efficient routines and focus abilities, you can get the
same amount done in less time and with less mental anxiety. Energy is
conserved for other life priorities.

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  Achieve Work-Life Balance – Continuous improvement strategies help you
maximize work output during dedicated work periods. You then gain more
time for personal activities rather than overworking.
 Boost Confidence – As your competencies and productivity rise, so does
your job confidence. You become bold in taking on challenges knowing your
ever-improving abilities.
For Organizations
 Increase Profitability – When employees produce more high-quality work
in less time, organizations spend less overhead while boosting profits.
 Competitive Edge – By developing an adaptable, high-performing
workforce, companies stay atop industry disruptions and can fend off
competitors.
 Attract Top Talent – The best workers are drawn to organizations focused
on maximizing employee output through training and development
opportunities.
 Higher Retention – Companies who invest in employee development see
greater staff loyalty. Workers are incentivized to stay and grow rather than
leave.
 Improved Customer Satisfaction – With knowledgeable, productive teams
providing excellent and timely service, customers are more satisfied and
loyal.
The overall benefits span from the individual employee level up to the strategic
competitive positioning of the entire organization. Thus, a culture of continuous
development and work performance improvement should be fostered at all levels
for maximum impact.

Reasons for Performance Issues:-

 Lack of motivation: Employees who lack motivation may neglect their
responsibilities, communicate poorly, or work without urgency.
 Lack of training: Employees who aren't trained properly may produce less
work of lower quality.
 Inadequate feedback: Without adequate feedback, employees may waste
energy, make more errors, and be less productive.
 Personal issues: Personal issues can affect an employee's focus, motivation,
and critical thinking.
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  Burnout: Burnout can lead to declining performance and productivity
levels.
 Ineffective leadership: Ineffective leaders may fail to meet goals and
provide employees with the direction they need.
 Unclear expectations: Employees who don't have clear expectations about
their job or responsibilities may perform poorly.
 Lack of resources: Employees who don't have the resources they need may
perform poorly.
 Insufficient pay: Employees who aren't paid enough may perform poorly.
 Conflict within the team: Unresolved interpersonal issues or poor conflict
resolution can undermine teamwork and hinder progress.
 Lack of collaboration or coordination: Team members who don’t
communicate well or share information may duplicate efforts or miss key
insights.

Approach to Identifying Sources:

1. Conduct Performance Reviews: Regular, structured reviews can identify
individual performance issues and recurring patterns across teams or
departments.
2. Use Surveys or Feedback Tools: Employee engagement surveys,
anonymous feedback mechanisms, and one-on-one interviews can help
uncover hidden performance barriers.
3. Observe and Analyze Workflows: Take time to observe how work is being
done—look for bottlenecks, duplication, or missed opportunities.
4. Data Analytics: Leverage performance data, such as KPIs (Key Performance
Indicators) and metrics, to identify trends that signal inefficiencies or
underperformance.
5. Root Cause Analysis: When performance problems are identified, use
techniques like the “Five Whys” or Fishbone Diagram (Ishikawa) to dig
deeper into the underlying causes.

Ways to Improve Work Performance

1. Set specific, measurable goals

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Setting concrete short and long-term goals with numeric targets and deadlines
provides clarity and motivation. Break major goals down into smaller milestones
to make them manageable. Focus on one step at a time.
Actionable tips:
 Making goals as quantifiable as possible
 Separating large goals into monthly, weekly, and daily mini-goals
 Writing down goals and placing them where you’ll see them daily
 Prioritizing top 1-3 milestone goals to focus on at a time

2. Analyze your peak productivity times

Identify the times of day when you have the most energy and focus. Try to align
intense project work during those productive hours.
Actionable tips:
 Tracking your energy levels at different times
 Limiting schedule interruptions during productive hours
 Reserving creative work for when you are most alert
 Scheduling meetings and lower focus tasks for less productive times

3. Create an ideal workspace environment

Set up your office or desk to maximize comfort and minimize distractions. This
primes you for focus.
Actionable tips:
 Keeping only essential items within sight and reach
 Adjusting lighting, temperature, and chair comfort
 Minimizing clutter and distractions
 Having equipment like chargers, pens, and sticky notes on hand

4. Prioritize your tasks strategically

Sort tasks by importance and urgency to optimize what you work on daily.
Arrange your schedule around priority tasks.
Actionable tips:
 Categorizing tasks by urgency/importance
 Completing highest priority tasks during peak energy hours
 Delegating or rescheduling low-priority tasks
 Saying no to additional requests likely to derail the focus

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5. Batch similar tasks together
Group-related tasks to maintain focus. For example, make all calls at once rather
than at irregular intervals.
Actionable tips:
 Identifying types of tasks you do repeatedly
 Blocking time to do same-category tasks consecutively
 Completing administrative tasks together in blocks of time
 Limiting task switching to avoid mental fatigue

6. Take regular breaks

Short breaks help recharge mental energy and boost productivity.
Actionable tips:
 Working in 25-minute intervals and then taking 5-minute breaks
 Standing up, stretching, and moving around during breaks
 Stepping away after a few intervals for a longer 15-30 minute break
 Avoiding burnout from overwork by strategically renewing focus

7. Set challenging but realistic standards

Determine optimal workload amounts, then increase by small increments to
deliberately stretch yourself.
Actionable tips:
 Tracking your current workflow capacity
 Increasing daily/weekly goals by 10% increments
 Continually adjusting as your capabilities expand
 Avoiding overextending by keeping goals reasonable

8. Limit distractions
Identify activities derailing your productivity and establish boundaries around
them.
Actionable tips:
 Disabling notifications during focus hours
 Closing apps or tabs not required for current tasks
 Politely declining unnecessary meetings or calls
 Scheduling emails in designated batches rather than constant checks

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9. Delegate and collaborate
Distribute workload across colleagues according to strengths. This increases team
productivity.
Actionable tips:
 Evaluating direct reports’ strengths and development goals
 Assigning tasks based on capabilities and bandwidth
 Rotating responsibilities to cross-train across roles
 Seeking input from others to leverage their expertise

10. Continuously learn relevant new skills

Seek training and lateral development opportunities to gain abilities needed for
career advancement.
Actionable tips:
 Identifying skills needed for future roles
 Taking courses or online learning during downtime
 Shadowing colleagues in other departments
 Attending conferences and seeking mentors

11. Cultivate positive relationships

Build rapport and maintain open communication with colleagues, managers, and
clients. This builds trust and eases coordination.
Actionable tips:
 Scheduling regular check-ins
 Expressing genuine interest in others’ priorities and challenges
 Providing and seeking timely, constructive feedback
 Avoiding unnecessary conflict and drama

12. Optimize systems and workflows

Evaluate processes for bottlenecks and inefficiencies. Streamline the most high-
impact areas first.

Actionable tips:
 Mapping existing workflows end-to-end
 Brainstorming changes to eliminate clutter

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  Implementing automation where possible
 Collaborating with team members to co-create optimal flows

13. Maintain work-life balance

Strive for equilibrium between professional and personal priorities. Prevent
burnout through rest and stress management.
Actionable tips:
 Leaving work at reasonable hours
 Taking regular vacations and weekends off
 Nurturing relationships and hobbies beyond work
 Getting adequate sleep, nutrition, and exercise

14. Track and review progress and metrics

Record indicators tied to performance goals. Analyze regularly to guide
improvements.
Actionable tips:
 Selecting the most vital metrics to track
 Entering or automating data collection
 Reviewing trends at least monthly
 Adjusting strategies based on insights gained

15. Reward yourself for wins

Reinforce good habits by celebrating progress and milestones. Use small rewards
judiciously.
Actionable tips:
 Defining realistic quick wins and longer-term targets
 Treating yourself to an enjoyable activity or gift upon success
 Publicly thanking team members for their contributions and achievements
 Simply pausing to appreciate how far you’ve come

Legal and Ethical Issues in Performance Appraisal

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1. Performance appraisals should not be used in a merely punitive or retaliatory
fashion. It is grossly unprofessional for a manager or supervisor to use the
appraisal process to 'get even' with an employee who has displeased or upset
them in some way.

2. Appraisals should not be used to discriminate against employees on the basis

of race, religion, age, gender, disability, marital status, pregnancy, or sexual
preference.

3. Performance appraisal results should be fair, accurate and supported by

evidence and examples. For instance, if an employee has poor interpersonal skills
and is harming morale and group performance, the supervisor might keep a log of
incidents. Co-workers may be interviewed and their views and reactions
recorded. The nature and effects of the employee's behavior should be
documented.

4. An employee should have the opportunity to comment on their appraisal

result, to express their agreement or otherwise, and to appeal the result or at
least request a review by upline supervisors.

5. Appraisals should be balanced, recording information on both the good and

the bad aspects of an employee's performance (as far as possible).

6. Appraisals results should not be used as the sole basis for promotion,
remuneration or termination decisions. A broad range of information should be
considered, in which the employee's appraisal results may be significant but not
necessarily conclusive.

7. Employees who receive a poor performance appraisal result should be given a

reasonable chance to improve. Generally speaking, it is a bad idea to dismiss,
demote of otherwise penalize an employee because of a single adverse appraisal
result (depending of course on the nature and seriousness of the conduct that
underlies the poor result).

8. Provide timely feedback, especially to marginal or poor performers. It is not

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fair to offer zero feedback to a poor performer for twelve months and then
present them with a bad appraisal. Be willing, especially with employees who are
having trouble, to offer more frequent feedback and guidance. Tell them if
something is wrong and give them a chance to correct the problem in a timely
manner.

9. Retain records. If an employee believes they have been dealt with unfairly,
they may have rights to instigate legal action years later. In the case of poor
performers, or persons dismissed or demoted, or those who resign or leave in less
than happy circumstances, we suggest that their appraisal records, together with
critical incident logs and other relevant documents, be archived indefinitely.
Check with local legal specialists as to required periods of record retention and
time limits on the rights of potential litigants, as these vary from one jurisdiction
to the next.

10. If an appraisal result is poor (or in any way likely to be controversial or

provocative), ask an objective third party for their views on whether the appraisal
result seems fair and reasonable. Be prepared to modify your position if the
second opinion is not supportive of the result.

11. Appraisals should avoid inflammatory and emotive language. As far as

possible, aim for a detached and dispassionate style. Ensure that criticisms relate
to actual job requirements and are not based on mere personal or other
irrelevant issues that have little or no connection with actual job requirements.

12. Managers and supervisors required to conduct staff appraisals should be

trained in appraisal principles and techniques. Conducting performance
appraisals is one of the most demanding of all supervisory activities. It is a
sensitive and sometimes controversial task which, if mishandled, can cause
serious damage to employee relations and morale.

13. Appraisal results should be treated as private and confidential information.

Record storage should be secure and controlled. Only people with an approved
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need to know should have access to an employee's performance appraisal
information.

Balanced scorecard
A balanced scorecard (BSC) is a strategic management performance metric that a
company can use to improve internal business operations and external results.
It's a way for organizations to focus on processes, that, when combined, can help
them meet their financial goals.
The balanced scorecard takes into account four perspectives that are essential to
value creation for an organization: the financial perspective as well as a focus on
customers, internal business processes, and learning and growth. Within each of
these areas, the BSC measures and monitors the key performance data that are
critical to an organization's success.

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Various performance frameworks have been developed to help entities focus on
the factors that drive successful attainment of goals and corresponding
performance measures.
One such framework is the balanced scorecard, developed by Robert Kaplan and
David Norton.
The balanced scorecard provides a set of performance measures that reflect an
entity’s goals and strategies. The framework includes measures from four
perspectives.
1. Financial :- How do we create value for our shareholders?
2. Customer :- What do new and existing customers value from us?
3.Internal operations :- What processes must we excel at to achieve our financial
and customer objectives?
4. Innovation and improvement activities :- How can we continue to improve and
create value?

Benefits of creating and deploying a Balanced Scorecard for PM

1. Increase Employee Engagement:- Qualitative and well-designed balanced

scorecards are an effective tool to indirectly improve employee
engagement.
2. Quantify Performance Improvement and Opportunity :- A well-designed,
balanced scorecard quantifies performance improvement and areas of
opportunity.
3. Improve Communication and Alignment :- Effective scorecards provide a
clear and shared vision of the organization’s objectives, helping to improve
communication and alignment.
4. Achieve Sustained Improvement :- Scorecards encourage a culture of
sustained improvement by requiring a more holistic approach.
5. Incentivize Employees :- Incentives used in conjunction with a scorecard
can help you reward high performers and encourage those who need to
improve.
6. Drive Accountability :- Effective scorecards link performance to the
organization’s overall performance and goals.

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HR Scorecard

The HR scorecard, or Human Resource Scorecard, is a strategic HR measurement

system. It assesses, manages, and improves the HR department's role. It
measures leading HR indicators that forecast business growth, including human
capital ROI, employee turnover, recruitment effectiveness, and more. The metrics
and KPIs vary based on an organization's goals.
This tool tracks HR function performance and aligns with strategic plans. It
enables targeted investments in HR to support business objectives. The HR
scorecard ensures alignment with overall business goals and helps identify areas
needing attention. It aids in making informed decisions about resource allocation.

When to Use HR Score Card?

HR managers and human resource management can use the tool to:
 Evaluate and measure the effectiveness of human resource function and
allocate budget towards HR initiatives
 Give clear insights into which human resources initiatives should be
prioritized, and set realistic human resources targets
 Determine who needs support from HR and make informed decisions
regarding resource allocation
In the best HR practices, this tool is also used to identify individuals who need
extra attention. Provide feedback & development opportunities to manage HR
activities better. Moreover, it is used to conduct annual reviews to Identify talent
gaps.

How to create a HR Scorecard?

1. Define Goals and Objectives
Goals may differ depending on what type of HR scorecard you’re using. However,
these goals must reflect company strategy and core business values.
For example, suppose your company has adopted lean principles as part of its
transformation efforts. In that case, you could use the following HR deliverables
and goals for your scorecard:
 Increase operational efficiency
 Improve customer service standards
 Reduce inventory levels
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  Minimize costs
 Avoid unnecessary expenses to enhance business success
2. Determine Benchmarks
Once you’ve defined your goals, it’s important to benchmark your department
against them. The benchmarks must be specific and measurable. They shouldn’t
refer to “best practices” or “industry standards.” Instead, they should be
quantifiable measures that highlight vital results.
For example, you would define six benchmarks to achieve a 10% reduction
in cost per unit sold over the next 12 months. These might include: Achieving
$5,000 savings over last year through improved quality and reduced waste
Eliminating overtime hours for specific staff members Improving delivery times
for outside and human resource customers from five days to three days.
3. Create Spreadsheets
Once you’ve defined goals, objectives, and benchmarks, it’s time to start
collecting data. For this, you could use any spreadsheet tool such as Microsoft
Excel, Google Sheets, or Apache OpenOffice Calc. In most cases, your HR team will
need to input all relevant data into the scorecard to ensure accuracy. For best
results, prepare a draft first. This way, you can check for errors before entering
the final version. It’s also easier to correct mistakes at this stage.
If you want to know how to set up each section of your HR Scorecard, follow
these simple instructions below:
 Goal Section. This section enables you to define goals, including whether to
make changes based on previous data. Whether or not you decide to do
this depends on what kind of HR scorecard you’re setting up.
 Include Goal Definitions. A goal definition is a short statement describing
the overarching outcomes associated with achieving that particular
objective. Your HR team should keep track of the overall performance
indicators for this purpose. You can do this by listing out the various
activities involved in attaining those objectives, followed by when the
training is done. If you choose to change these goals based on previous
data, you’ll find the data saved under the ‘Change data’ button in the ‘Goal’
section. It allows your organization to get back on track if something went
wrong earlier. Use the same HR processes whenever you create new goals
by defining objectives and measurements.

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  Measurement Sections. You can break down the measurement sections
according to the different types of analysis you wish to perform.
 Include Measurement in the Following Categories. For some companies,
the best business strategy is to measure things in terms of financial returns,
whereas others focus more on operational improvements. When creating a
scorecard, we recommend that you pick one measurement approach and
stick to it. That way, you don’t end up wasting time trying to analyze trends
based on mixed data. Once you’ve done this, you’ll receive trend reports
every quarter.
4. Aligning HR Systems
For some organizations, an effective strategy includes aligning their employee
management system. EIS is a central repository where all information about
employees — including payroll, attendance records, leave requests, etc. — is
stored. In simple words, we can say that it’s like your personal database. But
there’s no point in having an excellent EIS unless it supports your organizational
goals. Therefore, design the systems so they are in sync with each other and are
easy to utilize. You can try implementing the following steps to help you align
your EIS:
 Gather Employee Data and Put it Into the System. When you sign up for a
free account on HR software platforms such as PeopleSoft, SuccessFactors,
or Workday, you can upload current personnel records to enable better
visibility into data and processes. However, before you begin uploading
employee data, you may want to think about how much you wish to reveal
about your workforce to managers and supervisors. There are two ways to
do that. On the one hand, you can allow managers and supervisors to see
everything about their employees — even confidential details like bank
statements and medical diagnoses. On the other hand, you can restrict
access to only necessary parts of the information.
 Generate Employee Reports. You will agree on which types of reports you
should provide. For example, many departments will insist on getting
specific, detailed information while others won’t care much about these
reports. As long as your organization receives the raw data, everybody is
happy. The good thing about centralized HR systems is that you can share
the data among stakeholders via email or upload them onto an online
portal.
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5. Implementing HR Analytics
HR analytics refers to tools used to calculate statistics. The idea behind this
decision is to give managers insight without giving away too many personal
privacy details at the same time.
Once you’ve decided what access people will have to data, you can upload
current personnel files. Remember, though, that HR professionals must review all
contents before they’re made available to anyone else. To do it in an efficient
way, you should do the following:
 Implement Standardized Reporting. We know it is hard to make everyone
happy. While most managers would love to see detailed employee data,
they also prefer simple reporting formats not to spend hours analyzing
figures. It’s important to note that not everybody has the same
preferences. Some departments — like HR — require detailed information
while others — like marketing — need general statistics.
That being said, when you create a report, you can set different levels of detail so
that everyone gets what he needs. If you’re struggling with this step, check out
our guide on standardized reporting in HR systems.
6. Taking Advantage of External Applications & Integrations
Integration is another crucial element of modern business technology in HR
functions. Unfortunately, it hasn’t always been straightforward to establish
connections between HR tools and external applications. Today, however,
integrating HR solutions is almost effortless. It means that your entire team can
stay connected with critical information from outside sources.

Business Process Reengineering

Business Process Reengineering (BPR) is also referred to as business
transformation, business process redesign, or business process change
management. It started in the early 1990’s so management could concentrate on
adapting to evolving technology and other forces in their specific industry. The
focus of BPR is reevaluating and updating business systems to efficiently
accomplish numerous improvements in the business’ processes. These changes
include reducing operational cost, improving quality and customer service, and
staying competitive. BPR utilizes a logical approach for evaluating process
weaknesses, identifying gaps, and taking advantage of opportunities to simplify
and enhance business operations.
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Steps of BPR
1. Initiate a new process reengineering project and prepare a business case
for the same Negotiate with senior management to get approval to start
the process reengineering project
2. Select the key processes that need to be reengineered
3. Plan the process reengineering activities
4. Investigate the processes to analyze the problem areas
5. Redesign the selected processes to improve the performance
6. Ensure the successful implementation of redesigned processes through
proper monitoring and evaluation.

Advantages of BPR
 Appropriately concentrates on the business as it revolves around customer
needs
 Builds a strategic view of operational procedures by questioning how
processes are improved and how things could be done more efficiently
 Eliminates unnecessary activities
 Reduced the number of checks, controls, and reconciliation processes
 Reducing organizational complexity
 Provides improved sustainability and competence to an organization by
eliminating lag and unnecessary phases of management and operations
 Overcomes short-sighted approaches that usually emerge from excessive
concentration on functional boundaries
 It coordinates and integrates several functions immediately

McKinsey 7S Framework
McKinsey 7S Framework is a strategic planning tool designed to help an
organization understand if is it set-up in a way that allows it to achieve its
objectives.
Before the advent of the 7S Model, when managers thought about organizational
design, they tended to focus on structure and strategy. They thought about who
is responsible for what, who reports to whom, how many layers of management
there should be, and how to beat the competition.

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However, as organizations got larger and more complex, coordination became
just as important, if not more important, than structure.

1. Structure : How people are organised into functions or teams and the
hierarchy that manages how work is distributed and carried out.
2. Strategy : The broad approach or plan of action for building a competitive
advantage.
3. Systems: The procedures that support how the company operates on a
day-to-day basis – from planning and measurement of marketing activities,
to the collection, usage and management of data, to producing products.
4. Skills: The competence of the work force and their capabilities in areas
relevant to the business that they operate.
5. Staff : The number and availability of staff including the approach to
staffing – for example utilising freelancers and temporary staff where
necessary and outsourcing functions.
6. Style: The style of management within the organisation and the impact of
this on empowering staff, fostering new ideas and approaches and
supporting change.
7. Shared Values: The culture of the business which is largely directed by its
mission and values.
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Lean Management
Lean Management is a management and work organisation method aimed at
improving a company’s performance and, more specifically, the quality and
profitability of its output.
Lean Management optimises processes by reducing time spent on non-
value-added tasks (unnecessary operations or transport, waiting, overproduction,
etc.), causes of poor quality and complications. This method is supported by an
important managerial dimension to ensure employees work in the best
conditions. Ultimately, there are two main objectives: Complete customer
satisfaction and the success of each employee.

Lean management focuses on the following:

 Defining value from the standpoint of the end customer.
 Eliminating all waste in the business processes.
 Continuously improving all work processes, purposes and people.
Lean management facilitates shared leadership and responsibility; continuous
improvement ensures that every employee contributes to the improvement
process. The management method acts as a guide to building a successful and
solid organization that is constantly progressing, identifying real problems and
resolving them.

Origins of Lean Management

In the late 1940s, when Toyota laid the foundations for Lean Manufacturing, the
goal was to reduce processes that did not add value to the end product.
In doing so, the leaders managed to achieve significant improvements in
terms of productivity, efficiency, cycle time and profitability.
Through this significant impact, Lean thinking has spread to many industries
and has evolved into the 5 core principles of Lean Management as outlined by the
Lean Management Institute.
The term “Lean” was coined by John Krafcik (CEO of Google’s self-driving
car project, Waymo, from 2015 to 2021) in his 1988 article “Triumph of the Lean
Production System”.

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5 principles of lean management
Lean management incorporates five guiding principles that are used by managers
within an organization as the guidelines to the lean methodology. The five
principles are the following:
1. Identify value.
2. Value stream mapping.
3. Create a continuous workflow.
4. Establish a pull system.
5. Facilitate continuous improvement.
Identifying value, the first step in lean management, means finding the problem
that the customer needs solved and making the product the solution. Specifically,
the product must be the part of the solution that the customer will readily pay
for. Any process or activity that does not add value -- meaning it does not add
usefulness, importance or worth -- to the final product is considered waste and
should be eliminated.
Value stream mapping refers to the process of mapping out the company's
workflow, including all actions and people who contribute to the process of
creating and delivering the end product to the consumer. Value stream mapping
helps managers visualize which processes are led by what teams and identify the
people responsible for measuring, evaluating and improving the process. This
visualization helps managers determine which parts of the system do not bring
value to the workflow.
Creating a continuous workflow means ensuring each team's workflow
progresses smoothly and preventing any interruptions or bottlenecks that may
occur with cross-functional teamwork. Kanban, a lean management technique
that utilizes a visual cue to trigger action, is used to enable easy communication
between teams so they can address what needs to be done and when it needs to
be done by. Breaking the total work process into a collection of smaller parts and
visualizing the workflow facilitates removing process interruptions and
roadblocks.
Developing a pull system ensures that the continuous workflow remains stable
and guarantees that the teams deliver work assignments faster and with less
effort. A pull system is a specific lean technique that decreases the waste of any
production process. It ensures that new work is only started if there is a demand

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for it, thus providing the advantage of minimizing overhead and optimizing
storage costs.
These four principles build the lean management system. However, the last
principle -- continuous improvement -- is the most important step in the lean
management method.
Facilitating continuous improvement refers to a variety of techniques that are
used to identify what an organization has done, what it needs to do, any possible
obstacles that may arise and how all members of the organization can make their
work processes better. The lean management system is neither isolated nor
unchanging and, therefore, issues may occur within any of the other four steps.
Ensuring all employees contribute to the continuous improvement of the
workflow protects the organization whenever problems emerge.

Benefits of lean management

Lean management benefits organizations by focusing on improving all parts of the
work process throughout every level of the company's hierarchy. Specifically,
managers benefit from advantages such as:
 A more intelligent business process. The pull system ensures work is only
carried out when there is an actual demand and need for it.
 Improved use of resources. The pull system also ensures the organization is
only using resources when they are needed since it operates based on real
customer demand.
 Improved focus. Lean management decreases the number of wasteful
activities, therefore allowing the workforce to increase their focus on tasks
that produce value.
 Enhanced productivity and efficiency. Improved focus leads to a more
productive and efficient workforce since attention is not given to
unnecessary activities.

Quality Management Systems (QMS)

A quality management system (QMS) is defined as a formalized system that
documents processes, procedures, and responsibilities for achieving quality
policies and objectives. A QMS helps coordinate and direct an organization’s
activities to meet customer and regulatory requirements and improve its
effectiveness and efficiency on a continuous basis.
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ISO 9001:2015, the international standard specifying requirements for quality
management systems, is the most prominent approach to quality management
systems. While some use the term "QMS" to describe the ISO 9001 standard or
the group of documents detailing the QMS, it actually refers to the entirety of the
system.
Elements and requirements of a QMS
Each element of a quality management system helps achieve the overall goals of
meeting the customers’ and organization’s requirements. Quality management
systems should address an organization’s unique needs; however, the elements
all systems have in common include:
 The organization’s quality policy and quality objectives
 Quality manual
 Procedures, instructions, and records
 Data management
 Internal processes
 Customer satisfaction from product quality
 Improvement opportunities
 Quality analysis

Establishing and implementing a QMS

Before establishing a quality management system, your organization must
identify and manage various connected, multi-functional processes to help ensure
customer satisfaction. The QMS design should be influenced by the organization’s
varying objectives, needs, and products and services provided. This structure is
based largely on the plan-do-check-act (PDCA) cycle and allows for continuous
improvement to both the product and the QMS. The basic steps to implementing
a quality management system are as follows:
1. Design
2. Build
3. Deploy
4. Control
5. Measure
6. Review
7. Improve

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Design and Build
The design and build portions serve to develop the structure of a QMS, its
processes, and plans for implementation. Senior management should oversee this
portion to ensure the needs of the organization and the needs of its customers
are a driving force behind the systems development.
Deploy
Deployment is best served in a granular fashion by breaking each process down
into subprocesses and educating staff on documentation, education, training
tools, and metrics. Company intranets are increasingly being used to assist in the
deployment of quality management systems.
Control and Measure
Control and measurement are two areas of establishing a QMS that are largely
accomplished through routine, systematic audits of the quality management
system. The specifics vary greatly from organization to organization depending on
size, potential risk, and environmental impact.
Review and Improve
Review and improve detail how the results of an audit are handled. The goals are
to determine the effectiveness and efficiency of each process toward its
objectives, to communicate these findings to the employees, and to develop new
best practices and processes based on the data collected during the audit.

Benefits of QMS:-
 Defining, improving, and controlling processes
 Reducing waste
 Preventing mistakes
 Lowering costs
 Facilitating and identifying training opportunities
 Engaging staff
 Setting organization-wide direction
 Communicating a readiness to produce consistent results

Six Sigma
Six Sigma is a set of methodologies and tools used to improve business processes
by reducing defects and errors, minimizing variation, and increasing quality and
efficiency.
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Six Sigma is a disciplined and data-driven approach widely used in project
management to achieve process improvement and minimize defects. It provides a
systematic framework to identify and eliminate variations that can impact project
performance.

The goal of Six Sigma is to achieve a level of quality that is nearly perfect, with
only 3.4 defects per million opportunities. This is achieved by using a structured
approach called DMAIC (Define, Measure, Analyze, Improve, Control) to identify
and eliminate causes of variation and improve processes.

Each of the above phases of business transformation has several steps:

1. DEFINE:-
The Six Sigma process begins with a customer-centric approach.

Step 1: The business problem is defined from the customer perspective.

Step 2: Goals are set. What do you want to achieve? What are the resources
you will use to achieve the goals?
Step 3: Map the process. Verify with the stakeholders that you are on the right
track.
2. MEASURE:-
The second phase is focused on the metrics of the project and the tools used
in the measurement. How can you improve? How can you quantify this?

Step 1: Measure your problem in numbers or with supporting data.

Step 2: Define performance yardstick. Fix the limits for "Y."
Step 3: Evaluate the measurement system to be used. Can it help you achieve
your outcome?

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3. ANALYZE :-
The third phase analyzes the process to discover the influencing variables.

Step 1: Determine if your process is efficient and effective. Does the process help
achieve what you need?
Step 2: Quantify your goals in numbers. For instance, reduce defective goods by 20%.
Step 3: Identify variations using historical data.

4. IMPROVE :-
This process investigates how the changes in "X" impact "Y." This phase is where
you identify how you can improve the process implementation.

Step 1: Identify possible reasons. Test to identify which of the "X" variables identified in
Process III influence "Y."
Step 2: Discover relationships between the variables.
Step 3: Establish process tolerance, defined as the precise values that certain variables
can have, and still fall within acceptable boundaries, for instance, the quality of any
given product. Which boundaries need X to hold Y within specifications? What operating
conditions can impact the outcome? Process tolerances can be achieved by using tools
like robust optimization and validation set.

5. CONTROL :-
In this final phase, you determine that the performance objective identified in the
previous phase is well implemented and that the designed improvements are
sustainable.

Step 1: Validate the measurement system to be used.

Step 2: Establish process capability. Is the goal being met? For instance, will the goal of
reducing defective goods by 20 percent be achieved?
Step 3: Once the previous step is satisfied, implement the process.

Six Sigma Techniques

1. Brainstorming: Brainstorming is the key process of any problem-solving
method and is often utilized in the "improve" phase of the DMAIC
methodology. It is a necessary process before anyone starts using any tools.
Brainstorming involves bouncing ideas and generating creative ways to

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 approach a problem through intensive freewheeling group discussions. A
facilitator, who is typically the lead Black Belt or Green Belt, moderates the
open session among a group of participants.
2. Root Cause Analysis/The 5 Whys: This technique helps to get to the root
cause of the problems under consideration and is used in the "analyze"
phase of the DMAIC cycle.
In the 5 Whys technique, the question "why" is asked, again and
again, finally leading up to the core issue. Although "five" is a rule of thumb,
the actual number of questions can be greater or fewer, whatever it takes
to gain clarity.
3. Voice of the Customer: This is the process used to capture the "voice of the
customer" or customer feedback by either internal or external means. The
technique is aimed at giving the customer the best products and services. It
captures the changing needs of the customer through direct and indirect
methods. The voice of the customer technique is used in the "define' phase
of the DMAIC method, usually to further define the problem to be
addressed.
4. 5S System: This technique has its roots in the Japanese principle of
workplace energies. The 5S System is aimed at removing waste and
eliminating bottlenecks from inefficient tools, equipment, or resources in
the workplace. The five steps used are Seiri (Sort), Seiton (Set In Order),
Seiso (Shine), Seiketsu (Standardize), and Shitsuke (Sustain).
5. Kaizen (Continuous Improvement): The Kaizen technique is a powerful
strategy that powers a continuous engine for business improvement. It is
the practice continuously monitoring, identifying, and executing
improvements. This is a particularly useful practice for the manufacturing
sector. Collective and ongoing improvements ensure a reduction in waste,
as well as immediate change whenever the smallest inefficiency is
observed.
6. Benchmarking: Benchmarking is the technique that employs a set standard
of measurement. It involves making comparisons with other businesses to
gain an independent appraisal of the given situation. Benchmarking may
involve comparing important processes or departments within a business
(internal benchmarking), comparing similar work areas or functions with

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 industry leaders (functional benchmarking), or comparing similar products
and services with that of competitors (competitive benchmarking).
7. Poka-yoke (Mistake Proofing): This technique's name comes from the
Japanese phrase meaning "to avoid errors," and entails preventing the
chance of mistakes from occurring. In the poka-yoke technique, employees
spot and remove inefficiencies and human errors during the manufacturing
process.
8. Value Stream Mapping: The value stream mapping technique charts the
current flow of materials and information to design a future project. The
objective is to remove waste and inefficiencies in the value stream and
create leaner operations. It identifies seven different types of waste and
three types of waste removal operations.

Quick Response Manufacturing (QRM) is a strategy for reducing lead-

times across all functions of an organisation. The resulting improvements in speed
and responsiveness increase the organisation’s agility and responsiveness,
resulting in competitive advantage.

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QRM strategy comprises of 4 core concepts:

1. Realizing the Power of Time:- Lead time is much more important than most
managers realize. Long lead times create many organizational costs —
much more than just WIP and Finished Goods! Such costs are four to five
times labor costs. Shrinking these costs is a much bigger opportunity than
reducing labor.
2. Rethinking Organization Structure:- QRM transforms traditional functional
departments into an organization consisting of “QRM Cells.” Although the
cell concept has been known for some time, QRM Cells are more flexible,
more holistic, and apply outside the shop floor too.
3. Exploiting System Dynamics:- By getting managers to understand how
capacity, batch sizes and other factors impact lead times, QRM enables
them to make improved decisions that result in shorter lead times.
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4. Implementing a Unified Strategy Enterprise-wide:- QRM is not just a shop
floor approach, it is applied throughout the enterprise. This includes
material planning and control, purchasing and supply chain, quoting, order
processing and new product development. QRM provides a single, unifying
approach for the entire enterprise.
QRM has some commonality with other improvement techniques, like Theory
of Constraints, Lean, TQM, or Six Sigma. But the primary goal of QRM (no
matter what tools are used) should always be to reduce the overall throughput
time. Adopting QRM does not conflict with these efforts or make these past
efforts obsolete. It also does not mean that you need to abandon other
improvement efforts. In fact, adopting QRM will enhance existing
improvement initiatives and take them to the next level.

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