Performance Management HRM 3 Performance Management 1 Performance

Performance Management HRM 3 - Performance Management 1

Performance Management – Learning By the end of this unit you should be able to: 1. Explain what is meant by performance management 2. Describe the process of performance management 3. Critically evaluate the appraisal process 4. Explain what is meant by an appraisal interview and describe it’s benefits and drawbacks to the organisation, the manager and the employee 5. Describe 3 performance appraisal techniques 6. Evaluate the 360 degree feedback method of appraisal 7. Describe three interview styles associated with appraisal 8. Describe the key actions required to conduct an effective appraisal interview 9. Discuss the ethical dilemmas associated with performance appraisal 10. Describe 5 key errors associated with the appraisal process HRM 3 - Performance Management 2

Summary of Key Headings • • • Performance Management Performance Appraisal The Appraisal Interview 360 degree feedback Ethical Dilemmas in appraisal HRM 3 - Performance Management 3

Factor influencing performance According to Sparrow & Hiltrop (1994) the use of PMS is on the increase because of the following changes in the workplace • • • Delayering Devolution of accountability & responsibility Changing career & job expectations Flexible working arrangements Individuation Competitive pressures HRM 3 - Performance Management 4

Performance Appraisal Measuring a person’s job performance against predetermined work standards versus Performance Management A strategic management technique that links business objectives & strategies to individual goals, actions, performance appraisal & rewards thru a defined process. Incorporates appraisal, training & development, rewards, employee relations, individualism (Sparrow & Hiltrop 1994) HRM 3 - Performance Management 5

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Objectives of Performance Management Systems • • • Motivating performance Helping individuals develop their skills Building a performance culture Determining who should be promoted Eliminating individuals who are poor performers • Helping implement business strategies

Performance Management • Performance management is a management process of linking individual, group and organisation performance with the main strategic mission and values • It is an organisation-wide activity concerned with the continuous assessment and review of performance against pre-determined strategic objectives

Principles of Performance Management: • Owned and driven by line managers • Emphasis on shared goals and values • Something that is developed specifically and individually for the particular company • It should apply to all staff HRM 3 - Performance Management 9

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Read CIPD Factsheet: Performance Management 1. What does the article mean when it says that performance management should be • • Strategic Integrated About improvement About development 2. What is the difference between an objective & a performance standard? Give an example of each from your own experience. 3. Explain what is meant by 360 -degree feedback. HRM 3 - Performance Management 11

Characteristics of GOOD P. Mgt System • • Tailored to the organisation Support the culture Support the mission Defines the critical success factors Clarifies the principal accountabilities Enables systematic review of performance Effective PRP system Integrated approach Philpott & Sheppard (1993) HRM 3 - Performance Management 12

Characteristics of BAD P. Mgt System • • • No clear objective Departmental rivalry Failure to meet objectives Lack of clear accountabilities Role ambiguity Absence & turnover Lack of training, development or career plans Resistance Loss of credibility Philpott & Sheppard (1993) HRM 3 - Performance Management 13

Criticisms of Performance Management systems • • • Form filling exercise Company goals only Means to set pay levels Does not identify future potential in employees Does not improve organisational performance A HR thing!! Dependent on your boss The 3 objectives conflicting objectives Subjective & unfair ratings HRM 3 - Performance Management 14

How to overcome these criticisms • • • Training Involvement in design ‘Open’ system Visibly owned by senior management Ease administration Follow up on appraisal actions HRM 3 - Performance Management 15

Review Questions 1. Explain what performance management is both in writing and diagrammatic format 2. What makes a good performance management system? 3. What are the criticisms normally levelled at Performance Management Systems? 4. How might you minimise these criticisms? HRM 3 - Performance Management 16

Performance Appraisal Systematic approach to evaluating employee’s performance, characteristics or potential with a view to assisting with decisions in a wide range of areas such as pay, promotion, employee development, and motivation. (Gunnigle and Flood 1990) HRM 3 - Performance Management 17

Performance Appraisal v’s • Imposed on managers • Individual focus on individual performance • A beginning and an end • Just one part of the performance management process Performance Management • Owned and driven by line managers (Armstrong 1995) • Organisation focus • Links individual , group and organisational performance • Tied to the organisations strategy • Continuous and integrated process HRM 3 - Performance Management 18

Appraisal – As an employee………. As a manager ………… As the organisation……. HRM 3 - Performance Management 19

Why Appraise? ? Employer • Assess the performance of individuals • Set individual objectives • Assess how well objectives are being attained • Confirm what jobs/tasks are actually being done • Determine who should be promoted/transferred • Determine who needs training • Assess who should be considered for advancement Employee • A career development exercise • A way of assessing needs and if organisation can meet them • To clarify job, duties etc. • To identify own potential and how to fulfill it HRM 3 - Performance Management (Hunt 1992) 20

Perceived Benefits of P. A. MANAGER • Learn about employee now & future • Goal clarification • Measuring work performance • Motivate employee • Clarification COMPANY • Succession planning • Facilitate HRP • Link business and individual objectives • Improve communications overall • Improve performance both individual and organisational Evenden & Anderson (1992) HRM 3 - Performance Management 21

Perceived benefits for employee • • • Receive feedback Communicate views Career options Recognition Training & development needs Evenden & Anderson (1992) HRM 3 - Performance Management 22

Performance Appraisal 3 principal objectives 1. To motivate staff and improve performance thru objective & target setting 2. To assess employee performance and distributing pay 3. To identify training & development needs as well as career aspirations Fletcher (1993) HRM 3 - Performance Management 23

Methods (techniques) of Appraisal 1. 2. 3. 4. 5. 6. 7. 8. 9. *Rating Ranking Paired comparison Critical incident *Free form *Performance or objective oriented systems Assessment centre Self-assessment *360º feedback HRM 3 - Performance Management 24

Rating • • Appraiser of appraise Against predetermined scale Uses a series of relatively standard headings Often part of a results oriented schemes /objectives based scheme • Armstrong (1995)convenient but ignore the complex set of variables that deter. Work performance. Very subjective HRM 3 - Performance Management 25

Rating continued • Problems with consistency across managers • Error of central tendency • Forced distribution using the normal distribution curve • Or • Forced choice technique • BARS – Behaviourally anchored rating scales HRM 3 - Performance Management 26

Free form • • • Completely unstructured Allows for discretion Can create many inconsistencies Does not allow for effective comparisons Some managers like structure HRM 3 - Performance Management 27

Performance/Results/Objective Oriented • • • MBO Measured against previously agreed KRA’s Jointly set Manager must understand the employee’s job Manager must be committed to observation, feedback, target setting etc. • Difficult in a job that is subject to a lot of variation • Dificult in a job where you are very dependent on other jobs • Quantity versus quality issue HRM 3 - Performance Management 28

360 º Feedback/Multi Rater Assessment • Relatively new • To give a multi dimensional overview of an employee’s performance • Structured questionnaires completed anonymously • Can be done on computer • May require more training HRM 3 - Performance Management 29

Article: Its time to appraise our methods of appraisal Questions What are some of the criticisms of appraisal interviews? What does the article say about how to improve appraisal? HRM 3 - Performance Management 30

Difficulties with Appraisal 9 Common appraisal errors -Grote (1996) 1. Contrast effect 2. First impression 3. Halo/Horns 4. Similar to me 5. Central tendency 6. Negative & Positive skew 7. Attribution bias 8. Recency Effect 9. Stereotyping HRM 3 - Performance Management 31

Difficulties with Appraisal Hunt (1992) • • • Poorly designed Over-ambitious Inadequately resourced No training No guidelines HRM 3 - Performance Management 32

Difficulties with Appraisal • Torrington & Hall (1995), Fletcher (1993) conflicting purposes of PA • Line manager sees it as a HR thing (Grint, , 1993, Torrington & Hall 1995) HRM 3 - Performance Management 33

How to minimise these difficulties 4 Core Obligations of Management Longenecker & Ludwig (1990) 1. Sound procedure 2. Training 3. Top level support 4. Audit HRM 3 - Performance Management 34

Types of Appraisal Interview 1. Tell and sell 2. Tell and listen 3. Problem solve 4. Contingency approach (Norman Maier 1958) HRM 3 - Performance Management 35

TASK When would it be appropriate to use the different types of approach to the appraisal interview? (Tips: think about the type of appraiser/appraisee, nature of the business/organisation, availability of resources/time, what the appraisal will be used for) HRM 3 - Performance Management 36

Interview Format: Introduction General discussion, present level of success The body • Self-criticism • Self-help Conclusion – Confirm decisions, commitments, agreements, recommendations HRM 3 - Performance Management 37

Effective Appraisal Interviews • • • Start with purpose Establish rapport Main tasks and responsibility discussion Focus on work targets and standards Encourage self analysis Career aspirations, training needs discussion Manage expectations Summary Notes Follow up Evenden & Anderson (1992) HRM 3 - Performance Management 38

Guidelines for the Appraisal Interview • • • Emphasize positive aspects Emphasize improvement Privacy/Confidentiality Regular basis Criticisms: specific & constructive Stay calm Identify specific actions which need to be taken Emphasize assistance End by stressing the positive aspects of performance HRM 3 - Performance Management 39

Read article: A lovely audience 1. Pick out key points from the article, about how to conduct the appraisal interview that have not been discussed on the previous slides. HRM 3 - Performance Management 40

Extra Reading – all in Moodle! • Chapter 8 in core text book • CIPD Factsheets: – Performance Management – Performance Appraisal – 360 degree feedback • Class handouts/articles Human Resource Management 41

Typical Exam Questions 1. Discuss the characteristics of good and bad performance management systems. 2. Outline the steps to be taken to ensure a successful appraisal interview 3. “Performance management is the same as performance appraisal. ” Discuss. 4. Describe any three methods of appraisal. 5. Why is it important to manage & appraise performance? Discuss this from the employer, employee & company perspective. 6. Evaluate the effectiveness of the appraisal interview in the context of performance appraisal. HRM 3 - Performance Management 42

Autumn Paper 04/05 • • Discuss the characteristics of good and bad performance management systems. (20 marks) Describe THREE key errors associated with appraisal interviewing. (10 marks) Summer Paper 04/05 • • Explain what a performance management system is. (10 marks) Discuss the criticisms of performance management systems and what an organization can do to overcome them. (20 marks) HRM 3 - Performance Management 43