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Performance Management is the integrated process by which an agency involves its employees in improving organizational effectiveness in the accomplishment of agency mission and strategic goals. Performance Management consists of performance planning, evaluating and monitoring employee performance, employee development, and employee recognition.
While proper attention to team building is critical during the early phases of a project, it is a continuous process. The project manager should continually monitor team functioning and performance to determine what corrective action might be needed to prevent or to correct various team problems. Leading people and teams during the project life cycle is necessary to ensure that the focus is kept on the project goal, that communication is sound and that an environment is created where people are motivated and enthusiastic about delivering results (Steyn at al, 2009).
DEFINITION OF TERMS
Performance appraisal system describes how the agency will identify performance standards and core competencies and communicate them to employees. Periodical appraisal helps the company to measure employee's performance and to take apt decisions for further improvement. A structured business planning depends on the performance of the employee and it will be successful only when the employees are analyzing their work performance individually. The formal performance appraisal in a company is conducted annually for all staff and each staff member is appraised by their line manager.
A project team can be defined as a group of people whose members usually belong to different groups, functions and are assigned to activities for the same project. A team can be divided into sub-teams according to need. Usually project teams are only used for a defined period of time. They are disbanded after the project is deemed complete.
Project life cycle
The term project lifecycle refers to the models how a project is planned, controlled, and monitored from its inception to its completion and close out.
Theoretical representations that simulate the behavior or activity of systems, processes or phenomena. This is an artificial scenario or condition developed to explain a relationship between observed natural phenomena of the object under study and actual behavior.
TYPICAL MODELS INVOLVED
There are numerous models involved in the performance management. One such typical model is as follows:
Figure : Performance management model
PURPOSE OF PERFORMANCE MANAGEMENT
Performance Management links people to performance and profit. It starts by understanding what success looks like for an organisation, and then ensures that everyone in an organisation works effectively to achieve that success. Performance measures such as uptime and absenteeism is noted by Besterfield  to be one of the six basic concepts of Total quality management within a team or company (P3).
Three reasons for performance management:
Driving Results: - Purpose - to drive improvement in business results through individual, group, and enterprise goal alignment, measurement, performance coaching and performance information sharing. A performance management process intended to drive the achievement of key business results is typically designed to ensure that individual, group and enterprise goals and expectations are clearly defined, focused on key priorities, and well connected to the drivers of results. Formal and informal processes are used for identifying and communicating performance expectations and goals and ensuring goal alignment across group performance goals and measures are developed at several levels in the organisation. This is usually done with some balance between financial, operational and customer-based metrics.
Building Capability: - To drive organization and individual capability development by clarifying role-specific goals and competencies, establishing an environment of constructive feedback, and using formal developmental coaching/mentoring.
A performance management process intended to drive capability development is typically designed to help employees understand what they need to learn and how they need to learn it.
Employees are expected to be in a constant growth and learning mode, demonstrating organization and/or role-specific competencies; the bundles of skills, behaviors and knowledge that are critical to the organisation's ability to execute its business strategy. One of core values - management by fact - uses many types of date derived from business need and strategy. These data is used in performance management to benchmark against best practice or competitors. Analysis off this data support planning, reviewing overall performance, improving operations and change management. Coaching and mentoring programs and processes are used on a formal basis to provide employees with ongoing support as they develop and apply new competencies.
Growing Talent: - To motivate and retain high performers by providing career development programs encompassing motivational and reward strategies, challenging work assignments and other on-the-job learning initiatives that will lead to career advancement and ongoing job satisfaction.
A performance management process for identifying and rewarding talent is typically designed to yield a performance assessment that can easily be used to make decisions involving compensation, work assignments, career advancement and/or recognition. The way in which measures and goals are developed lends itself to differentiating individuals and/or groups.
PROCESSES INVOLVED IN PERFORMANCE MANAGEMENT
Under a project set-up, this involves the following steps per deliverable: -
Identification of clear and measurable performance goals: This refers to establishment of objectives and key results areas.
Measurement of those performance goals to assess progress: This includes measuring performance, provision of intermediate feedback and conduction of progress review:
Provision of feedback and coaching on performance results: This includes addressing of poor performance and the support of good performance.
Use performance appraisal for human resources management decisions: This decision may result in rewarding for appropriate performance or sanctioning of poor performance.
Under a project set-up, there should be a project manager (s) and team members. Similar to the project manager's performance measurement the team members should also be given a performance appraisal by the manager to let employees understand and view their own performance that would set the foundation for promotions, salary increases as well as counseling of a team member (Besterfield et al, ) this normally sets the tone for open discussion on the managers expectations from the team member or even the team in the case of team performance bonuses. Besterfiels et al, ) emphasizes that one of the key factors of a successful appraisal is employee involvement. In practice the individual or team will set up the appraisal criteria themselves and get official agreement with the manager on the measuring scales and performance criteria. This will eliminate any confusion or company politics when the appraisals are done.
The following are the major influences on team performance: -
Stimulating and interesting work
Convincing and committed goals
Shared team objectives, values and ownership
Distributed leadership based on expertise and respect
Open information sharing
Participation in project development, definition and planning
Self-managed team and work effort
Flexible working conditions
Minimal "ceremony" and " politics"
Opportunity for experience and growth
Measured goals and objectives
Measured performance and recording of results
Acceptance of innovative and creative solutions
Emphasis on quality of performance
Emphasis on quality of product
Tracking and containment of cost and schedule
Solid team leadership and technical direction
Opportunity for challenge and discovery
Clear goals and performance expectations
Active encouragement of self-development
Contributions based on expertise, need and trust
Equal member status and position in the team
Good communication and interpersonal relationships
Authority and responsibility matched by reliability and accountability
Consistent sense of purpose and direction
Open cross-functional communications
Open access to process information
Group decision-making by consent
Visibility and recognition of accomplishments
Qualified and high-energy team colleagues
Processes and opportunity for team building
High work interest, involvement, energy, pride in achievement
Mutual support, trust and risk sharing
An attitude of continuous improvement
Processes for resource sharing
Processes for conflict resolution
Opportunity to stretch
High morale and team spirit
Recognition of accomplishments
The following barriers of high team performance exist and need to be highlighted:
Shortcomings in organisation
Constantly changing objectives
Unstable work environment
Insufficient resources and support
Inappropriate control attitude and structure
Insufficient reward, challenge or opportunity
Shortcomings in leadership
Inappropriate leadership style
Lack of appropriate leadership skills
Inability to create satisfying work environment
Confusion over roles and responsibilities
Unclear or inadequate direction
Lack of problem solving and conflict resolution
No risk sharing
No visibility, recognition nor reward
Shortcomings in people
Lack of trust in the leader
Conflicting objectives, views and personal agenda
Personal politics and power struggles
Lack of appropriate team skills, competence and commitment
Negative attitude to work, no sense of achievement
Prevalence of groupthink
Mistrust and misguided collusion
Inordinate fear of failure
Shortcomings in tools and techniques
Lack of corporate control
Lack of project sponsor responsibilities
Lack of appropriate project management policies and procedures
Lack of an over-arching project life span methodology
Unclear channels of communication
Lack of supporting systems for tracking and forecasting progress, schedule performance and costs
No plan for transfer of the care, custody and control of the product.
MEASUREMENT OF PERFORMANCE
The commonly used modern tool for measuring performance is performance appraisal. Performance appraisal is commonly confused with performance management. Performance appraisal is a measurement method for performance management while as performance management itself is a cycle starting from an individual entry into an organization/project to point of exit.
Setting goals for the appraisal system
Developing criteria for successful performance
Creating metrics for evaluating performance
Selecting reviewees and reviewers
Considering the timing of feedback
Organizing logistics for the report and meeting
Giving candid and constructive feedback
Following up to ensure that the system works
Attributes of a good appraisal system:
Recognize and record an employee's contributions
Give employees useful performance feedback
Enable a more effective and equitable reward system
Develop the professional capabilities of employees
Communicate the organization's values and culture
Help the organization make evidence-based, legally defensible personnel decisions
Uses of the appraisal system
Prediction of future performance based on past performance
Retention decisions and succession planning
Assessment for training and development
Criteria for good appraisal system
Aligned with organizational goals
Relevant to given roles
Specific and measurable
Under employees' control
Understood and accepted by participants
Ratings in an appraisal system
Ratings can be the basis for:-
General or specific standards or expectations
Improvement on past performance
Rankings or comparison to others
Rating scales differ in terms of:
Definition of ratings
Number of possible ratings
Presence or absence of a midpoint
Types of rating scales
Graphic Rating Scales
Behaviourally Anchored Rating Scales (BARS)
Timing of appraisals:
Performance can be appraised:
After each project is completed
After a milestone is reached
Feedback in the appraisals:
Feedback reports can include:
Attributed ratings and comments
Anonymous ratings and comments
Statistics and comparisons
Weighted or un-weighted ratings by competency
Competencies necessary for advancement
Feedback is most useful when it is:
Candid and honest
Specific and actionable
Based on more than one incident or example
Based on more than one person's view
Framed positively and constructively
Behaviourally based rather than personality based
Summarized and integrated into key themes
Feedback meetings can include:
Discussion of Strengths and development needs
Team challenges and opportunities
Development and career planning
Goal setting for upcoming performance cycle
Follow up for the individual can include:
A written development plan with goals, timelines and responsibilities
Additional meetings with manager
Training to build on strengths and address needs
"Stretch" assignments or rotations
Follow up for the organization/project:
Use aggregated ratings for gap analysis and needs assessment
Track performance appraisal statistics to measure the success of the management development system
Train new recruits and periodically retrain reviewers about how to evaluate reviewees and give useful feedback
Periodically survey reviewees and reviewers about the costs and benefits of the system
Ensure that the performance appraisal system is in alignment with evolving organizational and business goals
Advantages and disadvantages of appraisal system:
They provide a record of performance over a period of time.
They provide an opportunity for a manager to meet and discuss performance with an employee.
They provide the employee with feedback about their performance and how they completed their goals.
They provide an opportunity for an employee to discuss issues and to clarify expectations with their manager.
They offer an opportunity to think about the upcoming year and develop employee goals.
They can be motivational with the support of a good reward and compensation system.
If not done appropriately, can be a negative experience.
Are very time consuming, especially for a manager with many employees.
Are based on human assessment and are subject to rater errors and biases.
If not done right can be a complete waste of time.
Can be stressful for all involved.
CRITICAL INCIDENT METHOD
The critical incidents for performance appraisal are a method in which the manager writes down positive and negative performance behaviour of employees throughout the performance period.
Critical incident method- Recording of events by appraiser.
An incident is critical when it illustrates what the employers has done or failed to do
Each employee will be evaluated as such and one's performance appraisal will be based on the logs that are put in the evaluation form.
The manager maintains logs on each employee, whereby he periodically records critical incidents of the workers behaviour.
At the end of the rating period, these recorded critical incidents are used in the evaluation of the workers' performance.
Disadvantages of critical Incident
This method suffers however from the following limitations:
Critical incidents technique of evaluation is applied to evaluate the performance of superiors rather than of peers of subordinates.
Negative incidents may be more noticeable than positive incidents.
It results in very close supervision which may not be liked by the employee.
The recording of incidents may be a chore for the manager concerned, who may be too busy or forget to do it.
The supervisors have a tendency to unload a series of complaints about incidents during an annual performance review session.
WEIGHTED CHECKLIST METHOD
Definition of weighted checklist
This method describes a performance appraisal method where raters familiar with the jobs being evaluated prepared a large list of descriptive statements about effective and ineffective behaviour on jobs.
Process of weighted checklist
HR department and Managers / Supervisors will set up checklist for each position.
If the rater believes strongly that the employee possesses a particular listed trait, he checks the item; otherwise, he leaves the item blank.
Sample of weighted checklist
Does he give respect to his superiors? Yes/No
Does he follow instructions properly? Yes/No
Does he make mistakes frequently? Yes/No
The value of each question may be weighted equally or certain questions may be weighted more heavily than others
Advantages and disadvantages of weighted checklist
This method help the manager in evaluation of the performance of the employee.
The rater may be biased in distinguishing the positive and negative questions. He may assign biased weights to the questions.
This method also is expensive and time consuming.
It becomes difficult for the manager to assemble, analyze and weigh a number of statements about the employee's characteristics, contributions and behaviours.
PAIRED COMPARISON ANALYSIS
Definition of paired comparison analysis
Paired comparison analysis is a good way of weighing up the relative importance of options.
A range of plausible options is listed. Each option is compared against each of the other options. The results are tallied and the option with the highest score is the preferred option.
Advantages and disadvantages of paired comparison analysis
It is useful where priorities are not clear.
It is particularly useful where you do not have objective data to base this on.
It helps you to set priorities where there are conflicting demands on your resources.
This makes it easy to choose the most important problem to solve, or select the solution that will give you the greatest advantage.
GRAPHIC RATING SCALES
Definition of the rating scales
The Rating Scale is a form on which the manager simply checks off the employee's level of performance.
This is the oldest and most widely method used for performance appraisal.
The scales may specify five points, so a factor such as job knowledge might be rated 1 (poorly informed about work duties) to 5 (has complete mastery of all phases of the job).
Content of appraisal
Quantity of work. Volume of work under normal working conditions
Quality of work. Neatness, thoroughness and accuracy of work Knowledge of job.
Dependability. Conscientious, thorough, reliable, accurate, with respect to attendance, relief, lunch breaks, etc.
Attitude. Exhibits enthusiasm and cooperativeness on the job
Cooperation: willingness and ability to work with others to produce desired goals.
Rating scales can include 5 elements as follows:
Advantages of the rating scales
Graphic rating scales are less time consuming to develop.
They also allow for quantitative comparison.
Disadvantages of the rating scales
Different supervisors will use the same graphic scales in slightly different ways.
One way to get around the ambiguity inherent in graphic rating scales is to use behaviour based scales, in which specific work related behaviours are assessed.
More validity comparing workers ratings from a single supervisor than comparing two workers who were rated by different supervisors.
ESSAY EVALUATION METHOD
This method asked managers / supervisors to describe strengths and weaknesses of an employee's behaviour. Essay evaluation is a non-quantitative technique. This method usually use with the graphic rating scale method.
Input of information sources
Job knowledge and potential of the employee.
Employee's understanding of the company's programs, policies, objectives, etc.;
The employee's relations with co-workers and superiors;
The employee's general planning, organizing and controlling ability;
The attitudes and perceptions of the employee, in general.
Disadvantages of essay evaluation
Manager / supervisor may write a biased essay.
A busy rater may write the essay hurriedly without properly assessing the actual performance of the worker.
Apart from that, the rater may take a long time, and this becomes uneconomical from the view point of the firm, because the time of the rater is costly.
Some evaluators may be poor in writing essays on employee performance. Others may be superficial in explanation and use flowery language which may not reflect the actual performance of the employee.
BEHAVIOURALLY ANCHORED RATING SCALES
This method used to describe a performance rating that focused on specific behaviours or sets as indicators of effective or ineffective performance.
It is a combination of the rating scale and critical incident techniques of employee performance evaluation.
Classification of behaviourally anchored rating scales:
Behavioural observation scales
Behavioural expectations scales
Numerically anchored rating scales
Each behaviour can rate at one of seven scales as follows (you can set scales depending on your requirements)
Extremely poor (1 points)
Poor (2 points)
Below average (3 points)
Average (4 points)
Above average (5 points)
Good (6 points)
Extremely good (7 points)
Advantages and disadvantages of behaviourally anchored rating scales:
This method are very useful and exactly.
It is very difficult to develop this method because you need to identify what is "good level" etc.
PERFORMANCE RANKING METHOD
Ranking is a performance appraisal method that is used to evaluate employee performance from best to worst. Manager will compare an employee to another employee, rather than comparing each one to a standard measurement.
Rating scale of ranking
Much better - 5 points
Slightly better - 4 points
Equal - 3 points
Slightly worst - 2 points
Much worst - 1 point
Process of ranking
The scaled comparison asks a rater or evaluator to compare the performance of two individuals.
Continue comparison to other two employees.
Total points to each employee.
Give point to employee, for example: A is Slightly better - 4 points so that B is Slightly worst - 2 points.
MANAGEMENT BY OBJECTIVE METHOD (MOB)
MBO is a process in which managers / employees set objectives for the employee, periodically evaluate the performance, and reward according to the result. MBO focuses attention on what must be accomplished (goals) rather than how it is to be accomplished (methods).
Classification of Objectives
Conditions of Management by Objectives
An objective must be satisfied SMART conditions:
Advantages of MBO
It is based on the assumption that the individual (employee) knows more than anyone else about her/his own capabilities, needs, strengths, weaknesses and goals. A further advantage of MBO is that the emphasis is on the future rather than on the past. Appraisal thus becomes a means to a constructive end.
The 360 DEGREE PERFORMANCE APPRAISAL
The 360 Degree Feedback is a system or process in which employees receive confidential, anonymous feedback from the people who work around them.
Who should conduct 360 degree performance appraisal?
Managers (i.e. superior).
Anyone who comes into contact with the employee and can provide valuable insights and information.
What's 360 degree measures?
360 degree measures behaviours and competencies.
360 degree addresses skills such as listening, planning, and goal-setting.
360 degree focuses on subjective areas such as teamwork, character, and leadership effectiveness.
360 degree provide feedback on how others perceive an employee.
360 degree appraisal has four components:
Forced ranking is a method of performance appraisal to rank employee but in order of forced distribution. For example, the distribution requested with 10 or 20 percent in the top category, 70 or 80 percent in the middle, and 10 percent in the bottom. The top-ranked employees are considered "high-potential" employees and are often targeted for a more rapid career and leadership development programs. In contrast, those ranked at the bottom are denied bonuses and pay increases. They may be given a probationary period to improve their performance.
Application of Forced Ranking
GE, Ford Motor, Conoco, Sun Microsystems, Cisco Systems, EDS, Enron and a host of other U.S. corporations have adopted similar policies of this method
Advantages and disadvantages of forced Ranking
They force reluctant managers to make difficult decisions and identify the most and least talented members of the work group.
They create and sustain a high performance culture in which the workforce continuously improves.
They increase unhealthy cut-throat competitiveness;
They discourage collaboration and teamwork;
They harm morale;
They are legally suspect giving rise to age discrimination cases.
BEHAVIOURAL OBSERVATION SCALES
Behavioural Observation Scales is frequency rating of critical incidents that worker has performed. The BOS was developed by Latham & Wexley (1977) who believed that both graphic rating scales and BARS require supervisors to make vague judgments. The BOS is a list of critical incidents behaviours which the supervisor has to rate in terms of frequency.
We use 5 scales as follows to identify frequency of behaviour.
IDENTIFICATION OF CRITICAL INCIDENTS
Items indicate either desired or undesired aspects of work performance, for examples:
Worker misses workdays ________
Worker never needs her/his work to be double checked _______
MEASUREMENT ERRORS DURING APPRAISAL PROCESS
Halo effect occurs when a rater attaches too much significance to a single factor of performance and gives similar ratings on other performance elements. Thus overall evaluation is significantly influenced by a single factor. Such a perception undermines the importance of other elements and leads to an unbalanced performance assessment of the individual. For example a manager rates a worker very high on quality because of her immaculate attention to details and lack of defects in her work. Then assuming the individual to be an overall high performer based on the quality of her work output, the manager rates her very high on efficiency, responsibility, punctuality, etc. without taking an objective look at her performance in these areas.
Strictness, Leniency and Central Tendency Bias
People differ in their tendency to evaluate people or performance. Some supervisors are very strict or conservative in their ratings and generally give low scores in their evaluations. This tendency may make high performers attain somewhat average ranking and average performers appear as poor performers. Raters with such tendency are known to have a strictness bias.
On the other hand, some supervisors demonstrate a leniency bias and rate their subordinates very liberally which may make even average performers seem like star performers, attaining very high performance scores.
And yet, others "play safe" by rating around the golden mean - the average. This may be done to avoid the necessity to justify scoring across the two extremes as some systems expect managers to specify additional comments as they give too high or too low ratings to employees. This rating error is known as the central tendency bias.
Performance appraisal involves assessment of employee performance for a specific period - quarterly, annually etc. People may not perform uniformly throughout that period. We all face highs and lows and demonstrate variance in performance due to numerous factors. It is therefore very important to review performance demonstrated throughout the period under consideration. Often however, recent events tend to overshadow the overall performance. People do have "short memories". Thus a person who has worked very hard and excelled throughout the year, but for some inadvertent reasons had faced performance issues in the last weeks or month may at times get a poor appraisal from the supervisor, showing a recency bias.
When supervisors rate employees one after another, rating of an exceptional performer or a very poor performer could affect the subsequent ratings of other individual(s). This phenomenon is known as the contrast effect. For example, let's suppose that a supervisor has just rated an outstanding performer and is now evaluating an individual who is also a good performer but there seems to be a contrasting difference between the abilities and output of the two individuals. This significant difference in performance or employee competencies could lead the supervisor to rating the second individual as an average performer.
Personal beliefs, attitudes, assumptions, experiences, preferences and lack of understanding about a person, class or a phenomenon can lead to an unfair evaluation which is off from reality. We all suffer from these shortcomings, consciously or unconsciously, while making everyday judgments about people, things, events etc.
It is especially important to be aware and sensitive to possible biases, prejudices and stereotypes while making judgments about employee performance. While many of the prejudices operate covertly and unconsciously, others strike us through conscious thoughts and feelings. Understanding common biases and being on guard while appraising can significantly raise the objectivity of the evaluation process.
Examples of personal bias include a bias against a race, ethnicity, religion, age, sex, or assuming that certain type or class of people are not suitable to perform a specific job or function etc. If you believe for instance, that women are emotional and men are rational, then chances are that you would not employ a female worker for a role that involves making objective decisions. Similarly, an assumption that young workers are faster and more efficient than old workers would make it more probable to give a higher efficiency rating to a younger worker than an old worker.
How errors can be reduced in appraisals.
Train raters to understand the evaluation process rationale and recognise sources of measurement errors
Make sure raters observe ratees on an ongoing, regular basis and that they do not try to limit evaluations to designated evaluation periods
Do not have one rater rate too many ratees; ability to identify performance differences drops and fatigue sets in when large numbers are involved
Make sure performance dimensions and standards are stated clearly avoid terms such as "average" because different raters react differently to such terms.
Besterfield et al,  listed some improvement suggestions on performance appraisals based on research done by some other practitioners. These improvements can be summarized as follow:
The rating scales used should be kept simple and have only a few rating categories
The appraisal should consider teamwork as well as individual performance, on a equal weighting basis.
Future performance planning requires more frequent reviews.
Promotion decisions should not be based on performance appraisals alone but should include a independent administrative process.
The appraisal should include external customer satisfaction ratings.
Subordinate and peer reviews forms the basis for internal customer ratings.
Include a section on implementation behavior to process improvements.
We have finally managed to find it out through our study in the performance management system that, it is possible to get all employees to reconcile personal goals with organizational goals. One can turn around any marginal business and increase productivity and profitability for any organization, with the transparent and hidden forces embedded in this process. It can be applied by organizations or a single department or section inside an organization, as well as an individual person or within a project structure.
The process is a natural, self-inspired performance process and are appropriately named the self-propelled performance process (SPPP).