Performance Management - Role of Hr

7/31/2019 Performance Management - Role of Hr

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Role of Human Resource in Performance Management

Performance Management is an ongoing communication process , undertaken in

partnership, between an employee and his or her immediate supervisor that involvesestablishing clear expectations regarding job functions, organizational goals,

performance feedback, performance measurement, barrier removal and continuous

improvement.

Today companies focus on creating objectives of the organization and aligning the

same with individual objectives, development of necessary & sufficient skills in the

employees to perform better and rewarding them for the desired performance with

monetary and non-monetary benefits. All these practices go a long way in increasing

employee morale and overall productivity. Motivated, productive employees are an

integral part of any company in the present competitive market.

A performance appraisal system facilitates optimization of employee performance and

also helps in identifying areas for development. It is also useful for taking administrative

decisions relating to payment of incentives, promotions etc. The performance appraisal

system should provide for recognition of employee performance in the face of adverse

external influences, if any. For example, the performance appraisal of a sales person

should take into account the effects of a slump in the market or high inflation rate.

The roles of HR in terms of objectives of Performance Appraisal are as follows:

Sr No. Objective Remarks1 Setting targets and goals as

performance standardsPerformance standards and specific goals areset at the beginning of the appraisal period.These targets motivate the employee toperform better.

2 Evaluating employeeperformance

The evaluation of employee performance helpsunderstand the strength and weaknesses ofthe employee. This evaluation also helps todetermine the achievement of pre-set goalsand targets.

3 Identifying training anddevelopment needs.

An employees areas of weakness are also theareas for improvement or development. Theseare the shortcomings in the individualsperformance, which need to be improved upon.

4 Rewarding performance Rewarding a good performer and punishing abad one encourages employee to performbetter. As has been stated in the reinforcementtheory, behavior is a function of its


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consequences.5 Improving performance Once the strength and weaknesses are

identified , the employee can be encouraged toovercome his weaknesses and leverage hisstrength to optimum his performance.

THE APPRAISAL PROCESS

The first step in the appraisal process is the determination of standards of

performance based on the organization objectives and the job

descriptions. The performance standards and objectives have to be

determined by the employee and the supervisor together. These have to

be communicated to the employee in a simple and lucid manner. The

goals and standards should be specific and quantifiable.

The next step in the process of appraisal is the measurement of employee

performance against the pre-determined goals and standards. This

determines what components of the performance are to be measured. Atthis stage, the process of measurement , namely, how the performance

components are to be measured , has to be determined.

The next step is the actual process of measurement. Performance

appraisal has to be a continuous process and the feedback should be

given to the employee at regular intervals. Making a note of the critical

incidents, either positive or negative, helps the manager keep a track of

the employee performance. Feedback has to be given once in 2-3 months,

depending on the need to do so, which would help the employee in

meeting the objectives. Jindal Iron & Steel Company for example, has

quarterly reviews based on the goals, the skills employed and the potential

of the employee. This helps the employees track their performance and

grooms them for higher responsibilities. The reviews could also me on

monthly basis.

The next step is a very critical step and involves communicating the

results of appraisal to the employee concerned. It is the responsibility of

the manager to make the employee feel comfortable with the whole

process. Continuous feedback and orientation would ensure a simple final

appraisal discussion, with a very few differences of opinion.

Once the appraisal is finalized after discussing it with the employee, it hasto be put to effective use. Though most organizations link it to the rewards

system, some prefer to restrict it to the development of employees.

Whatever might be the organization policy, the document of appraisal has

to be effectively and immediately put to use to ensure a better

performance during the next appraisal period.


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The ideal way to ensure maximum utility of performance appraisal is to

link the performance standards to rewards system and the competency

standards to training and development. The gaps in the competency level

can be identified and necessary training be imparted to the employee.

Some examples of best practices in Employee Performance Appraisal

Hughes Escorts

Hughes Escorts, the subsidiary of the US-headquartered telecom company Hughes,

uses a competency-based performance-enhancement model. Each position in the

organization is defined in terms of 23 key competencies, categorized into four groups:

attitude based, knowledge-driven, skill-centered and value based. The company uses

these competencies to measure shortfalls and provide relevant training inputs. This is

done to both maximize productivity and make employees aware of their professional

standing.

National Panasonic

This Japanese white-goods major has developed a performance-assessment system

driven by Key Result Areas (KRAs). KRAs describe performance goals business,

functional and behavioral with defined time frames and are decided jointly by the

employee and his or her manager at the beginning of the year. It is a structured

exercise using a written format. These KRAs are then used to map the employees

progress and based on the results, the company decides to plug performance gaps withthe help of relevant training inputs. National Panasonic puts a great deal of emphasis on

this process for reskilling its employees as it believes in developing its employees

instead of opting for expensive lateral recruits.

Assuring and maintaining the confidentiality of the appraisal is a major responsibility of

the HR function. An employee who has received an unfavorable appraisal would not like

the details to be made public. In contrast, any appreciation of employee performance

has to be in public in the form of rewards, special incentives etc. Therefore the HR

department has a major role to play in the successful implementation of a performance

appraisal system.


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Performance Linked Reward System

Employees are motivated by both intrinsic and extrinsic rewards. To be effective, the

reward system must recognize both sources of motivation. All reward systems are

based on the assumptions of attracting, retaining and motivating people. Financial

rewards are an important component of the reward system, but there are other factors

that motivate employees and influence the level of performance. In fact, several studies

have found that among employees surveyed, money was not the most important

motivator, and in some instances managers have found money to have a demotivating

or negative effect on employees.

Organizations adopt alternative reward systems to increase domestic and internationalcompetition. The competitive reasons for the growing emphasis on performance-basedcompensation are companies cutting costs, restructuring, and boosting performance.

To ensure the reward system is effective and motivates the desired behaviors, it isessential to consider carefully the rewards and strategies utilized and ensure therewards are linked to or based on performance. To be effective, any performancemeasurement system must be tied to compensation or some sort of reward. Rewardingperformance should be an ongoing managerial activity, not just an annual pay-linkedritual.

Strategies for rewarding employees performance and contributions include both non-financial and financial mechanisms. Some of the primary ones are discussed below.The list is not exhaustive, and individual units/departments may identify additional

mechanisms that are appropriate for and support their culture and goals.

Praise/recognition from supervisors - Praise and recognition fromsupervisors is consistently found to be among the most important motivators.Employees want to be recognized and feel their contributions are noticed andvalued. It is important that supervisors recognize the value and importance ofsincerely thanking employees verbally and/or in writing for their specificcontributions.

Challenging work assignments- Challenging/new work assignments areanother mechanism available to supervisors to reward good performance. Suchassignments can provide employees opportunities to develop new skills, expand

their knowledge, and/or increase their visibility within the organization. They alsosend an important message that employees contributions are recognized andvalued. In considering such assignments, supervisors should consult employeesabout the types of assignments that would be most valued, and they should alsoassess whether workloads will need to be redistributed to ensure employeeshave adequate time to devote to new tasks.

Professional growth and development opportunities- Supervisors mayprovide employees opportunities to participate in educational programs or other


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activities that will expand their skills/knowledge. Employees benefit bydeveloping new skills, and the institution benefits from the additional expertiseindividuals bring to the job. Nelson notes a recent survey found that 87% ofresponding workers viewed special training as a positive incentive, and itappeared most meaningful to employees with postgraduate education.

Paid Leave - Supervisors may award employees up to 32 hours of paid leaveannually in recognition of meritorious performance).

Progression through the salary range - Employees may receive salaryincreases to recognize the attainment of new and/or the enhancement of existingskills/competencies or for assuming increased responsibilities within the scope ofthe current position. The salary increase represents a progression through thesalary range approved for the position

Merit increases - allows supervisors to give employees an annual merit increase

to recognize consistently meritorious performance or successful completion of a

project that had a significant impact on a department or the university. Thereward may be in any amount up to 5% of the employee's current base salary,

subject to the availability of funds. Budgetary information regarding fiscal year

merit increases are issued annually as part of the budget process as soon as the

institution's fiscal position can be determined. To be eligible for a merit increase,

employees must have been employed for at least six continuous months and at

least six months must have elapsed since the employee's last salary increase,

promotion, salary increase due to progression in the salary range, demotion or

transfer from another department.

Lump Sum MeritA lump sum merit is a one-time award, not added to base pay, that can beawarded to an individual for meritorious job performance. Meritorious jobperformance is defined as either consistently high level of job performance over asustained period of time; or successful completion of an assigned project thathad a significant positive impact on the department or the university.

An employee cannot be guaranteed in advance a payment of a lump sum merit forachieving performance targets.

A lump sum merit award is not considered compensation for purposes of theovertime calculation for FLSA non-exempt employees.

A lump sum merit award is considered compensation for purposes of inclusion andcontributions for Teachers Retirement System (TRS) or Optional RetirementProgram (ORP) per HB1545, Section 51.962 as amended.

Lump sum merit awards are included in the Tax Sheltered Annuity (TSA)calculation.

A lump sum merit may be paid from any fund source. Payment from a grant fundwill be up to each individual granting agency.


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An important part of base pay management is the maintenance/monitoring of anemployee's base pay salary and progression through the salary range. HR stronglyencourages managers to award the regular merit increase as an additive to basepay if the employee's current pay is below salary range midpoint and the permanentfunding is available.

HR can play a significant role in performance linked reward system by ensuringfollowings:

1. Develop Clear expectation: Before developing effective performance based rewardsthe HR Manager along with line managers describes what exactly they expects from theemployees and convert those expectation through clearly defined goals, becauseoverall organizational goals may not apply to all employees.

2. Create a clear line of sight: A line of sight should be maintained between rewards andactions. Employee must be communicated that their direct effects efforts will impact theresults that management wants. Employees should not hold responsible for somethingwhich they cannot directly affect.

3. Set achievable goals: The employee's or group's goals should be within the reach ofthe performers. The performance based rewards must be tied to either individual orgroup that has reasonable chance of being achieved.

4. Establish credible system of measurement: The program should operate accordingto its principles and purpose. The performance measurement system should be credible

such that the participant (employees) must have faith in the fairness of themeasurement system. The measurement system should be fair & objective; it should beunderstood and agreed upon by both management and the participants.

5. Empower Employees: Management should ensure that the entire system should begeared to maximum productivity, communication & co-operation so that employeesshould be trained in the skills that are necessary to achieve their job related goals, theyshould be provided with necessary information to take intelligent job related decisions,employees should be empowered to make decision on their own.

6. Make rewards meaningful: The achievements rewarded should provide an important

return on investment to both the performer and the organization.For incentives to be effective, the actual reward must be significant that it should bemotivational enough to produce desired behaviors.

7.Make incentives/reward payouts immediate: For the connection between theperformance and reward to be truly motivational, management should strive for a muchshorter time frame for incentive payouts whenever possible.


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Performance Review:

Formal performance reviews are a crucial part of the ongoing dialogue between

managers and their employees. The objectives of the review conversation are to makesure that the employee and manager share a clear definition of the job, an

understanding of performance expectations for the position, and an assessment of the

employee's performance.

Performance evaluation is a necessary and beneficial process, which provides annual

feedback to staff members about job effectiveness and career guidance. The

performance review is intended to be a fair and balanced assessment of an employees

performance.

Tips for Successful Performance Reviews:

Frequent Conversations Prepare Managers and Employees for the Annual ReviewMidyear conversations present opportunities to assess progress toward goals and tomake midyear corrections. Learn more about preparing and conducting the reviewconversation.

Keep Job/Position Descriptions Up-to-DateJob/position descriptions should be reviewed annually to reflect the frequent change in

responsibilities and duties in MIT's positions.

Document the ConversationsA written performance review form or memo is important because it documents ashared understanding of past performance and provides a record of expectations for thework going forward.

Create a Reciprocal ProcessFrequent conversations about performance create a reciprocal process and anatmosphere of shared responsibility for the work.

Managers and employees who do meet regularly to discuss performance goals reportthat the annual review conversation becomes a summarya low-stress "non-event"that is just part of an ongoing cycle.

Start with a Self-AppraisalIndividual managers can also ensure that every employee receives an annual reviewand that the review process is based on a self-appraisal form completed by theemployee.
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Consider Multi-rater FeedbackFinally, a richer view of the employee's contributions can often be gained by includingfeedback from colleagues and customers. Get more information on creating an informalmulti-rater review.

Differentiating Pay

Studies show that one of the most effective ways to retain top performers is to rewardthem based on job performance. One way managers can do this most effectively is bycarefully distributing their merit pool. We encourage managers to differentiate meritincrease amounts to recognize each employee's performance, contributions, and pastyear's achievements. Individuals who demonstrate superior performance should berecognized with review increases at or above the established merit allocation amounts,even though lesser amounts will then be available for individuals who demonstrateaverage performance. In addition, we recommend that managers engage in opencommunication with staff regarding the specific merit allocation so that employees

understand their level of performance as it compares to the merit range established.

HR Managers role in Performance Evaluation:

Performance evaluation has several components: orientation, training and development,feedback and annual appraisal. Managers involved in the performance evaluationprocess assume responsibility for all of the evaluation's steps from beginning to end,starting from the employees first day on the job until the annual performance appraisal.

Orientation

Managers should provide each new employee with a copy of his specific job description.Ideally, candidates get a copy of their job description during the recruitment andselection process. A managers primary role is to provide new employees as well asseasoned employees with the tools necessary to perform their job functions. This setsthe stage for ongoing performance evaluation. Managers also are responsible forworkforce planning as it relates to performance evaluation -- workforce planningmatches the right job assignments and tasks with employee skills, qualifications andinterests.

Training

Performance evaluation includes employee training and development, which are withinthe purview of a management role. Although managers may use the talent ofexperienced, long-term employees to assist with skills training, the ultimateresponsibility for training rests on the shoulders of the department manager. In additionto developing the skills and capabilities of their employees, managers identify
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employees who have high potential. Such employees are distinguishable from highperforming employees. Managers use their own skills and talent to select employeeswho demonstrate aptitude and promise.

Feedback

Managers are responsible for providing employees with constructive feedback on aregular basis. Throughout the evaluation period, managers give their employeesongoing support, feedback and counseling on performance issues and disciplinary andcorrective action. When employee performance suffers, managers are the first ones toobserve the decline. Its their responsibility to address performance issues anddetermine whether an employee needs skills training or corrective action to return her toan acceptable performance level.

Appraisal

The culminating event in performance evaluation is the actual performance appraisal.Managers complete leadership training that enables them to understand the importanceof performance management and evaluation, as well as how to prepare for and conductan annual performance appraisal. Preparing for an appraisal requires that managersknow how to rate employees; their duty is to rate employees according to thecompanys expectations and its performance standards. Therefore, a managers roleincludes observation and assessment. Its up to the manager to conduct an appraisalmeeting that employees look forward to and one that encourages employees to achievetheir goals year after year.

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Performance Management - Role of Hr