Performance Management And Performance Related Pay

Rohit chawla l Student | 11503Aakash Budhrani l Student | 11723Sonia Mumtaz l Student | 11666Anna Noorali l Student | 12106Neelam Karim l Student | 11483

CBM | Institute of Business Management | KarachiBBA Class | Human Resource ManagementSpring Semester 2014

Definition

Thorough practice of managing people

Armstrong and Baron view:- Effective people and team management

Decomposition Performance Management-Strategic-Integrated

Ingredients of Performance Management-Performance Improvement-Development-Managing Behavior

What Performance Management Will Do?

1) Establishing a culture

2) Sharing expectation

3) Maintaining and improving the quality of relationships

4) Planning, through defining expectations

5) Measurement

How Performance Management Works

Corporate Strategies

Business and departmental

goals

Agreement on performance

priorities

Plans between individuals and

managers

Shepherd Leadership

Performance Appraisal

Appraisal Methods

1) The 360-Degree Appraisal

2) General Performance Appraisal

3) Technological/Administrative Performance Appraisal

4) Manager Performance Appraisal

5) Management by Objectives (MBO)

6) Employee Self-Assessment

General Performance Appraisal

360 Degree Appraisal

Management By Objective

Technology

Performance Appraisal Uses

1) Raises, Merit Pay, Bonuses

2) Personal Decisions (Promotion, Transfer, Dismissal)

3) Identification of training needs

4) Research purposes (e.g. assessing the worth of selection tests.

Performance Management at Google

Performance Management at Apple

Apple focuses on building a performance culture. A performance culture requires significant differentiation based on performance, and it’s clear that in this culture, the top performers and those who are working on mission-critical products are treated significantly differently. In fact, current and former employees frequently complained about the special treatment given to those designated as the “top 100 most important employees.”

Comparison

Failure of Performance Management

In a large survey conducted by WorldatWork, 58% of organizations rated their performance management systems as “C Grade or below.”

Reasons of failure of Performance appraisal

Due to missing the following aspects performance appraisal are failing

• Transparency

• Impersonal

• Reliability

• Open and participatory

• Noticeable and timely

CIPD View

• Ensuring individuals posses skills, and they comprehend what input they need to give in, to achieve expected performance.

• Encouraging relationship between line managers, individuals and teams by keeping communication.

• Success of Organization depends on clarity of what is meant of Performance and where organization needs to be in performance culture.

Performance Related Pay

1) Encouraging high performance levels by linking performance to pay.

2) Embedding an entrepreneurial or high-performance culture across an organization.

3) The notion of equity or fairness

Measuring Performance

Coverage And Trends in PRP

PRP in Public Sector

1) Individual PRP is more prevalent in private than other sector.

2) In Public Sector, Employees provide for a basic % increase.

3) Merit pay covers managerial and other white-collar staff.

4) There are differences in coverage of PRP internationally.

Measuring Trends in Merit Awards

1) Pay review process may provide for eitherA. All-merit awards.B. Basic-plus-merit awards.

2) Trends in performance pay are commonly measured via the pay review budget.

3) The scope for any merit element of pay tends to be reduced during times of low pay award levels.

Criticism on Performance related pay

• Decentralized process of appraisals

• Biasness issues

• Potential for negatively affecting motivation factor as in case bonus are proclaimed,

• Equal distribution of bonus, weakens purpose.

• Employees live in company for short term

• Subjective measures

Current Trends

• Establishing a performance oriented culture.

• Treating employees not only because of their services, but valuing their efforts in Organization.

• linking career of staff with Strategic goals.

• Focus is on the spirit of mutuality.

• Valuing not only highest, but smallest contributions

Alternative of PRP

• Appraise only competent employees (help them in nurturing skills, and ways to advance in the company)

•

CIPD View

1) Encouraging high performance, effective performance management and appraisal systems, and only then on pay as an incentive.

2) To create a sustainable high-performing workplace.