Factor Comparison A set of factors are identified as determining the worth of jobs. Typically the number of factors is small . Under this method,A few key jobs are selected and compared in terms of common factor.
Examples of factors are:
Skill
Responsibilities
Effort
Working Conditions
Procedure of Factor Comparison Method
1) Select and define the Factor
2) Select Key Jobs.
3)Rank key jobs by Factor.
4)Decide rates for key jobs
5)Apportion the wage Rate.
6)Evaluate the remaining Jobs
Advantage
*The value of the job is expressed in monetary terms.
*Can be applied to a wide range of jobs.
*Can be applied to newly created jobs.
* Money values are assigned in a fair and objective manner.
Disadvantage
*The pay for each factor is based on judgements that are subjective.
*The standard used for determining the pay for each factor may have build in biases that would affect certain groups of employees (females or minorities).
* It is difficult to understand and operate.
*It is time consuming and expensive method
Friday, January 25, 2008
Point Method
Point Method : It is most widely used method of job evaluation.Under it,jobs are divided into component factor.Points or weights are assigned to each factor depending on the degree of its importance in a particular jobs.The total points for a job indicate its relative worth or value.
A set of compensable factors are identified as determining the worth of jobs. Typically the compensable factors include the major categories of:
Skill
Responsibilities
Effort
Working Conditions
The procedure involved is as follows:
1) Determine the jobs to be evaluated.
2) Select the Factor :These factors can then be further defined.
Skill : Experience ,Education ;Ability
Responsibilities: Fiscal, Supervisory
Effort : Mental ,Physical
Working Conditions :Location ,Hazards ,Extremes in Environment
3)Define the factors:The selected factors and sub-factors are defines clearly in Writing
Factor:Skill,Responsibility,Efforts and Working Conditions
Sub Factors:Experience,Education,Ability,Fiscal,Supervisory,Mental ,Physical,Location ,
Hazards ,Extremes in Environment
4)Determine the Degree.
5)Determine relative Values of the job factors.
6)Assign Point Values to Degrees.
7) Find Points value of the jobs.
8) Assign Money Value.
Advantages
*The value of the job is expressed in monetary terms.
*Can be applied to a wide range of jobs.
*Can be applied to newly created jobs.
* Point method is the most comprehensive and accurate methods of jobs evaluation.
*Systematic wage differentials according to content of the job can be determine.
Disadvantages
*The pay for each factor is based on judgments that are subjective.
*The standard used for determining the pay for each factor may have built-in biases that would affect certain groups of employees (females or minorities).
*Point methods is complicated and an average worker can't Understand it easily.
*It is time consuming and expensive.
Job Classification/Grading Method
Classification Jobs are classified into an existing grade/category structure or hierarchy. Each level in the grade/category structure has a description and associated job titles. Each job is assigned to the grade/category providing the closest match to the job. The classification of a position is decided by comparing the whole job with the appropriate job grading standard. To ensure equity in job grading and wage rates, a common set of job grading standards and instructions are used. Because of differences in duties, skills and knowledge, and other aspects of trades and labor jobs, job grading standards are developed mainly along occupational lines.
Job classification (or job grading) is a simple, widely used method in which raters categorize jobs into groups; all the jobs in each group are of roughly the same value for pay purposes. The groups are called classes if they contain similar jobs or grades if they contain jobs that are similar in difficulty but otherwise different. Thus, in the federal government’s pay grade system a “press secretary” and a “fire chief” might both be graded “GS – 10” (GS stands for “General Schedule”) On the other hand, in its job system, the state of Florida might classify all “secretary IIs” in one class, all “maintenance engineers” in another, and so forth.
There are several ways to actually categorize jobs. One is to write class or grade description (similar to job descriptions) and place jobs into classes or grades based on how well they fit these descriptions. Another is to draw up a set of compensable factor based rules for each class, for instance, how much independent judgment, skill, physical effort and so on, does the class of jobs require?
The standards do not attempt to describe every work assignment of each position in the occupation covered. The standards identify and describe those key characteristics of occupations which are significant for distinguishing different levels of work. They define these key characteristics in such a way as to provide a basis for assigning the appropriate grade level to all positions in the occupation to which the standards apply.
Classification Method - This method is the most commonly used in the State Personnel Management System. In the Classification Method, the duties and responsibilities of a position are compared to the Nature of Work and Examples of Work sections of the classification specification in order to determine the classification with the “best fit
Classification is based upon the objective elements of a position and does not consider the status of an incumbent. Information relative to the employee¥s length of service, time spent at the maximum salary level of the position, or the quality of his/her performance is not considered in determining the appropriate classification of a position. Factors that are considered include such elements as the nature, scope and level of the duties and responsibilities; the relationship of the position to other positions in the department; supervision given or received; and exercise of independent judgment.
The classification cycle review process is as follows:
Notification of Review: The Office of Staff Personnel Services shall notify Administrative Services Managers of the schedule for the three-year classification cycle review prior to July 1, each fiscal year.
Employee Position Descriptions: The Administrative Services Managers shall submit current position descriptions for employees in their unit, college or division to the Office of Staff Personnel Services. The Office of Staff Personnel Services will review the position descriptions submitted and may request additional information or clarifying data prior to any on-site audit.
Employee Position Review: The employee position review process will include an analysis of the written description by a classification analyst; an on-site audit of the employee's position, when necessary; and a classification conference with the appropriate administrator.Following completion of review, the Classification Manager will meet with the appropriate administrator and Administrative Services Manager to discuss the findings of the review. Reclassification documents will be processed by the Office of Staff Personnel Services.
Notification and Effective Dates: Staff Personnel Services will notify employees of a classification decision, in writing, following completion of the classification review. Reclassifications, if any, shall be effective the first day of the pay period following completion of review.
Job evaluation or classification is the basis for determining the salary for a position, and for maintaining equitable salaries. The job evaluation process determines the appropriate job classification and title for each position.
The correct classification of a staff member's position is determined by many factors, including the following:
a. Basic duties and responsibilities
b. Knowledge, skills and abilities required (experience, education and training)
c. Scope and degree of judgement required and consequences of errors in judgement
d. Scope and degree of supervision received
e. Scope and degree of supervision exercised
f. Decision-making responsibility (if any)
g. Working conditions (if applicable)
h. Special licenses or certificates required (if any)
Examples: Description of Job Grades
Grade :Unskilled
Description : Jobs in this grade involve manual work.No formal education is required.
Grade : Skilled
Description : Jobs in this grade are clerical in nature.High School certificate is essestial.
Grade : Supervisory
Description: Jobs in this grade require ability to apply established procedures and to guide others.Graduate degree is required.
Grade : Executive
Description: Jobs in this grade involve decision making and administrative work. Professional qualifications are necessary.
Advantage
This method is easy to understand and simple to operate
It is more accurate and systematic than the ranking method.
It provides an opportunity to develop a systematic organisation structure.
This method is used in goverment offices.
Disadvantages
Classification judgments are subjective.
The standard used for comparison (the grade/category structure) may have built in biases that would affect certain groups of employees (females or minorities).
Some jobs may appear to fit within more than one grade/category.
It is very difficult to write accurate and precise description of job grades.
Ranking Method
The simplest job evaluation method ranks each job relative to all other jobs, usually based on some overall factor like “job difficulty”. There are several steps in the job ranking method.
Obtain job information: Job analysis is the first step: Job descriptions for each job are prepared and the information they contain about the job’s duties is usually the basis for rankings jobs. Sometimes job specifications are also prepared. However, the ranking method usually ranks jobs according to the whole job, rather than a number of compensable factors. Therefore, job specifications which list the job’s demand in terms of problem solving, decision making skills, for instance are not as necessary with this method as they are for other job evaluation methods.
"Ranking This method is one of the simplest to administer. Jobs are compared to each other based on the overall worth of the job to the organization. The 'worth' of a job is usually based on judgements of skill, effort (physical and mental), responsibility (supervisory and fiscal), and working conditions".
Three Technique can be used for ranking jobs. These techniques are as follows:
1) Job Description: In this technique , a written jobs description is prepared for every jobs.The job Description are then studied and analysed.The diffrences between them in terms of duties, skills requirements, etc.Each job is assigned a rank depending upon its relative significance. Several raters may independently rank job.The average of these ratings is calculated to determine the final ranking.
2) Paired Comparisons: In this technique each job is paired with every job in the series.The most difficult job in each pair is identified.Rank is assigned on the basis of the no. of times a job is reted more difficult
3) Rank jobs: For example, give each rater a set of index cards, each of which contains a brief description of a job. Then they rank these cards from lowest to highest. Some managers use an “alternation ranking method” for making the procedure more accurate. Here you take the cards, first choosing the highest and the lowest, then the next highest and next lowest, and so forth until you’ve ranked all the cards. Jobs in this small health facility are ranked from orderly up to office manager. The corresponding pay scales are on the right. After ranking, it is possible to slot additional jobs between those already ranked and to assign an appropriate wage rate.
Advantages
It is simplest and oldest method.
Very effective when there are relatively few jobs to be evaluated (less than 30).
It is very economical and less time consuming.
It involves little papper work.
Disadvantages
Difficult to administer as the number of jobs increases.
Rank judgements are subjective.
Since there is no standard used for comparison, new jobs would have to be compared with the existing jobs to determine its appropriate rank. In essence, the ranking process would have to be repeated each time a new job is added to the organization.
It does not indicate the degree of difference between diffrent jobs.
Job Evaluation Methods
Job evaluation is a practical technique, designed to enable trained and experienced staff to judge the size of one job relative to others. It does not directly determine pay levels, but will establish the basis for an internal ranking of jobs.
The two most common methods of job evaluation that have been used are first, whole job ranking, where jobs are taken as a whole and ranked against each other. The second method is one of awarding points for various aspects of the job. In the points system various aspects or parts of the job such as education and experience required to perform the job are assessed and a points value awarded - the higher the educational requirements of the job the higher the points scored. The most well known points scheme was introduced by Hay management consultants in 1951. This scheme evaluates job responsibilities in the light of three major factors - know how, problem solving and accountability.
Job Evaluation methods: Various methods of job evaluation may be group as under
1. Non-Quantitative Methods
•Ranking or Job comparison
•Grading or Job Classification
2.Quantitative Methods
•Factor Comparison
•Point Method
Thursday, January 24, 2008
Steps Involve in job evaluation
Steps in job evaluation
1.Introduce the concept of job evaluation.
2.Obtain management approval for the evaluation.
3.Train the job evaluation selection team.
4.Review and select the job evaluation method.
5.Gather information on all internal jobs.
6.Use information to fully expand job descriptions.
7.Use the selected job evaluation method to rank jobs hierarchically or in groups.
8.Link the ranked jobs with your compensation system or develop a new system.
9.Implement the job evaluation and compensation systems.
10.Periodically review your job evaluation system and the resulting compensation decisions.
1.Introduce the concept of job evaluation.
2.Obtain management approval for the evaluation.
3.Train the job evaluation selection team.
4.Review and select the job evaluation method.
5.Gather information on all internal jobs.
6.Use information to fully expand job descriptions.
7.Use the selected job evaluation method to rank jobs hierarchically or in groups.
8.Link the ranked jobs with your compensation system or develop a new system.
9.Implement the job evaluation and compensation systems.
10.Periodically review your job evaluation system and the resulting compensation decisions.
Job Evaluation Implement
Implement job evaluation
The concept of job evaluation often can be intimidating to employees in an established organization. Employees might worry about losing their jobs, and pay might be decreased after job comparisons and evaluations are completed. To help employees accept and understand your job evaluation system, approach job evaluation from an organizational development perspective.
Create a team
To promote widespread support, understanding, and acceptance across your organization, create a cross-functional team to work on job evaluation. The team should represent various levels and jobs within your organization.
Select the job evaluation method
The team can work together to evaluate and select a job evaluation method. Train team members in the requirements of the Fair Labor Standards Act and any other best practices for selecting a job evaluation method for your organization.
Communicate with employees
During the implementation of job evaluation, regularly communicate with employees throughout the process. This helps employees feel a sense of ownership from the results of the job evaluation results.
Disadvantage of Job Evaluation
One disadvantage of the method is its use of "universal" factors. Although, as mentioned it is quite possible for an organization to develop its own compoundable factors, factor comparison uses factors with common definitions for all jobs. This means using the same factors for all job families.
The definition of key jobs may be another disadvantage. A major criterion of a key job in factor comparison is the essential correctness of its pay rate. Since key jobs form the basis of the job-comparison scale, the usefulness of the scale depends on the anchor points represented by these jobs. But jobs change, sometimes imperceptibly. When jobs change and when wage rates change over time, the scale must be rebuilt accordingly. Otherwise users are basing their decisions on what might be described as a warped ruler.
The use of monetary units may represent a disadvantage if, as is likely, raters are influenced by whether a job is high-paid or low-paid. An unnecessary possibility of bias would seem to be present when raters use the absolute value of jobs to determine their relative position in the hierarchy.
Finally, the complexity of factor comparison may be a serious disadvantage. Its many complicated steps make it difficult to explain and thus affect its acceptance.
developing a point plan is complex. There are no universal factors, so these must be developed. Then degree statements must be devised for each of the factors chosen. All this takes time and money. Further, point plans take time to install. Each job must be rated on the scale for each factor, usually by several raters, and the results must be summarized and agreed to. Considerable clerical work is involved in recording and collating all these ratings. Much of this time and cost, however, can be reduced by using a ready-made plan.
Job classification is subjective, so jobs mightfall into several categories. Decisions rely on the judgment of the job evaluator. Job evaluators must evaluate jobs carefully because similar titles might describe different jobs from different work sites.
Subjective decisions about compensable factors and the associated points assigned might be dominate. The job evaluator must be aware of biases and ensure that they are not represented in points assigned to jobs that are traditionally held by minority and female employees.
Compensable factor comparison is a time-consuming and subjective process.
Advantage of Job Evaluation
1. Job Evaluation is a logical and, to some extent,an objective method of ranking jobs relative to one another.It will help in removing inequalities in a plant or industry.
2. In case of New Jobs, the method often facilitates fitting them into the existing wage structure.
3. The method helps in removing grievances arising out of relative wages, and it improve labour management relation and workers morale.
4. The method replaces the many accidental factor,occurring in less systematic procedure of wage bargaining by more impersonal and objective standards, thus establishing a clear basis for negotiations.
5. The method may lead to greater uniformity in wage rates,thus simplifying wage administration.
6. The the information collected in the process of job description and analysis may also be used for the improvement of selection, transfer and promotion procedures on the basis of comparative job requirement.
Job Evaluation Requirements
We will now explore how these evaluation requirements are met using this method.
1) Job Understanding
The basic information on the facts of the job is obtained by means of a job description. Job descriptions must meet the company’s requirements of clarity, comprehensives and consistency with other descriptions. The job holder and his or her immediate boss should have discussed and agreed a final version. This information is supplemented by the knowledge and understanding of the organization and how it works supplied by the Evaluation Committee. Through discussion each Committee member can then develop a common understanding of what a job involves before making judgments about its size.
1) Job Understanding
The basic information on the facts of the job is obtained by means of a job description. Job descriptions must meet the company’s requirements of clarity, comprehensives and consistency with other descriptions. The job holder and his or her immediate boss should have discussed and agreed a final version. This information is supplemented by the knowledge and understanding of the organization and how it works supplied by the Evaluation Committee. Through discussion each Committee member can then develop a common understanding of what a job involves before making judgments about its size.
2) Judgments
Evaluation is concerned with making judgments and in order to maximize the objectivity of these judgments, disciplines are built into the evaluation process. These are :
Systematic Framework : This is provided by the Guide Charts so that for each judgment to be made there is a definition of the levels to be selected. Thus discussion focuses upon matching information on job content with these definitions. This provides a basis for the discussion rather than relying upon strong personalities to sway the judgment.
Multiple Judgments : The evaluation process makes use of a committee. This enables individuals bias to be neutralized by the presence of others who will require individuals to substantiate their judgments.
Evaluation is concerned with making judgments and in order to maximize the objectivity of these judgments, disciplines are built into the evaluation process. These are :
Systematic Framework : This is provided by the Guide Charts so that for each judgment to be made there is a definition of the levels to be selected. Thus discussion focuses upon matching information on job content with these definitions. This provides a basis for the discussion rather than relying upon strong personalities to sway the judgment.
Multiple Judgments : The evaluation process makes use of a committee. This enables individuals bias to be neutralized by the presence of others who will require individuals to substantiate their judgments.
Consensus : The aim is always to achieve a consensus view on the evaluation. This means that there is no facility for averaging or voting, but rather the different views of the committee members are exposed and explored and individuals required to substantiate their views. Discussion then continues until all views have been explored and the judgment which is recorded is that .
Criteria for Assessing Job Content
It is very difficult to compare jobs in total in order to assess their size, particularly if the jobs are very different. Therefore a number of common criteria are required to enable these comparisons to be made. The criteria used in the method follows from extensive study of common elements found in all jobs and are based on what results the job is required to achieve and what job-holders are required to bring to their jobs.
Criteria for Assessing Job Content
It is very difficult to compare jobs in total in order to assess their size, particularly if the jobs are very different. Therefore a number of common criteria are required to enable these comparisons to be made. The criteria used in the method follows from extensive study of common elements found in all jobs and are based on what results the job is required to achieve and what job-holders are required to bring to their jobs.
4) Scale of Measurement
While a simple ranking order establishes a ‘pecking order’ the use of a points scale
provides :
- a result which is instantly and widely recognizable.
- the establishment of distances between jobs
- the ability to make comparisons with jobs in other organizations using the same evaluation method.
The actual numbers used in the Guide Charts are chosen to give conveniently sized numbers which do not require fractions and do not give numbers in millions. All organizations using the method use the same numbering pattern.
While a simple ranking order establishes a ‘pecking order’ the use of a points scale
provides :
- a result which is instantly and widely recognizable.
- the establishment of distances between jobs
- the ability to make comparisons with jobs in other organizations using the same evaluation method.
The actual numbers used in the Guide Charts are chosen to give conveniently sized numbers which do not require fractions and do not give numbers in millions. All organizations using the method use the same numbering pattern.
5) Cross Checks on the Evaluations
Because evaluation is not scientific, it is necessary to provide checks on the consistency of the evaluation results. These may be necessary :
* between different functions
* overtime as the evaluation proceeds
* between different committees where more than one evaluation
committee is involved in evaluating jobs within the organization.
* between different functions
* overtime as the evaluation proceeds
* between different committees where more than one evaluation
committee is involved in evaluating jobs within the organization.
The method of job evaluation contains two separate and independent checks on the evaluations :
(i) Profile Check
This is a check on the technical soundness of each evaluation as it is carried out. It is based upon the fact that the nature of jobs within organizations varies. Some jobs are much more about Know-How and Problem-solving, such as research jobs and backroom jobs, while others are much more about Accountability, the results and actions oriented jobs, which are the ‘line’ jobs. Others will fall between these extremes – namely the ‘staff’ jobs. The ‘Profile’ check looks at the relationship between the Know-How, Problem-Solving and Accountability elements of the evaluation.
With a little practice, evaluation committee members become very adept at assessing the sort of ‘profile’ different jobs will show and this becomes a very powerful evaluation check. How this works is considered in more detail later.
(ii) Overall Review
Once a number of jobs have been evaluated they are ranked in descending order of job size,
and the resulting hierarchy examined. If the relationships do not appear to be consistent or to
make sense the evaluations are re-examined. Reviews should be an on-going process.
The Guide Charts are written so that the definitions of the elements cover jobs in a wide variety of functions and organizations. They therefore have to be interpreted sensitively within the context of jobs in your company. The following section explains how the definitions apply, but real understanding can only be obtained by experience in evaluating jobs with the company.
Once a number of jobs have been evaluated they are ranked in descending order of job size,
and the resulting hierarchy examined. If the relationships do not appear to be consistent or to
make sense the evaluations are re-examined. Reviews should be an on-going process.
The Guide Charts are written so that the definitions of the elements cover jobs in a wide variety of functions and organizations. They therefore have to be interpreted sensitively within the context of jobs in your company. The following section explains how the definitions apply, but real understanding can only be obtained by experience in evaluating jobs with the company.
Principles Of Job Evaluation
Job evaluation is not scientific – it cannot be since there is no way of scientifically measuring jobs. It is therefore a process of judgment. The ‘correctness’ of the results it provides can only be assessed in terms of their acceptability to the vast majority of people to whom they apply.
The key to such success lies in guiding the judgment made about jobs within a process which is systematic and minimizes the subjectivity of the results, ensuring they are as objectives and justifiable as possible. To do this there are certain requirements which must be met :
1. An understanding of the job must be achieved.
2. Judgments must be made about the size of each job.
3. Common criteria are needed to assess the job content.
4. A common scale of measurement is required against which to make judgments.
5. Cross-checks are needed to ensure that the judgments are sound.
The key to such success lies in guiding the judgment made about jobs within a process which is systematic and minimizes the subjectivity of the results, ensuring they are as objectives and justifiable as possible. To do this there are certain requirements which must be met :
1. An understanding of the job must be achieved.
2. Judgments must be made about the size of each job.
3. Common criteria are needed to assess the job content.
4. A common scale of measurement is required against which to make judgments.
5. Cross-checks are needed to ensure that the judgments are sound.
6. Rate the Job not the Man.
7. The elements should be clearly defined and properly selected.
Additionally there are a number of basic principles which are important, and underlie the whole process of job evaluation :
(i) Evaluation is concerned with the job not the person performing it. This is very basic, but much easier to say than to achieve in practice. The reason for this is that often those evaluating the jobs will know (perhaps quite well) the actual job holder. Such knowledge should not be used. It is useful to imagine the job being performed – not by the present job holder but by a replacement who performs all aspects of the job acceptability.
(i) Evaluation is concerned with the job not the person performing it. This is very basic, but much easier to say than to achieve in practice. The reason for this is that often those evaluating the jobs will know (perhaps quite well) the actual job holder. Such knowledge should not be used. It is useful to imagine the job being performed – not by the present job holder but by a replacement who performs all aspects of the job acceptability.
(ii) Evaluation is based on Job Content which means that in making evaluation judgments we must be concerned with what the job has to do and achieve. Thus two dangers have to be avoided :
· the judgment on the job size must not be influenced by job titles which can be misleading, or by knowledge of present status and pay
· the jobs are evaluated as they are not as they could be, should be, might be or used to be. It would be wrong to construct a ‘model’ organization and evaluate that, rather than the reality of the organization as it is.
· the judgment on the job size must not be influenced by job titles which can be misleading, or by knowledge of present status and pay
· the jobs are evaluated as they are not as they could be, should be, might be or used to be. It would be wrong to construct a ‘model’ organization and evaluate that, rather than the reality of the organization as it is.
(iii) Since evaluation is concerned solely with organizational reality, care should be given to evaluate jobs at a fully acceptable standard of performance: they should not reflect good or poor performance of current job holders, but what is properly required by the job to achieve organizational effectiveness.
Job Evaluation
Job evaluation is a practical technique, designed to enable trained and experienced staff to judge the size of one job relative to others. It does not directly determine pay levels, but will establish the basis for an internal ranking of jobs.
The two most common methods of job evaluation that have been used are first, whole job ranking, where jobs are taken as a whole and ranked against each other. The second method is one of awarding points for various aspects of the job. In the points system various aspects or parts of the job such as education and experience required to perform the job are assessed and a points value awarded - the higher the educational requirements of the job the higher the points scored. The most well known points scheme was introduced by Hay management consultants in 1951. This scheme evaluates job responsibilities in the light of three major factors - know how, problem solving and accountability.
Job Evaluation; the methods and practices of ordering jobs or positions with respect to their value or worth to the organization.
"Job Evaluation is a method which help to establish a justified rank order of jobs as a whole being a foundation for the setting of wages.Job Evaluation is the only one of the starting points for establishing the relative differentiation of base wage rate"
MBO Disadvantages
MBO methods of performance appraisal can give employees a satisfying sense of autonomy and achievement. But on the downside, they can lead to unrealistic expectations about what can and cannot be reasonably accomplished.
The disadvantage is that MBO is very time consuming. The organization and the department have to be on the same page with respect to the goals that both are trying to achieve. It is also a very time-consuming process to come up with goals for each individual employee. MBO also doesn’t work well for employees who have little discretion over how their jobs are performed.
Supervisors and subordinates must have very good "reality checking" skills to use MBO appraisal methods. They will need these skills during the initial stage of objective setting, and for the purposes of self-auditing and self-monitoring.
Unfortunately, research studies have shown repeatedly that human beings tend to lack the skills needed to do their own "reality checking". Nor are these skills easily conveyed by training. Reality itself is an intensely personal experience, prone to all forms of perceptual bias.
One of the strengths of the MBO method is the clarity of purpose that flows from a set of well-articulated objectives. But this can be a source of weakness also. It has become very apparent that the modern organization must be flexible to survive. Objectives, by their very nature, tend to impose a certain rigidity.
Of course, the obvious answer is to make the objectives more fluid and yielding. But the penalty for fluidity is loss of clarity. Variable objectives may cause employee confusion. It is also possible that fluid objectives may be distorted to disguise or justify failures in performance.
Critics of the method say that it makes managers penalize a good, but not great employee who’s part of a superstar team, but a mediocre employee on a struggling team can come out looking great. “In many cases, the lowest performer might not be that much lower than the highest,” says Paul Spector, a professor of industrial psychology at the University of South Florida.2 “Intel has been targeting the weakest performers for so long now that there are no weak performers left—only good solid workers who are now being given unattainable goals and therefore being terminated,” says Ken Hamidi, spokesman for FaceIntel, a pressure group made up of current and former Intel employees.
Another criticism is that the method is a way for companies rationalize firings. “Good managers should have the capability to make these difficult decisions without a system forcing it on them,” says Chris Michalak, who designs appraisal systems at Towers Perrin. Jack Welch, CEO of GE, in his latest message to stockholders said that “Not removing that bottom 10%…is not only a management failure but false kindness as well.” This year Sun Microsystems will use a forced—ranking system to identify its worst performing 10%, who will be given 90 days to shape up, find another job inside Sun, or be fired.
MBO and IT Projects
Management by Objectives and IT projects
So what does MBO and IT projects have to do with each other?
Recently, I was fortunate enough to participate in a round table discussion with a group of CIOs whose focus is to identify novel approaches to improve the success of IT projects. The premise of the group is that despite capable people, strong project management methodologies and good technologies, IT still does not have a good track record in delivering projects that work, on time and on budget.
One of the key themes of the discussion was the importance of establishing objectives for the IT project in business terms. The IT project's objectives can include productivity and efficiency, reduced wastage or faster time to respond to changing market conditions.
The premise is that by establishing business objectives for your IT project, it will be more successful because the project can be measured against the objectives. It seems sensible enough, but does it work?
What about the business objectives? What can we measure during the IT project that will determine of the project is going to meet the business objectives set out earlier?
If your project is about infrastructure (such as new server, faster network connections), then the business objectives can be readily measured because you're generally replacing slower infrastructure with faster infrastructure. All things being equal, this should result in faster system performance meaning people don't have to wait for the system to 'catch up' while they’re doing their job.
If your project is about infrastructure (such as new server, faster network connections), then the business objectives can be readily measured because you're generally replacing slower infrastructure with faster infrastructure. All things being equal, this should result in faster system performance meaning people don't have to wait for the system to 'catch up' while they’re doing their job.
But what if your project is a business productivity application? How can you measure the productivity, efficiency and reduced wastage during application design and development? You cannot.
There is nothing we can measure related to business objectives during the traditional design and development process. Why is that? The only way to measure the business objectives is by having people use the new application to see if it works as intended. Unfortunately you need to wait until it's nearly finished — that is, when you put the user interface on it and people can begin to use it.
Unfortunately, traditional development practices only get to the user interface at the half-way mark, or later, in the software development lifecycle. Therefore, you must spend at least half of your budget before you can tell if you're going to meet your business objectives.
I think you can see the advantage of being able to measure, early on, whether your $100 million IT project will deliver on its business objectives well before the half way mark.
Successfully managing your IT projects with MBO
In order to use MBO in your IT project, you must rethink how you approach development. If you want to measure how well your project meets business objectives, then you must design and develop your IT project in a way that creates the right deliverables at the right time. Without the right deliverables, you cannot measure its performance.
In order to measure how well your IT project is meeting business objectives, as you go, you need something to measure. Generally, you need to measure people's performance using the application to see if the transaction time has been reduced and the training time reduced.
You therefore need to design and prototype the user interface first, before you do anything else. Why? The user interface is the only thing people will ever see of your new application. With it, you can precisely determine:
How long it takes people to perform a transaction
How long it takes people to learn the new user interface
Whether you have reduced wastage in people's activities
Whether double handling has stopped in people's activities
Organisational performance is clearly related to how well people are able to perform their jobs. Their performance, in the aggregate contributes to team and department performance indicators, and ultimately corporate objectives.
You need to measure the performance of people using the application as early as possible in order to ensure that you can take corrective action on the IT project to meet its business objectives.
You can have the best, fastest technology in the world, but if people cannot use it to do their jobs effectively, then it is, in fact, not the best technology in the world.
Advantage of MBO
Management by Objective is an important performance tool. It has certain Advantage.
1.MBO helps and increases employee motivation because it relates overall goals to the individual goals and helps to increase an employee's understanding of where the organisation is and where it is heading.
2.Manager are more likely to complete with themselves than with others managers.This kind evaluation can reduce internal conflict that often arise when manager compete with each other to obtain scarce resources.
3.MBO results in a "Means Ends" Chain.
4.MBO reduce the conflicting and ambiguity.
5.MBO provides more objective appraisal criteria.
6.MBO forces and aids in planning.By forcing top management to establish a strategy and goals for entire organisation.
7.MBO identifies problem better and early.
8.MBO helps the individual manager to develop personal leadership,especially the skills of listning,planning,counselling,motivation and evaluation.
9.MBO pragramme takes a great deal of time,energy and form.
10.Clarity of goals –With MBO, came the concept of SMART goals i.e. goals that are:
Specific Measurable Achievable Realistic, and Time bound.
11.The focus is on future rather than on past. Goals and standards are set for the performance for the future with periodic reviews and feedback.
12.Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitment.
13.Better communication and Coordination – Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the enterprise and also solve many problems faced during the period.
Objective of MBO
In Management by Objectives (MBO) systems, objectives are written down for each level of the organization, and individuals are given specific aims and targets. "The principle behind this is to ensure that people know what the organization is trying to achieve, what their part of the organization must do to meet those aims, and how, as individuals, they are expected to help. This presupposes that organization's programs and methods have been fully considered. If they have not, start by constructing team objectives and ask team members to share in the process."
"The one thing an MBO system should provide is focus", says Andy Grove who ardently practiced MBO at Intel. So, have your objectives precise and keep their number small. Most people disobey this rule, try to focus on everything, and end up with no focus at all.
Management by objectives can improve the performance of an organization by transforming an organization’s goals into personal goals.
For Management by Objectives (MBO) to be effective, individual managers must understand the specific objectives of their job and how those objectives fit in with the overall company objectives set by the board of directors. "A manager's job should be based on a task to be performed in order to attain the company's objectives... the manager should be directed and controlled by the objectives of performance rather than by his boss."
Personal goals are determined by their contribution to the objectives of the whole organization. And each person knows how his contribution is combined with the contributions of others to reach the objectives of the organization.
Consider the story of the three stonecutters who were asked what they were doing. The first replied, “I am making a living.” The second kept on hammering while he said, “I am doing the best job of stonecutting in the entire county.” The third one looked up with a visionary gleam in his eyes and said, “I am building a cathedral.”
The third stonecutter is a “manager”: he relates his contribution to the goals of his organization. The first stonecutter knows what he wants to get out of the work and manages to do so. He is likely to give a “fair day’s work for a fair day’s pay.”
It is the second stonecutter who could be a problem. He may believe that he is accomplishing something when in effect he is just polishing stones. Workmanship must always be related to the needs of the whole organization — the craft is not an end in itself. The craftsman must see the organization as a whole and understand what it requires of him.
Management by objectives (MBO) can improve performance by converting an organization’s needs into personal goals.
How do you implement MBO? (Short Version)
In Jim Pitkow’s words:
“I’ve just done them based upon having the employee do a bottom’s up (they typically require some structuring to get started) and then rationalizing them against the corporate goals, which the CEO tends to set in cooperation with the Board… probably makes sense to have management try it first to figure out what works for the team and then use that as a model for the rest of the company.”
How do you implement MBO? (Long Version)
What should an individual’s objectives state? Objectives can state
The objectives of the individual’s group.
The contributions the individual is expected to those objectives.
The contributions the individual is expected to make to help others obtain their objectives.
The contributions the individual can expect to receive from others towards the attainment of his own objectives.
Individual development objectives.
It may also be helpful for the individual to list obstacles in himself and others that may prevent him from reaching his goals.
Who should set the objectives? Each individual should set his objectives himself in relation to his group’s objectives. Each individual should also participate in the development of his group’s objectives and assent to them.
How should achievement be measured? An individual should measure his own performance against his objectives. He should receive and prepare measurements soon enough to make any changes necessary for the desired results. Measurements should go to the individual first, not his superior. Management by objectives is a tool for self-control, not a tool for control from above.
How should goals be achieved? Individuals should decide how to reach their personal goals. It should be clearly understood what the organizations bars as unsound. But within these limits, every individual should be free to decide what he has to do.
MBO Process
MBO is a system of systematic planning of what needs to be executed in the short term to implement the most effective action to take advantage of opportunities and to achieve the goals of the sales department and of the organization. After Peter Drucker introduced the phrase management by objectives (MBO) in 1954 his book, The Practice of Management, American businesses began embracing the notion with what often amounted to evangelical dedication, and during the 1960s and 1970s MBO was the most fashionable of all management practices.
Many companies adopted some form of MBO, which, as Drucker originally proposed, asks managers to focus on results, or outputs. However, MBO has fallen into disuse and many original MBO systems have been altered past recognition and usefulness. What has happened to such a strong concept? Has MBO proven not to be as effective as first hoped? Has MBO failed? Management experts in consulting firms, in business, and in the academic community are in general agreement that the problems with MBO stem from the users, not from the system, which is still regarded as one of the best, most effective, theoretical management practices ever conceived. The two biggest problems with MBO are lack of clear understanding of MBO procedures and hasty, inadequate implementation.
Management by objectives can work in any size organization if the procedures are understood and managers are patient in letting the system be accepted. First, MBO is an effective strategic planning and execution system; it is not an effective performance evaluation or reward system. Second, MBO is a bottom-up, process-oriented and team-oriented planning system, not a top-down command-and-control system.
Goals are defined as being relatively few and long-term in their focus. Objectives are defined as being relatively more numerous and short-term in their focus. The most important thing to remember about objectives is that the critical few are the ones to concentrate on. The critical few are the 20% of the objectives that will produce 80% of the results. One of the biggest problems many organizations have with MBO is that they set too many objectives, especially too many trivial ones. Set only those objectives that a unit or team can get their arms around—five to seven maximum—five is best. Also, remember that objectives are working tools, not public-relations statements designed to impress people. You cannot set effective objectives if you don’t have a “systematic way of exposing reality and acting on it.”
The first phase of the MBO process is planning in order to identify the critical few key result areas that will produce the vast majority of results. Some examples of key result areas for a sales department are:
High prices relative to the competition.
Share of advertising revenue
Revenue growth
Staff development and training
Steps in the MBO Process
Describe roles and missions: “who does what?”
Define key result areas.
Identify indicators of effectiveness: “what is good performance?”
Set objectives with a bottom-up process described above: “To (action verb) (single key result) by (target date) at (cost, if appropriate).” EXAMPLE: “To increase average spot prices 15% by the end of the second quarter at current expense levels.”
Decide on task-oriented and process-oriented action plans.
The team monitors progress: information, reports, conversations, communication (constant, open, and informal).
Communication is the grease for the MBO wheel, it keeps everyone running smoothly. Teams must continually communicate to everyone (management included) progress toward achieving its objectives, and management must communicate with everyone how the organization is doing in meeting its objectives by using newsletters, wall charts, memos, and departmental meetings, for example.
Everyone evaluates results (management and teams), make necessary adjustments, and set new objectives. MBO must be a continuous process; it must be part of an on-going system. Leave out a step and the system breaks down. Team and individual performance coaching is an integral part of the system. MBO cannot work on just a macro level, it must be managed on a micro level and involve everyone in the process. Everyone must know what the overall objectives of the organization are and what the organization's department and teams' goals are.
Finally, the objectives in an MBO system must be inextricably linked to an organization’s mission statement. Every objective must help accomplish the overall mission and then managers must “manage to the mission.”
Management by Objective-MBO
Management by objectives (MBO) is a systematic and organized approach that allows management to focus on achievable goals and to attain the best possible results from available resources. It aims to increase organizational performance by aligning goals and subordinate objectives throughout the organization. Ideally, employees get strong input to identify their objectives, time lines for completion, etc. MBO includes ongoing tracking and feedback in the process to reach objectives.
Management by Objectives (MBO) was first outlined by Peter Drucker in 1954 in his book 'The Practice of Management'. In the 90s, Peter Drucker himself decreased the significance of this organization management method, when he said: "It's just another tool. It is not the great cure for management inefficiency... Management by Objectives works if you know the objectives, 90% of the time you don't."
MBO (or management by objectives) is a technique credited to management guru Peter Drucker, to describe a method of performance management that is based on the setting of clear and measurable objectives, and the use of those objectives to evaluate and review performance. When done correctly, MBO is probably the best, and fairest way to plan for and create effectively performing employees, although, of course, if the implementation is poor, the outcomes will be poor.
Here's a formal definition:
Management by objectives (MBO) is a systematic and organized approach that allows management to focus on achievable goals and to attain the best possible results from available resources. It aims to increase organizational performance by aligning goals and subordinate objectives throughout the organization. Ideally, employees get strong input to identify their objectives, time lines for completion, etc. MBO includes ongoing tracking and feedback in the process to reach objectives.
By Drucker - Management by objectives can improve the performance of an organization by transforming an organization%u2019s goals into personal goals. Personal goals are determined by their contribution to the objectives of the whole organization. And each person knows how his contribution is combined with the contributions of others to reach the objectives of the organization.
By Jacquelyn Lynn - This article builds a case for setting "stretch goals"—tough, but attainable. It continues with how to define the goal so it meets important criteria: quantifiable, long-term goals broken down into weekly or monthly milestones and continual monitoring of progress. The last section explores how to build commitment by employees to the goals. One approach: "Level with your people about why the goal is critical."
Wednesday, January 23, 2008
360-degree Performance System
360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive appraisal where the feedback about the employees’ performance comes from all the sources that come in contact with the employee on his job. 360 degree respondents for an employee can be his/her peers, managers (i.e. superior), subordinates, team members, customers, suppliers/ vendors - anyone who comes into contact with the employee and can provide valuable insights and information or feedback regarding the “on-the-job” performance of the employee.
The 360-degree evaluation is a common tool in human resource management. Simply put, it is a mechanism for evaluating someone's performance based on feedback from everyone with whom the individual comes in contact—supervisors, coworkers, partners, subordinates, the general public. It is a method of collecting input from many sources in an employee's environment.
This can be a powerful tool. Each of wants to know how we're doing in our work. This method of collecting evaluative input is an excellent source of motivation for employees because it provides a truly honest assessment of how the employee and her performance are viewed by a variety of constituents.
In the more traditional method of performance appraisal, supervisors meet with employees one-to-one to discuss performance. By contrast, the 360-degree method uses confidential input from many people who can truly respond to how an employee performs on the job. The supervisor and employee meet to discuss the feedback received.
This can be a powerful tool. Each of wants to know how we're doing in our work. This method of collecting evaluative input is an excellent source of motivation for employees because it provides a truly honest assessment of how the employee and her performance are viewed by a variety of constituents.
In the more traditional method of performance appraisal, supervisors meet with employees one-to-one to discuss performance. By contrast, the 360-degree method uses confidential input from many people who can truly respond to how an employee performs on the job. The supervisor and employee meet to discuss the feedback received.
This type of feedback helps employees see themselves as others see them and allows them to seriously examine their behavior. It can reveal areas in which employees are performing particularly well and those areas in which there is room for improvement. It provides information of which neither the employee nor the supervisor may be aware. Specific input allows employees to adjust their performance. The most challenging aspect of the 360-degree evaluation is the evaluators' concern about confidentiality. When implementing this type of evaluation, it's best to assure other employees that what they share will remain strictly confidential. Likewise, explain to each employee that he will be evaluated by many people, including those who know his work best.
Typically, employees will find this methodology to be more fair. When they consider this process as opposed to being evaluated by an individual supervisor who has limited knowledge of what they do, they will begin to see the value in this type of evaluation. They will conclude that the 360-degree feedback is more accurate and equitable than other traditional approaches and puts all employees on a level playing field.
This review process is also helpful for the supervisor. It can provide a more accurate assessment of an employee's performance and help eliminate accusations of favoritism. The 360-degree process provides greater objectivity. And because the feedback is submitted anonymously, it provides a supervisor with the most unbiased and accurate information from which to draw performance conclusions. Most people are not able to see clearly how their performance is either enhancing the work situation for others or detracting from it. This performance evaluation method can help reveal these areas and allow us to improve the way we do our job, thereby creating greater harmony and better productivity in the workplace. The 360-degree evaluation will help employees identify their strengths so they can build on them at the same time it addresses their skill gaps. It is a process that leads to continuous learning, team building, growing self-confidence and improved productivity.
Sounds like a winning system, right? It can be, but your organization must be ready to accept the change from the traditional method of employee evaluation. Your formal and informal leaders must buy in to this idea and see the value of its adoption. Some questions you should ask yourself include the following:
Is your organization committed to continuous learning?
Does your organization see the value of developing leaders in-house?
Are you willing to make the changes necessary to do this?
What is the level of trust in your organization? Will your culture support honest feedback?
Is upper level management willing to lead the way and volunteer for 360-degree evaluation?
360 degree appraisal has four integral components:
1. Self appraisal
2. Superior’s appraisal
3. Subordinate’s appraisal
4. Peer appraisal.
Self appraisal gives a chance to the employee to look at his/her strengths and weaknesses, his achievements, and judge his own performance. Superior’s appraisal forms the traditional part of the 360 degree appraisal where the employees’ responsibilities and actual performance is rated by the superior. Subordinates appraisal gives a chance to judge the employee on the parameters like communication and motivating abilities, superior’s ability to delegate the work, leadership qualities etc. Also known as internal customers, the correct feedback given by peers can help to find employees’ abilities to work in a team, co-operation and sensitivity towards others.
Self assessment is an indispensable part of 360 degree appraisals and therefore 360 degree appraisals have high employee involvement and also have the strongest impact on behavior and performance. It provides a "360-degree review" of the employees’ performance and is considered to be one of the most credible performance appraisal methods.360 degree appraisal is also a powerful developmental tool because when conducted at regular intervals (say yearly) it helps to keep a track of the changes others’ perceptions about the employees. A 360 degree appraisal is generally found more suitable for the managers as it helps to assess their leadership and managing styles. This technique is being effectively used across the globe for performance appraisals. Some of the organizations following it are Wipro, Infosys, and Reliance Industries etc.
360 Degree Performance Evaluation
360 feedback assessments are powerful tools for helping individuals improve, grow, and develop their interpersonal skills. Our assessment gathers information from several people about an individual's performance as seen by his/her boss, self, peers, direct reports, and customers. Traditional performance evaluations are subjective and one-sided. Most traditional evaluation systems are ineffective in providing honest and objective feedback.
A better way is the 360-Degree feedback assessment process. No matter what position you hold in a company, it is important to understand how others (boss, team, peers and customers) perceive your effectiveness as a leader--strengths and weaknesses. 360-Degree input from supervisors, co-workers, clients and direct reports is valuable in improving organizational and individual performance.
Key Aspects of a 360 Degree Feedback Assessment Process
We conduct individual assessments, which includes input from 7-15 respondents directly on the Internet. We can provide either a standardized or a customized assessment. The standardized assessment consists of approximately 60 questions. The assessment is conducted via the Internet and we provide you a final report with these key features:
Mean Average
Gap Size Analysis
Open Ended Questions
Development Plan
Customizable
Overall Results
Overall Importance Ratings
Strengths by Rater Group
Developmental Needs by Rater Group
Strengths by Frequency of Occurrence
Developmental Needs by Frequency
Online Delivery
Multiple Languages
Coaching (optional)
We conduct individual assessments, which includes input from 7-15 respondents directly on the Internet. We can provide either a standardized or a customized assessment. The standardized assessment consists of approximately 60 questions. The assessment is conducted via the Internet and we provide you a final report with these key features:
Mean Average
Gap Size Analysis
Open Ended Questions
Development Plan
Customizable
Overall Results
Overall Importance Ratings
Strengths by Rater Group
Developmental Needs by Rater Group
Strengths by Frequency of Occurrence
Developmental Needs by Frequency
Online Delivery
Multiple Languages
Coaching (optional)
Is 360 Degree Feedback Better Than Traditional Evaluations?
Studies show 360 degree feedback assessments can have a positive economic impact when used for leader development. A study by J. Folkman showed the relationship between turnover and leadership effectiveness. He showed effective leaders have lower turnover of employees under them. Another study showed performance-based assessments and development can result in a 6 standard deviation improvement in employee performance, yielding a return on investment as high as 700%
Studies show 360 degree feedback assessments can have a positive economic impact when used for leader development. A study by J. Folkman showed the relationship between turnover and leadership effectiveness. He showed effective leaders have lower turnover of employees under them. Another study showed performance-based assessments and development can result in a 6 standard deviation improvement in employee performance, yielding a return on investment as high as 700%
How does it work?
The process is simple. We provide you a secure webpage where the questions are listed. The rated individual scores him/herself, along with their boss, and peer group. After all scorings are received, we provide you and the rated individual a printed report or access to a webpage listing the ratings summary.
The process is simple. We provide you a secure webpage where the questions are listed. The rated individual scores him/herself, along with their boss, and peer group. After all scorings are received, we provide you and the rated individual a printed report or access to a webpage listing the ratings summary.
7-15 people provide input on individual's performance
Completely anonymous-Identities protected
Internet based-Accessible from anywhere in the world
The first step includes a self-evaluation
Thorough and detailed reports providing improvement suggestions
We work with you or your company to custom design the assessment or use our standardized 360
We can custom design one assessment or as many individuals you desire
Most standard 360's have between 60-100 questions
Completed 360 includes a development guidebook
Arguments Against 360 Degree Performance Appraisal
Despite the fact that 360 degree appraisals are being widely used throughout the world for appraising the performance of the employees at all levels, many HR experts and professionals argument against using the technique of 360 degree appraisals. The main arguments are:
360 performance rating system is not a validated or corroborated technique for performance appraisal.
With the increase in the number of raters from one to five (commonly), it become difficult to separate, calculate and eliminate personal biasness and differences.
It is often time consuming and difficult to analyze the information gathered.
The results can be manipulated by the employees towards their desired ratings with the help of the raters.
The 360 degree appraisal mechanism can have a adversely effect the motivation and the performance of the employees.
360 degree feedback – as a process- requires commitment of top management and the HR, resources(time, financial resources etc), planned implementation and follow-up.
360 degree feedback can be adversely affected by the customers’ perception of the organisation and their incomplete knowledge about the process and the clarity o f the process.
Performance Appraisal Method
1. ESSAY APPRAISAL METHOD This traditional form of appraisal, also known as “Free Form method” involves a description of the performance of an employee by his superior. The description is an evaluation of the performance of any individual based on the facts and often includes examples and evidences to support the information. A major drawback of the method is the inseparability of the bias of the evaluator.
2. STRAIGHT RANKING METHOD This is one of the oldest and simplest techniques of performance appraisal. In this method, the appraiser ranks the employees from the best to the poorest on the basis of their overall performance. It is quite useful for a comparative evaluation.
3. PAIRED COMPARISON A better technique of comparison than the straight ranking method, this method compares each employee with all others in the group, one at a time. After all the comparisons on the basis of the overall comparisons, the employees are given the final rankings.
4. CRITICAL INCIDENTS METHODSIn this method of performance appraisal, the evaluator rates the employee on the basis of critical events and how the employee behaved during those incidents. It includes both negative and positive points. The drawback of this method is that the supervisor has to note down the critical incidents and the employee behaviour as and when they occur.
5. FIELD REVIEWIn this method, a senior member of the HR department or a training officer discusses and interviews the supervisors to evaluate and rate their respective subordinates. A major drawback of this method is that it is a very time consuming method. But this method helps to reduce the superiors’ personal bias.
6. CHECKLIST METHODThe rater is given a checklist of the descriptions of the behaviour of the employees on job. The checklist contains a list of statements on the basis of which the rater describes the on the job performance of the employees.
7. GRAPHIC RATING SCALEIn this method, an employee’s quality and quantity of work is assessed in a graphic scale indicating different degrees of a particular trait. The factors taken into consideration include both the personal characteristics and characteristics related to the on-the-job performance of the employees. For example a trait like Job Knowledge may be judged on the range of average, above average, outstanding or unsatisfactory.
8. FORCED DISTRIBUTIONTo eliminate the element of bias from the rater’s ratings, the evaluator is asked to distribute the employees in some fixed categories of ratings like on a normal distribution curve. The rater chooses the appropriate fit for the categories on his own discretion.
Appraisal for diffrent Levels
Performance appraisal is important for employees at all levels throughout the organization. The parameters, the characteristics and the standards for evaluation may be different, but the fundamentals of performance appraisal are the same. But as the level of the employees’ increases, performance appraisal is more effectively used as the tools of managing performance. Performance appraisals of Managers:Appraising the performance of managers is very important, but at the same time, it is one of the most difficult tasks in the organization. It is difficult because most of the managerial work cannot be quantified i.e. it is qualitative in nature like leading his/her team, guiding, motivating, planning etc.
Therefore, the two things to be noted and evaluated for the purpose of appraisals are:
Performance in accomplishing goals, and
Performance as managers
Performance in accomplishing goalsManagers are responsible for the performance of their teams as a whole. Performance in accomplishing goals would mean to look at the completion or achievement of the goals set for a team of employees which is being assigned to or working under a particular manager. The best measuring criteria for a manager are hi goals, his plans of course of action to achieve them and the extent of achievement of the goals.Performance as managersThe responsibilities of managers include a series of activities which are concerned with planning, organizing, directing, leading, motivating and controlling. Managers can be rated on the above parameters or characteristics
Criteria for measuring performance at different levels:The criteria for measuring performance changes as the levels of the employees and their roles and responsibilities change.A few examples for each level are described below:
For top level management
Degree of organizational growth and expansion
Extent of achievement of organizational goals
Contribution towards the society
Profitability and return on capital employed
Extent of achievement of organizational goals
Contribution towards the society
Profitability and return on capital employed
For middle level managers
Performance of the departments or teams
Co-ordination with other departments
Optimal use of resources
Costs Vs. revenues for a given period of time
The communication with superiors and subordinates
For front line supervisors
Quantity of actual output against the targets
Quality of output against the targets
Number of accidents in a given period
Rate of employee absenteeism
Compensation and Appraisal
One of the latest strategies being followed in all sectors through out the world for retention and talent management is “linking compensation to performance”. Commonly known as “Performance pay” or “Performance based pay”, it links the compensation of the employees to their performance and their contribution to the organizational goals. Therefore, periodic performance reviews play a vital role and provide the basis of performance related pay. Commissions, incentives and bonuses, piece rate pay help the employer to pay the employee according to their productivity and hard work.
The process of performance based pay involves:
Deciding and clearly defining the performance goals and the performance measures
Setting the target bonus for different levels of performances
Measuring the performance of the employee
Giving rewards and bonus according to performance
Organizations are also designing variable compensation plans for various roles and positions in the organization.
Types of Performance Pay
Merit pay – The first step to performance pay, merit pay means setting some basic salary according to the position and the rank of the employee and the variable part of the salary is based on the periodic performance reviews.
Profit Sharing – Sharing the profits of the enterprise with the employees as bonus.
Incentives and Performance Bonus – Rewards for special accomplishments or fulfillment of the targets set such as sales commission.
Gain sharing - Sharing of gains as a result of the increased performance of the employees with them.
Although performance related pay has always been a topic of discussions and controversies with many arguments against it, but it has also been proved that performance based pay motivates employees to perform better and earn, and encourages learning, innovation, creativity, problem solving and empowerment which can be facilitated through proper performance measurement and reviews.
Performance and Change Management
The performance appraisal process provides an opportunity for introducing organizational change. It facilitates the process of change in the organizational culture. The interactive sessions between the management and the employees, the mutual goal setting and the efforts towards the career development of the employees help the organization to become a learning organization. Conducting performance appraisals on a regular basis helps it to become an ongoing part of everyday practice and helps employees to take the responsibility of their work and boosts their professional development.Various studies in the field of human resources have already proved that performance appraisal process can affect the individual performance (in a negative or positive way), thus having an impact on the collective performance.
Change Management
In thinking about what is meant by “change management,” at least four basic definitions come to mind:
1. The task of managing change.
2. An area of professional practice.
3. A body of knowledge.
4. A control mechanism.
The Task of Managing Change
The first and most obvious definition of “change management” is that the term refers to the task of managing change. The obvious is not necessarily unambiguous. Managing change is itself a term that has at least two meanings.
One meaning of “managing change” refers to the making of changes in a planned and managed or systematic fashion. The aim is to more effectively implement new methods and systems in an ongoing organization. The changes to be managed lie within and are controlled by the organization. (Perhaps the most familiar instance of this kind of change is the “change control” aspect of information systems development projects.). However, these internal changes might have been triggered by events originating outside the organization, in what is usually termed “the environment.” Hence, the second meaning of managing change, namely, the response to changes over which the organization exercises little or no control (e.g., legislation, social and political upheaval, the actions of competitors, shifting economic tides and currents, and so on). Researchers and practitioners alike typically distinguish between a knee-jerk or reactive response and an anticipative or proactive response.
Performance appraisal: An opportunity for an organisational culture shift
Performance appraisal process focuses on the goal setting approach throughout the organisation.
Performance appraisal helps the clarity and understanding of the roles and responsibilities of the employees.
The performance appraisal processes have the potential positive effects on recruitment
It increases organisational effectiveness i.e. what to do and how to do through a formal and structured approach.
Some evidence of the beneficial effects of team rewards
Career Development and Appraisal
Performance appraisal is a part of career development. The latest mantra being followed by organizations across the world being – “get paid according to what you contribute” – the focus of the organizations is turning to performance management and specifically to individual performance. Performance appraisal helps to rate the performance of the employees and evaluate their contribution towards the organizational goals. Performance appraisal leads to the recognition of the work done by the employees, many a times by the means of rewards and appreciation etc. It plays the role of the link between the organization and the employees’ personal career goals.
Potential appraisal, a part of performance appraisal, helps to identify the hidden talents and potential of the individuals. Identifying these potential talents can help in preparing the individuals for higher responsibilities and positions in the future. The performance appraisal process in itself is developmental in nature. Performance appraisal is also closely linked to other HR processes like helps to identify the training and development needs, promotions, demotions, changes in the compensation etc. A feedback communicated in a positive manner goes a long way to motivate the employees and helps to identify individual career developmental plans. Based on the evaluation, employees can develop their career goals, achieve new levels of competencies and chart their career progression. Performance appraisal encourages employees to reinforce their strengths and overcome their weaknesses.
Challenges Of Performance Appraisal
In order to make a performance appraisal system effective and successful, an organization comes across various challenges and problems. The main challenges involved in the performance appraisal process are:
Determining the evaluation criteria Identification of the appraisal criteria is one of the biggest problems faced by the top management. The performance data to be considered for evaluation should be carefully selected. For the purpose of evaluation, the criteria selected should be in quantifiable or measurable terms
Create a rating instrument The purpose of the performance appraisal process is to judge the performance of the employees rather than the employee. The focus
of the system should be on the development of the employees of the organization.
Lack of competence Top management should choose the raters or the evaluators carefully. They should have the required expertise and the knowledge to decide the criteria accurately. They should have the experience and the necessary training to carry out the appraisal process objectively.
Errors in rating and evaluation Many errors based on the personal bias like stereotyping, halo effect (i.e. one trait influencing the evaluator’s rating for all other traits) etc. may creep in the appraisal process. Therefore the rater should exercise objectivity and fairness in evaluating and rating the performance of the employees
Resistance The appraisal process may face resistance from the employees and the trade unions for the fear of negative ratings. Therefore, the employees should be communicated and clearly explained the purpose as well the process of appraisal. The standards should be clearly communicated and every employee should be made aware that what exactly is expected from him/her.
Measure of Performance
The most difficult part of the performance appraisal process is to accurately and objectively measure the employee performance. Measuring the performance covers the evaluation of the main tasks completed and the accomplishments of the employee in a given time period in comparison with the goals set at the beginning of the period. Measuring also encompasses the quality of the accomplishments, the compliance with the desired standards, the costs involved and the time taken in achieving the results. Measuring employee performance is the basis of the performance appraisal processes and performance management. Accurate and efficient performance measurement not only forms the basis of an accurate performance review but also gives way to judging and measuring employee potential.
For the purpose of measuring employee performance, different input forms can be used for taking the feedback from the various sources like the superior, peers, customers, vendors and the employee himself. All the perspectives thus received should be combined in the appropriate manner and to get an overall, complete view of the employees’ performance. Observation can also be exercised by the superior to obtain information. Some suggestions and tips for measuring employee performance are:
Clearly define and develop the employee plans of action (performance) with their role, duties and responsibilities.
Organizational outcomes or the achievement of organizational goals should also be kept in mind.
Focus on accomplishments and results rather than on activities.
Also take note of the skills, knowledge and competencies and behaviors of the employees that help the organisation to achieve its goals.
If possible, collect the feedback about the performance of the employees through multi-point feedback and self-assessments.
Financial measures like the return on investment, the market share, the profit generated by the performance of the team should also be considered.
For an organisation to be an effective organisation and to achieve its goals, it is very important to monitor or measure its’ and its employee performance on a regular basis. Effective monitoring and measuring also includes providing timely feedback and reviews to employees for their work and performance according to the pre-determined goals and standards and solving the problems faced. Timely recognition of the accomplishments also motivates the employees and help to improve the performance.
Measuring the performance of the employees based only on one or some factors can provide with inaccurate results and leave a bad impression on the employees as well as the organisation. For example: By measuring only the activities in employee’s performance, an organization might rate most of its employees as outstanding, even when the organisation as a whole might have failed to meet its goals and objectives. Therefore, a balanced set of measures (commonly known as balanced scorecard) should be used for measuring the performance of the employee.
How is Performance Rated
(Unsatisfactory performance)
Explanation
Requires considerable improvement in tasks and activities.
Performance is not up to the mark in terms of quality, thought process and delivery.
Performance is not up to the mark in terms of quality, thought process and delivery.
(Marginal Performance)
Meets the expectations 60 – 70% of the time.
Quality of work
Can improve.
Needs supervision.
Remedial plan should be developed.
(Meets Expectations)
Is able to meet the expectations most of the time; however may not value add in situations and tasks.
Possesses high potential
Requires supervision at times.
Possesses high potential
Requires supervision at times.
(Above expectations)
Value adds in almost all the tasks on hand.
Possess very high potential
Can work independently.
Meets and consistently exceeds the job description requirements.
Possess very high potential
Can work independently.
Meets and consistently exceeds the job description requirements.
(Exceptional Performance)
Possess very high potential to take up higher and new responsibilities.
A job given is done very well without the need for supervision.High initiative and energy levels.
A job given is done very well without the need for supervision.High initiative and energy levels.
Appraisal pattern for confirmed employees
Confirmed employees are rated on 3 dimensions
· Rating on achievements – achievements based on actual projects
· Rating on technical competencies - related to technology, domain
· Rating on behavioral competencies- Interpersonal & managerial skills
· Rating on achievements – achievements based on actual projects
· Rating on technical competencies - related to technology, domain
· Rating on behavioral competencies- Interpersonal & managerial skills
Rating on achievements – this section deals with the performance of the employee on achievements based on projects and KRA’s. The parameter for achievement will be in terms of quality and timely delivery.
Rating on technical skills – this section deals with the performance of the employee on competencies relating to technical and functional skills.
Rating on technical skills – this section deals with the performance of the employee on competencies relating to technical and functional skills.
Rating on behavioral competencies- Interpersonal & managerial skills– Competencies in this section includes leadership skills, team player, knowledge sharing, commitment and communication.
Training for Appraisal
Every organisation conducts performance for assessing the performance of the employees and the organisation. But if not conducted properly, they can give a false impression about the performance of the employees and affect the overall performance of the organisation; therefore, there is a need to train the appraisers to ensure the maximum effectiveness of the process. Studies have revealed that appraisals are often conducted by the managers and the supervisor who sometimes, are themselves not aware of the procedures to be followed. They should be explained the importance and the implications of the performance appraisal to the organisations, the methods to be followed, the principles and the processes of the appraisal.
All managers and supervisors who consult performance appraisals should be given training for the following:
Methods, techniques and guidelines for setting goals and objectives
How to evaluate the performance and rate the employees
Standards for performance documentation
How to complete a performance appraisal form
How to maintain objectivity in the appraisal
Questioning techniques for appraisals
Responding to employee reactions
Improves rapport and communication
Building morale and motivating employees
Observing and measuring performance
Tracking results
Structuring the interview with the focus on improving performance
Feedback techniques (providing constructive feedback)
How to deal with non-performers and people who refuse to co-operate
Post review actions The training can be given by conducting special workshops by professional
HR consultants or qualified and experienced HR professionals of human resource management.
The venue for the purpose can be a suitable seminar hall, training room, conference hall, boardroom, or at some place away from the workplace like some hotel etc.
Self Appraisal
Self appraisal is an important part of the performance appraisal process where the employee himself gives the feedback or his views and points regarding his performance. Usually this is done with the help of a self appraisal form where the employee rates himself on various parameters, tells about his training needs, if any, talks about his accomplishments, strengths, weaknesses, problems faced etc.
TIPS FOR SELF – APPRAISAL
Be honest Always be truthful and honest while telling your accomplishments or failures. Don’t exaggerate your strengths and don’t hide your weaknesses. Don’t make personal judgments for anybody.
Do the preparation It’s always better to prepare yourself before the
meeting. Get all the lists in place, prepare all the evidences and references.
Be objective Objectivity is important in self – appraisal. Don’t exaggerate or downplay your achievements or failures. Be specific and concise in your statements and if possible support them with examples or references or evidences with dates. For example: "I responded to all queries within 48 hours" is better than just saying "My customer service was good."
Positive attitude Have a positive attitude towards the whole appraisal process. Be co-operative. Don’t hesitate from taking the responsibility of your failures as well as the achievements. Demonstrate enthusiasm to improve in future and take all his suggestions calmly. Don’t complain or demonstrate a negative attitude.
Cover all the aspects Apart from your strengths, weaknesses, accomplishments and failures, express the opportunities you would like have for your development and improvement. Suggest ways to overcome the problems faced. Assess your capabilities, behaviours and skills and competence.
Seek future responsibilities According to the assessment of the KSA’s according to your job description, plan the short term and long term for the next year. Try to look for tasks beyond your current job responsibilities. This will help in personal development as well as contributing to the organizational productivity.Self appraisal should ideally include the accomplishments, the goals achieved, the failures, and the personal growth (i.e. new skills acquired, preparation for the future etc.), the obstacles faced during the period, the efforts for removing them, the suggestions, and the areas of training and development felt by the employee.
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