Performance and Potential Management

Q1. “ Performance management is a system. It is not equal to performance

appraisals”. Give your comments. Illustrate. With one example.
1. Performance Management

Change is occurring at an accelerating rate and this is the centre around which we will
discuss performance management system. Traditionally the two concepts performance
management and performance appraisals were treated as one and the same thing,
however not the scenario is completely different. Performance Management is not just
HRD technique, it is not just evaluating the performance of an employee once a year, it is
the tool in the total performance management system. Earlier there was no need to check
performance against goals set but with the changing business environment there is the
emergence of a great need to have a performance management system.

Performance Management system is a n integrated system of linking business objectives /

goals with Key Results Areas (KRA) of Managers, only then does it become a
management tool. The system should be futuristic, the system should be communicated
and explained to all heads and employees.

The performance system should be facilitative, aiming to help Managers toenhance their
performance and leave some room for discretion. The system should encourage continous
learning and development.

Performance Management System implementation process includes the following steps

a. Goal Setting
b. Key Result Areas
c. Actions
d. Self Appraisals
e. Joint Review
f. Management Action

Goal Setting : This is the topmost item on the agenda, before goals are set usually a
SWOT analysis is carried out, then goals are set, goals are set in such a manner that they
coincide with the annual budget. In the setting of goals the managers also establishes the
measures of what will indicate goal accomplishment. Goals are set so that the need for
capital, material and human resources can be arranged at the same time.

Key Results Areas : it is a component of goal to be achieved by a person within a time

frame. It is the expected end result of the goal. Targets should be realistic and achievable,
the main message here is plan your work and work your plan.

Actions : This is the crucial stage. Each KRA is broken into key tasks and activities for
the subordinates to perform, here each task manager will prepare his own performance
and action plan. Important precaution is Think before you Act. In this process one can
anticipate some events which were not thought of earlier. This is a smoke signal, take

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care if it is going to result in a fire. The quality of the manager is to keep the boss
informed. Rectification action can be taken in time.

Self Appraisal : In achieving KRA periodic performance measurement is required

through self appraisal system. The purpose is to assess performance against result areas
and to find out the gaps in performance. Self appraisals should be conducted periodically
as the time frame for each KRA may not be the same., this system helps the manager to
control his own performance and it can result in better motivation.

Joint Review : The Self appraisal report should be submitted to the functional heads,
they with analysis the same and review it with the employee. Review will be with
reference to achievement or non achievement of KRA’s. If there is non achievement
cause analysis and action plan to overcome the problems will be taken and if need be
KRA may be reset.

Management Action :
Top management should get a clear picture so that action plan will be given for
execution, while suggesting changes they must take into consideration whether sound
support system are available or not and how to reinforce the same, what training facilities
should be provided, etc Suitable management action will guarantee sustainable
performance.

These are the six important steps in the Performance Management System Process.

Let us have a look at the flow chart:

Performance Management System Process.

Goal Setting
1

Management KRAS
Action 2
6

Actions
Joint Review 3
5

Self Appraisal
Performance Appraisals 4

The performance of the employee must be considered and this is done through
performance appraisals, appraisals can be done in two ways, either by self appraisal or an
appraisal being carried out by the superior / manager.

There is difference between performance management and appraisal, performance

appraisal is the tool through which one will be able to manage and evaluate the
performance of the employee.

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Q2. Explain the concept “ management By Objective (MBO). What is its co
relationship with cultural issues”
2. Management by Objectives

The concept of Management by Objective is given by Peter Drucker.

Management by Objective can be defined as

1. a dynamic system which integrates the company’s head to achieve its goals for
profits and growth with the mangers need to contribute and develop himself. It is
a demanding and rewarding style of managing business.
2. The superior and the subordinate managers of the organization jointly define its
common goals, define each individuals major areas of responsibilities in term of
the results expected of him and use these measures as guides for operating the unit
and assessing the contribution of each of its members.

In MBO the superior and subordinate sit down together and set their goals jointly in such
a way that there is harmony between the individuals goal and the goal / objective of the
organization.
MBO has various advantages and disadvantages.

Advantages :

1. Better appraisals
2. Manager planning
3. Reward Links
4. Corporate Planning
5. Motivating Individuals

Disadvantages :

1. Difficulty in communication
2. Difficult to explain the process to lower level employees
3. Cultural changes

The system of MBO is a very effective system which can help in the growth and success
of the organization but for it to succeed the MBO system must possess the following
elements :

1. Objectives for positions

2. Joint Objective setting
3. Linking of objectives
4. Measurement and Control
5. Review system
6. Involvement of Superiors
7. Staff support

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From the above we can conclude that here both the superior and the subordinate have
to come together and decide the goals and objectives which they have to achieve and
how they will achieve them, this must be done within the framework of the overall
objective / goal of the organization. There has to be a measure of control and review.
For the system to succeed it must be ably supported by both the top management and
the staff at the subordinate level. We can conclude that the MBO process is
apparently simple but in practice it requires great analytical skill and clarity of
purpose on the part of the management.

Performance of an organisation is influenced by the organistaions culture, it affects

the way managerial functions of planning, organizing, staffing, leading and
controlling are carried out in an organization.

Culture is the general pattern of behaviour, shared beliefs and values that the
organizational members have in common. It can be inferred from what people say,
do and think within an organizational setting. It involves learning and transmitting of
knowledge, beliefs and patterns of behaviour over a period of time.
This indicates that an organization culture is fairly stable and does not change too
fast, it often sets the tone for an organization and establishes the implies rules for the
way people should behave, this culture at times is a big restraint or disadvantage for
the MBO system cause it prevents change and is a kind of resistance to change.
People do not want to change and the whole concept of MBO is based on the issue of
adapting to change at the earliest so that the individual and organizational goals /
objectives can be achieved at the earliest in the most effective and efficient manner.

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 Q3. Critically examine the role of Assessment centers. Would you like to add any
value added information?

3. Assessment Centers :

Due to the changing business scenarios all organizations have to change or revise their
objectives from time to time. Appraisal methods are directly linked with these objectives.
Hence there should be full co-ordination between the top management, the HR
department and the executives who are going to evaluate the performance. Especially for
the senior level promotions a different methodology is recommended this is through
establishment of Assessment Centres. It can be a very useful method for internal
promotions. Organisation have to identify future responsibilities and they need to be
properly defined. The next step is to tap the potential of young candidate or even the
experienced seniors, their background is known now they have to be tested by different
means for the suitability to accept higher level jobs.

The assessment center should consist of a committee appointed by top management, it

should include executives from different functional heads to support the centre activities.
The committee should be given full information about the expected future roles the likely
candidates will be required to play.
The candidates are invited for the test, assessment – say for a period of 2-3 days. Various
methods are used for the same.

Role play method – here the candidates have to assume the future roles and play the
same, this is then assessed by the committee or assessors by observations and then
decisions are made

Training Instrument Method – here various instruments are developed, it is in the form
of questionnaire. These questions have to be answered in a given period of time which
are then analyzed and interpreted by a specialist.

Personal Interview / Discussion Method – this is the final stage to have a look at the
candidate and his performance. Here the personal skills, manners, habits are observed,
future course of action discussed. Here the members of the Committee personally meet
the candidate. This exercise is like a laboratory experiment.

This method of evaluation does have its limitation :

1. Halo effect
2. Horns effect
3. Defensiveness

Assessment centre is a very popular method, it gives a choice for the best selection. The
fundamental factor is to communicate the whole system, work it on a rational basis and
bring transparency in the promotional opportunities.

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4. Write Notes on:

4 a CIRO Method

The importance of evaluation in the training process is constantly emphasized. One of the
technique used for this is the CIRO Method

C – Context - what needs to be changes

I - Input - what procedures are most likely to bring about change
R - Reaction - trainee’s expressed reactions
O - Outcome- what evidence is there that change has occurred

CIRO scheme enlarges somewhat on the usual concept of evaluation. It particularly

emphasis the trainers need for information. The fundamental purpose of acquiring this
evaluation information to help the trainer decide how he can best use his resources to
increase the effectiveness of the training process. Through this, he can make his
contribution to the attainment of the organizations objective.

To summarise one can say :

Context : obtaining and using information about the current operational context in
order to determine the training needs and objectives

Input : Obtaining and using information about possible training resources in

order to choose between alternative inputs to training

Reaction : Obtaining and using information about trainees expectation or their

expressed reactions in order to improve training

Outcome : Obtaining and using information about the outcomes of training in order
to improve subsequent training. Three levels / steps of outcome evaluation are in terms of
immediate, intermediate and ultimate outcomes.

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4 b 360 degree feedback

We are not the best judge of our own strength and weakness, the ideal evaluation relies
on not on any one source but on multiple perspectives. These will include self reports as
well as peer, boss and subordinate feedback. The 360 degree evaluation method offers
feedback from all these sources and can be a powerful source of data targeting the
competencies that need to be improved. This method is generally used to assess senior
executives, the assessment is done through a questionnaire specially designed and
connected with behaviour critical for performance. The appraisal is done independently
by the concerned persons. Assessments are consolidated and feedback profiles are
prepared. A person who has to present this and explain the feedback should be a good HR
person, initially there should be discussion, dialogue and suggestions.

The 360 degree method serves as a good source of feedback to appraise the person
because on the basis of this he will be evaluated, his performance appraised, his rewards,
incentives, promotions, transfers etc will depend. No one likes to stagnate and even an
organization will not like to be static, therefore once this kind of evaluation is done
through this method there can be executive development programmes through which one
can then progress and move ahead in the hierarchy of the organization and develop
oneself.

360 degree feedback is usually a voluntary activity, this activity has its advantages :

a. it helps to bring about change and reduces resistance to power and change

b. benchmarking becomes possible

c. improvements in the organization, it may help to bring about cost reduction, waste
eliminations, etc. A mirror view is available through this method on the success or
failure

d. Team performance can be enhanced and there can be good cooperation and
coordination.

e. this method provides better feedback and is more objective then the appraisal based on
one person.

f. it provides scope to the person to improve and develop.

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Q5. Give your comments on any two Performance Parameters.
5. Performance Parameters

Performance appraisals are common but the frequency at which they should be done
differs, usually it is once a year. The parameters for the same needs to be developed by
the HR specialist. Performance can be appraised on various parameters viz :

1. Technical knowledge
2. Self Management
3. Productivity
4. Decision making
5. innovations
6. Communication skills
7. People development
8. Initiation
9. Diversification
10. Customer attention
11. Team work

As stated above the performance can be appraised on various parameters as listed above,
we will concentrate on two of them

Technical Knowledge

Employees can be a technical, administrative or financial officer, he has a certain level of

technical knowledge n his expert area. If one is a software engineer say in CAD, one is
expected to keep abreast of current information in CAD area. This is called knowledge
updation. Your expertise area can be very narrow or thin, in that small area you should be
the king. The persons fundamentals, concepts and technological base should help him to
improve the work practices. This necessitates prompt sharing of information with
subordinates and bosses, then this knowledge is effectively applied to day to day
practices and this helps in qualitative output which inturn helps in meeting the
organizations objectives.

Self Management

First manage the self, then manage others. One superb quality needs attention i.e.
Flexibility. In any organization today a common feature is unexpected / changing
demands. The trends can be upward or downward. One should be able to respond
positively towards any change, this is called the demonstration of flexibility. How can
one master this, the simple answer is to seek appropriate amount of guidance from
superior. One must not stop here, they must use the guidance, experience for self benefit
and organizations benefit.

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Productivity:

Excellence is the key word for any business activities. This results in improving
productivity. One of the ways of excelling is by elimination of waste. This should be a
continuous activity. Quality of input is very important as it is going to determine the
quality of output. All the same, there will be some areas where productivity measurement
will not be possible.

Decision Making

Decisions are taken at junior or senior level. Decisions must be taken and not given. It is
better to take even a wrong decision at times rather than not taking a decision at all. A
person should be able to anticipate a problem, identify the problem, evaluate the relevant
facts, generate alternative solutions and then reach a sound decision. In the process he
should know when to stop collecting data and still be able to decide in the matter.
Analysis is important, but he should not reach the stage of paralysis of analysis. Decision
are essential and need to be taken, decisions are taken at the subordinate or superior level
depending on the delegation of work and its responsibilities and the capabilities of the
person / employee.

Innovations

Peter ducker has indicated “ every manager has to be an opportunity seeker”. An

executive must see beyond the current problem or situation and generate new
ideas/practices. Encourage thinking process and produce improvements. Every staff
member is creative, try to get ideas from them. Have brain storming sessions. Get
feedbacks. If successful reward the idea. Knowledge sharing should be the key word,
because nobody like the steady water, it should flow.

Communication Skills

Having knowledge is one side and delivering the same is another. Every effective
executive has some side effects, however in communication skills side effects will be
very costly. He should be able to demonstrate effective presentation, planning and
delivery skills. TIME is constraint for all executives at top. Make communication a very
pleasant experience . do not forget the statement “unless your speech is better than
silence, do not speak”.

People Development:

You are going to work with people. Men have invented machines. Men behind machines
are important. Now-a-day it is called as HR Development. Treat human as resource i.e
with respect and dignity. Do seek feedback. Make effort to develop them. Create
opportunities for them. “ People are an assets which depreciates. So HR is the oxygen of
the industry.

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Initiation:

Is an executive pro-active or reactive? Proactive is initiative plus. Such as person is called

“ Self-Starter”. He is man of initiation. He demonstrate positive influence. He is able to
identify and mobilize resources necessary for achieving results. For then smile is genuine
and not extension of two lips.

Diversification:

As people bring variety of problems to the work place, similarly, they bring variety of
skills along with. Appreciate and value these skills. They will be helpful to take care od
diversification of business activity.

Customer attention:

Crate an atmosphere of win-win relationship with customers. Bring them in the category
of “ Delighted Customer”. Actively search ways to increase customer satisfaction.

Team Work:

Individual performance alone is not enough. Together, organization should achieve.

Q6. What are the challenges ahead in the changing business scenario?

6. Challenges in the changing business scenario

There are many challenges which an organization has to face in the changing business
scenario, some of them are discussed below :

1. Develop Employees – every organization must think about employee

development. Organisations have long term objectives and plans, to get the
success they should groom people. Executives are expected to shoulder future
responsibilities of the organization. This is called the development process and to
achieve this one can think of executive development programmes. Changes will
occur, technology may change, new systems may be put in place and to meet and
adapt to these changes the employees must be developed.
2. Performance appraisal methods – in an organization with the setting of goals also
come evaluation and appraisal of employees and for this performance appraisals
methods must be implemented. Various methods can be used viz : ranking
method, rating scale method, check list method, forced choice method, critical
incident method, confidential reports and assessment centers.
3. Motivation -

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Q7. Explain the process of self-assessment.
7 Self Assessment

As every employee is subject to assessment, so is the case with an organization.

Employees can be assessed by the self or by his direct superior. In the case of an
organization the assessment is by its own employees or b shareholders. Self assessment is
the best assessment and self controls are the best controls.

When objectives / goals are set and resources are provided, assessment should begin. The
greatest advantage of management by objectives is perhaps to make it possible for a
manager to control his own performance. Self control / self assessment means stronger
motivation - a desire to do the best rather than just enough. It means higher performance
goals and broader vision. Control means the ability to direct oneself and ones work It can
also mean domination of one person by another. Self awareness is the best awareness,
this is the foundation for self motivation process.

The self assessment process consist of the following five steps

1. Every employee has KRA for a given period of time. This will be the assessment
period also. The KRA are directly connected to the main objectives.

2. One must find the achievement level, i.e target v/s actual.

3. The gaps between targets and achievements can be due to certain constraints, they may
be individual or they may be external or internal.

4. Support must be provided in the form of guidance or training so that the gaps can be
overcome and achievement can assured.

5. for long term there can be development needs and for this training or non training as
required must be provided. Self assessment should be worked out considering availability
of such short term and long term resources.

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Diagrammatically it can be shown as below :

KEY RESULTS AREAS

( for a given period of time)

Achievements
(Target V/s Actuals)

Gaps in Achievements
(Due to constraints)
Own
Others
Internal
External

Support Needs
Technical
Non technical
Guidance

Development Needs
(Training or Non
Training)

Self assessment should be conducted periodically to suit the time frame of each KRA, if
essential the KRA’s should be modified.

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8. Illustrate with examples the role of :

8 a. Motivation:

What motivation is needed to obtain peak performance? The usual answer is job
satisfaction. To motivate a person for peak performance it is very important that
management set and enforce on itself high standards for its own performance of those
functions that determine the employee’s ability to perform. Positive motivation needs
responsibility. Only monetary rewards will not be sufficient. The enterprise must demand
it from their employees. The enterprise needs performance. It can get it only be
encouraging, by inducing.

8 b. Self Motivation

People- a great force in an organization. People understand other people. They try to read
others. However, what about the self? There are few tips on self-motivation.
Self behaviour is directly connected with the following motives.

1. Achievement
2. Affection
3. Impact
4. Control
5. Dependence

8 c. Demotivation

Allow people to talk about what demotivates them and listen carefully. The most valuable
technique you can see for preventing demotivation is a sympathetic and understanding
human response. Talk about work-related problems to prevent them from becoming more
intense. Assess the reasons for demotivating before considering any action.
Consider positive motivators- high standards of performance, information adequate for
self-control and participation of employees as a responsible citizen in the plant.
People can be demotivate by taking off the responsibilities or not giving rewards for the
ideas or no appreciations etc. demotivation can lead to low performance and bad work
environment.

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9. Bring out the concept with performance?
9a Self Awareness
A knowledge of the typical primary motivators of behaviour in a work place can help any
employee to deal more effectively with people. For a n employee, the main advantage of
being motivated is job satisfaction and for the employer it means good quality work. The
art of motivating people starts with learning how to influence individual’s behaviour. One
must be aware and the factors which motivate one, cause when one is motivated not only
will he perform he will, he will motivate others also and thus set up a chain reaction
which will help the organization in achieving its goal and objective. Self awareness here
mainly means that one must be aware of the self, and what factors will keep him
motivated and help him in achieving his needs / objectives.
Ones behaviour is directly connected with ones motives / needs viz achievement,
affection, impact, control and dependence. The above needs or motives can be used to
know the pattern of self behaviour in our organization. Once one masters oneself, there is
self awareness and this helps in getting yourself motivated for superior performance.

9b Self Management
First manage the self, then manage others. One superb quality needs attention i.e.
Flexibility. In any organization today a common feature is unexpected / changing
demands. The trends can be upward or downward. One should be able to respond
positively towards any change, this is called the demonstration of flexibility. How can
one master this, the simple answer is to seek appropriate amount of guidance from
superior. One must not stop here, they must use the guidance, experience for self benefit
and organizations benefit.

9 c. Self Performance
People have influence on you or you have influence on people but the most important is
influence on the self., this is the basic parameter of self performance.
Every person has the capability to make contribution in a particular special field. It is for
the person to find his fitment. To perform one has to :
1. learn to develop oneself – find out the potential areas, seek the opportunities and
decide what will be good for him.
2. one must learn to stay young, one ages physically, nothing can be done about it
but mentally also one must stay young, this can be achieved by updating
knowledge and keeping in touch with all changes taking places in and around the
work environment at the micro and macro level.
3. Learn to be mentally alive – One must be alert at all times, this is called the
quality of presence of mind, one must try and remain fresh at all times to absorb
and soak in fresh knowledge which will lead to growth.
4. Learn to know the exact purpose of the activity – one must learn the proper
method of doing the work, in what time it must be done, once one master all this
one can adapt to the changes taking place and the person will be able to perform.

In short we can see that if one has to perform he must be able to motivate himself and
must be keen to develop and learn only then can he succeed and stay ahead and achieve
all his goals / objectives.

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Q10. What is the difference between Potential and Performance ?
10 Differentiation between performance and potential :

When we speak about performance and potential we are referring to two different
aspects, performance relates to the fact of the actual work done / goal achieved. When
one speaks of performance it refers to the performance of the person, which is compared
to the goals / objectives set over a period of time. The growth and success of the company
is measured by its performance, the more the efforts the better the performance,
performance may be measured in various ways, individual performance, team
performance, performance of the company on the whole, etc

On the other hand when we speak of potential we refer to Human Potential, human
potential appraisal is a very difficult exercise. Potential – the highest level of work a
person could ultimately be expected to handle comfortably and successfully with our any
stress. This means work should always be a pleasure, you must be smiling and cheerful.
In potential one must place special emphasis on talent and ambition. At times it has been
observed that a person may be knowledgeable but may not be able to convert this
knowledge into performance, therefore potential appraisal plays an important role, the
existing performance of an employee must be appraised and one must find out where he
can fit in and be groomed to shoulder future organizational responsibilities. When one is
analyzing potential of a person one must keep track of the following three factors :
1) effective leadership 2) achieving excellence and c) making decisions..

Performance is the product of many factors, potential mainly is concerned with three
factors : Capture, Develop and Leverage. One must analysis the strength of the existing
employees and make optimum use of them, when they don’t possess the skills they must
be developed and necessary exposure must be given to them thorough training, they must
be encouraged. The management must allow the employees to leverage existing resources
to gain a competitive edge / advantage. To be successful there must be close co-
ordination between human resource planning and other performance factors.

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Q12. What are the important check points for s successful performance? Explain
any two?
12. Important check points for successful performance
Never Rarely Generally Always

Note: tick in appropriate column.

1. I try to smell and anticipate

Problem quickly.
2. I do seek opportunities
3. I study market conditions
Seriously.
4. I am transparent to get feed-back
5. Innovative ideas are
Encouraged in my Team.
6. Practice is more important than theory
7. Decision are taken and not
Given.
8. Due importance is given to
Self-assessment too.
9. First resources are given
Then performance is expected.
10. I am open to criticism.
Total

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Q13. Every person has a different method of learning. What is your effective
method of learning?
13. Learning

To achieve success everyone must learn, learning can be though any of the following
ways :

1. Learn by listening
2. Learn by reading
3. Learn by writing
4. Learn by Observation.

Every person uses a different way / method to learn and succeed. For me as a person to
succeed I know I have to learn and the best way for one to learn is to combine the above
four methods of learning, I not only learn by listening to my superiors and colleagues as
they have already experienced what they are talking about, by reading cause the material
being read is written by professional in the field who have spent years in research and
carrying out experiments before arriving at any conclusions. I also learn by writing cause
once I note down what I have done, I will not repeat a mistake or in future if a similar
problem or event arises I will be able to succeed as I will know what is to be done by
referring to what I have written. At time my best teacher for learning is observation,
cause what one observes is registered in the mind and one learns faster, if one were to see
how a particular work is done he is bound to succeed as he learns faster through
observation and can immediately put it into action, therefore at times it is very important
that one is given training be it through apprenticeship, hand on experience, coaching etc.

Individually speaking for me the best method of learning is an ideal mix of listening,
reading, writing and observation.

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Q14. How to set a career goal?
14 Career Goal
Career means a chosen pursuit, a profession or an occupation. It is the general course or
progression of ones working life or one’s professional achievements. One way to succeed
in your career is to develop a career plan, a career plan will outline the steps which will
be needed for one to succeed.

Steps for developing a career plan

1. Determine your interest and skills – one must determine ones interest and skills
and accordingly make a choice.
2. find out the career options – once the skills have been determined find out the
3. understand your strengths and recognize the limitations – one must list down ones
strengths and weakness
4. determine the career plan and goal – based on the strength and weakness and the
options available one must determine his / her career.
5. train oneself – for the chosen career one must equip himself/ herself with
necessary training required to do the work.
6. prepare your resume and search for the job – prepare your resume and start
looking for the job, all meet up with placement consultants
7. enjoy your chosen profession – one you find the job and start working one must
learn to enjoy the work undertaken
8. value addition – whenever possible one must try and do some value addition, one
must keep upgrading and keeping abreast will all developments
9. self assessment – one must carry out self appraisal and assessment and try and
overcome any shortfall, if any.
10. One must enjoy the bouquets and brickbats – one you have chosen the profession
one must be ready to accept the bouquets and the brickbats.

In a career at times you may face failure also, you must face the situation with courage
and conviction. One has to believe in oneself and never loose sight of the career goal.

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Q15. Give your views on TEAM performance .
15. Team Performance :

People work in two ways, either alone as individuals or as a team. However vast majority
of jobs require two or more people working together. Teams should be well organized.
Teams need not be a series of individuals linked together mechanically, Individuals have
work relations, teams have personal relations as well. The work should be organized such
that the ability and the performance of one man results in the benefit of both himself and
the whole group / team as also result in greater individual and group performance.

Team performance process will remain same as in performance system but here in place
of self appraisal there will be team appraisal. For team performance the role of the leader
of the team is very important, the leader is like the engine of the train. The speed of the
train will be the speed of the boogie. It is said that team work is the best and highest
when it is a question of life and death. Team performance must be sustained through
motivation of all members of the team / group.

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