Performance Appraisal

Performance Appraisal is the systematic evaluation of the performance of

employees and to understand the abilities of a person for further growth and
development. Performance appraisal is generally done in systematic ways which are
as follows:
1. The supervisors measure the pay of employees and compare it with targets
and plans.
2. The supervisor analyses the factors behind work performances of employees.
3. The employers are in position to guide the employees for a better
performance.
Objectives of Performance Appraisal
Performance Appraisal can be done with following objectives in mind:
1. To maintain records in order to determine compensation packages, wage
structure, salaries raises, etc.
2. To identify the strengths and weaknesses of employees to place right men on
right job.
3. To maintain and assess the potential present in a person for further growth
and development.
4. To provide a feedback to employees regarding their performance and related
status.
5. To provide a feedback to employees regarding their performance and related
status.
6. It serves as a basis for influencing working habits of the employees.
7. To review and retain the promotional and other training programmes.
Advantages of Performance Appraisal
It is said that performance appraisal is an investment for the company which can be
justified by following advantages:
1. Promotion: Performance Appraisal helps the supervisors to chalk out the
promotion programmes for efficient employees. In this regards, inefficient
workers can be dismissed or demoted in case.
2. Compensation: Performance Appraisal helps in chalking out compensation
packages for employees. Merit rating is possible through performance

appraisal. Performance Appraisal tries to give worth to a performance.

Compensation packages which includes bonus, high salary rates, extra
benefits, allowances and pre-requisites are dependent on performance
appraisal. The criteria should be merit rather than seniority.
3. Employees Development: The systematic procedure of performance
appraisal helps the supervisors to frame training policies and programmes. It
helps to analyse strengths and weaknesses of employees so that new jobs
can be designed for efficient employees. It also helps in framing future
development programmes.
4. Selection Validation: Performance Appraisal helps the supervisors to
understand the validity and importance of the selection procedure. The
supervisors come to know the validity and thereby the strengths and
weaknesses of selection procedure. Future changes in selection methods can
be made in this regard.
5. Communication: For an organization, effective communication between
employees and employers is very important. Through performance appraisal,
communication can be sought for in the following ways:
a. Through performance appraisal, the employers can understand and
accept skills of subordinates.
b. The subordinates can also understand and create a trust and
confidence in superiors.
c. It also helps in maintaining cordial and congenial labour management
relationship.
d. It develops the spirit of work and boosts the morale of employees.
All the above factors ensure effective communication.
6. Motivation: Performance appraisal serves as a motivation tool. Through
evaluating performance of employees, a persons efficiency can be
determined if the targets are achieved. This very well motivates a person for
better job and helps him to improve his performance in the future.

Performance Appraisal Tools and Techniques

Following are the tools used by the organizations for Performance Appraisals of their
employees.
1. Ranking

2. Paired Comparison
3. Forced Distribution
4. Confidential Report
5. Essay Evaluation
6. Critical Incident
7. Checklists
8. Graphic Rating Scale
9. BARS
10.Forced Choice Method
11.MBO
12.Field Review Technique
13.Performance Test
We will be discussing the important performance appraisal tools and
techniques in detail.
1. Ranking Method
The ranking system requires the rater to rank his subordinates on overall
performance. This consists in simply putting a man in a rank order. Under this
method, the ranking of an employee in a work group is done against that of another
employee. The relative position of each employee is tested in terms of his numerical
rank. It may also be done by ranking a person on his job performance against
another member of the competitive group.
Advantages of Ranking Method
i.

Employees are ranked according to their performance levels.

ii.

It is easier to rank the best and the worst employee.

Limitations of Ranking Method

iii.

The whole man is compared with another whole man in this

method. In practice, it is very difficult to compare individuals
possessing various individual traits.

iv.

This method speaks only of the position where an employee stands in

his group. It does not test anything about how much better or how
much worse an employee is when compared to another employee.

v.

When a large number of employees are working, ranking of individuals

become a difficult issue.

vi.

There is no systematic procedure for ranking individuals in the

organization. The ranking system does not eliminate the possibility of
snap judgements.

2. Forced Distribution method

This is a ranking technique where raters are required to allocate a certain
percentage of rates to certain categories (eg: superior, above average, average) or
percentiles (eg: top 10 percent, bottom 20 percent etc). Both the number of
categories and percentage of employees to be allotted to each category are a
function of performance appraisal design and format. The workers of outstanding
merit may be placed at top 10 percent of the scale, the rest may be placed as 20 %
good, 40 % outstanding, 20 % fair and 10 % fair.
Advantages of Forced Distribution
i.

This method tends to eliminate raters bias

ii.

By forcing the distribution according to pre-determined percentages,

the problem of making use of different raters with different scales is
avoided.

Limitations of Forced Distribution

iii.

The limitation of using this method in salary administration, however,

is that it may lead low morale, low productivity and high absenteeism.
Employees who feel that they are productive, but find themselves in
lower grade(than expected) feel frustrated and exhibit over a period of
time reluctance to work.

3. Critical Incident techniques

Under this method, the manager prepares lists of statements of very effective and
ineffective behaviour of an employee. These critical incidents or events represent
the outstanding or poor behaviour of employees or the job. The manager maintains
logs of each employee, whereby he periodically records critical incidents of the
workers behaviour. At the end of the rating period, these recorded critical incidents
are used in the evaluation of the workers performance. Example of a good critical
incident of a Customer Relations Officer is : March 12 - The Officer patiently

attended to a customers complaint. He was very polite and prompt in attending the
customers problem.
Advantages of Critical Incident techniques
i.

This method provides an objective basis for conducting a thorough

discussion of an employees performance.

ii.

This method avoids recency bias (most recent incidents are too much
emphasized)

Limitations of Critical Incident techniques

iii.

Negative incidents may be more noticeable than positive incidents.

iv.

The supervisors have a tendency to unload a series of complaints

about the incidents during an annual performance review sessions.

v.

It results in very close supervision which may not be liked by an

employee.

vi.

The recording of incidents may be a chore for the manager concerned,

who may be too busy or may forget to do it.

4. Checklists and Weighted Checklists

In this system, a large number of statements that describe a specific job are given.
Each statement has a weight or scale value attached to it. While rating an employee
the supervisor checks all those statements that most closely describe the behaviour
of the individual under assessment. The rating sheet is then scored by averaging
the weights of all the statements checked by the rater. A checklist is constructed for
each job by having persons who are quite familiar with the jobs. These statements
are then categorized by the judges and weights are assigned to the statements in
accordance with the value attached by the judges.
Advantages of Checklists and Weighted Checklists
i.

Most frequently used method in evaluation of the employees

performance.

Limitations of Checklists and Weighted Checklists

ii.

This method is very expensive and time consuming

iii.

Rater may be biased in distinguishing the positive and negative

questions.

iv.

It becomes difficult for the manager to assemble, analyze and weigh a

number of statements about the employees characteristics,
contributions and behaviours.

Performance Appraisal Biases

Managers commit mistakes while evaluating employees and their performance.
Biases and judgment errors of various kinds may spoil the performance appraisal
process. Bias here refers to inaccurate distortion of a measurement. These are:
1. First Impression (primacy effect): Raters form an overall impression
about the ratee on the basis of some particluar characteristics of the ratee
identified by them. The identified qualities and features may not provide
adequate base for appraisal.
2. Halo Effect: The individuals performance is completely appraised on the
basis of a perceived positive quality, feature or trait. In other words this is the
tendency to rate a man uniformly high or low in other traits if he is extraordinarily high or low in one particular trait. If a worker has few absences, his
supervisor might give him a high rating in all other areas of work.
3. Horn Effect: The individuals performance is completely appraised on the
basis of a negative quality or feature perceived. This results in an overall
lower rating than may be warranted. He is not formally dressed up in the
office. He may be casual at work too!.
4. Excessive Stiffness or Lenience: Depending upon the raters own
standards, values and physical and mental makeup at the time of appraisal,
ratees may be rated very strictly or leniently. Some of the managers are likely
to take the line of least resistance and rate people high, whereas others, by
nature, believe in the tyranny of exact assessment, considering more
particularly the drawbacks of the individual and thus making the assessment
excessively severe. The leniency error can render a system ineffective. If
everyone is to be rated high, the system has not done anything to
differentiate among the employees.
5. Central Tendency: Appraisers rate all employees as average performers.
That is, it is an attitude to rate people as neither high nor low and follow the
middle path. For example, a professor, with a view to play it safe, might give
a class grade near the equal to B, regardless of the differences in individual
performances.
6. Personal Biases: The way a supervisor feels about each of the individuals
working under him - whether he likes or dislikes them - as a tremendous
effect on the rating of their performances. Personal Bias can stem from

various sources as a result of information obtained from colleagues,

considerations of faith and thinking, social and family background and so on.
7. Spillover Effect: The present performance is evaluated much on the basis of
past performance. The person who was a good performer in distant past is
assured to be okay at present also.
8. Recency Effect: Rating is influenced by the most recent behaviour ignoring
the commonly demonstrated behaviours during the entire appraisal period.
Therefore while appraising performances, all the above biases should be avoidd.

Communicating Performance Appraisals

Performance appraisals enable superiors to know what their team members are
upto, evaluate their performances and also give them correct feedbacks so that
they know where they are lacking and work on their shortcomings.
The term Performance Appraisal generally causes anxiety among
employees, which definitely should not be the case. You really do not have to
worry about your appraisal if you have worked hard throughout the year.
There is definitely a certain way appraisals need to be communicated among
employees. There are organizations where management tends to create
unnecessary hype about performance appraisal. In such a scenario, trust me,
employees think only about their appraisals and find it extremely difficult to
concentrate on their routine affairs. The appraisal process certainly should not
disturb your daily schedule.
Let us understand how performance appraisal needs to be communicated
among employees.
The rating procedure, appraisal form or any other related information ought to be
sent to each and every individual separately. Do not mark a common mail to
everyone. If you do not want to take the pain of sending separate mails to
everyone, create a common login id where each and every individual can register
using their passwords and pull out the appraisal form. The appraisal form generally
has information about employees designation, grade, level in the hierarchy,
responsibilities and thus must be kept confidential.
Counselling needs to be done on a one on one basis. Address their queries,
confusions in private. Remember, appraisal is a very sensitive subject and should be
handled gracefully. Call the employees one by one either in your cabin or
conference room and try to find out if they need any help or guidance. Trust me, if

you call them in a group, they would never open up. It is unethical to discuss ones
performance or salary in public.
Once the appraisals are done, communicating the same to the employees is another
big challenge. The increment letters or appraisal letters should be handed over to
the employees either by the functional head or human resource team personally.Do
not ask your office peon to distribute the letters. Trust me, it is very insulting. You
are not doing any charity. It is their right.
Employee attrition is one of the major problems faced by organizations
after performance appraisal. Employees who work only for money quit after a
salary hike to negotiate further with any other organization. Individuals who do not
get satisfactory appraisal in any case get demotivated and look for a change. Any
employee who does not agree to his/her appraisal or feel has not got what he/she
deserves needs to be addressed at the earliest. Sit with the individual concerned
and try to make him/her understand as to why he/she has got a certain rating.
Employees cannot always be wrong. If you feel, an employee deserves slightly more
than what he has got, kindly reconsider your decision. Remember, it is always
better to give a decent salary hike to talented employees than losing them. After all,
if they leave, you in any case have to spend time and energy searching for a
replacement.
Employees need to be motivated after their appraisals. Congratulate each
and every one irrespective of their salary hike or promotion. Appreciate everyone
for being consistent and most importantly loyal towards the organization. Make sure
no one feels left out. Sit with them, give them new realistic targets and guide them
as to how can they work together, come out with more innovative ideas and show
better performances in the years to come.
Performance appraisal should not be the only method to evaluate or acknowledge
employees performance. Do not be rude to employees who did not perform well. It
is absolutely okay to handhold them and give a second chance.

Handling Employees After Performance Appraisals

Performance appraisal refers to the elaborate process of reviewing ones
performance and output over a certain period of time and not only give correct
feedbacks but also acknowledge and appreciate the hard work. Appraisal letters
cause a lot of anxiety and sometimes disappointment among employees.
Individuals never create problems when they get a good salary hike but trust me,
handling employees after a bad appraisal is a big challenge.
Let us go through few tips on how to handle employees after performance
appraisals:

Never forget to congratulate employees who have got a decent appraisal or a

promotion and a positive review from the management. It will further motivate
them and also instil a sense of pride and most importantly responsibility in them.
Make them feel important. If someone has worked really hard all through the year,
he/she definitely deserves to be praised for his/her efforts and encouraged to
perform better in the years to come. Celebrate his/her success.
Employees who had an unsatisfactory year and eventually a bad appraisal
are the ones who need most of your attention and care. One of the most
common problems with such employees is that they suddenly become negative
about everything, find reviewing authorities as their biggest enemies and also start
hating their organization. Yes, logically such a behaviour is not expected out of a
mature professional but we cant completely blame the poor individual also who
after slogging for a year did not get appraisal as per his/her expectations.
As they say with a little love, we can even change the world. Such employees
need to be handled with utmost patience. Sit with such employees and first of all try
to find out as to why they failed this time. Try to understand their mood and also
what they feel about their appraisal? It is obvious that they would not be in a great
mood but as a superior it is your duty to cheer them up so that they do not lose
their confidence and eventually interest in work and finally quit. Employees also
need to understand that there is always a next time and there is no point reacting
and fighting with people around. After all it would not solve your problem, instead
earn you a bad name in the organization.
Understand where the individual went wrong. All negativities and confusions
would disappear if you make the individual understand where all he/she lacked and
why his counterpart has got a decent appraisal while he/she has not? Yes,
employees at this point of time are really not in a mood to listen to their superiors
but you have to assure them that as a Boss, you are always there with them and
would certainly help in future as well. Understand if at all the individual is facing any
problem or not and most importantly try to provide a solution. Yes, after a bad
appraisal, employees tend to become negative but as a Boss it is your responsibility
to change their perception.
Let them speak and come out with their frustrations. Employees should also
be careful with their words. Never cross your limits. Handhold such employees and
provide necessary guidance whenever required. Send them a motivational email.
Such small initiatives go a long way in motivating employees so that they become a
little more serious and come back with a bang. Make them understand that this is
just a temporary phase and should not act as a demotivating factor for them.
Encourage them to work in unison with their fellow workers, read a lot and most
importantly believe in the organization and its process.

Job Evaluation
Job evaluation is a process of determining the relative worth of a job. It is a process
which is helpful even for framing compensation plans by the personnel manager. Job
evaluation as a process is advantageous to a company in many ways:
1. Reduction in inequalities in salary structure - It is found that people and
their motivation is dependent upon how well they are being paid. Therefore
the main objective of job evaluation is to have external and internal
consistency in salary structure so that inequalities in salaries are reduced.
2. Specialization - Because of division of labour and thereby specialization, a
large number of enterprises have got hundred jobs and many employees to
perform them. Therefore, an attempt should be made to define a job and
thereby fix salaries for it. This is possible only through job evaluation.
3. Helps in selection of employees - The job evaluation information can be
helpful at the time of selection of candidates. The factors that are determined
for job evaluation can be taken into account while selecting the employees.
4. Harmonious relationship between employees and manager - Through
job evaluation, harmonious and congenial relations can be maintained
between employees and management, so that all kinds of salaries
controversies can be minimized.
5. Standardization - The process of determining the salary differentials for
different jobs become standardized through job evaluation. This helps in
bringing uniformity into salary structure.
6. Relevance of new jobs - Through job evaluation, one can understand the
relative value of new jobs in a concern.
According to Kimball and Kimball, Job evaluation represents an effort to determine
the relative value of every job in a plant and to determine what the fair basic wage
for such a job should be.
Thus, job evaluation is different from performance appraisal. In job evaluation,
worth of a job is calculated while in performance appraisal, the worth of employee is
rated.

Personnel Records

Personnel Records are records pertaining to employees of an organization. These

records are accumulated, factual and comprehensive information related to concern
records and detained. All information with effect to human resources in the
organization are kept in a systematic order. Such records are helpful to a manager
in various decision -making areas.
Personnel records are maintained for formulating and reviewing personnel policies
and procedures. Complete details about all employees are maintained in personnel
records, such as, name, date of birth, marital status, academic qualifications,
professional qualifications, previous employment details, etc.
Types of Personnel Records
1. Records of employment contain applicants past records, list sources,
employees progress, medical reports, etc.
2. Wages and salaries records contains pay roll records, methods of wages and
salaries, leave records, turnover records and other benefit records.
3. Training and development contains appraisal reports, transfer cases, training
schedule, training methods.
4. Health and safety records include sickness reports, safety provisions, medical
history, insurance reports, etc.
5. Service Records are the essential records containing bio-data, residential and
family information, academic qualifications, marital status, past address and
employment records.
Purposes of Personnel Records
According to the critics of personnel records, this system is called as a wastage of
time and money. According to personnel records, followers of this : Dale Yoder, an
economist of Michigan University, USA has justified the significance of personnel
records after making an in-depth study.
1. It helps to supply crucial information to managers regarding the employees.
2. To keep an update record of leaves, lockouts, transfers, turnover, etc. of the
employees.
3. It helps the managers in framing various training and development
programmes on the basis of present scenario.
4. It helps the government organizations to gather data in respect to rate of
turnover, rate of absenteeism and other personnel matters.

5. It helps the managers to make salary revisions, allowances and other benefits
related to salaries.
6. It also helps the researchers to carry in- depth study with respect to industrial
relations and goodwill of the firm in the market.
Therefore, personnel records are really vital for an organization and are not a
wasteful exercise.

Employee Relations - Importance and Ways of Improving Employee Relations

Maintaining healthy employee relations in an organization is a pre-requisite for
organizational success. Strong employee relations are required for high productivity
and human satisfaction. Employee relations generally deal with avoiding and
resolving issues concerning individuals which might arise out of or influence the
work scenario. Strong employee relation depends upon healthy and safe work
environment, cent percent involvement and commitment of all employees,
incentives for employee motivation, and effective communication system in the
organization. Healthy employee relations lead to more efficient, motivated and
productive employees which further lead to increase in sales level.
Good employee relation signifies that employees should feel positive about their
identity, their job as well as about being a part of such a great organization. Despite
the importance of strong and healthy employee relations, there are circumstances
in the life of every organization when employee and management relations are
hampered. Instances of such circumstances are as follows1. When the employees do not behave as per accepted norms of behaviour, it is
known as employee indiscipline. Absenteeism, change in employees
behaviour, slow performance and grievances are all forms of employee
indiscipline. Thus, when the employees fail to meet management
expectations in terms of standard performance and behaviour, it is referred to
as indiscipline. In such cases, it must be ensured by the management that
steps should be taken so that employees behaviour is in conformity with the
managerial expectations.
2. Similarly, the employees also expect from the management to provide them
a safe working environment, fair treatment, proper incentives, participation in
decisions, and needs satisfaction. The failure on part of management to meet
these expectations is termed as employee grievance.
3. When the employees fail to meet their own expectations whether in terms of
personal goals, career goals, performance, self-respect, etc it is referred to

as employee stress. Excessive workload, insufficient workload, peer

pressure, excessive/unreasonable use of authority by the management, lack
of promotional opportunities, nature of job, etc all again lead to employee
stress.
All the above mentioned organizational factors influencing employees relation must
be carefully tackled. An optimistic approach to strengthen disciplinary culture rooted
on shared norms of employees should be adopted. An effective grievance redressal
system should be there. Stress management strategies should be followed in the
organization.
Improving Employee Relations
Employee relations must be strengthened in an organization. To do so, following
points must be taken care of:i.

Employee has expectation of fair and just treatment by the management.

Thus, management must treat all employees as individuals and must treat
them in a fair manner. Employee favoritism should be avoided.

ii.

Do not make the employees job monotonous. Keep it interesting. Make it

more challenging. This can be done by assigning employees greater
responsibilities or indulging them in training programmes.

iii.

Maintain a continuous interaction with the employees. Keep them updated

about companys policies, procedures and decisions. Keep the employees
well-informed. Informed employees will make sound decisions and will remain
motivated and productive. Also, they will feel as a member of organizational
family in this manner.

iv.

Employees must be rewarded and appreciated for a well-done job or for

achieving/over-meeting their targets. This will boost them and they will work
together as a team.

v.

Encourage employee feedback. This feedback will make the employers aware
of the concerns of employees, and their views about you as an employer.

vi.

Give the employees competitive salary. They should be fairly paid for their
talents, skills and competencies.

vii.

Be friendly but not over-friendly with the employees. Build a good rapport
with the employee. The employee should feel comfortable with the
manager/supervisor rather than feeling scared.

Employee Stress - Strategies for managing stress at workplace

What is Employee Stress ?

Employees stress is a growing concern for organizations today. Stress can be
defined as a lively circumstance in which people face constraints, opportunities, or
loss of something they desire and for which the consequence is both unpredictable
as well as crucial. Stress is the response of people to the unreasonable/excessive
pressure or demands placed on them.
Stress is not always negative. It may also bring out the best in individuals at times.
It may induce an individual to discover innovative and smarter way of doing things.
This positive dimension of stress is called as enstress. But usually, the term stress
has a negative implication and this negative aspect of stress is termed as distress.
For instance - When a subordinate is harassed or warned by his superior,
unhappiness of unsuitable job, etc. We can say that Stress causes some people to
break, and other to break records.
Symptoms of Stress
Some of the symptoms of stress at workplace are as follows

Absenteeism, escaping from work responsibilities, arriving late, leaving early,

etc.

Deterioration in work performance, more of error prone work, memory loss,

etc.

Cribbing, over-reacting, arguing, getting irritated, anxiety, etc.

Deteriorating health, more of accidents, etc.

Improper eating habits (over-eating or under-eating), excessive smoking and

drinking, sleeplessness, etc.

It is thus very essential to have effective stress management strategies in an

organization so that the detrimental repercussions of stress on the employees as
well as their performance can be reduced and controlled.
Sources/Causes of Stress
The factors leading to stress among individual are called as stressors. Some of the
factors/stressors acting on employees are1. Organizational factors- With the growth in organizational stress and
complexity, there is increase in organizational factors also which cause stress
among employees. Some of such factors area. Discrimination in pay/salary structure

b. Strict rules and regulations

c. Ineffective communication
d. Peer pressure
e. Goals conflicts/goals ambiguity
f.

More of centralized and formal organization structure

g. Less promotional opportunities

h. Lack of employees participation in decision-making
i.

Excessive control over the employees by the managers

2. Individual factors- There are various expectations which the family

members, peer, superior and subordinates have from the employee. Failure
to understand such expectations or to convey such expectations lead to role
ambiguity/role conflict which in turn causes employee stress. Other individual
factors causing stress among employees are inherent personality traits such
as being impatient, aggressive, rigid, feeling time pressure always, etc.
Similarly, the family issues, personal financial problems, sudden career
changes all lead to stress.
3. Job concerning factors- Certain factors related to job which cause stress
among employees are as followsa. Monotonous nature of job
b. Unsafe and unhealthy working conditions
c. Lack of confidentiality
d. Crowding
4. Extra-organizational factors- There are certain issues outside the
organization which lead to stress among employees. In todays modern and
technology savvy world, stress has increased. Inflation, technological change,
social responsibilities and rapid social changes are other extra-organizational
factors causing stress.
Strategies for Managing Stress
Stress experienced by the employees in their job has negative impact on their
health, performance and their behaviour in the organization. Thus, stress needs to
be managed effectively so as to set off these harmful consequences. Strategies for
managing stress are as follows-

Organizational strategies for managing stress

1. Encouraging more of organizational communication with the employees so
that there is no role ambiguity/conflict. Effective communication can also
change employee views. Managers can use better signs and symbols which
are not misinterpreted by the employees.
2. Encourage employees participation in decision-making. This will reduce role
stress.
3. Grant the employees greater independence, meaningful and timely feedback,
and greater responsibility.
4. The organizational goals should be realistic, stimulating and particular. The
employees must be given feedback on how well they are heading towards
these goals.
5. Encourage decentralization.
6. Have a fair and just distribution of incentives and salary structure.
7. Promote job rotation and job enrichment.
8. Create a just and safe working environment.
9. Have effective hiring and orientation procedure.
10.Appreciate the employees on accomplishing and over-exceeding their targets.
Individual strategies for managing stress
1. The employees should make a to-do list daily, prioritize the acts in the list
and plan the acts accordingly. Take regular breaks during work to relax you.
By effective time management, the employees can achieve their targets
timely and can meet work pressures and, thus, avoid stress.
2. Do hard work. Strive to achieve your goals but do not do it to the harm of
family, health, or peer.
3. Indulge in physical exercises. It helps in effective blood circulation, keeps you
fit, diverts mind from work pressures.
4. Encourage a healthy lifestyle. Take a regular sleep, have plenty of water,
have healthy eating habits. Promote relaxation techniques such as yoga,
listening music and meditation.
5. The employees should have optimistic approach about their work. They
should avoid connections with negative approach employees.

6. The employees should have emotional intelligence at workplace. They should

have self-awareness, self-confidence and self-control at workplace.
7. The employees should build social support. They should have close
connections with trustworthy peer who can listen to their problems and boost
their confidence level. This social network will help the employees to
overcome stress.
8. Employee counselling is a very good strategy to overcome employee stress.
Through counselling, employees can become aware of their strengths and
how to develop those strengths; their weaknesses and how to eliminate
them; and they can develop strategies for changing their behaviour.
Employees are also given career counselling which helps in reducing their
ambiguities with regard to career.
9. Find a fun way to release stress, such as, cracking jokes, playing tennis, golf,
etc.
10.Do not remain pre-occupied with yourself. Turn your focus outwards. Help
others. This will release some stress.

Employee Stress and Performance

Employee Stress is negatively correlated to their work performance. In
short, more the level of stress, lower is the performance. It was conventionally
perceived that reasonable levels of stress would boost the employees and improve
their work performance. But this perception no longer holds true. Today it is
believed that even a little bit of stress will inhibit employees work performance.
This is due to:
Even relatively slight stress distracts an employee. People facing stress
concentrate more on the repulsive feelings and emotions rather than on the
work/job at hand and consequently their work performance suffers. Stress
affects peoples intellectual, emotional, and interpersonal functioning.
Extended or repeated exposure even to minor levels of stress may have
detrimental effects on health and this might lower employees work
performance.
It has been researched that as stimulation increases, work performance
initially increases, but after a point of time begins declining. The exact location
of this variation point (at which the functions direction or trend reverses)
appear to depend on the complication of the work/task/job being performed.
The more the work complication, the less the stimulation levels at which a

decline in performance occurs.

Employees under stress loose their creativity and innovativeness. Their thinking
ability is narrowed.
But there are certain exceptions to the rule that stress interferes with work
performance. For instance, some people are at their best in times of calamity /
crises. They meet the expectations and show remarkable performance at times of
great stress. This may stem out from the fact that they have great expertise in the
tasks being performed, making their variation/inflection as very high. People who
have exceptional skills and competencies at a task may cognitively evaluate a
possibly stressful scenario as a challenge and not as a threat.
Thus, while concluding we can say that whether stress can spoil or increase
performance is dependent on factors such as work complication, the skills and
expertise of the employee in performing a task, personal traits of
individuals/employees involved, etc. Organizations which encourage an open and
honest communication develop an environment in which employees are less likely
to be stressed out, enabling the employees to best utilize their abilities and skills
and, thus, stimulating the employees work performance.

Employee Discipline and Features of a Sound Disciplinary System

Discipline means systematically conducting the business by the organizational
members who strictly adhere to the essential rules and regulations. These
employees/organizational members work together as a team so as to achieve
organizational mission as well as vision and they truly understand that the
individual and group aims and desires must be matched so as to ensure
organizational success.
A disciplined employee will be organized and an organized employee will be
disciplined always. Employee behaviour is the base of discipline in an organization.
Discipline implies confirming with the code of conduct established by the
organization. Discipline in an organization ensures productivity and efficiency. It
encourages harmony and co-operation among employees as well as acts as a
morale booster for the employees. In absence of discipline, there will be chaos,
confusion, corruption and disobedience in an organization.
In short, discipline implies obedience, orderliness and maintenance of proper
subordination among employees. Work recognition, fair and equitable treatment of
employees, appropriate salary structure, effective grievance handling and jobsecurity all contribute to organizational discipline.

Discipline is viewed from two angles/dimensions:

1. Positive Discipline: Positive Discipline implies discipline without
punishment. The main aim is to ensure and encourage self-discipline among
the employees. The employees in this case identify the group objectives as
their own objectives and strive hard to achieve them. The employees follow
and adhere to the rules and regulations not due to the fear of punishment but
due to the inherent desire to harmonize in achieving organizational goals.
Employees exercise self-control to meet these goals.
2. Negative Discipline: Employees adhere to rules and regulations in fear of
punishment which may be in form of fines, penalties, demotions or transfers.
In this case, the employees do not perceive organizational goals as their own
goals. The action taken by the management to ensure desired standard of
behaviour/code of conduct from the employees in an organization is called
negative discipline. The fear of punishment prevents the employees from
going off-track.
Characteristics of a Sound Disciplinary System (Red Hot Stove Rule)
Discipline should be imposed without generating resentment. Mc Gregor
propounded the red hot stove rule which says that a sound and effective
disciplinary system in an organization should have the following characteristics1. Immediate- Just as when you touch a red hot stove, the burn is immediate,
similarly the penalty for violation should be immediate/ immediate
disciplinary action must be taken for violation of rules.
2. Consistent- Just as a red hot stove burns everyone in same manner;
likewise, there should be high consistency in a sound disciplinary system.
3. Impersonal- Just as a person is burned because he touches the red hot stove
and not because of any personal feelings, likewise, impersonality should be
maintained by refraining from personal or subjective feelings.
4. Prior warning and notice- Just as an individual has a warning when he
moves closer to the stove that he would be burned on touching it, likewise, a
sound disciplinary system should give advance warning to the employees as
to the implications of not conforming to the standards of behaviour/code of
conduct in an organization.
In short, a sound disciplinary system presupposes1. Acquaintance/Knowledge of rules- The employees should be well aware
of the desired code of conduct/ standards of behaviour in the organization.
This code of discipline should be published in employee handbook.

2. Timely action- Timely enquiry should be conducted for breaking the code of
conduct in an organization. The more later the enquiry is made, the more
forgetful one becomes and the more he feels that punishment is not
deserved.
3. Fair and just action- There should be same punishment for same offence/
misconduct. There should be no favouritism. Discipline should be uniformly
enforced always.
4. Positive approach- The disciplinary system should be preventive and not
punitive. Concentrate on preventing misconduct and not on imposing
penalties. The employees should not only be explained the reason for actions
taken against them but also how such fines and penalties can be avoided in
future.
Types of Penalties for Misconduct/Indiscipline
For not following the standards of behaviour/code of conduct in an organization,
there are two kinds of penalties categorized asa. Major penalties- This includes demotion, dismissal, transfer, discharge,
withholding increments, etc.
b. Minor penalties- This includes oral warning, written warning, fines, loss of
privileges, etc.

Employee Grievance - Effective Ways of Handling Grievance

Grievance may be any genuine or imaginary feeling of dissatisfaction or injustice
which an employee experiences about his job and its nature, about the
management policies and procedures. It must be expressed by the employee and
brought to the notice of the management and the organization.
Grievances take the form of collective disputes when they are not resolved. Also
they will then lower the morale and efficiency of the employees. Unattended
grievances result in frustration, dissatisfaction, low productivity, lack of interest in
work, absenteeism, etc. In short, grievance arises when employees expectations
are not fulfilled from the organization as a result of which a feeling of
discontentment and dissatisfaction arises. This dissatisfaction must crop up from
employment issues and not from personal issues.
Grievance may result from the following factorsa. Improper working conditions such as strict production standards, unsafe
workplace, bad relation with managers, etc.

b. Irrational management policies such as overtime, transfers, demotions,

inappropriate salary structure, etc.
c. Violation of organizational rules and practices
The manager should immediately identify all grievances and must take appropriate
steps to eliminate the causes of such grievances so that the employees remain loyal
and committed to their work. Effective grievance management is an essential part
of personnel management. The managers should adopt the following approach
to manage grievance effectively1. Quick action- As soon as the grievance arises, it should be identified and
resolved. Training must be given to the managers to effectively and timely
manage a grievance. This will lower the detrimental effects of grievance on
the employees and their performance.
2. Acknowledging grievance- The manager must acknowledge the grievance
put forward by the employee as manifestation of true and real feelings of the
employees. Acknowledgement by the manager implies that the manager is
eager to look into the complaint impartially and without any bias. This will
create a conducive work environment with instances of grievance reduced.
3. Gathering facts- The managers should gather appropriate and sufficient
facts explaining the grievances nature. A record of such facts must be
maintained so that these can be used in later stage of grievance redressal.
4. Examining the causes of grievance- The actual cause of grievance should
be identified. Accordingly remedial actions should be taken to prevent
repetition of the grievance.
5. Decisioning- After identifying the causes of grievance, alternative course of
actions should be thought of to manage the grievance. The effect of each
course of action on the existing and future management policies and
procedure should be analyzed and accordingly decision should be taken by
the manager.
6. Execution and review- The manager should execute the decision quickly,
ignoring the fact, that it may or may not hurt the employees concerned. After
implementing the decision, a follow-up must be there to ensure that the
grievance has been resolved completely and adequately.
An effective grievance procedure ensures an amiable work environment because it
redresses the grievance to mutual satisfaction of both the employees and the
managers. It also helps the management to frame policies and procedures
acceptable to the employees. It becomes an effective medium for the employees to
express t feelings, discontent and dissatisfaction openly and formally.

Employee Training - Benefits and Steps in Employee Training Programme

Training implies enhancing the skills and knowledge of the employees for
performing a specific job. Training tries to improve employees performance in
current job and prepares them for future job. The crucial consequence of training is
learning.
Objectives of Employee Training Programmes
1. To prepare employees to meet the varying and challenging needs of the job
and organization.
2. To provide knowledge and skills to new entrants and to help them to perform
their role and job well.
3. To coach employees for more complex and higher level jobs.
4. To educate employees new and innovative ways and techniques of
performing job.
Benefits of Trained Employees
Training is a significant tool for employee development. Training has assumed great
importance because of exceptional rate of change in the internal and external
organizational environment. The importance/benefits of trained personnel towards
organizational development are as followsa. Trained employees do not require tight control and supervision as they are
well aware of how to perform a job.
b. Trained employees can show higher performance by making optimum and
best utilization of the materials, tools, equipments and other resources
provided to them.
c. Trained employees minimize wastages of resources in the organization and
work both efficiently and effectively.
d. Training makes employees more committed to an organization as the
employees are provided with growth, advancement and learning
opportunities.
e. Training develops a line of proficient and skilled managers as it prepares
employees for complex and higher level tasks.

f.

Trained employees adjust to the job better and there are fewer rates of
absenteeism and turnover.

g. Trained employees produce quality and quantity output.

h. Trained employees enable the organization to face competition from rival
firms.
i.

Trained employees can respond and adapt to the changing technology well.

j.

Trained employees become more proficient and, thus, their earning potential
increase.

Steps in Employee Training Programme

Training programme involves the following steps:
1. Identifying the training needs- The training needs of each employee
should be identified. Programmes should be developed that are best suited to
their needs.
2. Prepare the trainer- The trainer must do his home work well. He should
know both what to teach and how to teach. Time management is required by
the trainer. Training should be delivered in such a manner that the trainee
should not loose the interest in the job.
3. Prepare the trainee- The trainee should remain active during training. He
should know that why is he being trained. He should put across the trainer
questions and doubts. The trainee should be put at ease during the training
programme.
4. Explain and demonstrate the operations- The trainer should explain the
logical sequence of the job. The trainee should perform the job systematically
and explain the complete job he is performing. His mistakes should be
rectified and the complex step should be done for him once. When the
trainee demonstrates that he can do the job in right manner, he is left to
himself. Through repetitive practices, the trainee acquires more skill.
5. Follow up and feedback- The trainee should be given feedback on how well
he performed the job. He should be asked to give a feedback on the
effectiveness of training programme.

Methods of Training Employees at Workplace

Trainings help employees enhance their capabilities and acquire new learnings,
skills and knowledge. Trainings help employees come up with unique and innovative

ideas, meet targets within the desired time frame and make them efficient
resources for the organization.
One needs to understand that lot of time, money and energy go in designing
training programs for employees. Managers need to understand where all their
team members are lacking and need improvement. One needs to be very clear how
training programs would benefit the employees. Managers need to sit with human
resource professionals and design specific training programs keeping in mind the
needs and requirements of employees. Training programs conducted just for the
sake of it yield no results.
Training programs should not only be designed for existing employees but also for
new candidates.
Let us go through various training methods at the workplace:
Induction Training - Induction training is often given to new employees to make
them feel a part of the organization. How do you think an individual can perform if
he/she is not familiar with the policies and rules and regulations of the organization?
You cant expect an individual to deliver results on the first day itself. You need to
welcome your employees well for them to feel motivated and comfortable. Induction
programs need to be designed sensibly. Too much of information on the day of
joining will frighten the new employee and believe me, he/she will not come from
the next day onwards. Induction programs help new employees to get acquainted
with the work culture and fellow workers. Induction programs need to be short, crisp
but informative.
Refresher Training - Refresher trainings are designed for existing employees to
refresh them and also help them acquire new skills and technologies to keep pace
with the changing times. Such training programs prepare employees for more
responsible positions.
On the Job Trainings - On the job trainings are given to employees at the
workplace itself by their superiors and Bosses. Managers ought to sit with their
team members on a regular basis, train them on new technologies, skill sets to help
them cope with the changes. On the job trainings are given to employees along with
their jobs itself and make them capable to handle bigger responsibilities.
On the Job trainings are imparted by any of the following methods:
a. Coaching - Coaching is also defined as learning by doing and handling
various ongoing projects. In this method of training, team manager assigns
certain job responsibilities to team members, monitors their performance,
points out their mistakes, provides them feedbacks and also suggestions for
improvement.

b. Job Rotation - In this type of training, employees move from one position to
another, thus acquiring new skills and learnings. Job rotation acquaints
individuals with newer roles and challenges and makes them capable of
performing any type of task.
Employees need to be encouraged to go through various online learning sites which
would help them in their current job responsibilities. One needs to be aware of the
latest developments in his/her domain. Reading helps a lot.
Off the job Training - Off the job trainings are given outside the workplace.
Off the job trainings can be provided by any of the following methods:
a. Seminars/Conferences - Seminars and conferences are effective when
training needs to be given to a larger audience. Relevant information, latest
developments, new technologies and case studies are discussed on a
common platform to acquaint employees with new skill sets.
b. Simulation Exercise - Simulation exercises train the employees in an
artificial environment which closely resembles the employees actual working
conditions.
c. Vestibule Trainings - In vestibule trainings, employees practice work on the
instrument/equipment which they would be using in future when they would
be actually working.
Management Games and Role Plays train employees to deal with critical problems
and teach them to find innovative solutions.

360 Degree Feedback

360 degree feedback is also known as multi-rater feedback or multidimensional feedback or multi-source feedback. It is a very good means of
improving an individuals effectiveness (as a leader and as a manager). It is a
system by which an individual gets a comprehensive/collective feedback from his
superiors, subordinates, peers/co-workers, customers and various other members
with whom he interacts.
The feedback form is in a questionnaire format, which contains questions that are
significant to both individual as well as organization from performance aspect. It is
filled by anonymous people. The number of people from whom feedback is taken
can range from 6 - 20. The individuals own feedback is also taken, i.e., he self-rates
himself and then his rating is compared with other individuals ratings. Self ratings
compel the individual to sit down and think about his own strengths and
weaknesses.

The primary aim of a 360 degree feedback is to assist an individual to identify his
strengths and build upon them, to recognize priority fields of improvement, to
encourage communication and peoples participation at all levels in an organization,
to examine the acceptance of any change by the employees in an organization and
to promote self-development in an individual. It must be noted that the assessment
of individual by other people is subjective.
A 360-degree feedback is challenging, promoting and analytical. It should not be
regarded as ultimate and concluding. It is a beginning point. Self-assessment is an
ongoing process.
360 degree feedback provides a comprehensive view of the skills and
competencies of the individual as a manager or as a leader. The individual
gets a feedback on how other people perceive and assess him as an employee. 360
degree feedback is beneficial to both an individual as well as organization. It leads
to pooling of information between individual and other organizational members. It
encourages teamwork as there is full involvement of all the top managers and other
individuals in the organization. It stresses upon internal customer satisfaction. It
develops an environment of continuous learning in an organization. Based on a 360
degree feedback, the individual goals and the group goals can be correlated to the
organizational strategy, i.e., the individual and the group can synchronize their
goals with the organizational goals.
The feedback must be confidential so as to ensure its reliability and legitimacy. The
feedback must be accepted with positivity and an open-mind. The effectiveness of
the feedback must be evaluated and analyzed on a regular basis.

360 Degree Feedback - Advantages & Pre-requisites

Advantages of 360 Degree Feedback

It encourages participation of all and thus makes HR decisions more

qualitative.

It pinpoints the favoritism and biases of the supervisors present in

conventional appraisal systems.

The employees find 360 degree feedback more acceptable than the
traditional feedback approaches.

360 degree feedback is more impartial and objective than a one-to-one

assessment of employee traits.

It concentrates and stresses upon internal customer satisfaction.

It broadens the scope for employees to get various says for enhancing their
job role, performance, and views.

It can act as a supplement and not replacement to the conventional appraisal

system.

It can be motivating for the employees who undervalue themselves.

It encourages teamwork.

It is more credible as various people give almost same feedback from various
sources.

It brings into limelight the areas of employee development as it confirms the

employee strengths and identifies his weaknesses on which he can work
upon.

It creates an environment of trust and loyalty in an organization.

Basics and Pre-requisites of 360 Degree Approach

It is essential that an organization should be prepared for 360 Degree feedback. Not
only the organization, but also the candidate (the employee) should be prepared for
accepting it. Following are the essentials of an organizations preparedness
for the 360 degree approachThe top level management must be keen to spend their time and efforts in
giving feedback to their subordinates.
Status and ego issues shouldnt overwhelm in the organization.
The subordinates and the peer both should assess and analyze the top-level
managers and the top- level management should be open to accept their
feedback.
Everyone in the organization should take the feedback considerately and
constructively and utilize it for their development.
Ethics and moral values should be predominant in the organization.
The organization should encourage teamwork.
There should be self- learning in the organization, especially for the managers.

The personnel department of the organization should be highly credible.

There should be no politics in the organization.
Everyone in the organization should take the feedback seriously and should
make an attempt to benefit from the same.
It must be ensured that the feedback is confidential.
Following are the essentials of analyzing the candidates (employees)
preparedness for the 360 degree approachThe employee should have an intention to be better.
The employee should be open to accept the feedback and should respect the
views of others.
The employee should have a competitive feeling.
The employee should be keen in knowing the viewpoints of others towards him.
The employee should always learn on the job.

What is Employee Performance Management ?

Employee Performance Management is a process for establishing a
shared workforceunderstanding about what is to be achieved at an organisation
level. It is about aligning the organisational objectives with the employees' agreed
measures, skills, competency requirements, development plans and the delivery of
results. The emphasis is on improvement, learning and development in order to
achieve the overall business strategy and to create a high performance workforce.
History of Performance Management

Performance Management began around 60 years ago as a source of income

justification and was used to determine an employees wage based on performance.
Organisations usedPerformance Management to drive behaviours from the
employees to get specific outcomes. In practice this worked well for certain
employees who were solely driven by financial rewards. However, where employees
were driven by learning and development of their skills, it failed miserably. The gap
between justification of pay and the development of skills and knowledge became a
huge problem in the use of Performance Management. This became evident in the
late 1980s; the realisation that a more comprehensive approach to manage and
reward performance was needed. This approach of managing performance was
developed in the United Kingdom and the United States much earlier than it was
developed in Australia.
In recent decades, however, the process of managing people has become more
formalised and specialised. Many of the old performance appraisal methods have
been absorbed into the concept of Performance Management, which aims to be a
more extensive and comprehensive process of management. Some of the
developments that have shaped Performance Management in recent years are the
differentiation of employees or talent management, management by objectives and
constant monitoring and review. Its development was accelerated by the following
factors:

The introduction of human resource management as a strategic driver and

integrated approach to the management and development of employees; and

The understanding that the process of Performance Management is

something that's completed by line managers throughout the year - it is not a
once off annual event coordinated by the personnel department.

How Annual Appraisals are Different But Part of Performance Management

Most organisations have some type of employee appraisal system, and many are
experiencing the shortcomings of manual staff evaluation systems. When
discussing workforce performance the most commonly asked question is "How does
Performance Management differ fromperformance appraisals or staff reviews"?
Performance Management is used to ensure that employees' activities and
outcomes are congruent with the organisation's objectives and entails specifying
those activities and outcomes that will result in the firm successfully implementing
the strategy (Noe et al. 2000, p.55). An effective Performance Management process
establishes the groundwork for excellence by:

Linking individual employee objectives with the organisation's mission and

strategic plans. The employee has a clear concept on how they contribute to
the achievement the overall business objective,

Focusing on setting clear performance objectives and expectations through

the use of results, actions and behaviours,

Defining clear development plans as part of the process, and

Conducting regular discussions throughout the performance cycle which

include such things as coaching, mentoring, feedback and assessment.

Performance appraisal properly describes a process of judging past performance

and not measuring that performance against clear and agreed objectives.
Performance Management shifts the focus away from just an annual event to an ongoing process. Figure 2.1 is a process diagram that provides a graphical view of the
major differences between the two processes.

Figure 2.1 - Graphical view of the difference between Performance Appraisal and
Managementwww.peoplestreme.com
Typical Outcomes from Annual Appraisals
Most recent research suggests that annual staff reviews are generally perceived as
a difficult and painful process by both managers and employees. As there are
typically no objectives which are set in appraisal systems, there is no link to
strategic or operational outcomes. If the CEO's objective was to increase margins by
3%, employees may be aware of the CEO's intent but they are usually not measured
on this objective in their individual appraisal. Therefore, there is no linkage in the
appraisal review and no linkage at a team or department level.
Misdirected Bonuses

This situation has been illustrated many times where employees and managers
have received favorable reviews and bonuses and yet the organisation has not
achieved its goals. The organisation may be losing millions of dollars and yet
still paying out bonuses to its managers and employees.
Too Painful, Emotionally Charged
High stress levels for both managers and employees also become a factor. They
both know they will be judged on the outcome of the appraisal and the fallout is
often destructive rather than constructive. The reasoning behind this is that there
are rarely any pre-defined mesaures or objectives and the employee review is not
based on any considered evaluation criteria. The employees' remuneration and
future are at stake and the goodwill of the managers future resources are also at
stake. This leads to high stress in the case of both individuals and this is a poor
emotional state in which to have a thorough discussion about employee
performance.
Poor Understanding of Expectations
Where the appraisal system is poorly communicated, both the employee and
manager enter these discussions with low confidence levels. This is due to a lack of
"rules" as to how to go about the appraisal process and a lack of understanding of
the expected outcomes. As this process is infrequent, it is viewed by the employee
as an opportunity to discuss remuneration, promotion prospects and other issues
related to the employee. This means the discussion is dominated by employee
content rather than what the manager needs the employee to do for the next year.
This leads to vague definition of performance goals and perpetuates the system of
poorly defined and executed appraisals.
As an annual staff review is so infrequent, both managers and employees find it
difficult to remember what actually happened during the year. Both typically come
to the meeting ill prepared with little meaningful content to discuss. This makes the
appraisal more difficult and frustrates both the employee and manager.
Bad Timing
More often than not, the annual appraisal is executed on the employees'
anniversary which does not coincide with any particular performance period. If
appraisals are conducted annually on the anniversary date, it is only possible to
align at best only 50% of your staff with future objectives, assuming there is an
even distribution of start dates across the employee workforce. Given that
most appraisal systems are not automated, there is poor reporting and therefore
low visibility as to who did or did not achieve their objectives.
Subjective Manager Opinion

This means that an employees' future is wholly dependent on their manager's

highly subjective opinion. The CEO or other executive management does not have
clear vision as to who achieved their objectives and who did not. The outcome for
the CEO is that they do not have the ability to see failure as it is
occurring. Instead, they see failure after the fact and radical adjustments are then
required to repair the situation. By using standalone appraisal systems, the
outcome for the line manager is that they have additional pressure applied to them,
to fix a problem which has become a major issue and which could have been
otherwise identified and fixed in a very timely fashion.
Performance Not Aligned to Promotions
Given that annual appraisals are only conducted once yearly, most line managers
only seriously think and plan once a year. The consequences are poor resource
management, put-out-the-fire management and costly and reactive problem fixing
on the fly. Given that most appraisal systems are manual and on paper, the data
arising from an excellent performance typically does not find its way into the
succession planning process. Employees are therefore often disillusioned to find
that they have been passed over for further development or a promotion when they
have performed strongly for several years.
Poor Development Opportunities
This is a primary cause for employees leaving the organisation. Most appraisal
systems do not feature a competency assessment or an active development plan
that both the employee and manager have mutually agreed to. Staff often get
disillusioned and leave the organisation if they can see no personal development
prospects or if personal development has not occurred in practice for the last
several years, despite numerous promises.
No Consequence For Non-Participation
Given that most appraisal systems are manual, reporting is weak and therefore
compliance reporting is not visible. This inevitably means that managers learn that
they do not have to perform reviews and therefore they don't because there is no
negative consequence for them. Equally, employees learn that there is no
consequence to not being reviewed, they lose faith in management and invariably
look for somewhere else to work. Most manual appraisal systemssuffer from sub
30% compliance and can get to this point after only 18 months of operation i.e.
roughly one to one and a half performance terms.
Typical Outcomes from Performance Management
If Performance Management is implemented correctly with specific objectives tied to
the strategic and operational plan, organisational performance outcomes will likely
increase very quickly. For example, if the CEO asked for a 3% increase in gross

margin, this objective would be cascaded down to every department, team and
individual who can influence the increase in gross margin. Those who are successful
at achieving this objective will get a favorable review, those that could not, will get
an unfavourable performance evaluation in the absence of extenuating
circumstances. The process of Performance Management therefore drives
organisational performance outcomes. Employees that achieve the organisational
goals are rewarded with favourable reviews and bonuses in line with their
performance and contribution to the organisation.
Communication Improves The employee and manager communicate more
frequently and agree on changed objectives to suit continuing changes in conditions
and priorities. This is an inclusive and collaborative process, which ensures that the
employee has input and does not feel they have wasted the year. The employee
works towards specific objectives that are relevant. If the organisation is using a
Performance Management product that has a performance diary, both the manager
and employee attend the review meeting with copies of their performance diary
notes. This contains content from the performance period to be reviewed. Given
that both have content, they feel much better prepared and stress is lower than if
they were attending a meeting not aware of the subject matter.
Everyone Knows the Rules
Where there is a well structured Performance Management system that is
effectively communicated, both the employee and manager enter the process with
better levels of confidence as there are "rules" that clearly stipulate what is being
assessed and how. Employees are assessed on achievement of objectives that have
been clearly identified and agreed to. Managers have a better framework to assess
an employees' performance as they are familiar with the criteria to assess the
employee. The outcome is that both individuals have an informed discussion and
focus on achievement of both personal and business objectives, not on issues that
are irrelevant.
Better Recording Opens Up Communication
If the organisation has a system with a performance diary, then both parties are
prepared with relevant content to discuss. They have diary notes that relate to
performance during the entire performance period. This raises confidence and
reduces stress levels. Both parties feel more comfortable and they can have a
content rich and factual discussion about performance.
Frequent Communication Reduces Stress
Given that these performance reviews happen more frequently, the discussion
centers on performance of objectives rather than being dominated by the
employees' needs. The needs of the business are discussed more frequently to
achieve specific performance outcomes. This means both the employee and

manager communicate more effectively and achieve better outcomes. Emotionally

charged discussions tend to be displaced by business focused discussions on
achievement of objective outcomes.
As expectations are modified when a Performance Management system is
introduced, most organisations switch to defined performance periods. This means
that strategic and operational objectives are set at the beginning of the
performance period. Formal performance reviews are then conducted quarterly or
half yearly and enable management to direct and fine tune effort in relation to the
objectives.
Appraisals Become Relevant for Everyone
By conducting more frequent reviews, objectives can be adjusted and modified to
suit changing business conditions. This dramatically increases the probability that
the objectives are relevant and are able to be acted upon during the performance
period.
By performing frequent performance reviews, visibility is increased dramatically.
Areas of non performance receive much more focus and attention and problems can
be acted upon much quicker. Most Performance Management systems provide
reporting as to who has or has not achieved their objectives (departments and
individuals). Adjustments to objectives or strategy can then be made to ensure
expectations can be met. Alternately, expectations can be modified as appropriate.
By reviewing more frequently, all managers and employees start to plan and
execute to clearly thought out objectives. This results in better resource
management and enables managers to work on the business, not in the business.
Employee Learning and Development Starts to Happen
Given that most Performance Management systems require managers and
employees to commit to a development plan, employees experience real personal
development and become more engaged with the organisation. They feel part of the
organisation and start to understand that they and the organisation are
interdependent. The organisation is developing the employee and the employee is
working towards developing the organisation by achieving its goals. The majority of
Performance Management systems are able to provide graphical compliance
reports. Therefore, the setting of objectives and development plans for employees
can no longer be ignored. Employees see real planning, are involved in setting
meaningful objectives and have input into personal development plans which
benefit both themselves and the organisation. In all, this results in an
engaged workforce who are extremely committed to achieving real outcomes for
the organisation.
Performance Management Research

Several studies have been conducted in Australia that indicates the predominant
method of assessing employees in Australia is appraisal. During 2004, Associate
Professor Alan Nankervis of Royal Melbourne Institute of Technology conducted
a study of 992 Australian organisations. One of the outcomes was that only 2.4% of
organisations reviewed their employees against objectives, the remaining 97.5%
were a combination of some type of appraisal.
Furthermore, The Performance Management Institute of Australia conducted a
survey of Australian employees' attitudes towards Performance Management in the
workplace . Approximately 450 employees responded from a wide variety of
businesses and enterprises. The research found that, over 59% of employees
received performance reviews once per year or less. This implies that the majority
of Australian managers are failing to properly engage their employees. Effective
management requires a continual goal setting and review process which gives
employees regular feedback of management expectations and frequent praise for
achievement of desired goals.
Australian Managers Still Doing Standalone Appraisals
What the survey results imply is that Australian managers are performing
appraisals, not performance reviews and objective setting. The results may also
mean that managers are not targeting their teams to achieving strategic goals
which are at all time-bound. Usually, employees who are not formally reviewed for a
year or more are expending work effort in a manner or direction which is not readily
visible to their manager. This lack of employee engagement is leading to
disaffection from the employees who can make and want to make a difference to
the organisation. In our view, appraisals add very little value to the performance of
an organisation and in some circumstances may actually be detrimental to
organisations who wish to move towards Performance Management. A contributing
factor may be that line managers who have been conducting appraisals have also
seen little, if any, impact on departmental or team performance as a consequence
of conducting these appraisals.
PeopleStreme conducted several research studies in focus groups over the last four
years and during seminars on Performance Management. To summarise the
findings, 87% of organisations have some type of appraisal system. However, this is
usually referred to as the Performance Management system. Of the 87% that have
these systems, 95% were manual systems without performance objectives or
development plans. It was clear from the research that many organisations
incorrectly view manual annual appraisal systems as Performance Management
systems. Organisations are increasingly adopting Performance Management
systems. However, organisations in both Australia and the USA are experiencing
100% to 300% yearly increases in organisations acquiring Performance
Management systems exceeding the existing forecast rate.

In contrasting Performance Appraisal with Performance Management, it suggests

that performance appraisals are indeed an evaluation of an employees work.
However, Performance Management reflects the continuous nature of performance
improvement and employee development, recognising the importance of effective
management, work systems and team contributions.