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H uman R esources M anagement & Development May 04, 2005 (Wednesday) Presented By: Tariq Saeed To Pakistan Steel Mills.

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Presentation on theme: "H uman R esources M anagement & Development May 04, 2005 (Wednesday) Presented By: Tariq Saeed To Pakistan Steel Mills."— Presentation transcript:

1 H uman R esources M anagement & Development May 04, 2005 (Wednesday) Presented By: Tariq Saeed To Pakistan Steel Mills

2 O verview Introduction to Human Resource Management. Evolution & Development of HRM Foundations of HRM Theory & Practice Strategic HRM Motivation of Employees & Leadership Performance Management

3 T he C oncept O f H RM Has evolved through the Development of Management Thought process

4 Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims. D efinition O f M anagement

5 Management is classified into four branches in accordance with the type of resources it deals with, i.e., T ypes O f M anagement Money (Finance) Finance Management MaterialMaterials Management Machine (Technology)Operational Management Men (Human Resource) Human Resources Management.

6 The branch of Management of The Human Resources H uman R esource M anagement

7 E volution O f H uman R esources M anagement The Industrial Revolution (1776) The Emergence of Free Collective Bargaining Scientific Management US Civil Services Commission Private Industry’s Approach to Personnel Management Human Relations Movement The Behavioral Sciences

8 D evelopment O f H RM Pioneer Work Behavioral Science Movement Organizational Development Movement The Corporate Culture Cult The Art Of Japanese Management Peter Drucker 1950 Douglas Mcgreger Maslows Hierarchy Of Needs 1960 1960 - 1970 1970 - 1980 1980 - 1985

9 G rowth O f Human R esources M anagement File Maintenance Stage Government Accountability Stage Organizational Accountability Stage Strategic Partner-ship Stage


11 C hange F rom P ersonnel T o H RM From personnel department to HRM department. A change in approach and a change in name. Treating seriously the issues of attracting developing motivating people and to utilize them effectively. The organizations now rate high on development of following: personnel and HRM policies systems, practices Agreements consistent with the corporate strategy


13 “ Human Resource Management is concerned with the problems, organizations face at all levels of the organization”. “These activities undertaken by the organizations are the means by which they assure themselves of A long term supply of people with needed competencies and required levels of loyalty and commitment ”. ( “Professor Michael Bear”) W hat I s H RM C oncerned A bout?

14 D efinition O f T he F unctions O f H RM Human Resource Management is the process of acquiring, training, appraising, and compensating, retaining employees and attending to their labor relations, health and safety, and fairness concerns.

15 P resent C oncept O f H RM Human resource management in its present form is an approach to the management of people based on four fundamental principles. Human resources are the most important assets of an organization. Their Management is the key to its success. Success is most likely if the personnel policies and procedures are closely linked with, objectives and strategic plans. The corporate culture and values, organizational climate and managerial behavior culture influences the achievement of excellence. This culture be managed. HRM is concerned with integration. Getting all the members of the organization involved in working together with a common sense.

16 H RM C oncept HRM involves all the management decisions and actions that affect the nature of the relationship between the organization and employees i.e., Its Human Resources. It communicates the instrumental values about people and the notion that people no less than, physical plans and financial resources may be viewed and managed as assets. The most important implication of this approach is the development of trust between employees, managers and unions

17 H RM C oncept Human Resource Management is the responsibility of all those who manage people. It is the management concerned with people at work and with their relationship within an enterprise. It applies to all fields of employment. It aims at achieving both efficiency and justice. It seeks to brings together and develop into an effective organization, all the people of an enterprise, to make there best contribution to its success both as an individual and as member of working group. It seeks to provide fair terms and conditions of employment and satisfying work for the employed.

18 – Three basic traditions. Personnel Administration. Labor Relations. Organizational Development. – Changes in basic values of society. – Fundamental shift in ideology to the concern for the whole and not a part of community. – Concern with the rights of the managed not just the managers. – A shift towards greater concern for the systems of the organization. Contd.. E merging T rends I n H RM

19 – Employee involvement and union-management collaboration. – To identify problems and develop processes. – Competence and commitment issues given attention. – Traditional control on information flow giving way to more openness to employees and increase communications – Shift from short term perspective to long term perspective to problems and their solutions – Increased emphasis on training and development activities, performance appraisal and improvement processes. Contd..

20 – A concern for the outcomes not just the role and policies – Flexibility in application of HR policies to individuals and the business – Flexibility in control at the top to a more participative and collaborative management – Willingness to talk about the problems in organization – Change in attitudes towards conflicts – HRM concerned with the groups of shareholders, employees, the union and the government

21 H RM P eople F unctions I nclude: Job analyses Labor needs Recruit Select candidates Orient and train Wages and salaries Incentives and benefits Performance Management Employees Communications Train and develop Employee commitment Equal opportunity Health and safety Grievances/labor relations

22 H RM I s I mportant t o A ll M anagers. D on’t L et T hese H appen I n Y our A reas! The wrong person High turnover Poor results Useless interviews Court actions Safety citations Salaries appear unfair Poor training Unfair labor practices

23 L ine A nd S taff A spects O f H RM Authority Making decisions Directing work Giving orders Line Managers Accomplishing goals Staff Managers Assisting and advising line managers Definition

24 L ine M anager’s H RM J obs The right person Orientation Training Performance Creativity Working relationships Policies and procedures Labor costs Development Morale Protecting

25 S taff M anager’s H RM J obs Line authority Implied authority Functional control Employee advocacy

26 A ctivities W hich C onstitutes HRM Staffing. Retention. Development. Adjustment. Managing Change. Together these activities constitutes the HRM System.

27 HRM A ctivities All these activities are the special responsibilities of HR Department but these are also at the core of every managers job throughout an organization. The line managers have authority and have considerable impact on the way workers actually behave.

28 T hese A ctivities C an B e C arried O ut At: Individual levels. Work teams. Departmental levels. Organizational levels

29 S taffing Identifying work requirements within an organization. Determining the numbers of people and the skills mix necessary for the the work. Recruiting, selecting and promoting qualified candidates.

30 R etention Rewarding employees’ for performing their jobs effectively. Ensuring harmonious working relations between employees and managers. Maintaining a safe and healthy work environment.

31 D evelopment A function whose objectives is to preserve and enhance employees’ competence in their jobs through improving their knowledge, skills, abilities and other characteristics; (“COMPETENCIES”)

32 A djustment Comprises activities intended to maintain compliance with the organization's HR policies (e.g. through discipline) and business strategies (e.g. cost leadership)

33 M anaging C hange An ongoing process whose objective is to enhance the ability of an organization to anticipate and respond to development in its external and internal environments and to enable employees at all levels to cope with the changes.

34 C hange I n R ecruiting S trategy A change in recruiting strategy in accordance with the expected job requirements means: Develop selection procedure that will identify the kind of competencies required for future employees. Change in compensation policies. New incentive systems be developed. Offer new training & development programs. Assessment procedures will be changed. New rewards procedures. Discharge, promote or transfer some employees. Provide mechanism to remaining employees to cope with change.

35 O bjectives O f H RM D epartment Broad objective to optimize the usefulness of all workers in an organization Special objective To help line managers manage those workers more effectively. The HR department accomplishes this special objective through policy initiation and formulation, advice, service and control in resonance with line managers. Thus the HR responsibilities are shared by the hr department and line managers.

36 S pecial O bjectives The special objective is accomplished through: Policy incitation and formulation. Advise. Service. Control in close coordination with line managers.

37 H ow D o L ine M anagers’ S hare T hese A ctivities ActivityLine Managers ResponsibilityHR Department Responsibility STAFFING Providing data for job analysis and minimum qualifications; integrating strategic plans with HR Plans at the unite level, interviewing candidates, integrating information collected y the HR dept., making final decisions on entry level hires and promotions. Job analysis, HR planning, recruitment, compliance with civil rights laws and regulations; application blanks, written tests, performance tests, interview, background investigations, reference checks and physical examinations. RETENTION Fair treatment of employees, open communication, face to face resolution of conflict, promotion of teamwork, respect for the dignity of each individual, pay increase base on merit. Compensation and benefits, employees’ relations, health and safety and employee services. DEVELOPMENT On-the-job training, job enrichment, coaching, applied motivational strategies, performance feedback to subordinates. Development of legally sound performance management system, morale surveys, technical training, management and organization development, career planning, counseling and HR research. ADJUSTMENT Discipline, discharge, layoffs and transfers. Investigation of employee complaints, outplacement services and retirement counseling. MANAGING CHANGE Provide a vision of where the company or unit is going & the resources to make the vision a reality. Provide expertise to facilitate the overall process of managing change. HR Provides Expertise :Line Managers Use it to Manage People Effectively

38 ACTIVITYHow DoneFUNCTIONS Staffing Getting people. Employees. Employment. Training & Development Preparing them. Maximizing potential. HRD Motivation Stimulating them.Compensation & Benefits. Maintenance Keeping them.Employee Relations. B asic F unctions

39 T he HRM P rocess Organization Culture Strategic Objectives Strategic Objectives Environment HR Strategy Organizational structure Outputs Performance management Training and development Reward management Employee relations Performance management Training and development Reward management Employee relations Job analysis recruitment

40 S trategic H uman R esources M anagement Strategic HRM mean getting everybody from top of the organization to the bottom doing things to implement the strategy of business effectively. To use people most wisely with respect to the strategic needs of the organization. This needs an integrative frame work that systematically links HR activities with business needs. (Systems Approach) Development of a map and time line to ensure alignment between HR strategy and business strategy.

41 S trategic H RM A ctivities HR Philosophy HR Policies HR Programs HR Practices HR Processes

42 H uman R esources P hilosophy O r H R C ontribution i n C ompany G rowth & S uccess A firm’s HR philosophy is generally a broad statement about how it regards its people, the role they play in the overall success of a business, and how they are to be treated and managed. Empowering people to drive to business from the closest point to the market. Developing the skills to be the best in the business. Building career opportunities. Building teamwork. Helping people succeed by the building an environment with high integrity, strong and consistent values, and continuous improvement. Changing environment towards effective time management, cost consciousness and improving interaction for increasing productivity by proactive support to line managers.

43 ORGANIZATIONAL STRATEGY Initiates the process of identifying strategic business needs and provides specific opportunities to them ORGANIZATIONAL STRATEGY Initiates the process of identifying strategic business needs and provides specific opportunities to them STRATEGIC BUSINESS NEEDS Expressed in mission or vision statements and translated into strategic business objectives STRATEGIC BUSINESS NEEDS Expressed in mission or vision statements and translated into strategic business objectives INTERNAL CHARACTERISTICS EXTERNAL CHARACTERISTICS STRATEGIC HUMAN RESOURCES MANAGEMENT ACTIVITIES Human Resources Philosophy expressed in statements defining business values and culture. Human Resources Policies expressed as shared values (guidelines). Human Resources Programs articulated as Human Resources strategic. Human Resources Practices for leadership, managerial and operational roles. Human Resources processes for the formulation and implementation of other activities. Express how to treat and value people. Establishes guidelines for action on people related business issues and HR program. Coordinates efforts to facilitate change to address major people related business issues. Motivates needed role behaviors. Defines how these activities are carried out

44 R oles O f H R M anager Business person Shaper of change Consultant to the organization and partner to line managers Strategy formulator and implementer TALENT MANAGER (I.E network with professional colleagues, including recruiters,line managers, and other HR professionals) ASSET MANAGER AND COST CONTROLLER (Based on understanding financial and accounting procedures.)

45 S trategic P lanning a nd T rends Strategy is the company’s long-term plan for how it will balance its internal strengths and weaknesses with its external opportunities and threats to maintain a competitive advantage. Definition

46 S trategic P lanning 1 0 1 There are three levels of strategic planning as shown below Corporate Strategy Business Strategy Business Strategy Business Strategy Business Strategy Functional Strategies

47 T he S trategic P lanning P rocess SWOT analysis - Strengths, Weaknesses, Opportunities, and Threats Best strategic plans balance a company’s Strengths and Weaknesses with the Opportunities and Threats the firm faces Basic strategic trends Globalization Technological advances The nature of work The workforce

48 H R’s E volving R ole Protector and Screener Strategic Partner Change Agent

49 S trategic H RM Strategic Human Resource Management: linking HRM with strategic goals and objectives to improve business performance and develop organizational cultures fostering innovation and flexibility. Definition Clarify the business strategy Realign the HR functions and key people practices Create needed competencies and behaviors Realization of business strategies and results Evaluate and refine

50 H ow H R H elps S trategy E xecution Functional strategies should support competitive strategies Value chain analysis Outsourcing Strategy Formulation

51 H ow H R H elps F orm S trategy Formation of a company’s strategy = identifying, analyzing and balancing external opportunities and threats with internal strengths and weaknesses Environmental scanning

52 T he V alue C hain A pproach

53 H R A nd T echnology Basic HR systems demand paperwork 70% of HR’s employees time = paperwork Off the shelf forms from Office Depot/Officemax Online forms Human Resource Information Systems (HRIS) HR on the Internet

54 H R M eans P erformance Can HR have a measurable impact on a company’s bottom line? Better HRM translates into improved employee attitudes and motivation (e.g., working at home) Well run HR programs drive employee commitment TOYOTA

55 I s T here a “ O ne B est H R W ay”? Follow a company’s operating and strategic initiatives All companies can benefit from Profit sharing programs Results oriented appraisals Employment security Foster informal relationships- promote worldwide communications Develop global executives

56 C urrent P ressures O n H RM Increase international competition Increasing complexity of business and size of organizations Slower growth with receiving advancement opportunity to employees Increased education & awareness of the workforce Changing personal / work force values More concern with career and life satisfaction Changing workforce / mix demography Expectations / satisfaction of employers Productivity improvement needs Greater involvement of government in HR development and practices

57 C hallenges F aced B y H R M anagers Changing Mix Of Work Force Changing Personal Values Expectations Of Employees Levels Of Productivity Demands And Government Regulation

58 S trategic O bjectives F or H RM Design strategy ensuring fuller utilization of human resources Establish and maintain a self-respecting relationship among all employees Enable each person to make his/her maximum personal contribution to the effective working of the organization by creating an appropriate and conducive work climate Bring about maximum individual development of personnel through renewed thrust on employees education and training Make effort to recognize and satisfy individual and group need for providing higher job satisfaction Maintain a high morale and better human relations to win employee’s commitment

59 H ow T o A chieve O bjectives? Answer to this question by creating a culture in the organization which is employee-oriented. The factors responsible for fostering good human relations and higher productivity are as follows: Management’s genuine belief that employees love work (create proper environment) Utilizing employee’s higher skills through their involvement Recognition to employee’s informal groups Humanize jobs in which employees are called not by labels but by names Employee- orientated supervision, recognizing human dignity Two-way communication Feedback and counseling Ability based leadership Employee welfare and good quality of work life Equitable monetary benefits.

60 C ritical H R P rocesses Training And Development Policies Implementation Systems Update And Procedures Improvement Practices And Processes Development Competencies (KSAs) Development Talent Management Identification Of Future HR Requirement Leadership Development TQM

61 H RM I n P akistan HRM in Pakistani Environment Current Trends of HRM in Pakistan

62 T he C hanging R ole o f H R YesterdayTodayTomorrow Success factorsBusiness judgment intuition Information strategic plan mission Flexibility agility speed Organizational style PaternalisticProfessionalEmpowered learning vibrant Employees considered as.. Hungry, naked & defenseless creatures Thinking and rational beings Fully evolved completely satisfied, mature human beings Motivational methods Driving people through basic needs Driving people through social and intellectual needs People drive themselves Role of HRProviding people with food, clothing and shelter Motivate by providing effective & fair appraisals systems As a change agent As innovator As a strategic partner

63 Globalization. Technology. Change. Knowledge Capital. Speed in Market. Cost Control. Credibility. People Skills. Understanding the Business of Business. A Consultative Approach. Comfort with Change. Visioning. B usiness T rends & H R C ompetencies F or O ur T imes

64 H RM & P hilosophy O f I slam Authority and responsibility. Participative management. Rewards and performance Equal opportunities concept. Leadership Evaluation & improvement. Commitment & motivation Balanced approval

65 Motivation of Employees & Leadership

66 W hat I s M otive? Motive is an inner force that moves a person to behave in a certain way. Motives are the mainsprings of action in people. The term motive implies the action to satisfy a need.

67 M otives Motives are the “WHYS” of behavior. They arouse and maintain activity and determine the general direction of the behavior of an individual. Motives are sometime defined as needs, wants, drives and impulses within the individual. Motives are directed towards goals which may be conscious or subconscious

68 M otivation Motivation is a general term applying to the entire class of drives, desires needs, wishes and similar forces. To say that managers motivate their subordinates is to say that they do those things which they hope will satisfy those drives and desires and induce the subordinates to act in a desired manner. Motivation is a complex subject. It involves the unique feelings and thoughts and past experiences of each of us as we share a variety of relationships within and outside the organizations.

69 W hy M otivation? To initiate our followers to reach our objectives, we must hold some reward once the objective is attained. What rewards do people seek? The answer is that they seek to fulfill their wants and needs.

70 H uman N eeds PRIMARY NEEDS: Physiological requirements for water, air, food, sleep & shelter SECONDARY NEEDS Self Esteem Status Affiliation With Others Affection (Giving) Accomplishment Self Assertion


72 M otive N eeds & W ants The term motive, need, wants and drives are used interchange ably. Motivation can also be termed as the willingness to expand energy, achieve a goal or a reward. NEED Respect from others. BEHAVIOR outstanding work on the job. REWARD praise, pay increase, status symbols.

73 M otivator Motivator is something that influences an individual behavior. It makes a difference in what a person will do. Motivators are things that induce a person to perform. Motivators are the identified rewards or incentives that sharpen the drive to satisfy the wants.

74 M otivation A nd S atisfaction Motivation refers to the drive and effort to satisfy a want or goal. When a want is satisfied we experienced the contentment which is called Satisfaction. Motivation implies a drive towards an outcome, and satisfaction is the outcome experienced.

75 Significant Motivation Theories

76 1. The Carrot And The Stick Theory


78 HIERARCHY OF NEEDS Esteem Needs Affiliation or acceptance needs Need for self- actualizati on Security or Safety needs Physiological needs

79 A Hierarchy Of Work Motivation BASIC PHYSICAL NEEDS Food, clothing, shelter SAFETY & SECURITY Seniority plans, union health insurance, employee assistance plans, severance pay, pension etc LOVE & BELONGING Formal and informal work groups ESTEEM Titles, status symbols, promotions, banquets SELF-ACTUALIZATION Personal growth, realization of potential

80 3.McGregor’s Theory of Motivation THEORY “X”


82 4.Herzberg's Theory of Motivation (Two Factor Theory) According to this theory, motivation is largely affected by two factors, namely:  The Hygiene Factors Or The Dissatisfies.  The Motivators Or The Satisfiers.

83 The Hygiene Factors Or The Dissatisfiers Leadership Relationship With Peers, Superiors and Subordinates Working Conditions Salary Company Policy and Administration, etc

84 The Motivator Or The Satisfiers These are factors, which give a sense of satisfaction to the employees and result in motivating them. Achievement. Recognition. Advancement. Responsibility. Challenging work.

85 Herzberg’s Two Factor Theory Achievement. Recognition. Challenging work. Responsibility. Advancement. Challenging job. Company Policies. Supervision. Working conditions. Interpersonal relations. Salary /status, Security. MOTIVATORHYGIENE FACTOR The Job Itself Environment

86 Vroom’s Ex pectancy Theory People will be motivated to do things to reach a goal if they believe in the worth of their goal and if they can see that what they do will help them in achieving it. In a sense a particular action will lead to a desire Force=Valance X Expectancy Force=Strength of a persons motivation. Valence=Strength of individuals performance for an outcome. Expectancy=The probability that a particular action will lead to a desired outcome.

87 Vroom’s Ex pectancy Theory Recognizes the importance of: Needs and motivation The harmony of objectives. Expectation of the rewards for the work done. Perception of value varies. Managers job to design environment.

88 McCelland's Theory of Needs Three kinds of basic motivation needs: Need for Power(N Pwrs) Need for Achievement(N Ach) Need for Affiliation(N Aff)

89 Portar & Lowler Motivation Model Value of Rewards Ability to do specified task Perception of task required Effort Performance accomplishment Perceived effort – review probability Perceived effort – review probability Perceived equitable rewards Intrinsic rewards Satisfaction Exitricis rewards


91 Reinforcement Theory Individuals can be motivated by proper design of their work environment and praise for their performance and that punishment for poor performance produces negative results.

92 A pplication O f M otivation T heories Approaches to motivation: Hierarchy of Needs. Motivation Hygiene Approach. Intrinsic and Extrinsic Motivation Approach. Achievement Motivation. Behavior Modification. Expectancy Model.

93 S pecial M otivational T echniques Power & Achievement. Money as a Motivator. Competition. Job design & workflow. Integration of goals. Participation. Quality of work life (QWL)


95 1. Understand Individual Needs And Desires

96 2. Acknowledge And Respect Their Personal Worth

97 “Treat a man as he is, and he will remain as he is; treat a man as he can and should be, and he will become as he can and should be” ….. Goethe

98 3. Recognize And Appreciate Their Efforts "Forget their mistakes and zero in on all smart things that they do right. Praise them and they’ll do more things right and discover talents and abilities they never realized they had” …….. Mary Kay Ash

99 4. Involve Them And Encourage Participation

100 5.Seek Their Advice

101 6.Make Them Teachers

102 7.Delegating Star Projects

103 S elf M otivation Set a goal for yourself Supplement your long-term objectives with short-term goals and specific actions. Learn a challenging new task each year. Make your job a different one. Set improvement objectives for your position. Develop an area of expertise. Build on your strengths, or develop one of your weaknesses into a strength. Give yourself feedback and reward yourself.

104 L eadership S kills

105 I mportance O f L eadership You can take away my factories, burn up my buildings, but give me my people, and I’ll build the business right back again. (Henry Ford)

106 D efinition o f L eadership Leadership is defined as the art or process of influencing people so that they will strive willingly and enthusiastically towards the achievement of group goals.

107 L eadership & M anagership

108 D ifferences B etween a M anager and a L eader MANAGERLEADER AdministersInnovates Assigns goals and objectivesDevelops a vision Maintain powerEmpowers people Focuses on systems and structure Focuses on developing people Relies on controlInspire trust and motivate Short range viewLong range view Asks “how” and “when”Asks “what and why” Eye on the bottom line.Eye on horizon ImitatesCreates Accepts status quo.Challenges status quo Demand complianceDevelops commitment Does things rightDoes the right things

109 L eadership I s… A relationship… not a formal position. A behavior … not a function.

110 I ngredients o f L eadership Power. Fundamental understanding of people and their motivation. Ability to inspire followers to apply their full capabilities to a project. The style of the leader and the climate he/she develops.

111 T raits A pproach T o L eadership Physical Traits. Intelligence and Ability Traits. Task Related Characteristics. Social Characteristics.

112 K ey L eadership T raits Drive Motivation Honesty Integrity Cognitive ability Understanding of Business Impact of creativity Flexibility Charisma on Leadership effectiveness.

113 Leadership Behavior & Styles

114 Leadership Styles Autocratic leader Follower Democratic or participative leader Follower Free-rein leader Follower




118 T heories o f L eadership Leadership As A Continuum. Situation Or Contingency Approach. Path Goal Approach. Likert’s Four Systems of Management

119 L eadership A s A C ontinuum Forces operating in a manager’s personality Forces operating in a manager’s personality Forces in sub-ordinates that will affect manager’s behavior Forces in sub-ordinates that will affect manager’s behavior Forces in a situation Forces in a situation

120 C ontingency T heory O f L eadership People become leaders not only because of the attributes of their personalities but also because of various situational factors and the interactions between leaders and group members

121 C ritical D imensions O f T he L eadership S ituation Position Power Position Power Task Structure Task Structure Leader – Member Relations Leader – Member Relations

122 P ath G oal T heory The main function of the leader is to clarify and set goals with sub-ordinates, help them find the best path for achieving the goals and remove obstacles

123 Likert’s Four Systems Of Management System 1exploitive – authoritative System 1:exploitive – authoritative System 2benevolent – authoritative System 2 :benevolent – authoritative System 3consultative System 3 :consultative System 4participative - group System 4 :participative - group

124 Goal Approach To Leadership Effectiveness EffectiveOrganizationEffectiveOrganization LeaderBehaviorLeaderBehavior MotivatedSubordinatesMotivatedSubordinates Functions Of A Leader Of A LeaderFunctions CharacteristicsOfSubordinateCharacteristicsOfSubordinateWorkEnvironmentWorkEnvironment

125 T he M anagerial G rid The grid has two dimension: 1. Concern for production. 2. Concern for people.

126 The Managerial Grid

127 C an L eadership B e T aught? 80 percent of leadership growth derives from experience on the job. 20 percent can be acquired through training and study. On-the-job training and classroom training must go hand in hand.

128 Performance Management

129 Performance refers to an employee’s accomplishment of assigned tasks. P erformance

130 Appraisal All managers are constantly forming judgments of their subordinates and are in that sense continuously making appraisals. The term is,however, applied in Human Resource Management to “Formal and systematic assessment made in a prescribed and uniform manner at a certain time”. Appraisal is the judgement of an employee’s performance in his job, based on considerations other than productivity alone.

131 It is length of time during which an employees job performance is observed in order to make a formal report. A ppraisal P eriod

132 It is the systematic description of the job-relevant strengths and weaknesses of an individual or a group P erformance A ppraisal

133 P erformance A ppraisal A Complex and often Misunderstood Process Performance appraisal is an exercise in observation and judgement, it is a feedback process, and it is an organizational intervention. It is a measurement process as well as an intensely emotional and human process also.

134 P erformance M anagement Performance Management is the total process of observing an employee’s performance in relation to job requirements over a period of time and then making an appraisal of it. This is done by: Clarifying expectations. Setting goals. Providing on-the-job coaching. Storing and recalling information about performance. Counseling & Feedback. Monitoring.

135 Planning Performance. Managing Performance. Reviewing Performance. Rewarding Performance. P erformance M anagement P rocess

136 Managing performance needs appraisal. It means something very specific, and much too narrow. A process of improvement, which demands continued attention. Performance appraisal is only a part in the overall PM process. PM requires a willingness and commitment to focus on improving performance at all levels. Timely feedback and constant focus of everyone’s attention on the ultimate objective. We need to break performance appraisal orientation to performance management. P erformance M anagement

137 T he O rganizational A nd H uman C ontexts O f P erformance A ppraisal Performance appraisal is almost universal. In our contest not so well organized. Managers have limited contact with employees outside but we have no distance. Accuracy in appraisal is less important than motivating and rewarding the subordinates to most managers. Standards and ratings tend to vary widely and often unfairly Personal values and biases can replace organizational standards. Sometimes the validity of performance appraisals is reduced by the supervisor’s resistance to making them. Some supervisors complain that performance appraisal is pointless paperwork Performance appraisal interfere with more constructive supervisor -subordinate coaching relationships.

138 T he Process o f P erformance M anagement N eeds T hree T hings T o B e D one W ell DEFINE PERFORMANCE:  Set Goals.  Decide How to Measure Accomplishment.  Assessment of Process. FACILITATE PERFORMANCE:  Obstacles.  Provide Adequate Resources.  Careful Selection of Employees. ENCOURAGE PERFORMANCE: Provide sufficient number of rewards that employees really value and do so in a timely and fair manner

139 P urposes o f P erformance M anagement S ystem Provide justification for employment decisions. Provide feedback for personal and career development. Help establish objectives for training programs after identifying the development needs. Serve as-input for a formal reward and punishment system. To motivate employees to do better in present job. Used as criteria in test validation. Help diagnose organizational problems.

140 Purpose of Performance Management System Employment Decisions PURPOSES OF PERFORMANCE APPRAISAL SYSTEM Diagnosis of Organizational Problems Employee Feedback Objective for Training Programs Criteria in Test Validation

141 D iagnosing O rganizational P roblems H ow D one This is done by identifying training needs in terms of knowledge, skills abilities, and other characteristics to consider as a basis for distinguishing between effective and ineffective performers and using them in other decisions like hiring etc.


143 How does Performance Management fit into the overall company management process? Company Strategic Plans Sales Projections Line Expansions New Products Facility Plans Human Resources Organization Planning Succession Planning Organizational and People Development Performance Planning Periodic Reviews - Coaching & Feedback Performance Evaluation Rewards & Recognition Employee Dev /Career Plan Environment Styles Culture Values

144 P erformance M anagement S ystem The goal of performance management is to improve organizational performance by translating the organization’s strategic plan into individual employee performance plan This Needs a Proper and Integrated PMS

145 R equirements O f E ffective A ppraisal S ystems The Fundamental requirements of any appraisal-system are: Relevance Sensitivity Reliability. Acceptability Practicality.

146 Relationship Of Performance Standards To Job Analysis And Performance Appraisal Job Analysis Performance Standards Performance Standards Performance Appraisal Performance Appraisal Describes work and personal requirements of a particular job Describes work and personal requirements of a particular job Translate job requirements into levels of acceptable/ unacceptable performance Translate job requirements into levels of acceptable/ unacceptable performance Describes the job-relevant strengths and weaknesses of each individual Describes the job-relevant strengths and weaknesses of each individual

147 L egal I ssues I n P erformance A ppraisal To avoid legal difficulties, consider taking the following steps: Conduct a JA and determine job characteristics Incorporate these characteristics into a rating system Train supervisors to use the rating system properly. Provide performance counseling or corrective guidance Formal appeal mechanism, and higher level review. Document appraisal and reasons for termination decision

148 T he S trategic D imension O f P erformance A ppraisal Greatest Management Principle: The things that get rewarded get done well. Short term if rewarded will generate short term performance. When long term results required then the performance on longer periods need to be rewarded. Managers may emphasize short or long term objectives or a combination. Short term objectives - outcome as bottom line results for current quarter. Long term objectives - increase market share and securing repeat business. To be most effective, strategic management of Performance must be linked to the strategies an organization uses to gain competitive advantage eg innovation, speed, quality or cost control.

149 Types Of Review Performance Review. Potential Review. Reward Recommendations. Methods Of Review Ranking Grading Behavior Expectations Open Ended 360 Degree Feedback Multi-Rater.

150 A lternative M ethods O f A ppraising E mployee P erformance  Behavior oriented Rating Method.  Relative Rating System.  Absolute Rating System  Result orientated Method.  MBO  Work and Planning Review

151 B ehavior- o riented R ating M ethods Narrative Essay. Ranking. Paired Comparisons. Forced Distribution. Behavioral Checklist. Critical Incidents. Graphic Rating Scale. Behaviorally Anchored Rating Scales (BARS).

152 W hen S hould E ach T echnique B e U sed If objective is to compare employees across raters for important employment decisions (e.g. promotion, merit pay),MBO and work planning review should not be used. They are not based on a standardized rating scheme for all employees. If a BARS is used, diary keeping should be made a part of the process. This will improve the accuracy of the ratings, and it also will help supervisors distinguish between effective and ineffective employees. If objective performance data are available, MBO is the best strategy to use. Work planning and review are not as effective as MBO.

153 W hen S hould E ach T echnique B e U sed Appraisal methods that are best in a broad organizational sense- BARS and MBO - are the most difficult to use and maintain. Methods that focus on describing, rather than evaluating, behavior(e.g. BARS, rating scales)produce results that are the most interpretable across raters. No rating method has been an unqualified success when used as a basis for merit pay or promotional decisions. When certain statistical corrections are made, the correlation's between scores on alternative rating formats are very high. Hence all the formats measure essentially the same thing.

154 P opularity o f A ppraisal M ethods & T heir U se Rating Scales-51% Essays-23% MBOs-17% Other Forms-9%

155 W ho S hould E valuate P erformance The Immediate Supervisor. Peers. Subordinates. Self-appraisal. Customers Served. Computers. Multi-Raters or 360 Degree Feedback.

156 A ppraisal E rrors COMMON ERRORS: Leniency. Severity. Central Tendency. OTHER ERRORS: Halo Error Contrast Errors Recency Error

157 S ecrets O f E ffective A ppraisal I nterviews Frequent Communication Training in Performance feedback and Appraisal Interviewing Encourage Subordinate to Prepare Encourage Participation Judge Performance, Not Personality Be Specific, and Be an Active Listener Avoid Destructive Criticism Set Mutually Agreeable Goals Continue to Communicate, and Asses Progress Toward Goals Regularly Make Organizational Rewards Contingent on Performance

158 I mpact O f P erformance A ppraisal O n P roductivity, Q uality O f W ork L ife, A nd T he B ottom L ine Performance appraisal is a feedback process. Feedback increases performance by 10 to 30 percent.” Feedback is a fairly inexpensive way to improve productivity; but, to work effectively, it requires sustained commitment. The cost of failure to provide such feedback may result in the loss of key professional employees, the continued poor performance of employees who are not meeting performance standards, and a loss of commitment by all employees. The myth that employees know how they are doing without adequate feedback from management can be an “expensive fantasy”.

159 I mplications F or M anagement P ractice The difficulty of implementing and management of performance appraisal systems. To improve policy issues for improvement in PMS make “quality of performance appraisal feedback to subordinates” and “development of subordinates” integral parts of every manager’s job description. Tie rewards to effective performance. Recognize that performance appraisal is a dialogue involving people and data; both political and interpersonal issues are involved. No appraisal method is perfect, but with management commitment and employee “buy-in” performance management can be a very useful and powerful tool.

160 I mpact O f N ational C ulture O n O rganizational P erformance A ppraisals Less support for performance appraisal as practiced in Western cultures More focus on group rather than individual performance Greater willingness to consider nonperformance factors(e.g. off-the-job behaviors, age) as criteria in appraisal Less willingness to attribute performance levels to the skills and efforts of particular individuals More open and direct relations between supervisor and subordinate An expectation of closer supervisory styles. To forgive, forget and be generous on employee expectations.


162 C omplexity O f P erformance M anagement Performance Management includes issues as:  Developmental (feedback)  Technical aspects (Design of an appraisal system)  Interpersonal Aspects (Appraisal interviews)  Administrative (Pay, Promotions) This makes it extremely complex.

163 Linking Performance Management with other key areas Performance Planning Performance Feedback & Coaching Performance Evaluation Implementation Skills Gap Analysis Training Needs Assessment Employee Development Plan

164 P erformance M anagement S ystem “Is a means to create and maintain a climate of success in the organization.” … Martin Fisher, “Performance Appraisals” This means a Win-Win relationship with employees & Sharing the business success all the way

165 T he E xecutive A ppraisal P aradox Executive Paradox Structured performance reviews not liked Formal review below dignity Too busy to conduct appraisal. Autonomy and creativity in executives Results the only basis for assessing Comprehensive evaluation impossible via formal performance appraisal

166 A nswer T o T he E xecutive A ppraisal P aradox A formal, systematic executive appraisal process is a must. Incorporate formal performance planning. Make performance review and appraisal an ongoing process. Focus on process as well as outcomes during the executive review. Be as specific and thorough as possible.

167 Q uestions / A nswers

168 T hank Y ou

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