The performance management process involves all levels in an organization. Strategic goals set by the organization filter through the organization and affect the goals and activities of each employee. In addition, the performance management process gathers and updates current employee data to maintain the human resource information system (HRIS). The HRIS contains a skill bank of employee information that enables the HR department to determine if the organization has the right mix of skills and people to achieve the organization’s goals in an ever-changing world. This information is used in all areas of HR decision-making. Effective performance management requires ongoing communication between supervisors and staff. The assessment and review part of the process provides the opportunity for documentation and formal communication. It’s the time for the supervisor and the employee to set developmental goals that reinforce the organization’s strategic plan and, if there are areas of problem performance, action plans for improvement. There should be discussion of the employee’s career progress and plans made for training and long-term career growth. Many supervisors see the appraisal process as a motivation tool to improve employee performance.
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The employee’s main objective is to obtain feedback from the supervisor on his or her work performance. Ideally, employees receive feedback at all times and not just through the review process. The employee will also expect organizational support in his or her career growth. Together, the employee and the supervisor should identify areas for improvement and set goals for training and skill development. Anything the supervisor can do to enhance the employee’s skills will benefit both the employee and the organization. If the organization links performance appraisal to compensation, most employees will expect a raise as a result of a positive review. Though supervisors generally conduct the review, they may not have a say in the amount of compensation awarded because compensation is normally determined by organizational policy. This can be particularly problematic for supervisors who want to motivate employees through the appraisal process but find the organization’s compensation to be a de-motivator when increases are not as much as employees would like. For this reason, many supervisors prefer that compensation increases are not linked to the performance appraisal process.
Difference between Performance management and performance appraisal Performance Management
Performance management is a goal-oriented system to ensure that organizational processes exist to maximize the productivity of employees, teams and, ultimately, the organization.
A performance appraisal is a formal system of review and evaluation of individual or team performance.
Performance management is an ongoing organizational process that is conducted to maximize the productivity of employees with the overall intention of improving the organization’s effectiveness.
The performance appraisal is a periodic event to reflect and evaluate past performance with the intent to identify strengths and weaknesses of an employee’s performance and to identify developmental goals.
It is strategic in nature and involves every person and all HR processes in the organization. All are directly tied to achieving the organization’s goals.
A performance appraisal is just one part of a performance management system.
The Importance of Performance Management
The employees are an integral and indispensable part of running a business smoothly and efficiently. That’s why, keeping in mind the crucial role of the employees, a recent trend known as Performance Management has come into practice. Using performance management, we can ensure that our employees not only fulfil their responsibilities, but do so to the best of their abilities and up to your expectations. Performance management allows us to tap the full potential of our staff. It can be described as a comprehensive process starting from monitoring and developing the desired traits to rating their progress and rewarding them for their achievements. I. Involve Employees in the Planning Stage
The making of plans alone will not help us to run our business successfully. We must also focus on the appropriate ways to get business tasks done. One way of doing this efficiently is to involve our employees in the planning process. This will not only boost their morale and confidence, but also help us avoid any communication gaps in the process. Additionally, it will also help in providing them with a clear picture of what we expect from them and what they need to accomplish.
II. Monitoring the Progress of Our Employees
Just as revision of business plans is sometimes necessary for the success of our business, measuring the performance of every employee is also important. This ensures that tasks are efficiently completed on time and on or under budget. It also points out to you any shortcomings of either our staff or business plans, and helps us to take the appropriate corrective actions.
III. Ensuring All Around Development of Employees
Performance management gives us the tools to install the desired qualities in our employees in order to get the job done. Development is not limited to only individuals in our workplace, but also addresses the performance of the team as a whole. All around employee development not only ensures the personal and professional growth of our employees, but also the expansion and improvement of our business.
IV. Evaluation of Individual Performance
Evaluating and rating the performance of our employees on an individual basis is essential. This gives them a clear picture of where they presently stand, areas that they need to work on and what they are good at. This way, they can focus more on their weaknesses and work to strengthen those areas. We should make it company policy to issue performance reviews while providing your employees with the feedback that they need to perform better at their jobs.
V. Rewarding Our Employees
Rewarding and appreciating our employees’ efforts ensures that the level of their performance and consequently the performance of our business is not compromised. It ensures optimum productivity, Performance and maximum profitability. Rewarding our staff for a job well done not only enhance their performance but also serves as a tool to keep them motivated. Therefore, performance management is an effective system that allows us to achieve the financial goals of our small business. Methods of Performance Appraisal
There are a variety of appraisal methods available to organizations. The method selected by the organization should fit well with the organization’s goals and be appropriate to the job being appraised. Some organizations use different methods for different positions. Regardless of the system used, regular communication and feedback from managers are more important than the method used. Graphic rating scale
A graphic rating scale is the most commonly used appraisal system. Evaluators record their judgments on a scale that includes about 5–7 categories. Categories are defined by adjectives such as outstanding, meets expectations or needs improvement. This method is popular because it is easy to administer and can be quantified, if desired, by adding a numeric value to each description.
In the ranking method, the evaluator places employees from a particular group in the order of overall performance, starting with the top performer–who is rated the highest–and moving down to the poorest performer in the group who receives the lowest ranking. Paired comparison is a variation of the ranking method in which the performance of each employee is compared with every other employee. The comparison is often based on a single criterion, such as overall performance. The employee who receives the greatest number of favorable comparisons is ranked the highest. This can be difficult to administer if your work group consists of a large number of employees.
Forced distribution method
The forced distribution method requires the evaluator to assign individuals to a limited number of categories, much like a normal frequency distribution curve. A few individuals will get very high ratings and a few will get very low ratings, with the majority averaging in the center of the curve. Generally, those with very low ratings are subject to termination. As with the ranking method, this system requires the evaluator to place some employees at the bottom, even if their performance is acceptable, and some at the top, even if performance may actually be less than outstanding. The system makes the erroneous assumption that there must be some outstanding workers and some poor workers, even when that may not be the case. Forced distribution is unpopular among managers because many believe it destroys teamwork and fosters cutthroat competition among employees.
Critical incident method
The critical incident method requires the evaluator to maintain records of employees’ favorable and unfavorable performances. These critical incidents become the basis for evaluation. The incident log must be maintained over the entire evaluation period to eliminate the problem of just evaluating an employee’s most recent Performance.
In the essay method, the evaluator writes a brief narrative of the employee’s performance. The major criticism of this method is that it is very subjective because the evaluation criteria left entirely to the discretion of the evaluator and the results are dependent on the writing skills of the evaluator. It can be difficult to compare the results of employee evaluations that use the essay method because there are no common criteria used for evaluation. BARS–behaviorally anchored rating scale
BARS is a behaviorally anchored rating scale that combines elements of a traditional rating scale and a critical incident method. Various performance levels are described on a scale, and the evaluator compares the employee’s performance to the levels described. The descriptions provided reduce the amount of judgment required of the evaluator and rely on the evaluator’s observations of the employee’s work behavior.
MBO–management by objectives
Management by objectives, or MBO, is a results-based system that relies on the manager and the employee to jointly agree on objectives, the attainment of which becomes the basis of evaluation for the next appraisal period.
TCS- Tata Consultancy Service
About The Company
Tata consultancy services limited (TCS) is the world-leading information technology consulting, services, and business process outsourcing organization that envisioned and pioneered the adoption of flexible global and pioneered the adoption of the flexible global business practices that today enable companies to operate more efficiently and produce more value. They are part of one of Asia’s largest conglomerates- the TATA Group- which, with its interests in Energy, Telecommunications, Financial Services, Chemicals, provides us with a grounded understanding of specific business challenges facing global companies. The role of HR assumes unthinkable proportions and is subject to mammoth challenges. With this sensitive breed of IT professionals, how has TCS grown to and sustained at the number one position is a question which market watchers have asked themselves a thousand times. There is but one answer- passion for excellence in the workforce practices.
TCS has developed an unbreakable bond with sound HR practices in an environment that defines traditional roles and responsibilities. The TCS-HR group operates with technical experts to create a synergy which is enviable. The role of HR, which is that of a facilitator. So whether it is recruitment or even career development, HR is the catalyst which initiates and institutionalizes processes. To manage all the functions for over 14000 employees is a difficult task but the smoothness of operations is intriguing. The HR structure, which allows flexibility and empowerment, is the solution.
Performance Appraisal Criteria at TCS
Data relating to performance assessment of employees are recorded, stored and used for different purposes:
MAIN PURPOSE OF PERFORMANCE APPRAISAL
Identification of individual needs
Determining Transfers and job assignments
Identification of individual strengths and development needs. Administrative Uses
Retention or termination
Recognition of individual performance
Identification of poor performers
Organizational Maintenance/ Objectives
Determining organization training needs
Evaluation of organizational gal achievement
Information for goal identification
Evaluation of HR systems
Reinforcement of organizational development needs
Criteria for validation research
Documentation for HR decisions
Helping to meet legal requirements
Performance Appraisal and Competitive Advantages in TCS
The objectives of performance appraisal, point out the purpose which such an exercise seeks to meet. What needs emphasis is that performance evaluation contributes to TCS’s competitive strength. Besides encouraging high levels of performance, the evaluation system helps identify employees with potential, reward performance equitable and determine employee’s need for training.
Specifically, performance appraisal has helped the TCS gain competitive edge in the following ways: Improving performance
Making correct decisions
Ensuring legal compliance
Minimizing dissatisfaction and turnover
Values and behaviour
Strategy and behaviour
TCS conducts two appraisals:
1. At the end of the year
2. At the end of a project
Appraisals are based on Balanced Scorecard, which tracks the achievement of employees on the basis of targets at four levels:
Based on their individual achievements, employees are rated on a scale of one to five (five = “superstar”). If employees get a low rating (less than two) in two consecutive appraisals, the warning flags go up. “If the poor performer continues getting low scores then the exit option may be considered. Over the years TCS has found the pattern that leads to the maximum decline in performance. If employees work for more than two years on the same project, typically either their performance dips or they leave the organisation. To avoid that, TCS shuffles its employees between projects every 18 months or so. “Performance drops if motivation drops” the employee satisfaction depends upon the fact whether his performance is being appreciated and recognized. TCS’s performance management system has metamorphosed into one that emphasizes objectivity and a system that mandates performance evaluation against pre-determined criteria.
What Deserve special mention is the active participation of the senior management in the determination of guidelines for the Performance Appraisal Process. The process ensure buy in of the employees since the guidelines for the rating system and its conversion into money terms is not unilaterally decided by HR but is a consensus of a cross functional team with representation from all levels. TCS’s performance appraisal system is supported by an online system called the Human Resource management system an Oracle Developer 2000 based tool. An employee’s performance history at the click of a button and this accurately maintained for 14000 employees. Right from his entry, an employee in TCS get formal performance feedback once every 2 months till such time that he is confirmed after which the performance feedback is provided twice every year on a formal basis. TCS however widely encourages informal feedback discussions between Project leader & Team Members and this concept have found an overwhelming appeal among the people.
Recognition at TCS
Guaranteed high motivation levels at TCS through competitive compensation packages, stimulating job content, outstanding development opportunities, and not the least, an innovative recognition mechanism.
The various ways in which TCS recognizes its people are listed below: Project milestone parties — to encourage efficient execution of projects. Recognition of star performers / high fliers — to recognize outstanding talent. Nomination to covet training programmes — to encourage self-development. Best project award — to promote a spirit of internal competition across work groups and to foster teamwork. Best PIP award — to encourage innovation and continuous improvement. Best auditor award — to acknowledge participation in critical support roles Spot awards — to ensure real-time recognition of employees. Recommendations for new technology assignments / key positions — to ensure career progression and development of employees’ full potential. Performance-based annual increments — to recognize high performers Early confirmations for new employees — to reward high-performing new employees Long-service awards — to build organisational loyalty
EVA-based increments — to ensure performance-based salaries. On-the-spot recognition —to guarantee immediate recognition of good performance.