A STUDY OF PERFORMANCE MANAGEMENT PRACTICES ADOPTED BY VARIOUS NATIONS

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1. PERFORMANCE MANAGEMENT ASSIGNMENT ASSIGNMENT : A STUDY OF PERFORMANCE MANAGEMENT PRACTICES ADOPTED BY VARIOUS NATIONS SUBMITTED BY: SHERYL MEHRA BATCH: 2012-15…
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  • 1. PERFORMANCE MANAGEMENT ASSIGNMENT ASSIGNMENT : A STUDY OF PERFORMANCE MANAGEMENT PRACTICES ADOPTED BY VARIOUS NATIONS SUBMITTED BY: SHERYL MEHRA BATCH: 2012-15 DIVISION: C
  • 2. UNITED STATES OF AMERICA The strong individualistic nature of U.S culture is manifested in PMSs as a conviction that employee ought to be evaluated on their individual performance and contributions. As such, performance evaluation in the U.S. is largely focused on the performance of individual employees rather than the performance of teams or work units. As a capitalist country, workers in the US largely expect that their rewards will be a direct result of their individual contributions. As a result, there are competitive aspects to many PMSs in which only the top performing employees receive the greatest rewards. Capitalism has also created fierce competition for organisations & the people in them to be industry leaders . Pressure from stockholders, leaders and boards of directors generate organizational climates that are results- oriented and driven to be highly successful and profitable. At the same time, as a democratic country in which everyone has a voice in government, citizen expect fair & transparent systems and processes. For employees, this translates into the expection that PMSs will be administered in a fair & transparent manner & that employees will also have input into how their performance is evaluated. This expection is reinforced by the U.S legal syetem, which allows employees to easily seek redress if they feel they have been treated unfairly. Uses of PM in THE U.S. Currently, most U.S. organisations use their PMSs for decision –making(e.g. for pay, bonuses, promotion, assignments, reductions in force). Fewer use PM to guide employee development, including training, mentoring, and other experiences to help employees develop their capabilities. The choice of whether to use a system for decision-making or development is a critically important one that has implications for the system’s design and implementation. Tools used for measuring PM in U.S a) Six Sigma  One key innovation of Six Sigma implementation in American Companies involves the absolute "professionalizing" of quality management functions.  For them, Six Sigma programs are a kind of elite ranking terminology to define a hierarchy that kicks across all business functions and levels.  CEO and other Top Managers are responsible for setting up a vision for Six Sigma implementation. They also empower the other role holders with the freedom and resources to explore new ideas for breakthrough improvements. Employees are evaluated on the basis of their highest certification in Six Sigma (Black, Green, Yellow, etc.), or the extent of application of Six Sigma Certifications in daily work processes.
  • 3. b) Benchmarking:  This method improves performance by identifying & applying best demonstrated practices to operations & sales. Managers compare the performance of their employees externally with those of competitors.  Its objective is to find examples of superior performance and to understand the processes and practices driving that performance in employees.  Companies then improve their performance by tailoring and incorporating these best practices into their own operations.  Most managers use it to improve employee performance, understand relative cost position per employee, gain strategic advantage, and increase the overall rate of organizational learning. Key Factors impacting PM in the U.S. Whether used for decision-making, development, or both, three key factors that are so pervasive that they impact essentially all performance management systems in the U.S. are: 1. A focus on results 2. Implementation of automated human resource systems, and 3. A legal environment that allows challenges of employment practices. Key challenges facing effective PM in the U.S. PM is often referred to as the ‘Achilles heel’ of HRM. A survey by Watson Wyatt showed that only 30% of workers felt that their company’s PMS helps to improve performance. Less than 40% said their systems established clear performance goals, generated honest feedback, or used technology to streamline the process. While these attitudes might be attributed to poorly designed systems, it is usually not poorly developed tools and processes that cause difficulties with PM. Rather, difficulties arise because, at its core, PM relies on human interactions and is an extremely difficult process to implement effectively. While ther are many challenges associated with implementing effective PMSs in the U.S. three are problematic:  Organizational members view PM as an administrative burden to be minimized rather than an effective strategy to obtain business results,  Managers and employees are reluctant to engage in candid performance discussions, and  Judgment and time factors impede accurate performance assessment.
  • 4. MEXICO Economic development in Mexico over the last two decades has contributed to an attractive environment for business investment and growth. As one of the world’s largest economies, Mexico enjoys regional economic and political power among other Latin American countries and is home to major multinational corporations such as Cemex (cement), Cinepolis (movie provider), Nemak (autoparts), Gruma (tortilla maker) and Bimbo (bakery). Contrasting with the endemic economic instability and crises of the past, Mexico experiences a rather stable economic environment today. Nevertheless, for business to succeed in this setting, leaders need to be aware of its particular management style. Setting the Stage  To be effective, PM systems tend to be complex, require significant amounts of resources and entail a redefinition of the roles of human resources (HR) vs. front-line managers.  PM systems fulfill a strategic role in organizations and their implementation requires paying particular attention to the establishment of work goals, performance measurement, work evaluation and appraisal, and feedback processes. PM practices can also have notable benefits for individual workers, because they provide relevant information about training and development needs, while helping define rewards and recognition opportunities. Finally, PM systems potentially enable companies to set standards for attracting and retaining key human talent.  In Mexico, the main challenge faced by HR executives is how to design strategies that link individual and organizational performance in practice. Developing innovative strategies for managing this link requires the development of specific competencies. For example, there is a need to design and use instruments that measure different types of performance, and to manage a diverse range of PM tools. Managing a diversity of tools tests front-line managers’ work, especially when it comes to giving and receiving feedback on employees’ performance.Example: The case of CompuSoluciones, a medium-size IT company often ranked top in the Great Places to Work rakings. CompuSoluciones devotes much effort to manage the strategic positioning of its PM systems.  Understanding this post-evaluation process could explain much of the typical negative behavior and rejection of unfavorable appraisal, and contribute to more effective evaluation outcomes.
  • 5. PM Instruments and Tools  Because of the diverse meanings that organizational members grant to performance nowadays, there are different models and tools available according to the organizational level at which performance is appraised. The best-known appraisal tools in Mexico are: Management by Objectives, Economic Value Added, Balanced Scorecard, 360-degree Evaluation, Critical Incident Method, and Top Talent Ranking (forced curve). a) Management by Objectives (MBO)  It is a process whereby the superior and the immediate subordinate of an organization jointly identify the common goals, define each individual's areas of responsibility and use these measures as guides for operating the unit.  It is used widely as a performance appraisal technique, as it is easy to measure whether the stated objectives have been achieved or not. The Mexican theory of using this method is that when the goals of the individual & the organization are aligned, the employee contributes effectively to the organization, thereby, improving the overall efficiency. b) Top Talent Ranking (Forced Curve)  This method operates under the assumption that an employee's performance can be plotted in a bell-shaped curve.  Mexican Companies use this method as it helps them classify the employee workforce in an effective manner, and gives them those key employees who are fit to take senior positions in the future. It is used widely because it helps to identify & retain the key talent in the firm. c) Critical Incident Method  It involves identifying & describing specific events where the employee did something really well or something that needs improvement.  It's a technique based on the description of the event, and does not rely on the assignment of ratings or rankings.  This method is useful as it helps employees improve since the information in this method is more detailed & specific than in rating methods. Mexicans believe in this system as they think if the Critical Incidents are caught, the employees’ whole scenario can be well made out.
  • 6. UNITED KINGDOM Introduction  In the context of UK, PMS is considered as a strategic process that is aligned to the organization’s wider objectives and long-term direction.  It is integrative in nature, not only aligning organizational objectives with individual objectives but also linking together different aspects of HRM like HRD, employee reward, organizational development, etc.  In UK, Performance Management is based on an agreement b/w a manager & an individual, shared understanding of and continuing dialogue about an individual’s goals, standards expected, competencies needed, etc. Tools used for measuring PM in U.K a) Balanced Scorecard  This method seeks to integrate financial & non-financial performance measures for a particular employee & identify key ones that link to strategy.  It involves establishing major objectives for each of the four perspectives, translating each objective into targeted performance measures and comparing actual performance measures with the target measures.  The UK Assumption of this approach is that each performance measure is part of a cause- and-effect relationship involving a linkage from strategy formulation to financial outcomes. When all employees are evaluated through this approach, managers get a clear picture of the key talents of the company & where one particular employee lack & needs improvement. b) 360 Degree Appraisal  It is a process where multiple raters are involved in evaluating performance.  In this method an employee's performance is evaluated by his supervisor, subordinates, peers and customers.  It is the most widely accepted & applied as it provides the feedback on an employee from all angles of his work performance. c) Quantitative Models for Performance Measurement Systems (QMPMS)  This approach uses cognitive maps, cause and effect diagrams, tree diagrams, and the analytic hierarchy process, to quantify the effect of factors on performance of the various employees.  A problem of this approach is that PM usually involves identification of many factors affecting performance. So, the number of pair wise comparisons is huge; and managing them is exhausting and time consuming. d) The Last Planner System and Lean-based Process Measures  These measures are mostly implemented in the UK construction projects with varying levels of success, to increase the reliability of planning, improve production performance, and create a predictable workflow.
  • 7.  Through this, project teams commit to complete assigned tasks in a given week. Some LC practitioners refer to percentage plans complete (PPC) as a metric for commitment reliability.  At each weekly meeting, time is given to learn and understand why certain tasks were not completed as planned in the previous week, before creating a new weekly plan to be executed.  The concepts of TQM and JIT Manufacturing are often used to compliment this approach for efficient results. Key Challenges in PM in the U.K. 1. Concerns about the link between PA scores & the length of hours worked (i.e. work- life balance issues and rater bias) 2. An increasingly diverse domestic workforce (in terms of immigration and ethnic groups) 3. The recent introduction of age discrimination legislation in the U.K. and concerns for the absence of bias
  • 8. Germany Some researchers have found evidence that the german HRM model is in a process of change. While for a long time after World War II the economic conditions were more or less stable & characterized by growth, enabling the development of a social market economy, recently external factors inducing change have emerged. Among there are German reunification & the opening of new markets for labor as well as for products in central & eastern Europe & of course the worldwide encompassing phenomenon of globalization a) Individual Characteristics  First of all the fact that an employee’s performance is evaluated should be associated with age for several reasons.  Risk averse individuals try to avoid situations in which they are faced with income uncertainty. Since systematic performance appraisals are often a precondition for performance pay, we conclude that the willingness to take risks is positively associated with being in a job with systematic appraisals.  One may argue that women are less willing to task risk or have a lower expected tenure due to parental leaves, which may influence compensation and PA.  There are no expect direct effects of an employee’s education on the probability that her or his performance is appraised but rather an indirect effect.  Better educated employees should work in different jobs and, as we will argue in the next subsection, the job status and hierarchical level should have an impact on the use of performance appraisals. b) Job-based and Firm Characteristics  There should be a strong impact of firm size on the probability that an appraisal system is used for several reasons: In small owner-managed firms the employer knows most of his or her employees directly and observes their actual performance continuously even without systematic appraisals.  Moreover, in larger firms it becomes more necessary to compare the performance of employees across departmental boundaries, which makes standardized methods to appraise performance more important.  Furthermore, setting up a formal appraisal system causes fixed costs and, hence, the benefits of such systems are more likely to exceed the costs in larger firms.  Finally, large firms typically offer more formal training so that the presence of PA systems is more likely to determine specific training needs. Tools used for measuring PM in Germany: a) Activity-based Costing  An efficient cost accounting system is of vital importance for the corporate management & for several PM approaches.
  • 9.  For the Germans, the main idea of ABC is to directly measure the cost of resources used to perform organizational activities.
  • 10. TURKEY  Performance evaluation is one of the most challenging HR functions in Turkish organizations.  There are mainly three reasons for that. First, although 72 percent of companies reported that they had a performance evaluation system with a standard evaluation form, it is difficult to obtain `objective’ appraisals. One-third of the organizations reported that they evaluated performance on the basis of competencies and behavioral criteria. There is no evidence of anyscientific validity of the measures developed to assess these criteria.  Evaluators do not receive training prior to performance evaluation.  Another problem is related to the evaluation process. As would be expected in a high power distance culture, a majority of organizations (80 percent) conduct performance evaluations as a one-way process whereby subordinates are evaluated by their superiors only.  Moreover, self-assessment did not yield reliable outcomes, as people tend to rate themselves lower than the ratings they received from their supervisors. Tools used for measuring PM inTurkey: a) Total Quality Management (TQM)  It is a firm-wide management philosophy of continuously improving the quality of the products by focusing on customers’ needs & expectations to enhance their satisfaction & firm’s performance.  Most Turkish Manufacturing companies and Industry use it for improving customer satisfaction, quality of products and/or services, productivity, employee performance, QWL, market share, etc.  However, most of these Turkish firms face some obstacles in its efficient application like Employee Involvement, Inadequacy of the firm structure, Lack of firm’s resources, Illiteracy & unawareness among employees, etc. b) ERP Applications  In most Turkish organizations dealing with production planning, supplies, sales, distribution, accounting & customer service, ERP system is standard software that manages these functions by integrating them all together.  For the employees, there are two types of criteria used to measure their performance; financial criteria and market criteria. This includes ROI, Sales profit margin sales growth, market share, etc.  As all such metrics & information is shared & discussed using the ERP Systems, Managers can easily look into the detailed performance of their employees on the mutually agreed goals & instilled metrics.  All employees are given a proper training on how to use the ERP Application effectively. They then keep uploading, measuring & keep a track of their achievements as recorded by the ERP System.
  • 11. c) Key Performance Indicators (KPIs)  It is a measurement based PMS that translates the vision of the Turkish firms to strategies, and converts them & the mission into performance measures.  It is used mostly in sync & in accordance with the implemented ERP Systems of the organizations. KPIs are installed primarily by employees & then modified. These Indicators help the managers to develop & use Performance Metrics.
  • 12. INDIA  Performance management is the practice of actively using performance data to improve an organization’s performance. It involves strategic use of performance measures & standards to establish performance targets & goals.  It is also needed to prioritize and allocate resources, inform managers about the needed adjustments or changes in policy or program directions to meet goals, frame reports on the success, and improve the overall quality of work.  PMS is a complete work system that begins when a job is defined as needed and ends when the employee performs according to the standards laid by you.  It aims to achieve the company mission and vision. An effective PMS sets new employees up to succeed, so they can help your organization succeed. Tools used for measuring PM in India: a) KRA Oriented Measurement  It is the method of evaluating an employee’s performance on the basis of Key Result Areas framed mutually among him & his manager.  These KRAs are often framed at the year’s starting, revised throughout the year based on the changing conditions, and measured accordingly at year end.  It gives a clear picture to an employee of where does he lack & needs to improve. b) 360 Degree Appraisal  It is a process where multiple raters are involved in evaluating performance.  In this method an employee's performance is evaluated by his supervisor, subordinates, peers and
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