Dewakar Goel
A MODERN APPROACH
SECOND EDITION
Performance Appraisal andCompensation Management
Performance Appraisal andCompensation Management
Performance Appraisal andCompensation Management
A Modern Approach
DEWAKAR GOELHuman Resource Consultant
International Civil Aviation Organization (ICAO)Montreal, Canada
Human Performance TechnologistInternational Air Transport Association (IATA)
Geneva, SwitzerlandVisiting Faculty
Indian Institute of Technology Delhi, andNarsee Monjee Institute of Management Studies
Mumbai
New Delhi-1100012012
SECOND EDITION
PERFORMANCE APPRAISAL AND COMPENSATION MANAGEMENTA Modern Approach, Second EditionDewakar Goel
© 2012 by PHI Learning Private Limited, New Delhi. All rights reserved. No part of this bookmay be reproduced in any form, by mimeograph or any other means, without permissionin writing from the publisher.
ISBN-978-81-203-4565-2
The export rights of this book are vested solely with the publisher.
Fifth Printing (Second Edition) June, 2012
Published by Asoke K. Ghosh, PHI Learning Private Limited, M-97, Connaught Circus,New Delhi-110001 and Printed by Mudrak, 30-A, Patparganj, Delhi-110091.
Tomy loving son, Kartikeya
andmy dearest daughter, Sharmistha
vii
Contents
Foreword...................................................................................... xviiPreface ........................................................................................ xixPreface to the First Edition ............................................................ xxiAcknowledgements ....................................................................... xxiii
1. Understanding Human as Resource............................... 1–14Human Resource Identified in Personnel ......................................... 1Personnel Management is the Main Key.......................................... 2Performance Management in the Ambit of
Personnel Management ................................................................. 3Human Factor is the Core Issue ....................................................... 6Functions of the Personnel Department ........................................... 8
Organisational Planning and Development ........................................ 8Staffing and Employment .................................................................... 8Training and Development .................................................................. 9Wage and Salary Administration ........................................................ 9Motivation ........................................................................................... 9Employee Services and Benefits .......................................................... 9Industrial Relations ............................................................................. 9Personnel Records, Audit and Research ............................................. 9
Every Manager is a Personnel Manager ......................................... 10Human Relations are Important for Every Manager ...................... 11
Role of HR in Changing Industrial Scenario .................................... 13Suggested Further Reading ......................................................... 14
2. Performance Appraisal—An Overview .........................15–37The Necessity of Performance Appraisal ........................................ 21A Need-Based System must be Planned........................................ 24The System Requires Transparency ................................................ 25
viii Contents
Techniques are the Tools for Appraising Performance ................... 26Self-evaluation is Necessary ............................................................ 27Traditional Methods ....................................................................... 27
Ranking Straight ............................................................................... 27Comparing Person to Person ............................................................. 28Comparison by Way of Paired Ranking ........................................... 29Assessment of Linear Rating Scale ................................................... 30Forced Choice Description ................................................................. 30Evaluation Based on Forced Distribution ......................................... 31Questionnaire ..................................................................................... 32Write an Essay ................................................................................... 33Evaluation on the Parameters of Critical Incidents ......................... 33Evaluation by the Group ................................................................... 34Appraisal by Field Review ................................................................ 35Evaluation of Employee Cost ........................................................... 36
Suggested Further Reading ......................................................... 37
3. Modern Methods of Appraising Performance ...............38–56Multi-level Multi-source Feedback System
(360 Degree Feedback) ................................................................... 38How Does the System Work? ......................................................... 41Operating “360 Degree Feedback” .................................................. 43Evaluation on the Basis of Results or Management by
Objectives (MBO) ....................................................................... 44Human Value Accounting as Asset................................................ 49Evaluation on Behaviourally Anchored Rating Scales ................... 50Evaluation through Centre of Assessment ..................................... 51Potential Appraisal ......................................................................... 51Appraisal by Rater Concerns .......................................................... 53Performance Appraisal of Bureaucrats—New Approach ................ 54Suggested Further Reading ......................................................... 56
4. Appraisal Based on Key Performance Areas ................57–75Supreme Court Played a Vital Role for Change ............................ 58Government Initiative for Implementation ..................................... 59Performance Linked to KRAs ......................................................... 59MBO is the Basis of New Performance Management System ....... 60KPA and KRA Distinguished ........................................................ 61The Word SMART Crystallizes the Concept into Reality .............. 62KRA Requirements ......................................................................... 62Strengths and Limitations of KRA ................................................ 63The System Aims to have Bell Curve Approach ........................... 65Implementing KRA Based Performance Appraisal System ........... 66Planning for Performance ............................................................... 66
Contents ix
Identification and Measurement of KPAs ...................................... 67Mid-Year/Periodical Review ........................................................... 67Final Annual Assessment ............................................................... 68Non-participation of the Executive in the Process ......................... 69Normalisation for Implementing Bell Curve Approach .................. 69Feedback and Counselling .............................................................. 70Objective Assessment of Competencies .......................................... 70
Managerial Competencies ................................................................. 71Assessment of Core Values ................................................................ 71Assessment of Potential .................................................................... 72
Special Achievement Needs to be Recognized ................................ 73Plan for Training and Development ............................................... 73Distribution of Rating Scores on 10-point Scale for
Competencies and Potential ........................................................ 74Frequent Communication is Essential ............................................ 74Suggested Further Reading ......................................................... 75
5. Exploring Bell Curve Approach in Appraisal ...............76–99Implementing Bell Curve Approach in Performance Appraisal ..... 78
Performance Evaluation of Executives ............................................. 79Analysis of Rating Scores for Interpretation .................................... 80Bell Curve Analysis for Executives ................................................... 82
Suggested Further Reading ......................................................... 98
6. Competency Mapping to Enhance Performance ....... 100–117What is Competency? .................................................................... 102Types of Competency..................................................................... 102Competency Mapping Linked with Corporate Startegy................. 104Let us Unfold the Pages of History ............................................... 104Competency Grouped in Various Areas ........................................105Competency Mapping—Areas of Concern Why?
What? & How? .......................................................................... 106Competency Mapping is a Systematic Activity ............................. 107Identification of Competencies ....................................................... 108Benchmarking ................................................................................ 108Assessment of Competencies ......................................................... 109Tools for Assessment of Competency ............................................ 110Application of 360 Degree Feedback ..............................................111Advantages of the System ............................................................. 112Lengthy Procedural Formalities .....................................................112Assessment Centre for Competency Assessment ........................... 113How to Apply Assessment Centre Approach ................................ 114The Need for Assessor ................................................................... 115Role and Responsibility of the Assessor ........................................115
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