UNIT III
Performance Management System
Performance management system is the systematic approach to measure the performance of employees. It is a process through which the organization aligns their mission, goals and objectives with available resources (e.g. Manpower, material etc), systems and set the priorities.
The execution administration framework is a constant procedure of characterizing and conveying the activity parts and duties, execution desires, goals and set their needs between boss (administrator) and subordinates (workers). It incorporates association, office and representative shared objective and targets which are lined up with frameworks and assets. It is the channel of providing clarity about goals and also to improve the business processes through various methods and mechanism.
The competency, skills and knowledge gaps are also identified through this process which can be improved by providing guidance, trainings, coaching and mentoring to employees or teams at different levels and designations. It optimizes the results through a roper channel and process which reduces the conflicts and grievances among teams or employees. Because each individual is clear about the expectations from his/ her role and put their efforts to meet performance standards.
This process can be applied to single department / function or to whole organization. It aims to continuously monitor and measure the performance standards against the desired goals and objectives.
“Performance management is the continuous process of improving performance by setting individual and team goals which are aligned to the strategic goals of the organisation, planning performance to achieve the goals, reviewing and assessing progress, and developing the knowledge, skills and abilities of people.”
Principles of Ethics in Performance Management
The key principles of ethical performance management are as follows:
- An ethical performance management system directs its employees to respect the core values of the organization. Because the ethics practiced by the organization is in conjunction with its environment. On the other side, the organization respects its employees and provide good working environment so that they will generate the result as per the potential.
- This system is designed to make transparency in its operation and all the parties involved in performance management system respect each other’s needs, values, and preoccupations.
- It emphasizes individual responsibility for personal decision making, behaviour, and action rather than collective responsibility.
- This system put emphasis on employees respecting and actively considering the ethical concerns and issues of all stakeholders, rather than focusing merely on shareholders alone.
- This seeks to build or change culture to a state in which the vision of the organization includes its employees, its customers, and the society at large. The values and norms of organization support employee’s decision making, behavior, and actions consistent with an ‘ethical’ vision.
- This system provide fair and free environment to its employees so that employees can get the opportunity to scrutinize the basis upon which the important decisions were made.
Developing Code of Ethics
The key guidelines to maintain an ethical performance management system in the organization are given below:
- HR Responsibility: In organizations, the HR professionals are responsible for adding value to by developing HR functions. They are also responsible for maintaining the balance between performance improvement and ethical behaviour in the organization.
The HR professionals shall act as ethics custodians and train and develop human resources for dealing effectively with relationship issues of morality, integrity, and honesty with other stakeholders particularly customer, suppliers, and society at large.
2. Developing Standards: Human resource professionals must strive to meet the highest standards of competence and ethics. The purpose is to keep abreast of organizational strategy, mission, and objectives on a continuous and consistent basis.
They must drive ethics training of top managers and employees on a wide scale. They have to educate them on the significance of ethics in attaining high-performance standards. The HR professionals shall transmit ethics to employees, managers, and external stakeholders through performance management system.
3. Ethical Leadership: In making performance management a truly business-aligned, transparent, and credible management endeavor, human resource professionals must exhibit individual leadership. They should act as ethics communicator to improve the situation for their organizations.
4. Fairness and Justice: For employee’s work achievements and their contribution in improving organizational competence and performance, there should be fairness and justice in respect of rewards and recognitions.
Human resource professionals are ethically responsible for promoting fairness and justice in the organization and they must enable a culture where ethical behaviour and action is a key performance criterion.
5. Conflict Management: They must safeguard the interest of all stakeholders to eliminate the conflict arising between manager-employees, employer-employee and employees-organization on certain issues related to rewards and recognition etc.
6. Transferring Information: The human resource professionals should ensure truthfulness of communication. It should be in respect of performance feedback and counselling and help top leadership in taking informed personnel decision.
1. The 360-Degree Appraisal
This method involves giving out a questionnaire with questions regarding the performance of a colleague and they need to fill it up. This feedback can be considered by the manager while evaluating the performance at the end of the quarter/year.
2. General Performance Appraisal
This method involves continuous interaction between the employee and his manager continuous setting of goals and achieving them. Whether the employee has been able to do justice the entire process or not is evaluated at the end of the year.
3. Technological/Administrative Performance Appraisal
This appraisal technique concentrates on technical more than any other aspect of performance on the job as the employees involved have specialized skills. They’re judged on the skills they possess and the activity they complete.
4. Manager Performance Appraisal
The performance of a manager should also be appraised and this includes not just his/her performance on the job but also relationship management with clients at his/her disposal. Generally, anonymous feedback forms are received which are then considered for appraisal.
5. Employee Self-Assessment
This method is very unpopular among employees as nobody can deal with rating himself or herself. The self-assessment sheet is compared with the one filled up by the manager and the differences are discussed.
6. Project Evaluation Review
This method involves performance appraisal of the team members involved at the end of every project and not at the end of every year. This helps the team and its members develop with each passing project.
7. Sales Performance Appraisal
A salesperson is evaluated on the basis of his/her sales skills and accomplishment of financial goals set previously. Goals set in case of sales should be realistic and ways of achieving them should be decided by the employee and the manager concerned.
In conducting performance appraisals, managers must be careful to avoid making rating errors. Four of the more common rating errors are strictness or leniency, central tendency, halo effect, and recency of events.
Strictness or Leniency
Some supervisors tend to rate all their subordinates consistently low or high. These are referred to as strictness and leniency errors. The strict rater gives ratings lower than the subordinate deserves. This strictness error penalizes superior subordinates. The lenient rater tends to giver higher ratings than the subordinate deserves. Just as the strictness error punishes exceptional subordinates, so does the leniency error. Strictness- leniency bias presents less of a problem when absolute standards and results-oriented approaches to performance appraisal are used.
Central Tendency
Some raters are reluctant to rate subordinates as very high or very low. They dislike being too strict with anyone by giving them an extremely low rating, and they may believe that no one ever deserves to get the highest possible rating. The result of this type of attitude is that everyone is rated around average.
Halo Effect
When a single positive or negative dimension of a subordinate’s performance is allowed to influence the supervisor’s rating of that subordinate on other dimensions, a halo effect is operating. For example, the supervisor likes Tom because he is so cooperative. The halo effect leads Tom’s supervisor to automatically rate him high on all appraisal dimensions, including leadership, management, personnel administration, administrative teaming, and even budgeting. The result is that subordinates are rated consistently high, medium, or low on all performance appraisal dimensions.
Recency of Events
Ideally, performance appraisals should be based on data collected about a subordinate’s performance over an entire evaluation period (usually six months to a year). However, as is often the case, the supervisor is likely to consider recent performance more strongly than performance behaviors that occurred earlier. This is called the recency of events error. Failure to include all performance behaviors in the performance appraisal of a subordinate can bias the ratings.
Strictness or leniency, central tendency, halo effect, and recency of events all result in inaccurate performance appraisals of employees. The absolute standards and results-oriented approaches to performance appraisal, particularly BARS and goal setting, attempt to minimize such rating errors.
Factors influencing Industrial Relations
The industrial relations system of an organisation is influenced by a variety of factors.
A few important are:
1. Institutional factors
2. Economic factors
3. Social factors
4. Technological factors
5. Psychological factors
6. Political factors
7. Enterprise-related factors
8. Global factors
These interrelated and interdependent factors determine the texture of industrial relations in any setting. In fact, they act, interact, and reinforce one another in the course of developing the industrial relations.
1. Institutional Factors:
Under institutional factors are included items like state policy, labour laws, voluntary codes, collective bargaining agreements, labour unions, employers’ organisations / federations etc.
2. Economic Factors:
Under economic factors are included economic organisations, (socialist, communist, capitalist) type of ownership, individual, company — whether domestic or MNC, Government, cooperative ownership) nature and composition of the workforce, the source of labour supply, labour market relative status, disparity of wages between groups, level of unemployment, economic cycle. These variables influence industrial relations in myriad ways.
3. Social Factors:
Under social factors items like social group (like caste or joint family) creed, social values, norms, social status (high or low) — influenced industrial relations in the early stages of industrialisation. They gave rise to relationship as master and servant, haves and have-nots, high caste and low caste, etc. But with the acceleration of industrialisation, these factors gradually lost their force but one cannot overlook their importance.
4. Technological Factors:
Under technological factors fall items like work methods, type of technology used, rate of technological change, R&D activities, ability to cope with emerging trends, etc. These factors considerably influence the patterns of industrial relations, as they are known to have direct influence on employment status, wage level, collective bargaining process in an organisation.
5. Psychological Factors:
Under psychological factors fall items pertaining to industrial relations like owners’ attitude, perception of workforce, workers’ attitude towards work, their motivation, morale, interest, alienation; dissatisfaction and boredom resulting from man-machine interface. The various psychological problems resulting from work have a far-reaching impact on workers’ job and personal life, that directly or indirectly influences industrial relation system of an enterprise.
6. Political Factors:
The political factors are political institutions, system of government, political philosophy, attitude of government, ruling elite and opposition towards labour problems. For instance, the various communist countries prior to the adoption of new political philosophy, the industrial relations environment was very much controlled by the Government ever since change has altered considerably like other capitalist economics.
There too, unions are now at the helm of labour activities, the industrial relations and is marked by labour unrest. Most of the trade unions are controlled by political parties, so here the industrial relations are largely shaped by the gravity of involvement of political parties in trade union activities.
7. Enterprise-Related Factors:
Under enterprise-related factors, fall issues like style of management prevailing in the enterprise, its philosophy and value system, organisational climate, organisational health, extent of competition, adaptability to change and the various human resources management policies.
8. Global Factors:
Under global factors, the various issues included are international relations, global conflicts, dominant economic-political ideologies, global cultural milieu, economic and trading policies of power blocks, international trade agreements and relations, international labour agreements (role of ILO) etc.
State interventions and Legal Framework
For long several commissions and commissions debated reforms to industrial relations seeking to amend trade union act to make registration requirements relatively more stringent than at present (from any 7 being able to form a union proposed to be revised to 100 or 10% of the employees), provide for statutory mechanism for recognition, deny industrial relations to unregistered/minority unions, and specify more clearly not only trade union rights, but also trade union obligations/responsibilities. The Dispute Act is also proposed to be amended to provide for more emphasis on relations than disputes and set up an independent Industrial Relations Commfssion in the place of existing dispute resolving machinery. Proposals have also been made to consider constitution-negotiating councils where there is more than one union.
The central law, Trade Unions Act, 1926 provides for trade union registration, not trade union recognition. By convention, all registered unions have begun to have industrial relations rights, de facto, though not de jure. With the law permitting any seven employees being able to form and register a union, the ground was open for a variety of craft, category, caste, etc., based unions. Labour being a concurrent subject, certain state governments (like Maharashtra, Gujarat and Madhya Pradesh) have passed separate legislations provided mandatory mechanism for trade union recognition. Certain states like Andhra Pradesh made secret ballot a must. But statutory provisions concerning union recognition did not, unfortunately, ease conflict on this count. The biggest strike in post-independence India occurred in the Bombay Textile Industry in 1982 over the issue of, primarily, representative character of two rival unions. A variety of methods are available for determining the representative union. It can be done through any of the following methods: secret ballot, check-off of membership verification. Union shop method is not prevalent in India. However, selection of representative union for recognition as collective bargaining agent which is necessary to engage in collective bargaining has itself become a major problem because different national federations of trade unions did not agree to a common methods and left the problem for settlement according to location realities! Even the National Labour Commission has left it vaguely. Proposals to alter the situation, along with other major changes in the Trade Unions Act have become abortive since 1978.
In India, the role of national federations of trade unions and employers' organisations is limited, in collective bargaining, to a small nucleus of industrial associations which have a long tradition of collective negotiations with their counterpart trade union federations of workers. Among such employer associations, notable mention may be made of the Ahmedabad Mill Owners' Association, Ahmedabad, the Bombay Mill Owners' Association, Bombay, the Indian Sugar Mills Association, New Delhi, the Tea Association of India, Calcutta, the Indian Jute Mills Association, Calcutta, the Cement Manufacturers' Association, New Delhi, the United Planters Association of South India, coonoor, the Southern India Mill Owners' Association, Coimbatore, the Indian Banks Association, Bombay and the Indian Port Association, New Delhi. The confederation of Indian Industry, which till last year (1991) represented mainly the engineering Industry, which negotiating region-cum-industry agreements for member firms who assigned to them in writing such responsibility.
"The role of industry associations in collective bargaining seem to vary depending upon the profile and background of industry and entrepreneurship. In a traditional, the engineering industry, profession managers are the charge of variations in processes and outcomes are discernible in each case which merit detailed study."
In some Industrial centres, both trade unions and employers, particularly have set up coordination committees to adopt a joint/collective strategy to deal with collective bargaining and related matters. This process has started in Bangalore and Hyderabad and spread to other places. Industry wise coordination is also taking place with the commencement of industry wide agreements in core sectors like coal and steel. Oil industry, all of which is in public sector now, also has a coordination committee though it does not have an industry wide agreement.
For public employees, Joint Consultative Machinery and Board of Arbitration have been constituted. Public pay is revised through pay commissions which are usually adopted once every 12 years or so. The significant gap between central government pay systems and industrial pay systems created considerable heartburn and discontent to those who feel they were adversely affected particularly in the wake of some Supreme Court judgments pronouncing public sector as the State.
In a few industries such as cement arbitration has replaced collective bargaining over wages and working conditions while in others like media (newspapers) and sugar wage boards still decide the wages and working conditions. In all other cases, with all its distortions, collective bargaining is the main mechanism through which wages and working conditions are decided. Over the years, the scope of collective bargaining has been widened to include virtually every possible aspect of working relation including the quantum of overtime, shift manning, discipline promotions and transfers, for instance. An industrial society is highly complex and dynamic arrangement of differentiated groups, activities and institutional relationships intertwined with a variety of attitudes ad expectations. Consequently, any specific social phenomenon, such as industrial relations, cannot and should not be viewed in isolation from its wider context. The 'context' of industrial relations may usefully be divided into three major elements .
- The Industrial Relations 'System'. The roles, relationships, institutions, processes and activities which comprise the phenomena of industrial relations exist both in a wide variety of industries and services and at a number of levels ranging from the suborganisational (work group, section or department) and organisational (site or company) levels through the industry level to the national level. This inevitably creates a pattern of internal influences both horizontally (between different organisations/industries) and vertically (between different levels). Consequently, the industrial relations system, in terms of the attitudes and activities existing within it at any point of time, provides its down context or climate for the individual industrial relations situations.
• Other Segments of Social Activity. Industrial relations is only one segment of a society's structure and activity and as such is influenced by, and in turn influences, other segments of the society's activity. The economic, social and political segments are of particular importance in this respect. Actions or changes in these areas may directly stimulate or constrain specific industrial relations activities as well as indirectly influence the attitudes of the participants. It is important to recognise that these environments exert an influence at all levels of industrial relations and therefore, as Fox argues, "organisational issues, conflicts and values are inextricably bound up with those of society at large".
• Time. The present is only part of a continuum between the past and the future; consequently, current industrial relations owes much to its past (whether last week, last year, the last decade or even the last century) and the participant's goals and expectations for the future. At the micro level, the time context may be evidenced in two ways: (a) today's problem stems from yesterday's decision and its solution will, as the environment change, become a problem in the future, and (b) the attitudes, expectations and relationships manifest by the participants are, at least in part, the product of their past individual and collective experiences. At the macro level, industrial relations as a whole is subject to adjustment and development as society, expressed through changes in the economic, social and political environments, it change and develop.
At the same time it is important to recognise that the 'mass media' provide an additional, and very significant, context for industrial relations by virtue of their role in shaping attitudes, opinions and expectations. Any individual, whether as a manager, trade unionist or part of the 'general public', has only a partial direct experience of the full range of activities present in a society. Most knowledge and appreciation of economic, social, politcal and industrial relations affairs is, therefore, gained indirectly from the facts and opinions disseminated through newspapers and television.
Role of Trade Unions
- Collective Bargaining-Honble Supreme Court of India has defined Collective bargaining asthe technique by which dispute as to conditions of employment is resolved amicably by agreement rather than coercion. In this process negotiations and discussions take place between employer and employee in respect to working conditions.Refusing to bargain collectively is an illegal trade practice. Collective bargaining helps to resolve the issues of workers. Collective Bargaining is the foundation of the movement and it is in the interest of labour that statutory recognition has been accorded to Trade Union and their capacity to represent workmen.
- Trade Unions protect the worker from wages hike, provides job security through peaceful measures.
- Trade Unions also help in providing financial and non-financial aid to the workers during lock out or strike or in medical need.
- It has also to be borne in mind while making an agreement that the interest of the workers who are not the members of Trade Union are also protected and the workers who are not members of the Trade Union are also protected and the workers are not discriminated.
Collective Bargaining
Collective bargaining is a process of negotiation between employers and a group of employees aimed at agreements to regulate working salaries, working conditions, benefits, and other aspects of workers' compensation and rights for workers. The interests of the employees are commonly presented by representatives of a trade union to which the employees belong. The collective agreements reached by these negotiations usually set out wage scales, working hours, training, health and safety, overtime, grievance mechanisms, and rights to participate in workplace or company affairs.
The union may negotiate with a single employer (who is typically representing a company's shareholders) or may negotiate with a group of businesses, depending on the country, to reach an industry-wide agreement. A collective agreement functions as a labour contract between an employer and one or more unions. Collective bargaining consists of the process of negotiation between representatives of a union and employers (generally represented by management, or, in some countries such as Austria, Sweden and the Netherlands, by an employers' organization) in respect of the terms and conditions of employment of employees, such as wages, hours of work, working conditions, grievance procedures, and about the rights and responsibilities of trade unions. The parties often refer to the result of the negotiation as a collective bargaining agreement (CBA) or as a collective employment agreement (CEA).
Workers Participation in Management
Like other behavioural terms, WPM means different things to different people depending upon their objectives and expectations. Thus, WPM is an elastic concept. For example, for management it is a joint consultation prior to decision making, for workers it means co-determination, for trade unions It is the harbinger of a new order of social relationship and a new set of power equation within organisations, while for government it is an association of labour with management without the final authority or responsibility in decision making.
Let us also go through some important definitions of WPM.
According to Keith Davis, “Workers’ participation refers to the mental and emotional involvement of a person in a group situation which encourages him to contribute to group goals and share in responsibility of achieving them”.
In the words of Mehtras “Applied to industry, the concept of participation means sharing the decision-making power by the rank and file of an industrial organisation through their representatives, at all the appropriate levels of management in the entire range of managerial action”.
The following are the main characteristics of WPM:
1. Participation implies practices which increase the scope for employees’ share of influence in decision-making process with the assumption of responsibility.
2. Participation presupposes willing acceptance of responsibility by workers.
3. Workers participate in management not as individuals but as a group through their representatives.
4. Worker’s participation in management differs from collective bargaining in the sense that while the former is based on mutual trust, information sharing and mutual problem solving; the latter is essentially based on power play, pressure tactics, and negotiations.
5. The basic rationale tor worker’s participation in management is that workers invest their Iabour and their fates to their place of work. Thus, they contribute to the outcomes of organization. Hence, they have a legitimate right to share in decision-making activities of organisation.
The objectives of WPM are to:
1. Promote mutual understanding between management and workers, i.e., industrial harmony.
2. Establish and encourage good communication system at all levels.
3. Create and promote a sense of belongingness among workers.
4. Help handle resistance to change.
5. Induce a sense among workers to contribute their best for the cause of organisation.
6. Create a sense of commitment to decisions to which they were a party.
References:
- Organisational Behaviour and Human Resource Management by J. Paulo Davim
- Organisational Behaviour by Stephen K. Robbins
