Submitted by: LUSTRE, ROWENA M.

QUIZ NO. 2

1. How does a complete performance management system differ from the use of annual
performance appraisals?

Performance management refers to the set of activities and tasks that make sure that the
employees meet their goals on time. The goals need to be aligned with the objectives of the
organization. Performance management ensures the efficiency and effectiveness of the
performance of the employees when the goals are reached. Performance management has a
holistic approach in the sense, it analyzes employee performance keeping in mind the
development needs of the employee & organization.

While Annual Performance Appraisal system is a process designed to improve job understanding,
promote more effective job performance, and establish future goals for career growth. The goal
of the annual performance appraisal process is to provide staff members with feedback on their
performance and accomplishments for the previous year.

Every organization has its own unique set of objectives and core values. Performance
management ensures that goals and objectives are established clearly and there is a continuous
feedback mechanism in place. Appraisal on the other hand, is a part of the whole performance
management process but however, performance management is more flexible and multi-
dimensional in terms of communication.

Compared to annual appraisals, performance management takes a very holistic approach by not
just limiting itself to salary revisions and compensation. Performance management manages
employee goals effectively. There is a continuous feedback mechanism in place. There is better
employee engagement because there is more recognition of employee’s work and rewards are
given whenever necessary.

Every organization must ideally focus on employee performance and engagement with a holistic
approach. While performance appraisal is mandatory in an organization, creating developmental
strategies for improving the employee’s performance and productivity after the appraisal process
is also necessary. This ensures better business productivity.
2. Give two examples of administrative decisions that be based on performance management
information. Give two examples of developmental decisions based on this type of information.

Using Performance Management for Decision Making

When we mention decision making, it typically includes compensation increment, promotion, etc.
You can use performance management for decision making if:

 Availability of significant and conditional rewards are given to an employee.

 Use performance management to drive to focus and drive significant and high results.
 A strong connection between rewards and performance.

Using Performance Management for Development Making

Though used by very few in number, performance management when used by companies to drive
employee development and improve their career skills. You can select the same if your focus lies
on:

 Salary increments are given on the basis of skill level and local market expectations
 Vision is to nurture employees and see them as a long-term vision.

Both cases cannot be used together. If you plan a process which includes compensation and
development talks together, then neither of the processes gets justified. For example, a discussion
which included salary, bonus and performance discussions, starts with managers linking
ratings/numbers/performance to salary increments. This results in justification war from both the
parties instead of unbiased discussions. More often, the discussions on the development take a
back seat as monetary factors start playing.

But the reality lies in that organizations have been using the performance management system for
both the motives.

Though the ideal case scenario will be to use performance management strictly as one process,
either decision making or development.

Nevertheless, in situations where a performance management system is used for both purposes,
make sure there are separate discussions/meetings for performance review-development and
compensation increase. You can link the compensation decisions to local market needs and skill
level. Whenever the discussions have been combined, development issues are never discussed, as
both employee and manager get into defending the numerical ratings, which is linked to a bonus,
salary decisions.

3. How can involving employees in the creation of performance

standards improve the effectiveness of a performance management
system?

Consider these 3 strategies for evolving your performance management program:

1. Clearly define and communicate performance expectations

Performance management needs to be conducted first and foremost for the benefit of staff. The
process exists to help employees learn and grow with an organization and to better understand
their strengths and weaknesses in relation to maximizing their performance. For the best possible
outcomes managers and employees need to work together to set achievable goals and monitor
and regularly review progress against these goals.

Having clear, measurable, well-defined and realistic performance expectations from their
manager ensures that every employee is pulling in the same direction and working towards
common goals. Simply put, when employees have greater input on setting their own goals and are
provided with regular performance check-ins to evaluate progress, they are far more likely to
achieve them.

2. Schedule regular performance check-ins

Standard yearly reviews are too few and far apart. When you think about it, a performance
evaluation based on the anniversary of an employee’s start date is incredibly arbitrary. Try
conducting more frequent reviews throughout the year that are tied to defined and measurable
performance milestones. Managers and employees can agree on expectations at the beginning of
a performance period, and then evaluate, adjust and modify those expectations to suit shifting
business conditions.

More frequent reviews provide managers with visibility and insight into the performance of their
individual staff members. This insight supports managers in developing a much better
understanding of collective progress on major goals and can identify and correct problems as they
arise.

3. Connect employee tasks and goals to the organization’s strategic plan

Effective employee performance management involves ensuring that employees are aware that
their individual goals are directly tied to the key strategic objectives of the organization. When
employees’ day-to-day work is aligned with the success of the organization, they become more
engaged and recognize the interdependence between themselves and the organization. As a result,
employees become more committed to achieving positive outcomes for the business overall, and
share in that success!

4. Imagine that a pet supply store is stablishing a new performance management system to help
employees provide better customer service. Management needs to decide who should participate
in measuring the performance of each of the store’s sales people. From what sources should the
store gather information? Why?

In measuring performance management system for a pet supply store, they should include
Qualitative measures. Qualitative Measurement – goal is measured by manager’s observation
without any statistics or metrics to pull from.
Qualitative measures are often focused more on soft skills like communicating more effectively,
learning to better adapt to change, working collaboratively with you team, and so on. It may not
seem fair to judge these skills, but that’s why it’s important to set expectations with your
employees so they understand what you anticipate. For example, customer satisfaction and
product quality.

While Quantitative measures are what we typically think of when we think of goals. For example,
a recruiter’s goal might be X number of placements in a specific timeframe. The numbers won’t
lie. However, when setting qualitative goals, you must be clear on what successful performance
looks like for that specific goal, which may require a little more creativity. Rather than numbers
and statistics, consider the behaviors that will lead to successful performance.
For example, order-to-delivery lead time, supply response time, flexibility, resource utilization,
delivery performance.

Changes, Changes

Jennifer, the owner and manager of a company with ten employees, has hired you to take over the
HRM function so she can focus on other areas of her business. During your first two weeks, you
find out that the company has been greatly affected by the up economy and is expected to
experience overall revenue growth by 10 percent over the next three years, with some quarters
seeing growth as high as 30 percent. However, five of the ten workers are expected to retire
within three years. These workers have been with the organization since the beginning and
provide a unique historical perspective of the company. The other five workers are of diverse
ages. In addition to these changes, Jennifer believes they may be able to save costs by allowing
employees to telecommute one to two days per week. She has some concerns about productivity
if she allows employees to work from home. Despite these concerns, Jennifer has even
considered closing down the physical office and making her company a virtual organization, but
she wonders how such a major change will affect the ability to communicate and worker
motivation. Jennifer shares with you her thoughts about the costs of health care on the
organization. She has considered cutting benefits entirely and having her employees work for her
on a contract basis, instead of
being full-time employees. She isn’t sure if this would be a good choice. Jennifer schedules a
meeting with you to discuss some of her thoughts. To prepare for the meeting, you perform
research so you can impress your new boss with recommendations on the challenges presented.

1. Point out which changes are occurring in the business that affect HRM.
Human resources aid as a link between the top management and the employees in
facilitating the changes in the organization. Most of the changes that occur in an
organization affects human resources in so many areas. There are many factors that influence
change in the organization. One of these factors are external environmental factors that may
affect the ability of the organization to function well. Thus, the management should regularly

a. Five of the ten workers are expected to retire within three years have been with the
organization since the beginning and provide a unique historical perspective of the company
b. Save costs by allowing employees to telecommute one to two days per week
c. Concerns about productivity if she allows employees to work from home
d. Considered closing down the physical office and making her company a virtual organization
e. Ability to communicate and worker motivation.
f. Because of the costs of health care on the organization, the owner considered cutting benefits
entirely and having her employees work for her on a contract basis, instead of being full-time
employees

2. What are some considerations the company and HR should be aware of when making changes
related to this case study?

The following should be considered the following before making some changes in the
organization:
The company objectives. The management must assess whether the changes to
implement will help the organization achieve its goals.
 The labor law of applicable to the state or location. The HR management
must ensure that they are complying with the law and regulations and does not
deprive the rights of the employees.
The risks associated with remote work set-up. The management must be aware
of the issues and challenges that may arise from this setup such as internet connections
and the materials and equipment needed.
Communication. The management must clearly communicate the changes that are
about to happen to prepare the employees and avoid any conflicts.
Human Resource motivation. Due to the expected retirements that will happen, the
management must have programs that could attract, satisfy and motivate employees to
attain the goals of the organization and to prevent a high rate of employee turnover.
Health Care Insurance. The management must reconsider the removal of health care
insurance because of the health risks that are present nowadays. Having health insurance
as one of the employee benefits is ideal for organizations during the present time.
The timeline of change implementation. The management must create a timeline on how
they will implement the change. In the case given, the changes must not be implemented
all of a sudden but slowly as possible to give time for communication and prepare the
necessary things to avoid any issues along the way.

3. What would the initial steps be to start planning for these changes?

The organization may adopt some of the steps in business process re-engineering
steps as they plan to make changes, which may include the following

a) Set clear goals and objectives at a given time and make sure to
communicate it to the employees to attain and achieve the organization goals and
objectives.
b) Create the future action plan, and then management could know the targets of
each employee.
c) Assess the current organization’s strategic HR planning, identify department’s
current staff knowledge, skills, and evaluate their strengths and their training need.
d) Know all possible alternatives or methods that may help to attain those goals.
e) Analyze all potential costs and benefits that may be incurred when the changes are
implemented.

4. What would your role be in implementing these changes? What would Jennifer’s
role be?

The role of the HR would include the following:

 Start developing policies that would align with the expected growth of the business.
 Find out the reactions or gather the feedbacks of the employees in response to the planned
changes.
 Make sure that the changes will implement both the company and the employees.
 Update the employee’s contract in response to the changes.
 Arrange training programs specially for young employees.
 Link the HR functions with the business strategy. Jennifer’s role as the owner and
manager of the company would include the following:
 Lead the organization effectively and efficiently.
 Make the commitment to the changes.
 Take the risks of implementing the changes.
 Communicate the possible outcomes of implementing the changes with all the
employees.
 Lead the evaluation of processes and ask for opinions or corrections, if needed