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[Music] the writer author of one of the most popular books seven habits of highly effective people mr stephen richards covey has said one very beautiful line always treat your employees exactly as you want them to treat your best customers hello everyone a very good afternoon to everyone who is watching this video tutorial today we are going to learn about few very interesting topics like performance management system and performance improvement plan to start with we should first know what exactly performance management system is so when we say performance management system a performance management system is the systematic approach to measure the performance of employees it is basically a process through which the organization aligns their mission their goals objectives etc with the available resources the system and sets the priorities these systems are often based on organizational as well as job specific competencies which need to be obtained for successful job performance so in a way in a layman language maybe we can say that performance management is simply an ongoing process of communication between a supervisor an employee that occurs throughout the year in support of accomplishing the strategic objectives of the organization it is basically a direct or indirect link between the organization and an individual's goals so when we talk about performance management it is actually an amalgamation of different terminologies like goal setting feedbacks individual development plans when we talk about all these things when we bring them together it actually forms performance management system now while we go ahead let's understand what are the different steps included in performance management system when we talk about performance management system steps so the steps included in performance management system are four starting with the business role so when we say business role what do we mean by business role we have to actually set expectations we have to actually explain the job description to the person we should know what are the job skills or knowledge required for that particular role what are the individual skills or knowledge required for that particular role the second step is performance planning once the expectation setting has been done now we have to see how do we achieve the set standards how do we actually achieve the expectations or the expect the the expectations that have been set by the other person like for example when a new team member enters a team the manager tells him or her how he has to work in the team what are the things that he or she needs to achieve so that is the first step the second step is planning about the performance planning about how you achieve what is expected out of you the third step is performance development where we talk about things like individual development plan and individual goals and organizational goals an individual development plan is nothing but a detailed plan of how an individual will succeed in both personal as well as professional ways fourth step and the last step in performance management system is performance measurement so performance management is actually evaluating the performance and checking for any deviations and then taking corrective actions so once we know that what are the deviations that are happening in the performance in the performance of an employee so one is expected and the other thing is what is delivered so the difference between the two is actually calculated by evaluating the performance which is known as performance measurement now friends let us try to understand why is there a need for performance management system so as we were just talking about a few terminologies like goal setting idps or individual development plan or feedbacks reviews etc let's understand what is the actual need for these so basically a performance management system is needed for the following things the first one is to improve the company profit margin which means that if the performance of employees is good it impacts the level of productivity which directly impacts the revenue and company profit also it helps in scaling the business by growing talent the second thing says is to guide personnel along a suitable career path so basically it says that when you have to guide a personnel along a suit a suitable career path you have to actually work on an individual development plan we have to make our employees understand the employ importance of idps the employees should be asked to focus on their career development by working on their development plans for growth and development of both technical as well as soft skills the third thing is that performance management is needed to furnish staff with valuable and progressive feedback so basically i think one of the most important things that we need to keep in mind is that we should always always try to develop a culture of feedback in the organization to create a healthy environment where everybody can communicate openly without reservations the aim is to build a high performing team by getting continuous feedback the fourth thing says to ensure staff attains smart goals so when we say smart goals we mean to say goals are or goals that we are setting should be specific should be measurable should be attainable should be relevant and should be time bound so goal setting is very important to allow the team members to drive results or a particular behavior change within the organization it helps them to divide or to divide their attention in a planned manner so when you have goals set you know how you have to divide your time and how you have to work on different uh different tasks or different priorities so basically a team member has to decide a future roadmap and focus on a particular period the last thing says to ensure employee goals relate to and advance organizational objectives so basically we should ensure that this entire process when we are actually doing performance management we should always ensure that an organizational goals is directly aligned with individual goals or vice versa maybe the individual goals should directly be aligned with the organization school now let's understand now there are there are certain reasons why performance management is needed but how do you how do you decide what which one is an effective performance management system so basically when we talk about the effectiveness of a performance management system there are certain things that need to be kept in mind a performance management system should be one which is continuous which is approved by management or senior executives or senior staff which is incorporated which incorporates feedback culture in the organization or the feedback mechanism as mandate and not as a routine which is result based and last which is user friendly and gives you an overview of performance management activities now let's move on to the types of performance management systems there are different types of performance management systems in place so let's understand one by one what are the different types of performance management that are there in place so starting with the first one which is general appraisal method so as per the general appraisal method it's a very common it's a very very commonly used performance management system and it is used by many organizations so basically under this performance management system there is a constant interaction between the manager and the employee all year round it includes regular reviews of an employee job performance employee skills and employees achievements growth and overall contribution to the company so basically when we talk about the pros and cons of this method so there are certain pros certain advantages you can say of this type of performance management system which is you an employee gets continuous feedback an employee gets continuous evaluation of what he or she is doing how he is performing because of this what happens is that the gaps in performance can be identified very easily and can be identified timely so when you identify the gaps on time so what happens is that there is there are lesser chances of expectation mismatch or you can see unmisunderstanding and also in addition to this this also leads to increased engagement because the manager and employee are having continuous interactions they're having continuous discussions around their performance around their tasks around what they are doing so because of this there is a lot of engagement that happens in the organization which in turn leads to lesser attrition or you can say increased retention in the organization so because people are very very engaged they don't they don't look out for opportunities that often but at the same time when we talk about the disadvantages of this type of performance management system it is a very time taking process as the manager has to every now and then involve himself into discussions with the employee which is obviously a time taking task when we talk about the second type of performance management system which is known as 360 degree appraisal system when we talk about the 360 degree appraisal system when we talk about the 360 degree appraisal system we can say that is this the most commonly used performance management system most of the it organizations are using 360 degree performance appraisal system one of the organizations in fact that i worked with was also using the similar kind of appraisal system now here what happens is that the feedback is collected the feedback about your performance is being collected with every stakeholder who is uh who is related to the employee so for example the manager the peers the uh the subordinates right uh and the other colleagues and also most importantly self-assessment so all these all these areas are covered while the performance is being evaluated so all these parties are going to participate in evaluation of performance of one particular employee so when we talk about the pros and cons of this type of performance appraisal uh of this type of performance management system we can say that this is a very increased a very very self-aware kind of a process because uh i am getting to i am getting to learn about uh my feedback from so many parties so many different people so basically a lot of self-awareness balanced view it leverages strength so a lot of people are going to add on to what are my strengths uncovers blind spots and development of skills i get to know what where are the what are the areas that i can work on from different parties so that will help me to know what are the areas that i can develop on what are the skills that i can develop the cons of this type of particular performance management system is that it sidelines positive feedback so what happens is when you take feedback from so many parties there is a chance or there is a possibility that people speak more about your negative feedback than talking about the positive ones it on it garners dishonest reviews so what happens is that people might uh people not people might not uh feel very comfortable talking about the feedback for you and they might think that there are there are chances of spoiling relationships and because of that there might be dishonest reviews increases distrust in the leader it's a very time consuming process because you have to collect feedback from different parties and lastly it provides biased opinions because as i just mentioned that um it is going to you know because you're collecting feedback from different people so different people can be biased towards one individual so uh it depends on how what what relationship you have with the people how much you're working with that people so in different it it actually depends on different factors moving on to the next type of performance management system which is technological performance appraisal so when it comes to technological performance appraisal system it is actually there for measuring or evaluating specifically the technical ability of an employee when it comes to evaluating the technical skill set then we use the technological performance appraisal system basically it is very very useful for technical abilities or for for evaluating technical skills but it is not at all useful when it comes to soft skills so actually we can say that it is not uh it cannot be uniformly applied in the entire organization so that that may be can that can actually be a con for this type of performance management system moving on to the next category of performance management system which is manager performance appraisal so what happens is that there are certain organizations who who have a different process for evaluating the performance of individual contributors whereas they have a different process for the managers so basically this manager performance appraisal system is focused on only evaluating the managerial side of uh of a person so if a person is uh is is playing a role of a manager in the organization then this type of performance appraisal system helps in uh evaluating the management skills the people management skills of of uh of the employee ah this kind of uh this kind of fee management system this kind of performance management system is actually a good in a way that ah the manager is getting direct feedback from the team members but on the other hand it is also there is also a possibility that uh the team members might not feel very comfortable giving the you know feedback directly to the manager because obviously there is a fear of uh spoiling the relationship with the manager if they if they come out with something negative they might uh the manager might not like it and that might spoil the relationship between the manager and the employee so in a way you can say that this feedback can be dishonest moving on to the next category which is project evaluation review so basically this kind of evaluation is done when each project comes to an end so what happens is that it is done after each project ends so because of which there is there are very less chances of deviations from what is expected so which is as written in the pros so you know because of this there is a regular uh feedback mechanism also which is developed in the organization and there is very easy identification of uh deviation in work but on the other hand what happens is that each project is owned by a different manager so it becomes very difficult to flow the you know uh difficult uh the flow of uh the the flow of and as written in the cons so basically uh in the project evaluation review because there is no single manager in the sense that every project is being owned by a different manager so a different manager is giving review or is reviewing the performance of every set of project for an employee differently so it becomes very different very difficult for each manager to collaborate and then you know pass the feedback from one place to another so that is uh that becomes little difficult in project evaluation review the next type of employee the next type of performance management system is employee self-assessment so i can relate very well with this the employee self-assessment method of performance in performance management system that's because in the previous organization that i was working with i used to do do it for myself so what we used to do is that we used to get at the end of the year we used to get a form which the employee had to fill and the employee gets a chance to fill in all all that you've done throughout the year and write about their own uh improvement areas and their own initiatives and uh whatever contributions they've made throughout the year so this is uh this is this is one of the most uh effective ways i would say that in the sense that an employee is feeling very very valued and also the employee feels empowered because i am able to write my own feedback my own contributions and my own improvement area on my own and later when once i'm done with the assessment this assessment goes to my manager who then reviews it but on the other hand uh it becomes uh it becomes little difficult because when you when the employee you know is writing the feedback of self on his or her own so what happens is that it might uh it might be it might be you know overemphasized the the employee might try to over emphasize their contributions or maybe the employee might uh try to downplay their success in in some way if they're not satisfied so in a way it becomes uh it is not very trustworthy if you can say that this this might misuse this employees minds might misuse this type of employee self-assessment the last type of performance management system is the sales performance appraisal so there are many organizations which are sales driven or which have sales related targets so such organizations use this method where their sales targets are compared with actual performances this type of performance management system is less subjective as it is more data driven and you know it is basically based out of numbers what whatever numbers are whatever sales targets you were asked to achieve so you were you were asked to uh sell 10 products how many how many have you sell you've sold eight so the the you know the analyzation of this kind of uh data is very very simple so it's a way it's not very subjective um but on the other hand uh it is uh you know it is like not every organization can use this type of performance management system because not every organization is sales driven uh not like every organization has sales targets but organizations like baijus they have they are absolutely sales driven they are uh their main activity is selling so they can very well use this type of performance management system now uh when it comes to you choosing the best performance management system so how do you choose the best performance management system i think there's a very simple answer uh to this question because when it comes to choosing the first performance management system though the thing that you need to keep in mind is the nature of the organization so as i just told you that for example if for a for a manufacturing company which has blue-collar employees the performance will depend upon productivity so for them project evaluation review can do but for an organization which is driven by sales targets then we should go for sales performance appraisal system likewise in our i.t organizations you can go for 360 degree evaluation but when it comes to smaller organizations where you do not have many uh stakeholders of an employee you do not have many peers in the team you do not have many subordinates in the team so there you cannot go with 360 degree there may be you can go with the self-assessment you know appraisal so it depends on the type of organization that you are uh into and also one more thing i would want to mention here is that it is not necessary that if you have chosen a type of a particular type of performance management system you have to stick with it no it is not so in future if if you feel that there is a need for another type of performance management system you can definitely go with it for example um say today i have been using 360 degree performance management but tomorrow i might feel that you know it is becoming very tedious or it's a very time taking process and i i would want to shift my um shift my performance management system from 360 degree feedback mechanism to self-assessment appraisal maybe for individual contributors i will go with self-assessment method and maybe for managerial level people i can go with manager appraisal so it is not necessary that you have to stick with one uh type of performance management all always for you know till uh till eternity so it's not so you can always change your performance management system now now uh what happens is that we we talked a lot about performance management now there are different ways how you can manage the performance there are different ways how you can evaluate performance but what happens if somebody is not able to perform what happens if somebody is not performing up to the mark so there comes the performance improvement plan so basically a performance improvement plan is a formal document stating any recurring performance issues along with goals that an employee needs to achieve in order to regain good standing at the company usually within a specific timeline to complete the plan a pip is to resolve workplace productivity issues and help even the most unlikely employee succeed in your organization so in such cases what happens is that the manager is actually advised to give frequent feedback to the person who's not able to perform well in the organization so the feedback mechanism starts with a polite and a verbal feedback but when you see that there are no changes happening or there are no improvements happening in the person the manager is then you know asked to share some strict feedback some feedbacks that are written and even after these written and strict feedback if you feel that the employee is not able to perform the employee is not meeting expectations as told by the manager there comes in picture the performance improvement plan which is a formal process so what happens is that there is a performance improvement plan document which is being made by the manager which as as this says that you know which has uh exactly what needs to be done by the employee or with the targets given with the timeline specified with uh with definition of what actually needs to be done so basically when this performance improvement plan is being made there are certain things that need to be kept in mind so this performance improvement plan is depends from organization to organization uh about the timeline but generally it's a four to six weeks of timeline that uh that takes place in a pip so we start with a four week plan but in case we think that the pip is not going in the right direction we might the organization might take a decision to stop the pip even before four weeks and similarly if you think that the pip is going in the right direction and the employee needs some more time probably to improve then we can definitely extend the timeline of the pip from four to six speeds after this entire plan has been made the employee and the manager have to sit maybe on a weekly basis or every third day they have to sit together and this and discuss about what progress has been made so far every week the progress on the performance improvement plan should be talked about so that we know where we are heading so what happens is that after the performance improvement plan feedbacks are given we we actually kind of have an idea as to either the employee is going to fail the pip or the employee is going to pass the pip so if the employee passes the pip if the employee if the manager thinks that now what he's performing is up to the mark is up to the level as he expects then we can definitely say that the employee has passed the pip and we can definitely say that the employee has now reached to a level which is acceptable by the organization and the employee can resume services but in cases where employee is not comfortable with the expectations that have been said or is not able to perform to the mark or the level that is expected of him even after four to six weeks that's where the organization needs to take a decision and needs to say that the employee needs to be terminated this has to be conveyed to the employee so that the employee knows that he has not been able to pass the pip or or either way we can say that he has failed the pip now there are certain things that we should uh keep in mind uh while we are starting a pip or before we start start a pip so the first thing and the most important thing is that never never make the pip a surprise so what happens is that sometimes there are managers who are not very comfortable giving hard feedback to the people so they are not giving hard feedback to the people they give feedbacks in a very uh in a very subtle way which the employee might or might not understand so in those cases when the employee reaches the level where he is not at all able to perform and has been given feedbacks verbally but very politely the employee is not able to understand that he or she has reached a pip stage and when a pip is being started for that employee it becomes very difficult for that person to accept so that becomes a surprise for the employee so please we should we should always make sure that pip is not a surprise for the employee multiple feedbacks have been given to the employee and the employee realizes that there are gaps in performance secondly let the employee know that pip is a possibility so i have seen a lot of people who take pip as a very negative process they think that pip is a negative process to actually uh you know ask the person to leave in a in a formal way but it is not so we should understand that pip is a very positive process it is a process which is actually giving another chance or scope to an employee to understand the gaps in his performance and and basically make a comeback you know and come back on the right track third thing is consider having others in addition to the employee present for the conversation so what happens in organization is while the pip conversation is taking place there is the employee the manager and the hr also sitting in the in the discussion so it's your it's completely your choice to to uh to decide who you want to include in the discussion it can be the hr it can be the managers manager it can be it can be not not subordinates because it is it is absolutely a confidential process so subordinates should not be included in this but yes you can definitely uh include the skip level manager or the hr whomsoever you feel comfortable with have an overall consistent flow for the pip draft the plan always with the employees inputs so basically when you're drafting the employee uh you know uh the the performance improvement plan always make sure that you have put in the plan ing to uh what has been discussed between you and the employee you and both you and the employee both should be on the same page should be in sync because uh tomorrow if the employee says that this was not discussed with me and i i don't know what what these parameters are and why am i being evaluated on these parameters and the entire uh entire purpose comes to an end so which is not right so we should always uh make the plan in consultation with the employee who is undergoing the pip process understand the cultural implications of a pip so right in the beginning when we are starting the performance improvement plan we should let the employee know the cultural implications of a pip so we should tell them what happens if you pass the pip what happens if you fail the pip as i just explained to you all that if somebody is passing the pip means that now the person is performing up to the mark and can resume work uh in a normal manner and at the other end also the manager can guide that person that the the same similar kind of issue should not arise in future but on the other hand the employee should also be told that if there are if the employer is not able to perform up to the mark and fails the pip at the end of the four to six weeks timeline then the implication is that the employee has to leave the organization or the employee will be terminated so this is about the performance improvement plan i hope you all have understood the concepts and the things that we discussed in today's video tutorial and i look forward to do lot many more for all of you thank you so much everyone have a great day thanks