Question

2. You are the HR Manager for a small firm with 10 employees; all the employees are eligible for merit pay. You have been allocated $10,000 to reward these employees. Design a performance management system to first evaluate these employees and then a system to link their performance with these employees.

Answer 1

Design of Performance management system:

Performance management systems, which typically include performance appraisal and employee development, are the “Achilles’ heel” of human resources management. They suffer flaws in many organizations, with employees and managers regularly bemoaning their ineffectiveness. A recent survey by Watson Wyatt showed that only three out of 10 workers agree that their company’s performance management system helps improve performance. Less than 40 percent of employees said their systems established clear performance goals, generated honest feedback or used technology to streamline the process. While these results suggest that there may be poorly designed performance management systems in many organizations, it is typically not poorly developed tools and processes that cause difficulties with performance management. Rather, difficulties arise because, at its core, performance management is a highly personal and often threatening process for both managers and employees

Behavioural Expectations

As we will discuss below, effective performance management systems provide behavioral standards (see page 10 for an example) that describe what is expected of employees in key competency areas. During the performance planning process, managers should review and discuss these behavioural standards with employees. It is important for managers to make sure employees understand how the behavioural standards relate to their specific jobs.

Results Expectations

The results or goals to be achieved by employees should be tied to the organization’s strategy and goals. The employee’s development needs should also be taken into account in the goal setting process. Development goals can be targeted either to improving current job performance or preparing for career advancement. Example goals for an employee might be: Q Complete project “X” by time “Y.” Q Increase sales by 10 percent. Q Successfully mentor employee “X” to develop skill “Y.”

Competency model for HR Manager

From the above performance appraisal management frame work done and the calculations are given below,

Performance appraisal  working:

Performance appraisal	Total Allocation	$             10,000.00
Sl.no	Employee Number	Name	Rating	Reward %	Reward amount
1	8603	Jhon	Meets expectation	100%	$                     1,000
2	8674	Peter	Meets expectation	100%	$                     1,000
3	7498	Rio	Meets expectation	100%	$                     1,000
4	1100	Anna	Meets expectation	100%	$                     1,000
5	9267	Mary	Role model	120%	$                     1,200
6	8358	Stella	Below expectation	80%	$                         800
7	7760	Harry	Meets expectation	100%	$                     1,000
8	8169	Robert	Role model	120%	$                     1,200
9	1415	Albert	Meets expectation	100%	$                     1,000
10	6295	Victor	Below expectation	80%	$                         800

Performance appraisal	10	100%	$                 10,000.00
Performance criteraia	Number of person	% of contribution	Reward amount
Role model	2	20%	$                    2,000.00
Meets expectation	6	60%	$                    6,000.00
Below expectation	2	20%	$                    2,000.00