UNIT I

PERFORMANCE MANAGEMENT

THE CONCEPT

Performance is understood as achievement of the organization in relation with

its set goals. It includes outcomes achieved, or accomplished through
contribution of individuals or teams to the organizations strategic goals. The
term performance encompasses economic as well as behavioural outcomes.
Brumbach views performance more comprehensively by encompassing both
behaviors and results. He is of the view that behaviors as outcomes in their
own right, which can be judged apart from results. Performance is an impact.
The roles of any manage can be seen in three parts: Being, Doing and Relating.

Being it is concerned with the competencies of the manage that are relevant to
his/her performance. It is preparedness of the mind of the manager.
Doing focuses on the manage activities that are variably effective at different
levels in the organization: that affect performance of other roles dependent on
the manage output, and the organizational performance as a whole. As someone
said, Ideas are funny little things. They wont work unless you do.
Relating emphasizes the nature of relationships with members of the role
network-vertical, horizontal or otherwise.
Performance has a linkage with the individual potential and how best it is
realized by the individual. With regard to manage, his/her potential becomes the
input to the productive process and performance is the output.
Managees Potential is determined when a set of tasks are assigned to him. It is
also related to performance standards set.
Task-related activities refer to managees or supervisors involvement to achieve
the allocated task or meet expectations in the given task environment.
Performance is what the managees actually achieve. Performance in a role
refers to the extent to which the managees achieve the purpose for which the
role is created.
Choice, not chance, they say, determines destiny. The actual performance of
a managee is a function of several forces, internals as well as external to the
organization-some of choice, some of chance. Most organizations do not take
these forces into account-either systematically or intuitively-while building
expectations from a managee. A managee in her task environment could be
subject to some of the influences and factors shown in Exhibit.

Framework to Understand Role Performance

In this framework, Organizational Relevant Environment, Role Purpose or

Objective, Stakeholder Expectations, Role Technology and Input Role or Vendor
Contribution are inputs to the managees performance. These are substantially
known, and are the factors and forces, which organizational expectations from
the Managee Performance can reasonably be predicted.
Role Design, Managee Potential, Managerial Leadership, Competing and
Collaborating Colleagues, and Group Climate are throughput factors that can be
optimized by a manager to enhance the Managee Performance. These
determine whether the organizations performance expectations from a managee
are realistic. As such, throughput factors are the core concerns of PfM.
It can be argued that Role Design and Managee Potential are, in fact, input
factors. However, a manager can modify-enhance or stretch-these factors by
improving the fit between the managees capacities, resources and role
requirements, PfM would assume these as throughput factors.

Role Output or Managee Performance is the end-result-the effect for which we

work. This is the variable that is predicted or planned. It is invariably
observable and measurable. The behavior of all organisms is goal-directed. As
such, people performance is not only a sequence of causes and effects; it is a
chain of sub-goals and actions, leading towards the ultimate goal. In fact, when
a managee has a goal, he/she behaves as if she is following some signposts that
create a healthy expectancy in him/her to reach the goal.
Role Purpose or Objective sets the boundary for the goal(s). It is a reference
point for Stockholders Expectation.
Managee Potential corresponds to the role to which a managee is assigned and
the inputs he/she receives to fulfill the role purpose. It stretches or contracts
depending upon the Group Climate, the behavior of the Competing and
Collaborating Colleagues, and the Managerial Leadership. The actual
realization of a managees potential depends heavily on:
 Group and Organizational Purpose.
Group or Organization Capacities and Resources.
Human Climate in the Group or the Organization.
Quality of Up-stream or Vendor Inputs.
Feedback on Performance.

Role Design is fashioned by the organizing process. The sole purpose of

organizing and designing a role is to provide a vehicle for implementing
performance plans and expectations. It determines the requisite competencies,
knowledge and skills. Role design predominantly determines task-related
attributes needed by the managee.
Managerial Leadership predominantly determines the behavioral attributes
needed by the managee. Leadership role of the manager and managerial style of
the leader are also major determinants of the managees development and
his/her job satisfaction. Managerial leadership and group climate have
considerable influence on each other.
Group Climate - The internal psychological environment of the group-influences
the behavior, style and performance of the managee. It is also, in turn
influenced by the behavior and attitude of the managee. Group climate is after
all, the collective outcome of the behavior and attitudes of all the members of
the group-the managee and all his/her competing and collaborating colleagues,
the manager or the leader. People in any group or organization are less anxious
about work if both goal clarity and goal agreement are present. Considerable
conflict arises when purposes are unclear or when people disagree on what the
priorities should be. Without convergence on goals and priorities, groups or
organizations cannot develop a climate that facilitates performance.
Three abilities or forces in an individual are said to be essential for achievement:
 Icchha-desire or motivation;
Jnana-knowledge or know-how: and
Kriya-action to actualize.

Not much performance achievement has been reported without the creative
combination of these three forces which, acting dynamically and in concert,
form the core motive force of all people in any organization.
Through the medium of performance, an organization is able to effectively
achieve what it sets out to. Indeed, it is the peoples capacities and resources
that determine an organizations capability to perform and to satisfy or influence
its stakeholders. These capacities and resources reflect a measure of the internal
state of an organization that is expressed through its results.
Performance management is a way of systematically managing people for
innovation, goal focus, productivity and satisfaction. It is a goal congruent win-
win strategy. Its main objective is to ensure success to all managees i.e., all task
teams who believe in its process, its approach and implementation with sincerity
and commitment. The managees success is reflected in organisations bottom
line in terms of achieving its planned goals.
PfM is an endless spiral, which links several processes such as performance
planning, managing performance throughout the year, taking stock of managees
performance and potential. Also it includes recognizing and rewarding success
at the end of the year. PfM links these processes in such a way that an individual
managees performance is always oriented towards achieving organisational
goals. PfM creates positive goal oriented task motivation and aims at reducing
intra-organisational conflict.
It is realized that organisations could not be successful if they do not have a
good performance management system. Each manager needs to devise his/her
own system of managing performance. While some norms of performance
management are explicit others are not so clear even to the managers. It is said
that standards or expectations that define good performance may be generally
understood but are rarely specific. PfM is a holistic, largely participatory and
goal congruent process of managing and supervising managers at work. It is
understood as a systematic, organized approach to managing and rewarding
performance by generating and sustaining positive managee (employee)
motivation. It is neither the well-known system of performance appraisal nor the
well talked about system of MBO. Its salient dimensions include performance
standards- representing organizational goals and objectives, managee
recognition and reward.
According to Armstrong, PfM is a means of getting better results from the
organisations, teams and individuals by understanding and managing
performance within the agreed framework of planned goals and competency
requirements. It is a process for establishing shared understanding about what is
to be achieved and an approach to managing and developing people.

PfM Integrated Approach

Armstrong and Baron, defines PfM as a strategic and integrated approach in

delivering sustained success to organisations by improving performance of
people by developing the capabilities of teams and individuals. These experts
consider PfM as a strategic tool since it is concerned with achievement of long-
term organisational goals and effective functioning of organisations in its
external environment. PfM effects four types of integrations namely, vertical,
functional, human resource and goals.

Vertical Integration aligning objectives at organisational, individual and

team levels and integrating them for effective performance. The
 individuals and teams agree upon to a dialogue to work within the broad
framework of organisational goals and values.

Functional Integration it deals with focusing several functional energies,

plans, policies and strategies onto tasks in different levels and parts of the
organisation.

Human resource Integration this ensures effective integration of

different subsystems of HRM to achieve organisational goals with
optimum performance. These subsystems include people management,
task monitoring, job design, motivation, appraisal and reward systems,
and training and empowerment.

Goal integration it focuses on arriving at congruence between the needs,

aspirations and goals of the managees with that of the goals and
objectives of the organisation.

BASIC PRINCIPLES OF EFFECTIVE PfM

Quality and effectiveness of PfM is a reality in organisations only when certain

basic and fundamental tenets/ principles or practices of management are
followed. These include:

1. Transparency decisions relating to performance improvement and

measurement such as planning, work allocation, guidance and counseling
and monitoring, performance review etc., should be effectively
communicated to the managees and other members in the organisation.
2. Employee development and empowerment effective participation of
employees/ managees (individuals and teams) in the decision making
process and treating them as partners in the enterprise. Recognizing
employees/ managees of their merit, talent and capabilities, rewarding and
giving more authority and responsibility etc., come under the umbrella
this principle.

3. Values a fair treatment and ensuring due satisfaction to the stakeholders

of the organisation, empathy and trust and treating people as human
beings rather than as mere employees form the basic foundation, apart
from others.

4. Congenial work environment the management need to create a

conducive and congenial work culture and climate that would help people
to share their experience knowledge and information to fulfill the
managees aspirations and achieve organisational goals. The managees/
employees should be well informed about the organisational mission,
objectives, values and the framework for managing and developing
individuals and teams for better performance.

5. External environment effective and contextual management of external

environment to overcome the obstacles and impediments in the way of
effective managerial performance.

FEATURES OR CHARACTERISTICS OF EFFECTIVE PFM

PfM is a complex concept that encompasses different dimensions of the

organisation and the people. The mission, the objectives and the goals of the
organisation should be well designed. Performance planning, development and
reward systems enable the managees to realize their true potential in order to
contribute for organisational growth and development.
The managees performance and quality is a function of several prerequisites
that managers need to take care of. The following constitute the prerequisites
/characteristics to ensure effective practice of PfM:
1. Clarity of organisational goals the managers need to clearly and
precisely lay down the organisational goals, objectives and ensure that
these are well informed to the managees and other employees and make
them to realize what the organisation expects from them. The
organisational goals need to be translated into individual, team and
departmental/ divisional goals.
2. Evaluation the individual, team, department/ divisional performance
needs to be evaluated on continuous basis. The organisation should
develop an evaluation system and process, which is designed and
developed on scientific lines.
3. Cooperation but not control the managers should nurture the practice
of getting work done through the system of obtaining managees
consensus rather than through control or coercion.
4. Self-management teams the management need to encourage the
individual and teams for self-management of their performance. This
procedure creates in the managees a sense of responsibility and develops
a spirit to work with commitment and evaluate his/her strengths and
weaknesses from time to time and plan for reducing the performance
gaps.
5. Leadership development the managers need to identify such of the
managees who have leadership potential and apart from sincerity and
 honesty to ensure better and effective two-way communication between
the managers and the managees.
6. System of feedback the organisation must have a foolproof feedback
system of managees/ individuals/ teams/ departments performance. It
should be monitored continuously and generate feedback loops for better
performance management.

There must be a system that would help to monitor and measure all
performance against the set standards and the managees need to be informed of
their shortcomings. The evaluation system should be made transparent so as to
repose managees faith in the system.

SCOPE OF PfM

The PfM should conform to broad organisational framework. It should provide

for managers and managees shared experiences, knowledge and vision. It
encompasses all formal and informal measures and procedures adopted by
organisations to increase corporate, team and individual effectiveness.
Managees/ employees should be enabled continuously to develop knowledge,
skill and capabilities. PfM has got to be understood in totality of the organisation
but not in various parts. PfM is designed and operated to ensure the
interrelationship of each of these processes in the organisation.
PfM assumes that the managers and team members share accountability for
performance by jointly agreeing on common set of goals i.e., what they need to
do and how they need to do it. They jointly implement the agreed plans and
monitor outcomes.
PfM is concerned with everything that people do at work. It deals with what
people do (their work), how they do it (their behavior) and what they do it (their
result).
PfM data generated by the appraising process is used primarily for deciding
rewards. Including performance related pay. However, it is not the integral part
of PfM process.

THE PROCESS OF PfM

The process of Performance Management is comprised of three important parts

(1) Planning Managee Performance and Development; (2) Monitoring Managee
Performance and Development and (3) Annual Stock Taking. These occur in a
specified sequence. Planning is made at the beginning of the year while
monitoring and mentoring is continued through out the year as the plans are
executed. Stocktaking takes place at the end of the year. Each one of these
phases requires certain concrete actions by the managers and the managee. Both
these parties (manager and managee) provide appropriate inputs by keeping the
whole process in perspective.
The whole process of the performance management can be approached in a
different mode. Planning, review and stock taking can happen through out the
year, more specifically at the time of periodic review during the monitoring and
mentoring phase. As such, these three phases are dynamic and a continuously
interact with one-another.
The plans are periodically reviewed and feasibility is tested the context of
changing events and influences that could not be adequately forcing. Since the
process involves in both the managers and the managees it has a participatory
character. The following flow chart exhibits performance management process
in an organization.
 Organizational Mission,
Goals, Strategy, and
Operational Plans

1 2

2
Individual Role & its
Description, Indices for Role-wise Plans and
Monitoring Performance, Expectations
Performance Standards

4
Monitoring and
Feedback Stocktaking Mentoring Activity

The Performance Management Process

The chart exhibits that individual roles and their description, indices for
monitoring performance. Performance standards naturally cascade from
organizational mission, goals, strategy and operational plans. Since
performance management aims to improve quality of coordination among
people in the organization, role-wise performance plans and expectations must
flow from both.
Organizations mission, strategy and operational plan, and individual managees
role and his/her contribution to organizational process are cardinal inputs to
performance plans. The performance plans of all the managees in the
organization must finally add up to the organizational goals to be achieved
during the year. Managees performance and development plans are subjected
to monitoring and mentoring. Without cogent plans, for task accomplishment,
it is not possible to decide a benchmark to achievement against set goals.
Mentoring and development draws it direction from both development plan and
requirements.
Mentoring can also include briefing the managee before each training and
development activity both on the job and off the job. Briefing focuses on the
managee learning agenda. Debriefing the managee crystallize his/her learning
achieved during the training.
Stock taking both periodical and annual attempts to continuously assess the
extent of work as well as learning opportunity that have been optimally avail by
the managee. Inputs to stocktaking are provided by performance plans and
monitoring and mentoring records. Stock taking also provides several inputs to
future performance plan. Review in task assignments, task systems and tools are
also possible through stocktaking. An assessment of managees development
needs of future tasks and responsibilities is done more realistically to
stocktaking.
There are certain special features that will make PfM more effective and
qualitative in achievement of organizational goals. These include
1. Continuous process: Performance management should be a continuous
process and should be carried out through out the year, in its totality i.e.,
planning managee performance and development, monitoring managee
performance and mentoring managee development and annual stock
taking. These three phases should be implemented sequentially.
2. Flexible: The Performance management process should be flexible and
should ensure the manager and managee acting together. However,
each one of these parties should have sufficient maneuverability to
design their own process within the overall framework for performance
management.
3. Futuristic: Performance management should be futuristic. All the three
parts of performance management are oriented towards the future
planning and improvement. Evaluation system gives necessary inputs
for future actions.
4. Participatory: PfM is participatory in character. It provides for regular
and frequent dialogue between the manager and the managee to address
performance as well as development needs.
5. Controlling: PfM aims at measuring managees actual performance
against planned performance i.e., targets, standards or indicators.
6. Behavioural in Content: PfM is completely development nature and
concerns itself vigorously with managees psychological behavioural
aspects and personality traits, which are critical inputs to the
performance process. PfM specify these personal attributes and
behaviour of each managee and meticulously assess the extent of their
contribution to managee level of performance. This paves the way to
identify managees future development needs; and
7. Win-Win Philosophy: PfM provides the frame work in which manager
must support their managees to succeed and to win.

KEYS TO HIGH PERFORMANCE

Building organizational capability and successful implementation of high-

commitment in management practices is a key managerial responsibility. High
performance management practices require consistent leadership attention.
Most organizations, either by themselves or external help are able to develop
right business strategy without much difficulty. But, they find it hard to
implement it effectively. Hence, devoting, attention, time and energy to develop
people may be far more cost effective and provide a grater competitive edge.
Three basic principles are used by leaders to transform their organizations into
high commitment models of management. These include

1. Building Trust: Building trust in people is vital and this could be

possible by treating people with respect and dignity. Sharing
information with everyone and treating them, as human beings will
create a sense of trustworthiness among members of the organization.
2. Encouraging Change: Leaders can encourage change among employees
and the managee by exposing themselves and their colleagues through
alternative management models.
3. Measuring what is important: Leaders need to realize that what gets
measured gets measured. Robert Kaplan and David Nortons balanced
scorecard approach, in which financial measures are weighed against
measures of customer satisfaction and attention, employee attitudes and
retention, new product and business development, or readiness for
change. Details about what has happened is important. But much more
important is the organizations current condition in terms what enables or
hinders its performance.
Currently knowledge and capability is the real key to success. This rest in
people. So, paying serious attention to peoples issues becomes evermore
important. Leaders ought to build systems at this perspective.

ORGANIZATIONAL PERFORMANCE
Organizational Performance what it is?
Performance is all of these. Its the end result of an activity. And whether that
activity is hours of intense practice before a concert or race or whether its
carrying out job responsibilities as efficiently and effectively as possible,
performance is what results from that activity.

Managers are concerned with organizational performancethe accumulated end

results of all the organizations work processes and activities. Its a complex but
important concept, and managers need to understand the factors that contribute
to high organizational performance. After all, they dont want (or intend) to
manage their way to mediocre performance. They want their organizations,
work units, or work groups to achieve high levels of performance, no matter
what mission, strategies, or goals are being pursued.

Why is Measuring Organizational Performance Important?

Managers measure and control organizational performance because it leads to

better asset management, to an increased ability to provide customer value, and
to improved measures of organizational knowledge. In addition, measures of
organizational performance do have an impact on an organizations reputation.
The value created by Michael Jordan and other assets of the Bulls (coach Phil
Jackson; other talented team players including Scottie, Pippen and Dennis
Rodman; experienced marketing, operations, and financial employees; and other
resources including the arena and practice facilities, available capital, etc) was
possible only because they were managed extremely well as a portfolio of
assets. Thats what managers at high-performing companies dothey manage
the organizational assets in ways that exploit their value. Asset management is
the process of acquiring, managing, renewing, and disposing of assets as needed,
and of designing business models to take advantage of the value from these
assets. Its not just the top-level managers who are concerned with asset
management. Managers at all organizational levels and in all work areas
manage their available assetspeople, information, equipment, and so forth
by making decisions that they hope will lead to high levels of performance.
Because achieving high levels of organizational performance is important in
both the short run and long run, managers look for ways to better manage their
assets so that they look good on the key performance measures used by both
internal and external evaluators.
Increased Ability to Provide Customer Value providing value to customers is
important for organizations. If customers arent receiving something of value
from their interactions with organizations, theyll look elsewhere. Managers
should monitor how well theyre providing customer value, and they can do that
when they measure performance. For example, at IBMs Industry Solutions
Laboratories in Hawthorne, New York, Stuttgart, Germany, and Yamato, Japan,
customers interact with IBM researchers to come up with technological
solutions that meet their unique and challenging needs. For instance, Britains
Safeway Stores PLC and the Hawthorne Lab collaborated on a consumer
application that gives top customers the ability to conveniently create and
maintain personalized grocery shopping lists and preorder groceries using a
portable handheld device. And the Hawthorne Lab completed a project for
Southwest Airlines that automated the crew-pairing process-a company logistics
nightmare in which 2,700 pilots, 4,500 flight attendants, and more than 2,400
daily departures had to be logistically coordinated. It was important for the labs
managers to be able to measure how well they solved customer problems and to
gauge their ability to provide customer value.
Impact on Organizational Reputation You know that your personal reputation is
important in what others think of you. It influences whether they will ask you
for advice, listen to what you have to say, or trust you to complete assigned
tasks. Organizations strive to have good reputations, as well. They want
otherscustomers, suppliers, competitors, community, and so forthto think
highly off them. The advantages of a strong correlation between an
organizations financial performance and its reputation. Which leads to the
other? Its not always clear which comes first, but we do know its difficult to
have one without the other. In fact, a study of reputation and financial
performance showed a strong correlation between good reputation and strong
financial measures such as earnings growth and total return.
Improved Measures of Organizational Knowledge: We know from our
discussions in Chapters 2 and 10 that successful organizations of the twenty-first
century must be able to learn and respond quicklythat is, they must be
learning organizations. In learning organizations, organizational knowledge is
recognized as a valuable asset, just like cash, equipment, or raw materials. What
is Organizational knowledge? Its knowledge thats created by means of
collaborative information sharing and social interaction that lead to
organizational members taking appropriate actions. The key to valuable
organizational knowledge is this connection between information and action.
Organizational employees must share what they know and use that knowledge to
make changes in work practices, processes, or products to achieve high levels of
organizational performance.

Measures of Organizational Performance

There are three ways of measuring organizational performance. Generally

applied measures are 1. Productivity 2. Organizational Effectiveness, 3.
Organizational Ranking. Peter F. Drucker the well-known management guru
was of the view that an organizations employees need to see the connection
between what they do and the outcomes. He said, The focus of the
organization must be on performance The spirit of organization is high
performance standards, for the group as well as for each individual. But before
employees can see this connection and work toward achieving high
performance, managers need to specify the performance outcomes that will be
measured. The most frequently used organizational performance measures
include organizational productivity, organizational effectiveness, and industry
rankings.
Productivity is defined as the overall output of goods or services produced
divided by the inputs needed to generate that output. Organizations strive to be
productive. They want the most goods and services produced using the least
amount of inputs. Output is measured by the sales revenue an organization
receives when those goods and services are sold (selling price x number sold).
Input is measured by the costs of acquiring and transforming the organizational
resources into the outputs.
Its managements job to increase productivity by reducing the input cost and
increasing the output price (selling price). Doing this means being more
efficient in performing the organizations work activities. So, organizational
productivity becomes a measure of how efficiently employees do their work.
We are increasing our companys capability by increasing the capability of our
employees. Ford was investing in its future productivity by making employees
more efficient in their job-related use of the Internet, said the Chief Information
Officer of Ford Motors.
Organizational effectiveness is a measure of how appropriate organizational
goals are and how well an organization is achieving those goals. Its a common
performance measure used by managers.
Other descriptions of organizational effectiveness have been suggested by
management researchers. For instance, the systems resource model or
organizational effectiveness proposes that effectiveness is measured by the
organizations ability to exploit its environment in acquiring scarce and valued
resources. The process model emphasizes the transformation processes of the
organization and how well the organization converts inputs into desired outputs.
Then, finally, the multiple constituencies model says that several different
effectiveness measures should be used, reflecting the different criteria of the
organizations constituencies. For example, customers, advocacy groups,
suppliers, and security analysts each would have their own measures of how
well the organization was performing. Although each of these different
effectiveness models may have merit in measuring certain aspects of
organizational effectiveness, the bottom line for managers continues to be how
well the organization accomplishes its goals. Thats what guides managerial
decisions in designing strategies, work processes, and work activities, and in
coordinating the work of employees.
Ranking of Industries is determined by specific performance measures. For
instance, Fortunes Top Performing Companies of the Fortune 500 are
determined by financial results including, profits, return on revenue, and return
on shareholders equity; growth in profits for 1 year, 5 years, and 10 years; and
revenues per employee, revenues per dollar of assets, and revenues per dollar of
equity. Industry Weeks Best Managed Plants are determined by organizational
accomplishments and demonstrations of superior management skills in the areas
of financial performance, innovation, leadership, globalization, alliances and
partnerships, employee benefits and education, and community involvement.
Thus, different agencies apply different parameters or measures through which
performance of organizations is decided to rank the Industry/organization.

Performance Improvement Methodology and Techniques

Out of the performance improvement planning process come specific

performance improvement interventions, tactics and techniques. Note that these
interventions happen at five checkpoints. Upstream systems, inputs, process,
outputs and downstream systems. Quality management efforts must be defined
relative to these five checkpoints. In effect, transformation and continuous
improvement efforts are commitments to a practice of managing all five-quality
checkpoints. The management team then develops, through the performance
improvement planning process, a balanced attack to improve total system
performance, not just system subcomponents.
After interventions are made to the system, measure, assess and analyze
performance at the five checkpoints to determine whether the expected impact
actually occurred. Based on these data, make an evaluation relative to the
business strategy, the environment (both internal and external), the vision, the
plan and the improvement actions themselves. Note that the process of
evaluation is separate from the process of measurement. In addition,
measurement supports improvement as its primary objective. The
organizational system or unit of analysis being measured must be precisely
defined in order to avoid confusion. A number of measurement and evaluation
techniques may be used in this regard.
If the organization has an effective, high-performance management process in
the areas of planning, measurement and evaluation, control and improvement, it
will achieve its vision of the future and its desired outcomes over the long term.
An integrated approach to continuous improvement is essential to this
achievement.

DSMC/ATI Performance Improvement Model

The DSMC/ATI Performance Improvement Model, shown in the diagram is

primarily a model for creating an improvement project. It has seven steps and
begins with establishing a cultural environment and results in implementing a
continuous cycle of improvement projects aimed at improving organizational
performance.

Step 1 :Establish the Transformation Improvement Process Management and

Cultural Environment

The transformation improvement process is a total organizational approach

toward continuous improvement of products and services. It requires
management to exercise the leadership to establish the conditions for the process
to flourish. Management must create a new, more flexible environment and
culture, which will encourage and accept change. The new culture is developed
and operated so that all the people, working together, can use their talents to
contribute to the organizations objective of excellence. Management must
accept the primary responsibility itself and understand the prolonged gestation
period before the new systems become alive and productive.
 Step 1
Establish the TQM management and cultural environment

Vision Disciplined methodology

Long-term commitment Support system
People involvement Training

Step 2
Define mission of each
component of the
organization

Step 3
Set performance
improvement opportunities,
goals and priorities

Step 4
Establish improvement
projects and action plans

Step 5
Implement projects using Step 7
Review and
improvement
recycle
methodologies
 Step 6
Evaluate

Improvement performance
Cycle time
Lower cost
Innovation

Management is responsible for the following activities: (a) providing the vision
for the organization, (b) demonstrating a long-term commitment to implement
improvement, (c) actively involving all people in the improvement process, (d)
using a disciplined approach to achieve continuous improvement, (e) ensuring
that an adequate supporting structure is in place and (f) making all employees
aware of the need for, and benefits of, continuous improvement and training
them in the philosophy, practices, tools and techniques that support continuous
improvement.

Step 2: Define the Mission

The mission of each element of an organization must reflect a perspective such

that, when combined with other elements of the organization, it will provide the
synergy that produces positive performance improvement. Identify the
customer(s), their requirements, the processes and the products; develop
measures of the output that reflect customer requirements; and review the
preceding steps with the customer and adjust them as necessary. Define the
organizations mission with respect to those characteristics.
In developing this mission, all members of the organization must know the
purpose of their jobs, their customers(s) and their relation faction. Everyone has
a customer (internal or external). One objective of the transformation effort for
continuous improvement is to provide customers with services and products that
consistently meet their needs and expectations. Everyone must know the
customers requirements and must also make the suppliers aware of those and
other relevant requirements.

Step 3: Set Performance Improvement Goals

Improved performance requires improvement goals. Both involve change.

Steps 1 and 2 determine where the organization wants to go, how it is currently
performing and what role each member will play in achieving improved
organizational performance. Step 3 sets the goals for performance
improvement. These goals must reflect an understanding of the organizations
process capabilities so that realistic goals can be set. The goals should first be
set at the senior management level. They should reflect strategic choices about
the critical processes, the success of which is essential to organizational
survival.
Middle and line management set both functional and process improvement goals
to achieve the strategic goals set by senior management. This hierarchy of goals
establishes an architecture that links improvement efforts across the boundaries
of the functional organization. Within functional organizations, performance
improvement teams provide cross-functional orientation, and the employees on
those teams become involved in process issues. Thus, the entire organization is
effectively inter-linked to form an ideal performance improvement culture.
Step 4 : Establish Improvement Projects and Action Plans

The initial direction and the initial goals set for the continuous improvement
teams flow down from, and are determined by, top management. The steering
group performs the following activities. (a) Develops the organizational
transformation philosophy and vision; (b) focuses on critical processes; (c)
resolves organizational and functional barriers; (d) provides resources, training
and rewards and (e) establishes criteria for measuring processes and customer
requirements.

Step 5: Implement Projects with Performance Tools and Methodologies

Improvement efforts follow a structured improvement methodology. This

methodology requires the improvement team to define its customers and
processes, develop and establish measures for all process components and assess
conformance to customer needs. Analyzing the process will reveal various
improvement opportunities, some of which will be more valuable or achievable
than others. Opportunities are ranked by priority and improvements effected.
The improvement methodology is a cyclic and infinite process. As one
opportunity is pursued and improvements implemented, new opportunities are
identified and prioritized. Appropriate performance tools are employed at
various points in the process.

Step 6: Evaluate

Measurement is an essential element of the transformation and continuous

improvement process. If focuses on the effectiveness of improvement efforts
and identifies areas for future improvement efforts. A basic need in all
improvement efforts is the ability to measure the value of the improvement in
units that are pertinent and meaningful to the specific task. For example, one
evaluation of the before and after levels of customer satisfaction following
an improvement effort might include the number of customer complaints. The
method of the performance improvement should also be evaluated.
Most organizations have existing measures that may be used with little or no
modification. No menu of measurements is applicable to all users. The key is
to select measures that can be used by work units to manage and evaluate their
products and services so that continuous process improvement may be
undertaken.

Step 7: Review and Recycle

The continuous improvement process must be a permanent fixture in the

organization. Approaches to positive transformation for continuous
improvement that have limited lifetimes will become ineffective if left
unattended. Review progress with respect to improvement efforts and modify or
rejuvenate existing approaches for the next progression of methods. This
constant evolution reinforces the idea that continuous improvement through
organizational transformation and reengineering is not a program but rather is
anew expectation for day-to-day behaviour and a way of life for each member of
the organization.

MULTI-SOURCE FEEDBACK IN PfM

Multi-Source Feedback is a process used in performance management system to
solicit comments and views of other individuals in the organization about an
employees performance relating to competencies and behaviors.
PMS provides a linkage between employees/managees contribution and

Organizational results;
Recognition and rewards received by the employee;
Career development opportunities of the employee.

In order to make this linkage rigorous and objective performance assessment of

managees/employee is considered crucial. Multi source feedback ensures
effective performance management process. Multi rating system is
characterized by transparency and hallow-free.
An overview of the Performance Management System with
Multi Source Feedback Model is exhibited

Organizational Planning
Articulation and communication of desired business
Organizational results, strategy and goals, to arrive at a common
understanding of the direction of business
Business Vision and
Environment
Functional Planning
Mission
Cascading of organizational objectives to
various functions, departments, or teams
Jointly set byManager and
Employee Covers all area of
Performance targets,
Individual Performance Planning
Responsibilities, Translation of the above into individual roles
Competencies, etc. and clarification expectations from employee

Performance Assessment
Provided inputs on individuals capability,
delivery, and potential on the job for the
performance period based on expectations set

Performance Related Decision Making

On the basis of feedback, decisions on pay, career
development and training are taken. This impacts the
commitment of employees.
Features of Multi-Source Feedback

Multi Source Feedback is process of given the feedback to the

managee/employee on various dimensions of performance using more than one
rater. The salient features of MSF are as follows:

Feedback anonymity and rater confidentiality

The source of feedback is unknown to an employee and the inputs of managees

performance is obtained from different sources and then it is aggregated using a
particular analysis format the feedback and is then provided to the employee.

More than one rater and different sources

Traditionally, a manager would undertake performance assessment. Multi-

source feedback involves several individuals who view the
employees/managees performance from different aspects. These aspects may
be any or all of those represented below.
Internal External
Customers Customers Direct reports

Employee/
Self managee Manager

Co-workers Self-level Others

Reports

Involvement of people in multi-source feedback

As many as ten individuals may thus provide feedback to one individual.
Having several individuals give feedback, however, does not qualify a system to
be called multi-source feedback. Each rater must constitute a different party
or source with a varying level of interaction on performance.
Raters provide feedback based on the extent of interaction
Not all raters give feedback on all performance parameters. Performance
parameters are culled out for each rater based on whether the rater would have
interacted with the employee on the performance aspects. For instance,
leadership competencies may be assessed only by direct reports and not by the
customer.
Degree defines extent of multi-source feedback comprehensiveness
The extent to which different sources are involved in providing feedback defines
the degree of the multi-source system. Further, using more sources ensures a
holistic assessment of an employees/managees performance.

The most comprehensive type of multi-source feedback is 360-degree feedback,

which involves an employees customer, peer, direct reports, self and manager.
The other degrees are represented

Peer/Co-workers Manager

Customer Direct

Reports/Subordinates

Extent of multi-source feedback

Organizations often choose the source of feedback based on the criticality of

performance interaction. This is also based on the strategy and values of the
organization. IBM, for example, opts to use customer feedback as opposed to
using all sources to provide additional inputs. In an organization where
teamwork may be critical, the inputs of peers often become necessary and are
used extensively.

The how of performance is a typical area of assessment

An employee/managee to the organization may view performance as an

amalgam of two distinct areas of contribution.

The What The How

Of of
Performance Performance

Includes: Includes:
Targets/KRAs/Goals Competencies
Daily responsibilities or Desired behaviors
Accountabilities contribution Expected demonstration
to projects or task forces of organizational values
And attitudes

Multi-Source feedback is used here

Areas of contribution by an employee to the organization

Typically, the what of performance does a manager assess, as these

expectations are set between the manager and the managee/employee. And this
may be confidential.
Competencies, desired behaviors, attitudes and values are demonstrated in the
daily interaction of an employee with other parties. These are articulated by the
organization and are known to all employees. Hence these may form
appropriate parameters of assessment by multiple sources.
Merits of Multi-Source Feedback

Multi-source feedback offers the following advantages:

Greater buy-in due to more transparency and objectivity;
Extensive employee involvement;
Comprehensive feedback;
Balancing and moderation of rater bias;
Difficult to ignore;
More insight for self, managers and HR to plan initiatives and take
decisions;
Lower threat perception from negative feedback due to anonymous
input;
Creates an alignment between an employee and organizational values
and behaviors;
Increases team orientation and communication channels;
Focuses employees on self-development; and
Can also be extended to recruitment and exit interviews.

What is Multi-Source Feedback Used for?

Companies use multi-source feedback for a variety of purposes. Typically,

multi-source feedback can impact the decisions of:
Development; and
Pay and promotion.

In a study by Hewitt Associates in 1999 that studied the performance

management systems of over 3000 companies around the world, the prevalence
of multi-source application was seen to vary. Of the companies that used multi-
source feedback, the percentage of companies applying it for specific decisions
is mentioned.

Development only Incorporated into Pay and promotion

(70 percent) Performance rating (5 percent)
(20 percent)

Multi-source feedback can be incorporated into performance assessment in the

following two ways:

In overall assessment scores: In this case, it is usually assigned a weight

age-a weight age equivalent to the stress that the organization places on
competencies, values, and behaviors. In this case, multi-source feedback
may impact pay and promotion.
Separate score for multi-source feedback: In this, the score on multi-
source feedback is set aside for analyzing development needs only.
Development is the most common application of multi-source feedback
since employees are agreeable to feedback from different sources so long
as it does not impact their pay of career but is only geared toward
developing additional skills or behaviors.

Organizations Readiness to Use Multi-Source Feedback

Conditions to be fulfilled

Multi-source feedback is not commonly practiced. In fact, any organization

opting for multi-source feedback must check for organization and employee
readiness. Checking for acceptance is vital since implementation is the key to
success of this effort.
The existence of all the following factors is imperative before an organization
considers using this type of feedback:

Performance-driven culture;
An effective PMS which is participative in nature;
Definition and articulation of competencies, desired behaviors, and
organizational values;
Commitment of top management to this process (this process usually
starts from the top);
Ownership of PMS by HR, line managers and senior management;
Willingness of employees to be part of this feedback;
Acceptance of negative feedback;
Open communication systems;
Organizational emphasis and stress on career development, training and
coaching;
External/outward/customer-focused culture;
Partnership orientation in organization as opposed to top down
management.
Team-based working styles;
Employees are role-focused (do what is needed) as opposed to job-driven
(do what is articulated); and
Presence of data administration systems (especially if the organization
intends to process performance data in-house).

Companies Implementing Multi-Source Feedback

The prevalence of multi-source feedback is relatively uncommon, especially

across the organization. Many organizations opt for using this system only for
top management. Also, most organizations that use multi-source feedback limit
the degree of sources.
Some examples of companies that are using this multi-source feedback are given
in the following table.

Degree Example
90 (Assessment by manager) Most companies with a performance
management system in place use this mode of
feedback
180 (Assessment by manager C-Dot
and peer) Tata Communications
ICICI
Coca Cola
270 (Assessment by manager, BILT
peer and direct report) Woodward Governor
Wipro Infotech
360 (Assessment by manager, SGS Thompson
peer, direct report and customer) ITC

* It is possible that systems may have changed in the above companies.

Companies using multi-source feedback

Companies that have opted for multi-source feedback report a high degree of
satisfaction with this system and recommended it to other organizations. They
feel that multi-source feedback significantly improves development, process
fairness and employee performance.
PERFORMANCE EVALUATION OF EMPLOYEES

Performance evaluation of employees serves a number of purposes in

organizations. Management uses evaluations for human resource decisions.
Evaluations provide input into important decisions such as promotions,
transfers, and terminations. Evaluations identify training and development
needs. It pinpoint employee skills and competencies that are currently
inadequate but for which programs can be developed to remedy. Performance
evaluations can be used as a criterion against which selection and development
programs are validated. Newly hired employees who perform poorly can be
identified through performance evaluation and training effectiveness can be
measured. Evaluations also fulfill the purpose of providing feedback to
employees on how the organization views their performance. Furthermore,
performance evaluations are used as the basis for reward allocations.
Performance evaluation and motivation

The expectancy model of motivation provides linkages between effort-

performance and performance-reward that defines performance. In the
expectancy model, its the individuals performance evaluation. To maximize
motivation, people need to perceive that the effort they exert leads to a favorable
performance evaluation in turn leading to the rewards that managee values.
Following the expectancy model of motivation, if the objectives that employees
are expected to achieve are unclear, if the criteria for measuring those objectives
are vague, and if the employees lack confidence that their efforts will lead to a
satisfactory payoff by the organization when their performance objectives can
achieved, we can expect individuals to work considerably below their potential
thereby resulting in lowering of performance.

Why employee evaluation a demotivating in organizations?

In the real world of business, many employees may not be motivated is that the
performance evaluation process is often more political than objective. Many
managers will subordinate objective accuracy for self-serving ends
deliberately manipulating evaluations to get the outcomes they want.
What should management evaluate? The three most popular sets of criteria are
individual task outcomes, behaviors, and traits.
Individual Task Outcomes If ends count, rather than means, then management
should evaluate an employees task outcomes. For example, using task
outcomes, a plant manager could be judged on criteria such as quantity
produced, scrap generated, and cost per unit of production. Similarly, a
salesperson could be assessed on overall sales volume in his or her territory,
dollar increase in sales, and number of new accounts established.
Behaviors In many cases, its difficult to identify specific outcomes that can be
directly attributable to an employees actions. This is particularly true of
personnel in advisory or support positions and individuals whose work
assignments are intrinsically part of a group effort. In the later case, the groups
performance may be readily evaluated, but the contribution of each group
member may be difficult or impossible to identify clearly. In such instances, its
not unusual for management to evaluate the employees behavior. Using the
previous examples, behaviors of a plant manager that could be used for
performance evaluation purposes might include promptness in submitting his or
her monthly reports or the leadership style that the manager exhibits. Pertinent
salespersons behaviors could be the average number of contact calls made per
day or sick days used per year.
It is to be noted that these behaviors neednt be limited to those directly related
individual productivity. As we pointed out in our previous discussion on
organizational citizenship behavior, helping others, making suggestions for
improvements, and volunteering for extra duties make work groups and
organizations more effective. So including subjective or contextual factors in a
performance evaluation-as long as they contribute to organizational
effectivenessmay not only make sense, they may also improve coordination,
teamwork, corporation, and overall organizational performance.
Traits The weakest set of criteria, yet one that still widely used by the
organizations, is an individual trait. Traits such as having a good attitude,
showing confidence, being dependable, looking busy, or possessing a
wealth of experience may or may not be highly correlated with positive task
outcomes.
But only the nave (immature or inexperienced) would ignore the reality that
such traits are frequently used in organizations as criteria for assessing an
employees level of performance.
Who should do the evaluating?
Who should evaluate an employees performance? The obvious answer would
seem to be his or her immediate boss. By tradition, a managers authority
typically has included appraising subordinates performance. The logic behind
this tradition seems to be that since managers are held responsible for their
employees/managees performance, it only makes sense that these managers do
the evaluating of that performance. But that logic may be flawed. Others may
actually be able to do the job better.
Immediate superior

The majority of performance evaluations at the lower and middle levels of

organizations continue to be conducted by an employees immediate boss. Yet a
number of organizations are recognizing the drawbacks to using this source of
evaluation. For instance, many bosses feel unqualified to evaluate the unique
contributions of each of their employees. Others resent being asked to play
God with their employees careers. Many of todays organizations are using
self-managed teams, some organizations have devices that distance bosses from
their employees/managees. Also felt that employees/managees immediate
superior may not be the most reliable judge of that employees performance.
Peers Peer evaluations are one of the most reliable sources of appraisal data.
Because, First, peers are close to the action. Daily interactions provide them
with a comprehensive view of an employees job performance. Using peers as
raters results in a number of independent judgments. A boss can offer only a
single evaluation, but peers can provide multiple appraisals. And the average of
several ratings is often more reliable than single evaluation. On the downside,
peer evaluations can suffer from co-workers unwillingness to evaluate one
another and from biases based on friendship or animosity.
Self-evaluation Having employees evaluate their own performance is consistent
with values such as self-management and empowerment. Self-evaluations get
high marks from employees themselves; and they make excellent vehicles for
stimulating job performance discussions between employees and their superiors.
However, they suffer from over inflated assessment and self-serving bias.
Because of these serious drawbacks, self-evaluations are probably better suited
to developmental uses than for performance evaluative purposes.
Immediate Subordinates a fourth judgment source is an employees
subordinates. Its proponents argue that its consistent with recent trends toward
enhancing honesty, openness, and empowerment in the workplace.
Immediate subordinates evaluations can provide accurate and detailed
information about managers behavior because the evaluators typically have
frequent contact with the person being evaluated. The obvious problem with this
form of rating is fear of reprisal from bosses who are given unfavorable
evaluations. Therefore, respondent anonymity is crucial if these evaluations are
to be accurate.
360-Degree Evaluation
The latest approach to performance evaluation is the use of 360-degree
evaluations. It provides for performance feedback from the full circle of daily
contacts that an employee might have, ranging from mailroom personnel to
customers to bosses to peers. The number of appraisals can be as few as three or
four evaluations or as many as 25, with most organizations collecting five to ten
per employee.
Whats the appeal of 360-degree evaluations?

They fit well into organizations that have introduced teams, employee
involvement and quality-management programs. By relying on feedback from
co-workers, customers, and subordinates, these organizations are hoping to give
everyone more of a sense of participation in the review process and gain more
accurate reading on employee performance. 360-degree evaluations are
consistent with evidence that employee performance varies across contexts and
that people behave differently with different constituencies. The use of multiple
sources, therefore, is more likely to capture this variety of behavior accurately.
 UNIT - II

PERFORMANCE MANAGEMENT

INTRODUCTION:
Individual differences can influence behaviour in organizations. A vast array of
workplace behaviour shape how any individual performs in an organization.
Training is important for the success of any organization. The contents of the
training programmes have always been structured at higher levels and subject to
change. The training programme never emphasized on the basic workplace
skills which are necessary and can lay a strong foundation among the
employees to adopt any change in the work atmosphere. Improving these basic
skills is fundamental for increasing the productivity of employees and widening
the scope of the organization.
Basic workplace skills or workplace literacy refer to those generic skills that all
employees need at work, which are:-
Reading
Writing
Speaking
Math, and
Problem solving

The extent of the degree of each skill varies from each workplace and employee
depending on factors such as:-
Industry and Sector
Job function and specific duties
Use of technology in the workplace, and
Changing job requirements
Enhancing workplace literacy levels in the workplace improves bottom-line
performance of the employees and gives them scope for success in their careers.
Today, there is a growing recognition for workplace literacy as it is critical
factor in the corporate sector. Employers are paying more attention to the
potential impact it has on their business success and employees are recognizing
the importance of this. Workplace literacy ultimately contributes higher
revenues and improvement in the quality of work. Workplace literacy is a
competency to read the required work related material. It is proposed that
functional literacy be extended in terms of competency in listening, speaking
and writing than reading alone.
At this juncture, what we mean by workplace? Workplace includes
performance and productivity, absenteeism and turnover and organizational
citizenship.
Workplace is the pattern of action by the members of an organization that
directly or indirectly influences organizational effectiveness.
WORKPLACE PRIVACY
Do you think you have a right to privacy at your workplace? What can your
employer find out about you and your work? It is not uncommon that employers
can read your e-mail, even those marked personal or confidential, tap your
telephone, monitor your work by computer, store and review computer files, and
monitor you in an employee bathroom or dressing room. Today, 45 percent of
all companies and 17 percent of Fortune 1000 companies use monitoring
software of some type. The use of other forms of surveillance, such as video
cameras, brings that total up to 67 percent.
Why do mangers feel they must monitor what employees are doing? A big
reason is that employees are hired to work, not to surf the Web checking stock
prices, or shopping for presents for family or friends. Recreational on-the-job
Web surfing has been said to cost a billion dollars in wasted computer resources
and billions of dollars in lost work productivity annually. Thats a significant
cost to businesses.
Another reason that managers monitor employee e-mail and computer usage is
that they dont want to risk being sued for creating a hostile workplace
environment because of offensive messages or an inappropriate image displayed
on a coworkers computer screen. Concern about racial or sexual harassment is
one of the reasons why companies might want to monitor or keep backup copies
of all e-mail. This electronic record can help establish what actually happened
and can help managers react quickly.
Finally, managers want to ensure that company secrets arent being leaked.
Although protecting intellectual property is important for all businesses,
especially important in high-tech industries. Managers need to be certain that
employees are not, even inadvertently, passing information on to others who
could use that information to harm the company.
The consequences of inappropriate workplace usage can be serious for
employees and companies. For instance, shortly before Christmas 1999, 23
workers at a New York Times administrative center in Norfolk, Virginia, were
fired, and a number of other employees were reprimanded for violating the
companys policy that prohibits using the corporate e-mail system to create,
forward, or display any offensive or disruptive messages, including photographs,
graphics, and audio material. A number of Xerox employees were dismissed
for spending as much as eight hours a day browsing X-rated and e-shopping
Web sites during work hours. Two executives at Salomon smith Barney were
fired after a routine check of corporate e-mail system crashed for six hours after
an employee sent 60,000 co-workers an e-mail (asking them to respond back
using an attached e-receipt) about a national prayer day. Since the company
depended heavily on its internal e-mail communication system, this crash cost
the company hundreds of thousands of dollars.
Even with all the workplace monitoring that managers can do, employees in the
United Sates do have some protection through the federal Electronic
Communications Privacy Act of 1986. The ECPA prohibits unauthorized
interception of electronic communication. Although this law gives employees
some privacy protection, it doesnt make workplace electronic monitoring illegal
as employers are allowed to monitor communications for business reasons or
when employees have been notified of the practice. Although employees may
think that it is unfair for a company to monitor their work electronically and to
fire them for what they feel are minor distractions, the courts have ruled that,
since the computer belongs to the company, managers have a right to view
everything on it.
Because of the potentially serious costs and given the fact that these days many
jobs now entail work that involves using a computer, many companies are
developing and enforcing workplace monitoring policies. The responsibility for
doing this falls on managers. Its important to develop some type of viable
workplace monitoring policy. What can managers do to maintain control but do
so in a way that isnt demeaning to employees? They should develop an
unambiguous computer usage policy and make sure that every employee knows
about it. Tell employees up front that their computer use may be monitored at
any time and provide clear and specific guidelines as to what constitutes
acceptable use of company e-mail systems and the Web.
WORKPLACE VIOLENCE
The news headlines relate the sad details of an Atlanta stock day trader gunning
down individuals at a brokerage office. The popular media coined the term
going postal (because of incidences of postal employees gunning down their
co-workers) to describe individuals who are pushed over the edge and become
violent. Is workplace violence really an issue with which managers might have
to deal?
Although the number of workplace homicides is decreasing, the U.S.
Department of Justice estimates that workplace assaults of all types claim more
than 1 million victims each year. Other experts put the figure at closer to 2
million. The annual cost to U.S. businesses is estimated at between 20 and 35
billion dollars.
What factors are believed to be contributing to workplace violence?
Undoubtedly, employee stress caused by long hours, information overload, other
daily interruptions, unrealistic deadlines, and uncaring managers. Even office
layout designs with small cubicles where employees work amidst the noise and
commotion from those around them have been cited as contributing to the
problem. Dysfunctional work environments characterized by the following
contributes to the problem:
Employee work driven by TNC (time, numbers, and crises).
Rapid and unpredictable change in which instability and uncertainty
plague employees.
Destructive communication style in which managers communicate in an
excessively aggressive, condescending, explosive, or passive-aggressive
style; excessive workplace teasing or scapegoating..
Authoritarian leadership with a rigid, militaristic mind-set of managers
versus employees; employees arent allowed to challenge ideas,
participate in decision making, or engage in team-building efforts.
Defensive attitude in which little or no performance feedback is given;
only numbers count; and yelling, intimidation, and avoidance are the
preferred ways of handling conflict.
Double standards in terms of policies, procedures, and training
opportunities for managers and employees.
Unresolved grievances because there are no mechanisms or only
adversarial ones in place for resolving them; dysfunctional individuals
 may be protected or ignored because of long-standing rules, union
contract provisions, or reluctance to take care of problems.
Emotionally troubled employees and no attempt by managers to get help
for these people.
Repetitive, boring work in which theres no chance of doing something
else or of new people coming in.
Faulty or unsafe equipment or deficient training that keeps employees
from being able to work efficiently or effectively.
Hazardous work environment in terms of temperature, air quality,
repetitive motions, overcrowded spaces, noise levels, excessive
overtime, and so forth. To minimize costs, no additional employees are
hired when workload becomes excessive, leading to potentially
dangerous work expectations and conditions.
Culture of violence in which theres a history of individual violence or
abuse; violent or explosive role models; or tolerance of on-the-job
alcohol or drug abuse.
What can managers do to deter or reduce possible workplace violence? Once
again, we can use the concept of feed-forward, concurrent, and feedback control
to identify actions that managers can take.
EMPOWERMENT
Empowerment involves increasing the decision-making discretion of workers.
Many individual employees and employee teams are making the key operating
decisions that directly affect their work. They are developing budgets,
scheduling workloads, controlling inventories, solving quality problems, and
engaging in similar activities that until very recently were viewed exclusively as
part of the managers job. For instance, at Total Systems Services Inc. of
Columbus, Georgia, employees are actively involved in work decisions, which
at one point included the design of the companys new office complex. The
importance of employees to the company is reflected in the brick river walk
along the Chattahoochee River where each brick is engraved with an employees
name.
Why are employees empowered?
It is the need for quick decisions by those people who are most knowledgeable
about the issuesoften those at lower organizational levels. If organizations are
to successfully compete in a dynamic global economy, they have to be able to
make decisions and implement changes quickly.
Secondly, the reality that organizational downsizing during the last part of the
twentieth century left many managers with larger spans of control. In order to
cope with the increased work demands, managers had to empower their people.
Although empowerment is not a universal phenomenon, when employees have
the knowledge, skills, and experience to do their jobs competently and when
they seek autonomy and possess an internal locus of control, empowerment can
be beneficial.
Motivating Employees through Empowerment
At Sapient Corporation co-founders Jerry Greenberg and J. Stuart Moore
recognized that employee motivation was critically important to their companys
ultimate success. The designed their organization so that individual employees
are part of an industry-specific team that works on an entire project rather than
on one small piece of it. Their rationale was that people often feel frustrated
when they are doing a small part of a job and never get to see the whole job
from start to finish. They realized that people would be more productive if they
got the opportunity to participate in all phases of a project. Their approach
seems to be working as Fortune named Sapient one of the 100 Fastest Growing
Companies in 2000.
When youre motivated to do something, you find yourself energized and
willing to work hard at doing whatever it is youre excited about. It would be
great if all of a ventures employees were energized, excited, and willing to
work hard at their jobs. Having motivated employees is an important goal for
any entrepreneur, and employee empowerment is an important motivational tool
entrepreneurs can use.
Although its not easy for entrepreneurs to do so, employee empowerment-
giving employees the power to make decisions and take actions on their own-is
an important motivational approach. Because successful ventures must be quick
and nimble, ready to pursue opportunities in new directions. Empowered
employees can provide that flexibility and speed. They often display stronger
work motivation, better work quality, higher job satisfaction, and lower
turnover.
For example, the 5,600 employees at Butler International, Inc., a technology
consulting services firm based in Montvale, New Jersey, work at client
locations. Ed Kopko, president and CEO, recognized that employees had to be
empowered to do their jobs if they were going to be successful. The companys
commitment to and success with employee empowerment led to its being
awarded the Arthur Andersen Global Best Practices Award for Motivating and
Retaining Employees. Another entrepreneurial venture that has found employee
empowerment to be a strong motivational approach is Stryker Instruments in
Kalamazoo, Michigan. Each of the companys 40 production units (consisting of
about 40 employee each) has responsibility for its operating budget, coast
reduction goals, customer-service levels, inventory management, training,
production planning and forecasting, purchasing, human resource management,
safety, and problem solving. In addition, unit members work closely with
marketing, sales, and R&D during new product introductions and continuous
improvement projects. Says one team supervisor, Stryker lets me do what I do
best and rewards me for the privilege.
Empowerment is a philosophical concept that businessmen have to buy into.
In fact, it is hard for many to do. Their life is tied up in the business. They have
built it from the ground up. But continuing to grow is eventually going to
require handing over more responsibilities to employees.
Entrepreneurs can begin by using participative decision making in which
employees provide input into decisions. Although getting employees to
participate in decisions, is not quite taking the full plunge into employee
empowerment, it is, at least, a way to begin tapping into the collective array of
employees talents, skills, knowledge, and abilities.
Another way to empower employees is through delegation-the process of
assigning certain decisions or specific job duties to employees. By delegating
decisions and duties, the entrepreneur is turning over the responsibility for
carrying them out. Fully empowering employees means redesigning their jobs so
they have discretion over the way they do their work. Its allowing employees to
do their work effectively and efficiently by using their creativity, imagination,
knowledge, and skills.
If an entrepreneur implements employee empowerment properly, i.e. with
complete and total commitment to the programme and with appropriate
employee training, results can be impressive for the entrepreneurial venture and
for the empowered employees. The business can enjoy significant productivity
gains, quality improvements, more satisfied customers, increased employee
motivation, and improved morale. Employees can enjoy the opportunities to do
a greater variety of work, more interesting and challenging. Employees are also
encouraged to take the initiative in identifying and solving problems and doing
their work.
For example, at Mine Safety Appliances in Murrysville, Pennsylvania,
employees are empowered to change their work processes in order to meet the
organizations challenging quality improvement goals. Getting to this point took
an initial 40 hours of classroom instruction per employee in areas such as
engineering drawing, statistical process control quality certifications, and
specific work instruction. However, the companys commitment to an
empowered workforce has resulted in profitability increasing 91 percent over the
last five years, 95 percent of the companys employees achieving multi skill
certifications, and the company being named Home Depots Supplier of the
Year in 1999 in its first year of supplying the company.
EFFECTIVENESS
Managerial effectiveness can be defined as goal attainment. It means completing
activities so that organizational goals are attained. It is nothing but doing the
right things. It can also be considered as the measure of how appropriate
organizational goals are and how well an organization is achieving those goals.
It is a common performance measure used by managers.
Other descriptions of effectiveness have been suggested by management
researchers. For instance, the systems resource model of organizational
effectiveness proposes that effectiveness is measured by the organizations
ability to exploit its environment in acquiring scarce and valued resources. The
process model emphasizes the transformation processes of the organization and
how well the organization converts inputs into desired outputs. Then, finally, the
multiple constituencies model says that several different effectiveness measures
should be used, reflecting the different criteria of the organizations
constituencies. For example, customers, advocacy groups, suppliers, and
security analysts each would have their own measures of how well the
organization was performing. Although each of these different effectiveness
models may have merit in measuring certain aspects of organizational
effectiveness, the bottom line for managers continues to be how well the
organization accomplishes its goals. Thats what guides managerial decisions in
designing strategies, work processes, and work activities, and in coordinating
that work of employees. There are issues that can arise as managers design
efficient and effective control systems. Technological advances in computer
hardware and software, for example, have made the process of controlling much
easier, but these advances have bought with them difficult questions regarding
what managers have the right to know about employees and how far they can go
in controlling employee behavior.
EMPLOYEE PERFORMANCE MANAGEMENT
In the present competitive scenario, organizations have to ensure optimum
performance of their employees continuously in order to compete effectively.
Traditionally, this was attempted to achieve through performance appraisal of
employees which was more concerned with telling employees where they lacked
in their performance. It served the purpose to some extent, but not enough to
raise the employee performance at the most desirable level. This led to the
introduction of Performance Management
Concept of Performance Management
Performance management is the process of planning performance, appraising
performance, giving its feedback, and counseling an employee to improve his
performance.
Many people think that performance management (sometimes called
performance development) and performance appraisal are one and the same.
This thinking made many companies to retain the old practices of performance
appraisal. Therefore, these companies have not been able to reap the results of
performance management.
There is a need for changing mental set up along with the change in the system.
Changing the nomenclature of a system without changing the mental set up is
merely avoiding reality. Therefore, two systems performance management and
performance appraisal should be seen in different perspectives. The following
discussion will bring out the differences in them.
1. Performance management is more comprehensive than performance
appraisal, though performance appraisal is part of performance management.
Besides performance appraisal, performance management involves performance
planning and providing feedback and counseling to employees to improve their
performance.
2. In performance management, all activities are linked to organizational
objectives and strategies. Because of such a linkage, the focus is on why to
appraise rather than what and how to appraise the performance.
Many research evidences suggest that : the companies that have some sort of
performance management systems have achieved overall better financial
performance than those that have not.
Features of performance Management
A successful performance management system has the following salient
features.
1. Performance management is closely concerned with the organizational
culture and strategically linked to clearly defined to organizational objectives.
Therefore, performance measure is based on the critical success factors derived
directly form the corporate and business strategy.
2. Performance management system is closely linked to other systems of
human resource management, like planning, succession planning, and training
and development. Many feel that there should be separation of appraisal for
rewards from appraisal for development. Further, it is suggested that peer-level
managers should conduct appraisal for rewards, instead of just immediate
superiors.
3. Performance management is a continuous process of monitoring and
feedback. There should be involvement of employees through focus group
interviews, surveys, etc., in all stages for the design, implementation, and review
process.
4. Performance management involves effective use of technology in
conveying desired competencies and in monitoring, collecting and giving
feedback.
5. Performance management emphasizes comprehensive training to managers
not only for their own development but also to act as effective coaches as the
role of coaching in performance improvement is critical.
6. Performance management is a dynamic system that is suitable for
changing workplace realities, such as working in teams and alternative work
arrangements like tele-working, job sharing, etc.
Managers need to know whether their employees are performing their jobs
efficiently and effectively or whether there is need for improvement. Evaluating
employee performance is part of a performance management system, which is a
process of establishing performance standards and appraising employee
performance in order to arrive at objective human resource decisions as well as
to provide documentation to support those decisions. The performance appraisal
is a critical part of a performance management system. The following are some
different methods of doing performance appraisal.
Performance Appraisal
Performance appraisal is the key ingredient of performance management. In a
work group members, consciously or unconsciously, make opinion about others.
The opinion may be about their quality, behaviors, way of working etc, such an
opinion becomes basis or interpersonal interaction. In the same way, superiors
form some opinions about their subordinates for determining many things like
salary increase, promotion, transfer, etc. in large organizations, this process is
formalized and takes the form of performance appraisal. Performance appraisal
in some form has existed in old days also. For example, Wei dynasty (221-265
A.D.) in China introduced performance appraisal in which an Imperial Rater
used to appraise the performance of members of the official family. In its
present form, the New York City Civil Service adopted performance appraisal in
1883. Since then and specially after World War I, performance appraisal in
formal way has been adopted by most of the large organizations particularly in
business field. In our country too, large organizations adopt formal appraisal
method.
Concept of performance Appraisal
Appraisal is the evaluation of worth, quality or merit. In the organization
context, performance appraisal is a systematic evolution of personnel by
superiors or others familiar with their performance. Performance appraisal is
also described as merit rating n which one individual is ranked as better or worse
in comparison to others. The basic purpose in this merit rating is to ascertain an
employees eligibility of promotion. However, performance appraisal is more
comprehensive term for such activities because its use extends beyond
ascertaining eligibility of promotion. Such activities may be training and
development, salary increase, transfer, discharge, etc, besides promotion. A
formal definition of performance appraisal is as follows:
it (performance appraisal) is the process of evaluating the performance and
qualifications of the employees in terms of the requirements of the job for which
he is employed, for the purposes of administration including placement,
selection for promotion, providing financial rewards and other actions which
require differential treatment among the members of a group as distinguished
from actions affecting all members equally.
Beach bas defined performance appraisal as follows:
Performance appraisal is the systematic evaluation of the individual with regard
to his or her performance on the job and his potential for development.
Thus, performance appraisal is a systematic and objective way of judging the
relative worth or ability of an employee in performing his bob. It emphasizes on
two aspects; systematic and objective. The appraisal is systematic when it
evaluates all performances in the same manner, utilizing the same approaches so
that appraisal of different persons is comparable. Such an appraisal is taken
periodically according to plan; it is not left to chance. Thus, both raters and
rates know the system of performance appraisal and its timing. Appraisal has
objectivity also. Its essential feature is that it attempts at accurate measurement
by trying to eliminate human biases and prejudices.
Objectives of Performance Appraisal
As discussed earlier, performance appraisal is undertaken for a variety of
reasons.
Review of organizational practices shows that orgainsations undertake
performance appraisal exercises to meet certain objectives which are in the form
of salary increase , promotion, identifying training and development needs,
providing feedback to employees and putting pressure on employees for better
performance.
1. Salary increase. Performance appraisal plays a role in making decision
about salary increase. Normally salary increase of an employee depends on
how he is performing his job. There is continuous evaluation of his
performance either formally or informally. In a small organization, since
there is a direct contact between the employee and the one who makes
decisions about salary increase, performance appraisal can be an informal
process. However, in a large organization where such contact hardly exists,
formal performance appraisal has to be undertaken. This may disclose how
well and employee is performing and how much he should be compensated
by way of salary increase.
2. Promotion. Performance appraisal plays significant role where
promotion is based on merit. Most of the organizations often use a
combination of merit and seniority for promotion, performance appraisal
discloses how an employee is working in his present job and what his strong
 and weak points are. In the light of these, it can be decided whether he can
be promoted to the next higher position and what additional training will be
necessary for him. Similarly, performance appraisal can be used for
transfer, demotion and discharge of an employee.
3. Training and Development. Performance appraisal tries to identify the
strengths and weaknesses of an employee on his present job. This
information can be used for devising training and development programmes
appropriate for overcoming weaknesses of the employees. In fact, many
organizations use performance appraisal as means for identifying training
needs of employees.
4. Feedback. Performance appraisal provides feedback to employees about
their performance. It tells them where they stand. A person works better
when he knows how he is working; how his efforts are contributing to the
achievement of organizational objectives. This works in two ways. First,
the person gets feedback about his performance and he may try to overcome
his deficiencies which will lead to better performance. Second, when the
person gets feedback about his performance, he can relate his work to the
organizational objectives. This provides him satisfaction that his work is
meaningful. Thus, given the proper organizational climate, he will try his
best to contribute maximum to the organization.
5. Pressure on Employees. Performance appraisal puts a sort of pressure on
employees for better performance. If the employees are conscious that they
are being appraised in respect of certain factors and their future largely
depends on such appraisal, they tend to have positive and acceptable
behaviour in this respect. Thus, appraisal can work automatically as control
device.
Performance Appraisal Methods
Managers can choose from seven performance appraisal methods. The
advantages and disadvantages of each of these methods are shown in Exhibit
12.12.
Written Essays:
The Written essay is a performance appraisal technique in which an evaluator
writes out a description of an employees strengths and weaknesses, past
performance, and potential. The evaluator would also make suggestions for
improvement.
Critical Incidents:
The use of critical incidents focuses the evaluators attention on those critical or
key behaviours that separate effective from ineffective job performance. The
appraiser writes down anecdotes that describe what the employee did that was
especially effective or ineffective. The key here is that only specific behaviours,
not vaguely defined personality traits, are cited.
Graphic Rating Scales
One of the oldest and most performance appraisal methods is graphic rating
scales. This method lists a set of performance factors such as quantity and
quality of work, job knowledge, cooperation, loyalty, attendance, honesty, and
initiative. The evaluator then goes down the list and rates and employee on each
factor using an incremental scale. The scales typically specify five points; for
instance, a factor such as job knowledge might be rated from 1 (poorly
informed about work duties) to 5 (has complete mastery of all phases of the
job).
Behaviourally Anchored Rating Scales.
One increasingly popular performance appraisal approach is behaviourally
anchored rating scales (BARS). These scales combine major elements from the
critical incident and graphic rating scale approaches. The appraiser rates an
employee according to items along a numerical scale, but the items are examples
of actual behavior on a job rather than general descriptions or taints.
Multi-person Comparisons:
Multi-person comparisons compare one individuals performance with that of
one or more others. Its a relative, not an absolute, measuring device. The three
most popular approaches to multi-person comparisons include group order
ranking, individual ranking, and paired comparison. The group order ranking
requires the evaluator to place employees into a particular classification such as
top one-fifth or second one-fifth. The individual ranking approach requires
the evaluator merely to list the employees in order from highest to lowest. In the
paired comparison approach, each employee is compared with every other
employee in the comparison group and rated as either the superior or weaker
member of the pair. After all paired comparisons are made, each employee is
assigned a summary ranking based on the number of superior scores he or she
received.
Objectives:
MBO is also a mechanism for appraising performance. In fact, its the preferred
method for assessing managers and professional employees. With MBO,
employees are evaluated by how well they accomplish a specific set of goals
that has been determined to be critical in the successful completion of their jobs.
360 Degree Feedback:
360 degree feedback is a performance appraisal method that utilizes feedback
from supervisors, employees, and co-workers. In other words, this type of
review utilizes information from the full circle of people with whom the
manager interacts. Companies such as Alcoa, Pitney Bowes, AT&T, DuPont,
Levi Strauss, and UPS are using this innovative approach. Users of this
approach caution that, although its effective for career coaching and helping a
manager recognizes his or her strengths and weaknesses, its not appropriate for
determining pay, promotions, or terminations.
Compensation and Benefits
Would you work 40 hours a week or more for an organization for no pay and no
benefits? Although we might consider doing so for some social cause
organization, most of us expect to receive some compensation from our
employer. An effective and appropriate compensation system can help attract
and retain competent and talented individuals who can help the organization
accomplish its mission and goals.
Managers must develop a compensation system that reflects the changing nature
of work and the workplace in order to keep people motivated. Organizational
compensation can include many different types of rewards and benefits such as
base wages and salaries, wage and salary add-ons, incentive payments, and other
benefits and services.
As levels of skills tend to affect work efficiency and effectiveness, many
organizations have implemented skill-based pay systems, which reward
employees for the job skills and competencies they can demonstrate. In a skill-
based pay system, an employees job title doesnt define his or her pay category;
skills do. For example, the highest pay a machine operator at Polaroid
Corporation can earn is $14 an hour. However, because the company has a skill-
based pay plan, machine operators can earn up to a 10 percent premium if they
broaden their skills and perform tasks such as material accounting, equipment
maintenance, and quality inspection. Skill-based pay systems seem to mesh
nicely with the changing nature of jobs and todays work environment. As one
expert noted, Slowly, but surely, we are becoming a skill-based society where
your market value is tied to what you can do and knowledge are what really
count, it doesnt make sense to treat people as jobholders. It makes sense to treat
them as people with specific skills and to pay them for these skills.
Although many factors influence the design of an organizations compensation
system, flexibility is becoming a key consideration. The traditional approach to
paying people reflected a time of job stability when an employees pay was
largely determined by seniority and job level. Given the dynamic environments
that many organizations face in which the employee skills that are absolutely
critical to organizational success can change in a matter of months, the trend to
make pay systems more flexible and to reduce the number of pay levels.
However, whatever approach managers take, they must establish a fair,
equitable, and motivating compensation system that allows the organization to
recruit and keep a productive workforce.
Career Development
The term career has several meanings. In popular usage, it can mean
advancement, a profession, or a lifelong sequence of jobs. For our purposes, we
define a career as the sequence of positions held by a person during his or her
lifetime. Using this definition, its apparent that we all have, or will have, a
career. The concept is as relevant to unskilled laborers as it is to software
designers or physicians. But career development is not what it used to be.
Although career development has been an important topic in management
courses for years, we have witnessed dramatic changes in the concept. Career
development programs were typically designed by organizations to help
employees advance their work lives within a specific organization. The focus of
such programs was to provide the information, assessment, and training needed
to help employees realize their career goals. Career development was also a way
for organizations to attract and retain highly talented people. Those purposes
have all but disappeared in todays workplace. Widespread organizational
changes have led to uncertainty and chaos concerning the concept of a
traditional organizational career. Downsizing, restructuring, and other
organizational adjustments have brought us to one significant conclusion about
career development: The individual, not the organization, is responsible for his
or her own career! Therefore, one must be prepared to do what is necessary to
advance ones career. One must take responsibility for designing, guiding, and
developing ones own career. Your career will be managed by you, not by the
organization.
The idea of increased personal responsibility for ones career has been described
as a boundary less career in which individuals rather than organizations define
career progression, organizational loyalty, important skills, and marketplace
value. The challenge for individuals is that there are no norms and few rules to
guide them in these new circumstances. Instead, individuals assume primary
responsibility for career planning, career goal setting, and education and
training.
One of the first career decisions you have to make is career choice. The
optimum career choice is one that offers the best match between what you want
out of life and your interests, abilities, and market opportunities. Good career
choice outcomes should result in a series of positions that give you an
opportunity to be a good performer, make you want to maintain your
commitment to your career, lead to highly satisfying work, and give you the
proper balance between work and personal life. A good career match is one in
which you are able to develop a positive self-concept, to do work that you think
is important, and to lead the kind of life you desire.
Once you have identified a career choice, its time to initiate the job search. We
are not going to get into the specifies of job hunting, writing a resume, or
interviewing successfully, although those career are important. Lets fast
forward through all that and assume that your job search was successful. By
taking an active role in managing your career, your work life can be more
exciting, enjoyable, and satisfying.
Employee Performance Improvement (EPI)
Todays dynamic organizations must achieve positive results in record time-a
challenge that requires managers to avoid problems before they arise and to
solve these issues quickly. Employee Performance Improvement is a powerful
tool that can be used to build intellectual capital, establish and maintain a high-
performance workplace, enhance profitability and encourage productivity as
well as increase return on equity and improved safety.
EPI talks of two distinct aspects, performance and behavior. Behavior is an
action that can contribute to accomplishments whereas performance is the end
result. Although the ultimate focus EPI is on performance and
accomplishments, behavior contributes to the performance as they can positively
or adversely affect the performance.
There are a number of factors, which affect performance. The authors Rummler
and Brache have pointed out six variables that affects the job performance
namely, barriers, performance expectations, consequences, feedback,
knowledge/skill, and individual capacity. Thomas Gilberts Behavior
Engineering Model (BEM) includes the following, which affects the
performance namely:
a. Data and information
b. Resources, tools and environmental supports
c. Consequences, incentives and rewards
d. Skills and knowledge
e. Individual capacity
f. Motives
EPI is characterized by the attributes of being systematic, systemic, grounded in
scientifically derived theories, open to all methods, and is focused on
achievements that human performers and the system values. Through EPI one
can analyze important human performance gaps and plan for future impairments
in EPI through designing and developing cost-effective interventions to close the
performance gaps and finally evaluating the financial evaluating the financial
and non-financial results.
The EPI process model as depicted by The American Society for Training and
Development involves six steps, which include performance analysis, cause
analysis, intervention, implementation, change management, and evaluation.
There are usually several roles that consist of multiple steps; for example a
change manager may deal with implementation and change management in an
organization.
The roles of the EPI practitioner can be categorized into that of an analyst, an
intervention specialist, a change manager, and an evaluator. The process which
these roles go through may be termed as performance analysis, cause analysis,
intervention, implementation, change management, and evaluation and
measurement. The first and the most important process, which the practitioner
goes through is that of an analyst. The analysis tries to find out the cause of
human performance gaps or identify areas in which human performance can be
improved. Diagnosis of a problem is done at this stage, on the basis of which
the rest of the steps will follow.
The core competencies associated with EPI work are 16 in number and these are
again divided into six competencies each. These core competences consist of:
1. Industry awareness
2. Leadership skills
3. Interpersonal relationship skills
4. Technological awareness and understanding
5. Problem-solving skills
6. System thinking and understanding
7. Performance undertaking
8. Knowledge of interventions
 9. Business understanding
10. Organization understanding
11. Negotiation / Contacting skills
12. Buy-in/advocacy skills
13. Coping skills
14. Ability to see the Big Picture
15. Consulting skills
16. Project management skills
The importance of analysis has been stated and restated by many. Since, during
the analysis phase the problem is defined, it is considered the most important
phase. The analyst performs two functions, performance analysis and cause
analysis.
Performance analysis is the process of identifying the organizations
performance requirements and comparing them to its objectives and capabilities.
It involves identification of gaps in performance. In addition to determining the
performance gap, part of the performance analysis process involves assessing
the impact, results or consequences of the discrepancy. If there is a wide gap or
discrepancy, then arises the question of finding out the direct costs, opportunity
costs, intangible costs, etc.
Direct costs would include poor quality resulting in products that cannot be sold;
opportunity costs are not easy to measure such as missed sales, les than optimum
productivity, intangible costs deals with the employee more and customer
confidence. It is imperative to find out the impact of the performance gap to
ensure that the cost of minimizing to eliminating the problem is not greater than
the cost of the problem. Cause analysis is the process of determining the root
cause of past, present or future performance gaps. It involves examining the
discrepancies identified through performance analysis and determining their
causes.
It remains to be seen from which level analysis is carried out-whether it is the
organizational level, the work or process level or the individual performer level.
From the organizational level, the analysis focuses on the ability of the
organization to meet the customer needs, compete in the marketplace, carry out
strategies, and achieve goals. At the process level, analysis is carried out about
the processes and internal systems that are there to achieve organizational
objectives. The last is the individual performance level, where analysis is carried
out about the employees and how they are carry in g out their work activities.
They are carrying out their work through the processes that are in operation in
the organization.
The role of the analyst is linked directly to that performance and cause analysis.
There are various competencies associated with the role of an analyst. They are
a. Performance analysis skills- comparing actual and ideal performance
b. Needs analysis, survey design, and development skills- preparing
surveys
c. Competency identification skills-identifying the knowledge and skill
requirements
d. Questioning skills- gathering pertinent information through interviews
e. Analytical skills-breaking down components and reassembling them
f. Work environment analytical skills-examining the work environment to
find out issues affecting the human performance.
Performance Analysis
Since the EPI model stands on the role, competencies, and work output of the
analyst, the work of the analyst is considered to be the most critical. Model and
tools are essential for an analyst to carry out the work. These models and tools
provide an analysis with the organized and systematic methods for examining
human performance problems. The Rummler and Bracher Models shows the
three performance levels i.e., the organizational, process and individual levels on
one axis whereas on the other axis the model shows the three performance needs
i.e., goals, design, and management. This model illustrates the relationship
between the three performance levels and needs. The assumption here is that the
organization should be aligned in these areas. If there is consistency among the
three levels it is easier for the organization to achieve its objective. Analysis
may result in uncovering non-alignment or uncovering problems, which may
need different interventions.
Nine Performance Variables
The three levels of The Three Goals Performance Design Needs Management
performance
Organizational Organization Goals Organizational Organization
Level Design Management
Has the organization Are all relevant Have appropriate
strategy been functions in place? function goals been
articulated? Does Are all functions set? Is relevant
this strategy make necessary? performance
sense in terms of Is the current flow of measured? Are
external threats etc? inputs and outputs resources
Have the required between functions appropriately
outputs and level of appropriate? Does allocated? Are the
performance the organization interfaces between
expected been structure support the function being
determined and strategy? managed?
communicated?
Process Level Process Goals Process Design Process
Are goals for key Is this the most Management
processes linked to efficient /effective
customer/ org. process for Have appropriate
requirements? accomplishing the process sub-goals
process goals? been set?
Is process
performance
managed?
Are sufficient
resources allocated
to each process?
Are the interfaces
between process
 steps being
managed?
Job/ performer Job / Performer Job Design Job/ Performer
Level Goals Are process Management
Are job outputs and requirements Do the
standards linked to reflected in the performances
process appropriate jobs? Are understand the job
requirements? job steps in a logical goals?
sequence? Have Do the performers
supportive policies have sufficient
and procedures been resources, clear
developed? signals and a logical
Is the job job design?
environment Are the performers
ergonomically rewarded for
sound? achieving the job
goals?
Do the performers
know if they are
meeting the job
goals?
Do the performers
have the necessary
knowledge/skills to
achieve the job
goals?

Another performance analysis model known as the Behavior Engineering

Model (BEM) has been developed by Thomas Gilbert. This model consists of
two levels or dimensions. The model is given here below:

The Behavior Engineering Model (BEM)

Information Data Instrumentation Motivation
Instruments incentives
Environment 1. Relevant and 1. Tools and materials 1. Adequate
Supports frequent of work designed financial
feedback about scientifically to match incentives
adequacy of human factors made
performance contingent
2. Descriptions of upon
 what is expected performance
of performance 2. Non-
3. Clear and monetary
relevant guide incentives
to adequate made
performance available
3. career-
development
opportunities.
Persons Knowledge Capacity Motives
Repertory of 1. scientifically 1. Flexible
Behavior designed scheduling of 1.
training that performance Assessment
matches the to match peak of peoples
requirements of capacity motives to
exemplary 2. Prosthesis work
performance 3. Physical recruitment
2. Placement shaping of people to
4. Adaptation match the
selection realities of
the situation

The model delves into the theory that environmental supports that exist in the
environment affect the performance. A persons repertory of behavior talks
about those behavioral factors, which affects the performance. This model
assumes that most people wasnt to perform and do a good job; they also feel
that they are capable of doing so. Hence, in case of performance not being up to
the standard, it may be assumed that environment is putting up obstacles. The
goal of this model is to find out all the variables affecting performance and take
suitable steps so that desired performed is achieved. From this model, factors
which are hindering the performance of the employees can be pointed out.
Usually managers tend to lay the blame on the employee himself for poor
performance ignoring the environment factors, which may be affecting the
performance. Sometimes, the manager themselves are responsible for erecting
barriers and hence they may resist this focus on the environment.
Cause Analysis
Determining the root cause of performance problems is very important because
very often the symptoms or visible manifestations are taken to be the root cause.
These systems are called the presenting problems. They are the consequences or
results of another cause, but not the cause itself. The root cause is the underlying
reason for any problem. There are a number of tools to help the analyst uncover
the root cause of the problem. Some of them are brainstorming, cause and effect
analysis, five-why technique, system modeling, high-level flow charting,
detailed flowcharting, etc.
Brainstorming is used to generate a list of potential causes of a problem. It is
also a means of encouraging active participation and involvement of the group
members. This method begins with a problem being explore. Here the basic
aim is to probe everyones thoughts; hence each member of the group should
have a clear understanding of the problem before proceeding. Brainstorming
sessions may be structured or unstructured but causes, which are identified
through these sessions may only be the possible reasons of the root cause.
Cause and effect analysis visually organizes the information and shows the
linkages between the problem and its possible causes.
The five-way technique is mainly to exhaust the list of the potential causes until
the root cause remains. The techniques consist of asking questions, thinking
through the potential causes, and comes down to the root cause. System
modeling consists of putting inputs and processes in place and getting the
resultant output. Inputs are the resources that are used to feed the processes;
they may be in the form of information, human resources, equipment, etc.
processes are the takes activities, methods and procedures, which help convert
the inputs into outputs. Outputs are the products or services produced by the
purposes.
TEAM BUILDING

Team building is the most important, widely accepted, and applied OD

intervention for organizational improvement. For example, French and bell have
opined that probably the most important single group of interventions in the
OD are the team-building activities, the goals of which are the improvement and
increased effectiveness of various teams within the organization. A possible
reason for this phenomenon is that people in the organization work in groups
(teams) and the effectiveness of these groups ultimately determine
organizational effectiveness. Before going through how team-building can be
developed effectively, it is necessary to consider the life cycle of a team, how
synergy is generated through teamwork, problems in teamwork, and features of
effective team so that team-building exercise focus more sharply on developing
effective team.
TYPES OF TEAMS
In an organization, there may be different types of teams. It may be based on
their constitution, purpose, power entrusted, duration, etc. The more common
type of teams that may be found in an organization are lead teams, cross-
functional teams, problem-solving teams, and self-managing teams.
Lead teams.
The approach in teamwork adopted is do as I do rather than the conventional
do as I say approach. This creates the team spirit among its members which is
essential for effective performance. It consists of managers and their direct
subordinates. It is the most usual form of team which works in every part of an
organization. It is created on the basis of hierarchical relationships as
organizational administrative units. The objective is to plan and execute the
business activities in its specified area of responsibility. These activities include
determining how and what contribution the team will make to achieve
organizational objectives. A lead team sets the example by demonstrating the art
of teamwork.
Cross-functional teams.
It is constituted by drawing personnel from different functional areas,
particularly which have high interdependence. The objective is to solve
problems and take decisions in those areas which cannot be done by a particular
functional department. Because of the interdependence of various functions in
an organization, cross functional teams are created at various levels through the
role of such teams is more pronounced at higher level where the integration of
various functions is more problematic.
Problem-solving teams
It is also known as corrective action team constituted to solve specific problems
which an organization may be facing. Team members are drawn from those
areas where the problems requiring solution exist. They may be from a single
department or more than one department depending on the situation. Such a
team is constituted on following lines to make it effective.
1. Selecting the specific problems which cannot be solved by an individual
alone.
2. Selecting the personnel who have intimate knowledge of the problem.
3. Communicating the nature of the problem and need for its solution.
4. Giving the team a high profile within the organization.
5. Implementing the solution suggested by the team.
6. Recognizing the contribution made by the team.
It applies the problem solving methodologies and techniques to get deep into
problems, draws different alternatives solution to the problem, evaluates the
likely outcomes of each alternative, and finally suggests a particular solution and
its implications.
Self-managing teams. In todays context, more emphasis is given on self-
managing teams, also known as empowered or self-directed team. Self-
managing teams have the following characteristics:
1. They are empowered to share various management and leadership
functions.
2. They plan, control and improve their own work processes.
3. They set their own goals and inspect their own work.
4. They often create their own schedules and review their performance as a
group.
5. They prepare their own budgets and coordinate their work with other
departments.
6. They usually order materials, keep inventories and deal with suppliers.
7. They are frequently responsible for acquiring any new training they
might need.
8. They may hire their own replacement or assume responsibility for
disciplining their own members.
9. They, and no others outside the team, take responsibility for the quality
of their products or services.
The process of creating empowered teams should be slow process because it
requires attitudinal change on the part of both management and employees. If
organizational climate is not conducive, empowered teams perhaps may become
liabilities as it has happened in many cases. If the organization is ready for
creating empowered teams, it has to take the following precautions:
1. Defining areas of responsibility. Management should define the areas of
responsibility of the team. It should be defined with the consultation of the
possible members. The areas of responsibility may include productivity, quality,
safety, maintenance, personnel, and administration.
2. Deciding the measures, boundaries and feedback methods. The second step
is to decide measures, boundaries and feedback methods for each area of
responsibility. Measures are the means adopted to indemnify the extent to which
responsibility is being discharged. Boundaries prescribe the limits of
responsibility. Feedback relates to get information on how the responsibility is
being discharged in different areas.
3. Determination of training needs. Managers, in consultation with team
members identify the training needs for the members and train them to carry out
their responsibility.
4. Plan for transition. There is transition from the old way of working to
empowered team working and new responsibilities may gradually be added.
LIFE CYCLE OF A TEAM.
When a number of individuals begin to work at interdependent jobs, they often
pass through several stages as they learn to work together as a team. These
stages are: forming, storming, norming, performing and adjourning. These
stages are the result of a variety of questions and issues that team members face
such as who will be members of the team?, who will perform what
functions?, who will contribute what?, what rules will be followed?, how
can conflicts among members be resolved? and so on. These stages are
described below:
Forming: At the first stage of the life cycle, team members get introduced to
each other if they have not interacted earlier. They share personal information,
start to accept others, and begin to turn their attention towards the group tasks.
At this stage, interaction among team members is often cautious especially when
they are new to one another.
Storming: After the forming stage which is mostly related to perceiving and
assessing each other, members start interaction among themselves in the form of
competing for status, jockeying for relative control, and arguing for appropriate
strategies to be adopted for achieving teams goals. Because of individual
differences, different members may experience varying degree of tension and
anxiety out of this interaction pattern.
Norming. After storming stage, team members start setting. The team begins to
move in a cooperative fashion and a tentative balance among competing forces
is struck. At this stage, group norms emerge to guide individual behaviour which
form the basis for cooperative feelings among members.
Performing. When team members interact among themselves on the basis of
norms that have emerged in the team, they learn to handle complex problems
that come before the team. Functional roles are performed and exchanged as
needed, and tasks are accomplished efficiently.
Adjourning. Adjourning is the end phase of life cycle of a team. Sooner or later,
each team has to be adjourned, even the most successful teams as they have
completed their mission. The adjournment phase takes place in the case of those
teams which are created for some special purposes like task force, committee,
etc. other types of team like a department in an organization run on the basis of
some permanency though there may be changes in team members. After the
adjournment of team, intense social relationship among members comes to an
end.
Synergy in team work: Another important feature of team is the concept of
synergy which generates in teamwork and the understanding of which helps in
development effective team.
Synergy is the process putting two or more elements together to achieve a sum
total greater than the sum total of individual elements separately. This can be
described as 2 + 2 = 5 effect.
Thus, synergistic effects is not automatic but depends on different elements that
are put together and the way they interact among themselves, that is, how a
particular element affects another and is affected by it.
SOCIAL LOAFING
It is antithesis of synergy which suggests that people working together on a
common task may actually decrease their individual efforts; teamwork does not
necessarily spurt group efforts. A simple phenomenon of social loafing may be
observed in a group assignment to students during their study. In such an
assignment, students find that one or two students do not put their weight for the
completion of the project. These students may be called loafers who frequently
miss the project groups meetings, fail to perform their assigned tasks and so on.
They rely on the fact that more reliable members will complete the project
without their help and still expect to share the credit. This may happen in teams
in work organizations too. For example, in one experiment, it was found that
individuals total efforts were much higher than the group efforts. Individuals
were asked to pull alone as hard as possible on a rope attached to a strain gauge.
They averaged 138.6 pound of pressure while tugging on the rope. When the
same individuals pulled on the rope of groups of three, they exerted only 352
pounds of pressure with an average of 117.3 pounds each. In a group of eighty,
the individual average dropped down still lower 68.2 pounds. Dropping of
average output in group efforts indicates that some members of the group were
not contributing as much as they did individually. The possibility of social
loafing increases because of the following reasons.
1. When the division of work cannot be accomplished properly and
individual efforts are hard to determine, group efforts tend to slacken.
2. When the group is not cohesive with high output norms, individual
members do not contribute to the fullest extent.
Effective Team
It is one which contributes to the achievement of organizational objectives by
performing the task and providing satisfaction to its members. Team
effectiveness depends on the complementarity of team members. From this it
appears that there are many factors in effective team. These factors are skills and
role clarity, supportive environment super-ordinate goals and team rewards.
These factors are discussed below.
1. Skills and Role Clarity.
For an effective team, two things are required form its members skills which are
complementary to the team requirement and understanding of ones own role as
well as roles of other members. While skills are relevant for job performance,
understanding of rules helps members to meet the requirement of one another
thereby solving the problems which the team faces. Thus, team members may
tend to contribute positively to the teamwork. Even if one member lags behind,
he may tend to affect others because of chain reaction just like a rotten apple
injures its companions.
2. Supportive Environment.
A team loaded with skilled members cannot perform well if the organizational
climate is not supportive for that. If the organizational climate is not in tune
with high achievement, team members may not show high degree of enthusiasm
and they will use only a part of their skills in performing the jobs. Therefore,
managers at higher levels particularly at the top level should set organizational
climate and culture which enthuse team members to put in their best.
3. Super-ordinate Goals.
Super ordinate goals are those which are above the goals of a single team or a
single individual. Organizational goals have hierarchy and a lower order goal is
derived out of a higher-order goal. An individual works higher-level goal.
These super ordinate goals, then, serve to focus attention, unify efforts and
stimulate more cohesive team efforts.
4. Team Rewards.
Team performance depends on how reward is linked to team performance and
how members perceive this linkage. If team members perceive that reward is
contingent on team performance, they will put their maximum. Rewards of both
types, financial and non-financial, should be taken between encouraging and
rewarding individual initiative and growth and stimulating full contributions to
team success. Innovative non-financial team rewards for responsible behavior
may include the authority to select new members of the group, make
recommendations regarding a new supervisor, or propose discipline for team
members.
Eatzenbatch and Smith, management consultants, have suggested the concept of
real team and they feel that this concept is relatively unexploited despite it
capacity to outperform other groups and individuals. They define four
characteristics of real teams; small size; complementary skills; common
purpose, goals, and working approach; and willingness to be held mutually
accountable. Real teams can be created and sustained by:
1. selecting members for their complementary skills and potentials;
2. Developing clear rules of conduct and challenging performance goals;
3. establishing a sense of urgency right form the first meeting;
4. providing substantial time together in which new information is
constantly shared; and
5. Providing positive feedback, recognition and rewards.
Team Building process
Team building attempts to improve effectiveness of the team by having team
members to concentrate on:
1. Setting goals and priorities for the team.
2. Analyzing how teams goals and priorities are linked,
3. Analyzing how the work is performed,
4. Analyzing how the team is working and
5. Analyzing the relationships among the members performing the job.
 Various steps of team building process are not one-shot action; rather, they
are repetitive and cyclical.
1. Problem-sensing:
There are a number of ways in which problems of a team can be identified.
Often the team itself defines which aspects of team building it wishes to work
on. This problem can better be identified in terms of what is hindering group
effectiveness. At this stage, generally most of the members come forward with
their arguments as to what the real problems are. The view may be quite
different ranging form the organizational problem, groups problems to even
personal problems. In problem identification, the emphasis should be on
consensus. The consensus-seeking part to the process necessitates that each
person becomes thoroughly aware and understands clearly the basic concepts of
team development. Much of the problems may be solved through effective
communication and training sessions.
2. Examine Differences.
The perception of people on an issue differs because of their differing
backgrounds, such as, their value systems, personality, and attitudes. The
perception may be brought to conformity through the process of exercise on
perception which involves a number of psychological exercises particularly on
perceptional differences. The role communication is important in this context
because it will help in clarifying the actual problems to the members
3. Giving and Receiving Feedback:
The step of perceiving things and listening to each other may be relayed back to
the members as there si a possibility that such processes may create tense
situation into the group. Often, members report about the painful feelings that
they have at the time of evaluation of their feelings, the discussion should
continue until al members of the team have commented. The feedback should
be given to the members about their feelings, about the issue, the way people
talk about the side, the staying with the topic or going of on tangents, who was
talking more or who was talking less, who was trying to resolve the differences,
etc. Such feedback generally provides members to evaluative the values but at
the same time, also provides opportunity to understand themselves.
4. Developing Interactive Skills.
The basic objective of this process is to increase the ability among the people as
to how they should interact with others and engage in constructive behavior.
Following are the examples of constructive and negative behaviors.
CONSTRUCTIVE BEHAVIOUR:
i. Building: developing and expanding the ideas of others.
ii. Bringing in; harmonizing, encouraging others to participate.
iii. Clarifying; resting, ensuring, understanding, seeking relevant information.
iv. Innovating; bringing in new relevant ideas, information, feelings, etc.
NEGATIVE BEHAVIOR:
A. Over talk: interrupting, talking together with speaker
B. B. Attacking: deriding, belittling, criticizing person.
C. Negative: cooling, cynicism; undermining morale.
At the time of discussion of feedback, people take themselves assignments to
increase specific constructive behaviors and decrease specific negative
behaviors. If this process is adopted several times, there is a strong possibility
that members may learn constructive behaviors and leave negative behaviors.
This is quite helpful in developing team work.
FOLLOW-UP ACTION.
At this stage, the total team is convened to review that has been learned and to
identify what the next step should be. Follow-up action helps in overcoming the
drawback involved at the initial stages of team building. It involves deciding
who will take care of each area of the teams responsibilities and who will be
responsible for team projects in a group that has not developed a satisfactory
division of responsibility and authority in the team, with complex division of
responsibility and authority among members.
These attempts bring co-operative and supportive feelings among people
involved in the team functioning. It contributes positively towards the feelings
of the people. However, to encourage and sustain such feelings, management
should take such actions at regular intervals so that members feel reinforced and
sustain their positive behavior. Such actions will go a long way in shaping the
organizational climate quite conductive to members for their efficient working.
Evaluation of Team Building
As mentioned earlier, team building as an OD intervention has attracted
maximum attention. Many research studies have also confirmed the positive
contributions of team building on the organizations outcomes though in
different degrees. In general, team building contributes to the organizational
performance in the following manner:
1. It improves organizations problem-solving and decision-making ability.
2. It helps in developing effective interpersonal relationships by stimulating
the group members for that.
3. It helps in developing communication within the group and inter group and
overcoming many psychological barriers that block communication flow.
However, team building has been termed as one-sided effort and it suffers from
the following limitations:
1. It focuses only on work groups and other major organizational
variables such as technology, structure, etc., are not given
adequate attention
2. Team building becomes a complicated exercise when there is
frequent change in team members. New member may find it
difficult to adjust with the team because of his confusion over his
 roles in terms of task performance and building good
relationships.
In spite of these, team building has a positive outlook. However, it is not that
effective in isolation. Therefore, there have been calls for combining team
building with organization behavior modification approaches. One such
suggestion is to use a task hierarchy to reinforce the team as it progresses up a
behavior skill hierarchy.

UNIT III

LESSON:1 ORGANISATION STRUCTURE

Learning Objectives :

After studying its chapter you should be able to

Identify the various concepts of organization
Enumerate various properties of organization
Define the concept of organization
Summarise the principles of organization
List the factors that favour different structure of organization
Describe major universal forms of organization.
Explain why manages want to create boundary less organization.

Asea Brown Boveri

Asea Brown Boveri (ABB) was formed in 1987 through the transnational
merger of Asea of Sweden and Brown Boveri & Company (BBC) of
Switzerland, thus, creating a truly transnational company with operations spread
over 140 countries. It had a turnover of $17 illion and a staggering portfolio of
businesses which included generators, powerlines, toxic-waste treatment plants,
diesel locomotives, telecommunications, oil pipelines, robots, leasing, and
insurance.
Within two years of its formation, ABB had increased its profits by 53 per cent
and sales by 54 per cent and emerged as a largest electrical engineering
company in Eurpose. By 1990, it had gained one-third market share of the
European power equipment market, and captured over 20 per cent of the worlds
business. It had also become the largest producer of railway vehicles. In the
US, its product range in the power equipment market was broader than was
offered by either Westinghouse or General Electric (GE) (GE described ABB as
the most formidable adversary it has every faced).
ABB grew at an astonishing pace in a very short time through a series of
mergers and acquisitions. By 1993, the ABB empire comprised nearly 1,300
companies, structured as 5,000 profit centres, with a combined turnover of $32
billion. More than its size and complexity, ABB had also emerged as a model
for the new kind of organizations in a global economy.
This case focuses on the mechanisms and processes used by ABB to achieve
fast-paced global growth in the face of established industry leaders (e.g, GE,
Siemens, Hitachi, Mitshbishi)

What is an organization?

The term organization is used in many ways. Organization may be described

as an activity or people who are united by a common purpose. In a broad
sense, it may be equated with an ongoing business unit engaged in utilizing
resources to create a result. It may be used either in a static way, referring to a
fixed structure of responsibilities or in a dynamic way, referring to a process by
which the structure is created, maintained, and used. Figure 3.1 brings out these
differences.

Organization Modern Terms

Structureof
Structure of Duties
duties and
organizational
And structure
responsibilities Organizational
Responsibilities Structure

Process, that is one of the

important functions
organizing of management
Process, That is One of
The
Important Functions Organizing
of Management

An
An Entity such an organization as a company
Entity Such An Organization
as a Company

Figure 3.1 Three uses of organization design

Organization as a structure

Structure, according to Kast and Rosenzweig, is the established pattern or

relationships among the component parts of the organization. Organization
structure in this sense refers to the network of relationships among individuals
and positions in an organization. Organization structure describes the
organizations framework Just as human beings have skeletons that define their
parameters, organizations have structures that define theirs.
Organization as a process
Organization, as a process, refers to certain dynamic aspects like what tasks are
to be done, who is to do them, how the tasks are to be grouped, who is to report
to whom and where the decisions have to be made. As managers do their work,
structural change take place. The process view, basically, includes two
(modern) concepts differentiation and integration of activities.
Organization as a group
Some writers have tried to strike a balance between An organization is a
collection of interacting and interdependent individuals who work toward
common goals whose relationships are determined according to a certain
structure".
Properties of modern organizations
A formal organization is an economic and social entity in which a number of
persons perform a variety of tasks in order to attain a common goal. It is an
effective instrument that helps individuals accomplish personal objectives that
they cannot achieve alone. Following are various properties of modern
organizations:
1. Social Entities
Organizations exist to serve the needs of people. They exist to combine human
efforts in order to achieve certain goals. They perform some activity that creates
something of value for the individuals and / or groups.
2. Goal Directed
All organizations are goal directed. They are designed for a purpose and much
of the behaviour within and between organizations reflects that goal. Objectives
legitimize the existence of an organization.
3. Relatively Permanent
A basic feature of organizations is that they are relatively permanent social
entities. They are created to last a long time. This characteristic allows
organizations to continue their existence and operations even while changing
their structure, and membership.
4. Structure
Organizations have structure, in which the stated role of each member is
expressed. The tasks are deliberately subdivided into separate departments and
sets of operations.
5. Openness
An organization operates as an open system. It both consumes resources and
exports resources to the environment. It must interact with the environment to
survive.
Organization has been defined by various authors as follows :-
According to Henri Fayol To organize a business is to provide it with
everything useful to its functioning-raw-materials, tools, capital and personnel
G. Terry defines organizing as, The establishing of effective authority
relationships among selected work persons and work places in order, for the
group to work together efficiently
William spriegal defines, In its broadest sense, organization refers to the
relationship between the various factors present in a given endeavour. Factory
organization concerns itself primarily with the internal relationships within the
factory such as responsibilities of personnel arrangement and grouping of
machines and material control. From the stand point of the enterprise as a
whole, organization is the structure of relationship between the various factors in
an enterprise
Bernard defines, An organization comes into existence when there are a
number of persons in communication and relationship to each other and are
willing to contribute towards a common endeavour.
Koontz and ODonnell define as The establishment of authority relationships
with provisions for structural co-ordination both vertically and horizontally
between positions to which have been assigned specialized tasks, required for
the achievement of the enterprise objectives. It is, thus, structural relationships
by which an enterprise is bound together and the framework in which individual
effort is co-ordinated
O. Sheldon defines Organization is the process of so combining the work
which individuals or groups have to perform with facilities necessary for its
execution that the duties so performed provide the best channels for efficient,
systematic, positive and co-ordinated application of available effort
L.Allan defines Organization is the process of identifying and grouping the
work to be performed, defining and delegating responsibility and authority and
establishing relationships for the purpose of enabling people to work most
effectively together in accomplishing objectives.
G.Dessler defines An organization consists, of people who carry out
differentiated tasks which are co-ordinated to contribute to the organizations
goals.
Mooney and Reiley define Organization is the form of every human association
for the attainment of a common purpose. They visualize it as the process of
relating specific duties or functions in a co-ordinated whole.
E.H. Schein defines An organization is the rational co-ordination of the
activation or roles of a number of people for the achievement of some common
explicit purpose or goal through division of labour and functions and through a
hierarchy of authority and responsibility.
R.C.Davis defines Organization is a group of people who are co-operating
under the direction of leadership for the accomplishment of a common end.
J.C. Denyer defines Organization is concerned with the arrangement of work
with the division of activities and with the allocation of duties, authority and
responsibilities.
Determining the Kind of Structure
Peter Drucker has pointed out three specific ways to find out what kind of
structure is needed to attain the objectives of a specific business, which are
discussed below :
1. Activities Analysis. It is the first stage in building an organization structure.
It involves finding out what activities are needed to attain the objectives of the
enterprise. Each business undertaking performs functions such as
manufacturing, purchasing, marketing, personnel, accounting etc. These
functions can be identified after proper analysis. The whole work is divided
into smaller homogeneous units so that the same may be assigned to different
individuals.
2, Decision Analysis. What decisions are needed to obtain the performance
necessary to attain objectives? What kind of decisions are they? What
activities are involved in or affected by them? Which managers must therefore
participate in the decisions? Analysis of the foreseeable decisions shows the
structure of top management the enterprise needs and the nature of authority and
responsibility different levels of operating management should have.
3. Relations Analysis. With whom will a manager-in-charge or an activity have
to work? Such other questions of relations, e.g., line and staff relations, relations
between subordinates and superior will also help in deciding the structure of the
organisation.
Principles of organization
The principles are guidelines for planning an efficient organization structure.
Therefore, a thorough understanding of the principles of organization is essential
for good organization. The important principles of organisation are discussed
below:
1. Objectives: An enterprise strives to accomplish certain objectives.
Organization serves as a tool to attain these objectives. The objectives must be
stated in clear terms as they play an important role in determining the type of
structure.
2. Division of Work: The entire work in the organisation is divided into various
parts so that every individual is confined to the performance of single job,
according to his ability and aptitudes. This is also called the principle of
specialization. More a person continues on a particular job, the better will be his
performance.
3. Definition of Jobs. Every position in the organization should be clearly
defined in relation to other positions. The duties and responsibilities assigned to
every position and its relationship with other positions should be clearly defined
to avoid overlapping of functions.
4. Line and Staff Functions. Line functions are those which accomplish the
main objectives of the company. The manufacturing and marketing departments
are considered are called the line functions and other functions like personnel,
plant maintenance, financing and legal are considered as staff functions.
5. Chain of Command. There must be clear line of authority from the top to the
bottom of the organization. The organization structure facilitates delegation of
authority.
6. Parity of Authority and Responsibility. Responsibility should always be
coupled with corresponding authority. Each subordinate must have sufficient
authority to discharge the responsibility entrusted to him.
7. Unity of Command. No one in the organisation should report to more than
one supervisor. Everyone in the organization should know whom he reports and
who reports to him.
8. Exceptional Matters. This principle requires that organization structure should
be so designed that managers are required to go through the exceptional matters
only.
9. Span of Supervision. The span of supervision means the number of persons a
manager or a supervisor can direct. If too less number of employee are
reporting to a supervisor, his time will not be utilized properly. But, on the other
hand, there is a limit to the number of subordinates that can be efficiently
supervised by an executive.
10. Balance: These should be proper balance in the formal structure of the
organization in regard to factors having conflicting claims, e.g., between
centralization and decentralization, span of supervision and lines of
communication and authority allocated to departments and personnel at various
levels.
11. Communication. A good communication network is essential to achieve the
objectives of an organization. No doubt the line of authority provides
readymade channels of communication downward and upward, still some blocks
in communication occur in many organization.
12. Flexibility. The organization structure should be flexible so that it can be
easily and economically adapted to the changes in the nature of business as well
as technical innovations.
13. Continuity. Change is the law of nature. Many changes take place outside
the organization. These changes must be reflected in the organization. The
form of organization structure must be able to serve the enterprise and to attain
its objectives for a long period of time.
Universal forms of organization design
There are many universally-accepted forms of organization design. However,
there are really five basic categories: (T) functional (U-form) design, (2)
conglomerate (H form) design, (3) divisional (M-form) design, (4) matrix
design, and (5) hybrid design.
Functional (U-form) Design
The functional design is based on the concept of functional departmentalization.
The economist, Oliver Williamson (1975), referred to this as a the U-form, for
unity. Organizational members are grouped into departments such as human
resource, operations, and finance. This structure provides for the advantages of
functional departmentalization. It also requires a great deal of integration and
coordination of work across departmental lines to achieve operational harmony.
The U-form organization utilizes a functional base at the corporate level. A
distinguishing feature of the U-form structures is that all the functional areas
need each other to survive. That is, without marketing, operations has no orders
to fill, and without operations, marketing has no product or service to sell. This
form of organization is well adapted to the smaller organizations, maintain
overall management and control without too much difficulty. However, as the
organization grows in size and complexity it is difficult to manage .
 President

Vice President, Vice President, Vice President, Vice President, Vice President,
Operations Marketing Finance Human Resources R&D

Plant Regional Controller Labour Relations Scientific

Managers Sales Managers Director Director

Shift District Accounting Plant Personnel Lab

Supervisors Sales Managers Supervisor Manager Manager

FIGURE 3.2 Functional (U-form) Design for a Small Manufacturing Company

(Source : Griffin, 1990, p 320)
Conglomerate (H-form) Design
A conglomerate may be defined as an organization composed of a number of
unrelated businesses. The H-form structure is designed as a holding company.
The conglomerate platform produces a structure similar to product
departmentalization. Usually, each business unit is headed by a general
manager who is totally responsible for its profit and losses, and each general
manager operates independently.
Managers usually have a difficult time in maintaining performance and
integrating activities across such diverse organizations. There is also strong
evidence that conglomerates produce only average-to weak financial
performance (Porter 1987). President

Avis Coca-Cola
Playtex Samsonite Sattel Tropicana
Bottlers

FIGURE 3.3 Classical Conglomerate (H.Form) Design

(Source : Griffin, 1990, p 321)

Divisional (M-form) Design

This is another divisional approach, which is popular, especially for large
corporations. This is patterned along product lines. In this M-form structure, a
number of related businesses function under a single and broad organizational
framework. There is considerable decentralization of authority in the operating
divisions. In this form, each division is headed by a general manager , who is
allowed to operate with autonomy. Care is also taken to assure appropriate
coordination of divisional activities.
 CEO

The The Limited Lerner Victorias Other

Limited Express Shops Secret Chains

FIGURE 3.4 Multidivisional (M-form) Design

(Source : Griffin, 1990, p321)

The greatest strength of the M-form design is that it affords considerable

opportunities for coordination and sharing of resources such as purchasing and
marketing research. The centralized purchasing power helps the firm to
negotiate favourable contract terms. It has the potential for healthy internal
competition among divisions.
Matrix Design
The matrix design is created by superimposing a set of project structures on top
of a functional structure. The basic structure of the organization follows a
functional design. Superimposed over this functional base is a set of temporary
project groups with a project manager in charge of each. Members of each
project team are selected or assigned from the functional department. One
person may be a member of more than one project group.
Advantages and Disadvantages of the Matrix Design
The matrix design offers a number of major advantages
1. It involves and challenges matrix term members
2. It provides enlarged tasks for people
3. It develops employee skills
4. It encourages people to identify with the end product(s)
5. It permits experts to be assigned to critical areas as needed
 6. It fosters flexibility throughout the organization
7. It develops the ability to adapt to changes in the environment
8. It motivates interdisciplinary cooperation
9. It facilitates the integration of organizational information
10. It frees top management so that it can spend more time planning
11. It fosters the development of management skills.
The matrix design also has a number of major disadvantages, which are as
follows:
1. It demands a high level of interpersonal skills
2. It has a negative impact on morale when personnel are rearranged
3. It fosters confusion and frustration from its multiple-command
structure
4. It creates a sense of anarchy that results when employees are unable to
Identify appropriate higher authority.
5. It cause power struggles between functional managers and project
Manager.
6. It natures groupitis, by which project team members become so
focused on their own activities that they loose sight of broader organization
goals.

7. It introduces the potential of dominance by one side of the matrix over

the over.
8. It creates the risk of duplication of effort by project groups.
9. It promotes many meetings and more talk than action.
10. It is costly to implement and maintain.
Hybrid Design
The hybrid design utilizes both functional and divisional
departmentalization. Some Departments are established along functional
lines so that those workers who perform similar tasks can be grouped together.
Other departments are subdivided and assigned to the various product
divisions.
The figure shows a bank. Each branch represents a territorial division.
Each branch Operation is divided into three major product departments : (1)
loans, (2) savings, and (3) checking. For example, within each loan
department, separate customer service groups handle consumer loans and
commercial loans.

Hybrid design enjoys the unique benefits of both functional and divisional
structure. Further the hybrid design provides the opportunity to improve
coordination both within and among divisions. The hybrid design can also help
in the proper alignment of corporate and divisional goals. Finally, the hybrid
design fosters both flexibility within divisions and efficiency within functional
departments. The most serious drawback is often leads to excessive duplication
of activities between functions and divisions. A second disadvantage of the
hybrid is its tendency to create conflict between headquarters and divisional
function.
Trends in organization design
There are two widely-publicized contingency factors that are emerging from
todays business environment that further complicate the problem of
organization design. They are : (1) informational processing imperatives and (2)
global imperatives.
Information-processing: The modern business organization is an information-
processing system. In order to plan and implement strategy, organizational
members must have access to pertinent information, and they must be able to
process and analyze it properly. As the environment becomes less stable and
uncertain, the demand for appropriate information processing increases.
Information is collected and / or disseminated through organizational
communication networks. Figure shows two basic communication networks-
the wheel and the all-channel network is best for complex tasks.
Figure equates the wheel network with a mechanistic structure that features a
vertical hierarchy of authority as its basis for information processing and
problem solving. The all-purpose network is equated with an organic structure,
through its emphasis on lateral as well as vertical communication and
information.
FIGURE : 3.7 Two Group Communication networks and their Organizational
Design Implications (Source : Schemerhorn, 1989, p 208)
Thus, the uncertainties of the external environment have an impact on the
information-processing needs of the organization and, in the process, influences
its design.
EXERCISE:
CASE INCIDENTS :
QUESTIONNAIRE :
The purpose of this exercise is to help the reader gain a better understanding of
the unique differences between mechanistic and organic organization. This
exercise may be completed by a single reader, but greater insight may be gained
by completing the exercise as per of a group.
Time Required 45 Minutes
Step 1 : Individual activity 15 minutes
Step 2 : Small-group activity 15 minutes
Step 3 : Discussion 15 minutes

Procedure
Step 1 :Complete and score the Mechanistic and Organic Organization Survey,
Step 2 :Form small groups and assign each group the task of computing average
scores, discussing the differences in scores, and developing group responses to
the discussion questions.
Step 3 :A representative from each group will present group-average scores and
the groups responses to the discussion questions.

MECHANISTIC AND ORGANIC ORGANIZATION SURVEY

Statement Strongly Slightly Not Slightly Strongly

Agree Agree Sure Disagree Disagree

1. Job clearly and precisely 5 4 3 2 1

defined
2. Rules are flexible enough to 1 2 3 4 5
cope with exceptional cases.
3. Positions are arrayed in a 5 4 3 2 1
clear and orderly hierarchy
4. The organization is dedicated 1 2 3 4 5
to the idea that each worker
should be encouraged to fully
develop his / her skills and
abilities.
5. Rules and regulations are 5 4 3 2 1
clear and are followed by
everyone.
6. Only critical decisions must 1 2 3 4 5
be approved by top
management
7. Most communications from 5 4 3 2 1
above deal with instructions
on how to do something

8. There is a narrow span of 5 4 3 2 1

control
9. For many tasks, there are no 1 2 3 4 5
 formal, written procedures.
10 One organizational goal is to 1 2 3 4 5
be flexible and adaptable to
change
11. Managers move up on clear 5 4 3 2 1
career ladders
12. Promotion is based on 5 4 3 2 1
technical competence.
13. Job designs facilitate 1 2 3 4 5
opportunities to interact with
workers from other
departments
14. For some situations, there are 5 4 3 2 1
simple no rules or
regulations.
15. There are few levels of 1 2 3 4 5
authority
16. Job duties and goals are not 5 4 3 2 1
rigid and unchanging.
17. Temporary work teams are 1 2 3 4 5
used to resolve problems or to
accomplish goals
18. Rules apply to everyone, no 5 4 3 2 1
matter who you are.
19. Downward communication 1 2 3 4 5
usually carries advice and
information
20. There is little upward 5 4 3 2 1
communication.

Mechanistic / Organic Organization Survey Scoring Sheet

Transfer your numeric responses from the survey onto this scoring sheet. For
example, your mechanistic score for Rules and Regulations is the sum of your
responses to statements 5 and 18. Then, by addition, calculate the subtotals and
the totals for both mechanistic and organic characteristics.
Category Mechanistic Organic
Rules and regulations 5 ------------- 2 -------------
18 ------------- 14 -------------
Subtotals ------------- -------------

Jobs and roles 1 ------------- 9 -------------

16 ------------- 7 -------------
Subtotals ------------- -------------

Hierarchy 1 ------------- 6 -------------

8 ------------- 15 -------------
Subtotals ------------- -------------

Communication 7 ------------- 13-------------

20 ------------- 19-------------
Subtotals ------------- -------------
Culture 11 ------------- 4 -------------
12 ------------- 10 -------------
Subtotals ------------- -------------
TOTALS -------------- ------------

On the organization Continuum below, place an X for your mechanistic score

and another X for your organic score.

----------------------------------------------------------------------------------------
50 40 30 20 10 0 10 20 30 40 50
Mechanistic Score Organic Score
Organization Continuum

Interpreting the Mechanistic / Organic Organization Survey Scores

Category Interpretation
-------------------------------------------------------------------------------
Mechanistic Organic
Rules and Many clear and precise rule A few flexible rules
Regulations and regulations that apply to
Everyone

Jobs and Roles Specialized, rigid, and Few formal duties

and procedures, unchanging job duties and roles while
encouraging the use of
That are clearly defined for temporary work teams
Everyone

Hierarchy Small spans of control and Large spans of control, few

level of
May levels of management management, and
decentralized
arrayed in an orderly hierar- authority
chy; authority highly
centralized

Communication Little upward communication, Upward and horizontal

communi-
With downward communication cation or networking
encouraged,
Primarily for the purpose of with job design facilitating
communi-
Giving instructions centralized cation with workers
from outside the
On how to do things group

Culture A culture that maintains the A culture dedicated to

flexibility and
Status quo and breeds a adaptability to
change, with the
Company loyalty wherein philosophy that each worker
should mangers move up a clearly be encouraged to
fully develop his / defined career ladder based her
talents and abilities
On demonstrated technical
Competence
 LESSON: 2 MOTIVATION
Learning Objectives :
Outline the motivation process.
Differentiate context theory of motivation from content theory.
Describe Maslows need literacy.
Differentiate motivators from hygiene factors.
List of the characteristics that lisa achieves prefer in a job.
Compare the Maslows and other theories of motivation.
Clarify the key relationships in expectancy theory.
Attempt the techniques of applying motivation team.
Identify the high morale and low morale in an organization.
Explain the relationship between Motivation and morale.

Concept of motivation
Motivation means those forces that cause people to behave in certain way. It
encompasses all pressures and influences that trigger and sustain human
behaviour. People are complex and uniquely different. What motivates one
person or one work group may not motivate another. Successful managers
understand the concept of human motivation . They use that understanding to
achieve high standards of work performance.
Motivation Framework
The framework begins with a deficiency that a person experiences. Next, the
individual selects one of those ways to satisfy the deficiency and, initiates goal-
directed behaviour-perhaps asking the boss for a raise. Rewards and / or
punishment will follow the performance and, finally, the person will reassess the
need deficiency.
FIGURE 3.8 The Basic Motivation Framework (Source : Gibson, et al, 1988

CONTENT THEORIES
Content theory is concerned with identifying those factors for improved
performance. Managers apply the content approach by helping workers satisfy
their needs while helping the employing institute meet its goals.
 Perceived Need State of Tension Performance
--------------------- ------------------------- -------------------
Unmet need; sense Unmet need creates Behaviour that
Of deprivation tension and drive fulfills need

FIGURE 3.9 Conceptual Model of Content Theory of Motivation

(Source : Holt, 1990, p 425)

MASLOWS NEED HIERARCHY

Abraham Maslow (1943) postulates that people are motivated by multiple
needs, which could be arranged in a hierarchy, as depicted in Fig.310.
According to Maslow, there are five general categories of needs in order of
ascendance:
1. Physiological needs are the most basic physical needs for food,
water, shelter, etc. On the job, these needs consist of needs for
adequate heat, air, and a base salary to ensure survival.
2. Security needs are the needs for a safe and secure environment. In
the workplace, these are the needs for job safety, job security, and
fringe benefits.
3. Belongingness needs represent the needs to have satisfactory social
relationships, to be accepted by ones peers, to be part of a group. In the
organization, these needs are reflected by the need to participate in a
work group
4. Esteem Needs deal with the desire to receive attention and appreciation
from others. In a work environment, this is the need for status and
recognition for ones contributions to work group and the organization.
5. Self-actualization needs include the needs for self-fulfilment and
competency. At work, this translates into needs for personal growth,
development, and self-respect.
 FIGURE 3.10 Maslows Hierarchy of Needs (Source : Maslow, 1943)

Implications of Maslows Theory

Maslows hierarchy helps manager to understand employee needs and use the
motivation theory to help the individual satisfy need . That is, there is a lack of
evidence that the satisfaction of a given need reduces in importance or increases
the importance of the next higher need
ALDERFERS ERG THEORY
Building on the Maslow approach, Clayton Alderfer (1972) developed the ERG
theory. According to Alderfer, human needs can be condensed into three
categories.
1. Existence needs are the needs for physical well-being
2. Relatedness needs focus on the needs for satisfactory relationship with others
3. Growth needs pertain to the development of human potential and the desire
for personal growth and increased competence.
The ERG model is similar to Maslows theory.The needs in both are in a
hierarchical form .There is the assumption that people move up the hierarchy a
step at a time. However, Alderfer believes that movement up the hierarchy is
more complex, reflecting a satisfaction progression component as well as a
frustration progression component.
MURRAYS MANIFEST NEEDS
Another need theory is H.A. Murrays (1938) Manifest Needs theory, as further
conceptualized by Atkinson (1964). The manifest needs approach is similar o
but more complex than Maslows. Murray proposed greater variety of needs
and believed that any number of needs might influence behaviour at the same
time.
Murray did not place the needs into any particular order of importance. He
postulated that each need had two principal components-direction and intensity.
Direction deals with the object or person that is expected to satisfy the need.
That
is, for a hungry person, a restaurant many represent the needs direction.
Intensity represents the relative importance of the need.
FREDERICK HERZBERGS TWO FACTOR THEORY
Frederick Herzberg (1959) and his associates interviewed some 200 engineers
and accountants. They found different sets of factors deal with the satisfaction
and dissatisfaction. That is, a worker who identified low pay as a cause of
dissatisfaction didnt necessarily identify high pay as a source of satisfaction.
These findings made to conclude that the traditional model of motivation and
satisfaction, as showing Fig. 3.11 was incorrect. It also shows that his findings
postualate that there is one dimension ranging from satisfaction to no
satisfaction and another dimension ranging from dissatisfaction to no
dissatisfaction.
FIGURE 3.11 Alderfers ERG Theory (Source : Moorhead and Griffin, 1989, p
115)
The principal factors are listed in Fig.3.12 under two categories-motivation and
hygiene factors. Motivation factors, such as achievement and recognition, were
the principal sources of satisfaction and motivation. When motivation factors
were present in the job situation, they could cause satisfaction and motivation.
When they were not present, the people felt no satisfaction, as opposed to
dissatisfaction.
The hygiene factors were sources of dissatisfaction and the lack of motivation.
In other words, when supervision and working conditions, are inadequate, lead
to dissatisfaction. When these factors were perceived as adequate, respondents
were not satisfied, but they no longer felt dissatisfied.
MOTIVATION FACTORS HYGIENE FACTORS
Achievement Supervision
Recognition Working conditions
The work itself Interpersonal relationship
Responsibility Pay and security
Advancement and growth Company policy and administration

Fig 3.12
The two-factor theory is still perceived as a valuable contribution to the task of
understanding the complex job characteristics of satisfaction, dissatisfaction, and
motivation.
McCLELLANDS ACQUIRED NEEDS THEORY
David McClelland (1961) used the Thematic apperception Test (TAT) to study
human needs. It involves asking respondents to look at pictures and write
stories about what they see in the pictures. The stories are then analyzed to find
certain theme that represent various human needs. His studies lead to the
identification of three acquired needs-the needs for achievement, power, and
affiliation.
1. The Need for Achievement (nAch) is the desire to accomplish difficult tasks,
to solve difficult problems, to do things more efficiently, and to master
complex tasks.
2. The Need for Power (nPower) is the desire to influence or control other
people, to be responsible for other, and to hold authority over them.
3. The Need for Affiliation (nAff) is the desire to establish and maintain warm
relationship with others.
McClelland proposed that people acquire these needs for achievement, power,
and affiliation over the time. On the job, the manager can learn to recognize
these needs in workers and use them to motivate behaviour, as suggested in
Fig.3.13
Individual Need Work Preference Exampled of an Appropriate
Job Assignment
High need for Individual responsibility for Computer scientist
Achievement results Achievable but responsible for software
challenging goals Feedback on design and technical problem
performance solving in support of a
management information
system.
High need for Interpersonal relationship Human resources specialist
affiliation Companionship Social approval responsible for employee
relations, college recruiting,
and management
development programs.
High need for power Control over other persons Audit manager in charge of a
Impact on people and events group of newly-hired junior
Public recognition and attention accountants assigned to
complete a complex audit of
a bank.

FIGURE 3.13 Work preferences of Persons High in Needs for Achievement,

Affiliation, and Power (Source : Schemerhorn, 1989, p 361)

COMPARISON OF CONTENT THEORIES

PROCESS THEORIES OF MOTIVATION
They explain the process that motivates behaviour. The most prominent process
theories are expectancy theory, equity theory, and attribution theory.
Expectancy Theory
Expectancy theory (Vroom, 1964) is based that human behaviour depends on
peoples expectations concerning their ability to perform tasks and to receive
desired rewards. The major elements of expectancy theory are depicted in
Fig.3.15. According to the theory, employee motivation leads to the effort to
have better performance. This performance leads to a variety of outcomes, each
of which has a value called valence. There are three keys to the model(1) the
workers expectation that effort will result in high performance: and (2) the
workers expectation that the performance will result in certain outcomes and

FIGURE 3.14 Parallels Among Need Theories of Motivation (Source :

Moorhead and Griffin, 1989, p 124)
(3) the workers expectation that each outcome possesses a particular valence.
The effort-to-performance expectancy is the workers perception of the
probability that his / her effort will achieve high performance. If the worker is
confident that the effort will achieve high performance, expectancy is strong,
perhaps approaching 1.0 (where 1.0 equals absolute certainty that the effort will
be successful in achieving high performance
 FIGURE 3.15 Major Elements of Expectancy Theory (Source: Daft, 1988, p
409)
The performance-to-outcome expectancy is the workers perception of the
probability that performance leads to certain outcomes. Thus, a worker who
believes that high performance will earn an increase in pay has an expectancy
close to 1.0. On the other hand, if the worker believes that a pay increase is not
a function of performance, the expectancy is close to 0. Finally, if the worker
believes that performance has a modest impact on pay, the expectancy will be
somewhere between 0 and 1.
The worker might perceive that high performance will result in positive
outcomes, such as increased pay and promotion, or negative outcomes such as
fatigue and stress. The valence of an outcome is a measure of its relative
attractiveness or unattractiveness to the worker. That is, pay raises and
promotions are probably perceived to be outcomes with positive valences, but
fatigue and stress may be outcomes with negative valences.
The overall model is that motivated work behaviour is dependent on three key
conditions: (1)the effort-to-performance expectancy must be well above zero;
(2) the performance-to-outcome expectancy must be well above zero; and (3)
the sum of the valences for the potential outcomes must be positive.
Porter-Lawler Theory
The Porter-Lawler Extension of Expectancy Theory Model is found in Fig.3.16
and offers some interesting new insights into expectancy theory. For example,
effort is shown to be influenced by two factors; (1) the value or valence of the
potential reward; and (2) the perceived effort-reward expectancy probability.
The model also indicates that, between effort and performance, there

FIGURE 3.16 Porter-Lawler Extension of Expectancy Theory

(Source: Porter and Lawler, 1968)
are two mitigating factors; (1) the workers abilities and traits: and (2) role
perception.
According to Porter and Lawler, there are two kinds of rewards: (1) intrinsic
rewards; and (2) extrinsic rewards. Intrinsic rewards are intangible rewards,
such as accomplishment and a sense of achievement. Extrinsic rewards are
tangible rewards, such as pay and promotion. The extension model also
introduces the mitigating influence of the workers perception of the equity of
rewards on ultimate job satisfaction.
Implications of Expectancy Theory
For the average manager, expectancy theory is probably too complicated to
apply directly to a specific workplace situation. Despite its complexity,
expectancy theory provides managers with a number of helpful guidelines.

Evaluation Evaluation Comparison Feelings of

of Self of Other of Self With Equity or
Other Inequity

FIGURE 3.17 Formation on Equity Perception

(Source : Moorhead and Griffin, 1989, p 134)

Equity Theory
Equity theory (Adams, 1963) explains people want to be treated fairly. Equity
is defined as the belief that one is being treated fairly in relation to others, and
inequity is the belief that one is being treated unfairly in relation to others.
Equity perceptions are formed through the four-step process shown in Fig.3.17.
First, the worker evaluates how he/she is being treated by the organization.
Second, the worker evaluates how a comparison-other worker is being treated.
Third, the worker compares the two treatments, by comparing how he/she is
treated with how the other worker is treated. Finally, as a result of this
comparison, the worker feels either equity or inequity. The equity comparison
takes the following form.
Outcomes ( self ) Outcomes (other)
comparedto
Inputs( self ) Inputs(other)
Thus, the worker compares his/her own input-to-outcome ratio with the
corresponding ration of the comparison-other.
Worker Responses
After the equity comparison, the worker will respond as illustrated in Fig 3.18.
If the worker feels equity, he/she is motivated to maintain the current situation.
If the worker feels inequity, he/she is motivated to respond with six behaviours
identified by Adams (1965): (1) the worker may decide to alter inputs by putting
more or less into the job; (2) the worker may change outcomes by demanding a
raise or a different work station, (3) the worker may alter his/her self-evaluation;
(4) the worker may alter his/her evaluation of the comparison-other; (5) the
worker may change the comparison-other to a different co-worker; and (6) the
worker may leave the situation by transferring or resigning.

FIGURE 3.18 Responses to Equity and Inequity

(Source: Moorhead and Griffin, 1989, p 135)
Attribution Theory
Attribution theory is a process theory of motivation. It postulates that workers
observe behaviour, then attribute cause and meaning to it (Kelley, 1971). As
depicted in Fig 3.19 workers observe their own behaviour and decide whether it
is principally motivated by internal or external factors. This decision ultimately
shapes the workers responses to future motivation. That is, a worker who
decides he/she is intrinsically motivated seeks more internal motivation in the
future. Similarly, a worker who believes himself/herself to be extrinsically
motivated seeks more extrinsic motivational factors in the future. The theory
contends that workers may, from time to time, alter their preferences for future
incentives.

FIGURE : 3.19 An Attributional View of Employee Motivation (Source :

Moorhead and Griffin, 1989, p 152)
Application of motivation theories
Reinforcement theory is based on the assumption that people tend to repeat
behaviour for which they are rewarded, and they tend not to repeat behaviour for
which they are not rewarded (Skinner, 1971), Reinforcement may be defined as
anything that causes a targeted behaviour to be either repeated or inhibited. As
shown in Fig 3.20 there are four basic kinds of reinforcement.
Positive reinforcement is the administration of a positive and pleasant
consequence following a desired behaviour. It is a tool to strengthen and reward
worker behavior e in the best interests of the organization.
Avoidance learning is the removal of an unpleasant consequence following a
desired behaviour. Sometimes called negative reinforcement, avoidance
learning is the way workers learn to do the right things to avoid unpleasant
outcomes.
Punishment is the administration of unpleasant consequences as a result of
undesirable behaviour. If an employee does something wrong, the punishment
is designed to discourage the employee from repeating the undesired behaviour.
Extinction is the administrative withdrawal of a positive reward so that the
behaviour is no longer reinforced and is less likely to be repeated. For example,
if a worker is habitually late to work, pay raises or other positive rewards can be
removed, so that the worker will realize that the behaviour is not resulting in
desired outcomes.
 FIGURE 3.20 Changing Behaviour with Reinforcement
(Source : Daft and Steers, 1968, p 109)

Questions for Review

1. Does motivation come from with in 6. What is the role of self-
efficiency in
A person or is it a result of the goal setting?
Situation? Explain.

2. What are the implications of Theories 7. Contrast distributive and

procedural
X and Y for motivation practices? Justice. What implications might they
Have for designing pay systems in
Different countries?
3. Compare and contrast Maslows 8. Identify the variables in expectancy
Hierarchy of needs theory with theory.
(a) Alderfers ERG theory and
(b) Herzbergs two-factor theory
4. Describe the three needs isolated by 9. Explain the formula:
Perforamance =
McClelland. How are they related f(A x M x O) and give an example.
To worker behavior?
5. Explain cognitive evaluation theory. 10. What consistencies among
motivation
 How applicable is it to management concepts, if any, apply cross-
culturally?
Practice?

Questions for Critical Thinking

1. The cognitive evaluation theory is 4. Can an individual be too

motivated, to
Contradictory to reinforcement that his or her performance declines
And expectancy theories. Do you as a result of excessive effort?
Discuss.
Agree or disagree ? Explain.

2. Manager should be able, through 5. Identify three activities you really

Proper selection and job, design enjoy (for example, playing tennis,
To have every employee experience reading a novel, going
shopping). Next
Flow in his or her job. Do you agree identify three activities you
really dis-
Or disagree? Discuss. Like (for example, going to the dentist,
3. Analyze the application of Maslows cleaning the house, staying on a
And Herzbergs theories to an African restricted-calorie diet). Using
the
Or Caribbean nation where more than expectancy model, analyze each
of
A quarter of the population is your answers to assess why some
Unemployed. Activities stimulate your effort
while
Others do not.

Team Exercise What do People Want from Their Jobs?

Each class member beings by completing the following questionnaires:

Rate the following 12 job factors according to how important Each is to you.
Place a number on a scale of 1 to 5 on the line before Each factor.
 Very important Somewhat important Not important
5 4 3 2 1

----- 1. An interesting job

----- 2. A good boss
----- 3. Recognition and appreciation for the work I do
----- 4. The opportunity for advancement
----- 5. A satisfying personal life
----- 6. A prestigious or status job
----- 7. Job responsibility
----- 8. Good working conditions
----- 9. Sensible company rules, regulations, procedures, and polices
----- 10. The opportunity to grow through learning new things
----- 11. A job I can do well and succeed at
----- 12. Jo security

This questionnaires taps the dimensions in Herzbergs two-factor theory. To

determine if hygiene or motivating factors are important to you, place the
number 1-5 that represent your answers bellows.
Hygiene factors score Motivational factors score
2. ------------- 1. --------------
5. ------------- 3. --------------
6. ------------- 4. --------------
8. ------------- 7. --------------
9. ------------- 10. --------------
12. ------------- 11. --------------
Total points ---------- Total points --------------------
Add up each column. Did you select hygiene or motivating factors as being
most important to you?
Now break into groups of five or six and compare your questionnaire results.
(a) How similar are your scores? (b) How close did your groups results come to
those found by Herzberg? (c) What motivational implications did your group
arrive at based on you analysis?

Case Incident What Drives Employees at Microsoft?

The reality of software development in Dressed in extravagant Victorian
a hug company like Microsoft-it outfits? But the underlying theme that
employs more than 48,000 people-is unites Microsofties is the belief that
that a substantial portion of your work the firm has a manifest destiny to
involves days of boredom punctuated change the world. The least
by hours of tedium. You basically consequential decision by a
spend your time in an isolated office programmer can have an outsized
writing code and sitting in meetings importance when it can effect a new
during which you participate in release that might be used by 50
looking for and evaluating hundreds of million people.
bugs and potential bugs. Yet Microsoft employees are famous for
Microsoft has no problem in finding putting in long hours. One program
and retaining software programmers. manager said, In my first five years, I
Their programmers work horrendously was the Microsoft stereotype. I lived
long hours and obsess on the goal of on caffeine and vending-machine
shipping product. hamburgers and free beer and 20-hour
From the day new employees begin workdaysI had no life I
work at Microsoft, they know theyre considered everything outside the
special and that their employer is building as a necessary evil. More
special. New hires all have one thing recently, things have changed. There
in common-theyre smart. The are still a number of people who put in
company prides itself on putting all 80-hour weeks, but 60-and 70-hour
recruits through a grueling interview weeks are more typical and some even
loop, during which they confront a are doing their jobs in only 40 hours.
barrage of brain-teasers by future No discussion of employee life at
colleagues to see how well they think. Microsoft would be complete without
Only the best and the brightest survive mentioning the companys lucrative
to become employees. The company stock option program. Microsoft
does this because Microsofties truly created more millionaire employees,
believe that their company is special. faster, than any company in American
For instance, it has a high tolerance for history-more than 10,000 by the late-
nonconformity. Would you believe 1990s. While the company is certainly
that one software tester comes to work more than a place to get rich,
every day former manager claim that executives still realize that money
the human resources department matters.
actually kept a running chart of
employee satisfaction versus the Questions
companys stock price. When the
stock was up, human resources could 1. If you were a programmer, would
turn off the ventilation and everybody you want to work at Microsoft? Why
would say they were happy. When the or why not?
stock was down, we could give people 2. How many activities in this case can
massages and they would tell us that you tie into specific motivation
the massages were too hard. In the theories? List the activities, the
go-go 1990s, when Microsoft stock motivation theories, and how they
was doubling every few months and apply.
yearly stock splits were predictable, 3. As Microsoft continues to get larger
employees not only got to participate and its growth rate flattens, do you
in Microsofts manifest destiny, they think management will have to modify
could get rich in the process. By the any of its motivation practices?
spring of 2002, with the world in a Elaborate.
recession, stock prices down, and the
growth for Microsoft products
slowing, it wasnt so clear what was
driving its employees to continue the
companys dominance of the software
industry.

MORALE
Morale is a feeling, somewhat related to spirit, enthusiasm or Zeal
-Dale Yoder
Morale is a mental condition or attitude of individuals or groups which
determines their willingness to cooperate
-Edwin B. Flippo
Nature of Morale
The term morale is used to describe overall climate prevailing in a group.
Morale is a degree of enthusiasm or a zeal along with willingness of persons
towards contributing their efforts to achieving goals.
 Fig 3.21 Building moral

Importance of morale in Organization

A willing worker can devote more attention, apply more skills, and
achieve high productivity. All these are the effect of high morale. If there is
low productivity, and no congenial relations between the staff, the progress is
bound to be affected adversely. Therefore, high morale amongst the
employees is of utmost importance.
Secondly, the employees are the representatives of the organization. If they are
respected by the society in general it gives name to the organization and good
reputation comes with it. Such a reputation also makes the organization
successful. Thirdly if the employees have high morale it is the positive effect
of positive approach of management. Behavior, policy and minimum disputes
are evidenced from the existence of high morale. Respect can be commanded
by the workers having high morale.
Fourthly, a satisfied worker refrains himself from living away from the job.
This reduces the absenteeism and thereby high turnover is achieved.
Fifthly if industrial disputes and employee grievances are avoided which is
possible by raising employee morale, it adds to the reputation of organization.
Thus existence of high morale in the employees individually or in group is most
important for the progress and high reputation of organization.
Benefits of existence of high morale
Employees with high morale like their jobs and always cooperate to achieve
organizational goals. It comes from job satisfaction. High morale is indeed a
manifestation of the strength of the employees, their dependability, confidence
and devotion to the job. Existence of high level of morale benefits the
organization in following ways.
(1) The employees extent cooperation in achieving the goals of organization that
too willingly.
(2) High morale generates loyalty towards the organisation through leadership.
(3) Employees follow the rules and regulations and thus behave in disciplined
way.
(4) It generate high interest in the employees towards the jobs and ultimately
towards organization.
 (5) The employees feel pride to be the part of organization.
(6) Rate of absenteeism is reduced and turnover us increased.

Effects of low morale : Low morale is the outcome of mental unrest. Any one
with disturbed mind can not concentrate on his job. This, in turn adversely
affects his and ultimately organizational productivity. Doubtful and suspicious
atmosphere and low morale go hand in hand . Finally it leads to following
consequences:
(1) Rate of absenteeism goes up which ultimately decreases productivity.
(2) Excessive complaints are made and grievances are put forward.
(3) Workers get frustrated.
(4) Congenial atmosphere in workers is disturbed giving rise to friction
between the workers, workers and supervisors etc.
(5) Dissent towards to management and its leadership goes on increasing
(6) Discipline is not maintained.
Methods of measuring employee morale
Measuring the morale, therefore, becomes assessment of various. It can be
measured as follows.
1. Grievances - Grievance against the job, supervisor and the organization
directly affects the morale of employees. Thus, the rising grievances and the
pace of their redressal, enable the management to assess the morale.
2. Direct Observation There are people who are shy at expressing themselves.
They even do not speak out their sufferings. Naturally they accept whatsoever
comes. But such an acceptance by them has a silent effect on their mental set
up. This knowingly or unknowingly appears in their attitude and performance.
Such situations lower down their morals. Only their behavioural attitude is the
indication of their low morale.
3. Statistics and Records : High morale reduces the complaints, grievances,
absenteeism, accidents, transfer requests. They are the outcome of prevalence of
low morale. Records of all such matters are nicely maintained. A periodical
analysis of these is made. If such an analysis reveals rise in such matters can be
the indication of lowering morale in the employees.
4. Providing suggestion boxes : It is, suggested that a suggestion box may be
kept handy and the employees be informed that they can put their suggestions in
writing in such box, even without mentioning their name and putting their
signature.
5. Open door policy : Open door policy means keeping the doors of top
executives open for the employees to approach them and put forth their
grievances. This is a democratic way of giving equal importance to all. This
facility itself can add to boosting the morale.
6. Personal counseling : This counselor, himself, approaches the worker and
discusses with them their problems. He arrives at certain conclusions regarding
the dissatisfaction in them. The more is the degree of dissatisfaction of lower is
the degree of morale. He then enlists all the reasons and submits them to high
authorities.
7. Surveys : Survey is collecting the information from almost all corners either
through personal discussions or through questionnaires. Such a survey of
attitude and opinion can discover conflicts and dissatisfaction and thus enable to
assess morale.
Productivity and morale:
1. High morale and high productivity : If the atmosphere is congenial,
cooperative along with providing good raw material, good working conditions,
good job procedure, encouragement by supervisors, good remuneration etc. the
morale is at high level. Under such conditions, high morale stimulates
productivity.
2. High morale with low productivity : If all factors affecting morale are fairly
good, the employees are satisfied and resultantly their morale is high. This high
morale enhances enthusiasm of workers towards job.
3. Low morale and low productivity : If all the elements as discussed in No.1
above are in negative status they are sure to affect the morale adversely and
because of other inferior conditions the productivity too is at lower level.
4. Low morale and high productivity : Out of the elements affecting morale and
productivity, those which are directly related only to productivity are in good
conditions but the elements affecting morale are not there, there will exist low
morale.
Measures to promote Morale
1. Fair Remuneration : It is, essential to evaluate a wage structure considering
the job entrusted, cost of living and wage structure of other organization. It is an
old saying that way to satisfaction goes through stomach. Thus remuneration
plays a vital role in boosting the morale.
2. Incentive Schemes : Incentive, monetary or non-monetary, is a way to
motivate an employee show more skills and utilize his unused capacity. In other
words incentive may raise his morale.
3. Welfare : Indian factories act has made it compulsory for the factories to
provide certain welfare facilities. These facilities are generally provided to
employees. These facilities are bear minimum requirements to keep the
employees fit to work.
4. Job Security : If an employee is assured of his continuance on his job, the fear
of extrication will be removed. This will boost his interest leading to
satisfaction and finally rise in his morale.
5. Fair promotion policy : An employee with a goal of being promoted before
him, puts his all out efforts for better performance on the post he holds. This is
rise is morale degree.
6. Honest and competent leadership : The leader is a person who is always with
the employees and therefore can understand them. He can find out factors of
dissatisfaction, it any, in the employees and can help in removing them. This
will add to the degree of morale.
7. Congenial Atmosphere : It is a psychologically proved universal truth that a
person working at a clean and hygienically good place along with cooperation
from co-workers as well as superiors gives better performance than a person
working at duty unhygienic place with lack of cooperation from co-workers and
supervisors.
8. Effective communication system : Communication is the means by which
required information is polarized and made to reach appropriate person. As far
as employees working on the floor are concerned, they require timely
instructions regarding performing jobs.
9. Efficient organization : Unless a proper organization structure is established,
it will not be possible to have effective and correct flow of work. What so ever
organizational structure is adopted-centralization, decentralization-combination
of these two (system of communication-personnel department etc.) by the
management it should be effective and suitable to the work.
10. Worker Participation : Workers participation in management is a democratic
way of managing. Their participation in decision making creates a feeling of
pride, and their participation in overall management creates a feeling of pride
and self importance in the minds of employees.
MOTIVATION AND MORALE
Motivation is a physical thing offered to employees in order to mobilize hidden
capabilities and skills in the employees. Motivation makes the employee to
work.
Morale is a mental thing that cannot be shown. It is experienced and felt by
observing the zeal and willingness to work as an effect of employee satisfaction.
Motivation helps boosting the morale to some extent. It is a type of reward
given to employees for good efficient work. Thus motivation assumes status or
cause which will not last long.
Morale
Behavioural Attitude, Sentiment of
Satisfaction, enthusiasm, zeal and
Willingness to work

High Morale Low Morale

Factors affecting morale

Fair - 1. Remuneration - Poor
Good - 2. Welfare Lacking
Yes - 3. Motivation No
Yes - 4. Job security- No
Good - 5. Cooperation with Bad
Co-workers and
Superiors
Allowed 6. Participation in decision Rejected
Making
Congenial 7. Working Atmosphere Unhealthy
Quick 8. Grievance Redressal Lingering
Experienced 9. Job Satisfaction Not
experienced
Motivation is a stimulant which temporarily moves one into action. As soon as
its purpose is served the action takes its own way.
Morale is a composite of feelings, attitudes and sentiments that contribute to
general feeling of satisfaction at work.
Motivation is a function of drives and needs.
Morale on the other hand is a function of freedom or restraint onwards goal.
Motivation mobilizes energy.
Morale mobilizes sentiments and willingness.
QUESTIONS
1. What is Morale? Write the factors that affect the morale.
2. Morale is a mental condition or attitude of individuals of group which
determines their willingness to cooperate Elucidate the statement with the help
of nature of morale.
3. Write the effect of employee morale on overall performance of any
organization.
4. How can Morale be measured ? Explain.
5. Explain the relationship between morale and productivity. Do you feel that it
is only the high morale that increases the productivity?
6. Differentiate between morale and motivation.
7. Enumerate and explain the measures of improving employee morale.
8. Do you agree that Maslows need Hierarchy theory has a direct relation with
Employee morale ? Explain.

LESSON:3 CONTEMPORARY EMPLOYMENT PRATICES

Learning Objectives:
Identify the different concepts of tenure of employment.
Clarify the new paradigms in employment.
Observe the dynamic changes in woru and were place practice
Define performance appraisal of employee
Explain how labour become flexible.
Work schedule options
Most people work an eight-hour day, five days a week. They start at a fixed
time and leave at a fixed time. They do their work from their employers place
of business. But a number of organizations have introduced alternative work
schedule options. They all increase flexibility for employees. In a work world
being pressed for time and personal responsibilities, increasing work schedule
options can be a way to improve employee motivation, productivity, and
satisfaction.
Flextime
Flextime is short for flexible work hours. It allows employees some discretion
over when they arrive at and leave work. Employees have to work a specific
number of hours a week, but they are free to vary the hours of work within
certain

Example of a Flextime Schedule

Flexible Common Common Flexible

hours core Lunch core hours

6 A.M 9 A.M 12 noon 1 P.M. 3 P.M. 6 P.M

Time during the day

Fig 3.22
limits. As shown it Fig.3.22 each day consists of a common core, usually six
hours, with a flexibility . For example, exclusive of a one-hour lunch break, the
core may be 9 A.M., to 3 P.M., with the office actually opening at 6 A.M. and
closing at 6 A.M. All employees are required to be at their jobs during the
common core period, but they are allowed to accumulate their other two hours
before and / or after the core time.
The benefits of flextime are numerous. They include reduced absenteeism,
increased productivity, reduced overtime expenses, a lessening in hostility
toward management, reduced traffic congestion round work sites, elimination of
tardiness, and increased autonomy and employee job satisfaction. But beyond
the claims, whats flextimes record?
Flextime tends to reduce absenteeism and frequently improves worker
productivity, probably for several reasons. Employees can schedule their work
hours to align with personal demands, thus reducing tardiness and absences, and
employees can adjust their work activities to those hours in which they are
individually more productive.
Flextimes major drawback is that its not applicable to every job. It works well
with tasks for which an employees interaction is limited. It is not a viable
option for receptionists, sales personnel in retail stores, or similar jobs for which
service demands.
Job Sharing
A recent work scheduling innovation is job sharing. It allows two or more
individuals to split 40-hour-a-week job. For example, one person might
perform the job from 8 A.M. to noon, while another performs the same job from
1 P.M. to 5 P.M.; or the two could work full, but alternate days.
Job sharing draws talents of more than one individual in a given job. A bank
manager describes it as on opportunity to get two heads, but pay for one. It
also gives the opportunity to acquire skilled workers. They may be women with
young children and retirees. Many Japanese firms are increasingly considering
job sharing-but for a very different reasons. Job sharing is seen as a
humanitarian means for avoiding layoffs due to overstaffing.
From the employees perspective, job sharing increases flexibility. As such, it
can increase motivation and satisfaction for those to whom a 40-hour-a-work job
is just not practical. On the other hand, the major drawback from managements
perspective is finding pairs of employees who can coordinate the intricacies of
one job.
Telecommuting
Telecommuting refers to employees who do their work at home at least two days
a week on a computer that is linked to their office. It is also known as virtual
office Recent estimates indicate that between 9 million and 24 million people
telecommute in the United States. This translates to about 10 percent or more of
the workforce. Well-known organizations that actively encourage
telecommuting include AT & T, IBM, Merrill Lynch, American Express,
Hewlett-Packard, and a number of U.S. government agencies. The concept is
also catching on worldwide. In Finland, Sweden, Britain, and Germany,
telecommuters represent 17, 15, 8, and 6 percent of their workforces,
respectively.
What kinds of jobs lend themselves to telecommuting? Three categories have
been identified as most appropriate: routine information-handling tasks, mobile
activities, and professional and other knowledge-related tasks. Writers,
attorneys, analysts, and employees who spend the majority of their time on
computers of the telephone are natural candidates for telecommuting. For
instance, telemarketers, customer-service representatives, reservation agents,
and product-support specialists spend most of their time on the phone. As
telecommuters, they can access information on their computer screens at home
as easily as in the companys office.
The major merits of telecommuting include a large labor pool from which to
select, higher productivity, less turnover, improved morale, and reduced office-
space costs. The major demrit is less direct supervision of employees In
addition, in todays term-focused workplace, telecommuting may make it more
difficult for management to coordinate teamwork. From the employees
standpoint, telecommuting offer a considerable increase in flexibility. For
employees with a high social need, telecommuting can increase feelings of
isolation and reduce job satisfaction. And all telecommuters potentially suffer
from the out of sight, out of mind effect. Employees who arent at their desks,
who miss meetings, and who dont share in day-to-day informal workplace
interactions may be at a disadvantage when it comes to raises and promotions.
Its easy for bosses to overlook or undervalue the contribution of employees
whom they see less regularly.
Shifting focus of work
India had graduated from being predominantly agricultural to being industrial to
being post-industrial or service and high-tech economies. This transition has
resulted in a shift from (a) information in terms of wealth base; (b) muscle to
machine-tending skills in the use of human skills / energy; (c) independence in
employment relations; (d) fairness in motivational approaches; (e) direction and
control to consensus and commitment of managing people at work.
Figure 3.23 Shifting Focus in the Realm of Work
Aspect Traditional Early / Traditional Post-Industrial
Agriculture Industry Service/High-tech
Wealth Land Money Mind/Information
Skill / Effort Brawn / Muscle Machine-tending Brain / Mind
Attitude
And Ability
Matter,
Not just Skill
Management Unilateral Pluralistic Egalitarian
Philosophy
Management
Style Autocratic Paternalistic Collegial
Employment Mater- Employer- Partners
Context Servant Employee
Relationship One-sided Interdependence Mutuality and
Dependence Independence
Communication Top-down Two-way Transparent
Motivation Fear Favour Fairness
Performance Information Formal, One-way Formal, Open,
Appraisal Confidential Participative
Boss Appraisals
Control Direction and Inducement Consensus /
 Control Commitment
Remaining comprise the high-tech manufacturing and modern services sector.
Therefore, the emerging picture about the world of work, even if it is changing
rapidly, appears static to some and dynamic to others. Given the vast diversity
of the country, the picture at the macro level is vastly heterogeneous. Here there
are changes in eight broad areas: (i) market, (ii) work, (iii) technology, (iv)
worker, (v) work organization, (vi) skills, (vii) compensation, and (viii)
workplace governance.
Changes in the market
In the emerging economic scenario, the market-place is witnessing six
interrelated changes: (i) plan to market (ii) import-substitution to export-oriented
growth (iii) protection to competition (iv) sellers to buyers market, (v)
producer to consumer orientation, and (vi) swadeshi to videshi. Survivial in the
market-place depends on low-cost, high-quality products/services; zero-defect,
not just meeting, customers expectations; and innovation.
In India, companies like Arvind Mills, Infosys, Ranbaxy, Sundaram Fasteners,
and TI Cycles have changed their market strategy not just to adjust to the
changes, but to become major global players in their respective area (Das,
1996). Sundaram Fasteners won a five-year contract competing with 12 foreign
companies in a global bid for supplying radiator caps to all General Motor plants
worldwide: Against a standard reject rate of 150 parts per million, it has
achieved six parts per million and never missed a delivery in the last two year.
It requires a long-term vision, identifying products which have a long shelf life,
avoiding the temptation for wild diversification and focusing on not only cost
but also value, quality, timeliness and innovation.
Changing nature of work
Work is becoming increasingly technology driven. It is impacting on both
content and contexts. Based on the concrete experience of many workplaces,
the following scenario is the changing nature of work.
 Robotized assembly operations
Unmanned power plants
Office less work (journalists or sales professionals)
Open 24 hours, 365 days a year (be it a factory, bank or a restaurant)
Contract work contract of work
Employed worker independent contractor
Dependent / interdependent independent worker
Permanent temporary
Office home
Fixed flexible hours of work
Jobs as property jobs for prosperity
Lifetime employment lifetime employability
Single task/single career multiple tasks / multiple careers
Individual team
Functional cross-functional
Ladders loops
Managers facilitators
Fordist-Taylorism Neo-Fordist Toyotaism
Sequenced/Segmented approach parallel/circular work organization
Autonomous hierarchies interdependent partnerships
Employee as a servant employee as a partner / (internal) customer
Loyalty competence / competencies
Norms values
Managing leading
Control commitment
Direction empowerment
A major change, however, is the increasing informalization of work. Overtime
And contract work eventually create bigger problems for the management.
Hence, managements will need to deal judiciously with the problems in the area
of employment relations.
Changing technology of work
New technologies, new materials new processes and new methods have
revolutionized the world of work. Listed here are some ways in which the face
of the factory and office are changing 3.24.
Figure 3.24 Changing Face of a Modern Factory / Office
Yesterday Today Tomorrow
Factory
Putting out system Regular premises Work out of home
Start to finish under Make-or-buy dilemma Outsource as much
Same roof as possible
Manual machines Electrical, mechanical Digital, cellular
Office
Ink Pen Ball Pen ?
Typewriter Computer ?
Telephones Pagers ?
Duplicator Xerox machines ?
Telex Fax, e-mail and internet ?
Annual filing Electronics databases ?

Changing profile of workers

Figure 3.25 Changing Profile of Workers
Yesterday Today Tomorrow
Majority Majority Majority
Blue Collar White collar Gold collar
Illiterate workers and Both workers and Workers more literate than
Literate bosses Their bosses are their bosses in terms of
literate technical knowledge in

Their respective work areas

Workers low-caste and Workers and Workforce increasingly
Managers upper-caste managers diverse
Low aspirations homogeneous High aspirations
 Instrumental in
orientation

Production worker comprise no more than about 15 per cent of the total
workforce in todays modern, high-tech factories. Even in the defence services,
hierarchy becomes less important. In the Air Force, for instance, once the
aircraft is airborne, the seniors let the juniors take charge of the control panels.
In traditional cargo handling, a worker would typically aspire to become a
highly skilled worker or a junior supervisor.
Managing differences: There are three major issues in dealing with the changing
demographics of the workforce: managing cerebral workers, managing
expectations, and managing differences. Of these, managing differences are
most crucial and challenging:
Religion : Hindu, Muslim, Christian and others
Caste: Forward, backward, most backward, Scheduled Caste / Tribe
Language: English, Hindi, regional and other languages
Region: North-South, East-West
Age : Old any young workers
Sex : Male and female. In some countries gays and lesbians too
have articulated their special needs and expectations
Intra and international diversity
Intersectoral diversity:Traditional and modern manufacturing, for
instance
Workforce in existing plants and Greenfield sites
Cultural integration in mergers and acquisitions
Women are likely to improve their number in the total workforce and,
particularly, in jobs held by males. This requires paying attention to issues like
(a) balancing work-family responsibilities; (b) dual career planning; (c) taking
care of the needs of the workers with family responsibilities; and (d) creating an
inclusive work environment for both men and women as colleagues and
undertaking proactive, preventive measures to deal with prejudice,
discrimination, stereotyping and sexual harassment.
Mass production is being replaced with flexible specialization. With new
manufacturing methods, newer approaches to work organization are required.
According to Storey (1987) the essential features of superior forms of new
methods of manufacturing and work organization include.
A fuller utilization of available work time; flexibility of work , team working of
one kind or another; just-in-time production; learning by doing and innovative
ideas contributed by all levels of employees; and elimination of non-value-
added activities; and workers undertaking production, inspection and
maintenance functions themselves. Enhancing competitiveness has focused
attention not merely on the macro environment (East Asian Miracle, World
Bank), but also on manufacturing itself (Hayes, et al., 1988).
New initiatives in manufacturing (Peters and Waterman, 1982; Schonberger,
1986) have a clear focus: Total Quality Management (TQM) on quality; Just in
Time (JIT) on cost control; ISO on systems; and Advanced Manufacturing
Technology (AMT), Cellular Manufacturing (CM), Computer-Integrated
Manufacturing (CIM), Flexible Manufacturing Systems (FMS), and Lean
Production (LP), on responsiveness to market demands. The strategy is to
compete both on cost and quality and be responsive to market needs (Lawler,
1992).
Manufacturing methods and technologies should support such strategies.
Companies are focusing on product (Products which have longer life-cycles
such as Denim in the case of Arvind Mills) and process (Kaizen) through
integrated technologies such as computer numerically controlled (CNC)
machines. AMTs offer the advantage of automation by way of low cost and
high and consistent product quality. They can also cope with a wide variety of
products with a minimum set-up and changeover time.
The flattening out of organizational structures, shifting from a sequential to a
parallel approach, integrating of producers and customers to form a dynamic
interaction and combining of the efforts of head (planning) and hand (execution)
have become integral elements of the emerging systems of work organization.
Figure 3.26 The main Features of Traditional and Emerging
Approaches to Job Design
Traditional Approaches Emerging Approaches
Job content Autonomy / Control, Cognitive demand, cost
with Responsibility and
Skill variety, task interdependence
identity,
Task significance and
feedback

Contingency Individual differences- Organizational factors

Growth needs strength Production uncertainty
Mechanism Motivation Knowledge application
and
development

Source : T.D. Walland P.R.Jackson (1995). New manufacturing Initiatives and

Shopfloor Job Design. A Howard (ed). The Changing Nature of Work. San
Francisco: Jossey-Bass p.164
Corresponding changes in the work organization include aspects such as
employee participation, team working, security of employment, commitment
and extensive training (Storey, 1994; 248). For example, Japan has overtaken
western countries in adopting new, advanced, flexible manufacturing systems
(Jaikumar, 1986; Valery, 1987). Yet, it has not abandones Tayloristic practices
and managerial control. Indeed, Storey (1987;248) argues, these features are
taken to new heights because employee groups are themselves engaged in
seeking out unnecessary movements and excess labour in true Tayloristic
fashion.
Skills development
The twenty-first century belongs to those who have the skills and knowledge.
The post-liberalization/globalization era unskilled workers are either losing jobs
or being pushed to the unorganized sector, where working conditions are harsh
and earning low. Skilled workers are able to retain their jobs and improve their
career and earnings.
Lifetime employment in the current and future context would mean a continuous
obligation to train, retain and redeploy employees. This also signifies a mutual
obligation and commitment to technological advancement, job and work
redesign, and responsibility for self-development and employee training. It also
means that employees should be career resilient and career self-reliant.
Technological pressures of restructuring mean a shift in the demand for skills,
Training and retaining systems. The government alone cannot fund the massive
training effort called for. Hence, alternative ways of financing should be
considered. Also, the systems of certification in the country are woefully
inadequate. Only far greater quality assurance and cost effectiveness will ensure
that the already meager investments are put to optimal use and not frittered
away. The training requirements for women, the disadvantaged groups in
society warrant special attention. There is a need to arrange for the education
and training of children as well as review the present systems of skills
transmission. In sum, there are five aspects of skills development that require
attention:
Skills development fund
Singapore and Malaysia, for instance, have set up skills development funds with
contributions from employers-a per cent (usually 1.5 per cent) of the wage bill.
The collection and disbursement of funds under the scheme has been made
simple by using the existing network of commercial banks. This is a macro-
level initiative that India could also emulate.
Retraining
The National Renewal Fund (NRF) did not meet its objective. While over
80,000 opted for the VRS utilizing NRF funds, barely a 1000 people were
retrained and 100 redeployed. Several companies have clauses on redundancy
and retraining. But retraining in an unemployment context would result in a
situation whereby redundant workers in a family would be competing with the
younger ones entering the labour market for the first time.
Multiple skills/tasks
The one-person one-skill/task concept is giving way to the one-per-son many
skills/tasks concept. This is helpful to the organization in terms of a better
utilization of people in the workplace. It also helps insure individuals against
redundancy, since at least some skills are expected to remain marketable, and
facilitates redeployment.
Companies may issue passports to its employees and notify in it the skills the
employee has learnt. This is deemed method of recognition of the skills
acquired by the worker. Such certification of marketable skills helps
outplacement in case of redundancy.
Compensation
Wages and salaries are a cost to employers and income to employees.
Employers should be concerned with wage costs, not wages per se. The
principle should be work smart, earn more, instead of work more, earn more
because physical effort has limits while smartness knows no bounds.
The system of compensation should emphasize equity, both internal and
external. Pay differentials can be based on skills, effort, responsibility and
conditions of work.
Wages parity is a major issue. Public policy is aimed at ensuring a sense of
parity and proportionality because wide differences can create social problems.
Parity is an issue whenever a pay commission or a wage board gives its
recommendations or award. It is also an issue in collective bargaining.
Performance-linked pay
This means pay is dependent on performance.
It requires a good system of performance planning and measurement
It should not viewed as a chance to reduce existing pay levels.
Employees feel vulnerable to violent fluctuations in earning, hence, the
Entire pay should not be made variable. A percentage (say 70 per cent)
should be fixed and the balance variable at the worker level. At the senior
management level, 30 per cent could be fixed and 70 per cent variable
(inclusive or commission on profits, etc.). For salespersons, a regular
employees pay could be variable by up to 30 per cent and that of
commission agents up to 70 or 80 per cent.
Individuals/Teams should be able to contribute/make a difference to the
performance of work.
Employees should not be punished for factors beyond their control.
If teamwork is critical, team rewards must also be emphasized.
There is no one standard model/approach/scheme to be followed.
Pay differentials should be based on the principal of equal pay for work
of equal value, which should take into account four parameters, handy skills,
efforts, responsibility and working conditions.
The (motivational) components of performance-linked pay systems
could be both financial and non-financial.
Performance-linked pay systems should focus on both short-term and
long-term performance needs. Several merit increments in a few years at the
start of a career may, under certain conditions, have negative effects on
performance in subsequent years. Therefore, a judicious combination of merit
increments and lumpsum payment should be used.
The various types of performance-linked pay include: individual or team-based
pay, incentive pay, merit increments, lumpsum payments, skill/competence-
based pay, gain sharing, bonus plans, profit sharing, employee share-ownership
plans, stock options and non-financial rewards.
Workers as owners
Profit sharing as a stock options are also becoming the norm. State initiative in
this regard can be found in France in particular and Europe in general. In the
US and UK, employee ownership is encouraged as a tax planning device. In
Pakistan and Bangladesh, apart from bonus, legally mandated welfare funds are
financed through profit sharing. Even in India, a beginning was made by
earmarking 5 per cent of equity issues to workers. Corporate initiatives also
provide for building stake in workers as owners. We have, for instance, two
examples n Bangalore: Brooke Bond in the past, and Infosys now, which have
pioneered employee shareholding.
Increasing competition and rising labour costs are leading employers to
introduce a variety of changes in traditional compensation systems.
Non-traditional methods
In the context of Indian organizations some non-traditional developments
include the following.
Managing without managers (small, software companies run by professionals)
Supervision without supervisors (several)
Managing without traditional structures (several companies)
Managing without traditional owners (several worker-owned companies)
Managing without unions (this is becoming common now)
Personnel management without personnel managers
Managing without quality boundaries (many companies)
 Managing without a complete, full-time workforce (several companies)
Downsizing
Downsizing is occurring on a large-scale in many big firms. Though the
estimates of surplus labour in the organized sector vary between 20 and 30 per
cent, some large firms are known to have reduced their workforce by over 50
per cent in the last 10 years while a considerable number are planning to reduce
it by third in the next five years. Unless new investments lead to the net
addition to jobs in the organized sector-which did not happen in the 1990s-
employment in this sector will shrink further over the next few years.
Flexible work
There are new employment contracts, based on contingent workforce, old
putting out systems. Todays producers without factories are akin to traders. In
some cases workers/trade union leaders are turning out to be major labour
contractors. In yet other cases, production decision are left entirely to workers
who organize themselves without a foreman or a contractor.
Companies need to draw a line on how much temporary help and contract
employment to use and what implicit or explicit continuity to offer employees.
Thus short-term economic and long-term economic and social consequences of
new employment practices need to be evaluated carefully. Unfortunately in
India we do not have empirical and longitudinal databases and hence we tend to
rely on hunches, hindsight and anecdotal case histories/experiences. In view of
that, it is important to formulate well-thought-out and comprehensive
approaches to outsourcing and job security.
Firms flexibility
Firm maintain flexibility through organizing their production in diverse ways
and through strategic decisions such as the following.
Parallel production
Outsourcing
 Lease license manufacturing
Franchising
Employment of contingent workforce
Shifting workforce from contract of employment/work to contract for
work etc.
These measures significantly reduce the number of regular employees needed
and considerably increase the managements leverage over workers and their
unions in times of industrial strife.
Labour flexibility
Flexible practices in labour utilization should not increase the rigidity for labour.
According to the labour law in several South-East Asian countries, the rights to
recruit, rewards, transfer, motivate, assign work and adjust the workforce are
considered managerial rights. In India, however, these are the subject of
collective bargaining. The applicability of several labour laws increases with
the increase in the size of employment. This serves as a disincentive, and
managements tend to reduce employment below certain threshold limits so as to
not come under the purview of labour laws. This has, along with other factors,
contributed significantly to an increase in capital intensity and a decrease in
labour intensity in several industries.
Firms seeks labour flexibility on one or more of the following counts.
Numerical flexibility (size of workforce)
Skill flexibility (composition of workforce)
Functional flexibility (job enrichment/job enlargement)
Location flexibility (transfer / mobility)
Time flexibility (flexi time)
Pay flexibility (flexi pay)
INTRODUCTION :
There are three main reasons to appraise subordinates performance. First,
appraisals provide important input on which promotion and salary raise decision
can be made. Second, the appraisal lets the boss and subordinate develop a plan
for correcting any deficiencies the appraisal might have unearthed, and to
reinforce the things the subordinate does correctly. Finally, appraisals can serve
a useful career-planning purpose, by providing the opportunity to review the
employees career plans in light of his or her exhibited strengths and
weaknesses.
Peer Appraisals With more firms using self-managing teams, appraisal of
an employee by his or her peers-peer appraisal-is becoming more popular.
Research indicates that peer appraisals can be effective. One study involved
undergraduates placed into self-managing work groups. The researchers found
that peer appraisals had and immediate positive impact of (improving)
perception of open communication, task motivation, social loafing, group
viability, cohesion, and satisfaction.15
Rating Committees Some companies use rating committees. A rating
committee is usually composed of the employees immediate supervisor and
three or four other supervisors.
Using multiple raters can be advantageous. It can help cancel out problems such
as bias on the part of individual raters. It can also provide a way to include in
the appraisal the different facets of an employees performance observed by
different appraisers. This is probably why composite ratings tend to be more
reliable, fair, and valid than those done by individual supervisors.
Self-Ratings Employees self-ratings of performance are also
sometimes used, usually in conjunction with supervisors ratings. The basic
problem with self-ratings is that employees usually rate themselves higher than
their supervisors or peers would rate them.
Appraisal by Subordinates Some firms let subordinates evaluate their
supervisors performance, a process many call upward feedback. Such feedback
can help top managers diagnose management styles, identify potential people
problems, and take corrective action with individual managers, as required.
360-Degree Feedback With 360-degree feedback, performance information is
collected all around an employee, from his or her supervisors, subordinates,
peers, and internal or external customers. This is generally done for
development rather than for pay raises. The usual process is to have the raters
complete appraisal surveys on the rate. Computerized systems then compile all
this feedback into individualized reports that go to ratees. The person may then
meet with his or her supervisor to develop a self-improvement plan.

QUALITY CIRCLE

What is a Quality circle? Its a work group of 8 to 10 employees and supervisors

who have a shared area or responsibility. They meet regularly-typically once a
week, on company time and on company premises-to discuss their quality
problems, investigate causes of the problems, recommend solutions, and take
corrective actions. They take over the responsibility for solving quality
problems, and they generate and evaluate their own feedback. But management
typically retains control over he final decision regarding implementation of
recommended solutions. Therefore, part of the quality circle concept includes
teaching participating employees group communication skills, various quality
strategies, and measurement and problem analysis techniques.
Do quality circles improve employee productivity and satisfaction? A review of
the evidence indicates that they are much more likely to positively affect
productivity. They tend to show little or no effect on employee satisfaction; and
although many studies report positive results from quality circles on
productivity, these results are by no means guaranteed. 27 The failure of many
quality circle programs to produce measurable benefits has also led to a large
number of them being discontinued.
Quality Circles
A quality circle (QC) is a small group of workers who meet voluntarily, once a
week or two, to identify, analyze, and resolve problems in their work area. The
QC idea is another one of those management techniques that the Japanese
borrowed from the United Sates. QCs offer a number of advantages o
organizations, to the manager, and to the QC members.
Advantages of the QC to the Organization
One U.S.study (Grapevine, 1982) reports that QCs provide the following
advantages to the employing institution:
1. Improved performance and productivity.
2. Greater employee satisfaction.
3. Measurable cost savings.
4. Better employee morale and pride in their work.
5. Improved teamwork.
Advantages of the QC to the Manager
The study found that QCs provide the following advantages to the manager:
1. Employees become more effective at attaining targeted goals.
2. Tardiness and absenteeism are reduced.
3. Indirect costs are reduced and productivity is increased.
4. Employees acquire better safety awareness.
5. Work quality improves.
6. Reduced grievances and down-time.
7. Employees receive on-the-job problem-solving experience.
8. Employee communication is improved.
9. Supervisors have more time to do more effective training.
Advantages of the QC to the Member
The same study also found the following advantages accrued to the members of
the QC
1. Personal motivation through the sense of belonging to a team.
2. A genuine interest in their work and a pride in doing it well.
3. Improved interpersonal relations between supervision and
employees.
4. A sense of dignity and a feeling of being appreciated for their efforts.
5. A feeling that being QC member contributed to their own job
security and quality of life.
For Review and Discussion
1. Explain briefly the changing practices in tenure of employment.
2. Describe briefly the change in the nature of job.
3. Identify the modern methods of production.
4. Discuss the dynamic changes taking place in the work place.
5. Comment on the role played by IT in industry.
6. Performance Appraisal and 3600 feedback are mutual Discuss
7. Indicate the ways and means by 90 can be constructed in
organization.
CASE EXERCISES
1. The National Bank has decided to computerize as many of its operations
as possible in order to increase efficiency and customer convenience.
One of their first steps was to place automatic teller machines (ATM) in
the surrounding community. The bank has also started a program that
expands on telephone banking by allowing the owners of
microcomputers to conduct virtually all of their banking business from
their homes.
 These successes have caused the bank to consider the use of
microcomputers of terminals in the homes of their employees so that
they may work at home. It is believed that this will allow greater
flexibility for employees and reduce the need for office and floor space
at the main and branch offices. It is clear that technology will stimulate
many changes in the banks current personnel practices as the
relationship between work and the individual employee changes. The
personnel director has been asked to develop a report outlining the
changes that will be necessary in the banks personnel policies.
Since contact with immediate supervisors would be eliminated
for many employees under this new work arrangement, what type of
performance appraisal system would you suggest?
2. Using the job analysis information for the airline captains job determine
the performance criteria that would be useful in establishing a
performance appraisal systems.
3. As a student, you have been subjected to a form of performance
appraisal through the course grades that you have received or earned
(depending on your outlook). Discuss whether you feel that the sources
of errors present in the performance appraisal processes have been
encountered in your personal experiences. How might grading systems
eliminate such errors?
4. Obtain a copy of a performance appraisal form from a local organization.
Critique the form based on
a. Job-relatedness
b. Potential sources of error
c. Use in personnel-related programs
 Unit IV
Lesson - I

INDUSTRIAL RESTRUCTURING

INTRODUCTION

Business/industrial organisation and its environment is constantly changing.

While commenting upon the quantum and quality of its impact, one
management guru FENCH(1976) remarks that such is the face of change that
modern manager feel out of date these changes have emanated from
proliferate influences of negative constraints and positive stimulates resulting
from the microenvironment and macro environment. The response of industrial
organization to a rapidly changing environment are multiple and varied. These
may be restructuring, out sourcing, benchmarking, supplier partnering, customer
partnering, merging, globalization, flattering, focusing and empowering.
The collective organizational efforts are directed to specifically optimize the
customers satisfaction and customer value. In an efficient and effective manner
organization are attempting to a quire insights in the chemistry of process in
order to optimize time or motion or methods or utilizations or waste or cost or
revenue of customer value etc.
As per Mr. Thurow(1993) remarks in the past economic winner were those
who invented new product. But in the 21st century sustainable competitive
advantage will come more out of new process technology and much less out of
new product technologies.
The global interest in industrial restructuring has grown repeatedly. The focus
is on achieving substantial improvements in interventional, interorgnizational
and customer based process. Re-structuring is new and it has to be done to
achieve break through result in terms of major gain in process, product and
performance and eliminating irrelevant cost by identifying redundant, poorly
planned and in effectively performed activities.
Industrial re-structuring improves financial performance, enhances customer
satisfaction, reduces cost, improves quality, improve productivities, flexibility,
reduce process time and attracts employees participation. As per DewanPort
(1993) the organization BPR and process improvements as a revolutionary new
approach that was information technology and HRM to dramatically improve
business performance. As per Bartel and Ghoshal(1995) said that turn business
re-structuring into people Rejuvenation, this indicate that company success with
re-Engineering and restructuring have established employee culture with four
characteristics - discipline, support, trust and strength.
Discipline lubricates employees to accomplish there gone by meeting and
exiting there voluntarily. Support structure facilitates, guide and help them.
Transparency open management process, promote equity and involvement. This
resulting in to trust. The cultivation of feeling of an access between employees
and organization. In terms of future possibility strengthen the bonds.
As per Mohanty & Deshamukh (1998) remarks that industrial re-starching on
the foundation of the systems, thinking and principles of industrial Engineering.
The success of industrial re-structuring implementation is possible if the
following postulates are adhered to:-

- Without and under laying competence in accessing complex situation

(out side changes) an organization is un-likely to advance.

- The competence call for developing radical thinking skills and

proficiency in strategic value innovation.
 - Value innovation requires an organizational commitment to create a
strategy momentum for inside in changes.

- With organizational commitment the organization is more likely to

advance in bringing in side out change and attain breakpoints.

Business itself is a process and process may be defined as inter-related

systematic, sequential and logical series of activities directed at obtaining a pre-
determined out come in a effective manner. According to KLEIN (1993)
industrial re-structuring is rapid and radical re-design of strategic value added
business process and the systems policies and organization structure that support
them to optimizes the workflows and productivity in our organization. As Mr.
Thomas (1994) defines it as radical scrutiny, questioning, re-defining and
redesign of business process with an aim of eliminating all activities not
centrally to the business goal. Hammer and Champy defines as the fundamental
re-thinking and radical re-design of business process to achieve dramatic
improvements in critical, contemporary measures of performance such as cost
quality service and speed. It may be observed that industrial re-structuring is an
analytical, intellectual re-construction activity. It is a complex dynamic costly
and time-consuming task. The goal is to improve. It requires collective
wisdom, mutual understanding, voluntarily and active support of one and all
union and outside the organization including top management.

APPROACHES TO RE-STRUCTURING PROCESS

Systematic re-design and clean sheet is the approach to process re-structuring.

These approaches differ in time orientation and the future roll of existing
process. The soft skills viz-motivation, attitude, knowledge, creativity,
restructuring programme. These help in creating a congenial tone and toner in
educating organizational participates and removing their fear and soothing their
feelings. This creating an enabling organizational environment to the proposed
process changes in the business organization.
The Manager in the 1st instance should intelligently bring home the need for
change in the organization. It should be effectively communicated to the
organizational participants through notice, circular, discussion, and seminar and
by management developments programme etc. Gaining organization wide
acceptance at all levels is an uphill task, because each level and individual is
likely to see with his own glass. The reaction to change is different and
divergent viz- unaware, acceptance, action, denial and shock etc. Generally the
people will create following three significant resistance to change:-

1. When people are comfortable with the status quo.

2. When they do not undirected why the change is desirable.
3. When they have doubts about the companys viabilities to achieve desired
skills.

In this light it may be said that the Manager should educate the organizational
participants to gain commitment to new idea and need for re-structuring. Firstly
vision statement should contain target objective these may be, cost reduction,
quality, customer satisfaction, financial performance, resource utilization. It
should be developed and supplied by the top management. It represents the first
step in the re-structuring projects. The active participation of Senior Managers
imparts real meanings to such projects. Secondly all major processes should be
identified and examined to gain necessary insides about their rolls,
responsibility, time and output etc. In the overall utility creation and value
addition function of a business organization, should be organized. Thirdly an in-
depth examination of the rolls of information technology, Human Resources and
organization culture is necessary in restructuring process.
Information Technology is a very powerful tool it can speed up the process and
it can add to the customer service. If the process can be automated, it can help
in reduction of cost and other related problems. Thus the Manager should
evaluate current technology in order to find out whether it may be used to obtain
better result or not. Human Resources and organization culture need to be
studied if the process is to be truly restructured. Without active willing,
voluntarily and sincere participation of organizational member no improvement
takes place. It is there for essential that the issue related to HR such as
motivation and moral, professional cases, participants compensation etc,
should be properly tackled in advance for actual restructuring. The creation of a
new process design upon creativity and innovativeness of restructuring and their
availability and propensity to make use of the rules of business structuring is
essential for getting the better results.

The core principles of business restructuring which are applicable to process

redesign as well as process re-engineering can be summarized as follows:

It should be customer driven

It should be strategic in concept
Concentrate in key business process
It is a cross functional activities
It requires the active involvements of Senior Managers
It is not quick fix, it should be flexible
It needs time and dedication from the people
It requires the communication of clear vision
The designing and restructuring in fact should be real one. The Human
Resources, Organization culture, Information Technology should be actually
involved in the task of restructuring.

Guidelines for effective restructuring

No two business organization are a like however there are some general
guidelines which can on hence the probabilities of success for business
restructuring.

Some of the guidelines are as follows:-

Driven from the top management

Treat people with respect and courtesy
The vision of industrial restructuring should be clear
Industrial restructuring is a holistic philosophy
Try to achieve early successes in order to overcome resistance
It builds momentum and condition
It is a continues process and is a tool for improvements and
developments.
There should be a match between the process and needs

Advantage of industrial restructuring

Some of the important benefits of industrial restructuring are as follows:-

Improvements of customer satisfaction
Reduction in staff turn over
Waste reduction
 Improve the quality
Increased profitability
Better organizational climate
Increase sense of responsibility and commitment in human resources of
an organization.
Reduce Administrative Problems
The industrial restructuring process efforts seeks to change process structure by
empowering motivated front line workers to make decision by providing assess
to relevant information. It is analytical strategies cross functional, creative and
innovative in nature. Its thing is to think a fresh, a willing participation of one
and all Senior and Junior, Internal and external participation. Its motto is to
break through for better elimination of non-value addition activities and
promotion of new thinking, up-gradation of skills and empowerment to all.

LESSON 2

REWARD SYSTEM AND EMPLOYEES PRODUCTIVITY

INTRODUCTION

World-class achievers follow world-class models. Reward and recognition are

essential for appreciating the employees work and inspiring them for continues
improvement in their work. During the ruff time a ward of appreciation and
encouragement in often an incentive. We need to keep trying when going on
work is easy. Recognition of our efforts inspires us to even higher level of
achievement. Some quality organisation in India have started using consist of
rewards and game sharing on the pattern of Japan.
Rewarding and recognizing people more then any other management act
profoundly effects employees motivation and job satisfaction. Some times
Managers fail to appreciate people and recognize their contribution on a day-to-
day basis. Other time Managers loose sight of purpose and provide monitory
rewards while forgetting to say Thank you.

REWARDS:-

Rewards on the other hands are a direct delivery of money and some thing of
financial value. Reward should punctual ate appropriate achievement and serve
as manifestation of on going recognition. The recognition is an intangible
expression of worth. Rewards are concrete expression of appreciation that is
meaningful to the receiver. Recognition is always powerful but reward without
recognition is weak. When rewards displace recognition they are a waste of an
opportunity and resources. Unfortunately too often Manager of many
organizations in India expresses appreciation with a cash award without
demonstrating a sincere appreciation of their employees contribution. Typical
reward given in Indian organisation to employees are pay, promotion,
increased bonus, benefits, company car, profit sharing and trips etc, to increase
the morale of an employee in the organization for better productivity, peace and
prosperity.

RECOGNITION

Recognition is an act of acknowledgment, approving and appreciating an

activity or service of the employees in any organization.
The term Re-means again and cognition means to think. Thus recognition
means to think again. An affective recognition strategy causes people to think
again about the value and unique contribution of each person that brings to the
per suite of total quality. Recognition is an on going activity that does not focus
only at award ceremonies. It is directed at an industrial self-esteem and social
needs. It is an intangible acknowledgement of a person and a method of teams
accomplishment. The forms of acknowledgement most commonly used in
recognition are praise, personal thank, letter, momentous and social lunch and
dinner.
OBJECTIVE OF REWARD SYSTEM
Reward system needs to embody following four objective which are adopted by
many International and Indian award winner:-

Disciplined use of quality improvement and problems solving approach

are recognized and rewarded.

Teamwork and efforts to eliminate internal competition are encouraged

by recognizing and rewarding successful practices.

Clear and specific quality improvement objective are included in

performance appraisal and reward system.

Promotion criteria include the action and activities that support total
quality in any organization.

PRINCIPLIES FOR EVALUATION OF REWARD SYSTEM

In order to establish the appropriate reward and recognition objective for total
quality implementation plan, the following principles may be used to evaluate
the existing and proposed reward system:-
 Place emphasis on success rather than failure.
Deliver recognition in an open and published way.
Deliver recognition in a personal and honest manner that is appropriate
to the employees.
By attention to the timing, if it is praise, provide it immediately. If it is
reward, make the response quickly.
Strive for clear and well-communicated line of sight between
achievement and award.
Above all recognize recognition. That is recognize the people who
recognize other for doing what is the best in totality.
The umbrella objective of a reward strategy is to ensure that quality tools
and process are used. Work systems are changed and team behaviors are
adopted in support of better environment.
STRATEGIC GUIDELINES FOR REWARD AND RECOGNITION
Without supporting recognition and reward system the transition to action and
behavior that implement quality concepts will be incrementally more difficult.
In our views a successful Indian organization, which have implemented, total
quality in the organization have following seven strategic guidelines for its
implementation: -
Recognizing positive action and behaviors of employees.
Recognizing manager for implementing total quality.
Develop promotion criteria that reinforce quality behavior.
Recognizing quality in bonus plan objective
Have separate appraisal for salary revision
Create a bonus plan for all benefits
Introduce a gain sharing plan and share gain with employee for as long
as the organization receives a return.
In nutshell for introducing an effective reward system we need to adopt that
forms NOAH principles No more prizes for predicting rains. Prizes only
for building arks.
The employees productivity is directly proportional to the reward system in any
organization. To study the relationship between employee productivity and
reward system in an organization we may discuss the following important
strategic initiatives.
MANAGERIAL LEADERSHIP AND COMMITMENT

The behaviors of management team at all level of the organization provide

the necessary leadership, it sets the tune and acts as example for its
successful implementation of quality in the organization. Any successful
organizational efforts realise on the competence and support of local
management.

In any organization each individual Manager must first accept and interact
with the following four supposition for managing a quality organization:-
Setting team and individual performance based on customer requirements.
Methods of reviewing objective and planning for variance have to be
consistent. Employees are better able to improve the work system then the
management because the problem comes from system not from the workers.
Performance improvement is not accomplished by slogans, punishment and
unrealistic goal.

SIX KEY GOALS

We have consolidated the following observation in to six key goals for laying
the foundation for better productivity in any organization:-
 Manager must act as a role model and promoter.
Employees involvement and teamwork must be established on an integral
part of productivity.
Quality improvement must be promoted by Managers personally by using
quality process.
Management must maintain a style of openness, patience and trust
worthiness.
Quality support must be included in the method to identifying supervision
and Managers.

It should be treated as a necessary ending task since it is a continues process.

SUPPORTING ORGANIZATIONAL ROLE AND STRUCTURE

To establish support organizational role and structure for better productivity

management should consider following strategic initiative:-
Developing and communicating a clear image for future state.
Using multiple and consistent leverage point to manage the transition.
Implementing organizational arrangement for the transition.

Each of these initiatives would require same level of incremental or re-directed

main power, original re-structuring and re-defining of roles.
EDUCATION AND TRAINING PROGRAMME
International award winners have selected nine goals for education and training
programme for better productivity:-
Training on basic of productivity to all employees.
Education plan as an integral part of quality maintenance strategy.
 Education plan that facilitate the transfer of skills and knowledge to actual
environment of the group.
Tailoring the training plan to the level of function and business area of the
workshop.
Curriculum comprising principles, tools and process action for the behavior
change.
Training should be conducted in National Work Group so that they can
learn and apply the appropriate skills together.
Classroom training must be reinforced with on the job coaching and
refresher courses.
EXTERNAL CONSULTANT
External Consultant can be the vital asset to management in starting up the
better productivity with the total quality management and the right use of
technique needed for planning and implementing the strategic for change. But a
caution must be observed in selecting an appropriate consultant for the purpose
of business development program.

TEN TOPS AXIOMS FOR SUCCESSFUL REWARD SYSTEM AND

EMPLOYEES PRODUCTIVITY IN ORGANISATION.

1. Do the normal, sensible things first by producing, marketable products,

looking after management, personnel and customers.
2. Change the criteria for selecting managers. In addition to professional
know-how, they need to think more about their responsibilities than
about their careers or power games.
3. Realise the importance of the lowest levels of management. They
represent the organisation. For that reason focus on people and products
rather than on systems and procedures.
4. Remember that its better to take the long view than to seize a short-term
advantage. Proper timing is more important. Make rapid, though not
always perfect, decisions. Keep three phases in mind: recognize what is
needed early, then accelerate the decision-making process; and finally,
implement the decision quickly.
5. Soberly estimate the possibilities of streamling and subsequently
implementing the measures. Adapt corporate structures more rapidly to
growth, activity and empowerment. Do not subsidise non-viable
business. Adapt the workforce to new circumstances both regionally and
professionally. Think of a reduction in costs as an opportunity to think
about long-term options and to lay the groundwork for future
investments.
6. Do not overlook renovation in addition to innovation. Furthermore,
innovation should be applied to management, leadership, and
organisation, as well as to products.
7. Communication as a means to an end is the key. Of course, actions and
facts are more convincing than mere words.

8. Establish good labour-management relations even though an ideal peace

is unlikely.
9. Implement a new style of management and new kinds of relations with
employees based on management commitment and employees
involvement.
10. And last but certainly not the least, the most important single axiom for
executives is: be credible and consistent in word and deed.
Twelve condition for excellence.
These 12 conditions of excellence for total quality are as follows:-
- Customer satisfaction
 - Stockholders value
- Employees satisfaction
- Public approval
- Value ratio
- Error free performance
- Product/Process leadership
- Management leadership
- The operating plan
- Customer orientation
- Human resources excellence
- Value/Cost ratio

FIVE ROLES OF LEADERS

The five roles of a leaders and managers for the above are as under:-
Challenging the Process
Leaders are pioneers people who seek out new opportunities and are willing to
change the status quo. They recognize that failure to change creates mediocrity.
They innovate, experiment and explore ways to improve the organizations.
Most importantly, they realise that not all good ideas come from themselves.
They realise that others close to a problem are probably more able to come up
with a sensible solution.
Inspiring a Shared Vision
Leaders look towards and beyond the horizon. They look to the future with a
dream of what might be. They envisage the future with a positive and hopeful
outlook. They believe that if people work together, they can achieve the
impossible. Leaders are expressive and attract followers through their
genuineness and skillful communication.
Enabling Others to Act
Leaders know that they are rewarded for getting others to achieve results. They
cant do it alone. They need to infuse people with enthusiasm and commitment.
They have to be persuasive. Leaders develop relationships based on mutual
trust and they get people to work together towards collaborative goals. They
stress participation in decision-making and problem solving. They actively
involve others in planning, allowing them the discretion to make decisions even
if this means making mistakes. Risk taking is encouraged. Leaders ensure that
people feel strong and able to do a job.
Modelling the Way
Leaders are clear about their business values and beliefs. They have standards
which are understood by all. They stand up for what they believe in and they
communicate this to their people. They keep people and projects on course by
behaving consistently with these values and modeling how they expect others
to act. Their words and deeds are consistent. Leaders make us believe that the
impossible is within reach. They also plan and breakdown projects into
achievable steps by creating opportunities for small wins. They make it easier
for others to achieve goals by focusing on these steps and identifying key
priorities.
Encouraging the Heart
Leaders encourage people to achieve difficult targets. They persist in their
efforts by relating recognition to achievements. They visibly recognize
contributions to the overall purpose and give frequent feedback. Leaders let
others know that their efforts are appreciated. They communicate the success of
the team and celebrate small wins. Leaders nurture a team philosophy and go
out of their way to say thank you for a job well done. They manage to sustain
efforts and encourage others to put even more efforts into what they do.

FEATURES OF GOOD LEADERS

 Search for challenging opportunities to change, grow, innovate and
improve.
Experiment, take risks and learn from the accompanying mistakes.
Envision an uplifting and ennobling future.
Enlist others in a common vision by appealing to their values, interests,
hopes and dreams.
Foster collaboration by promoting cooperative goals and building trust.
Strengthen others by sharing information and power and increasing their
discretion and visibility.
Set an example for others by behaving in ways that are consistent with
others stated values.
Plant small wins that promote consistent progress and build commitment.
Recognize individual contributions to the success of every project.
Celebrate team accomplishments regularly.
CASE STUDY
The 1992s were a watershed for the Indian Banking Industry, and particularly
for Nationalised banks which hitherto had a monopoly in the Industry.
Following the deregulation of the financial sector, the Bank has faced increased
competition from other financial institutions like Canfin Home Ltd., LIC
Housing Corp. and Foreign Private Sector Banks. These specialised financial
institutions were giving a tough competition for Corp. Bank resulting in an
intense squeeze on profit margins and the need to make considerable efforts to
retain its clientele. Under such pressure, Corp. Bank introduced new technology
and new financial products and new reward system for bank managers and staff.
Information and communication technologies (ICTs) enabled the bank to
process much larger volumes of business and just as importantly, the new ICTs
themselves facilitated the development of new, technically based products and
services (such as home banking, smart cards and debt cards) which Corpn. Bank
started to market to its customers.
Running parallel with these technical changes was the dismantling of the
paternalistic Human Resource Management System. In essence, Corp. Bank
bureaucratic culture and its associated belief system for managers and staff of
appropriate behavior being rewarded by steady promotion through the ranks was
swept aside.
The new culture in the past changing environment, emphasized customer
service and the importance of measuring and rewarding staff according to their
performance. The new performance related reward system was introduced at the
board meeting held in June, 2002. Mr. N.K. Singh, Chairman and Managing
Director of the Bank said that the proposed reward system would be a key
strategy to maintain our reputation and market share. He outlined that in
future, the salary of bank managers would be tied to their leadership skills and
the quality of customer service. Accordingly, the reward system would link
managers pay to behavior traits that relate to leadership and customer service.
The variable pay for both managers and staff would be based on what is
accomplished because customer service is central to Corp. Banks strategic plan,
a three category rating system that involves not meeting customer
expectations, meeting them or for exceeding them is the essence of the new
reward system.

Questions:

1. Outline the merits and limitations of Corp. Banks proposed reward system
for the managers and staff.
2. Development an alternative reward system for corp. Banks employees and
explain why it is superior than the proposed reward system.
LESSON-3

QUALITY STANDARD AND EMPLOYEES DIMENTATIONS

In order to under stand quality system one must understand their quality. As nos
of definitions have been given but some of them are most informative as
follows;-

-The features and characterists of a product, and service, which bear upon its
ability to satisfya, stated and implied need.
- Fitness for purpose.
- Meeting customers requirements and exceeding their Expectations.
- Doing things right first time.

The essence of these quality definitations is to pride companies operating system

which promote conformance to specification. The more towards quality
assurance rather than quality control philosophy and the ever-increasing pressers
to provide better quality of product led to the adoption of the concept of quality
system. The quality system can be defined as follows: -
The quality system is the original structure, responsibility, procedures, process
and resources for implementing quality management.
According to this approach a quality system covers all business function except
finance. The main aliment of quality system.
Manufacturing process:
Design
Purchase
Process Engineering
Inspection
Delivery
Customer Order

Service Process
Development
Purchases
Customer Service
Validation
Training
Customer Order
International Organization for standardization (ISO)

ISO is a specified agency for standardization. It is a worldwide federation of

national standard bodies of more than 100 countries. ISO 9000 standard
emphasis that quality system is the right way to acchive and maintains quality
standard. ISO 9000 is equally applicable to small and large organisation. It
defines the basic concept specific procedure and formulates criteria to ensure
that the product of an organization meets the customer requirement.
The main elements of ISO 9000
There are 20 elements of ISO 9000 standard, which determine how the standard
should be applied to any particular organisation. The 20 elements of ISO 9000
are as follows:-
- Management responsibility
- Quality system
- Contract review
- Design control
- Documents control
- Purchasing
- Purchaser supplied product
- Product identification and traceable
- Process control
- Inspection and testing
- Inspection measuring and test equipments
- Inspection and test states
- Control of non-confirming product
- Corrective action
- Handling, Storage, Packaging and delivery
- Quality records
- Internal quality audits
- Training and development of the employees
- Servicing
- Statistical technique
The benefits of quality standard
The following are the major benefits of quality standard:-
- Value for money
- Customer satisfaction
- Higher productivity
- Increased profitability
- Improved corporate image
- Access to global market
- Growth of the organization
- Higher morale of the employees
The following steps have been identified for developing quality system in the
organization:-
Analysis - It involves an identification of the quality objective. A review of
the existing quality system ensuring of commitment of senior management and
development of the implementation plant.
Product and service specification the steps involved developing contract
review, procedure, design and development procedure.
Material control The 3rd steps involves procedure for the specification of
bought in goods and service, method for accessing sub contractor and procedure
for receiving raw material including sampling plant and control procedure for
any material supplied directly by the customer.
Process control The 4th steps require procedure for identifying the product
through conversion process and for maintaining tractability.
Inspection and testing This steps includes the method for in process and final
checking of the product. This stage should also include details of any statistical
technique.
Quality rewards This steps required procedure for the maintenance and storage
of quality system rewards. It also requires procedure for periodic auditing of the
systems. Procedure are also require for recording of employees training.
Quality manual A quality manual should be prepared which is a relatively
brief documents stating the business policy with respect to quality.
Quality system design and structure The Company in India and world over
have under taken only one of the formulized designs of the quality system as a
process development.
EMPLOYEES DIMENTIONS
Sirota and Weber (1994) have identified following employees dimensions to
maintain quality standard for better productivity and corporate culture in the
organisation.
Empowerment of employees.
Reward and recognition.
Training and developments
Open communication
Employees orientation
Sense of Direction
Fact based decision-making
Continuous improvements.
Collaboration
Corporate citizenship

From the above we can say that in any organisation the way of recognition of
people are as under:-

Develop a behind the scenes award specifically for those whose actions arent
usually in the limelight, make sure such awards are in the limelight.
Create a best ideas of the year booklet and include everyones picture, name
and description of their best ideas.
Feature the quality team of the month and put their picture in a prominent place.
Honour peers, who have helped you by recognizing them at your (or their) staff
meetings.
Let people attend meetings, committees, etc. in your place when youre not
available.
Create a visibility wall to display information, posters, pictures, thanking
individual employees and their teams, and describing their contributions.
Take interest in employees development and set up appropriate training and
experience to build on their initiatives.
Get your teams pictures in the company newspaper newsletter.
Ask people to help you with a project you consider to be especially difficult but
which provides real challenge.
Send a team to special seminars, workshops or meetings, outside that cover
topics they are especially interested in.
Promote, or nominate for promotion, those people who contribute most to
improvement over a period of time.
Standard provide a clear definition and exception for customer management and
employees, except for the standard/regulation connected with safety and health
of the customer using the services. Quality of life can be obtained by focusing
on principle. We must realise that we do not control authority but our principal
do. Yes we can control our action but not the consequences of our action.
Building of character and creating quality of life is a function of aligning. Our
belief and behavior must be in concurrence with universal principle. These
principles are impartial, external, factual, objective and self-evident.

As human being we have four unique endowments i.e. self-awareness,

conscience. Independent and creative imagination. We must nurture these four
endowments by following ways:-
A daily in-depth analysis and evaluation of our expression enhance a
endowments and create synergy among them.
Educate your conscience by learning, listening and responding.
Have a high trust, culture by avoiding lies, cover up, game playing, backroom
manipulation and bad mouthing.
A life of total integrity is the only one worth striving for granted. It is a struggle.
Nurture independent will by making and keeping promise .To build national
integrity, start by making and keeping small promises, slowely go ahead.
Develop creative imagination through utilisation, visualization in a high
leverage mental exercise.

SEVEN HABITS OF HIGHLY EFFECTIVE PEOPLE.

1. Proactive, responsible. Acceptance Pro-active leaders and employees

accept responsibility for their own behavior without blaming and accusing
others. They act according to values and principles they identify and
commit to live by; and focus on their circle of influence, wherein they can
make a difference, as opposed to spending time in their circle of concern,
where they have little ability to contribute. When they are involved in
change, proactive leaders share their own responsibilities and while working
within their circle of influence make efforts to fulfill them. They dont pass
the buck and point fingers.
2. Security through shared mission, vision, principle, and values Security lies
in the clearly identifiable mission, vision and principles that are constantly
reflected in the behavior of leaders and managers. Employees place
throughout the organisation. When people feel secure in the mission and
principles of the organisation, they feel less threatened and, thus, offer less
resistance to change in structure and systems.
3. Prioritized joint commitments It is important for people not only to
understand the mission, vision, principles, and values of the organisation,
but also to understand and share through involvement and commitment in its
strategic action plans. The difference is the understanding that strategy will
change with the changing environment and internal resources, while core
mission and principles will be more constant and stable.
4. The paradigm of mutual benefits-Trust is built when people see by constant
practice that leaders seek mutual benefit for employees and other key
stakeholders in all their quality change decisions and initiatives. True win-
win thinking requires seeking to understand needs and wants of stakeholders
and synergistic creation of their alternatives that cooperatively balance
competing needs and scarce resources.
5. First understand and then be understood- Central to effective change based
on win-win thinking is the constant opinion of two-way communication
between all participants in the organisation through a stakeholders
information system (SIS). This two-way communication process includes:
- Management with employees.
- Upper management with middle management.
- Departments and divisions with each other.
- Headquarters with the field.
- The main organisation with external stakeholders and external
stakeholders with each other.
6. Constant synergistic dialogue Through constant synergistic dialogue, the
creative capabilities of the organisation are unleashed through the
involvement of all appropriate parties to:
- Assess and evaluate organizational strengths, weaknesses,
opportunities, and threats pertaining to meeting stakeholders
needs.
- Develop and implement solutions addressing any and all of
them.
7. Continuous personal and organizational improvement Continuous
improvement means continuous change. When people within organizations
commit to the principle that the status quo means continued innovation and
progress, they reduce resistance to change and look forward to making the
 next series of structural and process improvements even more significantly
effective.
As with any complex ecosystem, organizational effectiveness and quality
comes through balance. Change for the sake of change alone, and change so
frequent that it becomes disruptive, uneconomical, and inefficient as well as
ineffective, does not constitute quality. Leaders must never be afraid to institute
change.
Developing quality culture in an organisation.
Culture is not a technocratic but a behavioral issue. There are however
approaches that provide a path towards quality culture. Quality problems are
mostly related with management. Culture issue apply to all levels upper
management, middle management, supervisors, technical specialist, and the
workforce..
Organisation culture can be changed. We need to provide awareness of quality
by evidence of upper management leadership, self-developments.
empowerments, participation, recognition, and regards. To change culture it
requires a year not month, to change quality, requires trust not techniques.
STEPS FOR CREATING QUALITY CULTURE IN AN ORGANISATION.
Managements thoughts and actions towards delivery its customers.
Removing organizational boundaries and internal competition.
Using fact based decision-making.
Continuous improvement must be encouraged. (Use of KAIZEN).
Do not use specially designed organizational structure for maintaining total
quality.
A condition strives for attaining a world-class label is the need of the hour for
Indian companies. They must follow the seven quality maturity phases for
achieving the accelerated improvement.
 LESSON-4

ILLUSTRATIONS ON HR DIMENSIONS DRAWN FROM CMM

The Capability Maturity Model This Model is an organizational model that

describes 5 evolutionary stages (levels) in which an organization, manages its
process and system for its development and growth.
CMM describes 5 evolutionary stages in which an organization manages its
processes. The though behind the Capability Maturity Model, origin should be
able to absorb and carry its software applications. The model also provides
specific steps and activities to get from one level to the next.
The 5 stages of the Capability Maturity model are:
1. Initial (processes are ad-hoc, chaotic, or actually few processes are
defined)
2. Repeatable(basic processes are established and there is a level of
discipline to stick to these processes)
3. Defined (all processes are defined, documented, standardized and
integrated into each other)
4. Managed(processes are measured by collecting detailed data on the
processes and their quality)
5. Optimizing(continuous process improvement is adopted and in place be
quantitative feedback and from piloting new ideas ands technologies)

The Capability Maturity Model is useful not only for software development, but
also for describing evolutionary levels of organizations in general that an
organization has realized or wants to aim for.
CONCEPT OF SIX SIGMA FOR DEVELOPMENT AN GROTH FOR AN
ORGANIZATION
It is not a secret society, a slogan or a clich. Six Sigma is process that helps
organizations focus on developing and delivering near-perf services. Why
Sigma? The word is a statistical term that measures how far a deviates from
perfection. The central idea behind Six Sigma is that if you can defects you
have in a process, you can systematically figure out how to elimi close to zero
defects as possible. Six Sigma has changed the DNA of may now the way they
work..
Six Sigma incorporates the basic principles and techniques used in Business,
Statistics, and Engineering. These three form the core elements of Six Sigma.
Six Sigma improves the process performance, decreases variation and maintains
consistent quality of the process output. This leads to defect reduction and
improvement in profits, product quality and customer satisfaction.
Six Sigma stands for Six Standard Deviations (Sigma is the Greek letter used to
represent standard deviation in statistics) from mean. Six Sigma methodologies
provide the techniques and tolls to improve the capability and reduce the defects
in any process.
Six Sigma methodologies improve any existing business process by constantly
reviewing and re-tuning the process. To achieve this, Six Sigma uses a
methodology known as DMAIC (Define opportunities, Measure performance,
Analyze opportunity, Improve performance, Control performance.). Six Sigma
methodologies is also used in many Business Process Management initiatives
these days. These Business Process Management initiatives are not necessarily
related to manufacturing. Many of the Business Process Management that use
Six Sigma in todays world includes call centers, customer support, supply chain
management and project management.
The Six Sigma Tool Box is a comprehensive self-help set of Documents to a
system under various conditions. It covers fundamentals and provide specific
service and process with individual needs and goals. To achieve Six Sigma
quality, a process must produce no more than 3.4 defect opportunities. An
opportunity: is defined as a chance for nonconformance, or required
specifications. This means organizations need to be nearly flawless in
processes. Six Sigma is a vision many organizations strive toward and a philos
their business culture. At its core, Six Sigma revolves around a few key
concepts.
Critical to Quality: Attributes most important to the customer
Defect: Failing to deliver what the customer wants
Process Capability: What your process can deliver
Variation: What the customer sees and feels
Stable Operations: Ensuring consistent, predictable processes to improve sees
and feels
Design for six sigma: Designing to meet customer needs and Process cap

THE SIX SIGMA - A COMPLETE PACKAGE ARE AS UNDER

Fact Sheet Six Sigma in a nutshell. This is a simple, concise overview

phrases, and concepts and basic activities are summarized.
Overview Document This document can be used to start discussion a explains
key concepts and touches on training elements required. It is Fact Sheet, but
still easy and quick to take in.
Building a Six-Sigma organization A document that pulls no punches
commitment and skills needed to ensure a successful initiative.
Defining Requirements One of the most important aspects in under initiative
is to understand what the requirements for the initiative are. They helps the
organization to define its service requirements for any improve only can this
document be used to collect thoughts on what is required. It can similarly be
used for other initiatives in HR, it and other business.
Reviewing Questions:
1.What do you mean by industrial restructuring? What are the important
postulates for implementing restructuring?
2.Please explain core principles of business restructuring in details?
3. What are the advantages of industrial restructuring? Explain important
guidelines for effective restructuring.
4.What is the objective of rewards system? Pl explain the principles for
evaluation of reward system.
5.What is ISO 9000? Explain its main elements in brief.
6 Pl explain seven habits for an effective people.
7.Pl explains different roles features of a leader in the present scinero.
8.How you will create quality culture in an organisation? Pl explains steps in
development of quality culture in the organisation.
9.How you will maintain quality standard in the organisation? Pl explains
different dimentations of it.
10.Explain six-sigma approach for development and growth for an organisation.
 Unit V

QUALITY PERFORMANCE MANAGEMENT

Indian and Western thought in a Market era;

Performance Management from the writings of Sri Aurobindo and
the Mother;
Integrated Studies Dealing with Methods, Techniques and Processes.

Objectives:
In this section, we will introduce you to the concept of Performance
Management, its role in the context of globalisation, Perspectives of Sri
Aurobindo and the Mother on Quality of Performance. Studies on Methods,
Techniques and process of performance appraisal are also reviewed. This
section is a practical extension of earlier sections. After you work out this
Section, you should be able to:
Understand the concept of Performance Management at individual and
Organisation level.
Evolve Prescription for effective performance management.
Review the writings of Sri Aurobindo and the Mother on Quality
Performance Management based on the nature of body, mind and
intellect.
Explain steps to be followed when developing an appraisal system.
Describe the process of implementing an effective appraisal feed back
system and administrative issues involved in it.
In this Section, we have discussed the following:
Performance Management and Appraisal System in changing economic
scenario.
 Sri Aurobindo and the Mothers Writings on Quality Performance
Management.
The Methods, Techniques and the Process of Performance Appraisal
System and the feed back mechanism.

Part - I

HOW DO WE DEFINE PERFORMANCE AND

WHY DO WE MEASURE IT?

Despite the importance of performance appraisal, few organizations clearly

define what it is they are trying to measure. In order to design a system for
appraising performance, it is important to first define what is meant by the term
work performance. Although a persons job performance depends on some
combination of ability, effort, and opportunity, it can be measured in terms of
outcomes or results produced. Performance is defined as the record of outcomes
produced on specified job functions or activities during a specified time period.
For example, a trainer working for the World Bank was evaluated on her
organization of presentations, which was defined as the presentation of
training material in a logical and methodical order. The extent to which she
was able to make such methodical presentations would be one measure of
outcomes related to that function. Those outcomes were evaluated by the
customers who receive the training.
Obviously a sales representative would have some measure of actual sales as an
outcome for a primary function of that job. Customer service is a likely
candidate as another important function that would have very different outcome
measures for defining performance. College professors are typically evaluated
on three general work functions: teaching, research, and service. Performance in
each of these three areas is defined with different outcome measures. Students
are obviously one source of data to evaluate the quality of the teaching.
Performance on the job as a whole would be equal to the sum (or average) of
performance on the major job functions or activities. For example, the World
Bank identified eight job functions for their trainers (e.g. use of relevant
examples, participant involvement, evaluation procedures). The functions have
to do with the work that is performed and not the characteristics of the person
performing. Unfortunately, many performance appraisal systems confuse
measures of performance with measures, traits, or competencies of the person.
Prescriptions for Effective Performance Management
1. Strive for as much precision in defining and measuring performance
dimensions as is feasible.
Define performance with a focus on valued outcomes.
Outcome measures can be defined in terms of relative frequencies of
behavior.
Define performance dimensions by combining functions with aspects of
value (e.g., quantity, quality, timeliness).
2. Link performance dimensions to meeting internal and external customer
requirements.
Internal customer definitions of performance should be linked to external
customer satisfaction.
3. Incorporate the measurement of situational constraints.
Focus attention on perceived constraints on performance.
Designing an appraisal System:
Appraisal can be either person-oriented (focusing on the person who performed
the behavior) or work-oriented (focusing on the record of outcomes that the
person achieved on the job). Effective performance appraisal focuses on the
record of outcomes and, in particular, outcomes directly linked on an
organizations mission and objectives. Some Sheraton Hotels offer 25-minute
room service or the meal is free. Sheraton employees who are directly related to
room service are appraised on the record of outcomes specially related to this
service guarantee. Lenscrafters guarantees new glasses in 60 minutes or theyre
free. Individual and unit performance are measured by the average time taken to
get the new glasses in the customers hands. These are outcomes. In general,
personal traits (e.g., dependability, integrity, perseverance, loyalty) should not
be used when evaluating performance since they are not measures of actual
performance. They may be correlates or predictors of performance but they are
not measures of performance.
There are six categories of outcomes by which the value of performance in any
work activity or work function may be assessed. Although all of these criteria
may not be relevant to every job activity or job function, a subset of them will
be. It is also important for organizations to recognize the relationships among
the criteria. For example, sometimes managers encourage employees to push
for quantity, without recognizing that quality may suffer or that co-workers
might be affected. Likewise, they may focus on quality without emphasizing
timeliness, cost effectiveness, or interpersonal impact.
The Six Primary Criteria on Which the Value of Performance May Be Assessed
1. Quality: The degree to which the process or result of carrying out an
activity approaches perfection, in terms of either conforming to some
ideal way of performing the activity or fulfilling the activitys intended
purpose.
2. Quantity: The amount produced, expressed in such terms as dollar value,
number of units, or number of completed activity cycles.

3. Timeliness: The degree to which an activity is completed, or a result

produced, at the earliest time desirable from the standpoints of both
 coordinating with the outputs of others and maximizing the time
available for other activities.
4. Cost-effectiveness: The degree to which the use of the organizations
sources (e.g., human, monetary, technological, material) is maximized in
the sense of getting the highest gain or reduction in loss from each unit
or instance of use of a resource.
5. Need for supervision: The degree to which a performer can carry out a
job function without either having to request supervisory assistance or
requiring supervisory intervention to prevent an adverse outcome.
6. Interpersonal impact: The degree to which a performer promotes feelings
of self-esteem, goodwill, and cooperativeness among coworkers and
subordinates.
Quality Performance in the Market era:
We may include contextual or citizenship performance in the interpersonal
impact category or outcomes. A good organizational citizen is an employee
who contributes beyond the formal role expectations of a job as might be
detailed in a job description. Such employees are positively disposed to take on
alternative job assignments, respond cheerfully to requests for assistance from
others, are interpersonally tactful, arrive to work on time, and often may stay
later than required to complete a task. Contextual performance operates to
either support or inhibit technical production and can facilitate their translation
into individual-, group-, and system level outcomes.
Contextual performance contributions such as mentoring, facilitating a pleasant
work environment, and compliance with organizational and subunit policies and
procedures may have implications for several of the other outcome categories as
well. If performance is defined at a more specific task or activity level,
contextual performance also could be represented in the description of the
function itself and combined with one or more of the value criteria (e.g., quality,
quantity). For example, one model of citizenship performance includes
personal support as a dimension and defines it by such behaviors as helping
others by offering suggestions, teaching useful knowledge or skills, and
providing emotional support for their personal problems. We could certainly
define outcomes in these areas according to quantity and quality values (e.g.,
how often is emotional support offered; how good was it?).
Measuring Overall Performance
While an overall rating approach where the rater does not distinguish among the
criteria is surely faster than making assessments on separate criteria, the major
drawback is that it requires raters to simultaneously consider as many as six
different aspects of value and to mentally compute their average. The probable
result of all this subjective reasoning may be less accurate ratings than those
done on each relevant criterion for each job activity and less specific feedback to
the performer. In general, the greater the specificity in the content of the
appraisal, the more effective the appraisal system regardless of the purpose for
the appraisal system.
Performance Management and Compensation
The information collected from performance measurement is most widely used
for compensation, performance improvement or management, and
documentation. As we discussed in previous chapters, performance data also
are used for staffing decisions (e.g. promotion, transfer, discharge, layoffs),
training needs analysis, employee development, and research and program
evaluation.
Performance appraisal information may be used by supervisors to manage the
performance of their employees. Appraisal data can reveal employees
performance weaknesses, which managers can refer to when setting goals or
target levels for improvements. Performance management programs may be
focused at one or more of the following organizational levels: individual
performers, work groups or organizational subunits, or the entire organization.
Data on performance should be collected at the appropriate level and over time
to indicate trends.
To motivate employees to improve their performance and achieve their target
goals, supervisors can use incentives such as pay-for-performance programs
(e.g., merit pay, incentives, bonus awards). One of the strongest trends in the
market era is toward some form of pay-for-performance (PFP) system.
Obviously, effective performance measurement is critical for PFP systems to
work.
Internal Staffing
Performance appraisal information also is used to make staffing decisions.
Many organizations rely on performance appraisal data to decide which
employees to move upwards (promote) to fill openings and which employees to
retain as a part of rightsizing effort.
One problem with relying on performance appraisal information to make
decisions about job movements is that employee performance is only measured
for the current job. If the job at the higher, lateral, or lower level is different
from the employees current job, then it may be difficult to estimate how the
employee will perform on the new job. Consequently, organizations have
resorted to using assessment procedures in addition to appraisal data to make
staffing decisions. These assessment methods include assessment centers,
testing, work samples, and interviews.
Training Needs Analysis
Most firms use appraisal data to determine employees needs for training or
development. Hundreds of companies, including Microsoft, IBM, and Merck,
now use multisource raters (e.g., subordinates, peers, clients) to evaluate their
supervisors or managers. The results are revealed to each manager with
suggestions for specific training and development (if needed). Honeywell, for
example, has specific training modules based on appraisal ratings for several job
functions.
Research and Evaluation
Appraisal data also can be used to determine whether various human resource
programs (e.g., selection, training) are effective. For example, when Toledo,
Ohio, wanted to know whether their police officer selection test was valid, they
collected performance appraisal data on officers who had taken the test when
they were hired so that test scores could be correlated with job performance.
Part II

WRITING OF SRI AUROBINDO AND THE MOTHER:

Supramental Consciousness

There is an ascending evolution in nature which goes from the stone to the plant,
from the plant to the animal, from the animal to man. Because man is, for the
moment, the last rung at the summit of the ascending evolution, he considers
himself as the final stage in this ascension and believes there can be nothing on
earth superior to him. In that he is mistaken. In his physical nature he is yet
almost wholly an animal, a thinking and speaking and animal, but still an animal
in his material habits and instincts. Undoubtedly, nature cannot be satisfied with
such an imperfect result; she endeavours to bring out a being who will be to man
what man is to the animal, a being who will remain a man in its external form,
and yet whose consciousness will rise far above the mental and its slavery to
ignorance.
Sri Aurobindo came upon earth to teach this truth to men. He told them that
man is only a transitional being living in a mental consciousness, but with the
possibility of acquiring a new consciousness, the Truth-consciousness, and
capable of living a life perfectly harmonious, good and beautiful, happy and
fully conscious. During the whole of his life upon earth, Sri Aurobindo gave all
his time to establish in himself this consciousness which he called supramental,
and to help those gathered around him to realize it.
India has seen always in man the individual a soul, a portion of the Divinity
enwrapped in mind and body, a conscious manifestation in Nature of the
universal self and spirit. Always she has distinguished and cultivated in him a
mental, an intellectual, an ethical, dynamic and practical, an aesthetic and
hedonistic, a vital and physical being, but all these have been seen as powers of
a soul that manifests through them and grows with their growth, and yet they are
not all the soul, because at the summit of its ascent it arises to something greater
than them all, into a spiritual being, and it is in this that she has found the
supreme manifestation of the soul of man and his ultimate divine manhood, his
paramartha and highest purusartha. And similarly India has not understood by
the nation or people an organised State or an armed and efficient community
well prepared for the struggle of life and putting all at the service of the national
ego, - that is only the disguise of iron armour which masks and encumbers the
national Purusha, - but a great communal soul and life that has appeared in the
whole and has manifested a nature of its own and a law of that nature, a
Swabhava and Swadharma, and embodied it in its intellectual, aesthetic, ethical,
dynamic, social and political forms and culture. An equally then our cultural
conception of humanity must be in accordance with her ancient vision of the
universal manifesting in the human race, evolving through life and mind but
with a high ultimate spiritual aim, - it must be the idea of the spirit, the soul of
humanity advancing through struggle and concert towards oneness, increasing
its experience and maintaining a needed diversity through the varied culture and
life motives of its many peoples, searching for perfection through the
development of the powers of the individual and his progress towards a diviner
being and life, but feeling out too though more slowly after a similar
perfectibility in the life of the race. It may be disputed whether this is a true
account of the human or the national being, but if it is once admitted as a true
description, then it should be clear that the only true education will be that
which will be an instrument for this real working of the spirit in the mind and
body of the individual and the nation. That is the principle on which we must
build, that the central motive and the guiding ideal. It must be an education that
for the individual will make its one central object the growth of the soul and its
powers and possibilities, for the nation will keep first in view the preservation,
strengthening and enrichment of the nation-soul and its Dharma and raise both
into powers of the life and ascending mind and soul of humanity. And at no
time will it lose sight of mans highest object, the awakening and development
of his spiritual being.
Self-Assessment Question:
Compare and contrast the sense of achievement between Indian and Western
thought?
___________________________________________________
___________________________________________________
___________________________________________________
___________________________________________________

THE POWERS OF THE MIND

The instrument of the educationist is the mind or antahkarana, which consists of
four layers. The reservoir of past mental impressions, the citta or storehouse of
memory, which must be distinguished from the specific act of memory, is the
foundation on which all the over layers stand. All experience lies within us as
passive or potential memory; active memory selects and takes what it requires
from that storehouse. But the active memory is like a man searching among a
great mass of locked-up material; sometimes he cannot find what he wants;
often in his rapid search he stumbles across many things for which he has no
immediate need; often too he blunders and thinks he has found the real thing
when it is something else, irrelevant if not valueless, on which he has laid his
hand. The passive memory or citta needs no training, it is automatic and
naturally sufficient to its task; there is not the slightest object of knowledge
coming within its field which is not secured, placed and faultlessly preserved in
that admirable receptacle. It is the active memory, a higher but less perfectly
developed function, which is in need of improvement.
The second layer is the mind proper or manas, the sixth sense of our Indian
psychology, in which all the others are gathered up. The function of the mind is
to receive the images of things translated into sight, sound, smell, taste and
touch, the five senses and translate these again into though-sensations. It
receives also images of its own direct grasping and forms them into mental
impressions. These sensations and impressions are the material of thought, not
thought itself; but it is exceedingly important that thought should work on
sufficient and perfect material. It is, therefore, the first business of the
educationist to develop in the child the right use of the six senses; to see that
they are not stunted or injured by disuse, but trained by the child himself under
the teachers direction to that perfect accuracy and keen subtle sensitiveness of
which they are capable. In addition, whatever assistance can be gained by the
organs of action, should be thoroughly employed. The hand, for instance,
should be trained to reproduce what the eye sees and the mind senses. The
speech should be trained to a perfect expression of the knowledge which the
whole antahkarana possesses.
The third layer is the intellect or buddhi, which is the real instrument of thought
and that which orders and disposes of the knowledge acquired by the other parts
of the machine. For the purpose of the educationist this is infinitely the most
important of the three I have named. The intellect is an organ composed of
several groups of functions, divisible into two important classes, the functions
and faculties of the right-hand, the functions and faculties of the left-hand. The
faculties of the right-hand are comprehensive, creative and synthetic; the
faculties of the left-hand critical and analytic. To the right-hand belong
judgment, imagination, memory, observation; to the left-hand comparison and
reasoning. The critical faculties distinguish, compare, classify, generalise,
deduce, infer, conclude; they are the component parts of the logical reason. The
right-hand faculties comprehend, command, judge in their own right, grasp, hold
and manipulate. The right-hand mind is the master of the knowledge, the left-
hand its servant. The left-hand touches only the body of knowledge, the right-
hand penetrates its soul. The left-hand limits itself to ascertained truth, the
right-hand grasps that which is still elusive or unascertained. Both are essential
to the completeness of the human reason. These important functions of the
machine have all to be raised to their highest and finest working-power, if the
education of the child is not to be imperfect and one-sided.
There is a fourth layer of faculty which, not as yet entirely developed in man, is
attaining gradually to a wider development and more perfect evolution. The
powers peculiar to this highest stratum of knowledge are chiefly known to us
from the phenomena of genius, - sovereign discernment, intuitive perception of
truth, plenary inspiration of speech, direct vision of knowledge to an extent often
amounting to revelation, making a man a prophet of truth. These powers are
rare in their higher development, though many possess them imperfectly or by
flashes. They are still greatly distrusted by the critical reason of mankind
because of the admixture of error, caprice and a biased imagination which
obstructs and distorts their perfect workings. Yet it is clear that humanity could
not have advanced to its present stage if it had not been for the help of these
faculties, and it is a question with which educationists have not yet grappled,
what is to be done with this mighty and baffling element, the element of genius
in the pupil. The more instructor does his best to discourage and stifle genius,
the more liberal teacher welcomes it. Faculties so important to humanity cannot
be left out of our consideration. It is foolish to neglect them. Their imperfect
development must be perfected, the admixture of error, caprice and biased
fancifulness must be carefully and wisely removed. But the teacher cannot do it;
he would eradicate the good corn as well as the tares if he interfered. Here, as in
all educational operations, he can only put the growing soul into the way of its
own perfection.
THE EDUCATION OF THE VITAL:
The Indian and Western Thought:
Of all education, the education of the vital is perhaps the most important and the
most indispensable. Yet it is rarely taken up and followed with understanding
and method. There are several reasons for this: first, human thinking is in a
great confusion over what concerns this particular subject; secondly, the
enterprise is very difficult and to be successful in it one must have endurance,
endless persistence and an inflexible will.
Indeed, the vital in mans nature is a despotic and exacting tyrant. Moreover,
since it holds within itself power, energy, enthusiasm, effective dynamism,
many have a feeling of timorous respect for it and try always to please it. But it
is a master that is satisfied by nothing and its demands have no limit. Two
ideas, very widespread, specially in the West, contribute towards making its
domination ever more masterful. One is that the goal of life is to be happy; the
other that you are born with a certain character and it is impossible to change it.
The first idea is a childish deformation of a very profound truth: it is that
all existence is based upon the delight of being and without the delight of being
there would be no life. But this delight of being, which is a quality of the Divine
and therefore unconditioned, must not be confused with the pursuit of pleasure
in life, for that depends largely upon circumstances. The conviction that makes
one believe that one has the right to be happy leads, as a matter of course,
towards the will to live ones life at any cost. This attitude in its obscure and
aggressive egoism brings about every conflict and misery, deception and
discouragement, ending often in a catastrophe.
In the world, as it actually is, the goal of life is not to secure personal happiness,
but to awaken the individual progressively towards the Truth-consciousness.
The second idea arises from the fact that a fundamental change in
character needs an almost complete mastery over the subconscient and a very
rigorous disciplining of whatever comes up from the inconscient, which in
ordinary natures, is an expression of the consequences of atavism and of the
environment in which one is born. Only an almost abnormal growth of
consciousness and the constant help of Grace can achieve this Herculean task.
Besides, this task has rarely been attempted; many famous teachers have
declared it unreliable and chimerical. Yet it is not unrealiable. The
transformation of character has been realised in fact by means of a clear-sighted
discipline and a persevence so obstinate that nothing, not even the most
persistent failures, can discourage it.
The indispensable starting-point is a detailed and discerning observation of the
character to be transformed. In most cases, that itself is a difficult and often
baffling task. But there is one fact which the old traditions knew and which can
serve as the clew in the labyrinth of inner discovery. It is that everyone
possesses in a large measure, and the exceptional individual in an increasing
degree of precision, two opposite tendencies in the character, almost in equal
proportions, which are like the light and the shadow of the same thing. Thus a
man who has the capacity of being exceptionally generous suddenly finds
rushing up in his nature an obstinate avarice; the courageous is somewhere a
coward and the good suddenly have wicked impulses.
Life seems to endow everyone, along with the possibility of expressing an ideal,
with contrary elements representing in a concrete manner the battle he has to
wage and the victory he has to win so that the realisation may be possible. In
this way, all life is an education carried on more or less consciously, more or
less deliberately. In certain cases this education helps the movements expressing
the light, in others the opposite movements i.e., those that express the shadow.
If the circumstances and the environment are favourable, the light will grow at
the expense of the shadow; otherwise the contrary will happen.
Hence the individuals character will crystallise according to the caprice of
nature and the determinism of a material and vital life, unless there is a luminous
intervention of a higher element, a conscious will which will not let nature
follow its whimsical procedure but replace it by a logical and clear-seeing
discipline. This conscious will is what we mean by the rational method of
education.
The education of the vital has two principal aspects, very different as to the goal
and the process, but both are equally important. The first is to develop and
utilise the sense organs, the second is to become conscious and gradually master
of ones character and in the end to achieve its transformation.
The education of the senses, again, has several aspects, adding to each other as
the being grows: indeed this education should not stop at all. This sense organs
may be so cultivated as to attain a precision and power in their functioning far
greater than what is normally expected of them.
Some ancient mystic knowledge declared that the number of senses that man can
develop is not five but seven and in certain special cases even twelve. Certain
races at certain epochs have, through necessity, developed more or less perfectly
one or the other of these supplementary senses. With a proper discipline
persistently gone through, they are within the reach of all who are sincerely
interested in their culture and its results. Among the many faculties that are
often spoken of, there is, for example, this one: to widen the physical
consciousness, project it out of oneself so as to concentrate on a definite point
and thus get the sight, hearing, smell, taste and even the touch at a distance.
To this general education of the senses and their action there will be added, as
early as possible, the cultivation of discrimination and the aesthetic sense, the
capacity to choose and take up what is beautiful and harmonious, simple,
healthy and pure. For, there is a psychological health even as there is a physical
health; there is a beauty and harmony of the sensations, even as there is a beauty
of the body and its movements.
As the capacity of understanding grows in the child he should be taught, in the
course of his education, to add artistic taste and refinement to power and
precision. He must be shown, made to appreciate, taught to love beautiful, lofty,
healthy and noble things, whether in nature or in human creation. It must be a
true aesthetic culture and it will save him from degrading influences. For in the
wake of the last wars and the terrible nervous tension which they provoked, as a
sign, perhaps, of the decline of civilisation and decomposition of society, has
come a growing vulgarity which seems to have taken possession of human life,
individual as well as collective, particularly on the level of aesthetic life and the
life of the senses. A methodical and enlightened cultivation of the senses can,
little by little, remove from the child whatever is vulgar, commonplace and
crude in him through contagion: this education will have happy reactions even
on his character. For one who has developed a truly refined taste, will feel,
because of this very refinement, incapable of acting in a crude, brutal or vulgar
manner. This refinement, if it is sincere, will bring to the being a nobility and
generosity which will spontaneously find expression in his behaviour and will
keep him away from many base and perverse movements.
And this brings us naturally to the second aspect of vital education, i.e., that
which concerns character and its transformation.
Generally, systems of discipline dealing with the vital, its purification and its
mastery proceed by coercion, suppression, abstinence and asceticism. The
procedure is certainly easier and quicker although, in a deeper way, less
enduring and effective than that of strict and detailed education. Besides, it
eliminates all possibility of the intervention, help and collaboration of the vital.
However, this help is of the utmost importance if one wishes to have an all-
round growth of the individual and his activity.
To become conscious of the many movements in oneself and take note of what
one does and why one does it, is the indispensable starting-point. The child
must be taught to observe himself, to note his reactions and impulses and their
causes, to become a clear-sighted witness of his desires, his movements of
violence and passion, his instincts of possession and appropriation and
domination and the back-ground of vanity against which they stand with their
counterparts of weakness, discouragement, depression and despair.
Evidently, the process would be useful only when along with the growth of the
power of observation there grows also the will towards progress and perfection.
This will is to be instilled into the child as soon as he is capable of having one,
that is to say, at a much younger age than is usually believed.
There are different methods according to different cases for awakening this will
to surmount and conquer: on certain individuals it is rational arguments that are
effective, for others sentiment and goodwill are to be brought into play, in others
again it is the sense of dignity and self-respect; for all, however, it is the
example shown constantly and sincerely that is the most powerful means.
Once the resolution is firmly established, there is nothing more to do than to
proceed with strictness and persistence, never to accept defeat as final. If you
are to avoid all weakening and withdrawing, there is one important point you
must know and never forget: the will can be cultivated and developed even like
the muscles by methodical and progressive exercise.
You must not shrink from demanding of your will the maximum effort even for
a thing that appears to be of no importance; for it is by effort that capacity
grows, acquiring little by little the power to apply itself even to the most
difficult things. What you have decided to do, you must do, come what may,
even if you have to begin your attempt over and over again any number of times.
Your will be strengthened by the effort, and in the end you will have nothing
more to do than to choose with a clear vision the goal to which you will apply it.
To sum up: one must gain a full knowledge of ones character and then acquire
control over ones movements so that one may achieve perfect mastery and
transformation of all the elements that have to be transformed.
Now, all will depend upon the ideal which the effort for mastery and
transformation seeks to achieve. The value of the effort and its result will
depend upon the value of the ideal. This is the subject we shall deal with next,
in connection with mental education.
Activity:
Sri Aurobindos concept of education and its roll in enhancing quality of
performance at individual and organisation level:
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THE MOTHERS FOUR AUSTERITIES AND FOUR LIBERATIONS
To pursue an integral education that leads to the supramental realisation a
fourfold austerity is necessary and also a fourfold liberation.
Austerity is usually confused with mortification. When austerity is spoken of,
one thinks of the discipline of the ascetic who seeks to avoid the arduous task of
spiritualising the physical, vital and mental life and therefore declares it
incapable of transformation and casts it away without pity as a useless burden, a
bondage fettering all spiritual progress; in any case, it is considered as a thing
that cannot be mended, a load that has to be borne more or less cheerfully until
the time when Nature or the Divine Grace relieves you of it by death. At best
life on earth is a field for progress and one should try to get the utmost profit out
of it, all the sooner to reach that degree of perfection, which will put an end to
the trial by making it unnecessary.
For us the problem is quite different. Life on earth is not a passage nor a means
merely; it must become, through transformation, a goal, a realisation. When we
speak of austerity, it is not out of contempt for the body, with a view to
dissociating ourselves from it, but because of the need of self-control and self-
mastery. For, there is an austerity which is far greater, more complete and more
difficult than all the austerities of the ascetic: the austerity necessary for the
integral transformation, the fourfold austerity which prepares the individual for
the manifestation of the supramental truth. One can say, for example, that few
austerities are so severe as those which physical culture demands for the
perfection of the body. But of that we shall speak in due time.
Before I begin describing the four kinds of austerity required, I must clear up
one question which is a source of much misunderstanding and confusion in the
minds of most people: it is about ascetic practices which they mistake for
spiritual discipline.
Now, these practices consist in ill-treating the body so that one may, as it is said,
free the spirit from it; they are, in fact, a sensual deformation of spiritual
discipline; it is a kind of perverse need for suffering that drives the ascetic to
self-mortification. The Sadhus bed of nails and the Christian anchorites
whip and sack-cloth are the results of a sadism, more or less veiled, unavowed
and unavowable; it is an unhealthy seeking or a subconscient need for violent
sensations. In reality these things are very far from the spiritual life; for they are
ugly and low, dark and diseased; spiritual life, on the contrary, is a life of light
and balance, beauty and joy. They have been invented and extolled by a sort of
mental and vital cruelty inflicted on the body. But cruelty, even with regard to
ones own body, is none the less cruelty, and all cruelty is a sign of great
unconsciousness.
Unconscious natures need very strong sensations; for without that they feel
nothing; and cruelty, being a form of sadism, brings very strong sensations. The
avowed purpose of such practices is to abolish all sensation so that the body may
no longer be an obstacle to ones flight towards the Spirit; the efficacy of such
means is open to doubt. It is a well-known fact that if one wants quick progress
one must not be afraid of difficulties; on the contrary, it is by choosing to do the
difficult thing each time the occasion presents itself that one increases the will
and strengthens the nerves. Indeed, it is much more difficult to lead a life of
measure and balance, equanimity and serenity than to fight the abuses of
pleasure and the obscuration they cause, by the abuses of asceticism and the
disintegration they bring about. It is much more difficult to secure a harmonious
and progressive growth in calmness and simplicity in ones physical being than
to ill-treat it to the point of reducing it to nothing.
It is much more difficult to live soberly and without desire than to deprive the
body of nourishment and clean habits so indispensable to it, just to show off
proudly ones abstinence. It is much more difficult again to avoid, surmount or
conquer illness by an inner and outer harmony, purity and balance than to
despise and ignore it, leaving it free do its work of ruin. And the most difficult
thing of all is to maintain the consciousness always on the peak of its capacity
and never allow the body to act under the influence of a lower impulse.
It is with this end in view that we should adopt the four austerities which will
result in the four liberations. Their practice will constitute the fourfold
discipline or Tapasya which can be thus defined:

(1) Tapasya of Love.

(2) Tapasya of Knowledge.
(3) Tapasya of Power.
(4) Tapasya of Beauty.

The gradation is, so to say, from above downwards; but the steps, as they stand,
should not be taken to mean anything superior or inferior, nor more or less
difficult nor the order in which these disciplines can be and should be followed.
The order, importance, difficulty vary according to the individual and no
absolute rule can be framed. Each one should find and work out his own
system, according to his capacity and personal needs.
Only an overall view will be given here presenting an ideal procedure that is as
complete as possible. Everyone will then have to apply it as far as he can and as
best be can.
The Tapasya or discipline of beauty will take us through the austerity of
physical life, to freedom in action. The basic programme will be to build a
body, beautiful in form, harmonious in posture, supple and agile in its
movements, powerful in its activities and resistant in its health and organic
function.
To get these results it will be good, in a general way, to form habits and utilise
them as a help in organising the material life. For the body works more easily in
a frame of regular routine. Yet one must know how not to become a slave to
ones habits, however good they may be. The greatest suppleness must be
maintained so that one may change ones habits each time it is necessary to do
so.
One must build up nerves of steel in a system of elastic and strong muscles, so
that one is capable of enduring anything whenever it is indispensable. But at the
same time care must be taken not to ask of the body more than the strictly
necessary amount of effort, the energy required for growth and progress, and
shut out most strictly all that produces exhausting fatigue and leads in the end to
degeneration and decomposition of the material elements.
Physical culture which aims at building a body capable of serving as a fit
instrument for the higher consciousness demands very austere habits: a great
regularity in sleep, food, physical exercises and in all activities. One should
study scrupulously the needs of ones body for these vary according to
individuals and then fix a general programme.
Once the programme is fixed, one must stick to it rigorously with no
fancifulness or slackness: none of those exceptions to the rule indulged in just
for once, but which are repeated often for, when you yield to temptation even
just for once, you lessen the resistance of your will and open the door to each
and every defeat. You must put a bar to all weakness; none of the nightly
escapades from which you come back totally broken, no feasting and glutting
which disturb the normal working of the stomach, no distraction, dissipation or
merry-making that only waste energy and leave you too lifeless to be the daily
practice.
One must go through the austerity of a wise and well-regulated life,
concentrating the whole physical attention upon building a body as perfect as it
is possible for it to become. To reach this ideal goal one must strictly shun all
excess, all vice, small or big, one must deny oneself the use of such slow
poisons as tobacco, alcohol, etc. which men have the habit of developing into
indispensable needs that gradually demolish their will and memory. The all-
absorbing interest that men, without exception, even the most intellectual, take
in food, in its preparation and consumption, should be replaced by an almost
chemical knowledge of the needs of the body and a wholly scientific system of
austerity in the way of satisfying them. One must add to this austerity regarding
food, another austerity, that of sleep. It does not mean that one should go
without sleep, but that one must know how to sleep. Sleep must not be a fall
into unconsciousness that makes the body heavy instead of refreshing it.
Moderate food, abstention from all excess, by itself minimizes considerably the
necessity of passing many hours in sleep. However, it is the quality of sleep
more than its quantity that is important. If sleep is to bring you truly effective
rest and repose, it would be good to take something before going to bed, a cup of
milk or soup or fruit-juice, for instance. Light food gives a quiet sleep. In any
case, one must abstain from too much food; for that makes sleep troubled and
agitated with nightmares or otherwise makes it dense, heavy and dull. But the
most important thing is to keep the mind clear, to quiet the feelings, calm the
effervescence of desires and preoccupations accompanying them.
If before retiring to bed one has talked much, held animated discussions or read
something intensely interesting and exciting, then one had better take some time
to rest before sleeping so that the minds activities may be quieted and the brain
not yield to disorderly movements while the physical limbs alone sleep. If you
are given to meditation, you would do well to concentrate for a few minutes
upon a high and restful idea, in an aspiration towards a greater and vaster
consciousness. Your sleep will profit greatly by it and you will escape in a large
measure the risk of falling into unconsciousness while asleep.
After the austerity of a night passed wholly in rest, in a calm and peaceful sleep,
comes the austerity of a day organised with wisdom, its activities divided
between wisely graded progressive exercises, required for the culture of the
body and the kind of work you do. For both can and should form part of the
physical Tapasya.
With regard to exercises, each one should choose what suits best his body and, if
possible, under the guidance of an expert on the subject who knows how to
combine and grade the exercises for their maximum effect. No fancifulness
should rule their choice or execution. You should not do this or that simply
because it appears more easy or pleasant; you will make a change in your
programme only when your trainer considers the change necessary.
The body of each one, with regard to its perfection or simply improvement, is a
problem to be solved and the solution demands much patience, perseverance and
regularity. In spite of what men may think, the athletes life is not a life of
pleasure and distraction; it is a life, on the contrary, made up of well-regulated
endeavour and austere habits for getting the desired result and leaves no room
for useless and harmful fancies.
In work too there is an austerity; it consists in not having any preference and in
doing with interest whatever one does. For the man who wishes to perfect
himself, there is nothing like small or big work, important work or unimportant.
All are equally useful to him who aspires for self-mastery and progress. It is
said that you do well only what you do with interest. True, but what is more
true is that one can learn to find interest in whatever one does, even the work
that appears most insignificant. The secret of this attainment lies in the urge
towards perfection. Whatever be the occupation or task that falls to your lot, do
it with a will towards progress. Whatever you do must be done not only as well
as you can but with an earnestness to do it better and better in a constant drive
towards perfection. In this way all things without exception become interesting,
from the most material labour to the most artistic and intellectual work. The
scope for progress is infinite and one can be earnest in the smallest thing.
This takes us naturally to liberation in action; for in ones action one must be
free from all social conventions, all moral prejudices. This is not to say that one
should lead a life of licence and unrule. On the contrary, you submit here to a
rule which is much more severe than all social rules, for it does not tolerate any
hypocrisy, it demands perfect sincerity.
All physical activities should be organised in such a way as to make the body
grow in balance and strength and beauty. With this end in view one must
abstain from all pleasure seeking, including the sexual pleasure. For each sexual
act is a step towards death. That is why from the very ancient times among all
the most sacred and most secret schools, this was a prohibited act for every
aspirant to immortality. It is always followed by a more or less long spell of
incon-science that opens the door to all kinds of influences and brings about a
fall in the consciousness. Indeed, one who wants to prepare for the supramental
life should never allow his consciousness to slip down to dissipation and incon-
science under the pretext of enjoyment or even rest and relaxation.
The relaxation should be into force and light, not into obscurity and weakness.
Continence therefore is the rule for all who aspire for progress. But especially
for those who want to prepare themselves for the supramental manifestation, this
continence must be replaced by total abstinence, gained not by coercion and
suppression but by a kind of inner alchemy through which the energies usually
used in the act of procreation are transmuted into energies for progress and
integral transformation. It goes without saying that to get a full and truly
beneficial result, all sex impulse and desire must be eliminated from the mental
and vital consciousness as well as from the physical will. All transformation
that is radical and durable proceeds from within outwards, the outward
transformation being the normal and, so to say, the inevitable result of the inner.
A decisive choice has to be made between lending the body to Natures ends in
obedience to her demand to perpetuate the race as it is, and preparing this very
body to become a step towards the creation of the new race. For the two cannot
go together; at every minute you have to decide whether you wish to remain
within the humanity of yesterday or belong to the supermanhood of tomorrow.
You must refuse to be moulded according to life as it is and be successful in it, if
you want to prepare for life as it will be and become an active and efficient
member of it. You must deny yourself pleasures, if you wish to be open to the
joy of living in integral beauty and harmony.
This brings us quite naturally to vital austerity, the austerity of the sensations,
the Tapasya of power; for the vital being is indeed the seat of power, of
enthusiasms that realise. It is in the vital that thought changes into will and
becomes a dynamism of action. It is also true that the vital is the seat of desires
and passions, of violent impulses and equally violent reactions, of revolt and
depression. The usual remedy is to strangle it, to starve it by depriving it of
sensations: indeed it is nourished chiefly by sensations and without them it goes
to sleep, becomes dull and insensitive and, in the end, wholly empty.
The vital, in fact, draws its subsistence from three sources.
The one most easily accessible to it is from below, the physical energies coming
through the sensations. The second is on its own plane, when it is sufficiently
wide and receptive, in contact with the universal vital forces. And the third, to
which generally it opens only under a great aspiration for progress, comes from
above through the infusion and absorption of spiritual forces and inspirations.
To these men try more or less always to add another source; which is, at the
same time, for them the source of most of their torments and misfortunes. It is
the interchange of vital forces with their fellow creatures, generally grouped by
twos, which they mistake for love, but which is only an attraction between two
forces that the pleasure in mutual interchange.
So, if we do not wish to starve our vital, the sensations should not be rejected,
nor reduced in number or blunted in intensity; neither should they be avoided,
but they must be utilised with discrimination and discernment. Sensations are
an excellent instrument for knowledge and education. To make them serve this
purpose, they should not be used egoistically for the sake of enjoyment, in a
blind and ignorant seeking for pleasure and self-satisfaction.
The sense should be able to bear everything without disgust or displeasure; at
the same time they must acquire and develop more and more the power to
discriminate the quality, origin and result of various vital vibrations, so as to
know whether they are favourable to the harmony, the beauty and the good
health or are harmful to the poise and progress of the physical and vital being.
Moreover, the senses should be utilised as instruments to approach and study the
physical and vital worlds in all their complexity. Thus they will take their true
place in the great endeavour towards transformation.
It is by enlightening, strengthening and purifying the vital and not by weakening
it that one can help towards the true progress of the being. To deprive oneself of
sensations is therefore as harmful as depriving oneself of food. But even as the
choice of food must be made with wisdom and only with a view to the growth
and proper functioning of the body, so the choice of sensations also should be
made and control over them gained with an altogether scientific austerity, with a
view only to the growth and perfection of this great dynamic instrument which
is as essential for progress as all the other parts of the being.
It is by educating the vital, by making it more refined, more sensitive, more
subtle, one should almost say, more elegant, in the best sense of the word, that
one can overcome its violences and brutalities which are, in general, movements
of crudity and ignorance, of a lack of taste.
In reality, the vital, when educated and illumined, can be as noble, heroic and
unselfish, as it is now spontaneously, vulgar, egoistic, perverted when left to
itself without education. It is sufficient for each one to know how to transform
in oneself this seeking for pleasure into an aspiration towards supramental
plenitude. For that, if the education of the vital is pursued far enough, with
perseverance and sincerity, there comes a moment when it is convinced of the
greatness and beauty of the goal and gives up petty illusory satisfactions of the
senses in order to conquer the divine Delight.
Part III

THE METHODS, TECHNIQUES AND PROCESS OF EVALUATION

There are three basic ways in which raters can make performance assessments:
(1) they can make comparisons of ratees performances (2) they can make
comparisons among anchors or performance level anchors and select one most
descriptive of the person being appraised, and (3) they can make comparisons of
individuals to anchors.

Rating Format Options

COMPARISONS AMONG PERFORMANCES

Compare the performances of all rates to each anchor for each job activity,
function, or overall performance. Rater judgments may be made in one of the
following ways:
Indicate which ratee in each possible pair of ratees performed closest to
the performance level described by the anchor or attained the highest
level or overall performance. (Illustrative method: paired comparison)
 Indicate how the ratees ranked in terms of closeness to the performance
level described by the anchor. (Illustrative method: straight ranking)
Indicate what percentage of the ratees performed in a manner closest to
the performance level described by the anchor. (Note: the percentages
have to add up to 100% for all the anchors within each job
activity/function.) (Illustrative method: forced distribution).

COMPARISONS AMONG ANCHORS

Compare all the anchors for each job activity or function and select the one(or
more) that best describes the ratees performance level. Rater judgments are
made in the following way:

Indicate which of the anchors fit the ratees performance best (and/or
worst). (Illustrative method: CARS, forced choice)

COMPARISONS TO ANCHORS
Compare each ratees performance to each anchor for each job activity or
function. Rater judgments are made in one of the following ways:

Whether or not the ratees performance matches the anchor. (Illustrative

methods: graphic rating scales such as BARS; MBO)
The degree to which the ratees performance matches the anchor.
(Illustrative methods: all summated rating scales such as BOS and PDA
methods)
Whether the ratees performance was better than, equal to, or worse than
that described by the anchor. (Illustrative method: Mixed standard
scales)
Defining the Rater

Ratings can be provided by ratees, supervisors, peers, clients or customers, or

high-level managers. While most companies still give the supervisor the sole
responsibility for the employees appraisal, formal multirater systems are
becoming quite popular. A growing number of companies use formal self-
assessments. The purpose is to encourage employees to take an active role in
their own development. Upward appraisals (ratings by subordinates) are also on
the increase.
With increasing frequency, organizations are concluding that multiple rater
types are beneficial for use in their appraisal systems. Ratings collected from
several raters, also known as 360-degree appraisal systems, are thought to be
more accurate, have fewer biases, are perceived to be more fair, and are less
often the targets of lawsuits. The use of 360-degree appraisal systems is one of
the characteristics of high-performance work systems, which have been linked
to superior corporate financial performance.
The probable reason this approach is successful is that many of the rater types
used (e.g., customers, peers) have direct and unique knowledge of at least some
aspects of the ratees job performance and provide reliable and valid
performance information on some job activities. In fact, the use of raters who
represent all critical internal and external customers contributes to the accuracy
and relevance of the appraisal system.

Many organizations use self-, subordinate, peer, and superior ratings as a

comprehensive appraisal prior to a training program. The Center for Creative
Leadership in Greensboro, North Carolina, requires all particulars in its one-
week assessment center program to first submit evaluations from superiors,
peers, and subordinates. These data are tabulated by the Center, and the
feedback is reported to participants on the first day of the assessment center
program. Participants consider this feedback to be among the most valuable
they receive.
Many companies now use external customers as an important source of
information about employee performance and for reward systems. The Marriott
Corporation places considerable weight on its customer survey data in the
evaluation of each hotel as well as work units within the hotels. Burger King,
McDonalds, Dominos Pizza, and Taco Bell are among the companies that hire
professional customers or mystery shoppers to visit specific installations to
provide detailed appraisals of several performance functions.
A summary of recommendations for implementing a multirater/360-degree
appraisal system is as follows.

Recommendations for Implementing a 360-Degree Appraisal System

INSTRUMENT ISSUES

Items should be directly linked to effectiveness on the job.

Items should focus on specific, observable behaviours (not traits,
competencies).
Items should be worded in positive terms, rather than negative terms.
Ratees, particularly employees, may be less likely to respond honestly to
negative items about their boss.
Raters should be asked only about issues for which they have firsthand
knowledge (i.e., ask subordinates about whether the boss delegates work
to them; dont ask peers since they may not know).
ADMINISTRATION ISSUES

Select raters carefully by using a representative sample of people most

critical to the ratee and who have had the greatest opportunity to observe
his or her performance.
Use an adequate number of raters to ensure adequate sampling and to
protect the confidentiality of respondents (at least three per source).
Instruct respondents in how the data will be used and ensure
confidentiality.
To maintain confidentiality, raters should not indicate their names or
other identifying characteristics and surveys should be mailed back
directly to the analyst in a sealed envelope.
Alert and train raters regarding rater errors (e.g., halo, leniency, severity,
attributional bias).

FEEDBACK REPORT

Separate the results from the various sources. The ratee should see the
average, aggregated results from peers, subordinates, higher-level
managers, customers, or other sources that may be used.
Show the ratees self-ratings as compared to ratings by others. This
enables the ratee to see how his or her self-perceptions are similar or
different from others perceptions.
Compare the ratees ratings with other norm groups. For example, a
managers ratings can be compared to other managers (as a group) in the
firm.
Provide feedback on items as well as scales so ratees can see how to
improve.
FEEDBACK SESSION

Use a trained facilitator to provide feedback to ratees.

Involve the ratee in interpreting his or her own results.
Provide an overview of the individuals strengths and areas for
improvement.
Provide feedback on recommendations and help him or her to develop an
action plan.

FOLLOW-UP-ACTIVITIES

Provide opportunities for skill training in how to improve his or her

behaviours.
Provide support and coaching to help him or her apply what has been
learned.
Over time, evaluate the degree to which the ratee has changed
behaviours.

SETTING THE STANDARDS AND BENCHMARKING:

Benchmarking is the process of gauging the internal practices and activities

within a firm to an external reference or standard. It is a continuous process of
measuring ones own products, services, systems, and practices against the
worlds toughest competitors to identify areas for improvement.
An estimated 70 percent of the Fortune 500 companies use benchmarking on a
regular basis. For example, Ford Motor Company benchmarked its accounts
payable function against Mazda Motor Corporation. Ford found that it had
about five times as many employees as it needed. The automaker redesigned the
system for tracking orders, deliveries, and invoices and thereby helped
employees to perform the same tasks more efficiently. As a result, Ford was
able to simplify the process, reduce the number of employees, and reduce errors.
Goodyear Tire and Rubber changed its compensation practices by benchmarking
what several fortune 100 firms were doing in compensation. It developed a
system to link employee performance to the firms financial gains. AT & T
examined the role of chief financial officers to redesign the job duties and
functions of the CFO to be more in line with what world-class CFOs were
doing.
Studies on the effectiveness of benchmarking have found that it is critical to
have top management support and commitment to the project. In addition, when
it results in setting moderately difficult goals that employees believe are
attainable, it seems to work. But when poorer performing companies receive
benchmarking data that their practices are significantly different from the best
practices, and their managers set radical, unrealistically high goals, employees
have difficulty embracing the changes and may resist them. As a result,
performance actually may decline.

These findings should not discourage managers from benchmarking their

practices. Instead, managers should be alerted to the types of goals they should
set after receiving benchmarking data. Perhaps setting more realistic goals and
gradually increasing the difficulty of the goals would encourage employees.
This is known as shaping, which is a behavioral change technique that promotes
gradual improvement from known, initial behavior to a desired goal, or, in this
case, the benchmark.
For example, if an organization wants to meet the best practice of having 1
percent defects in its industry, and their initial performance is at 20 percent
defects, the company may need to first use 15 percent defects as a goal. Once
workers master that goal and are rewarded, then the company can change the
goal to 10 percent defects. In this way, the company is continually moving
toward the benchmark goal and employees are less resistant than if they were
initially assigned the goal of 1 percent defects, which they may have felt was
unattainable. To use shaping effectively in benchmarking practices, the
following tips are offered:

1. Identify what is to be benchmarked (a process, product, service, etc.)

2. Identify comparable companies.
3. Collect data to precisely define the target goal (benchmark).
4. Collect data to determine the organizations current performance level
against the benchmark.
5. Reduce the target to discrete, measurable, smaller steps or goals.
6. Train, as needed, any employees so that they can meet the smaller goals
(subgoals).
7. Periodically provide feedback and use appropriate, valued reinforcers for
meeting the subgoals.
8. Increase the subgoals so that they are getting closer to the target goal.
9. Recalibrate benchmarks periodically.

The recalibration is important so that the organization continually monitors the

benchmark or target goal because it may change. Successes by companies may
lead to new standards.
Benchmarking should be considered one form of performance measurement that
provides a basis of comparison to competitors and other outside sources. While
this is a useful approach to measurement, the importance attached to any
measurement should derive from the extent to which the measurement is related
to the strategic goals of the organization.
MALCOLM BALDRIGE AWARD:
Malcolm Baldrige Award One popular from of benchmarking combining nicely
with public relations is to compete for awards that focus on product or service
quality. The most significant of such awards in the United States is the Malcolm
Baldrige National Quality Award. Established by the U.S. Congress in 1987,
the Baldrige award is administered by the National Institute of Standards and
Technology of the Department of Commerce (see www.nist.gov.) The U.S.
president personally presents these prestigious awards in a ceremony in
Washington, D.C. The purpose of the Baldrige award is to promote national
awareness of the importance of total quality achievements.
Seven categories are used to assess quality management and improvement.
These are in order of points: business results (450), leadership (110), human
resource development and management (100), process management (100),
strategic planning (80), customer and market focus (80), and information and
analysis (80). The total number of points that can be obtained is 1,000.
The seven categories are based on a set of core values and concepts, including
the importance of customer-driven quality, leadership, continuous improvement
and learning, employee participation and development, fast response, design
quality and prevention, long-range view of the future, management by fact or
date, partnership development, company responsibility and citizenship, and
results focus.
The Baldrige award allows any publicly or privately owned business in the
United States to apply, with the stipulation that only one division or submit of a
company can apply for the same award category in the same year. Not eligible
are local, state, and national government agencies; not-for-profit organizations;
trade association; and professional societies. Two awards may be given
annually in each of three categories: manufacturing companies service
companies, and small businesses. Applications for the Baldrige award require
submission of up to 75 pages for a completed application form.
Some companies that have won the Baldrige award since its inception in 1988
are Motorola, General Motors Cadillac, IBM, Federal Express, and Ritz Carlton
Hotels. Winners are expected to share information about their successful
performance strategies with other U.S. organizations. Most U.S. companies
requesting the application materials use them to evaluate their own programs
and make changes. Many of the largest U.S. corporations have used the
Baldrige criteria as benchmarks and as a model for instituting major
organizational change processes.
There are many external award programs that are used by organizations to
benchmark and assess performance. In addition, many companies use internal
programs to assess work units on quality and customer satisfaction.

Malcolm Baldrige National Quality Award Criteria

A total of 1,000 points are possible among the seven categories:

1. Leadership (110 points)
1.1 Leadership System . 80
1.2 Company Responsibility and Citizenship .. 30
This category examines senior leaders personal leadership and involvement
in creating and sustaining values, company directions, performance
expectations, customer focus, and a leadership system that promotes
performance excellence. Also examined is how the values and expectations
are integrated into the companys leadership system, including how the
company continuously learns and improves, and addresses its societal
responsibilities and community involvement.
2. Strategic Planning (80 points)

2.1 Strategy Development Process . 40

2.2 Company Strategy 40
This category examines how the company sets strategic directions and how
it determines key action plans. Also examined is how the plans are
translated into an effective performance management system.
3. Customer and Market Focus (80 points)
3.1 Customer and Market Knowledge .40
3.2 Customer Satisfaction and Relationship Enhancement 40
This category examines how the company determines requirements and
expectations of customers and markets. Also examined is how the company
enhances relationships with customers and determines their satisfaction.
4. Information and Analysis (80 points)
4.1 Selection and Use of Information Data .. 25
4.2 Selection and Use of Comparative Information and Data ..... 15
4.3 Analysis and Review of Company Performance ....... 40
This category examines the management and effectiveness of the use of data
and information to support key company processes and the companys
performance management system.
5. Human Resource Development and Management (100 points)
5.1 Work Systems .. 40
5.2 Employee Education, Training, and Development .. 30
5.3 Employee Well-Being and Satisfaction ... 30
This category examines how the workforce is enabled to develop and utilize
its full potential, aligned with the companys objectives. Also examined are
the companys efforts to build and maintain an environment conducive to
 performance excellence, full participation, and personal and organizational
growth.
6. Process Management (100 points)
6.1 Management of Product and Service Processes ... 60
6.2 Management of Support Processes .. 20
6.3 Management of Supplier and Partnering Processes . 20
This category examines the key aspects of process management, including
customer-focused design, product and service delivery processes, and
supplier and partnering processes involving all work units. The category
examines how key processes are designed, effectively managed, and
improved to achieve better performance.
7. Business Results (450 points)
7.1 Customer Satisfaction Results . 130
7.2 Financial and Market Results .. 130
7.3 Human Resource Results .. 35
7.4 Supplier and Partner Results 25
7.5 Company-Specific Results . 130
This category examines the companys performance and improvement in
key business areas-customer satisfaction, financial and marketplace
performance, human resource, supplier and partner performance, and
operational performance. Also examined are performance levels relative to
competitors.

Malcolm Baldrige Criteria for HR Development and Management

5.0 Human Resource Development and Management (100 points)

5.1 Work Systems (40 points)
Describe how the companys work and job design and its compensation and
recognition approaches enable and encourage all employees to contribute
effectively to achieving the companys performance and learning objectives.

a. Work and Job Design

How work and jobs, including those of managers all levels in the company,
are designed, organized, and managed to ensure:

1. Opportunities for individual initiative and self directed responsibility in

designing, managing, and improving company work processes.
2. Flexibility, cooperation, rapid response, and learning in addressing
current and changing customer and operational requirements.
3. Effective communications, and knowledge and skill sharing across work
functions, units, and locations.

b. Compensation and Recognition

How the companys compensation and recognition approaches for

individuals and groups, including managers at all levels in the company,
reinforce the overall work systems, performance, and learning objectives.

5.2 Employee Education, Training, and Development (30 points)

Describes how the companys education and training address key company
plans and needs, including building knowledge and capabilities, and
contributing to improved employee performance and development.
a. Employee Education, Training, and Development
Describe:
1. How education and training address the companys key performance
plans and needs, including longer-term employee development
objectives.
2. How education and training are designed to support the companys
approach to work and jobs. Include how the company seeks input from
employees and their managers in education and training design.
3. How education and training, including orientation of new employees, are
delivered.
4. How knowledge and skills are reinforced on the job.
5. How education and training are evaluated and improved, taking into
account company performance, employee development objectives, and
costs of education and training.

5.3 Employee Well-Being and Satisfaction (30 points)

Describe how the company maintains a work environment and work climate that
support the well-being, satisfaction, and motivation of employees.

a. Work Environment

How the company maintains a safe and healthful work environment. Include
how employee well-being factors such as health, safety, and ergonomics are
included in improvement activities. Briefly describe key measures and
targets for each important factor. Note significant differences, if any, based
upon different health and safety factors in the work environments of
employee groups or work units.
b. Employee Support Services

How the company supports the well-being, satisfaction, and motivation of

employees via services, facilities, activities, and opportunities.

c. Employee Satisfaction

How the company determines employee well-being, satisfaction, and

motivation. Include:
1. A brief description of formal and informal methods used. Outline how
the company determines the key factors that affect employee well-being,
satisfaction, and motivation and assesses its work climate. Note
important differences in methods, factors, or measures for different
categories or types of employees, as appropriate.

2. How the company relates employee well-being, satisfaction, and

motivation results to key business results and/or objectives to identify
improvement activities.

Major Administrative Issues to Consider in Performance Management

1. Frequency and timing of formal appraisals

Number of times per year (e.g., one per year, every six months,
quarterly?)
Time period (e.g., anniversary of hire, after project completion)
2. Rating/data Collection medium
 Computerized data collection/data tabulation/integration into database
Hard copy for personnel file and sign off?
Use of technology for performance data collection and monitoring
Computer programs that can monitor rater rating tendencies.

3. Training programs

For raters, ratees, administrators

Scheduling/assessment/follow-up

4. Method of feedback

Feedback via computer versus scheduled sessions

Feedback based on comparisons to other employees/companies
Formal feedback sessions with supervisors, team, consultants, coaches.
To create a supportive atmosphere for the feedback meeting between the
employee and supervisor, several recommendations exist. The rater should
remove distractions, avoid being disturbed, and take sufficient time in the
meeting. Raters seem to have trouble adhering to these guidelines. Raters
should keep notes on effective and ineffective behavior as it occurs so that they
will have some notes to refer to when conducting the feedback session.
Raters should be informal and relaxed and allow the employee the opportunity
to share his or her insights. Topics that should be addressed include praise for
special assignments, the employees own assessment of his or her performance,
the supervisors response to the employees assessment, action plans to improve
the subordinates performance, perceived constraints on performance that
require subordinate or supervisory attention, employee career aspirations,
ambitions, and developmental goals. In sum, raters should provide feedback
that is clear, specific, descriptive, job related, constructive, frequent, and timely.
Self Assessment Question:
What is the importance of designing an appropriate appraisal system which is
quite relevant to the organizational culture of institution with optimum
utilization of human resource?
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 SUMMARY

Performance appraisals have become an increasingly important tool for

organizations to manage and improve the performance of employees, to make
more valid staffing decisions, and to enhance the overall effectiveness of the
firms services and products. The design, development, and implementation of
appraisal systems are not endeavors that can be effectively handled by following
the latest fad or even by copying other organizations systems. Instead, a new
appraisal system must be considered a major organizational change effort that
should be pursued in the context of improving the organizations competitive
advantage. This means, like any such change effort, there will be vested
interests in preserving the status quo that will be resistant to change, no matter
how beneficial it may be for the organization. These sources of resistance to the
change have to be identified and managed to build incentives for using a new
appraisal system.
Once a well-designed system has been implemented, the work is still not done.
An appraisal system has to be maintained by monitoring its operation through
periodic evaluations. Only by keeping an appraisal system finely tuned will it
enable managers to have a rational basis for making sound personnel decisions
and for making the kinds of gains in productivity that are so critically needed in
todays times.
Among the personnel decisions, some of the most important concern the
organizations compensation system. The prescriptions should be helpful
guidelines for improving any appraisal system. Effective performance appraisal
also must be carefully integrated with other human resource domains,
particularly compensation systems with a pay-for-performance component.
Accurate appraisals also are critical for determining training needs.
 DISCUSSION QUESTIONS

1. Why has performance appraisal taken on increased significance in recent

years?
2. As the workforce becomes more diverse, why does performance
appraisal become a more difficult process?
3. Many managers describe performance appraisal as the responsibility that
they like the least. Why is this so? What could be done to improve the
situation?
4. What steps would you take if your performance appraisal system resulted
in disparate or adverse impact on the value system of the organisation?
5. Under what circumstances would you use customer or client evaluation
as a basis for appraising employees?
6. Why are so many companies using 360-degree feedback systems? What
are the benefits of such a system?
7. Why should managers provide ongoing and frequent feedback to
employees about their performance?

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