THESIS REPORT

Performance
Management Practices
in Project based
Organizations
2007

Zulfiqar Ahmad
 Introduction

• Reason of selecting this topic

– Third Wave

– Growing Focus on HR value

– Gap

2
 Objectives
• To study the practiced performance
management system in project
organizations
• To find the strengths & weaknesses of
the practiced performance management
systems.
• To carry out a comparative analysis of
the practiced performance management
systems.
• To study the gap between the current
industry’s practices and the theoretical
constructs.
• To find important factors in performance
3
 Scope of study

•Telecom
Performance Management in Project based organizations •ZTE
•Wateen
•Diallog
•Software
Management •LMKR
one time
systems and processes to •Si3
temporary endeavor undertaken •Ultimus
plan, monitor, measure & improve
to create a unique product or •Construction
the performance of an
service. •Emaar
employee
•Al-Ghurair
•HRL

4
Literature Review
 Difference in HR
requirements
• HR planning:
– Requirement for HR are identified at the start of
each project.
– Minimizing the resource overload.
• Job Assignment:
– Mostly Temporary or contractual jobs.
• Training
– More frequent
• Career development:
– Complex spiral
• Compensation
– Piece wise and skill based
• Structure
– Matrix or product team

6
 Organizational
Structure
• Functional Structure
• Project structure
• Matrix Structure
– Balanced
– Weak
– Strong
– Composite

7
Organizational
Structure

8
 Project Human
Resource
• Organizational Planning

Acquiring Staff

• Measuring performance

• Release of Staff from

project

9
 Organizational
Planning
• Identifying, documenting, and
assigning project roles,
responsibilities, and reporting
relationships
• Output from Organizational
Planning
o project organizational charts
o work definition and assignment
process
o responsibility assignment matrixes
10
 Organizational
Breakdown Structure
(OBS)

11
Work Definition and
Assignment

12
Resource Histogram

13
RACI Matrix

14
 Measuring
Performance
• Definition

• Emergence

• Modern performance Management

• Goals of Performance Appraisal

15
 Performance
Management Process

• Setting Objectives & Standards

• Assess or Evaluate performance

• Performance Appraisal

• Performance Development
16
 Setting Objectives &
Standards
• Targeting Outcomes
• Determining Resources
• Setting Priorities
• Establishing Standards
• Job Description
• Key Responsibility
Areas (KRA)

17
Performance Appraisal
Methods
• Behavior-Based Approaches
– Conventional Rating Scale
– Behaviorally Anchored Rating Scale
(BARS)
– Behavioral Frequency Scale (BOS)
– Weighted Checklist
– Assessment Centers
– Critical Incident Appraisal
• Comparative Method
– Ranking Methods
– Alternation Ranking
– Paired-comparison Ranking
– Forced Distribution
18
Performance Appraisal
Methods
• Attribute Approach
– Graphic Rating Scale
• Results-Focused Approaches
– Management by Objectives
– Work-standards Approach
– The Swan Approach
– Essay Approach
• Balanced Scorecard

19
 The Ideal
Performance
Appraisal Cycle
• Phase 1: Performance Planning
• Phase II: Performance Execution
• Phase III: Performance
Assessment
• Phase IV: Performance Review
• Phase V: Performance Renewal

20
 Common Rating
Errors
• Halo / Horns effect
• Leniency / Severity
• Central tendency
• Regency error
• Similarity error
• Spillover error
• First impression error
21
 Latest trends in
performance
management
• Web based performance
management
• Team based performance
appraisal
• Training of the appraiser
• Job sculpting
• Frequent feedbacks
• Pay for performance
22
 Theory & Practices of
Project Management
• Project Management Processes
– Initiating processes
– Planning processes
– Executing processes
– Controlling processes
– Closing processes
• Important Tools
– Work Breakdown Structure (WBS)
– Gantt chart
– Program Evaluation and Review Technique
(PERT) 23
Work Breakdown
Structure (WBS)

24
Gantt chart

25
Program Evaluation and
Review Technique (PERT)

26
Joining the dots

27
Findings
 ZTE Pakistan
• China based Telecom Company
• Leading provider of
telecommunications equipment and
network solutions
• Partnerships with PTCL and Ufone
telecom
• Vision & Mission
– …Employee's career development and
Findings
• Telecom their benefits are highly concerned and
• ZTE
•Software
guaranteed to be growing along with
•Construction the company's development at the 29
 Human Resource
Dept
• Recruitment, training, appointment
and employee motivation.
• 'Three Career Development Paths'
oriented to technology, service and
management
• Employment ethos of 'Only the Best
People'
• 27,000 employees
Findings
• Telecom • 'Most Favorable Enterprise for
• ZTE
•Software
•Construction
Employment’ in china 30
 Organizational
Structure of ZTE

Findings
• Telecom
• ZTE
•Software
•Construction 31
 Performance
Management at ZTE
• Online Appraisal Form
• Objective of Appraisal:
• To ensure a formal review program
• To evaluate work performance
• To promote communication
• Frequency:
– Monthly appraisal
– Quarterly formal review meeting
• Relative Grading System
Findings
• Telecom – Department average/ section average *
• ZTE original score
•Software
•Construction 32
 Appraisal Process

Findings
• Telecom
• ZTE
•Software
•Construction 33
 Performance
Appraisal’s Rating
Appraisal Definition of category % of total # of employees
category rated in this category
S Indicates Exceptional Performance that 20%
consistently exceeds requirements of the
position.
A Indicates performance that consistently meets 30%
the requirements of the position. This
evaluation will normally be used to describe
performance of high quality that meets &
occasionally exceeds the existing standards of
the profession
B Indicate performance which is average, 35%
meeting expectations but need improvements
C Indicates Performance that requires 10%
improvement (i.e. meets requirements without
initiative or advancement)
Findings
• Telecom C2 Performance to be improved (Hardly meets 5%
• ZTE requirements).
•Software
•Construction 34
 Appraisal Form

Findings
• Telecom
• ZTE
•Software
•Construction 35
 Linkages with other
subsystems
• Annual Incentives
– End of financial year, linked with financial
position
– Distributed in accordance with employee's
appraisal
– Rating for this year is not less than “A
– Service life should be more than one year
• Annual Bonus
– Based on Performance & Recommendations
– Subject to accomplishments
Findings
• Telecom • Promotions
• ZTE
•Software – No direct linkage. However, last annual
•Construction appraisal should be have less than “A” 36
 Wateen Telecom
• Abu Dhabi group
• Largest private sector complete
communication company
• Complete Range of carrier class
telecom and multimedia
services
Findings
• Telecom
• Wateen
•Software
•Construction 37
 Performance
Management at Wateen
• Objective
– Setting work standards.
– Assessing the employee’s actual performance.
– Providing feed back to the employees
• Role of HR in Performance Management
– Advise managers on performance appraisal
system.
– Preparation of Forms.
• Types of Performance Appraisal
– Annual performance Appraisal.
Findings – Performance appraisal for promotions.
• Telecom – End probation period.
• Wateen
•Software • Frequency: Annual
•Construction 38
 Appraisal Process

Findings
• Telecom
• Wateen
•Software
•Construction 39
 Performance
Appraisal
• Form has 3 sections (see Annex-3)
– Section A: objectives are measured
– Section B: Records his/her assessment
– Section C: Assesses competency for
Leadership
Rating Scale
4 Overachieved all assigned objectives and excelled in
other areas/ disciplines.
3 Overachieved all assigned objectives
Findings
• Telecom 2 Achieved all assigned objectives
• Wateen
•Software 1 Did not achieve assigned objectives
•Construction 40
 Linkages with other
subsystems
• Increments
– Based on his/ her performance
score
• Promotions
– PEC provides opportunity to
discuss career interests

Findings
• Telecom
• Wateen
•Software
•Construction 41
 Diallog Broadband
• Began operations in November
2005
• Vision is to …provide state-of-the-
art integrated communication
solutions.
• Products & Services
– Services to evaluate, design, build
Findings
• Telecom
and run adaptive systems
• Diallog
•Software • Project controller is key person
•Construction 42
 Performance
management at Diallog
• Purpose of appraisal is
– Assess the performance
– Bi-annual evaluation for controlling
purpose
• Process of Performance
management
• Goal setting
• Role clarification
• Setting performance standards Rating
1 = Exceptionally exceeds 10%
• Measuring performance standards

Findings • Appraisal interview 2 = Exceeds standards 25%

• Telecom • Appraisal forms (see Annex-6)
3 = Meet standards 45%
• Diallog
4 = Partially meets standards 15%
•Software
•Construction
– Self evaluation form 5 =Does not meet Standards 435%
 LMKR
• Founded in 1994
• Global provider of
– Geo-Technology,
– Information Technology, and
– Information Management services to
businesses and governments
• Vision & Mission
– …treat all our employees as members and
strive to provide a cordial and professional
work environment…
Findings • HR policy at LMKR:
•Telecom
•Software – improvement in the quality of teamwork,
•LMKR policy implementation, and quality in routine
•Construction 44
 Performance
Management at LMKR

Findings
•Telecom
•Software
•LMKR
•Construction 45
 Performance
Management at LMKR
• Two stage process
• Distributed: 10 days prior to appraisal date
• Performance Appraisal Forms
– Three sections
• A: Objectives and results weighted 65%
• B: Key behaviors/ performance Weighted 20%
• C: Value addition Weighted 15%
• Ratings of Performance Appraisals
– 4 = greatly exceeds normal requirements
– 3 = exceeds normal requirements
– 2 = meets normal requirement
– 1 = fails to meet normal requirement
Findings
•Telecom • Linkage with increments, training and
•Software promotions
•LMKR
•Construction – Salary Planning Review meetings 46
 Si3(System Integration,
Innovation and
Intelligence)
• Premier IT Systems Integrator
• Commenced operations in 2004
• Offices in Karachi, Islamabad,
Kuala Lumpur, and Toronto
• Provides total End-to-End
Systems Integration solution
Findings • Weak Matrix structure
•Telecom
•Software
•Si3
• Named “Best Employer” in 2006
•Construction 47
 Performance management
Process at Si3
• Step1: Clarify the Job Duties
• Step2: Communicate
Expectations and Standards
• Step3: Observe Performance
• Step4: Analyze Performance
• Step5: Report Performance
Findings
•Telecom
•Software
•Si3
•Construction 48
 Si3’ Appraisal
• Appraisal Form (annex-7) has 4
sections
– Section A: General Information and
Responsibilities
– Section B: Business objectives (weighted 90%)
– Section C: key Abilities (weighted 10%)
– section D: Setting
Rating Scale goals for the Next Year
Weighted Performance Performance
Mean (WPM) Category

3.51 – 4.00 Excellent

Findings 2.71 – 3.50 Very Good

•Telecom
1.71 – 2.70 Good
•Software
•Si3 0.00- 1.70 Unsatisfactory
•Construction 49
 Ultimus
• Founded in 1994
• Export focused foreign firm
• Expertise is BPM
• Offices in 16 countries
• HR Dept led by retired army
personnel
Findings • EAPD Program
• Telecom
•Software
•Ultimus
– Exceller – Achiever- prospector-
•Construction
defector (20,40,30,10) linked with
50
 Appraisal Process at
Ultimus

Findings
•Telecom
•Software
•Ultimus
•Construction 51
 Performance
Management at Ultimus
• Appraisal Forms (annex-8)
– Part I – Critical Performance Elements
– Part II – Progress Review
– Part III – Annual Summary Rating
– Part IV –Overall Summary Rating

Summary Rating Total Score

Significantly Exceeds Expectation 95-100

Significantly Exceeds Expectation 80-94

Findings Meets Expectation 50-79

•Telecom 49 or below; no element rated
•Software Needs Improvement
FME
•Ultimus
Fails to Meet Expectation 1 or more elements rated FME
•Construction 52
 Emaar
• Dubai-based Public Joint Stock
Company
• Entered in Pakistan in 2004
• Currently 3 major project ( of US$2.4
billion) in Pakistan.
• Mission
Findings
•Telecom
– … Emaar cares about the employees
•Software
•Constructio
like a family….  
n
•Emaar • Performance has no direct link with53
 Performance Management
System @ Emaar

Findings
•Telecom
•Software
•Constructio
n 54
•Emaar
 Performance Appraisal
Form of Emaar
• Frequency:
– Monthly review (MUSHAFA)
– Formal annual evaluation
• Appraisal is simple and has 3 parts(annex-
9)
– Assessment Areas for Field Staff
– Competence Assessment
– Overall Summary
RATING DESCRIPTION
Performance consistently exceeds a majority of position
1 Superior requirements and is consistently ahead of peer
group
Findings
•Telecom Performance fully meets position requirements and
•Software 2 Fully Meets Expectations
matches peer group
•Constructio Performance fails to meet most position requirements
3 Needs Improvement
n and is below peer group 55
•Emaar
 Habib Rafiq Limited
(HRL)
• Land Developers
• Successfully operating for more
than 30 years
• 5000 professionals working
globally
• Dedicated HR dept only at the
Findings
head office
•Telecom
•Software
•Constructio
• Performance management
n
•HRL
administrated from head office
56
 Appraisal Process
of HRL

• Step I – Planning/ Goals setting

• Step II – Execution Phase

• Step III – Performance Evaluation

Findings
•Telecom
•Software
•Constructio
n 57
•HRL
 Performance Appraisal
Form
HRL
• Form has two parts (annex-10)
– Part-1: key responsibility areas

– Part-2: Employee’s weak areas are

identified
Appraisal Rating
1. Much Below standard
2. Partially met standard
3. Met standard
Findings
•Telecom
4. Exceeded standard
•Software 5 Greatly exceeded standard
•Constructio
n 58
•HRL
 Al-Ghurair Giga
• JV between two of UAE’s
leading conglomerates
• Partner of DHA Islamabad
• Wining formula
– Highly qualified professionals in
the field of architecture, interior
designing, construction and
management
Findings
•Telecom
•Software
– Insightful knowledge
•Constructio
n
– Experience of numerous
•Al-Ghurair 59
 Policy for performance
management at Al-
Ghurair Giga
• Assessment at least twice a
year
• Appraiser must read the
guidelines carefully before
filling
• Responsibility of the HR
Department.
Findings
•Telecom
•Software
•Constructio
• employee with minimum six
n
•Ghurair
months of service will be 60
 Performance
Appraisal @ Ghurair
•
Giga
Two forms for measuring performance
(annex -11)
– Form-A: Employee Performance
Evaluation
• Consist of four parts,
goals/objectives/tasks, other
accomplishment, employee comments and
career matching

Findings
•Telecom – Form-B: Construction Manager
•Software
•Constructio Appraisal Form
n
•Ghurair • In this five behaviors are spelled out 61
Methodology
 Research Design
Researcher interference Minimal

Type of Investigation Comparative & Co-

relational
Study Setting Field Study

Unit of analysis Organizational

Individual
Time Horizon Cross-sectional

Constraints Reluctance
Geographical
limitation 63
 Data collection
Methods
• Primary Sources
– Survey Questionnaires
– Interviews
– Observations
• Secondary Sources
– Journals
• International Journal of Project Management
• Journal of Management Studies
• Human Resource Management Journal
• International Journal of Human Resource
Management and Personnel Review
• Journal of Applied Psychology
– Books & Internet
64
Theoretical
Framework

65
 Hypothesis
• Hypothesis 1
– H10 There is a relationship between the clear expectation
in performance appraisal and job performance
– H1A There is no relationship between the clear
expectation in performance appraisal and job performance
• Hypothesis 2
– H20 There is a relationship between the developmental
focus of performance appraisal and job performance
– H2A There is no relationship between the developmental
focus of performance appraisal and job performance
• Hypothesis 3
– H30 There is a relationship between the strong linkage of
performance appraisal with reward and job performance
– H3A There is a no relationship between the strong linkage
of performance appraisal with reward and job
performance
• Hypothesis 4
– H40 There is a relationship between the valid appraisal
design and job performance
– H4A There is a no relationship between the valid appraisal
66
 Sampling Design
Population Telecom enablers,
software & land
developer
Sampling Stratified Quota
Method Sampling

Sample size 60

67
 Questionnaire
• Closed ended questionnaire
– Annex-12
– Four questions against each
variable
• Subjective/open ended
questions during interview &
survey
– 15 questions

68
Analysis

69
 Individual Level
Analysis- ZTE
• ZTE
– Result based appraisal system
– High strategic congruence:
Monthly Appraisals
– Appraisal promotes self-interest
not teamwork
– High risk of supervisor
manipulation because of only top
Analysis down appraisal
•Telecom
•Individual – Problem with relative grading
•Sectoral
•Collective – Online appraisal Missing human 70
 Individual Level
Analysis-Wateen
• Wateen
– Result based appraisal with little
focus on behavior aspect
– reliability is very low
• Attributes are very generic and
rater’s are not trained about
standards
– Low priority to appraisal
Analysis
– No record keeping and regency
•Telecom
•Individual
error
•Sectoral
•Collective
– Less involvement of HR manager71
 Individual Level
Analysis-Diallog
• Diallog Telecom
– Attribute approach
– No specificity
• No focus on developmental aspect
– Procedural unfairness & employees’ fear
– No informal feedback system &
surprises
– Not proper JDs - leads to ambiguity
about expectations, unrealistic goals
Analysis – Military culture and impact on appraisal
•Telecom
•Individual
– Forms are generalized
•Sectoral • Problem with design and content
•Collective 72
 Telecom Sector
Analysis
• Little Behavioral focus
• No developmental Aspect
• Appraisal as an event
• No informal Feedback
• Tell-Sell kind of appraisal
Interview
• No performance related Record-
keeping which leads to rater
Analysis errors
•Telecom
•Individual
•Sectoral
• No Rater’s training
•Collective – Low Reliability 73
 Individual Level
Analysis-LMKR
• LMKR
– Result and attribute approach
– Appraisal signed-off after
discussion
– Regency error, halo, horn effect
– Low reliability
• Value addition section & Subjectivity
Analysis – Central tendency error – no one
•Software
•Individual
•Sectoral
gets 4.
•Collective
– Rating scale is unbalanced 74
 Individual Level
Analysis-Si3
• Si3
– MBO based performance appraisal
– JDs are static and difficulty in
pinning down objectives
– narrow job descriptions doesn’t
take into account work
interdependence
Analysis – Penalize or endorse employees on
•Software
•Individual their numeric score – Low
•Sectoral
•Collective specificity 75
 Individual Level
Analysis-Ultimus
• Ultimus
– Comparative approach (forced
distribution) and result based
– Result based approach is aligned with
business needs
– Some demotivation in average
performer because of Excellor- achiever
program
– Low inter rater reliability
Analysis
•Software – Appraisal used only for administrative
•Individual
•Sectoral purpose
•Collective
– 76
 Software Sector
Analysis
• Competition not cooperation
– Myopic view of job
• Dangling Employees
• Stretched Targets
• No Consideration of Situation
factor
• Lacking Transparency
• Multi-role demand & appraisal
Analysis challenges
•Software
•Individual
•Sectoral
• Peer appraisal-paradox
•Collective 77
 Software Sector
Analysis
• Generic Appraisal form
• Lack of top management
support
• Multi-skill employees and
appraisal-reward linkage
Analysis
challenges
•Software
•Individual
•Sectoral
• Web based Appraisal &
•Collective 78
 Individual Level
Analysis-Emaar
• Emaar
– Balances both result and
behavioral factors.
– Diversified portfolio & Focus to
results
– Generalized targets
– Policy issue of Average rating -
Analysis mediocre workforce
•Construction
•Individual – Inter-rater reliability is very low
•Sectoral
•Collective
– Onsite – offsite gap 79
 Individual Level
Analysis-HRL
• HRL
– Only Result based appraisal
– Low relaibility
• Objectives are not rated individually; rather a
brief descriptive assessment against loose
definitions of expected performance
– Culture of the company is highly
bureaucratic
– Top management is considered to be
Analysis non-supportive
•Construction
•Individual – Fixed generalized KRAs.
•Sectoral
•Collective 80
 Individual Level
Analysis-Giga
• Al-Ghurair Giga
– Non Indigenous Appraisal System
– job descriptions are not proper
defined
– direct evaluation

Analysis
•Construction
•Individual
•Sectoral
•Collective 81
 Construction Sector
Analysis
• Project-portfolio resource and
role demands
• behaviors
• Low reliability
– Evaluation is dependant on the
supervisor
• General level of acceptability
Analysis
•Construction
• Appraisal forms are not true
representative
•Individual
•Sectoral
•Collective 82
 Summarized Project
Level
• ‘‘Managing by projects’’ as the
strategy and HRM alignment

• “Temporary” organizations and

nedd of change in the human
Analysis
resource configuration
•Construction
•Individual
•Sectoral
•Collective 83
 Summarized Project
Level
• Employee development is under-
emphasized
• 75% agreed that less focus on
developmental aspect
• Negative correlation,-.52, between the
work performance and focus on
Focus on employee development
developmental Strongly
Disagree
Disagree
Neutral
Agree

Analysis
•Construction
•Individual
•Sectoral
•Collective 84
 Summarized Project
Level
• Clear expectations about job
itself

Clear Expectations
Neutral
Agree
Strongly
Agree

Analysis
•Construction
•Individual
•Sectoral
•Collective 85
 Summarized Project
Level
• 0.6 between expectations & work
performance
• Statistically proved by t-test, 1.98 against
table (1.62, df 117)
• So accept null hypothesis (H1)

Analysis
•Construction
•Individual
•Sectoral
•Collective 86
 Summarized Project
Level
• Objective appraisal form with
strong validity (less
contamination) of system
• Strong correlation (0.75)
between the valid design with
less subjectivity can increase
work performance
Analysis
•Construction • But in comparison with -tive
•Individual
•Sectoral
•Collective
correlation with developmental
87
 Summarized Project
Level

Analysis
•Construction
•Individual
•Sectoral
•Collective 88
 Summarized Project
Level
• Correlation of reward linkage
with work performance is 0.23
which is not significant.

• F-test of overall model with

value of 188 shows that results
are significant. R = 0.66 and
Analysis
•Construction R2 = 0.430 shows the
•Individual
•Sectoral
•Collective
predictability of the results. 89
 Co relational Matrix

Work
  Valid Design Expectations Reward Linkage
performance

Work performance
1

Valid Design
0.75 1

Clear Expectations
0.58 0.55 1

Reward Linkage 0.23 0.25 0.16 1

Developmental focus
Analysis -0.52 -0.40 -0.34 -0.02
•Construction
•Individual
•Sectoral
•Collective 90
Recommendations

Proposed PM model for

project organizations
Factors important in
project organization

92
Proposed Appraisal
Model

93
Proposed Appraisal
Process

94
 Features of proposed
model
• Continuous evaluation process
• Based on latest international standards
• Links individual performance with the goals of the
departments and organization through the
process of goal setting in the planning stage
• Provides opportunity of development and conflict
resolution
• Takes into account behavioral aspect of
employee’s performance and measure against
predefined competency dictionary
• Comprehensive measurement system in which
numerical values are calculated and provide the
overall rating against a rating scale.
• Future outlook
• Provides input to training and development
95
•
Joining the dots

96
 Sample Appraisal
form based on model

20%
10%

97
Section II

98
Section II

99
 Sample Appraisal
form based on model

100
 Sample Appraisal
form based on model
Net Scoring

101
102
103
104
Appraisal Forms
Thank you

Q&A