PERFORMANCE MANAGEMENT

INTRODUCTION

Performance management is a critical human resources management tool. The use of this tool is
extended beyond the industrialized organizations to non-government organizations, government
systems, academic institutions and the like.

Performance management is a system that impacts and affect everyone in the organization. It helps the
organization achieve business results and maintain its desired culture. It enables the employees to
understand how they are contributing to the organization’s strategic priorities and goals, what is
expected of them, and how they are doing as it focuses on the employee’s growth and development.
Within the context of human resource management, it is used to support other HR systems, such as
training and development, career development, succession planning, leadership development, selection,
staffing, compensation and rewards management.

Performance Management: A Strategic and Integrated Management Process

Despite a wealth of research materials on subject, there is no consensus on one ideal performance
management system (PMS). However, it has been pointed out that any performance management
system should reflect the unique requirements of an organization.

Perspectives on performance management system have been advanced with the objective of putting
into context the practice and system of managing individual performance and linking these two levels of
performance.

The Perspectives

1. Performance management as a system for managing organizational performance

2. Performance management as a system for managing employee performance
3. Performance management as a system for integrating the management of organizational and
employee performance.

PERFORMANCE MANAGEMENT AS A SYSTEM FOR MANAGING ORGANIZATIONAL LEVEL

When performance management is used as a system for managing organizational performance, the
focus is on the determination of the organization’s strategy, and the implementation of that strategy
through organization’s structure, technology, business systems and procedures. Employee is not the
primary focus, although they will be affected by changes in technology, structure, and operating
systems. This is normally done by setting corporate policy and resource aims and guidelines, specifying
a detailed set of plans, budgets, objectives, targets and standards of performance and regularly and
systematically reviewing the performance of all services.

From an organizational perspective the following activities may be conducted

1) Performance planning
2) Performance improvement
3) Performance review
Performance planning includes activities such as formulating the organization’s vision and strategy and
defining what is meant by performance. Performance improvement takes a process perspective, that is,
including such activities as business process re-engineering and continuous process improvement.
Performance review embraces performance measurement and evaluation.

Employee performance management

When performance management is used as a system for managing employee performance, the focus I
on engaging employees on planning their goals, managing their performance, reviewing their progress
and developing themselves. It emphasizes the contributions of employees and their behaviors or
competencies. In the end, employees who meet their targets and demonstrate exemplary behavior are
rewarded

 Planning involves establishing performance targets, identifying job behaviors and identifying
performance measures.
 Managing involves monitoring behavior and objectives, reinforcing desired behaviors and
objective attainment and redirecting inappropriate behavior.
 Appraising involves formal meeting of employee and manager, performance plan document,
focus on future and employee’s development and re-planning, and new objective
establishment.

Integrated Performance Management System

When performance management is used as a system for integrating the management of organizational
and employee performance, it supports a company’s or organization’s overall business goals by linking
the work of each individual employee or manager to the overall mission of the work unit. It is about
directing and supporting employees to work as effectively and efficiently as possible in line with the
needs of the organization.

In this perspective, performance management aligns the organizations strategic direction with individual
performance. Performance management can be viewed as a tool used to create and sustain a
workplace environment where both an organization and its employees succeed in fulfilling business
objectives.

Based on the foregoing, performance management is both strategic and integrative. It is strategic
because performance management pushes the realization of the strategic goals of the organization as it
encompasses the larger and broader issues and concerns of the organization’s life. It is also within this
context that performance management is integrative because it aligns and links the organization’s
strategic direction with individual performance. In other words, it ensures the fulfillment of the
organizational outcomes and individual goals by linking other system in support of overall direction of
the organization. Data generated from the PMS can be utilized for other HR system either as basis for
program development or for evaluation.
PERFORMANCE MANAGEMENT APPROACHES

Performance management is better understood in terms of approaches used by organizations. The

fundamental principle prevalent in these approaches is that corporate strategic goals provide the
starting point for business and departmental goals, followed by agreement on performance and
development goals, leading to the drawing up of performance plans. Between individuals and
supervisors, with continuous monitoring and feedback supported by formal reviews. The use of the
approaches depends on the unique requirements of the organization.

a. Mixed Model or Total Performance Management Approach

A performance management system that combines planning, management and appraisal of both
performance results and competency behavior is called a “mixed model.” Performance management is
and must be shared responsibility of employees and managers. This approach can be divided into four
(4) Key areas: performance planning, performance monitoring and coaching, performance evaluation
and development discussion, and rewarding performance.

b. The balanced scorecard

The balanced scorecard was originally proposed as an approach to performance management

measurement by combining traditional financial measures with non-financial measure to provide
managers with richer and more relevant information about organizational performance, particularly
with regard to key strategic goals.

The balanced scorecard aims to:

1. Enable organization to manage strategy by linking corporate objectives, initiatives, measures, and
targets at all levels of the organizations
2. To achieve a balanced set of performance measures and targets that allow managers to track
progress in key areas.

Many organizations now use a balanced scorecard to:

1. Formulate and refine strategies

2. Communicate strategies and priorities throughout the organization
3. Link strategic objectives to long-term targets and budgets
4. Monitor progress and introduces initiatives to improve performance

EXERCISE:

1. Describe the steps in performance management process

2. What is the importance of rewarding performance?