PERFORMANCE MANAGEMENT & COMPETENCY MAPPING

UNIT 1
PERFORMANCE MANAGEMENT
The performance management cycle is a reoccurring phenomenon in every organization.
PERFORMANCE MANAGEMENT CYCLE
The performance management cycle is an annually reoccurring phenomenon in which
employees are evaluated throughout the year. All employees go through this cycle, starting with
goal-setting at the beginning of the year, followed by the monitoring of their progress, helping them
develop to do better, and ending with a formal evaluation afterward.
The goal of this cycle is to develop and execute employee performance plans. These plans
help in focusing employee efforts on achieving organizational goals which, in turn, helps to align
employee priorities with the goals of the organization.
It is important to realize that the goal of the performance management cycle is explicitly aimed at
improving performance. All the activities that we will discuss in the performance cycle model are
aimed at setting goals and coaching the employee to reach or even overreach, these goals.
THE PERFORMANCE MANAGEMENT CYCLE MODEL
One of the earliest versions of a performance management model has been published by Peter
Drucker. MBO proposes that individual goals should be aligned with organizational goals. It is the
responsibility of management to cascade higher level, organizational goals into smaller, individual
goals. This way the employee is contributing towards realizing the goals of the overall business. This
alignment between individual and team objectives and the organizational goals is not always easy to
achieve but a good goal to keep in mind.
 The model starts with planning, which involves setting goals and defining success metrics,
usually at the beginning of the year. Once goals are set;
 The second stage involves monitoring the progress of these goals. If there is potential for
improvement, or performance is lacking;
 Employee development takes place;
 The employee is then rated and rewarded on their performance, and the cycle starts again.
Planning
 The planning phase revolves around setting performance expectations for the employee. These
are often planned and are also included in the job descriptions. It is best practice to actively involve
the employee in this planning process. This involvement increases satisfaction with the performance
cycle, as well as perceived fairness, usefulness, and motivation to improve. Employee performance
plans should also be flexible so they can be adjusted for changing objectives and requirements along
the way. For more information about planning and goal setting, the SMART goal-setting process is a
useful framework.
Monitoring
In the monitoring phase, the goals set in the planning phase are actively tracked. Monitoring
involves the continuous measuring of performance and providing feedback on progress towards the
goals. By monitoring continuously, the manager or supervisor can correct in case of suboptimal
performance, rather than finding this out at the end of the year when it is too late. A manager should
stay away from micromanagement and determining exactly how this goal has to be achieved. Good
management practices are key when it comes to effective monitoring.
Developing 
Development plays a key role in improving performance. As a result of active monitoring, areas
of improvement can be identified. This can be underperformance that should be corrected or areas of
superior performance in which the employee wants to excel even further. This can be achieved in the
form of training and development but also through challenging assignments and other opportunities
for personal and professional growth.
Rating & rewarding 
Rating performance is an inevitability to determine the added value of employees to the
organization. In case of superior performance, the employee should be recognized for their
performance. This can be through giving them praise, a raise, time off, recognition items, a
promotion.
CONSIDERATIONS OF PERFORMANCE MANAGEMENT
Performance management encompasses the setting of these goals, and the monitoring of
employees and departments to ensure that objectives are being met in the most effective way
possible.
At the end of the day, no company can succeed without committed, dedicated employees that
understand their role in the organization. A good performance management strategy can give these
individuals context, and provide them with the motivation they need to deliver bottom-line results for
the business.
THE PERFORMANCE MANAGEMENT CONTRIBUTION

1. Motivation to perform is increased.

Receiving feedback about one’s performance increases the motivation for future
performance. Knowledge about how one is doing and recognition of one’s past successes provide the
fuel for future accomplishments.
2. Self-esteem is increased.
Receiving feedback about one’s performance fulfils a basic need to be appreciated and valued
at work. This, in turn, is likely to increase employees’ self-esteem.
3. Managers gain insight about subordinates.
Direct supervisors and other managers in charge of the appraisal gain new insights into the
person being appraised. The importance of knowing your employees is highlighted by the fact that
the Management Standards Centre has recognised that developing productive relationships with
colleagues is a key competency for managers. Gaining new insights into a person’s performance and
personality will help the manager build a relationship with that person.
4. The job definition and criteria are clarified.
The job of the person being appraised may be clarified and defined more clearly. In other
words, employees gain a better understanding of the behaviours and results required of their specific
position. Employees also gain a better understanding of what it takes to be a successful performer
5. Self-insight and development are enhanced.
The participants in the system are likely to develop a better understanding of themselves and
of the kind of development activities of value to them as they progress through the organisation.
Participants in the system also gain a better understanding of their strengths and weaknesses, which
can help them better define future career paths.
6. Organisational goals are made clear.
The goals of the unit and the organisation are made clear, and the employee understands the
link between what he or she does and organisational success. This is a contribution to the
communication of what the unit and the organisation are all about.
7. Employees become more competent.
An obvious contribution is that the performance of employees is improved. In addition, there
is a solid foundation for developing and improving employees by establishing developmental plans.
8. There is better protection from lawsuits.
Data collected through performance management systems can help document compliance
with regulations. When performance management systems are not in place, arbitrary performance
evaluations are more likely, resulting in an increased exposure to litigation.
9. There is better and more timely differentiation between good and poor performers.
Performance management systems allow for a quicker identification of good and poor
performers. Also, they force supervisors to face up to and address performance problems on a timely
basis.
10. Supervisors’ views of performance are communicated more clearly.
Performance management systems allow managers to communicate to their subordinates their
judgements regarding performance. Thus, there is greater accountability in how managers discuss
performance expectations and provide feedback. When managers possess these competencies,
subordinates receive useful information about how their performance is seen by their supervisor.

LINKING REWARD SYSTEM TO PERFORMANCE MANAGEMENT

The word “Performance” means a lot in the organizational sector. Organizations need to
perform well continuously to sustain its place in the competitive market. For an organization to
perform well, the contribution from each individual employee working for it, should reach its height.
How to gain higher performance from individual employees? – is an important question, for which
the HR people need to come out with the possible solution suited for their organization. The term
coined to handle this process is referred as “Performance Management”.

Why Link Reward to Performance

To connect two ends of the rope, a knot is required; to make it lengthy and useful for long
run. Likewise, the tie up between the reward and performance should be made for employee
retention and their commitment to work, which ultimately improvise the contributing factor of the
employee. Employees should perform well to be rewarded and the approach designed for this is “Pay
for Performance”. Apart from the base pay, which is based on job description, a variable pay should
be announced for their outstanding performance.    Although the pay raise motivates the employees
to an extent, ultimately, they want them to be appreciated and recognized in a society for their work,
here comes the employee recognition program. Many employees become less committed to work not
because of their low pay structure, but for the lack of recognition. Both types of rewarding system
should be ensured for higher motivation, retention, engagement and job satisfaction.

A simple example for performance-based reward system can be best explained by the game
of cricket. When a bowler or batsman performs well in a match, his performance is rewarded by the
cricket council through the title “Man of the Match” and cash award. It motivates the winner and also
the team players to perform well for their team.