MGT 669: Performance Management

Credits: 3

Lecture Hours: 48

Course objective
Performance management is the most critical function and strong determinant of organizational
excellence. This course is designed to develop appreciation and skills essential for designing and
instituting effective performance management systems and strategies. Students will gain practical skills
through self-reflection, discussion, case studies, reading, literature reviews, research and application.

Course Description
This course contains introduction to performance management, performance management system and
strategic, performance planning and appraisal, performance management implementation, performance
monitoring and counseling, Performance Management Strategic and Interventions, Ethics in
Performance Management, Role of HR Professionals in Performance Management System, Emerging
Concepts.

Course Details
Unit 1: Introduction to Performance Management LH 5
Concept of Performance Management, Characteristics, Objectives and Principles of
Performance Management, Role of Appraisal in Performance Management, Challenges to
Performance Management, Performance Management Process, Performance Management
Process-Conceptual Model and its Application.

Unit 2: Performance Management System and Strategies LH 6

Objectives, Functions, Characteristics of effective PMS, Components of PMS, Competency
based PMS, Electronic Performance Management, Corporate and Business Level Strategic
Plans, Objectives, Targets, Goals, Target and Performance Management, Scorecards.

Unit 3: Performance Planning and Appraisal LH 7

Concept of Performance Planning, Characteristics, Objectives, Importance & Methodologies,
Components of Performance Planning, KPIs (Key performance Indicators) Process & Barriers
to Performance Planning, Competency Mapping, Methods of Competency Mapping,
Appraisal Process, Approaches, Methods & Common Rating Errors. e-HR Managing 360
Degree performance appraisal.

Unit 4: Performance Management Implementation LH 6

Bottlenecks, Strategies & Factors affecting PM implementation, Operationalizing Change through
Performance Management, Building & Leading high performance team, Organizational
Culture and Performance Management.
 Unit 5: Performance Monitoring and Counseling LH 7
Concept, Characteristics, Objectives, Importance and Process of Performance Monitoring,
OngoingMentoring and Protégé Development Performance Counseling: Concept,
Principles of Performance Counseling, Performance Counseling Skills & Performance
Counseling for higher job performance.

Unit 6: Performance Management Strategic and Interventions LH 6

Reward based performance management; career based performance management, team based
performance management, culture based performance management; measurement based
performance management; competency based performance management; leadership based
performance management.

Unit 7: Ethics in Performance Management LH 4

Principles, Ethical Issues & Dilemmas, Developing Code of Ethics, Performance Management in
MNCs.

Unit 8: Role of HR Professionals in Performance Management System LH 3

Appraising HR function, Future role of HR Professionals in Performance Management in
KnowledgeMillennium.

Unit 9: Emerging Concepts LH 4

HR Bench Marking and Performance Management, HR Out Sourcing and Performance
Management, Role of Mentoring on Performance Management, Performance Management in
Developing Countries.

Reference Books
Aguinis, H., Performance Management, New Delhi: Pearson
Education, Inc. Kandula, S. R., Performance Management, New Delhi:
PHI.

Rao, T.V., Performance Management and Appraisal Systems. New Delhi:

Response Bank. Cardy, R. L., Performance Management: Concepts, Skills and
Exercise, New

Delhi: PHI,
Cascio, W. F., Managing Human Resources: Productivity, Quality of work life, Profits.

Singapur: MGraw Hills.

Dessler, G.& Varkkey, B., Human Resource Management, New Delhi: Prentice Hall.
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PERFORMANCE MANAGEMENT
CONCEPT

Performance Management involves the combination of two distinct terms performance and
management. Performance is the physical and mental contribution of employees to achieve
organizational goals whereas management is an act of planning, monitoring and evaluating activities.
Performance management is an act of planning, monitoring and evaluating the mental and physical
contribution of human resources in the organization

In other words, it can be defined as a systematic process for improving organizational performance by
developing the performance of individuals and teams. It is a means of getting better results from the
organization, teams and individuals by understanding and managing performance within an agreed
framework of planned goals, standards and competence requirements.

According to Walters

Performance management is: the process of ‘directing and supporting employees to work as
effectively and efficiently as possible in line with the needs of the organization’

According to Armstrong and Baron

‘Performance management is a strategic and integrated approach to delivering sustained success to

organizations by improving the performance of the people who work in them and by developing the
capabilities of teams and individual contributors’

Performance management is an ongoing process involving planning, monitoring, and evaluation of an

employee's goals and overall contribution to the business. It includes planning performances,
appraising performance, giving feedback and counselling employees to improve their performance. Its
primary objective is to motivate and enhance employees' efficiency and effectiveness.

CHARACTERISTICS OF PERFORMANCE MANAGEMENT

Performance management is a pre-planned process of which the primary elements are agreement,
measurement and feedback. The following are the characteristics of performance management −

1. Measures outputs of delivered performance

It is concerned with measuring outputs of delivered performance compared with expectations

expressed as objectives. Its complete focus is on targets, standards and performance measures. It is
based on the agreement of role requirements, objectives and performance improvement and personal
development plans.
2. Concerned with inputs and values

Performance management is also concerned with inputs and values. The inputs are the knowledge,
skills and behaviors required to produce the expected results from the individuals.
3. Continuous and flexible process

Performance management is a continuous and flexible process of observation and feedback. It

involves managers and employees that sets out how they can best work together to achieve the
required results.

4. Principle of management by contract and agreement

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It is based on the principle of management by contract and agreement rather than management by
command. It relies on consensus and cooperation rather than control or coercion.

5. Focuses on future performance planning and improvement

Performance management also focuses on future performance planning and improvement rather than
on retrospective performance appraisal. It functions as a continuous and evolutionary process, in
which performance improves over the period of time; and provides the basis for regular and frequent
dialogues between managers and individuals about performance and development needs.

. The Performance Management Contribution

Performance management is an ongoing process involving planning, monitoring, and evaluation of an

employee's goals and overall contribution to the business. It includes planning performances,
appraising performance, giving feedback and counselling employees to improve their performance.
Performance management system can make the following important contributions:

1. Motivation to perform is increased.

Performance management provides regular feedback to employees about their performance.

Employees get knowledge about they are doing and get recognition about past successes. Once they
know about their past performance through proper feedback, employees will be motivated to perform
more better in future.

2. Self-esteem is increased.

Positive feedback about 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.

Managers involves in direct supervision and appraisal of subordinate. There is direct and frequent
interaction between managers, supervisors and employees so that managers gain new insights about
the person and personality. Also, supervisors gain a better understanding of each individual’s
contribution to the organization. Such new insights of a person’s performance and personality
will help the manager build a relationship with that person.

4. The job definition and criteria are clarified.

In performance management, the job of the person being appraised may be clarified and defined more
clearly. In other words, employees gain a better understanding of the behaviors and results required of
their specific position. Employees also gain a better understanding of which criteria define job
success.

5. Self-insight and development are enhanced.

Participants in the performance management system gain a better understanding of their strengths and
weaknesses. They can better understand about themselves and the kind of development activities they
need for their progress through the organization which can help them better define future career
paths.

6. Personnel actions are more fair and appropriate.

Performance management systems provide valid information about performance, which can be used
for personnel actions such as merit increases, promotions and transfers, as well as terminations. In
general, a performance management system helps ensure that rewards are distributed on a fair and
credible basis.
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7. Organizational goals are made clear.

The goals of the unit and the organization are made clear, and the employee understands the link
between what he or she does and organizational success. This is a contribution to the communication
of what the unit and the organization are all about and how organizational goals cascade down to the
unit and the individual employee. Performance management systems can help improve employee
acceptance of these wider goals (i.e., organizational and unit level).

8. 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.

9. There is better protection from lawsuits.

Data collected through performance management systems can help document compliance with
regulations (e.g., equal treatment of all employees regardless of sex or ethnic background). When
performance management systems are not in place, arbitrary performance evaluations are more likely,
resulting in an increased exposure to litigation.

10. identification of 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 (i.e.,
before the problem is too costly and cannot be remedied).

11. performance are communicated more clearly.

Performance management systems allow managers to communicate to their subordinates about their
judgements regarding performance. Mangers involve in assessing and monitoring the performance of
others. They are accountable to discuss performance expectations and provide feedback. When
managers possess these competencies, subordinates receive useful information about how their
performance is seen by their supervisor.

12. Organizational change is facilitated.

Performance management systems can be a useful tool to drive organizational change. For example,
assume an organization decides to change its culture to give top priority to product quality and
customer service. Once this new organizational direction is established, performance management is
used to align the organizational culture with the goals and objectives of the organization to make
change possible. Employees are provided with training in the necessary skills, and are also rewarded
for improved performance so that they have both the knowledge and the motivation to improve
product quality and customer service.

13. Voice behavior is encouraged.

Voice behavior involves making suggestions for changes and improvements that are innovative,
challenge the status quo, are intended to be constructive, and are offered even when others disagree. A
well-implemented performance management system allows employees to engage in voice behavior
that can lead to improved organizational processes. The performance review meeting can lead to a
conversation during which the employee provides suggestions on how to reduce cost or speed up
specific process.

14. Employee engagement is enhanced.

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A good performance management system leads to enhanced employee engagement. Employees who
are engaged feel involved, committed, passionate, and empowered. Moreover, these attitudes and
feelings result in behaviors that are innovative and, overall, demonstrate good organizational
citizenship and take action in support of the organization. Employee engagement is an important
predictor of organizational performance and success and, consequently, engagement is an important
contribution of good performance management systems.

Guiding Principles of Performance Management

Performance management is a constant process of matching individual efforts with organizations’

objectives. This results in significant cost savings, accelerating the achievement of the firm's
objectives and a continuous rise in production.

The principles of performance management should be about people and performance, not just the
process involved. Some of the guiding principles of performance management are as follows −

Performance Analysis

In performance management, the performance of employee is analyzed by appraiser or reviewer and

manager. The appraiser measures the behavior of the employee and the outputs he/she gives prior to
any kind of management changes. Through this analysis, the management measures the current
performance, establishes standards, specifies the deficiencies, calculates the value of improvement
and finally determines the performance.

Transparency

Secrecy in any program breeds distrust and uncertainty. Transparency is essential to individuals and
teams to easily understand how their objectives correspond with the company's goals. Transparency
about relevant company data, availability of resources to be utilized to increase work efficiency, and
company goals. This way can employees take responsibility for goals and synchronize themselves
independently.
Set Right Goals

Employee performance is determined by the corporate goal. Goals provide direction and inspiration to
employees. When the goals are abstract and difficult to quantify or seem impossible compared to the
current state, this functions as a demotivator. In this manner, corporate goals must be set clearly

Be Specific

Managers should be clear how the organizations’ objectives relate to individual targets. Any doubt
should be avoided when communicating expectations and goals. Keep it concise and easy to
comprehend. This encourages employees to focus their efforts on improving their performance by
following established standards and enhancing productivity.

Effective Measure

The criteria must be quantifiable for a performance management program to be effective. An

employee should be able to understand his/her performance aligning to the program aimed at specific
targets.

Proper Communication
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A well-designed communication system may significantly improve efficiency and accelerate the
whole process. When vital information is provided to individuals, they feel valued. Communication is
also critical during times of crisis to maintain staff performance.

Motivation and Feedback

Performance management is an ongoing activity. Every person needs some motivation. Organizations
should develop some techniques to encourage them consistently to meet objectives and strive for
greater performance. Further feedback is itself intrinsic motivation tool. When employees get accurate
feedback at the appropriate moment, they may take remedial action and adjust their performance. So,
provide feedback to all of the organizations actors so that individuals, teams, and departments work
together to accomplish objectives.

Appropriate Tools and Training

The employees should have necessary knowledge, skills, and ability to do their assigned tasks more
efficiently and effectively. This principle suggest to manage appropriate training and make employees
capable of doing the assign ed tasks while also overcoming everyday obstacles.

Performance Appraisal

Performance Appraisal involves the combination of two different terms “performance” and
“appraisal.” Performance refers physical and mental contribution of employees in their organization.
It is doing jobs effectively and efficiently. And appraisal is the systematic assessment or evaluation of
worth of their contribution. Performance Appraisals is the assessment of worth of employees physical
and mental contribution in the organization.

It can be defined as a systematic evaluation of an individual with respect to performance on the job
and individual’s potential for development. Performance appraisal is a formal process whereby each
employee is evaluated to determine how s/he is performing. It assesses employees’ performance role,
career development potentialities and also strengths and weakness.
According to Wayne F. Cascio, “Performance appraisal is the systematic description of job related
strengths and weakness individuals or groups.”

Conclusively, performance appraisal is a formal, structured system of measuring, evaluating job

related behaviors and outcomes to discover reasons of performance and how to perform effectively in
future so that employee, organization and society all benefits.”

Difference Between Performance Appraisal and Performance Management

Performance appraisal is an operational technique for increasing staff efficiency. In contrast,

performance management is a strategic tool. There are some significant distinctions between
performance appraisal and performance management. They are as follows –
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PERFORMANCE MANAGEMENT PROCESS

Performance management is an ongoing process. Performance management does not take place just
once a year. Performance management is a continuous process including several components. These
components are closely related to each other, and the poor implementation of any of them has a
negative impact on the performance management system as a whole.
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PREREQUSITE

There are two important prerequisites that are required before a performance management system is
implemented: (1) knowledge of the organization’s mission and strategic goals and (2) knowledge of
the job in question.

Strategic planning allows an organization to clearly define its purpose or reason for existing, where it
wants to be in the future, the goals it wants to achieve, and the strategies it will use to attain these
goals. Once the goals for the entire organization have been established, similar goals cascade
downward, with departments setting objectives to support the organization’s overall mission and
objectives.

The second important prerequisite before a performance management system is implemented is to

understand the job in question. This is done through job analysis. Job analysis is a process of
determining the key components of a particular job, including activities, tasks, products, services, and
processes. A job analysis is a fundamental prerequisite of any performance management system.
Without a job analysis, it is difficult to understand what constitutes the required duties for a particular
job. If we don’t know what an employee is supposed to do on the job, we won’t know what needs to
be evaluated and how to do so.

Performance Planning

The second component of the performance management process involves performance planning.
Performance planning includes the consideration of results and behavior as well as a development
plan.

Result is the yardstick of performance management and used to measure employees and departments
performance. It provides information about performance gap and achievement. It evaluates how well
individual employee has performed against assigned target.

Behaviors that is how a job is done, constitute an important component of the planning phase. It
includes competencies, which are measurable clusters of knowledge, skills and attitude (KSAs) that
are critical in determining how results will be achieved . Behavior is measured through close
observation and monitoring by supervisor or human resources department.

Finally, the development plan includes a description of areas that need improvement and goals to be
achieved in each area. In this stage, plans are developed to improve employees KSA.

Performance Execution

The third component involves performance execution. Both the employee and the manager are
responsible for performance execution. Employee needs to be committed to goal achievement and
should take a proactive role in seeking feedback from his or her supervisor.

The responsibility of manager or supervisor for the execution of performance is to provide resources,
tools and equipment to employees, provide regular feedback to subordinates about their performance,
motivate team members and focus on development activities to enhance individuals’ knowledge and
skills.

Performance Assessment

The fourth component involves performance assessment. Both the employee and the supervisor must
evaluate employee performance. In this step, employees and managers both are responsible to
measure and assess the performance of employees. It is the self-appraisals, and appraisal by others.
Involvement of the employee in the process of assessment will increases his or her ownership and
commitment to the system.
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The performance assessment includes the assessment of individual target, behavior and attitude, and
special achievement during the performance appraisal cycle.

Performance Review

The fifth component involves performance review where the employee and manager meet to discuss
employee performance. They exchange the performance feedback and review performance against
performance target or performance goal.

Performance review focuses on the present and the future. The present involves the changes in
compensation that may result from the results obtained. The future involves a discussion of goals and
development plans that the employee will be expected to achieve during the period before the next
review session.
•. Performance Renewal And Re-contracting

The final component involves performance renewal and re-contracting. As the performance
management is ongoing process, once it has been reviewed and end, the cycle starts for the next
performance appraisal. It should be again aligned with next year’s organizations mission, goals and
objectives and integrated with departmental goals.

Challenges or Issues of Performance Management

Performance management is: the process of ‘directing and supporting employees to work as
effectively and efficiently as possible in line with the needs of the organization’. The major challenges
of performance management are as follows:

1. Strategic Focus

Performance management should focus on overall goals on the basis of which strategies and action
plan should be made. Focus should be given in common goals, despite different department has
different goals.

2. Effective Feedback

Timely and effective feedback is the pre-requisite of effective performance management.

Management must provide consistent, timely and meaningful feedback to employees. Inconsistent and
late feedback led confusion, disappointment and frustration to employees. That will hurt employees
morale, engagement and finally derails the performance of business organization.

3. Leadership Support

In the implementation of performance management practices, the commitment and support of top
management is quite essential. Managers must support staff to improve their skills, update their
knowledge with evolving technology.

4. Stakeholders’ Review

When designing performance management system, management should involve major stakeholders.
Without proper consultation with stakeholders, performance management process may not address all
needs of organization.

5. Evaluation
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Evaluation of performance should be done at regular interval and detect the problem at early stage. It
will be helpful to correct problem and provide feedback in time. The evaluation should be done by
independent authorities.

6. Mutual Trust and Transparency

Effectiveness of performance management depends on the trust and transparency between managers
and employees. Lack of mutual trust and transparency will create doubt on their credibility and
distrust between managers and employees, finally makes the performance management system
worthless.

7. Incompetency

All team members involved in performance management system must possess appropriate skills,
knowledge and attitude to utilize the system. For that proactive training and development should be
implemented to ensure that em

8. Reward

Appropriate reward is one of the greatest challenge to the performance management. An appropriate
reward system that encourage high performer and discourage low performer must be practiced. A
wholistic reward system that is financial and non financial reward system should be developed and
communicated to employees. Greater emphasis should be given non-financial rewards.

9. Melding Culture

The ability to align organizational culture with organizational practices will determine the success of
performance management. There must be compatibility between performance management system
and organizational culture which is planned to be implemented. This requires change in the system,
policy and procedures.

10. Persistence

Long-lasting effort and years of hard work will be in the planning and implementation of performance
management. There must be complete involvement of each and every employee to make performance
management successful. Hard work and perseverance of all employees and manager are must for the
successful accomplishment of performance.
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UNIT 2
Performance Management System and Strategy
Performance Management System (PMs)

Performance management system is the systematic approach to measuring the performance of

employees. It is a process through which the organization aligns its mission, goals, and objectives
with available resources (e.g. Manpower, material, etc), systems, and set the priorities.
It is the process of creating an appropriate work environment where employees can perform
to the best of their abilities in order to meet the organizational goals.
It is a broad set of activities aimed at improving employee performance. The fundamental
goal of performance management system is to promote and improve employee effectiveness.
It is a continuous process where managers and employees work together to plan, monitor and review
an employee’s work objectives or goals and his or her overall contribution to the organization.
The performance management system is aligned strategically with the corporate strategy and HR
strategy so as to derive unit, team and individual objectives.

Characteristics of Performance Management System

PMs is a continuous process where managers and employees work together to plan, monitor
and review an employee’s work objectives or goals and his or her overall contribution to the
organization. The following characteristics are likely to allow a performance management
system to be successful.
• Strategic congruence.
The system should be congruent with the unit and organization’s strategy. For a performance
management system to be effective and successful, it is important that employee goals must
be aligned with the team and organizational goals. This means that the performance
management system must be congruent with the team and organizational strategies.
• Context congruence.
Context refers to the organizational culture. An organizational culture binds the values and
norms of an organization which in turn dictates the behaviors and attitudes of employees at
work. Organizational culture plays an important role within the organization, so, it is
necessary that the performance management system of an organization is aligned with the
organization’s culture as well as the broader cultural context of the region in which the
organization is operating. Binding organizational culture with PMs motivates employees, and
increases job satisfaction.
• Thoroughness.
The system should be thorough regarding four dimensions. First, all employees should be
evaluated (including managers). Second, all major job responsibilities should be evaluated
(including behaviors and results). Third, the evaluation should include performance spanning
the entire review period, not just the few weeks or months before the review. Finally,
feedback should be given on positive performance aspects as well as those that are in need of
improvement.
• Practicality.
Systems that are too expensive, time consuming, and complex will obviously not be effective.
Good, easy-to-use systems e.g., performance data are entered are available, for managers to
help them make decisions. Finally, the benefits of using the system (e.g., increased
performance and job satisfaction) must be seen as outweighing the costs (e.g., time, effort,
expense).

Meaningfulness.
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The system must be meaningful. First, the standards for evaluations of each job function
must be important and relevant. Second, performance assessment must emphasize only those
functions that are under the control of the employee. Third, evaluations must take place at
regular intervals and at appropriate moments. Fourth, the system should provide for the
continuing skill development of evaluators. Finally, the results should be used for important
administrative decisions. People will not pay attention to a system that has no consequences
in terms of outcomes that they value.
• Specificity.
A good system should be specific: it should provide detailed and concrete guidance to
employees about what is expected of them and how they can meet these expectations.
• Identification of effective and ineffective performance.
The performance management system should provide information that allows for the
identification of effective and ineffective performance. The system should allow for
distinguishing between effective and ineffective behaviors and results, thereby also allowing
for the identification of employees displaying various levels of performance effectiveness.
• Reliability.
A good system should include measures of performance that are consistent and free of error.
For example, if two supervisors provided ratings of the same employee and performance
dimensions, ratings should be similar.
• Validity.
The measures of performance should also be valid. In this context, validity refers to the fact
that the measures include all relevant performance facets and do not include irrelevant
performance facets. In other words, measures must be relevant not deficient and are not
contaminated. In short, measures include what is important and do not assess what is not
important and outside of the control of the employee.
Openness.
Good systems have no secrets. First, performance is evaluated frequently and performance
feedback is provided on an ongoing basis, so, employees are continually informed of the
quality of their performance. Second, the appraisal meeting consists of a two-way
communication process during which information is exchanged. Third, standards should be
clear and communicated on an ongoing basis. Finally, communications are factual, open, and
honest.
Acceptable and fair
• A good system is one which is accepted and perceived fair by all employees . it is important
for management to get feedback from the employees about the system. As the outcome of the
performance management system affects everyone that interacts with the systems, all parties
must be involved in the design and implementation of the system. This will make
performance management systems fair and reduce employee resistance and increase
performance.
• Inclusiveness.
Good systems include input from multiple sources on an ongoing basis. The evaluation
process must represent the concerns of all the people who will be affected by the outcome.
Input about employee performance should be gathered from the employees themselves before
the appraisal meeting. All participants must be given a voice in the process of designing and
implementing the system. Such inclusive systems are likely to lead to more successful
systems including less employee resistance, improved performance, and fewer legal
challenges.

• Correctability.
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Despite, it is virtually impossible to create a system that is completely objective because

human judgment is an important component of the evaluation process, the process of
assigning ratings should minimize subjective aspects; When employees perceive an error has
been made, there should be a mechanism through which this error can be corrected.
Standardization.
Good systems are standardized. This means that performance is evaluated consistently across
people and time. To achieve this goal, the ongoing training of the individuals in charge of
appraisals, usually managers, is a must.
• Ethicality.
Good systems comply with ethical standards. This means that the supervisor suppresses her
personal self-interest in providing evaluations. In addition, the supervisor evaluates only
performance dimensions for which she has sufficient information, and the privacy of the
employee is respected.

Objectives of Performance Management System

The following are the key objectives of performance management system:
1. To leverage the performance of the organization, given that goals are complex to achieve.
2. To create role clarity, clarify performance objectives and measure at individual, team and
organizational level.
3. To promote high-performance work culture in the organization.
4. To encourage team work, a sense of belonging and ownership.
5. To develop employees by systematically identifying training and development needs.
6. To foster positive the relationship between manager and employees through a two-way
communication process.
7. To focus on the process rather than on format to meet the demand and expectation.
8. Initiating, developing and implementing follow up action for developing performance of
employees.
9. To bring out the hidden potential and competencies of employees.
10. To recognize, reward and compensate employees for the achievement of performance objectives
successfully in a more objective, transparent and equitable way.

Components of Performance Management System

Performance Management System is a continuous process where managers and employees work
together to plan, monitor and review an employee’s work objectives or goals and his or her overall
contribution to the organization.

Performance Planning:
Performance planning is the first crucial component of any performance management process which
forms the basis of performance appraisals. Performance planning is jointly done by the appraisee and
also the reviewee in the beginning of a performance session. During this period, the employees decide
upon the targets and the key performance areas which can be performed over a year within the
performance budget., which is finalized after a mutual agreement between the reporting officer and
the employee.

Performance Appraisal and Reviewing:

The appraisals are normally performed twice in a year in an organization in the form of mid reviews
and annual reviews which is held in the end of the financial year. In this process, the appraisee first
offers the self-filled up ratings in the self-appraisal form and also describes his/her achievements over
a period of time in quantifiable terms. After the self-appraisal, the final ratings are provided by the
appraiser for the quantifiable and measurable achievements of the employee being appraised.
The entire process of review seeks an active participation of both the employee and the appraiser for
analyzing the causes of loopholes in the performance and how it can be overcome.
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Performance feedback and personal counseling:

This is a very important step in which the appraiser and employee sit in discussion. The appraiser
talks to the employee about areas of improvement and about his levels of contribution, expected
performance achievement, etc. Along with transparent feedback, the need for training and
development is also identified. The appraiser needs to adopt necessary measures to ensure that the
employee meets the company’s expectation levels and that he improves overall performance

Rewarding good performance:

This stage is very sensitive for an employee as this may have a direct influence on the self-esteem and
achievement orientation. During stage, an employee is publicly recognized for good performance and
is rewarded. Any contributions duly recognized by an organization helps an employee in coping up
with the failures successfully and satisfies the need for affection.

Performance Improvement Plans:

In this stage, fresh set of goals are established for an employee and new deadline is provided for
accomplishing those objectives. The employee is clearly communicated about the areas in which the
employee is expected to improve and a stipulated deadline is also assigned within which the employee
must show this improvement. This plan is jointly developed by the appraisee and the appraiser and is
mutually approved.
Potential Appraisal:
Potential appraisal forms a basis for both lateral and vertical movement of employees. By
implementing competency mapping and various assessment techniques, potential appraisal is
performed. Potential appraisal provides crucial inputs for succession planning and job rotation.

Competency Based Performance Management System

Competency or Talent is foundation for people for achieving superior performance in any job. A
competency-based performance management system (cPMS) is modern performance management
techniques focuses both on developmental and judgmental aspects of performance management.
It is a performance strategy that critically assesses competencies and links the usage of competency
model to performance management system (PMS), which eventually result in overall effective
performance.
cPMS takes all factors of performance into consideration including inputs, throughput, output and
outcomes by the individual. It is more objective in nature. It analyzes the progress of individuals and
directed towards those skill that can be improved.
It attempts to integrate the key behavioral competencies with performance management for achieving
superior performance. When integrating behavioral competencies with performance management,
organization should focus on 40:20:40 principle. That is 40 percent on business process, 20 percent on
technology and 40 percent on change management including communication and training.
The competency based performance management system involves following steps:
1. identify the core position within the organization
2. identify the key soft skills or competencies for the position.
3. Assessing the current skills or competency level of employees with multisource feedback
mechanism.
4. Provide training and development to necessary competencies.
5. Reflect the competency required in the performance appraisal.
6. Establish competency performance expectation of employees.
7. Provide ongoing feedback, counselling and recognition.
Despite the popularity of competency based performance management system, little attention is given
value dimension of organization in cPMS. In other words, value dimension of performance
management is neglected. Further, it requires to append ethical component in the list of
competencies.

Electronic Performance Management

Globalization eliminated the boundary of business organizations and activities are extending across
the world. Further, dramatic development of information technology has contracted the world and
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made the competition tougher. In this condition, organizations are blending information technology
with human resources activities to perform job more diligently and swiftly that is called e-
performance management. E-performance management is the planning, implementation, and
application of information technology in managing the PMS. E-performance management is a part of
e-HRM or HR information system (HRIS). It is the use of IT in the field of PMS, which integrates
strategies, policies, and practices of the organization with the performance management process.
E- performance management system develops online software package with multiple application
modules that can record all information about human resources management and performance
management so that information of large numbers of employees and managers across the
organization, across the world can be obtained at the press of bottom.
E-performance management is typically defined as the use of computer system, interactive electronic
media and telecommunication network to carry out the function of human resources management
department.
E-performance management products provides the information of skill, knowledge and competencies
in the form of web-based, real time, software tool that is fully integrated with organizational strategies
and objectives. It allows the organization to maintain a record of core skills and competence relative
the job. It integrates these all kinds of competencies into the employees performance management
process. It provides the templates that could used across the organization of different parts of the
world.
e- performance management plays following crucial roles:
1. ensure that the employees understood the importance of their contribution to the organizational
goals and objectives.
2. ensure each employee understands what is expected from them and equally ascertaining whether
the employees possess required skills and support for fulfilling such expectations.
3. facilitates cordial and harmonious relationship between an individual employee and manager based
on trust and empowerment.
Benefits of e-performance management
E-performance management is the planning, implementation and application of information
technology in managing performance management system. It is a part of e-HRM and HR information
system. The benefit of e- performance management is described under:
For Employees:
Clarifies the expectation of employers.
Provides self assessment opportunities.
Improves employees performance.
Clarifies career path.
Provides job satisfaction.
For Managers
Receives instant feedback on employees.
Need not rewrite performance contract each year.
Provides individual development plan.
Reduces paper-based activities.
For Organization
Improves organizations performance
Promotes employees retention
Improves organizations’ productivity
Overcome the barriers to communicate
Foster clear accountability
Provides cost advantages
However, e-performance management has changed the concept of traditional management concept
from management is the art of getting things done through people to management is developing
people through work.
Corporate and Business Level Strategic Plans
Strategic planning is a process that involves describing the organization’s destination, assessing
barriers that stand in the way of that destination, and selecting approaches for moving forward. The
main goal of strategic planning is to allocate resources in a way that provides organizations with a
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competitive advantage. Overall, a strategic plan serves as a blueprint that defines how the
organization will allocate its resources in pursuit of its goals.
There are several steps that must be considered in the creation of a successful strategic plan. These
include
(1) the conduct of an environmental analysis (i.e., the identification of the internal and external
parameters of the environment in which the organization operates);
(2) the creation of an organizational mission (i.e., statement of what the organization is all about);
(3) the creation of an organizational vision (i.e., statement of where the organization intends to be in
the long term, say, about 10 years);
(4) setting goals (i.e., what the organization intends to do in the short term, say, one to three years);
and
(5) the creation of strategies that will allow the organization to fulfill its mission and vision and
achieve its goals (i.e., descriptions of game plans or how-to procedures to reach the stated objectives).
After each of these issues has been defined, organizational strategies are created so that the mission
and vision are fulfilled and the stated goals are met.

1. ENVIRONMENTAL ANALYSIS
The first step in conducting a strategic plan is to step back to take in the “big picture.” This is
accomplished through what is called an environmental analysis. An environmental analysis identifies
external and internal parameters with the purpose of understanding broad issues related to the
industry.
An examination of the external environment includes a consideration of opportunities and threats.
Opportunities are characteristics of the environment that can help the organization succeed.
Economic, political/legal, social, technological, competitors, customers, and suppliers are major
external environmental factors.
An examination of the internal environment includes a consideration of strengths and weaknesses.
Strengths are internal characteristics that the organization can use to its advantage. Weaknesses are
internal characteristics that are likely to hinder the success of the organization.
Organizational structure, organizational culture, politics, processes, size are major internal
environmental factors together creates strengths and weakness.
After external and internal issues have been considered, information is collected regarding
opportunities, threats, strengths, and weaknesses. This information is used to conduct a gap analysis,
which analyzes the external environment in relation to the internal environment. The pairing of
external opportunities and threats with internal strengths and weaknesses leads to the following
situations (ranked from most to least competitive):

i. Opportunity + Strength = Leverage.

The best combination of external and internal factors occurs when there is an opportunity in the
environment and a matching strength within the organization to take advantage of that opportunity.
These are obvious directions that the organization should pursue.

ii. Opportunity + Weakness = Constraint.

In a constraint situation, the external opportunity is present; however, the internal situation is not
conducive to taking advantage of the external opportunity. network-connected devices and specialized
components. The external opportunity would still be there but, absent the internal capabilities, it
would not turn into an advantageous business scenario.

iii. Threat + Strength = Vulnerability.

In this situation, there is an external threat, but this threat can be contained because of the presence of
internal strengths.
iv. Threat + Weakness = Problem.
In the worst scenario, there is an external threat and an accompanying internal weakness.

2 MISSION
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After the environmental analysis has been completed and the gap analysis reveals an organization’s
leverage, constraints, vulnerabilities, and problems, the members of the organization must determine
who they are and what they do. The mission statement summarizes the organization’s most important
reason for its existence. Mission statements provide information on the purpose of the organization
and its scope. Good mission statements provide answers to the following questions:
• Why does the organization exist?
• What is the scope of the organization’s activities?
• Who are the customers served?
• What are the products or services offered?
In sum, a mission statement defines why the organization exists, the scope of its activities, the
customers served, and the products and services offered. Mission statements also include specific
information, such as the technology used in production or delivery, and the unique benefits or
advantages of the organization’s products and services. Finally, a mission statement can include a
statement of values and beliefs, such as the organization’s managerial philosophy.

3 VISION
An organization’s vision is a statement of future aspirations. In other words, the vision statement
includes a description of what the organization would like to become in the future (about 10 years in
the future). Vision statements are typically written after the mission statement is completed because
the organization needs to know what it is and what its purpose is before they can figure out who they
will be in the future. However, that mission and vision statements are often combined and, therefore,
in many cases it is difficult to differentiate one from the other.
In such cases, the vision statement usually includes two components: a core ideology, which is
referred to as the mission, and an envisioned future, which is what is referred to as the vision per se.
The core ideology contains the core purpose and core values of an organization, and the envisioned
future specifies long-term objectives and a picture of what the organization aspires to.
In sum, a vision statement includes a description of future aspirations. Whereas the mission statement
emphasizes the present, the vision statement emphasizes the future.
Characteristics of Good Vision Statements
Brief
Verifiable
Bound by a timeline
Current
Focused
Understandable
Inspiring
A stretch

4 GOALS,
After an organization has analyzed its external opportunities and threats as well as internal strengths
and weaknesses and has defined its mission and vision, it can realistically establish goals that will
further its mission.
The purpose of setting such goals is to formalize statements about what the organization hopes to
achieve in the medium- to long-range period (i.e., within the next three years or so).
Goals provide more specific information regarding how the mission will be implemented.
Goals can also be a source of motivation and provide employees with a more tangible target for which
to strive.
Goals also provide a good basis for making decisions by keeping desired outcomes in mind.
And, finally, goals provide the basis for performance measurement because they allow for a
comparison of what needs to be achieved versus what each unit, group, and individual is achieving

5 STRATEGIES
At this point, we know what the organization is all about (mission), what it wants to be in the future
(vision), and some intermediate steps to follow to get there (goals). What remains is a discussion of
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how to fulfill the mission and vision and how to achieve the stated goals. This is done by creating
strategies, which are descriptions of game plans or how-to procedures to reach the stated objectives.
The strategies could address issues of growth, survival, turnaround, stability, innovation, and
leadership, among others.
The human resources (HR) function plays a critical role in creating and implementing the strategies
that will allow the organization to realize its mission and vision. Specifically, the HR function can
make the following contributions:
Communicate knowledge of strategic plan. The HR function can be a good channel to communicate
the various components of the strategic plan (e.g., mission, vision, and goals) to all the employees.

• Outline knowledge, skills, and abilities (KSAs) needed for strategy implementation. The HR
function, through job analyses and the resulting job descriptions, serves as a repository of knowledge
regarding what KSAs are needed for a successful implementation of the strategic plan. Thus, the HR
function is in a unique situation to provide information about whether the current workforce has the
KSAs needed to support the strategic plan and, if not, to offer suggestions about what types of
employees should be hired and what types of plans should be put in place to develop the needed
KSAs internally.

• Propose reward systems. The HR function can provide useful information on what type of reward
system should be implemented to motivate employees to support the strategic plan.

Goals, Objectives, Target and Performance Management

Goals
A “goal” can be defined as “The purpose toward which an endeavor is directed. Goals are high-level
statements of direction. They should be aspirational. They should remain constant until your strategy
changes. Examples might be: Improve customer retention, reduce process waste, Maintain the
dividend, improve member engagement, Serve customers more quickly
Goals should be unique to organization. They are very much dependent on vision and mission
statement and on your analysis.
A goal is an “umbrella” statement that then needs to be broken down into how this will be achieved –
in other words, the goal is broken down into strategy to achieve the goal.
An organization may have more than one goal, but the number of goals should be limited to not more
than 3. Each of these “goals” describes a different way of looking at the organization, and, most
certainly, a different way of achieving and measuring success.
Objectives
Once you've defined goals, the next step is to break them down into objectives. “Objectives” are the
elements which, together, achieve the goal. Objectives are more specific than goals both in terms of
their aims, and in terms of their timeframes (which are usually shorter). In contrast to your Goals,
objectives should be SMART, that is:
Specific - what exactly is it?
Measurable - how will you measure it?
Achievable - is it realistically achievable?
Relevant - how and why is it relevant to your strategy?
Timebound - by when will you achieve it (including milestones along the way)?
That is, at some defined point in the future you should know that you either did or did not achieve the
objective. While goals allow for some ambiguity, objectives do not.
The following are some major differences between goals and objectives:
Alignment and order
Goals are set to achieve the mission of an organization or individual, while objectives are set for the
accomplishment of goals. Goals are thus higher in order than objectives.
Scope
Goals are broad intentions and are often incapable of being measured in quantifiable units. Objectives
are narrower than goals and are described in terms of specific tasks.

Specificity
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Goals are general statements of what is to be achieved. They do not specify the tasks that need to be
performed to accomplish them. Objectives, on the other hand, are specific actions one takes within a
certain timeframe.
Tangibility
Goals can be intangible and non-measurable, but objectives are defined in terms of tangible targets.
For example, the goal to “provide excellent customer service” is intangible, but the objective to
“reduce customer wait time to one minute” is tangible and helps in achieving the main goal.
Timeframe
Goals are set to be achieved over a long period, while objectives are meant for a shorter time frame. A
goal is usually divided into several objectives spread over multiple time frames.
Language
The language used in describing goals is more focused on conceptual thinking, whereas that used in
objectives is more on the creative side.

Target and Performance Management.

Target is the specific, planned level of a result to be achieved within an explicit timeframe with a
given level of resources. The quality of the final results depends directly on the targets that are set at
the beginning of the cycle. It avoids the Garbage In, Garbage Out Principle.
Targets are the base for the final evaluations. It determines the threshold forces employees to meet the
threshold. At the end, the managers will have to evaluate employees’ performance basing on the
achievement of those targets. If employees meet threshold, their performance is evaluated positively.
However, the targets have been set wrongly it may lead to inconsistency between employees’
achievements and the results of the company.
Performance Management refers to the process of setting goals and objectives and regularly checking
progress toward achieving those goals. It is a continuous process feedback loop whereby the
outcomes are continually measured and compared with the target objectives. Any discrepancy or gap
is then fed back into changing the inputs, so as to achieve the desired objectives.
It is a forward-looking process and a “Leading Indicator” of performance because it drives a system
or organization towards a desired future goal. Goals, objectives, and targets come together under the
banner of “Performance Management.
Performance Review
A performance review is a formal assessment in which a manager evaluates an employee’s work
performance, identifies strengths and weaknesses, offers feedback, and sets goals for future
performance.
Performance review involves a formal meeting about how an employee is fairing in an organization-
development and performance-wise. This review is a planned process and can be conducted quarterly,
half-yearly or annually depending on the organization.
performance management systems can involve as many as six formal meetings. Each of these
sessions should be seen as a work meeting with specific goal, including the following:
• System inauguration. The purpose of this meeting is to discuss how the performance management
system works, which requirements and responsibilities rest primarily on the employee, and which rest
primarily on the supervisor.
• Self-appraisal. The purpose of this meeting is to discuss the self-appraisal prepared by the employee.
• Classical performance review. The purpose of this meeting is to discuss employee performance,
including the perspectives of both the supervisor and the employee.
• Merit/salary review. The purpose of this meeting is to discuss what, if any, compensation changes
will result from the employee’s performance during this period.
• Developmental plan. The purpose of this meeting is to discuss the employee’s developmental needs
and what steps will be taken so that performance will be improved during the following period.
• Objective setting. The purpose of this meeting is to set performance goals that are both behavior and
results oriented for the following review period.
An employee performance review is a two-way process, an employee is free to share his/her feedback
with the manager or the supervisor. Most employee performance review is a one-level process except
360-degree performance reviews that uses a multi-rater system where managers, co-workers,
colleagues provide input and employee self-reviews himself/herself.
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Performance review discussions serve very important purposes.

i. Meetings allow employees to improve their performance by identifying performance
problems and solutions for overcoming them.
ii. Performance reviews can help employees understand what they’re doing well, how they
can improve, how their work aligns with larger company goals, and what is expected of
them.
iii. Managers who use performance reviews effectively can more easily recognize high
performing employees, correct issues before they become insurmountable, communicate
expectations, encourage growth and development, and foster employee engagement.
iv. Meeting help to build a good relationship between the supervisor and the employee
because the supervisor shows that she cares about the employee’s ongoing growth and
development and that she is willing to invest resources, including time, in helping the
employee improve.

Performance Feedback'
Performance Feedback is the response given to an employee by his/her superior regarding his / her
achieved performance vis a vis expected/desired performance in terms of volume of work/quality of
work/pace of work/attitude towards the work/customers which should be genuine and unbiased i.e
based on the facts, figures and incidents.
The sandwich feedback technique is a popular three-step procedure for providing corrective feedback.
The sandwich feedback method starts with praise, followed by corrective feedback, followed by more
praise.
This means that the feedback discussion starts with positive comments, and is followed by negative
criticism, before appreciative words are used again. The term “sandwich method” comes from the fact
that the negative feedback, in this instance the cheese and the ham, is packed between words of praise,
which are the slices of bread. The aim of this method is to create a pleasant atmosphere for discussion
and to relax the severity of the negative criticism. The person criticized in this way should become
more receptive and ultimately leave the conversation with a good feeling.
360-degree feedback is a method of employee review that provides each employee the opportunity to
receive performance feedback from their supervisor or manager and four to eight peers, reporting staff
members, coworkers, and, customers. Most 360-degree feedback tools are also responded to by each
individual in a self-assessment. 360-degree feedback allows each individual to understand how his
effectiveness as an employee, coworker, or staff member is viewed by others. The most effective 360-
degree feedback processes provide feedback that is based on behaviors that other employees can see.
Now, 720-degree appraisal and feedback system has been using in practice. It is nothing rather
applying 360-degree feedback repeatedly or two-times at a time.

Scorecards For Performance Management;

Scorecards also called balance scorecard, was developed in the early 1990s by Robert Kaplan and
David Norton. It expands upon the Management by Objective model by providing a framework for
translating the company's mission, strategy, and values into quantifiable, measurable goals, and
objectives.
The Balance Scorecard analyzes the organization based upon four criteria customers, learning and
growth (HRs), internal business (Internal process) and financial aspects (profitability, operating costs,
and return-on-investment), and maintain balances between these factors.
Balance scorecard criteria serves as performance expectation of organization, lays the foundation for
clear performance expectations and the elimination of ambiguity concerning employee priorities.
With a complete scorecard in place, employees know where they stand, and can easily determine what
areas they can contribute to the success of an organization’s strategy.
Through the BSC, an organization monitors both its current performance and its efforts to improve
process, motivate and educate employees and enhance information system. It develops a balanced
approaches (Quantitative and Qualitative) to evaluate performance employees.
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Unit 3
Performance Planning and Appraisal
Concept of Performance Planning

Performance planning is a key area in performance management. It is the process of communication

between a manager and an employees that results in mutual understanding of what the employee
should be doing during the next period of time.
It includes setting goals, objectives, targets and standard of performance which revolve around the
four parameters such as quantity, quality, cost and timeliness. During performance planning, the
company objectives and the performance goals are communicated to the employee by seniors. And
the necessary training, resources, and support should also be provided.
According to Armstrong
Performance Planning define expectations- results to be achieved and the skills, knowledge, expertise
and capabilities required to attain these results.
According Bacal
Performance planning is the process in which employees and managers work together to determine
what employees should be doing in the next year and what successful performance means.
So, performance planning is the process of determining what and how a job is to be done in such a
manner that both the employee and his superior understand what is expected from the employee and
how success is defined and measured.
Characteristics of Performance Planning
Performance Planning define expectations- results to be achieved and the skills, knowledge, expertise
and capabilities required to attain these results. The major characteristics of performance planning are:
i. it is the foundation of effective performance management; it is effective when managers and
employees jointly set performance criteria.
ii. It starts with understanding of organizational objectives and strategy and ends with setting
performance criteria.
Iii. It exemplifies the commitment of employees and their managers towards attainment of
organizations mission and objectives.
Iv. It is fundamental managerial function and integral part of PMS.
V. it is tool to help individuals contribute their best to an organization in terms of ability, efforts and
results.
vi. It gives holistic meaning to employee performance development.
vii. It specifies the action required to accomplish each goal and expectation.
viii. It identifies the resources required for the success of the individual and work unit.
ix. It decides how success will be assessed.
x. it provides a valid basis for distinguishing levels of performance.
xi. It establishes ongoing communication which helps in mutual understanding, alignment, and
expectation for outstanding result.
Objectives of Performance Planning
Performance Planning define expectations- results to be achieved and the skills, knowledge, expertise
and capabilities required to attain these results. The objectives of performance planning can be split at
following levels:
At Organizational Level
1. To clearly define and communicate to employees the organizations mission, objectives, strategies
and performance goals.
2. To provide appropriate resources, support and training to employees in order to achieve the goal
and target.
3. To ensure that employees receive feedback on continuous basis.
4. To align job description organizational objectives and strategies.
5. To boost motivation and self concept of employees.
At Manager Level
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1. To provide opportunity to employee for joint goal setting for greater ownership and
accountability.
2. To clearly articulate performance metrics used to measure employees’ success in meeting agreed
goals and target.
3. To provide training whenever required to equip employees to perform as planned.
4. To provide ongoing on the job’ feedback.
At Employee Level
1. To determine performance goals and targets with the manager.
2. To view manager as a counselor or mentor rather than someone who passes judgement.
3. To become receptive to feedback.
4. To develop self-efficacy for providing information on self-performance.
Importance Of Performance Planning
Performance planning is the process in which employees and managers work together to determine
what employees should be doing in the next year and what successful performance means. The
importance of performance planning are given below:
1. Performance planning helps in aligning the individual goals with the organizational goals and the
concept behind this is mutuality for survival and growth.
2. This makes the entire process of performance management more accountable and objective.
3. It focuses on key results area and key performance area which must be considered for gaining the
competitive edge.
4. Performance planning helps in maximum utilization of resources and it is important to make clear
in the role and responsibilities of employees.
5. It helps employees in terms of role clarity and performance expectation for enhanced contribution.
6. it focuses on area of priority and concern for the organization for better emphasis of time, resources
and individual efforts.
Performance Planning Process
Performance planning is the process in which employees and managers work together to determine
what employees should be doing in the next year and what successful performance means.
Business planning
Business Planning also known as performance planning. It is a process of strategizing business
process. It involves analyzing internal components comprising products, process, people, cost etc. and
external conditions such as market forces, competitive forces, and other social, cultural, technological
and political forces. Besides, risk involved, resources allocation, work planning and priority setting
are analyzed based on the mission and objectives of the organization.

Identification of Key Success Factors

The second step of performance planning is identification of key success factors. These factors may
include cost of production, productivity, quality, delivery, responsiveness, branding etc. to meet the
demand generated by business planning. These factors demonstrate the areas where an organization’s
needs to focus for an enhanced level of performance.
Departmental objectives and strategies
Based on the organizational strategies and objectives, departmental goals and objectives are defined.
The departmental objectives are then broken into individual job objectives.
Individual Objectives and action plan
It consists of defining performance elements, that is what employees have to do. It defines the job
duties and responsibilities that contribute accomplishing organizational objectives and strategies.
These components are called critical components.
Individual performance expectation
It is the final step of performance planning. It contains setting individual employees performance
standards, that is telling the employee how well he has to do it. The manager explains to employees
what successful performance means.
Barriers to Performance Planning
Performance planning is the process in which employees and managers work together to determine
what employees should be doing in the next year and what successful performance means. The
barriers to performance planning can be categorized into two types which are as follows:
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Organizational Barriers
Most of the traditional organizations are not in favor of performance planning. According to this
concept, the organizations spending time on performance planning is just a wastage of time. These
organizations believe that they have a strong implementation strategy and due to this only, it becomes
the barrier.
Individual Barriers
The lack of commitment in the organization’s employees or management is another important barrier
to performance planning. Sometimes managers or employees or both show less commitment towards
the achievement of organizational goals and the reasons could be personal, organizational,
competitive or any other HR factor. For example, Organizational politics, workplace bullying or high
conflict causes employees to show less interest in their job responsibilities

Methodologies of Performance Planning

The key methodologies of setting up a performance criteria can be understood by following points and
are as follows:
1. Key Performance Area
Key performance area (KPA) involves the identification of targets pertaining to certain tasks and
activities which are challenging, and stretch the capabilities of the employee. It describes priority
areas to an employee and subsequent working on the specified areas.
As today’s organization lays a lot of emphasis on the objectivity of performance measurement, a lot of
time is consumed in setting performance criteria. So, it is important to set performance target and
determine key performance area which are critical for the organizational development perspectives.
The process of KPA involves following steps:
1. identification of key tasks and activities by both the employees and the manager
2. analyzing and determining priority areas.
3. setting targets or goals in the identified or focused area.
4. documenting and seeking the employee’s commitment to identified work.
5. Making arrangements for required resources.
2. Key Results Area ( KRA)
KRA is also known as key work outputs (KWO). It may be defined as general areas of outcomes or
outputs for which role is responsible. This means key result area is such areas for which one is
responsible for result. It captures the 80 percent work role where as 20 percent of work role based on
shared responsibility. It is different in terms of levels of the employees and types of department.
For example, “ Image of the organization” is the key result area of chief executive officer but
hopefully all employees contribute to this outcome. Further KRA of HR specialist can be employee
relation, motivation, career development, compensation etc. where as KRA of sales specialist are sales
forecasting, customer care, customer retention etc.
Identifying KRA helps employees in numbers of ways:
Clarify their roles.
Align their roles to the organization’s business or strategic plan.
Focus on results rather than activities.
Communicate their role’s purposes to others.
Set goals and objectives.
Priorities their activities, and therefore improve their time work management.
Make value-added decisions.
2. Task and Target Identification
Tasks and Target Identification involves the identification of roles, responsibilities, tasks and key
targets of the employees. By identifying these, each and every employee should know their duties and
key targets.
4. Goal Setting Exercises
An organization’s ultimate goal determines its strategy. For example An organization intending to
become the world’s largest textile company in the shortest possible time which is ultimate goal of any
organization, will increase its production capacities either through organic route such as setting up
new manufacturing facilities, or by acquiring other textile organizations.
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Since acquisition helps increasing production capacities quickly, the organization shall pursue
acquisition as a strategy for faster growth but acquisition strategy also involves turning around the
performance of the older acquired production units which essentially calls for improving human
performance for corporate success.
Components of Performance Planning
The performance planning is all about exploration of what individuals need to do and know in order to
improve their performance and develop their skills and competences. It is also about knowing how
managers can provide the support and guidance needed to employees. The key components of
performance planning are as follows:
1. Results
Results refer to what needs to be done or the outcomes an employee must produce. It includes the key
accountabilities, specific objectives and performance standard. Key accountabilities refer the broad
areas of a job for which the employee is responsible for producing results. This information about key
responsibilities are obtained from the job description.
Specific Objectives are statements of important and measurable outcomes. Objectives are the desired
level of performance. Specific objectives are part of each accountability that employees will achieve.
A performance standard is a yardstick used to evaluate how well employees have achieved each
objective. Performance standard is usually a minimum acceptable level of performance.
Discussing results also means discussing performance standards. Performance standards provide
information about acceptable and unacceptable performance (e.g., quality, quantity, cost, and time).
2. Behaviors
Behaviors include competencies, which are measurable clusters of KSAs that are critical in
determining how results will be achieved. Examples of competencies are customer service, written or
oral communication, creative thinking, and dependability.
Although it is important to measure results, an exclusive emphasis on results can give an incomplete
picture of employee performance. For some jobs it may be difficult to establish precise objectives and
standards whereas for other jobs, employees may have control over how they do their jobs but not
over the results of their behaviors.
For example, the sales figures of a salesperson could be affected more by the assigned sales territory
than by the salesperson’s ability and performance. Behaviors, or how a job is done, is an important
component of the planning phase. This is probably why results from a survey indicated that, in
addition to sales figures, salespeople would like to be appraised on such behavioral criteria as
communications skills and product knowledge.
3. Development Plan
Development plan is identifying areas that need improvement and setting goals to be achieved in each
area. It is the identification of employee strengths and weaknesses as part of the performance
management system. Development plans usually include both results and behaviors. The development
plan includes a description of areas that need improving and goals to be achieved in each area.
Developmental plans allow employees to answer the following questions:
• How can I continually learn and grow in the next year?
• How can I do better in the future?
• How can I avoid performance problems faced in the past?
Developmental plans can be created for every job, ranging from entry level to the executive suite.
Information to be used in designing developmental plans comes from the appraisal form. Specifically,
a developmental plan can be designed based on each of the performance dimensions evaluated.
Key Performance Indicators
Key Performance Indicators (KPIs) are quantifiable goals intended to measure the scope or potential
of a company’s success or attainable business objectives. These performance measurements can help
indicate which components of your business are the most beneficial to its progress, which ones can
help optimize its performance, or which areas of your company may need work.
KPIs, sometimes called KSIs (or key success indicators), should be quantifiable metrics that can be
measured regularly to chart the success of a project or a business’ operation as a whole. They can
apply to any element of your business, from marketing to customer service, to employee satisfaction,
to financial health.
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“Key performance indicator (KPI) is defined as a concrete parameter for measuring an

individual’s/team’s/business unit’s/organization’s performance, as it aligns to the overall business
goals.
Types of Key Performance Indicators
There are a variety of KPIs that can help measure the performance or progress of your business. Some
types of KPIs include:
1. Quantitative indicators: Quantitative indicators are represented by continuous or discrete numbers,
which can be ratios, percentages, or whole numbers that represent values like rating scales, dollars, or
weight. These indicators are the most straightforward quantifiable measures of performance, as they
present direct numerical values.
2. Qualitative indicators: These indicators are not expressed numerically but through feelings or
opinions. An employee satisfaction survey can be an example of qualitative data where performance
is based on feedback.
3. Leading indicators: Leading indicators are variables that can help identify long-term trends and
possibly predict successful future outcomes of your business processes.
4. Lagging indicators: Lagging KPIs compare a business’ current performance in a particular field
with their past performance in the same field.
5. Input indicators: Input indicators are a type of KPI that track the resources necessary to produce the
intended outcome, such as funding or extra staff. Input indicators can help companies keep track of
how efficiently they are using their resources.
6. Output indicators: Output indicators measure the success or failure of your business activities, like
the number of goods or services created through a particular process. Revenue growth and new
customer acquisition also indicate how well your business is performing.
7. Process indicators: Process indicators represent the efficiency of a business’s process and how
effectively it is functioning.

Approaches to Performance Appraisal

Performance appraisal is not about single event such as completing a standard performance standard
form, but rather a process that is ongoing. It should connect the process to organizational functioning
and have performance improvement, not simply salary adjustment and/or disciplinary action as their
focus.
Creamer and Janosik outlined several approaches to performance appraisal, including behavioral
based approaches, result focus approaches and appraisal of team performance.
1. Behavioral- Based Approaches
The approach which more focus on behavioral part of employees than other is behavioral approach. It
uses specific performance factor to evaluate employees. Under this approach measure of performance
can be either quantitative or qualitative. Common behavioral approaches are as follows:
i. Rating Scale
Rating is a commonly used traditional method of performance appraisal. Under this approach, an
employee is numerically rated from 1 to 10 on various job performance criterions like attendance,
attitude, performance, output, sincerity, dependability, initiative, etc. The employee may be rated by
his/her superiors, colleagues or even customers, depending upon the nature of job. Scores of all
criterions are finally calculated, and results are withdrawn.
ii. Behaviorally Anchored Rating Scale
This method is a combination of traditional rating scales and critical incidents methods. It consists of
preset critical areas of job performance or sets of behavioral statements which describes the important
job performance qualities as good or bad (for e.g. the qualities like inter personal relationships,
flexibility and consistency, job knowledge etc). These statements are developed from critical
incidents.
These behavioral examples are then again translated into appropriate performance dimensions. The
performance dimensions can be seven to nine. The final groups of behavior incidents are then scaled
numerically to a level of performance that is perceived to represent.
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A rater must indicate which behavior on each scale best describes an employee’s performance. The
results of the above processes are behavioral descriptions, such as anticipate, plan, executes, solves
immediate problems, carries out orders, and handles urgent situation situations.
iii. Weighted Checklist
A weighted checklist is a list of statements that describes the characteristics and performance of
employees on the job, such as leadership skill, knowledge, skills, abilities etc. The appraiser is given a
checklist of the descriptions of the behavior of the employees from effective to ineffective. It contains
different questions such as:
• Does he give respect to his superiors? Yes/No
• Does he follow instructions properly? Yes/No
• Does he make mistakes frequently? Yes/No
The supervisor answers in yes or no form. After ticking these questions, forms are sent to human
resources department where final rating is done. Human resources manager assign numerical values
or weight to each check list based on their importance. Feedback is provided to by rater to employees.
iv. Forced Choice Method
Forced choice method of performance appraisal was introduced by J.P. Guilford. It is one of the most
systematic and reliable approach to evaluate employees accurately. Under this approach, the HR
manager, at first, prepares a set of positive as well as negative statements. The statements are then
forwarded to the rater, following which the rater indicates which of the given statements suits the
employee. Once the rater finishes evaluating all employees, the report is sent to the HR manager for
final assessment. Some examples of positive and negative statements are
Positive statements
Communicates well with superiors.
Plays active role in meetings and other office events.
Negative statements
Consistently over-promises and under-delivers.
Isn’t punctual, often comes late to the office.
Each of such statements, both positive as well as negative, carries certain score set by the HR
manager, which is not even revealed to the rater. It makes the process more objective. The scores are
at last summed up and conclusion is withdrawn. The employees with high scores are ranked at the top
while least scoring employees are ranked at the bottom.
2. Result-focused approach
This approach focuses on the product or the outcome of one’s effort. It seeks to identify and evaluate
what has been accomplished by an employee subject to appraisal. It has both positive and negative
side. One positive side is that it sets short term and long term goals of employees in the context of
organizational objectives which are perceived as fair and generates high commitment and encourages
high participation. The negative side is the it too focuses on result and it is inflexible. It includes
following two approaches:

i. Management by Objectives
The concept of ‘Management by Objectives’ (MBO) was coined by Peter Drucker in 1954. It is a
process where the employees and the superiors come together to identify some goals which are
common to them, the employees set their own goals to be achieved, the benchmark is taken as the
criteria for measuring their performances and their involvement is there in deciding the course of
action to be followed.
The basic nature of MBO is participative, setting their goals, selecting a course of actions to achieve
goals and then taking decision. The most important aspect of MBO is measuring the actual
performances of the employee with the standards set by them. Entire program me of MBO is divided
in four major steps i.e setting up of goal, action planning, compari-son and timely review.
Setting up of goal-
In goal setting superior and subordinate together set certain goals, i.e the expected outcome that each
employee is supposed to achieve.
Action planning,
The manner in which goals could be achieved is determined i.e. identifying the activities which are
necessary to perform; to achieve pr determined goals or standards. When the employees start with
 28

their activities, they come to know what is to be done, what has been done, and what remains to be
done and it also gives an idea about the resources to be achieved.
Comparison
The goals set by the individual employee are compared with the actual goals achieved. It gives an idea
to the evaluator as why there is a variation in desired outcome and actual outcome .Such a comparison
helps create need for training so as to enhance employees’ performance.
Timely review:
It is the final step, it involves monitoring activities and taking corrective actions so that actual
performances do not deviates from standards established in beginning.
Managers need to ensure that the appraisal process are congruent with objectives and strategies of the
organization. An MBO rating form needs to provide space to list of employees objectives in order of
importance as well as space for evaluator to describe employees performance using mutually agreed
performance scale such as outstanding, very good, good, average and below average.
Accountabilities and measures approach
This approach involves the manager and employee agreeing on accountability and performance
factors and including them in the job description. Performance is often forecast for each factor to
enable quantifiable measure for each other. An accountability and measure form can be created with
performance factors categories.
Performance Appraisal Methods
There are several techniques of performance appraisal, each with some strong points as well as
limitations. Some of the commonly used performance appraisal techniques are described dividing into
two categories:
A. Past Oriented Methods
Past oriented methods assess behavior that has already occurred. They focus on providing feedback to
employees about their action, feedback that is used to achieve greater success in the future. Common
past oriented methods are as follows:
1. Graphic Rating Scale
It is the oldest and most widely used method. It is also called linear rating or simple rating scale. In
this method, appraisers are given a printed form which contains various objectives or qualities to be
rated like analytical ability, creative ability, leadership qualities, emotional stability in case of
managerial employees. The qualities in respect of workers could be attendance, overall output,
attitude, dependability, initiative, cooperation etc. Appraiser assigns the points to each quality or
character. The given points are added to find out overall performance. Employees are then ranked on
the basis of total points assigned and assess a person on the quality of his or her work in terms of
average; above average; outstanding; or unsatisfactory.

ii. Essay Method

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In the essay method, the appraiser writes an elaborate statement about the employee who is being
evaluated. Appraiser uses broad categories such as overall impression of performance, promotability
of employee, existing capabilities and qualifications of performing jobs, strengths and weaknesses and
training needs of the employee. He also suggests ways to improve his performance and appreciates
the good qualities. This essay can be prepared by the appraiser alone or together with the employee.
As the criteria for evaluation is not defined, it helps the appraiser to focus on the areas that actually
need improvement.
4. Critical Incidents Method:
The approach is focused on certain critical behaviors of employee that makes all the differences in
the performance. The critical incidents or events represent the outstanding or poor behavior of
employees or the job. Under this method, a supervisor maintains logs of each employee, periodically
records the incidents and describes how employees behaved during those incidents. These are then
discussed with the employee. The discussion focuses on actual behavior rather. It includes both
negative and positive points. The positive or effective behavior is assigned more points. The example
of a critical incident and behavior is given below:

5. Ranking
Ranking is one of the simplest methods of performance appraisal. Under this method, employees are
ranked from the best to the worst according to their performance level. In this, the superior ranks his
or her subordinates in the order of their merit, starting from the best to the worst. All that the HR
department knows is that A is better than B. The ‘how’ and ‘why’ are not questioned, nor answered.
No attempt is made to fractionalize what is being appraised into component elements. There are two
methods of ranking:
i. Alternative ranking method:
Alternate ranking is the performance appraisal method for employees where appraiser selects the best
and worst employees based on certain trait/criterion and ranks them accordingly. First, all employees
involved in ranking are listed. Then based on the established trait/criterion, appraiser selects best
employee and puts him/her at the top of the ranking. Later, appraiser selects the employee whose
performance is least and ranks him/her as the last. The employees who are assessed as second highest
and second last are added again to the rank list from top and bottom. This alternating ranking of
highest and lowest continues until all employees are ranked.
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ii. Paired Comparison Methods

A paired comparison is a method in which a certain employee and his/ her job is compared with
another employee of a similar post, and his/ her job. It involves the comparison overall performance
of one individual with that of the other on the basis of a common criterion.
Under this method, supervisor compares each employee with every other employee in the group and
assigns weight to each employee. Once the marks are assigned, the scores are derived by taking the
mean and the standard deviation from all of the scores. After all, comparisons are made and each
employee is assigned a summary or ranking based on the number superior scored or received.

6. Work Standards method:

In this technique, management establishes the goals openly and sets targets against realistic output
standards. These standards are incorporated into the organizational performance appraisal system.
Thus each employee has a clear understanding of their duties and knows well what is expected of
them. Performance appraisal and interview comments are related to these duties. This makes the
appraisal process objective and more accurate. It works best in long-term situations for human
resources teams, as it considers performances during that duration and eliminates time consuming
processes.
However, it is difficult to compare individual ratings because standards for work may differ from
job to job and from employee to employee. It does not allow for reasonable deviations.
6. Field Review Method
It is the group judgement technique. Under this method a member of HR department interviews line
managers to evaluate their respective employees. s/he collects pertinent information on each
employee with respect to the requirement of each job and obtain an opinion on performance on each
employee from the line managers. HR staffs also draws out all ratings obtained based on interactions
with line managers and probes into means and methods of improving the performance of every
employee. He repeats this process for each managerial unit of the organization. Then he meets with
 31

small group of raters from each managerial unit and goes over each employee rating with them to
identify areas in terms of inter-rater disagreement, help the group arrive at consensus and determine
that each rater conceive the standard similarity.
B. Future Focused Method
Future oriented performance appraisal aims to contribute to employees motivation, development and
HR Planning. It focuses on future performance by assessing employees potential for achievement
and by setting target for both short term and long term performance. The commonly used future
oriented methods are as follows:
1. Management By Objective (MBO):
The concept of ‘Management by Objectives’ (MBO) was coined by Peter Drucker in 1954. It is a
process where the employees and the superiors come together to identify some goals which are
common to them, the employees set their own goals to be achieved, the benchmark is taken as the
criteria for measuring their performances and their involvement is there in deciding the course of
action to be followed. The basic nature of MBO is participative, setting their goals, selecting a
course of actions to achieve goals and then taking decision. The most important aspect of MBO is
measuring the actual performances of the employee with the standards set by them.
MBO process goes as under,
Establish goals and desired outcomes for each subordinate
Setting performance standards
Comparison of actual goals with goals attained by the employee
Establish new goals and new strategies for goals not achieved in previous year.
This process involves the employee and manager working as a team to identify goals for the former
to work on. Once the goals are established, both parties discuss the progress the employee is making
to meet those goals. This process concludes with the manager evaluating whether the employee
achieved the goal.
Merits
Establishes link between individual and organizational performance.
Easy to implement and measure
Employees are motivated as they are aware about expected roles and accountability.
Performance-oriented diagnostic system.
Facilitates employees counselling and guidance.
Measures performance not personality of employees.
Demerits
Difficult to have employees agree on goals.
Misses’ intangible like honesty, integrity, quality etc.
Interpretation of goals vary from managers to managers.
Goal setting for qualitative functions may be cumbersome.
Time consuming, complicated, lengthy and expensive.
360 Degree Performance Appraisals:
This method is also known as ‘multi-rater feedback’, it is the appraisal in a wider perspective where
the comment about the employees’ performance comes from all the possible sources that are directly
or indirectly related with the employee on his job. In 360-degree performance appraisal an employee
can be appraised by his peers, managers (i.e. superior), subordinates, team members, customers,
suppliers/ vendors - anyone who comes into direct or indirect contact with the employee and can
provide necessary information or feedback regarding performance of the employee the “on-the-job”.
The four major component of 360-degree performance appraisal are
1. Employees Self Appraisal
2. Appraisal by Superior
3. Appraisal by Subordinate
4. Peer Appraisal.
Employee self-appraisal gives an option to the employee to know his own strengths and
weaknesses, his achievements, and judge his own performance.
Appraisal by superior the judgement of employees’ responsibilities and actual performance by the
superior.
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Appraisal by subordinate gives a chance to evaluate the employee on the basis of communication
and motivating abilities, superior’s ability to delegate the work, leadership qualities etc.
Peers can aid to find employees’ who are co-operative, employees who ready to work in a team and
understanding towards others.

Behaviorally Anchored Rating Scales:

This method is a combination of traditional rating scales and critical incidents methods. It consists of
preset critical areas of job performance or sets of behavioral statements which describes the
important job performance qualities as good or bad (for e.g. the qualities like inter personal
relationships, flexibility and consistency, job knowledge etc). These statements are developed from
critical incidents. Developing BARS typically requires five steps:
i. Effective and ineffective job performance behavior are identified to describe performance
measures. These measures are generally identified by managers, employees and HR
functionaries.
ii. These incidents are clustered into smaller set of performance dimensions. Each cluster
possessing similar critical incidents is then defined. The number of behaviors is kept at
manageable limits which are consistent with the job dimensions.
iii. Job experts relocate the original critical incidents. They are given cluster’s definition and the
critical incidents and are asked to reassign each incident to the cluster they think it fits best.
iv. Job experts rate the behavior described in the incident as how to effectively or ineffectively
it represents performance in the appropriate dimensions.
v. A subset of incident is used as a behavior anchor for each dimension.
A rater must indicate which behavior on each scale best describes an employee’s performance. The
results of the above processes are behavioral descriptions, such as anticipate, plan, executes, solves
immediate problems, carries out orders, and handles urgent situation situations.
Balanced Score Card
Balance scorecard, was developed in the early 1990s by Robert Kaplan and David Norton. It
expands upon the Management by Objective model by providing a framework for translating the
company's mission, strategy, and values into quantifiable, measurable goals, and objectives.
The Balance Scorecard analyzes the organization based upon four criteria customers, learning and
growth (HRs), internal business (Internal process) and financial aspects (profitability, operating
costs, and return-on-investment) and maintain balances between these factors.

Financial:
The financial perspective examines if the company‘s implementation and execution of its strategy
are contributing to the bottom-line improvement of the company. It provides clear-cut long range
target for profit seeking organization operating purely in commercial environment. Success of such
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organization should be measured by how effectively and efficiently these organizations captures the
cost efficiency, delivering maximum value to the customer.
Customers satisfaction:
This perspective captures the ability of the organization to provide quality of goods and services,
effective delivery, and overall customer satisfaction. For the purpose of this model, both the
recipient of goods and services and organizations are regarded as the customer of the business
process.
Internal Business Process:
The internal process perspective is concerned with the processes that create and deliver the customer
value proposition. It focuses on all the activities and key processes required in order for the
company to excel at providing the value expected by the customers both productively and
efficiently. These can include both short-term and long-term objectives as well as incorporating
innovative process development in order to stimulate improvement.
Learning and Growth:
The innovation and learning perspective is the foundation of any strategy and focuses on the
intangible assets of an organization, mainly on the internal skills and capabilities that are required to
support the value creating internal processes. The innovation and learning Perspective is concerned
with the jobs (human capital), the systems (information capital), and the climate (organization
capital) of the enterprise.

Balance scorecard lays the foundation for clear performance expectations and the elimination of
ambiguity concerning employee priorities. With a complete scorecard in place, employees know
where they stand, and can easily determine what areas they can contribute to the success of an
organization’s strategy.
Through the BSC, an organization monitors both its current performance and its efforts to improve
process, motivate and educate employees and enhance information system. It develops a balanced
approaches (Quantitative and Qualitative) to evaluate performance employees.

Assessment Centered Method

The organization basically uses this method of evaluation for evaluating managers who are
subsequently going to deal with their juniors. The assessment-based method judges the employee as
per the different situations and analyses their overall behavior. It uses multiple techniques to
evaluate employees where simulation is given more fucus. Further, performance evaluated by
multiple rater from different perspectives, like acceptability, openness, tolerance towards fellow
employees and certain situations, etc. and performance.
720-Degree feedback:
This method doubles what you would get from the 360-degree feedback! The 720-degree feedback
method collects information not only from within the organization but also from the outside, from
customers, investors, suppliers, and other financial-related groups. Performance is evaluated two
times from multiple raters.
Common Rating Errors
Rating errors are problems on performance appraisals which are subject to a wide variety of
inaccuracies and biases. These errors occur in the rater’s observations, judgement, and information
processing, and can seriously affect assessment results. The most common rating errors are
a) Halo Effect:
It is the propensity of the raters to rate on the basis of one trait or behavioral consideration in rating
all other traits or behavioral considerations. One way of minimizing the halo effect is appraising all
the employees by one trait before going to rate on the basis of another trait.
(b) The Central Tendency Error:
It is the error when rater tries to rate each and every person on the middle point of the rating scale
and tries not to rate the people on both ends of the scale that is rating too high or too low. They want
to be on the safer side as they are answerable to the management.
(c) The Leniency and Strictness Biases:
 34

The leniency biasness exists when some raters have a tendency to be generous in their rating by
assigning higher rates constantly. Such ratings do not serve any purpose. Whereas The strictness
bias is the opposite, raters consider everything as bad and they are strict or harsh raters.
(d) Personal prejudice:
If the raters do not like any employee or any group, in such circumstances he may rate him on the
lower side of the scale, the very purpose of rating is distorted which might affect the career of
employees also.
(e) The Recent Effect:
The raters usually retain information about the recent actions of the employee at the time of rating
and rate on the basis of recent action taken place which may be favorable or unfavorable at that
point of time.
f. Stereotyping:
It is a mental picture the rater holds about ratee because of the ratee’s sex, age, religion, and caste,
etc. The rater generalizes the ratees behavior on the basis of above characteristics and that leads to
overestimation or underestimation of the rates performance. For example, a rate having Kshatriya
caste is considered to be aggressive in achieving the organization’s goals and usually gets high
rating.
g. Horn Effect
The "horn" effect is a form of rater bias which occurs when an employee is highly competent or
incompetent in one area, and the supervisor rates the employee correspondingly low in all areas.
This bias can also be seen in recruiting, often based on first impressions that overshadow all other
aspects of the individual.
h. Spill Over Effect:
The present performance is evaluated much on the basis of past performance. “The person who was
a good performer in distant past is assured to be okay at present also”.
i. Contrast Effect:
This error occurs when evaluation of a rates performance is affected by comparisons with other
people recently encountered. The rater lets another employee’s performance influence the ratings
that are given to someone else.
For example, when the performance of an average employee is evaluated immediately after the
performance of an outstanding employee, the supervisor might end up rating the average person as
“below average” or “poor.

e-HR Managing
e-HR Managing is also called electronic human resources management. It is the use of web-based
technologies to provide HRM services within employing organizations. It embraces e-recruitment
and e-learning, the first fields of human resource management to make extensive use of web-based
technology. From this base e-HRM has expanded to embrace the delivery of virtually all HR
policies. Within a system of e-HRM, it is possible for line managers to use desktop computers to
arrange and conduct appraisals, plan training and development, evaluate labour costs, and examine
indicators for turnover and absenteeism. Employees can also use a system of e-HRM to plan their
personal development, apply for promotion and new jobs, and access a range of information on HR
policy.
E-HRM is the (planning, implementation and) application of information technology for both
networking and supporting at least two individual or collective actors in their shared performing of
HR activities.

E-HRM is not the same as HRIS (Human resource information system) which refers to ICT systems
used within HR departments. Nor is it the same as V-HRM or Virtual HRM – which is defined by
Lepak and Snell as “…a network-based structure built on partnerships and typically mediated by
information technologies to help the organization acquire, develop, and deploy intellectual capital.”

E-HRM is in essence the devolution of HR functions to management and employees. They access
these functions typically via intranet or other web-technology channels. The empowerment of
managers and employees to perform certain chosen HR functions relieves the HR department of
 35

these tasks, allowing HR staff to focus less on the operational and more on the strategic elements of
HR, and allowing organizations to lower HR department staffing levels as the administrative burden
is lightened.
There are three tiers of E-HRM. These are described respectively as Operational, Relational and
Transformational. Operational E-HRM is concerned with administrative functions – payroll and
employee personal data for example. Relational E-HRM is concerned with supporting business
processes by means of training, recruitment, performance management and so forth.
Transformational E-HRM is concerned with strategic HR activities such as knowledge management,
strategic re-orientation. An organization may choose to pursue E-HRM policies from any number of
these tiers to achieve their HR goals.

Performance Planning and Appraisal in Nepalese Organizations:

Performance Planning
The concept of human resources management in Nepal is in nascent stage. In fact there is culture of
preparing performance planning prior to performance appraisal in Nepalese organizations. The
condition of performance planning in Nepalese organizations can be presented as follows:
Result:
Results refer to what needs to be done or the outcomes an employee must produce. It includes the
key accountabilities, specific objectives and performance standard. In Nepalese organization
accountability, objectives and standard of employees performance is not indicated clearly.
Employees are doing job randomly. When something wrong happened, lower level employees are
threatened and when something good happened, higher level managers will feel pride without
recognizing the efforts and performance of lower level employees. There is buck mastership
syndrome in Nepalese organization.
Behavior:
Behaviors include competencies, which are measurable clusters of KSAs that are critical in
determining how results will be achieved. Performance planning clearly explains the cluster of key
success factors (KSA). However, employees are unknown about KSAs till their retirement in
Nepalese organizations.
Developmental Plan
Development plan is identifying areas that need improvement and setting goals to be achieved in
each area. There is system for formulating developmental plan in Nepalese organization to
determine the area of employee improvement.
Performance Appraisal in Nepal Organizations
Performance appraisal is not given sufficient priority by Nepalese organizations. Performance
appraisal is directed towards the promotion of employees rather providing feedback and
performance improvement. Practices performance appraisals in Nepalese organizations are precisely
mentioned hereunder:
Private Sector Organization:
Almost private sectors enterprises are owned and controlled by family member. In these
organization performance appraisals is based on personal judgment and subjective assessment of
managers or owners. Large sized public limited companies and multinational companies have
followed rating scale method to assess employees.
Public Enterprises:
Nepalese public enterprises have systematized the appraisal methods. Most of the public enterprises
use graphic rating scale. They follow general principles prescribed by public service commission.
Appraisal is done by supervisors, departmental heads and chief executive (CEO) in every six
months.
Schools and Universities:
Performance appraisal is lacking in government school and universities. In school, appraisal is done
based on personal discretion and subjective assessment of headmaster. Likewise, systematic
performance evaluation is also lacking in colleges and universities. Research work, articles, journals
and book publications etc. are taken to measure the performance. Performance in the classroom is
avoided. Evaluation is done for the promotion purpose than reward where seniority is given high
weight.
 36

Civil Service:
Civil service is guided by the Civil Service Act and regulation and the performance appraisal of such
organization is done based on the provision specified by respective Acts and rules. Appraisal is done
by supervisor, reviewer and review committee. Forty marks are allotted for performance evaluation
where supervisor can provide maximum 25 marks, 10 marks by reviewer and rest 10 marks by
review committee. Performance level is divided into four broad categories as outstanding, good, fair
and low.
Supervisor, sometime uses checklist methods whereas review committee focuses on personality
traits than work performance. However, almost employees get good marks and fewer favoured are
given outstanding scores.
Security organizations:
Nepal army and police are important security forces. Nepal police is guided by Nepal police Act and
performance appraisal is done according to the provision laid down in this Act. In Nepal police,
appraisal is done by supervisor, reviewer and review committee. The police department considers
major three components such as personal traits, work efficiency and implementation ability to
appraise employees.
Nepal army has separate system for the evaluation performance. It includes supervisor, review
officer, senior review officer and review committee. It uses different criteria such as personal traits,
leadership ability, professional ability and work efficiency
Joint ventures and private Banks:
Joint venture and commercial banks apply performance appraisal systems and methods to extent.
They are using graphic rating scale method to evaluate the performance. Performance appraisal done
by supervisor, reviewer, departmental heads or chief executive officer (CEO). The CEO makes final
decision about performance evaluation.
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Unit 4
Performance Management Implementation

Bottlenecks of PM Implementation;

Performance management is a broader concept is a broader concept encompassing the performance

appraisal as one of the important components. The success and failure of the PM is based on the
management and its employees. In fact, PM should be used as tool to align the employee’s efforts
with the organization vision and strategies and the desired culture. However, numbers of factors
created challenges to the effective execution of PMS in the organizational context. The bottleneck or
challenges to execute PMS are as follows:

Lack of Management Commitment

Despite most of the successful organizations have realized that the role of knowledge human
resources are most crucial for the survival, sustenance, innovation and growth of the organization,
management focuses more on technology, products, markets etc. than on human resources. Human
resources are not given priority and not participated in strategy formulation. Because they are
inexpensively available in the organization.

Lack of Performance Oriented Culture

Culture prevailing in the organization has significance impact on the success of management and
improvement of performance. Employees competencies are influenced by an organization culture.
Organization culture includes tacit knowledge, social interconnections and specificity.

Employees are seen as a child and the management behaves as parent. Employees behaviour is
focused every time when rewarding or giving punishment to them than their performance. There is
total absence of performance oriented culture. So, employees are lethargic to performance
improvement effort in the organization context.

Lack of Proper Management tools and Techniques

Due to the global competition and development of information technology, improvement of
employees’ performance becomes crucial, which requires the adoption of proper performance
management tools and techniques.

There are different performance tools and techniques, where balanced scorecard. The balance
scorecard provides a comprehensive framework that translates an organization’s mission, vision,
objectives and strategies into action. It maintains balance among four forces i.e. financial, customers,
internal business process and learning and growth. Most of the organizations have not been
experienced with the balanced scorecard system, although it has high potentialities to improve
performance.

Lack of Ownership

The main challenge to execute performance management system is that nobody i.e neither line
managers nor HR professional are ready to take ownership for improving performance. Line
managers spend much of their time on performance appraisal than performance planning, managing,
monitoring activities. They also involve in comparing people, blaming employees and cancelling or
postponing performance counselling meeting. Line managers often fails appreciate what employees
have done and condition under which it has been done.

Human resources professionals also support to line managers and they involve in criticizing
employees when they fail to do the task efficiently instead of managing training, They also believe
 38

that line managers know better about employees and train them, which is wrong. These all situations
prove the greatest challenge in the execution of performance management system.

Lack of Flexibility of the system

Performance management system requires modification or alteration of its tools and techniques
according to the changes on external environment. The continuity of old methods and tools will be the
main blockade for the performance improvement. Generally top management stands as the most
critical road to effective implementation of performance management system pretending that lack of
resources, employees will not accept it. Lethargic organizational cultures are too strong to respond the
needs of performance management.

Strategies of PM Implementation;
Devising appropriate strategies for effective implementation of performance management is crucial to
the very survival of organizations. Some of the effective strategies for effective utilization of
performance management system are as follows:

Top Management Agreement, Commitment and Leadership

As the top management especially Chief Executive Officer is the executive head and administrative
boss of the organization, their agreement, strategic commitment and effective leadership is crucial for
the execution of performance management. Without the agreement, strategic commitment and
effective leadership, implementation of performance management is impossible.

Building a Performance Oriented Culture

Organizations must align their human resources to their culture to the successful implementation of
performance management system. Performance oriented work culture can be different types such as
quality of work, work-life balance, future growth opportunities, tangible rewards, enabling
environment and inspirational values.

Performance oriented culture launches a variety of improvement efforts. It takes a lot of focused,
energized efforts, strong will power of the organization stakeholder. It also empowers employees to
maximize their potential. It helps attracting and recruiting the best people and harnesses best talent
people to achieve business productivity.
Manager’s participation and accountability

Having agreement, commitment and support of top management is not sufficient to execute PMS,
rather it requires participation and commitment of rest of the management team. Besides, the
involvement of employees is also crucial. Participation of managers and employees in strategy
formulation enhances trust, understanding, and ownership of performance management system. It is
essential that managers must be accountable for the performance being managed.

Training and feedback

Employees at levels must know principles, measures, tools, process and procedures about the
performance management to implement it. So, training and education to employees is essential to
understand and execute performance management system.

Benchmarking Best Practices

Benchmarking is the practice of comparing business processes and performance metrics to industry
bests and best practices from other companies. Organizations should compare their performance with
the performance of best firm in the industry. It inspires the firm for continuous improvement in
performance of employees. Thus, organization should freely share such benchmarked information
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with employees so that employees will accept as the role model to emulate which is appropriate for
the organization.

De-linking reward administration system

The fundamental objectives of PM is to improve organizations performance through the improvement

of employee performance. However, performance management is used as the basis of reward system.
Performance management is linked with reward. It is considered as reward management tool rather
performance improvement. Performance is compared with reward that will defeat its objectives of
performance management system.

De-linking reward to performance, organization can continue to focus on performance improvement

effort and provide regular feedback to employees for consistent and purposive improvement of their
performance.

Communication and feedback

Communication is one of the important factors in effective implementation of performance

management. Communication comprises feedback and clarifies all issues. Most of the newly recruited
employees fail to deliver result to their organization. However, employees are not solely responsible
for such failure. In fact it happens due to the lack of clear communication criteria about their
performance. Unless employees know what is expected from them, employees fail to contribute to
performance objectives or expectation. Performance objectives should be based on SMARTER
objectives, where s stands for specific, m for measurable, a for attainable, r for realistic, t for time-
bound, e for exciting and r for recorded.

Information Infrastructure

Information is designed for collecting, reporting and analyzing data efficiently. If the data integration
or communication process is flawed, the decision based on that data likely to be more flawed. Further,
most of the information system is developed by specialists for the specialist of the organization, and
thus failed to serve. To overcome this pitfall, management should develop effective IT system to
make data flawless. Despite information system is designed by specialist, it should clearly
understandable to managers and employees. Because managers are the real source of information and
employees are the executor the information in reality.

Organizational Behavior Improvement

It is the behaviour of managers towards employees. It should be improved to improve overall

performance of employees. Employees motivation, positive reinforcement and career counselling
should be managed and improved. Employees should be participated in decision making and feedback
should be objective, fair, specific behaviour focused, well timed and foster mutual understanding and
empathy.

Factors Affecting Effective Use of Performance Management

The factors affecting effective use of performance management system are as follows:

Corporate Culture

Corporate culture should be such that it encourages team working, ownership of problems, risk taking
or entrepreneurship, and orientation towards continuous improvement.

Alignment

The integration and linkage of individual strategies and goals and the good match between the
managers’ responsibilities and the performance being managed is the key.
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Review and Update

A continuous of the strategy, the performance being managed, and systems and process being used to
manage is important. The focus of PM should be to drive action for improvement and learning rather
than control. Focus should be also be on the development of action plans in order to explain how the
gaps between performance measures and goals and goals could be closed and review their progress
periodically.

Communication and reporting

Communication and reporting of performance and feedback on an ongoing basis essential. Timely and
updated communication and reporting about the performance of employees to managers influence the
effective use of performance management.
Involvement of employees

There is consensus around the benefits of making every one participates in the development of
measures. Involvement in the selection and definition of measures can reduce employees’ and
managers’ resistance to performance management, and increase their usage level of performance
measures.

Reward linkage

The opinion on linking reward with performance seems to be divided, some favouring it and others
opposing it. However, it is prudent to administer reward through a separate mechanism.

Management Leadership and commitment

Executive support, leadership commitment and management understanding is necessary to generate

clear accountability and responsibility of measures and results.

Operationalizing Changes through Performance Management

It refers to changing culture of the organization by reinforcing desirable employees’ behaviour which
plays crucial roles to operationalize the change in organization. The change can be operationalized by
the use of following dimensions:

Culture:

Culture refers to the set of norms, values, beliefs and rituals etc. held by the organization.
Organizations have specific working culture and employees’ behaviour is guided and influenced by
working culture. Employees do not often deliver expected performance due to the lack of alignment
their aim, behaviour with organization’s working culture. Performance management establishes
effective linkage between culture and the aim of employees and their behaviour by which it makes
possible to operationalize the change.

Skills:

Skills are the ability or capacities to do the work. To operationalize the change, it requires adequate
skills to human resources. Performance Management designs and develops training and development
programs, career advancement, reward and compensation, that makes employees capable for doing
the complex task in the easiest ways.

Strategy
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With the changing environment, organizations have to change their strategy. In order to change their
strategy, it requires different performance imperatives such as appropriate roles, action plans,
behavior etc. Once change initiatives go on appropriate measures through counselling feedback and
reinforcement has to pursue to put the change moving towards its goals.

Teams

Teams are the engine for operationalizing the change program. Teams do not only put HRs with
different skills and knowledge together but also synchronizes the thoughts, emotions, mind, and
attitude towards the achievement of goals. Performance management focuses on different teams such
as self-managed, autonomous work team etc.

Performance Management
Performance management is about improving and developing performance as well as rewarding for
performance. Rewards specially financially rewards create people commitment towards the change
management.

Besides, in the change process, resistors are common, they should be respected and their feeling
should be acknowledged. By listening their concern genuinely, organizations can build consensus and
continue to pursue change with the support of employees. Managers must communicate a lot with
employees to facilitate change. So, performance management can act as a communication strategy and
reinforcement mechanism to shape the behaviour of employees necessary for ensuring the success of
change management.

Building & Leading High-Performance Team

High performance team is a group of employees across all levels of hierarchies inclined to drive an
organization towards creativity and motivation thereby making an organization more adaptive to
market forces, and tap into intellectual resources to drive breakthrough results.

A high-performance team is composed of goal-oriented individuals who collaborate towards a

common objective and are hyper-focused on achieving great results. A team can be said to be high
performance when it is highly adaptive, difficult to build, expensive to maintain and glorious to
behold.

Building and leading high-performance teams helps in managing team dynamics the establishes
productive work environment, delivers high performance and fosters creativity. An organization can
mobilize participation, build consensus, reduce conflict by exploring the key ingredients of effective
teams and enhancing synergy. However, lack of knowledge about teams to its member will be the
major hurdle to implement the high-performance team.

There is a step-by-step formula for building and leading high performing team. It goes through
following steps:

i. Building Commitment:
Building and leading high performing team targets unprecedent achievement, is a challenging work
where past experience is not enough to guide team members. They require new perspectives, new
skills and work practices. They require new norms and commitment to get unprecedented
achievement. So, building commitment among team members is a prerequisite for building and
leading high performing team.

ii. Making People Stakeholder

The collective passion, stake, and persistence are fertile ground for developing high performance
team. The organization must develop feelings of each team members as the stakeholder of the team.
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Such perception fosters commitment among team members to work towards the success of
organization and makes them ready to face challenge.

iii. Risk and result

Building high performance team is not only about team of persons with skills, ability or knowledges.
It is not just putting right persons in team and overcoming setbacks and organizational resistance. It is
all about commitment of team members, their unity to face challenges and embracing risk or
challenges for the pursuit of result. For this, human factor to high performance should be emphasized
and commitment of people should be fostered.

iv. Getting the Job Done

High performance team is a risky business. It is not just about working harder, but it is new ways of
establishing new ways of working and delivering results. In other words, it is dealing with the
uncertainty and unpredictability of a new approach. Managers should be trained to make the
employees capable for getting the job done. To make the team high performance, managers should be
trained and rewarded for minimizing the risk and maximizing the predictability. They should be
guided by new assumptions of the business.

V. Getting the Team

It is the final stage of building high performing team. It consists new capabilities facing midst of
resistance in the pursuit of set back or breakdowns. Breakdown is the situation where current
performance falls short of committed goals. Such setback or breakdown can be accidental or
deliberately set in motion.

The leaders and team members must assume the risk and learn new ways of dealing with setback, they
have to take greater risk in the long run. If leaders and team members accept challenges and move
their organization forward, they can get success in a dramatic way. The daring challenges, risk and
feedback provides unique outcomes that would not have been possible in normal situation.

Organizational Culture and Performance Management

Organizations are living social organism, each organization has its character, history, nature, character
and culture. Older and more successful organization has more strong culture.

Organizational culture is the way that organizations get things done. It’s how decisions are made, how
the organization communicate, and celebrate employees. It’s the daily actions, attitudes, and
behaviours that individually and collectively make up an organization. Organization culture can be
strong and weak. Strong culture involves the system or values which are widely extended and
intensely shared. It is development oriented, and it focuses on flexibility, adaptability and readiness in
the face of change which has high value on organizational growth. Weak culture is just opposite.

Performance management is a people’s commitment seeking process which is driven by

organizational objectives and strategies. An effective culture drives people, keeps people engaged at
fundamental level and translates engagement into high performance. A strong culture is assumed to be
positive impact on performance. It aligns with business strategy to ensure long term goals of the
organization. Further, organizations of mixed culture and it is not concerned with only HR
professional but also more concerned with top level management.

Following measures are to be carried out in order to enable organizational culture contribute to the
organizational performance and competence:

i. Aligning organizational culture with organizational objectives and strategies.

ii. Changing culture to drive performance.

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iii. Benchmarking culture against the excellent and successful organization.

iv. Going beyond the best employer to become the best performer.

v. Assessing culture quickly and simply.

vi. Combining culture with other initiatives to drive performance.

vii. Understanding the role of top management in building culture.

viii. Engaging employees through culture.

ix. Using a positive culture to sustain performance in time of major change.

x. Building trust inside and outside the organization with the positive culture.

xi. Developing a culture that respects and celebrates diversity.

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Unit- 5
Performance Monitoring and Counselling
Concept of Performance Monitoring;
In simple terms, Monitoring is the systematic and periodic collection of information. Performance
monitoring is the systematic process of continuously observing, analyzing the performance of
employees. It also includes providing feedback and counselling for improving the skill, knowledge
and changing behavior of employees.
Performance monitoring makes accurate and objective performance observation. It is done on the
outcome and expectations contained in the employees performance plan, that is also explained in
performance appraisal for the purpose of developing employees. In performance planning, managers
provide appropriate and timely feedback to encourage employees to maximize their performance.
According to Haynes
Performance monitoring makes contribution in the evaluation of work methods and employees
performance.
In short, Performance monitoring is the process of helping employees sustain performance at a
planned level, enhancing individual competencies and making employees competitive within the
organization for productive contribution. It entails analysis of five major areas:
Results successful achievement of job tasks.
Effectiveness accuracy of performance of job.
Progress towards improvement areas.
Methods and procedures use of improved work methods and better procedure.
Work habits cultivation of right work ethics and attitude.
Characteristics of Performance Monitoring
The key characteristics of performance monitoring are given below:
1. In organizations, a performance monitoring plan is a critical tool for planning, managing, and
documenting data collection.
2. It is an important part of performance management system to control and measure the
behaviors.
3. This helps in maintaining the employees’ performance as per the goals and objectives of the
organization.
4. Performance monitoring helps in building the strong relationships between the management
and employees for their efficient performance.
5. It facilitates career development of employees and provides the training and development
opportunity to employees.

Objectives of Performance Monitoring

The major objectives of performance monitoring are listed as under:
1. To provide learning, training, and development opportunities to employees.
2. To improvise individual job performance as well as methods and techniques of measuring
performance.
3. To review the ways of defining and agreeing of performance criteria of teams and
individual employees at the performance planning level.
4. To assess commitment and motivational level to accept and realize performance feedback
in positive perspectives.
5. To incorporate change necessitated by external environment and affect over all
performance improvement of the organization.

Importance

Performance management is important because:

1. it provides scope for modification, change and or alteration of the existing performance
management system, paving way for new or improved system.
 45

2. it helps on reviewing and correcting performance objectives as linked to mission and

objectives of the organization.
3. it continually enhances the performance of employees.
4. it helps in realizing the full potential of employees and organization for excellence in
performance.

Process of Performance Monitoring

Performance monitoring is the process of helping employees sustain performance at a planned

level, enhancing individual competencies and making employees competitive within the
organization for productive contribution. It goes through following steps:
1. Gap Identification
During the performance appraisal period, managers need to consult with employees and
discuss about performance plan on a continuous basis. This discussion will make employees
aware about expected level of performance that need to be delivered. It also enables
employees to foresee on what basis and how performance is to be assessed.
Performance appraisal provides a variety of data on employees’ actual performance which can
be used as a basis for identifying gaps in planned and actual performance. As there are many
factors to be monitored, managers must decide what needs to be monitored. After that a
procedure is defined the way of obtaining data with the help of performance appraisal vital
information about various aspects of performance could be gathered. It also identifies
strengths, weakness, areas of improvement, target performance level for the next performance
cycle.
2. Discussion, Feedback and Improvement Plan
After identifying the areas of strengths and improvement, managers need to share information
with respective employees. Its aim is to involve employees in the performance monitoring
activities through personal interaction, progress review and audit. Then the manager discusses
the performance issues and provides feedback to employees about their identified strengths
and improvement areas.
Providing feedback is not merely an advice or telling employees what ought to do. It is the
most crucial activity in the performance monitoring process. It enables employees to
understand how his performance affects him, the work unit and the organization. Effective
feedback helps in promoting self-esteem, gaining better insights about experiences,
performance and increases self-awareness for maximizing performance. However, feedback
should be clear. It should contribute in enhancing individual and team performance overtime.
Employees feedback is crucial for the success of performance management system, if it is not
handled properly it will lead to the frustration and eventually poor performance. Feedback
should not be seen as negative but it should be considered as constructive part to improve
performance and seen in positive light. However, traditional feedback system is not adequate
to make aware employees about their current performance and the performance level in the
days to come, it requires ongoing follow up and it should be followed multi-sources/ 360-
degree feedback system.
360-degree feedback is the most appropriate feedback system for the all-round development
employees’ performance. The essentials of multi sources feedback system includes following
mechanisms:
i. Develop Positive Culture:
A positive and supportive culture of the organization will help to motivate employees to
change behavior. Organization should use the introduction of multisource/ 360 degree
feedback system to address cultural issues.
ii. Clarity of Purpose
The purpose of feedbacking system must be well proven, mature and owned by all. The
purpose of performance monitoring must be clear in terms of deciding future challenges and
decision related to career and reward.
iii. Realistic Assessment
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Feedback must provide knowledge to employees to know his/ her actual performance. When
employees get opportunities to compare his/her performance with multisource assessment,
clarity comes in mind about his/her performance reality.
vi. Training
Before giving feedback to employees, all people involved in the feedback should be trained.
Providing effective feedback requires special skills and knowledge to balance the expectation
of management and employees. Training should be provided to managers about how to give
proper and constructive feedback.
vii. Joint Effort
A joint effort is required to appraiser and employees to develop better feedback mechanism
system. During the feedback, managers must support employees concern for security, identity
and self-respect.
There should be continuous communication between employees and managers to enhance
understanding and develop future iteration of feedback system. This will also help to sustain
multi-sources or 360-degree feedback effective.
Developing improvement plan is another crucial factor of effective performance monitoring.
Managers and employees jointly workout performance action plan for attaining performance
criteria laid down jointly in the performance planning stage. Performance improvement
objective should be clearly laid down along with key performance indicators for subsequent
measurement and evaluation of the performance improvement action plan.
3. Seek Employee's Commitment and Verify for Adherence
The finalized performance plan should be mutually agreed up on and documented. Managers
must ensure that employees is committed to act up on his/her part of the plan and produce the
desired result within an agreed time frame. Further, managers need to keep effective
implementation, tracking and control measure in place.

Ongoing Mentoring and Protégé Development;

M = manage relationship, E = encourages, N = nurtures, T = teaches, O = offer mutual

respect, R = respect mentee's needs
Meaning:
Mentoring is a Greek word meaning enduring and defined as the sustained relationship
between youth and adult through continued involvement and assistantship of guidance.
Mentoring is a process of providing guidance, pragmatic advice, and continuing support by
the selected and trained individuals that will help the people in their learning and development
process. Mentoring is a process whereby more experienced managers actively guide less
experienced managers. The mentor provides guidance through direction, advice, criticism,
and suggestions. Mentoring is a dynamic and reciprocal relationship in a work environment
between a manager (mentor) and employees (protege) aimed at promoting the career
development of both.
According to Gordon
Mentoring is a fundamental form of human development where one person invests time,
energy and personal know-how assisting the growth and ability of another person.
According to Vickie L. Nadolski . Mentoring is linking an experienced person (mentor)
with a less experience person (mentee) to help their personal and professional growth’.
According to Jacobi, ‘Mentoring is a one to one helping relationship or nurturing
process’.

In short, mentoring is a parenting process where a competent person educates and nurtures
less competent employees in the organization. The mentor is like a "guru". It is a nurturing
process of developing personal and professional competencies for improved work life balance
and individual performance for promoting talents internally within the organization.
Mentoring is voluntary, collaborative and mutually beneficial partnership between proteges
and mentors. It is done in two ways: informally and formally.
 47

Informal mentoring happens organically. The mentor and mentee mutually agree that there is
a need to have this relationship. The level of engagement is agreed upon by both and can be
changed as needed. Formal mentoring is when an official plan is put in place and you are
paired up with another whether or not you feel the mentorship is needed.
Mentoring does not involve hierarchical considerations, where employees can freely discuss
their personal problems and hidden parts of their personalities.
Mentoring addresses the personal problem of employees, managers as mentors can keep
employees happy and motivated.
Mentoring infuses higher confidence in employees / proteges in their ability, skills,
knowledge in thinking and working together that will enhance performance of employees or
managers or organization to achieve organizational objectives and strategies. Monitoring
helps for tapping, harnessing and utilizing internal talents for gaining and sustaining
competitive advantages by organization.
Therefore, mentoring need not to be restricted only on trainees or beginners but must be
expanded to include a pool of people at different hierarchical levels and functions. However,
establishing an efficient and effective mentoring program faces a challenging situation such as
personal transformation, complex problem, opportunity and dilemma.
Institutionalization of Mentoring Program

Institutionalization is a process intended to regulate societal behavior (i.e., supra-individual

behavior) within organizations. Mentoring is really the motivational side of management and
mentoring program benefits employees and employees such as increase in skills, knowledge,
experiences, higher confidences, satisfaction, motivation of employees, personal and
professional development and finally effective succession planning and management. An
institution of monitoring program involves following steps;
1. Understanding the Proteges:
Mentoring involves understanding the needs, goals, attitudes, and perception of the proteges
so as to align it effectively with the objectives of the mentoring program. Thus matching of
mentors and proteges is an essential step in the process of establishing mentoring program. An
effective alignment results in success of mentoring program and helps organization to its
mission and objectives.
2. Reviewing Proteges’ Actions and Consequences
Mentoring requires the mentor and proteges to participate in mid point progress and end of the
program review. The review provides mentor and protégé an opportunity to benchmark
progress, uncover problems, and recommend improvement or adjustment to the mentoring
program design.
3. Identifying Protégé’s Development Needs
Proteges complete a behavioral assessment tool known as 360 multi-rater assessment tool.
The feedback provides proteges an opportunity to target developmental needs and effective
mentoring action plan. Proteges can uncover real issues and solve them with the help and
guidance of mentor based on 360-degree feedback.
4. Assigning of Development Plans
Mentor provides proteges with developmental assignment to strive for productive goals,
develop positive attitude and have a proper perception about himself, his mentor and the
organization.
5. Expanding Protégé’s Mental Horizon
Protégé is encouraged to be innovative in his approach to problem solving, developmental
assignment, and networking opportunities to develop relationships, gain exposure, and
increase visibility.
6. Developing Action Plan
Protégé design and define mentoring action plan (MAP) with the assistance from his mentor.
It involves following steps:
i. Agreeing on a goal
Ii. Brainstorming : Idea, resources and activities
Iii. Sequencing action steps
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Iv. Carrying out steps

V. Achieving goals: Debrief. Hone reflective thinking skills

Performance Counselling:

Meaning
In simple term counselling is the assistance and guidance by professional in resolving present
psychological problems. Counseling is a dyadic relationship between two persons i.e., a
counselor and a counselee. A counselor offers help to the counselee in related issues like
problem solving, target achievement etc.
Performance counselling is the process of guiding about performance related problems of
employees. Performance counseling involves helping an employee to understand his own
performance, find his place in relation to others and identify ways to improve upon. It focuses
“on analysis of performance of the job and identification of training needs for further
improvement.
Performance counselling is provided by the manager to employees to help them in the
analysis of job performance, identification of training needs, and finding solution to the
problems which hinder job effectiveness.
According to Willam R Tracy
Performance Counselling is a manager initiated strategy for improving employees
performance.
Performance counselling is the process of communication to an employee the manager’s
assessment of the strong aspects of the employee’s performance of the job and ways in which
that performance may be improved. It helps to remove inner obstacles to outer performance.

Principles of Performance Counselling

Major principles of performance counselling are as follows:

Strengthening communication between manager and the employee.
Making the employee understand performance level exhibited by him – successful
performance or marginal.
Involving the employee in the problem-solving process.
Enabling the employee to identify elements that contributed to success.
Helping the employee to attain performance objectives.
Motivating the employee for gaining commitment to improve performance.
Maintaining and increasing the employee’s self-esteem.
Providing support, guidance, and resources as may be required by the employee to
successfully achieve performance objectives.
Encouraging the employee to learn.
Focusing on behavior, not personality.
Using reinforcement techniques to shape behavior.
Reposing trust and confidence in the employee for achieving performance objectives.
Documenting the discussion.

Performance Counselling Skills

Performance Counselling is a manager-initiated strategy for improving employees

performance. For the purpose of counselling, given below are the key performance
counselling skills:
1. Active Listening
One very important key essential of performance counselling is active listening which
involves paying attention to the various messages being sent by the other person. Active
listening means listening thoughtfully or deliberately to the way employees say things.
Following things should be done to improve the listening:
Employees’ Message
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During the performance counselling session, managers must carefully listen to their
employees and communicate the fact both verbally and non-verbally that message of
employees has been received and understood.
Eye Contact
Maintaining eye contact with their employees by managers convey that managers are
interested and sincere in their attempt to find a solution to their performance problems or help
in improving their performance. However, it may be noted that eye contact has some cultural
connotations. For example, maintaining direct eye contact for a long time is symbolled as
confidence in American culture where as in Japan it may be construed offensive.
Body Posture
Being relaxed and making the employee comfortable gives a cue that manager is concerned
about him. However, it may be noted that too relaxed a posture by the manager may show
lack of interest to the employees.
Head Nods
Occasionally, nodding the head shows managers are paying attention and encourages the
employee to continue.
Facial Expression
Managers should keep facial expression natural and exhibit a warm nature so that employees
can be at ease to discuss his performance problems or further performance improvement
plans. This is actually important because many employees are not actually comfortable
discussing their performance deficiencies with their managers.
Expression
Managers need to listen more and talk only when required in order to encourage employees to
discuss their performance problem or performance improvement plan freely and frankly.
However, long silence can sometimes be distracting and make employees feel uncomfortable.
Responding
Active listening followed up with responding by the manager is to show that they are
understand their employees. Manager should clarify and confirm the employees response in
order to remove any ambiguity that may prevail in their minds by summarizing, interpreting
and clarifying their message. The manager’s empathy in responding employee shall make the
performance counselling success.

3. Questioning
The questions asked can facilitate or hinder the process of communication. The questions can
serve several purposes: they can help in getting more information, establishing mutuality,
clarifying matters, stimulating thinking. In the situation of counselling, questions play a very
important role. Some questions can shut off the counselee, or make him dependent on the
counsellor and another set of questions can build autonomy of the counselee. Obviously, the
latter will be helpful, and not the former.
Generally, questions should be open-ended to gain insight in to individuals' performance
related problems. Further, knowing what information to keep confidential and what to present
to the chain of command is crucial for the success of performance counselling.

Performance Counselling for Higher Job Performance

Performance counselling is a manager-initiated strategy to develop an insight into his/her

subordinates work life, the areas where employees are performing well, and areas where s/he
needs to improve. However, performance counselling and feedback are two different things.
Performance counselling is a management-initiated strategy and designed to improve the
performance of employees. It is more participative and problem-solving approach. Employee
feedback is a mechanism for sharing performance concern for improvement during the course
of day-to-day employee’s working. Feedback may emanate from different sources such as
colleagues, managers, self and job itself. However, feedback from these sources is not free
from deficiencies. For example, feedback from colleagues will be colored official politics,
 50

managers feedback may be guided more by criticism or negativity. Self-feedback may over
estimate self-worth and contribution whereas feedback from job itself may be the lack of
understanding of depth of competencies required for a successful task accomplishment.
Despite many managers and employees feel performance counselling dysfunctional in the
absence of feedback, giving performance feedback alone is not adequate to motivate
employees and enhance job performance and satisfaction. Performance counselling to
employees by their managers is an essential responsibility of managers to improve satisfaction
and motivation at the job. For the higher job performance, performance counselling should
contain following elements:
Communication
An effective communication between managers and employees regarding job performance is
the important element for improving job performance. Performance counselling provides
communication between managers and employees. The general climate of such conversation
should be congenial which may help the employee to be in a receptive mood.
It is always very important to keep in mind that communication is greatly influenced by how
problems and issues are perceived by the two persons involved in the conversation. The
communication may get distorted if people are not empathic to each other.
Non-verbal communication is as important as verbal communication because people speak
much more through their gestures and postures than through words. The tone and manner of
speaking is also important which may be positive as well as negative.
Organizational Culture
Developing organizational culture of performance counselling supported by managers is
essential for employee's motivation and satisfaction. The feedback seeking culture should be
replaced by feedback giving culture. This means managers must be ready to give performance
counselling to employees and employees should be ready receive counselling.
A benevolent organizational culture help at shaping the ways in which receive, accept and
process the performance counselling. Work supportive culture of performance counselling
makes employees committed in improving job performance. However, performance
counselling is highly supportive to cultural and societal values. And it is different from
country to country.
Training
Employees’ perception on performance counselling influences the quality of performance
counselling and eventually affects job satisfaction, employees motivation and job
performance. Employees may have different perception about performance counselling.
Those employees who are goal oriented and have high self-efficacy are more receptive to
performance counselling and it will be highly useful. For others, performance counselling will
harm than any good. Further, managers ability to empathize employees understanding and
sentiments such as abilities to make employees optimistic, create pleasant attitude and
lowering stress etc. also influence the effectiveness of performance counselling on higher job
performance. Therefore, both managers (counsellors) and employees (Counselee) need
appropriate training before sending them in counselling program, so that they will internalize
the performance counselling is a corporate way of life.
However, performance counselling is not a panacea for solving all evils related to the
performance improvement. It does consist any trick or magic that unwilling employees will
accept and follow it, rather it is a systematic tool that shape, motivate and guide employee's
behavior towards the higher job performance.
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Unit 6:
Performance Management Strategy and Intervention
A performance management strategy is an overall plan for measuring and managing
employee performance within an organization. It outlines the goals, processes, and techniques
that will be used to evaluate and improve performance. A performance management
intervention, on the other hand, is a specific action or set of actions taken by an organization
to address a specific performance issue or to improve overall performance.
The following are some key elements of a performance management strategy:
Goals: The strategy should clearly outline the performance goals that the organization is
trying to achieve and how they align with the overall goals of the organization.
Processes: The strategy should clearly outline the processes that will be used to measure and
manage performance, including how performance will be evaluated and how feedback will be
provided to employees.
Techniques: The strategy should outline the specific techniques that will be used to improve
performance, such as training, coaching, and mentoring.
Communication: The strategy should outline how performance information will be shared
with employees and how they will be involved in the performance management process.
Evaluation: The strategy should include a plan for evaluating the effectiveness of the
performance management process and making any necessary adjustments.
Performance management interventions are specific actions taken to address a specific
performance issue or to improve overall performance. Some examples of performance
management interventions include:

A performance management strategy is a comprehensive plan for measuring and managing

employee performance, while a performance management intervention is a specific action or
set of actions taken to address a specific performance issue or improve overall performance.
Both elements are important for organizations to align its employee performance with
organizational goals, and to improve overall performance and productivity.
Reward based Performance Management
Reward-based performance management is a system of measuring and managing employee
performance in which rewards, such as bonuses, salary increases, or promotions, are offered
to employees who meet or exceed performance expectations. This approach is based on the
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idea that employees will be motivated to improve their performance if they are offered
tangible rewards for doing so.
Advantages of reward-based performance management include:
Increased motivation: Employees may be more likely to work harder and perform better if
they know that their efforts will be rewarded.
Improved performance: By offering rewards for meeting performance goals, organizations
can encourage employees to meet or exceed those goals and improve their performance
overall.
Increased retention: Employees who feel they are being fairly compensated and recognized
for their efforts may be more likely to stay with the organization.
Clarity of expectations: By setting clear performance goals and linking them to rewards,
organizations can ensure that employees understand what is expected of them and can focus
their efforts accordingly.
However, reward-based performance management also has its own set of disadvantages:
Limited focus on long-term goals: Employees may focus too heavily on short-term goals and
rewards, rather than on long-term strategic goals.
Unintended consequences: Some employees may focus too much on earning rewards and
neglect other important aspects of their job, such as teamwork, ethics and customer service.
Risk of demotivation: If rewards are not perceived as fair, or if employees feel that they are
not receiving the rewards they deserve, they may become demotivated.
Risk of creating unhealthy competition: Employees may become too focused on competing
with one another to earn rewards, rather than collaborating and working together.
In conclusion, reward-based performance management can be an effective way to motivate
and improve employee performance, but it should be implemented with care and a clear
understanding of its potential limitations. Organizations should also consider different other
performance management methods to ensure that they are using the most appropriate
approach for their workforce and organization.
Career based Performance Management
Career-based performance management is a system of measuring and managing employee
performance that focuses on helping employees to develop and advance their careers within
the organization. This approach is based on the idea that by providing employees with
opportunities for professional development and career advancement, they will be more
motivated and engaged in their work, and will ultimately perform better.
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Advantages of career-based performance management include:

Increased motivation: By providing employees with opportunities for professional
development and career advancement, organizations can help to keep employees engaged and
motivated in their work.
I. Improved performance: By providing employees with the skills and training they
need to advance their careers; organizations can help to improve their overall
performance and productivity.
II. Increased retention: Employees who feel that their careers are progressing within
the organization may be more likely to stay with the organization long-term.
III. Alignment with organizational goals: By aligning employee career development
with organizational goals, organizations can ensure that they are developing the
skills and expertise they need to achieve their strategic objectives.
However, career-based performance management also has its own set of disadvantages:
I. Limited focus on short-term goals: Employees may focus too heavily on long-
term career development and neglect short-term performance goals.
II. Limited applicability: Career-based performance management may not be
appropriate for all employees or all types of jobs.
III. Limited resources: Providing employees with professional development
opportunities and career advancement opportunities can be resource-intensive for
organizations.
IV. Risk of demotivation: If employees feel that there are limited opportunities for
career advancement, they may become demotivated and disengaged from their
work.
In conclusion, career-based performance management can be an effective way to motivate
and improve employee performance by providing opportunities for professional development
and career advancement. However, organizations should be mindful of its potential
limitations and ensure that it is implemented in a way that aligns with both the organization's
goals and the employees' goals and aspirations.
Team based Performance Management
Team-based performance management is a system of measuring and managing employee
performance that focuses on the performance of teams rather than individual employees. This
approach is based on the idea that teams are more effective than individuals in achieving
 54

organizational goals, and that by managing team performance, organizations can improve
overall performance and productivity.
Advantages of team-based performance management include:
I. Increased collaboration: By managing team performance, organizations can
encourage team members to work together and share ideas more effectively.
II. Improved performance: By focusing on team performance, organizations can
ensure that all team members are working towards the same goals and that their
efforts are aligned.
III. Increased accountability: By managing team performance, organizations can
ensure that all team members are held accountable for their contributions to the
team's performance.
IV. Improved communication: By managing team performance, organizations can
encourage team members to communicate more effectively and address issues
more quickly.
However, team-based performance management also has its own set of disadvantages:
I. Limited focus on individual performance: By focusing on team performance,
organizations may neglect to measure and manage individual employee
performance.
II. Limited applicability: Team-based performance management may not be
appropriate for all types of jobs or all teams within an organization.
III. Limited flexibility: By managing team performance, organizations may have less
flexibility to address the unique performance needs of individual team members.
IV. Risk of demotivation: If team members feel that their individual contributions are
not recognized or rewarded, they may become demotivated and disengaged from
their work.
In conclusion, team-based performance management can be an effective way to improve
overall performance and productivity by managing team performance. However,
organizations should be mindful of its potential limitations and ensure that it is implemented
in a way that aligns with both the organization's goals and the individual team members' goals
and aspirations. Additionally, it is important to balance team-based performance management
with individual performance management to ensure that the unique needs and contributions
of each employee are recognized and rewarded.
Culture based Performance Management
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Culture-based performance management is a system of measuring and managing employee

performance that takes into account the cultural context in which the organization operates.
This approach is based on the idea that cultural factors can have a significant impact on
employee behavior and performance, and that by understanding and managing these factors,
organizations can improve overall performance and productivity.
Advantages of culture-based performance management include:
I. Increased cultural awareness: By managing performance in the context of the
organization's culture, organizations can help to ensure that employees are aware
of the cultural factors that can impact their behavior and performance.
II. Improved communication: By managing performance in the context of the
organization's culture, organizations can help to ensure that communication is
effective and that employees understand what is expected of them.
III. Increased alignment with organizational goals: By managing performance in the
context of the organization's culture, organizations can help to ensure that
employee behavior and performance is aligned with organizational goals.
IV. Increased employee engagement: By managing performance in the context of the
organization's culture, organizations can help to ensure that employees are
engaged and motivated in their work.
However, culture-based performance management also has its own set of disadvantages:
I. Limited applicability: Culture-based performance management may not be
appropriate for all types of organizations or all types of employees.
II. Limited flexibility: By managing performance in the context of the organization's
culture, organizations may have less flexibility to address the unique performance
needs of individual employees.
III. Limited understanding of culture: Organizations may not have a full
understanding of the cultural factors that can impact employee behavior and
performance, which can lead to ineffective management practices.
IV. Risk of cultural bias: By managing performance in the context of the
organization's culture, organizations may inadvertently perpetuate cultural biases
or stereotypes.
In conclusion, culture-based performance management can be an effective way to improve
overall performance and productivity by managing employee performance in the context of
the organization's culture. However, organizations should be mindful of its potential
limitations and ensure that it is implemented in a way that aligns with both the organization's
 56

goals and the cultural context in which it operates. Additionally, it is important to be aware of
potential cultural bias and ensure that the management practices are inclusive and non-
discriminatory.

Measurement based Performance Management

Measurement-based performance management is a system of measuring and managing
employee performance that relies on the collection and analysis of data to evaluate employee
performance. This approach is based on the idea that by collecting and analyzing data on
employee performance, organizations can make more informed decisions about how to
improve performance and productivity.
Advantages of measurement-based performance management include:
I. Improved objectivity: By collecting and analyzing data on employee performance,
organizations can make decisions about performance that are based on objective
criteria, rather than subjective opinions.
II. Increased visibility: By collecting and analyzing data on employee performance,
organizations can gain a more complete understanding of how employees are
performing and where improvements are needed.
III. Increased accountability: By collecting and analyzing data on employee
performance, organizations can hold employees accountable for their performance
and ensure that they are meeting expectations.
IV. Improved decision making: By collecting and analyzing data on employee
performance, organizations can make more informed decisions about how to
improve performance and productivity.
However, measurement-based performance management also has its own set of
disadvantages:
I. Limited focus on the big picture: By focusing on data, organizations may neglect
to consider the broader context in which employee performance is taking place.
II. Limited applicability: Measurement-based performance management may not be
appropriate for all types of employees or all types of jobs.
III. Limited understanding of data: Organizations may not have a full understanding
of how to collect and analyze data on employee performance, which can lead to
ineffective management practices.
 57

IV. Risk of demotivation: By focusing on data and performance metrics, organizations

may neglect to consider the human factors that can impact employee behavior and
performance.
In conclusion, measurement-based performance management can be an effective way to
improve overall performance and productivity by collecting and analyzing data on employee
performance. However, organizations should be mindful of its potential limitations and
ensure that it is implemented in a way that aligns with both the organization's

Competency based Performance Management

Competency-based performance management is a system of measuring and managing
employee performance that focuses on the specific skills, knowledge, and behaviors that
employees need to perform their jobs effectively. This approach is based on the idea that by
identifying and developing key competencies, organizations can improve overall performance
and productivity.
Advantages of competency-based performance management include:
I. Improved alignment with organizational goals: By identifying and developing key
competencies, organizations can ensure that employee behavior and performance
is aligned with organizational goals.
II. Increased focus on development: By identifying and developing key
competencies, organizations can provide employees with the training and
development opportunities they need to improve their performance.
III. Improved objectivity: By focusing on specific competencies, organizations can
make decisions about performance that are based on objective criteria, rather than
subjective opinions.
IV. Increased accountability: By focusing on specific competencies, organizations can
hold employees accountable for their performance and ensure that they are
meeting expectations.
However, competency-based performance management also has its own set of disadvantages:
I. Limited applicability: Competency-based performance management may not be
appropriate for all types of employees or all types of jobs.
II. Limited flexibility: By focusing on specific competencies, organizations may have
less flexibility to address the unique performance needs of individual employees.
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III. Limited understanding of competencies: Organizations may not have a full

understanding of the specific competencies that are needed for different types of
jobs or roles, which can lead to ineffective management practices.
IV. Risk of demotivation: By focusing on specific competencies, organizations may
neglect to consider the broader context in which employee performance is taking
place.
In conclusion, competency-based performance management can be an effective way to
improve overall performance and productivity by identifying and developing key
competencies. However, organizations should be mindful of its potential limitations and
ensure that it is implemented in a way that aligns with both the organization's goals and the
specific needs of the employees and their job roles. Additionally, it is important to balance
the focus on competencies with other performance management methods to ensure that the
unique needs and contributions of each employee are recognized and rewarded.

Leadership based Performance Management

Leadership-based performance management is a system of measuring and managing
employee performance that focuses on the role of leaders in creating a positive and
productive work environment. This approach is based on the idea that by developing the
leadership skills of managers and supervisors, organizations can improve overall performance
and productivity.
Advantages of leadership-based performance management include:
I. Improved leadership: By developing the leadership skills of managers and
supervisors, organizations can improve the effectiveness of their leadership and
create a more positive and productive work environment.
II. Increased accountability: By developing the leadership skills of managers and
supervisors, organizations can hold them accountable for creating a positive and
productive work environment and ensuring that employees are meeting
expectations.
III. Improved employee engagement: By developing the leadership skills of managers
and supervisors, organizations can help to ensure that employees are engaged and
motivated in their work.
IV. Increased alignment with organizational goals: By developing the leadership skills
of managers and supervisors, organizations can ensure that their leadership is
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aligned with organizational goals and that they are effectively leading their teams
to achieve those goals.
However, leadership-based performance management also has its own set of disadvantages:
I. Limited applicability: Leadership-based performance management may not be
appropriate for all types of organizations or all types of employees.
II. Limited understanding of leadership: Organizations may not have a full
understanding of the specific leadership skills that are needed for different types
of jobs or roles, which can lead to ineffective management practices.
III. Risk of demotivation: By focusing on leadership skills, organizations may neglect
to consider the broader context in which employee performance is taking place
and the other factors that can impact employee motivation and engagement.
IV. Limited resources: Developing the leadership skills of managers and supervisors
can be resource-intensive for organizations, and they may not have the resources
to invest in leadership development.
In conclusion, leadership-based performance management can be an effective way to improve
overall performance and productivity by developing the leadership skills of managers and
supervisors. However, organizations should be mindful of its potential limitations and ensure
that it is implemented in a way that aligns with both the organization's goals and the specifi c
needs of the employees and their job roles. Additionally, it is important to balance the focus
on leadership development with other performance management methods to ensure that the
unique needs and contributions of each employee are recognized and rewarded.

Competency based Performance Management

Competency-based performance management is a system of measuring and managing
employee performance that focuses on the specific skills, knowledge, and behaviors that
employees need to perform their jobs effectively. This approach is based on the idea that by
identifying and developing key competencies, organizations can improve overall performance
and productivity.
In competency-based performance management, the organization identifies a set of core
competencies that are essential for success in the given role or the organization as a whole.
These competencies are then used to evaluate employee performance and identify areas for
improvement. Employees are also provided with training and development opportunities to
help them acquire or enhance the required competencies.
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Advantages of competency-based performance management include:

I. Improved alignment with organizational goals: By identifying and developing key
competencies, organizations can ensure that employee behavior and performance
is aligned with organizational goals.
II. Increased focus on development: By identifying and developing key
competencies, organizations can provide employees with the training and
development opportunities they need to improve their performance.
III. Improved objectivity: By focusing on specific competencies, organizations can
make decisions about performance that are based on objective criteria, rather than
subjective opinions.
IV. Increased accountability: By focusing on specific competencies, organizations can
hold employees accountable for their performance and ensure that they are
meeting expectations.
However, competency-based performance management also has its own set of disadvantages:
I. Limited applicability: Competency-based performance management may not be
appropriate for all types of employees or all types of jobs.
II. Limited flexibility: By focusing on specific competencies, organizations may have
less flexibility to address the unique performance needs of individual employees.
III. Limited understanding of competencies: Organizations may not have a full
understanding of the specific competencies that are needed for different types of
jobs or roles, which can lead to ineffective management practices.
IV. Risk of demotivation: By focusing on specific competencies, organizations may
neglect to consider the broader context in which employee performance is taking
place.
In conclusion, competency-based performance management can be an effective way to
improve overall performance and productivity by identifying and developing key
competencies. However, organizations should be mindful of its potential limitations and
ensure that it is implemented in a way that aligns with both the organization's goals and the
specific needs of the employees and their job roles. Additionally, it is important to balance
the focus on competencies with other performance management methods to ensure that the
unique needs and contributions of each employee are recognized and rewarded.
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Unit 7:
Ethics in Performance Management
Principles of Ethics in Performance Management

Principles of Ethics in Performance Management

Ethics is the process of rational thinking aimed at establishing what value to hold and when to hold
them. Ethical performance management is defined as the process of planning, managing, appraising
and monitoring employee's performance based on principles of fairness, objectivity, transparency, and
good corporate governance. The key principles of ethical performance management are as follows:
Principle of Core Values
An ethical performance management system directs its employees to respect the core values of the
organization. Because the ethics practiced by the organization is in conjunction with its environment.
On the other side, the organization respects its employees and provide good working environment so
that they will generate the result as per the potential.
Principle of Fairness and Justice
This system is designed to make transparency in its operation and all the parties involved in
performance management system respect each other’s needs, values, and preoccupations.
Principle of Assuming Responsibility
It emphasizes individual responsibility for personal decision making, behavior, and action rather than
collective responsibility. Individual employees assume personal responsibility not only for themselves
but for the actions of the organization as well. Employees are free to report, supply, and assist in an
investigation into business ethics concern of their organization.
Principles of Integration
This system put emphasis on employees respecting and actively considering the ethical concerns and
issues of all stakeholders, rather than focusing merely on shareholders alone.
Principle of Ethical Culture
This seeks to build or change culture to a state in which the vision of the organization includes its
employees, its customers, and the society at large. The values and norms of organization support
employee’s decision making, behavior, and actions consistent with an ‘ethical’ vision.
Principle of Robust
This system provides fair and free environment to its employees so that employees can get the
opportunity to scrutinize the basis upon which the important decisions were made.
Ethical Issues and Dilemmas
Rushworth Kidder (1995) said that “An ethical dilemma is not a choice between right and wrong, but
a choice between two rights.”
In organizations, many managers talk about ethics but do not recognize or act upon ethical issues in
their day-to-day managerial responsibilities and most ethical questions arise from people relationships
within the organizational settings. Performance management is essentially a commitment-based
system of the organization. This seeks to align employee action and behavior towards the desired
organizational goals. As employees are the key to the organization, their beliefs, values, behaviors,
and actions have a profound impact on the organization’s outcomes and most organizations
understand that employees tend to engage in behavior that is recognized and rewarded, and avoid
behavior that is penalized.
In the course of performance management, many ethical issues and dilemmas do rise during the
course of its design, development and administration.
Managerial Malpractices
There are different kinds of activities include feudal treatment given to employees, bribery,
backstabbing, office politics, etc. and all these activities affect the outcome of performance
management. Such unethical managerial behavior has a devastating impact on the morale, motivation,
commitment, and performance of employees which is not good for organizational health. The
performance management system must recognize only those employees who perform in a manner
which is consistent with the expectation of societal mores and ethical norms.
Performance Appraisal
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Performance appraisal lends itself to ethical issues as assessment of an individual’s performance is

based on observations and judgement and the HR managers are expected to observe the performance
in order to judge its effectiveness.
Managerial favoritism may influence the effectiveness of performance appraisal system. The
managers tend to rate those employees high whom they consider to be their loyalists and they inflate
their performance ratings and reward them for the performance they have never exhibited, or perhaps
could never deliver. In such situations, these types of managerial unethical behaviors and actions have
a detrimental effect on the rest of the employees including performers.
Value Conflict
Every organization has its own set of core values and they expect that its employees should honor and
practice these values. On the other hand, if we are considering the employees, they also have their
own set of values and goals and they want to follow their own value rather than the organization’s
values.
Workplace Politics
Workplace politics is the major concern in these days and according to a survey it is estimated that 18
per cent of an administrator’s time is spent resolving conflicts among employees. This type of
situation also states that use of such intentional behavior is designed to acquire power or to protect
their self-interest.
Employee Engagement
It has been seen that many talented employees’ shows dis-interest to their jobs and they tried to
maintain the minimum level of performance to hold on to their jobs. In most of the situation it has
been observed that they spent their precious time on other unnecessary activities.
For example: Employees using their organization’s internet access for personal purposes during work
hours and it results in productivity losses.
Taking Unnecessary Credit
It is the tendency taking credit for subordinates’ work. In a practical sense, there are many managers
who show their employees work as their own and they take unnecessary credit of their employees to
work. These managers are either incompetent or dislike to work, and manipulate their subordinate’s
good work as their own and these kinds of issues adversely impact the performance of employees.
Moral Mazes:
Moral mazes refer to the situation when managers deliberately avoid to highlight wrongdoings in the
organization. It is the major ethical issues in performance management. Sometime managers avoid to
highlight the issues like wrong use of resources, mismanagement of contract, conflicting interests etc.
due to the fear of alienation or potential consequential impact on themselves. They pretend the
behavior is not really unethical or excuse the behavior saying it is really best interest of the
organization. It leads to impunity and such undesirable behavior will be detrimental to the overall
business organization in long run. Such a scenario poses an ethical challenge to performance
management system.
Multiple Loyalties
Loyalty is an ethical value and many people feel an obligation to promote the interests of special
groups or friends. However, the primary loyalty is to the code of ethics and the public good and these
obligations can become unethical when it extends to making sure that a special group or individual
benefits at the expense of other groups.

Developing Code of Ethics

The key guidelines to maintain an ethical performance management system in the organization are
given below:
HR Responsibility
In organizations, the HR professionals are responsible for adding value to by developing HR
functions. They are also responsible for maintaining the balance between performance improvement
and ethical behavior in the organization.
The HR professionals shall act as ethics custodians and train and develop human resources for dealing
effectively with relationship issues of morality, integrity, and honesty with other stakeholders
particularly customer, suppliers, and society at large.
Developing Standards
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Human resource professionals must strive to meet the highest standards of competence and ethics.
The purpose is to keep abreast of organizational strategy, mission, and objectives on a continuous and
consistent basis.
They must drive ethics training of top managers and employees on a wide scale. They have to educate
them on the significance of ethics in attaining high-performance standards. The HR professionals
shall transmit ethics to employees, managers, and external stakeholders through performance
management system
Ethical Leadership
In making performance management a truly business-aligned, transparent, and credible management
endeavor, human resource professionals must exhibit individual leadership. They should act as ethics
communicator to improve the situation for their organizations.
Fairness and Justice
For employee’s work achievements and their contribution in improving organizational competence
and performance, there should be fairness and justice in respect of rewards and recognition
Human resource professionals are ethically responsible for promoting fairness and justice in the
organization and they must enable a culture where ethical behaviour and action is a key performance
criterion.

Conflict Management
They must safeguard the interest of all stakeholders to eliminate the conflict arising between manager-
employees, employer-employee and employees-organization on certain issues related to rewards and
recognition etc.
Transferring Information
The human resource professionals should ensure truthfulness of communication. It should be in
respect of performance feedback and counselling and help top leadership in taking informed personnel
decision.
Performance Management in MNCs
Multi-National Corporations (MNCs) are business activities of business organizations beyond
domestic border. They operate in a number of countries for various business and competitive reasons.
Corporate strategies vary based on the countries where they are operating and HR strategy also varies
from country to country. However, MNCs are sending their human resources home country to host
countries or host country to home country. Human resources of the same organization working in
different countries are confronting different policies and system which may lead to conflict.
Performance management as a strategic human resources management process enables the MNCs to
continuously evaluate and individual subsidiary unit which requires alignment of corporation's
objectives and strategies with performance management. However, the local culture significantly
influences the management of organization and its performance. Being an integral component of HR
Management approach, performance management approach should change, modelled and re-modelled
to suit the corporate strategy, local culture and ethical setting in which an MNC operate or intends to
operate.
The design and implementation of performance management system in host country should be
develop in such a way that is consistent with the corporate strategy of the business organization. Some
MNCs have developed modern performance management system such as Balance Score Card, and
MBO approach.
The rapid globalization, turbulent technological revolution and increasing deregulation have profiled a
new competitive landscape in the global context. This new context has challenged the performance of
MNCs which also impacts performance management. In such scenario, cultural and ethical dilemma
may emerge in MNCs. Culture is a key determinant of people behavior and it also influences
employment practices. As performance management is people commitment and behavior-oriented
system, cultural dimensions have deep impact on the performance management system of MNCs. The
performance management system of MNCs have following dimensions:
Individualism versus Collectivism
It refers to the extent to which a person’s life is governed by personal versus team objectives. Most of
the western countries have individualistic culture and rest of the world is collective culture. This
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means that almost all western countries are governed by individual accomplishment. They focus on
career development, reward individual performer, and individual goal setting. They focus on
autonomy, cost benefit involvement and calculative. It has high correlation with employment
opportunity for women in managerial position because women are more inclined to professional
development than men.
Countries with collective culture give high emphasize on team achievement, attempts to improve team
performance and seek benefit for the whole organization. Employees of such countries seek for job
security, inclined to nice pay package and professional development.
Countries are vaguely different in term of their culture. Such cultural differences may create conflict
between the employees of home country and host countries. Therefore, performance management as
an organizational strategy needs to adapt HR strategy to suit the cultural setting of the organization.
Power Distance
It refers to the extent that low status persons accept and legitimate the power and influence of high-
status persons. Power distance is correlated with individualism and collectivism. Individualistic
culture is generally low on power distance i. e. less hierarchical whereas collectivists cultures are high
on power distance. Countries with individualistic culture are more participative and participates
employees in goal setting, collectivists are less participative in goal setting. Performance appraisal is
subject in nature and based on managers’ perception. This mean performance appraisal is based on
managers’ subjective assessment or personal likes and dislikes.
In collectivist culture managers tend to promote employees based on more personal qualities and
fitment with corporate culture. There is low level of open feedback, and communication. Thus,
employees reluctant to share new ideas. Performance counselling and monitoring is less frequent
In individualistic culture managers identify managerial talents among employees and emphasizes
performance standards, measures and monitoring. Performance counselling and monitoring is more
predominant and frequent performance review happens in individualistic culture.
Therefore, performance management as an organizational strategy needs to be adapted to suit the
power distance between the managers and employees of the host countries.
Masculinity and Femininity
It is the extent to which aggressive and material well-being are valued in a society versus good
interrelationships and the general quality of life. In masculinity culture, managers pay attention and
personal needs than performance. Managers are viewed best judge. They follow top down decision.
Employees are more loyal to managers than MNCs. They prefer non-financial rewards such as
appreciation, recognition etc. than financial rewards. There is high power distance between managers
and employees and direct feedback is difficult. In this culture, managers follow informal performance
counselling.
Managers in Feminine culture pays attention in financial reward and focuses on performance.
Employees are participated in performance evaluation and administrative matters with the focus on
developing talents and imparting administrative rewards. Formal counselling is more prevalent in
feminist culture.
Uncertainty Avoidance
It is the degree to which members of culture fear the unknown. An employee with low degree of
uncertainty avoidance do not feel stress and threatened which facing changes and ambiguity.
Employees usually have relatively short average duration and have little loyalty towards the
organization. Innovation is encouraged. Managers are more confident in their leadership ability and
motivation. They demand little about flexible working schedules and general skepticism towards
technological solution. The high uncertainty avoidance culture has strong loyalty to one’s employees
and job tenure is relatively high. Power to managers depend on their ability to control their
uncertainty.
The performance management tends to emphasize creativity and technological competency for those
who take and accept the risk, change and ambiguity. They use more local managers whereas a country
with high uncertainty avoidance tendency emphasizes on native or expatriate managers in the key
positions in their host countries.
Ethical Challenges in Performance Management of MNCs
Managing ethics on global scale in different cultural settings is a major challenge for MNCs.
Generally, four challenges in this respect are noteworthy:
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Value Diversity
MNCs are operating in different countries and tend to employ employees and managers of divers
backgrounds in terms of social and cultural norms and values which pose problems of legitimacy. For
example, giving and receiving gift in business transactions in the most of western countries is a
symbol of warmth and courtesy where some other countries like Nepal, it is considered as an act of
bribery. Similarly, whistleblowers will be rewarded in some countries but in other countries their
service will be terminated irrespective of performance level. It is basically relevant to expatriate
managers and employees.
Rule Setting
Rule setting in the international arena has proven to be a difficult proposition leading to considerable
international regulatory voids. MNCs pays huge bribes to the government of host countries especially
developing countries such as to gain special treatment in the matters like taxation, environmental
issues, dumping, labor legislation etc. Performance management and reward system in such scenario
tends to be narrowly focused on merely generating profit for the MNCs, without focusing ethical
issues.
Lack of direct enforceability
Some MNCs are financially strong and use financial clout to influence the governments’ policies and
practices host countries in their favor. They develop aggressive performance target and tight schedule
to generate high profit in the shortest possible time to please the boss of parent company. Employees
are taken as the cog of machine and hardly participated in goal setting, performance planning,
performance managing and performance planning.
Scope of Responsibility
Almost MNCs are established and run by the entrepreneurs of developed countries to developing
country to exploit natural and other resources of developing countries than providing services. They
have to face different problems related to child labor, education, loan policies etc. They are offering
more reward to employees and taking undue advantages due to the poor economic condition than
promoting skills and efficiency. Therefore, ethics call for MNCs not to take undue advantages of the
people in the host countries.
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Unit 8
Role of HR Professionals in Performance Management System

Appraising HR Functions

Human Resources are responsible for initiating the performance appraisal process for the department.
It is to assess the performance of its staff. On top of it, there task is to design and develop the
Performance Management System of the organization.
According to Peter F. Drucker, “The business has two basic functions: marketing and innovation.
Marketing and innovation produce results; all the rest are costs.”
In these types of situations, the objective of the HR function is to provide a favorable and supporting
climate and appropriate systems. The purpose is to align human performance with the business
strategies of the organization.
The major problem with the HR function in any organization is that its results are difficult to quantify
in the balance sheet. This leads to the downgrading of its contributions. Based on the balanced
scorecard method, the ‘Performance scorecard’ methodology can be evolved to appraise the
performance of the HR function. The performance scorecard enables the leadership to determine how
effectively HR is leveraging on human capital, as well as mobilize and galvanize the people within the
organization. It is done in terms of four perspectives-quality, cost, delivery, and responsiveness.
By using performance scorecard, it helps in appraising HR functions from the following perspectives:
Operations Perspective
The operations perspective includes the internal business processes and their alignment with HR
functions and it should find out the key problems and their effective solution. The metrics based on
this perspective allow senior leadership to know the effectiveness and efficiency. It also helps in
knowing the quality of these HR processes in meeting organizational and environmental requirements.
Financial Perspective
To keep the cost of compensation and benefits at an optimal level is another important HR function. It
is required for HR professions that they should consider the organization’s ability to pay and other
growth perspectives.
They need to focus on the employee’s contribution in terms of financial data with respect to an
investment made on employees.
HR Perspective
This perspective includes employee training and corporate cultural attitudes. These training programs
are related to both individual and corporate self-improvement. Organizational success depends on
how effectively the organizations are discovering and managing their human resources.
The key differentiator between the successful and unsuccessful organizations is the effectiveness of
knowledge-worker and today’s HR function needs to develop an innovative workforce capable of
delivering results at all times, consistently and continuously.
Customer Perspective
In recent days, organizations have realized the importance of customers in business success and they
have also realized that if customers are not satisfied, they will eventually find other organizations that
will meet their needs.
Role of HR Professionals in Performance Management in Knowledge Millennium

The HR professionals have some key future roles in the organization which are discussed as below:
Strategic Partner
In today’s organizations, HR managers need to think of themselves as strategic partners to guarantee
their viability and ability to contribute. When the HR persons are in this role, they contribute to the
development of and the accomplishment of the organization-wide business plan and objectives. The
organizations are establishing HR business objectives to support the attainment of the overall strategic
business plan and objectives.
HR representatives should be tactical and deeply knowledgeable about the design of work systems in
which people succeed and contribute because the strategic partnership impacts HR services such as
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the design of work positions; hiring; reward, recognition and strategic pay; performance development
and appraisal systems; career and succession planning; and employee development.
To meet these challenges, the HR professionals as strategic business partners will be required to
perform the following functions:
The HR professionals will be required to craft and execute corporate strategy. These strategies will
result in inimitable results, actions, and behavior of human resources of the organization.
They will have to play a pivotal role in the identification of performance gaps and benchmarking. It is
for enabling a higher level of individual performance so that the synergistic effect can be obtained.
In organization, the HR professional shall be entrusted with the job of taking stock of performance-
related issues and problems on a proactive basis.
He must assist managers and top management in boosting overall organizational performance. It is
done through human resources by creating appropriate performance-oriented work culture, devising
innovative reward and compensation systems, managing talent pools, developing competencies and
managing appropriate ethical behavior in the organization.
Making Effective Forecasts
In this global business scenario, only those organizations are successful which are making effective
forecasts and taking appropriate steps to take the maximum advantages and it is possible only when
the employees of the organization are capable, competent, motivated, and committed, and deliver
excellent performance on a continuous basis.
In such a scenario, performance problems are likely to occur. In this situation, there are two ways
open to HR professionals-either wait for the inevitable performance problem to occur, or anticipate
performance problems by sniffing around. By pre-empting performance problems of the organization,
the HR professionals can save organizations a lot of cost. The cost can be calculated in terms of failed
efforts, lost opportunities, counselling time and efforts, etc.
Acting as Performance Counsellor
For improving an employee’s performance, performance counselling is a manager-initiated strategy. It
is a supportive process conducted by a manager to enable an employee to define and work through
personal problems or organizational changes.
The reason is that it affects job performance. It means better bottom-line results; organizations
recognize and reward such managers. Managers with good counselling skills can get that kind of
performance from their employees by using the tools of counselling.
Employee Advocate
When there is a role of employee sponsor or advocate, the HR manager plays an integral part in
organizational success via his knowledge about and advocacy of people. This advocacy includes the
expertise of the manager in how to create a work environment in which people will choose to be
motivated, contributing, and happy.
Employee ownership in the organization can be built by fostering effective methods of goal setting,
communication and empowerment through responsibility. The professional help to establish the
organizational culture and climate in which people have the competency, concern and commitment to
serve customers well.
Change Champion
The need for the HR professional in organization is realized by constant evaluation of the
effectiveness and due to this they are known as champion change. The HR professionals are
exceptionally valued when both knowledge about and the ability to execute they have in making
successful change strategies. They know how to link change to the strategic needs of the organization
and this will minimize employee dissatisfaction and resistance to change.
In the same line of action, the HR Managers should do the following things to ensure success:
They should use workforce skills and abilities in order to exploit environmental opportunities and
neutralize threats.
They must employ innovative reward plans that recognize employee contributions and grant
enhancements.
They must indulge in continuous quality improvement through TQM and HR contributions like
training, development, counseling, etc.
They must utilize people with distinctive capabilities to create unsurpassed competence in an area.
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Their effort should be to decentralize operations and rely on self-managed teams to deliver goods in
difficult times.
In times of crisis such as Lay off; the workers in a smooth way explained facts to unions, workers and
other affected groups.
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UNIT 9
Emerging Concepts
HR Benchmarking and Performance Management
HR benchmarking and performance management are closely related concepts that are used to
improve the effectiveness and efficiency of an organization's human resources (HR) function.

HR benchmarking involves comparing an organization's HR practices, processes, and

performance metrics to those of other organizations in order to identify best practices and
areas for improvement. This can be done by collecting data on key HR metrics, such as
employee turnover, recruitment costs, and training costs, and comparing them to industry
averages or to the data of other organizations.

Performance management, on the other hand, is the process of setting performance goals,
monitoring progress towards those goals, and providing feedback and coaching to employees
to help them improve their performance. This can include setting clear expectations,
providing regular feedback, and offering rewards and recognition for high performance.

By combining HR benchmarking and performance management, organizations can not only

identify areas for improvement in their HR practices, but also take action to implement those
improvements and track progress over time. This can help organizations to improve the
overall effectiveness and efficiency of their HR function, which can ultimately lead to better
performance and results for the organization as a whole. Impacts of HR benchmarking in
performance management are
HR benchmarking can help organizations identify best practices and areas for improvement
in their HR practices, processes, and performance metrics.
By comparing their own data to industry averages or to the data of other organizations,
organizations can get a sense of how their performance compares to others and where they
may need to focus their efforts to improve.
By using benchmarking data to identify areas for improvement, organizations can then take
action to implement changes and track progress over time.
By combining HR benchmarking with performance management, organizations can ensure
that their performance management practices are aligned with industry best practices and that
they are targeting the right areas for improvement.
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It can also help organizations to set more realistic and achievable performance goals and
targets by understanding the performance level of other organizations in their industry.
It can also assist organizations in identifying areas where they have a competitive advantage
and areas where they need to improve in order to achieve better results.
By benchmarking HR performance regularly, organizations can keep track of their progress
and adjust their strategy as needed to continue to improve their performance over time.
HR Outsourcing and Performance Management
HR outsourcing refers to the practice of hiring a third-party company or provider to handle
certain HR functions, such as payroll, benefits administration, recruitment, and training.
The impact of HR outsourcing on performance management can depend on the specific
functions that are outsourced and the quality of the outsourcing provider. In general,
outsourcing certain HR functions can help organizations to improve their performance
management by:
I. Allowing them to focus on core business activities and strategic initiatives rather
than getting bogged down in administrative tasks.
II. Providing access to specialized expertise, tools and technology that the
organization may not have in-house, which can help to improve the effectiveness
and efficiency of the HR function.
III. Reducing costs, by avoiding the need to invest in expensive HR software and
infrastructure.
IV. Improving data collection and analysis, by using outsourcing providers that can
provide more robust data collection and analysis tools and services.
V. Improving service levels, by using outsourcing providers that can provide more
efficient and effective HR services to employees.
However, it is important to note that HR outsourcing can also have negative impacts on
performance management if not done properly. Choosing the wrong provider can result in
poor service, lack of communication and lack of transparency, and can lead to a lack of
control over the outsourced functions. It can also lead to a lack of alignment of the
outsourced functions with the organization's overall performance management strategy.

Therefore, organizations should carefully consider the risks and benefits of HR outsourcing
and choose a reputable provider that has a proven track record of success in their industry.
Additionally, they should have a clear plan in place to manage the outsourced functions and
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ensure that they are aligned with the organization's overall performance management
strategy.

Impact of HR Outsourcing on Performance Management

I. HR outsourcing can allow organizations to focus on core business activities and
strategic initiatives rather than getting bogged down in administrative tasks.
II. Provides access to specialized expertise, tools and technology that the
organization may not have in-house, which can help to improve the effectiveness
and efficiency of the HR function.
III. It can reduce costs, by avoiding the need to invest in expensive HR software and
infrastructure.
IV. Improving data collection and analysis, by using outsourcing providers that can
provide more robust data collection and analysis tools and services.
V. Improving service levels, by using outsourcing providers that can provide more
efficient and effective HR services to employees.
However, if not done properly, HR outsourcing can also have negative impacts on
performance management such as poor service, lack of communication and lack of
transparency.
It can also lead to a lack of control over the outsourced functions and a lack of alignment of
the outsourced functions with the organization's overall performance management strategy.
Organizations should carefully consider the risks and benefits of HR outsourcing and choose
a reputable provider that has a proven track record of success in their industry.
Organizations should have a clear plan in place to manage the outsourced functions and
ensure that they are aligned with the organization's overall
Performance Management in Developing Countries
Performance management in developing countries can present unique challenges due to
factors such as limited resources, lack of infrastructure, and cultural differences. These
challenges may include difficulty in setting clear performance expectations, limited access to
training and development opportunities, and limited ability to provide incentives and rewards
for high performance. Strategies for addressing these challenges may include developing
clear and measurable performance metrics, providing on-the-job training and mentoring, and
finding ways to recognize and reward high performers despite limited resources.
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Additionally, it is important to consider and respect cultural differences in performance

management practices.
Performance management in developing countries can be challenging for a variety of reasons.
One of the main challenges is the limited resources available, which can make it difficult to
establish clear performance expectations, provide training and development opportunities,
and offer incentives and rewards for high performance.

To address these challenges, organizations in developing countries may need to be creative in

their approach to performance management. For example, they may need to develop clear
and measurable performance metrics that are specific to their local context, and that take into
account the limited resources available. They may also need to provide on-the-job training
and mentoring, which can be more cost-effective than formal training programs.

Another important aspect of performance management in developing countries is the need to

recognize and reward high performers despite limited resources. This may involve finding
non-monetary ways to recognize and reward high performance, such as through promotions,
public recognition, or other types of non-financial incentives.

Cultural differences also play a big role in performance management in developing countries.
For example, in some cultures, direct feedback and criticism may be viewed as disrespectful
or offensive, so organizations may need to adapt their feedback and communication styles to
be more culturally appropriate. Additionally, in some cultures, there may be a strong
emphasis on group cohesion and collective responsibility, rather than individual performance,
which may affect how organizations approach performance management.

In summary, performance management in developing countries can present unique challenges

due to limited resources, lack of infrastructure, and cultural differences. To address these
challenges, organizations need to develop clear and measurable performance metrics, provide
on-the-job training and mentoring, and find non-monetary ways to recognize and reward high
performers. Additionally, they need to be aware of cultural differences in performance
management practices and adapt their approach accordingly.
The impact of culture on performance management are as under
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I. Limited resources can make it difficult to establish clear performance

expectations, provide training and development opportunities, and offer incentives
and rewards for high performance in developing countries.
II. To address these challenges, organizations in developing countries may need to be
creative in their approach to performance management.
III. Developing clear and measurable performance metrics that are specific to the
local context, and that take into account the limited resources available.
IV. Providing on-the-job training and mentoring, which can be more cost-effective
than formal training programs.
V. Finding non-monetary ways to recognize and reward high performance, such as
through promotions, public recognition, or other types of non-financial incentives.
VI. Cultural differences also play a big role in performance management in
developing countries, such as direct feedback and criticism may be viewed as
disrespectful or offensive, organizations may need to adapt their feedback and
communication styles to be more culturally appropriate.
In some cultures, there may be a strong emphasis on group cohesion and collective
responsibility, rather than individual performance, which may affect how organizations
approach performance management.
Organizations need to be aware of cultural differences in performance management practices
and adapt their approach accordingly.

Thank you