Performance Management

Lecture 2
 Some Definitions
• Performance Management Systems:
“Key tools to transform people's talent and motivation
into a strategic organizational advantage”
• Performance management is: “an ongoing process of
communication between a supervisor and an
employee that occurs throughout the year, in support
of accomplishing the strategic objectives of the
organization. The communication process includes
clarifying expectations, setting objectives, identifying
goals, providing feedback, and reviewing results” [2]
 Some Definitions
• Performance management is: “an ongoing process involving
feedback, coaching and recognition” which aims to enhance
competence, capability and confidence [3]
• Performance management is [4] “an ongoing process where
supervisors and employees work together to plan, monitor,
and review an employee’s work objectives, goals, and
professional development” which is comprised of frequent
informal conversations including coaching, feedback and
support to employees about their work, needs and
accomplishments related to the duties and expectations of
their positions.
 Some Definitions
• Our textbook’s definition: “continuous process
of identifying, measuring, and developing the
performance of individuals and teams and
aligning performance with the strategic goals
of the organization”
• So: what are the common thing(s) between all
of these definitions?
Performance Management Phases
Example [3]
Phase I: Goal
Setting &
Development
Planning

Phase II: Mid-

Phase III: Year-
End Review Year
Calibration
Continue: Performance Management Phases Example
Phase I [3]

Includes:
• Clarifying and aligning measurable goals and
defining expectations for the entire year
• Discussing competencies; identifying
“development opportunities and interests in
both the short (current role) and longer term
(career goals)”
Continue: Performance Management Phases Example
Phase II [3]

Includes:
• Informal discussions to solicit and provide
feedback, guidance, coaching, and recognition for
contributions of everyone
• Discussing progress on performance, goals, and
competencies; recognizing any accomplishments
and identifying challenges
• Calibrating on goals for the remainder of the year
and adjusting plans (if needed) to accurately
reflect changes to all expectations and priorities
Continue: Performance Management Phases Example
Phase III [3]

Includes:
• Discussing annual performance relative to
goals, competencies, and development plans
• Identifying and celebrating achievements
“(inclusive of goal delivery and competency
demonstration)”
• Assessing performance of goals and
competencies and determining the ratings of
the performance
 A Quote by Peter F. Drucker

• “A manager is responsible for

the application and
performance of knowledge”
 Common Scenario
• Sally is a sales manager at a large pharmaceutical company. The fiscal year will end in one
week. She is overwhelmed with end-of-the-year tasks, including reviewing the budget she is
likely to be allocated for the following year, responding to customers’ phone calls, and
supervising a group of 10 salespeople. It’s a very hectic time, probably the most hectic time
of the year. She receives a phone call from the human resources (HR) department: “Sally, we
have not received your performance reviews for your 10 employees; they are due by the end
of the fiscal year.” Sally thinks, “Oh, those performance reviews. . . .What a waste of my
time!” From Sally’s point of view, there is no value in filling out those seemingly meaningless
forms. She does not see her subordinates in action because they are in the field visiting
customers most of the time. All that she knows about their performance is based on sales
figures, which depend more on the products offered and geographic territory covered than
the individual effort and motivation of each salesperson. And, nothing happens in terms of
rewards, regardless of her ratings. These are lean times in her organization, and salary
adjustments are based on seniority rather than on merit. She has less than three days to turn
in her forms. What will she do? She decides to follow the path of least resistance: to please
her employees and give everyone the maximum possible rating. In this way, Sally believes the
employees will be happy with their ratings and she will not have to deal with complaints or
follow-up meetings. Sally fills out the forms in less than 20 minutes and gets back to her “real
job.”
 Discussion

Is this really a
“Performance
Management”?
• Let’s go back to our textbook’s definition:
“continuous process of identifying, measuring,
and developing the performance of individuals
and teams and aligning performance with the
strategic goals of the organization”

• What are the two main components of

performance management?
 Two Main Components
• Continuous process: Performance management is
ongoing. It involves a never ending process of setting
goals and objectives, observing performance, and
giving and receiving ongoing coaching and feedback.
• Alignment with strategic goals: Performance
management requires that managers ensure that
employees’ activities and outputs are congruent with
the organization’s goals and, consequently, help the
organization gain a competitive advantage.
Performance management therefore creates a direct
link between employee performance and
organizational goals and makes the employees’
contribution to the organization explicit.
 Management versus Appraisal
• Performance management is different from
performance appraisal.
• What do you consider Sally's approach? Is it
Management or Appraisal? Why?
 Management versus Appraisal
• Once a year or continuous?
• Is there any feedback and coaching?
• So, it is just Appraisal.
• What is the difference between performance
management or performance appraisal?
 Management versus Appraisal
• “Performance appraisal is the systematic
description of an employee’s strengths and
weaknesses”
• So, in fact: performance appraisal is an
important part of the performance
management.
• Performance management is much bigger
than management appraisal or management
measurement.
• Performance management systems need to
make the employee contribution to goals of
the organization clearly explicit.
– Did Sally do that?
• Thus, a common understanding about what
to achieve and how to achieve is needed.
 References
Our Textbook:
Aguinis, Herman; “Performance Management”; ISBN 9781292024073, Publisher Pearson
Education, 2013, 3rd ed

[2] https://hr.berkeley.edu/hr-network/central-guide-managing-hr/managing-hr/managing-
successfully/performance-management/concepts

3]https://humanresources.uchicago.edu/tpm/Performance%20Management%20Program%20Ov
erview%20and%20Process%20Options.pptx
[4] https://hrdesign.wisc.edu/content/uploads/2015/03/PM-Webinar.pptx