Performance Management Systems

B. Performance Management Cycle and 2. Performance Appraisal and Reviewing

Productivity and Efficiency  It is already the period of
execution.
 Performance appraisal is
sometimes done annually or at
Performance Management Cycle least twice a year because it is
 There are errors and biases involved. costly on the part of the
 PMS that is used are just like humans who management.
are also bound to commit mistakes  How performance appraisal
 It is a limited set to the appreciation of works? First, the employees are
the one who is crafting it. given the chance or the
opportunity to rate their own
performance, sometimes done in
written. They may be called by the
6 Phases of Performance Management Cycle
hr manager and asked to assess
1. Performance Planning themselves regarding their
 Centralized company - the decision performance if they were able to
process is done by the upper accomplish what is expected of
management and lower managers you.
have no contribution as to the  Second, the manager or the
planning or formulation of appraiser will provide then his
company policies. own assessment in the
 Decentralized company - the performance of an employee. Then
employees are involved in the that would be the final rating. This
decision-making process. is also for due process purposes
 Example: The management that an employee has the
together with the employees are opportunity to rate their own
planning/deciding on what performance.
performance management is
adapted. Once they agreed on what
tools should be adapted, they will 3. Feedback
try to decipher how long that  Feedback is done after doing the
particular management tool will be step 2 through personal
applied (period of execution). counseling or performance
After decipher, they are going to facilitation, perhaps the conduct of
agree as to who will be the trainings and seminars
employees that will be covered.  The employee is given suggestions
 The degree of participation of the or recommendations as to how
employee would depend on the they can improve their
kind of company it is either the performance.
company is centralized or  This step is important because an
decentralized. employee is given the chance to
Performance Management Systems
develop their skills and character
that is vital in their progress as an
employee.
 This is not only for the benefit of
the employee but also to the
employer because the loopholes in
the execution of the their
performance will be
remedied/solved that will help the
company achieve better
performance.
 The employees improvement is
being highlighted in this step.
 Through this step, the employee
will be able to know on what
certain areas that went wrong and
how can they improve their
performance.
4. Rewarding Good Performance
(incentives/bonus)
 Reward for good performance.
 In a psychology study, it shows
that employees wanted to be
rewarded in different ways,
perhaps monetary reward is the
most desirable.
 Reward system is important
because it helps boost the self-
esteem of an individual employee
and that they will be motivated
and eager to accomplish more
tasks that is assigned to them.
5. Performance Improvement Plans
 Fresh set of goals are established
for an employee and a new
deadline is provided for
accomplishing the subject.
 It somewhat like you repeat the
planning stage.
 This is to testify that the
performance management system
is a continuous process.
 Example (last example given in
chapter 1): When an employee is
able to reach the quota then the
manager will assess again since
the last set that the manager
applied is achievable and realistic.
Then the manager will set a new
standard or increase the quota.
6. Potential Appraisal
 All the things that you were able to
come up with in the performance
management cycle, this is the time
that you will be using it in your
decision-making.
 Example: It will help you decide to
move the employee laterally
(transferring of an employee from
one department to another) or
vertically (whether upwards or
downwards). Upwards which also
known as a promotion and
downward is a demotion.
Demotion is not frequent since it is
prejudicial on the part of the
employee unless there is a valid
ground.
 This is implement to competency
mapping and assessment
techniques (performance
management tool that is adapt in
the planning stage).
In conclusion, the performance management
cycle is indeed a continuous process.
Performance Management Systems
Performance
 In layman's term, it is an execution of an
action. However in business context, it is
define as maximizing the amount of
output energy from a system. Therefore,
improving all the factors that increases
the profit.
 Demarcation/distinction between income
generating entities and public sectors.
 In public sectors, the performance would
pertain to whether or not they are able to
deliver proper services.
 Productivity and efficiency are used
interchangeably.
Difference between productivity and efficiency
Productivity
 Formula: Output over input
 By that formula, productivity means that
it does not define the volume of the input.
It only shows the output of gain in
relation to the input employed.
 It refers about the work done over a
certain period.
 Output per unit of time
Efficiency
 It is used as getting the most out of your
resources. Most likely, your business is
able to produce more with less money
and less waste. You can operate day-to-
day without making costly errors.
 In another term, it refers to the amount of
effort and resources that people put into
work.
 It is a gauge of the amount of effort that
was put in producing that particular
output.
 Best possible output for each unit of time.
Translated into doing things right, means
that you achieve the peak level of
efficiency and productivity.
 Two types: technical efficiency and
allocative efficiency.
A. Technical Efficiency
 Maximum output from a set
of input
B. Allocative Efficiency
 Optimal combination of
inputs (e.g. direct materials,
direct labor, factory
overhead)
 (1) Productivity is quantity and efficiency
is quality.
 (2) In efficiency, you take into account the
underlying cost.
 (3) Productivity is a raw measure and
efficiency is a refined measure.
 It is significant especially on the
managers to assess or judge the
performance of the employee based on
efficiency rather that the productivity. It
is much if the employee is both
productive and efficient as this will lead
to realization of the company missions
and visions.
 Productivity plus efficiency equates true
productivity. The two must be
inextricable (not separated) linked in
order for the business to achieve its
company objectives and mission and
vision.
 Example: Student A and B are both
preparing for a qualifying exam. They
were given two weeks to study and
review. During the two weeks, student A
Performance Management Systems

was able to read 100 pages and only 50

pages for student B. But it turned out that
student B (efficient) got the highest score
compare to student A (productive).
 Another example: There are two teachers
who are teaching online. They were
mandated by the school to make 12
lesson plans in 1 week. Teacher A was
able to complete making the 12 lesson
plans but Teacher B was only able to
make 10 lesson plans. But the latter need
not to review the lesson plans as it was
perfectly made and only the former will
be the one to review as there are a lot of
errors found on it. So Teacher A needs
another time to review/redo again the
lessons plans. By that example, Teacher B
is more efficient and Teacher A is only
productive but less efficient.
 Thus, productivity calculates quantity
while efficiency measures quality.
 As saying goes: Quality over quantity.