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 The process of creating a work environment or setting in
which people are enabled to perform to the best of their
abilities
 A whole work system that begins when a job is defined as
needed
 It ends when an employee leaves your organization
 A performance management system includes the following
actions:
◦ Develop clear job descriptions
◦ Select appropriate people with an appropriate selection
process
◦ Negotiate requirements and accomplishment-based
performance standards, outcomes, and measures
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◦ Provide effective orientation, education, and training
◦ Provide on-going coaching and feedback
◦ Conduct quarterly performance development discussions
◦ Design effective compensation and recognition systems that
reward people for their contributions
◦ Provide promotional/career development opportunities for
staff
◦ Assist with exit interviews to understand WHY valued
employees leave the organization

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 The performance management has following dimensions:
◦ Output or Result Dimension: The most acceptable and
measurable dimension of performance is result and output. It
describes the consequence of inputs in a summary form or a
final product or semi – final product form or service form. It
describes the standard. It is easily measurable.

◦ Input Dimension: It deals with the activities or tasks to be

accomplished by the individual. The nature of activities to
be undertaken by the individual, the time frame, the quality
of inputs to be given, etc. constitute the input dimension

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◦ Time Dimension: Performance can be defined for a task, for
a day, for a week, for a month, year or for life. The time
period for performance is important. Time may become the
target.

◦ Focus Dimension: The focus can be on anything. The focus

of performance can be on many other dimensions. It could
be on quality or on cost or financial dimensions

◦ The other dimensions are Quality and Cost dimensions

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Performance management has the following characteristics:

1. Performance management is supposed to be owned and

driven by line management and not by HR department or
one or two executives

2. There is emphasis on shared corporate goals and values

3. Performance management is not a package solution; it is

something that has to be specific for a particular
organization

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These are components of performance management:
1. Development of mission and goal statement of the
company
2. Development of business plans
3. Communicating goals and objectives to employees
4. Defining role responsibilities
5. Defining and measuring individual performance
6. Developing appropriate reward and punishment strategies
to modify behavior

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Some observations about performance of employees in Indian
organizations are listed below:
1. All employees have potential to contribute to job and
organization, but only a few of them make good
contributions
2. Potential of Indian executives (Engg., MBA, CA etc.) is
high and can be compared with the best from other
countries like USA, UK, Germany, etc.
3. Most employees (in any organization ) only manage to
demonstrate average performance

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4. A number of employees develop negative attitude and
frustration at workplace
5. Work culture in some Indian organization is poor or weak
6. In spite of high potential, employees fail to develop their
competence in organizations
7. When employees start their career at the age of 22 -25
years, most of them show high motivation and interest for
work but they fail to sustain it overtime
8. Many organizations have rigid and bureaucratic structures
that are not conducive to creativity and innovation,
although this trend is gradually changing and some
companies are developing flexible structure
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9. Awareness and skill level of workers is increasing,
companies should attempt to utilize their skills for
organizational goals
10. Technology is changing very fast, continuously impacting
job content. While some executives can adjust, many
cannot, a factor leading to low job performance
11. It is observed that many employees develop rigid and
inflexible attitudes. Consequently they become poor
performers, despite their high potential

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◦ In any organization, performance of employees can be
enhanced by multiple intervention techniques like change
in technology, elimination of non – value adding activity,
using information technology for various business
processes, designing incentive reward & recognition
schemes etc.
◦ As motivation level is low/average, performance
management strategies should necessarily aim at
improving motivation level of people
◦ A framework for performance management including
organization, group and individual level intervention
strategies is proposed
◦ The objective of this framework is to radically enhance
performance of large number of employees in any
organization
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 Organization Level
Intervention

Enhanced
Enhanced
Motivation
Group Level Intervention Job Level
Level

Individual Level
Intervention

Performance Management Strategies

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◦ All performance management strategies can be classified
into three categories, namely organization level, group
level and individual level

◦ Organizational level interventions which can improve

performance are given below:
 Reengineering selection
 Reengineering performance appraisal systems
 Reengineering training and development
 Reengineering compensation
 Reengineering career development

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◦ A manger can try for individual level and group level
interventions also. However these interventions can
achieve limited success
 Creating motivating climate
 Participative decision – making
 Support
 Group psychotherapy and T – Group
 Counselling
 Role clarification
It is necessary to introduce changes in human resources
strategies to improve performance of large number of
employees drastically.

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◦ The directions for changing human resource strategies are
discussed below:

Selection:
Performance of the person depends not only on knowledge
and skill but also on his liking and disliking for job, but
this fact remains undetected in the selection process. Some
suggestions in this respect are given below:
1. Companies should try to select employees more scientifically
2. Selection should be based on assessment of knowledge, skill and
attitude
3. Selection tests should have predictive validity.

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Performance Appraisal:
Performance appraisal can be very useful tool for
assessment of employees as well as development of their
potential in terms of knowledge and skill as required for
further developing their potential and better on – the – job
performance. It can be used for following purpose:
◦ Communicating work expectation
◦ Improving performance by conveying appropriate feedback
◦ Determining employee potential
◦ Counselling and developing employees
Compensation:
Compensation can play a major role in facilitating changes
in organization. Organization should be able to redesign
compensation plans in such a way that employees
cooperate with changes rather than oppose the same.

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Training and Development :
Training need analysis should be done scientifically. A
company should attempt to ensure transfer of training at
the work place. Employees should be encouraged to
initiate improvement activities after learning new ideas
and concepts.

Career Development:
Every organization should develop a career development
policies for all employees including workmen. Specific
policies for career development for workmen should be
developed. It is not uncommon to see workmen facing
stagnation in their careers.

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 The process includes:
◦ Developing job descriptions and a reporting structure that
provides clarity of roles and responsibilities
◦ Creating a system for the identification and measurement of
performance driving behaviors and results that align with the
values of the firm and overall business strategy
◦ Establishing career paths and supporting training and
employee development programs
◦ Implementing a formal process to monitor, appraise and
reward employees
◦ Driving open two-way communication between employees
and managers in a constructive, guided fashion
This process contains following steps:

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 Performan
ce

Future
Performan Diagnosis
ce

Performance
Management
Process
Performance
Improvemen Evaluation
t

Dealing Feed Back

with Feed
back

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Performance:
- The worker exhibits behaviors or achieves outcomes that
considers to be important in the work place
- The effective management of performance first requires a
solid understanding of the performance domain
- Two major approaches of defining performance are
behavioral and outcome approaches
- Behavior approaches describe job performance in terms of
behaviors that the worker should and should not do
- Outcome approaches describes job performance in terms of
outcomes achieved, such as amount of sales, number of new
clients and so on
Diagnosis:
- Determining the cause of performance, is a critical and
absolutely necessary step
-
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- It is important because it drives remedies, influences
evaluation and underlies conflict
- Diagnosis requires observation.
- A systematic approach to make judgments about causes
requires examination of the pattern of performance
observations.
- Ex. Performance observation patterns
- Tasks/Roles/Objectives
- 1 2 3 4
3 2
Paul
6 6
Person Tom
(or Team)
Sam 3 4

Roy
2 7

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Evaluation:
- The process of judging the worth of observed performance
- To evaluate the performance
 Observe a worker
 Type of yard stick a manager is using
- A consensus needs to be developed in regard to what is to be
attended to and considered relevant for performance
evaluation
- A common framework for evaluating such that everyone has
the same standards and agrees on the worth of various levels
of performance
Feedback:
- To correct and refine our performance, to understand the
strengths and weaknesses
- Drawing inferences and conclusions about personality ,
attitude, or other internal characteristics will likely increase
the defensiveness of the worker
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- Feedback with a persons focus will likely not be accepted
and can cause conflict and emotional reaction
- Focusing feedback on performance separates any
performance difficulties from the worth of the person
- Providing timely feedback is a desirable and positive goal,
but timely feedback will do no good, if it is not accurate
- Frequent feedback, i.e. more opportunities to discuss
performance and to take steps to improve it, can be provided
Dealing With Feedback:
- Delivering and receiving feedback can involve more than
rational assessment and discussion of plans for improvement
- When performance feedback is done for the first time or
when it is not part of regular pattern of events, it is only
natural that emotions occur
- The evaluator should manage such emotions and put the
worker at easee.
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Performance Improvement:
- Improving performance is, or atleast should be, the goal of
performance management
- Goal setting is a straight forward and simple approach to
motivation that has received solid research support as an
effective tool for improving performance
- The expectancy model which is applied for motivation can
be used to increasing performance

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Individual Performance:
Managers: Must make clear to employees the standards
required of them in terms of work performance. To respond
positively and constructively when problems arise.

Employees: To achieve and maintain the standards expected of

them.

Organizational Performance:
Organizational performance comprises the actual output or
results of an organization as measured against its intended
outputs

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Assessment of Individual Performance through Appraisal
1. The Individual Performance Management Procedure will be
implemented at any time if performance standards are not
achieved and will involve the principles of objective setting and
review.
2. Where performance issues are highlighted prior to an appraisal,
all efforts should be made to address these issues within that
process prior to initiating the Individual Performance Procedure

Assessment of Organizational Performance through

Appraisal
The performance issues assessed are: Efficiency,
Effectiveness, Relevance, Financial viability, and Economy

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