INTRODUCTION

In the changed competitive business scenario,

organizations have to improve their competitive
position to survive and sustain themselves by
aligning performance of human resources with their
business strategies. Creating a ‘fit’ between the
human performance and the business strategy can
help secure employee behaviours and attitudes
necessary for successful implementation of business
strategies. This strategic approach to integrate
performance into the organizational architecture is
the essence of Performance Management.

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Performance Management
 CONCEPT OF PERFORMANCE
MANAGEMENT
The term “performance management” has been one of the
most important and positive developments in the sphere of
human resource management in recent years. In traditional
appraisal system, managers and employees meet once in a
year for annual performance assessment and review to look
back at the work done during the previous year and to
evaluate what was accomplished. But, many progressive
organizations realized that looking back does little to improve
performance, and there is a need for more integrated,
continuous and holistic system for managing performance of
individuals and teams. In recent times, therefore, there has
been a shift away from performance appraisal to a more
comprehensive approach called ‘Performance Management’.

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 Overview of Performance Management

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Performance Management
 PERFORMANCE MANAGEMENT DEFINED
Some important definitions of Performance Management are
given hereunder:
1. “Performance management is defined as a trategic 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”. - Michael Armstrong, 2000

2. “Performance management is an approach to creating a

shared vision of the purpose and aims of the organization,
helping each employee understand and reorganize their part
in contributing to them, and in so doing, manage and enhance
the performance of both individuals and the organization.” -
Fletcher, 1993
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 3. “Performance management is a continuous
process of identifying, measuring and developing
the performance of individuals and teams and
aligning performance with the strategic goals of
the organization”.
- Herman Aguinis, 2007

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 FEATURES OF PERFORMANCE
MANAGEMENT
As may be seen from the above definitions, the important
features of performance management are:
1. It is a Continuous Process
It is an on-going, never – ending process. Setting goals,
observing performance, giving coaching and counseling,
identifying development needs and giving feedback are
continuous activities.
2. It is a Strategic Process
The individual goals are linked to the strategic goals of the
organization.

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 3. It is an Integrated Approach
Performance management is integrated in four
senses.
Vertical integration: aligning business objectives with
individual and team objectives.
Functional integration: linking functional strategies in
different parts of the business.
HR integration: linking different aspects of human
resource management (HRM), especially organization
development and human resource development and
rewards, to achieve a coherent approach to the
management and development of people.
Integration of individual needs with organizational
needs as far as this is possible.

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 4. It is an Approach for Performance Improvement
It provides support and guidance to enable individuals and
teams to perform better and achieve organizational, team
and individual effectiveness.

5. It is Concerned with Development

The most important function of performance management is
to improve the capabilities/abilities of individuals and teams
to improve their performance. Performance improvement is
not achievable unless there are effective processes of
continuous development - that is, the core competencies of
the organization and the capabilities of individuals and teams.

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Performance Management
 OBJECTIVES OF PERFORMANCE
MANAGEMENT
Performance management has the following objectives:
• To help achieve sustainable improvements in organizational
performance.
• To help in developing more performance oriented culture.
• To increase the motivation and commitment of employees.
• To help employees to develop their abilities, and increase their
job satisfaction and achieve their full potential.
• To enhance team cohesion and performance.
• To develop constructive and open relationships between
individuals and their managers in a process of continuing
dialogue.
• To provide opportunities for individuals to express their
aspirations and expectations about their work.
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Performance Management
 PRINCIPLES OF PERFORMANCE
MANAGEMENT
Underlying qualities or principles are the basic assumptions of a good
performance management process. Some of the major principles that
are consistently found in an effective performance management
process that can be adapted by an organization are listed below:
1. It translates organizational goals into divisional,
departmental, team and individual goals.
2. It clarifies corporate goals to all managers and employees of the
organization.
3. It is a continuous and evolutionary process, in which
performance improves over time.
4. It relies on consensus and cooperation rather than control or
coercion.
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 5. It creates a shared understanding of what is
required to improve performance and how this
will be achieved.
6. It encourages self-management of individual
performance.
7. It requires a management style that is open and
honest and encourages two-way communication.
8. It requires continuous feedback.
9. It measures and assesses all performance
against jointly agreed goals.
10. It should apply to all employees.
11. It is not primarily concerned with linking
performance to financial rewards.
12. Performance is about providing support as well as
direction.
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 Performance Appraisal and
Performance Management Compared

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 CHARACTERISTICS OF AN IDEAL
PERFORMANCE MANAGEMENT SYSTEM

An ideal performance management system should

have the following characteristics:
• Fairness • Transparency
• Equity • Specificity
• Thoroughness • Practicality
• Meaningfulness • Reliability
• Inclusiveness • Openness
• Correct ability • Standardization
• Ethicality

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 Integration of Performance
Management with other HRM Areas

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 The following factors influence the performance
management processes in an organization:

 Culture
 Functionality
 Job Design
 Team Work
 Organization Development
 Corporate Strategies

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 ROLE OF HR PROFESSIONALS IN
PERFORMANCE MANAGEMENT

HR professionals play an important role in

performance management. HR professionals
can help organizations in improving its
performance by helping in planning employee
objectives, appraising progress, establishing
priorities, and ensuring that employees
understand their roles in the organization’s overall
mission and objectives.

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 HR professionals’ role in the performance management
system revolves around the following tasks:

1. Creating an information sharing culture.

2. Design and development of performance management
system.
3. Training managers to conduct performance
management effectively.
4. Training employees to participate effectively in
performance management processes.
5. Scheduling the processes of the system.
6. Acting as an ‘internal consultant’.
7. Analysis of results.

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