THE ESSENCE OF PERFORMANCE

MANAGEMENT
 Performance management defined

Performance management is a continuous process of improving

organizational performance by:

• Aligning individual and organizational goals;

• Planning performance to achieve the goals;

• Reviewing and assessing progress; and

• Developing people
Other definitions:

‘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.’ Aguinis (2005)

‘Performance management is the system through which organizations set work goals, determine performance
standards, assign and evaluate work, provide performance feedback, determine training and development
needs and distribute rewards.’ Briscoe and Claus (2008)

‘Performance management is a broad set of activities aimed at improving employee performance.’ DeNisi,
and Pritchard (2006)

‘Performance management is the key process through which work gets done. It’s how organizations
communicate expectations and drive behaviour to achieve important goals; it’s also about how organizations
identify ineffective performers for development programmes or other personnel actions.’ Pulakos (2009)

Performance management is regarded as a continuous, future-orientated and participative system; as an

ongoing cycle of criteria setting, monitoring, informal feedback from supervisors and peers, formal multi-source
assessment, diagnosis and review, action-planning and developmental resourcing.’ Shields (2007)
 Performance
management is
managing the business
Line managers are there to manage performance and performance management helps
them to do this – it is a natural process of management. It is not an HR-directed annual
procedure. It is a continuous process, not simply a process of appraising people once a
year.
Definition of PM

1. Continuous Process of
 Identifying
 Measuring
 Developing

The performance of individuals and

teams
Definition of PM (continued)

and
2. Aligning performance
with

Strategic Goals of the organization

Performance Management

is NOT

performance appraisal
PM is NOT performance appraisal
•Performance Management

• Strategic business considerations

• Driven by line manager

• Ongoing feedback
• So employee can improve performance
 PM is NOT performance appraisal
• Performance Appraisal

• Driven by HR

• Assesses employee
• Strengths &
• Weaknesses

• Once a year

• Lacks ongoing feedback

 Contribution of Organisation to performance management
The opportunity to:

• Integrate individual, team and corporate objectives;

• Guide individual and team effort to meeting overall business needs;

• Motivate and engage employees;

• Recognize individual contribution;

• Plan individual careers;

• Introduce relevant and effective learning and development programmes to

meet identified needs
 Contribution of Managers to performance management

Managers will be able to:

• Take steps which will deliver improved performance in their department;

• Clarify expectations with the individual members of their teams;

• Have ‘quality time’ with their staff to discuss matters affecting work, performance and
development away from the hurly-burly of everyday working life;

• Provide better feedback to individuals about their performance and progress based on a mutual
understanding of needs;

• Identify areas of individual concern and provide guidance to enable individuals to make the best
use of their abilities;

• Build closer working relationships based on mutual trust and respect;

• Identify individual training and development needs.

Contribution of Employees to performance management

Employees will:

• know what is expected of them;

• know how they stand;

• know what they need to do to reach their goals;

• be able to discuss with their manager their present job, their

development and training needs and their future.
 Performance management – practitioners’ principles

‘Performance ‘A ‘Driven by
management is management ‘It’s about how corporate
what managers tool which we manage purpose and
do: a natural helps people – it’s values.’
process of managers to not a system.’
management.’ manage.’

‘Only
interested in
‘To obtain things you can
solutions that do something
work.’ about and get
a visible
improvement.’

‘Success
‘Focus on depends on
‘Based on
changing what the
accepted ‘Focus on organization is
behaviour principles but
rather than development and needs to
operates
paperwork.’ flexibly.’ not pay.’ be in its
performance
culture.’
 Principles of performance management
• Have clear aims and measurable success criteria

• Be designed and implemented with appropriate employee involvement.

• Be simple to understand and operate.

• Have its effective use core to all management goals.

• Allow employees a clear ‘line of sight’ between their performance goals and those of the
organization.

• Focus on role clarity and performance improvement.

• Be closely allied to a clear and adequately resourced training and development infrastructure.

• Make crystal clear the purpose of any direct link to reward and build in proper equity and
transparency safeguards.

• Be regularly and openly reviewed against success criteria.

 The performance management cycle
Strategic goals of the
organization

Plan
Performance agreement:
• role profile and key result areas
• key performance indicators
• performance goals
• competencies
• performance improvement
• personal development

Review Performance Act

• dialogue and feedback
• agree strengths and any • carry out role
areas for improvement • implement performance
• build on strengths – ‘you are improvement plan
particularly strong in this area’ – • implement personal
how can you make development plan
even greater use of them?

Monitor
Ongoing performance management

• track performance
• provide continuous feedback
• provide coaching
• deal with under-performers
Plan
Agree expectations in the form of the results, competencies and actions required defined as performance and learning
goals, and action plans to improve performance and to develop abilities. This is the performance agreement which
provides the basis for managing performance throughout the year and for guiding improvement and development
activities. It is used as a reference point when reviewing performance.

Act
Individuals manage their own performance with guidance as required from their manager. Individuals meet the
demands of their roles as defined at the planning stage in the form of key result areas, goals, competency
requirements and action plans.

Monitor
Outcomes are checked against plans and ensuring that corrective action is taken when necessary. It involves
individuals monitoring and managing their own performance and managers providing feedback, support and guidance
as necessary.

Review
This provides a focal point for the consideration of key performance and development issues and leads to the
completion of the performance management cycle by providing the basis for updating performance agreements. The
performance review meeting is an important means of ensuring that the five primary performance management
elements of agreement, feedback, assessment, positive reinforcement, and dialogue can be put to good use.
Disadvantages/Dangers of Poorly-implemented
PM Systems

For Employees
• Lowered self-esteem

• Employee burnout and job dissatisfaction

• Damaged relationships

• Use of false or misleading information

Disadvantages/Dangers of Poorly-implemented
PM Systems

For Managers
• Increased turnover

• Decreased motivation to perform

• Unjustified demands on managers’ resources

• Varying and unfair standards and ratings

 Disadvantages/Dangers of Poorly-implemented
PM Systems

For Organization
• Wasted time and money

• Unclear ratings system

• Emerging biases

• Increased risk of litigation

Aim and Role of PM Systems:

Overview
Strategic

Administrative

Informational

Developmental

Organizational maintenance

Documentation
Strategic Purpose

Link individual goals with organization’s goals

Communicate most crucial business strategic initiatives

Administrative Purpose

Provide information for making decisions:

 Salary adjustments
 Promotions
 Retention or termination
 Recognition of individual performance
 Layoffs
Informational Purpose

Communicate to Employees:
Expectations

What is important

How they are doing

How to improve
Developmental Purpose

Performance feedback/coaching

Identification of individual strengths and weaknesses

Causes of performance deficiencies

Tailor development of individual career path

Organizational Maintenance Purpose

Plan effective workforce

Assess future training needs

Evaluate performance at organizational level

Evaluate effectiveness of HR interventions

Documentation Purpose

Validate selection instruments

Document administrative decisions

Help meet legal requirements

An Ideal PM System: 14 Characteristics
1. Congruent with organizational strategy
2. Thorough
3. Practical
4. Meaningful
5. Specific
6. Identifies effective/ ineffective performance
7. Reliable
An Ideal PM System: 14 Characteristics
(continued)
8. Valid
9. Acceptable and Fair
10. Inclusive
11. Open (No Secrets)
12. Correctable
13. Standardized
14. Ethical
Congruent with organizational strategy

• Consistent with organization’s strategy

• Aligned with unit and organizational goals

 Thorough

• All employees are evaluated

• All major job responsibilities are evaluated
• Evaluations cover performance for entire review period
• Feedback is given on both positive and negative performance
Practical
• Available
• Easy to use
• Accesible to decision makers
• Benefits outweigh costs
 Meaningful

• Standards are important and relevant

• System measures ONLY what employee can control
• Results have consequences
• Evaluations occur regularly and at appropriate times
• System provides for continuing skill development of
evaluators
Specific

Concrete and detailed guidance to employees

• What’s expected
• How to meet the expectations
Identifies effective and ineffective performance
• Distinguish between effective and ineffective
• Behaviors
• Results

• Provide ability to identify employees with various levels of performance

 Reliable

• Consistent
• Free of error
• Inter-rater reliability
 Valid

• Relevant (measures what is important)

• Not deficient (doesn’t measure unimportant facets of job)
• Not contaminated (only measures what the employee can control)
 Acceptable and Fair

• Perception of Distributive Justice

• Work performed  Evaluation received  Reward

• Perception of Procedural Justice

• Fairness of procedures used to:
• Determine ratings
• Link ratings to rewards
Inclusive

• Represents concerns of all involved

• When system is created, employees should help
with deciding
• What should be measured
• How it should be measured

• Employee should provide input on performance

prior to evaluation meeting
 Open (No Secrets)

• Frequent, ongoing evaluations and feedback

• 2-way communications in appraisal meeting
• Clear standards, ongoing communication
• Communications are factual, open, honest
Correctable

• Recognizes that human judgment is fallible

• Appeals process provided
 Standardized

• Ongoing training of managers to provide

• Consistent evaluations across
• People
• Time
 Ethical

• Supervisor suppresses self-interest

• Supervisor rates only where she has sufficient information about the
performance dimension
• Supervisor respects employee privacy
Performance
Appraisal
 Definitions

According to Newstrom, “It is the process of evaluating the

performance of employees, sharing that information with
them and searching for ways to improve their
performance’’.
 Meaning
Performance appraisal is the step where the
management finds out how effective it has been at hiring and
placing employees .

A “Performance appraisal” is a process of evaluating an

employee’s performance of a job in terms of its requirements.
 Performance Appraisal
The process by which an employee’s contribution to the organization
during a specified period of time is assessed.

Performance Feedback
Lets employees know how well they
have performed in comparison with the
standards of the organization
 Purpose

Empowerment

Relationship

Flexibility

Optimal
Performance

Recognition and
Rewards

Morale
 Objectives of Performance Appraisal
According to:
Employee Organization

concrete and tangible

measuring the efficiency
particulars about their work
assessment of maintaining organizational

performance control.

Aims at:

 Personal development mutual goals of the

 work satisfaction employees & the organization.
 involvement in the growth & development
organization. increase harmony & enhance
effectiveness
PA and other HRM Functions
Training &
Development
Recruitment

P
A Compensation

Selection

Labor Relations
Why PA May Fail
Mgr not
taking PA Lack
Unclear seriously appraisal
Language skills

Mgr not Mgr not

honest or prepared
sincere

No on- Insuff.
going Rewards
feedback
Ineffective Mgr Lacks
discussion Infor.
 Process

Setting
performance
Taking corrective standards Communicating
standards
standards

Discussing Measuring
results standards
Comparing
standards