PERFORMANCE MANAGEMENT

Chapter-1
 DEFINITION OF PERFORMANCE
MANAGEMENT

• Performance management can be defined as a systematic process

to improve organizational performance by developing the
performance of individuals and teams working with an
organization.
• It is a means of getting better results from the organization,
teams, and individuals by understanding and managing their
performance within a framework of planned goals, standards and
competence requirements.
In other words, performance management is the process of
managing an organization’s management strategy. This is how
plans are converted into desired outcomes in organizations.
 DEFINITION OF PERFORMANCE
MANAGEMENT
• Performance Management is – ‘The development of individuals
with competence and commitment, working towards the
achievement of shared meaningful objectives within an
organization which supports and encourages their achievement’
(Bob Lockett).
• ‘Performance Management is managing the business’ (Susan
Mohrman).
• Performance Management is – The process of ‘Directing and
supporting employees to work as effectively and efficiently as
possible in line with the needs of the organization’ (Walter
Barinaga).
Performance Management is – The processes of creating a work
environment or setting in which people are enabled to perform to the
best of their abilities. Performance management is a whole work
system that begins when a job is defined as needed. It ends when an
employee leaves your organization.
 EVALUATION OF PERFORMANCE
MANAGEMENT
Performance evaluation is the process of evaluating how effectively
employees are fulfilling their job responsibilities and contributing to the
accomplishment of organizational goals.
•To appraise performance effectively, a manager must be aware of the
specific expectation for a job, monitor the employee’s behavior and
results, compare the observed behavior and results to expectations and
measure the match between them.
•In most cases, a manager should also provide feedback to employees, a
process that can produce strong reactions.
•Performance evaluations are extremely important to an organization,
although they may be difficult to conduct. They tell organizations
whether their selection methods are right.
•They demonstrate where training, development and motivational
programs are needed and later help to assess whether these have been
effective.
•As a matter of fact, many organizational policies and practices are
evaluated, in large part, through their impact on performance.
 EVALUATION OF PERFORMANCE
MANAGEMENT
Performance evaluation is the process of evaluating how effectively employees
are fulfilling their job responsibilities and contributing to the accomplishment of
organizational goals.
Performance Evaluation
• Focus is on evaluation
• Seen as a once-a-year event
• Discussions happen when salary increases are awarded or performance problems emerge
• Forms are designed to evaluate performance and rank employees
• Feedback occurs primarily in the appraisal

5 steps to measure the Performance Management System

1. Do Your Research and Bench­mark Best Practice.
2. Define organizational goals and objectives. What is it that company attempts to achieve?
3. Establish Success Measures.
4. Evaluate the Results.
5. Take Action on the Results.
 EVALUATION OF PERFORMANCE
MANAGEMENT
Step 1 — Do Your Research and Bench­mark Best Practice.
Research the best practices and appropriate measures to inform yourself what
success looks like in performance management in general and your industry. It is
important to dedicate time to research to understand what success looks like.

Step 2 — Define organizational goals and objectives.

What is it that your company attempts to achieve? Are you trying to improve
organizational performance or individual performance? Or are you focusing on
increasing employee motivation and engagement?
In order to make the plan effective it is important it is specific, measurable,
achievable, relevant and timely aka SMART goals.

Step 3 — Estab­lish­ing Suc­cess Measures

Once you are clear of the goals of your per­for­mance man­age­ment sys­tem, the
next step is to estab­lish what suc­cess should look like for each one.
 EVALUATION OF PERFORMANCE
MANAGEMENT
Per­for­mance Man­age­ment Goal Exam­ple Suc­cess Measures
Increase employ­ee moti­va­tion and  Employ­ee engage­ment sur­vey results
engagement  Impact of per­for­mance reviews on
employ­ee moti­va­tion levels
 Employ­ee turnover rates

Step 4 — Evaluate the Results.

Once you have estab­lished your suc­cess mea­sures, it’s time to start col­lat­ing data and
evaluating.
To tru­ly know how effec­tive your per­for­mance man­age­ment is — and to under­stand
how to improve it — you will need a com­bi­na­tion of both qual­i­ta­tive and quan­ti­ta­tive
data.

Step 5 — Take Action on the Results.

Once you’ve analyzed the results, you should have a clear idea of how effec­tive your
per­for­mance man­age­ment process­es are and which aspects could be improved. If the
results are not as good as you had hoped, don’t be dis­heart­ened.
Develop a strategy and set new goals on how to improve the deficient performance or
problems in your performance management process. Make sure to make the new goals
are specific, measurable, achievable, relevant and with a clear timeline.
WHAT A PERFORMANCE MANAGEMENT
SHOULD DO?
 Establish objectives through which individuals and teams can
see their part in the organization’s mission and strategy.
 Improve performance among employees, teams and,
ultimately, organizations.
 Keep employees to account for their overall performance via
linking it to reward, career progression and termination of
contracts.

Effective performance management relies on both formal and

informal processes. It involves planning – for example, defining
and reviewing objectives, linking ways of achieving those
objectives to business plans, and setting measures of success.
These are often discussed in meetings between the line manager
and employees, known as performance appraisal.
IMPORTANCE OF PERFORMANCE
MANAGEMENT
It Provides a Look into the Future
Provides Clarity in the Organization

Helps to Create Development and Training Strategies

Provides the Opportunity for Exchanging Feedback

Increases Employee Retention

Boosts Employee Engagement

It helps in boosting employee productivity and engagement

It offers mentoring for increasing performance

IMPORTANCE OF PERFORMANCE
MANAGEMENT

Boosts Employee Engagement

It encourages employee recognition and reward

It helps in boosting employee productivity and engagement

Helps to enforce goal setting and achievement

It offers mentoring for increasing performance

LINKAGE OF PERFORMANCE MANAGEMENT TO
OTHER HR PROCESS
Performance management as a continuous communication process between an
employee and his/her immediate supervisor, determining clear objectives and
clarity with regards to the following:
How the employee’s job contributes to the objectives of the company.
The employee’s key performance areas.
What are the standards and expectations in terms of the key performance areas?
Measurement of key performance areas
How performance can be improved
Barriers to performing optimally
 LINKAGE OF PERFORMANCE MANAGEMENT
TO OTHER HR PROCESS
Managers use performance management systems to assess and reward the
behavior of their employees. The relationship between performance
management and strategic planning links day-to-day operations with
company’s vision. Additionally, a strategic human resource management
functions that included are:
Defining Personal Development Goals
Setting Organizational Goals
Managing Change
Providing Training
Ensure HR does what it is supposed to do [(1) Recruitment and Hiring,
(2) Training and Development, (3) Employer-Employee Relations, (4) Maintain
Company Culture, (5) Manage Employee Benefits, (6) Create a Safe Work Environment,
(7) Handle Disciplinary Actions.]
 PURPOSE/OBJECTIVE OF PERFORMANCE
MANAGEMENT
Performance management is about aligning individual objectives to organizational
objectives and ensuring that individuals hold the corporate core values. It provides for
expectations to be defined in terms of role responsibilities and accountabilities expected to
do, skills expected to have and behavior expected to be.

The main points of view towards achieving the aims of performance managements are:
 Empowering, motivating and rewarding employees to perform their best for the
organization.
 Focusing on employees’ tasks, the right things and make them doing right. Aligning
everyone’s individual goals towards the goals of the organization.
 Proactively managing and resourcing performance against objectives of the
organizations.
 Linking job performance to the achievement of the council’s corporate strategy and
service plans.
 The alignment of individual objectives with team, department and corporate plans. The
presentation of objectives with clearly defined goals using measures, both soft and
numeric. The monitoring of performance and tasking of continuous action as required.
 All individuals being clear about what they need to achieve and expected standards, and
how that contributes to the overall success of the organization; receiving regular, fair,
accurate feedback and coaching to stretch and motivate them to achieve their best.
 AIM/PURPOSE/OBJECTIVES OF PERFORMANCE
MANAGEMENT

Performance management can be defined as a systematic process to improve

organizational performance by developing the performance of individuals and
teams working with an organization.

The aim/purpose/objectives of Performance Management are:

1. Setting and Defining Goals
2. Setting Expectations for Managers and Employees
3. Setting Performance Standards and metrics to measure
4. Establishing Effective Communication
5. Determining training plan
6. To review the process periodically
 Setting and Defining Goals
Goal setting has always been one of the most effective and consistent methods used to
improve performance among employees. Setting and defining clear goals yields several key
benefits, including: 
 Allowing employees to focus on what’s important.
 Aligning individual objectives with business objectives.
 Helps to identify the Key Results and work upon delivering them.

 Setting Expectations for Managers and Employees

An efficient performance management system should set expectations right for each
employee – managers and employees. It is absurd to expect a poor performer to start giving
good results right away. Or a star performer to stay consistent every other week. In order to
set expectations that yield solid results, try to follow this succession of stages for expectation
setting:
 Define
 Explain
 Document

 Setting Performance Standards and metrics to measure

Once the goals are set and communicated, there have to be set standards of deliverables.
There should be metrics to measure the objectives defined and keep it simple. Any good
performance management system should always have a set of performance standards, and
performance plans, that streamline employee performance evaluation and improvement.
 Establishing Effective Communication
Hence it is important to communicate and have discussions regularly. This would give the
employee an understanding of how well he has been doing and how to prioritize the
remaining goals. This channel also gives an opportunity to both – the managers and the team
member to have a better connection and address many other employee issues that may be
underlying.

 Determining training plan

The final and essential objective of performance management deals with
individual development – that is, to identify the training and development needs of
employees, and implement a well-designed development plan. 
Establishing personal development plans helps employees acquire the necessary knowledge
and skills to advance in their individual careers. A well-executed training plan builds
improved competency and value add to one’s position, and ultimately organizational value.

 To review the process periodically

Once the system is functioning well, it needs to be counter-checked to avoid any missed
chance. There should be a regular audit of the reports and fine-tune the process and system
at least 3 years once. This not only eradicates the loopholes but also allows for alignment
with the industry practice.
 DIMENSION OF PERFORMANCE
MANAGEMENT
•A guide for development and coaching that we often use uses 10 performance
dimensions that apply in most, if not all, jobs – from entry level right to CEO level.
•They provide a great way to look at the top 10 critical dimensions of almost every
job and provide a great framework to guide and develop people in their roles. These
include:
1. Quantity of work – The quantity or amount of work produced, or the
sheer volume of work completed by employees – recognizes hard-working
employees
2. Quality of work – The quality of work produced in terms of standards,
errors, waste and rework – recognizes employees who produce quality work,
work which meets standards and work with few errors or mistakes
3. Timeliness of work – Timely delivery of work in terms of schedules,
meeting deadlines, etc. – recognizes employees who produce work on-time
and meet deadlines
4. Use of Resources/Efficiency – Efficiency measures are used to monitor
the relationship between the amount produced and the resources used. This
means that efficiency measures are created by comparing input and output,
see expressing measures with two or more variables. There are two general
types of efficiency measures: unit cost and productivity.
 DIMENSION OF PERFORMANCE
MANAGEMENT
5. Value Add – work produced meets the expectations of customers (external
or internal) recognizes employees who do work that meets/exceeds internal or
external customer standards and expectations
6. Self-Reliance – recognizes employees who produce work without the need
for extensive supervision requires a reasonable level of support
7. Department Contribution – the employee is helpful to others in the
department in getting work done and sets a tone of co-operation
8. Productive Work Habits – the employee has an overall work style which is
effective and productive in terms of time management, setting priorities and
following-up on commitments
9. Adding Skills & Capabilities – the employee is continuously adding new
capabilities in terms of skills, knowledge, and attitude to get work done in
new/better ways and building for the future
10. Alignment & Compliance – the employee behaves in a way that is
aligned with the values, culture and mission of the organization as well as
common organizational practices and procedures.
This is a very useful way to consider performance and incorporating the 10
dimensions really adds value to the performance management process.