UNIT 1
PERFORMANCE
MANAGEMENT
Introduction - definition - performance
appraisal to performance management –
performance management and other HR
sub-systems - objectives, characteristics performance management conceptual
model –benefits & imperatives of
performance management - challenges
to performance management
Introduction
“Performance management is the
process of creating a work
environment or setting in which
people are enabled to perform to
the best of their abilities.”
“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
organisation”
What is
Performance
Management?
It is integrated, because
it effects four types of
integration
• Vertical
• Functional
• Human Resource
• Goals
Nature of performance Management
Concern with
output,outcomes,process
and input.
Concern with planning.
Concern with
measurement and review.
Concern with continuous
development and
improvement.
Concern for
communication.
Concern for stakeholder.
Ethical concerns.
SCOPE OF
PERFORMANCE
MANAGEMENT
SYSTEM
Identifying the parameters
of performance and stating
them very clearly;
Setting performance
standards;
Planning performance
development activities;
Planning in participative
ways where appropriate,
performance of all
constituents;
Creating ownership;
Identifying competencies
and competency gaps that
contribute/hinder to
performance;
Recognizing and promoting
performance culture;
Process of PM
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Basis of Comparison
Performance Appraisal
Performance Management
Meaning
Evaluating the performance and potential of
employees
Managing and developing employees and their
performance
Purpose
Determine compensation
Increase the growth of the organization
Orientation
A system
A process
Flexibility
Not Flexible
Highly flexible
Type of tool
Operational tool
Strategic tool
Aim
Improve employee efficiency
Reach business development goals
Ownership
HR department
Managers and stakeholders
Time frame
Annually
Ongoing
Nature
Retrospective
Forward-looking
Approach
Based on individual employees
Team-based value
Objectives of PM
To enable the employees towards achievement of superior standards of
work performance.
To help the employees in identifying the knowledge and skills required for
performing the job efficiently as this would drive their focus towards
performing the right task in the right way.
Boosting the performance of the employees by encouraging employee
empowerment, motivation and implementation of an effective reward
mechanism
Promoting a two way system of communication between the supervisors
and the employees for providing a regular and a transparent feedback for
improving employee performance and continuous coaching.
Identifying the barriers to effective performance and resolving those
barriers through constant monitoring, coaching and development
interventions.
Creating a basis for several administrative decisions strategic planning,
succession planning, promotions and performance based payment
Conceptual Model
PROVIDES CLARITY
 Performance management gives employees a clear understanding of their
expectations, goals, and deliverables. It creates an amicable work environment as team
leads and members are on the same page concerning deliverables and outcomes.
 Such work cultures, in turn, experience reduced conflict, increased efficiency, and
enhanced performance quality.
ENHANCES EFFICIENCY
Benefits
 Performance management tools help capture details about employees, including
salaries, targets and goals, and performance. These data points enable organizations to
consistently select the right employees for specific roles and promotions.
 They also help identify those who are not performing optimally, so that plans can be
made for additional training or performance improvement plans (PIPs), etc.
PROMOTES JOB SATISFACTION
 As employees gain clarity about their deliverables, and the expectations from them, it
also creates opportunities for self-assessment, improved performance, and agency in
defining one’s career path.
 This autonomy empowers employees to take charge of their growth and professional
development, which in turn promotes job satisfaction.
Benefits
INCREASES MOTIVATION
 A performance management system identifies and showcases star performers in an organization. Such
recognition helps develop a culture of excellence that motivates employees to produce their best work and put their
skills to best use.
 Organizations can choose to recognize and reward employees with monetary benefits, awards, or promotions.
This drives home the message that the organization will reward good performance and encourage others to strive for
exceptional achievements.
ENABLES OBJECTIVE DECISION-MAKING
 Humans often carry unconscious bias, which is hard to recognize and reduce. And while working with teams, there
could be a natural tendency to favor a few. But a robust performance management system enables managers
and leaders to make objective decisions while reducing biases, nepotism, favoritism, etc.
 A performance management system can provide data based purely on merit and map them to expected targets
and goals, thereby making the process transparent and objective. This in turn enables objective decision-making.
CHALLENGES OF PERFORMANCE MANAGEMENT
IMPLEMENTING A SUCCESSFUL PERFORMANCE MANAGEMENT SYSTEM
TAKES PLANNING AND SEAMLESS MATCHING OF THE NEEDS OF THE
BUSINESS TO THE TOOLS AVAILABLE.
FOLLOWING THE COVID-19 PANDEMIC-INDUCED LOCKDOWNS, MOST
ORGANIZATIONS HAVE NOW ESTABLISHED HYBRID WORK MODELS, WHICH
INCLUDE PART OR FULL WORK FROM HOME. THIS HAS ALSO CAUSED SIGNIFICANT
CHALLENGES WHILE IMPLEMENTING PERFORMANCE MANAGEMENT SYSTEMS.
WITH WORK FROM HOME AND INABILITY TO MEET EMPLOYEES IN PERSON, ALL
OF THE FOLLOWING CHALLENGES BECOME IMPORTANT AND NEED TO BE
ADDRESSED.
THE ABSENCE
MILESTONES
CHALLENGES OF
PERFORMANCE
MANAGEMENT
OF
GOAL
SETTING
AND
DEFINED
 It is vital to break organizational goals down into specific
milestones against decided timelines. Failing to define
milestones and establish clear communication with
employees can hamper performance.
 On the other hand, with hybrid work, when organizations
define milestones and set smaller manageable goals, it helps
employees take smaller steps to greater success and also
helps managers effectively track progress.
USING PERFORMANCE MANAGEMENT SOLELY AS A
MEASUREMENT TOOL
 Many leaders and managers mistake performance
management as an exercise solely in success measurement,
when it is actually about feedback and continuous
improvement.
 The objective and focus of performance management should
be as much on the progress and development of the
employees as it is on measurement and evaluation
ESTABLISHING TRUST
CHALLENGES
OF
PERFORMANCE
MANAGEMENT
 Most organizations do not take the time and effort to educate and get
the buy-in of employees for their performance management system and
process. This, in turn, promotes confusion and distrust. Most employees
don't know how they are to be rated, and hence view the rating system
with suspicion.
 Educating the workforce and explaining the hints of the performance
management system in force, and being transparent can earn the trust
and the support of employees, especially in hybrid work models.
UNTRAINED MANAGERS
 Evaluating people is a complex task. Most managers hate this process
and aren't convinced they are proficient at it. A vital aspect of
performance management is to coach managers on how to evaluate
their teams.
 This would require training and supporting them when having difficult
conversations, addressing performance issues, and solving team
challenges. It also helps if organizations make these conversations more
frequent versus the typical annual appraisal cycles.
IT’S AN ANNUAL ACTIVITY
CHALLENGES OF
PERFORMANCE
MANAGEMENT
A majority of organizations follow the
traditional form of performance management
that is conducted annually. This puts the focus
on evaluation rather than development.
Performance management is evolving and
needs to be conducted at frequent intervals so
companies can provide employees with timely
feedback and development plans.
Sub
Systems of
HRD
Performance
Appraisal
Potential
Appraisal
Career
Planning
Training
Organizational
Development
Rewards
Counselling
Quality Circle
Role Analysis
Performance appraisal: The performance of an employee is measured against the factors such as knowledge of job, quality and quantity of output,
initiative, supervision, leadership qualities, cooperation, dependability, health, versatility, judgment etc. The purpose of appraisal is to assess the
present position of efficiency of employee in order to determine the need for training.
Potential Appraisal: The object of potential appraisal is to develop latent abilities of individuals. Potential appraisal provides vital information
about individuals to prepare career plans for them. Potential appraisal evaluates the leadership abilities and potentials of the individuals. It
ensures a good match between employees potentials and the job.
Career Planning: Planning for Career makes employee grow in his working life time while unplanned careers flopped. The first and foremost step
in career planning is to make one’s SWOT analysis. He should assess his strength, weaknesses, opportunities and threats.
Training: Training is an attempt to improve current or future employee performance by increasing an employee’s ability to perform through
learning usually by changing the employee’s attitude or increasing his or her knowledge. The need for training is determined by the deficiency of
employee’s performance, Training process include; acquiring skills, concepts, attitudes for increasing effectiveness in doing a specific job or jobs.
Organisation Development: Organisation Development intend to change beliefs, attitudes, values and structure of organisations that they can
better adapt to new technologies, markets and challenges and the dizzying rate of change itself. Organisation is an open system and therefore
must develop itself by adopting various changes to meet the challenges thrown out by the constantly changing environment.
Rewards:Rewarding employees for their excellent professional performance over and above their usual wages and salaries boost up their morale
and encourage others to work hard. Reward systems are to be looked after by HRD. By rewarding hard work employees are motivated further.
Output goes up. It leads to maximum utilization of available human resources to enhance productivity. Rewards are one of the ways to
frustration, depression and dissatisfaction from the employees. Slow work tendencies can also be removed.
Counseling: Counseling is an essential instrument of HRD. It serves several purposes. Counseling is a service
provided to the employees regarding their personal problems. For this purpose services of professional
counselors need to be obtained. It reduces employee turnover, absenteeism, tardiness and helps in
strengthening the superior subordinate & relationship, understanding problems of juniors and seniors thereby
facilitating better communication and effective decision making.
Quality Circle: Quality circle is a small group of people doing same or similar work. They meet voluntarily
together on regular basis for an hour per week, during office hours under the leadership of their supervisor
and trained to identify, analyze and solve some of the problems of their work and submit solutions to
management.
Role Analysis: Role is a set of expected behaviour patterns attributed to a person occupying a given position
in a unit. Every employee has a role to play. Everyone does not have to be consistent and regular in one role.
Employees have to play diverse roles both on and off the jobs. To understand the behaviour of a person, it is
essential to know what role he is currently playing. The attitude and behaviour of a person vary with the role
identity. Roles change according to the circumstances.
Performance management Examples
HSBC
HSBC now has an HR mobile app where employees and managers can easily capture
achievements and share feedback.
Employees can access an HR-to-do list, their performance and development plans, online learning
resources, and manage their personal employment information. Managers can handle approvals
on the go, set goals, and regular check-ins to maintain productivity and facilitate continual
growth.
The app lends itself well to flexible and remote working models without compromising results. It
has created a stronger relationship between managers and employees, where employees feel
more supported, and end-of-year appraisals feel more meaningful.
Deloitte
Deloitte rolled out a pilot performance management
program that encouraged team managers to have frequent
check-ins with team members about their performance,
priorities, and strengths. Surveys completed by employees
helped team leaders understand the process from their
perspective and make improvements.
Custom career development plans were created for all
employees. What’s more, everyone was provided with a
career coach to help them develop.
Data has been beneficial, particularly in helping
underperforming employees see where they sit in relation to
their colleagues, listen to constructive feedback, and take
action. It has also helped Deloitte understand people, team,
and leadership trends they haven’t been able to see before
this. One example is the connection between feedback
conversation frequency and employee performance.
IKEA set out to drive business performance by strengthening management and leadership
skills.
An accredited “train-the-trainer performance management coaching program” was created
for them and rolled out to 750 managers and supervisors across the UK. This included an
interactive seminar, developing coaching skills (aligned with the International Coaching
Federation), certification, and the identification of internal coaching champions.
Departments with managers who attended performance management coaching training
saw a 5% KPI increase and went from 60% scores in management ability to 90% scores
across the board.