PERFORMANCE MANAGEMENT SYSTEM
Performance Management System
Name
Institution
Date of Submission
1
PERFORMANCE MANAGEMENT SYSTEM
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1.1 Purpose of Performance Management
Performance management is defined as a system used within organizations to aid in the
development of individuals with the required skills, commitment and competencies for working
towards achieving the organization’s shared objectives (Noe, et al., 2017). Performance
management is carried out for a number of reasons, key among them helping employees to set
SMART goals and providing continuous support to the employees. The focus of performance
management is on ensuring that everyone is aware of what is expected of them. SMART goals are
used in this case, with the employees and the human resource department meeting regularly to
discuss them and consider how they can be achieved. The role of the management in this case is
to ensure that the set goals are relevant, and that they contribute towards the overall organizational
objectives (Lawler, 2003). For this to be achieved, the employees have to be supported in regards
to their wellbeing and mental health, creating a culture in which employees feel valued. With this,
performance management results in a motivated employees that works hard to fulfil their set goals,
and by extension, the organizational objectives.
1.2 Components of Performance Management Systems
The performance management system is a comprehensive process, with four of the
components discussed below;

Performance Planning- This is the first element of the process as it forms the basis for
performance appraisal and ultimate performance management. This is carried out at the
beginning of a performance sessions where the employee to be appraised and the individual
set to conduct the appraisal at the end of the period agree on the key performance areas and
set targets.

Performance appraisal- This is the component during which the performance of the
employee is evaluated against the set targets during the planning stage (Rao, 2004). In most
cases, the performance appraisal is conducted twice within a year- the mid review and the
annual review at the end of the financial year. Self-appraisal is the first part of the process
in which the appraisee describes their achievements over the period of time being appraised
(Rao, 2004). The appraiser then rates the appraisee on the same targets and performance
areas, considering the measurable and quantifiable achievements over the same period.
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
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Feedback on performance appraisal- The appraisal process is to be followed by a feedback
session in which the appraiser providers information regarding the overall performance of
the employee, its variance from the expected levels of performance and the areas of
improvement. This has to be an open and transparent process as it is meant to identify
possible reasons why the employee is not performing to the required standards and set forth
action plans to rectify this (Sahu, 2009). Counselling, guidance and mentorship is also
offered at this stage, all aimed at developing the employee’s competencies and improving
the organization’s overall productivity.

Performance rewards- This component follows after the performance appraisal. This is
considered a vital element of the performance management process as it determines how
motivated the employees will be as they continue working towards the organizational goals
(Noe, et al., 2017). Depending on the outcomes of the performance appraisal, the
employees that perform well are supposed to be publicly recognized and rewarded for their
performance. This is considered to have a direct impact on the self-esteem of the employee,
as well as their continued motivation and productivity.
1.3 Relationship between motivation and performance Management
Employee motivation refers to the forces that would inspire an individual at work to
intensify their willingness and desire to use their potentialities during performance in order to
contribute towards the achievement of organizational objectives (Lindner, 1998). Over the years,
it has increasingly been illustrate by numerous studies that employee motivation has a direct
correlation with employee performance implying that the more motivated an employee is, the
better their performance would be. A number of motivational incentives exist within organizations
such as wages and salaries, piece rates, fringe benefits, job rotation, bonuses and training
opportunities.
A number of literary works have been conducted on the relationship between motivation
and employee performance.
Maslow’s Hierarchy of Needs Theory- This is among the first motivational theories
developed in 1943 by Abraham Maslow. In the theory, Maslow posits that there are five levels of
employee needs beginning from the physiological, safety and security, social, esteem and selfactualization (Ramlall, 2004). All this needs motivate an individual to work, and are designed in a
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hierarchical manner in that an individual has to satisfy the lower level needs such as physiological
and safety before satisfying higher level needs such as esteem and self-actualization. In the theory,
the satisfaction of one level of need gives an employee motivation to work harder towards the
satisfaction of another level of need, resulting in improved employee performance and
productivity.
Expectancy Theory- The theory posits that an employee gets motivated to work and be
productive depending on the belief that their efforts will bring about a good appraisal on their
performance, that the good appraisal would result in rewards from the organization and that the
rewards that will be offered will be able to satisfy their needs (Ramlall, 2004). The theory therefore
brings together a number of elements that eventually result in satisfaction beginning from
employee effort, to performance, to rewards and finally individual satisfaction. As such, the theory
argues that an employee is highly motivated when their expectancy levels are high and the possible
rewards are satisfying and lucrative.
2.1 Purpose of reward within performance management system
Reward is a critical component within performance management especially after a
performance appraisal has been conducted as it is a crucial motivator capable of contributing
towards improved productivity. The main purpose of reward is to attract, retain and motivate
employees within the organization (Aguinis, 2005). Given the relationship between motivation
and employee performance, it has been proven that motivation through various incentives results
in a feeling of being valued and brings about increased productivity (Dobre, 2013). By rewarding
good performance, the organization is able to motivate the employees to continually work hard as
it indicates that their efforts are recognized. In doing this, employees will tend to develop a feeling
of belonging and value within the organization, resulting in improved retention rates. In addition,
the organization will become known for being one of the best companies to work for as a result of
the benefits, resulting in the attraction of potential workforce. This eventually results in higher
employee turnover, helping the organization to manage its performance.
2.2 Components of total reward system
A total reward system is a system that recognizes both financial and non-financial rewards
to the employees (Jiang, et al., 2009). It refers to all the efforts that can be used by the employer
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in the recruitment, motivation and retention of employees. Total reward systems has a number of
components such as compensation, professional development, benefits, recognition and work life
balance.
Compensation- This refers to the numerous ways in which an employee earns money from
the organization (Shields, et al., 2015). Typically, the employee compensation consists of hourly
wage or a base salary even though some organizations include bonuses and profit sharing.
Professional Development- This includes a broad spectrum of opportunities for the learning
and advancement of the employee. This can include mentorship, reimbursement of tuition and
defined advancement tracks. A key example is an organization that chooses to cover the costs to
allow for all the employees within a given department to gain access to an online course that is
relevant to their line of work.
Work-life balance- This refers to the opportunity provided to the employees so as to meet their
personal obligations (Jiang, et al., 2009). This could include the ability to arrive late or leave work
earlier than expected so as to attend a child’s events, childcare subsidies, paid and unpaid leave,
volunteer programs for community involvement and stress management resources. This is done in
recognition that an employee with a handle on their personal life will offer more productivity at
work than one that is stressed about a given aspect of their personal life.
3.1 Factors to be considered when managing performance
When managing performance within an organization, the following factors have to be taken
into consideration;
Managerial communication and coaching- It has been identified through numerous
research studies that managers have a significant impact on employee productivity and
performance (Yang, et al., 2010). As such, an effective performance management system will
consider the kind of relationship that exists between the manager and the employee and whether
there is an aspect of coaching. Coaching among managers and employees allows for the provision
of necessary feedback as well as the opportunity to present the employees with the resources they
require so as to perform at the highest possible level.
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Compensation Processes- A good performance management system links pay to goal
achievement. This is done in order to motivate the employees to constantly record high
performance and improve their productivity.
SMART Objectives- This is one of the most critical elements of a performance
management system as it determines whether the set goals and objectives are achieved. SMART
objectives refers to objectives that are specific, measurable, achievable, relevant and time-bound.
In performance management, the objectives underline the employee’s performance and thus an
understanding of this from the word go would result in better productivity.
Employee behavioral patterns- Employee performance management considers more than
just the achievement of set goals and instead goes further to evaluate an employee’s behaviors and
attitudes towards work, other employees and the management. Such patterns could bring about an
understanding of the level of performance of an employee and the reasons behind the achievement
of that level. As a result, it is necessary to consider the employee behavioral patterns in conducting
a performance management system.
3.2 Sources of data for performance management
When conducting performance management, it is necessary to have multiple sources of
data to work with as this contributes towards objectivity during the process. This data can be
derived from a number of sources among them;
Employee performance records-This can be derived from each department depending on
the tasks assigned to each employee. The information derived from this can include the number of
sales made by an employee in a given month, the number of reports delivered on time and those
out of deadline or the number of calls answered and responded to.
Customer/Supervisor Complaints- Since organizations make it possible for customers to
lodge complaints, performance management systems can use this especially in the case where a
complaint was lodged specifically against a given employee. This way, the appraiser can use this
information along with the other performance reviews to analyze the overall performance of the
employee within the organization.
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Industry and Market Reward System Comparisons- Performance management systems can
be compared across a number of organizations in the determination of best practices. Components
such as reward systems do not necessarily have to be unique to the organization as companies can
find out what other companies do for purposes of understanding what to implement within their
own organizations. As such, the organization can acquire secondary data from other organizations
regarding what they do for their rewards system and how this works for them. Afterwards, the
organization can decide to either replicate this within the organization or customize it depending
on the organizational needs.
4.1 Performance Reviews- Frequency, Purpose and Process
As defined earlier, a performance review is a process of conducting an evaluation of an
employee’s past performance, assessing their current performance and making plans for future
performance objectives (Shields, et al., 2015). The performance review process is two wayinvolving the appraiser (the manager conducting the review) and the appraisee (the employee
whose performance is being reviewed). The process begins with a self-appraisal where the
employee appraises themselves on the identified work parameters. The appraiser then rates the
employee over the same parameters in a joint sessions where feedback is given to the employee
regarding their performance. Learnings and career goals are identified and discussed with the aim
of improving organizational productivity. Finally, the appraiser and the employee agree on future
goals and actions to be undertaken to achieve them.
Different organizations conduct their performance reviews at different frequencies,
commonly annually, semi-annually and quarterly. The annual review is conducted at the end of
the financial year and looks at the performance of the employee throughout the year. The semiannual review is conducted twice a year while the quarterly review is conducted at the end of each
quarter. The annual review is the most common within organizations as it is a requirement in most
business jurisdictions as a way of managing employee relations.
Performance reviews serve a number of purposes. To begin with, they identify ways to
improve on current performance through the identification of current strengths in an employee’s
performance along with areas for further improvement. This implies that by evaluating how an
employee has performed in the past, the review offers an opportunity for the employee to identify
the areas they do right and the areas that require further work, resulting in possible improvements.
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Performance reviews also focus on the future to identify employee capabilities, career
aspirations and developmental needs. After the review of past performance, the process also
includes a discussion of the available areas for progression for the employee, the employee
capability, their career interests and how to achieve them. In doing this, the review ensures that an
employee is placed within an area that they are comfortable in performing to their full potential.
4.2 Performance Review
Appendix 3
Performance review form
Date of Review …………………….. Period Covered …1 year
Name of Manager …………………
Name of employee …………………………….
Job Role of Employee …Warehouse Operative
1. Summary of discussion on performance over the last six months
Positive performance for the last six months as all targets have been met. However, when
compared to the first three months after probation and a couple after, the last six months
have seen a slight reduction in the effort
exhibited.……………………………………………………………………………………………
……
2. The quality of the work provided, recording areas that have gone well and those where
improvement is required
………………………………………………………………………………………………….
Overall, there has been high quality of work provided. In some months, the targets have
been exceeded by over two points indicating good performance. The main area in which
improvement is required is on people relations for the employee and other colleagues to be
able to get together, both during work and other activities
………………………………………………………………………………………………….
3. Record performance against targets set and in those cases where they have not been met,
record the reasons given and your views on these
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…………………………………………………………………………………………………
All performance areas exceeded the set targets.
………………………………………………………………………………………………….
4. Outline agreed actions to overcome any shortfall against targets including such factors as
training and development needs, equipment needs or medical support
Actions by line manager:
Actions by employee:
Assign tasks in which staff are required
to work together
Practice common courtesy
Make time for out of work colleague activities
Encourage collaborative task completion Develop a general interest in other staff
…………………………………………..
Follow up with colleagues
…………………………………………….. Find common interests with colleagues
Signed:
………………………………..
Line Manager
Date ………………………………..
Self-appraisal
Name:
1. Circle appropriate answers, and comment below
(a) Do you have an up-to-date job description?
(b) Do you have an up-to-date action plan?
Yes
No
Yes
No
Yes
No
(c) Do you understand all the requirements of your job?
(d)
Do you have regular opportunities to discuss your work, and action plans?
Yes
No
(e)
Have you carried out the improvements agreed with your manager which were
made at the last appropriate meeting?
Yes
No
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2. What have you accomplished, over and above the minimum requirements of your job description; in
the period under review (consider the early part of the period as well as more recent events)? Have you
made any innovations?
I have not made any innovations but I have made sure to go the extra mile during my
tasks. I ensure the highest level of accuracy when picking products and orders as well as
relocating them for storage.
3. List any difficulties you have in carrying out your work. Were there any obstacles outside your own
control which prevented you from performing effectively?
The main difficulty experienced is the strained relations between myself and other
colleagues. Newness to the job and lack of adequate social skills have made it difficult to
freely mix with the others especially during social events.
4. What parts of your job, do you:
(f) Do best?
Receiving orders
Conducting shipments with the least bit of damage
(g) Do less well?
Relations with fellow colleagues
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(a) Have difficulty with?
Relating with colleagues and mixing with them during social events.
(b) Fail to enjoy?
No aspects
5. Have you any skills, aptitudes, or knowledge not fully utilized in your job? If so, what are they and
how could they be used?
So far, I do not have any
6. Can you suggest training which would help to improve your performance or development?
People relations skills in order to help with my social skills
7. Additional remarks, notes, questions, or suggestions
Working at the company has been an insightful experience.
OBSERVATION RECORD – F306B (To be completed by assessor)
Candidate’s name:
Unit 3PRM - Learning Outcome No 4:
Be able to conduct and reflect upon a performance review.
Skills required
Assessor feedback – to be completed by the assessor with notes to
support the decision
Identify purpose
To assess the performance of the employees against the set targets at the start of the
year.
What difficulties have you experienced in the performance of your job?
Plan meeting:

aims and objectives

questions

roles/resources

Structure.
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Prepare suitable environment.
Open meeting appropriately:

introductions

Aims and objectives.
Establish rapport and put
candidate at ease.
Use appropriate questioning
techniques:

open questions

Clarifying.
Control meeting without
dominating.
Communicate (listening and
speaking) effectively with
candidate, using appropriate
body language.
Invite, and deal with, candidate
questions.
Identify any development
needs and actions.
Conclusion and summary
Conduct meeting within legal
and ethical requirements.
Assessor’s signature:
Used open questions and clarified concepts
Date:
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Review Narrative
Appraiser: Good morning John*? How are you today?
Appraisee: Good morning Evans*. Am doing good thank you. How are you?
Appraiser: Equally good am glad. Did the lightning affect you last night? I could barely get any
sleep.
Appraisee: You felt it too? It was so scary, and I kept tossing and turning. I was told that’s the
norm with this place, so I will have to get used to it over time.
Appraiser: Yes, it happens a lot around here. Well, as you know this is a session for us to review
your performance for the last one year that you have been with us. The main aim of this meeting
is to identify your areas of strength and weakness and come up with solutions on how you can be
able to improve your performance. So far, how has been your experience at the company?
Appraisee: It has been good so far. The tasks provided have made it possible for me to gain
increased experience in the field of warehousing.
Appraiser: Am glad. The review indicates a positive performance as you have exceeded the set
targets for each of the areas. I commend you for that.
Appraisee: Thank you. I try my best.
Appraiser: Are you experiencing any difficulty in relation to the completion of your tasks?
Appraisee: No difficulty directly related to the job. However, I experience some level of difficulty
in relating to fellow colleagues especially during social events.
Appraiser: What do you think can be done to resolve that?
Appraisee: I have been considering attending a people relations training.
Appraiser: That’s a good start. Although there are other simpler ways you could also improve on
it. For instance, you could find out about the common interest of your colleagues. That way, you
can join in. Also, you could try and be friendly by say being courteous to find out how someone’s
morning has been and such.
Appraisee: That sounds like something I could do. Thank you.
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Appraiser: So can we agree that we are setting for ourselves targets for your people relations?
Appraisee: Yes, I can work to achieve them within the next three months.
Activity Two: Reflective Statement
4.3 Outcomes of performance review meeting
Generally, the performance review meeting went as anticipated with the employee’s
performance being reviewed against set benchmarks. The employee’s performance was identified
as being on target despite the visible reductions in effort. Employee behavior was discussed, with
reference to the aggressive behavior reported by colleagues. Ultimately, the employee opened up
on the reasons behind the lack of involvement in organizational activities away from work- this
being identified to be a lack of familiarity with the rest of the team. With this identified, it was
possible to talk through ways in which the employee felt the situation could be improved, plans
they had in mind to improve their own performance and the departmental areas they were most
comfortable in for purposes of their professional progression.
Own performance
Throughout the review, I strived to maintain a professional stance. At one point, the
employee broke down in relaying the reasons why they no longer felt as a valued part of the
organization. When a lack of motivation and familiarity was mentioned, I felt the need to apologize
and take responsibility on behalf of the company as I understood how this could result in lower
productivity. However, the session was meant for honest communication regarding his
performance during which I acknowledged that it is possible that lack of motivation and familiarity
could be a main contributor. I however maintained professionalism and inquired in-depth on the
kind of motivations they would suggest be put in place in order to improve the situation.
The main undoing was going into the review with a mental script of what I expected to
happen. Having learnt about reviews, I was set on putting into use all the components. However,
I realized that the actual process occurs better when it is left to be a free flowing tow way
communication between the manager and the employee.
Learning points for future review meetings
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Open communication- The review should not be formalized as a process for crucifying the
employee. Instead, it should be taken as an opportunity for the employee and the management to
communicate regarding the aspects that could be encouraging productivity and those hindering the
process (Holloway, et al., 2009). The manager should be ready to offer feedback regarding the
employee performance while the employee should be encouraged to discuss reasons behind their
performance, their career goals, future prospects and action plans.
Provide potential solutions for identified problems-During the review, it is most likely that
problems will be identified by the employee. As the appraiser, it is necessary that potential
solutions to this problems be offered to ensure that they do not persist. For every criticism offered
by the manager, a potential solution should be offered so as to help the employee to improve on
the areas identified.
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References
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Lawler, E. E., 2003. Reward practices and performance management system effectiveness.
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