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Pm Overview  Performance Management is critical to small & large organizations .

it is more than just completing the "dreaded" annual review in order to get the annual bonus or pay increase. It is an ongoing activity with the ultimate goal of improving both individual and corporate performance. Performance Management is known as the “Achilles Heel” (area of weakness ) of Human Capital Management .  Performance Management is how organizations communicate expectations & drive behaviors to achieve important goals, & to identify poor performers for development program or other personnel actions.  Performance Management is a continuous process of identifying, measuring & developing the performance of individuals & teams, and aligning their performance with the strategic goals of the organization.  Performance Management is a concerned with outputs (achievement of results) & with outcomes (impact made on performance). But, it is also concerned with the processes required to achieve these results (competencies) and the inputs in terms of capabilities (knowledge, skills & competence) expected from teams & individuals involved.  There is no one right way of managing performance: the approach must depend on the context of the organization – its culture, structure, technology.

Past History
 No one knows when formal methods of reviewing performance were first introduced. According to Harold Koontz (1909-1984), the emperors of Wei Dynasty (AD 221-265) in China had an ‘Imperial Rater’, whose task was to evaluate performance of official family.  The first formal monitoring systems, however, evolved out of the work of Fredrick Taylor (1855-1932) & his followers before World War I.  Rating for officers of US Armed Forces was introduced in 1920s, which spread to UK.  Merit-rating came to the fore in USA & UK in 1950s & 1960s when it was sometimes rechristened Performance Appraisal.  Management By Objectives (MBO), then came & went by in the 1960s & 1970’s, & simultaneously, experiments were made with Critical Incident Technique & Behaviorally Anchored Rating Scales (BARS).  A revised form of result-oriented Performance Appraisal emerged in the 1970s, which still exists today.

favorable.  W D.  Takes full part in group meetings & contributes useful ideas frequently. while keeping abreast with what they are doing. unfavorable & repellent.  The W D Scott scale was modified & used to rate the efficiency of US Army Officers. Drucker in 1955. This concept did not gain much acceptance. but had considerable influence on methods of developing competence frameworks Behaviorally Anchored Rating Scales  BARS are designed to reduce the rating errors. and managers rate each dimension on a scale. He invented the ‘Man-to-Man Comparison’.Some examples of BARS are:  Continually contributes new ideas & suggestions. prior to World War I. Merit-ratings earlier version was criticized for being mainly concerned with assessment of traits. indifferent. John C. . used for reports on workers & for rating managers & supervisors.  The pioneering efforts of Scott were developed into Graphic Rating Scale.  Listens to colleagues & keeps them reasonably well informed about own activities. Flanagan (1906-1996) developed the “Critical Incident Technique” – appraiser should focus on critical-behavior incidents.  In 1954. & was soon adopted by British Army. Delivers opinion & suggestions at group meetings from time to time.  MBO was defined by John Humble in 1972 as “a dynamic system which seeks to integrate the company’s needs to clarify & achieve its profit growth goals with the manager’s need to contribute & develop himself”. & initiated an era of promotion on the basis of merit. but is not a major contributor to new thinking or planning activities.  Managers/Supervisors were assessed on qualities like inspiring. Management By Objectives (MBO)& Critical Incident Technique  The term MBO was first coined by Peter F. Scott was the American pioneer who first introduced rating of the abilities of workers in Industry. who emphasized that “an effective management must direct the vision & efforts of all managers towards a common goal”. The term ‘Performance Management’ was first used in the 1970s. They include performance dimensions such as teamwork. but it did not become a recognized process until the latter half of the 1980s.

 The concept of performance management then lay fallow for some years. obtained against these objectives.  As a result of research Performance Management was defined as under: “A strategy which relates to every activity of the organization set in the context of its HR policies. under the influence MBO movement. The first book on Performance Management was however published by Plachy in 1987. as it incorporated the agreement of objectives & an assessment of results. impressionistic & arbitrary judgments and ratings by different managers not being compatible.Performance Appraisal (1970s Version)  In the 1970s a revised approach to performance appraisal was developed. and style & communication systems. and to aid in the creation of a developmental plan.  This form of Performance Appraisal received a boost during the late 1980s. the aim of which was to help managers give feed back in a helpful & constructive way. but began to emerge in USA. but many criticisms were made because of drawbacks like subjective. . Beer & Ruh described the performance management system at ‘Corning Glass Works. by the research project conducted by the then Institute of Personnel Management. culture. in middle 80’s. Enter Performance Management Early Days  The first recorded use of the term “Performance Management” was made in 1976.  By 1990 performance management had entered the vocabulary of HRM in UK & USA. The nature of the strategy depends on the organizational context & can vary from organization to organization”.  It was also called ‘Results-oriented appraisal”. Performance Management Established  Full recognition to the existence of “Performance Management” was provided in 1992.

to work Effectively & Efficiently.Two Propositions Upon Which Foundation of Performance Management is Built Proposition # 1 When People (Individual + Teams) know & understand what is Expected of them. that cascade down throughout the organization. to improve their Performance. to produce Optimum Results (IRS Management Review – 1996)  Performance Management is about:  “Directing & Supporting Employees. & have been part of forming these Expectations. to work as Effectively & Efficiently as possible.  To provide Support & Guidance. the Basic Aims of Performance Management are:  To Share Understanding about What is to be Achieved. in order to achieve Organizational Goals (Hendry. that can be achieved by Individuals & Teams. they will use their best endeavors to meet them Proposition # 2 Capacity to meet Expectations.  Common Elements in All Three Definitions  1 Improving Individual & Team Performance2 Translating Corporate Goals into Achievable Objectives. Basic Aims of Performance Management The two propositions we just discussed imply that.  To Develop Capacity of People & Organizations to achieve it. . in line with the needs of the Organization” (Walters – 1995). & Resources made available to the Individuals/Teams. 3 Directing & Supporting Employees. Bradley & Perkins – 1997). by the Organization.  The Level of Support extended by the Management. depends on:  The Levels of Capability.  Some Definitions which Lead to the Notion What Performance Management is About  A systematic approach to improving Individual & Team Performance.  The Processes. Individuals & Teams Need. Systems.  Performance Management is a way of translating Corporate Goals into Achievable Objectives.

Increase motivation & commitment of employees  Enable Individuals to develop their abilities. .  Ensure that your teams are not only motivated to perform to the limit of their ability. Six Aims/Purpose of Performance Management As Outlined by Herman Aguinis  Strategic Purpose. through an effective program of Personal Development. To allow Managers to provide coaching to employees  Organizational Maintenance Purpose.Aims of Performance Management  Help to achieve sustainable improvements in Organizational Performance  Act as a lever for change in developing a more performance-oriented culture. finally developing employee for future roles (succession planning). Keep employees informed how they are doing & about Organization’s/Supervisors  Developmental Purpose. agree plans for next years improvement. Furnish valid & useful information. pay employees for good performance. that can be used for administration decisions & test development Characterstics of Performance Management  It communicates a Vision of Organizations objectives to all of its Employees. review performances against agreed objectives. for making administrative decisions about employees Informational Purpose. To provide information.  Develop constructive & open relationships between Individuals & their Managers. To collect useful information. to their own & organizations advantage.  Enhance the development of Team Cohesion & Performance. increase job satisfaction & achieve their full potential. to be used in workplace planning/allocation of Human Resources  Documentional Purpose. also stretch these boundaries.  Provide opportunities for individuals to express their aspirations & expectations about their work.  In nutshell it helps organizations to set objectives over the year. Help Top Management achieve Strategic Business Objectives  Administrative Purpose.

All major job responsibilities be evaluated.  Practicality. 14 Characteristics of Performance Management As Outlined by Herman Aguinis  Strategic Congruence. Entry of performance data to be user friendly and increased performance/job satisfication  Meaningfulness. that are related to wider objectives.  Ethicality .  It expresses performance targets in terms of measurable outputs.  It conducts a formal review of progress towards these targets. & training/learning targets.  Correctability  Standardization.  Reliability. Results should be used for important administrative decisions  Specificity.  Openness. accountabilities. in order to improve effectiveness.  It links performance to pay.  Inclusiveness. It sets Departmental & Individual Performance Targets.  It Evaluates the whole process.  Identification of Effective & Ineffective Performance.  Thoroughness. specially for senior managers. Individual Goals must be aligned with unit/organizational goals.  Validity  Acceptability & Fairness.