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NAME : Snehal P Bhadane

ROLL NO.: 47


SUBJECT: Human Resource Management

TOPIC: Performance Management

FACULTY : Prof. Dr. Varkhede

Assignment on Performance Management

Performance management


Performance assessment has a long history based on comparative judgments of human

worth. Assessment and reward strategies are related to concepts of effective working
behavior. Recently, performance measurement has had wider purposes:
• To identify and enhance desirable or effective work behavior.
• Reinforcing this behavior by linking rewards to measured performance.
• Developing desired competences and building human capital within organizations.
Enthusiasts for performance assessment argue that it serves a key integrating role
within an organization's human resource processes. Firstly, it provides a checking mechanism
for resourcing policies and procedures, evaluating the quality of recruits and hence the
underlying decision-making process. Secondly, it monitors employee commitment and the
relevance of their working behaviour to business objectives. Thirdly, it provides a rationale
for an organization's pay policies. Taken at face value, these intentions seem entirely
compatible with an integrated and strategic approach to human resource management. In
reality, however, the definition and measurement of good performance is a controversial
matter, involving fundamental issues of motivation, assessment and reward.


Following aspects are need to be considered to evaluate and fostere performance

1. The environmental context: The business environment exercises both a direct and an
indirect influence on the conduct of performance assessment. Most environmental
factors have a diffuse and often unrealized effect on assessment and pay structures. It
is likely that different individuals - and organizations - will respond in varying ways
to these factors.
2. Business culture: At a national level, culture affects performance management
through sociopolitical traditions and attitudes which determine whether assessment is
acceptable, and to what degree. Cultural norms dictate 'acceptable' standards of
performance and the management methods by which they are assured. For example,
in a number of Asian societies, the employment relationship is a matter of honour, and
obligations are regarded as morally, rather than contractually, binding between the
two parties. In a situation where people are automatically expected to do the job as
agreed, the role of performance assessment is questionable.
3. Legislation: In free market economies, the employment relationship between workers
and employing organizations is seen as a contractual matter. This relationship is
expressed in formal or legalistic statements of obligation between the two, such as
written employment contracts, job descriptions and performance objectives.
Performance measurement has the purpose of ensuring that the employee fulfils the
4. General economic conditions: Prevailing attitudes towards employees and, in turn,
their response to performance assessment are considerably affected by issues such as
unemployment. Growth and shrinkage in the job market is conventionally believed to
be followed by changes in the behavior of workers and employers. At times of high
unemployment, workers are thought to be concerned about losing their jobs and hence
more conscientious and tolerant of strict management. When suitable employees are
scarce, managers must be cautious - unflattering assessments can trigger an
employee's move to another organization.
The relationship between the economy and assessment is circular and
complex. Performance management is justified by organizational efficiency, and the
overall efficiency of organizations in a country is crucial for its economic well-being.
Income generated by effective, as opposed to inefficient, performance encourages
economic wealth.
5. Industry sector: Methods of performance management vary considerably between
different industrial sectors, partly as a matter of the nature of the work involved,
tradition and fashion. Sales-dominated industries, such as financial services, tend to
have clear individual or team objectives which can be translated readily into
performance targets. Performance-related pay is common in this sector and
commission-only contracts are not unusual. In other sectors, objectives are more
diffuse and difficult to measure so that PRP is not easily justified.
6. Technological change: Computer networking is likely to have a dramatic effect on
the nature of supervision, and hence performance assessment. Technology has the
power to provide extensive statistics such as the the time an individual spends logged
on to a system, number of key strokes and volume of output.
7. Flexibility and diversification: The traditional nature of the employment
relationship , moving the balance of power firmly in favor of employers. As the job
descriptions have disappeared or, at least, have been diluted, so that employees can be
asked to do virtually anything required by the organization. Conversely, performance
criteria have been more tightly defined, typically expressed in the form of demanding
objectives: forever-moving goalposts. Performance assessment has become the crucial
means of monitoring this relationship.
8. Employee relations: Performance management is a means of enhancing managerial
control, particularly through individual performance-related pay schemes. The
individualization of pay diminishes or neutralizes the role of collective bargaining.
The purpose and influence of trade unions is undermined, reducing both their
effectiveness and attractiveness as an alternative focus for employee commitment.
9. Workforce composition: Largely forgotten in the controversy over PRP, the other
main function of performance assessment is the identification of individual strengths
and weaknesses the latter can be targeted for improvement through training and
development. Strengths may indicate a potential star performer, worthy of a
management career route and promotion. Assessment employed to determine
development needs ultimately serves to increase a nation's human capital. Less
positively, demographics and a history of unequal opportunities affect the conduct of
assessment, since they largely determine who assesses whom. For example, in
countries such as the UK, it is likely that performance assessments are largely carried
out by white male managers, whereas the people they assess are probably of mixed
gender and ethnic origin. this is one of a series of organizational issues.


• The Organization and Effective Performance: How do organizations decide which

performance criteria should be measured? How do they differentiate between a good,
average or indifferent employee? This section of Human Resource Management in a
Business Context discusses psychological and organizational factors which influence
employees' and raters' expectations of 'good performance'.
• The 'right' image: It is clear that any performance assessment system is vulnerable to
the cloning process. Without thought, performance management can drive out
diversity. It is also open to manipulation by employees who can identify the qualities
necessary to 'get on' in a particular organization.
• Impression management: The most significant quality required for selection to top
jobs is the ability to create a good impression. This section of Human Resource
Management in a Business Context considers issues such as self-awareness, self-
monitoring and cultural role models.
• Influencers: Performance assessments tend to value image qualities: apparent self-
confidence, the ability to talk charismatically, etc. The so-called 'smile-factor' is
related to the halo effect.
• Assessment and organizational change: Delayering and downsizing have had the
effect of increasing the ratio of staff to managers throughout the western business
world. As a consequence, managers have a greater number of assessments to conduct
on people they know less about.


Performance management strategies are particularly concerned with workforce

motivation or, more accurately, management belief in the factors which lead to employee
effort and commitment. 'Promotion must not be dependent on performance’ meaning existing
formal and informal approaches to employee performance management and appraisal
(EPMA) tend to work well enough in theory, but fail to meet expectations in practice.
• Motivation and performance:There is a considerable body of literature on the
relationship between motivation and work performance. Theories range from the
simplistic 'economic man' variety, typical of 'scientific management', to complex
expectancy models. One of the practical survey says that, Performance and
productivity boosted by regular reviews - Nearly 4 in 5 (79%) of businesses who use
performance assessment say that regular employee performance reviews benefit
overall business performance, and almost as many (76%) feel that they improve
employee productivity.
• Achievers and non-achievers: Several researchers have attempted to identify the
important factors leading to successful performance by comparing recognized high
achievers with average performers. Furnham reviewed much of this and found
consistent themes such as: perseverance, ability, contacts (through networking), self-
reliance, thinking big and good time management.
Locus of control: Performance management implies that employees can be influenced or
controlled to perform effectively. However, people vary in their reactions to the
persuasion or coercion of others.


The strategic aspects of performance-related pay processes are exemplified in the
integration of appraisal and performance-related pay processes within performance
management systems. These links have information about rating scales of various kinds
(including trait, competency and behaviourally-anchored systems:
• Management by objectives (MBO):The origins of strategic performance management
can be traced to the concept of management by objectives. This is a technique to
establish individual performance objectives which are tangible, mesaurable and
verifiable. Individual objectives are derived or cascaded from organizational goals.
Reward management: Reward or compensation management is an aspect of HRM which
focuses pay and other benefits on the achievement of objectives. Typically, it
incorporates other changes in pay administration and policy, including:
Decentralization of responsibility for setting pay levels
Uniform appraisal schemes
Flexible working practices
Performance-related pay
360-Degree Feedback: The tool is already recognized for promoting the growth of managers.
It enables people in the know to provide their leaders with an honest assessment of their
skills and integrity, based on a secure, confidential questionnaire. Automated 360
aggregate reports that would help them measure their human assets and understand the
culture of their organizations. With the help of 360 aggregate report organizations can
The integrity of their leaders
Their level of competency
Whether they adhere to codes of ethics
Whether the organization is out of control
3-step plan to scan organizational performance:
1. Assess the right people: covers all the senior management of the organization,
including the CEO and CFO
2. Ask the right questions: includes 360-degree feedback questionnaire. The most
effective questionnaires include competencies and skills that will be needed in and
beyond the foreseeable future.
3. Aggregate the results: An aggregate report provides the view from 10,000 feet,
contributing to an overall picture of corporate skills and culture. It can reveal specific
corners of the organization where integrity is strongly or weakly practiced.
Appraisals and Assessment
The assessment process: It covers traditional appraisal methods - the rating of individuals on
quasi-objective criteria or standards deemed to be relevant to performance - leading on to
modern competence-based approaches.
Appraisals and conformity Appraisal is a procedure designed to encourage conformity to the
standards, norms or image required by the person completing the assessment. The focus
is on the kind of behaviour the company culture requires, discouraging any behaviour
which does not fit. this section debates the value of verbal and numerical judgments.
Performance appraisal has become one of the most widely used management tools
despite widespread criticism of its effectiveness.
The counselling interview: Having tested the manager's talents as untrained psychologist, the
next part of the process expects the manager to be a qualified counselor. The counselling
interview normally takes the form of a face-to-face dialogue between the appraising
manager and the appraisee. The scope for conflict - and its avoidance - is considerable.
Objectivity and subjectivity in assessment: Some of the key issues of performance
management revolve around questions of fairness, judgment and interpretation of both
results and behaviour. Serious attempts have been made to address these areas, focusing
on results, processes or behaviour.


Performance-related pay:
There is a widespread opinion among senior managers that PRP must be a good thing - but
the evidence for its effectiveness is not overwhelming. However, research does indicate
that most employees are unhappy with PRP. Questions of fairness, managerial judgment,
reward value, relationship to company performance, demotivation, flexibility, and conflict
with team philosophy.

HRM is associated with sophisticated performance assessment, typically involving
performance-related pay. The assessment of performance can be beneficial to personal
development. We considered performance management as an integrated system. Theoretical
descriptions of such systems emphasize their value to the link between individual employee
performance and the achievement of strategic goals. However, there are philosophical issues
of what precisely represents 'good' performance, and further technical problems of
measurement. This has led to an unhappy marriage of uncertain appraisal techniques with an
ideological enthusiasm for performance pay. Free market organizations are particularly
concerned with performance-related pay as a motivating factor, but this trend appears to be
ideological rather than rational. Current evidence shows that performance-related pay
demotivates more people than it motivates. We completed the chapter with a critique of
appraisal methods and a discussion of recent attempts to objectify their use.