Performance Management and Rewards

Performance Management - Definition

Performance management is an ongoing process of communication between a supervisor and
an employee that occurs throughout the year, in support of accomplishing the strategic
objectives of the organization. The communication process includes clarifying expectations,
setting objectives, identifying goals, providing feedback, and reviewing results.
Managing Employee Performance“ The Cycle”
Overseeing performance and providing feedback is not an isolated event, focused in an annual
performance review. It is an ongoing process that takes place throughout the year. The
Performance Management process is a cycle, with discussions varying year-to-year based on
changing objectives.
The cycle includes Planning, Checking-In, and Review.
•To begin the planning process, you and your employee review overall expectations, which
includes collaborating on the development of performance objectives. Individual development
goals are also updated. You then develop a performance plan that directs the employee's
efforts toward achieving specific results to support organizational excellence and employee
success.
•Goals and objectives are discussed throughout the year, during check-in meetings. This
provides a framework to ensure employees achieve results through coaching and mutual
feedback.
•At the end of the performance period, you review the employee's performance against
expected objectives, as well as the means used and behaviors demonstrated in achieving
those objectives. Together, you establish new objectives for the next performance period.

Source: University of California. (2019). Performance Management: Concepts & Definitions.

Retrieved from https://hr.berkeley.edu/hr-network/central-guide-managing-hr/managing-
hr/managing-successfully/performance-management/concepts

Performance management
Want to understand the basics of performance management? Many writers and consultants
are using the term as a substitution for the traditional appraisal system. You are encouraged
to think of the term in this broader work system context instead. Performance management
eliminates the need for performance appraisals, employee reviews, and employee evaluations.
What Performance Management Is Not

Performance management is not an annual appraisal meeting. It is not preparing for that
appraisal meeting nor is it a self-evaluation. It's not a form nor is it a measuring tool. Although
many organizations may use tools and forms to track employee goals, accomplishments, and
improvements, they are not the process of performance management.

What Does Performance Management Include?

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 whole work system that begins when a job is defined as
needed. It ends when an employee leaves your organization by way of finding a new job or
retiring.

Performance management defines your interaction with an employee at every step of the way
in between these major life cycle occurrences. Performance management makes every
interaction opportunity with an employee into a learning occasion.

Components of a Performance Management System

The performance management system may contain all of these components, but it is the
overall system that matters, not the individual components. Many organizations have been
able to develop effective performance management systems without all of the following
practices.

A performance management system includes the following actions:

•Develop clear job descriptions using an employee recruitment plan that identifies the
selection team.
•Recruit potential employees and select the most qualified to participate in interviews onsite.
•Conduct interviews to narrow down your pool of candidates.
•Hold multiple additional meetings, as needed, to get to know your candidates' strengths,
weaknesses, and abilities to contribute what you need. Use potential employee testing and
assignments where they make sense for the position that you are filling.
•Select appropriate people using a comprehensive employee selection process to identify the
most qualified candidate who has the best cultural fit and job fit that you need.
•Offer your selected candidate the job and negotiate the terms and conditions of employment
including salary, benefits, paid time off, and other organizational perks.
•Welcome the new employee to your organization.
•Provide effective new employee orientation, assign a mentor, and integrate your new
employee into the organization and its culture.

Source: Heathfield, S. M. (2020, January 30). What Is Performance Management in the

Workplace? Retrieved from https://www.thebalancecareers.com/performance-management-
1918226

The Important Steps Involved in Staffing process

Some of the important steps involved in staffing process are as follows:
Staffing is referred as both line as well as a staff activity. It is referred as line activity because
like other functions such as planning, organizing, directing, controlling, staffing is also
performed by every manager
It is a staff activity because it is an important area of management also like marketing
management, financial management, we have human resource management department also
in large organisations.
The steps involved in the staffing process are:
1. Estimating manpower requirement:
Staffing process begins with the estimation of manpower requirement which means finding out
number and type of employees needed by the organisation in near future. Manpower
requirement is not only to find out number of people needed but also the type of people.
Type means what should be the qualification educational background of the people whom we
need to appoint. While assessing the type of manpower required company should also make
policy regarding number of people to be appointed from backward classes, women force,
minority, etc.

For estimating manpower Requirement Company will take following three steps:

(i) Work load Analysis.

(ii) Workforce Analysis.

(iii) Comparing both to find out requirement.

Workload Analysis:

This requires finding number and type of employees required to perform various jobs designed
in organisational structure.

Workforce Analysis:
It means analysing existing workforce or employees already occupying the job positions and
how many of them are overburdened or under burdened.

Comparison:

After doing work load analysis and workforce analysis, the manager compares both as excess
of work load over workforce indicated under staffing and you need to appoint more people
whereas excess of workforce over work load indicated over staffing and you need to remove
or transfer some employees elsewhere.

As both overstaffing as well as understaffing are undesirable. The manager tries to find out
the manpower requirement by equating workload analysis to workforce analysis.

2. Recruitment: It refers to the process of inducing the people to apply for the job in the
organisation. After assessing the number and type of employee required, the manager tries
that more and more people should apply for the job so that the organisation can get more
choice and select better candidates.

If we can fulfill the requirement from inside the organisation through transfers and promotion,
then it is very economical and fast but generally organisation has to fulfill its requirement from
outside the organisation. To recruit people from outside the organisations contact various
placement consultants, employment exchanges, contractors etc. but the most common way to
recruit fresh talent is through advertisement. Company advertises in newspapers etc. and
many job seekers after reading the advertisement applies for the job.

3. Selection:
It refers to choosing the most suitable candidate to fill the vacant job position. The selection is
done through a process, which involves test, interviews, etc.

In selection number of selected candidate is less than the number of rejected candidates that
is why selection is called negative process also. The main objectives of selection are:

(i) To select the best among the available.

(ii) To make selected candidate realise that how seriously things are done in the organisation.

4. Placement and Orientation:

Placement refers to occupying of post by the candidate for which he is selected. After selection
the employee is given appointment letter and is asked to occupy the vacant job position.

Orientation refers to introduction of new employees to the existing employees large

organisations organise orientation programmes to familiarize the new employees with the
existing whereas in small organisations superior takes the new employees on round and
introduces him to the existing employees.

5. Training and Development:

To improve the competence of employees and to motivate them it is necessary to provide
training and development opportunities for employees so that they can reach to top and keep
improving their skill. Organisations may have in house training centres or arrange with some
institutions to provide training for their employees. Training and development not only
motivate employees but these improve efficiency of work also.

Source: Samiksha. (2013, December 4). What are the Important Steps Involved in Staffing
Process? (5 Steps). Retrieved from http://www.yourarticlelibrary.com/organization/what-are-
the-important-steps-involved-in-staffing-process-5-steps/8677

Performance Appraisal
Performance appraisal has three basic functions:
(1) to provide adequate feedback to each person on his or her performance;
(2) to serve as a basis for modifying or changing behavior toward more effective working
habits; and
(3) to provide data to managers with which they may judge future job assignments and
compensation.
Criteria of PA
1. Clear objectives
2. Management and employee endorsement
3. Flexibility
4. Predictibility
5. Performance dialogue
6. Appraisal form
7. Periodic system checks

Sources:
Jahan. (2015). Criteria for a Successful performance appraisal. Retrieved from
http://hrmpractice.com/criteria-for-a-successful-performance-appraisal

Levinson, H. (2014, August 1). Appraisal of What Performance? Retrieved from

https://hbr.org/1976/07/appraisal-of-what-performance

*Process of P.A. >Steps

1. Establishment of performance standards
2. Mutually set measurable goals
3. Measure actual performance
4. Compare actual performance with standards
5. Discuss the appraisal with the employee
6. If necessary, initiate corrective action

*Sources of information in actual performance

1. Personal observation
2. Statistical reports
3. Oral reports
4. Written reports

*Methods of P.A.
1. Absolute standards - subjects of appraisal are not compared with other persons - methods:
1.1 Essay Appraisal
1.2 Critical Incident Appraisal
1.3 Checklist
1.4 Adjective Rating Scale (also known as "Graphic Rating Scale")
1.5 Forced-Choice Appraisal 1.6 Behaviorally Anchored Rating Scale (BARS)
2. Relative Standards - compare individuals against other individuals
2.1 Group Order Ranking
2.2 Individual Ranking
2.3 Paired Comparison
3. Objectives - also known as "Management by Objectives (MBO)"
4 Steps:
3.1 Goal Setting
3.2 Action Planning
3.3 Self-control
3.4 Periodic Reviews

*Errors in P.A.
1. Halo Error
2. Leniency Error
3. Control Tendency Error
4. Recency Error
5. Personal Bias Error

Sources:
PERFORMANCE APPRAISAL PARAMETERS. (2010). Retrieved from
https://shodhganga.inflibnet.ac.in/bitstream/10603/5904/12/12_chapter 3.pdf

Performance management and appraisal . (2016). Retrieved from

https://pdfs.semanticscholar.org/93cc/62d7f8a9188c88c509df80b6550f98bc5e7f.pdf

Types of Organizational Incentives

Money is an important motivator. Common uses of money as incentive are in the form of
wages and salaries, bonus, retirement benefits, medical reimbursement, etc. Management
needs to increase these financial incentives making wages and salaries competitive between
various organisations so as to attract and hold force.

Non-financial incentives help management satisfy its employees’ these needs:

1. Appreciation of Work Done
2. Competition
3. Group Incentives
4. Knowledge of the Results
5. Worker’s Participation in Management
6. Opportunity for Growth
7. Suggestion System
8. Job Enrichment
 Motivation Incentives
Compensation incentives may include items such as raises, bonuses, profit sharing, signing
bonus, and stock options.

Recognition incentives include actions such as thanking employees, praising employees,

presenting employees with a certificate of achievement, or announcing an accomplishment at
a company meeting.

Rewards incentives include items such as gifts, monetary rewards, service award presents, and
items such as gift certificates. An additional example is employee referral awards that some
companies use to encourage employees to refer job candidates.

Appreciation incentives include such happenings as company parties and celebrations,

company paid family activity events, ice cream socials, birthday celebrations, sporting events,
paid group lunches, and sponsored sports teams…

Source: Sayao, M. (2016). Types of Organizational Incentives. Retrieved from

https://prezi.com/m/vlrwfvkxdsqe/types-of-organizational-incentives/

Sources:

Heathfield, S. M. (2020, January 30). What Is Performance Management in the Workplace? Retrieved from
https://www.thebalancecareers.com/performance-management-1918226

Jahan. (2015). Criteria for a Successful performance appraisal. Retrieved from http://hrmpractice.com/criteria-for-a-
successful-performance-appraisal

Levinson, H. (2014, August 1). Appraisal of What Performance? Retrieved from https://hbr.org/1976/07/appraisal-
of-what-performance
PERFORMANCE APPRAISAL PARAMETERS. (2010). Retrieved from
https://shodhganga.inflibnet.ac.in/bitstream/10603/5904/12/12_chapter 3.pdf

Performance management and appraisal . (2016). Retrieved from

https://pdfs.semanticscholar.org/93cc/62d7f8a9188c88c509df80b6550f98bc5e7f.pdf

Samiksha. (2013, December 4). What are the Important Steps Involved in Staffing Process? (5 Steps). Retrieved
from http://www.yourarticlelibrary.com/organization/what-are-the-important-steps-involved-in-staffing-process-5-
steps/8677

Sayao, M. (2016). Types of Organizational Incentives. Retrieved from https://prezi.com/m/vlrwfvkxdsqe/types-of-

organizational-incentives/

University of California. (2019). Performance Management: Concepts & Definitions. Retrieved from
https://hr.berkeley.edu/hr-network/central-guide-managing-hr/managing-hr/managing-successfully/performance-
management/concepts