“Performance Management”

Introduction:

The concept of performance management has gained strong attention to improve

results in the midst of challenging economic conditions. Many organizations instead of
waiting for external improvements such as market growth and technological advances,
they looked into their internal capabilities for performance and productivity gains.

Performance Management – Definition

Performance management is the continuous process of improving performance by

setting individual and team goals which are aligned to the strategic goals of the
organization, planning performance to achieve the goals, reviewing and assessing
progress, and developing the knowledge, skills and abilities of people.

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 cycle definition encompasses four main

stages:

The
performance
management cycle is a
model that allows
management and
employees to better
achieve
organizational goals through a structured process of employee development.

1. Planning

Planning is a complex, comprehensive intellectual management process, focused on

proper selection of goals and objectives and developing a course of action on the tasks
and resources to be employed to achieve these goals and objectives for future
organizational performance.
Before the management talks to the employee, the management team should meet and
decide the organization’s goals and objectives for the year.

This involves the overall strategy for the business, but also the personal objectives for
all employees and teams, including development goals, specific tasks, targets, actions
and behaviors.

In this strategy, the goals should be clearly outlined using the S.M.A.R.T. method.

SMART goals are:

 Specific - The goal is clearly outlined, with detailed information such as what is
to be achieved, how well it must be done, and why it is important.

 Measurable - The goal must have a definite and measurable indicator to tell if it
has been achieved.

 Achievable - While the goal should stretch the employee, it should not be so
lofty as to not be realistically achievable at all.

 Relevant - The goal is in line with both the employee’s job and the overall goals
of the organization.

 Time-bound - There should be a definite timeline as to when this goal should

be completed.

In setting these goals, management can also put in place an employee

development plan. It is at a very high-level, employee development is a process of
working with employees to improve, enhance, refine and hone existing skills, and to
also develop newer ones, in support of the organization’s mission and goals.

The Essential Characteristics of Planning

1. Planning is crucial
2. An intellectual process
3. A continuous function
4. Planning is flexible
5. For all managerial functions
6. Planning contributes to the objectives
7. Future is always full of uncertainties
8. Better utilization of resources
9. Increases organizational effectiveness
10. Reduces the cost of performance
11. Helps in coordination
12. Delegation is facilitated

Importance of Planning

1. Planning provides direction

2. Planning reduces risks of uncertainty
3. Planning reduces overlapping and wasteful activities
4. Planning promotes innovative ideas
5. Planning facilitates decision making
6. Planning establishes standards for controlling

Types of Plan at Different Management Levels

Levels of management – hierarchy of managerial positions which work and function at

diverse positions.

Planning at the Top Level Management

The main role of the top level management is summarized as follows;

1. determines the objectives, policies and plans of the organization

2. assembles and bring together available resources
3. does mostly the work of thinking, planning and deciding
4. spends more time in planning and organizing
5. prepares long-term plans of the organization which are generally made for 5 to 20
years

Strategy – is a blueprint of actions and resource distribution intended to realize the

goals of the organization.

Strategic plans – are long-term plans that make apparent the manner on how the
organization will serve customers and position itself among competitors in the
industry for the next five years.

Mission – is a statement of the company’s fundamental intention and the reach of

operations.

Vision – provides the future direction of the organization and what it can become.

Planning at the Middle Level of Management

The middle level management emphasizes more on following tasks:

 1. gives recommendations or advices to the top level management
2. implements the policies and plans in conformance with company’s policies and
the objectives which are made by the top level management
3. co-ordinates the activities of all the department
4. communicates about information and policies with the top level management and
the lower level management
5. prepares short term plans of their departments which are generally made for 1
to 5 years
6. inspires and provides guidance to low-level managers towards better
performance

 Tactical Plans - Tactics are the means needed to activate a strategy and make it
work.
Tactical Plans carry out strategic plans by transforming them into definite
plans appropriate to a specific area of the organization like finance,
marketing, operations and human resource.

Planning at the Lower Level of Management

The lower level management performs following activities:

1. assigns employees tasks

2. guides and supervises employees on day-to-day activities
3. develops morale in the workers
4. maintains a link between workers and the middle level management
5. informs the workers about the decisions which are taken by the management
6. informs the management about the performance, difficulties, feelings, demands,
etc., of the workers
7. ensures the quality and quantity of production
8. makes recommendations and suggestions
9. upchannels employee problems

 Operational Plans are the plans that are made by first-line or low level managers.
 Single-use plans are those unique plans that are intended to be used only once
and simply cover the content involved in one situation.
 Standing or ongoing plans are typically prepared once and preserve their
significance over a period of years while going through periodic modifications
and updates when necessary.

2. Monitoring
It is a key function in achieving the goals set out in the planning stage. The
monitoring will not be as effective, however, if it is only done once or twice during the
year. It is advised that management meets with employees on a monthly or quarterly
basis to check in on progress, offer help if needed, assist in solving any problems that
might have arisen, and adjust goals, if necessary.
In holding monthly or quarterly meetings with the employee, management can more
easily oversee this process.

3. Reviewing
At the end of the year, the management and the employee meet to review the
previous year and see if goals were met.

This is another opportunity to build a collaboration with the employee. The more
involved they are in the other stages of the performance management cycle, the more
motivation they will have to continue working diligently to achieve their goals and those
of the organization.

This evaluation should include questions such as:

 Was the original goal realistic?

 Was the goal in line with the organization’s objectives?

 Did the employee gain useful experience or skills?

 How well did the employee complete their tasks?

 Did the organization offer the proper support to achieve the goal?

 In what ways could future goals be set differently to ensure success?

 What aspects of this process could be streamlined or improved?

The employee can present their perspective on how well they did during the year and
receive feedback from the management team on how well they met or exceeded their
goals.

4. Rewarding

The final stage of the performance management cycle plan is the reward. This is a
stage that cannot be overlooked, as it is the one that is the most important for
employee motivation.
Employees who do not receive a proper reward after a year of striving to meet
organizational goals, and succeeding in doing so, will lose motivation for the next year.
They might lose faith in their organization, feel that their talents are not appreciated,
and begin searching for another job.

Some rewards that might be offered are:

 An increase in compensation

 A one-time bonus

 Increased vacation time

 Special projects

 A promotion

 A positive written review

 Company-wide acknowledgment

After the reward stage of the performance management cycle model, the management
team and the employee can choose to meet one final time, to review the cycle as a
whole.

Importance of performance management cycle in business

By developing the performance management cycle plan example as described above,

an organization can maximize the output of their employees, ensure that organizational
goals are being driven forward and concretely track the performance of each employee.

Employees also benefit from the performance management cycle plan. Through
collaboration with and support from their management team, they see that they are a
valued member of a team. Their skills are being developed and used in meaningful
ways, and there is a reward for hard work.

What is the performance appraisal?

Performance appraisal, or performance evaluation, is the assessment of past
performance within a given time frame. The purpose is to judge how well employees
have performed relevant to expectations and to use this information to make a variety
of talent and organizational decisions. A performance review generally refers to the
component of performance appraisal that involves completing rating tools/forms and
having a formal conversation between an employee and manager to discuss the
evaluation results.

Although employees and managers often think of performance appraisal as

synonymous with performance management, the two are not the same. Performance
management includes setting expectations, measuring employee behaviors and results,
providing coaching and feedback, and evaluating performance over time to use in
decision making. The purpose is to align individual efforts to achieve organizational
goals.

Five Essentials of an Effective Strategy

 An effective strategy is deeply understood and shared by the organization.

 An effective strategy allows flexibility so that the direction of the organization can
be adapted to changing circumstances.
 Effective strategy results from the varied input of a diverse group of thinkers.
 Effective strategy follows a thorough and deep analysis of both the external
environment and the internal capabilities of the organization.
 Effective strategy identifies areas are competitive advantage.

Purpose and Goals of Performance Management

The purpose of performance management is to give both managers and employees a

clear and consistent system within which to work that, in turn, will lead to increased
productivity.

 This system shows employees the pathway to success, allows for the measuring
of performance coupled with feedback and offers training and development
opportunities.

 Performance management allows management to understand what their

employees are doing and track progress on company objectives while providing
consistent feedback.

The five main objectives of performance management:

 1. Develop clear role definitions, expectations and goals.

2. Increase employee engagement.

3. Develop managerial leadership and coaching skills.

4. Boost productivity through improved performance.

5. Develop a performance reward program that incentivizes accomplishment.

Knowledge Check:
1. Provides the future direction of the organization and what it can become.
2. It is a key function in achieving the goals set out in the planning stage.
3. A plan means needed to activate a strategy and make it work.
4. A plan that made by first - line or low level managers.
5. Employees should feel valued and appreciated for the effort and work they do.
6. It should involve meeting with employees and being transparent about company
goals, directions and obstacles.
7. The long-term plans that make apparent the manner on how the organization
will serve customers and position itself among competitors in the industry for the next
five years.
8. A state of performance management cycle plan that is the most important for
employee motivation.
9. The goal must have a definite and measurable indicator to tell if it has been
achieved.
10. Refers to a statement of the company’s fundamental intention and the reach of
operations.
11. A plan that is typically prepared once and preserve their significance over a
period of years while going through periodic modifications and updates when
necessary.

12. It is a regular review of an employee’s job performance and overall contribution

to a company.
13. In this strategy, the goals should be clearly outlined using the SMART method.
14. A blueprint of actions and resource distribution intended to realize the goals of
the organization.
15. It refers to any effort targeted at closing the gap between actual results and
desired results.

Answer key:
1. Vision
2. Monitoring
3. Tactical plan
4. Operational plan
5. Employee recognition 
6. Goal Setting
7. Strategic plan
8. Rewarding
9. Measurable
10. Mission
11. Standing or ongoing plan
12. Performance appraisal
13. Planning
14. Strategy
15. Performance improvement

Assessment:
1. What do you mean by performance management approach?
Answer:
It is a forward looking process as it involves both the supervisor and also the employee
in a process of joint planning and goal setting in the beginning of the year.
2. Identify the main role of the top level management in planning stage.
Answers:

 determines the objectives, policies and plans of the organization

 assembles and bring together available resources
 does mostly the work of thinking, planning and deciding
 spends more time in planning and organizing
 prepares long-term plans of the organization which are generally made for 5 to
20 years

3. Enumerate the four performance management cycle.

Answer:
They includes the planning, monitoring, rewarding, and reviewing.

References:
https://hr.berkeley.edu/hr-network/central-guide-managing-hr/managing-hr/managing-
successfully/performance-management
https://www.clearreview.com/resources/guides/what-is-effective-performance-
management/
https://blog.vantagecircle.com/objectives-of-performance-management/

THANK YOU AND GOD BLESS YOU ALL