HRM2604 Study Guide E

© 2012 University of South Africa
All rights reserved
Printed and published by the

University of South Africa
Muckleneuk, Pretoria
HRM2604/1/2013–2019
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CONTENTS
1 Page
Preface iv
TOPIC 11
STUDY UNIT 1: Performance management and reward systems in context 3
STUDY UNIT 2: Performance management process 22
STUDY UNIT 3: Performance management and strategic planning 34
STUDY UNIT 4: Defining performance and choosing a measurement approach 43
STUDY UNIT 5: Measuring results and behaviours 53
STUDY UNIT 6: Gathering performance information 61
STUDY UNIT 7: Implementing a performance management system 71
TOPIC 287
STUDY UNIT 8: Performance management and employee development 88
TOPIC 3109
STUDY UNIT 9: Reward systems and legal issues 110
TOPIC 4125
STUDY UNIT 10: Managing team performance 126
BIBLIOGRAPHY 137
(iii) HRM2604/1/2013–2019
Preface
2Dear Student
1.1 WELCOME
It is a great pleasure to welcome you to this module: Performance Management Practices.
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To ensure that you share our enthusiasm for this field of study, we urge you to read this
preface thoroughly. Refer back to it as often as you need to, since it will certainly make
studying this module a lot easier. The field of Human Resource Management (HRM), and
Performance Management Practices in particular, is extremely dynamic and challenging,
in South Africa and across the globe. The learning content and activities contained in this
learning guide as well as the prescribed book will therefore afford you opportunities to
explore the latest developments in this field and help you discover the field of Perfor-
mance Management as it is practised today. We hope that you will enjoy the module.
As you know, this module does not stand alone. It is an integral part of human resource
management. The purpose of and the learning outcomes for this module are therefore
aimed at developing your expertise and abilities in the practices of managing employee
performance in the broader context of human resource management.
1.2 PURPOSE OF THE MODULE

The purpose of this module is to prepare you, and develop your expertise and abilities
4
in the practices of managing employee performance in the organisation.
1.3 APPROACHES TO THE MODULE AND LEARNING

OUTCOMES
This module uses the outcomes-based approach to education and training. You will
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therefore find a number of learning outcomes below and at the beginning of each topic.
These learning outcomes are there to guide you through the learning material. They inform
you about what you have to do at the end of each topic or study unit. They also indicate
what knowledge, skills, attitudes and values you may be expected to demonstrate in the
assessment process, that is, in the assignments and the examination. You should also
realise that these learning outcomes are linked to the activities provided throughout this
study guide, the assignments and the examination. They are therefore a means whereby
we can evaluate or assess a student's mastery of a specific section of this module. The
learning outcomes therefore act as your ‘’navigational compass’’ throughout this module.
(iv)
1.3.1 Module outcomes
yy Critically synthesise the process of performance management.
yy Demonstrate the ability to explore performance management in the organisational
context.
yy Demonstrate a comprehensive knowledge base of and insight into the dynamics
and challenges related to designing and implementing a performance management
system in organisations.
yy Demonstrate the ability to explore a shift from performance appraisal to performance
management.
yy Design a performance management system that incorporates individuals and teams.
yy Express the role played by rewards in a performance management system.
yy Demonstrate a comprehensive knowledge base of and insight into the management
of employee performance improvement.
yy Comply with different South African legislation when managing employee performance.
1.3.2 Critical cross-field outcomes

Apart from the module outcomes, which are based on the specific field of study, we also
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want you to achieve the critical cross-field outcomes included below. Hence many of
the activities in the learning guide and in the assignments for this module are aimed at
helping you to develop these competencies.
yy Identify and solve problems in which responses display that responsible decisions
have been made using critical and creative thinking.
yy Work effectively with others as a member of a team, group, organisation or community.
yy Organise and manage yourself and your activities responsibly and effectively.
yy Collect, analyse, organise and critically evaluate information.
yy Communicate effectively using visual, mathematical and/or language skills in the
modes of oral and/or written presentation.
yy Demonstrate an understanding of the world as a set of related systems by recognising
that problem-solving contexts do not exist in isolation.
1.4 OVERVIEW OF THE MODULE
1.4.1 Scope of this module

In this module you will be exposed to a wide spectrum of significant aspects of perfor-
7
mance management in organisations. These aspects include the shift from performance
appraisal to performance management, measuring behaviour and results, performance
management and rewards, managing employee performance improvement, managing
individuals and teams, and the legal perspectives on performance management. Special
areas of interest will undoubtedly develop as you immerse yourself in the subject matter.
(v) HRM2604/1
1.4.2 The study material
The study material for this module consists of this study guide, a prescribed book and
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several tutorial letters which will be sent to you during the course of the semester. You are
welcome to also consult other sources which you find interesting regarding this module.
1.5 FRAMEWORK OF THE MODULE

Any teaching and learning method requires the use of certain terms. In order to find your
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way through this learning guide, it is therefore essential that you take note of the terms
used, which are explained below.
1.5.1 Topic
A topic represents a major component of the subject and tutorial matter. A topic has a
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number of learning outcomes which indicate the standard or level of competence you
should achieve in respect of the specific topic.
1.5.2 Study unit

A study unit is an identifiable section of a topic. Each topic therefore consists of one or
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more study units.
1.5.3 Learning outcomes

In your studies you will be concentrating mainly on learning outcomes. In each topic,
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specific learning outcomes are set, WHICH YOU, AS A STUDENT, MUST BE ABLE TO
DEMONSTRATE IN RESPECT OF THAT TOPIC. These specific learning outcomes are also
linked to the activities in the study guide, the assignments and the examination, and are
therefore a means whereby we can evaluate or assess your mastery of a specific topic.
Figure 1 is an example of the layout of the tutorial matter.
MAKE SURE THAT YOU FAMILIARISE YOURSELF WITH THE TERMINOLOGY USED IN
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THIS MODULE.
1.6 THE STUDY PROCESS
1.6.1 Suggestions on how to approach your studies in this module

Tutorial letter 101 and this study guide will direct you on how to approach your learning
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and apply your mind to how you may use these to your benefit. As a distance learning
student it is necessary that you know who to contact if you have any academic and ad-
ministrative queries, how to manage your time, etc.
You will need to spend at least 240 hours on this module. This includes approximately
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80 hours of reading and studying the study material, 80 hours of activities and assign-
(vi)
ments, and 80 hours of preparation for the examination. We encourage you to follow the
proposed schedule for the allocation of time to the various topics, study units and other
activities that are provided in your Tutorial HRM2604/101. You may wish to read more
widely than only the study guide and the prescribed book. You are welcome to do so!
1.6.2 The importance of completing activities, assignments and self-assessment

questions
1.6.2.1 Activities
16 You will encounter various types of activities in this study guide:
yy reflecting on work covered
yy completing assessment questions
We consider your completion of the activities in the study guide and the assignments
17
as crucial to your successful completion of this module. Firstly, the activities in the study
guide will help you to understand and apply the theory to real-life or fictitious problems
in performance management. Secondly, the activities will assist you in doing the self-
assessment questions and the assignments for this module.
1.6.2.2 Assignments
The assignments for this module will be provided in Tutorial letter 101. The completion of
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assignments is crucial in helping you achieve the learning outcomes. By completing the
assignments, you will get a feel for the type of question you can expect in the examination
and obtain first-hand feedback from the lecturer. The assignment questions also afford
you the opportunity to apply the theory to a case study or a practical situation relating
to your own workplace. By submitting the assignments for assessment, you will also
have the opportunity to earn a year mark of up to 10% of your final assessment mark for
this module. In each assignment you will be informed of the purpose of the assignment
and which module outcomes the assignment will assess. Details of the assignments and
requirements for the examination are provided in Tutorial letter 101.
1.6.2.3 Self-assessment questions

At the end of each study unit you will find a list of possible assessment questions based
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on the work done in that section. We advise you to work through these questions dili-
gently, since they provide extremely useful opportunities to prepare you for possible
examination questions. Self-assessment plays a critical role in the mastery of learning
outcomes and you should therefore make an effort to complete all the self-assessment
activities in the study guide. You will find most of the answers to these questions in the
study material covered in the study guide and prescribed book. It is our belief that you
should not have any surprises in the examination. It is therefore in your own interest to
work through these assessment questions.
(vii) HRM2604/1
1.6.2.4 Assessment of the module
During the semester, you will be assessed on your assignments and in the examination
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against transparent assessment criteria relating directly to the outcomes for the module.
The assignment marks you obtain during the semester will contribute towards your final
assessment mark. Further details of the assessment and examination requirements for
this module are provided in Tutorial letter 101.
1.7 THE USE OF ICONS

The icons that will be used in this study guide are as follows:
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Icon Description
Learning outcomes. This icon indicates what aspects of the

particular topic or study unit you have to master and be able to
demonstrate.
Study. The study icon indicates which sections of the prescribed

textbook or the learning guide you need to study and internalise.
Key concepts. This icon will highlight key concepts dealt with in
the specific study unit.
22
Activity. This icon refers to activities that you MUST do in order to

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develop a deeper understanding of the learning material.
24
Mind map. Mind maps are provided to help you to see the rela-
25
tionship between various parts of the learning material.
Assessment. This icon indicates that you will be required to test

your knowledge, understanding and application of the material
you have just studied.
Feedback. This icon indicates that you will receive feedback on

your answers to the activity.
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(viii)
1.8 HOW YOU WILL BENEFIT FROM THIS MODULE
To ensure that you deliver quality work for the module, it is imperative for you to comply
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with the following:

yy You need to study the prescribed tutorial matter conscientiously according to the
guidelines and in the sequence indicated.
yy You need to relate what you are learning to your work situation.
yy You need to plan your studies according to the time available.
yy You need to use the study guide and prescribed book according to the guidelines
provided.
When you have successfully completed this module, you will be well equipped to enter
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the work environment with a solid background in the field of performance management.
1.9 WHAT YOU CAN EXPECT FROM UNISA

29 You can expect us to do the following:
yy We will provide you with up-to-date and relevant study material that is regularly com-
pared with and benchmarked against similar local and international programmes.
yy We will keep the study material in line with the needs of industry and commerce by
consulting regularly with experts in the profession, industry leaders and government
officials.
yy We will assist you by affording you the opportunity to develop competencies and skills
at a certain level. The outcomes correspond to the National Qualifications Framework
(NQF) level 6.
yy You will be assessed according to the NQF’s level descriptors.
yy We will support you whenever you require assistance. You may contact your lecturer
by making a personal appointment; contacting him/her telephonically; writing to him/
her via email or using the course contact option on myUnisa or by traditional mail.
We understand that studying through distance education is more challenging than
attending a residential university.
yy We will provide you with clear indications of what we expect from you in terms of
your assessment.
yy We will give you timeous feedback on the assignments. We will return your assign-
ment and our feedback within three weeks after the due date if you have submitted
the assignment on or before the due date.
30 Good luck and enjoy the module!
31 Regards
32 Lecturer Performance Management Practices
(ix) HRM2604/1
(x)
TOPIC 1
Topic content
Study unit 1:
Performance management and reward systems in context
33
Study unit 2:
Performance management process
34
Study unit 3:
Performance management and strategic planning
35
Study unit 4:
Topic 1 Defining performance and choosing a measurement
36
approach
Study unit 5:
Measuring results and behaviours
37
Study unit 6:
Gathering performance information
38
Study unit 7:
Implementing a performance management system
39
Introduction
As you know, the objectives of employees and those of the employer are often in con-
40
flict. For the employee it is important to experience job satisfaction while performing his
or her tasks, and also to be rewarded satisfactorily. For the typical organisation, on the
other hand, productivity, and therefore profit, is important. It is not too difficult to see
that these two sets of needs are not necessarily compatible (or complementary). Take the
following as an example of this tension between employee and employer: employees
would be happy to receive high salaries, while management’s position would be that
this would directly undermine the objectives of the employer. Surely, in your life you
have also sensed the underlying conflict between these two poles, whether you are an
employer or an employee.
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Is there a way to synchronise these two sets of
objectives?
This is an interesting and challenging question and one that we will be addressing
41
throughout this topic.
42 Is there a way to synchronise these two worlds? Yes, it looks like there is indeed a way!
43 One way is through the process of performance management.
44 The two main factors that contribute to employee satisfaction are

1. the nature or content of the job
2. the relationships at work
If these two factors can be optimised, one would expect a higher level of satisfaction and
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probably also increased productivity. Performance management focuses, among other

things, on both the job content and the relationship between a team leader (supervisor)
and a team member (subordinate) (Pieters, 2009:262).
It will be our aim in this first topic to highlight some interesting issues around performance
46
management practices. We trust that it will motivate you for the rest of the module.
Remember that the first unit lays the foundation for the rest of the units and that you
need to pay careful attention to it. Also, do the activities by writing your thoughts into
the space provided throughout this study guide. This will help you to start preparing for
the assignments and examinations later on.
Aim of the topic

The aim of this topic is to provide you with a comprehensive understanding of the process
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and practices of performance management as one of the human resource management

(HRM) functions.
Learning outcomes
After completing this topic, you should be able to:

yy E ither justify or criticise a shift from performance appraisal to performance manage-
ment in managing employee performance.
yy Interpret a link between performance management and a reward system.
yy Design an employee development plan in accordance with a specific job position.
yy Illustrate the performance management process using a diagram.
yy Link performance management to the strategic planning of the organisation.
yy Implement a performance management system.
2
Study unit 1
Performance management and reward systems in
context
Contents
48 Learning outcomes
49 Key concepts
50 Introduction: origins and evolution of performance management
51 1.1 Defining performance management
52 1.2 The performance management contribution
53 1.3 Disadvantages/dangers of poorly implemented performance management systems
54 1.4 Reward systems
55 1.5 Aims and role of performance management systems
56 1.6 Characteristics of an ideal performance management system
57 1.7 Integrating performance management with other human resource and develop-
ment activities
58 1.8 Summary
59 Self-assessment questions
Learning outcomes
After completing this study unit, you should be able to:

yy Explain the concept of performance management.
yy Distinguish between performance management and performance appraisal.
yy Define reward systems and distinguish between different types of rewards.
yy Explain the contributions that a performance management system can make in the
organisation.
yy Discuss how a poorly implemented performance management system affects both
the organisation and the employee.
yy Examine the implications of the absence of each characteristic of an ideal perfor-
mance management system.
yy Indicate the relationship between performance management and other human
resource and development activities in an organisation.
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Key concepts
yy performance management
yy performance appraisal
yy performance management process
yy reward system
Introduction: origin and evolution of performance

management
The idea of managing performance, at both individual and organisational levels, is far
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from new – an extensive range of literature covers the subject. Should you be interested
in reading more on the issue, a good account of the development of performance man-
agement may be found in Fletcher (2002) (see the list of references at the back of this
study guide – look under surnames starting with the letter F). He traces performance
management’s origins as far back as the Second World War (1938–1945), focusing on the
period since the 1950s, a decade that involved personality-based appraisal. This means
that the focus was on evaluating performance, with no intention to improve it.
Appraisal practices in the 1960s shifted to a greater emphasis on goal-setting and the
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assessment of performance-related abilities (and more recently, competencies) rather than

personalities. The late 1980s and the 1990s saw organisations undergo a process of rapid
and successive change. Almost inevitably, what Fletcher calls “performance appraisal”
became a central mechanism in a more holistic approach towards managing people and
business in general. This means that managers do their work by getting other people
to do theirs.
Therefore, during the 1980s, people became more performance oriented. During the
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1990s, things shifted again in this field and performance management began to be seen
as more of a core management process and started to grow out of its “appraisal” box, de-
veloping into an integrated, strategic and grown-up cousin of the original idea that you
read about earlier on in this paragraph (Houldsworth & Jirasinghe, 2006:6).
In summary, the practice that we know today as performance appraisal, developed from
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humble beginnings some 60 years ago. During those early days the emphasis was on
individual competencies of employees. Over the last couple of decades this has devel-
oped into the very sophisticated organisational function that we know today. Currently,
performance management (PM) is a fundamental part of the rest of the enterprise, rec-
ognised as contributing to the achievement of the strategic goals of the organisation.
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1.1 Defining performance management
Study section 1.1 in the prescribed book.
Your prescribed book mentions that there is, unfortunately, no generally accepted
65
definition for the concept of performance management. However, the definition in

your prescribed book is in line with the one provided in the Guide to Managing Human
Resources (2011) which also explains performance management as 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 organisation. This guide
further states that the communication process includes clarifying expectations, setting
objectives, identifying goals, providing feedback and evaluating results. It is one of the
key processes that, when carried out effectively, helps employees know that their con-
tributions are recognised and acknowledged.
66 The two main components of the definition, according to the prescribed book are:
yy Continuous process
Study the PM process in figure 2.1 in study unit 2.
You should now be able to verify if this component is true, let’s take some time and have a look
67
at figure 2.1. Can you see the arrows starting from stage 1, cascading down to stage 6? What
happens when they reach stage 6? Yes, they start moving upwards! This is why we say perfor-
mance management is a never-ending process. From stage 6, the process starts all over again!
yy Alignment with strategic goals

Think a bit about organisational goals of the organisation at which you are employed. If you
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are not working, ask a relative or a friend.
OK, there are a few you can think of. Now try to think of your job description. Try to link your
69
daily tasks with your organisational goals. See if you can find any link.
Can you clearly establish how your daily tasks contribute to the goals of the organisation as
70
a whole?
71 If not, your organisation is less likely to achieve its goals.
72 The performance management process is there to close that gap!
5 HRM2604/1
Activity 1.1
(a) Read Sally’s scenario in section 1.1 of the prescribed book and judge whether her
activity covers these two components.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) Read the Merril Lynch scenario in the same section 1.1. What did this organisation
do that led to its PM system being successful that you can recommend to remedy
problems in Sally’s organisation?
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Feedback 1
(a) Sally’s behaviour does not cover the component of PM being “continuous”. For her to be
able to fill in the forms within 20 minutes is a clear indication that she did not set goals
and objectives, and that she does not have time to observe performance and to give
ongoing coaching and feedback. Obviously these activities cannot be carried out in 20
minutes! In other words, she just gives once off feedback.
Also, the “alignment with strategic goals” component is not covered in the scenario. It
looks like Sally does not care how her subordinates perform and how their performance
contributes to the organisational goals; hence she finds the whole PM process to be a
“waste of time”.
(b) The following activities are taking place at Merrill Lynch which make its PM system
successful:
yy At the beginning of the year, employees and managers set employee objectives.
yy Mid-year reviews assess what progress has been made towards the goals and how
personal development plans are faring.
yy The end-of-the-year reviews incorporate feedback from different sources, evaluate
progress towards objectives and identify areas that need improvement.
yy Managers get extensive training on how to set objectives and conduct reviews.
yy There is a website containing all information about all aspects of PM that is acces-
sible for managers.
6
Sally’s scenario is a common one in many organisations. You could have come across such a
scenario many times. If you are not employed, ask your employed friends or relatives and you
will be shocked by the stories they tell!
73 Note: PM is NOT performance appraisal. See the differences below.
Performance management Performance appraisal
yy Strategic business considerations yy Assesses employee strengths and

yy Ongoing feedback, so employee weaknesses
can improve performance yy Conducted once a year
yy Driven by line manager yy Lacks ongoing feedback
yy Driven by HR
For a better understanding of the difference between PM and performance appraisal, Rao
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(2008) tabulated comparisons between PM and performance appraisal. Study the table below.
75 Table 1.1 Comparisons between Performance Appraisal Systems and Performance

Management Systems
Performance Appraisal Systems Performance Management Systems

Focus is on performance appraisal and Focus is on performance management
generation of ratings
Emphasis is on relative evaluation of Emphasis is on performance
individuals improvement of individual officers and
their departmental or team performance
Annual exercise, though normally Continuous process with quarterly
periodic evaluations are made or periodic performance review
discussions
Emphasis is on ratings and evaluation Emphasis is on performance planning,
analysis, review, development and
improvement
Rewards and recognition Performance rewards may or may not
of good performance are be an integral part, but defining and
important components setting performance standards are an
integral part
Designed and monitored by the HR/ Designed by the personnel/HR
administration department department, but could be monitored by
the respective departments themselves
Ownership is mostly with personnel/ Ownership is with line managers;
administration department personnel/administration department
facilitates its implementation
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KPAs and KRAs are used to ensure KPAs or KRAs are used as a planning
objectivity mechanism
There are review mechanisms to There are review mechanisms
ensure objectivity in ratings essentially to bring about performance
improvement
It is format-driven with emphasis on It is process-driven with emphasis on the
the process linked to promotions, format as an aid linked to performance
rewards, training and development improvement and through this to other
interventions, placement, etc. career decisions as and when necessary
Adapted from Rao (2008).
1.2 The performance management contribution

The PM system benefits both the employer and employees. However, the perception
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held by many employees is that PM systems aim at benefiting only the organisation. This
is evidenced by the survey conducted at Watson Wyatt as illustrated in section 1.2. The
findings of this survey showed that only 3 out of 10 employees believe their company’s
performance review system actually helped them improve their performance. There are
many benefits associated with PM systems.
Thirteen advantages of PM are provided in this section. All of these advantages benefit
77
both the employer and the employee. To ensure that you clearly know how, quickly do
the following activity:
Activity 1.2
Pick any two of the advantages provided in section 1.2 of the prescribed book and indi-
cate how each benefits both the organisation and the employee.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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8
1Feedback
It does not matter which two advantages you chose. As long as you can justify and highlight
how employers and employees benefit from them. Let us look at the ones I chose.
yy The definitions of job and criteria are clarified – when employees know exactly what
tasks they should perform, what exactly is expected of them, as well as how their jobs
contribute to the goals of the organisation as a whole, they will work harder towards these
goals. At the same time, the organisation will benefit from the achievement of goals by
increasing its profit. If the PM system of the organisation is tied to rewards, employees
will benefit from their profitable organisation. We will go into detail about rewards in
section 1.4.
yy Administrative actions are more fair and appropriate – if, for instance, the organisa-
tion tied its PM system to promotion or salary adjustments, it will be seen as right and fair
to apply such initiatives, especially if they were part of the agreement at the beginning of
the year. In this case employees will be benefiting from working hard, while the organisa-
tion’s productivity is also improving.
Study all these advantages with your workplace in mind. If you are not employed yet, ask
78
employed relatives or friends if they can identify with them.
1.3 Disadvantages/dangers of poorly implemented

PERFORMANCE MANAGEMENT systems
Having read Sally’s scenario in section 1.1, as well as Merrill Lynch’s in the same section,
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you should be able to spot the difference between well and poorly implemented PM
systems. Your prescribed book describes a few consequences of low quality and poorly
implemented PM systems in section 1.3.
Activity 1.3
(a) Read the scenario in box 1.2. Now, from a list of consequences of poorly implemented
PM systems, pick the ones that impacted directly on this scenario. Substantiate your
choice by highlighting how each impacted on the scenario.
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9 HRM2604/1
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(b) Which ones are more likely to impact indirectly on the scenario? Just list them on
the following lines:
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2Feedback
(a) The disadvantages impacting directly on the scenario:

yy Increased risk of litigation – it is mentioned in the scenario that the female employee
took the matter to the relevant institution for intervention. In South Africa, that institu-
tion would be the Commission for Conciliation, Mediation and Arbitration (CCMA).
yy As a result of this, the organisation wasted time and money by running up and
down, having to pay $1.2 million for emotional distress and economic damages.
yy Further, definitely the relationship between the female employee and her man-
ager was damaged.
These are the three disadvantages that are impacting directly on the scenario.
(b) The disadvantages impacting indirectly on the scenario are
yy increased turnover
yy lowered self-esteem
yy decreased motivation to perform
yy employee burnout and job-dissatisfaction
yy varying and unfair standards and ratings
yy emerging biases
10
In (a) you had to indicate how each impacted on the case study. You should be able to do the
same with the disadvantages you mentioned in (b). Remember, while the disadvantages that
you identified in (b) impacted indirectly on the scenario in box 1.2, they could also impact
directly on another scenario. In other words, what the problem would be in the scenario as a
result of a poorly implemented PM system will depend on the situation at that point in time.
1.4 Reward systems

As we all know, a country’s capital and natural resources used to be regarded as the key
80
determinants of its ability to create wealth. However, capital is a global commodity; Japan
showed the world that natural resources are not a prerequisite for economic performance.
An organisation that has developed its human capital has the competitive edge. Intellec-
tual capital resides in individuals. It therefore follows that if intellectual capital is essential
for an organisation’s performance, the way in which people are managed is the key to
unleashing and utilising this undervalued capacity (Coetzee & Holtzhausen, 2007:115–116).
According to these authors, one of the consistent findings in worldwide surveys on per-
81
formance management is the following:
‘The biggest reason why performance management fails is because there is little
differentiation between levels of performance in terms of rewards.’
82 Let us now put this research finding to the test! Quickly do the following activity:
Activity 1.4
Analyse the performance management of your organisation and comment if it is linked

to any reward system. Are rewards distributed fairly according to your analysis? Substanti-
ate your answer.
Remember, if you are not employed, ask a friend or a relative or any person you know
who might provide the information you need.
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11 HRM2604/1
3Feedback
You work for a good employer if your organisation’s performance management system is linked
to some rewards directed at good performers, especially if these rewards are distributed fairly!
However, in many organisations the link between performance and rewards is not that visible,
that is, some people go to work and do just well enough to avoid being dismissed, and yet they
are still entitled to the same cheque as everyone else, including the outstanding performers!
Employees regard reward and reward-related decisions as subjective statements on their

individual worth relative to others: they communicate very clearly what the organisation or
manager values or considers to be important. As such, they place a value on individuals and have
a tremendous potential impact, positive or negative, on the employee–manager relationship.
Although many factors contribute to the establishment of sound employee–manager relation-

ships, the reward decisions managers make will be a true test of their honesty and integrity.
Activity 1.5
(a) Define the concept of a reward system.
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(b) Differentiate between tangible returns and relational/intangible returns.
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(c) All types of rewards are directly related to PM systems. Do you agree or disagree with
this statement? Substantiate your answer.
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12
(d) Study different types of rewards found in organisations. Now, differentiate between
base pay, cost-of-living adjustments, contingency pay and short-term incentives.
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4Feedback
(a) The definition of a reward system is given clearly in section 1.4. Note that both tangible
and intangible returns are considered as part of employees’ reward.
(b) Tangible rewards can be touched by employees (examples are provided in the prescribed
book) and some of them are regulated by legislation. Intangible rewards cannot be
touched. Instead, they are felt by employees. This means that if these types of rewards
are given to employees, employees may feel satisfied and fulfilled intrinsically (inside).
Examples are given in the prescribed book.
(c) No, not all types of rewards are directly related to PM systems. Employees may receive
some rewards based on how long they have been working for the organisation (senior-
ity) as opposed to performance. You may know of factors other than seniority. In some
organisations, qualifications may also play a role in some employees receiving more
rewards than others. What about your organisation?
(d) I will just highlight the most distinguishing factors of these four types of rewards so that
you do not get confused or so that you do not confuse them.
yy Base pay is the same amount of cash given to all employees performing similar duties
in exchange for work.
yy Cost-of-living adjustments are given to combat the effects of inflation.
yy Contingency pay, also referred to as merit pay, is given in addition to the base pay
based on past performance. Contingency pay always considers the employee’s level of
performance. (We will learn more about this type of pay in study unit 9.)
yy Short-term incentives are temporary in nature and, unlike cost-of-living and contingency
pay, they are not added to the base pay.
These are just a few distinguishing factors. The prescribed book provides interesting examples
of each, which makes them clearer. The factors which I did not embrace in this question are
straightforward and easy to understand. I found these four worthy of some clarification.
1.5 Aims and role of performance management

systems
Performance management is regarded as a critical aspect of organisational performance
83
(Gruman & Saks, 2011). Pulakos (2011) explains that this is because it is the key process
13 HRM2604/1
through which work is accomplished. It should therefore be treated by managers as the
most valuable aspect. The aims and roles discussed in section 1.5 are applicable to most
organisations in South Africa and other countries in the world.
The main aim of a PM system is to improve individual and team performance, based on the
84
principles of measurement, appraisal, action and monitoring. It manifests in very different

forms, depending on whether the aim is to further improve good performance or deal
with underperformance. The prescribed book discusses the six purposes of a PM system.
Activity 1.6
Study the performance management process in figure 2.1 in study unit 2. See if you can
link each stage to the following purposes of performance management:
yy strategic purpose
yy administrative purpose
yy informational purpose
yy developmental purpose
yy organisational maintenance purpose
yy documentational purpose
5Feedback
yy Strategic purpose – this takes place in stage 1 where knowledge of the organisation’s
mission and strategic goals, and knowledge of the job in question are clarified.
yy Administrative purpose – this takes place in stage 4 where the manager assesses whether
the employee is on the right track and displaying the required behaviour, and in stage 5
which involves a meeting between the employee and the manager to review performance.
yy Informational purpose – this takes place in stages 1, 2, 3, 4, 5 and 6.
yy Developmental purpose – this also takes splace in stages 2 and 4. In stage 2 employees
carry out their task which the manager is going to assess in stage 4 to see if they are on
the right track. If not, there is a need for intervention to improve.
yy Organisational maintenance purpose – this takes place in stages 1 and 6 of the PM
process. Since this purpose involves anticipating changes in the external environment so
that it can proactively deal with changes in the future, this is part of strategic planning.
yy Documentational purpose – this takes place in stages 5 and 6 where whatever the
outcome of the employee performance review is recorded (stage 5) and, where necessary,
a new performance contract/agreement is drafted (stage 6).
For you to understand each role well, study them in conjunction with the stages in the PM
system in study unit 2. This way it will be easy for you to find a link.
14
1.6 Characteristics of an ideal performance man-
agement system
In section 1.3 we discussed the disadvantages of poorly implemented PM systems. In this
85
section we will study how PM systems should be implemented in a way that benefits both
the employer and the employee. In other words, in this section we try to answer questions
such as: What does a good PM system look like? What qualities will a good system have?
Activity 1.7
Read the following scenario and answer the question that follow:
It is getting close to the end of the year and Nkwe, the line manager in the production
section of a large manufacturing firm in Gauteng, is preparing documents to start with
employees’ performance reviews. He realises that it is too late for this process and that
the senior management will require reports soon. He is panicking and eventually he de-
cides to outsource this task to a private consulting firm. He knows that it would be very
expensive, but he does not have any choice. He advises the consultants that, during the
performance review meeting, they should pay more attention to the reduction of waste
and the number of units each employee produced. According to Nkwe, these aspects
were very important in the organisation. A number of employees received poor ratings.
Although they had valid explanations why they performed poorly, nobody listened to
them. Their problem was that some nights when they were on a night shift, their ma-
chines would get stuck. They always had to wait a long time for technicians to come in
and fix them during the night.
Employees were also very upset when they discovered that they received different rewards,
despite the same performance review ratings. Some employees who happened to be
favourites of the line manager were not even interviewed. They just received satisfactory
ratings. This inconsistency caused a lot of unhappiness.
Identify the characteristics of an ideal PM system that are absent in Nkwe’s organisation.
Substantiate your answer.
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15 HRM2604/1
6Feedback
The absent characteristics are:

yy Thoroughness – behaviour is not evaluated, only results are evaluated. For example,
only the reduction of waste and units produced are evaluated. Also, some employees
were given ratings even though they were not interviewed.
yy Practicality – outsourcing the performance management function is expensive compared
to Nkwe doing it in-house.
yy Meaningfulness – some employees were rated poorly, despite the fact that factors pre-
venting them from performing well were beyond their control. For example, the breaking
down of machines during the night shift.
yy Validity – both behaviour and results should be measured, not only a single facet of
performance. Facets that were measured in the case study were beyond the employees’
control.
yy Acceptability and fairness – obviously the PM in the scenario lacked these. There was
no two-way communication, as employees could not mention their concerns. As a result,
they will not accept and perceive the system as fair.
yy Openness – meetings should consist of two-way communication. This is not the case in
the scenario. Employees could not raise their concerns.
yy Correctability – there should not be favouritism. This was the case in our scenario, which
resulted in these employees receiving high ratings that they did not deserve, while some
received poor ratings, yet their poor performance was due to factors beyond their control.
yy Standardisation – there is no consistency in ratings in our scenario. Raters were subjec-
tive, being strict to some employees and lenient to their favourites.
yy Ethicality – the raters in the scenario put forward their personal bias during the evalua-
tion process (by having favourites among employees and rating them high).
You could have picked characteristics other than those highlighted here. Remember, you had
to substantiate your answer in more detail. This means that if you chose a specific characteris-
tic, you were able to justify by quoting from the scenario what statement or activity informed
you that this characteristic was missing. Here I provided you with some clues only. However,
if you study these characteristics in more detail, you will find this activity easy and interesting.
1.7 Integrating performance management with other

human resource and development activities
There is a clear link between PM and other human resource management functions. Some
86
links are visible, while others are not. For instance, there is an obvious link between PM
and training, development and compensation, while the link is not so obvious between
PM and workforce planning, recruitment and hiring.
16
Activity 1.8
Briefly explain the relationship between PM and the following human resource activities/
functions:
yy training and development
yy compensation
yy recruitment and hiring
yy workforce planning
yy labour relations
7Feedback
yy Training and development – PM identifies those employees in need of training and

development interventions.
yy Compensation – good performers are identified during performance review and get
rewarded for their outstanding performance.
yy Recruitment and hiring – PM will assist in identifying which skills are needed (through
the process of job analysis) and how many people are needed. These can be used when
recruiting and hiring new staff.
yy Workforce planning – since PM will assist in identifying which skills are needed, this
information will inform how many people having which skills are required in specific
jobs. Developmental plans indicate which initiatives are required in terms of training
and development in preparation for future promotions, as well as what types of skills
and knowledge will be required in the future.
yy Labour relations – even though PM could reveal poor performers, it is still important
for organisations to follow prescriptions in the Labour Relations Act. For instance, such
employees cannot be dismissed without following all procedures. PM enables managers
and staff to communicate and build good relationships.
You may think of as many functions of human resource management as possible and try to
find their relationship with the PM system, but you must be able to justify the relationship.
1.8 Summary
In this study unit you were introduced to PM systems. The term was defined and its
87
origins and evolution were clarified. A PM system is continuous and benefits both the
employer and the employee. Some characteristics have been identified without which
the PM system cannot be successful. Finally, the study unit analysed the link/relationship
between PM and other human resource activities/functions. The following unit will look
deeper into the PM process.
17 HRM2604/1
1Self-assessment questions
Multiple-choice questions
(1) The objectives of the employer and those of employees are often in conflict. The
process of synchronising these sets of objectives is called …
(1) performance appraisal
(2) performance review
(3) performance management
(4) performance execution
(2) The two main components of the performance management definition are …
(1) continuous process and alignment with strategic goals.
(2) alignment with strategic goals and performance assessment.
(3) continuous process and performance review.
(4) alignment with strategic goals and identifying prerequisites.
(3) Which of the following statements regarding performance management are correct?
(a) A performance management system has an aim and purpose of both a strategic
and an administrative nature in the organisation.
(b) Performance management is more than just evaluating employees’ performance.
(c) Employees’ motivation to perform as well as their self-esteem are increased
through the process of performance management.
(d) Performance management systems serve as important “feeders” to other human
resource and development activities.
Choose the correct option:

(1) ab
(2) acd
(3) bcd
(4) abcd
Essay-type questions
(1) Performance management is not performance appraisal. Do you agree or disagree
with this statement? Substantiate your answer.
(2) Find a link between performance management and the following administrative
decisions in the organisation:
yy salary adjustments
yy promotions
yy employee retention or termination
yy recognition of superior individual performance
yy identification of poor performers
yy lay-offs
yy merit increases
(3) The documentational role of performance management is important should there
be a court case. Why?
(4) Discuss why it is important to link the performance management system with rewards.
(5) Discuss the disadvantages/dangers of poorly implemented performance manage-
ment systems.
(6) Briefly explain the aims and roles of a performance management system.
18
2Guidelines for answering self-assessment questions
Have you attempted to answer these questions before look-

88
ing at the answers?
Self-assessment means that you need to answer the questions on your own first
and then evaluate your answers using the guidelines provided. Do not read
the answers if you have not yet attempted to answer the questions yourself!
8 Feedback on multiple-choice questions
Question Answer Reference
1 Option 3 Refer to the introduction section in this study

unit.
2 Option 1 Refer to section 1.2 in the prescribed book.
3 Option 4 Refer to sections 1.1, 1.2, 1.5, 1.6 and 1.7 in the
prescribed book.
9 Feedback on essay-type questions
You could have structured your answers in the following way:

(1) Study the last part of the feedback to activity 1.1, as well as table 1.1. The distinction be-
tween performance management and performance appraisal is made clear in more detail.
(2) Salary adjustments, promotions, recognition of superior individual performance, lay-offs
and merit increases may occur as a result of performance management. It is only through
the PM system that the performance of employees can be traced in order to reward
good performers and either demote or terminate poor performers. (However, the correct
procedure should be followed here. This will be discussed in more detail in study unit 9.)
Try to recall if you have ever experienced any of these in your workplace. If you are not
employed or have never been employed before, consult a friend or a relative. Was it fair,
reliable, valid, consistent, etc. If it was not, what actions did you take?
Just think how you would feel after your annual performance review, in which you
are complimented for the good work you did, if you receive a high rating but no accom-
panying reward. You then speak to your close colleague and he mentions that he was
also complimented for good work and received a good rating. Surprisingly, he further
tells you that his salary was adjusted accordingly. You get furious and confronts your
manager to find out what is missing in your case for you not to have received an adjust-
ment on your salary. At first she ignores you but eventually she responds: “You know what,
19 HRM2604/1
salary matters are confidential, so I would like to treat them accordingly. You were not
supposed to discuss such issues with your ‘so-called close colleague’ in the first place!”
Obviously such a situation would make you feel upset and demotivated!
(3) If your organisation does not keep records and does not have a policy clearly stating
when a salary adjustment is applicable, it will be in trouble should you decide to take
this matter to the CCMA as an unfair labour practice.
This emphasises the importance of the documentation role played by performance man-
agement. If the organisation can show proof in its documents that there was no unfair
labour practice in this matter, it will be off the hook! For example, perhaps the salary
adjustment in this organisation is based not solely on performance ratings, but also on
years of experience and how long an employee has been with the organisation. In such
a case the organisation will be able to justify its decision, but this should be documented!
(4) Employees regard rewards and reward-related decisions as subjective statements on
their individual worth relative to others. Rewards communicate clearly what the or-
ganisation or manager values or considers to be important. As such, they place a value
on individuals and have a tremendous potential impact, positive or negative, on the
employee–manager relationship. Employees find rewards to be a good way for the
manager to say “thank you for the hard work”. In other words, they reinforce the good
performance. Employees will find it to be unfair to work hard while they will receive the
same pay as colleagues who underperform. Good performers will want more rewards
for their outstanding performance.
Study section 1.4 in the prescribed book, in conjunction with section 1.1 in the study guide.
(5) Study these disadvantages in section 1.3 in the prescribed book. Make sure that you can
explain how each disadvantage occurs in the PM system. For example, let us take the
disadvantage “increased turnover”. This happens when employees find their PM system
not to be fair and consistent, with perceived biases and favouritism. This may result in
them leaving the organisation. Let us take the disadvantage “damaged relationships” as
another example. This happens when employees feel that their ratings were not accurate,
that is, they were full of biases. In such cases they will not fully cooperate with the manager
and as a result, there will always be tension among managers and their subordinates.
(6) Study these aims and roles in section 1.1.5 in the prescribed book. Make sure that you
can explain how the PM system fulfils each role. Let me provide you with two examples
for your convenience. Firstly, let us take the aim/role “the definition of role and criteria
are clarified”. For the organisation to be able to rate employees as poor, average or out-
standing performers, managers should first explain to employees what is expected of
them (results and behaviour), as well as how they will be assessed (criteria to be used for
assessment) to determine whether they met the expectation (we will deal with this aspect
in the subsequent study units). Secondly, let us look at the aim/role “organisational goals
are made clear”. For employees to contribute to the organisational goals, these goals
must be explained to employees at the beginning of the performance management cycle
(we will learn more about this in the subsequent study units). This will ensure that the unit
and individual performance are in line with the organisational goals. From these two
examples you should be able to substantiate how PM fulfils the remaining aims/roles.
Please do not proceed to the next study unit before you have mastered all the activi-
90
ties in this study unit, the self-assessment questions, as well as the learning outcomes
at the beginning of this study unit!
20
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21 HRM2604/1
Study unit 2
Performance management process
Contents
91Learning outcomes
92Key concepts
932.1 Prerequisites
942.2 Performance planning
952.3 Performance execution
962.4 Performance assessment
972.5 Performance review
982.6 Performance renewal and recontracting
992.7 Summary
Self-assessment questions
100
Learning outcomes

yy pply the stages of the performance management (PM) process in the organisational
A
context step by step.
yy Explain the interrelatedness of the stages in the performance management process.
yy Justify the importance of implementing all the stages of PM.
yy Discuss the consequences of skipping any stage in the PM process.
Key concepts
yy prerequisites
yy performance planning
yy performance execution
yy performance assessment
yy performance review
yy performance renewal and recontracting
22
Study the performance management process in figure 2.1 in the prescribed book.
As you can see from figure 2.1, performance management (PM) is an ongoing process. It
101
does not take place just once a year. It is a continuous process consisting of several com-
ponents. The arrows in-between the stages simply highlight that each stage should
follow the previous one and after the last stage, the process starts all over again. Study
each stage thoroughly and do the following activity:
Activity 2.1
Why do we have an arrow from the sixth stage (performance renewal and recontracting)
pointing straight back to the first stage (prerequisites stage) and not to any other stage?
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10 Feedback
Because PM is an ongoing process (continuous), after the last stage the PM process starts all
over again at stage 1. There is no way that PM can start at the performance review or perfor-
mance execution stage! However, we must acknowledge the fact that in some organisations
(maybe many!), PM starts and ends at any stage.
Therefore you need to know why the stages should follow one another in the order shown in
figure 2.1. This is very important!
We are going to unpack the stages in this process from the next section. These stages
102
are discussed in more detail in sections 2.1 to 2.6 in the prescribed book.
2.1 Prerequisites
As you have noticed from study unit 1, this is the first stage of performance manage-
103
ment. The two important prerequisites for a performance management system to be

implemented are
1. knowledge of the organisation’s mission and strategic goals
2. knowledge of the job in question
104 We will now look at each of these prerequisites in more detail.
23 HRM2604/1
yy Knowledge of the organisation’s mission and strategic goals
Just knowing the organisational plan is not enough! The mere presence of a strategic
105
plan does not guarantee that the information will be used effectively as part of the per-
formance management system.
In fact, countless organisations spend thousands of hours creating strategic plans that lead
106
to no tangible actions. These organisations spend too much time and effort crafting their
mission and vision statements without any understanding of concrete follow-up actions.
To ensure that these strategic goals cascade down the organisation and lead to concrete
actions, a conscious effort must be made to link them with individual performance. We
are going to learn more about this in study unit 3.
Basically, a link should cascade from the organisation’s strategic plans down to unit
107
(departmental) strategic plans, job descriptions and individual and team performance.
yy Knowledge of the job in question

Knowledge about what a job entails is obtained by means of the process of job analysis.
108
Does this concept ring a bell? Probably yes! You came across this concept in previous
human resource management modules or courses. During this process, the required
duties for a particular job are clarified, as well as the knowledge, skills and abilities (KSA)
required for the particular job.
Activity 2.2
(a) Why is it important for the organisation to explain its goals to employees?
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) Briefly explain the relationship between job analysis and job description.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) Why are job descriptions regarded as a key prerequisite for any performance man-
agement system?
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
11 Feedback
(a) Because the business unit’s goals should be in line with the organisation’s strategic goals
and individual goals. Therefore, if the strategic goals are clarified, it also becomes clear
for the business’s units and individuals of what needs to be done in order to help the
organisation get there.
(b) Through job analysis we obtain information regarding the tasks of a particular job and
the knowledge, skills and abilities required to perform this job. This information will then
be documented in a job description.
(c) Because they provide the criteria (ie yardsticks) that will be used in measuring performance.
Study different methods used to conduct job analysis in the last paragraphs of section
109
2.1 in the prescribed book. These methods are observation, job-related questionnaires
and interviews. Make sure that you study how each takes place as well as each one’s
advantages and disadvantages.
110 We are now going to look at the second stage of the PM process, performance planning.
2.2 Performance planning
During this stage, the manager and the employee meet to agree on what is expected of
111
the employee. Basically at this stage it is clarified what behaviour the employees should
display and what results are expected of each employee. You should understand that in
some situations it becomes important to measure behaviour rather than results, especially
where the employees’ do not have full control over their performance. For instance, in
the case of customer service, employees’ behaviour may be more important than actual
results.
You should also study what a consideration of results needs to include. Study the example
112
of the university professor’s job in section 2.2.1. This example will provide you with a
thorough knowledge of when to measure results, when to measure behaviour and when
to measure both. When behaviour and results are agreed upon, the manager and the
employee will then compile a developmental plan together. We will not cover this topic
here, as it is discussed in more detail in study unit 8.
25 HRM2604/1
Activity 2.3
(a) Provide examples of accountability for an administrative officer.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) Analyse the evaluation of the salesperson in the example provided in section 2.2.2 of
the prescribed book and suggest what needs to be done to ensure a fair performance
review of the salesperson in question.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12Feedback
(a) Examples of accountability for an administrative role would be to

yy provide accurate, organised and efficient administrative support
yy respond promptly and thoroughly to requests for information
(b) It will be unfair to review the job of a salesperson based only on the sales figures (results).
In addition to sales figures, behavioural criteria such as communication skills and product
knowledge should be reviewed. In other words, because the results (sales figures) are be-
yond the salesperson’s control, it is not fair if behaviour is ignored. In this type of job we
therefore need to try to evaluate how the job was done, rather than what was produced.
2.3 Performance execution
This is what can be referred to as a “hands-on” stage. Employees will be engaged in the
113
actual work, striving to display the required behaviour towards the achievement of the
expected results. The prescribed book clearly discusses factors that must be present dur-
ing this stage. Note that in this stage, there is a two-way communication process whereby
the manager should provide feedback and coaching, while employees should commu-
26
nicate openly about areas where they encounter problems that could impact negatively
on their performance.
Activity 2.4
Justify the following statements:
yy Commitment to goal achievement is a responsibility of the employee during the

performance execution stage.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
yy Resources are a responsibility of the manager during the performance execution stage.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13 Feedback
yy Commitment to goal achievement is a responsibility of the employee during the

performance execution stage.
−− Employees should be involved when organisational goals are set.
−− People tend to work hard if they know exactly what it is to be achieved.
−− They should be clarified on how their contributions will lead to the achievement of
the organisational goals.
−− This can be done by linking their job descriptions to these organisational goals.
yy Resources are a responsibility of the manager during the performance execution

stage.
−− Managers should make resources available in order for employees to perform properly.
−− They should offer employees opportunities in line with their development plans.
Now do the same with other factors, from both the manager’s and the employee’s perspective,
114
and see if you can justify each responsibility.
27 HRM2604/1
2.4 Performance assessment
This stage in many organisations is called mid-year reviews. Basically the manager will
115
be assessing the extent to which employees are on track towards achieving the required
results or whether they are displaying the expected behaviour.
Activity 2.5
Think of the situation where you have been informed about the goals of the organisation,
the goals of the unit or department as well as your job description. You now know exactly
how your contribution will help your department and organisation to achieve these goals.
You aim very high to exceed the expectations, if possible. You work hard in pursuit of these
goals. However, you are not sure if your hard work will indeed lead you towards the achieve-
ment of these goals. You are wondering if you are on the right track. Nobody comes to you
to assess your performance and inform you whether your performance is indeed helping
this organisation in achieving its goals. You are also not sure if you display the required
behaviour! The worst part is that you submitted your developmental plan which indicates
what skills and knowledge you will need to enhance your performance, but there is no one
following up to make sure that the development is taking place. What do you do?
14 Feedback
What is lacking in this situation is the performance assessment activity whereby the manager
and the employee sit down to discuss the progress in working towards set organisational goals.
In the scenario above, you needed your manager to sit down with you to inform you whether
you were on the right track and to encourage you to keep up the good performance! In case
you were experiencing some problems that seemed to somehow hinder your performance
and you wanted to bring these to the attention of your manager, the performance assessment
stage would be the right platform to address the situation.
2.5 Performance review

This stage is well known as the performance appraisal stage. It is hated by both manag-
116
ers and employees. Managers are uncomfortable about this stage, especially when they
have to provide feedback on poor performance. Employees always regard this stage as
one in which the manager wants to get back at them. They always perceive this stage
as subjective and biased. However, if the PM of the organisation is done properly, that is,
all stages in this process are applied, there should not be any reason for the discomfort.
117 We will learn more about performance review/appraisal in study unit 5.
28
2.6 Performance renewal and recontracting
This stage involves reviewing organisational goals in preparation for the next review
118
cycle. This stage acknowledges that in some instances goals are not reached, not because
employees do not make the effort, but because goals may not be practically achievable.
Activity 2.6
The performance renewal and recontracting stage uses the insights and information
gained from the other stages. Provide the kind of information to be obtained from other
stages and justify the use of each in the performance renewal and recontracting stage.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15Feedback
yy Prerequisites – What are the goals of the organisation that were set at the beginning of the
review cycle? Are the unit’s or departmental goals in line with these goals? Are they clear?
How are the individuals’ job descriptions linked to these goals? Where can we improve?
yy Performance planning – the behaviour, results against specific standards as well as
development plans will be reviewed during this stage. It will indicate whether improve-
ment is required from this perspective, for example if results were achieved but did not
reach the required standard. The problems that could have led to this situation should
be discussed and addressed to ensure that it does not affect performance again in the
next performance review cycle.
yy Performance execution – What employees reported as an obstacle to achieve their
targeted performance will be reviewed during this stage. Managers will rely on the in-
formation that they document during the execution stage to improve performance in
the next review cycle.
yy Performance assessment – Here the information to be focused on depends on the kind
of assessment for each employee in this stage. If they seem to be on the right track, they
29 HRM2604/1
will be encouraged to keep up the good work. If they do not reach the required standard,
they will be given suggestions on how to improve in the next cycle.
yy Performance review – Based on the results of this stage, employees can be rewarded
for a good job or be advised to undergo some training to help them to improve their
future performance.
2.7 Summary
From the above activity the interdependence of the stages of the performance manage-
119
ment process should be clearer. It looks like one stage is meaningless without the others.
The sensitivity and criticality of the fifth stage, is evident as Rao (2008:3) puts it:
“[Performance review] has caused a few people to get promoted, some of them unde-
servingly, a few others to leave their jobs, and yet a few others to walk into office every
day with low interest and satisfaction and carry on with their jobs.”
120 We shall look deeper into this in the next study unit.
(1) Which one of the following statements is correct?
(a) The first stage in the performance management process is performance planning.
(b) The performance prerequisites stage involves the identification of results and
the behaviour of employees.
(c) Only employees have some responsibilities during the performance execution
stage.
(d) During performance review, employees receive feedback on their performance.
(2) Areas that need improvement and setting goals to be achieved in each area should
be included in the …
(a) behaviour analysis.
(b) results assessment.
(c) development plan.
(d) performance standards.
(3) Which of the following statements are correct?

(a) Job analysis is a prerequisite for any performance management.
(b) There should always be a link between the organisation’s strategic plans, the
unit’s or departmental strategic plans and individual and team performance.
(c) It is the responsibility of managers to observe and document performance on
a daily basis.
(d) The performance renewal and recontracting stage is identical to the performance
review stage.

(1) ab
(2) bcd
(3) ad
(4) abc
30
(1) Illustrate the performance management process using a diagram and discuss each
stage involved in more detail.
(2) The stages in the performance management process are interrelated. Elaborate on
this statement.
(3) Defend the inclusion of all these stages in the performance management process by
explaining the implication of skipping one of these stages.
(4) Identify and describe the primary responsibilities of employees during the perfor-
mance execution stage.
(5) List the three required aspects that a developmental plan should include.

121
ing at the answers?
122
1 Option 4 Refer to sections 2.1, 2.3 and 2.6 in the prescribed

book.
2 Option 3 Refer to section 2.2.3 in the prescribed book.
3 Option 4 Refer to figure 2.1 in the prescribed book.
(1) Refer to sections 2.1 to 2.6. Make sure that you put these stages in a sequential order. You
must keep in mind that a process follows a certain sequence. For instance, it would not
make sense to have performance planning before we clarify prerequisites. How could
employees agree to contribute to organisational goals if they are not told about them
first? Etc.
You should have referred to the different stages listed from sections 2.1 to 2.6. Prove that
you did not just memorise these steps by discussing each of them by giving practical
examples. You will not be able to do this if you do not understand the theory behind
each stage.
31 HRM2604/1
Basically you need to do the following:
yy First study these stages step by step.
yy Discuss what each of them involves.
yy Make sure that you are able to put them in a sequential order.
(2) Follow the same three steps as for answering question 1. To make you see the interrelated-
ness of these stages, remove one or two and try to think what is likely to happen. Let us
assume that you are the manager and you choose to remove the performance planning
stage from this process in your organisation. What is likely to happen?
First ask yourself the following questions: How would employees know the exact results
expected from them? On what standard should these results be? How would you as
the manager know which specific skills could help improve the performance of these
employees?
Can you see that ignoring this stage will hinder performance in the organisation as a
whole?
Now try to remove other stages and see if you can notice the implications of each action.
As you can see, you only find negative implications for both the organisation and em-
ployees. This is a clear indication of the interrelatedness of the stages in the performance
management process!
(3) With this question I just wanted to introduce to you another version of question 2 above.
There are many ways to phrase questions. But there is only one way of mastering them,
which is to study with understanding and be able to provide examples where necessary.
So, basically, this question can be answered by following the guidelines I provided for
question 2.
(4) The primary responsibilities of employees during the performance execution stage are
clearly discussed in section 2.3 of the prescribed book. Also study activity 2.6.
(5) At the very least, a developmental plan should include
yy areas that need improvement
yy goals to be achieved in each area
yy both results and behaviour
Make sure that you can clearly explain what the purpose of including all these aspects is. Study
stages 1 to 6 of the performance management process in figure 2.1. Each stage plays a role
in compiling a developmental plan.
123
32
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33 HRM2604/1
Study unit 3
Performance management and strategic planning
Contents
124Learning outcomes
125Key concepts
1263.1 Definition and purposes of strategic planning
1273.2 The process of linking performance management to the strategic plan
1283.3 Building support
1293.4 Summary
Learning outcomes

yy istinguish between the concepts of mission, vision, goals and strategies of the
D
organisation.
yy Discuss the relationship between the mission, vision, goals and strategies of the
organisation.
yy Explain the process of linking performance management to the strategic plan.
yy Justify the need to cascade organisational goals down to the unit as well as to team
and individual levels.
yy Explain the importance of communicating the implementation of a performance
management system to the organisation as a whole.
Key concepts
yy strategic planning
yy mission
yy vision
yy goals
yy strategies
34
3.1 Definition and purposes of strategic planning
Organisations use strategic planning to develop goals and comprehensive plans for
131
achieving these goals. This is done at the top management level of the organisation. As
you have learnt in the previous study unit, it is important that the top management share
these goals and plans with employees at all levels in the organisation. The main reason for
this is to ensure that everyone in the organisation knows how their contribution supports
the performance of the organisation as a whole. You also learnt about the importance of
explaining the organisational goals to all employees. If you cannot remember the stage
in which this takes place, please revise study unit 2. It is important to approach this study
unit with a sound knowledge of all the stages of PM.
3.2 The process of linking performance management

to the strategic plan
This process is clearly depicted in figure 3.2 in the prescribed book. Also study the Key
132
Bank of Utah for an overview of how the whole process of alignment takes place. The
scenario provides a good example of the alignment process. Basically the organisational
goals are set and plans are made at the strategic level, cascaded down to the unit level,
further cascaded down to the job description of each individual and then compared
to the actual performance of individuals and teams, thereby determining whether the
organisational goals have been achieved.
Study sections 3.1 to 3.2.1.5 in the prescribed book.
Activity 3.1
(a) Match the strategic planning purposes in column A with the concepts in column B.
Note that some of the concepts in column B are applicable to more than one strategic
purpose.
Column A Column B
1. Helps define the organisation’s identity Mission
2. Helps organisations to prepare for the future Vision
3. Enhances the ability to adapt to environmental Goals

change
4. Provides focus and allows for better allocation of Strategies

resources
35 HRM2604/1
5. Produces an organisational culture of Environmental
cooperation analysis
6. Allows for the consideration of new options and

opportunities
7. Provides employees with information to direct

daily activities
(b) Briefly justify each match you provided in (a).
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) Explain the relationship between the following concepts:

yy mission statement
yy vision statement
yy goals
yy strategies
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36
18 Feedback
(a)
Column A Column B
1. Helps define the organisation’s identity Mission
2. Helps organisations to prepare for the future Vision
3. Enhances the ability to adapt to environmental change Environmental
analysis
4. Provides focus and allows for better allocation of Goals
resources
5. Produces an organisational culture of cooperation Goals
6. Allows for the consideration of new options and Strategies
opportunities
7. Provides employees with information to direct daily Goals
activities
(b) You should have structured your answer in the following way:
yy Purpose 1 is matched with the mission statement. The mission statement clarifies
who the organisation is and what it does. In other words, the identity, purpose and scope
of the organisation are clarified.
yy Purpose 2 is matched with the vision statement, because the vision statement expresses
what the organisation wishes to be in the future. In other words, it highlights to everyone
involved with the organisation what the future aspirations of the organisation are.
yy Purpose 3 is matched with environmental analysis, since it aims at informing the
organisation about anything happening in both the external and internal environment
to facilitate decisionmaking on how to adapt should it become necessary.
yy Purpose 4 is matched with the concept of goals because goals tell people in the
organisation what exactly they must achieve (in the medium or long term). Also, they
clarify tangible targets to be met daily, weekly or monthly, as well as how to achieve
them using which resources.
yy Purpose 5 is also matched with goals since they clarify tangible targets to be met, as
well as how to achieve them. By providing the targets each employee needs to meet, a
culture of performance and cooperation is encouraged.
yy Purpose 6 is matched with strategies since it informs the organisation about oppor-
tunities in the environment (both internal and external) and gives advice on what new
approaches to follow in order to pursue organisational goals and plans.
yy Purpose 7 is also matched with goals because by specifying the targets each employee
needs to meet, they are likely to work towards meeting them.
(c) Because a mission statement provides clarity on why the organisation exists, its scope,
what products it will supply to the market and the targeted customer, it forms the basis
for the development of a vision statement. In other words, for the vision statement to be
formulated, it needs the information provided in the mission statement. Because mission
and vision statements are broad in nature, the organisation needs to formulate short-,
medium- and long-term goals in line with its mission and vision statements. Because
37 HRM2604/1
goals are more measurable, specific, practical and realistic, they provide clear guidance
towards the envisioned organisational future. Strategies indicate the way the vision,
mission and goals can be achieved. They provide a description and a game plan, as well
as the procedures to reach the set goals.
If you found this activity challenging, please do not move on to the next sections. First
133
study the relevant sections again.
Study sections 3.2.2 to 3.2.4 in the prescribed book.
You need to study these sections in conjunction with the Key Bank of Utah scenario in sec-
134
tion 3.2. Employees’ job descriptions should be aligned with the mission, vision and goals
of the organisation and the unit. The PM system should also follow the same alignment.
3.3 Building support

Owing to the scarcity of resources and the politics as a result of resource allocation in
135
organisations, every system must benefit the organisation in the long run. If this is not
the case, such systems are likely to be rejected by the top management. For the PM sys-
tem to be successful, it should involve people from the very beginning. If people are not
involved in this process, they may resist its implementation and not support the system
at all. Note that for the PM system implementation to succeed, not only management
should be convinced, but all participants should understand their roles in the system.
3.4 Summary
This study unit focused on how the organisation’s mission and vision should be cascaded
136
down to unit level, as well as to the individual and team levels. We also learnt about the role
of job descriptions in this process, as well as the importance of involving all participants
in the performance management process. Please do not move on to the next study unit
if you have not mastered all the learning outcomes for this study unit.
(1) Which of the following are purposes of strategic planning?
(a) Helps define the organisation’s profitability.
(b) Helps organisations to anticipate an economic downturn.
(c) Enhances the ability to adapt to environmental changes.
(d) Provides employees with information to direct daily activities.

(1) abc
(2) bcd
(3) cd
(4) bd
38
(2) An environmental analysis is required when compiling a strategic plan. The process
of analysing the external environment in relation to the internal environment is
referred to as …
(1) gap analysis
(2) opportunities analysis
(3) threats analysis
(4) weaknesses analysis

(a) Economic and technological factors are common factors affecting the internal
environment of the organisation.
(b) An examination of the external environment involves a consideration of op-
portunities and threats.
(c) Why does the organisation exist? This question is answered in the mission
statement.
(d) Performance management is likely to be successful if it is put in the hands of
top management.

(1) bcd
(2) ad
(3) abcd
(4) bc
(1) List the purposes of strategic planning.
(2) Briefly explain what is meant by cascading down the organisational goals.
(3) Briefly explain the role of job analysis in the process of performance management.
(4) Explain the internal and external factors that should be considered during strategic
planning.
(5) Discuss the importance of analysing the organisation’s internal and external environ-
ments for the success of the performance management system.

137
ing at the answers?
138
139
39 HRM2604/1
19Feedback on multiple-choice questions
(1) The purposes of strategic planning are summarised as follows:

yy It helps to define the organisation’s identity
yy It helps the organisation to prepare for the future
yy It enhances the ability to adapt to environmental changes
yy It provides focus and allows for better allocation of resources
yy It produces an organisational culture of cooperation
yy It provides employees with information to direct daily activities
Make sure that you understand how the strategic planning fulfils all these purposes.
Study section 3.1 for guidelines.
(2) Normally organisational goals are set at the top management level. However, employ-
ees from the different business units/departments are the people who ensure that the
organisation achieves these goals. Therefore, the business unit/departmental goals
should be in line with the goals of the organisation as a whole. Further, job descriptions
for each individual should be linked to the unit/departmental goals. This will clarify the
contribution of each individual or team to the achievement of organisational goals.
(3) You first have to define the process of job analysis and then proceed to explain its role in
the PM system. You should structure your answer as follows:
Job analysis refers to the process of determining the key components of a particular job,
including all activities, tasks, products and processes.
We can align the goals of the organisation and department with those of individuals only
by having a thorough knowledge of the different jobs in the organisation. We can gain
this knowledge by conducting a job analysis and then develop job descriptions that are
in line with the organisational and departmental goals. Employees will be able to carry
out their duties clearly knowing what impact their contributions have on the success of
the organisation as a whole, which in return will make it easier for managers to evaluate
or measure their performance.
(4) These factors are clearly discussed in section 3.2.1.1 in the prescribed book and they are
economic, political/legal, social and technological factors and competitors, customers
and suppliers. This section also provides you with questions to be asked when analysing
these factors. Make sure that you understand how each factor impacts on the organisa-
tion’s strategic planning.
(5) Study the feedback provided for question 4. Note that it will be easy for you to under-
stand the impact of the external factors on performance management if you know
40
their impact on the strategic planning of the organisation as a whole. For instance, if
economic growth is low, the country will fail to create more jobs (economic factor). Or if
the minimum wage set for different categories of employees is set very low, people’s buy-
ing power will decrease. As a result, they will not buy the products or services offered by
the organisation. This will affect the performance of employees such as salespeople who
may not be able to reach their sales targets. We will learn more about solving problems
such as these in the next study unit.
140
41 HRM2604/1
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42
Study unit 4
Defining performance and choosing a measurement
approach
Contents
142Key concepts
1434.1 Defining performance
1444.2 Determinants of performance and factors affecting them
1454.3 Performance dimensions
1464.4 Approaches to measuring performance
1474.5 Summary
Learning outcomes

yy Define what performance is and what it is not.
yy Explain the determinants of performance.
yy Discuss factors influencing the determinants of performance.
yy Justify why employees have to demonstrate both task and contextual performance
behaviours.
yy Distinguish between the different ways of measuring employee performance.
Key concepts
yy task behaviour
yy contextual behaviour
yy declarative knowledge
yy procedural knowledge
yy motivation
yy trait approach
yy behaviour approach
yy result approach
43 HRM2604/1
4.1 Defining performance
Have you ever tried to answer the questions: What is performance? Is it the same concept
149
as performance management? Section 4.1 answers these questions. Performance refers

only to the behaviour of an employee performing activities, not to the outcome or results
of the activities. However, performance management systems will consider behaviour as
well as the results of the activities. Remember, these are the same behaviours and results
that were agreed upon in stage 2 of the performance management process.
Activity 4.1
Briefly explain the “evaluative and multidimensional” nature of behaviour that can be
labelled as performance.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21Feedback
The evaluative nature of behaviour labelled as performance means that it can always be judged
as positive, neutral or negative. This judgement is always based on whether the behaviour
displayed is in line with what was agreed upon in stage 2 (see study unit 2) and whether the
behaviour is in line with the required behaviour towards the achievement of the organisational
mission, vision and goals (see study unit 3).
The multidimensional nature of behaviour means that when evaluating behaviour, we may
not stick to only one specific behaviour and make a judgement. Some employees may not
directly reflect the required behaviour, but other behaviour which may lead to the achievement
of organisational goals is implied in their activities. The prescribed book provides an example
of such a scenario. Study this example and see if you can come up with similar scenarios.
Think of Obed, a truck driver who works for a transport business. He is not punctual and always
arrives late with customers’ goods. However, even though the customers reported this to the
employer, the same customers always ask the employer to send Obed to deliver. When the
employer asked why they still want him even if he is always late with their goods, they replied:
“Although your driver is always late, he saves us a lot of money. He offers to unload all the goods
from the truck himself, so that we don’t have to hire temporary people to unload our goods.”
44
As you can see from the scenario above, Obed did not display one required behaviour, but he
was still going the extra mile to satisfy the organisation’s customers.
4.2 Determinants of performance and factors af-

fecting them
Determinants of performance refer to aspects that play a role to ensure that the required
150
and expected performance takes place. We cannot expect recently appointed employees
to be high performers in the next performance review cycle without taking any initiative
to make them become high performers. Basically, employees must be equipped with the
knowledge and motivation to perform at a specific level. The formula for determining
performance is as follows:
151 Performance = Declarative knowledge × Procedural knowledge × Motivation
This means that for performance to take place, all these factors need to be present in
152
employees. For instance, if employee X possesses a degree and has some previous work
experience in managing conflict in a team, we cannot assume that this employee will
always perform as required. Knowledge does not automatically results in required per-
formance. This employee must be motivated to perform as required too. In a nutshell,
if any of the determinants of performance has a value of 0, then performance also has
the value of zero.
Depending on which determinant is missing, the employer should find a way to address
153
the situation. The first step is to determine the source of poor performance and address
it accordingly. For instance, employee X in the scenario above may not have the motiva-
tion to perform and, as a result, will perform poorly. Should the employer send such an
employee for training in Cape Town or Polokwane? No, training is not the solution here.
Employees should inform the employer about their lack of motivation. Note that reasons
for employees’ poor performance could be the employees themselves, human resource
practices or the environment.
Activity 4.2
(a) Performance = Declarative knowledge × Procedural knowledge – Motivation

Is this formula correct? Why?
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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45 HRM2604/1
(b) Suggest any mechanism to address a lack of declarative knowledge, procedural
knowledge and motivation in an employee.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Feedback
22
(a) The formula is incorrect. There will be no performance if one of the determinants is lacking.
The formula indicates that the motivation is 0. In this case, performance should also be 0.
(b) In addressing declarative knowledge, the employer considers training interventions that
will equip employees with skills and the know-how to perform their duties as required.
After these employees have acquired the necessary skills and know-how, they should be
given the opportunity to practise these to get hands-on experience of what they have
learnt during their training.
4.3 Performance dimensions

We learnt about the two characteristics of behaviour in section 4.1. This section pro-
154
ceeds to distinguish between two types of performance, namely task and contextual
performance. Do you still remember the evaluative nature of performance? Remember,
performance management systems should evaluate both behaviour and results when
measuring employee performance. Further, the system should also take into account the
two dimensions of performance, namely task and contextual performance. Task perfor-
mance involves how well an employee performs compared to the job description. This
takes us to section 4.2 where the determinants of performance were introduced. We may
say an employee who is rated high on task performance possesses all determinants of
performance and is expected to perform well. But what if the employee does not display
contextual performance behaviour? Do you think this employee should still receive a
high rating during performance review? No. Globalisation and intense competition force
organisations to encourage employees to also pay attention to positive contextual per-
formance. Think of Thato, a cashier at a huge retailer, who is fast and managing queues
very well. But Thato always steals money from the till point of a colleague, Joni, when he
is not around. Of course Joni will be held accountable for the shortage at the end of the
day and will even have to pay it in. Employer-employee relations will be damaged, but
the organisation’s profit will also be at stake.
46
It is therefore important to encourage positive contextual performance if an organisa-
155
tion wants to sustain a competitive advantage. In a nutshell, employees should display

both task performance (possess skills and the ability to carry out their daily tasks) and
contextual performance (team spirit, motivation to go the extra mile). Task performance
can be addressed through training and mentoring, but it is difficult to address contex-
tual performance, since it has to do with people’s personalities. Can one’s personality be
changed? You be the judge!
Activity 4.3
What is the main distinguishing factor between task and contextual performance?
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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23Feedback
Task performance is learnt (skills and knowledge), while contextual performance has to do
more with personality. (See several examples of each in section 4.3 of the prescribed book.)
4.4 Approaches to measuring performance

Look at figure 4 in the prescribed book. This figure puts job performance into context. It
156
also highlights that for results to be achieved, the individual or team is expected to have
certain traits to enable them to demonstrate specific behaviour in a specific work situa-
tion. Therefore, different approaches of measuring performance should be considered
to measure performance. There are circumstances that require a specific approach of
measuring performance to such an extent that if this be ignored, employees may perceive
their performance review as unfair.
47 HRM2604/1
Activity 4.4
(a) (Give two reasons why the trait approach to measuring performance is perceived as
unfair by employees.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) Identify the main distinguishing factor of the trait, behaviour and result approaches
to employee performance.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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(c) Give an example of the danger of focusing on measuring results while ignoring
behaviours.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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24Feedback
(a) Firstly, traits are not easy to change, no matter how hard an employee tries. Secondly,
there is no direct link between the traits an employee possesses and job performance.
You could be motivated and determined, but not have the required abilities, skills, experi-
ence to perform (in other words, this employee could still lack declarative and procedural
knowledge, task performance, as well as contextual performance).
(b) The traits approach ignores the outcome or results produced. It focuses only on individual
traits such as interpersonal skills, analytical skills, problem-solving skills and intelligence.
The behavioural approach measures how the job was done and ignores the results ob-
tained. The results approach focuses on measuring what has been achieved and ignores
how these results were obtained.
(c) Consider the following scenario:
Tibane is a salesperson at Tau Enterprises. She exceeds the sales target every month and
as a result, she receives a large commission at the end of the month. Everybody admires
her, but doesn’t know how she achieves the high sales. It was discovered eventually
that she was using a misleading advertisement telling potential customers in brochures
that if they buy one product, they will receive another product for free, which will be
48
sent through registered mail. When these buyers enquired about their pending goods
after a while, they found that the organisation knew nothing about them. The buyers
then reported the organisation to the Consumer Commission. The entire organisation
is in hot water because of only one person whose behaviour in obtaining outstanding
results was ignored.
In the scenario above, if the salesperson’s behaviour was managed well (ie how these high
sales figures were achieved was also evaluated), this situation could have been avoided.
4.5 Summary
In this study unit we learnt what performance is and what it is not. The study unit also
157
highlights that there are three determinants of performance that will result in no perfor-
mance or poor performance if one of them is absent. Further, employees’ performance
is affected by individuals themselves, human resource practices as well as the work
environment. Three approaches of measuring employee performance were introduced,
as well as the circumstances in which each can be applied. The next study unit provides
guidelines on how to apply the behaviour and result approaches of measuring employee
performance. If you have not mastered the learning outcomes of this study unit, please
study them again, as they serve as a basis for understanding the next study unit.
(a) The definition of performance does not include the results of an employee’s
behaviour, only the behaviour itself.
(b) Judging behaviour as positive, neutral or negative reflects the evaluative nature
of performance behaviour.
(c) Contextual performance varies across jobs.
(d) The work situation affects employee performance.

(1) abc
(2) cd
(3) bd
(4) abd
(2) The approach of measuring performance which emphasises what employees do and
does not consider employees’ traits or the outcomes resulting from their behaviour
is referred to as …
(1) traits
(2) results
(3) behaviour
(4) contextual
49 HRM2604/1
(3) Which of the following circumstances are most appropriate for the result approach
of measuring performance?
(a) Workers are skilled in the required behaviour.
(b) Poor results are due to factors beyond the employee’s control.
(c) Outcomes occur in the distant future.
(d) Results are consistently improving over time.

(1) ad
(2) bc
(3) cd
(4) abc
(1) Elaborate on the following statement: “If any of the determinants of performance
has a value of 0, then performance also has the value of 0.”
(2) Discuss how performance problems can be addressed.
(3) Briefly explain how an employee, human resource practices and the work environ-
ment can affect employee performance. Provide examples.
(4) Identify factors that make it imperative to have a workforce that is highly equipped not
only with task performance, but also with positive contextual performance behaviour.

158
ing at the answers?
159
1 Option 4 Refer to sections 4.1 to 4.3 in the prescribed book.
50
26Feedback on essay-type questions
(1) There must be a combination of all the determinants for performance to take place at
the required standard or even to exceed the standard, hence the formula:
Performance = Declarative knowledge × Procedural knowledge × Motivation
The statement therefore means that if an employee is in possession of just two determi-
nants in the formula, for instance procedural knowledge and motivation, there is no way
that this particular employee can perform at the required standard, since the declarative
knowledge (skills, knowledge and ability) to perform that particular job will be lacking.
(2) In order to address performance problems properly, managers must find information
that will allow them to understand whether the source of the problem is declarative
knowledge, procedural knowledge, motivation, or some combination of these three
factors. It will not help to train an employee if the reason for poor performance is actu-
ally lack of motivation.
(3)
yy Employee – whether the employee will perform poorly or outstandingly, depends on
whether he or she possesses the abilities, skills or motivation to do the job.
yy Human resource practices – sometimes an employee may not possess the required skills
and knowledge to do the job. The organisation should play a role in offering training
opportunities, while employees should take responsibility for their own development.
yy Work environment – for employees to perform better, the right equipment and tools
should be available to carry out their duties. The environment should be conducive
to performance.
(4) Factors that make it imperative for having a workforce that is highly equipped with both
task and contextual performance behaviour include
yy global competition
yy the need to offer customer service
yy the formation of teams in the organisation
yy employees will find the system to be fair
yy they have an impact on ratings of overall performance (implicit impact)
yy if not explicitly defined, they can be more subjective and subject to bias
Make sure that you can clearly explain how each compels the organisation to focus on both
types of behaviour. These factors are clearly discussed in section 4.3 in the prescribed book.
160
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52
Study unit 5
Measuring results and behaviours
Contents

162 Key concepts
163 5.1 Measuring results
164 5.2 Measuring behaviours
165 5.3 Summary
Learning outcomes

yy Distinguish between the results and behaviour approaches of measuring performance.
yy Differentiate between accountabilities, objectives expected and performance stan-
dards in a specific job.
yy Develop accountabilities, objectives expected and performance standards in a
specific job.
yy Discuss characteristics of objectives, as well as characteristics that determine whether
you have a useful standard.
yy Distinguish between two types of competencies.
yy Explain two types of systems used to evaluate competencies.
Key concepts
yy accountabilities
yy objectives
yy performance standards
yy competencies
yy comparative systems
yy absolute systems
53 HRM2604/1
5.1 Measuring results
Accountabilities must be provided in order to explain to employees what exact broad

167
objectives they should achieve as outcomes. Accountability is a major job responsibility

or initiative that an employee is committed to accomplish during the review cycle. An
important benefit of setting accountabilities is that it improves communication between
employee and supervisor, as they jointly clarify job responsibilities and performance
expectations at the beginning of the review cycle. Each accountability must have the
expected objectives, that is, what must be achieved in each specific area.
168 When developing accountabilities, the following should be clarified:

yy the percentage of employees’ time spent performing each accountability
yy the impact of inadequately performing the accountability on the unit’s mission
yy the serious consequence of an error for the employees or the organisation as a whole
See the good example of the accountabilities of the position of Training Specialist/
169
Consultant – Leadership and Team Development at Target Corporation in section 5.1.1

in the prescribed book. You may consult as many sources as possible to make sure that
you master this topic very well. Remember, accountabilities are not job descriptions.
However, as you can see from the Target Corporation case, we need the job description
to determine job accountabilities.
In order to check whether the accountabilities are accepted successfully, objectives should
170
be set. In other words, if employees reach the set objectives, the organisation can be sure
that it is on the right track towards achieving its goals. Section 5.1.2 in the prescribed
book provides the example of setting objectives for the position of Training Specialist/
Consultant at Target Corporation.
For the objectives to serve a useful function, they must have certain characteristics. Study
171
these characteristics in section 5.1.2 in the prescribed book. Make sure that you fully un-
derstand the implication of ignoring one of these characteristics when setting objectives.
The final step is to measure whether there is any progress towards achieving the objec-
172
tives set. It will be useless to set objectives if the organisation will not be able to gauge
the extent to which employees are meeting them. Study the characteristics of useful
performance standards in the prescribed book. The same Target Corporation case is also
given in section 5.1.3 in the prescribed book to provide you with guidelines on how to
set a performance standard.
Activity 5.1
(a) Approach any person holding any position (different from yours if you are already
employed). Ask this person to provide you with any two accountabilities of the position.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) Briefly explain the relationship between accountabilities, objectives and performance
standards.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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27 Feedback
(a) I also conducted my own research on the following two positions and gathered the fol-
lowing accountabilities:
yy Operations Manager
−− Administer the operations budget (25%).
−− Establish and maintain quality vendor services within allotted budget (15%).
−− Proactively recommend and implement quality enhancements to operational
systems (15%).
−− Demonstrate leadership in managing operations staff.
yy Sales Manager
−− Increase total annual corporate sales.
−− Demonstrate sales leadership.
−− Recruit, retain and develop top sales talent while maintaining a low average an-
nual employee turnover rate.
Can you add objectives and performance standards to each accountability? Examples
are provided in sections 5.1.1 to 5.1.3 in the prescribed book. Use them as guidelines.
(b) Accountabilities refer to a broad area of the job in which the employee is responsible
for producing results. But how can you determine whether employees are succeeding
in carrying out their accountabilities? This can be done by setting objectives on which
employees will receive feedback in terms of progress made for each of their account-
abilities. Performance standards must also be set, serving as yardsticks to gauge whether
employees work towards the achievement of the set objectives, which will indicate whether
employees are succeeding in carrying out their accountabilities.
Always make sure that you will be able to distinguish between concepts that are inter-
173
related, such as the ones referred to in this section. You also need to understand how
they are related. See the feedback on (b). Ask yourself: Is it possible to have objectives
if we do not have clear accountabilities? Can we reward an employee for outstanding
performance if we have not set performance standards?
55 HRM2604/1
5.2 Measuring behaviourS
You were introduced to the behaviour approach of measuring performance in study unit
174
4. You also learnt about circumstances that justify the application of this method. We can
only be sure that employees will behave in a required manner if they possess certain com-
petencies. There are certain indicators to tell us whether they possess these competencies.
See the example of the university professor teaching an on-line course provided in section
5.2 in the prescribed book. Note the behavioural indicators used to determine whether
the competency required for on-line teaching was present. To evaluate competencies,
two systems can be used, namely comparative and absolute systems. Neither of them is
a perfect method, since each has its advantages as well as its disadvantages.
Activity 5.2
(a) Go back to activity 5.1. Find out (from either the same job holder or any other person)
about the competencies needed to carry out daily tasks.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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(b) Identify indicators that could suggest whether competencies to perform well in the
position in (a) are present or not.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28 Feedback
(a) The following are competencies of the positions for the sales and operational manag-
ers in activity 5.1. Since they are both managers, competencies required in their jobs are
more or less the same.
yy Sensitive to individual and team motivators/demotivators.
yy Plan and direct activities.
yy Ability to build self-reliance (awareness/responsibility).
56
yy Ability to foster a cooperative team style.
yy Innovative and creative.
yy Communicate effectively, both verbally and in writing.
yy Direct and coordinate activities.
(b) Below are indicators for only two competencies listed above.
yy Sensitive to individual and team motivators/demotivators

−− Listen to the concerns of individuals and teams.
−− Apply consistency in compensation and development matters.
yy Ability to foster a cooperative team style

−− Organise diversity awareness days.
−− Encourage whole-team goal-setting sessions.
Conduct some research on the remaining competencies to find as many indicators as possible.
5.3 Summary
In order to measure behaviour, we first need to determine whether the required compe-
tencies are present. These competencies can be divided into differentiation and thresh-
old competencies. To determine whether the required competencies for a specific posi-
tion are present, indicators are used. Two main systems that can be used to measure
behaviour are comparative and absolute systems, each having its own advantages
and disadvantages.
(a) Accountabilities are the same as a job description.
(b) When objectives are achieved, they will help to ensure that the accountability
is carried out successfully.
(c) Two systems to evaluate competencies are comparative and attribution systems.
(d) An indicator is behaviour that, if displayed, suggests that the competency is
present.

(1) abc
(2) bd
(3) bc
(4) acd
Read the following scenario and answer the questions that follow:
In the previous three performance review cycles, Tau and Dipuo, employees in the
painting section at Ford-Mazda Motor Company, received outstanding ratings for their
performance. The other four employees in the same section received average ratings in
these cycles. These four employees did not understand why their two colleagues scored
so high, despite the fact that they were provided with the same working tools and were
generally working under the same conditions.
57 HRM2604/1
(2) In the scenario above, Tau and Dipuo possess … competencies while their four col-
leagues possess … competencies.
(1) differentiating, threshold
(2) threshold, differentiating
(3) indicator, threshold
(4) differentiating, comparative
(3) Which one of the following statements about the comparative measurement system
is correct?
(1) It is not straightforward: it is difficult to see which employees are where in the
distribution.
(2) It is biased.
(3) It may be subject to legal challenge.
(4) Individual assessment is the focus.
(1) Identify characteristics of good objectives and performance standards.
(2) Define competencies and differentiate between the two types of competencies.
(3) Distinguish between comparative and absolute evaluation systems of measuring
behaviour.
(4) Discuss the role played by competencies when measuring behaviour.
(5) Discuss the advantages and disadvantages of comparative and absolute systems.

175
ing at the answers?
176
1 Option 2 Refer to sections 5.1 and 5.2 in the prescribed

book.
58
(1) The characteristics of objectives and performance standards are clearly discussed in
sections 5.1.2 and 5.1.3. Study them and make sure that you understand how each will
impact on the performance review if absent. A good way of linking it to the real working
environment is to relate each characteristic to your own working environment. (If you
are not employed, ask an employed friend or relative for some information from their
workplace.)
(2) The definition of competencies as well as the two types of competencies is well clarified
in section 5.2.
(3) The comparative and absolute evaluation methods are discussed in more detail in section
5.2. Discussing them again in this feedback will just be duplication! However, you must
make sure that you can differentiate between the two.
(4) In order to tell whether required performance behaviour will be displayed by employees,
these employees should possess certain competencies. The presence of these competencies
is a clear indication that the behaviour required for performance will be displayed. There
are indicators that can suggest that an employee possesses the required competencies.
This is clearly discussed in section 5.2. Examine different positions and the required com-
petencies to perform these jobs and study them until you have mastered this topic.
(5) The advantages and disadvantages of comparative and absolute systems of evaluating
behaviour are clearly discussed in section 5.2.2. Do not confuse the two. You first need to
distinguish between the two systems before you will be able to master the advantages
and disadvantages of each.
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Study unit 6
Gathering performance information
Contents

179 Key concepts
180 6.1 Appraisal forms
181 6.2 Characteristics of appraisal forms
182 6.3 Determining overall ratings
183 6.4 Appraisal period and number of meetings
184 6.5 Who should provide performance information?
185 6.6 A model of rater motivation
186 6.7 Preventing rating distortion through rater training programmes
187 6.8 Summary
Learning outcomes

yy Discuss the components of appraisal forms.
yy Analyse the desirable features that make appraisal forms effective.
yy Distinguish between different strategies to obtain an overall performance score for
each employee.
yy Explain the importance of considering multiple sources to collect performance
information.
yy Examine motivational barriers that prevent raters from providing accurate perfor-
mance information.
yy Argue the role played by rater training programmes in preventing rating distortion.
Key concepts
yy appraisal forms
yy employee rating
yy behaviour
yy competencies
yy rating inflation
yy rating deflation
61 HRM2604/1
6.1 appraisal forms
At the heart of performance management systems is performance measurement. In our
189
performance management process, this is stage 5, employees’ performance is reviewed,

rated and rewarded. If performance does not meet the expected standard (which was set
during the performance planning stage), the manager and the employee will have to sit
down to draw up a development plan. Reviewing an employee’s performance requires a
document in which all the information about the employee has been recorded through-
out the performance management cycle (normally a year). It is important to know that it
is not a once-off session. Read Sally’s scenario in section 1.1 in the prescribed book. This
is a bad approach to performance management.
The information gathered is recorded on appraisal forms. This can be done manually (on
190
paper) or electronically. Note the advantages of completing the appraisal form electroni-
cally. However, whether the organisation uses the paper or electronic way to complete
the form, it has to comprise of a combination of several components.
Activity 6.1
(a) Obtain an appraisal form of your organisation (request one from a relative or a friend
if you are not employed). Evaluate this form in terms of the six components to be
included in an appraisal form.
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(b) What do you think is the importance of having “employee’s comments” and “signa-
tures” sections on the appraisal form? Give reasons for your answers.
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62
31Feedback
(a) Your organisation would have a good appraisal form if the form comprises of a combina-
tion of the components discussed in section 6.1 of the prescribed book.
(b) Under normal circumstances, employees are likely to accept their performance rating
if they are given an opportunity to voice their opinion. Therefore a performance ap-
praisal form that has an employee’s comments section is likely to be perceived as fair by
employees. Another reason for having this section is for the organisation to have proof
of the decisions that were made during performance review meetings. This section also
confirms an employee’s knowledge and acceptance of the outcome of the review. An
employee knows exactly what it is and has agreed with it.
Consider this example: A decision is made that employee A is not getting any promotion
as he did not score any outstanding performance this year. In the employee’s comments
section employee A admitted that he did not make an effort with some duties in his per-
formance agreement and promises to work harder in the coming year. The organisation is
safe in case employee A later threatens the organisation to press charges with the CCMA
for unfair labour practice for being denied a promotion. The organisation will simply
retrieve the form in which employee A provided his comments and which he signed.
Now study the other components and see if you can explain the role of
191
each component, as well as the implications of the omission of each com-

ponent on the appraisal form.
6.2 Characteristics of appraisal forms

Appraisal forms differ across organisations, depending on whether the organisation
192
adopts the behaviour or result approach to measure employees’ performance. Some

forms may minimise these two approaches and focus entirely on the developmental
side. If the developmental approach is adopted, normally the administrative role of the
performance management system (discussed in study unit 1) falls away. However, whether
organisations use the behaviour, result or developmental approach, appraisal forms must
still contain certain features to make them effective. These characteristics are discussed
in more detail in section 6.2 of the prescribed book.
Activity 6.2
Study the same form you obtained in activity 6.1 and analyse it in terms of the charac-
teristics of a good appraisal form
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63 HRM2604/1
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32Feedback
It is a good form if it has all the required characteristics. Consider an appraisal form which is
not comprehensive, that is, not all performance dimensions agreed upon during the perfor-
mance planning stage (stage 2 in the performance management process) are reviewed. Or
rather, they are reviewed, but only for a certain period instead of the entire cycle. Such a system
will be viewed as unfair and biased by employees.
The example provided above refers to an appraisal not meeting the characteristic of compre-
hensiveness. This is just an example. Note that all the characteristics have their own implications.
Use my example as a guideline to think of the implications of a form that does not meet the
other characteristics. I believe that it will be an easy task if you analyse the appraisal form your
organisation uses for your current position. If you are not employed, an employed relative or
friend will be glad to assist you and give their opinions on the implications of each characteristic.
6.3 Determining overall ratings

Now that performance information has been collected, the manager should give a rating
193
to each competency being reviewed (if the behaviour approach is being used) or to the
results achieved by the employee (if the result approach is being used). Providing rat-
ings means that the manager must determine the overall performance of the employee
for that particular cycle. To do this, two strategies can be used, namely judgemental and
mechanical.
64
The judgemental approach does not involve any calculation. The rater determines the
194
overall rating by simply looking at every aspect of performance and giving a rating.
However, with the mechanical approach, some scores and weights are assigned. These
two are then multiplied. The answer reflects the final points an employee scored. Figure
6.3 shows an appraisal for a grocery retailer. Study this to learn how to determine overall
ratings following the mechanical strategy/approach.
Activity 6.3
List the steps to be followed to determine an overall rating when the mechanical strategy/
approach is adopted.
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33 Feedback
The following steps should be followed:

yy Provide scores for each competency being reviewed.
yy Multiply scores with the weight allocated to each competency.
yy Provide scores for each key result being reviewed.
yy Multiply scores with the weight allocated to each key result.
yy The answer you get reflects the total earned by the employee.
yy To get the subtotal, add the scores for competencies to the scores earned for the key results.
Divide the sum by four. The answer you get reflects the overall rating of the employee.
It is very easy to follow if you study these steps and apply them practically in the example
provided in figure 6.3. Some of you may be lucky to find that this is what you do at work on
a daily basis!
65 HRM2604/1
6.4 Appraisal period and number of meetings
Different organisations have different performance appraisal/review periods. However,
195
whether the organisation prefers annual, semi-annual or quarterly reviews, there are ba-
sically six formal meetings between the subordinate and the supervisor. You will notice
that these meetings are not practically separable. During one meeting, issues meant for
other meetings can overlap and be discussed. For example, say employee Y gave herself
low ratings in the first half of the year. During the appraisal meeting she may be required
to indicate initiatives that she believes could help her to improve her performance. As a
result, issues for the development plan meeting are also covered.
196 Think of more overlapping issues from each appraisal meeting.
6.5 Who should provide performance information?

In section 6.3 we analysed the information to be included in the employee’s appraisal
197
form. We also discussed strategies/approaches to determine performance ratings for

employees. Now the question is who should gather this information. Why these parties?
It is always assumed that the supervisor is the sole eligible party in collecting employees’
performance information. However, many parties can be involved, for example supervi-
sors/line managers, peers, subordinates and customers.
Activity 6.4
Why should organisations consider multiple sources for obtaining performance informa-
tion? Give reasons for your answer.
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66
34Feedback
Employees will perceive the performance appraisal to be fair if multiple sources are used.
Reasons:
yy For some jobs, the supervisor may not observe subordinates’ performance on a regular
basis. (Make sure that you can identify such jobs!)
yy Sometimes supervisors may be biased when evaluating employee performance. (Try to
identify reasons for a supervisor to be biased and collect as many examples as possible.)
6.6 A model of rater motivation

At the heart of our nature as human beings there are subjectivity and bias, either inten-
198
tionally or at the subconscious level. Employee performance ratings can be inflated (being
too lenient) or deflated (being too strict).
As you can see from this section, there are several factors that motivate supervisors to
199
either inflate or deflate performance ratings. Figure 6.4 further provides us with a model
for rater motivation. Also study this model to get a clearer understanding of what mo-
tivates the supervisor to distort the ratings. Generally, there are several motivational
barriers that lead to supervisors inflating or deflating performance ratings. Study them
in this section. Make sure that you can categorise the motivational barriers that lead to
the deflation or inflation of ratings.
6.7 Preventing rating distortion through rater

training programmes
Training programmes can help to address the problem of distorted ratings when appraising
200
employee performance. Training can help to address both intentional and unintentional
errors in rating performance. Further, organisations should consider providing supervi-
sors with incentives so that they will be convinced that they have more to gain by giving
accurate ratings than by giving inaccurate ratings.
6.8 Summary
We learnt about gathering performance appraisal information and that not only the super-
201
visor can collect employees’ performance information, but also parties such as peers, job
incumbents themselves and customers. The information collected should be recorded on
the appraisal form which should contain a competencies section (if the behaviour approach
67 HRM2604/1
is followed) or key result areas (if the result approach is followed). Either judgemental or
mechanical strategies can be used to determine overall ratings. Rater errors that may occur
during the appraisal meetings can be addressed through training programmes.
(1) Which of the following are components of appraisal forms?
(a) Competencies and indicators
(b) Major achievements and contributions
(c) Developmental achievements
(d) Employee comments
(1) abc
(2) ab
(3) cd
(4) abcd
(a) Descriptiveness and adaptability are two of the desirable features that make an
appraisal form effective.
(b) The two main strategies used to obtain an overall performance score for each
employee are judgemental and threshold strategies.
(c) The use of weights in performance rating allows the supervisor to come to an
objective and clear overall performance score for each employee.
(d) Employees are likely to trust ratings from their supervisors more than ratings
from peers.
(1) abcd
(2) bd
(3) ac
(4) acd
(3) Which of the following are sources to be considered when collecting performance
information?
(a) Customers
(b) Peers
(c) Suppliers
(d) Self
(1) abd
(2) cd
(3) bcd
(4) ad
(1) Discuss the components of appraisal forms.
(2) Analyse the desirable features that make appraisal forms effective.
(3) Distinguish between different strategies used to obtain an overall performance score
for each employee.
(4) Examine motivational barriers that prevent raters from providing accurate perfor-
mance information.
68

202
ing at the answers?
203
(1) These components are clearly discussed in section 6.1 and summarised in table 6.1 in
the prescribed book. It is important that you understand why they should be included
in the appraisal form.
(2) Firstly, you have to identify each feature and discuss it. Secondly, discuss why this feature
is important in the appraisal form. Lastly, discuss the implications if this feature is not
included in the appraisal form. For example, what would happen if the appraisal form
in your organisation lacks relevancy, that is, it is not focusing on your real daily tasks? It
is not reflecting your true performance, and as a result it will not play any role in improv-
ing your performance.
(3) The two strategies used to obtain an overall performance score for each employee are
judgemental and mechanical. The judgemental strategy considers every aspect of per-
formance and then arrives at a defensive summary, whereas the mechanical strategy
relies on the ability of the rater to arrive at a fair and accurate overall score.
(4) Differentiate between motivators that can lead to supervisors inflating or deflating per-
formance ratings. Refer to section 6.6 for more detail on motivational barriers.
204
69 HRM2604/1
Notes/Mind map
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70
Study unit 7
Implementing a performance management system
Contents

206 Key concepts
207 7.1 Introduction
208 7.2 Communication plan
209 7.3 Appeal process
210 7.4 Training programmes for the acquisition of the required skills
211 7.5 Pilot testing
212 7.6 Ongoing monitoring and evaluation
213 7.7 Summary
Learning outcomes

yy esign a communication plan to ensure that information regarding the performance
D
management system is widely disseminated in the organisation.
yy Explain the importance of including an appeal process in the performance manage-
ment process.
yy Discuss different training programmes that can equip raters with the required skills
for the implementation of a performance management system.
yy Identify different rater errors occurring during the performance appraisal meeting
and apply corrective measures to address these errors.
yy Explain the purpose of conducting a pilot test of the performance management
system.
yy Give advice on how to monitor and evaluate the performance management system.
Key concepts
yy communication plan
yy appeal process
yy rater error training
yy frame of reference training
yy behaviour observation training
yy self-leadership training
71 HRM2604/1
7.1 Introduction
Effective performance management relies on systems and people working together to
215
make sure that the right things happen. Therefore, before implementing a performance
management system, all managers must be committed to the system and they must be
aware of the acceptable standards that each employee will be expected to achieve. Refer
back to section 3.3 in the prescribed book for more detail about the reasons for market-
ing the concept of a performance management system. In this study unit we will design
a communication plan to gain system acceptance and discuss the appeal process, training
programmes for performance rating, as well as continuous monitoring and evaluation of
the performance management system.
7.2 Communication plan

Everyone in the organisation should know about the performance management system
216
and have detailed information about it. This is referred to as the organisation’s commu-
nication plan. Section 7.1 highlights questions that this plan aims to answer. This section
further warns against cognitive biases if all issues are not clarified. These biases are selec-
tive exposure, selective perception and selective retention. To minimise these cognitive
biases, table 7.1 in the prescribed book lists several considerations to limit the effects
of communication barriers.
Activity 7.1
(a) Obtain a communication plan of your organisation. Ask a friend or a relative if you
are not employed. Analyse it with reference to the communication plan for the senior
executive service given in the prescribed book. Does it answer all key questions?
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72
(b) What implications will it have if a communication plan does not answer all of the key
questions?
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37Feedback
(a) A communication plan is good if it answers all the key questions. Such communication
plans further help eliminate cognitive biases among employees.
(b) No one in the organisation will buy into the implementation of the performance man-
agement system if the key questions are not answered. Do you still remember the “fear
of the unknown”? This is how employees will feel in organisations with inadequate com-
munication plans.
7.3 Appeal process

Many employees dread facing another annual performance appraisal, yet they hope for
217
the best and are anxious to discover the amount of a salary increase or bonus. Supervi-
sors and managers, too, put off this annual event, because it requires candid feedback on
employee performance, which sometimes results in confusion or disappointment. When
employees receive an unsatisfactory performance review and feel that the evaluation of
their job performance is unfair, they should be given an opportunity to appeal.
The dissatisfaction is normally due to two types of issues, judgemental and administra-
218
tive issues. Note the levels of appeal discussed in section 7.3 in the prescribed book and
make sure that you can distinguish between the two.
Activity 7.2
After studying section 7.3, why do you think the appeal process for the performance
evaluation is important?
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73 HRM2604/1
38Feedback
The purposes of an appeal process for the performance evaluation are stated clearly in sec-
tion 7.3. However, the question required you to make sense of what you read in this section
and prove your understanding by explaining the reasons for the process in your own words.
Because the appeal process endeavours to clarify that the ratings were correct and that the
correct procedure was followed, good relationships will be built between the supervisor and
employees. We have mentioned in previous study units that the more employees perceive per-
formance review to be fair, the more likely they are to buy into it and work towards improving
their performance. This fairness can be perceived only if they are satisfied that ratings were
true reflections of their performance and that the procedure was followed properly.
219Another version of this question could be:
Briefly explain the implications of not having an appeal process in the performance
220
management system.
The answer is the same as above. You just have to rephrase it. For example, you should men-
221
tion that the relationship between supervisor and subordinate can be bruised forever. This
could result in poor performance of the employee and ultimately the entire business unit,
because employees will perceive such a system as unfair and punitive. They will resist any
developmental initiatives.
There is a lot of things you can mention in answering this question. A good way of proceed-
222
ing to answer this question is to put yourself in the shoes of someone who is faced with such
a performance management system. Just imagine that feeling of not being satisfied and not
having a platform to air your concerns. It’s bad, isn’t it?
7.4 Training programmes for the acquisition of the

required skills
A performance management system cannot be successful if it is just implemented without
223
any introductory measures. It is important that the organisation train managers in per-
formance management before it implements such a system. These training programmes
include rater error training, frame of reference training, behavioural observation train-
ing and self-leadership training. It is important to know that the main purpose of these
training programmes is to provide participants in the performance management system
with the skills and tools needed to do a good job. Another purpose is to help increase
satisfaction with the system. Do you still remember the administrative and judgemental
issues discussed in section 7.3?
Study sections 7.4.1 to 7.4.4 in the prescribed book.
74
Activity 7.3
(a) Complete the following table by providing a practical example of each rater error
and indicating how it can be rectified. Try your best to provide your own original
examples, rather than using examples from sources such as articles, the internet or
HR books. This will ensure that you understand the errors in this module and extend
your understanding to the real work situation!
RATER ERROR PRACTICAL CORRECTIVE

EXAMPLE ACTION
Similar to me error
Contrast error
Leniency error
Strictness error
Central tendency error
Halo error
Primacy error
Recency error
Negativity error
First impression error
Spillover error
Stereotype error
Attribution error
(b) Distinguish between the following training programmes for the acquisition of the
required skills to implement performance management successfully.
yy Rater error training
yy Frame of reference training
yy Behavioural observation training
yy Self-leadership training
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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75 HRM2604/1
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39 Feedback
(a) You could have raised many possible examples with corresponding corrective actions!
Now compare your answer with the guidelines provided in the table below.
RATER PRACTICAL EXAMPLE CORRECTIVE ACTION

ERROR
Similar to Ms X has divorced in the The focus of the

me error past two years. The rater performance review
knows this and even should be on the
knows the grounds for performance standards
the divorce. The rater also set in the planning stage.
divorced many years ago Factors that are not work-
and finds Ms X similar to related must never be
her because they both taken into consideration.
went the same route
(divorce), perhaps for
similar reasons. So the
rater rates Ms X high.
76
ERROR
Contrast Nelly, as compared to Tom, Raters should focus on the

error generally performs poorly preset standards instead
in her work. However, of comparing employees.
during the performance There should be enough
review meeting Nelly time to conduct the
receives an average rating meeting.
and Tom gets a high
performance rating, just
because of the pre-held
assumptions.
Leniency The rater: “I know you The rater should base

error always work very hard, ratings on either the
I have even noticed that behaviour displayed or
you sometimes leave the results achieved by
your office very late in the employees, not on the
evening. You therefore time they spend in their
deserve a high rating!” offices.
Strictness The rater: “I am not happy If employees are not

error with your work, I will meeting the standards,
therefore give you the this should be clearly
minimum of 2 out of 5 on pointed out to each
the rating scale. Maybe individual.
this will push you to work Raters should be
harder in the next review trained to provide good
period!” developmental activities to
help employees to improve
their performance. A
low rating will not in any
way encourage them to
improve.
77 HRM2604/1
ERROR
Central Rater: “Do not worry, Performance appraisal

tendency I will make sure that should not be only
error no one gets less than 3 judgemental, but should
on the scale (average also have an element of
performance). Your development.
performance is not bad Poor performers should
anyway.” be informed of their true
performance so that they
can make an effort to
improve, whereas high
performers should be
recognised and rewarded
where possible.
Halo error Nhanhla is an attractive All these qualities are good

contact centre agent in terms of the customer
who is always friendly service performance
to potential customers dimension. But the
on the phone. She also question is, does she meet
respects everyone in the all the daily or weekly
organisation and always targets? Is she always up
greets everyone. Therefore to date with her work? The
she receives a high rating should also cover
rating in all performance these aspects.
dimensions.
Primacy Rater: “It is December We must ask ourselves

error now and time for the what happened between
performance appraisal, March and November.
Sam. You impressed me Did Sam further increase
in February when you the sales figures? The
increased our sales figures rater should focus on
by 6%. I will therefore give information gathered
you a high rating.” throughout the
performance appraisal
period, rather than only
on information for the
beginning of the period.
78
ERROR
Recency Rater: “Tina, you It is clear from the

error are coming to work very example that Tina was
late these days. This really arriving at work early
affected your rating for at the beginning of the
the performance appraisal year. Only recently she
period.” started to arrive late.
So why does the rater
focus only on the recent
scenario? The rater should
focus on information
gathered throughout the
period, rather than only on
recent information.
Negativity Rater: “Sam, do you still How can just one negative
error remember the argument incident be used to pin an
you had with one of our employee down? The rater
customers in the reception did not even consider the
area in July? Unfortunately fact that Sam increased
that affected your rating the organisation’s sales
for this performance figures in February (see
appraisal period.” primacy error)!
First Rater: “By merely looking Looks and appearances

impression at you, young man, I see have nothing to do
error a performer. You look with an employee’s
energetic and appear to performance. Only work-
be a responsible guy. I do related information,
not have doubts that you based particularly on the
deserve an outstanding standards and targets to
rating!” be achieved, should be
the main focus during
performance appraisal.
79 HRM2604/1
ERROR
Spillover Rater: “Dan, you seem to be Raters should be taught

error a hardworking young man. during training to focus
Looking at your previous only on the current review
review period, I see that you period when reviewing
achieved an outstanding employee performance.
performance rating in all What answer do you
performance dimensions. expect from Dan? Only
There is no need to go a big: “No, I worked even
into detail in the current harder!”
period. I trust you, you must
have kept up the good
work, or am I wrong?”
Stereotype Rater: “Everybody This statement is not

error (including women based on facts at all. Such
themselves) knows that generalisations should be
women are generally avoided at all costs when
not ‘time conscious’. appraising employee
Therefore I give all performance. Raters
women a low mark in should rather collect
the time management information to support
performance dimension.” whatever ratings they give
to employees, regardless of
gender.
Attribution Rater: “We cannot accept The fact that Nomsa and
error excuses here, Nomsa. If her team leader have a
you do not get along with problem that hampers
the current team leader, her performance, means
there is no way we can that the manager should
move you to a new team. intervene. Rather than
You must work out your accusing Nomsa of being
differences! I expect your a problematic lady,
performance to improve the problem should be
in the next performance discussed and jointly
review period, or else …!” resolved!
What an exercise! I hope that you have learnt enough about each rater error from this activ-
ity not to repeat them if you are a rater. Unfortunately some of them come naturally, at the
subconscious level. Think a about the stereotype error. If generally you hate a certain ethnic
group (eg Zulus, Tsongas, Pedi, Afrikaners), or rather have had a bad experience with them, you
will definitely prefer the other groups above this group and give a member from this group a
80
low rating. Remember, in dealing with all these errors, the rater’s focus should always be on
the work-related performance dimensions and nothing else!
(b)
yy Rater error training
This training alerts supervisors to the fact that there are errors associated with the per-
formance management system, which are either intentional or unintentional. In order to
increase rating accuracy, rater error training provide guidance on how to avoid these errors.
yy Frame of reference training

During this training, supervisors are familiarised with the various performance dimen-
sions to be assessed. The overall goal of this training is to give raters the skills to provide
accurate ratings on each performance dimension by developing a common frame of
reference. The point of departure in this training is the discussion of the job description
of the employee to be rated.
yy Behavioural observation training

This training focuses on enhancing raters’ ability to observe, store and recall information
about performance.
yy Self-leadership training
The goal of this training is to improve raters’ confidence in their ability to manage per-
formance. The assumption is that if there is increased self-direction, self-motivation and
self-confidence, there will be increased accuracy.
7.5 Pilot testing

A pilot is like the feasibility study conducted when you intend to start a new business.
224
It is a small experiment designed to test logistics and gather information prior to the
full implementation of a specific system in order to improve the system’s quality and ef-
ficiency. A pilot study can reveal deficiencies in the design of a proposed system, which
can then be addressed before implementation.
7.6 Ongoing monitoring and evaluation

A considerable amount of research indicates that there is huge frustration and dissatisfac-
225
tion with existing methods of formal employee performance management and appraisal,
whether the approach is based on rating scales, competency assessments (behaviour),
objectives (results), 360-degree feedback or other performance standards. Therefore,
ongoing monitoring of the performance management system is necessary to ensure that
the system remains relevant and useful to the organisation and its employees. Section
7.6 in the prescribed book provides several measures that can be used on a regular basis
to monitor and evaluate performance management systems.
81 HRM2604/1
Activity 7.4
Briefly explain the implications of not monitoring and evaluating the performance man-
agement system after its implementation.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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40 Feedback
It will not be clear whether all stakeholders have bought into the idea of introducing and
implementing the system. If either the employees or their managers have negative attitudes
towards and perceptions of the performance management system, they will not cooperate.
As a result, the system will not yield the intended results, that is, performance will not improve.
7.7 Summary
It is important for the organisation to have a communication plan that addresses the key
226
questions that participants may ask. The appeal process ensures that employees can get
clarity on their scores and managers can prove that all procedures were followed cor-
rectly. There are several training programmes for raters to give them the necessary skills
to provide accurate ratings. This study unit also emphasised the importance of a pilot test
and the ongoing monitoring and evaluation of the performance management system.
(1) Which of the following are key questions to be addressed in a communication plan
to be implemented before the performance management system is launched?
(a) What is the role of other parties in the system?
(b) What are my responsibilities in the system?
(c) How is the system related to other initiatives?
(d) How will the system deal with poor performance?

(1) ad
(2) bcd
(3) bc
(4) abc
82
(2) Anna possesses good typing skills and her boss always gets his typed documents in
time. Therefore her boss gives her a high rating for this performance dimension. High
ratings are also given when reviewing file management skills and customer service.
Which of the following rater errors is Anna’s manager committing in the scenario?
(1) Contrast error
(2) Halo error
(3) Primacy error
(4) Spillover error
(3) The training programme that emphasises intrinsic (internal) sources of behavioural
standards and doing things for their intrinsic value is referred to as …
(1) rater error training.
(2) behavioural observation training.
(3) frame of reference training.
(4) self-leadership training.
(1) Design a communication plan to ensure that information regarding the performance
management system is widely disseminated in the organisation.
(2) Explain the importance of including an appeal process in the performance manage-
ment process.
(3) Discuss the training programmes for raters in order to equip them with the required
skills for the implementation of a performance management system.
(4) Identify different rater errors that may occur during the performance appraisal meet-
ing and apply corrective measures to address these errors.
(5) Explain the purpose of conducting a pilot test of the performance management system.
(6) Discuss the monitoring and evaluation of the performance management system.
14 Guidelines for answering self-assessment questions

227
ing at the answers?
228
41Feedback on multiple-choice questions

3 Option 4 Refer to sections 7.4.1, 7.4.2, 7.4.3 and 7.4.4 in the
prescribed book.
83 HRM2604/1
(1) Your communication plan should always address the key questions discussed in section
7.1. It must also focus on minimising the effects of communication barriers by considering
the guidelines in table 7.1. Also study the example of a communication plan for the senior
executive service provided in the last paragraph in the prescribed book.
(2) Study section 7.3 to answer this question. Also study activity 7.2, as it provides good guide-
lines to answer this question. You first need to explain what an appeal process is. Then
indicate whether an appeal process is necessary in a performance management system.
Explain what would happen if it is not included in the performance management system.
(3) Study the training programmes in section 7.4 in the prescribed book. Also study activ-
ity 7.3 for more guidelines to distinguish between the four training programmes. The
four different training programmes for raters are rater error training, frame of reference
training, behavioural observation training and self-leadership training. Make sure that
you can argue how each training programme can improve rater accuracy when rating
employee performance.
(4) For an answer, study section 7.4.1 in conjunction with activity 7.3. Rater errors are discussed
here in more detail. Activity 7.3 provides you with different rater errors, as well as measures
to address each of them. Make sure that you understand each and are able to identify
them when they occur in a real working environment (scenario or case study). Also make
sure that you apply the rater error training programme to correct each of these errors.
(5) Study section 7.5 for the answer. Basically, pilot testing of the performance manage-
ment system will enable managers to adjust and revise the system as required. In other
words, it allows for the identification and early correction of any flaws before the system
is implemented throughout the organisation.
(6) Several measures are clearly discussed in section 7.6. Make sure that you understand how
each contributes to the monitoring and evaluation of PM systems.
229
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86
TOPIC 2
Topic content
Study unit 8:
Topic 2
Performance management and employee development
230
Introduction
One of the aims of performance management is to develop employees in order to improve
231
their performance. During the performance review stage, an employee is rated to deter-
mine whether performance is at the expected standard or not. If the employee achieved
the expected standard, he or she will be rewarded. If not, the employee will be referred
to the development programme with the aim of improving his or her performance in the
next performance management cycle. The developmental plan will be drafted by the line
manager and the underperforming employee. This plan should include a description of
specific steps to be taken and objectives to reach, the resources and strategies that will
be used to achieve these objectives and the completion date. More importantly, the plan
should keep the needs of both the organisation and the employee in mind.
Aim of the topic

The aim of this topic is to provide you with a comprehensive understanding of the process
232
and practices of improving employee performance.
Learning outcomes

yy Design a development plan that can be used to improve employee performance.
yy Discuss the role of 360-degree feedback in performance management practices.
yy Explain how coaching can help to improve employee performance.
87 HRM2604/1
Study unit 8
Performance management and employee
development
Contents
234Key concepts
2358.1 Personal developmental plan (PDP)
2368.2 Direct supervisor’s role
2378.3 Coaching as one of the developmental plan activities
2388.4 360-degree feedback systems
2398.5 Summary
Learning outcomes

yy escribe the importance and benefits of including a developmental plan as part of
D
the performance management system.
yy Discuss the various short- and long-term objectives of a developmental plan.
yy Design a developmental plan that will ensure employee performance improvement.
yy Identify the key activities that will facilitate the successful implementation of a
developmental plan.
yy Explain the meaning of coaching in the PM context.
yy Discuss the role of coaching in an endeavour to improve employee performance.
yy Explain the aspects that need to be addressed for coaching to turn feedback into
results.
yy Discuss the four guiding principles that provide a good framework for successful
coaching.
yy Draw and discuss the coaching process diagram.
yy Implement a 360-degree feedback system with the aim of providing feedback on
and improving performance.
yy Identify the advantages and the risk of implementing a 360-degree feedback system.
yy Discuss the characteristics of a good 360-degree feedback system.
88
Key concepts
yy employee developmental plan

yy coaching
yy 360-degree system
8.1 Personal developmentAL plan (PDP)

This study unit will expose you to a personal developmental plan (PDP). Other authors
241
refer to it as an individual developmental plan or employee developmental plan. Employees in

organisations are continually assessed through performance review, which can be formal
or informal. There are two main stakeholders involved in this process, namely employees
who seek to improve their performance and the line manager/supervisor/leader who is
playing a guiding and supporting role in the development of these employees.
After the completion of the performance review session, both parties (employee and
242
manager) need to look at ways of addressing the identified performance gaps. A per-
sonal developmental plan serves as a guiding document indicating which areas need to
be addressed. In other words, personal development is a lifelong process of nurturing,
shaping and improving employees’ skills, knowledge and interests. The long-term aim of
personal development is also to enhance employees’ effectiveness and adaptability, and
minimise the chance that their skills might become obsolete, or that they might be made
redundant. Although a PDP is reactive in nature as it is derived from the performance
review, it is still a useful tool for personal development. Make sure that you master the
objectives, the content as well as the activities of the developmental plan.
Activity 8.1
During the performance review, Mabaso, the line manager in the finance department,
reviewed the financial clerk Kabelo and gave him a very high rating. Kabelo actually ex-
ceeded the expected performance standard in every performance dimension and the
manager is proud of him. The manager told him that owing to his outstanding perfor-
mance, he seems to be ready for a senior clerk position. The manager and Kabelo agreed
that since he is doing so well in his current position, there is no need to prepare a PDP
as it will be a waste of time.
(a) Do you agree with Mabaso’s and Kabelo’s decision? Elaborate.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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89 HRM2604/1
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(b) After the completion of your performance review with your manager, you are told
by your line manager that you need to draft a personal development plan to identify
areas in which you need to improve. The manager also informs you that he will provide
you with all the necessary support you may need from him. Draft a developmental
plan. Use the developmental plan of Texas A & M University in section 8.1.2 in the
prescribed book as a guideline.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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(c) Briefly explain the following activities as interventions to improve employee perfor-
mance within the organisation:
yy On-the-job training
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
yy Job rotation
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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yy Mentoring and coaching

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90
43Feedback
(a) You should disagree with their decision to ignore the developmental plan. The long-term
aim of personal development is also to enhance employees’ effectiveness and adaptabil-
ity, and minimise the chance that their skills might become obsolete, or that they might
be made redundant. Therefore, although Kabelo is performing outstandingly in his job,
he still needs a developmental plan to enhance his adaptability in the new position to
which he will be promoted, and also in his future career movements.
(b) In addition to the developmental plan for Texas A & M University in section 8.1.2 in the
prescribed book, see the developmental plan for the position of a lecturer at the University
of South Africa below.
APPENDIX B: UPATED PERSONAL DEVELOPMENTAL PLAN FOR 2009
DEPARTMENT: DIRECT
SUPERVISOR:
JOB INCUMBENT’S INCUMBENT’S

NAME: JOB TITLE:
INCUMBENT’S INCUMBENT’S
PERSONNEL JOB GRADE:
NUMBER:
TRAINING/
DEVELOPMENTAL
PRIORITY
1 CRITICAL (within 3 RELEVANT TRAINING TARGET NAME OF COMMENTS

months) KPA, INTER- DATE PERSON
Directly related to OBJECTIVE OR VENTION RESPONSIBLE
improving critical ACTIVITY IN NEEDED (eg FOR
work performance PERFORMANCE customer MONITORING
AGREEMENT care course) (eg Direct
Supervisor)
2 CORE (within 6
months)
Enables an employee
to perform core
areas of the job
content
3 INTERMEDIATE
(within 12 months)
Enables an employee
to perform the
remaining areas of
the job content
4 ADVANCED
Enables an employee
to perform
specialised areas of
the job family
91 HRM2604/1
5 DEVELOPMENTAL/
ELECTIVE
Provides
opportunities
for personal and
professional growth
and development
DIRECT SUPERVISOR: JOB INCUMBENT:

SIGNATURES
DATE: DATE:
Remember, this could differ from a developmental plan for other positions. There could be
elements missing compared to what you learnt in section 8.1.
(c) On-the-job training – this is the process whereby an employee is given the oppor-
tunity for training within the organisation by an experienced person who designs the
programme and indicates the number of hours that it will possibly take the employee
to complete the training.
Job rotation – here an employee is assigned to different kinds of jobs within the organ-
isation to acquire a range of skills and knowledge.
Mentoring and coaching – this is a developmental process which consists of a one-

on-one relationship aiming at nurturing the protégé’s skills and knowledge. Although
we identified and discussed several interventions that can help to improve employee
performance, coaching is the popular one; hence it is the only one falling within the scope
of this module. It will therefore be discussed in more detail in the next section.
8.2 Direct supervisor’s role

By now you must be aware that the PDP is a joint effort by the employee and the line
243
manager. It is informed by the formal performance review and the future skills demanded
or the succession plan. Even though the manager may ask an employee to draft it alone,
they will eventually sit down to discuss its contents.
Let us look at the role of a supervisor in the process of drafting a personal developmental
244
plan. This might vary from organisation to organisation, depending on the organisational
philosophy and what needs to be achieved.
Activity 8.2
As a direct supervisor in one section of your organisation, explain at least three roles that
you will play in the process of drafting a PDP.
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92
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44Feedback
(1) Inform the employee of what is required of him or her to achieve the set performance
standard and also make him or her aware of the performance standard that needs to
be achieved. The supervisor will also advise the employee on steps to be taken towards
improving his or her performance.
(2) Assist the employee by seeking a third party’s intervention where needed. This might
include but is not limited to mentors, coaches and other departmental activities to assist
the employee in achieving the set goal.
(3) Review the set developmental objectives and make suggestions to ensure that the objec-
tives are achievable, specific and doable.
(4) Introduce reinforcement mechanisms such as rewards as incentives.
8.3 Coaching as one of the developmentAL plan

activities
After identifying the areas of improvement, several interventions can be chosen in order
245
to reach the objectives stated in the developmental plan. These are discussed in section
8.1.3 in the prescribed book. As mentioned earlier on, the only intervention to be covered
in more detail in this module is coaching.
246 Just to refresh your mind, quickly do the following activity:
Activity 8.3
What do you understand by the concept of coaching? Find any three sources that define
coaching. Summarise the three definitions and give your own brief explanation of this
concept.
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93 HRM2604/1
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45Feedback
Although there is not one exact answer to this question, the following should serve as a model
explanation:
Coaching is a collaborative, ongoing process in which a manager interacts with employees,

playing an active role and taking an interest in their performance. In general, coaching involves
directing, motivating and rewarding employee behaviour. Coaching is a day-to-day function
that involves observing performance, complimenting good work and helping to correct and
improve any performance that does not meet expectations and standards. Coaching is also
concerned with long-term performance and involves ensuring that the developmental plan is
being achieved. Being a coach, therefore, is similar to serving as a consultant and for coach-
ing to be successful, a coach must establish a helping relationship. Establishing this helping
relationship is particularly important when the supervisor and subordinate do not have similar
cultural backgrounds, as is often the case with expatriates or when implementing a global
performance management system. In such situations, helping and trusting relationships allow
for what is labelled cultural transvergence in performance management, which means that
cultural differences are discussed openly and alternative practices which enhance individual
and team performance are implemented.
Thus, coaching helps to turn feedback into results. However, for this to happen, coaches
247
need to do the following:
yy Establish developmental objectives

The manager works together with the employees in creating the developmental plan
248
and its objectives.
yy Communicate effectively
The manager maintains regular and clear communication with employees about their
249
performance.
yy Motivate employees
Managers must reward positive performance. When positive performance is rewarded,
250
employees are motivated to repeat this level of positive performance in the future.
yy Document performance
Managers observe employee behaviour and results. Evidence of instances of good and
251
poor performance must be gathered.
yy Give feedback
Managers measure employees’ performance and their progress towards achieving goals.
252
They praise good performance and point out instances of substandard performance. Man-
agers provide feedback to enable employees to improve their performance in the future.
94
yy Diagnose performance problems
Managers must listen to employees and gather information to determine whether per-
253
formance reaches the set standard. Managers should point out instances of substandard
performance and assist employees to avoid poor performance in the future.
yy Develop employees
Managers provide financial support and resources for employees’ development (eg
254
funding for training and allowing time away from the job for developmental activities)
by helping employees to plan for the future and by giving challenging assignments that
force employees to learn new skills.
Note that not all coaches perform coaching functions by engaging in all of the behaviour
255
described above. However, managers who do so are highly effective leaders!
8.3.1 Four guiding principles that provide a good framework for under-
standing successful coaching
1 A good coaching relationship
256
For coaching to work, it is imperative that the relationship between the coach and the
257
employee be trusting and collaborative. To achieve this type of relationship, the coach
must listen in order to understand. In other words, the coach needs to try to walk in the
employee’s shoes and view the job and organisation from his or her perspective.
2 The employee is the source and director of change

258
The coach must understand that the employee is the source of change and self-growth.
259
After all, the purpose of coaching is to change employee behaviour and set a direction
for what the employee will do differently in the future. This type of change will not take
place if the employee is not in the driver’s seat. Accordingly, the coach needs to facilitate
the employee’s setting of the agenda, goals and direction.
3 The employee is whole and unique

260
The coach must understand that each employee is a unique individual with several job-
261
related and job-unrelated identities (computer network specialist, father, etc), and has
a unique personal history. The coach must try to create a whole and complete and rich
picture of the employee. It will be beneficial if the coach has knowledge of and can help
the employee to connect life and work experiences in meaningful ways.
4 The coach is the facilitator of the employee’s growth

262
The coach’s main role is one of facilitation. A coach must direct the process and help with
263
content (eg of a developmental plan), but must not take control of these issues. The coach
needs to maintain an attitude of exploration; help expand the employee’s awareness of
strengths, resources and challenges; and facilitate.
95 HRM2604/1
Activity 8.4
You are the production manager of a tire manufacturing plant in Soweto. The reports for
the past three months show that customer complaints have increased dramatically. After
conducting your own informal research, you found that customers are no longer satis-
fied with your product (the quality of tires manufactured by this organisation). You are
tempted to put all the blame on the line manager, but then you recall the good coaching
principles that you studied in this module to solve such problems. Apply all four good
coaching principles to this situation.
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96
46Feedback
It could have been a bit tough to integrate all these guiding principles for good coach-
ing. See how I have structured the answer below.
Firstly, as the manager, you have to put yourself in the shoes of this line manager and view the
job and organisation from his perspective. You also need to search for positive aspects of the
employee (strengths), because this is likely to lead to a better understanding and acceptance
of the employee (principle 1). Secondly, in order to expect change in behaviour from the em-
ployee, put the employee in the driver’s seat. For instance, ask this line manager to send you
weekly reports, so that you can review them and monitor whether there is some improvement.
Return these reports after you have reviewed them. Include some comments, congratulating
successes or making suggestions for areas in which improvement is needed (principles 2 and
4). The coach must understand that each employee is a unique individual with several identi-
ties (job-related and job-unrelated) and a unique personal history, and must never compare
this line manager with other line managers in other sections (principle 3).
264 Simple, wasn’t it?

The supervisor will appreciate the mere fact that the manager takes his “precious time”
265
to read his reports each week and return them with comments and compliments. This
will motivate him to reach the lofty goal that was set for him.
We should note that coaching, just like performance management, is not a once-off event,
266
but a process. Let us look at this fact in the following section.
8.3.2 Coaching process

267 The coaching process is depicted in figure 6.1 below.
268Set developmental goals
269 Identify development resources and strategies
270 Implement strategies
271 Observe and document behaviour
272 Give feedback
Figure 6.1 Coaching process (Source: Aguinis, 2009:214)
97 HRM2604/1
We have already discussed many of the components of the coaching process in the previ-
273
ous sections of this study unit. In summary, the first step involves setting developmental
goals. These developmental goals must be reasonable, attainable and derived from a
careful analysis of the areas in which an employee needs to improve. In addition, goals
should take into account both short- and long-term career objectives.
The second step in the coaching process is to identify resources and strategies that will
274
help the employee to achieve the developmental goals.
The third step involves implementing the strategies that will allow the employee to achieve
275
the developmental goals.
The fourth step in the process is to collect and evaluate data to assess the extent to which
276
each of the developmental goals has been achieved.
Finally, the fifth step involves the coach providing feedback to the employee. Based on
277
the extent to which each of the goals has been achieved, the developmental goals are
revised and the entire process begins again.
To prove that you have mastered the coaching process, do the following activity. Do not
278
despair if you find it challenging, you will get clarity from the feedback. However, do not
cheat, try it on your own first and use the feedback for corrections. Good luck!
Activity 8.5
Refer back to activity 8.4. Remember that you applied the guiding principles for good
coaching in this activity. Advise the line manager on how to practically apply the steps
in the coaching process with the aim to improve performance in his section.
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47 Feedback
Was it easy to apply all the steps? Well done if you managed to do that without cheating!
Step 1 – Set developmental goals. The line manager analyses the areas in which employees
need to improve. The developmental goals can be set based on the developmental plan each
employee submitted.
Step 2 – Identify developmental resources and strategies that will help employees to achieve
the developmental goals set in step 1. These strategies could be, for instance, attending
courses, mentoring or job rotation to provide employees with the skills they need to improve
performance in this division.
Step 3 – Implement strategies. The line manager can now receive actual on-the-job training,
participate in job rotation or start attending a course. It will be useless to identify developmental
resources and interventions without implementing them.
Step 4 – Observe and document developmental behaviour. Here the line manager should
collect and evaluate data to assess the extent to which the employee has achieved each of
the developmental goals (see the challenges in this step in the next section).
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Step 5 – Give feedback. As a coach, the line manager should provide feedback to the employees.
Whether each developmental goal has been achieved or not, all the goals should be revised
and then the entire process starts again.
8.3.3 Challenges during the observation and documentation of develop-

mental behaviour and outcomes
In study unit 3 we addressed the fact that people can make intentional and unintentional
279
errors while observing and evaluating performance. Managers can make similar errors
in observing and evaluating behaviour related to developmental goals. For example, a
manager might make a halo error by assuming that if an employee does a good job at
working towards one developmental goal (eg improving her typing skills), this employee
is also doing a good job at working towards another developmental goal (eg improving
customer service). Therefore, as is the case for performance in general, it is important to
observe and document behaviour specifically related to developmental activities. Docu-
mentation can include memos, letters, email messages, handwritten notes, comments,
observations, descriptions and evaluations provided by colleagues.
Observing an employee’s progress in achieving developmental goals is not such an easy

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task as it seems. The following are constraints that managers might experience in an at-
tempt to observe an employee’s performance regarding developmental plans:
yy Time constraints
Managers may be too busy to gather and document information about an employee’s
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progress towards achieving developmental goals. Consequently, too much time may
elapse between the assignment of the activity and the manager’s checking on the em-
ployee’s progress.
yy Situational constraints
Managers are often unable to observe employees as they engage in developmental
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activities and therefore may not have first-hand knowledge about their performance.
For example, managers do not observe the extent to which an employee enrolled in an
on-line course is an active participant and contributor, or a passive learner.
yy Activity constraints
When the development activity is highly unstructured, such as an employee reading a
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book, the manager may have to wait until the activity is completed to assess whether
the activity has been beneficial.
The question now is how these challenges can be minimised. How can these constraints
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be addressed to make sure that a manager will be able to observe and evaluate an em-
ployee’s performance regarding developmental activities?
285 The following recommendations can minimise these constraints:

−− A good communication plan should explain the benefits of implementing a
developmental plan effectively. This helps the manager to accept the plan.
100
−− Train managers so that they minimise errors (ie rater error training), share notions
of what it means to complete developmental activities successfully (ie frame of
reference training), observe performance accurately (ie behavioural observation
training) and are confident and comfortable in managing employees’ develop-
mental activities (ie self-leadership training). (Refer to study unit 6 for more detail
about these training programmes.)
−− Understand the forces that motivate managers to make an effort to develop
their employees. In other words, what does the manager gain if developmental
activities are supervised appropriately?
Activity 8.6
Study the rater errors during performance review/appraisal provided in study unit 3.
Choose any three of these errors and indicate how they can also manifest during the
observation of developmental behaviour and outcomes. Give practical examples of each
error you have chosen.
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48 Feedback
You had to choose any three of the rater errors. To prove that you understand how each of
them occur, you had to give a practical example to illustrate how each of them manifests
during the observation of developmental behaviours and outcomes. See my examples below
and compare them with yours!
yy Negativity error – this error occurs when the manager regards negative information more
important (and therefore puts more focus on it) than positive or neutral information.
Meisie, a saleslady at PTT Supermarket, was told to improve her customer service, team-
working skills, communication skills (both verbal and written) and report-writing skills.
Several activities were provided to her in an attempt to help her to improve her perfor-
mance in each of these performance dimensions. She was sent to different workshops so
that she could network with other salespeople and learn from them. During the obser-
vation period, the manager realised that Meisie improved a lot in the customer service
performance dimension, but still battled with team work. Instead of acknowledging the
improvement in customer service, the manager dwells/focuses more on the area in which
she did not improve (working in a team) and gives her a very low rating.
yy Stereotype error – this error occurs when the manager has an oversimplified view of
individuals based on group membership. For example (back to the scenario in the first
bullet), if the manager is a sexist man (views women generally as poor performers) and
does not regard women as capable human beings, he will rate Meisie negatively, even if
she shows improvement in all her developmental goals.
yy Contrast error – this error occurs when managers compare individuals with one another
instead of against predetermined standards. Returning to the scenario in the first bullet, it
would be a contrast error if, instead of measuring Meisie’s progress against the preset de-
velopmental goals, the manager compares her progress with other salespeople’s progress.
286 I trust that you will be able to do the same with the remaining rater errors.
8.4 360-degree feedback systems

A 360-degree feedback system is a process in which employees receive confidential,
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anonymous feedback from the people who work with them. For developmental pur-
poses, these people are typically subordinates, the direct manager, peers and customers.
The system will include questions covering a broad range of workplace competencies,
measured on a rating scale, and will also request a rater to provide written comments.
The system includes the employee being rated.
This is a tool that helps employees to build new skills and improve their performance
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in general by gathering and analysing performance information from several reliable

sources. The information from various sources will be compared to establish discrep-
ancies between all the opinions on an employee’s performance. This system is largely
implemented for the employees who have a supervisory role, but it can be used for all
positions in the organisation. The internet is becoming the best tool of administering a
360-degree feedback system.
The 360-degree feedback system automatically compiles the results into a table and
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presents them in a format that helps the recipient to create a personal developmental
plan. Individual responses are combined with responses from other raters in the same
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category to preserve anonymity and to give employees a clear picture of their overall
strengths and weaknesses. The results can be automatically emailed to employees and
the direct line manager to be reviewed before they meet to establish a PDP.
Refer to table 8.3 in the prescribed book for more information on various companies us-
290
ing a 360-degree feedback system. A 360-degree feedback system includes information

on the following competencies: communication, leadership, adaptability, relationships,
task management, production, development of others and personal development.
Sections 8.3.1 to 8.3.3 further discuss the advantages of a 360-degree feedback system,
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the risks of implementing a 360-degree feedback system and the characteristics of a

360-degree feedback system. Study them thoroughly.
Activity 8.7
(a) Briefly explain how each of the following parties play a role in the 360-degree feed-
back system:
yy Peers
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yy Supervisor
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yy Subordinates
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(b) How does 360-degree feedback provide the following two advantages?
yy Reducing “undiscussable”
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103 HRM2604/1
yy Decreased possibility of bias
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(c) Mosima, an HR officer, received feedback for her performance review through a
360-degree feedback system. Her line manager told her that, according to the results
of her performance review, she is underperforming. As a result, she must be demoted
and her salary reduced. Reflect on the characteristics of a 360-degree feedback system
to analyse the decision made by Mosima’s line manager. Is this the right decision?
Substantiate your answer.
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49Feedback
(a)
yy Peers: Since peers work close to each other, they are well positioned to assess their col-
leagues and identify the interventions that can be used to enhance team and individual
effectiveness, for example qualities such as cooperation and interpersonal skills.
yy Supervisors/line managers: They know what is expected of each job incumbent in
each position. They are therefore in a good position to be able to identify employees’
strengths and weaknesses.
yy Subordinates: Subordinates work very closely with their line managers on a daily basis.
They are therefore a better source to provide feedback on their line managers’ performance
in dimensions such as communication and leadership skills.
(b) The 360-degree feedback system gives raters the opportunity to provide anonymous
feedback. This makes it easier for them when they have to give negative feedback which
they might have felt uncomfortable to give in a face-to-face situation. It makes it easier
for employees to identify others’ weaknessess without bias.
(c) The decision is not right. The 360-degree feedback system is only for developmental pur-
poses and cannot be used to demote employees. The system should be used to identify
the weaknesses and strengths of the employee and help the employee to develop a PDP
to turn the identified weaknesses into strengths. Mosima can challenge this decision
through the CCMA as an unfair labour practice.
104
8.5 Summary
In this study unit we learnt that employees’ performance can be improved through a
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PDP. Employees outline the areas in which they need to improve so that the line manager
can suggest interventions to help them improve. One of these interventions is coaching.
Coaching is a continuous process. During coaching, employees should regularly receive
feedback. The 360-degree feedback system provides anonymous feedback from subor-
dinates, the direct manager, peers and customers for developmental purposes.
(1) Developmental plans should include a description of specific steps to be taken,
as well as dates for completion.
(2) Only line managers can draft employees’ developmental plans.
(3) The 360-degree feedback system creates rivalry between employees.
(4) Managers cannot make errors when observing and evaluating behaviour related
to the PDP.
(2) Which of the following are constraints that managers might experience when attempt-
ing to observe employees’ performance regarding personal developmental activities?
(a) Time constraints
(b) Literacy constraints
(c) Situational constraints
(d) Activity constraints

(1) ab
(2) cd
(3) acd
(4) abc
(3) Which of the following are risks associated with implementing a 360-degree feed-
back system?
(a) Anonymity can be compromised and the sensitive information can be distorted.
(b) Raters might experience information overload as they have to complete many
forms.
(c) Employees might not value the opinion of others and start questioning its
reliability and validity.
(d) Managers might be reluctant to cooperate with their subordinates.

(1) ab
(2) abc
(3) cd
(4) bcd
(1) Argue the need for PDPs in the organisation.
(2) What is the role of the direct line manager in the development of a PDP?
105 HRM2604/1
(3) Briefly explain the role of the coaching process in an endeavour to improve employee
performance.
(4) Discuss the characteristics of a good 360-degree feedback system.
(5) Identify the advantages and the risks of implementing a 360-degree feedback system.

293
ing at the answers?
294
1 Option 1 Refer to sections 8.1.2, 8.2 and 8.3 in the

prescribed book, as well as section 8.3.3 in the
study guide.
2 Option 2 Refer to section 8.3.3 in the study guide.
3 Option 3 Refer to section 8.4 in the study guide.
(1) Because the PDP will be outlining areas in which employees feel they need some im-
provement, it will indicate to line managers exactly which mechanisms are needed to
intervene in this regard. Furthermore, there are four main objectives of PDPs, which
are discussed in more detail in section 8.1.1 in the prescribed book. Make sure that you
understand each objective.
(2) Line managers play a pivotal role in the employee developmental process. By participat-
ing in drafting the PDP, line managers will understand the developmental process from
the employees’ perspective, anticipate barriers and defensive attitudes, and create a plan
in a collaborative fashion. The roles to be played by line managers are discussed in more
detail in section 8.2 in the prescribed book.
(3) If the line manager finds coaching to be a suitable intervention to improve employee
performance, he or she must ensure that all steps in the coaching process are followed.
Based on the specific area that needs improvement, the line manager should ensure
that specific goals are set, come up with ways to help the employee to improve, allow
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employees to take part in the developmental initiatives, observe employees participating
and document the developmental behaviour. It is very important for the line manager
to regularly give feedback, whether positive or negative. Complimenting good work
will encourage employees to work harder, while giving negative feedback will alert an
employee to improve performance. Because coaching is an ongoing function, employee
performance can be observed on a daily basis and poor performance can be corrected
early.
(4) The characteristics of a 360-degree feedback system are discussed in section 8.3.3 in the
prescribed book. In order to understand why a 360-degree feedback system “must” have
all these characteristics, you need to first reflect on what would happen if it does not have
each of these. Let us assume, for example, the characteristic of anonymity is lacking in
a 360-degree feedback system. Peers will know who rated them negatively. They will
therefore become rivals and enemies, which can hamper the performance of the organ-
isation as a whole. Imagine also what would happen when a subordinate rates a direct
line manager negatively. The employee can be victimised by this manager in the future.
Do the same with the other characteristics in the prescribed book. This will en-
hance your understanding of all these characteristics!
(5) Although there are many advantages associated with 360-degree feedback systems,
there are also risks involved in using them. You should do exactly what you did in ques-
tion 4. Analyse each advantage of these systems. Ask yourself the following questions:
yy Why are we saying this aspect is an advantage to the organisation?
yy Is this aspect benefiting the organisation, employees, or both? How?
yy How does each risk affect employees and the organisation?
These questions will help you to master any learning outcome set around the advantages and
risks involved in 360-degree feedback systems.
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107 HRM2604/1
Notes/Mind map
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108
TOPIC 3
Topic content
Study unit 9:
Topic 3
Reward systems and legal issues
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Introduction
During the execution stage (stage 3) of the performance management process, em-
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ployees strive to display the behaviour and achieve the results expected of them. If they
succeed, they should be rewarded. This will encourage them to work harder in the next
performance management cycle. This topic discusses different forms of rewards available
for organisations to give to employees as incentives.
The legal aspect of performance management is crucial, as non-compliance could have

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expensive implications for the organisation. There are several South African Acts that
regulate performance management.
Aim of the topic

The aim of this topic is to provide you with a thorough knowledge of the role of rewards
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in performance management, as well as the different labour legislation that regulate

performance.
Learning outcomes

yy Discuss the role of rewards in performance management.
yy Discuss the relationship between rewards and organisational culture.
yy Identify and discuss the labour legislation that regulates performance management.
109 HRM2604/1
Study unit 9
Reward systems and legal issues
Contents

301 Key concepts
302 9.1 Traditional and contingent pay (CP) plans
303 9.2 Reasons for introducing contingent pay plans
304 9.3 Possible problems associated with contingent pay plans
305 9.4 Selecting a contingent pay plan
306 9.5 Legal perspectives on performance management
307 9.6 Ethical dilemmas in performance management
308 9.7 Summary
Learning outcomes

yy Distinguish between traditional and contingent pay plans.
yy Explain reasons for introducing contingent pay plans.
yy Identify possible problems associated with contingent pay plans.
yy Describe considerations to be taken into account when selecting CP plans.
yy Discuss problems associated with CP plans.
yy Identify ethical dilemmas in performance management.
yy Discuss concepts that often come into play in the case of litigation related to the
implementation of performance management systems.
yy Identify South African labour legislation that has an impact on performance
management.
yy Design a performance appraisal system that is legally sound.
Key concepts
yy contingent pay plans

yy organisation's culture
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Important legislation
Labour Relations Act 66 of 1995

Basic Conditions of Employment Act 75 of 1997
Employment Equity Act 55 of 1998
Skills Development Act 97 of 1998
Ethics
9.1 Traditional and contingenT pay (CP) plans

What do we mean by “rewards”? Are they related to performance management (PM)
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systems? What is the relationship between the two? We are going to find answers to
these questions in this study unit.
You learnt in your labour relations modules that the relationship between the employer
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and the employee is based on the economically motivated process in which certain inputs
(physical and mental work behaviour) are exchanged for some outputs (rewards) that are
considered to be desirable in satisfying individual needs or goals. The utilisation of rewards
can therefore be a very important and powerful tool for shaping and determining work
behaviour aimed at attaining the strategic objectives of an organisation.
Two main approaches that an organisation can use to reward its employees are the
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traditional approach and contingent pay (CP) plans. The main distinguishing factor be-
tween these two approaches is that the traditional approach does not take employee
performance into account. Employees receive their rewards for the position they fill and
not necessarily for how they do their work. On the other hand, CP plans, also called pay-
for-performance, take into consideration employees’ performance.
Activity 9.1
(a) Identify two approaches that organisations can adopt to reward employees.
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(b) Do you think there is any relationship between the two approaches you identified in
(a) and performance management? Substantiate your answer.
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111 HRM2604/1
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Feedback
52
(a) The two approaches are the traditional and contingency pay plan approaches.
(b) There is no relationship between the traditional approach of rewarding employees and
performance management. Only individuals’ positions are considered to get rewards.
However, there is a strong link between the CP plans approach and performance man-
agement. When this approach is followed, individuals receive rewards based on how
well they do their work.
9.2 Reasons for introducing contingency pay plans

When you studied the two approaches of rewarding employees you should have ana-
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lysed each and concluded which one you perceive as appropriate and fair, especially if
you think you are a hard worker and you deserve to be recognised for that!
Activity 9.2
(a) Briefly explain why many organisations are embracing CP plans.
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(b) Performance = Declarative knowledge × Procedural knowledge × Motivation (see

study unit 4). Which one of the components in this formula can be addressed by CP
plans? Substantiate your answer.
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53 Feedback
(a) Firstly, if employees know exactly what they will receive if they perform at the higher level
(expectancy) and they value what they expect (valence), they will put more efforts into
performing outstandingly (instrumentality).
Secondly, the organisation can attract high-achieving performers and these employees
can be retained if CP plans are embraced.
(b) The motivation component is addressed by CP plans. High-achieving performers will
be motivated to work even harder if they know that their good performance will be
recognised by the organisation.
9.3 Possible problems associated with contingenT

pay plans
Although there are many positive reasons for organisations to introduce CP plans, they
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do not always bear fruits as expected. In such cases, it becomes very expensive for an
organisation to implement CP plans and as a result, they get abandoned. Several reasons
that lead to CP plans not succeeding are discussed in section 10.3. Make sure that you
understand each reason and how it contributes to the CP plan being unsuccessful. In
addition to these reasons, also study the examples of Green Giant and Sears in the last
paragraph of section 10.3. These examples illustrate some of the complications organisa-
tions experience when CP plans are embraced.
9.4 Selecting a contingenT pay plan

Not all types of CP plans can be used across all organisations. Some considerations need
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to be taken into account before a choice is made. Two main considerations are the organ-
isational culture and the organisation’s strategic direction. There are types of CP plans
that can succeed in cultures labelled as traditional cultures, yet be unsuccessful in those
labelled as involvement cultures.
113 HRM2604/1
Activity 9.3
(a) Just to refresh your memory, find any source that can provide you with a definition
of organisational culture and write it down here.
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(b) Briefly explain why the organisational culture must be considered before choosing
a CP plan. Provide a suitable example.
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54Feedback
(a) Organisational culture refers to “a pattern of shared basic assumptions that was
learned by a group as it solved its problems of external adaptation and internal integra-
tion, that has worked well enough to be considered valid and, therefore, to be taught
to new members as the correct way you perceive, think, and feel in relation to those
problems” (Schein, 2004:17).
Ravasi and Schultz (2006) state that organisational culture is a set of shared mental as-
sumptions that guide interpretation and action in organisations by defining appropriate
behaviour for various situations.
(b) Different CP plans suit different cultures. For example, if the organisation's culture sup-
ports teamwork, it will not be a good idea to choose CP plans such as sales commissions
or piece rates. These can succeed in cultures that recognise individual performance. If
teamwork is recognised, team rewards should be implemented.
9.5 Legal perspectives on performance management

Like any other human resource management function, such as recruitment and selec-
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tion, training and development, compensation and employment relations, performance

management is influenced by South African labour legislation. This means that when
they are not satisfied with the outcome of their performance ratings, employees can
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report the matter to the Commission for Conciliation, Mediation and Arbitration (CCMA).
In most instances, the cases reported to the CCMA regarding performance management
are unfair labour practices. Employees could be dissatisfied with either the procedure
followed to arrive at their poor performance rating or the reasons the employer puts
forward for the low rating.
Study sections 10.7 and 10.8.
Activity 9.4
Refer back to study unit 2 and study figure 2.1 in particular, together with a description of
each stage in the diagram. Which stage in the diagram do you find to be more affected
by legal compliance than others? Substantiate your answer.
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55Feedback
You should have identified performance review as the stage that is more affected by legal is-
sues than any other stage in the diagram. Why performance review? What do you find to be
the most possible reason?
It is because of the interaction between two people, where one party has authority to rate the
other. These people will either reach consensus or differ about the rating given to the ratee.
This could be based on facts or just be a perception. If they reach an agreement, this is actually
good for the organisation. However, if they do not agree, the ratee can take major legal action
against the organisation. Section 10.8 discusses several other concepts that often come into play
in the case of litigation related to the implementation of a performance management system.
Section 10.9 in the prescribed book discusses several laws impacting on performance
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management in the United States of America. Do not study this section at all. The influ-
ence of the South African legislation on performance management is discussed in this
study guide.
318 Do the following activity as a point of departure for this section.
115 HRM2604/1
Activity 9.5
Critically study the six concepts found to be in play in the case of litigation relating to
performance management in section 10.8 in the prescribed book. (Obtain copies of the
South African legislation, for example the Basic Conditions of Employment Act 75 of
1997 (BCEA), the Labour Relations Act 66 of 1995 (LRA), the Employment Equity Act 55 of
1998 (EEA) and the Skills Development Act 97 of 1998 (SDA). You may buy copies of these
Acts from the Government Printer, or alternatively visit www.gov.za on the internet and
download these documents. Study each of these documents thoroughly.
Now do the following:
(a) Among the six concepts that you studied in section 10.8 in the prescribed book,
identify the ones that are related to some of the South African legislation. In other
words, match each concept with the Act that you think is applicable.
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(b) Interpret the relationships you have identified in (a) above. For example, if you found
the concept of illegal discrimination to be related to the Employment Equity Act 55
of 1998, state the ways in which they are related.
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(c) To prove that you understand the South African labour legislation, give advice to
organisations on how they should approach performance management in a way that
is legally sound. Base your advice specifically on the answer you gave in (a). Where
applicable, give practical examples.
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56Feedback
This could have been one of the challenging activities! However, the easiest way to proceed
would have been to read the relevant Acts as indicated in the instructions at the beginning of
this activity, in conjunction with the concepts discussed in section 10.8.
You were supposed to match each concept with a related Act. You should have substantiated
your answer by briefly describing each relationship. See the guidelines provided below:
(a) There is a very close relationship between the following:
(1) Employment at will concept – Labour Relations Act 66 of 1995 and Basic Conditions
of Employment Act 75 of 1997
(2) Adverse impact and illegal discrimination – Employment Equity Act 55 of 1998 and
Skills Development Act 97 of 1998
You could have identified many Acts having some link with these concepts, as long as you can
substantiate each relationship!
(b) Here you had to elaborate on the relationships that you identified in (a).
See the following guidelines:
yy Employment at will concept – Labour Relations Act 66 of 1995 and Basic Con-
ditions of Employment Act 75 of 1997. They both involve an element of employee
dismissal. According to the employment at will concept, the employer or employee
can end the relationship at any time. However, three forms of dismissals are regulated
in the LRA, namely dismissal for misconduct, incapacity (poor work performance
and ill health or injury) and dismissal based on operational requirements. Similarly,
the Basic Conditions of Employment Act 75 of 1997 requires employees to give notice
before they end the employment contract.
yy Adverse impact and illegal discrimination – Employment Equity Act 55 of
1998. In the adverse impact concept, discrimination can take place when previously
disadvantaged groups (women, blacks, Coloureds and Asians) receive lower ratings
than previously privileged groups. In illegal discrimination, raters assign different scores
to employees based on factors that are not work-related, such as race, nationality,
colour or ethnic group. All forms of discrimination are addressed in the EEA. In this Act,
117 HRM2604/1
affirmative action was promulgated to address the injustices of the past regarding
previously disadvantaged groups. This Act also prohibits any form of discrimination,
whether on the basis of race, ethnic group, religion, age, gender, or anything else.
However, you must be able to distinguish between illegal and legal discrimination in
the performance management system. The prescribed book clearly explains this in
the last paragraph of section 10.8.
The Skills Development Act 55 of 1998 further compels organisations to provide rel-
evant training to the previously disadvantaged groups in order to close the skills and
knowledge gap between these groups and the previously privileged group.
(c) The advice that you can give to organisations to ensure that they approach performance
management in a legal manner is that they should always consult labour legislation to
avoid illegal approaches.
If, for instance, performance appraisals are used as the basis for personnel selection
decisions, such as promotions and transfers, or decisions to lay off or discharge an em-
ployee as opposed to retaining the employee, these evaluations are subject to the labour
legislation we have in South Africa. In other words, if the total “selection process” has an
adverse impact on members of the previously disadvantaged groups, each component
of the selection process, including the performance appraisal or evaluation, must be
independently evaluated for an adverse impact. If it is determined that the performance
appraisal is causing an adverse impact, the employer must be able to demonstrate its
job relatedness. If the appraisal cannot be “validated” by showing its job relatedness, the
adverse impact must be eliminated through changes in the evaluation or the procedures
by which it is implemented.
Since termination of employment is regulated in the Labour Relations Act 66 of 1995

and the Basic Conditions of Employment Act 75 of 1997, a copy of these Acts should be
displayed on the walls in the workplace, as required by law.
In a case where the employer wishes to dismiss an employee owing to incapacity (poor
performance), it is important that the employer can prove that the reason for this dis-
missal is valid by providing supporting documents. The correct procedure also has to be
followed, as the LRA emphasises.
Performance management systems must not only be legally sound, they should also
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be ethical. The next section takes us through the ethical perspective on performance
management systems.
9.6 Ethical dilemmas in performance management

Performance appraisal also lends itself to ethical issues. The assessment of an individual’s
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performance is based on observation and judgement. Line managers are expected to

observe the performance (or understand the process) in order to judge its effectiveness.
Yet, some line managers rate performance based on factors that are not job related (for
example the employee is not loyal to the rater, or the ratee belongs to a different caste
or religion).
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Activity 9.6
Obtain any source in which you can find the concept of ethics defined. The source could
be an academic article in one of the many journals, a book or the internet. In your own
words, explain what ethics means.
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57 Feedback
This is how Rossouw (1998) defines ethics:
“Ethics concerns itself with what is good or right in human interaction. It involves consideration
of ‘good’, the ‘self’ and the ‘other’.”
Brewster, Carey, Grobler, Holland and Wärnich (2008:168) define ethics as follows:
“Ethics deal with values, with good and bad, with right and wrong.”
You could have obtained sources that define ethics differently from the sources quoted here.
However, ethics generally has to do with good, bad, right, wrong, or morality which are also
emphasised by different authors.
Ethics should be the cornerstone of performance evaluation and the overall objective
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of highly ethical performance reviews should be to provide an honest assessment of

the performance and mutually develop a plan to improve the employee’s effectiveness.
Many managers talk about ethics but do not recognise or act upon ethical issues in their
day-to-day managerial responsibilities. Employees have a big stake in the way managers
evaluate and operate. Managers and employees alike are concerned about “politics and
lack of fair treatment, honesty and truthfulness” in connection with performance reviews.
Experience has clearly indicated that the handling of performance review sessions is
usually far more critical than the decision made or information conveyed in the session.
Frequently, when unsuccessful promotion candidates are notified of the decision that
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someone else has been selected, no reasons are provided for their rejection. They are not
told why. Often they are not told anything, usually because the managers or supervisors
do not feel equipped or skilled enough to explain the reasons in a systematic and rational
way. Sometimes, major miscommunication occurs in performance review sessions owing
to basic differences in ethical orientation.
323 Consider this conversation:
The reviewer: “That report is a requirement, and we need to follow the rules of the organisa-
324
tion. I want it before the end of this week.”
119 HRM2604/1
The person being reviewed: “I make a significant contribution to this organisation and I
325
don’t have time to prepare reports that no one looks at. So, judge me on what I accomplish,
not on adherence to the rules!”
What is happening here? Who is wrong and who is right? Do you still remember the
326
traditional and involvement cultures we discussed in section 10.4?
Basically, the reviewer is concerned with decisions and actions that conform to basic
327
principles and rules (traditional culture), while the person being reviewed believes in
an involvement culture which appears to be orientated towards the outcome – the end
justifies the means (results). They are talking on two different, nonconnecting planes.
Unless the employee and the reviewer are successful in negotiating an ethical balance,
each may view the other as taking unfair shots – and the battleground will be the per-
formance review process!
9.7 Summary
In this study unit you learnt about ensuring good performance through the rewards system.
328
Rewards motivate employees and encourage high performance. Rewards also encourage
high-performers to remain longer with the organisation. Performance should be approached
in a way that complies with the law. The critical issue that is often litigated is the performance
review (appraisal). However, Acts such as BCEA, EEA, LRA and SDA regulate many aspects of
performance management. Performance appraisal also lends itself to ethical issues, because
the assessment of an individual’s performance is based on observation and judgement. Eth-
ics should be the cornerstone of performance evaluation and the overall objective of highly
ethical performance reviews should be to provide an honest assessment of the performance
and mutually develop a plan to improve the ratee’s effectiveness.
(a) The aim of the traditional approach of rewarding employees is to reward each
employee for filling a specific position as per the job description.
(b) The aim of the traditional approach of rewarding employees is to reward each
employee based on how well they perform their jobs.
(c) A contingent pay plan is also referred to as pay-for-performance.
(d) Retaining high performers is one of the reasons for introducing CP plans.

(1) abc
(2) acd
(3) abcd
(4) bd
(2) Which of the following statements refer to possible problems associated with CP plans?
(a) There is the folly of rewarding A while hoping for B.
(b) Rewards are not considered significant.
(c) There is intrinsic motivation at the expense of extrinsic motivation.
120
(d) Rewards for executives are disproportionately high compared to rewards for
other employees.

(1) abc
(2) bc
(3) abcd
(4) abd

(1) When choosing CP plans, the organisational culture should be considered.
(2) Traditional cultures are characterised by shared decisionmaking, lateral com-
munication and loosely defined roles.
(3) A skills-based pay plan is suitable for the organisation adopting teamwork as
its strategic business objective.
(4) Misrepresentation refers to revealing untrue, unfavourable performance infor-
mation that damages employees’ reputation.
(1) Distinguish between traditional and contingent pay plans.
(2) Argue possible reasons for introducing contingent pay plans.
(3) Explain considerations to be taken into account when selecting a contingent pay plan.
(4) Discuss concepts that often come into play in the case of litigation related to the
implementation of performance management.
(5) Identify South African labour legislation that impacts on performance management.

329
ing at the answers?
330
121 HRM2604/1
(1) Refer to section 10.1 in the prescribed book.

When the traditional approach is followed, the employees get rewarded for filling spe-
cific positions in the organisation. Their performance in that particular position is not
considered when determining their rewards. The CP plans focus on how well employees
perform their jobs. Employees receive increases in pay based wholly or partly on job
performance. Refer to section 10.1.
(2) Study section 10.2 in the prescribed book.
Reasons for choosing CP plans:
−− Performance management will be taken seriously, since employees will know that it
really pays off to work hard.
−− The organisation will see the importance of clearly defining what is to be rewarded
and how much the reward should be.
−− The communication in the organisation will be improved, since managers will com-
municate to employees what behaviour and results are expected of them and how
results can be achieved.
−− The sorting effect will be encouraged. This means that top performers will be attracted
to the organisation and retained if CP plans are introduced.
−− CP plans can project a good corporate image, because this system is viewed as fair
as it is based on clearly communicated expectations and standards.
−− It improves motivation, since employees will work even harder if they know they will be
rewarded. However, this depends on whether they are given the right tools to perform
and whether the reward is of value to them.
(3) Refer to section 10.4 in the prescribed book. The following are the considerations to be
taken into account when choosing CP plans:
−− Is the organisation built around individual or teamwork norms?
−− Are high performers seen as role models or threats to top management?
−− Does the organisation have a traditional or involvement culture? (Study the two types
of culture so that you will be able to distinguish between them.)
(4) These concepts are fully discussed in section 10.8 in the prescribed book. Study them in
conjunction with activity 9.5. Make sure that you understand the relationship between
some of these concepts and South African labour legislation.
(5) The labour legislation is fully discussed in the feedback on activity 9.5. Make sure that
you study these Acts thoroughly at www.gov.za, so that you know how each Act af-
fects performance management. You may also purchase copies of these Acts from the
Government Printer.
331
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124
TOPIC 4
Topic content
Study unit 10:
Topic 4
Managing team performance
332
Introduction
This topic introduces a “team” aspect to performance management. It will not make any
333
sense to reward individual employees if the organisation is organised around teams. Dif-
ferent teams are used in organisations and they all have implications for performance
management.
Aim of the topic

The aim of this topic is to provide you with a comprehensive understanding of the im-
334
plications of teams for performance management practices.
Learning outcomes

yy Discuss the implications of teams for performance management.
yy Illustrate the performance management process that includes a team component.
125 HRM2604/1
Study unit 10
Managing team performance
Contents
336Key concepts
33710.1 Definition of a team and its importance
33810.2 Types of teams and implications for performance management
33910.3 Purposes and challenges of team performance management
34010.4 Including team performance in the performance management system
34110.5 Rewarding team performance
34210.6 Summary
Learning outcomes

yy Define the concept of a “team” in the organisational context.
yy Discuss why teams are formed in organisations.
yy Distinguish between different types of teams in the organisation.
yy Analyse the implications of teams for the implementation of performance manage-
ment systems.
yy Examine team performance management and recognise its challenges.
yy Discuss basic principles to be followed when designing team performance manage-
ment systems.
yy Explain the implications of measuring and rewarding individuals while the organisa-
tion is based on teams.
Key concepts
yy team
yy team performance management
126
10.1 definition of a team and its importance
In the previous study units we have focused mainly on the management of individual
344
performance and not on team performance. Given the increasing pervasiveness of teams
in organisations worldwide, it would be a big mistake if we exclude the management
of team performance from our discussion! This study unit will introduce us to different
types of teams in organisations, as well as their influence on the implementation of per-
formance management systems.
In the definition of a team in section 11.1 in the prescribed book we find several aspects
345
that differentiate a team from a group. Firstly, there should be two or more people working
together. Secondly, there should be interdependence among these people and, finally,
these people should share a common and valued goal, objective or mission.
Activity 10.1
Study the definition of a team in section 11.1 of the prescribed book and provide any
three examples of teams that we find in a working environment.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
127 HRM2604/1
60Feedback
There are many examples you could have given. Compare the ones I provide here with yours
and see if you are on the right track.
yy A group of top managers working together face to face in the process of planning and
implementing organisational strategies.
yy A team of surgeons, radiologists, anaesthetists, theatre nurses and other team members
undertaking theatre procedures.
yy In an effort to combat juvenile offence, parents, welfare agencies, psychologists, social
workers, legal officers and other specialists meeting to share ideas.
yy A group of medical specialists operating from Cuba, Canada, India and South Africa in an
attempt to find a new drug to cure AIDS. They communicate only through the telephone,
emails and other social networks.
yy A team of cleaners providing all the cleaning services at the University of South Africa.
From these examples, you should have noticed that through teams organisations can
346
achieve goals that cannot be achieved by an individual. For example, for a specific medical
condition, radiologists identify and confirm the problem, and then a surgeon performs
the operation.
10.2 Types of teams and implications for performance

management
From Activity 10.1, you should have noticed that there are several types of teams in an
347
organisation. However, these teams differ according to the complexity of the tasks (from
routine to nonroutine) and membership configuration (from static to dynamic). Based on
these distinctions, teams are categorised into work or service, project and network teams.
All these types are discussed in detail in section 11.2 in the prescribed book.
Activity 10.2
Refer to the feedback on activity 10.1. Look at each example of a team provided there
and identify which ones can be categorised as a work (service), project or network team.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
128
61Feedback
yy A group of top managers working together face to face in the process of planning
and implementing organisational strategies – This is a project team since it comprises
people of different disciplines in the organisation. For example, the executive directors of
marketing, human resource management, finance, and so forth will be working together
to align the strategies of their respective departments with those of the organisation as
a whole.
yy A team of surgeons, radiologists, anaesthetists, theatre nurses and other team
members undertaking theatre procedures – This is also a project team. Each group
of professionals possesses unique skills that the others do not have.
yy In an effort to combat juvenile offence, parents, welfare agencies, psychologists,
social workers, legal officers and other specialists meeting to share ideas – This
is also a project team. Each group plays its unique role, but they are working together
towards a shared objective.
yy A group of medical specialists operating from Cuba, Canada, India and South Africa
and in an attempt to find a new drug to cure AIDS. They communicate only through
the telephone, emails and other social networks – This is a network team. Members
of this team do not meet face to face. They communicate with each other through differ-
ent types of communication technologies, such as emails, telephone, video conference.
yy A team of cleaners providing all the cleaning services at the University of South
Africa – This is a work/service team, since they work together daily and perform tasks of
a routine nature (the same tasks every day).
10.3 Purposes and challenges of team performance

management
Whether employees work individually or are organised in teams, the goals of a perfor-
348
mance management system are the same, that is, strategic, administrative, informational,
developmental, organisational maintenance and documentational goals. However, one
additional goal of performance management concerned with team performance is to
ensure the accountability of all team members and to motivate them to have a stake in
the team performance.
Do you still remember the concept of “social loafing”? It refers to team members who
349
would not engage in the tasks assigned to their team, but who would still expect incen-
tives based on the hard work of other team members. Such team members are referred
to as “free riders”. This is one of the main challenges when implementing performance
management that involves teams.
Study the questions posed as challenges to organisations that choose to include a

350
team component in the performance management system in section 11.3 in the pre-
scribed book.
129 HRM2604/1
10.4 Including team performance in the performance
management system
The very same process of performance management that we studied in study unit 2
351
(figure 2.1) is also applicable to team performance management. The only difference is
that for team performance management, we measure the performance of individuals
working together towards a shared goal.
Activity 10.3
Study the different stages in the performance management process in sections 11.4.1
to 11.4.6 in the prescribed book. Identify any similarities and differences between per-
formance management focusing on teams and performance management focusing on
individuals studied in study unit 2.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
130
62Feedback
You must have spotted several similarities in each stage. Below are some of the similarities found.
Prerequisites stage
Performance management concerned with both individual and team performance emphasises
that employees should know the mission and objectives of the organisation. The knowledge of
the job in question is also emphasised, as well as the skills and abilities (KSAs) needed by each
individual to contribute to the whole team’s success. (Note the five KSAs discussed in section
11.4.1 in the prescribed book.)
Performance planning
Team performance management also takes results and behaviour into consideration, as well
as the creation of a developmental plan, but now these are at the team level.
Performance execution
Similar to performance management focusing on individuals, team performance manage-
ment in this stage allows team members to engage in tasks assigned to them. In cases where
there is a supervisor, he or she will be observing and documenting team performance, as well
as making resources available for the team to succeed.
Performance assessment
Team members also assess one another’s performance (on an individual basis), as well as the
performance of the team as whole.
Performance review
Two performance review meetings take place in team performance management. During the
first meeting, the supervisor or manager evaluates the team’s performance if the team is not
autonomous (independent). If the team is autonomous, the team leader takes the lead. Dur-
ing the second meeting, the manager/supervisor or team leader meets each team member
individually.
Performance renewal and recontracting

This stage involves the principles applied in the individual performance management system.
The information gathered during the performance review stage is used to adjust goals, either
upwards or downwards.
To be able to identify the similarities and differences, study each stage in conjunction with
chapter 2 in the prescribed book.
10.5 Rewarding team performance

Organisations that organise their employees around teams should adjust their performance
352
management systems accordingly. It will not help the organisation to reward employees
for individual performance, while encouraging teamwork.
131 HRM2604/1
Activity 10.4
TT Transport Services is a well-known truck maintenance workshop in town. For the entire
seven years of its existence it paid its employees’ salaries. This means that all employees
were entitled to their salaries, regardless of the output they produced. Now, as the strate-
gic objective of this organisation has changed, all employees are remunerated according
to a pay-for-performance plan. The organisation moved from a salaried workforce to a
pay-for-performance reward system. The team in the truck maintenance workshop was
actively involved in setting the team goal, which is to shorten the time that clients’ trucks
are withdrawn for maintenance. The team will therefore receive additional compensation,
depending on whether they accomplish this team-based goal.
Discuss how the performance of the team at TT Transport Services can be evaluated and
rewarded.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
63 Feedback
Firstly, the team’s performance should be measured against the achievement of goals and results
and rewarded accordingly. This will encourage team spirit. Secondly, individual performance
should also be measured. This will help to identify individual behaviour that contributes to
the success of the whole team and solve the problem of free riders.
10.6 Summary
Organisations use different types of teams. These different types of teams have differ-
353
ent implications for performance management. The same process followed to manage
individual performance can still be used to manage team performance.
132
(1) Which of the following are basic principles to be followed when designing a perfor-
mance management system that includes teams?
(a) Define subgroups that have a lot in common.
(b) Measure short-term changes.
(c) Use a multimethod approach to measurement.
(d) Clearly define measurement goals.

(1) ab
(2) abc
(3) abcd
(4) cd

(a) The aim of the performance management system concerned with team perfor-
mance is to make all team members accountable and to motivate them to have
a stake in team performance.
(b) Within a team, two or more people interact dynamically and independently and
share a common and valued goal, objective or mission.
(c) One reason why teams are popular in the organisation is that they enhance the
social responsibility to the community.
(d) If the organisation is based on teams but performance is still measured and
rewarded at the individual level, team performance will be successful.

(1) abc
(2) bcd
(3) acd
(4) abcd
(3) Which of the following questions should be asked by organisations that choose to
include a team component in their performance management?
(a) How do we assess relative individual contributions?
(b) How do we balance individual and team performance?
(c) How do we identify individual and team performance?
(d) How do we gather performance information?

(1) abc
(2) cd
(3) ab
(4) abc
(1) Distinguish between different types of teams in an organisation.
(2) Analyse the implications of teams for the implementation of performance manage-
ment systems.
(3) Explain the implications of measuring and rewarding individual performance while
the organisation makes use of teams.
133 HRM2604/1

354
ing at the answers?
355
1 Option 4 Refer to section 11.2 in the prescribed book, as

well as activity 10.2 in the study guide.
2 Option 3 Refer to sections 11.1 and 11.3 in the prescribed

book.
Feedback on essay-type questions

65
(1) Teams in organisations include work/service, project and network teams. Make sure that
you know how these teams differ. Study section 11.2 in the prescribed book in conjunc-
tion with activity 10.2.
(2) First discuss the six basic principles that need to be followed when including team per-
formance in the performance management system. Further, study the different stages of
performance management in sections 11.4.1 to 11.4.6. You will notice that these stages
are similar to individual performance management in study unit 2. The only difference
is that each stage highlights how a team performance element can be applied. For
example, the prerequisites stage (stage 1) identifies the knowledge, skills and abilities
needed by each team member to work towards achieving the goals of the whole team. In
stage 2 (performance planning), as in the individual performance management system,
results and behaviour expected of the team are clarified. Team members are informed
of the expected results and behaviour, as well as the developmental goals that need to
be achieved by the team as a whole.
Only two stages are discussed here. You should be able to do the same with the other
four stages. Use the discussion of these two stages as a guideline.
(3) If the organisation is based on teams but performance is still measured and rewarded at
the individual level, team performance will suffer. Individual rewards should be applied
only where employees are working independently. There should not be any coopera-
tion required from other individuals. However, if a team approach is adopted by the
134
organisation, a team reward system must be applied. Rewarding individuals in a team
environment will lead to competition among team members. Study section 11.5 in the
prescribed book.
This is the last study unit for this module. A wise student will revise the study guide as
356
many times as possible, together with the relevant sections in the prescribed book,
and do all the activities and self-assessment questions in this study guide. Convert
all learning outcomes at the beginning of each study unit into questions and answer
all of them! Good luck!
135 HRM2604/1
Notes/Mind map
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BIBLIOGRAPHY
Aguinis, H. 2009. Performance management. 2nd edition. Upper Saddle River, NJ: Pearson
Prentice Hall.
Brewster, C, Carey, L, Grobler, P, Holland, P & Wärnich, S. 2008. Contemporary issues in hu-
man resource management: Gaining a competitive advantage. 3rd edition. Cape Town:
Oxford University Press Southern Africa.
Coetzee, M & Holtzhausen, MME. 2007. Human resource management and labour relations.
Pretoria: University of South Africa.
Fletcher, C. 2002. Performance appraisal and career development. 2nd edition. Cheltenham:
Stanley Thornes.
Guide to managing human resources. 2011. Available on the internet at: http://hrweb.berke-
ley.edu/guides/managing-hr/managing-successfully/performance-management/
concepts (accessed 2 March 2012).
Guman, JA & Saks, AM. 2011. Performance management and employee engagement.
Human Resource Management Review, 21(2):123–136.
Houldsworth, E. & Jirasinghe, D. 2006. Managing and measuring employee performance.
London: Kogan Page.
Pieters, M.A. 2009. Textbook for human resource practitioners. Cape Town: Pearson.
Pulakos, ED & O'Leary, RS. 2011. Why is performace management broken? Industrial and
Organizational Psychology, 4:146–164.
Rao, T.V. 2008. Lesson from experience: A new look at performance management systems.
VilkaIpa, 33(3):1–15, July – September.
Ravasi, D & Schultz, M. 2006. Responding to organisational identity threats: exploring the
role of organisational culture. The Academy of Management Journal, 49(3):433–458.
Rossow, GJ. 1998. Establishing moral business culture in newly formed democracies.
Journal of Business Ethics, 17(14):1563–1571.
Schein, EH. 2004. Organisational culture and leadership. 3rd edition. San Francisco:
Jossey-Bass.
137 HRM2604/1

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1.2 PURPOSE OF THE MODULE

in the practices of managing employee performance in the organisation.

1.3 APPROACHES TO THE MODULE AND LEARNING

1.3.2 Critical cross-field outcomes

1.4 OVERVIEW OF THE MODULE

1.4.1 Scope of this module

1.5 FRAMEWORK OF THE MODULE

1.5.2 Study unit

more study units.

1.5.3 Learning outcomes

1.6 THE STUDY PROCESS

1.6.1 Suggestions on how to approach your studies in this module

1.6.2 The importance of completing activities, assignments and self-assessment

1.6.2.3 Self-assessment questions

1.7 THE USE OF ICONS

Learning outcomes. This icon indicates what aspects of the

Study. The study icon indicates which sections of the prescribed

Activity. This icon refers to activities that you MUST do in order to

develop a deeper understanding of the learning material.

tionship between various parts of the learning material.

Assessment. This icon indicates that you will be required to test

Feedback. This icon indicates that you will receive feedback on

with the following:

1.9 WHAT YOU CAN EXPECT FROM UNISA

30 Good luck and enjoy the module!

32 Lecturer Performance Management Practices

throughout this topic.

43 One way is through the process of performance management.

44 The two main factors that contribute to employee satisfaction are

probably also increased productivity. Performance management focuses, among other

Aim of the topic

and practices of performance management as one of the human resource management

After completing this topic, you should be able to:

After completing this study unit, you should be able to:

Introduction: origin and evolution of performance

assessment of performance-related abilities (and more recently, competencies) rather than

Study section 1.1 in the prescribed book.

definition for the concept of performance management. However, the definition in

yy Alignment with strategic goals

are not working, ask a relative or a friend.

71 If not, your organisation is less likely to achieve its goals.

72 The performance management process is there to close that gap!

73 Note: PM is NOT performance appraisal. See the differences below.

Performance management Performance appraisal

yy Strategic business considerations yy Assesses employee strengths and

75 Table 1.1 Comparisons between Performance Appraisal Systems and Performance

Performance Appraisal Systems Performance Management Systems

Adapted from Rao (2008).

1.2 The performance management contribution

Study section 1.2 in the prescribed book.

employed relatives or friends if they can identify with them.

1.3 Disadvantages/dangers of poorly implemented

Study section 1.3 in the prescribed book.

(a) The disadvantages impacting directly on the scenario:

1.4 Reward systems

formance management is the following:

Analyse the performance management of your organisation and comment if it is linked

Employees regard reward and reward-related decisions as subjective statements on their

Although many factors contribute to the establishment of sound employee–manager relation-

Study section 1.4 in the prescribed book.

(a) Define the concept of a reward system.

75 Table 1.1 Comparisons between Performance Appraisal Systems and Performance

3. Enhances the ability to adapt to environmental Goals

4. Provides focus and allows for better allocation of Strategies

6. Allows for the consideration of new options and

7. Provides employees with information to direct