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Performance Management

Definition M. Armstrong and H. Murlins A process or set of processes for establishing shared understanding about what is to be achieved, and for managing and developing people in a way, which increases the probability that it will be achieved in the short and longer term.

Locket in R. Harrison A continuous process in which organization clarify the level of performance required to meet their strategic objectives, convert them into unit and individual objectives and manage them continually. (so) that they remain relevant and consistent with overall strategic objectives

Aim of Performance Management Establish a culture in which managers, individuals and groups are responsible for the continuous improvement of business processes and of their own skills, competencies and contributions Empowering, motivating and rewarding employees to do their best Proactively managing and resourcing performance against agreed accountabilities and objectives The process and behaviors by which managers manage the performance of their people to deliver a high-achieving organization Maximizing the potentials of individuals and teams to benefit themselves and the organization, focusing on achievement of their objectives West Bromwich Building Society

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Performance Management process

Preparation of the mission and value statement linked to business strategy Definition of corporate and functional or departmental objectives Agreement of accountabilities, tasks, objectives, competences and performance measures the performance agreement or contract Agreement of work plans and personal development and performance improvement action plans (this can form part of performance agreement) Continuous management of performance throughout the year Preparation by the manager and the individual for the formal review The annual performance review, which leads to a new performance agreement Formal development and training programmes prompted by the performance review (but throughout the year less formal training will be taking place in the shape of coaching, counseling, on- the-job training and self- development activities) Rating or ranking performance although usual, this is not an inevitable performance management activity Performance related pay (PRP)- link between performance as measured by a performance management process and pay is becoming more common

Mission and value


Performan ce

Continuou s Perfor.

Preparation for review

Performanc e Review

Performance Rating Performance related pay

Developme nt &

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Performance Appraisal The formal assessment and rating of individuals by their managers at, usually, an annual review meeting

How Performance Appraisal System integrates with other human Resource Systems
Performance related pay Career Developmen t Incentive Compensati on bonus

Customer Focus

Performance Appraisal System Training


Organization al redesign

Non financial incentives

Compensati on

Comparison between management





Performance Appraisal 1. Top down assessment dialogue 2. Annual appraisal meeting one or more
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Performance management Joint process through Continuous review with

3. Use of rating 4. Monolithic system 5. Focus on quantified objectives as well as objectives 6. Link to pay less likely to be a direct link to pay 7. Bureaucratic Documentation kept to a minimum Views from practitioners about performance management A management tool which helps managers to manage Driven by corporate purpose and values To obtain solutions that work Only interested in things you can do something about and get a visible improvement Focus on changing behavior rather than paperwork Its not a system A natural process Focus on development

review Ratings less common Flexible process Values and behaviors

Biases that affect managers Evaluations of staff (R.Bacal,2000) Factors that may affect a managers assessments during performance appraisal Halo or Horn Effect The halo effect is the tendency to rate someone high in all categories because he or she is high in one or two areas. Evaluating someone lower is sometimes also called the horn effect Standards of Evaluation When using categories such as fair, good, excellent, etc, we should be aware that the meanings of these words will differ from person to person Central tendency

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This is the habit of assessing almost everyone as average. result in appraiser not rating anyone very or very low Recency Bias

This bias will

It is a tendency to assess people based on most recent behavior and ignoring behavior that is older Leniency bias There is a tendency to rate higher than is required, usually accompanied by some rationalization as to why this is appropriate Opportunity Bias The absence of the notion that opportunity (factors beyond the control of the employees) may either restrict or facilitate performance, and assigning credit or blame to the employee when the true cause of the performance was opportunity False attribution Errors The tendency to misattribute success and failure to an individual, and assume they are both under the complete control of the employee

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