chrmp

CHRMP (CERTIFIED HUMAN RESOURCE ®

Performance
1
Management
Domain Excellence Business Acumen
MANAGEMENT PROFESSIONAL) CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

Courseware Handbook
chrmp
®
Human Resource Management, over the
CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL years, has evolved as a strategic function in
organisations There is an expressed need for
trained HRM professionals having the required

®
Technology Efficacy Workplace Proficiency competencies to deliver results that impact
business.

p
CHRMP (Certified Human Resource Management Professional) uses a
proprietary competency framework to prepare HR professionals in four key
competency areas:
- Domain Excellence
rm
- Business Acumen
- Workplace Proficiency
- Technology Efficacy

CHRMP courseware from the series ‘Domain Excellence in HR’ follows a

practical and industry- oriented approach aimed at helping HR professionals
create greater success at their workplace. Within this certification handbook,
you will find:
- Practical templates and frameworks ready to execute
- Illustrative examples to help you understand the concepts better
ch

- Pragmatic planning suggestions

- Application based content to augment your learning

Visit www.chrmp.com

Launched in 2010, CHRMP certification has helped thousands of HR

professionals add tremendous value to organisations while also maximizing
their potential for career growth. CHRMP offers different certifications for
varied experience levels within HR as well as specializations for various HR
domains. Our certified professionals now hold distinguished positions in stellar
organisations across the globe in more than 40 countries.

chrmp
®

CERTIFIED HUMAN RESOURCE

MANAGEMENT PROFESSIONAL

Performance
1
Management
 chrmp
®

CERTIFIED HUMAN RESOURCE

MANAGEMENT PROFESSIONAL

chrmp
®

CERTIFIED HUMAN RESOURCE

MANAGEMENT PROFESSIONAL

Performance mangement
Measuring and managing performance

Ripples Learning
 ®
Performance Management

p
Measuring and managing performance
rm
ch

Published By

chrmp
®

CERTIFIED HUMAN RESOURCE

MANAGEMENT PROFESSIONAL
 p ®
rm
Copyright © 2021 by Ripples Learning Services

All rights reserved. This book or parts thereof may not be reproduced in any form, stored
in any retrieval system, or transmitted in any form by any means—electronic, mechanical,
photocopy, recording, or otherwise—without prior written permission of the copyright
owner.

Ripples Learning Services

Parisara No.12, 1st Main Road,
ch

K.R. Garden 8th Block Koramangala

Industrial Extension, Bangalore: 560095

Visit our website

Ripples Learning: www.rippleslearning.com
CHRMP: www.chrmp.com

Edition 2021

ISBN
 chrmp
®

Performance
III
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

®
About CHRMP

The Certified Human Resource Management Professional

(CHRMP) programme is a premiere certification programme

p
available worldwide to professionals and aspirants alike in the
field of Human Resource Management.

It is a globally recognized, competency-based HR certification

rm which ensures domain excellence and validation through its
practical, industry-oriented approach.

The CHRMP learning system comprises self-paced, instructor

CERTIFICATE OF ACHIEVEMENT
led and blended options. The pedagogy focuses on real skills,
Recipient Name
has successfully completed the course

HRBP Advanced
which are immediately transferrable to the workplace.
June 5, 2020 Certification Code CHRMP
ADV

Authorised Signatory
The credibility of the CHRMP certification is validated by best-
in-class testing standards and delivered in partnership with
ch

Pearson VUE. The exams are computer-based, which you can

take either from the comfort of your home or from the nearest
Pearson VUE test centre in more than 190 countries.
chrmp
CERTIFIED HUMAN RESOURCE
®

MANAGEMENT PROFESSIONAL The CHRMP Continuing Professional Development(CPD)

Membership develops critical competencies of workplace
ADVANCED proficiency, technology efficaciousness and business acumen
HR B P
having immediately applicability at your workplace.
 chrmp
®

Performance
IV
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

Learning Objectives

®
As a student, you’ll get a few significant benefits from this courseware. You’ll learn to:

01
Establish performance standards
for appraisal.

p
Enumerate the correct metric to be
02 used as KPIs and KRAs for roles in
MBO.
rm
Evaluate the numerous appraisal
methods and select the one best
suited to the organisation’s culture 03
and requirements.

Analyse performance appraisal

04 data, diagnose errors, and
recommend corrective actions.

Coach managers on the

organisation’s performance
appraisal process.
05
ch

06
Devise behaviour statements that
can be used as a part of BARS.

Deploy succession planning

systems to protect critical roles. 07

08 Develop performance
improvement plans.

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
V
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

®
01. Introduction........................................................................................................................1

p
02. Performance Management..............................................................................................2
Definition.....................................................................................................................2
Stages in performance management................................ .......................................2
.

Objective of performance management system in organization............................3

Uses of performance management system in organization....................................4
rm
03. Performance Appraisal.....................................................................................................6
Definition.....................................................................................................................6
Stages in performance appraisal..............................................................................6
Relationship between Job Analysis and Performance Appraisal...........................7
Difference between Performance Management and Performance Appraisal.......8
04. Traditional Methods of performance appraisal.......................... ...................................9
Essay method.............................................................................................................9
Confidential report.....................................................................................................10
Checklist method.......................................................................................................11
Graphic rating scale...................................................................................................13
ch

Critical incident technique.........................................................................................15

04. Contemporary Methods of performance appraisal.......................... .............................17
Behaviourally Anchored Rating Scales (BARS)........................................................17
Assessment centers..................................................................................................19
360 degree feedback.................................................................................................19
Management by Objectives (MBO)...........................................................................20
Balanced Scorecard...................................................................................................24
Objective and Key Results.........................................................................................26
05. Errors in Performance Appraisal......................................................................................28
Leniency or Stringency effect....................................................................................28
Central tendency.........................................................................................................28
Halo effect..................................................................................................................28
Horn effect..................................................................................................................29
Recency effect............................................................................................................29

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
VI
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

Primacy effect............................................... ............................................................29

06. Reasons for failure of performance management system in organizations................30
08. Effective Performance Management Systems in Organisations.................................32
Elements.....................................................................................................................32

®
Implementation..........................................................................................................33
09. Legal implications........................................................................................................34

p
rm
ch

Become a Certified Human Resource Management Professional

 1 Introduction chrmp
®

CERTIFIED HUMAN RESOURCE

MANAGEMENT PROFESSIONAL

®
Organisational growth is intrinsically linked with adept planning and
agility to respond to stimuli. This reflects as the performance index of an
organization.

Hence, it becomes essential for organisations to strategise and track

the progression effectively. Therefore, it is necessary to understand and

p
implement a performance management system in organization to leverage
the resources efficiently.

Let’s get started!

rm
Performance can be defined as the execution of a task or action.

Evaluation of performance in an organization is done mainly through

performance management, performance appraisal.

The outcomes of performance assessment are promotions, salary hikes,

learning interventions, etc.

You can’t manage what you can’t measure!

ch

Performance
01 Become a Certified Human Resource Management Professional
Management
 Performance chrmp
2
®

Management
CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

®
Performance management is a continuous process that steers an
individual’s performance to achieve organizational goals.

Stages in Performance Management

Performance management system essentially highlights the efforts made

p
to accomplish organizational goals.

It involves:
rm
Planning Rating &
Monitoring Developing
rewarding

A. Planning
• Establish organizational goals from vision and mission.
• Set individual goals aligned with organizational goals.
ch

• Define performance benchmarks.

B. Monitoring
• Check progress on defined goals.
• Identify areas of improvement.
• Provide feedback on the same.

C. Developing
• Implement steps for capacity building.
• Provide continuous support for bridging performance gaps through
feedback, coaching, and mentoring.

Performance
02 Become a Certified Human Resource Management Professional
Management
 chrmp
®

Performance
03
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

D. Rating and Rewarding

• Quantify an individual’s performance.
• Compensate the same.
• List the unachieved goals.

®
• Include them in the next goal setting cycle.

Objectives of Performance Management System in

an Organization

p
Organisations implement performance management systems with an
aim to:

i. Promote based on competence and performance.

ii.
rm
Confirm the services of employees on probation.
iii. Decide upon pay raise.
iv. Assess the training and development needs of employees.
v. Give feedback to employees on their performance and show the road
for development.
vi. Improve the understanding between the supervisor and the subordinate
of the goals and concerns of the employee.
vii. Determine if other HR efforts like selection, training, and transfers have
been significant or not.
ch

Feedback Input

Direction Motivation

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
04
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

Employee
Feedback
Development

®
Motivation
Documentation System

p
Uses of Performance Management System in an
Organization
rm
Organisations do not employ this system solely to govern performance
levels. Alternately, performance management is also applied for:

A. Developmental Uses: Performance management initiates individual

growth in tandem with the organization’s progress. This is attained by:
• Identification of individual needs
• Performance Feedback
• Determining transfers and job assignments
• Identification of individual strengths and developmental needs
ch

B. Administrative Uses: Performance management regulates

management’s decisions pertaining to:
• Salary
• Promotions
• Retention or Termination
• Recognition of Individual Performance
• Lay-Offs
• Identification of Top Performers
• Identification of Poor Performers

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
05
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

C. Organisational Uses: Performance management delineates

organisational strategies through
• HR Planning
• Determining organizational training needs

®
• Evaluation of organizational goal achievement
• Information for goal identification
• Evaluation of HR systems
• Reinforcement of organizational development needs

p
D. Documentation: Performance management provides supporting
evidence for
• Criteria for validation research
• HR decisions
• Legal requirements
rm
ch

Become a Certified Human Resource Management Professional

 Performance chrmp
3
®

Appraisal
CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

®
It is the objective assessment of an individual’s performance against
well-defined benchmarks.

Benchmarks can be job knowledge, quality of output, the quantity of output,

initiative, leadership abilities, communication skills, integrity, etc.

p
Stages in Performance Appraisal
A. Establish performance standards through goals and KPIs.
B. Communicate the same.
C.
rm
Appraise performance by various methods.
D. Performance interview to provide feedback.
E. Archive performance data to use for appropriate purposes.

Establish performance standard

Communicate the standard

ch

Appraise performance

Conduct Performance interview

Archive performance data

Performance
06 Become a Certified Human Resource Management Professional
Management
 chrmp
®

Performance
07
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

Relationship between Job Analysis and Performance

Appraisal

®
Job analysis (JA) examines a job to understand the associated tasks
and responsibilities (job description) and the required skill set (job
specification) for the same.

These outcomes help in establishing the desired performance standards

p
for the job.

Desired performance standards define levels of acceptable and

unacceptable performance.
rm
Performance appraisal (PA) compares an individual’s performance with the
prescribed standards.

JOB ANALYSIS PERFORMANCE PERFORMANCE

STANDARDS APPRAISAL
Job description Levels of Compares an
acceptable & individual’s
unacceptable performance
performance with the prescrib
-ed standards
ch

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
08
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

Difference between Performance Management and

Performance Appraisal

®
Very often, the terms Performance Management and Performance
Appraisal are both used interchangeably. However, there are distinct
differences between the two which are highlighted below.

p
Performance management Performance appraisal

Continuous process One time activity

Facilitates performance Evaluates performance

rm
Prospective in approach Retrospective in approach

Qualitative and quantitative Quantitative in nature

Applicable for the entire organization Applicable for an individual

A flexible mechanism which can be

changed to factor in organizational A rigid mechanism
changes
ch

Strategic tool Operational tool

Leads to coaching, mentoring, capability Leads to change in role, designation,

building compensation

Become a Certified Human Resource Management Professional

 Traditional Methods of chrmp
4
®

Performance Appraisal
CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

®
Techniques to evaluate performance differ from organization to
organization.

Some of the factors contributing to this are the culture of the organization,
the style of leadership, the extent of engagement of employees in decision
making to name a few.

p
Broadly, the various methods can be categorized into

1. Traditional methods
2. Contemporary methods
rm
Let’s discuss the traditional methods in detail here:

Traditional methods
These include the following:

Checklist Critical
Essay
ch

Method Incident
method Technique
Confidential Graphic
Reports Rating Scale

A. Essay method

Also known as the free form method, the rater describes the employee’s
performance verbally—through an essay under specific categories.

The categories could be

• The rater’s overall impression of the employee

Performance
09 Become a Certified Human Resource Management Professional
Management
 chrmp
®

Performance
10
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

• The promotion potential of the employee

• The strengths and weaknesses of the employee

Advantages:

®
• Useful in filling information gaps that often creep into the better-
structured methods.
• Easy approach as it doesn’t require much language proficiency.
• Assesses relevant skills and competencies that are required to perform.

Disadvantages:

p
• Highly subjective.
• Dependent upon the writing skills and memory of the rater.
• Based upon the impression of the employee rather than facts.
• Time-consuming.
rm
• Rater gets confused about what to write.

B. Confidential Reports

Confidential Reports are mostly used in the government departments,

though their use in the industry is not ruled out. They are highly secretive
and have almost lost all their relevance now.

These reports are delivered in closed envelopes,making it completely

inaccessible for the assessees.
ch

They try to measure performance based on criteria like attendance, self-

expression (written or oral), leadership, initiative, technical ability, integrity,
judgment, etc.

Advantage:
• This method permits the evaluator to give a frank account of the
employee.

Disadvantage:
• This leads to favouritism because it is discreet in nature.
• The employees are unable to identify the areas of improvement.

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
11
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

C. Checklist Method

In the checklist method, the supervisor merely has to put a tick-mark (√)
while answering a Yes / No question about the employee’s performance.

®
The supervisor then forwards it to the HR department, and they do the
evaluation.

This method eases the supervisor’s task of evaluating performance.

p
The HR department can assign specific points to “Yes” and “No” and arrive
at an evaluation score.

Example of checklist:
rm
No Question Yes No

1 Is the employee interested in the job?

2 Does he or she have adequate knowledge about the job?

3 Does he or she perform well with others?

ch

When the HR department gives more weight to some criteria of evaluation

than others, it becomes a weighted checklist method.

The assignment of weights depends on the importance of the criteria in the

execution of the job.

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
12
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

Example of weighted checklist for a HR Recruiter:

Performance Ratings (1 to 5)

®
Criteria Weightage 1 being lowest
5 being highest

Has knowledge of job sites 1.5

p
Able to source candidates from
3
job sites

Able to find keywords from the

3
job description
rm
Able to conduct screening round
1.5
of telephonic interview

Knows how to send an email

1
confirming schedule of interview

Advantages:
• Economical
• Easy to administer
ch

• Limited training of rater

• Standardisation of rating parameters

Disadvantages:
• Open to rater bias
• Use of personality criteria instead of performance
• Use of improper weights by the HR department

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
13
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

D. Graphic Rating Scale

It is the simplest and the most popular technique for appraising

performance.

®
Each criterion of performance is measured against a numeric scale. The
scale can range from excellent to poor.

The rater checks the appropriate performance level on each criterion and

p
computes the employee’s total numerical score.

The number of points then scored might be linked to promotions or salary

hikes.
rm
Example 1:

Excellent Good Accept-

No Criteria Fair (2) Poor (1)
(5) (4) able (3)

Interpersonal
1
Skills

Job
ch

2
Knowledge

3 Attendance

4 Dependability

Total

Final Score = Excellent + Good + Acceptable + Fair + Poor

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
14
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

Advantages:
• Easy to adapt to any job.
• Easy to use.
• Low cost.

®
• A large number of employees can be evaluated in a short period of
time.
• Rater does not require any training to use.

Disadvantages:
• Open to rater bias

p
• Bias in subjective areas such as attitude and cooperation
• Gives a wrong illusion of numerical precision
rm
Example 2:

This form is for the appraisal and evaluation of Mr. ______________________.

Please fill in your responses by stating the extent to which you agree/
disagree with the statements made below by giving a rating of 1–5.
(1 – Disagree completely, 5 – Agree)

Criteria 1 2 3 4 5
ch

Business Skills and Experience

a. Provides accounting and administrative

support in budget accounts payable, payroll/
human resources, insurance, and risk
management

b. Supervises and coordinates the performance

of project-staff, program-schedules, and
services

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
15
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

Planning Skills 1 2 3 4 5

a. Prepares and maintains organisation and

®
administration budgets

b. Prepares monthly reports for management

c. Prepares budget documents and updates

p
documents periodically for the Board of
directors

Professional and Technical Skills

rm
a. This person stays on top of the developments
in his field

People Management Skills

a. Can get several tasks done at the same time

b. Communication skills
ch

E. Critical Incident Technique

In this method, the rater records the critical incidents in a diary (both
positive and negative).

A critical incident is the employer’s critical behaviour, which makes the

difference between functional and ineffective performance.

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
16
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

Example:

®
Positive Critical Incidents Negative Critical Incidents

July 21: The sales representative waited August 3: Sales representative did not
patiently to attend to the customer return from the break on time and did not
complaints. He was courteous and polite explain when asked why he was delayed.
and resolved the situation very well.

p
July 31: The sales representative placed an
order for the item that was unavailable in
the store and ensured to get it delivered at
the customer’s place.
Sept 2 : The sales representative refused to
bill the items which the customer bought
despite the billing counter being open.

Sept 6: The sales representative helped the
rm customer with the different alternatives
for a product that the customer was
purchasing.He patiently explained the
various features of the similar products.
Sept 17 : The sales representative did not
guide the customer to the product rack
despite being repetitively asked by the
customer.

Oct 9 : The sales representative refused to

Sept 29th : The sales representative opened give a demonstration of the product to the
the door and helped the customer carry the customer when the customer wished to
shopping bag to the vehicle. have one.

Advantages:
ch

• Based on actual behaviours rather than impressions

• Captures descriptions to support ratings
• Reduces Recency Bias
• Encourages subordinate to improve because s/he knows exactly what
behaviours to demonstrate

Disadvantages:
• Negative behaviours are more noticeable than positive behaviours
• Time-consuming
• The employee feels closely supervised
• Inaccurate recording of incidents.

Become a Certified Human Resource Management Professional

 Contemporary Methods
5 of Performance chrmp
®

CERTIFIED HUMAN RESOURCE

MANAGEMENT PROFESSIONAL

Appraisal

®
Let’s discuss the contemporary methods now:

These include:

p
Management Objective and
Balanced Key Results
by objective
scorecard (OKR)
(MBO)
rm
Assessment 360-degree
BARS feedback
center

A. BARS (Behaviourally Anchored Rating Scales)

ch

Behaviourally Anchored Rating Scales (BARS) are rating scales whose

scale points are defined by statements of effective and ineffective
behaviours. They are said to be behaviourally anchored.

The scales represent a continuum of descriptive statements of behaviours

ranging from least to most significant. An evaluator must indicate which on
each scale best describes an employee’s performance.

This can be considered as the combination of “Critical Incident Method”

and “Graphic Rating Scales Method,” where the repetitive critical incidents
become the points in the scale on which performance is measured.

Performance
17 Become a Certified Human Resource Management Professional
Management
 chrmp
®

Performance
18
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

BARS – Example

The checker could be expected to look for mismarked

®
Outstanding performance
and mismatched items.

The checker is aware of prices that continuously

Good performance
fluctuate in price.

p
Checker knowledgeable on sizes of cans and other
Slightly good performance
packed products.

Neither low nor good
performance
rm
Slightly poor performance
Knows how to ask others when the price on the shelf
and marked price differs before scanning the item.
The checker can be expected to check out a customer
with 15 items when operating a quick check while lights
are flashing.

Ask customers the prices of items that are without

Poor performance
marked prices.

Lingers in a long conversation with the customer while

Extremely poor performance
others are in line.
ch

Neither low nor good perfor- Closes counter when taking a break even if the line is
mance very long.

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
19
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

B. Assessment center

It is one of the evaluation processes used to gauge the existing perfor-

mance of an individual as well as his/her potential for future growth.

®
It uses a combination of tests to examine the competencies required for a
particular job. Some of these include:

• In-Basket exercise

p
• Competency-based interview
• Case study
• Roleplay
• Group discussion
• Computer simulations
rm
These tests are conducted at a common center for all the candidates.
The responses are then assessed by experienced evaluators.
The major competencies sought are interpersonal skills, communication
skills, decision making, persuasion, problem-solving.

This method was initially developed by the German army in the 1930s to
hire personnel. However, in recent times, it is now used to identify potential
and developmental needs and create a succession planning roadmap.
ch

C. 360-degree feedback

Also known as the multi-rater system, this method gathers feedback from
everyone, managers, subordinates, peers, clients, with whom an employee
has a working relationship.

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
20
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

SUPERVISOR
RATING

®
PEER
RATING

SELF
RATING
PEER
RATING

p
SUBORDINATE
RATING
rm
Most organizations use this feedback for building new skills, competencies
and behaviour in their employees.

D. Management by objective (MBO)

It is a performance management framework that involves setting up clearly

defined goals that are mutually agreed upon by the management and
employees. This concept was introduced in 1954 by Peter Drucker in his
book The Practice of Management.
ch

Few organizations using MBO are HP, Xerox, Madura paints, Glaxo limited,
BHEL, Blue Star.

Process:
• Establish organizational goals from the vision and mission of the
organization.
• Define employees’ goals in alignment with the organizational goals.
• Monitor performance by tracking the progress of each goal.
• Review performance to find out the areas of improvement.
• Provide feedback for corrective action.

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
21
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

• Appraise performance using the relevant method to rate and reward

performance.
• The unaccomplished goals then become part of the next MBO cycle

®
1.Establish
Establish
organizational
goals

p
2.Define
Define
6.Appraise
Appraise
employees’
performance
goal

MBO Process
rm
5.Provide
Provide 3.Monitor
Monitor
feedback performance

4.Review
Review
performance
ch

Terminology used in MBO:

i. SMART Goals:

S – Specific: what will the goal accomplish.

M – Measurable: progress on goal can be measured through a
metric
A – Attainable: the result of the goal must be achievable.
R – Relevant: the goal must be relevant to your area of
performance.
T – Time-bound: the goal must be achieved within a timeframe.

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
22
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

How to write SMART goals:

Action: verb to describe the goal

Detail: what the goal wants to achieve

®
Value: in terms of number or percentage
Unit: elements
Deadline: timeline

Example: 1

p
Decrease HR costs per new hire by 20% of the last year cost by end of Q3.
Action: Decrease
Detail: HR costs per new hire
Value: 20%
rm
Unit: last year cost
Deadline: end of Q3

Example: 2

Increase new customers to 10,000 people by 31st July,2021.

Action: Increase
Detail: new customers
Value: 10000
Unit: people
Deadline: 31st July,2021
ch

ii. Key performance areas (KPA)

These are areas within the business unit, for which an individual or group is
logically responsible.

All the tasks and responsibilities mentioned in the job description

constitute the KPA.

Examples:
• Using resources efficiently and effectively.
• Improving business processes.
• Improving safety and accident prevention.

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
23
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

iii. Key result areas (KRA)

These are the general areas of outputs or outcomes for which the
individual’s role is responsible.

®
The tasks and responsibilities mentioned in the job description which are
critical for the achievement of the goal constitute the KRA.

Generally, a single role has 3 to 5 KRAs.

p
Examples:
• Increase number of sales from the previous period.
• Increase the ratio of online sales to other sales.
• Ensure current customers continue to buy and use the product.
rm
• Decrease employee turnover.
• Increase efficiency in processing payroll

iv. Key performance indicators (KPI)

The metrics (number, quantity) used to track the progress of KRAs. These
metrics are derived from the same.

Examples:
• Number of new sales
• Sales by the method of contact
ch

• Customer retention rate

• Employee turnover rate
• The annual cost to process the organization’s payroll

Types of KPI:

a. Lead KPI: These are indicators of future performance.

They can influence change.

Examples: % Growth in Sales Pipeline, % Growth in New Markets

b. Lag KPI: These are indicators of past performance.

They record what has happened.

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
24
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

Examples: Gross Margin, NPS

Advantages of MBO
• Participative goal setting exercise.

®
• Clarity in terms of outcomes as individual goals is aligned to
organizational ones.
• Optimal use of resources.

Shortcomings in MBO
• Time-consuming exercise.

p
• Focus is on individual performance rather than the organization.
• Reward punishment approach.

E. Balanced scorecard
rm
It is a performance management framework, which includes both financial
and non-financial metrics to provide a balanced view of the organization’s
performance. This concept was developed by Dr. Robert Kaplan and Dr.
David Norton in the mid-1990s.

Few organizations using BSC are Godrej, Nerolac Paints, Infosys, Castrol
India, Taj group of hotels, Volkswagen, Philip, Wells Fargo.

This methodology analyses organization goals from four different

ch

perspectives, namely:

Perspectives Definition

what goals will impact the financial health and capacity of the
Financial
organization?

what is needed to deliver to the customers to achieve financial

Customer
growth?

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
25
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

what needs to be done internally to meet our customer goals to

Internal process
achieve financial growth?

®
Organizational what skills are required to devise a process that would make
capacity the customers happy and impact customer growth?

Terminology used in BSC:

p
i. Objectives: goals derived from the vision and mission of the
organization.
ii. Measures: milestones that monitor achievement of goals (KPI).
iii. Targets: desired level of performance for each measure.
iv. Initiatives: actions/projects taken to achieve goals.
rm
v. Action items: tasks that help complete the initiatives.

Tools used in BSC:

i. Strategy maps: A strategy map is a tool to show a logical, cause-and-

effect connection between strategic objectives.
ii. Scorecard: It is a tabular representation of the objectives, measures,
targets, and initiatives.
iii. Dashboard: The visual representation of the scorecard.
ch

Advantages of BSC
• An overall view of the organizational performance.
• Organizational growth is connected to the vision and mission.
• Collaborative exercise of goal setting.
• Measures are chosen as per business needs.

Shortcomings of BSC
• Difficult to manage so many measures.
• Balancing between perspectives is difficult.
• Focus remains on financial growth.
• Regular up-gradation to make it relevant.

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
26
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

F. Objective and Key Results (OKR)

It is a goal-setting tool used in organizations to define ambitious(stretch)

goals and deliver high-performance metrics.

®
This concept was introduced in the 1970s in Intel by Andy Grove, the then
CEO. This transformed intel into the most valuable company by 1997.

Google has been using OKR since its inception. Other organizations like

p
Netflix, Spotify, Twitter, LinkedIn, Walmart are also using this to define
goals.

Terminology:
rm
Objective: WHAT – the major goal to be achieved. It can be an ongoing
process.

Key result: HOW – milestones to complete to reach the objective. KPIs may
or may not be used here.

An effective OKR has 3-5 KRs.

How to write Objective and Key Results

ch

I will (mention OBJECTIVE) as measured by Key Results (KR1, KR2, KR3).

Example 1:

Objective Improve the blog strategy

Key Results 1 Publish 50 new blogs in Q3

Key Results 2 Conduct 5 interviews with industry experts

Key Results 3 Get 5000 subscribers on the blog

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
27
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

Example 2:

Objective Grow team with A players

®
Key Results 1 Offer employees referral bonus for A-Players hired

Hire 25 new employees this quarter for the 5 requesting

Key Results 2
department.

p
rm
ch

Become a Certified Human Resource Management Professional

 Errors in Performance chrmp
6
®

Appraisal
CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

®
Performance Management is a very important process in an organization.
Hence the following errors should be avoided.

Leniency or Stringency Effect:

This error is due to leniency on the part of the evaluator, which makes the

p
assessment subjective.

A rater may be lenient because

• he or she may feel a poor rating on the part of the subordinate will also
rmreflect poorly on him / her.
• may feel a poor rating might result in termination.
• may feel a poor rating will result in the relationship being affected.

Central Tendency:
The central tendency bias causes raters to score employees near the aver-
age or the middle of the scale.

The rater does this as:

ch

• He/she may be doubtful about how much he or she knows about the
performance of the employee.
• He/she can’t make up his or her mind.
• May feel a poor rating will result in the relationship being affected.

Halo Effect:
The evaluator appraises the employee favorably because of one aspect of
their performance.

Performance
28 Become a Certified Human Resource Management Professional
Management
 chrmp
®

Performance
29
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

Horn Effect:
The evaluator appraises the employee unfavorably because of one aspect
of their performance.

®
Recency Effect:
When the employee is rated on the latest behaviors and results, it is called
as recency effect.

p
Primacy Effect:
When the employee is rated based on the first impression, it is called as
primacy effect.
rm
ch

Become a Certified Human Resource Management Professional

 Reasons for failure
7 of PM System in chrmp
®

CERTIFIED HUMAN RESOURCE

MANAGEMENT PROFESSIONAL

organisations

®
The choice of the system doesn’t complement the
1 culture of the organization.

p
Goal setting is complex and usually involves top
rm management only.

The performance management system attempts

3
to address all HR functions in the organization,
thereby shifting the focus from the core.
ch

The appraisal methods are not free from person

4 perception and lead to error.

Most of the systems lack an effective rewarding

5 criterion.

Performance
30 Become a Certified Human Resource Management Professional
Management
 chrmp
®

Performance
31
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

The ratings do not reflect the actual performance

6 since they are prone to bias.

®
The entire process of performance management
7 is tedious and lengthy.

p
Constructive feedback and coaching are not
rm given.

Initiatives to bridge performance gaps are

9 generally not implemented.
ch

Favoritism may influence performance appraisal

10 leading to mistrust and closer supervision.

Managers and supervisors do not know how to

11 use the system.

Become a Certified Human Resource Management Professional

 Effective Performance
8 Management Systems chrmp
®

CERTIFIED HUMAN RESOURCE

MANAGEMENT PROFESSIONAL

in Organisations

®
Elements

p
Select a system that is a
cultural fit.
rm
Simplify goal setting
and encourage the
participation of all.

Focus on addressing
performance gaps
through constant feed-
ch

back and coaching.

Monitor performance
continuously.

Devise different criteria

to address different HR
functionalities.

Performance
32 Become a Certified Human Resource Management Professional
Management
 chrmp
®

Performance
33
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

Implementation
The efficacy of a performance management system is in its successful
implementation.

®
This can be achieved by:

Uniformity with other HR functionalities: The decided performance

standards should be used in other HR functions such as hiring, training,

p
rewarding, etc.

Motivating top management to use it: The top management should

be motivated to implement the system judiciously. This would foster
commitment in the organization for the same.
rm
Communicating the process: Efforts must be made to communicate the
process and its elements to all the stakeholders to gather feedback. This
would bring clarity to the system and help refine it based on the inputs
received.

Digitising the system: This would make the system more efficient by
reducing the cumbersome paperwork. This would also create a positive
impression about the system as human intervention is minimized.
ch

Implementing a test case: This would help make necessary changes in the
system by identifying whether it is operating smoothly or not.

Training managers and subordinates: This would improve the

understanding of the system to implement it better.

Assessing the system: This would lead to better functioning of the system
by plugging the loopholes.

Become a Certified Human Resource Management Professional

 9 Legal Implications chrmp
®

CERTIFIED HUMAN RESOURCE

MANAGEMENT PROFESSIONAL

®
Appraisals can be a breeding ground for legal disputes between employees
and management. Here are some legal issues to consider.

Legally Defensible Appraisal Procedures

• Base decisions about employees on standardized performance

p
appraisal system.
• Uniform appraisal process for all employees within a job group with the
same evaluation criteria.
• Performance standards should be formally communicated to the
rm employees.
• All employees should be able to review their appraisal results.
• There should be a formal appeal process for the ratee to challenge the
rater’s judgment.
• All raters should be provided with instructions and training on
conducting appraisals correctly and in an unbiased, systematic, and fair
manner.

Legally Defensible Appraisal Content

ch

• Performance appraisal benchmarks should be based on job analysis.

• Appraisals based on personality traits should be avoided.
• Objective performance data (sales, productivity, and other business
metrics) should be used wherever possible.
• The employee should not be rated against criteria over which she or he
has no control.
• Criteria should be job-related and specific rather than global or general.
• Performance dimensions should be assigned weights to show their
relative importance.

Performance
34 Become a Certified Human Resource Management Professional
Management
 chrmp
®

Performance
35
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

Legally Defensible Documentation of Appraisal Results

• A written record of evidence leading to termination decisions should
be maintained (e.g., Performance Appraisal, Performance Counselling,

®
Improvement Plans, etc.)
• Written documentation (with behavioural examples) should be included
for extreme ratings, and it must be consistent with numerical ratings.
• Documentation requirements should be consistent for all raters.

p
Legally Defensible Raters
The raters should have been trained in ‘how to appraise.’

• The raters should have the opportunity to observe the employee first-
rm
hand to review his or her performance.
• The use of more than one rater is desirable to lessen the amount of
influence of any one rater.
ch

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
36
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

What CHRMP Alumni say about us

“If you want to ace it in HR, both as an entrant to the role or as a seasoned professional who is looking
at enhancing their competence, then CHRMP is for you.

®
I highly recommend it because it helps provide clarity for the role that HR and HR personnel play in a
VUCA world. It gives you access to a rich alumni network of HR professionals who now hold critical
and leading HR roles in Comp & Ben, L&D, Talent Management, and HR Business
Partnering roles.

It is designed for the modern HR professional who is now a key go-to strategy enabler for the CEO of
the business. The content too is customized and allows you the experience of either gain competence
in all areas of HR or specific areas that matter most to you based on your role and tenure.

p
So, it’s a highly customer- as well as business-centric Certification that truly sets you apart when you’re
in the job market!”

— Mukund Ganapathy
Sr. L&D Business Partner, Amazon India
rm
“I wanted to get international certification that will be an added value for my HR career.While
going through the certification process, I found the learning process to be smooth and easy. The
videos are clear, the topics are well chosen.I liked the clarity of the modules, the examples given
by the trainers. The training course was easy because I felt same as in the classroom, so this is
an added value. I specially liked the L&D module. I would surely recommend CHRMP to others
looking for a certification in HR. I would like to thank CHRMP team for the support and for being
efficient in answering any query.”

— Joanna Elias
ch

HR Assistant, United Nations

“I have 5+yrs of experience in HR domain !! CHRMP has an wonderful learning sessions with self
development career!!! It’s useful for HRs for ugrade of Knowledge and implementation!!! For Non
HRs it will be new and easy to Know about the HR field and they can easily implement the process
in their new career!!!! So I will b giving 200% Go+ for Chrmp classes and get full benefits of HR
domain!!! Tk u ripples for opportunity!!!”

— Zunaith K
Sr. HR Admin, Titanium Motors, Mercedes Benz, India

Become a Certified Human Resource Management Professional

 chrmp
®

Performance
37
Management CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL

Books in the same series

Expand your horizon and enhance your knowledge with a diverse range of

®
CHRMP books.

Domain Domain Domain

chrmp chrmp chrmp
® ® ®

Excellence CERTIFIED HUMAN RESOURCE

Excellence Excellence
CERTIFIED HUMAN RESOURCE MANAGEMENT PROFESSIONAL CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL MANAGEMENT PROFESSIONAL

Talent Acquisition Compensation HR Operation

Creating Strategies for recruiting the right talent
And Benefits Planning Enabling HR Administrative services for employees

Designing equitable and fair pay structures

p
rm
Ripples Learning Ripples Learning Ripples Learning

Domain
Domain chrmp
®

Excellence Domain
chrmp chrmp
®

Excellence
®
CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL
Excellence
Behavioural
CERTIFIED HUMAN RESOURCE CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL MANAGEMENT PROFESSIONAL

Learning & Event Interviewing HR Policies

Development Making evidence based hiring decisions
Constructing policy frameworks that guide

Organisational Capability building through learning interventions

ch

Ripples Learning
Ripples Learning Ripples Learning

Domain Domain Domain

chrmp chrmp
® ®

chrmp Excellence Excellence

®

Excellence CERTIFIED HUMAN RESOURCE

MANAGEMENT PROFESSIONAL
CERTIFIED HUMAN RESOURCE
MANAGEMENT PROFESSIONAL
CERTIFIED HUMAN RESOURCE

Employee
MANAGEMENT PROFESSIONAL

Job Analysis Competency Mapping

Defining critical elements of the job Engagement Building robust and effective competency frameworks

Enhancing employee experience for continuous growth

Ripples Learning Ripples Learning

Ripples Learning

Become a Certified Human Resource Management Professional