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It is an organization - wide management program
that provides a structured approach to:
Communicate business strategy
Establish a shared understanding of what is to be
achieved and how it is to be achieved
Facilitate management of self and others
Measure and motivate performance
(organizational and individual)

Performance Management A management
process for ensuring employees are focusing their
work efforts in ways that contribute to achieving
the agencys mission. It consists of three phases:
(a) setting expectations for employee performance,
(b) maintaining a dialogue between supervisor and
employee to keep performance on track, and
(c) measuring actual performance relative to
performance expectations.

A process for communicating employee performance
expectations, maintaining ongoing performance dialogue,
and conducting annual performance appraisals;

A procedure for addressing employee performance that
falls below expectations;

A procedure for encouraging and facilitating employee

Training in managing performance and administering the
system; and

A procedure for resolving performance pay disputes.

A Performance Management System enables a
business to sustain profitability and performance by
linking the employees' pay to competency and
contribution .
It provides opportunities for concerted personal
development and career growth .
It brings all the employees under a single strategic
umbrella .
What you cannot measure you cannot improve.
If you cannot improve you cannot grow.
Measurement helps in objectively differentiating
between performers and non performers.
Pay for performance is possible only through

To confirm the services of probationary employees upon
their completing the probationary period satisfactorily
To check the effective & efficiency of individuals, teams &
To effect promotions based on competence and
To access the training and development needs of the
To decide upon the pay rise
PM can be used to determine whether HR programmes
such as selection, training, and transfer have been effective
or not.
Emphasis is on relative
evaluation of individuals
Annual exercise
Rewards & recognition of
good performance
Designed & monitored by HR
Ownership is mostly with the
HR dept.
Emphasis is on performance of
individuals, team & orgn.
Continuous process
Performance rewarding may or
may not be integral part
Designed by HR dept. but
monitored by respective dept.
Ownership is with the line
managers, HR facilitates its
Work plan A document that describes the work
to be completed by an employee within the
performance cycle, the performance expected,
and how the performance will be measured.

Corrective action plan A short-term action plan
that is initiated when an employees performance
fails to meet expectations. Its purpose is to
achieve an improvement in performance.

Individual development plan An action plan for
enhancing an employees level of
performance in order to excel in the current
job or prepare for new responsibilities.

Performance appraisal A confidential
document that includes the employees
performance expectations, a summary of the
employees actual performance relative to
those expectations, an overall rating of the
employees performance, and the supervisors
and employees signatures.

Performance documentation A letter, memo,
completed form, or note on which the
supervisor indicates the extent to which the
employee is currently meeting expectations
and provides evidence to support that

Fair appraisal Appraising employees in a
manner that accurately reflects how they
performed relative to the expectations
defined in their work plan and in a manner
that is not influenced by factors irrelevant to

The appraiser and the appraisee jointly set
the Key Result Areas (KRAs) and assign
mutually agreed weightage expressed as a
Simple mathematical relationship between
set weightage and accomplishment gives a
final numerical score on KRAs
To evaluate all management personnel on
company values and leadership attributes a
new section has been added entitled Values
in Action

A KRA refers to a target that needs to be
achieved by the appraisee in a given time
KRAs are the set of performance
expectations from the appraisee
The focus is on tangible outputs. However
this does not mean that tasks that have a
qualitative output cannot form a KRA
The focus is on tangible outputs. However
this does not mean that tasks that have a
qualitative output cannot form a KRA
Functional reporting cases will require input from
the functional superior in setting KRAs for the
The appraiser , the appraisee and the functional
superior will have to mutually agree upon the KRAs
for the appraisee.
In case of a disagreement , it will be the functional
superiors responsibility to convince the
superior to reach an agreement on the KRAs and
communicate the same to the appraisee.
In some cases, functional goals could be super-
to business goals.

The reviewer meets the appraiser to investigate
the point of disagreement.
The reviewer decides to meet the appraisee to
hear his / her views.
The reviewer examines the case and
communicates his / her decision to the appraiser.
The appraiser communicates the decision of the
reviewer to the appraisee.

Rewards and Recognition

Training and Development

Potential Appraisal

Career and Succession Planning

Numerous methods have been devised to measure the
quantity and quality of performance appraisals. Each of the
methods is effective for some purposes for some
organizations only. None should be dismissed or accepted as
appropriate except as they relate to the particular needs of
the organization or an employee.
Broadly all methods of appraisals can be divided into two
different categories.
Traditional Methods
Modern/ Future Oriented Methods

Traditional Methods
1. Rating Scales
3. Forced Choice Method
4. Forced Distribution Method
5. Critical Incidents Method
6.Behaviorally Anchored Rating Scales
7. Field Review Method

Modern/ Future Oriented Methods
1.Management By Objectives
2. Psychological Appraisals
3. Assessment Centers
4. 360-Degree Feedback
Management By Objectives: It means management by
objectives and the performance is rated against the
achievement of objectives stated by the management. MBO
process goes as under.
Establish goals and desired outcomes for each subordinate
Setting performance standards
Comparison of actual goals with goals attained by the
Establish new goals and new strategies for goals not achieved
in previous year.
Advantage It is more useful for managerial positions.
Disadvantages Not applicable to all jobs, allocation of merit
pay may result in setting

These appraisals are more directed to assess employees
potential for future performance rather than the past one.
It is done in the form of in-depth interviews, psychological
tests, and discussion with supervisors and review of other
It is more focused on employees emotional, intellectual, and
motivational and other personal characteristics affecting his
This approach is slow and costly and may be useful for bright
young members who may have considerable potential.
However quality of these appraisals largely depend upon the
skills of psychologists who perform the evaluation.

This technique was first developed in USA and UK in 1943.
An assessment center is a central location where managers may come
together to have their participation in job related exercises evaluated by
trained observers.
It is more focused on observation of behaviors across a series of select
exercises or work samples.
Assesses are requested to participate in in-basket exercises, work groups,
computer simulations, role playing and other similar activities which require
same attributes for successful performance in actual job.
The characteristics assessed in assessment center can be assertiveness,
persuasive ability, communicating ability, planning and organizational ability,
self confidence, resistance to stress, energy level, decision making,
sensitivity to feelings, administrative ability, creativity and mental alertness
Disadvantages Costs of employees traveling and lodging,
psychologists, ratings strongly influenced by assessees
inter-personal skills. Solid performers may feel suffocated in
simulated situations. Those who are not selected for this also
may get affected.
Advantages well-conducted assessment center can achieve
better forecasts of future performance and progress than
other methods of appraisals. Also reliability, content validity
and predictive ability are said to be high in assessment
centers. The tests also make sure that the wrong people are
not hired or promoted. Finally it clearly defines the criteria for
selection and promotion.

It is a technique which is systematic collection of performance
data on an individual group, derived from a number of
stakeholders like immediate supervisors, team members,
customers, peers and self.
In fact anyone who has useful information on how an
employee does a job may be one of the appraisers. This
technique is highly useful in terms of broader perspective,
greater self-development and multi-source feedback is
360-degree appraisals are useful to measure inter-personal
skills, customer satisfaction and team building skills.
However on the negative side, receiving feedback from
multiple sources can be intimidating, threatening etc.
Multiple raters may be less adept at providing balanced and
objective feedback.