Performance Management

Warm Welcome to
3 semester.
rd

AIMA .BMSCEEDL
Aug 2018
Prof B K KUMAR
Herman Aguinis, University of Colorado at Denver
 “It is a continuous process of
 ….identifying,
 ….measuring and developing the
performance of individuals and teams and
 …aligning performance with the strategic
goals of the organization”.

 PM contains two major components:

1. It’s a continuous process
2. Alignment with strategic goals
 Performance management (PM) includes
activities that ensure that goals are
consistently being met in an effective and
efficient manner.

 Performance management focuses on the

performance of an organization,
 a department,
 employee, or even the processes to build a
product or service or any other areas in an
organization.
An iterative process of goal-setting, communication,
observation and evaluation to support, retain and develop
exceptional employees for organizational success.
Set
Goals

Evaluate
P Commu
nicate

M
Observ
e
 1..The action or process of carrying out or
accomplishing an action, task, or function
can be termed as performance.
 2…Performance management includes
 A…the processes used to manage
corporate performance,
 B…the methodologies that drive some
of the processes and
 C…the metrics used to measure
performance against strategic and
operational performance goals.
 To reach organizational mission and
goals

 Encourage and reward behaviors aligned

with organizational mission and goals

 Curb or redirect non- productive

activities
 1…Be treated fairly and consistently
 2…Job/career enrichment opportunities
 3…Clear expectations
 4…Positive/constructive feedback on a
regular basis
 5….Involvement in goal setting
 6…Economic reward
 What are Performance
Standards?
Performance Standards are the
benchmark against which performance
is measured.
 The information collected by a PM
system is most frequently used
for

1. Salary administration

2. Performance feedback

3. Identification of employee
 1 Strategic purpose
 2 Administrative purpose
 3 Informational
 4 Developmental
 5 Organizational
maintenance
 6 Documentational
 1 It serves the strategic purpose of the org.
 2 Provide information for reward system
 3 Facilitates HR decisions

 4 Enabling employees to learn about their

performance as against org expectations
 5 It serves as a developmental purpose

 6 Serves org maintenance purpose

 7 Support HR decision to meet legal
requirements
 Purposes of PM Systems

6 functional areas…22 focus pts

Herman Aguinis, University of Colorado at Denver

 Purposes of PM Systems:
Overview

 1…Strategic
 2…Administrative
 3…Informational
 4…Developmental
 5…Organizational maintenance
 6…Documentational

Herman Aguinis, University of Colorado at Denver

 1…Strategic Purpose
 Link individual goals with
organization’s goals

 Communicate most crucial

business strategic initiatives

Herman Aguinis, University of Colorado at Denver

2…Administrative Purpose
 Provide information for making
decisions re:
Salary adjustments
Promotions
Retention or termination
Recognition of individual
performance
Layoffs

Herman Aguinis, University of Colorado at Denver

3…Informational Purpose
Communicate to Employees:
 Expectations

 What is important

 How they are doing

 How to improve

Herman Aguinis, University of Colorado at Denver

4…Developmental Purpose
 Performance
feedback/coaching
 Identification of individual
strengths and weaknesses
 Causes of performance
deficiencies
 Tailor development of
individual career path

Herman Aguinis, University of Colorado at Denver

5…Organizational Maintenance
Purpose
 Plan effective workforce
 Assess future training needs
 Evaluate performance at
organizational level
 Evaluate effectiveness of HR
interventions

Herman Aguinis, University of Colorado at Denver

6…Documentational Purpose
 Validate selection
instruments
 Document administrative
decisions
 Help meet legal requirements

Herman Aguinis, University of Colorado at Denver

 An Ideal PM System:
14 Characteristics
1. Congruent with organizational
strategy
2. Thorough
3. Practical
4. Meaningful
5. Specific
6. Identifies effective/
ineffective performance
7. Reliable

Herman Aguinis, University of Colorado at Denver

 An Ideal PM System:
14 Characteristics (continued)
8. Valid
9. Acceptable and Fair
10. Inclusive
11. Open (No Secrets)
12. Correctable
13. Standardized
14. Ethical

Herman Aguinis, University of Colorado at Denver

01…Congruent with organizational
strategy
 Consistent with organization’s
strategy
 Aligned with unit and
organizational goals

Herman Aguinis, University of Colorado at Denver

 02…Thorough
 All employees are evaluated
 All major job responsibilities
are evaluated
 Evaluations cover performance
for entire review period
 Feedback is given on both
positive and negative
performance

Herman Aguinis, University of Colorado at Denver

 03…Practical

 Available
 Easy to use
 Acceptable to decision makers
 Benefits outweigh costs

Herman Aguinis, University of Colorado at Denver

 04…Meaningful
 Standards are important and
relevant
 System measures ONLY what
employee can control

 Results have consequences

 Evaluations occur regularly and at
appropriate times
 System provides for continuing skill
development of evaluators

Herman Aguinis, University of Colorado at Denver

 05…Specific

Concrete and detailed

guidance to

 What’s expected

How to meet the

expectations

Herman Aguinis, University of Colorado at Denver

 06…Identifies
effective and ineffective performance

 Distinguish between effective

and ineffective
• Behaviors
• Results
 Provide ability to identify
employees with various levels
of performance

Herman Aguinis, University of Colorado at Denver

 07…Reliable

 Consistent
 Free of error
 Inter-rater reliability

Herman Aguinis, University of Colorado at Denver

 08…Valid

 Relevant (measures what is

important)
 Not deficient (doesn’t measure
unimportant facets of job)
 Not contaminated (only
measures what the employee
can control)

Herman Aguinis, University of Colorado at Denver

 09 .Acceptable and Fair

 Perception of Distributive
Justice
• Work performed  Evaluation
received  Reward

 Perception of Procedural Justice

• Fairness of procedures used to:
 Determine ratings
 Link ratings to rewards

Herman Aguinis, University of Colorado at Denver

 10..Inclusive
 Represents concerns of all
involved
• When system is created,
employees should help with
deciding
 What should be measured
 How it should be measured

• Employee should provide input

on performance prior to
evaluation meeting
Herman Aguinis, University of Colorado at Denver
 11..Open (No Secrets)
 Frequent, ongoing evaluations
and feedback
 2-way communications in
appraisal meeting
 Clear standards, ongoing
communication
 Communications are factual,
open, honest

Herman Aguinis, University of Colorado at Denver

 12..Correctable

 Recognizes that human

judgment is fallible

 Appeals process provided

Herman Aguinis, University of Colorado at Denver

 13..Standardized

 Ongoing training of managers

to provide

 Consistent evaluations across

• People
• Time

Herman Aguinis, University of Colorado at Denver

 14 Ethical
 Supervisor suppresses self-interest

 Supervisor rates only where she has

sufficient information about the
performance dimension

 Supervisor respects employee

privacy

Herman Aguinis, University of Colorado at Denver

 Integration with other
Human Resources
and Development Activities

Herman Aguinis, University of Colorado at Denver

 PM provides information for:
• Development of training to meet
organizational needs
• Workforce planning

• Recruitment and hiring decisions

• Development of compensation
systems

Herman Aguinis, University of Colorado at Denver

P M & P A SAME ?

Herman Aguinis, University of Colorado at Denver

 Both are different concepts.
 PM is a broader term & includes appraisal as
a part of the performance system.

 Performance appraisal is the systematic

description of an employee’s strengths and
weakness.

 Thus, performance appraisal is an important

component of performance management.
PM is NOT performance appraisal

 Performance Management
• Strategic business
considerations
• Driven by line manager
• Ongoing feedback
 So employee can improve
performance

Herman Aguinis, University of Colorado at Denver

PM is NOT performance appraisal
 Performance Appraisal
• Driven by HR
• Assesses employee
 Strengths &
 Weaknesses

• Once a year
• Lacks ongoing feedback

Herman Aguinis, University of Colorado at Denver

Contributions of Performance
Management…

Herman Aguinis, University of Colorado at Denver

Contributions of Performance Management
For Employees
 Clarify definitions of
job
success criteria
 Increase motivation to perform
 Increase self-esteem
 Enhance self-insight and
development

Herman Aguinis, University of Colorado at Denver

Contributions of Performance Management
For Managers
 Communicate supervisors’ views of
performance more clearly
 Managers gain insight about
subordinates

 Better and more timely

differentiation between good and
poor performers
 Employees become more competent
Herman Aguinis, University of Colorado at Denver
Contributions of Performance Management
For Organization/HR Function
 Clarify organizational goals
 Facilitate organizational change

 Fairer, more appropriate

administrative actions
 Better protection from lawsuits

Herman Aguinis, University of Colorado at Denver

 Motivation to perform is increased
 Increases self esteem
 Managers gain insight about subordinates

 Jobs are simplified

 Organizational goals are clear
 Employees become more competent

 Differentiation b/n good & poor

performance
 Performances are communicated
 1..Strategic  10…Openness
congruence  Correctability
 Thoroughness
 Practicality  Standardization

 Meaningfulness  Ethicality
 Specificity
 Reliability  14…Identification
of effective &
 Validity ineffective
 Acceptability performance
 9..Inclusiveness
 1 .Increased turnover
 2 Use of misleading information
 3 Wasted time & money

 4 Lowered self esteem

 5 Damaged relationships

 6 Decreased motivation to perform

 7 Employee job burnout & dissatisfaction
 8 Increased risk of litigation

 9 Unjustified demands on managers &

employees resources

 10 Varying & unfair stds & ratings

 11 Emerging biases

 12 Unclear rating systems

 Disadvantages/Dangers of Poorly-
implemented
PM Systems

For Employees
 Lowered self-esteem
 Employee burnout and job
dissatisfaction
 Damaged relationships
 Use of false or misleading
information

Herman Aguinis, University of Colorado at Denver

 Disadvantages/Dangers of Poorly-implemented
PM Systems

For Managers
 Increased turnover
 Decreased motivation to perform
 Unjustified demands on managers’
resources
 Varying and unfair standards and
ratings

Herman Aguinis, University of Colorado at Denver

 Disadvantages/Dangers of Poorly-
implemented
PM Systems

For Organization
 Wasted time and money
 Unclear ratings system

 Emerging biases
 Increased risk of litigation

Herman Aguinis, University of Colorado at Denver

P M PROCESS

Herman Aguinis, University of Colorado at Denver

P Prerequisite
M
s
P Performance
M
Planning
P Performance Execution
M

P Performance
M
Assessment
P Performance
M
Review
P
M Performance Renewal
& Re-contracting
 Two important prerequisites
before PM system are:

1. Knowledge of the org’s mission &

strategic goals
2. Knowledge of the job in
question (this is done through
job analysis)
 Employees should have a through
knowledge of the PM System.
 Planning discussion includes :

1. Results
2. Behaviours
3. Developmental issues
 At the execution stage, following
factors must be considered:

1. Commitment to goal achievement

2. Ongoing performance feedback &
coaching
3. Communication

4. Collecting & sharing performance

data
 It is important for employee as well as the
managers to take ownership of
assessment process.

 It helps the org to use the information

obtained in a productive manner for
the future requirements.

 Inclusion of self appraisal is also beneficial

in all manner.
 Review stage involves meeting
between employees & the manager.

 This meeting is called Appraisal

Meeting.

 Review meeting helps employee and

manager to design developmental
plans.
 Its identical to planning stage.

 Manager uses the insights &

information gained from other
phases to reset performance goals
for employees