Performance Management

Lecture 1

Worku Mekonnen (PhD)

 Performance Management
Performance management 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 ” (Aguinis, 2009 , p. 3).
Performance Management
Definition
Continuous Process of
 Identifying performance of individuals and teams
 Measuring performance of individuals and teams
 Developing performance of individuals and teams

and
 Aligning performance with the strategic goals of the
organization
PM is NOT performance appraisal
PM
 Strategic business considerations
 Ongoing feedback
 So employee can improve performance
 Driven by line manager
Performance appraisal
 Assesses employee
 Strengths &
 Weaknesses
 Once a year
 Lacks ongoing feedback
 Driven by HR
Contributions of PM
For Employees
 The definitions of job and success are clarified
 Motivation to perform is increased
 Self-esteem is increased
 Self-insight and development and enhanced
Contributions of PM
For Managers
 Supervisors’ views of performance are communicated
more clearly
 Managers gain insight about subordinates
 There is better and more timely differentiation
between good and poor performers
 Employees become more competent
Contributions of PM
For Organization/HR Function
 Organizational goals are made clear
 Organizational change is facilitated
 Administrative actions are more fair and appropriate
 There is better protection from lawsuits
Why Implement a Performance Management
System?

Performance management systems can serve six

important purposes
Strategic
Administrative
Communication
Developmental
Organizational maintenance
Documentation
1. Strategic purpose.

By linking the organization’ s goals with individual

goals, the performance management system
reinforces behaviors consistent with the attainment of
organizational goals. Moreover, even if for some
reason individual goals are not achieved, linking
individual goals with organizational goals serves as a
way to communicate what are the most crucial
business strategic initiatives.
2. Administrative purpose

Performance management systems are a source of

valid and useful information for making
administrative decisions about employees. Such
administrative decisions include salary adjustments,
promotions, employee retention or termination,
recognition of superior individual performance,
identification of poor performers, layoffs, and merit
increases.
3. Communication purpose .

A performance management system can be an

excellent communication device . Employees are
informed about how well they are doing and receive
information on specific areas that may need to be
improved.
4. Developmental purpose .

Feedback is an important component of awell -

implemented performance management system.
Managers can use feedback to coach employees and
improve performance on an ongoing basis. This
feedback allows for the identification of strengths and
weaknesses as well as the causes for performance
deficiencies (which could be due to individual,group,
or contextual factors).
5. Organizational maintenance purpose .

An important component of any workforce planning

effort is the talent inventory, which is information on
current resources (for example, skills, abilities,
promotional potential, and assignment histories of
current employees). Performance management
systems are the primary means through which
accurate talent inventories can be assembled.
6. Documentation purpose .

Performance management systems allow for the

documentation of important administrative decisions.
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
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
Disadvantages/Dangers of
Poorly-implemented PM Systems
for Organization
Wasted time and money
Unclear ratings system
Emerging biases
Increased risk of litigation
Characteristics of an Ideal PM System
A. Congruent with organizational
strategy
Consistent with organization’s strategy
Aligned with unit and organizational goals
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
Practical
Available
Easy to use
Acceptable to decision makers
Benefits outweigh costs
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
Specific
Concrete and detailed guidance to
employees
what’s expected

how to meet the expectations

Identifies effective and ineffective
performance
Distinguish between effective and ineffective
Behaviors
Results
Provide ability to identify employees with various
levels of performance
Reliable
Consistent
Free of error
Inter-rater reliability
Valid
Relevant (measures what is important)
Not deficient (doesn’t measure unimportant facets of
job)
Not contaminated (only measures what the employee
can control)
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
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
Open (No Secrets)
Frequent, ongoing evaluations and feedback
2-way communications in appraisal meeting
Clear standards, ongoing communication
Communications are factual, open, honest
Correctable
Recognizes that human judgment is fallible
Appeals process provided
Standardized
Ongoing training of managers to provide
Consistent evaluations across
People
Time
Ethical
Supervisor suppresses self-interest
Supervisor rates only where she has sufficient
information about the performance dimension
Supervisor respects employee privacy
Integration with other Human Resources
and Development activities
PM provides information for:
 Development of training to meet organizational needs
 Workforce planning
 Recruitment and hiring decisions
 Development of compensation systems
Thank you,