Introduction to Performance

Management
 Performance Management
• Performance Management is a process of designing and
executing motivational strategies, interventions and drivers with
an objective to transform the raw potential of human resource
into performance.

• Performance Management acts as an agent in converting the

potential into performance by removing the intermediate
barriers as well as motivating and rejuvenating the human
resource.
 Definitions
• According to Armstrong, “Performance Management is a means of getting

better results from the organization, teams and individuals by

understanding and managing performance within an agreed framework of

planned goals, standards and competence requirements.

• Armstrong and Baron define Performance Management as a “strategic

and integrated approach to delivering sustained success to organizations by

improving performance of the people who work in them and by developing

the capabilities of teams and individual contributors.

 What is not Performance Management?

• Performance Appraisal is a singular activity that is employed to assess performance of

employees for a predetermined duration on a set of parameters.

• Performance Management is an integrated activity that aims to nurture and

institutionalize performance management as a fundamental system of the organization.

• Performance appraisal is considered as one of the tools that is used in measuring actual

performance of employees on an assigned task.

• Performance Management is viewed as an activity of goal setting and monitoring

achievement of goals. It is also viewed as another form of management by objectives

(MBO).
What is not Performance Management?

• Performance Management is a comprehensive

discipline that consists of strategies to address
the entire motivational need structure of human
resource such as physiological, security, social,
self-esteem and self- actualization through
appropriate interventions and drivers.
 Similarities and Differences of PA and PMS
Performance Appraisal Performance Management System

1. The main focus area here is performance 1. The focus is on performance management.

appraisal and the generation of ratings. 2. It stresses upon performance improvements of

2. It lays emphasis on relative evaluation of individuals, teams and the organization.

individuals. 3. This is a continuous process with quarterly

performance review discussions.

3. It is an annual exercise.
4. Emphasis is on performance planning, analysis,
4. Emphasis is on ratings and evaluations.
review, development, etc.
5. Here the reward and recognition of good
5. Performance rewarding may or may not be integral
performance is an important component.
part.
6. Designed and monitored by the HR
6. It is designed by the HR department but monitored
department.
by the respective departments themselves.
 Significance of Performance Management

• Competitiveness:

- More performance oriented HRM practices are preferred than those of

maintenance and collective bargaining.

• Business-HR Partnership:

- Contribution to the bottom line of organizations in terms of profits, sales,

turnover, etc.

- effective functioning of organization in terms of culture, employee performance,

etc.

- Value addition could be attained only when performance management practices

are given high priority.

 Significance of Performance Management

• Fulfilment of Human Resource Needs:

- In the motivational hierarchy, most employees in business organizations

are placed at the level of self esteem and self actualization. ( perform high
level tasks)
• Core of HR:

- Performance driven practices such as reward, career, team building, etc.

• Capable of Institutionalising High Performance Work Culture:

- It promotes openness, trust, collaboration, etc.

Significance of Performance Management

• Integrated Motivational Tool:

- A set of motivational tools that are capable of obtaining

superior performance of employees. Conversion of latent
potential that exists inside human beings into tangible and
contextual performances.
 Challenges of Performance Management
• Rationalist Approach:

- There must be a super ordinate purpose and theme running across all performance

management efforts.

• Engineering Alignment:

- Performance Management must perform the role of catalyst in attaining short,

medium and long term objectives of an organization.

• Melding culture:

- Success of performance management largely depends upon its capability to blend

various practices with culture.

• HR Competencies:

- HR leadership is highly critical to the effective practice of performance management.

Challenges of Performance Management

• Utilitarian Instrumentalism:

- It means performance management encourages i) sourcing

human resource as cheaply as possible, ii) retaining the as
long as useful.
• Engineering Unlearning Process:

- learn -Unlearn- relearn

Theoretical Foundations of Performance
Management
The fundamental structure of performance
management is drawn from basic principles of
well established motivational and learning
theories.
 Motivational Theories
• Hull’s Drive Reduction Theory

- This model helps in the design and implementation of performance

strategies, interventions and drivers mainly in the area of reward,

measurement and competency management.

- Central learning of this model is that the goal of all motivated behaviour

is to reduce the intensity of a drive/need called as drive reduction.

- A high performance work culture can be built using this theory as a base.
 Motivational Theories
• Murray’s Manifest Theory

- This theory encompasses two broad motives consisting four needs, namely:

i) achievement, ii) affiliation iii) autonomy and iv) power.

- The first broad motive is called directional motive that guides people to behave in a

particular manner and in a particular direction.

- The second motive is known as intensity motive that is represented by the intensity of

need and energy level to fulfil that need.

- Needs are largely learned rather than inherited and activation of these needs is contingent

upon the external environment. It is called manifest needs theory.

- This need-environment-performance theory has great relevance in the development of

culture and team based performance management interventions and drivers.