Contents

Elements of Performance Management

Performance Management utility
Achieve Model
Performance Management – 7 Important Dimensions
15th Best practices of Performance Management
Elements of Performance Management
Effective performance management systems typically include the following three broad elements:

Goal setting,
Performance review and a
 Performance improvement process.

Organizations may use a multitude of options in the execution of the performance management
process, but an effective system will incorporate the three basic elements in some form
Element one: goal setting

Goal setting is a process of establishing objectives to be achieved over a period of time. It is

the performance criteria an employee will be evaluated against. Performance goals for
individual employees should ideally align with organizational goals.
Common types of goals include the following:
Job description goals. Goals may be based on the achievement of a pre-established set of
job duties from the description. These goals are expected to be accomplished continuously
until the job description changes. Examples might be financial, customer oriented, or
process- or system-oriented goals.

Project goals. Goals may be based on achievement of a project objective. These goals may
be set for a single year and changed as projects are completed. Job description and
project goals are "what" needs to be accomplished.
Behavioral goals. Goals may be based on certain behaviors. These goals are expected to be
accomplished continuously. Behavioral goals are "how" things need to be accomplished.
Stretch goals. Goals that are especially challenging to reach are sometimes referred to as stretch
goals. Stretch goals are usually used to expand the knowledge, skills and abilities of high-potential
employees

In addition to focusing only on a few major goals during a single year, the goals should be
SMART:
Specific, clear and understandable.
Measurable, verifiable and results-oriented.
Attainable, yet sufficiently challenging.
Relevant to the mission of the department or organization.
Time-bound with a schedule and specific milestones.
Finally, effective goals should be participative. Both manager and individual should be
involved in the development of goals to ensure understanding and commitment. Goals
should be documented, available for review, managed on a continuous basis and
acknowledged. Goals should be flexible enough to account for changing conditions.

Examples of effective goals include statements such as these:

•Increase revenue by 10 percent during the first quarter.
•Reduce office expenses by 25 percent as compared with the prior year's actual costs.
•Decrease employee absences from three days to one day per quarter.
Element two: performance review
Performance review is the process of assessing an employee's progress toward goals. Strengths
and weaknesses of all employees are recorded regularly so that the organization can make
informed and accurate decisions regarding an employee's contribution, career development,
training needs, promotional opportunities, pay increases and other topics. Performance review
and evaluation involve the objective and subjective consideration of how to measure and
evaluate employee performance results.
Recommendations for an effective performance review process include:

A feedback process that is continuous and timely throughout the review period so that
employees know how they are doing and what is expected.
A dialogue that includes performance feedback measured against clear and specific
goals and expectations established at the outset of the performance management
cycle.
A process for acknowledging the outcomes of the performance review process that
is documented between the manager and the employee.
A two-way individual conversation between the manager and the employee
(preferably face-to-face) at least once a year.
Element three: performance improvement plans
The use of a performance improvement plan (PIP) can range from employees:
 who may be new to a role or
who are unclear on performance expectations .
who are regularly falling short of meeting performance expectations and
 whose performance may necessitate the beginning of a progressive discipline process
regarding the performance level.
The document used to guide the process is a critical tool as it helps facilitate performance
discussions, records areas of concern and ways to correct them, and serves as legal and
decision-making documentation
The format of the PIP will vary by employer and should include the following components:
Employee information.
Relevant dates.
Description of performance discrepancy/gap.
Description of expected performance.
Description of actual performance.
Description of consequences.
Plan of action.
Signatures of the manager and the employee.
Evaluation of plan of action and overall performance improvement plan.
Performance Management – Utility

(1) It translates corporate goals into individual, team, departmental, and divisional goals,
(2) It helps to clarify corporate goals,
(3) It is a continuous and evolutionary process in which performance improves over time,
(4) It is realized on consensus and cooperation, rather than control or coercion. It encourages the self-
management of individual performance. It requires a management style that is open and encour­ages
two-way communication between supervisors and subordinates,
(5) It requires continuous feedback, and
(6) It measures and assesses all performance against jointly agreed goals. It applies to all staff, and it is
not primarily concerned with linking performance to financial rewards.
ACHIEVE model

An ACHIEVE model has been designed to help managers understand why performance problems may
have occurred and then to develop and change strategies aimed at solving problems.
The elements in the ACHIEVE model are:
A – Ability (knowledge and skills of subordinates)
C – Clarity (clarity of what to do)
H – Help (organizational help, support)
I – Incentive (motivation or willingness of subordinates)
E – Evaluation (coaching and performance feedback)
V – Validity (of personnel practices)
E – Environment (external factors that can affect individual performance even if he/she has all the ability).
In using the ACHIEVE model, managers must know and evaluate how each factor will
affect the present or potential performance of staff members for a given task.
Performance is said to be affected by motivation and ability, role perception or job
understanding, and environmental and organizational support.

The ACHIEVE model is stated to affect performance by providing feedback (telling

subordinates as to how well they are doing), and analyzing the validity of personnel
practices such as appraisal, training, promotion, and dismissal.
 Performance Management – 7 Important Dimensions

Dimension # 1. Result and Output:

The most acceptable and measurable dimension of performance is result and output. It
describes the conditions of inputs which included raw material, working conditions, process
capabilities and talent of employees in the final form of product or service. It is necessary to
plan all the performance activities in a scientific and systematic manner so that the desired
result or output may be obtained.
Dimension # 2. Input:
This dimension deals with the activities to be accomplished by the employee. Performance can
be achieved if the nature of inputs can be managed without mistake, because performance is a
function of three sets of factors – ability, motivation and organizational support. If anyone
among these three factor is less the performance is to be poor

Employee Performance = Employee Competence + Employee Motivation + Organizational Support

Dimension # 3. Time:
Time is precious and very important dimension of performance. In the current scenario of world,
the performance management is time bound otherwise the survival of organization is not possible
in the future. Performance of an employee in relation to a given role during particular period of
time under the set of circumstances operating at that point of time. Therefore, time may become
the target.
Dimension # 4. Focus:
Performance also has a focus dimension. For example in case of sales, profits and new areas.
Focus means attention, not only on own activities but should also keep close watch on related
activities.
Dimension # 5. Quality:
‘Quality is not destination but a journey’. Quality refers to doing the things right from the first time
rather than making and correcting mistakes in order to achieve total customer satisfaction. It means
quality is conformance to customer requirements, not goodness. Higher is the quality greater is the
satisfaction of customers. It is the responsibility of each and every employee as well as management to
build a quality standard which provides reasonable customer satisfaction at economical cost. Quality is
the core dimension of performance management.
Dimension # 6. Cost:
The ultimate principle of purchasing is the low cost with best quality. Therefore cost effectiveness is
another dimension of performance management. It implies the capacity of a business unit to produce
a given commodity at a lower cost through more effective utilization of existing resources. It is the
process of cost reduction by improving efficiency of operations.
Dimension # 7. Output- relationship and analysis
Output relationships and analysis- It is relevant and essential to understand the input-output relationships
and analysis. The purpose of input-output analysis is to find out the interdependencies and complexities
of the economy in order to determine the conditions for maintaining balance between demand and
supply. It describes the inputs required to produce the outputs of different sectors of the economy. It also
involves the study of the exchange of goods and services among industries.
Best practices for performance management.
While performance management can sound deceptively simple, the process itself is very
complicated. That’s why we have put together this list of best practices for performance
management.

1. Identify the goals of your performance management initiatives

As we are creating our performance management program, we need to understand what we want to
accomplish.
Asking the following questions can help :
•Is increased productivity a priority?
•Does your organization want to identify leaders from within and develop them?
•Do you want to streamline the compensation process?
•Are you seeking to improve employee retention or engagement?
If we know what we want our program to do, it will be easier to build it to accomplish that goal.
2. Define and describe each role
We mentioned this above, but it bears repeating. It is much harder for an employee to be successful if
they don’t know exactly what is expected from them, how they should do it, and what the end result
should look like.
3. Pair goals with a performance plan
As you set goals, develop a performance plan to go alongside. Year-long goals often fail, as they are too
large and employees can get overwhelmed before they start. A performance plan helps them visualize
their path, making it much more likely that they will meet their goal.

4. Monitor progress towards performance targets

Review key areas of performance. Use metrics and analytics to your advantage, tracking how goals are
progressing to make sure that interventions can happen early, if necessary
5. Coaching should be frequent
The point of coaching is to help identify and solve problems before they get too big. If it’s not frequent,
it’s not going to help at all. Monthly or quarterly meetings should be held to help keep employees on
the right track.
6. Use guidelines to your advantage
Guidelines should be created for each role as part of the first stage of the performance management
cycle. These policies or guidelines should stipulate specific areas for, or limits on, opportunity, search
and experimentation. Employees do their jobs better when they have solid guidelines to follow.
7. Build a performance-aligned culture
Make sure your workplace has shared values and cultural alignment. A sense of shared values, beliefs
and expectations among employees creates a more harmonious and pleasant workplace. Employees
should be committed to the values and objectives outlined, and exemplified by, top management.
8. Organize cross-functional workshops
This helps employees - and managers - understand what other departments do, how they think and what
their strengths and weaknesses are. They can discover something new and find new connections, which can
help them in future work.

9. Management should offer actionable feedback

During these coaching meetings, tensions can arise if the feedback is not given in a constructive, actionable
manner. It is not very important to look backward and point fingers, rather management should guide
employees towards future success.

10. Keep it professional, not personal

Giving less-than-stellar feedback is hard on both managers and employees, it’s one of the reasons that
performance appraisals tend to be a least-liked task. Managers should make sure to keep feedback
professional and remember to focus on behavior, rather than characteristics.

For example, pointing out that David regularly turned in important reports late is feedback about a behavior.
Saying that David is lazy, and that’s why the reports were often late is feedback about a characteristic. One of
these can help an employee own their role in a project’s success (or lack thereof) and the other will make
them defensive instantly.
11. It’s not only employees that need training
Management should be trained too. Coaching and offering good feedback are not easy jobs, which is why
there are so many specialist coaches out there. For managers to be able to lead well, they should be
trained in these skill sets.
12. Take advantage of multiple-source feedback
Ask employees to write feedback for each other. This will give management a more holistic view on
employee performance, understand the challenges that teams are facing, and be able to better offer
feedback.
13. Don’t depend only on reviews
While the review process is important, it is only one part of the system as a whole. Planning, coaching, and
rewarding employees are equally key parts of the system.
14. Problems are not always employee-based
It can be easy to assume that problems are always caused by employees, but that simply is not the
case. Problems can arise from external factors such as availability of supplies, internal processes that
are causing issues, or organizational policies. Seek out the source of problems as precisely as you can
in order to fix them.
15. Recognize and reward performance publicly and frequently
Management cannot expect employees to stay motivated if they are never rewarded, yet many
companies overlook this key step. Make sure that employees are compensated and recognized for
their hard work, and they will continue delivering for your organization.