MBA 225 – Human Resource Management

PERFORMANCE
MANAGEMENT
Discussants:

Ms. Harzel Jazz Aquino

Ms. Judy Rose Gallardo
Ms. Archien Labustro
Ms. Meriam Joy Reginaldo
Ms. Alva Reyteran
 TOPIC OUTLINE
PERFORMANCE MANAGEMENT
I. THE BASIS OF PERFORMANCE MANAGEMENT
1. Performance Management Defined
2. Aims of Performance Management
3. Characteristics of Performance Management
4. Development of Performance Management
5. Concerns of Performance Management
6. Understanding of Performance Management
7. Guiding Principles of Performance Management
8. Performance Appraisal and Performance Management
9. Views on Performance Management
10. Performance Management and the Psychological Contract
II. THE PROCESS OF PERFORMANCE MANAGEMENT
1. The Process of Performance Management
2. Performance management as a process of Management

III. THE PRACTICE OF PERFORMANCE MANAGEMENT

1. Three Main Approaches to Performance Management

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 I. THE BASIS OF PERFORMANCE MANAGEMENT
1. Performance Management Defined
2. Aims of Performance Management
3. Characteristics of Performance Management
4. Development of Performance Management

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 I. THE BASIS OF PERFORMANCE MANAGEMENT
5. Concerns of Performance Management
6. Understanding of Performance Management
7. Guiding Principles of Performance Management

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 CONCERNS OF PERFORMANCE
MANAGEMENT
The following are the main concerns of performance management:

1. Concern with outputs, outcomes, process and inputs.

2. Concern with planning.
3. Concern with measurement and review.
4. Concern with continuous improvement.
5. Concern with continuous development.
6. Concern for communication.
7. Concern for stakeholders.
8. Concern for fairness and transparency.

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 Concern with outputs, outcomes,
process and inputs.

Performance management is concerned with OUTPUTS (the achievement of results)

and OUTCOMES (the impact made on performance). But it is also concerned with
the PROCESSES required to achieve these results (competencies) and the INPUTS in
terms of capabilities (knowledge, skill and competence) expected from the teams and
individuals involved.

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 Concern with outputs, outcomes,
process and inputs.
Example:

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 Concern with planning.

Performance management is concerned with planning ahead to achieve future

success. This means defining expectations expressed as objectives and in
business plans.

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 Concern with measurement and review.

If you can’t measure it you can’t manage it.’ Performance management is

concerned with the measurement of results and with reviewing progress
towards achieving objectives as a basis for action.

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 Concern with continuous improvement.

Concern with continuous improvement is based on the belief that continually

striving to reach higher and higher standards in every part of the organization
will provide a series of incremental gains that will build superior performance.
This means clarifying what organizational, team and individual effectiveness
look like and taking steps to ensure that those defined levels of effectiveness are
achieved.

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 Concern with continuous development.

Performance management is concerned with creating a culture in which

organizational and individual learning and development is a continuous
process. It provides means for the integration of learning and work so that
everyone learns from the successes and challenges inherent in their day-to-day
activities.

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 Concern for communication.

Performance management is concerned with communication. This is done by

creating a climate in which a continuing dialogue between managers and the
members of their teams takes place to define expectations and share
information on the organization’s mission, values and objectives.

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 Concern for stakeholders.

Performance management is concerned with satisfying the needs and expectations of all the
organization’s stakeholders – owners, management, employees, customers, suppliers and the
general public. In particular, employees are treated as partners in the enterprise whose
interests are respected, whose opinions are sought and listened to, and who are encouraged
to contribute to the formulation of objectives and plans for their team and for themselves.
Performance management should respect the needs of individuals and teams as well as those
of the organization, recognizing that they will not necessarily coincide.

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 Concern for fairness and transparency.

Four ethical principles that should govern the operation of the performance management process have been
suggested by Winstanley and Stuart-Smith (6).

These are:
– respect for the individual;
– mutual respect;
– procedural fairness;
– transparency of decision making.

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 UNDERSTANDING PERFORMANCE
MANAGEMENT
There are five issues that need to be considered to obtain a full understanding of
performance management:

1. the meaning of performance;

2. the significance of values;
3. the meaning of alignment;
4. managing expectations;
5. the significance of discretionary behavior

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 The meaning of performance

Performance is often defined simply in output terms – the achievement of quantified objectives. But
performance is a matter not only of what people achieve but how they achieve it. The Oxford English
Dictionary confirms this by including the phrase ‘carrying out’ in its definition of performance: ‘The
accomplishment, execution, carrying out, working out of anything ordered or undertaken.’ High
performance results from appropriate behaviour, especially discretionary behaviour, and the effective
use of the required knowledge, skills and competencies. Performance management must examine how
results are attained because this provides the information necessary to consider what needs to be done to
improve those results.

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 Performance management and values

Performance is about upholding the values of the organization – ‘living the

values’. This is an aspect of behaviour but it focuses on what people do to
realize core values such as concern for quality, concern for people, concern for
equal opportunity and operating ethically. It means converting espoused values
into values in use: ensuring that the rhetoric becomes reality.

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 The meaning of alignment

One of the most fundamental purposes of performance management is to align individual and
organizational objectives. This means that everything people do at work leads to outcomes
that further the achievement of organizational goals. This purpose was well expressed by
Fletcher (8) who wrote: ‘The real concept of performance management is associated with an
approach to creating a shared vision of the purpose and aims of the organization, helping
each employee understand and recognize their part in contributing to them, and in so doing,
manage and enhance the performance of both individuals and the organization.

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 Managing expectations

Performance management is essentially about the management of expectations.

It creates a shared understanding of what is required to improve performance
and how this will be achieved by clarifying and agreeing what people are
expected to do and how they are expected to behave and uses these agreements
as the basis for measurement, review and the preparation of plans for
performance improvement and development.

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 Performance management and
discretionary behaviour

Performance management is concerned with the encouragement of productive discretionary

behaviour. As defined by Purcell and his team at Bath University School of Management (9),
‘Discretionary behaviour refers to the choices that people make about how they carry out their
work and the amount of effort, care, innovation and productive behaviour they display. It is the
difference between people just doing a job and people doing a great job.’ Purcell and his team,
while researching the relationship between HR practice and business performance, noted that
‘the experience of success seen in performance outcomes help reinforce positive attitudes’.

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 GUIDING PRINCIPLES OF
PERFORMANCE MANAGEMENT
Egan (10) proposes the following guiding principles for performance
management:

Most employees want direction, freedom to get their work done, and encouragement
not control. The performance management system should be a
control system only by exception. The solution is to make it a collaborative
development system in two ways. First, the entire performance management
process – coaching, counselling, feedback, tracking, recognition, and so forth
– should encourage development. Ideally, team members grow and develop
through these interactions. Second, when managers and team members ask
what they need to be able to do to do bigger and better things, they move to
strategic development.
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 I. THE BASIS OF PERFORMANCE MANAGEMENT
8. Performance Appraisal and Performance Management
9. Views on Performance Management
10. Performance Management and the Psychological Contract

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 PERFORMANCE APPRAISAL
AND PERFORMANCE
MANAGEMENT
Performance Appraisal -a systematic and periodic process of measuring an
individual's work performance against the established requirements of the job.

Performance Management- a continuous process focusing on various aspects,

such as planning, tracking, and assessing the employee’s performance against the
organizational goals. It is not a one-time process, but rather a continuous process
that can yield long-term results.

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 Difference of performance management
and performance appraisals
Category Performance Appraisal Performance Management
Approach Used to evaluate employees based on A comprehensive approach that helps
their previous performance manage the employee’s performance
against the company’s vision
Scope Applies to individual employees Applies to a team, business unit,
department, or project
Past vs. Future Focuses on past performance Focuses more on enhancing present
and future growth
Objective Objective is to evaluate the Aims employees overcome obstacles
performance and check if employees and challenges they endure in their
have achieved their goals. commitment
Timing Semi-Annually, Annually, or quarterly Ongoing process

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Flexible vs. Rigid Follows a template, standard set of Allows more flexibility
rules.
Facilitation Conducted by HR Department Involves multiple stakeholders,
including managers, and supervisors
Customization More structured and formal Less structured
Quantitative vs. Qualitative methods Quantitative Approach Involves both qualitative and
quantitative approach
Compensation Often linked to compensation, salary Broader, and compensation remains a
hike, and promotions minuscule subject
Communication Top-down approach Involves two-way communication
Lead Time Implementation is immediate and about skilling programs, rewards, and
lead time is short long-term engagement, which take
more time to implement.
Employee efficiency vs. Company enhance the work efficiency of the helps achieve company goals
goals employees
Proactive vs. Reactive Reactive Proactive

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 Types of Performance Appraisals

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 Uses of Performance Appraisals

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 Types of Performance Management
Systems
1. Balanced Scorecard - it combines four different business perspectives—
financial, customer, internal processes, and people—to help companies
understand and achieve their organizational objectives.
2. Management by Objectives - it centers on creating a set (anywhere from
two or six) of organizational objectives, which are then used as guideposts for
creating individual employee objectives.
3. Budget-Driven Plans - In this case, “work plans” are linked to the overall
budget of the organization, and spending goes to the projects and programs that
deliver results. It is a less commonly used performance management system,
but it works for some organizations.

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 Types of Personnel Performance
Management Systems
1. OKR (objectives and key results) - a simple way to set, track, and measure
progress toward goals on a regular basis
2. HR Review-Driven Systems - interested in aspects of performance unrelated to
objectives, such as whether an individual is developing a specific skill set or if they
are a good fit for the team. Often, these types of evaluations are separate from an
OKR system, but may also need to be measured.

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 Importance of Performance
Management
• keeping employees engaged – according to Growth Divide Study 4%
of employees would prefer their manager gives them feedback and
development opportunities in real-time, and 81% would prefer at least
quarterly check-ins with their manager.
• retaining talent - Employees who have frequent meetings with
management to discuss performance, solve problems and receive
training are more likely to stay with the company.
• developing leaders from within - This consistent development and
partnership between managers and employees allow for the
development of leaders from within the company.

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 Purpose of Performance
Management
• Develop clear role definitions, expectations, and goals
• Increase employee engagement
• Develop managerial leadership and coaching skills
• Boost productivity through improved performance
• Develop a performance reward program that incentivizes accomplishment.

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 Real World Examples of
Performance Management

Google launched They are able to use The system is Adobe’s leadership team they are using a more
a project that feedback to see designed to be made a bold leap into a fluid performance
dedicated to how well teams are continuous, centered performance management process
assessing their performing and around a positive management system that where employees
managers, which understand where employee-manager began by training receive ongoing, timely
has led to a collaboration is relationship, with managers how to feedback from
thorough training happening – and daily activity and perform more frequent management. This has
and future where it is not. They feedback being check-ins and offer been paired with a
development also have developed incorporated into actionable guidance, renewed focus on
process that sets internal software to conversations that then the company gave immediate employee
managers, and provide continuous, solve problems rather managers the leeway development and an
thus employees, real-time feedback. than rehash past they needed to internal app for
up for success. actions. effectively lead. communicating
feedback.
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 PERFORMANCE MANAGEMENT AND
THE
PSYCHOLOGICAL CONTRACT
A psychological contract is a system of beliefs that encompasses the actions
employees believe are expected of them and what response they expect in
return from their employer.

A positive psychological contract is one in which both parties – the

employee and the employer, the individual and the manager – agree on
mutual expectations and pursue courses of action that provide for those
expectations to be realized.

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 Performance management processes can help to clarify the psychological
contract and make it more positive by:
• Provide a basis for the joint agreement and definition of roles;
• communicating expectations in the form of targets, standards of
• performance, behavioral requirements (competencies), and upholding
• core values;
• obtaining agreement on the contribution of both parties (the manager and
• the individual) has to make to get the results expected;
• defining the level of support to be exercised by managers;
• Provide rewards that reinforce the messages about expectations;
• Giving employees opportunities at performance review discussions to clarify
points about their work.
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 II. THE PROCESS OF PERFORMANCE MANAGEMENT
1. The Process of Performance Management
2. Performance management as a process of Management

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 The four stages of performance management.
 

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 Planning.

Goal planning and setting is an integral stage of performance

management cycle. It is where employee, team, and business
goals are aligned and set.

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 Monitoring.

To monitor employee goals, plan regular check-ins and 1-on-1s to

address any roadblocks preventing employee productivity. These
conversations should be on-going to stay up to date with goal progress
and needed adjustments.  

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 Performance Review

 Performance review is implemented to assess employee success or possible shortcomings.  If leaders have
utilized the monitoring stage effectively, they should already have a grasp on how well an employee
performed to achieve their goals. But reviewing helps managers evaluate end results and the process
leveraged to achieve them. 

This would be a great opportunity for management to understand the employees’ perspectives, provide
feedback for improvement, discuss future development opportunities, and create a roadmap for the future.

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 Rewarding.

This is where leaders provide rewards and recognition for employees’ efforts and
success. By acknowledging your employees’ success, you demonstrate their value to
the organization, from top to bottom. Without rewards, your employees risk losing
motivation and their future performance may decrease.

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 “Performance Management as a
Process of Management”

Performance Management process plays a vital part in the growth of a

company. The performance management process is all about making sure
your employees are happy, engaged and working towards your collective
goals. The performance management process needs to be at the forefront of
your mindset and high up your list of priorities.

 
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 III. THE PRACTICE OF PERFORMANCE MANAGEMENT
1. Three Main Approaches to Performance Management

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 SUMMARY

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 MBA 225 – Human Resource Management

Discussants:

Ms. Harzel Jazz Aquino

Ms. Judy Rose Gallardo
Ms. Archien Labustro
Ms. Meriam Joy Reginaldo
Ms. Alva Reyteran