CHAPTER: ONE

PERFORMANCE
MANAGEMENT
OVERVIEW
LEARNING OBJECTIVES

• Understand What is “Performance Management”?

• Characteristics of Ideal Performance Management System to be Successful
• Compare between performance appraisal and performance management
• Describe the multiple purposes of a performance management system
• Integration with other human resources and development activities
 W H AT I S “ P E R F O R M A N C E
MANAGEMENT”?
• Performance management is the continuous process of identifying, measuring, and
developing the performance of individuals and teams and aligning their performance
with the organization’s goals.

• It improves organizational performance by creating a work environment in which people can

perform to the best of their abilities .

• It 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.
CHARACTERISTICS OF IDEAL
PERFOMANCE MANAGEMENET
SYSTEM TO BE SUCEESFUL
• Meaningfulness: evaluation must take place at regular intervals and provide continuing skills
development of evaluator.
• Specificity: a good system should be specific, provide details and guidance to employees about
what is expected of them and how they can meet these expectations.
• Reliability: Should include measures of performance that are free of errors (ex: if two supervisors
provide rating to same employee performance dimension must rating similar).
• Validity: includes all relevant performance facts.
• Acceptability: perceived as fair by all participants.
CHARACTERISTICS OF IDEAL
PERFOMANCE MANAGEMENET SYSTEM
TO BE SUCEESFUL” CONT’D”
• Openness : provide feedback in a two-way exchange, communication should be open.
• Correctability: establishing an appeal process.
• Standardization : consist of evaluate to achieve goals through ongoing training.
• Ethicality: supervisor evaluates only performance dimensions.
• Identification :of effective & ineffective performance.
PERFORMANCE APPRAISAL AND PERFORMANCE
MANAGEMENT
• Performance appraisals

• Performance appraisal can be defined as the formal assessment and rating of

individuals by their managers at, usually, an annual review meeting.

• Performance appraisal systems are comprehensive, providing information about how

well you performed over the past year.

• This information might be used to create incentives for future performance (e.g., merit
raises), but the evaluation is in many respects backward-looking.

• Performance appraisal is an important part of performance management systems.

 PERFORMANCE APPRAISAL AND PERFORMANCE
MANAGEMENT
• Performance management, in contrast, often devotes less attention to evaluating what you did
over the past year, with a much stronger focus on what you are doing right now, and how it
might be improved in the future.

• Performance management is not only about appraisals, but it also aligns the goals of
employees with that of the firm, providing workers with continual on-the-job feedback, and
rewarding them.

• Performance management is a continuous and much wider, more comprehensive and more
natural process of management than performance appraisal.

• Performance management clarifies mutual expectations, emphasizes the support role of

managers who are expected to act a coaches rather than judges and focuses on the future.

• Some performance management programs will include systematic activities (e.g., training, job
redesign) to assist employees whose current performance is not meeting standards.
PERFORMANCE APPRAISAL AND PERFORMAN
MANAGEMENT
• You might compare a performance appraisal to taking a test in college.

• Do tests motivate you? Do they make you want to truly excel, or do you just want to get
through them?

• Now compare your test-taking experience with an experience in which your instructor
talked to you about your career plans, complimented you on your performance, and
offered you suggestions for improving it. That probably had a greater motivating effect on
you.

• Employers have to appraise you, just as your university has to test you to be sure you
graduate with the qualifications people in society expect.

• But your performance in either scenario consists of so much more than that.

•
 PERFORMANCE APPRAISAL AND
P E R F O R M A N C E M A N A G E M E N T: S I M I L A R I T I E S

• There are some important similarities between performance appraisal and performance
management.

• They are both ultimately concerned with the effectiveness of individuals, work
groups, and organizations,

• They both focus on identifying good performance and on increasing the likelihood
that individual employees will be effective in their jobs.

• They both rely on group leaders, supervisors, or managers to help determine whether
employees are performing well and to help them perform better.
 PURPOSES OF PM SYSTEMS
• In general performance management systems can serve the following six purposes:
1. Strategic,
2. Administrative,
3. Informational,
4. Developmental,
5. Organizational maintenance,
6. Documentational purposes.
 PURPOSES OF PM SYSTEMS
1. Strategic Purpose
First linking individual goals with organizational goals:
• Help top management achieve strategic business objectives.
• Reinforce behaviors consistent with the attainment of organizational goals.
• Serves to communicate what are the most crucial business strategic initiatives.
PURPOSES OF PM SYSTEMS
1. Strategic Purpose
Second play an important role in the onboarding process.
• Onboarding refers to the processes that lead new employees to transition from
being organizational outsiders to organizational insiders.
• Allows new employees to understand the types of behaviors and results that are
valued and rewarded
• Lead to an understanding of the organization’s culture and its values.
SYSTEMS
2. Administrative Purpose
• Furnish valid and useful information for making administrative decisions about
employees including:
salary adjustments,
promotions,
employee retention or termination,
recognition of superior individual performance,
identification of poor performers,
layoffs,
 merit increases.
SYSTEMS
3. Informational Purpose
• PM serves as an important communication device.
• First, they inform employees about how they are doing and provide them with
information on specific areas that may need improvement.
• Second, they provide information regarding the organizations and the
supervisor’s expectations and what aspects of work the supervisor believes are
most important.
SYSTEMS
4. Developmental Purpose

Feedback is an important component of a well-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).
• Feedback is useful only when used to remedy any deficiencies and when employees are willing
to receive it.
• Organizations should strive to create a “feedback culture” that is nonthreatening.
• Through PM employees receive information about themselves that can help them
individualize their career paths on the long-term aspects of development.
SYSTEMS
5. Organizational Maintenance Purpose
• Provide information to be used in workforce planning.
• Workforce planning comprises a set of systems that:
1. Allows organizations to anticipate and respond to needs emerging within
and outside the organization,
2. To determine priorities, and to allocate human resources where they can do
the best.
SYSTEMS
5. Organizational Maintenance Purpose
• An important component of any workforce planning effort is the talent inventory,
• Talent inventory which is information on current resources (e.g., skills, abilities,
promotional potential, and assignment histories of current employees).
AIMS AND ROLE OF PM
SYSTEMS
5. Organizational Maintenance Purpose
• Performance management systems are the primary means through which
accurate talent inventories can be assembled.
• Other organizational maintenance purposes include:
• Assessing future training needs,
• Evaluating performance achievements at the organizational level,
• Evaluating the effectiveness of HR interventions (e.g., whether employees
perform at higher levels after participating in a training program).
SYSTEMS
6. Documentational Purpose

Performance management systems allow for the documentation of important

administrative decisions.
This information can be especially useful in the case of legal action.
 I N T E G R AT I O N W I T H O T H E R H U M A N
RESOURCES AND DEVELOPMENT ACTIVITIES
• Performance management systems serve as important “feeders” to other human
resources and development activities.
1. The relationship between performance management and training.
• Performance management provides information on developmental needs for
employees.
• This will help the organization to train those who most need it in the most critical
areas).
I N T E G R AT I O N W I T H O T H E R H U M A N
RESOURCES AND DEVELOPMENT ACTIVITIES

2. Performance management also provides key information for workforce planning.

• Specifically, an organization’s talent inventory is based on information collected
through the performance management system.
• Development plans provide information on what skills will be acquired in the
future
I N T E G R AT I O N W I T H O T H E R H U M A N R E S O U R C E S
AND DEVELOPMENT ACTIVITIES

3. This information is also used in making recruitment and hiring decisions.

• Knowledge of an organization’s current and future talent is important when
deciding what types of skills need to be acquired externally and what types of
skills can be found within the organization.
I N T E G R AT I O N W I T H O T H E R H U M A N R E S O U R C E S
AND DEVELOPMENT ACTIVITIES
4. Relationship between performance management and compensation systems.
• Compensation and reward decisions are likely to be random in the absence of a
good performance management system.