Performance

Management

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Performance Management
and Reward System
What is Performance?
➢ Doing something successfully by using skills,
knowledge and motivation
➢ “Outcomes, results or accomplishments”

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What is Performance
Management?
 Performance
Management
➢a process to establish a shared understanding
about what is to be achieved, and an
approach to managing and developing people
in order to achieve it
➢Getting better results for the organization via
the measurement of individual performance

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 Performance management (PM) includes activities
that ensure that goals are consistently being met in
an effective and efficient manner.

 Performance management focuses on the

performance of an organization, a department,
employee, or even the processes to build a product or
service or any other areas in an organization.
An iterative process of goal-setting, communication, observation and
evaluation to support, retain and develop exceptional employees for
organizational success.

Set
Goals

Evaluate
PM Commu
nicate

Observe
 Nature of Performance Management
• Performance Management
➢Processes used to identify, encourage, measure, evaluate,
improve, and reward employee performance
Provide information to employees about their performance. Clarify
organizational performance expectations.
Identify the development steps that are needed to enhance employee
performance.
Document performance for personnel actions.
Informing and getting agreement on individual performance Facilitate
them to achieve better results
Provide rewards for achieving performance objectives.
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Performance Management is A Part of HRM Cycle
Reward

Recruitment & Performance Appraisal

Selection

Training and
Development

Performance depends upon each of the four components and how they are coordinated
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Performance
Management
Linkage

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 GOALS OF
GOALS OF PERFORMANCE
PERFORMANCE
MANAGEMENT
MANAGEMENT
◆ Improve employee performance
◆ Develop people for promotional
opportunities
◆ Meet employee need for feedback

◆ Ensure that employees are working

toward organizational goals
◆ Provide the data needed to make
and defend important human
resources decisions
 It serves the strategic purpose of the org.
 Provide information for reward system
 Facilitates HR decisions
 Enabling employees to learn about their
performance as against org expectations
 It serves as a developmental purpose
 Serves org maintenance purpose
 Support HR decision to meet legal
requirements
  Openness
 Correctability
 Strategic congruence
 Standardization
 Thoroughness
 Ethicality
 Practicality
 Identification of
 Meaningfulness
 Specificity effective & ineffective
 Reliability performance
 Validity
 Acceptability
 Inclusiveness
Characteristics of an
Effective Performance
Management System
An effective performance management system should

1
Align with your organization’s strategic direction and
culture

2 Be practical and easy to understand and use

Monitor and measure results (what) and behaviors

3 (how)

Establish clear communication between managers and

4 employees about what they are expected to accomplish

Provide constructive and continuous feedback on

5 performance
 Are Performance Management
and Performance Appraisal the Same?
 Both are different concepts.
 PM is a broader term & includes appraisal as a
part of the performance system.
 Performance appraisal is the systematic
description of an employee’s strengths and
weakness.
 Thus, performance appraisal is an important
component of performance management.
◆ Performance management is the process through
which managers ensure that employee activities
and outputs are congruent with the organization's
goals.
◆ Performance Appraisal is the process through

which an organization gets information on how

well an employee is doing his or her job.
 PERFORMANCE
APPRAISAL
VS PERFORMANCE
MANAGEMENT
Performance appraisal --
◆

setting standards, informing

employees, ratings and
feedback.

◆ Performance management -- “all of

those processes led by managers to
help employees perform as
effectively as they can.”
 Motivation to
perform is increased
 Increases self
esteem
 Managers gain
insight about staff
and direct reports
 Jobs are simplified
 Organizational goals are
clear
 Employees become more
competent
 Differentiation b/n good &
poor performance
 Performances are
communicated
 Change can be possible
 The information collected by a PM system is
most frequently used for
1. Salary administration
2. Performance feedback
3. Identification of employee strengths &
weakness
 Strategic purpose
 Administrative purpose
 Informational
 Developmental
 Organizational maintenance
 Documentational
 Increased turnover
 Use of misleading information
 Wasted time & money
 Lowered self esteem
 Damaged relationships
 Decreased motivation to perform
 Employee job burnout & dissatisfaction
 Increased risk of litigation
 Unjustified demands on managers &
employees resources
 Varying & unfair stds & ratings
 Emerging biases
 Unclear rating systems
 Prerequisites
PM

PM Performance Planning
PM Performance Execution
PM Performance Assessment
PM Performance Review
Performance Renewal &
PM
Re-contracting
 Two important prerequisites before PM
system are:
1. Knowledge of the org’s mission & strategic
goals
2. Knowledge of the job in question (this is
done through job analysis)
 Employees should have a through knowledge
of the PM System.
 Planning discussion includes :
1. Results
2. Behaviors
3. Developmental issues
 At the execution stage, following factors must
be considered:
1. Commitment to goal achievement
2. Ongoing performance feedback & coaching
3. Communication
4. Collecting & sharing performance data
5. Preparing for performance reviews
 It is important for employee as
well as the managers to take
ownership of assessment
process.
 It helps the org to use the
information obtained in a
productive manner for the
future requirements.
 Inclusion of self appraisal is also
beneficial in all manner.
 Review stage involves meeting between
employees & the manager.
 This meeting is called Appraisal
Meeting.
 Review meeting helps employee and
manager to design developmental
plans.
 It‘s identical to planning
stage.
 Manager uses the insights &
information gained from
other phases to reset
performance goals for
employees