Definition: Performance management is a continuous process of identifying, measuring and developing the performance of individuals and teams and aligning performance with the strategic goals of the organization.

Let’s consider each of the definition’s two main components: Continuous process: Performance management is ongoing process of setting goals and objectives, observing performance & giving & receiving ongoing coaching & feedback. Alignment with strategic goals. Performance management requires that managers ensure that employees’ activities & outputs are congruent with the organization’s goals & consequently, help the organization gain a competitive advantage. PM therefore creates a direct link between employee performance & organizational goals & makes the employees’ contribution to the organization explicit.

Characterstics Performance Management

Performance Appraisal

1. Type of objectives Emphasis on integrating, organizational, team,& individual objectives

Individual objectives

2. Frequency Continuous review with one or more formal reviews in a year

Annual Appraisal

3. Rating system Joint or participative process, rating less common

Top-down system with ratings

4. Reward Linkage Does not have direct link to reward

Often linked to pay

5. Ownership Owned by management Owned by HRD

6. Focus of performance reviews

Future focused Focus on past performance

7. Questions asked What can be done to help employees perform as effectively as possible?

How well was the work done?

Comparison of Performance Management & Performance Appraisal

Motivation To perform is increase. Self esteem is increased. Managers gain insight about subordinates. The definitions of job & criteria are clarified. Self-insight & development are enhanced. Administrative actions are more fair &

appropriate. Organisational goals are made clear.

Employees become more competent.There is better protection from lawsuits.Better & more timely differentiation b/w good & poor performer.Supervisors’ view of performance are communicated more clearly.Organisational change is facilitated.Motivation, commitment, & intentions to stay in the organisation are enhanced.

Increased Turnover Use Of Misleading Information Lowered Self-Esteem Wasted time & Money Damaged Relationship Decreased Motivation TO Perform Employee Burnout & Job dissatisfaction

Unclear Ratings System

Increased Risk Of LitigationUnsatisfied Demands On Managers & Employees Resources.Varying & Unfair Standards & Ratings

Strategic Purpose Administrative Purpose Informational Purpose Developmental Purpose Organisational Maintenance Purpose Documentational Purpose.

Validity : Do not include factors outside the control or factors unrelated to performance

Acceptability & Fairness: Many elaborated performance measures are extremely valid & reliable, but consume more time.

Fairness in judgment(eg: across countries) Inclusiveness: Concerns of the people who will be affected by the

outcome.

Input from employee before appraisal.

Feedback for process of designing & implementing the system.

Openness: Good system have no secrets

Frequent evaluation & feedback is provided. Appraisal meeting is of two way communication.

Standards should be clear.

Communication are factual, open & honest. Correctability: Mechanism through which errors are corrected. Standardization: Training for managers regarding appraisal.

Ethicality: Supervisors should evaluate based on performance, privacy of the employee is respected.

Prerequisites

PerformancePlanning

PerformanceExecution

PerformanceAssessment

Performance Review

Performance Renewal &

Recontracting

STAGES IN PERFORMANCE MANAGEMENT PROCESS

Prerequisite: a) Knowledge of the organization’s mission & strategic goals.

b) Knowledge of the job in question. Performance planning: a) Results.

b) Behaviors.

c) Development plan Performance Execution:

Individual Responsibilities in PM

Manager’s Responsibilities

1. Committing to goal achievement

1. Observation & documentation

2. Soliciting performance feedback & coaching

2. Updates

3. Communicating openly & regularly with the Manager

3. Feedback

4. Collecting & sharing performance 4. Resources

5. Preparing for performance reviews

5. Reinforcement

Performance Assessment: a) Independent evaluation Appraiser & appraisee.

b) Assessment by Managers & review & approved by senior mgmt & HR.

c) Self-assessment is done by the subordinates if necessary from customers, peers, subordinates

d) Reviewing of subordinates self-appraisal with managers appraisal regarding the subordinate.

Performance Review: a) Performance review are stressful.

b) Reviews evaluate our performance on the job.

c) The supervisors & employee meet to discuss the employee’s performance during appraisal period.

d) Two-way discussion of the employee’s performance during appraisal period.

Performance Renewal & Recontracting: a) Manager & subordinate plan next year’s objective.

b) Necessary adjustments & revisions are made taking into account the changes & accomplishments of the past 12 months.

The process begins again.

PERFORMANCE MANAGEMENT & STRATEGIC PLANNING

Definition of Strategic Planning: It is a process that involves describing the organization’s destination, assessing barriers that stand in the way of that destination, & selecting approaches for moving forward. The main goal of strategic planning is to allocate resources in a way that provides organization with a competitive advantage. Overall, a strategic plan serves as a blueprint that defines how the organization will allocate its resources in pursuit of its goals.

PROCESS OF LINKING PM TO THE STRATEGIC PLAN

Organization’s Strategic Plan•Mission•Vision•Goals•Strategies

Unit’s Strategic Plan•Mission•Vision•Goals•Strategies

Job Description•Tasks•Knowledge•Skills•Abilities

Individual & Team Performance

•Results•Behaviours•Developmental Plan

Developing strategic plans at organizational level

Environmental Analysis: Opportunities & Threats

MISSION: Why an organization exists?

Characteristics Of a Good Mission Statement:

It should be feasible It should be precise It should be clear It should be motivating It should be distinctive It should indicate major components of strategy It should indicate how objectives are to be accomplished.

VISION: What organization wants to become?

Characteristics Of a Good Vision Statement: Concise Appeals to all stakeholders Consistent with Mission & Values It should be feasible Verifiable Inspirational

GOALS: Short-term goals within specified period covered by plan.

How the vision & mission will be implemented & fulfilled

Strategies: Procedures to reach the stated objectives. Communicate knowledge of strategic plan Outline knowledge, skills,& abilities needed for strategy implementation Propose reward systems

Our Mission: At Microsoft, work to help people & businesses throughout the world to realize their full potential. This is our mission. Everyhting we do reflects this mission & the values that make it possible.

Our Values: Integrity & honesty Passion for customers, for our partners, for technology Openness & respectfulness Taking on big challenges Constructive self-criticism, self-improvement, & personal excellence Accountability to customers, shareholders, partners, & employees for

commitments, results, & quality.

JOB DESCRIPTIONS: Should be congruent with the organization & unit mission, vision, goals &

strategies. Objectives listing of job little, tasks, duties, & responsibilities involved in a

job. Differentiate the job from other jobs

INDIVIDUAL & TEAM PERFORMANCE:

Motivate employees to display the behavior & produce results. HR can function to make informed decision about design choices. Criteria measured in the PMS are result that must be relevant to the units &

organization.