Introduction to Performance Management

Presented By Gajaba Perera-Gunawardena Management Consultant

After studying this chapter, you should be able to:

Session Objectives

1. Define Performance Management

2. Explain the Performance Management Cycle.

3. Identify the process and uses

2008 Prentice Hall, Inc. All rights reserved.

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What is Performance Management (PM)

Performance management is an ongoing, continuous process of communicating and clarifying job responsibilities, priorities and performance expectations in order to ensure mutual understanding between Management and employees It emphasizes communication and focuses on adding value to the organization by promoting improved job performance and encouraging skill development. Performance Management involves clarifying the job duties, defining performance standards, and documenting, evaluating and discussing performance with each employee.

What is PM
According to Schultz (2003:76) Performance management is the day-to-day management of employees in terms of the goals of the organization. A performance management system is a systematic process that formally documents the goals and objectives of each employee, with a built-in review process. Good performance management means that each person will have goals and measures that are linked directly to the organization's strategy.

What is PM
Performance management is a means of getting better results from a whole organization, or teams and individuals within it, by understanding and managing performance within an agreed framework of planned goals, standards and competence requirements

What is PM
Performance management is a strategic tool and is holistic in nature as it pervades in every activity of the organization which is concerned with the management of individual, team and the overall organizational performance. The process is indispensable and very important for an organization as it is concerned with establishing a culture in which the individuals and teams can excel by continuously improving in terms of skill sets and the business processes

Why so Important?
People are the most strategic asset and the greatest investment Delivery of all organizational goals and mission depends on people Performance Management Directly Impacts: Employee Retention, Engagement, and Commitment Employee Productivity and Efficiency (all levels) Process Performance Service Excellence, Customer Satisfaction, and Organization Image .

Performance management
An effective Performance Management process establishes the groundwork for excellence by:
Linking individual employee objectives with the organizations mission and strategic plans. The employee has a clear concept on how they contribute to the achievement the overall business objective, Focusing on setting clear performance objectives and expectations through the use of results, actions and behaviors, Defining clear development plans as part of the process, and

Conducting regular discussions throughout the performance cycle which include such things as coaching, mentoring, feedback and assessment

Copyright 2008 John Wiley & Sons, Inc.

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Why Performance Management?

Total Quality

The Performance Management Approach

Appraisal Issues

Strategic Focus

2008 Prentice Hall, Inc. All rights reserved.

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Components of the PM Cycle

PLAN (Box a)
PM Planning is an integrated process. Starts with Role Creation and Development Clarifying Roles and Expectations is important because an employee must understand his or her role in the organization before the performance of that role can be fairly assessed. Next is effective objective-setting . This results in an agreement on what the employee has to achieve. It is important to define and manage expectations. It also forms the mutually agreed point of reference for performance reviews.

Components of the PM Cycle

PLAN The Third step in the planning process is Assessment Planning. The manager and the employee must plan and agree as how to evaluate performance during the assessment period. Development Planning (box b)
After creating goals and assessing progress, the employee and employer will identify areas that can be improved; the action plan for this improvement is called development planning/Personal Dev. Planning.

 ACT encourage performance to the required standard and provide support and development. Provide necessary resources, such as tools and equipment. Provide encouragement and motivation.
Monitor (Box c) To ensure regular support and correction or re-adjustment of decisions before it is too late.

Components of the PM Cycle

REVIEW This phase (Box d) is the final one in the cycle. Review is done as agreed in the first phase of PM Planning. Review methodology, agreed goals and outcomes are clear. Therefore, could minimize grievances and disputes. Any shortfalls by the employee could be identified and appropriately remedied (Box b)

Defining the Employees Goals and Work Standards

Guidelines for Effective Goal Setting

Assign Specific Goals

Assign Measurable Goals

Assign Challenging but Doable Goals

Encourage Participation

2008 Prentice Hall, Inc. All rights reserved.

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Basic Concepts in Performance Management and Appraisal

Comparing Performance Appraisal and Performance Management

Performance Appraisal:
Setting work standards, assessing performance, and providing feedback to employees to motivate, correct, and continue their performance.
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Performance Management:
An integrated approach to ensuring that an employees performance supports and contributes to the organizations strategic aims.

Performance Appraisal
The focus is on top down assessment Performed annually Usage of ratings is very common The focus is on traits Rigid system Are very much linked to pay

Performance Management
Stresses on mutual objective setting through a process of joint dialogue

Continuous reviews are performed Usage of ratings is less common The focus is on quantifiable objectives, values and behaviors Flexible system Is not directly linked to pay

Purpose of Performance Management

Broadly, Performance Management serves four major Purposes
1. Development uses To assess the training and development needs of employees. To let the employees know where they stand insofar as their performance is concerned and to assist them with constructive criticism and guidance for the purpose of their development. To determine whether HR programmers such as selection, training, and transfers have been effective or not.

Purpose of Performance Management

2. . Administrative

Uses.

To effect promotions based on competence and performance To confirm the services of probationary employees upon their completing the probationary period satisfactorily. To decide upon a pay raise where (as in the unorganized sector) regular pay scales have not been fixed.

Purpose of Performance Management

3. Organizational maintenance/objectives To improve communication. Performance Management provides a constant dialogue between the superior and the subordinate, and improves understanding of personal goals and concerns. This can also have the effect of increasing the trust between the supervisor and the employee. 4. Documentation purposes.

To record store, and retrieve data relating to performance of all sectors, in the main, including assessment of employees for managerial uses/decisions

What should be rated?

One of the steps in designing an appraisal program is to determine the evaluation criteria .It is obvious that the criteria should be related to the job. The six criteria for assessing performance are: 1. Quality: The degree to which the process or result of carrying out an activity approaches perfection in terms of either conforming to some ideal way of performing the activity, or fulfilling the activitys intended purpose. 2. Quantity: The amount produced, expressed in monetary terms, number of units, or number of competed activity cycles. 3. Timeliness: The degree to which an activity is completed or a result produced, at the earliest time desirable from the standpoints of both coordinating with the outputs of others and of maximizing the time available for other activities.

What should be rated?

4.

Cost of Effectiveness: the degree to which the use of the organizations resources9e.g. human, monetary, technological and material) is maximized in the sense of getting the highest gain or reduction in loss from each unit or instance of use of a resource.

5. Need for supervision: The degree to which a job performer can carry out a job function without either having to request supervisory assistance or requiring supervisory intervention to prevent an adverse outcome. 6. Interpersonal impact: The degree to which a performance promotes feeling of self-esteem, goodwill and cooperation among co-workers and subordinates.