Performance Management

Meaning
Performance management includes activities which
ensure that goals are consistently being met in an effective
and
efficient
manner.
Performance
management
emphasizes on the performance of an organization, a
department, employee, or even the processes to build a
product of service, as well as many other areas.
Performance Management is also known as a process by
which organizations align their resources, systems and
employees to strategic objectives and priorities.
It consists of three primary elements-measurement,
feedback and positive reinforcement.
Performance Management means systematically managing
all the people in an organization, for innovation, goal focus,
productivity and satisfaction.
Performance Management is the approach to the
management of people using performance, planned goals
and objectives, measurement, feedback and recognition to
motivate people to realize their maximum potential

Definition of Performance
Management (PM)
Performance management is the
process of directing and supporting
employees to work as effectively and
efficiently as possible in line with the
needs of the organization (by Walters)

Goals/objectives of Performance Management

To review the performance of the employees over a given period of time

To utilize the resources in the most optimum manner
To achieve the desired results
To develop work plans, identify the competencies required for performing
the job
To set appropriate work standards
To judge the gap between the actual and the desired performance
To select right people, for the right job, at the time & place
To design an appropriate compensation, recognition and reward system.
To train and develop the human resources
To motivate the employees to work better
To measure work performance
To diagnose the strengths and weaknesses of the individuals so as to
identify the training and development needs of the future
To strengthen the relationship and communication between superior
subordinates and management employees
To enhance productivity and work efficiency
To find out the reasons for poor work performance and take necessary
corrective actions
To develop a healthy work culture
To help the management in exercising organizational control

Key Performance Indicators

Employee Productivity
o Average sales turnover per employee
o Average profit per employee
o Value added per employee

Employee Cost
o Employment costs as % of sales turnover / profit
o Employment costs per employee
o Employment costs as % of operating costs

Employee Turnover/Loyalty
o % of employees that leave the organization in a
given time period
o Average length of service

Concerns of PM

PM is concerned with: Productivity

Planning of performance
Performance measurement and
review
Continuous improvement
Continuous development

Benefits of PM
Financial gains

Non-financial gains

Effective
management control

Improvement in
production and
productivity
Improvement in sales
position
Reduction in costs
Timely completion of
work/projects
Avoids work delays
Achievement of targets

Healthy work
environment
Employee satisfaction
Better chances of
career advancement
opportunities
Proper training and
education to increase
performance
Develops a sense of
belongingness
amongst the
employees
Encourages work
transparency
Develops Motivated
employees
Avoids cases of stress,
excessive work

Flexible, responsive to
management needs
Displays better data
relationships
Helps to comply with
legal requirements like
audit, inspection etc.
Simplifies
communication of
strategic goals
Provides well
documented and
communicated process
documentation
Involvement of the
lower level employees
in work

Principles of PM Plan

Continuous coaching, training, feedback & communication

Effective communication
Discussions on specific job
Evaluation techniques
Performance standards
Appropriate ranking and ratings
Practical and standard format/ procedure of Performance
Management Appraisals
Employee involvement
Employee development
Fair performance evaluation
Proper documentation
Consistency in PM plan
Free from personal bias

Performance management process:

characteristics
1.
2.
3.
4.

Continuous process
Use of ranking and ratings
Focus on employee behaviour
Cooperative approach between
managers and employees
5. Training for all concerned
6. Scope for further improvment

Performance management process:

Steps
1.
2.
3.
4.

Planning
Execution of plans
Performance assessment
Review

Goals/objectives of performance
management
To achieve the desired results
To ensure optimization of resources
To create a healthy work
environment
To plan jobs, determine
competencies required and set
performance standards

Managerial Control

Meaning

Control is the process that ensures that activities

performed are in conformation with the plans.
Control is the process of analysing whether actions
are producing desired results.
To control mans to check and ensure that each
activity is performed in a planned and desired
manner.
As a functional of management, controlling means
taking necessary preventive and corrective actions
so as to ensure optimization of resources for
appropriate achievement of goals.
Control process is necessary to find out deviations
between actual performance and standards/ plans
so as to suggests corrective actions with a view to
ensure satisfactory performance.

Autho
r

Definition

Robert
Antho
ny
Henri
Fayol

Control of an undertaking consists of seeing that everything

is being carried out in accordance with the plan which has
been adopted, the orders which have been given, and the
principles which have been laid down. Its object is to point
out mistakes in order that they may be rectified and
prevented from recurring

EFL Br
each
:

Control is checking current performance against predetermined standards contained in the plans, with a view to
ensure adequate progress and satisfactory performance.

Harold
Koont
z
:

Controlling is the measurement and correction of

performance in order to make sure that enterprise objectives
and the plans devised to attain them are accomplished.

Nature/ Features of control

Feature

Explanation

Continuous
process

Involves continuous monitoring of performance, analysing

standard, procedures and polices and suggesting remedial
measures to correct performance

All pervasive Control is the final step in the management process without
Management which the management process is incomplete. It helps to find
function
out whether the organizational resources is utilized in the most
effective manner to achieve desired results. It is the function
of every manager and every managerial level. It is a universal
function of management
Forward
looking

One can control the future event but not the past. Control
analyses the past performance to take corrective actions for
the future

Dynamic
Process

The control mechanism is flexible and its nature changes

according to the requirement of time and situation

Measuremen Control function aims to achieve desired outcomes. It

t process
measures the deviations between actual performance and
standards/ plans.
End process

The management process starts with planning and ends with

control function to ensure achievement of desired objectives. It
is the

Goal

Control is a means to achieve desired ends. It aims at reaching

Areas of control
Policies
Organization structure
Personnel
Wages and salaries
Costs
Resources
Projects
Functions :Production, Marketing , Sales,
Research and development
External relations

Control Process

Essential of effective control

system
1. Accuracy
2. Timely
3. Objective (free
from bias)
4. Understandable
5. Comprehensive
6. Focussed on
critical points
7. Forward looking

8. Flexibility
9. Economical
10.Realistic standards
11.Compatible with
organization
12.Motivating
13.Generate useful information
14.Suggest corrective &
preventive actions
15.Use of effective control
technique

Limitations

Difficult to control external factors

Resistance of employees
Costly System
Difficulty in setting quantitative
performance standards
Depends upon accurate and
undisturbed flow of information

Techniques of control

(Prepare Short notes on each from any book on principles and practices of
management)

Traditional
Personal observation
Statistical data and
control reports
Plans
Operational/ internal
audit
Organization structure
Break-even analysis
Budgeting control

Modern
Network analysis-: PERT
& CPM
Management Audit
Responsibility Accounting
Return on Investment
Management Information
System
Balanced Score Card
Economic Value Added
Market Value Added