Performance Management Performance Management The

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					Performance Management

       The Concept
 What is Performance Management ?
PfM is an ongoing communication process, undertaken
  in partnership, between an employee and his/her
  immediate supervisor that involves establishing clear
  expectations and understanding about: -
 the essential job functions the employee is expected
  to do,
 how the employee’s job contributes to the goals of
  the organization,
 what “doing the job well” means in concrete terms,
 how employee and supervisor will work together to
  sustain, improve, or build on existing employee
 how job performance will be measured, and
 identifying barriers to performance and removing
  them.                                      Robert Bacal
               Pfm Definitions
• Performance management is a strategy designed to
  manage the performance of people involved in the
  effective working of an organization.
                                                       Potaka – 1998
Performance Management is a Process for
  establishing a shared understanding about what is
  to be achieved, and how it is to be achieved, and an
  approach to managing people that increases the
  probability of achieving success.
                              Tracey B. Weiss and Franklin Hartle.
  Key Words in Tracey’s Definition
 A Process – PM is not just about a set of forms, the
  annual appraisal ritual, or the bonus scheme. It is
  about the everyday actions and behaviors people use
  to improve performance in themselves and others. It
  can not be divorced from the management processes
  that pervade the organization.
 … for establishing a shared understanding about what
  is to be achieved, and how it is to be achieved - To
  improve performance, individuals need to have a
  common understanding about what performance
  (and success) in their jobs look like. It can be a list of
  tasks, objectives, or results. It can also be a set of
  behaviors. Often it is both. These goals need to be
  defined clearly and by agreement with the job holder
  so that people know what they are working toward.
             Tracey’s Definition
 … and an approach to managing people – the focus
  of PM is on people; it is about how individuals and
  teams work together and support each other to
  achieve shared objectives. In particular, it puts the
  responsibility on managers to work effectively
  (through coaching and motivating) with those for
  whom they are accountable.
 … that increases the probability of achieving success –
  PM has a clear purpose. It is about achieving success
  in the work place for individuals and the organization.
  It is about achieving wins for every one. By
  establishing a continuous management process that
  delivers clarity, support, feedback, and recognition to
  all staff, leaders will take a major step in ensuring
  significant performance improvement in their
Nature of Performance Management
Performance management is a means of getting
   better results from the organization and
   individuals by understanding and managing
   performance within an agreed framework of
   planned goals, standards and attributes/
   competencies requirements.
It is a process for establishing a shared
   understanding about what is to be achieved,
   and how it is to be achieved; more
   importantly, it is an approach to managing
   people which increases the achievement job-
   related success.
 Nature of Performance Management
How this interpretation is helpful can be understood by
  highlighting a few key words used.
1) Performance management is a process. Not just the
   annual appraisal ritual. It is about the every day
   actions and behaviors. It cannot be divorced from
   the management process which pervade the
   organization generally.
2) P.M. is for establishing a shared understanding
   about what is to be achieved and how it is to
   achieved. They need to be defined clearly and by
   agreement with the job holder so that people know
   what they are working towards.
Nature of Performance Management
3. It is an approach to managing people – teams
  and individuals and how they work together
  supporting each other and achieve the shared
  objectives. It puts the responsibility on
  managers to work effectively with the
  employees through coaching and motivating.
4) PM increases the probability of achieving job-
  related success and significantly improving
             Philosophy of PfM
The term philosophy means the general principles
  or laws of a field of knowledge, activity , etc, as
  the philosophy of performance management.
PfM is underpinned by a philosophy which is based
1. Motivation theories,
2. Organizational effectiveness and how PfM
   contributes to it, and
3. Beliefs about how performance is best
                 Motivation theories
1. Goals setting theory/MBO – specific, reachable, firm and
     reasonable, participatively determined goals, provision of feedback, and
     feedback used to gain commitment.
2. Reinforcement theory – successes in achieving goals and
     rewards act as positive incentives and reinforce the successful
     behavior, which is repeated the next time a similar need arises.
3.   Expectancy theory – This theory states that to perform with
     high motivation the individuals have to:
     a) feel able to change their behavior;
     b) feel confident that a change in their behavior will produce a
     c) value of the reward sufficiently to justify the change in behavior.
       Organizational Effectiveness
This concepts of OE which influence
  performance management are:
 The need for clarity about strategy and values
  – the role of PfM in supporting the achievement of strategies is
  fulfilled by providing a means of integrating objectives downwards,
  upwards and laterally throughout the organization.
 the existence of two-way communication
the benefits derived from developing and
 operating a ‘learning organization’.
 Beliefs on Performance Management
The following beliefs on how performance should be managed have
  contributed to the development of the philosophy of PfM ands how
  it should be put into practice:
 the significance of the input, process, output, outcomes model in
  managing performance;
 The significance of PfM as a natural process of management;
 The need to mange expectations;
 The importance of creating a partnership betwee3n managers and
  their staff in managing performance – managing by agreement
  rather than command;
 The significance of objectives;
 The importance of measurement, feedback and ‘contingency
  management’; and
 The need to empower people.
    The Holistic Approach of PfM
The philosophy of PfM is therefore holistic. It takes
  an all-embracing view of the constituents of good
  performance –
 how this contributes to desired outcomes at the
  departmental and organizational level, and
 what needs to be done to improve these
This is entirely consistent with the HRM philosophy
  of treating employees as valued assets and
  investing in their management and development
  in order to enhance their value.
    The Holistic Approach of PfM
The holistic approach to PfM also impels the
   integration of business plan and objectives with
   the departmental objectives and the
   departmental objectives to the team/ individual
   objectives and their must be a cascading effect.
It further implies that PfM should also be linked to
   TQM and various functions of HRM – selection,
   training and development, rewards,
   organizational culture
                       Total PfM
The traditional performance appraisal schemes are criticized
   for their focus on a very narrow definition of what
   performance means in particular jobs.
Usually a set of objectives/goals/targets were used to define
   performance outputs (KPA/KRA) for an individual job for a
   particular time period.
Some times the objectives were related to bigger corporate
   objectives some times not.
Occasionally they covered aspects of whole job, but mostly
In other words, the traditional approach is a very one-
   dimensional output model of job performance.
Total PfM is moving beyond this one-dimensional approach
                      Total PfM
In recent years many organizations have integrated
   competencies into the PfM process so that job expectations
   can be defined in terms of WHAT results have to be
   achieved and HOW they are to be achieved. This is an
   input-output model, known as a “Mixed Model”. A PfM
   process that combines planning, managing, and reviewing
   of both job results and competencies is called the mixed
The mixed models assess and reward both the results and
   demonstration of competencies – both what actually
   employees deliver and how they do it. The mixed model
   represents a more powerful and longer-lasting approach to
   PfM than just an objective-based approach
                  Total PfM
The total PfM is basically a competency based
  approach. It is extended to take into account a
  third dimension – the customer. The customer is
  involved in setting the performance contract and
  on giving feedback to the performance review.
A competency based approach brings a different
  perspective to PfM. Performance is defined in
  terms of the results and also in terms of the
  behaviors employees use to achieve the results.
      Component Elements of PM
1. Performance Planning - employees and
   managers work together to identify, understand,
   and agree on what the employee is to be doing,
   how well it needs to be done, why it needs to be
   done, when to be done, and so on.
2. On-going Performance Communication – a
   two-way process working throughout the year to
   ensure that job tasks stay on track, that problems
   are red-flagged before they grow, and that both
   manager and employee keep themselves
3. Observation, Data Gathering, and
   Documentation – Observing the performance of
    the employee, data gathering and documenting the
    data gathered.
      Component Elements of PM
4. Performance Review Meeting – A process
   where manager and employee work together to
   assess the degree to which the employee has
   attained agreed-upon goals and work together
   to overcome any difficulties encountered. This
   meeting usually refers to annual or biannual
5. Performance Diagnosis and Coaching - The
   process of identifying the real underlying
   causes of problems or deficits in the
   performance of an individual, department or
   the organization through analysis and solving
   those problems through communication.
6. Planning Again.
     Seven Tenets/doctrines of PfM

1. PM is a Core Business Process.
2. There is no One-Size-fits-all answer.
3. All aspects of Performance matter.
4. Discretionary effort drives success.
5. Effective links with Rewards get important
   message across.
6. Ownership of the Process is key to the
   performance/ success.
7. Performance management is about
                    Tracey B. Weiss & Franklin Hartle.
   1) PM is a core Business Process
PM is the driving force in successful organizations. It ensures
  that individuals and team work together to achieve
  sustainable competitive advantage. This means planning
  for performance improvement, coaching to fulfill the
  plans, managing progress continuously, and recognizing
  and rewarding achievement.
PM needs to be driven by top management and linked to the
  business planning process. It becomes the way in which
  strategic change is achieved, new cultures are built, and
  business initiatives such as quality improvement and
  customer service are turned from ideas into reality.
Managing total performance involves the creation of a
  working environment within which development,
  delivery, and recognition of achievement happen on a
  continuous basis. Coaching and managing progress
  become everybody’s job.
2)There is No one-size-Fits All Answer
It is important for every organization to develop
   and refine its own approach to PM. There is
   no perfect model. Each organizaiton or
   operational unit needs to assess how
   performance should be managed and they
   design – with contribution from line managers
   and staff – a process to fit the environment.
   Then it needs to continually assess how well
   the procd3ess is serving the needs of its
   customers and the organization.
 3) All Aspects of Performance Matter
Many approaches to PM fail because they only
 capture the hard elements of performance that
 can be targeted and measured. There are many
 jobs, particularly those for which the prime
 objective is to improve customer service, where
 this approach is unlikely to work on its own.
What matters more is how people go about their
 work, which competencies leads to superior
 performance, and how these can be acquired,
 developed and improved. The PM process must
 reflect a balance between measurable results and
 demonstration of the “right stuff” that leads to
 individual and organizational success.
 4) Discretionary Effort Drives Success
Raising the level of performance is all about
  getting discretionary effort from people.
  Leaders need to emphasize progress and
  continually push the boundaries of
  discretionary effort. But to get that kind of
  performance from the employees the
  workplace environment must encourage and
  reward them to do so.
  5) Effective Links With Rewards Get
       Important Message Across
Organizations dedicated to continuing performance
  improvement need to reflect this across their
  total approach to reward. Training, career
  development, and non-financial personal and
  team rewards are at least as important as
  financial incentives and PRP. Getting the right
  balance is critical for pay systems on their own do
  not manage people or performance.
On the contrary, well-designed rewards will
  reinforce key business messages. PM plays a vital
  role in reinforcing the link between compensation
  and the strategy and culture of the organization.
 6) Ownership of the Process is Key
Line managers and individuals need to believe in the4 way
   performance is managed so that they will contribute the extra
   effort. Successful PM harnesses both ream and individual
   contribution rather than concentrating on one or the other. It
   means that defining and assessing performance is no longer
   just a manager’s prerogative. It has to be an integral part of
   the relationship between employees and the organization. It
   is the day-to-day performance dialogue, the quality of
   discussion, the focus on development and providing
   recognition that are the real signs of a flourishing
   performance culture. All of these have toy be owned by line
   managers, teams and individuals. The most effective and
   enduring PM processes are developed with line managers and
   staff so that there is a proper fit between the process and the
   real-time working practices.
    7) PM is about Relationships
People value the opinion of someone they
  respect and trust. Effective PM requires
  communication and feedback. This requires
  rapport, candor, honesty, and a genuine sense
  of caring. The caring creates a foundation for
  an open dialogue, where both people feel that
  their opinions can be heard and understood in
  a non-defensive atmosphere.
             What PfM Does?
1) PfM translates corporate goals into individual,
   team, departmental and divisional goals.
2) It helps to clarify corporate goals.
3) PfM is continuous and an evolutionary process
   in which the performance improves over time.
4) It relies on consensus and co-operation rather
   than control or coercion.
5) PfM creates a shared understanding of what is
   required to improve performance and how this
   will be achieved.
            What PfM Does?
6.It encourages self-management of individual
7. It requires a management style that is open
     and honest and encourages two-way
     communication between superiors and
8) It requires continuous feedback.
9) Feedback loops enable the experiences and
     knowledge help to modify corporate
             What PfM Does?
10) It measures and assesses all performance
  against jointly agreed goals.
11) It should apply to all staff.
12) It is not primarily concerned with linking
  performance to financial rewards.
We may add that PERFORMANCE
Pay-offs of PM – For Organizations.
• Organizations work more effectively since
  goals and objectives of the organization, the
  units/departments, the job/workers are all
  linked. There is a unitary purpose and
  direction to the work.
• Legal advantages.
      Pay-offs of PM – For Managers
Reduces the need for micromanage the work and
 the workers.
 Saves time by helping employees make decisions
 on their own by ensuring they have the necessary
 knowledge and understanding to make decisions
Increases understandings among the staff about
 who is responsible for what.
 Reduces frequency of situations where you do
 not have the information you need when you
 need it.
 Reduces mistakes and errors (and their
 repetition) by helping you and your staff identify
 the causes of errors on ineffectiveness.
      Pay-offs of PM – For Employees
 Helps employees to know whether they are doing well
  or not in their jobs.
 Helps to know at what level of authority they have
 Get recognition for a job well done.
 Provided with opportunities to develop new skills.
 Helps to know the attitudes and reactions of the
  superior (boss).
 Enables them to make decisions by themselves.
 Are not micromanaged by the boss.
 Helps to have all the resources required for the job.
                 SCOPE OF PM

 PM is about managing the organization. It is a natural
  process of management, not a system or technique
  (Fowler 1990).
 It is about managing within the context of business
  environment – external and internal. This will affect
  how it is developed, what it sets out to do and how it
  appears. The context is very important.
 PM concerns everyone in the organization, not just
  the managers.
 It rejects the cultural assumption that only managers
  are accountable for the performance of their
  subordinates and teams replacing it with the belief
  that responsibility is shared between managers and
  team members (employees), i.e, responsibility is
  shared by managers and employees.
               Scope of PfM

 Employees are regarded as customers for the
  managerial contribution and services they
 Managers and employees are jointly
  accountable for results and are jointly involved
  in planning – both in monitoring performance
  and in taking action.
 Hence, PM is a holistic (i.e. all embracing)
  approach to managing for performance – a
  concern of everyone in the organization.
  However, this is not necessarily the universal
  practice an consequently, PM is carried out with
  varying degrees of success and commitment
  from employees.
                 AIMS OF PfM
The aim of PM is to achieve consensus because, as
  Fletcher put it, ‘Our perceptions of what is real and
  valid in the world depend on a consensus of a shared
One of the aims of PfM is “to clarify the psychological
Pm is very much concerned with inter-relationships –
  between managers and individuals, between managers
  and teams, between members of teams, and between
  individuals and groups and other stakeholders.
These relationships are reciprocal, and PfM aims to
  improve their quality.
                 AIMS OF PfM
 To share understanding about what is to be achieved,
  to develop the capacity of people and the
  organization to achieve it, and to provide the support
  and guidance the individuals and teams need to
  improve their performance.
 To establish a culture in which individuals and groups
  take responsibility for the continuous improvement of
  business processes and of their own skills and
 To achieve consensus on expectations – what the
  organization expects the individuals and teams to do,
  and individuals and teams to communicate their
  expectations of what they should be able to do, of
  how they should be managed, the support and
  resources they need and their talents should be used.
                Aims of PfM

 To develop and improve the quality of reciprocal
  interrelationships – between managers and
  individuals, between managers and teams,
  between team members and between
  individuals and groups and other stakeholders.

 Achieve sustainable improvements in
  organizational performance.

 Increase the motivation and commitment of
                Aims of PfM
 Enable individuals to develop their abilities,
  increase their job satisfaction and achieve their
  full potential to their own benefit and that of
  the organization as a whole.
 Provide for the accurate and objective
  measurement and assessment of performance
  in relation to agreed targets and standards
  leading to objective feedback from managers.
 Provide basis for rewarding people in relation to
  their contribution.
 Demonstrate to every one that organization
  values them as individuals.
           CONCERNS OF PM
• Concerns with Output, Outcomes, Process and Inputs:
   PM is concerned with outputs - the achievement of results
  - and with outcomes - the impact made on performance.
  But it is also concerned with the processes required to
  achieve these results (competencies) and the inputs in
  terms of capabilities (knowledge, skill and competence)
  expected from the teams and individuals involved.
• Concern with Planning : PM is concerned with planning
  ahead to achieve future success. This means defining
  expectations expressed as objectives and in business plans.
• Concern with Measurement and Review: ‘ If you can’t
  measure it, you can’t manage it’. PM is concerned with the
  measurement of results and with reviewing progress
  towards achieving objectives as a basis for action.
            Concerns of PfM
• Concern with Continuous Development and
  Improvement: PM is concerned with creating a
  culture in which organizational and individual learning
  and development are a continuous process. It
  provides for the integration of learning and work so
  that everyone learns from the successes and
  challenges in their day-to-day activities.
• Concern for Communication : PM is concerned
  with communication. This is done by creating a
  climate in which a continuing dialogue between
  managers and the members of their teams takes place
  to define expectations and share information on the
  organization’s mission, values and objectives. This
  establishes mutual understanding of what is to be
  achieved and a frame- work for managing and
  developing people to ensure that it will be achieved.
             Concerns of PfM
Concern for Stakeholders: At its best, PM is
  concerned with the needs and expectations of all
  stakeholders of the organization, including the
  general public. Ideally, employees are treated as
  partners in the enterprise whose interests are
  respected, whose opinions are sought and listened
  to, and who are encouraged to contribute to the
  formulation of objectives and plans for their team
  and for themselves. PM should respect the needs
  of individuals and teams and also of the
  organization, recognizing that they will not
  necessarily coincide.
               Concerns of PfM

• Ethical Concerns: PM processes should operate in
  accordance with agreed ethical principles. These are:
  1) Respect for the Individual - people should be
  treated as ‘ends in themselves’ and not merely as
  ‘means to other ends’.
  2) Mutual Respect - the parties involved in PM
  processes should respect each other’s needs and
  3) Procedural Fairness - the procedures incorporated in
  PM should be operated fairly to limit the adverse
  impact on individuals.
  4) Transparency - people affected by decisions
  emerging from PM processes should have the
  opportunity to scrutinize the basis on which decisions
  were made.
                PfM Issues
The most important issue, of course, is that PM
  achieves what it sets out to achieve in the
  manner in which it is expected to achieve it.
  PM is difficult, not an easy option. It is
  demanding. PfM involves the following
  (positive) issues:
1. Fairness.
2. Transparency.
3. Equity.
4. Discipline.
                 Success Criteria
1) PM processes fit the culture of the organization, the
   context in which it operates and the characteristics of its
   people and work practices.
2) There is commitment and support from top management.
3) There is shared ownership with line managers and
   employees generally.
4) Processes are aligned to the real work of the organization
   and how, in general, performance is managed.
5) It can be demonstrated that PM adds value in terms of
   both short-term results and longer-term development.
6) PM processes are integrated with strategic and business-
   planning processes
7) PM processes are integrated with other HR processes
                Success Criteria
8) PM processes can operate flexibly to meet local or
   special circumstances.
9) PM processes are readily accepted by all concerned as
   natural components of good management and work
10) All stakeholders within the organization are involved
   in the design, development and introduction of PM.
   These comprise top management, line managers, team
   leaders, team, individual employees and trade-union or
   employee representatives.
11) PM processes are transparent and separate fairly and
12) Managers and team leaders take action to ensure that
   there is a shared understanding generally of the vision,
   strategy, goals and values of the organization.
                 Success Criteria
13) PM processes recognize that there is a community of
  interests in the organization and respect individual needs/
14) PM processes are used by managers and team leaders to
  help people feel that they are valued by the organization.
15) PM processes help to align organizational and individual
  goals. Individuals and teams are given opportunity to put
  forward their views on what they can achieve, and their
  views are listened to.
16) The focus of PM is on the development of people and the
  provision of the support they need. Financial rewards are a
  secondary consideration if, indeed, they are associated with
17) There are competence frameworks in place developed
  specially for the organization with the full involvement of
  all concerned.
              Success Criteria
18) The aims and operation of PM and how it can
  benefit all concerned are communicated
  thoroughly and effectively.
19) Training in PM skills is given to managers, team
  leaders, and employees generally.
20) The effectiveness of PM is continually
  monitored and evaluated.
21) The opinions of all stakeholders are sought
  about how well the scheme is working, and
  action is taken as required to improve the various
1. Robert Bacal           Performance Management.
                          Mcraw-Hill, New York, 1999
2. Tracey B.Weiss         Performance Management.
    Franklin Hartle       The hay Group, 1997.
3. Michael Armstrong      Performance Management. Kogan
                          Page. London 1994.
4. Deb & Kohli            Performance Management. Oxford

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