3. Performance management:
Introduction:
 Process for setting goals and regularly checking
progress toward achieving those goals.
 Goal is to ensure that every system and sub systems in
an organization are optimally working together
 includes activities that ensure organizational goals are
consistently met in an effective and efficient manner

4. Definition:
 Performance management is a continuous process
of identifying, measuring and developing
performance in organizations by linking each
individual’s performance and objectives to the
organization’s overall mission and goals
 Continuous process. It is ongoing and never
ending process
 Link to mission and goals. It requires that
managers ensure that employee’s activities are
linked with organization’s mission and goals

5. Components of PM:
Performance Planning
Coaching
Multiple Sources of Feedback
Performance Review

6. Theories of PM:
 Goal-setting theory:
 Edwin Locke in the year 1968
 Individual goals established by an employee play an
important role in motivating him for superior
performance.
 Employees keep following their goals. If these goals are
not achieved, they either improve their performance or
modify the goals and make them more realistic.
 In organizational context, personal empirical
observations highlight that the goals of individuals,
teams and the entity as a whole can be in conflict. Goal
conflict can motivate incompatible actions and this has
the potential to impact performance.

7. Expectancy theory:
 Given by Victor Vroom in 1964.
 Based on the hypothesis that individuals adjust their
behaviors on the basis of anticipated satisfaction of
valued goals set by them.
 The individuals modify their behavior in such a way
which is most likely to lead them to attain these goals.
 This theory underlies the concept of performance
management as it is believed that performance is
influenced by the expectations concerning future events
(Salaman et al, 2005).

8. Organizational theory:
 Organizational theory studies organizations as a whole
 It should be rational, information based, efficiency
oriented and distinguish between two types of
performance evaluation control: behavior based and
outcome based.
 The organizational theory:
 Compares ability to measure behaviors and outcomes.
 Uses control as a measurement and evaluation process.
Reward is implicit.
 Can reduce divergent preferences through social control.
 Uses information as a purchasable commodity

9. The performance management
cycle:
Performance management is a continuous process of
planning, monitoring and reviewing employee
performance.
 Three phases of performance management are
 Plan
 Monitor
 Review and Evaluate

10. Start of performance cycle
Performance Management Cycle

11. Phase 1 — Plan
The planning phase is a collaborative effort involving
both managers and employees during which they will:
 Identify training objectives that will help the employee
grow his or her skills, knowledge.

12. Cont….
 Identify career development objectives that can be part
of longer-term career planning.
 Identify and review the links between the employee’s
job description, his work plan and the organization’s
goals and objectives to determine if it reflects the work
that the employee is currently doing.

13. Setting objectives and
Measurements:
 Difficult part of phase is finding appropriate and clear
language to describe the objectives and measures.
 Managers need to ensure that the objectives are a good
representation of the full range of duties carried out by
the employee
 Everyday tasks that can take time but are often
overlooked as it is accomplished.

14. Start of performance cycle
Performance Management Cycle

15. Phase 2 — Monitor
 Continuous monitoring is necessary for effective
performance management.
 Monitoring day-to-day performance
 Managers should not micro-manage employees
 Focus their attention (results achieved and individual
behaviors)
 Assess progress towards meeting performance
objectives

16. Cont….
 Identify any changes that may be required
 Determine if any extra support is required from the
manager to assist the employee in achieving his or her
objectives
 Identify any barriers that may prevent the employee
from accomplishing performance objectives.

17. Continuous coaching:
 Coaching means providing direction, guidance, and
support as required on assigned activities and tasks.
 As a coach, managers need to recognize strengths and
weaknesses of employees and work with employees to
identify opportunities and methods to maximize their
performance.

18. Providing feedback
 Positive feedback
It involves telling someone about good
performance.
 Feedback timely, specific and frequent
appreciation (for effective performance).

19. Constructive feedback
 It alerts an individual to an area in which performance
could improve.
 It is descriptive and should always be directed to the
action, not the person.
 Its main purpose is to help people understand where
they stand in relation to expected job.

20. On-going
Start of performance cycle
Performance Management Cycle

21. Phase 3:
Review and Evaluate:
 Managers should review their performance
management notes and documentation generated
throughout the year in order to more effectively assess
the employee’s performance.

22. Cont…
In the performance assessment meeting, employees and
managers will:
 Summarize the work accomplished during the
previous year.
 Document challenges come upon during the year
 Identify areas for training and/or development
 Identify and discuss an unexpected barriers to achieve
of the objectives

23. Cont…
 The employee and the supervisor should sign off on
the form. This acknowledges involvement of employee
.
 If an employee disagrees with performance
assessment, provide them with the opportunity to
attach their comments.
 Managers must ensure that the employee receives a
copy of the assessment form and the signed document
is put in the employee's file.

25.  Motivation to perform is increased.
 The job definition and criteria are clarified.
 Self-insight and development are enhanced.
 Organizational goals are made clear.
 Employees become more competent.
Few contributions

26. Motivation to perform is increased
increases the motivation for future performance.
provide the fuel for future accomplishments
The job definition and criteria are clarified
 The job of the person may be clarified and defined
more clearly
 employees gain a better understanding of the
behaviors and specific position

27. Self-insight and development are enhanced
 gain a better understanding of their strengths and
weaknesses
Organizational goals are made clear
 To understand the organizational success Goals
should be clear and must be understandable for
employees
Employees become more competent
 performance of employees is improved
 developing and improving employees by establishing
developmental plans

28.  Employees may quit due to results.
 False or misleading information may be used.
 Self-esteem may be lowered.
 Time and money are wasted.
 Relationships are damaged.
 Motivation to perform is decreased.
 Employees suffer from job burnout and
job dissatisfaction.
Dangers of Poorly
Implemented PM
Systems

29. Performance
Management
Performance Appraisal
•Performance management
is the process of identifying,
measuring, managing, and
developing the performance
of the human resources in
an organization.
•It’s a systematic analysis
and measurement of worker
performance.
•Performance appraisal, on
the other hand, is the
ongoing process of evaluating
employee performance.
•Performance appraisals are
reviews of employee
performance over time.
Performance Management
versus Performance Appraisal

30.  It improves performance by identifying and applying
best demonstrated practices to operations and sales
 objective of Benchmarking is to find examples of
superior performance
Benchmarking

31.  Select a product, service or process to benchmark
 Identify the key performance metrics
 Choose companies or internal areas to benchmark
 Collect data on performance and practices
 Analyze the data and identify opportunities for
improvement
 Adapt and implement the best practices, setting
reasonable
Steps of
Benchmarking

32. Reward system
 Reward system is the set of mechanisms for
distribution of intangible and tangible returns as part
of employment relationship.

33. Types of returns
 Base pay
 Cost of living
 Short term incentives
 Long term incentives
 Income protection
 Work life focus
 Allowances
 Rational returns

34. Table
 Returns and their degree of dependence on
performance management system.
 Return Degree of dependence
 Base pay Moderate
 Cost of living adjustment Low
 Contingent pays High
 Short-term incentives High
 Long-term incentives High
 Income protection Low
 Work/life focus Moderate
 Allowances Moderate
 Relational returns Moderate