What Is Performance Management?

Performance management is the process of continuous feedback and communication between

managers and their employees to ensure the achievement of the strategic objectives of the
organization.
What was once an annual process is now transitioning to continuous performance management. The
goal is to ensure that employees are performing efficiently throughout the year, and in the process,
address any issues that may arise along the way that affect employee performance.
Performance Management system is the heart of the human resource system because information
produced from it is useful in human resource planning, management and decision-making processes.
It is a big help to the Division by tracking the employees’ performance and tells whether or not they
need extra support, can handle a higher-level training, or deserve a raise or rewards.

Objectives of Performance Management Systems

Here are the major objectives of performance management that a company should consider when
establishing a performance management system:

1. Setting and Defining Goals

Goal setting has always been one of the most effective and consistent methods used to improve
performance among employees. Setting and defining clear goals yields several key benefits,
including:

 Allowing employees to focus on what’s important.

 Aligning individual objectives with business objectives.
 Optimizing employees’ individual performance.
 Identifying the key result areas and work upon improving them.

It is important to set goals that are mutually beneficial for both employee performance and business
performance.

2. Setting Expectations for Managers and Employees

Alongside distinct goals, a strong performance management system seeks to establish
clear expectations from managers and employees alike.

In order to set expectations that yield solid results, this is the succession of stages for expectation
setting:

 Define the expectations in clear terms. Let the employees know exactly what is expected
from them and provide clarification when needed.
 Explain how the expectations established will help in fulfilling the overall business objectives;
draw the line of sight between their contribution and the business achieving those objectives.
 Document the expectations. Establish a process that clearly defines and measures what to do
and who is responsible for each task.

Only when employees have a clear understanding of their own roles, responsibilities, and
accountabilities, that they are likely to be more consistent in their results and productive in their
work efforts.
3. Establishing Effective Communication
Communication is essential in our workplace. When an organization has a culture dedicated to
strong, effective communication, it results in a workforce that is engaged and has aligned its
individual objectives with the overall business objectives.

Part of effective communication involves transparency – team members should have a clear
understanding of what other active projects their teammates are engaged in. A team that lacks
communication, ultimately lacks the cooperation that is required for any high performing team.

4. Setting Performance Standards

Setting performance standards for employees can make or break the results of your performance
management system. Any good performance management system should always have a set of
performance standards, and performance plans, that streamline employee performance evaluation
and improvement.

It is impossible to identify reasons for failures in an individual’s performance without a performance

management system. Performance management systems highlight gaps in contribution, while
bringing attention to the areas that note progress.

One of the greatest objectives of performance management is to identify the strengths

and opportunity areas of your organization, which become more evident and therefore easier
to identify and improve upon with the established performance standards to measure against.

5. Establishing Individual Training and Performance Plans

The final objective of performance management deals with individual development – that is, to
identify the training and development needs of employees, and implement a well-
designed development plan.

Establishing personal development plans helps employees acquire the necessary knowledge and
skills to advance in their individual careers. A well-executed performance plan builds improved
competency and value add to one’s position, and ultimately organizational value.

Components of the performance management system that include:

 Planning
 Monitoring
 Developing
 Rating & rewarding
1. Planning
The first step in the performance management process is to set objectives and define your success
metrics. Goal-setting must be more than just a top-down process to succeed.
Teams and individual contributors need to have the opportunity to get involved into the whole
process. This is a great way to avoid blind spots and build fairness into the entire process and
everyone will know what performance expectations they're trying to fulfill and how they'll be
evaluated.
2. Continuous monitoring
Continuous monitoring involves actively tracking and reporting the work done and potential hurdles.
By doing so regularly, problems can be addressed immediately. You can avoid a scenario where
significant issues are only revealed at the end of the performance cycle when it's too late to do
anything about them.
What’s more, monitoring reveals insights that can also be used to inform decisions and improve
results.
3. Developing
During the monitoring stage, under or overperformance areas often come into focus, so
development is when they get addressed. This third stage offers the chance to make employee
development plans for ongoing education and training, lay out new assignments, and present the
opportunity to take on more challenges. Plus, managers can offer coaching and feedback, creating
the space for people to reach their potential and use all of their talents.
4. Rating & rewarding
From time to time, organizations find it useful to summarize employee performance. This can be
helpful for looking at and comparing performance over time or among various employees.
Organizations need to know who their best performers are.
In an effective organization, rewards are used well. Rewarding means recognizing employees,
individually and as members of groups, for their performance and acknowledging their contributions
to the agency’s mission.

*1st component: PLANNING = setting goals*

SMART goals provide a clear and structured framework that ensures goals set with employees are
met. The importance of SMART goals lies in their ability to provide clarity, structure, and
accountability. By following the SMART framework, goals become more actionable and effective in
driving performance and growth.
SMART is an acronym for Specific, Measurable, Achievable, Relevant & Time-bound which should be
the characteristics of goals to be set.
Let us start with the first letter S for Specific
Specific
SMART goals are specific and clear, reducing confusion for employees, managers, and even other
colleagues and giving employees focus and direction. This also helps managers evaluate
performance more objectively. With vague goals, it can be hard to say if the employee fell short or
exceeded expectations, but with specific goals, it will be evident.

Measurable
If you can’t measure something, you can’t tell if you’re performing well or if you’re off track and need
to correct your course. Measurable goals have several uses in performance management such as to
show if employees are on track, ahead or behind in completing goals, show the margins by which
employees exceeded or fell short of the goal, indicate strengths and potential areas of improvement
and compare past and peer performance
Achievable
Achievable goals are those that employees have the tools, support, time, and expertise to reach.
Goals that are too hard to reach can end up making employees feel discouraged and hurt their
performance. On the other hand, attainable goals can be motivating and inspire employees to
continue working toward goals in the future.
Relevant
Relevant refers to making sure the goal itself aligns with values and long-term goals and objectives.
The goals that your employees are striving to achieve should be aligned with what the organization is
trying to achieve. A relevant goal ensures that the efforts put into achieving it have a meaningful
impact.
Time-bound
Goals should be timely, or time-bound, with a start date and completion deadline. With a set
timeline, there’s no confusion about when the goal needs to be met. Time-bound goals provide
opportunities for managers to check in with their employees and help them stay on track. It’ll also be
clear to managers during performance reviews if their report tends to complete goals early, on time,
or behind schedule.

*2nd component: MONITORING = tracking performance*

After establishing our SMART goals, we need to set our Key Performance Indicators or our KPIs. It is
important to note that goals are the longer-term targets that an employee is expected to achieve
over a period of months or a year while KPIs are the daily, weekly, or monthly targets that must be
consistently achieved in order to achieve their goals.

So, what is Key Performance Indicators

It is a quantifiable measure of performance over time for a specific objective. Key performance
indicators (KPIs) are vital tools that help you track, evaluate, and enhance employee performance.
KPIs tell you whether you’re making progress or how far you are from reaching your goals
Why use KPIs for Performance Management?
1. Measuring Performance
KPIs provide a tangible way to measure an employee's performance. They serve as benchmarks or
standards against which actual performance can be evaluated. KPIs help in objectively assessing an
employee's achievements and contributions, and provide a clear picture of how well they are
meeting their performance expectations.

2. Goal Alignment
KPIs help in aligning individual performance with organizational goals and objectives. By setting KPIs
that are aligned with the overall strategic goals of the organization, employees can better understand
their role in contributing to the success of the organization. KPIs provide a roadmap for employees to
understand what is expected of them and how their performance impacts the broader organizational
objectives.
3. Feedback and Development
KPIs serve as a basis for providing feedback to employees on their performance. They help managers
in conducting meaningful performance evaluations and providing constructive feedback on areas of
improvement. KPIs also help employees in self-assessment, identifying their strengths and areas for
development, and setting personal development goals. KPIs can be used as a basis for coaching,
mentoring, and training to enhance employee performance and development.

4. Performance Recognition and Rewards

KPIs provide a basis for recognizing and rewarding employees for their outstanding performance.
When employees meet or exceed their KPIs, it signals that they have achieved their targets and
contributed to the success of the organization. Recognition and rewards based on KPIs can motivate
employees to strive for excellence and can reinforce desired behaviors and outcomes

5. Performance Accountability
KPIs help in establishing clear performance expectations and holding employees accountable for
their performance. When KPIs are clearly defined, communicated, and monitored, employees are
aware of what is expected of them and can be held accountable for their performance. This
promotes a culture of performance accountability and ensures that employees are focused on
achieving their performance targets.

6. Data-Driven Decision Making

KPIs provide data and insights that can be used for data-driven decision making. By analyzing KPI
data, organizations can identify trends, patterns, and areas of improvement in employee
performance. KPIs can help in identifying high-performing employees, areas that require additional
resources or support, and areas that need performance improvement interventions.

*3rd component: DEVELOPING = addressing issues / chance for improvement*

Now lets go to Performance Coaching and Feedback

Performance coaching is a developmental process that aims to enhance an individual's
performance, skills, and abilities over an extended period. It involves a collaborative relationship
between a coach (usually a manager, mentor, or professional coach) and an employee.

The primary goal of coaching is to help individuals identify their strengths and weaknesses, set
specific goals for improvement, and develop action plans to achieve those goals. Coaches provide
guidance, support, and encouragement to facilitate the learning and growth of an employee.

There are different coaching styles that can be applied in performance management here are some
example:

1. Holistic Coaching

Holistic coaching considers all aspects of an individual's life, including professional and personal
dimensions. It aims to create balance and alignment across these areas to foster overall well-being
and fulfillment. This style is best applied when individuals seek harmony and integration in their
lives, addressing work-related goals and personal aspirations.
2. Vision Coaching

Vision coaching focuses on helping individuals clarify their long-term vision and goals, aligning their
actions with their aspirations. The coach encourages individuals to visualize their desired future and
develop strategies to realize it. This style is best applied when individuals seek direction and clarity
about their purpose or embark on significant life or career transitions.

3. Laissez-faire Coaching

Laissez-faire coaching involves minimal intervention from the coach, allowing the individual being
coached to take the lead in setting goals and making decisions. The coach provides support and
resources as needed but empowers the individual to drive their own development process. This style
suits self-motivated individuals who thrive in autonomous environments and prefer to take
ownership of their learning and growth.

4. Mindful Coaching

Mindful coaching emphasizes present-moment awareness and non-judgmental acceptance. The

coach encourages the individual to cultivate mindfulness practices, such as meditation or reflective
journaling, to enhance self-awareness and emotional regulation. This style benefits individuals
seeking to reduce stress, increase resilience, and improve their overall well-being by cultivating
mindfulness skills.

5. Developmental Coaching

Developmental coaching focuses on supporting individuals in overcoming barriers to growth and

maximizing their potential. The coach helps individuals identify limiting beliefs, patterns, or
behaviors and develop strategies to overcome them. This style is best applied when individuals face
challenges or transitions in their personal or professional lives and seek support to navigate these
obstacles and unlock their full capabilities.

Punta naman po tayo sa feedback

Feedback is information provided to an individual about their performance or behavior. It can be

positive, highlighting what was done well, or constructive/corrective, pointing to areas for
improvement.

Feedback is typically specific, timely, and actionable, aimed at helping individuals understand how
their actions impact others and how they can adjust their behavior to achieve better results. It can
also come from various sources, including managers, peers, subordinates, or customers.

Here are some types of feedback:

Formal vs Informal Feedback

Formal feedback follows a structured process and is often documented. Although it provides a clear
framework for evaluation and performance tracking, it can also feel strict and impersonal and may
not capture real-time performance issues.
Informal feedback is provided spontaneously and often occurs in day-to-day interactions. It is less
structured and may take the form of casual conversations, quick check-ins, or on-the-spot feedback.
It also allows for timely course correction and promotes open communication and collaboration.
However, the lack of a proper system may affect quality and consistency.

Formal feedback is best applied for comprehensive evaluations and performance appraisals, while
informal feedback is more suitable for providing ongoing support, guidance, and real-time coaching
in day-to-day interactions.

Positive vs Negative Feedback

Positive feedback acknowledges and reinforces desirable behaviors, accomplishments, or strengths.
It encourages desired behaviors, boosts confidence and morale, and reinforces a culture of
recognition and appreciation.

Negative feedback addresses areas for improvement, mistakes, or performance issues. It provides
opportunities for improvement and fosters accountability and self-awareness, but it can be
demotivating if not delivered constructively and sensitively.

Positive feedback is best applied to reinforce desired behaviors and recognize achievements, while
negative feedback is necessary for addressing performance gaps and driving improvement. Both
types of feedback should be used in balance to support overall development and growth.

Constructive vs Destructive Feedback

Constructive feedback focuses on providing specific suggestions for improvement. It is usually
supportive and respectful and promotes growth and learning. While it facilitates improvement and
development, it also requires skillful delivery to ensure it is received positively and acted upon.

Destructive feedback is harmful or damaging in nature, often focusing on criticizing or belittling

individuals without offering constructive solutions or guidance for improvement. It can undermine
confidence, demotivate individuals, and damage relationships.

Constructive feedback is essential for promoting growth and development, while destructive
feedback should be avoided altogether.

*4th component: RATING & REWARDS*

What is Performance Appraisal?

Performance appraisal is the process of assessing an employee’s work performance based on pre-
defined criteria. It helps organizations measure productivity, identify strengths and weaknesses,
provide feedback, and plan future career development.
Traditional Methods of Performance Appraisal
Traditional performance appraisal methods focus on structured, hierarchical approaches to
evaluation. These methods rely on predefined metrics and often lack real-time feedback.
1. Ranking Method
The ranking method involves ranking employees from best to worst based on their overall
performance. It directly compares employees against each other. Although this method is
straightforward and easy to implement in small organizations, it does not provide specific feedback
for improvement.

2. Paired Comparison Method

Here, each employee is compared with every other employee in pairs. The employee who performs
better gets a higher ranking. In the paired comparison method, each employee is compared with
every other employee in pairs on a one-to-one basis. This method results in a ranking order based on
the number of times an employee is considered better than their peers. While this helps in fair
assessment, it becomes complex when dealing with a large workforce.
3. Graphic Rating Scale
The graphic rating scale method involves rating employees on a continuum for various performance
traits, such as quality of work, dependability, and communication skills. Ratings are usually on a scale
from 1 to 5 or 1 to 10.

4. Critical Incident Method

The critical incident method involves documenting specific instances of employee behaviors, both
positive and negative. This method helps in analyzing performance over time but requires consistent
documentation.
5. Checklist Method
In the checklist method, a checklist of predefined employee behaviors and characteristics is used to
evaluate performance. In this method each performance aspect is simply checked off and provides a
uniform basis for evaluation but can be prone to rater biases
6. Confidential Report
Here, a supervisor prepares a confidential report evaluating an employee’s strengths and
weaknesses. This method features confidentiality in a way that only the employee’s immediate
superior and higher management have access to the report. Though this encourages honest
feedback due to its confidential nature, it relies heavily on the personal observations and judgments
of the supervisor which can be subjective and can lead to biases.

7. Essay Method
The essay method involves supervisors writing a detailed description of an employee’s performance.
This narrative appraisal covers various aspects such as strengths, weaknesses, achievements, and
potential areas for development. While it provides in-depth insights, it is time-consuming and highly
subjective.

8. Field Review Method

In the field review method, a third-party evaluator, often from the HR department, conducts a
detailed interview with the supervisor about the employee’s performance. The third-party then
prepares the evaluation report based on the interview. This method can reduce supervisory biases
since it involves an eternal evaluator to ensure objectivity but relies solely on the accuracy of the
supervisor’s input.
Modern Methods of Performance Appraisal
With evolving workplaces and digital advancements, modern appraisal methods have become more
interactive, data-driven, and continuous.
1. Management by Objectives (MBO)
In this method, managers and employees work together to identify, plan, organize, and
communicate goals for success. The manager identifies the desired objectives to be achieved, giving
the employee a major area of responsibility in terms of the results that are expected from him or
her. The manager and employee can then discuss the progress made overtime and the employer can
then use these measures of progress as a guide to measuring the contribution level of the
employee.

2. 360-Degree Feedback
In the 360-degree feedback method, multiple raters are involved in evaluating the performance of
an individual. The feedback of the employee is collected by all agents within the organization who
interact with him or her, including superiors, peers, subordinates, and even. Usually, this feedback is
collected by an online questionnaire designed specifically for this purpose. When every employee in
an organization gives appraisal and takes part in regular self-evaluation, it ensures effective
performance analysis with diverse levels of transparency.

3. Behaviorally Anchored Rating Scale (BARS)

This method bring out both the qualitative and quantitative benefits of the performance appraisal
process. In the Behaviorally Anchored Rating Scale (BARS) system, the employer compares employee
performance with specific behavioral examples that are anchored to numerical ratings.

Because this method accesses both quantitative and qualitative forms of measurement, while also
incorporating intangible qualities of employees into the rating system, BARS succeeds in providing
clear standards, improving feedback, and providing accurate performance analysis and consistent
evaluation. Its primary drawback is, like most other performance review methodologies, when done
manually it poses the risk of being skewed by distortions caused by bias.
4. Psychological Appraisal
This method is particularly useful when determining the hidden potential of employees because it
focuses on evaluating an employee’s future performance rather than the results of their past work.
In this performance appraisal method, qualified psychologists conduct a variety of tests on
employees, including in-depth interviews, psychological tests, and private discussions. These tests
aim to identify an employee’s emotion, intellect, and other related traits that could affect their
future performance in an organization.

Although this method is thorough and insightful, it can evidently be a slow, complex, and costly
process. Further, the quality of the results centers upon the psychologist who administers the
procedure and a variety of external influencers that may affect the employee during testing (e.g.;
personal stress related events), so results can sometimes be inconsistent.
5. Assessment Center Method
This performance appraisal method assesses employee performance in social-related situations.
Employees are asked to take part in situational exercises that aim to highlight their potential success
in various roles and bearing various responsibilities. This method is widely used for leadership and
managerial roles. This process is useful in giving insight into the employee’s personal characteristics
that can influence their success like their ethics, tolerance, problem-solving skills, judgement,
adaptability and collaboration
6. Human Resource Accounting Method
Employees are evaluated based on their contribution to the company’s profitability. The human
resource accounting method involves the analysis of an employee’s performance through the
monetary benefits they yield to the company. This measurement is usually obtained by comparing
the cost of retaining an employee to the monetary benefits /contributions the organization has
ascertained from that specific employee. This method helps in understanding the financial value of
human resources but may overlook qualitative factors.

That ends my presentation po. Thank you!

1. Define objective or goals

- Increase sales per unit by at least 10% this year

2. Set measurable target

- Get previous year sales ex. 200 + 10% = 220 units / 12 months = 18-20 units per month

3. Monitor, Review & Update

-