PERFORMANCE

MANAGEMENT
 DEFINITION
• Performance management is the systematic process by which an organization involves its
employees, as individuals and members of a group, in improving organizational
effectiveness in the accomplishment of the organization’s mission and goals.
• It is also defined as the process through employees’ activities and outputs are congruent with
the organization’s goals.
• In other words, it is a strategic tool used to promote an effective organization.
 SCHEMATIC DIAGRAM OF
PERFORMANCE PLANNING PROCESS

Planning

Monitoring

Developing

Rating

Rewarding
 PLANNING
• Planning means setting performance expectations and goals for employees to channel their
efforts toward achieving organizational objectives.
• Planning includes establishing elements and standards of their performance appraisal plans.
The performance elements and standards should be measurable, understandable,
challenging, verifiable and achievable.
• Purpose: To help the employees, understand the goals of the organization, what needs to be
done, why it needs to be done and how well it should be done.
 MONITORING
• It means consistently measuring performance and providing ongoing feedback to employees
on their progress toward reaching their goals.
• It includes progress reviews with employees where their performance is compared against
plan and standards.
• PURPOSE: it provides the advantage of checking how well employees are meeting
predetermined standards and to make changes if there are supervening events beyond their
control that may impede their standards.
• And Unacceptable performance can be identified on time and assistance provided.
 DEVELOPING
• This provides an excellent opportunity to identify training and developmental needs.
Through PMS, employee developmental needs are evaluated and addressed
• PURPOSE: Providing training and developmental opportunities encourage good
performance, strengthen job related skills and competencies and help employees keep up
with changes in the workplace.
 RATING
• Summarizes employee performance over a certain period. Rating means evaluating
employees against standards in their performance plan and assigning a summary rating of
record.
• PURPOSE: this serve as an evidence of performance.
 REWARDING
• Recognizes employees for their performance and acknowledges their contributions to the
organization’s strategic objectives. It can come in many forms like award distinction,
achiever’s award and usually, a merit increase in pay and other forms of monetary
incentives.
 PURPOSE OF PERFORMANCE
MANAGEMENT SYSTEM (PMS)
• Strategic Purpose
- There should be a link between the employees’ activities to the organizational goals.
- it’s a must to look at the key elements of the job and the critical success factors that can
support the strategic goals of the company.
- Managers and subordinates should sit down to work on performance plan, and the first
question to be asked is: “What are the strategic goals of the company and How can the employee
support these goals?”
• Administrative purpose
- the performance appraisal is used as the basis for administrative actions such as: Salary,
increases, recognition of high achievers, promotion, demotion, lay-offs, discipline and termination.
- However, performance review is universally disliked and avoided. Why??
• Developmental purpose
- This is to develop people with potentials and overcome their shortcomings.

- Using of feedback mechanism, performance appraisal would indicate the shortcomings

of employees which could be addressed through training and development.
 PERFORMANCE APPRAISAL
• It is defined as a method by which the job performance of an employee is evaluated
generally in terms of quality, quantity, cost and time.
• Performance appraisal is the “RATING” part of the performance management system. It
provides opportunity for a structured formal interaction between a subordinate and
supervisor, that usually takes the form of a periodic interview, in which the work
performance of the subordinate is examined and discussed, with a view to identifying the
weaknesses and strengths as well as ways for improvement and skills development.
 EVALUATION VS FEEDBACK
• Evaluation – it provides basis for personnel actions such as promotion, demotion, transfer,
termination and salary increase.
• Feedback mechanism – focuses on the development of the employee including the
identification of coaching and training needs.
 BASIC REQUIREMENTS OF A GOOD
PERFORMANCE APPRAISAL
• Clarify purpose of the job, job duties, and responsibilities.
- The job description, functions, duties and responsibilities, and job analysis, are the best sources
of documents to start with. Discuss with your subordinates the key result areas of the job that could be
focused on his daily work activities to get results.
 BASIC REQUIREMENTS OF A GOOD
PERFORMANCE APPRAISAL
• Define performance goals with measurable outcomes.
- Performance goals must be aligned with the organization’s goals and
strategies.
- Setting performance goals must pass the SMART test: specific and stretching,
measurable, achievable, realistic and relevant, time-bound. In that is clear at what point they
should be achieved.
 BASIC REQUIREMENTS OF A GOOD
PERFORMANCE APPRAISAL
• Define the priority of each job responsibility and goal.
- Prioritize each key job responsibility and goal set according to its
importance and impact to the company’s goals and strategies.
 BASIC REQUIREMENTS OF A GOOD
PERFORMANCE APPRAISAL
• Define performance standards for each goal set.
- Performance elements tell employees what to do, the standards tell how well
they have to do it.
- A performance standard is a management-approved expression of the
performance thresholds, requirements, expectations that must be met to be appraised at
particular level of performance.
 APPROACHES TO MEASURING
PERFORMANCE
• There are various approaches in measuring performance. The most common are the
following:
- Comparative approach
- Forced Distribution
- Paired Comparision
 COMPARATIVE APPROACH
• It consists of techniques that require the rater to compare the performance of an employee
against those of others.
• Categories:
1. Ranking – Rank of employees from highest to lowest or best to worst.
2. Forced Distribution – Performance is ranked in groups.
3. Paired comparison – it requires comparing every employee with every other employee in the
work group.
 ATTRIBUTE APPROACH
• It starts on the premise that employees have certain traits or attributes believed to be
desirable for the organization’s success. It Identifies and defines such traits as leadership,
initiative, maturity, competitiveness, interpersonal skills, creativity, problem solving, and
communication.
Scales used:
1. Graphic Rating Scale
2. Mixed Standard Scale
 GRAPHIC RATING SCALE
• A list of traits is evaluated by a five-point scale. The manager considers one employee at a
time, circling the number that signifies how much of the trait the individual has.
• Graphic Rating scales can provide the rated with a number of different points which a rater
simply places a check mark.
 MIXED STANDARD SCALE
• It was developed to get around some of the problems with graphic rating scale. It defines
relevant performance standards dimensions and the delops statements representing good,
average and poor performance along each dimension. These statements are then mixed with
the statements from other dimensions on the actual rating instrument.
• In a scale of (Poor, adequate, Commendable, Excellent, Distinguished) or of 3 (High,
Medium, Low), employees and rated against these attributes.
 BEHAVIORAL APPROACH
• It tries to identify and define behaviors of employees that employees may exhibit to be
effective on the job.
• There are 5 techniques that are required to assess their employees on their effectiveness and
their behaviors:
- Critical Incidents
- Behaviorally– Anchored Rating Scales
- Behavioral Observation Scales
- Organizational Behavior Modification
 THE RESULTS APPROACH
• It is premised on the assumption that subjective rating can be eliminated from the
measurement process and that the results are the closest indication of one’s contribution to
organizational effectiveness.
 QUALITY APPROACH
• It is anchored on customer satisfaction through an effective quality assurance system. Its aim
is to ensure quality standards are maintained.
• In quality approach it is believed that the major focus of performance evaluation should be
to provide employees with feedback on areas which they can improve..
 APPRAISAL
• Human Judgment is far from perfect and their weaknesses is an important factor behind the
controversies associated with performance appraisals.
• It is essential that raters must be trained to be aware of some rating errors. The most
common errors are the following:
1. Contrast Effects – The tendency for a rater to evaluate a person relative to to other
rather than on the extent to which the individual is fulfilling the requirements of the Job.

2. First Impression - The tendency to make an initial favorable or unfavorable

judgment about an employee that is not justified by the employee’s subsequent behavior.
 3. Halo Effect – Inappropriate generalization from one aspect of a person’s preference
to all aspects of the person’s job performance.

4. Similar to me – The tendency for people to be judged more favorably who are
similar, rather than dissimilar to the rater in attitudes and background.

5. Recency – The tendency to rate people based upon the most recent performance,
instead of on the entire rating period. This usually occurs because the supervisors has no
documented history of performance of the employee.