Performance Management

History of Performance ManagementNo one knows precisely when formal

methods of reviewing performance were first introduced.

The first monitoring systems, however, evolved out of the work of Frederick Taylor and his followers before world war 1.

Rating army officers was started in 1920s in US and then spread to UK.

In 1950s and 1960s it then modified to performance appraisal.

History of Performance ManagementThe term Performance management was first

used by Beer and Ruh.Performance Management began around 60

years ago as a source of income justification and was used to determine an employees wage based on performance.

Organizations used Performance Management to drive behaviors from the employees to get specific outcomes. In practice this worked well for certain employees who were solely driven by financial rewards.

History of Performance ManagementHowever, where employees were driven by

learning and development of their skills, it failed miserably.

The gap between justification of pay and the development of skills and knowledge became a huge problem in the use of Performance Management.

History of Performance ManagementThis became evident in the late 1980s; the

realization that a more comprehensive approach to manage and reward performance was needed.

This approach of managing performance was developed in the United Kingdom and the United States much earlier than it was developed in Australia.

Definitions of Performance Managementperformance management establishes a

shared understanding about what is to be achieved and an approach to leading and developing people which will ensure that it is achieved. ( Michael Armstrong & Angella Baron 2004).

Performance management involves thinking through various facets of performance, identifying critical dimensions of performance , planning , reviewing and developing and enhancing performance related competencies. ( Dr. T.V. Rao 2004).

Definition performance measurement is the process of

assessing progress towards achieving predetermined goals, while performance management is building on that process adding the relevant communication and action on the progress achieved against predetermined goals. ( Bourne 2003)

DefinitionPerformance management is the process

through which managers ensure that employee’s activities and outputs contribute to organizational goals. ( Louis R. Gomez & David B. Mejia 1999).

The performance management is defined as a data-guide approach to managing work behavior. ( Daniels and Rosen 1984 ).

Concerns of performance management Performance management is concerned with

outputs (the achievement of results) and 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.

Concerns of performance management Performance management is concerned with

planning ahead to achieve future success. This means defining expectations expressed as objectives and in business plans.

Performance management is concerned with the measurement of results and with reviewing progress towards achieving objectives as a basis for action.

Concerns of performance managementConcern with continuous improvement is

based on the belief that continually striving to reach higher and higher standards in every part of the organization will provide a series of incremental gains that will build superior performance.

This means clarifying what organizational, team and individual effectiveness look like and taking steps to ensure that those defined levels of effectiveness are achieved..

Concerns of performance managementPerformance management is concerned with

creating a culture in which organizational and individual learning and development is a continuous process. It provides means for the integration of learning and work so that everyone learns from the successes and challenges inherent in their day-to-day activities.

Concernsperformance management 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.

Concerns Performance management is concerned with

satisfying the needs and expectations of all the organization’s stake- holders – owners, management, employees, customers, suppliers and the general public.

In particular, 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.

ConcernsConcern for fairness and transparency. Four

ethical principles that should govern the operation of the performance management process have been suggested by Winstanley and Stuart-Smith

These are: – respect for the individual; – mutual respect; – procedural fairness; – transparency of decision making.

Need and Scope clarifying the mission, vision, strategy, and

values of the organization attracting and retaining talents Facilitates competency mapping, training and

development needs identification,employees attain their full potential Improves organization's ability to change

faster by highlighting the gap between potential capabilities and present ability.

Need and ScopeIt is an on-going, year round, interactive

process between Managers/Supervisors and employees aimed at achieving better results for continual organizational improvement.

It is the most important and productive activity a manager can pursue, because if it is done well, employees will perform in the right way to get the right results.

Need and ScopeIf it is ignored or poorly done, employee’s

performance results and motivation suffers and the manager may end up doing the employee’s work rather than managing.

It does not focus on judging a comparative rating of an employee’s performance.

Need and ScopeThe whole idea therefore of PM is to manage the

performances of our employees bearing in mind their strengths and weaknesses and effectively coach and counsel them on how to improve their performance, so that the business can continually be improved.

It encourages the employee to solicit, and the supervisor to provide frequent, constructive feedback that can be put to use in enhancing performance.

Linkage of Performance Management with Other Sub-systemsHuman resource planning

job-person fitment criteriaIndustrial relations

Joint goal setting results in improved performance�Training and development

Basis for training needs identification� Aids in performance improvement�

Reward Management Identification of talents� Effective career and succession planning� Compensation management�

BenefitsA good performance management system

works towards the improvement of the overall organizational performance by managing the performances of teams and individuals for ensuring the achievement of the overall organizational ambitions and goals.

BenefitsEnsuring that the employees understand the

importance of their contributions to the organizational goals and objectives.

Ensuring each employee understands what is expected from them and equally ascertaining whether the employees possess the required skills and support for fulfilling such expectations.

BenefitsEnsuring proper aligning or linking of

objectives and facilitating effective communication throughout the organization.

Facilitating a cordial and a harmonious relationship between an individual employee and the line manager based on trust and empowerment.

BenefitsAn effectively implemented performance

management system can benefit the organization, managers and employees in several ways as depicted in the table given below:

Organization’s Benefits - Improved organizational performance, employee retention and loyalty, improved productivity, overcoming the barriers to communication, clear accountabilities, and cost advantages.

BenefitsManager’s Benefits - Saves time and

reduces conflicts, ensures efficiency and consistency in performance.

Employee’s Benefits - Clarifies expectations of the employees, self assessment opportunities clarifies the job accountabilities and contributes to improved performance, clearly defines career paths and promotes job satisfaction.

In past appraisal was driven by personnel dept and line managers but now it is taken care by HR dept.

PMS and HR

Performance Management and Performance Appraisals Performance Appraisals

Performance Management

Top Down assessment

Annual meetingUse of RatingMonolithic SystemFocus on objectivesLinked to payMore paper workHR department

Joint process through dialogue

Continuous reviewRating is less commonFlexible processFocus on values,

behaviors and objectives.Less directly linked to

payLess paper workLine managers