3. Definition: Performance management is a continuous process of
identifying, measuring and developing the performance of
individuals and teams and aligning performance with the strategic
goals of the organization.
Let’s consider each of the definition’s two main components:
Continuous process: Performance management is ongoing process
of setting goals and objectives, observing performance & giving &
receiving ongoing coaching & feedback.
 Alignment with strategic goals. Performance management
requires that managers ensure that employees’ activities & outputs
are congruent with the organization’s goals & consequently, help
the organization gain a competitive advantage. PM therefore
creates a direct link between employee performance &
organizational goals & makes the employees’ contribution to the
organization explicit.

4. Comparison of Performance Management & Performance
Appraisal
Characterstics Performance Performance
Management Appraisal
1. Type of objectives Emphasis on integrating, Individual objectives
organizational, team,&
individual objectives
2. Frequency Continuous review with Annual Appraisal
one or more formal
reviews in a year
3. Rating system Joint or participative Top-down system with
process, rating less ratings
common
4. Reward Linkage Does not have direct link Often linked to pay
to reward
5. Ownership Owned by management Owned by HRD
6. Focus of Future focused Focus on past performance
performance reviews
7. Questions asked What can be done to help How well was the work
employees perform as done?
effectively as possible?

5.  Motivation To perform is increase.
 Self esteem is increased.
 Managers gain insight about subordinates.
 The definitions of job & criteria are clarified.
 Self-insight & development are enhanced.
 Administrative actions are more fair &
appropriate.
 Organisational goals are made clear.

6. Employees become more competent.
There is better protection from lawsuits.
Better & more timely differentiation b/w good &
poor performer.
Supervisors’ view of performance are communicated
more clearly.
Organisational change is facilitated.
Motivation, commitment, & intentions to stay in the
organisation are enhanced.

7.  Increased Turnover
 Use Of Misleading Information
 Lowered Self-Esteem
 Wasted time & Money
 Damaged Relationship
 Decreased Motivation TO Perform
 Employee Burnout & Job dissatisfaction

8.  Unclear Ratings System
Increased Risk Of Litigation
Unsatisfied Demands On Managers & Employees
Resources.
Varying & Unfair Standards & Ratings

9.  Strategic Purpose
 Administrative Purpose
 Informational Purpose
 Developmental Purpose
 Organisational Maintenance Purpose
 Documentational Purpose.

11.  Validity : Do not include factors outside the control or factors unrelated to
performance
 Acceptability & Fairness: Many elaborated performance measures are extremely
valid & reliable, but consume more time.
Fairness in judgment(eg: across countries)
 Inclusiveness: Concerns of the people who will be affected by the
outcome.
Input from employee before appraisal.
Feedback for process of designing & implementing the system.
 Openness: Good system have no secrets
Frequent evaluation & feedback is provided.
Appraisal meeting is of two way communication.
Standards should be clear.
Communication are factual, open & honest.
 Correctability: Mechanism through which errors are corrected.
 Standardization: Training for managers regarding appraisal.
 Ethicality: Supervisors should evaluate based on performance, privacy of the
employee is respected.

12. Prerequisites
Performance
Planning
Performance
Execution
Performance
Assessment
Performance
Review
Performance
Renewal &
Recontractin
g

13. STAGES IN PERFORMANCE MANAGEMENT PROCESS
 Prerequisite: a) Knowledge of the organization’s mission & strategic goals.
b) Knowledge of the job in question.
 Performance planning: a) Results.
b) Behaviors.
c) Development plan
 Performance Execution:
Individual Responsibilities Manager’s Responsibilities
in PM
1. Committing to goal 1. Observation & documentation
achievement
2. Soliciting performance 2. Updates
feedback & coaching
3. Communicating openly & 3. Feedback
regularly with the Manager
4. Collecting & sharing performance 4. Resources
5. Preparing for performance 5. Reinforcement
reviews

14.  Performance Assessment: a) Independent evaluation Appraiser & appraisee.
b) Assessment by Managers & review & approved by senior mgmt & HR.
c) Self-assessment is done by the subordinates if necessary from customers, peers,
subordinates
d) Reviewing of subordinates self-appraisal with managers appraisal regarding the
subordinate.
 Performance Review: a) Performance review are stressful.
b) Reviews evaluate our performance on the job.
c) The supervisors & employee meet to discuss the employee’s performance during
appraisal period.
d) Two-way discussion of the employee’s performance during appraisal period.
 Performance Renewal & Recontracting: a) Manager & subordinate plan next
year’s objective.
b) Necessary adjustments & revisions are made taking into account the changes
& accomplishments of the past 12 months.
The process begins again.

15. PERFORMANCE MANAGEMENT & STRATEGIC PLANNING
Definition of Strategic Planning: It is a process that involves
describing the organization’s destination, assessing barriers that
stand in the way of that destination, & selecting approaches for
moving forward. The main goal of strategic planning is to
allocate resources in a way that provides organization with a
competitive advantage. Overall, a strategic plan serves as a
blueprint that defines how the organization will allocate its
resources in pursuit of its goals.

16. PROCESS OF LINKING PM TO THE STRATEGIC PLAN
Organization’s Strategic Plan
•Mission
•Vision
•Goals
•Strategies
Unit’s Strategic Plan
•Mission
•Vision
•Goals
•Strategies
Job Description
•Tasks
•Knowledge
•Skills
•Abilities
Individual & Team
Performance
•Results
•Behaviours
•Developmental Plan

17. Developing strategic plans at organizational level
Environmental Analysis: Opportunities & Threats
MISSION: Why an organization exists?
 Characteristics Of a Good Mission Statement:
 It should be feasible
 It should be precise
 It should be clear
 It should be motivating
 It should be distinctive
 It should indicate major components of strategy
 It should indicate how objectives are to be accomplished.

18. VISION: What organization wants to become?
 Characteristics Of a Good Vision Statement:
 Concise
 Appeals to all stakeholders
 Consistent with Mission & Values
 It should be feasible
 Verifiable
 Inspirational
GOALS: Short-term goals within specified period covered by plan.
How the vision & mission will be implemented & fulfilled
Strategies: Procedures to reach the stated objectives.
 Communicate knowledge of strategic plan
 Outline knowledge, skills,& abilities needed for strategy implementation
 Propose reward systems

19.  Our Mission: At Microsoft, work to help people & businesses throughout the
world to realize their full potential. This is our mission. Everyhting we do
reflects this mission & the values that make it possible.
 Our Values:
 Integrity & honesty
 Passion for customers, for our partners, for technology
 Openness & respectfulness
 Taking on big challenges
 Constructive self-criticism, self-improvement, & personal excellence
 Accountability to customers, shareholders, partners, & employees for
commitments, results, & quality.
JOB DESCRIPTIONS:
 Should be congruent with the organization & unit mission, vision, goals &
strategies.
 Objectives listing of job little, tasks, duties, & responsibilities involved in a
job.
 Differentiate the job from other jobs

20.  INDIVIDUAL & TEAM PERFORMANCE:
 Motivate employees to display the behavior & produce results.
 HR can function to make informed decision about design choices.
 Criteria measured in the PMS are result that must be relevant to the units &
organization.