The document outlines the definition, benefits, and purposes of performance management (PM) systems, emphasizing their role in enhancing individual and organizational performance. It highlights the significance of aligning individual goals with organizational objectives while detailing the characteristics of an ideal PM system and the repercussions of poorly implemented systems. Additionally, it discusses the importance of integrating PM with other human resource activities to foster employee development and organizational growth.

1. Performance Management
Performance Management

2. Performance Management
Performance Management
Todays Contents
Todays Contents
 Definition of Performance Management (PM)
 The Performance Management Contribution
 Disadvantages/Dangers of Poorly-implemented PM
systems
 Definition of Reward Systems
 Aims and role of PM Systems
 Characteristics of an Ideal PM system
 Integration with Other Human Resources and
Development Activities

3. Performance Management: Definition
Performance Management: Definition
Continuous Process of
Identifying performance of individuals and teams
Measuring performance of individuals and teams
Developing performance of individuals and teams
and
Aligning performance with the strategic goals of the
organization

4. PM is NOT performance
PM is NOT performance appraisal
appraisal
Performance Management
– Strategic business
considerations
– Ongoing feedback
– So employee can improve
performance
– Driven by line manager
Performance appraisal
– Assesses employee
• Strengths &
• Weaknesses
– Once a year
– Lacks ongoing
feedback
– Driven by HR Dept

5. Contributions of PM
Contributions of PM
For Employees
For Employees
The definitions of job and success are clarified
Motivation to perform is increased
Self-esteem is increased
Self-insight and development are enhanced

6. Contributions of PM
Contributions of PM
For Managers
For Managers
Supervisors’ views of performance are
communicated more clearly
Managers gain insight about subordinates
There is better and more timely differentiation
between good and poor performers
Employees become more competent

7. Contributions of PM
Contributions of PM
For Organization/HR Function
For Organization/HR Function
Organizational goals are made clear
Organizational change is facilitated
Administrative actions are more fair and
appropriate
There is better protection from lawsuits

8. Disadvantages/Dangers of
Disadvantages/Dangers of
Poorly-implemented PM Systems
Poorly-implemented PM Systems
for Employees
for Employees
• Lowered self-esteem
• Employee burnout and job dissatisfaction
• Damaged relationships
• Use of false or misleading information

9. Disadvantages/Dangers of
Disadvantages/Dangers of
Poorly-implemented PM Systems
Poorly-implemented PM Systems
for Managers
for Managers
• Increased turnover
• Decreased motivation to perform
• Unjustified demands on managers’ resources
• Varying and unfair standards and ratings

10. • Wasted time and money
• Unclear ratings system
• Emerging biases
• Increased risk of litigation
Disadvantages/Dangers of
Disadvantages/Dangers of
Poorly-implemented PM Systems
Poorly-implemented PM Systems
for Organization
for Organization

11. Reward Systems: Definition
Reward Systems: Definition
Set of mechanisms for distributing
Tangible returns
and
Intangible or relational returns
As part of an employment relationship

12. Tangible returns
Tangible returns
Cash Compensation
Base pay
Cost-of-Living & Contingent Pay
Incentives (short- and long-term)
Benefits, such as
Income Protection
Allowances
Work/life focus

13. Intangible returns
Intangible returns
 Relational returns, such as
Recognition and status
Employment security
Challenging work
Learning opportunities

14. Returns and Their Degree of Dependency
Returns and Their Degree of Dependency
on the Performance Management System
on the Performance Management System
Return
 Cost of Living Adjustment
 Income Protection
 Work/life Focus
 Allowances
 Relational Returns
 Base Pay
 Contingent Pay
 Short-term Incentives
 Long-term Incentives
Degree of Dependency
• Low
• Low
• Moderate
• Moderate
• Moderate
• Moderate
• High
• High
• High

15. Purposes of PM Systems:
Purposes of PM Systems:
Overview
Overview
 Strategic
 Administrative
 Informational
 Developmental
 Organizational maintenance
 Documentation

16. Strategic Purpose
Strategic Purpose
Link employee behavior with organization’s
goals
Communicate most crucial business strategic
initiatives

17. Administrative Purpose
Administrative Purpose
Provide information for making decisions related to:
 Salary adjustments
 Promotions
 Retention or termination
 Recognition of individual performance
 Layoffs

18. Informational Purpose
Informational Purpose
Communicate to Employees:
Expectations
What is important
How they are doing
How to improve

19. Developmental Purpose
Developmental Purpose
 Performance feedback / coaching
 Identification of individual strengths and
weaknesses
 Causes of performance deficiencies
 Tailor development of individual career
path

20. Organizational Maintenance Purpose
Organizational Maintenance Purpose
 Plan effective workforce
 Assess future training needs
 Evaluate performance at organizational
level
 Evaluate effectiveness of HR interventions

21. Documentational Purpose
Documentational Purpose
 Validate selection instruments
 Document administrative decisions
 Help meet legal requirements

22. Characteristics of an Ideal PM System
Characteristics of an Ideal PM System

23. Congruent with organizational strategy
Congruent with organizational strategy
• Consistent with organization’s strategy
• Aligned with unit and organizational goals

24. Thorough
Thorough
• All employees are evaluated
• All major job responsibilities are evaluated
• Evaluations cover performance for entire
review period
• Feedback is given on both positive and
negative performance

25. Practical
Practical
• Available
• Easy to use
• Acceptable to decision makers
• Benefits outweigh costs

26. Meaningful
Meaningful
• Standards are important and relevant
• Results have consequences
• Evaluations occur regularly and at appropriate
times
• System provides for continuing skill
development of evaluators

27. Specific
Specific
Concrete and detailed guidance to employees
• What’s expected
• How to meet the expectations

28. Identifies effective and ineffective performance
Identifies effective and ineffective performance
• Distinguish between effective and ineffective
– Behaviors
– Results
• Provide ability to identify employees with
various levels of performance

29. Reliable
Reliable
• Consistent
• Free of error
• Inter-rater reliability

30. Valid
Valid
• Relevant (measures what is important)
• Not deficient (doesn’t measure
unimportant facets of job)

31. Acceptable and Fair
Acceptable and Fair
• Perception of Distributive Justice
– Work performed  evaluation received  reward
• Perception of Procedural Justice
– Fairness of procedures used to:
• Determine ratings
• Link ratings to rewards

32. Inclusive
Inclusive
• Represents concerns of all involved
– When system is created, employees should help
with deciding
• What should be measured
• How it should be measured
– Employee should provide input on performance
prior to evaluation meeting

33. Open (
Open (No
No Secrets)
Secrets)
• Frequent, ongoing evaluations and feedback
• 2-way communications in appraisal meeting
• Clear standards, ongoing communication
• Communications are factual, open, honest

34. Correctable
Correctable
• Recognizes that human judgment is fallible
• Appeals process provided

35. Standardized
Standardized
• Ongoing training of managers to provide
• Consistent evaluations across
– People
– Time

36. Ethical
Ethical
• Supervisor suppresses self-interest
• Supervisor rates only where he/she has
sufficient information about the performance
dimension
• Supervisor respects employee privacy

37. Integration with other Human Resources
Integration with other Human Resources
and Development activities
and Development activities
PM provides information for:
Development of training to meet organizational
needs
Workforce planning
Recruitment and hiring decisions
Development of compensation systems

38. Question
Performance management plays a crucial role in organizations. It encompasses
various processes and activities aimed at maximizing individual and organizational
performance. One of the key purposes of performance management is to ensure
alignment between individual goals and organizational objectives. With this in mind,
which of the following statements best describes the purpose of performance
management in an organization?
A.To evaluate employee job satisfaction and overall happiness in the workplace, ensuring a positive work
environment.
B.To identify training and development needs, facilitating the enhancement of employee skills and
knowledge.
C.To establish a hierarchy of authority and clarify reporting lines to improve organizational structure.
D.To monitor employee attendance and punctuality, ensuring adherence to work schedules.
Please select the correct option (A, B, C, or D) and provide short justification

39. The best answer is:
(B)
To identify training and development needs, facilitating the enhancement of
employee skills and knowledge. Performance management is a
comprehensive process that involves setting clear performance expectations,
regularly assessing performance, providing feedback, and identifying areas
for improvement. One of the primary objectives of performance management
is to identify individual employee training and development needs. By
assessing performance and recognizing areas where employees may require
additional support or skill enhancement, organizations can design targeted
training programs to help employees improve their performance and
contribute to the overall success of the organization.

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