Performance management (PM) includes activities which ensure that goals are consistently being met in an effective and efficient manner. Performance management can focus on the performance of an organization, a department, employee, or even the processes to build a product or service, as well as many other areas. PM is also known as a process by which organizations align their resources, systems and employees to strategic objectives and priorities.[1]

1. Basic Concepts in Performance
Management and Appraisal
Performance Appraisal:
Setting work standards, assessing
performance, and providing
feedback to employees to
motivate, correct, and continue
their performance.
Performance Management:
An integrated approach to
ensuring that an employee’s
performance supports and
contributes to the organization’s
strategic aims.
Comparing
Performance Appraisal
and
Performance Management

2. 2
Definition of Performance Management
Performance management is a strategic and integrated process of setting, tracking and
measuring individual performance objectives against organizational goals and
competencies to develop the capabilities of individuals and teams to help deliver
sustained success to organizations.
Components
Goal Setting and
Expectations
1
Talent Development
Opportunities
2
Review Cycle
3
Descriptions
Alignment of individual and
organizational goals in consideration
of individual capabilities, career goals,
business function and level
Formal and informal learning and
development opportunities that support
an individual in achieving his or her
goals
A clear and transparent process for
evaluating employees against
individual goals and expectations
Objectives
Key Components of Performance Management
 Reinforce organizational priorities
 Communicate clear measures and
performance targets
 Connect jobs to business strategy
 Improve performance through
continuous feedback &development
 Train managers to be people
developers and engage employees
 Inform decisions about raises,
promotions, and transfers
 Recognize staff accomplishments
Career Development

3. 3
Objectives of the
Performance Appraisal System (PAS)
• Help Individuals
– Develop Role Clarity
– Plan their Work
– Understand their Strengths and Weaknesses
– Follow Methods to Overcome Weaknesses
• Improve Mutuality between Reporting Manager and
Reportee
• Identify Training and Developmental Needs of an
Individual
• Provide basis for merit increase and incentives

4. 4

5. 5
Components of your Performance objectives
Performance Area
KPI
KPI Measure
Target Achievement
Relative Weightage
•Financial
•Customer
•Process
•People
• Specific performance goals
• Role based
• No more than 6-8 performance
objectives should be identified
• These should measure success against
the KPI
• should be as objective & measurable
as possible
• These should highlight what is expected
from “On Target” performance
• Set by manager and agreed by employee
•Based on the criticality of the KPI’s to your role
as well as the effort required
•Allocated in discussion with your manager
The KPI’s should be as objective and measurable as possible and will be created based
on a KPI Dictionary available for your reference.

6. 6
Drive performance of individual by focusing on
results
Provide meaningful measurement
Effective feedback
Design development goals
How does it help a Manager?

7. 7
Feedback: An employee is interested to know their performance for
the year, this is the most important thing for him/her
Motivation: Let the employee know what his/her strengths are and
help them in reinforcing positive behaviors
Trust: Create an environment of trust and openness.
Career Planning
What does it mean for an employee?

8. Performance Appraisal Roles
• Supervisors
 Usually do the actual
appraising.
 Must be familiar with
basic appraisal
techniques.
 Must understand and
avoid problems that can
cripple appraisals.
 Must know how to
conduct appraisals fairly.

9. Performance Appraisal Roles (cont’d)
• The HR Department
 Serves a policy-making and advisory role.
 Provides advice and assistance regarding the appraisal tool to use.
 Trains supervisors to improve their appraisal skills.
 Monitors the appraisal system effectiveness and compliance with
relevant laws and guidelines.

10. Designing the Appraisal Tool
• What to Measure?
Work output (quality and quantity)
 Personal competencies
 Goal (objective) achievement
• How to Measure?
 Generic dimensions
 Actual job duties
 Behavioral competencies

11. Appraisal Tools
Tool Advantages Disadvantages
Graphic rating
scale
Simple to use; provides a
quantitative rating for each
employee.
Standards may be unclear; halo
effect, central tendency, leniency,
bias can also be problems.
BARS Provides behavioral “anchors.”
BARS is very accurate.
Difficult to develop.
Alternation ranking Simple to use (but not as simple as
graphic rating scales). Avoids central
tendency and other problems of
rating scales.
Can cause disagreements among
employees and may be unfair if all
employees are, in fact, excellent.
Forced distribution
method
End up with a predetermined number
or % of people in each group.
Employees’ appraisal results depend
on your choice of cutoff points.
Critical incident
method
Helps specify what is “right” and
“wrong” about the employee’s
performance; forces supervisor to
evaluate subordinates on an ongoing
basis.
Difficult to rate or rank employees
relative to one another.
MBO Tied to jointly agreed-upon
performance objectives.
Time-consuming.

12. Management by Objectives (MBO)
• A comprehensive and formal organizationwide goal-setting and
appraisal program requiring:
1. Setting of organization’s goals.
2. Setting of departmental goals.
3. Discussion of departmental goals.
4. Defining expected results (setting individual goals).
5. Conducting periodic performance reviews.
6. Providing performance feedback.

13. 15
Performance Rating Scale
The State rating scale includes five performance ratings:
Exceeds requirements consistently and/or by a wide
margin; nearly ideal
Consistently meets and sometimes exceeds
requirements
Usually meets requirements; Completes requirements
as expected
Frequently fails to meet requirements; much room for
improvement
Outstanding
Very Good
Satisfactory
Needs Improvement
Poor Fails to meet requirements consistently and/or by a
wide margin
DRAFT DOCUMENT – FOR DISCUSSION PURPOSES ONLY
Manag
e
Plan
Review
TIP: The rating should support the comments and examples that demonstrate proficiency,
accuracy, and effort in each area. Start by filling out the comments and THEN assign
the rating that best reflects the description above.
Rating Scales

14. 16
Common Rating Pitfalls
Letting a good or bad rating on one performance area influence
scores in other areas
Halo Effect
Rating all subordinates’ performance at a similar, average
score, regardless of differentiating performance or behavior
Central Tendency
Scoring a subordinate generously to make the employee feel
good or to make the manager look good to leadership
Leniency
Scoring a subordinate poorly because the manager has extra
strict standards or wants to appear tough
Scoring a subordinate’s performance relative to teammates
rather than individually
Strictness
Comparative Rating
DRAFT DOCUMENT – FOR DISCUSSION PURPOSES ONLY
Manag
e
Plan
Review
Evaluating based on personal feelings toward the employee
rather than on professional performance
Relationship Bias
Rating performance primarily on most recent tasks rather than
across the complete time period
Recent Work Focus
Rating performance based on his/her physical appearance. If
appearance affects work, still focus on the performance.
Appearance Bias
Rating a subordinate based on the effort put into the job rather
than actual results and performance
Effort Rating

15. Who Should Do the Appraising?
Self-Rating
Subordinates
360-Degree
Feedback
Potential
Appraisers
Immediate
Supervisor
Peers
Rating
Committee

16. Matching Talent to Reward
1. High potential –
Individuals who deliver differential value as evidenced by
past performance and have the potential (the ability,
engagement, and aspiration) to rise to and succeed in
more senior, critical positions
Value creation of high potential employees
Fast food
restaurant
Investment
banker
*Good Managers Focus on Employees' Strengths, Not Weaknesses: Knowledge@Wharton
http://knowledge.wharton.upenn.edu/article.cfm?articleid=1223)
2. Critical workforce segments –
highly-skilled, highly-trained individuals who drive the
highest proportion of revenue growth
3. Natural strengths of all employees – employees
are unique individuals who naturally think, feel, and
behave in different ways, resulting in divergent
strengths and weaknesses. “A great manager is
brilliant at spotting the unique differences that
separate each person and then capitalising on them”*
Specialists
Critical Workforce
Critical Workforce
Segments
Segments
Flexible Labour Core Workforce
1 2 3 4 5
5
4
3
2
1
Value (
£s)
Scarcity of skills
Average
performers
Top
performers
Average
performers
Top
performers
2X
8X
100
800
Software
developer
Average
performers
Top
performers
Low complexity
jobs
Medium complexity
jobs
High complexity
jobs
– ‘
Productivity increase
Profitability increase
12.5%
8.9%
Sample size = 90,000 employees
Before
strength-based
intervention
After strength-based
intervention
Source: 2008 Gallup Organization, Princeton, NJ. Gallup Management Journal
http://gmj.gallup.com /
After identifying the critical employee groups that support strategy and drive business success, their values in the workplace environment
and how that impacts commitment and Performance, we identify the appropriate Total Reward levers and principles that apply to these
workforce segments and thereby support business strategy and help drive value.

17. 19
Tips for the Performance Review Conversation
Managers play a critical role in this process, and their approach can have a significant
positive or negative impact on results. To ensure successful Performance Review dialogues,
managers should:
Focus on
Strengths
Give Specific
and Targeted
Feedback
Remain Positive
about
Opportunity
Areas
• Research has shown that focusing on performance strengths
during the Performance Review can have a positive impact of
more than 36 percent on performance
 TIP: Don’t confuse performance strengths with personality
strengths. Both are important components of the Performance,
but try to keep your feedback separate and specific to each
component.
• By providing specific feedback regarding the outcomes of the
formal review, managers can positively impact performance by
6.6 percent
 TIP: Ensure the feedback you provide is specific and actionable
• Addressing performance gaps is critical to managing
performance; however, do not over-emphasize. Findings indicate
that an emphasis on performance weaknesses during the review
can actually reduce employee performance.
 TIP: When discussing a performance weakness, be sure to
provide specific suggestions for improving performance and
balance the dialogue with both strengths and weaknesses
DRAFT DOCUMENT – FOR DISCUSSION PURPOSES ONLY
Manag
e
Plan
Review

18. Open and closed questions
• Closed – ‘yes’ or ‘no’
answers
• Open - respondents
open up
– What?
– Why?
– How?
– Where?
– When?
– Who?

19. Silent Steve
• Ask open questions
• Don’t butt in
• Give them time to talk

20. Non-stick Nigel
• Pin him to his performance
• Focus on the future
• Get him to agree a target

21. Bored Betty
• Forms – a starting box, not a finishing line
• Talk to the person behind the employee
• Discuss long term development, not just short term targets

22. Defensive Dennis
• Leave out the character analysis
• Create an informal set-up
• Stick to the evidence

23. Weepy Wendy
• No surprises
• Start with something good
• Be sympathetic but stick to your guns