This document discusses performance management systems. It defines key terms like performance appraisal, performance management, and performance management system. It categorizes performance management into two types - one that evaluates organizational effectiveness and one that evaluates employees. It outlines the relationship between performance management and other HR functions like recruitment, training, compensation etc. It also discusses different approaches to performance management like setting goals, continuous feedback, and rewards & recognition programs. Finally, it provides examples of performance measurement tools like balanced scorecards and key performance indicators.

1. Performance Management System
PROF.ELIZABETH MATHEW

2. Concept
PERFORMANCE APPRAISAL
Is the process of determining how well employees do their jobs relative to a standard
and communicating that information to them.
PERFORMANCE MANAGEMENT
Is a series of activities designed to ensure that
the organization gets the performance it
needs from its employees.
PERFORMANCE MANAGEMENT SYSTEM
Performance management system refers to set of
organizational, managerial, team and individual metrics
used to attain the aims and objectives of performance
management.
Performance management system design is one of the key
methods HR management uses to contribute to organizational
performance

3. PM –Categorized Into 2 Separate Types Of Management
First: deals with the organization as a whole and evaluates the
effectiveness of its managers
Second: deals with the system of evaluating the employees in order to
enable them to achieve reasonable goals and thus ensure that the
organization performs better.

4. Recruitment & Selection
Basis for determining selection
criteria
Quality candidates result in
performance improvement
Human Resource Planning
Data on Job- person fitment
criteria
Matching for organizational
effectiveness
Industrial Relations
Improved working relations
Joint goal setting results in improved
performance
Training & Development
Basis for training needs
identification
Aids in performance
improvement
Competency management
Reward Management
Identification of talents
Effective career and succession
planning
Compensation management
Mentoring and Counselling
Develop Leadership Skills
Employee Empowerment
Work-life balance
Internalization of ethics & policy
Performance Management
Actual stock taking
Performance
management audit

6. Performance- Focused Organizational Cultures
ENTITLEMENT APPROACH
Adequate performance and stability
dominate the organization.
Employee rewards vary little from person to
person and are not based on individual
performance differences.
Performance appraisal activities are seen as
having little tie to performance and as being
primarily a “bureaucratic exercise”
PERFORMANCE DRIVEN APPROACH
Focused on results
Performance appraisals link results to
employee compensation and development

7. Detailed Appraisal Of
Employee Performance
Clear Expectations, Goals, and
Deadlines
Clear Feedback On
Performance
Manager And Employee
Training As Needed
Consequences For
Performance
Components of a Performance-Focused Culture

8. An effective performance management system should do the following
Make clear what
the organization
expects
Provide
performance
information to
employees.
Identify areas of
success and needed
development
Document
performance for
personnel records

10. What Are the Different Approaches to Performance Management?
Key
Performance
Indicators
Roadmap
Rewards
And
Recognition
Programs
Continuous
Feedback
Mentorship
Program

11. Roadmap
.
The goals you want the
employee to achieve
within a defined period
Milestones that will
lead to said goals
The action plan that
will help achieve the
goals and milestones
Key Performance
Indicators (KPIs)
that will help
measure the
performance of the
employee

12. Key Performance
Indicator (KPIs)
KPI’s, help you decide what metrics you need to judge an
employee
What the baseline for these metrics should be
How managers and stakeholders can measure and analyze
progress.
KPIs work when you set tangible and
achievable goals for the employee
Drawn after goals are
finalized

13. • The basic responsibility of the employee
which they are supposed to perform
• Alludes to the sector of outcome within the
business organization, for which the
department or unit is responsible.
KRA
• Is the financial and non-financial metric used
by the firms to gauge and fortify the success,
towards the goals of the organization.
• Evaluation technique to see how well the
KRA’s are being performed.
KPI

14. KRA
•Recruitment
& Selection
KPI
• Reduce Average time taken to fill
vacancies
• Reduce Average cost per recruitment
• Finalize selection in 5 week for
individual position

15. 1. Absenteeism
2. Turnover Rate
3. Active employee social ambassadors
4. Active intranet users
5. Employee satisfaction index (ESI)
6. Hires post-trial period
7. Employee Suggestion Box Outcomes
9. Internal Promotion Rate
10. Online company ratings
Employee
Engagement
The following KPIs measure the employee
engagement

16. Theories of Goal Setting
GOAL- SETTING THEORY:(LOCKE-1968) MANAGERS MUST ENSURE THE FOLLOWING –
EMPLOYEE TO BE WILLING TO PERFORM
Goals must be specific
Goals must be robust yet attainable
Goals must be desirable
Goals must be tied to feedback mechanism.

18. Self –Efficacy At Work(Albert Bandura-1977)
Self-Efficacy is a person’s particular set of beliefs that determine how well one can execute a
plan of action in prospective situations (Bandura, 1977). To put it in more simple terms,
self-efficacy is a person’s belief in their ability to succeed in a particular situation.

20. Edward W Deming (TQM):These systems encourage to meet the personal goals at
the expense of organization
Past accomplishments
I know I can do the
job and have
outstanding quality
Performance of others
Emotional state
I don’t think I can do the
job on time and have
quality outstanding
Self efficacy
High: Set goals/Targets
Preserve/targets
Creatively solve problems
Visualize success
Learn from failure
Low: Avoid Difficult tasks
Think of excuses for failing
Develop low aspirations
Quit
Blame setbacks on lack of ability
of luck

21. Expectancy Theory – Vroom 1964

22. Identifying And Measuring Employee Performance
Quantity of output
Quality of output
 Timeliness of output
 Presence at work
40%
20%
20%
20%
percentage
Classes
Research
MDP & Consultation
Mentoring
Weighting of Management Duties Weight
Improve Customer Feedback 50%
Control operational Cost 30%
Encourage Quality Improvements 20%
Total Management Performance 100%

23. Performance Management Model (PCER)
Performance
Management
Plan
Coach
Evaluate
Reward

26. Performance Appraisal
Performance appraisal always involves:
Setting work standards
Assessing the employee’s actual performance relative to
those standards
Providing feedback to the employee with the aim of
motivating him or her to eliminate performance
deficiencies or to continue to perform above par

27. Objectives of Performance Appraisal
DEVELOPMENT DECISIONS
Personal Development
Development of skills and competencies
Self analysis
Self development planning
ADMINISTRATIVE DECISIONS
Personnel decisions
Removal of deficiencies in performance
Job re-design

28. PerformanceAppraisalProcess
•What should be assessed?
•Who should make the appraisal
•Which procedure(s) should be utilized?
•How will the results be communicated?
Defining objectives of performance appraisal
Defining performance expectations
Designing performance appraisal system
Implementing performance appraisal system
Performance appraisal interview
Post performance appraisal actions

29. WHO CONDUCTS APPRAISAL
Supervisor rating
employee
Employees rating
their superiors
Team members
rating each other
Employee rating
themselves
Multisource or
360 degree

30. Tools of Performance Appraisal
Scaling
Methods
• Graphic
Rating Scales
• Behavioural
Rating Scale
Comparative
Methods
• Ranking
• Forced
Distribution
Narrative
Method
• Essay
• Critical
Incident
Other Tools
• MBO
• 360 Degree
/Multisource
Appraisal

31. Three aspects of
performance are appraised
using graphic rating scales:
Descriptive categories:
Quality of work,
Attendance, Dependability
Job Duties:
Roles and Responsibilities
as per job description
Behavioural Dimensions:
decision making, employee
development,
communication etc.

32. Collect Critical
Incidents
Identify Performance
Dimensions
Reclassify the incidents
Assign scale values to
the incidents
Develop a final
Instrument
Steps To Develop BARS
Behaviourally – Anchored Rating Scale

33. Behaviorally-Anchored Rating Scale for Customer Service Skills

34. Forced Distribution Curve

36. Modern Performance Appraisal

37. Assessment Centre Appraisal Method
The Assessment Centre method of performance appraisal combines role plays, situational
judgment tests, presentations, group activities, interviews, simulations, psychometric tests
and other techniques to make critical talent decisions.
An assessment center performance appraisal helps
predict future behavior, make better talent
decisions, diagnose development needs and groom
employees to expand their KRAs
Instrumental in identifying high-potential
employees and professional training needs
to bridge the skills gaps, leadership
development and succession planning.

38. Why use the assessment center method of performance appraisal
Best of many worlds
They offer one platform to carry out
many performance appraisal
activities: behavioral profiling,
psychometric tests, potential
evaluation and more!
Higher accuracy
Assessors get to observe
and evaluate employees in
real-time, thereby eliminating
biases concerning past
performances.
Adaptability
Assessment centers can be
designed and customized to
match specific appraisal
requirements and job profiles.
Engagement
The interactive quality of virtual
assessment centers is a welcome
alternative to monotonous performance
appraisal methods.

39. Psychometric assessment as a performance appraisal method
These assessments are also known as psychological appraisals and help analyze six major components of an employee’s
performance:
Psychometric assessments offer predictive insights about employees, allowing decision-makers to chart a more
streamlined career trajectory for individuals within the company.

40. HUMAN-RESOURCE (COST) ACCOUNTING METHOD
Analyses an employee’s performance through the
monetary benefits he/she yields to the company.
It is obtained by comparing the cost of retaining an
employee (cost to company) and the monetary
benefits (contributions) an organization has
ascertained from that specific employee.

41. Performance Check-ins
Performance check-ins, used as an appraisal method in
HRM, refer to a frequent review and feedback process
between managers and their direct reports.
The process builds rapport and helps managers
understand what their team members are working on
throughout a timeline, between annual appraisal cycles.

43. Appraisal Interview Hints For Appraisers
Prepare before interview
Focus on objective performance
Be specific about rating and feedback
Develop a future improvement plan
Reinforce employee successes
Talk too much
Lecture the employee
Focus entirely on negative job
performance
Compare the employee with others
Think that the employee has to agree

44. Pitfalls of Appraisal
Time and resource
constraint of
managers
Wide variation in
standards and
ratings
Personal values
and bias
Limitation of
performance
appraisal
techniques
Lack of
communication
Managerial
resistance
Negative feedback

45. The term balanced scorecard (BSC) refers to
a strategic
management performance metric used to
identify and improve various internal
business functions and their resulting
external outcomes.
Used to measure and provide feedback to
organizations
Balanced scorecards are common among
companies in the United States, the United
Kingdom, Japan, and Europe.
Balanced Scorecard
David Norton and Robert Kaplan -1992

46. BSC can be Immensely Powerful In Helping Organization To
Createa tangibleroad –map from the “ current state” to a more successful future state.
Identify major roadblocks and areas where you lack the critical competencies to proceed to the
next stage
Articulate how your goals will directly helpthe organization to move upwards through the
stages
Prioritize business activities in the order they need to be tackled to allow the most rapid
progression through the stages.

47. 2017 survey - (2CG - strategic execution consultancy firm)
•77% report that their Balanced Scorecard is extremely or very useful.
•75% use the Balanced Scorecard to influence business actions.
•Of the 64% of organizations that have refreshed their Balanced
Scorecard, the majority—71%—did so during the previous 12 months.
•The Balanced Scorecard is used by both small and large
organizations: 61% of respondents had less than 500 employees, and 9%
had over 10,000 employees.

48. Managing Strategy: Four Process

49. Finance Customer Internal Business
Process
Learning and
Growth
The balanced scorecard involves measuring four main aspects of a
business

50. Learning and Growth
This perspective is also called “organizational capacity.”
It looks at organizational performance through the lens of
human capital, culture, technology, and infrastructure.
The learning and growth perspective considers how well
information and knowledge are captured and implemented
by employees to create a competitive advantage.
For instance, are your employees using your technology stack
to execute tasks and manage processes?
Does your organization provide adequate training and
resources?
What steps are you taking to remain competitive?

51. INTERNAL BUSINESS PROCESSES
The next perspective focuses on how well your
internal processes are operating.
Are there gaps, delays, or bottlenecks in the pipeline
that need to be addressed?
How can you streamline your processes for greater
efficiency and effectiveness?
How quickly can your organization adapt to changing
business needs or conditions?

52. Customer
The customer perspective asks, “What is
important to our customers and stakeholders?”
This perspective focuses on finding new
customers, building brand recognition and
trust, and increasing customer satisfaction.
In other words, how well are you serving your
customers and the stakeholders your
organization was designed to serve?

53. Financial
The final piece of the puzzle is the
organization’s financial state.
Finances are lagging indicators of past
decisions; they are still an important part of
any organization’s health and key to
understanding overall performance and
creating strategies for the future.
Clear long-range targets for profit seeking
organizations, operating in a purely
commercial environment

55. Generic Strategy Map

57. Objective Measurement Target
Grow Revenues Sales growth 10%
Increase Firm value Market Value 10%
Grow profit Net Income 15%
Make customer happy Satisfaction Survey 10 rating
Keeping customers
coming back % customers who return 85%
Targeting new customers % of new customers 10%
Provide fast customer
service
second or a minute to serve
customers 30secs -1 min
Offer many new
interesting products number of stock keeping units 100
Build employees skill Hours of training 10 hrs/m
Stay informed of
customer's taste survey- Face book/link 1/m
Cu st om er
Internal Process
Le a r ni ng a nd Gr owt h
Finance
Ba l a nce d Scor e ca r d wit h St r a t e g y Ma pping
Delicious Biryani
Theme/ Vis
ion: Opertional excellence and Innovation
Strategy
Sales
Revenue
Firm
Valve
Profit
Customer
Satisfaction
Customer
retention
New
Customer
Prompt
Service
Product
Variety
Train
employees
Stay with
current
trends

58. Balanced Scorecard for an E-Commerce Business

59. Rationale for the Balanced Scorecard

60. Elements of Good Performance Appraisal System
Aligning individual performance expectations with the organizations Vision and values
Measuring key results and competencies
Appraising against clearly defined performance expectations
Working together to develop performance expectations
Providing frequent and timely feedback
Conducting performance appraisals as scheduled
Encouraging employees to conduct self appraisal
Evaluating employee performance against established performance standards
Scheduling training on the appraisal process
Demonstrating organizational commitment

61. Process of Performance Monitoring
Performance appraisal
Performance monitoring
Identify gaps in planned performance and
actual performance
Discuss, provide feedback and develop
improvement plan
Seek employee commitment and verify

62. Reward Management
Organizational values and want to pay for
For the value they create or the organization
Right behavior and actions
Foster and maintain high performance work culture
Motivate employee –to obtain commitment and engagement
Attract and retail talents
Emphasize the right mix of financial and non-financial rewards
Operate in ways that are fair,equitable,consistent and transparent

63. Nutshell – Trident Group
Performance
Planning
Organizational goal setting
and finalization of balance
score
Individual goals/KPI
Evaluation
Framework
Goal
Key initiatives
Competencies and
values
Roles and traits
Evaluation
framework
Mid year
review
Self Appraisal
Rating and
appraisal by the
appraiser
Feedback
discussion with
appraiser
Approval thought
by review
committee
Appeals procedure
if any
Coaching and
feedback session
Output of
Performance review
Input for training and
development
Input for
promotions/increment
/ transfer decisions