Performance Management
Performance Management
Performance Management
Continuous process of Identifying, Measuring and
Developing performance of individuals and teams and
Aligning performance with the strategic goals of the
organization
Aligning performance with the strategic goals of the
organization which requires managers ensure that
employees activities and output are congruent with the
organization goal.
Contributions of Performance Management
For Employees
1. Clarify definitions of job and success criteria Ex,
employees gain better understanding of the behavior and
results required of their specific position.
2. Increase motivation to perform Ex, Recognition about
ones past successes.
3. Increase self-esteem Ex, receive feedback about ones
performance fulfills a basic human need to be recognized
and valued at work.
4. Enhance self-insight and development The participant
in the system likely to develop better understanding of
themselves & kind of development activities that values
to them as progress through the organization.
For Managers
1. Communicate supervisors views of performance more
clearly There is greater accountability in how manager
discuss performance expectations & provide feedback
2. Managers gain insight about subordinates It will helps
to build better relationship with that person and gain
better understanding of each individuals contribution to
organizational.
3. Better and more timely differentiation between good and
poor performers They force supervisor to face up to &
address performance problems on timely basis.
4. Employees become more competent
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For Organizations
1. Wasted time and money it will wasted when systems
are poorly designed and implemented.
2. Unclear ratings system because of poor
communication, employees may not know how their
ratings are generated and how the ratings are translated
into reward.
3. Emerging biases Personel values, biases and
relationship are likely to replace organizational standard.
4. Increased risk of litigation Expensive lawsuits may be
filed by individuals who feel they have been appraised
unfairly
Aims and Role of PM Systems
1. Strategic
To help top management achieve strategic business
objectives.
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14. Ethical
Supervisor suppresses her self-interest in providing
evaluation
Supervisor rates only where she has sufficient
information about the performance dimension
Supervisor respects employee privacy
Integration with other Human Resources and Development
Activities
PM provides information for:
o Development of training to meet organizational
needs
o Workforce planning, organizations talent
inventory is based on information collected
through the PM system.
o Recruitment and hiring decisions, development
plan provide information on what skills will
acquire in future.
o Development of compensation systems,
whether employees satisfy with given
compensation or not
PM is NOT PA
Performance Management
Strategic business considerations
Driven by line manager
Ongoing feedback
So employee can improve
performance
Performance Appraisal
Driven by HR
Assesses employee
Strengths &
Weaknesses
Once a year
Lacks ongoing feedback
PM Around the World
PM used in United States, Mexico, Turkey, India, Australia,
China, and so on
Common across countries: Need to align individual and
organizational goals to enhance the performance of
individuals and groups
Yet, different countries emphasize different components of
PM
EX 1: PMs in Japan tend to emphasize behaviours to the
detriment of results
EX 2: The current challenge among many organizations in South
Korea is how to reconcile a
merit-based approach with more traditional cultural
values
Reward Systems
It is the set of mechanisms for distributing both tangible
return (include CASH = base pay, cost of living, short
term incentives and BENEFIT = income protection,
allowance) & intangible returns (recognition, promotion,
COLA) as part of an employment relationship.
Types of returns/reward.
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Base pay
Given to employees in exchange for work performed.
Include range of values, focuses on potion & duties
performed rather than individuals contribution.
Usually same for all employees that perform similar
duties & ignore differences across employees
But differences within base pay may existed based on
experience & differential performance
Cost of living adjustments (COLA)
Imply same percentage increase for all employees
regardless of their individual performance.
Given to combat he effect of inflation in an attempt to
preserve the employees buying power
Contingent pay or merit pay is given as addition to the
base pay based on past performance.
Contingent pay the amount of additional compensation
depends on employees level of performance.
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Short-term incentive
It allocated based on past performance.
It not added to the base pay & only temporary pay
adjustment based on the period (quarterly/annual)
It one time payments and referred variable pay
Incentives is known as advance.
Long term incentive
Attempt to influence future performance over a longer
period of time.
It involved stock ownership / option to buy stocks at preestablished & profitable price
In this, employees personally invested in the organization
success & the investment is expected to translate into
sustained high level of performance.
Income protection
It serve as backup to employees salary in the event that
they sick, disable or no longer able to work.
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