PERFORMANCE MANAGEMENT

Performance management is concerned with improving both

individual and team performance. Discuss this statement under the
following headings:

i. The principles and process of performance management

ii. Performance agreements or contracts
iii. Monitoring and evaluation of performance

What is performance management?

Performance management can be defined as a systematic process for

improving organizational performance by developing the performance of
individuals and teams.1 It basically comprises of an agreement between the
organization and individuals or teams of individuals, within an agreed
framework with the aim of establishing planned goals, standards and
competency requirements.

1.0 The principles and process of performance management

1.1 Principles

i. Performance management focuses on results, rather than

behaviors and activities.
A common misconception among supervisors is that behaviors
and activities are the same as results. Thus, an employee may
appear extremely busy, but not be contributing at all toward the
goals of the organization. An example is the employee who
manually reviews completion of every form and procedure,
rather than supporting automation of the review. The supervisor
may conclude the employee is very committed to the
organization and works very hard, thus, deserving a very high
performance rating.

ii. It aligns organizational activities and processes to the

goals of the organization
Performance management identifies organizational goals,
results needed to achieve those goals, measures of effectiveness
or efficiency (outcomes) toward the goals, and means (drivers)
to achieve the goals. This chain of measurements is examined to
ensure alignment with overall results of the organization.

1
Human Resource Management Practice-Micheal Armstrong (10th Edition)
 iii. It cultivates a system-wide, long-term view of the
organization.
An effective performance improvement process must follow a
systems-based approach while looking at outcomes and drivers.
Otherwise, the effort produces a flawed picture. For example,
laying off people will likely produce short-term profits. However,
the organization may eventually experience reduced
productivity, resulting in long-term profit loss.2

iv. It Produces meaningful measurements

These measurements have a wide variety of useful applications.
They are useful in benchmarking, or setting standards for
comparison with best practices in other organizations. They
provide consistent basis for comparison during internal change
efforts. They indicate results during improvement efforts, such
as employee training, management development, quality
programs, etc. They help ensure equitable and fair treatment to
employees based on performance.

Other notable principles on performance management

1. Helps you think about what results you really want. You're
forced to be accountable, to "put a stake in the ground".
2. Depersonalizes issues. Supervisor's focus on behaviors and
results, rather than personalities.
3. Validates expectations. In today's age of high expectations
when organizations are striving to transform themselves and
society, having measurable results can verify whether grand
visions are realistic or not.
4. Helps ensure equitable treatment of employees because
appraisals are based on results.
5. Optimizes operations in the organization because goals and
results are more closely aligned.
6. Cultivates a change in perspective from activities to results.
7. Performance reviews are focused on contributions to the
organizational goals, e.g., forms include the question "What
organizational goal were contributed to and how?"
8. Supports ongoing communication, feedback and dialogue about
organizational goals. Also supports communication between
employee and supervisor.
9. Performance is seen as an ongoing process, rather than a one-
time, snapshot event.

2
Richard A. Swanson, in Performance Improvement Theory and Practice (Advances in Developing Human
Resources, 1, 1999
 10. Provokes focus on the needs of customers, whether
internal or external.
11. Cultivates a systems perspective that is, focus on the
relationships and exchanges between subsystems, e.g.,
departments, processes, teams and employees. Accordingly,
personnel focus on patterns and themes in the organization,
rather than specific events.
12. Continuing focus and analysis on results helps to correct
several myths, e.g., "learning means results", "job satisfaction
produces productivity"
13. Produces specificity in commitments and resources.
14. Provides specificity for comparisons, direction and
planning.
15. Redirects attention from bottom-up approaches (e.g.,
doing job descriptions, performance reviews, etc., first and then
"rolling up" results to the top of the organization) to top-down
approaches (e.g., ensuring all subsystem goals and results are
aligned first with the organization's overall goals and results).

Process of performance Management

Performance management includes activities to ensure that goals are

consistently being met in an effective and efficient manner. The field of
performance management can comprise two separate types of management.
In one aspect of performance management, an analyst may view the
performance of a company as a whole, and also evaluate the effectiveness of
the managers and heads of companies in reaching goals. In another sense,
performance management may be a system of evaluating employees to help
them reach reasonable goals and thus ensure that the company performs
better. This discussion will focus on the latter definition.

Employee performance management is the process companies use to

manage their employees to ensure organizational success. Performance
management techniques include planning job goals and expectations,
monitoring performance, making improvement in the employees' jobs and
rewarding good performance. Employees are individuals companies rely on
to complete business tasks and functions; employee performance
management seeks to improve the company culture and employee goodwill.
Improving these areas can help companies hire the best employees and
retain valuable employees with key knowledge of business processes.
Employee Performance Management Process

 Establishing Performance Goals

 Performance Plans

 Observation and Feedback

 Evaluating Performance

 Rewarding Performance

 Recognizing Performance Problems ("Performance Gaps")

 Performance Improvement / Development Plans

 Firing Employees

Performance management of individual employees differs. It generally

includes the following: planning work, setting goals, offering feedback and
reviews, offering opportunities to learn more in one’s field, and rewarding
employees who perform well.

Employee performance management works best when work is

planned and goals are consistent. This may mean having a clear way to
communicate regarding work expected at the moment and upcoming work.
Planning also includes defining expectations of the employee so that he or
she is not broadsided by evaluation criteria not included in planning.

Planning and setting goals in performance management also creates a

system of predictable rewards for good performance, and consequences for
poor performance. This way the employee can reasonably assume the
consequences of work performance, whether good or bad.

Performance management also involves giving feedback to employees

on a more consistent basis than the average annual review. Instead, an
employee’s ability to exceed or failure to meet goals may be monitored on a
monthly basis. This provides the employee with either the opportunity to
receive compliments and rewards fairly regularly, or to make behavior
changes sooner if performance is not up to par.

Often employees feel that end of the year reviews contain criticisms of work
in the past year that were never openly discussed with the employee. The
employee benefits from a more consistent model of performance
management evaluation, since this gives a person time to address issues
and change problem issues.

In a performance management model, employees must also be given ways

to grow and develop in their field. This means giving opportunities to work
on harder projects, pairing less-skilled employees with expert employees,
and offering team models where employees can direct and make decisions.
Greater responsibility and opportunities to advance in one’s field are
essential to maintaining happy and productive employees.

Rewards are also a huge part of performance management. The

greatest part of this is rewards of monetary nature, either in bonuses or
raises, when employees perform well. As well, employees who actually are
now qualified to work in a high level of their field should be placed in
positions of greater responsibility, and receive a greater share of pay.
Performance analysis should focus as much or more on positive
performance than it does on negative performance. Rewards for positive
performance must be real and tangible, or else the company runs the risk of
becoming a “negative action” company only.

Processes

Employee performance management usually contains several steps for

guiding and evaluating employees. These steps include planning,
monitoring, developing, rating and rewarding.

The planning phase starts with companies deciding on the necessary

employee jobs and tasks that need to be completed in the workplace.
Managers will decide on the specific tasks and wages for each job prior to
hiring employees. Once a suitable employee is hired, the employee
performance management system moves into the monitoring phase.

The monitoring phase of employee management involves managers training

and watching how the employee performs his job. The monitoring phase
dovetails with the development phase of the employee performance
management system. As managers monitor each employee, they will usually
offer tips and advice for completing tasks more effectively and efficiently.
These two phases usually make up the bulk of employee management, as
they address the actual tasks and job performance of each employee in the
company. These two phases are followed by the rating portion of employee
management.
The rating phase of the employee performance management system is
created by each company according to their management style and
company culture. Most companies will explain the rating system to
employees while scoring the employee appropriately based on his job
performance and productivity. Rating employees is completed on a periodic
basis, depending on the company and its employee performance
management system.

After an employee is rated for his performance, the company will reward
the employee. Rewards can be monetary or incentive based. Common
monetary rewards include bonuses, merit pay increases or gift cards;
incentive style rewards include banquets with recognition plaques or
trophies, extra vacation days or physical gifts of goods or services.
Companies may use a mix of rewards on a tiered basis, allowing employees
to strive for the best reward available for their job performance

2.0 Performance agreements or contracts

These agreements or contracts are crucial for the organization and the
individual or team of individuals, as they not only form a basis for
development, assessment and feedback in the performance management
process, but they go ahead and define expectations in the form of a role
profile that sets out role requirements in terms of key result areas and the
competencies required for effective performance.
They are a way or process by which management can form the basis for
development, assessment and feedback. Expectations within the
performance contract are defined in the form of a role profile that sets out
role requirements in terms of key result area and the competencies
required for effective performance. Assessments of past performance lead
to an analysis of future requirements.
The performance agreement seeks to incorporate any performance
improvement plans that may be necessary for the organization as a whole,
and a personal developmental plan for the individual or individuals within
the organization, thus the fusion of the two within the agreement. It will
therefore provide for what individuals are meant or expected to do, but will
also include an indication of what support they will receive from their
manager.

The first and key important step would be to define or provide an analysis of
the role requirements and the performance review.
1. Provision for definition of Role Requirements

Here a role profile is established, which seeks to define the role of

individuals and the organization in terms of the key results expected,
what role holders need to know and are able to do (these are their
competencies), their behavioral competencies and upholding of the
organizational core values.
Its important to note that role profiles need to be updated each time
such a formal agreement is developed. So here, one would aim at
finding out , through a role analysis, what people are expected to
achieve when carrying out their work and the competencies and skills
they need to meet these expectations.
One considers the purpose of the role analysis i.e. why the role exists
and what the role holder is expected to contribute, to whom the role
holder reports to and who reports t the role holder, what the role
holder is required to achieve and what the role holder is expected to
know and able to do.
One approaches role analysis by;
 Obtaining documents on the organizations structure, existing
job descriptions e.t.c.
 Asking managers for fundamental information concerning the
overall purpose of roles, key result areas and technical
competencies required.
 Asking role holders similar questions about their roles.

Note that the above can be done through interviews, questionnaires

or observation. The role profile content will include;
 The role title
 Department
 Responsible to
 Responsible holder
 Purpose of the role
 Key result areas

Then one must consider competency analysis, which aims at utilizing

behavioral analysis to establish behavioral dimensions affecting role
performance and produce competency frameworks. This can be done
through; expert opinions, structured interviews, workshops amongst
others.

3.0 Monitoring and evaluation of performance

Although performance management is a continuous process it is still

necessary to have a formal way of monitoring and evaluation. This
should be rooted in the reality of the employee’s performance.
Monitoring and evaluation aids managers and individuals to take a
positive look together at houw performance can become better in the
future and how any problem in meeting performance standard and
achieving objectives can be resolved.
The true role of performance management evaluation is to look
forward to what needs to be done by people to achieve the purposes
of the job, to meet new challenges, to make even better use of their
knowledge, skills and abilities to develop their capabilities by
establishing a self-managed learning agenda and to reach agreement
on any area where performance needs to be improved and how that
improvement should take place.

Approaches of employee evaluation and monitoring

There are a number of approaches used in employee evaluation, one

of these approaches is the casual, unsystematic evaluation. It was
commonly used in the past but lost its popularity with the need of
quantitative and qualitative measurement of output for the rank and
file personnel.
There is the traditional approach, which is used to evaluate
employees characteristic, employees contribution or both. All
employees are evaluated in the same manners using the same
approach.
There is the mutual goal setting, which is also known as the
behavioral approach. It provides for an analysis of the mutual goals,
those of the individual and those of the individual in relation to the
organization.

Problems in performance evaluation

Amongst the problems faced in performance evaluation, one is in

relation to managers. Here managers wish to appraise their
subordinates on a fair and accurate basis and this result in fault
managerial assumption. The managers may have the assumption that
employees really want to know where they do stand, on this basis this
turns out to be a myth and not a reality.

Objectives of performance evaluation vary from organization to

organization. Hence criteria used to evaluate employees, vary from
one organization to another. Criteria is hard to define, and thus the
lack of ambiguity, vagueness and generality. As such, performance
evaluation based on different criteria, are hardly comparable.

How to make performance evaluation more effective

This can be done through the standard evaluation scheme. This

is based on management by objectives. It implies a more positive
approach for performance e evaluation. According to this approach,
the emphasis in performance evaluation should be shifted from
evaluation to analysis. Therefore the evaluation shifts from that of
criticizing the subordinat to that of helping him or her to improve his
or her performance. The employee evaluates himself/herself thus
becomes an active agent in the evaluation process.
It can also be done through performance review. Here, the
purpose of this is to analyse what a person has done and is doing in
his job in order to help him perform better to review employee
performance. One way of doing this is through counseling sessions.
Multiple evaluation also provides an indication of overall
performance and also potential for employee development. This
involves evaluation of the same by superiors, peers, subordinate and
the employee himself.
A formal training is the most effective way to prepare managers
and supervisors to conduct successful employee evaluation.

The need for evaluation

Performance evaluation helps promote an employee to higher level of
jobs involving a higher order of responsibilities, which the employee
can effectively discharge without being over-burdened and stretched.
Performance evaluation also assists the organization to allocate jobs
among employees as per their capabilities, so that organizational
responsibilities are discharged effectively.
Employees are able to identify for salary increment, promotion,
transfer and lay off or termination of service. A firm which carries out
evaluation is able to determine training from development of the
needs of employees. Evaluation also helps to motivate employees by
providing feedback on their performance level. It also helps to
establish a basis for research and reference for personnel decisions in
the future.