Global HRM

22MBAHR404
Module 5
MODULE 5

Performance management cycle, Key

components of PMS, Performance Management
of International Assignees, Issues and
challenges in international performance
management, PMS for expatriates, PMSs in six
leading economies: China, India, Japan, South
Korea, UK and USA.
Performance Management Cycle

Every organization aims to optimize the performance

of its employees in order to reach its objectives. To
accomplish this, it is essential to have a system in
place that enables managers to oversee, mentor, train,
and inspire their employees. This is where the
concept of a performance management cycle comes
into play.
The performance management cycle can be divided
into four key stages: planning, monitoring,
developing and reviewing, and rating and rewards.
Planning
In the planning stage, the groundwork for success is laid
down. Before management talks to the employee, the
management team should meet and decide the
organization’s goals and objectives for the year.
This involves the overall strategy for the business, but also
the personal objectives for all employees and teams,
including development goals, specific tasks, targets,
actions and behaviors.
Without that crucial information, any planning with
employees will not be effective.
Once the management team knows the details of what
they want the employee to achieve, it is time to meet
with the employee and make a strategic plan for the
year.
This should be a collaborative process, as an
employee who understands why they are being set
specific goals and tasks is more likely to be invested
in succeeding at them.
In this meeting, the goals should be clearly outlined
using the S.M.A.R.T. method.
SMART goals are:
Specific – The goal is clearly outlined, with detailed
information such as what is to be achieved, how well it
must be done, and why it is important.
Measurable – The goal must have a definite and
measurable indicator to tell if it has been achieved.
Achievable – While the goal should stretch the
employee, it should not be so lofty as to not be
realistically achievable at all.
Relevant – The goal is in line with both the
employee’s job and the overall goals of the
organization.
Time-bound – There should be a definite timeline as
to when this goal should be completed.

Each of the employee goals set should align with the

organization’s goals, and contribute to achieving
them. Making sure that those goals align will ensure a
cohesive overall strategy.
In setting these goals, management can also put in place
an employee development plan.
In the beginning stage of the performance management
cycle, management gets an opportunity to identify areas of
training and development in which an employee needs to
strengthen and set goals that will achieve that.
Creating an employee development plan will demonstrate
that management is actively working with the employee to
assist them in becoming a more skilled and valuable player
in the organization.
Monitoring
In the performance management cycle model,
monitoring is a key function in achieving the goals set
out in the planning stage.
The monitoring will not be as effective, however, if it is
only done once or twice during the year. It is advised
that management meets with employees on a monthly or
quarterly basis to check in on progress, offer help if
needed, assist in solving any problems that might have
arisen, and adjust goals, if necessary.
In a yearly goal setting, problems often arise from poor
planning and a lack of motivation. Having a large, far-off
goal can be intimidating, or can seem so far off that the
employee does not take the proper, actionable steps.
Breaking the goal down into monthly subgoals can smooth
the process, giving the employee a more manageable task.
In holding monthly or quarterly meetings with the
employee, management can more easily oversee this
process.
Organizational goals can also shift during the year, and
more frequent meetings can allow for new goals to be
introduced that align more properly with organizational
objectives.
Reviewing
At the end of the year, the management and the employee meet to
review the previous year and see if goals were met.
This is another opportunity to build a collaboration with the
employee. The more involved they are in the other stages of the
performance management cycle, the more motivation they will
have to continue working diligently to achieve their goals and
those of the organization.
If proper monitoring was done, the management will have already
have a good idea of how well the employee did during the year.
The review is a chance for management and employees to
evaluate both the final result and the process itself.
This evaluation should include questions such as:
Was the original goal realistic?
Was the goal in line with the organization’s objectives?
Did the employee gain useful experience or skills?
How well did the employee complete their tasks?
Did the organization offer the proper support to achieve
the goal?
In what ways could future goals be set differently to
ensure success?
What aspects of this process could be streamlined or
improved?
The employee can present their perspective on how well
they did during the year and receive feedback from the
management team on how well they met or exceeded
their goals. If there have been performance issues during
the year, this is where they can be brought up. It is
recommended that if issues are being discussed, possible
solutions are also presented.
This is also a space in which future development
opportunities can be discussed, as well as bonuses or
compensation increases.
Rewarding
The final stage of the performance management cycle
plan is the reward. This is a stage that cannot be
overlooked, as it is the one that is the most important for
employee motivation.
Employees who do not receive a proper reward after a
year of striving to meet organizational goals, and
succeeding in doing so, will lose motivation for the next
year. They might lose faith in their organization, feel that
their talents are not appreciated, and begin searching for
another job.
When management fairly rewards employees and
gives them recognition for their efforts, they are
ensuring that those employees will continue to work
hard to achieve organizational goals.
These rewards should be merit-based. Employees
will recognize who amongst them has put in the
effort, and if they see colleagues rewarded without
cause, they could lose motivation. Conversely,
when employees see a high-performer get a
handsome reward, it demonstrates the value in
putting in that extra effort.
Some rewards that might be offered are:
An increase in compensation
A one-time bonus
Increased vacation time
Special projects
A promotion
A positive written review
Company-wide acknowledgment

After the reward stage of the performance management cycle

model, the management team and the employee can choose to
meet one final time, to review the cycle as a whole. This is a
chance to bring up any issues that might have arisen, and
begin talks about the next year’s goals.
Key components of PMS

Managing employee performance is of paramount

importance for organizations striving to achieve their goals
and remain competitive. Performance management systems
play a pivotal role in this process by providing structure and
clarity to an organization’s performance-related activities.

A Performance Management System (PMS) is a strategic

approach to ensuring that an organization’s employees
consistently perform their duties effectively and contribute
to the achievement of the company’s goals.
It encompasses a combination of processes, tools, and
software that facilitate the monitoring, assessment,
and improvement of employee performance.
A well-implemented performance management
system in HRM aims to align individual and team
performance with the overall organizational strategy,
fostering a culture of continuous improvement.
Performance Planning
Performance planning is the foundation of a performance
management system. It involves setting clear, measurable goals
and expectations for employees. Key aspects of performance
planning include:
Goal Setting – Defining specific, achievable, and time-bound
objectives that align with the organization’s overall strategy.
Competency Frameworks – Identifying the skills, knowledge,
and behaviors required for success in a particular role.
Performance Standards – Establishing the criteria against
which employee performance will be evaluated.
Performance Appraisal
Performance appraisal is the process of assessing
employee performance and providing feedback. Key
elements of performance appraisal include:
Regular Feedback – Conducting ongoing conversations
between employees and managers to discuss progress,
achievements, and areas for improvement.
Formal Reviews – Periodic formal evaluations that
provide a comprehensive assessment of an employee’s
performance.
360-Degree Feedback – Gathering input from peers,
subordinates, and other stakeholders to offer a more
holistic view of an employee’s performance.
Performance Improvement Plans (PIPs)
PIPs are structured programs designed to help employees
who are struggling to meet performance standards. Key
components of PIPs include:
Identification of Issues – Clearly pinpointing the areas in
which an employee is falling short of expectations.
Developmental Goals – Setting specific improvement
goals and a timeline for achieving them.
Support and Resources – Providing the necessary
resources, training, and guidance to help the employee
meet the established goals.
Development and Training
Employee development and training are integral to
enhancing skills and knowledge. Key elements of
development and training within a performance
management system include:
Individual Development Plans – Creating personalized
plans for each employee to address their professional
growth and career aspirations.
Training Opportunities – Identifying training programs,
courses, and workshops that can improve employee
performance.
Continuous Learning – Encouraging a culture of ongoing
learning and skill development.
Recognition and Rewards
Recognizing and rewarding outstanding performance
is essential for motivation and engagement. Key
aspects of recognition and rewards include:
Acknowledgment – Acknowledging and appreciating
the efforts and achievements of employees.
Monetary Rewards – Providing bonuses, salary
increases, or other financial incentives for exceptional
performance.
Non-Monetary Rewards – Offering non-financial
rewards such as certificates, public recognition, or
additional time off.
Performance Metrics and Key Performance
Indicators (KPIs)
Data-driven decision-making is crucial in performance
management. Key components of performance metrics
and KPIs include:
Data Collection – Gathering relevant data on employee
performance and organizational goals.
Benchmarking – Comparing employee performance
against industry standards or internal benchmarks.
Regular Monitoring – Continuously tracking
performance metrics to identify trends and areas for
improvement.
Variables affecting Performance
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