Purpose of the Performance Management

The organization uses the performance manage to ensure the same direction at all levels of the
organization. The top management sets the business strategy and defines the strategic initiatives.
The top management defines the desired steps to be taken during one year.

The performance management is not focused on measuring the standard performance

resulting from the job description (other processes should be used for keeping the consistent
and reliable output of any job). The performance management is focused on performing the
strategic tasks of the organization. It is focused on the development of the key talents, top
performers and successors. The process identifies the best potentials in the organization, and it
differentiates them from the rest of the population.

HR Role in the Performance Management

The performance management system has to be well connected with other HR processes like
the Compensation and Benefits, Talent Management and Training and Development. HR cannot
run the performance appraisals without using the outcomes from discussions. The performance
management process is expensive. Each manager has to prepare for the appraisal, and the
discussion has to last at least one hour per employee. It is a massive loss of productivity if the
results are not used.

The performance management system is a ongoing process. It consists from several sub-
processes during the year:

 Goal Setting Process

 Personal Development Plan
 Interim Performance Appraisal
 Performance Appraisal
 Succession Planning and Talent Management

The performance management has to be consistent with the business strategy, and most
processes have to be managed top-down. Employees do like to receive the positive feedback, but
they do not like the ranking. Many organizations use the normal distribution for the performance
rating of employees. Managers have to be trained in providing the honest feedback about the
performance of the employee. Managers have to be trained in the consequences management.

The role of HR in the PM is about making the process transparent, clear and consistent across
the organization. The results of employees have to be comparable as the outputs can be used in
other HR processes. The top management will not take HR proposals relevant if they do not trust
the fairness and transparency of the performance appraisal process.

HR has to make the process as easy as possible. It has to focus on collecting the most valuable
information. HR has to lead the development of the application for the performance
management system as the data collection is run automatically.
Performance Management Content
 General Performance Management System
o What is Performance in Human Resources
o Purpose of Performance Management
o Performance Management Benefits
o Performance Management Risks
o Forced Distribution in Performance Management
o Performance Management and Maximizing Employee Engagement
o Performance Management and Motivation of Employees
o Performance Management and Business Strategy
o Performance Management and Employee Segmentation
 Goal Setting and Monitoring Process
o What is a Goal?
o Why are Goals important?
o Challenging or Weak Goals
o SMART Goals
o Goal Setting Skills and Training

Any effective performance management system includes the following components:

1. Performance Planning: Performance planning is the first crucial component of any

performance management process which forms the basis of performance appraisals.
Performance planning is jointly done by the appraisee and also the reviewee in the
beginning of a performance session. During this period, the employees decide upon the
targets and the key performance areas which can be performed over a year within the
performance budget., which is finalized after a mutual agreement between the reporting
officer and the employee.
2. Performance Appraisal and Reviewing: The appraisals are normally performed twice
in a year in an organization in the form of mid reviews and annual reviews which is held
in the end of the financial year. In this process, the appraisee first offers the self filled up
ratings in the self appraisal form and also describes his/her achievements over a period of
time in quantifiable terms. After the self appraisal, the final ratings are provided by the
appraiser for the quantifiable and measurable achievements of the employee being
appraised. The entire process of review seeks an active participation of both the employee
and the appraiser for analyzing the causes of loopholes in the performance and how it can
be overcome. This has been discussed in the performance feedback section.
3. Feedback on the Performance followed by personal counseling and performance
facilitation: Feedback and counseling is given a lot of importance in the performance
management process. This is the stage in which the employee acquires awareness from
the appraiser about the areas of improvements and also information on whether the
employee is contributing the expected levels of performance or not. The employee
receives an open and a very transparent feedback and along with this the training and
development needs of the employee is also identified. The appraiser adopts all the
possible steps to ensure that the employee meets the expected outcomes for an
organization through effective personal counseling and guidance, mentoring and
 representing the employee in training programmes which develop the competencies and
improve the overall productivity.
4. Rewarding good performance: This is a very vital component as it will determine the
work motivation of an employee. During this stage, an employee is publicly recognized
for good performance and is rewarded. This stage is very sensitive for an employee as
this may have a direct influence on the self esteem and achievement orientation. Any
contributions duly recognized by an organization helps an employee in coping up with
the failures successfully and satisfies the need for affection.
5. Performance Improvement Plans: In this stage, fresh set of goals are established for an
employee and new deadline is provided for accomplishing those objectives. The
employee is clearly communicated about the areas in which the employee is expected to
improve and a stipulated deadline is also assigned within which the employee must show
this improvement. This plan is jointly developed by the appraisee and the appraiser and is
mutually approved.
6. Potential Appraisal: Potential appraisal forms a basis for both lateral and vertical
movement of employees. By implementing competency mapping and various assessment
techniques, potential appraisal is performed. Potential appraisal provides crucial inputs
for succession planning and job rotation.

Performance Management
Management Systems’ performance management tools help you build a sustainably successful
organization by increasing the effectiveness of plan implementation and by
promoting accountability throughout your company.

We define “performance management systems” as the “processes or systems that you use to
motivate people on your team to achieve your goals.” While some approaches focus on only one
component of these systems – e.g., individual performance evaluation forms, creating corporate
scoreboards, etc. – our approach focuses on helping you develop a fully functional integrated
system that links what you want to achieve as a company to what teams and individuals need to
do to support these goals.

Our work with you on performance management system design and implementation can take
many forms, depending on your organization’s needs. This can include:

 Providing training to you and your team on how to design and implement effective
Performance Management Systems, using Management Systems’ proven approach.
o Assessing the effectiveness of each component of your company’s or a specific
department’s current performance management system. This involves evaluating
the effectiveness of:
 Your company’s plan and “planning process” including:
 The content of your plan – specifically, the extent to which your
plan clearly defines your company’s Key Result Areas,
Objectives, and Goals;
 The process you use to communicate and reinforce your company
goals throughout your organization.
  The measurement systems you use to assess progress against your plan.
 Feedback/Progress Review systems – how and when you and your team
review progress against your goals.
 Evaluation System – the process you and your team use to evaluate
overall performance at the end of your “planning period” (typically the
end of each year).
 Reward Systems – how and what you reward people for.
 The “linkages” between all components of your company’s performance
management system – that is, the extent to which you actually have a
“system” versus just individual components.
 Assessing the effectiveness of your company’s individual performance management
system. This involves evaluating the effectiveness of:
o Job/Role Descriptions that should be used both as hiring tools and to help
position-holders understand basic expectations of performance.
o Individual performance criteria/Goals – what you use as the basis for
performance evaluation and how these Goals/performance criteria link to what
you want to achieve as a company or department.
o The measurement systems used to evaluate individual performance.
o Feedback/Review processes – how and when individual managers provide
feedback to each direct report on his or her performance.
o Performance Evaluation System – the process used to evaluate individual
performance on an annual basis.
o Reward System – how and what people are rewarded for on an individual basis.
 Partnering with you in the design/re-design of your company’s performance management
system and its implementation. This can include designing a system to promote the
achievement of specific results, enhancing the effectiveness of one or more components
of an existing system, creating tools to support effective system implementation, and
working with you to design and implement programs to help managers/leaders develop
the skills and capabilities needed to fulfill their roles as implementers of the system.
 Working with you to develop and use “Key Result Area-Based Role Descriptions” that
serve as the foundation of effective individual performance management. Hundreds
of companies have successfully used our Key Results Area-Based Role Description
methodology to enhance individual performance.
 Helping your company develop and implement a SMART Goal-based individual
performance evaluation process which:
o Focuses individuals on effectively performing their roles and on achieving results;
o Uses specific, measurable, time-dated Goals as the standards against which
performance is evaluated;
o Clearly links individual goals with company and/or department goals (that is, by
individuals working to achieve their goals, they are contributing to the
achievement of company goals).
 Helping you develop “Performance Scoreboards” for the company as a whole,
divisions, departments, or individuals that provide you with quick summaries of
performance against your most critical Goals. Customized Performance Scoreboards
provide managers/leaders with the information they need to identify “what’s working”
and “what’s not working” with respect to achieving company Goals. Analysis of
Scoreboards helps managers/leaders proactively adjust plans to promote the greatest
success.