Performance Management -

Meaning, System and Process

Definition of Performance Management

The role of HR in the present scenario has undergone a sea change and its focus is on evolving such
functional strategies which enable successful implementation of the major corporate strategies. In a
way, HR and corporate strategies function in alignment. Today, HR works towards facilitating and
improving the performance of the employees by building a conducive work environment and
providing maximum opportunities to the employees for participating in organizational planning and
decision making process.

Today, all the major activities of HR are driven towards development of high performance leaders
and fostering employee motivation. So, it can be interpreted that the role of HR has evolved from
merely an appraiser to a facilitator and an enabler.

Performance management is the current buzzword and is the need in the current times of cut throat
competition and the organizational battle for leadership. Performance management is a much
broader and a complicated function of HR, as it encompasses activities such as joint goal setting,
continuous progress review and frequent communication, feedback and coaching for improved
performance, implementation of employee development programmes and rewarding achievements.

The process of performance management starts with the joining of a new incumbent in a system and
ends when an employee quits the organization.

Performance management can be regarded as a systematic process by which the overall

performance of an organization can be improved by improving the performance of individuals within
a team framework. It is a means for promoting superior performance by communicating
expectations, defining roles within a required competence framework and establishing achievable
benchmarks.

According to Armstrong and Baron (1998), Performance Management is both a strategic and an
integrated approach to delivering successful results in organizations by improving the performance
and developing the capabilities of teams and individuals.
The term performance management gained its popularity in early 1980’s when total quality
management programs received utmost importance for achievement of superior standards and
quality performance. Tools such as job design, leadership development, training and reward system
received an equal impetus along with the traditional performance appraisal process in the new
comprehensive and a much wider framework. Performance management is an ongoing
communication process which is carried between the supervisors and the employees through out
the year. The process is very much cyclical and continuous in nature. A performance management
system includes the following actions.

Developing clear job descriptions and employee performance plans which includes the key result
areas (KRA') and performance indicators.

Selection of right set of people by implementing an appropriate selection process.

Negotiating requirements and performance standards for measuring the outcome and overall
productivity against the predefined benchmarks.

Providing continuous coaching and feedback during the period of delivery of performance.

Identifying the training and development needs by measuring the outcomes achieved against the set
standards and implementing effective development programs for improvement.

Holding quarterly performance development discussions and evaluating employee performance on

the basis of performance plans.

Designing effective compensation and reward systems for recognizing those employees who excel in
their jobs by achieving the set standards in accordance with the performance plans or rather exceed
the performance benchmarks.

Providing promotional/career development support and guidance to the employees.

Performing exit interviews for understanding the cause of employee discontentment and thereafter
exit from an organization.

A performance management process sets the platform for rewarding excellence by aligning
individual employee accomplishments with the organization’s mission and objectives and making the
employee and the organization understand the importance of a specific job in realizing outcomes. By
establishing clear performance expectations which includes results, actions and behaviors, it helps
the employees in understanding what exactly is expected out of their jobs and setting of standards
help in eliminating those jobs which are of no use any longer. Through regular feedback and
coaching, it provides an advantage of diagnosing the problems at an early stage and taking
corrective actions.
To conclude, performance management can be regarded as a proactive system of managing
employee performance for driving the individuals and the organizations towards desired
performance and results. It’s about striking a harmonious alignment between individual and
organizational objectives for accomplishment of excellence in performance.

Objectives of Performance
Management
According to Lockett (1992), performance management aims at developing individuals with the
required commitment and competencies for working towards the shared meaningful objectives
within an organizational framework.

Performance management frameworks are designed with the objective of improving both individual
and organizational performance by identifying performance requirements, providing regular
feedback and assisting the employees in their career development.

Performance management aims at building a high performance culture for both the individuals and
the teams so that they jointly take the responsibility of improving the business processes on a
continuous basis and at the same time raise the competence bar by upgrading their own skills within
a leadership framework. Its focus is on enabling goal clarity for making people do the right things in
the right time. It may be said that the main objective of a performance management system is to
achieve the capacity of the employees to the full potential in favor of both the employee and the
organization, by defining the expectations in terms of roles, responsibilities and accountabilities,
required competencies and the expected behaviors.

The main goal of performance management is to ensure that the organization as a system and its
subsystems work together in an integrated fashion for accomplishing optimum results or outcomes.

The major objectives of performance management are discussed below:

To enable the employees towards achievement of superior standards of work performance.

To help the employees in identifying the knowledge and skills required for performing the job
efficiently as this would drive their focus towards performing the right task in the right way.

Boosting the performance of the employees by encouraging employee empowerment, motivation

and implementation of an effective reward mechanism.

Promoting a two way system of communication between the supervisors and the employees for
clarifying expectations about the roles and accountabilities, communicating the functional and
organizational goals, providing a regular and a transparent feedback for improving employee
performance and continuous coaching.

Identifying the barriers to effective performance and resolving those barriers through constant
monitoring, coaching and development interventions.

Creating a basis for several administrative decisions strategic planning, succession planning,
promotions and performance based payment.

Promoting personal growth and advancement in the career of the employees by helping them in
acquiring the desired knowledge and skills.

Some of the key concerns of a performance management system in an organization are:

Concerned with the output (the results achieved), outcomes, processes required for reaching the
results and also the inputs (knowledge, skills and attitudes).

Concerned with measurement of results and review of progress in the achievement of set targets.

Concerned with defining business plans in advance for shaping a successful future.

Striving for continuous improvement and continuous development by creating a learning culture and
an open system.

Concerned with establishing a culture of trust and mutual understanding that fosters free flow of
communication at all levels in matters such as clarification of expectations and sharing of
information on the core values of an organization which binds the team together.

Concerned with the provision of procedural fairness and transparency in the process of decision
making.

The performance management approach has become an indispensable tool in the hands of the
corporates as it ensures that the people uphold the corporate values and tread in the path of
accomplishment of the ultimate corporate vision and mission. It is a forward looking process as it
involves both the supervisor and also the employee in a process of joint planning and goal setting in
the beginning of the year.
Need for an Effective Performance
Management System
In the era of cut throat competition and globalization, organizations have realized the importance of
strategic HR practices for gaining a competitive edge over the competitors. A well designed
performance management system can play a crucial role in streamlining the activities of the
employees in an organization for realizing the ultimate corporate mission and vision. Performance
management is a useful tool for aligning all the major organizational functions and sub functions so
that the focus is directed towards attainment of the organizational goal.

Performance management is a much broader system as it is linked with the processes of planning,
implementing, reviewing and evaluating, for augmenting growth and productivity at both the individual
and organizational level.

By clearly defining both individual and team based responsibilities in the form of KRA’s as
well as by creating an understanding of shared mutual accountabilities, a good performance
management system enables, empowers and facilitates the development of staff members.

Managing the performance of the employees is one of the toughest challenges which the
organizations are facing today as this completely depends upon the employee’s commitment,
competence and clarity of performance. If managed efficiently through a well planned reward practice
and feedback mechanism, a performance management system can serve as an important tool for
employee motivation and development. The need for the introduction of a robust system of
performance management was felt during the period when the traditional performance appraisal
mechanism started failing and its limitations were surfacing up. The performance appraisal system of
the earlier period was missing objectivity as the diameters or the parameters for measuring
performance were not clearly specified and the focus was on traits instead on behaviors or
measurable targets. As a result, the employee’s morale and motivation to work was adversely
affected due to an absence of a transparent feedback mechanism and lack of employee involvement
in the entire process of appraisal. A performance management system overcomes the drawbacks of
the traditional performance appraisal system by maintaining a futuristic approach instead of assessing
the past contributions of the employees for evaluating the performance of the employees.

Performance management is a strategic tool and is holistic in nature as it pervades in every

activity of the organization which is concerned with the management of individual, team and the
overall organizational performance. The process is indispensable and very important for an
organization as it is concerned with establishing a culture in which the individuals and teams can
excel by continuously improving in terms of skill sets and the business processes.

Performance management facilitates improvement of quality of relationship amongst the members of

the organization by encouraging sharing of expectations and building a climate of openness and
mutuality. The significance of performance management has grown in recent times because most of
the organizations are giving a lot of importance to employee development and talent management.
The contemporary organizations are working towards grooming the competencies of the employees
for maintaining a leadership in the competitive market and performing outstandingly. Arvind Mills of
Lalbhai Group, realized the importance of strategic HRM practices and the implementation of a pro
active performance management system in their organization after facing serious threats from the
business competitors. The company created a Manpower Planning and Resource Group which
took the charge of preparing job descriptions and structuring the jobs for the employees and was
responsible for implementing the recruitment and selection procedures. An innovative online
recruitment system was introduced which was known as Selection Information System, for fixing
interviews, generating call letters, etc. This system was linked with the Compensation Information
System and Training Information System. The training requirements of the employees were taken
care by the Management and Organizational Development Group. The company also introduced
MBO system, for setting smart goals for the employees which may motivate them for a superior
performance.
Performance management has attracted the attention of many organizations and in the near
future its importance will still grow as it will become more integrated with the processes like
talent management, career management, pay based on performance, development and talent
management.

Performance Appraisal and

Performance Management
The contemporary organizations are undergoing a transformation for coping against the changing
needs of the environment and excelling in the business by building up their adaptive capabilities for
managing change proactively. The traditional performance appraisal system did not suffice the needs
of the changing scenario as it was mainly used as a tool for employee evaluation in which the
managers were impelled to make subjective judgments about the performance and behavior of the
employees against the predetermined job standards.

The main objective of the performance appraisal system was to exercise control over the activities of
the employees through disciplinary actions and management of rewards and promotions. The
supervisors were expected to rate their employees on certain traits ranging between a scale of
unsatisfactory to outstanding performance and these ratings were susceptible to various errors like
central tendency, bias, halo effect, etc.

Performance appraisals were mostly carried out annually for measuring the degree of
accomplishment of an individual and were implemented on a top down basis in which the supervisors
had a major role to play in judging the performance of an employee without soliciting active
involvement of the employee. Performance appraisals were mostly discredited because it was
backward looking concentrating largely on the employee’s inabilities and flaws over a period of a year
instead of looking forward by identifying the development needs of the employees and improving
them. Traditionally, the performance appraisals were organized in a bureaucratic manner and
suffered from unnecessary delays in decisions and corruption. Performance appraisals were mostly
narrowly focused and functioned in isolation without bearing any linkage with the overall
organizational vision or goals. The side effects of the performance appraisal system was it generated
skepticism amongst the managers and the employees on any new initiative of the HR.

In the present scenario, the organizations have shifted their focus from performance appraisals to
performance management as a result of internationalization of human resources and globalization of
business. The functions of HRM have become far more complicated as today the major focus of
strategic HRM practices is on the management of talent by implementing such development
programmes which enhance the competencies of the employees. The performance management
approach focuses more on observed behaviors and concrete results based on the previously
established smart objectives. By adopting techniques like Management by Objectives (MBO), smart
objectives are established in terms of either facts and figures and in the entire process the superior
plays the role of a coach or a facilitator. The objectives are mutually decided at the beginning of the
performance season and serve as a standard of performance for evaluation. In this method, the
employees can offer a feedback on their contributions by filling up a self appraisal form. Performance
management is a much broader term in comparison with performance appraisal as it deals with a
gamut of activities which performance appraisals never deal with. This system is a strategic and an
integrated approach which aims at building successful organizations by developing high performance
teams and individuals and improving the performance of people. This process starts when a job is
defined. Performance management emphasizes on front end planning instead of looking backward
unlike performance appraisals and the focus is on ongoing dialogue instead of appraisal documents
and ratings. Thus, performance management may be regarded as a continuous process.

A table depicted below shows a comparison between performance appraisal and performance
management:

Performance Appraisal Performance Management

Focus is on top down assessment Stresses on mutual objective setting through a process of
joint dialogue

Performed annually Continuous reviews are performed

Usage of ratings is very common Usage of ratings is less common

Focus is on traits Focus is on quantifiable objectives, values and behaviors

Monolithic system Flexible system

Are very much linked with pay Is not directly linked with pay

Performance management is concerned with assumptions, mutual obligations, expectations and

promises (Guest, D E et al, 1996). The views of some of the leading organizations of performance
management approach are given below:

According to Eli Lilly and Co., performance management focuses on aligning the individual goals with
the goals of the organization and ensures that the employees work on the right tasks and do the right
things.

According to Standard Chartered Bank, performance management is concerned with those processes
and behaviors by way of which the managers manage the performance of the employees for
developing high achieving organizations.
Effective Performance
Management Process: Five
approaches defined

Most managers today dislike the performance appraisal process and view it as an annual, traditional, time-
consuming, burdensome, counterproductive, and a painful practice where they only spend a small amount of time
at the end of the year collecting employee information and filling out appraisal forms. Reasons include the
inconsistency in using performance appraisals within the organization, the ambiguity in distinguishing among the
different levels of performance, and the poor linkage between the appraisal system and the need to develop
better skills and competencies for employees. Yet what these managers don’t know is that performance appraisal
when properly conducted is considered invaluable to the organization since it builds up employee objectives,
links them to the corporate and strategic goals, identifies employee strengths and weaknesses, and legally
explains to an employee how HR decisions were taken. For more information on how to strengthen the
performance appraisal process and strategically link it with employee training and development, check out my
article Linking Performance Appraisal to Training And Development: Case Study Example.

In this 2145-word post, a model of an effective performance management process based on the one
proposed by Elaine D. Pulakos is presented. Next, the purposes of performance management in
achieving organizational goals are clearly delineated. Finally, a variety of approaches to performance
management with their associated techniques and their corresponding strengths and weaknesses are
examined in detail. These approaches include the comparative approach, the attribute approach, the
behavioral approach, the results approach, and the quality approach.

The Performance Management Process

Performance management ensures employee goals, objectives, and outcomes are in harmony with
organizational goals. The performance management system consists of three main parts: defining
performance that is appropriate to the organization through the job analysis process, measuring
performance by acquiring information on how well an employee is fulfilling his/her job via the appraisal
system, and finally reporting performance feedback and effectiveness to employees.

It should be noted that the performance management process is not a onetime event that occurs once
a year but it is a fully-fledged model process as shown in the figure below. The model which is based
on the one proposed by Elaine D. Pulakos in his book “Performance Management: A New Approach
For Driving Business Results” consists of six steps for an effective performance management
process.

Step 1. This step involves the identification of the organization’s goals and objectives and the key
performance outcomes that provide value for customers, employees, and the organization in general.
The goals of all departments, divisions, and employees of the organization need to be aligned with its
strategic goals.

Step 2. This step involves identifying SMART objectives, goals, behaviors, and activities for a given
employee in order to determine how he can achieve the company goals spotted in the first step.

Step 3. This step involves exchanging regular feedback between employees and their managers to
point out their achievements and their weaknesses and issues. Proper training and senior
management support is provisioned here to ensure performance feedback is genuinely communicated
between the employee and the manager, an effective performance management system is
entrenched in the organization’s culture, and appraisals are completed on time.

Step 4. This step involves the performance assessment of the employee’s results and behaviors by
their managers against the agreed performance targets and goals. For this step to be effective, the
evaluation process needs to:
• Be a two-way discussion of weaknesses and opportunities for improvement between the employee
and the manager
• Has to happen on a frequent basis (rather than annually)

Step 5. This step includes the identification of improvement needs (training, behavioral adjustments,
new priorities based on changes on organizational goals or performance indicators).

Step 6. This step includes the results of achieving or failing to achieve the required performance
outcomes such as promotions, salary increases, bonuses, opportunities, layoffs, etc.

It is very crucial for the performance management process to be effective since it constitutes the
source of any needed change to the organization. The process should satisfy a strategic purpose by
linking employee objectives to organizational goals through defining and measuring employee
characteristics that would help in implementing the organization’s strategies. It should also help in
making administrative decisions like salary raises, terminations, layoffs, etc. Finally, it should aid in
improving employees’ performance by determining the reasons behind any weaknesses they have
and by conducting a proper talent management system to identify their training and development
needs.

Performance Management Approaches

There exist several approaches that determine how to do performance evaluation, each of which has
its own strengths and weaknesses. In order to achieve its strategic business goals, an organization
can choose to adopt a particular approach or blend many of these approaches for the sake of
implementing an effective performance management system. This system needs to evaluate both the
performance results as well as the behaviors that the employee has demonstrated to achieve the
organization’s business goals (step 4 above). The approaches that are discussed in this post include
the comparative approach, the behavioral approach, the results approach, the attribute approach, and
the quality approach.

The Comparative Approach

This approach involves comparing and ranking an individual’s performance with respect to others in a
given group. A straightforward technique would be to simply rank employees from the highest
performer to the lowest performer. Another technique, called Forced Distribution system, involves
ranking employees in category groups like for example a group of top performers constituting 10% of
the employees, another group of average performers constituting 40%, another group of good
performers constituting 30%, and finally a group of low performers constituting 10%.

A major advantage of the forced distribution system is that it aligns employee performance and
compensation with the organization’s performance by ensuring top performers are rewarded, given
proper training, and developed for higher managerial positions while poor performers are given
chances for improvement or dismissed if their performance is not getting better. Their dismissal will
consequently allow the recruitment of a new talent into the organization.

A major disadvantage of the forced distribution system is that it yields inappropriate results when for
example all members of a workgroup are top performers, yet only 10% need to be in this category.
The system ranks employees based on certain categorization rules rather than on their performance
and employees with higher rankings would then receive better incentive pay than those with lower
rankings. In addition it might not be easy to categorize employees especially when the ranking criteria
is not clearly defined within the organization’s HR system. Finally, the forced distribution system might
cause negative repercussions on an employee’s self-confidence and might be considered illegal and
unethical if not communicated clearly across the organization.

Another technique worth mentioning here is the Paired Comparison whereby the rater compares a
performer with every other performer in a group and assigns a score of 1 for the higher performer.
The final performance score would then be the summation of the winning points from all comparisons.
Yet this technique becomes tedious for large groups as the rater would need to make 36 comparisons
for a group of 9 employees or 45 comparisons for a group of 10 employees.

The Attribute Approach

This performance management approach evaluates performers against a predefined set of traits or
characteristics such as teamwork, problem solving, judgment, creativity, etc. One of the most common
techniques for this approach is the Graphic Rating Scale which defines a numbered rating scale (from
1 to 5 points for example). The evaluator would then select the rating that he believes the performer
has demonstrated for each characteristic or performance dimension.

Another technique which improves on the Graphic Rating Scale is the Mixed-standard Scale. The idea
is to define a set of performance levels (for example High, Medium, Low) and then prepare a
statement that describes the qualities or behavior required to achieve each performance level for a
given characteristic or performance dimension. The evaluator would then go through each statement
and determine whether the performer is above (+), equal (0), or below (-) the statement. A predefined
legend scoring key would then be utilized to calculate the final score for each performance dimension.

The Behavioral Approach

This approach includes several techniques that define and shape the right behaviors of employees for
an effective performance. The first technique, Behaviorally Anchored Rating Scale (BARS), defines
behaviors, which serve as guides for the rater, associated with different levels of performance for a
given performance dimension or trait. For each of these performance dimensions, the evaluator would
rate the performer by associating him with the behavioral level that fits his performance. A major
disadvantage of this technique is that managers tend to remember only behaviors that closely relate
to those defined in the performance scale which leads to biased rating.

Another technique, Behavioral Observation Scale (BOS), is a variation of BARS with two more
features. First, it includes a larger number of behaviors to provide a more specific and accurate
description of the employee behavior for an effective performance. Second, the rater would need to
rate the frequency that this behavior is seen to be exhibited by the performer. The overall score would
then be the average of all these frequency ratings. A major drawback of this technique is the big load
of information about employee behaviors that needs to be remembered and processed by managers
especially when they are responsible for rating a considerable number of employees.
Another technique is the use of Competency Models which provide descriptions of competencies that
are common for a particular occupation or organization. By definition, competencies represent the
skills and abilities required to perform a certain job. Teams across the entire organization should work
together to come up with a list of competencies for each job and a weighting given for each
competency for performance evaluation. These models also need to be periodically reviewed to make
sure they stay relevant to the organization’s goals.

The Results Approach

This approach focuses on removing the subjectivity from the measurement process by evaluating
objectives based on employee performance results. It’s more like a black and white answer (you
either meet or you do not meet the given objective). Strategic goals should be established by the top
management team (TMT) which then feed to more specific goals down the organizational hierarchy.
Managers and their subordinates should participate together to come up with a set of SMART goals
that would link back to the strategic goals. Two techniques use the objective system: the Balanced
Scorecard and the Productivity Measurement and Evaluation System (ProMES).
The balanced scorecard consists of four perspectives for performance management including
financial, customer, internal or operations, and learning and growth. The financial perspective centers
around increasing the shareholder value, the customer perspective focuses on creating value for
customers in terms of service and quality improvement, the internal and operations perspective
defines the business processes that would ensure customer satisfaction, and the learning and growth
perspective achieves the organization’s vision and focuses on innovation and continuous
improvement. Employees across the organization need to understand and be aware of these
perspectives which define the strategic objectives and how they are translated down and mapped into
business unit and employee objectives.

Though it is time consuming to develop, the ProMES system is effective in motivating employees
towards increasing productivity and in measuring and feeding back productivity information. It
primarily consists of four steps; the first step involves identifying the organizational objectives or
products to be achieved, the second step provides measurements of how well these objectives or
products are made, the third step evaluates how effective these measurements are in terms of their
level of evaluation, and the fourth and final step feeds back to employees their level of performance
on each of these measurements. An overall productivity score is finally computed as a summation of
the performance scores on all the measurements.

The Quality Approach

The aim of this approach is to improve customer satisfaction by reducing production defects and by
achieving continuous service improvement. The quality philosophy advocates that employees should
not be held accountable for results that are not completely under their control (which are polluted or
affected by environmental or system conditions); otherwise this would result in employee demotivation
and would inflict the continuous improvement process. Thus the quality ideology considers both
person and system factors in its performance measurement system. Besides, quality proponents
articulate that regular feedback is needed from managers, customers (internal and external), and
peers on the personal characteristics of the employee as well as on the quality of his work activities in
order to resolve performance issues. Hence the quality approach is more like a combination of the
results and attribute approaches for performance evaluation.

The quality approach also recommends the use of Kaizen process in order to continuously improve
business processes and outcomes. Kaizen, the Japanese word of improvement, is one of the
principles applied in Lean manufacturing and Total Quality Management (TQM) and it focuses on
applying Deming’s iterative Plan-Do-Check-Act (PDCA) method to achieve continuous improvement.

Finally there are plentiful of statistical process control techniques that can be used to identify and
resolve problems. These include cause-and-effect (Fishbone or Ishikawa) diagrams, Pareto charts,
control charts, process-flow analysis, histograms, and scattergrams.
Performance Management
Planning
Performance Management Phase I: Planning

Setting Performance Objectives

Employees and managers meet to clarify expected outcomes for the year and set objectives that link
the employee's job to department and campus objectives. Objectives define "what" employees are
expected to accomplish. Managers and employees should aim to define S.M.A.R.T. objectives.

 Specific
 Measurable
 Attainable
 Relevant
 Timely

Examples of S.M.A.R.T. objectives

Implement update of on-line graduate application program by October 1, 2006

Reduce telephone expenses by 15% within the first half of the fiscal year.

Identify three new funding sources by the end of FY 2006, and ensure that all grant requests are
written, reviewed, and submitted to the granting agency/foundation by the respective deadlines.

Identifying Behaviors for Success

In addition to objectives (which focus on end results) other aspects of performance should be
considered. Understanding the approaches and behaviors that employees can use to perform the job
is often as important to success as end results.

Many approaches, however, are not easy to measure. For this reason, managers and employees
should discuss these aspects of performance, sometimes called "performance dimensions," in
specific, observable, job-related, behavioral terms.

For example, if success in meeting an objective such as "updating an on-line graduate application
program" requires strong interpersonal skills, then the employee should know that s/he will have to
build solid relationships, collaborate, and incorporate ideas and suggestions made by colleagues.
Performance will be assessed on how well behaviors associated with the dimension, interpersonal
skills, are demonstrated in reaching the objective.
In addition to strong interpersonal skills, other examples of commonly used performance dimensions
include:

 Customer Service Orientation

 Effective Communication
 Valuing Diversity
 Analysis and Problem-Solving
 Decision-Making and Results Orientation
 Fostering a Safe and Secure Environment
 Creating Development Goals

Managers and employees should work together to create development plans as part of the annual
performance management process. The plan can focus on skills aimed at job mastery or combine job
mastery with professional development skills. Job mastery skills are those that are necessary to
successfully perform one's job. Professional development skills are the skills and knowledge that go
beyond the scope of the employee's job description, although they may indirectly improve job
performance. Development plans commonly include classes, but can also include elements such as
cross-training and special project participation.

 Resources
 Guide to Managing Human Resources – Employee Development and Training
 Guide to Managing Human Resources – Performance Management
 Link to Union Contracts
 Personnel Policies for Staff Members, Policy 23 – Performance Management (link is external)
 Support Performance Development

Performance Management Phase II:

Check-in
Once performance objectives are set, managers should check in regularly with
employees to discuss the status of objectives and to provide feedback based on
observations of an employee's performance. It is equally important to provide feedback
on areas of success as on those requiring improvement. Check ins also provide the
opportunity to adjust objectives as the year unfolds.

Effective Coaching
Coaching is a method of providing feedback. It helps shape performance and increases
the likelihood that the employee's results will meet expectations. A coaching session
generally focuses on one or two aspects of performance, rather than the overall review
that takes place in a formal end-of-year review.

Key Elements of Coaching

 Coach to focus attention on any specific aspect of the employee's performance.

 Observe the employee's work and solicit feedback from others if appropriate.
 Take the time to understand why performance is successful or needs
improvement.
 Advise the employee ahead of time on issues to be discussed.
 Involve the employee in identifying successes and solutions
 Discuss alternative solutions.
 Agree on action(s) to be taken.
 Recognize successes and improvements.
 Document key elements of the coaching session.
 Schedule follow-up meeting(s) to measure results.

Some Questions to Consider When Coaching

 Do both the employee and manager have a common understanding of what

"success" looks like?
 Do both the employee and manager recognize and agree on when performance
needs to be improved?
 What elements contribute to the employee's success (adequate time or
resources, support from management or other employees, the employee's talent
and interest in the project)?
 In what ways can the manager and employee support continued positive results
and/or turn around difficult situations?
 Does satisfactory performance result in excessive work being assigned?
 Does unsatisfactory performance result in positive consequences such as an
undesirable task being reassigned?

Performance Management Phase III:

Review
The performance review summarizes the employee's contributions over the entire
appraisal period (usually one year). It may occur as often as is necessary to
acknowledge the employee for accomplishments and to plan together for improved
performance.
Preparing for the Review
Much of the hard work of reviewing performance should be carried out before the formal
meeting. Prior to the meeting managers can encourage employee involvement by asking
the employee to:

 Prepare a self-evaluation and/or

 List accomplishments and identify areas for improvement and/or
 Provide names of key clients who can give feedback on the employee's
performance
 Propose work-related and professional objectives for the next review period

Managers should review the employee's:

 Objectives for the review period - level of accomplishment and progress

 Any changes that have occurred in objectives during the year
 Professional development over the review period
 Input provided by key clients and colleagues
 Previous performance reviews

View the Performance Rating Scale and Behavioral Anchors Matrix (PDF). Sample
forms for non-represented and represented staff are available at Performance
Management: Forms.

Conducting the Review Discussion

The review discussion is simply a continuation of the momentum established throughout
the year. The key is to set a tone that is open and productive, and to ensure that by the
end of the discussion both manager and employee have reached an understanding on
any issues that require further discussion, timelines for completion, objectives that need
to be met for the next year, and review points. For suggestions, including questions to
stimulate discussion, please see the page titled "Tools and Resources for Performance
Management."
1
Staff represented by Teamsters 2010 must be reviewed with an approved form and
scale. See "Assessment Forms" on the Resources page. Staff represented by the CNA
also have an approved form available through UHS.
360 Degree FeedBack

In human resources or industrial psychology, 360-degree feedback, also known as multi-

rater feedback, multi source feedback, or multi source assessment, is a process utilized
by organizations to solicit information from a variety of workplace sources on an
employee's work-related behavior and/or performance. Most often, information solicited
in a 360-degree feedback process will include feedback from an employee's
subordinates, peers (colleagues), and supervisor(s), as well as a self-evaluation by the
employee him or herself. Such feedback can also include, when relevant, feedback from
external sources who interact with the employee, such as customers and suppliers or
other interested stakeholders. 360-degree feedback is so named because it solicits
feedback regarding an employee's behavior from a variety of points of view
(subordinate, lateral, and supervisory). It therefore may be contrasted with "downward
feedback" (traditional feedback on work behavior and performance delivered to
subordinates by supervisory or management employees only; see traditional
performance appraisal), or "upward feedback" delivered to supervisory or management
employees by subordinates only.

Organizations have most commonly utilized 360-degree feedback for developmental

purposes, providing it to employees to assist them in developing work skills and
behaviors. However, organizations are increasingly using 360-degree feedback in
performance evaluations and employment decisions (e.g., pay; promotions). When 360-
degree feedback is used for performance evaluation purposes, it is sometimes called a
"360-degree review."

There is a great deal of debate as to whether 360-degree feedback should be used

exclusively for development purposes[1] or for evaluation purposes as well.[2] This is
due primarily to feedback providers' subjectivity and motivations, inter-rater variations,
and whether feedback providers have the ability to fairly evaluate attainment of work and
organizational objectives. While these issues exist when 360-degree feedback is used
for development, they are more prominent when employers use them for performance
evaluation purposes, as they can unfairly influence employment decisions, and even
lead to legal liability
COUNSELING AND COACHING

Procedures
The University encourages open communication between employees and supervisors. It
is the role of the supervisor to communicate job performance expectations to the
employee. This communication exchange starts with the initial orientation and training of
the new employee. As the employee performs the various job functions, it is essential for
the supervisor to provide verbal feedback concerning the quality of work.

Coaching is the ongoing process whereby the supervisor directs the development of the
employee through regular performance feedback. If the employee is meeting the
supervisor’s expectations, positive feedback can be used to reinforce performance and
further motivate the employee to even higher levels of performance.

Counseling occurs when there are performance problems and may be used to assist the
employee in achieving a satisfactory level of performance prior to initiating any more
formal resolution for administrators or any Corrective Action for staff. In such cases, the
supervisor should meet with the employee to clarify performance expectations and
determine what obstacles are impeding the employee’s ability to perform to standard.
The problem could be a lack of clear instructions, a need for training, the lack of
tools/resources, or the impact of another employee’s behavior. Whatever the cause, it is
supervisor’s role is to minimize the barriers to acceptable performance and provide clear
expectations for the employee. The position description can be a valuable tool for this
purpose.

The following may be helpful in preparing for a counseling meeting:

 Before the meeting – Review relevant documentation.

 During the meeting – State the problem in terms of expected performance vs.
actual performance; allow the employee to respond; and jointly develop a
solution.
 After the meeting – Document the meeting, and, most importantly, follow-up.
The counseling meeting should be viewed as developmental rather than punitive. For
staff, the supervisor should stress that counseling is not part of the corrective action
procedure, but that corrective action may result if the employee does not change the job
behavior. Written documentation pertaining to the counseling meeting is not kept in the
employee’s personnel file, but it should be kept in the departmental file or a
management working file.
Balanced scorecard

The Balanced Scorecard concept is a management and measurement system which

enables organizations to clarify their vision and strategy and translate them into action.
The goal of the balanced scorecard is to tie business performance to organizational
strategy by measuring results in four areas: financial performance, customer knowledge,
internal business processes, and learning and growth.

History of the Balanced Scorecard

In 1992, an article by Robert Kaplan and David Norton entitled "The Balanced Scorecard
- Measures that Drive Performance" in the Harvard Business Review caused a lot of
attention for their method, and led to their business bestseller, "The Balanced
Scorecard: Translating Strategy into Action", published in 1996.

The financial performance of an organization is essential for its success. Even non-profit
organizations must deal in a sensible way with funds they receive. However, a pure
financial approach for managing organizations suffers from two drawbacks:

It is historical. Whilst it tells us what has happened to the organization, it may not tell us
what is currently happening. Nor it is a good indicator of future performance.

It is too low. It is common for the current market value of an organization to exceed the
market value of its assets. Tobin's-q measures the ratio of the value of a company's
assets to its market value. The excess value is resulting from intangible assets. This kind
of value is not measured by normal financial reporting.

The 4 perspectives of the Balanced Scorecard

The Balanced Scorecard method of Kaplan and Norton is a strategic approach, and
performance management system, that enables organizations to translate a
company's vision and strategy into implementation, working from 4 perspectives:

1. Financial perspective.
2. Customer perspective.
3. Business process perspective.
4. Learning and growth perspective.

This allows the monitoring of present performance, but the method also tries to capture information
about how well the organization is positioned to perform in the future.
Benefits of the Balanced Scorecard

Kaplan and Norton cite the following benefits of the usage of the Balanced
Scorecard:

 Focusing the whole organization on the few key things needed to create
breakthrough performance.
 Helps to integrate various corporate programs. Such as: quality, re-
engineering, and customer service initiatives.
 Breaking down strategic measures towards lower levels, so that unit
managers, operators, and employees can see what's required at their level to
achieve excellent overall performance.

1. The Financial Perspective

Kaplan and Norton do not disregard the traditional need for financial data. Timely and accurate
funding data will always be a priority, and managers will make sure to provide it. In fact, there is often
more than sufficient handling and processing of financial data. With the implementation of a corporate
database, it is hoped that more of the processing can be centralized and automated. But the point is
that the current emphasis on financial issues leads to an unbalanced situation with regard to other
perspectives. There is perhaps a need to include additional financial related data, such as risk
assessment and cost-benefit data, in this category.

2. The customer perspective

Recent management philosophy has shown an increasing realization of the importance of customer
focus and customer satisfaction in any company. These are called leading indicators: if customers are
not satisfied, they will eventually find other suppliers that will meet their needs. Poor performance
from this perspective is thus a leading indicator of future decline. Even though the current financial
picture may seem (still) good. In developing metrics for satisfaction, customers should be analyzed. In
terms of kinds of customers, and of the kinds of processes for which we are providing a product or
service to those customer groups.

3. The Business Process perspective

This perspective refers to internal business processes. Measurements based on this perspective will
show the managers how well their business is running, and whether its products and services
conform to customer requirements. These metrics have to be carefully designed by those that know
these processes most intimately. In addition to the strategic management processes, two kinds of
business processes may be identified:
Mission-oriented processes. Many unique problems are encountered in these processes.
Support processes. The support processes are more repetitive in nature, and hence easier to
measure and to benchmark. Generic measurement methods can be used.

4. Learning and Growth perspective

This perspective includes employee training and corporate cultural attitudes related to both individual
and corporate self-improvement. In a knowledge worker organization, people are the main resource.
In the current climate of rapid technological change, it is becoming necessary for knowledge workers
to learn continuously. Government agencies often find themselves unable to hire new technical
workers and at the same time is showing a decline in training of existing employees. Kaplan and
Norton emphasize that 'learning' is something more than 'training'; it also includes things like mentors
and tutors within the organization, as well as that ease of communication among workers that allows
them to readily get help on a problem when it is needed. It also includes technological tools such as
an Intranet.

The integration of these four perspectives into a one graphical appealing picture, has made the
Balanced Scorecard method very successful as a management methodology.