Performance Management 

Performance management refers to the broad range of trial, policy, dealings, and interventions deliberate to help workers improve their performance. Performance management usually includes the constant method of finding, measuring, and increasing the performance of individuals and groups in organizations (Hooria, Lubna and Mattiullah, 2018).It is the process of creating a work environment or setting in which people are enabled to perform to the best of their abilities (Manchester Metropolitan University, ND).It is a holistic, goal-congruent and largely participatory process of managing and supervising work in their task, team or groups. It is more into organizational goals and objectives, manager recognition and awards corresponding to manager needs and aspirations (Davinder, 2010). Performance Management deals with the challenges organization face in defining, measuring and stimulating employee performance with the ultimate goal to improve organizational performance (Deanne, Paul & Jaap, 2004).Performance management arises from the awareness that a systematic, organized approach to managing and rewarding performance better generates and sustains positive manager motivation (Davinder, 2010). It is the main vehicle by which managers communicate what is required from employees and give feedback on how well they are achieving job goals.  It brings together many of the elements that make up the practice of people management, including in particular learning and development. Performance management establishes shared understanding of what is to be achieved and provides an approach to leading and developing people that will ensure it is achieved (Manchester Metropolitan University, ND).

Despite the potential of performance management systems to positively support the organization and enhance both employee and organizational performance, the reality faced by practitioners may be very different (Aguinis, Joo, & Gottfredson, 2011). In fact, PM systems, which include sometimes very blunt Performance Appraisal (PA) practices, have been called the “Achilles’ heel” of organizational processes (Pulakos, Mueller-Hanson, O’Leary, & Meyrowitz, 2012). Perhaps because of this more skeptical view, a significant shift in performance management practices has been witnessed more recently with calls made to make performance management  more comprehensive, holistic and ultimately more ‘developmental’ in nature. In essence, this view sees performance appraisal  as an annual evaluation exercise, whereas, performance management  is an ongoing, if not continuous, activity that focuses on defining, assessing, and developing performance in a manner that aligns with strategic goals (Aguinis, 2013).


     Video 1 : Performance Management 

     Source : Gregg Learning ,2018

Aguinis, H. (2013). Performance management (3rd ed). Boston: Pearson.

Aguinis, H., Joo, H., & Gottfredson, R. K. (2011). Why we hate performance management—And why we should love it. Business Horizons, 54, 503–507. doi:10.1016/j.bushor.2011.06.001.

Davinder,S.,2010, Performance Appraisal and Management,1st ed.India,

Himalaya Publishing House.

Deanne, N.D.H., Paul,B. and  Jaap,P.,2004, ‘Performance Management: A model and research agenda’, Erasmus Universiteit Rotterdam,pp.1-20.

Hooria,S.,Lubna,K.,Mattiullah,B.,2018, 'Effect of Performance Management on Employees Well-Being via Perceived Job Control ',Macrothink Institute,2(1),pp.18-32.

Manchester Metropolitan University,ND, ‘Performance Management An introduction’,1st ed.UK, Department of Human Resources, Manchester Metropolitan University.

Pulakos, E. D., Mueller-Hanson, R. A., O’Leary, R. S., & Meyrowitz, M. M. (2012). Building a high-performance culture: A fresh look at performance management. Effective Practices Guidelines. Alexandria, VA: SHRM Foundation.

Objectives of Performance Management System

According to Armstrong and Baron (1998) performance management is a strategic and integrated approach towards the performance of individuals and teams who are delivering their best for the success of the organization. Performance management is the continuous process of monitoring that the organizational goals are achieved in an efficient and effective way (Tyson & York, 2002).According to (Fadil and Geline,2012) objectives of performance management could be defined as follows 

·           To review the performance of employees for a period of time.

·           To evaluate the gap between the current and desired performance.

·           To support the manager in conducting the control/audit.

·           To help in improving relationships and communication between managers and employees.

·           To establish the strengths and weaknesses of employees, in order to identify training needs and future development.

·           To provide the feedback from employees regarding their performance.

·           To ensure the clarity of expectations and responsibilities of the functions to be performed by employees.

·           To evaluate the effectiveness of other functions of the organization's human resources such as recruitment, selection, training and development.

Furthermore, 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 (Bragger et al., 2014). According to Johnson & Shields (2007) , 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. At the same time, Kinicki, Jacobson, Peterson, & Prussia( 2013) states ,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. Moreover, DeNisi & Smith (2014) defines, the major objectives of performance management are ,

·       ·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.


Video 1 : Objective of having good performance management system 

      Source :Mark Debinski ,2012

Armstrong, M. & Baron, A. (1998), Performance Management: The New Realities, Institute of Personnel and Development, London.

Bragger, J., Kutcher, E., Menier, A., Sessa, V., & Sumner, K. (2014). Giving nonselective downsizing a performance review. Human Resource Development Review, 13, 58-78. doi: 0.1177/1534484313492331 0.1177/1534484313492331.

DeNisi, A., & Smith, C. (2014). Performance appraisal, performance management, and firm-level performance: A review, a proposed model, and new directions for future research.  The Academy of Management Annals, 8, 127-179. doi:10.11606/rco.v11i29.122140.

Fadil,O.,Gelina,M.,2012, ‘Performance Management, Its Assessment and Importance’, Audit Department, Post Telecom of Kosovo, Pristine, Kosovo b Finance Department, Faculty of Business Administration “Kristal” University, 41(1),pp.434-441.

Johnson, L., & Shields, J. (2007). Lessons from management–union partnership in teacher performance appraisal in the New South Wales public education system. The International Journal of Human Resource Management, 18, 1214–1227. doi:10.1080/09585190701392048.

Kinicki, A. J., Jacobson, K. J., Peterson, S. J., & Prussia, G. E. (2013). Development and validation of the performance management behavior questionnaire. Personnel Psychology, 66, 1–45. doi:10.1111/peps.12013.

Tyson, S. and York, A. (2002), Essential of Human Resource Management, 4th edition, Butterworth Heinemann, Oxford.

The Performance Management cycle 

Figure 1 :The performance management cycle 

    Source : Michael and Stephen,2013,pp.337 

While there are many versions of the performance management cycle, the most popular is probably the one cited by Michael Armstrong in his Hand­book of Performance Management. First stage of this performance management cycle is ‘planning’, a phase which was traditionally carried out only once each year. During this planning phase, employees are set SMART objectives, which contribute to achieving one or more of the company’s goals. The planning phase also includes the formation of a personal development plan (what strengths and skills the employee should develop to achieve their goals) and a review of the employee’s job requirements. The idea is to ensure that the organization’s goals and values feed into this planning phase, there­by ensuring that individual performance is aligned with the overall strategy of the organisation.The next stages are ​‘Act’ and ​‘Track’, which occur through­out the year. Employees aim to achieve their objectives and carry out their role effectively, while line managers coach their employees, track progress, and provide feedback(Michael and Stephen,2013).

Further, historically, companies have placed a large emphasis on the final stage, ‘Review’, often combining it with employee performance ratings. The ‘Review’ phase traditionally encompasses an annual performance review, a meeting where employee and manager discuss and evaluate goal progression and completion, performance issues, training and development, and opportunities for advancement. This once a year meet­ing can be extremely stressful for both employee and manager, and ultimately unproductive. Attempting to discuss and achieve so much in one meeting is simply unfeasible and the review frequently becomes a tick-the-box exercise with little meaningful conversation (Michael and Stephen, 2013).

The Performance Management cycle in Delmege and Forsyth Company Ltd

When analyzing the performance management cycle in Delmege , the objective of this process is to enhance business results through continuous assessment and managing  of employee performance(HR form10 -Performance Evaluation Form P2, Delmege Forsyth and company).  Hence the exercise should be completed within the defined timeline with utmost care. It is mandatory to discuss with employees about their performance and agree on future performance. Performance feedback will help and guide employees to perform better. Performance appraisal should be conducted in a fair and equitable manner (HR form10 -Performance Evaluation Form P2, Delmege Forsyth and company)  . Performance evaluation year is from 1^st April to 31^st March of the succeeding year.  

Performance evaluation consist of following parts (HR form10 -Performance Evaluation Form P2,Delmege Forsyth and company).

·       Objective Setting-  by 30^th April every year

·       Mid-year Review of objectives - by 31^st October every year

·       Year-end Review of objectives - by 10^th April every year

·       Qualitative Factor Evaluation (Should be done at the year-end review)

·       Training Needs Identification

1.Performance planning and agreement    

In performance planning and agreement stage, appraiser, appraisee and appraisee’s superior should

Sign the Performance Evaluation Form at the end of objective setting, Mid-year review and Year-end

Review (HR form10 -Performance Evaluation Form P2,Delmege Forsyth and company).

Further, following areas should be completed in objective setting (HR form10 - 

Performance Evaluation Form P2,Delmege Forsyth and company).

·       KPIs/Quantitative Factors– Brief but clear description of the performance objective.

·       Target – Always should be quantified.

·       Weight – Weight is given to each objective. Total weight of four objectives should be equal to 100%.

·       Expected Achievement by Mid-Year – Percentage of achievement of the objective by the mid-year.

E.g. Objective is to introduce 50 new customers and at least 30 customers should be introduced by the mid-year. Hence the expected achievement by mid-year (30^th September) is 60%

·       Training needs identification (HR form10 -Performance Evaluation Form P2,Delmege Forsyth and company).

·       Select 3 general skills by putting a tick.

·       Name the training requirements specifically needed according to area of work

Duly completed forms should be submitted to the HR Division on or before 20th April every year.

2. Act Performance Activities

·         Carry out day to day job role

·         Carry out training programs on performance improvement and personal development

      3. Monitor /manage  and review performance throughout the year

Ø  Midyear review (HR form10 -Performance Evaluation Form P2,Delmege Forsyth and company).

·       Objective of the mid-year review is to track the progress of the performance objectives and identify corrective actions as and when required.

·       HR Division will distribute performance evaluation forms to relevant Heads of companies / SBUs / Divisions, during the month of September.

·       Tick the relevant cage according to the agreement percentage.

E.g. Achievement by mid-year is 25 customers. Hence the achievement percentage is 50% ((25/50)*100)

·        Duly completed forms should be re-submitted to the HR Division on or before  31^st October  every year .

      ·        

Ø  Yearend review (HR form10 -Performance Evaluation Form P2,Delmege Forsyth and company).

It is a joint analysis of performance .Following areas should be completed at Year End Review

 KPIs/Quantitative Factors Year-End Evaluation.

·       Quantify the achievement of the objective.

·       If any employee has achieved more than 100%, mark the achievement accordingly.

·       Discuss the achievement % with employees. If any employee does not agree with the score, clarify his/her doubts

·       Obtain the achievement score by multiplying the weight of the objective by the achievement percentage (Refer A*B remark in the form).

·       Obtain the total year end %.

·                 Qualitative Factor Evaluation

·       Refer Performance Factor Standards section for standardization of rankings.

·       Add the total score of six factors. Maximum should be 30 (6*5).

·       Divide the total score by 30 and multiply the answer by 100.

Performance Summary

·       Take Quantitative Factor Evaluation final score (X) and Qualitative Factor Evaluation final score (Y).

·       Multiply the score by respective weightings (80% and 20% respectively) and obtain the total. Add to totals together and obtain final score.

Further, duly completed forms should be re-submitted to the HR Division on or before 10th April every year. Subsequently performance review joint discussions should be conducted with each employee.

   Figure 2: Performance Evaluation Form – Delmege Group of Companies

       Video 1 : Performance management cycle

  

       Source :Athena professional ,2014

·        Michael,A. ,Stephen.T.,2013, Armstrong’s Handbook of Human Resource Management Practice,13^th ed. India, Michael Armstrong.

Establishing Performance Management system in Organization

According to Armstrong (2013), performance management system is a means of getting better results from the organizations, teams and individuals by understanding and managing performance within the agreed framework of planned goals and competency requirements. It is a process for establishing shared understanding about what is to be achieved and an approach to managing and developing people. According to Gubbins and Rousseau (2015), the elements of good performance management system would be:

Goal setting — Top management need to set goals the right way. They need to be meaningful and understood. Employees should have context as to why these individual goals matter and how they are furthering organizational objectives. Employees will care much more about their roles and be much more engaged when they know and truly understand how their job matters.

Transparent communication and collaboration — Employees want and deserve their managers and leaders to be open and authentic at all times. They don’t want to be kept in the dark when their companies are going through hard times. They want to be kept abreast of pertinent information. On top of this, they want real-time communication while building healthy relationships with their colleagues and managers. This will involve regular feed­back and honest discussion even when such communication is difficult or uncomfortable.

Employee recognition — An effective performance management system should prioritise employee recognition and reward. Employees should feel valued and appreciated for the work they do and the effort they put in. If employee recognition is not a priority, this will most likely have a negative bearing on voluntary turnover.

Honest and regular feedback and reviews — The more frequent and precise the feed­back, the better individual performance. It’s that simple. Employees want regular insights into their work and the better informed employees are regarding their performance, the better able they are to improve and excel.

Employee development — No ambitious top performer wants to remain at a company long-term without honing and developing skills. Advancement and development are important to employees not to mention, companies stand to benefit when employees are more skilled and capable.

Furthermore, according to Madela and Dorin(ND),following nine guidelines and ideas can assist to develop a performance management system 

·  Motivational rather than confrontational  

· Take great care in establishing what it is that you want to measure 

· Develop effective measurements that tell people how they are doing 

· Establish straightforward, honest criteria that tell people exactly what they must do to achieve a particular score

· Communicate the established criteria to the people who need the information to perform effectively

· Obtain employee input when establishing the criteria and the measurements 

· Review the employee’s progress on the defined criteria, goals, and competencies regularly

· Avoid the “halo” effect, the employee needs to see and read his performance ratings, rankings, the judgment calls 

· Previously established criteria that came together to form his ratings.

According to Herman (2013),characteristics of a proper performance management system would be  Strategic congruence , Thoroughness ,Practicality ,Meaningfulness , Specificity , Identification of effective and ineffective performance ,Reliability , Validity ,Acceptability and fairness , Inclusiveness ,Openness , Correctability ,Standardization and Ethicality. Moreover, Brandon Hall Group Research team (2016) says six critical characteristics of performance management system are :

· Make performance management people centric.

· Focus development on enhancing strengths and not fixing weaknesses.

· Align performance goals to business goals. 

· Leverage technology to enable effective performance management.

· Train managers to be effective performance coaches.

· Recognize employees for small and large accomplishments.

Also a good performance management system should have top management support, involve employees in their development, ensure that those measures used are relevant to managers and employees in performing their day-to-day jobs, be part of a feedback loop that links them to manager and employee performance appraisals ,Primarily use non-financial performance techniques, vary between locations, change over time as the company needs change,  are intended to foster improvement rather than just monitoring (Paul.and Jim,ND).

     Video 1 : How to establish a good performance management system in organization 

                Source :Public Health Centers for Excellence,2015 

Brandon Hall Group Research Team,2016,’ Performance Management 2016: people Over Process’,1^st ed., Brandon Hall Group.

Herman,A.,2013,’ Performance Management’,1^st ed.UK, Edinburgh Business School  Heriot-Watt University.

Gubbins, C. and Rousseau, D. M. (2015). Embracing translational HRD research for evidence-based management: Let's talk about how to bridge the research–practice gap. Human Resource Development Quarterly, 26, 109–125. doi:10.1002/hrdq.21214

Madela,M.A.,Dorin,C.,ND,’The importance of implementing performance management system in Romanian firms ‘,University of Oradea

Michael,A. & Stephen,T.(2013), Armstrong's Handbook of Human Resource Management Practice: Building Sustainable Organizational Performance Improvement.

Paul,F.,Jim,B.,ND,’ A Review of Performance Measurement: towards performance Management ‘,Computer Integrated Manufacturing Research Unit (CIMRU), National University of Ireland.

Importance of having good Performance Management system  

Performance management is expected to improve organizational performance generally by creating a performance culture in which the achievement of high performance is a way of life. More specifically, effective performance management ensures that individual goals are aligned with organizational goals, so that key performance indicators for employees are linked to those of the organization, and the contribution people can make to organizational performance is therefore defined (Michael and Stephen,2013).Further, Davinder  (2010) identifies the benefits of performance management  as It  focuses on results rather than behaviors and activities , 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, It Cultivates a system-wide, long-term view of the organization.

Also according to Chang & Hahn (2006), employees are motivated to improve their performance through effective performance management system. A performance management program is essential to promoting and improving employee effectiveness. It involves a continuous process in which managers and staff work together to plan, monitor and review goals and individual contributions to the agency. Further, Haines & St-Onge (2012), state managers know their employee’s strengths and weaknesses through good performance management system .A performance management system can enable managers to better understand their employees’ skill sets and proficiency levels. Through improved employee observation, managers master understanding of an individual’s strengths and weaknesses. The manager and the employee can offer each other feedback and address concerns, creating a transparent work environment. Managers can also get a sense of how to motivate employees, from leading by example to fair allocation of work. Moreover, according to Schneid, Isidor, Steinmetz & Kabst (2016), good performance management system enables employees to be more engaged. A good performance management system leads to more employee engagement. If they are satisfied with their performance management system, employees are more motivated and less likely to leave the organization. Engaged employees are more involved, committed, passionate, and empowered. These feelings lead to employees going the extra mile in supporting the agency’s mission. At the same time, Wells et al. (2007) say, through effective performance management system, employees understand their job responsibilities. An effective HR system also gives staff a better understanding of their daily tasks, as well as insights into behaviors and results needed to perform their job well. If an employee receives constant and high-quality feedback, the employee well become more self-aware of their behaviors and leads to more growth and development. Such systems empower HR team members to be a resource for employees and managers in goal setting and progress tracking. They also aid in creating and approving individual development plans, which can include: training, helping employees learn role-supportive knowledge and improving skills in their current roles.

     Video 1 : Benefits of having good performance management system 

     Source :Swayaminfologic,2014 

Chang, E., & Hahn, J. (2006). Does pay‐for‐performance enhance perceived distributive justice for collectivistic employees? Personnel Review, 35, 397–412. doi:10.1108/00483480610670571

Davinder,S.,2010, Performance Appraisal and Management,1st ed.India,Himalaya Publishing House.

Haines, V. Y., & St-Onge, S. (2012). Performance management effectiveness: practices or context? The International Journal of Human Resource Management, 23, 1158–1175. doi:10.1080/09585192.2011.561230.

Michael,A. ,Stephen.T.,2013, Armstrong’s Handbook of Human Resource Management Practice,13^th ed. India, Michael Armstrong.

Schneid, M., Isidor, R., Steinmetz, H., & Kabst, R. (2016). Age diversity and team outcomes: A quantitative review. Journal of Managerial Psychology, 31, 2–17. doi:10.1108/JMP-07-2012-0228.

Wells, D. L., Moorman, R. H., & Werner, J. M. (2007). The impact of the perceived purpose of electronic performance monitoring on an array of attitudinal variables. Human Resource Development Quarterly, 18(1), 121-138. https://doi.org/10.1002/hrdq.1194.