This document discusses performance management and defines it as a strategic and integrated approach to improving performance at the individual, team, and organizational levels. It outlines the key components of a performance management system, including performance planning, appraisal and feedback, rewarding performance, and performance improvement plans. The benefits of performance management are provided for organizations, managers, and employees. Stress and its causes in the workplace are also examined, along with strategies for managing stress organizationally.

1. MANU

2.  DEFINITION
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.
 MEANING
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.

3.  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.
OBJECTIVES

4. 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.
Identifying the training and development needs by measuring the outcomes achieved
against the set standards and implementing effective development programs for
improvement.

5. EVOLUTION OF PERFORMANCE MANAGEMENT
First Phase:
• The origin of performance management can be traced in the early 1960’s when the performance appraisal
systems were in practice.
• During this period, Annual Confidential Reports (ACR’s) which was also known as Employee service
Records (ESR) were maintained for controlling the behaviors of the employees and these reports provided
substantial information on the performance of the employees.
• Any negative comment or a remark in the ESR or ACR used to adversely affect the prospects of career
growth of an employee. The employees used to remain in absolute darkness due to the absence of a
transparent mechanism of feedback and communication. This system had suffered from many drawbacks.

6. Second Phase:
This phase continued from late 1960’s till early 1970’s, and the key hallmark of this phase was that
whatever adverse remarks were incorporated in the performance reports were communicated to the
employees so that they could take corrective actions for overcoming such deficiencies. In this process of
appraising the performance, the reviewing officer used to enjoy a discretionary power of overruling the
ratings given by the reporting officer. The employees usually used to get a formal written communication
on their identified areas of improvements if the rating for any specific trait used to be below 33%.

7. Third Phase:
• In this phase the term ACR was replaced by performance appraisal. One of the key changes that
were introduced in this stage was that the employees were permitted to describe their
accomplishments in the confidential performance reports. The employees were allowed to describe
their accomplishments in the self appraisal forms in the end of a year. Besides inclusion of the traits
in the rating scale, several new components were considered by many organizations which could
measure the productivity and performance of an employee in quantifiable terms such as targets
achieved, etc.

8. Fourth Phase:
• This phase started in mid 1970’s and its origin was in India as great business tycoons like Larsen &
Toubro, followed by State Bank of India and many others introduced appreciable reforms in this field.
• In this phase, the appraisal process was more development driven, target based (performance based),
participative and open instead of being treated as a confidential process. The system focused on
performance planning, review and development of an employee by following a methodical approach.
• This phase was a welcoming change in the area of performance management and many organizations
introduced a new HR department for taking care of the developmental issues of the organization.

9. Fifth Phase:
• This phase was characterized by maturity in approach of handling people’s issues. It was more
performance driven and emphasis was on development, planning and improvement. Utmost
importance was given to culture building, team appraisals and quality circles were established for
assessing the improvement in the overall employee productivity.
• Note: - The performance management system is still evolving and in the near future one may expect
a far more objective and a transparent system.

10. BOOZ ALLEN'S PERFORMANCE MANAGEMENT MODEL

11. COMPONENTS OF PERFORMANCE MANAGEMENT SYSTEM
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.
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.

12. 3. Feedback and counseling
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.
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.

13. 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.
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.

14. BENEFITS OF PERFORMANCE MANAGEMENT
 Organization’s Benefits
• Improved organizational performance,
• employee retention and loyalty,
• improved productivity,
• overcoming the barriers to communication,
• clear accountabilities, and
• cost advantages.

15.  Manager’s Benefits
• Saves time and reduces conflicts
• ensures efficiency
• consistency in performance.

16.  Employee’s Benefits
• Clarifies expectations of the employees,
• self assessment opportunities clarifies the job accountabilities and contributes to
improved performance,
• clearly defines career paths and promotes job satisfaction.

17. KNOWLEDGE MANAGEMENT

18. DEFINITION
Knowledge management is the systematic management of an organization's knowledge assets
for the purpose of creating value and meeting tactical & strategic requirements; it consists of
the initiatives, processes, strategies, and systems that sustain and enhance the storage,
assessment, sharing, refinement, and creation of knowledge.

19. TYPES OF KNOWLEDGE

20. OBJECTIVES
• Facilitate a smooth transition from those retiring to their successors who are recruited to
fill their positions.
• Minimize loss of corporate memory due to attrition and retirement.
• Identify critical resources and critical areas of knowledge so that the corporation “knows
what it knows and does it well—and why.”
• Build up a toolkit of methods that can be used with individuals, with groups, and with the
organization to stem the potential loss of intellectual capital.

21. WHY IS KNOWLEDGE MANAGEMENT IMPORTANT TODAY?
 Globalization of business
Organizations today are more global—multisite, multilingual, and multicultural in nature
 Leaner organizations.
We are doing more and we are doing it faster, but we also need to work smarter as knowledge workers,
adopting an increased pace and workload.
 “Corporate amnesia.”
We are more mobile as a workforce, which creates problems of knowledge continuity for the organization and
places continuous learning demands on the knowledge worker. We no longer expect to spend our entire work
life with the same organization.
 Technological advances.
Advances in information technology not only have made connectivity but have radically changed expectations.

22. PERSONALITY TRAITS

23. Personality traits reflect people’s characteristic patterns of thoughts, feelings, and behaviors.
Personality traits imply consistency and stability—someone who scores high on a specific trait like
Extraversion is expected to be sociable in different situations and over time. Thus, trait psychology
rests on the idea that people differ from one another in terms of where they stand on a set of basic
trait dimensions that persist over time and across situations.
DEFINITION

24. •Openness
•Conscientiousness
•Extraversion
•Agreeableness
•Neuroticism
PERSONALITY TRIATS
The most widely used system of traits is called the Five-Factor Model.
This system includes five broad traits that can be remembered as OCEAN:

26. BIG FIVE FACTOR MODEL
• Openness - Openness to experience describes a person's degree of intellectual curiosity, creativity,
and preference for novelty and variety. Some disagreement remains about how to interpret this
factor, which is sometimes called intellect.
• Conscientiousness - Conscientiousness is a tendency to show self-discipline, act dutifully, and aim
for achievement. Conscientiousness also refers to planning, organization, and dependability.

27. • Extraversion - Extraversion describes energy, positive emotions, assertiveness,
sociability, talkativeness, and the tendency to seek stimulation in the company of others.
• Agreeableness - Agreeableness is the tendency to be compassionate and cooperative
towards others rather than suspicious and antagonistic.
• Neuroticism - Neuroticism describes vulnerability to unpleasant emotions like anger,
anxiety, depression, or vulnerability. Neuroticism also refers to an individual's level of
emotional stability and impulse control and is sometimes referred to as emotional
stability.

29. DEFINITION
Stress is defined as “a state of psychological and
physiological imbalance resulting from the disparity
between situational demand and the individual's
ability and motivation to meet those needs.”

30. Stress can be positive or negative:
 Stress is good when the situation offers an opportunity to a person to gain something.
 It acts as a motivator for peak performance.
 Stress is negative when a person faces social, physical, organizational and emotional problems.
 Factors that are responsible for causing stress are called stressors.

31. CLASSIFICATION OF STRESS
The two main classifications of stress are Eustress and Distress.
 Eustress is caused by continuous success and when expectations become higher. This develops the
sense of urgency and alertness needed for survival when confronting threatening situations. And
stresses to hold their position becomes more.
 Distress is a negative stress. It is caused due to disappointments, failures, threats, embarrassment and
other negative experiences. This can result is distrust, rejection, anger and depression which eventually
may turn out to get headaches, stomach upsets, rashes, insomnia, ulcers, high blood pressures, etc. And
this can have harmful effects over one’s physical, mental and spiritual health.

32. THE MAJOR CAUSES OF STRESS AT WORK OR IN ORGANIZATION:

33. CAUSES OF STRESS AT WORK
 Career Concern:
If an employee feels that he is very much behind in the corporate ladder, then he may experience
stress. If he seems that there are no opportunities for self-growth, he may experience stress.
 Role Ambiguity:
It occurs when the person doesn't know what he is supposed to do, on the job. His tasks and
responsibilities are not clear. It creates confusion in the minds of the worker and results in stress.
 Rotating Work Shifts:
Stress may occur in those individuals who work on different work shifts. Employees may be
expected to work on day shift for some days and then on the night shift.

34.  Occupational Demands:
Some jobs are more demanding than others. Jobs that involve risk, and danger are more stressful.
Research findings indicate, job that cause stress needs constant monitoring of equipment and devices,
unpleasant physical conditions, making decisions, etc.
 Lack of Participation in Decision-making:
Many experienced employees feel that management should consult them on matters affecting their jobs.
In reality, the superiors hardly ask the concerned employees before taking a decision. That develops a
feeling of being neglected, which may lead to stress.
 Role Conflict:
It takes place when people have different expectations from the person performing a particular role. It can
also occur if the job is not as per expectation, or when a job demands a certain type of behavior that is
against the person's moral values.

35.  Work Overload:
Excessive workload leads to stress as it puts a person under tremendous
pressure.
 Work Underload:
Doing less work or jobs of routine and simple nature would lead to
monotony and boredom, which can lead to stress.
 Poor Working Conditions:
Employees may be subject to poor working conditions. It would
include bad lighting and ventilation, excessive noise, and dust, presence of toxic gasses and
fumes, inadequate safety measures, etc.

36. • Lack of Group Cohesiveness:
Every group is characterized by its cohesiveness, although they differ widely in its degree. Individuals experience stress when
there is no unity among work group members. There are mistrust, jealousy, frequent quarrels, etc., in groups and this lead to stress
to employees.
• Interpersonal and Intergroup Conflict:
These conflicts take place due to differences in perceptions, attitudes, values and beliefs between two or more individuals and
groups. Such conflicts can be a source of stress for group members.
• Organizational Changes:
When changes occur, people have to adapt to those changes, and this may cause stress. Stress is higher when changes are
significant or unusual like transfer or adoption of new technology.
• Lack of Social Support:
When individuals believe that they have the friendship and support of others at work, their ability to cope with the effects of stress
increases. If this kind of social support is not available, then an employee experiences more stress.

39. IDENTIFICATION OF STRESS AT VARIOUS LEVEL
• Because stress is such an individual experience, it's important to let your body be your guide. Learn
to recognize the ways that you tend to react, and the events or situations that are likely to cause you
to feel stress.
• Level 1 - Immediate stress
• Increased heart rate and blood pressure
• Rapid breathing
• Perspiring and sweaty palms
• Indigestion and nervous stomach

40. • Level 2 - Continued stress
• Feelings of being pressured or driven
• Exhaustion and fatigue
• Anxiety
• Memory loss
• Colds and flu
• Increase in smoking or alcohol and caffeine consumption
• These symptoms can occur when there is no relief from a Level 1 stress. Your body begins to release stored sugars and
fats, using up its resources. For example, a long-term deadline at work, or a drawn-out divorce may lead to Level 2 stress.

41. • Level 3 - Ongoing stress
• Insomnia
• Errors in judgment
• Personality changes
• Autoimmune disorders
• Heart disease
• Mental illness
• When a stressful situation is not resolved and carries on for prolonged periods, Level 3 stress can
result. Your body cannot produce the energy resources it needs and the on-going strain can cause
dysfunctions and breakdowns. An unsatisfying and highly demanding job or caring for a disabled
family member could potentially cause this kind of stress.

42. PSYCHOLOGICAL STRESS
• Psychological stress refers to the emotional and
physiological reactions experienced when an
individual confronts a situation in which the
demands go beyond their coping resources.
Examples of stressful situations are marital
problems, death of a loved one, abuse, health
problems, and financial crises.

43. PSYCHOLOGICAL STRESS
• A very much overlooked side of stress is its positive adaptations. Positive psychological stress can
lead to motivation and challenge instead of anxiety. The effects of experiencing eustress, which is
positive stress, versus distress, which is negative stress, are significant. While colloquially lumped
together, the various types of stress should be treated as separate concepts.
• Hans Selye proposed that there are four variations of stress. On one axis, there is good stress (eustress)
and bad stress (distress). On the other is overstress (hyperstress) and understress (hypostress). The
goal is to balance these as much as possible. The ultimate goal would be to balance hyperstress and
hypostress perfectly and have as much eustress as possible. It is extremely useful for a productive
lifestyle because it makes working enjoyable instead of a chore, as seen with distress.

44. ORGANIZATIONAL STRATEGIES FOR MANAGING STRESS
• Encouraging more of organizational communication with the employees so that there is no role
ambiguity/conflict. Effective communication can also change employee views. Managers can use
better signs and symbols which are not misinterpreted by the employees.
• Encourage employees’ participation in decision-making. This will reduce role stress.
• Grant the employees greater independence, meaningful and timely feedback, and greater
responsibility.

45. • The organizational goals should be realistic, stimulating and particular. The employees must be
given feedback on how well they are heading towards these goals.
• Encourage decentralization.
• Have a fair and just distribution of incentives and salary structure.
• Promote job rotation and job enrichment.
• Create a just and safe working environment.
• Have effective hiring and orientation procedure.
• Appreciate the employees on accomplishing and over-exceeding their targets.