Unit III: Strategic performance development approach. Trends in performance appraisal—self appraisal,
competency mapping, balance scorecard; using KPA’s for peak performance; Retention strategies— combating job
hopping; HR empowerment through performance management
Strategic performance development approach
A well-designed performance management process stimulates managers to develop high-quality strategic plans, set
ambitious targets, and track performance closely-all activities which help to achieve strategic objectives and
consequently sustained value creation.
It involves the development of processes for establishing shared understanding about what is to be achieved, and an
approach to managing and developing people in a way that increase the probability that it will be achieved in the
short and longer term.
Evaluating periodically the human resource inside the organization can increase the motivation and commitment of
employees and enable individuals to develop their abilities, increase their job satisfaction and achieve their full
potential to their own benefit and that of the organization as a whole.
Performance management can be defined as a strategic and integrated approach to delivering sustained success to
organizations by improving the performance of the people who work in them and by developing the capabilities of
teams and individual contributors.
It is mainly concerned with individual performance and development but it can also be applied by teams.
OBJECTIVES OF PERFORMANCE MANAGEMENT
Recruitment and Selection
Personnel decisions - promotion, layoff etc.
Training and Development
Feedback, motivation and personal development
Career planning and development
Compensation and Reward
Internal employee relations
STRATEGIC PERFORMANCE MANAGEMENT
Strategic performance management is defined as: the process where steering of the organization takes place through
the systematic definition of mission, strategy and objectives of the organization, making these measurable through
critical success factors and key performance indicators, in order to be able to take corrective actions to keep the
organization on track
1. Identify competitive status of the firm (Strength & Weakness)
2. Determine organizational and HR strategies
3. Align the performance management system (performance criteria and type of appraisal method)
Process of strategic performance management
Strategic development: The strategy development process results in clear strategic objectives and action plans for
measurable performance improvement. Strategic plans tend to look inward, resulting in unrealistic long-term views
that do not take environmental developments into account and that focus insufficiently on competitive advantage
Budgeting/target setting: The budget/target setting process results in clear operational action plans for improving
the key value drivers, for committing resources, and for setting financial targets for the coming year
Forecasting: Regular forecasts are made to predict whether the organization is still on track or whether corrective
and/or predictive actions are needed to solve current or predicted problems.
Performance measurement: The performance measurement process collects, processes (including consolidation),
and distributes data and to allow an effective execution of the other sub-processes. The information is represented in
the form of critical success factors (CSFs) Key performance indicators (KPIs).
Performance review process: periodically reviews actual performance, targets, and forecasts in order to ensure that
timely preventive and corrective action is taken to keep the company on track. Performance review meetings
generally take place on a regular basis rather than as an exception when there really is a problem.
Incentive compensation: This process links strategic and operational actions for key value drivers, in a balanced
way with compensation and benefits policies.
Main Purposes of Performance Management
1. Individual Rewards (Base and Incentive)
2. Feedback for Sub-Ordinate (Plus and Minus)
3. Recognition of Superior Performance
4. Documentation of Weak Performance
5. Personnel Decision-Making
6. Future Goal Commitments (Planned Achievements)
7. Compensation "Pay for Performance"
8. Job Performance Improvements
9. Documentation for Decisions
10. Goal Setting - Later Evaluation
11. Promotion Decisions
12. Identify Training Needs
13. HR Planning
Process of Performance Management
Identify dimensions of
Define & Communicate
Determine who will
Trends in performance appraisal
1. Self appraisal
The self-appraisal (also known as a self-evaluation or a self-assessment) is your opportunity to reflect on the things
you did well, and the things you didn't do so well - but learned from this past year.
The self-appraisal is important because it can help accomplish two things:
Remind your manager of your accomplishments, development and challenges
Identify where there may be discrepancies between your and your manager's view of your performance
Six steps to completing a great self-appraisal
1. Share your brilliant successes. Look at previous feedback received, projects you've completed and initiatives
you've launched - all excellent fodder. If you haven't done so in the past, start keeping a performance journal. It will
make your next self-appraisal that much easier to complete.
2. Share what you've learned. What have you learned in the past year? Look to identify the ways in which you've
been able to enhance your skills; describe the new skills you've mastered and how they've helped you in your career
development. Describe how you've applied these new skills to your job and how they support the goals of your
department and organization.
3. Share your challenges. This isn't an annual opportunity for shameless self- promotion. It's an opportunity for
some humility. Be candid about your challenges in the year. Describe how you overcame them or the steps you will
take in the year ahead to address them.
4. Be honest. Don't embellish your accomplishments. Think hard about how you choose your ratings for yourself.
Your manager will likely want you to support your ratings so be prepared to provide examples of your successes
(why you deserve that high rating) and examples of your not-so-great performance (why you may deserve a weaker
5. Take time to do it well. Your manager can tell if you rushed your self-appraisal. So take the time needed to do it
justice (schedule time for it in your calendar!). After all, your self-appraisal is all about you, and you're worth it!
Use all the space/features provided in the form to tell your story.
6. Don't attempt to complete it in one go. Treat your self-appraisal like a work of art that builds over time. You'll be
much happier with the end result if you give yourself time to reflect and carefully support your self-assessment.
2. Competency mapping
Fig: use and adv of competency mapping
Competency Mapping is a process of identifying key competencies for an organization and/or a job and
incorporating those competencies throughout the various processes (i.e. job evaluation, training, recruitment) of the
organization. A competency is defined as a behavior (i.e. communication, leadership) rather than a skill or ability.
Competency mapping identifies an individual's strengths and weaknesses. The aim is to enable the person to better
understand him or herself and to point out where career development efforts need to be directed.
The steps involved in competency mapping with an end result of job evaluation include the following:
Conduct a job analysis by asking incumbents to complete a position information questionnaire (PIQ). The PIQ can
be provided for incumbents to complete, or you can conduct one-on-one interviews using the PIQ as a guide. The
primary goal is to gather from incumbents what they feel are the key behaviors necessary to perform their respective
Using the results of the job analysis, you are ready to develop a competency based job description. This is
developed by carefully analyzing the input from the represented group of incumbents and converting it to standard
With a competency based job description, you are on your way to begin mapping the competencies throughout your
HR processes. The competencies of the respective job description become your factors for assessment on the
performance evaluation. Using competencies will help guide you to perform more objective evaluations based on
displayed or not displayed behaviors.
Taking the competency mapping one step further, you can use the results of your evaluation to identify in what
competencies individuals need additional development or training. This will help you focus your training needs on
the goals of the position and company and help your employees develop toward the ultimate success of the
CHARACTERISTICS OF INDIVIDUAL IN COMPETENCY
Motive: Underlying need or thought pattern that drives directs and selects an individual’s behavior. Eg need for
Trait: A general disposition to behavior responds in a certain way, for instance with self-confidence, self-control,
Self-concept: What they think they value, what they think they do or interested in doing
Knowledge: Content knowledge
PROBLEM WITH COMPETENCYMAPPING
A problem with competency mapping, especially when conducted by an organization is that there may be no
room for an individual to work in a field that would best make use of his or her competencies.
METHODS USED IN COMBINATION FOR COMPETENCY MAPPING
Task Analysis work Shops
Use of job description
3. BALANCED SCORECARD (BSC)
The balanced scorecard (BSC) is a strategic planning and management system that organizations use to:
1. Communicate what they are trying to accomplish
2. Align the day-to-day work that everyone is doing with strategy
3. Prioritize projects, products, and services
4. Measure and monitor progress towards strategic targets
The balanced scorecard is a strategy performance management tool – a semi-standard structured report that can
be used by managers to keep track of the execution of activities by the staff within their control and to monitor the
consequences arising from these actions.
The critical characteristics that define a balanced scorecard are:
• Its focus on the strategic agenda of the organization concerned
• The selection of a small number of data items to monitor
• A mix of financial and non-financial data items.
Balanced scorecard is an example of a closed-loop controller or cybernetic control applied to the management of
the implementation of a strategy.
Closed-loop or cybernetic control is where actual performance is measured, the
measured value is compared to a reference value and based on the difference between the two corrective
interventions are made as required. Such control requires three things to be effective:
a choice of data to measure,
the setting of a reference value for the data,
the ability to make a corrective intervention
The Four Legs of the Balanced Scorecard
Information is collected and analyzed from four aspects of a business. First, learning and growth are analyzed
through the investigation of training and knowledge resources. This first leg handles how well information is
captured and how effectively employees utilize the information to convert it to a competitive advantage over the
Second, business processes are evaluated by investigating how well products are manufactured. Operational
management is analyzed to track any gaps, delays, bottlenecks, shortages or waste.
Third, customer perspectives are collected to gauge customer satisfaction with quality, price and availability of
products or services. Customers provide feedback regarding if their needs are being met with current products.
Finally, financial data such as sales, expenditures and income are used to understand financial performance. These
financial metrics may include dollar amounts, financial ratios, budget variances or income targets. These four legs
encompass the vision and strategy of an organization and require active management to analyze the data collected.
Therefore, the balanced scorecard is often referred to as a management tool, not a measurement tool.
Balanced Scorecard implementation
Set up a vision, mission and strategic objectives.
Perform a stakeholder analysis to gauge the expectations of customers and shareholders.
Make an inventory of the critical success factors
Translate strategic objectives into (personal) goals
Set up key performance indicators to measure the objectives
Determine the values for the objectives that are to be achieve
Translate the objectives into operational activities.
Key performance indicators (KPIs)
Key performance indicators (KPIs) are business metrics used by corporate executives and other managers to track
and analyze factors deemed crucial to the success of an organization. Effective KPIs focus on the business processes
and functions that senior management sees as most important for measuring progress toward meeting strategic goals
and performance targets.
KPIs differ from organization to organization based on business priorities. For example, one of the key performance
indicators for a public company will likely be its stock price, while a KPI for a privately held startup may be the
number of new customers added each quarter. Even direct competitors in an industry are likely to monitor different
sets of KPIs tailored to their individual business strategies and management philosophies.
Key Performance Indicators (KPIs) are a set of quantifiable measurements that highlight the critical success factors
of an organization. They are used to gauge or compare performance in terms of meeting the organization’s strategic
goals and objectives. KPIs focus on the most important performance information that enables organizations to
understand whether they are on track to meeting their goals.
One of the main purposes of KPIs is to reduce the complex nature of organizational performance to a few key
factors in order to make the overall performance more understandable and manageable.
These assessments often lead to the identification of problems as well as areas for potential improvements.
As Peter Drucker said, ―What gets measured gets managed.‖ Therefore, it is essential to make sure what is being
measured is what is really important to the company’s success.
What is important often depends on who is measuring it. KPIs differ depending on the organization.
Not only do Key Performance Indicators differ per organization they also often differ from department to
department within an organization. The KPIs useful for one department or division of a company may not be useful
at all for another. For example, a Sales Division would have different indicators than the Production or Finance
While there are numerous key performance indicators, the top areas of attention address key areas of operations.
Key Performance Area
Key = crucial/main
Performance = Achievement/Attainment
Area = space/range/field of operation
KEY PERFORMANCE AREA = Main achievement space
KPA is the overall scope of activities that an individual on a job role has to perform.
-KPA is not always result focused
There are the areas within the business unit, for which an individual or group is logically responsible.
Key Performance Areas
• Maintaining good working condition in plant.
• Optimum Resource Utilization.
• Process Improvement.
• Safety and Prevention planning and control.
• Working within the company’s SLA(Service Level Agreement), GRC(Governance, Risk Management and
Characteristics of good KPIs
People often use the acronym ―SMART‖ to refer to the characteristics of good performance indicators
KPI characteristics identified are
• Relevant to and consistent with the specific organization's vision, strategy and objectives.
• Focused on organization wide strategic value rather than non-critical local business outcomes.
• Representative – appropriate to the organization together with its operational performance.
• Realistic – fits into the organization ’s constraints and cost effective;
• Specific – clear and focused to avoid misinterpretation or ambiguity;
• Attainable – requires targets to be set that are observable, achievable, reasonable and credible under
expected conditions as well as independently validated;
• Measurable – can be quantified/measured and may be either quantitative or qualitative;
Retention strategies— combating job hopping
Retention strategies are policies and plans that organizations follow to reduce employee turnover and attrition and
ensure employees are engaged and productive long-term. The key challenge for businesses is ensuring a retention
strategy aligns with business goals to ensure maximum return on investment. Corporate social responsibility is a key
growth area of retention strategies – employees may be more likely to remain with an employer that shows a
commitment to the local community or the environment. At the same time, CSR is increasingly aligning with the
bottom line as consumers increasingly do business with companies that display strong social responsibility policies.
Good retention starts from the time you hire employees to the time they leave your company. See how tweaking
some of your employment practices can have a big impact on employee retention:
• Recruitment and hiring. It’s worth spending time and effort on recruiting. When there’s a good match between
employees and your organization, retention is less likely to be an issue.
• Orientation and onboarding. Again, it’s worth having good practices in place. Treating employees right in the
critical early stages of employment has been proven to enhance retention.
• Training and development. Training and development are key factors in helping employees grow with your
company and stay marketable in their field.
• Performance evaluation. When employees know what they’re doing well and where they need to improve, both
they and your organization benefit.
• Pay and benefits. While today many employees tend to rate factors such as career development higher than pay,
good pay and benefits still count.
• Internal communication. Effective communication can help ensure that employees to want to stay with your
company. Employees need to know—and be reminded on a regular basis—how the organization is doing and what
they can do to help.
• Termination and outplacement. Employees who leave on good terms are much more likely to recommend your
company, and in doing so, help you attract and retain future employees
A job hopper is someone who works briefly in one position after another rather than staying at any one job or
organization long-term. Although most people change jobs more frequently than was the case in the past, job
hoppers do so more often. Job hopping is a pattern of changing companies every year or two of one's own volition
rather than as a result of something like a layoff or company closure.
Job-hopping, generally defined as spending less than two years in a position, can be an easy path to a higher salary
— but experts caution that bouncing from position to position can be a serious red flag to prospective employers
Consequences of Job Hopping
Drop in productivity, increase in training costs, impact on work culture are a series of aspects associated with job
hopping. No doubt job hopping has become the latest trend today, or a shortcut to success. A series of rapid, random
and pointless moves will show up as annoyances on the resume. Employers view such contenders as lacking in
loyalty, trust and self-motivation. Quick moves from one job to other raise big questions for prospective employers
as to one's staying power and ability to withstand challenges, as well as accept accountability. Employer may
question the candidate’s commitment to a particular organization. The future employers, who are probably looking
for a long term employee, might not be impressed with the job hopping tendencies. They might perceive that one
has become a job hopper may be because of inability to get along with colleagues or employers.
Job hopping does not leave substantial time to acquire sufficient experience and hands-on skills. In many
cases, after innumerable hops, one may find oneself at the same place where they first started. The consequences of
frequent job change are many, but the most affected area is loyalty with the organization. The word loyalty has
become old fashioned and is no more considered a success mantra. Loyalty, which once has been considered a
fundamental value in an Indian organization seems to be losing its relevance. People, especially younger generation,
are highly career centric. They do not mind changing jobs too often if it helps them earn more and grow faster. They
are ready to shift their loyalties for extra money, an additional perk or any other monetary consideration.
Combating the Job-Hopping Trend
1. Make teaching a key leadership responsibility.
Effective leaders are great teachers, and great teachers are always learning. Employees look to managers to establish
clear priorities and direction. They then provide focused support so that teams can achieve defined goals.
As a teacher, the manager offers the expertise and wisdom that shapes the course of the group’s success. Of course,
managers also learn from the knowledge and contributions of individuals to make the team stronger.
At all levels, strong leaders are highly visible. They engage in meaningful conversations with both staff and
customers, host town hall-style gatherings that bring together cross-functional team members, and plan interactive
work group meetings to share information and gain insight from colleagues.
2. Empower staff to produce better results.
Central to all contemporary performance-improvement methods, including lean and Six Sigma, is the idea that
better solutions emerge when you talk to the people closest to the work. When you’re trying to make work better,
more efficient, and more satisfying, gathering feedback from front-line employees is crucial.
Large, complex projects often involve cross-functional groups drawn from many departments. However, managers
should also pursue more focused intradepartmental projects that involve team members in decision-making.
3. Create aligned, team-specific goals.
Most organizations have mastered the art of setting well-defined, specific, and measurable goals at the corporate
level. But to influence behavior and performance, companies should also have tactical goals at the department or
The first step is setting, tracking, and consistently reporting these goals. Then, teams can more productively discuss
progress. This helps work groups strengthen their sense of purpose and improves quality, service, and efficiency.
They’ll clearly understand their most pressing initiatives and how to incorporate those goals into their work.
4. Encourage employees through balanced, consistent feedback.
Mentoring staff members to improve performance is arguably a manager’s most important job. Too often, managers
think of feedback as only sharing negative information. But to build morale and develop a high-performance
culture, managers should also have conversations that reinforce success and reward positive results.
Besides creating a culture of recognition and appreciation, balanced feedback helps employees readily accept
constructive criticism. Feedback that only points out mistakes and deficiencies is demoralizing — and in the end, it
will aggravate turnover instead of reducing it.
Day-to-day demands and crises arise, so some managers never find time to achieve seemingly lofty goals meant to
enhance employee engagement, retention, and loyalty. But engaging employees and earning full commitment isn’t
just in a manager’s job description — it’s central to the way that the best leaders complete tasks and blaze trails with
HR empowerment through performance management
An empowered workforce can provide a competitive advantage for your company.
It can encourage innovation, catalyse productivity and boost morale.
Empowered employees deepen the pool of experience and talent you need to succeed.
Some characteristics of an empowered employee include:
An intimate understanding of company objectives.
Accountability and ownership of work and project outcomes.
Confidence that their skills and experience are important to the organization.
How to empower employees through performance management?
1) Share the big picture - At an individual level, we all impact the company in some way. If you want your
employees to be vested in your company enough to give their best, it is crucial they know exactly how their role fits
into the big picture.
In practice, an organization can easily incorporate the big picture in various layers of performance management:
Measurable results of reviews can easily aggregate to team, department and even company averages, showing how
individuals impact overall performance at the organization level.
Individual and overarching competencies are a great bridge between individual effort and the overall success of a
company. Being able to link an individual’s key performance indicators with a company’s objectives creates real
tangents between people and the big picture.
Constant feedback between manager and employee means frequent opportunities for managers to share big picture
directives that provide context to individual deliverables at the employee level.
Cascading goals draw a direct line between employee goals and company objectives.
2) Coach, don’t supervise
Employ performance management by encouraging managers to focus on productivity, innovation and
collaboration. Managers can talk about these competencies on a regular basis through feedback: ―How can I help
you win / be more innovative / get past any hurdles / leverage collaboration?‖ By shifting the conversation from
micro-managing to coaching, everyone wins.
Danger of supervising is that these employees don’t work toward the right result but toward the
manager’s acceptable result. Furthermore, employees start to churn out lower-quality work on purpose because
everything is scrutinized, regardless of effort. In the end, the manager gets stuck spending more time on the details
and less time on the big picture.
3) Use cascading goals to involve employees in their own success
A very simple performance management practice for any organization is to allow employees to define their own
goals, their sub-goals and/or their milestones – which all cascade up to the success of the team’s larger initiatives.
Normally, managers are in charge of creating goals, sub-goals and tasks for team members. But by placing this
responsibility onto the shoulders of the individual employee, managers can focus more on the big picture (this will
make managers happy) and your employees will have a stake in their own success (which will make employees
Tying goals upward to larger initiatives is the performance management practice called cascading goals.
4) Revitalize the performance review
To improve performance management at your company, start with eliminating ―rank & yank.‖ Rank & yank is a
pejorative term describing an antiquated practice used by HR departments to measure its employees’ performance
against each other (rank) and then terminate employees who score the lowest (yank).
The annual performance review, paired with rank & yank, has become one of the most brutally demoralizing and
intimidating aspects of a person’s employment.
An effective and positive alternative to the annual review is ongoing and regular feedback. Performance
management, after all, comes down to a very basic concept: open communication between managers and
Open, on going communication about performance
Goals can be kept on track with continuous support and/or adjustments to expectations throughout the year.
Goals are transparent and give managers the opportunity to support team members at the first sign of a problem.
Coaching and mentoring is much easier in a conversation without the formalities and deadlines of a formal
Issues can be resolved immediately with a quick conversation before they grow too big.
Improved rapport and morale.
Employees feel empowered throughout the year because they have access to performance-related dialogues at any
time. Ongoing feedback between managers and employees fosters trust, which paves the way to autonomy. As a
result you have an employee who is empowered to focus on achieving their goals in a way that feeds into the big
picture and you have a manager who can lead his or her team to success.
STRATEGIC EMPLOYEE EMPOWERMENT
Employee empowerment is a means by which individuals are given the authority to analyze situations
autonomously and take proactive decisions. This instils a sense of ownership towards the company in the
This attitude of the employees can go a long way in driving the business forward.
MEANS OF EMPOWERING EMPLOYEES IN A WORKPLACE
1. Providing the necessary skills to do the job: Employees can’t do the assigned tasks if they don’t have the
necessary skills to do it. It is important for an organization to assess the gaps between the current and required
skills. Training must be provided to the employees to bridge the skills gap. Therefore, if you want an empowered
workforce, employees need to be trained in the right skills.
2. Granting sufficient authority: The second method of empowering employees is to provide them adequate
authority to decide on how to complete their tasks. They need to be given the authority to complete the task in any
manner they choose to accomplish; as long as it confirms to the broad guidelines set by the organization. Others in
the organization should be aware that they have not only the responsibility but also the authority to complete the
3. Articulating the vision of individuals’ job: It is important that employees have a clear idea about the outcome
and where their task fits in the overall scheme of things. It empowers them with a broader perspective of the
organization’s overall mission, vision, goals and strategic plans.
4. Providing adequate information and resources: Employees have access to all the information they require to
make decisions. Therefore supplying information and allocating the required resources empower the employees to
perform better in their job.
5. Building employees’ confidence: According to the expectancy theory, if employees believe that they CAN
achieve a certain result, they are more likely to be successful in doing the same.
6. Guiding with positive feedback: Providing positive feedback about the tasks done and guiding employees about
best practices gives encouragement to the employees. It also helps employees to stay on the right track and develop
Handling a large workforce is a daunting task. However, with empowered employees, it becomes easier as they
work not only towards achieving their individual objectives but also the organizational goals.
7. Training for management
Training line managers on how to let go and trust their teams is really important. In many cases, micromanagement
can disengage employees and lead them to feel undervalued and unmotivated. If people feel trusted and appreciated
by their manager, they are more likely to feel secure and valued, and empowered to make decisions.
8. Give a clear definition of strategy: In some organisations, employee turnover can be due to a lack of
opportunity or a lack of knowledge on how individuals contribute to the business and its goals. Therefore, it is
important for employees to understand the business strategy, where they fit into it, and how they can support it on a
9. Make use of 360° reviews: 360° reviews provide a great opportunity for managers and teams to give and receive
as much feedback as possible and celebrate success. They can also help identify areas for development, helping
people to improve their skill set. Encouraging dialogue between a manager and a team member is vital in building
confidence and helping people develop.
10. Develop appropriate KPIs: Setting key performance indicators on employee retention rates for example can
help with measuring rates of employee engagement within the organisation. While many businesses set KPIs for
profits and customer feedback, often little is done in formally measuring employee morale.