Performance Management

1. PERFORMANCE MANAGEMENT
Vildan ESENYEL
Advanced Human Resource Management

2. Contents
Performance Management
Performance Appraisal
Differences of Performance Management and Appraisal
Who should do the appraising
Methods of Performance Appraisal
Appraisal Period
Purposes of Performance Management
Reward Systems
Problems in Performance Management
Evaluating Performance
Talent Management
Appraisal Interview
Disadvantages/Dangers of Poorly Implemented PM Systems
Suggestions and Conclusion

3. Teams of highly skilled, trained and
motivated employees will nearly
always overcome most of the
difficulties created by external forces
while a poorly motivated, untrained
and unskilled labor force will nearly
always fail to take advantage of
favorable external opportunities.

4. Performance is the sum of behavior plus results:
Performance = Behavior + Results
If you only focus on behaviors, you won’t notice if you did not get
desired results
If you only focus on results, you won’t notice if your employees
don’t behave correctly
What is Performance?

5. What Influences Performance?
1
1. Career goals are not being met with the
job.
2. There is conflict with other employees or
the manager.
3. The goals or expectations are not in line
with the employee’s abilities.
4. The employee views unfairness in the
workplace.
5. The employee manages time poorly.
6. The employee is dissatisfied with the job

6. What Influences Performance?
2
1. The employee doesn’t have
correct equipment or tools to
perform the job.
2. The job design is incorrect.
3. External motivation factors are
absent.
4. There is a lack of management
support.
5. The employee’s skills and job are
mismatched

7. Types of Performance Issues
1. Constantly late or leaves early
2. Too much time spent doing
personal things at work
3. Inability to handle proprietary
information
4. Family issues
5. Drug and alcohol abuse
6. Nonperforming
7. Conflicts with management or
other employees
8. Theft
9. Ethical breaches
10. Harassment
11. Employee conduct outside the
workplace

8. What do we mean by performance management?
‘The policies, procedures
and practices that focus on
employee performance as a
means of fulfilling
organisational goals and
objectives’
(Lowry (2002) in Marchington
and Wilkinson (2005: 187-8))
‘

9. Performance Calibration
Process in which supervisors and
managers at the same level in
an organization discuss staff
performance ratings and outcomes to
ensure ratings and development
messages are applied consistently
Setting Expectations
The process of discussing what is
expected from an employee in terms
of job roles and responsibilities
Goals and Objectives
Desired results each employee aims to
achieve, determined based on
conversations between managers and
employees
Goal Alignment
Process of ensuring individual
goals support the achievement of
department goals and department
goals support the achievement of
University goals
Assessment
Review of goals, objectives,
and other factors, and the
determination of the level of
successful achievement
The process of setting expectations, aligning goals, assessing results, and focusing on staff development through
ongoing conversations between managers and their direct report(s).
What is Performance Management?
Feedback and Development
Focus of the conversations
between managers and
employees in determining
strengths, opportunities for
improvement, and how
to grow and develop
Feedback and
Development
PerformanceManagement
InAction
Performance Management is what you do with the information you’ve
developed from measuring performance.

10. performance management is a tool to ensure that
managers manage effectively; that they ensure the
people or teams they manage:
According to Armstong and Baron:
• know and understand what is
expected of them.
• have the skills and ability to deliver on
these expectations.
• are supported by the organization to
develop the capacity to meet these
expectations are given feedback on
their performance.
• have the opportunity to discuss and
contribute to individual and team
aims and objectives.

11. Performance management
performance management should be:
Strategic
Integrated
Performance improvement
Development
Managing behaviour
It should incorporate:

12. The Performance Management Cycle
Performance management is a
process, not an event.
It operates as a continuous cycle.

13. PM provides information for:
Development of
training to meet
organizational
needs
Workforce
planning
Recruitment
and hiring
decisions
Development
of
compensation
systems

14. An effective performance management system should do the
following:
Make clear what
the organization
expects
Identify areas of
success and needed
development
Document
performance for
personnel records
Provide performance
information to
employees

15. Performance Management and Organizational
Development
Organizational development
can be defined as a complex educational
strategy intended to change the beliefs,
attitudes, values and structure of
organizations so that they can better adapt
to new technologies, markets and
challenges, and the rate of change itself.
The output from
performance
management can be
used as an input to
Organizational
Development.
Continuous and Continual improvement

16. The keys to the successful introduction and
application of performance management are:

17. Main purposes of performance management
The
organizational
level
The individual
and team
level

18. Purposes of Performance Management Systems:
Strategic
Administrative
Informational
Developmental
Let’s look at each in detail.

19. Purposes of Performance Management
Systems:
Commitment
& Consistency
Reciprocation
Scarcity
Authority
Let’s look at each in detail.
The following are the key principles of influencing people:
Strategic
Purpose
Link individual goals
with organization’s goals
Communicate most
crucial business strategic
initiatives

20. Purposes of Performance Management
Systems:
Administrative
Purpose
Provide information for
making decisions:
Salary adjustments
Promotions
Retention or
termination
Recognition of
individual performance
Layoffs

21. Purposes of Performance Management
Systems:
Informational
Purpose
Communicate to Employees:
Expectations
What is important
How they are doing
How to improve

22. Purposes of Performance Management
Systems:
Developmental
Purpose
Performance
feedback/coaching
Identification of individual
strengths and weaknesses
Causes of performance
deficiencies
Tailor development of
individual career path

23. Purposes of Performance Management
Systems:
Plan effective workforce
Assess future training
needs
Evaluate performance at
organizational level
Evaluate effectiveness of
HR interventions

24. Purposes of Performance Management
Systems:
Validate selection
instruments
Document administrative
decisions
Help meet legal
requirements

25. Contributions of Performance Management
For Employees
Clarify definitions of
job
success criteria
Increase motivation to
perform
Increase self-esteem
Enhance self-insight and
development
For Managers
Communicate supervisors’
views of performance more
clearly
Managers gain insight
about subordinates
Better and more timely
differentiation between good
and poor performers
Employees become more
competent
For Organization/HR
Function
Clarify organizational goals
Facilitate organizational
change
Fairer, more appropriate
administrative actions
Better protection from
lawsuits

26. Disadvantages/Dangers of Poorly-implemented PM Systems
For Employees
• Lowered self-esteem
• Employee burnout and
job dissatisfaction
• Damaged relationships
• Use of false or
misleading information
For Managers
• Increased turnover
• Decreased motivation
to perform
• Unjustified demands on
managers’ resources
• Varying and unfair
standards and ratings
For Organization/HR
Function
• Wasted time and
money
• Unclear ratings system
• Emerging biases
• Increased risk of
litigation

27. Performance
Management
is NOT
performance appraisal

28. Performance Appraisal vs Performance Management
Performance management
is a series of activities
designed to ensure that the
organization gets the
performance it needs from
its employees.
• Strategic business
considerations
• Driven by line manager
• Ongoing feedback
• So employee can
improve performance
Performance appraisal is the
process of determining how
well employees do their jobs
relative to a standard and
communicating that
information to them.
• Driven by HR
• Assesses employee
• Strengths &
• Weaknesses
• Once a year
• Lacks ongoing feedback

29. Performance appraisal
means evaluating an
employee’s current
and/or past performance
relative to his or her
performance standards.

30. Uses of Performance Appraisal
Human resource planning
Recruitment and selection
Training and development
Career planning and development
Internal employee relations
Compensation programs
Assessment of employee potential
ADMINISTRATIVE and DEVELOPMENTAL ACTIONS

31. Why Performance Appraisal?
validate and refine organizational
actions (e.g., selection,
training);
provide feedback to employees
with an eye on improving
future performance
Performance appraisal is a vehicle to:

32. Effective Performance Management
STANDARDIZATION
DEVELOPMENT
CONSISTENT
• Consistent with the
strategic mission of
the organization
• Performance
expectations
• Legal and job related
• Beneficial as a
development tool
• Useful as an
administrative tool
• Effective in documenting
employee performance
• Viewed as generally
fair by employees
• Trained appraisers
• Standardization
Continuous
open
communication

34. Establish Performance Criteria (Standards)
Behaviors
Competencies
Goal achievement
Improvement potential
Traits

35. How to Set Effective Goals
Assign Specific
Goals
Assign
Measurable
Goals
Assign Challenging but Doable Goals
Encourage
Participation

36. The Appraisal Period

37. WHO SHOULD DO THE APPRAISING?
1
2
3
4
5
Let us look at each in detail.

38. WHO SHOULD DO THE APPRAISING?
1
• Traditionally most
common choice.
• Usually in excellent
position to observe
employee’s job
performance
• Has responsibility for
managing particular
unit.

39. Our culture has viewed
evaluation by subordinates
negatively.
Some firms find that evaluation
of managers by subordinates is
both feasible and needed.
Issues:
• Could be seen as a
popularity contest
• Possible reprisal against
employees
WHO SHOULD DO THE APPRAISING?
2

40. WHO SHOULD DO THE APPRAISING?
3
Work closely with evaluated
employee and probably have
undistorted perspective on
typical performance.
Problems include reluctance of
some people who work closely
together, especially on teams, to
criticize each other.

41. WHO SHOULD DO THE APPRAISING?
4
• If employees understand
their objectives and the
criteria used for evaluation,
they are in a good position to
appraise own performance.
• Employee development is
self-development
• Self-appraisal may make
employees more highly
motivated

42. WHO SHOULD DO THE APPRAISING?
5
• Customer behavior
determines firm’s degree of
success
• Demonstrates commitment
to customer
• Holds employees accountable
• Fosters change

43. RATING COMMITTEES
Using multiple raters is
advantageous.
It can help cancel out problems
such as bias on the part of
individual raters. It can also
provide a way to include in the
appraisal the different facets of an
employee’s performance observed
by different appraisers. Multiple
raters often see different facets of
an employee’s performance.
A rating committee is
usually composed of the
employee’s immediate
supervisor and three or
four other supervisors.

44. 360-Degree Evaluation
Multi-rater evaluation
Input from multiple sources
Focuses on skills needed across
organizational boundaries
More objective measure of
performance
Process more legally defensible

46.  Rating scales
 Critical incidents
 Essay
 Work standards
 Ranking
 Paired comparisons
 Forced distribution
 Behaviorally anchored
rating scales (BARS)
 Result-based systems
Choosing a Performance Appraisal Method

47. Written Essays
Probably the simplest
method of evaluation is
to write a narrative
describing an employee’s
strengths, weaknesses,
past performance,
potential, and
suggestions for
improvement.

48. Critical Incident Method
The critical incident
method entails keeping
an anecdotal record of
good or undesirable
examples of an
employee’s work-related
behavior and reviewing it
with the employee at
predetermined times.

49. Behaviorally Anchored Rating Scales (BARS)
BARS specify definite,
observable, and
measurable job behavior.
Examples of job-related
behavior and
performance dimensions
are found by asking
participants to give
specific illustrations of
effective and ineffective
behaviour regarding each
performance dimension.

50. Multi-person Comparisons
Multi-person
Comparisons evaluate
one individual’s
performance against the
performance of one or
more others. It is a
relative rather than an
absolute measuring
device.
The three most popular comparisons are:
• group order ranking,
• individual ranking,
• paired comparisons

51. Alternation Ranking Method
Ranking employees from
best to worst on a trait or
traits is another popular
appraisal method.
Because it is usually
easier to distinguish
between the worst and
best employees than to
rank them, an alternation
ranking method is useful.

52. Graphic Rating Scale Method
A graphic rating scale lists
a number of traits and a
range of performance for
each.
The supervisor rates each
subordinate by circling or
checking the score that
best describes the
subordinate’s
performance for each
trait, and then totals the
scores for all traits.

53. Forced Distribution
Rater assigns individual in
workgroup to limited
number of categories
Assumes all groups of
employees have same
distribution

54. Result-Based Systems
Manager and
subordinate agree on
objectives for next
appraisal
Evaluation based on
how well objectives
are accomplished
Management by objectives (MBO)

55. Work Standards
Compares
performance to
predetermined
standard

56. Competency-based appraisal
A consequence of the
development of
organizational
competency models
has been that
employers have
increasingly extended
their use from training
and development,
selection and reward
into the area of
appraisal.

57. Team-based appraisal
In individual appraisals, the focus is often on evaluating the achievement of the tasks set out for the job.
For teams, some commentators (Scott and Einstein, 2001) argue that the best way to appraise
performance is by focusing on the outcomes of the team (e.g. productivity, sales volume and customer
complaints).

58. Using Information Technology to Support Performance Management
Electronic performance
monitoring (EPM) systems
use computer technology to
allow managers to monitor
their employees’ rate,
accuracy, and time spent
working online or just on
their computers.
Electronic Performance Monitoring

59. Evaluations fulfill the purpose of providing feedback to
employees on how the organization views their
performance

61. Problems in Performance Appraisal
• Performance appraisal process cuts into
manager’s time
• Experience can be unpleasant when
employee has not performed well

62. Problems in Performance Appraisal
• Factors such as attitude, appearance, and
personality are difficult to measure
• Factors may have little to do with employee’s job
performance
• May place evaluator and company in untenable
positions

63. Problems in Performance Appraisal
Halo error: Manager generalizes one positive performance feature
or incident to all aspects of employee performance, resulting in
higher rating
Horn error: Manager generalizes one negative performance
feature or incident to all aspects of employee performance,
resulting in lower rating

64. Problems in Performance Appraisal
Leniency: Giving undeserved high ratings
Strictness: Being unduly critical of employee’s work
performance
Worst situation is when firm has both lenient and strict
managers and does nothing to level inequities

65. Problems in Performance Appraisal
• Error occurs when employees are incorrectly
rated near average or middle of scale
• May be encouraged by some rating scale systems
requiring evaluator to justify extremely high or
extremely low ratings

66. Problems in Performance Appraisal
• Employee’s behavior often improves and
productivity rises several days or weeks before
scheduled evaluation
• Natural for rater to remember recent behavior
more clearly than past actions
• Necessary to maintain records of performance

67. Problems in Performance Appraisal
• Managers allow individual differences such as gender,
race, or age to affect ratings
• Effects of cultural bias, or stereotyping, can influence
appraisals
• Other factors
Example: Mild-mannered employees may be
appraised more harshly, simply because they do not
seriously object to appraisal results

68. Problems in Performance Appraisal
Sometimes, managers control every aspect of appraisal
process and manipulate the system
Example:
A supervisor wants to give pay raise to certain
employee, so supervisor may give employee an
undeserved high performance evaluation.

69. Problems in Performance Appraisal
• Evaluation process may create anxiety for
appraised employee
• Opportunities for promotion, better work
assignments, and increased compensation may
hinge on results

70. Reactions
A manager owes an employee a welldone appraisal, no matter how difficult an
employee is, or how difficult the conversation about performance might be.
Reactions of
Managers
Reactions of
Appraised
Employees

71. Feedback as a System
Feedback has a direct impact on our work:
Gives us specific information to help us improve
Makes performance expectations clear from the start
Heightens efficiency by reducing resentment, buildup, etc.
Strengthens relationships
Motivational feedback Development feedback
There are different types of feedback that should be
used according to the situation:

72. Experts recommend a five-step
process:
1. Review the objectives of the
session
2. Dual preparation
3. Plan your approach
4. Check your attitude
5. Select the right time and place
Preparing for the Performance Review Session

73. Learning and development
Performance reviews can be
regarded as learning events, in
which individuals can be
encouraged to think about how
and in which ways they want to
develop.
This can lead to the drawing up
of a Personal Development
Plan (PDP) setting out the
actions they propose to take
(with the help of others, not
least their managers) to
develop themselves.

74. Organizational Processes of Talent and Performance
Management
Talent management is the goal-oriented and integrated process of planning,
recruiting, developing, appraising, and compensating employees.

75. PAY SYSTEM

76. Reward Systems
Tangible returns
Cash compensation
Base pay
Cost-of-Living & Contingent
Pay
Incentives (short- and long-
term)
Benefits, such as
Income Protection
Allowances
Work/life focus
Intangible returns
Relational returns, such as
Recognition and status
Employment security
Challenging work
Learning opportunities

77. The Manager, Employee Development
and Performance
100
125
Performance of Employees Reporting to Manager A Performance of Employees Reporting to Manager B
Source: Learning and Development Roundtable 2003 Employee Development Survey
Employees of managers who are very effective at development can outperform their
peers by up to 25 percent
Impact of Manager-Led Development on Employee Performance
Employees Reportingto
ManagerA
Manager A is very ineffective
at developing employees
Employees Reportingto
ManagerB
Manager B is very
effective at developing
employees
}
25%
PerformanceImprovement
directly attributable to
Manager B’s effectiveness at
employee development

78. SUGGESTIONS FOR IMPROVING
PERFORMANCE EVALUATIONS
Evaluate
Selectively
Document
Performance
Behaviours in a Diary
Use Multiple
Evaluators
Emphasize
Behaviours Rather
Than Traits
Train Evaluators

79. REFERENCES
Armstrong, M. (2006) A Handbook of Human Resource Management Practice,
London: Kogan Page.
Armstrong, M. and Murlis, H. (2004) Reward Management: A Handbook of
Remuneration Strategy and Practice, 5th edition, London: Kogan Page.
Beardwell, I. and Holden, L. (2001) Human Resource Management: A
Contemporary Approach, Harlow, UK: Pearson Education.
Bechet, T, P. (2008) Strategic Staffing: A Comprehensive System for Effective
Workforce Planning, New York: American Management Association.
Sims, R. S. (2006) Human Resource Development: Today and Tomorrow,
Greenwich, CT: Information Age Publishing
Taylor, S. (2002) People Resourcing, London: Chartered Institute of Personnel and
Development
Torrington, D., Taylor, S. and Hall, L. (2008) Human Resource Management,
London: Prentice Hall
Wright, P., Dunford, B. and Snell, S. (2001) ‘Human Resources and the Resource-
Based View of the Firm’, Journal of Management, 27: 701–21