Performance Management Conceptual

Framework

Introduction: Performance Management involves thinking

through various facets of performance, identifying critical
dimensions of performance, planning, reviewing, developing
and enhancing performance and related competencies.

Performance management system requires a clear definition of

the organizational vision, which is communicated to all
members of the organization in the context of a work
environment where every one knows what is expected in terms
of performance, and people are enable to perform to their best.

Performance management is a kind of compass; one that

indicate a persons actual direction as well as a persons
desired direction. Like a compass, the job of the manager is to
indicate where that person is now, and help to focus attention
and effort on desired direction. Performance management
requires willingness and a commitment to focus on improving
performance at the level of individual or team every day.

Organization with strong performance management systems

are 51% more likely to out perform the competitors on financial
measures, and 41% more likely to out perform their
competitors on non-financial measures ( e.g. customer
satisfaction, employee retention, quality of products or services
)

Performance management is difficult to execute well

throughout an entire organization because, performance
management demand daily, not annual, attention from every
manager. It is part of continuous process of improvement over
time.
IMPORTANCE OF PERFORMANCE MANAGEMENT:

Performance management plays an important part in the

overall process of growth of the individual or of the
organization. Hence it is important that we examine it in some
details:

1. Growth of individuals:
Improve employees efficiency by helping them realize and
use their full potential in carrying out their firms missions.
Provide information to employees and managers for
decisions making.
Improve the moral of the employee, and hence keep them
motivated.
2. Growth of organization:
Increase profitability
Increase output turnover
Improve quality maintenance
Competitive advantages
Enhance company image

PROCESS OF PERFORMANCE MANAGEMENT:

To practice sound performance management, managers must

do some thing provide timely feedback about performance,
while constantly focusing everyones attention on the ultimate
objective (e.g. world class customer service).

At general level, the broad process of performance

management requires three things:

Performance Planning:

Performance is defined as the record of outcomes produced on

specified job functions or activities during a specified time
period. A manager who plan performance ensures that
individual employees or teams know what is expected of them
and that they stay focused on effective performance. This
involves:
 Identify KRAs / Goal Setting:
1) Area of responsibility in which an employee is expected to
produce results.
2) Give direction to employees job and help in focusing on
important areas.
3) Provide a basis for appraisals & counseling.
Understanding Critical Success Factors:
These are measures that focus on how the job is to be
accomplished & include skills, Knowledge or behaviour that
improve job effectiveness / performance.

Drawing the Developmental Plan:

It is drawn based on the followings:

1) The planned KRAs.

2) Barriers to successful performance that have identified.
3) Gaps if any identified in critical success factors.
4) Any other developmental needs expected by employees.

Facilitate performance:

A. To eliminate roadblocks to successful performance.

Example:

Outdated or poorly maintained equipments

Delay in receiving supplies
Inefficient design of work space
Ineffective work method
B. To provide adequate resources to get a job done right and on
time.
Example:

Capital resource
Material resource
 Human resource
C. To pay careful attention while selecting employees
and to provide adequate training

Encourage performance:

A. Review performance in fair manner:

Collect employee inputs through survey or interview.
Ensure that all employees are treated consistently & fairly
while communicating about the process for administration
& rewards.
Encourage consistency in the approach across the
organization & constantly remind appraisers about ratings
errors. Like:- Halo effect, leniency or harshness error,
personal biasness.
B. Provide sufficient amount of rewards that employees really
value.
For example: pay, benefits, free time, merchandise, or
special privilege.

C. Provide sufficient amount of rewards to the employees in a

timely manner \

LINK BETWEEN PERFORMANCE MANAGEMENT &

PERFORMANCE APPRAISAL:

Performance management is continuous process. Performance

appraisals are periodic activities. Performance management is
dynamic process while performance appraisals are static.
Performance appraisals are a part of performance
management.

Performance management with performance appraisals should

lead to increase performance. However in most organizations,
performance appraisals have lead to decreased performance.
This happens particularly when appraisals are focused to wards
rewards, and when fewer people are rewarded than those
expecting them. Hence, those who are not rewarded get
demotivated.

The effort should be to make the performance process more

effective and productive using appraisal system. Appraisal
system helps managers manage their performance. Managers
should not be over whelmed with appraisals or appraisals
outcomes and ignore the most important aspects of
performance management performance improvements and
competency building. This happens when the concern get
focused on appraisals rather than improvements, or on rating
and rewards rather than performance enhancement and
development. Managers need to learn to enjoy the process
itself as it occurs round the year and is not blocked by
appraisals as they occurs once in a while.

Differences between Performance Management System

and Performance Appraisal System:

Performance Management System:

1. Focus is on performance appraisal and generation of ratings.

2. Emphasis is on relative evaluation of individuals.
3. Annual exercise.
4. Emphasis is on rating and evaluation
5. Rewards and recognitions of good performance is an
important component
6. Designed and monitored by the HR department.
7. Ownership is mostly with HR department.
8. KPAs and KRAs are used for bringing in objectivity.
9. Developmental needs are identified at the end of the year on
the basis of the appraisal of competency gaps
10. They are review mechanisms to ensure objectivity in
ratings
11. Format driven with emphasis on the process.
12. Linked to promotion, rewards, training and development
interventions and placements.
Performance Appraisal System:

1. Focus is on performance management

2. Emphasis is on performance improvements of individuals,
team and the organization
3. Continuous process.
4. Emphasis is on performance planning, analysis, review,
development and improvements.
5. Performance rewarding may or may not be an integral part.
Defining and setting performance standards is an integral
part.
6. Designed by HR department but could be monitored by the
respective departments themselves.
7. Ownership is with line managers, HR facilitates its
implication
8. KPAs or KRAs are used as Planning mechanisms
9. Developmental needs are identified in the beginning of the
year on the basis of competency requirements for the
coming year.
10. They are review mechanisms essentially to bring
performance improvement
11. Process driven with emphasis on the format as an aid
12. Linked to performance improvements and through them to
other HR decisions as and when necessary.

BENEFITS OF PERFORMANCE MANAGEMENT

1. PM focuses on results, rather than behaviors and

activities: A common misconception among supervisors is
that behaviors and activities are the same as results. Thus,
an employee may appear extremely busy, but not be
contributing at all toward the goals of the organization. An
example is the employee who manually reviews completion
of every form and procedure, rather than supporting
automation of the review. The supervisor may conclude the
employee is very committed to the organization and works
very hard, thus, deserving a very high performance rating.
2. Aligns organizational activities and processes to the
goals of the organization: PM 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.
3. Cultivates a system-wide, long-term view of the
organization: An effective performance improvement
process must follow a systems-based approach while looking
at outcomes and drivers. Otherwise, the effort produces a
flawed picture. For example, laying off people will likely
produce short-term profits. However, the organization may
eventually experience reduced productivity, resulting in long-
term profit loss.
4. Produces meaningful measurements: These
measurements have a wide variety of useful applications.
They are useful in benchmarking, or setting standards for
comparison with best practices in other organizations. They
provide consistent basis for comparison during internal
change efforts. They indicate results during improvement
efforts, such as employee training, management
development, quality programs, etc. They help ensure
equitable and fair treatment to employees based on
performance.

Other Benefits of Performance Management

1. Helps you think about what results you really want. You're
forced to be accountable, to "put a stake in the ground".
2. Depersonalizes issues. Supervisor's focus on behaviors and
results, rather than personalities.
3. Validates expectations. In today's age of high expectations
when organizations are striving to transform themselves and
society, having measurable results can verify whether grand
visions are realistic or not.
4. Helps ensure equitable treatment of employees because
appraisals are based on results.
5. Optimizes operations in the organization because goals and
results are more closely aligned.
6. Cultivates a change in perspective from activities to results.
7. Performance reviews are focused on contributions to the
organizational goals, e.g., forms include the question "What
organizational goal were contributed to and how?"
8. Supports ongoing communication, feedback and dialogue
about organizational goals. Also supports communication
between employee and supervisor.
9. Performance is seen as an ongoing process, rather than a
one-time, snapshot event.
10. Provokes focus on the needs of customers, whether
internal or external.
11. Cultivates a systems perspective, that is, focus on the
relationships and exchanges between subsystems, e.g.,
departments, processes, teams and employees. Accordingly,
personnel focus on patterns and themes in the organization,
rather than specific events.
12. Continuing focus and analysis on results helps to correct
several myths, e.g., "learning means results", "job
satisfaction produces productivity", etc.
13. Produces specificity in commitments and resources.
14. Provides specificity for comparisons, direction and
planning.
15. Redirects attention from bottom-up approaches (e.g.,
doing job descriptions, performance reviews, etc., first and
then "rolling.

PERFORMANCE PLANNING:

Performance Planning may be defined as a systematic outlining

of the activities that the manager is expected to undertake
during a specified period so that he is able to make his best
contribution to developmental and organizational outcomes.
The activities, thus outlined are indicative of the nature of
contributions the manager is expected to make to the
departmental goals. Personal planning involves

1. Role Description & Analysis:

Comprehensive and precise description of individuals roles
Identifications of individuals responsibilities, goals, tasks,
relationships, competencies and KPA
Role ambiguity may result in failure.
Role Stress: Role Ambiguity, Role Overload, Role Conflict
2. Special and Developmental Analysis:
One time, non repetitive, short term projects.
Aims at improving systems, procedures, competencies etc.
 Result in specific time-bound accomplishments by
individuals.
Innovations and creativity are involved
Covers self development issues
a.Aims at expanding, enhancing and improving abilities of
individuals to perform better
b.Self development activities may be on-the-job or off-
side.
c. Most important and urgent organizational needs should
be addressed and learning opportunities should be
provided to the individuals.
Covers system oriented issues
a.Studies to diagnose a major problem or obstacle
b.Review of existing system, procedures and modifying
them
c. Design new systems to effectively meet requirements
3. Performance Standards:
Standardization of exceptions
Equitable and consistent standards
Identical standards to measure performance
Predetermined standards to maintain discipline and overall
quality
To develop a widely acceptable basis for ascertaining and
assessing task progress.
Conflicts can be minimized
Standards help when specific targets cannot be set.
Standards help to describe fully satisfactory performance
Standards are based on role description responsibilities
Standards can be developed by
a. Key responsibility of the role
b. Results, outcomes, outputs or events.
c. Parameters used to assesses results are quality,
quantity, time, cost or combination of these.
d. Methods include data collection through questionnaire,
reports, interviews etc.
4. Outcomes or Stocktaking:
Stocktaking Performance:
a. Desired outcomes of Individuals role
b. Planned events for individuals development
c. Planned events for systems development
d. Workgroup inputs necessary for individuals
 e. Managers help
f. Synchronization monitoring control
Stocktaking Potential:
a. Professional Achievements
Qualifications Acquired
Professional recognition earned
b. Self Development
Carried out by individual
Organizations support is provided.
Appraising for Recognition & Reward
a. Reward management
b. Performance related pay
c. Paying for contribution

EVALUATING PERFORMANCE MANAGEMENT:

The performance process must follow a good measurement

practice in which consistent training, feedback and
communication are primary to achieve the targets. In this
process, the major job responsibilities of the particular job
should be defined and communicated rather than the
generalized personality traits. Then the performance standards
for these responsibilities are to be defined and communicated
by involving the employees. Evaluation period is an important
criterion while measuring the performance and should be fair
enough. The performance management plan should be
consistent with government laws which address non
discrimination.

The PMS involves several challenges. The following seven

challenges require great implementation effort to prevent the
system from failure.

1. Measuring / evaluating dimensions

2. Linking job description to performance management
3. Implementing performance management for staffs.
4. Linking compensation to performance management.
5. Matrix management
6. Keeping the system alive.
7. Keeping leaders focused.
These challenges can be kept away from undermining a
performance management implementation by meeting them
head on.