Performance Management – Meaning, Features, Basic Elements, Need and Cycle
Performance management is the integration of performance appraisal systems with broader human resource systems as a means of aligning employees’ work behaviours with the organisation’s goals.
Features of Performance Management that differentiates it from Performance Appraisal
1. Performance management never means just meeting with a subordinate once or twice a year to ‘review your performance’. It means continuous, daily or weekly interactions and feedback to ensure continuous improvement.
2. Performance management is always goal-directed. The continuing performance reviews always involve comparing the employee’s or team’s performance against goals that specifically stem from and link to the company’s strategic goals.
3. Performance Management means continuously reevalauting and (if need be) modifying how the employee and team get their work done. Depending upon the issue, this means additional training, changing work procedures, or instituting new incentive plans, for instance.
Basic Elements of Performance Management
1. Direction sharing
It means communicating the company’s higher-level goals (including its vision, mission, and strategy) throughout the company and then translating these into doable departmental, team, and individual goals.
2. Goal alignment
It means having a process that enables any manager to see the link between an employee’s goals and those of his or her department and company.
3. Ongoing performance monitoring
It usually includes using computer-based systems that measure and then e-mail progress and exception reports based on the person’s progress toward meeting his or her performance goals.
4. Ongoing feedback includes both face-to-face and computer-based feedback regarding progress toward goals.
Coaching and developmental support
It should be an integral part of the feedback process.
5. Rewards, recognition, and compensation
These all play a role in providing the consequences needed to keep die employee’s goal-directed performance on track.
Need for Performance Management
Employers are moving to performance management for three main reasons—total quality, appraisal issues, and strategic planning.
1. Total Quality
More managers arE adopting the total quality management (TQM) philosophy advocated by management gurus like W. Edwards Deming. Deming argued that an employee’s performance is more a function of things like training, communication, and supervision than of his or her own motivation. Performance appraisals tend to focus more on problems—what’s the employee doing wrong? Deming said that is the wrong approach. Consistent with Deming’s philosophy, performance management puts the focus on continuous collegial feedback, and (when necessary) on changing things like training, incentives, and procedures.
2. Appraisal Issues
Traditional performance appraisals are often tense and counterproductive. Indeed, there is an obvious flaw in appraising employees once or twice per year: if things need improving, why wait 6 months to do some¬thing about it?
3. Strategic Planning
Researchers studied 1,800 large companies. About 90% had strategic plans with strategic goals. However, only about one in eight achieved their strategic goals. Briefly, many managers formulate strategic plans, and then drop the ball? They do so by not communicating their strategies to employees, by not assigning each employee clear goals and responsibilities, and by not monitoring actual progress.
Performance management aims to avoid that. Employees get goals that stem from the company’s strategy. Then, performance management’s continuous performance reviews align the employee’s or team’s performance with those strategic goals.
The Performance Management Cycle
Performance management should be an ongoing, interactive process designed to enhance employee capability and facilitate productivity. The performance management cycle is illustrated in the following figure:
There is no one way to manage performance. Whatever system is adopted needs to be congruent with the culture and principles that pervade the organisation. However, most systems of performance management have several parts:
1. Defining Performance
It is desirable to carefully define performance so that it supports the organisation’s strategic goals. Setting clear goals for individual employees is a critical component of performance management.
2. Appraisal Process
It is important to conceptualise an appraisal process that will be steady across the organisation and consistent with the culture of the organisation. There are many ways of appraising employee performance, and the system adopted has to be one that will work in the context of the particular organisation involved.
3. Measuring Performance
Measuring performance does not need to be narrowly conceived but can bring together multiple types of performance measured various ways. The key is to measure often and use the information for midcourse corrections.
4. Feedback and Coaching
To improve performance, employees need information (feedback) about their performance, along with guidance in reaching ; next goal.
Difference between Performance Appraisal Systems and Performance Management Systems
Performance Appraisal Systems
Performance Management Systems
|Focus is on performance appraisal and generation of ratings||Focus is on performance management.|
|Emphasis is on relative evaluation of individuals||Emphasis is on performance improvements of individual officer and his department or team performance|
|Annual exercise-though normally periodic evaluations are made||Continuous process with quarterly or periodic performance review discussions|
|Emphasis is on rating and evaluation||Emphasis is on performance planning, analysis, review, development and improvements|
|Rewards and recognition of good performance is an important component||Performance rewarding may or may not be an integral part
Defining and setting performance standards is an integral part
|Designed and monitored by the personnel/administration department||Designed by the personnel/HR department but could be monitored by the respective departments themselves|
|Ownership is mostly with the administration/personnel department||Ownership is with line managers, personnel/administration facilities its implementation|
|KPAs and KRAs are used for bringing in objectivity||KPAs, or KPAs are used as planning mechanisms|
|Development needs are identified at the end of the year on the basis of the appraisal of competency gaps||Developmental needs are identified in the beginning of the year on the basis of the competency requirements for the coming year|
|There are review mechanisms to ensure objectivity in ratings||There are review mechanisms essentially to bring performance improvements|
|It is a system with deadlines, meetings, input and output and a format.||It is a system with deadline, meeting, input, output and a format.|