Contributions of Performance Management Systems

Motivation to perform is increased.

Self-esteem is increased.

Managers gain insight about subordinates.

The definitions of job and criteria are clarified.

Self-insight and development are enhanced.

Administrative actions are more fair and appropriate.

Organizational goals are made clear.

Employees become more competent.

Employee misconduct is minimized.

There is better protection from lawsuits.

There is better and more timely differentiation between good and poor performers.

Supervisors’ views of performance are communicated more clearly.

Organizational change is facilitated.

Motivation, commitment, and intentions to stay in the organization are enhanced.

Voice behavior is encouraged.

Employee engagement is enhanced.

Disadvantages/Dangers of Poorly Implemented Performance Management Systems

Increased turnover

Use of false or misleading information

Lowered self-esteem

Wasted time and money

Damaged relationships

Decreased motivation to perform

Employee job burnout and job dissatisfaction

Increased risk of litigation

Unjustified demands on managers’ and employees’ resources

Varying and unfair standards and ratings

Unclear ratings system

Returns and Their Degree of Dependency on the Performance Management System

Return Degree of Dependency

Cost-of-living adjustment Low

Income protection Low

Work/life focus Moderate

Allowances Moderate

Relational returns Moderate

Base pay Moderate

Contingent pay (Merit Pay) High

Short-term incentives High

Long-term incentives High

Purposes Served by a Performance Management System

Strategic: To help top management achieve strategic business objectives

Administrative: To furnish valid and useful information for making administrative decisions about
employees

Informational: To inform employees about how they are doing and about the organization’s and the
supervisor’s expectations

Developmental: To allow managers to provide coaching to their employees

Organizational maintenance: To provide information to be used in workplace planning and allocation of

Documentational: To collect useful information that can be used for various purposes (e.g., test
development, administrative decisions)

Characteristics of an Ideal Performance Management System

Strategic congruence
Context congruence

Thoroughness

Practicality

Meaningfulness

Specificity

Identification of effective and ineffective performance

Reliability

Validity

Acceptability and fairness

Inclusiveness

Openness

Correctability

Standardization

Ethicality

Performance Management Process:

prerequisites

In summary, there are two important prerequisites that must exist before the implementation of a
successful performance management system. First, there is a need to have good knowledge of the
organization’s mission and strategic goals. This knowledge, combined with knowledge regarding the
mission and strategic goals of their unit, allows employees to make contributions that will have a
positive impact on the unit and on the organization as a whole. Second, there is a need to have good
knowledge of the job in question: what tasks need to be done, how they should be done, and what KSAs
are needed. Such knowledge is obtained through a job analysis. If we have good information regarding a
job, then it is easier to establish criteria for job success.

Performance Planning

Results

Behaviors

Developmental Plan
Performance Execution

Employees Managers

Commitment to goal achievement Observation and documentation

Ongoing performance feedback and coaching Updates

Communication with supervisor Feedback

Collecting and sharing performance data Resources

Preparing for performance reviews Reinforcement

Performance Assessment

In sum, both the employee and the supervisor must evaluate employee performance. Employee
involvement in the process increases employee ownership and commitment to the system. In addition,
it provides important information to be discussed during the performance review, which is discussed
next.

Performance Review

Six Recommended Steps for Conducting Productive Performance Reviews

1. Identify what the employee has done well and poorly by citing specific positive and negative
behaviors.

2. Solicit feedback from your employee about these behaviors. Listen for reactions and explanations.

3. Discuss the implications of changing, or not changing, the behaviors. Positive feedback is best, but an
employee must be made aware of what will happen if any poor performance continues.

4. Explain to the employee how skills used in past achievements can help him overcome any current
performance problems.

5. Agree on an action plan. Encourage the employee to invest in improving his performance by asking
questions such as “What ideas do you have for ______?” and “What suggestions do you have for
______?”

6. Set up a meeting to follow up and agree on the behaviors, actions, and attitudes to be evaluated.

Performance Renewal and Recontracting

The final stage in the performance process is renewal and recontracting. Essentially, this is identical to
the performance planning component. The main difference is that the renewal and recontracting stage
uses the insights and information gained from the other phases.
Linking Strategic Management and Strategic Planning

1- Organization’s Strategic Plan