Performance management is a systematic process used by organizations to ensure that

employees' activities and outputs align with the organization’s strategic goals. It involves
ongoing communication between managers and employees to assess performance, set
expectations, provide feedback, and develop skills to enhance job performance. The process aims
to improve individual and organizational performance and foster professional growth.

Here is a detailed breakdown of the performance management process:

1. Planning

The performance management process starts with careful planning. During this phase, the
organization sets clear expectations and goals for employees.

• Setting Objectives: Managers and employees work together to set specific, measurable,
achievable, relevant, and time-bound (SMART) goals. These goals should align with both
individual career aspirations and the broader strategic objectives of the organization.
• Performance Standards: Clear performance standards are established to define how
success will be measured. These may include key performance indicators (KPIs) or
benchmarks that employees are expected to meet.
• Competency Development: Along with performance objectives, expectations regarding
skills, competencies, and behaviors are also outlined. This ensures employees understand
what is expected in terms of technical skills, leadership, communication, teamwork, and
other competencies.

2. Monitoring

This phase involves the continuous tracking and measuring of performance against the objectives
set in the planning phase.

• Ongoing Feedback: Managers provide ongoing feedback throughout the year, rather
than waiting for an annual review. This enables timely course correction and performance
improvements.
• Performance Tracking: Various tools and methods, such as performance dashboards,
regular check-ins, and self-assessments, are used to monitor progress. Both quantitative
(sales targets, output measures) and qualitative (behavioral competencies, customer
feedback) indicators may be tracked.
• Documentation: Documenting achievements, challenges, and progress is crucial for
providing concrete examples during future evaluations and feedback sessions.

3. Developing

Development is a critical aspect of performance management, focusing on enhancing employees'

skills and performance capabilities.
 • Training and Development: Managers identify skill gaps or areas for improvement and
provide opportunities for professional development. This can include on-the-job training,
mentorship, workshops, or courses.
• Coaching: Continuous coaching by supervisors and peers can help employees refine their
skills and stay aligned with performance goals.
• Career Growth Planning: Employees are encouraged to participate in setting their own
developmental goals, which may include gaining new skills, exploring new career paths,
or preparing for future leadership roles.

4. Reviewing/Assessing

Formal evaluation or review of an employee’s performance typically takes place at regular

intervals, such as quarterly or annually. This stage focuses on comparing the employee’s
performance against the pre-established objectives and standards.

• Performance Appraisals: During the appraisal, managers evaluate the employee’s

achievements, progress, and areas for improvement. This could be done through:
o Self-assessment: Employees reflect on their performance, achievements, and
challenges.
o Manager’s Evaluation: Managers provide their assessment of how well the
employee has met objectives.
o 360-degree Feedback: Input from peers, subordinates, and supervisors might also
be used to give a well-rounded view of the employee’s performance.
• Rating Systems: Organizations may use rating systems (e.g., ranking or grading scales)
to classify performance levels, from "exceeds expectations" to "needs improvement."
• Gap Analysis: Any gap between expected and actual performance is identified and
discussed.

5. Rewarding

Rewarding is a critical step in the performance management process, ensuring that employees
feel recognized and motivated to continue performing at a high level.

• Compensation Adjustments: High performers may be rewarded with salary increases,

bonuses, or other financial incentives.
• Non-Monetary Rewards: Recognition programs, promotions, additional responsibilities,
or personal development opportunities can serve as non-monetary rewards that
acknowledge employees’ efforts.
• Public Recognition: In some organizations, employees might be publicly recognized in
team meetings or through corporate communication channels for their achievements.

6. Improving/Action Planning

In cases where performance has not met expectations, this phase involves implementing an
improvement plan to help employees get back on track.
 • Performance Improvement Plan (PIP): If an employee’s performance is below
expectations, a PIP may be introduced to help them improve. The plan should include
specific steps, timelines, and clear goals for improvement.
• Support and Mentoring: Additional support, such as more frequent check-ins,
additional resources, or mentoring, may be provided to help the employee achieve desired
performance levels.
• Addressing Problems: If performance continues to fall below expectations despite
interventions, further action may be taken, such as reassignment to a different role or
even termination in severe cases.

7. Renewal/Continuous Cycle

Performance management is a continuous cycle, and once the process of evaluating and
rewarding is completed, the planning for the next performance cycle begins.

• Continuous Feedback Loop: The insights gained during the assessment phase inform
the planning of the next cycle, allowing for goal adjustments, new challenges, and
developmental opportunities.
• Adaptation: The performance management process must remain flexible to adapt to new
organizational goals, shifts in market conditions, or evolving business strategies.

Benefits of Performance Management

• Alignment with Organizational Goals: Performance management ensures that

employees’ efforts are directed toward achieving organizational objectives.
• Increased Employee Engagement: Continuous feedback and recognition improve
employee engagement and motivation.
• Skill Development: Performance management provides employees with a clear path for
skill development and career growth.
• Improved Communication: The process promotes ongoing communication between
managers and employees, helping to clarify expectations and address issues proactively.
• Data-Driven Decisions: With measurable goals and regular reviews, the organization
can make data-driven decisions about promotions, training needs, or workforce
adjustments.

Conclusion

The performance management process is essential for improving employee performance,

driving organizational success, and fostering a culture of continuous improvement. When
effectively implemented, it leads to greater alignment between individual contributions and
organizational objectives, enabling businesses to thrive in competitive environments.

Dimensions of Performance Management refer to the various aspects or areas that are critical
to the effective evaluation and enhancement of employee performance. These dimensions
provide a comprehensive framework for managing performance holistically, ensuring alignment
with organizational goals, and fostering employee growth. The main dimensions include goal-
setting, feedback, development, reward systems, and more.

Here are the key dimensions of performance management:

1. Goal Setting and Alignment

• Clear Objective Definition: Performance management starts with establishing clear,

specific, measurable, achievable, relevant, and time-bound (SMART) goals. These goals
align individual performance with the organization’s strategic objectives.
• Cascading Goals: The process often involves cascading organizational goals down to
teams and individual employees, ensuring alignment at all levels.
• Performance Standards: Each goal is linked to specific performance standards that
define acceptable and exceptional levels of achievement.

2. Performance Measurement and Monitoring

• Key Performance Indicators (KPIs): KPIs are used to quantify and measure the
effectiveness of an employee’s work. This could include sales figures, productivity
metrics, or customer satisfaction scores.
• Qualitative and Quantitative Assessment: In addition to numerical data, performance
management also considers qualitative aspects such as teamwork, leadership, and
communication skills.
• Ongoing Monitoring: Performance is monitored regularly through formal and informal
means, allowing for real-time adjustments and feedback.

3. Feedback and Communication

• Continuous Feedback: Providing real-time, ongoing feedback is a cornerstone of

effective performance management. Frequent check-ins help employees understand how
they are performing and make necessary improvements.
• Constructive Communication: The feedback process should be constructive, focusing
not only on areas of improvement but also on positive reinforcement and recognition of
achievements.
• Two-Way Communication: Performance management is most effective when there is
open dialogue between managers and employees, where employees can share their views
and contribute to their own development.

4. Development and Training

• Skills Assessment: One of the primary dimensions of performance management is

identifying gaps in skills and competencies.
• Career Development Plans: Organizations use performance management to create
development plans that align with both individual aspirations and organizational needs,
encouraging continuous learning and growth.
 • Training Programs: Based on performance reviews, employees may receive training in
technical skills, leadership, communication, or other areas necessary for their role.

5. Employee Recognition and Reward Systems

• Monetary Rewards: High performers are often rewarded with bonuses, salary increases,
or promotions.
• Non-Monetary Rewards: Recognition through awards, public acknowledgment,
additional responsibilities, or professional development opportunities can serve as
powerful non-monetary motivators.
• Incentive Programs: Performance management systems often include incentive
programs that tie compensation or recognition to performance outcomes.

6. Performance Appraisal and Evaluation

• Annual or Periodic Reviews: Formal performance appraisals typically occur on a

quarterly, bi-annual, or annual basis. These reviews summarize an employee’s
performance over a period and compare it against pre-set objectives.
• Self-Assessment: Employees are often given the opportunity to evaluate their own
performance, providing insight into their own achievements and areas for improvement.
• Multi-Rater Feedback (360-Degree Feedback): Performance evaluations may also
incorporate feedback from peers, subordinates, and customers to provide a well-rounded
view of performance.

7. Coaching and Mentoring

• Personalized Coaching: Managers provide one-on-one coaching to guide employees

toward improving performance or developing new skills.
• Mentorship: Establishing mentoring relationships helps employees grow professionally,
learn from experienced colleagues, and align their personal growth with organizational
goals.
• Leadership Development: For high-potential employees, coaching and mentoring are
critical dimensions that contribute to leadership development and succession planning.

8. Performance Improvement Plans (PIP)

• Addressing Underperformance: When performance does not meet expectations, a

Performance Improvement Plan (PIP) is created to clearly outline areas for improvement
and steps for development.
• Supportive Measures: The PIP dimension emphasizes providing additional support,
resources, and guidance to help the employee improve.
• Clear Objectives and Deadlines: The PIP includes specific objectives, timelines, and
measurable outcomes to track progress and assess improvements.

9. Organizational Culture and Engagement

 • Alignment with Values: Employee performance is often evaluated in the context of the
organization’s core values and culture. Employees are expected not only to meet goals
but also to exhibit behaviors aligned with organizational ethics and principles.
• Engagement and Morale: Performance management also includes ensuring that
employees are motivated, engaged, and committed to their roles, which contributes to
overall organizational success.
• Employee Well-Being: A focus on holistic employee well-being is becoming an
important dimension, with organizations prioritizing work-life balance, mental health,
and job satisfaction.

10. Documentation and Record-Keeping

• Performance Documentation: All performance reviews, feedback, and development

plans should be well-documented for future reference. This helps in tracking progress
over time and ensures fairness in evaluations.
• Compliance and Legal Considerations: Performance management systems must also
adhere to legal requirements, ensuring that evaluations are fair, unbiased, and in line with
labor laws.

11. Accountability and Responsibility

• Clarifying Roles: Performance management requires employees to have a clear

understanding of their roles, responsibilities, and accountabilities.
• Ownership of Performance: Employees are encouraged to take ownership of their
performance, regularly assess their progress, and take proactive steps to meet or exceed
expectations.
• Manager Accountability: Managers are also accountable for providing the necessary
support, resources, and feedback to help employees succeed.

12. Adaptability and Flexibility

• Dynamic Adjustments: Performance management must be adaptable to changes in the

business environment, organizational strategy, or individual circumstances.
• Real-Time Adjustments: The ability to adjust goals, provide feedback, or change
development plans dynamically based on evolving needs ensures that performance
management stays relevant.

Conclusion

The dimensions of performance management provide a comprehensive approach to managing

employee performance, development, and overall contributions to organizational success. By
addressing these key areas, organizations can foster continuous improvement, engagement, and
alignment between individual and organizational goals. Effective performance management
enhances productivity, talent retention, and long-term success.
The measurement approach in performance management refers to the methods and strategies
used to assess and quantify employee performance. This involves using objective metrics,
qualitative assessments, and feedback systems to measure how well employees are meeting their
goals and contributing to organizational success. A structured measurement approach helps
organizations track progress, identify areas for improvement, and make data-driven decisions
related to rewards, promotions, and development.

Key Components of a Measurement Approach

1. Objective vs. Subjective Measurement

o Objective Metrics: These are quantifiable data points that can be measured
without bias, often linked to specific outcomes or outputs. Examples include:
§ Sales targets
§ Customer satisfaction scores
§ Production levels
§ Attendance and punctuality records
o Subjective Metrics: These are based on personal judgments, opinions, and
observations, typically involving qualitative factors such as:
§ Leadership skills
§ Teamwork and collaboration
§ Attitude and work ethic
§ Problem-solving abilities

A robust measurement approach integrates both objective and subjective metrics to ensure a
well-rounded evaluation.

2. Key Performance Indicators (KPIs)

o KPIs are specific, measurable goals that align with organizational objectives.
These indicators track an employee's performance over time and assess the
outcomes of their actions.
o KPIs should be directly linked to the employee's role and responsibilities and
provide insight into how their performance contributes to overall business
outcomes.
o Examples of KPIs include:
§ Revenue generated by a salesperson
§ Time to resolution for customer service representatives
§ Percentage of projects completed on time
3. Balanced Scorecard
o The Balanced Scorecard is a strategic measurement framework that evaluates
performance across four dimensions:
§ Financial Performance: Measures such as profit margins, revenue
growth, or return on investment (ROI).
§ Customer Perspective: Metrics related to customer satisfaction, loyalty,
or retention.
§ Internal Business Processes: Efficiency metrics like production cycle
times, process improvements, or defect rates.
 § Learning and Growth: Measures related to employee development,
innovation, or skill enhancement.

Using the Balanced Scorecard ensures a holistic approach by looking at financial and
non-financial performance measures.

4. 360-Degree Feedback
o 360-degree feedback is a multi-source assessment that gathers input from various
perspectives, including supervisors, peers, subordinates, and sometimes
customers.
o This feedback provides a well-rounded view of an employee's performance,
capturing both strengths and areas for improvement from different angles.
o This method is particularly useful for assessing leadership, communication, and
interpersonal skills, which may not be captured by objective metrics alone.
5. Self-Assessment
o Employees are often asked to complete self-assessments as part of the
performance measurement process. This allows them to reflect on their own
performance, achievements, and areas where they feel improvement is needed.
o Self-assessment encourages employees to take ownership of their development
and gives them a voice in the evaluation process.
o When combined with manager assessments, it fosters more productive
performance discussions and alignment on expectations.
6. Behavioral Anchored Rating Scale (BARS)
o The BARS method uses specific behavioral examples to define performance
levels on a rating scale. Instead of vague labels like "poor" or "excellent," BARS
ties performance ratings to real-world examples of behavior that reflect
performance standards.
o For instance, for leadership skills, a "5" might be defined as "consistently
demonstrates effective decision-making under pressure," while a "1" might be
"frequently avoids making decisions in high-pressure situations."
7. Management by Objectives (MBO)
o MBO is a performance measurement technique where employees and managers
collaboratively set clear, measurable goals at the beginning of the evaluation
period.
o Throughout the period, progress is monitored, and the final performance is
evaluated based on how well the agreed-upon objectives were achieved.
o MBO focuses on outcome-based performance, encouraging alignment between
individual contributions and organizational goals.
8. Competency-Based Measurement
o This approach measures how well employees demonstrate specific competencies
or behaviors that are critical to job success. Competencies might include:
§ Technical skills (e.g., software proficiency)
§ Interpersonal skills (e.g., teamwork, communication)
§ Problem-solving and critical thinking abilities
§ Leadership qualities
 o Competency models are often developed for different roles, and employees are
assessed based on their proficiency in these areas.
9. Qualitative Assessments
o Qualitative methods involve open-ended assessments, such as written feedback,
interviews, or discussions that allow for more detailed and nuanced evaluations of
an employee's performance.
o This approach helps capture aspects of performance that are difficult to quantify,
such as innovation, creativity, or emotional intelligence.
o While qualitative assessments may be subjective, they provide valuable context
and insight beyond numbers or rankings.
10. Performance Appraisal Rating Systems

• Graphic Rating Scales: A common method where employees are rated on a scale (e.g.,
1-5) for various performance factors such as quality of work, reliability, and teamwork.
• Forced Ranking: This approach ranks employees relative to each other, typically placing
them into categories such as top, middle, or bottom performers.
• Checklist Method: Managers evaluate employees by checking off behaviors or traits that
apply to the individual from a predefined list.

Conclusion

An effective measurement approach in performance management integrates multiple

methods—quantitative metrics, qualitative feedback, competency models, and continuous
monitoring—to create a comprehensive and fair evaluation system. It ensures that employees are
measured against clear and relevant goals, promoting alignment between individual performance
and organizational success.

Choosing the right measurement approach for performance management is crucial for accurately
assessing employee performance, promoting development, and aligning individual contributions
with organizational goals. Here’s a structured approach to selecting a measurement method that
suits your organization’s needs:

1. Define Objectives and Purpose

Start by clarifying the primary objectives of the performance measurement system. Consider the
following questions:

• What do you want to achieve? (e.g., improve employee performance, align with
business goals, foster development)
• What is the purpose of the evaluation? (e.g., performance reviews, promotions,
training needs assessment)

2. Consider Organizational Culture

The organizational culture plays a significant role in determining the most suitable measurement
approach. Evaluate:
 • What values does the organization prioritize? (e.g., collaboration, innovation, results-
oriented)
• How does the organization view performance feedback? (e.g., as a tool for
development, accountability, or both)

3. Identify Key Performance Indicators (KPIs)

Determine the specific KPIs or behaviors that are essential for measuring performance in your
organization. Consider:

• What are the critical success factors for the organization? (e.g., customer satisfaction,
revenue growth, quality of work)
• Which behaviors contribute to these success factors? (e.g., teamwork, communication
skills, leadership)

4. Choose a Measurement Approach

Based on the objectives, culture, and KPIs, select the most appropriate measurement approach.
Here’s a quick overview of the key methods to consider:

Measurement
Description Best Suited For
Approach
Focuses on measurable outcomes Organizations prioritizing results
Results Approach
and goals. and accountability.
Evaluates how employees achieve
Behaviors Organizations emphasizing culture,
their results through specific
Approach teamwork, and ethical practices.
behaviors.
Uses specific behavioral anchors to Organizations seeking objectivity
BARS
rate performance. and clarity in evaluations.
Critical Incident Documents specific incidents of Organizations valuing real-life
Method effective or ineffective performance. examples for feedback.
360-Degree Gathers feedback from multiple Organizations emphasizing
Feedback sources for a comprehensive view. teamwork and collaboration.
MBO with Combines goal-setting with Organizations looking for a
Behavioral Focus behavioral evaluation. balanced approach to performance.
Organizations focusing on
Competency-Based Assesses employees based on
employee development and specific
Evaluation predefined competencies.
skill sets.
Graphic Rating Rates employees on a scale with Organizations needing a simple,
Scale behavioral anchors. structured evaluation method.

5. Assess Resources and Constraints

Evaluate the resources available for implementing the chosen measurement approach, including:
 • Time: How much time can be allocated for training, evaluations, and feedback sessions?
• Budget: What financial resources are available for developing or purchasing performance
management tools?
• Technology: What systems or software are in place to support performance measurement
and tracking?

6. Implement the Measurement System

Once the measurement approach is selected, develop a clear implementation plan:

• Training: Provide training for managers and employees on the chosen measurement
method.
• Communication: Clearly communicate the objectives, processes, and expectations
related to the performance measurement system.
• Feedback Mechanisms: Establish regular feedback mechanisms to assess the
effectiveness of the measurement approach and make adjustments as needed.

7. Review and Refine

After implementing the measurement system, continuously review its effectiveness:

• Solicit Feedback: Gather feedback from employees and managers on the measurement
process and its impact on performance.
• Adjust as Needed: Make necessary adjustments to the measurement approach based on
feedback and changing organizational needs.

Conclusion

Choosing the right performance measurement approach involves a careful consideration of your
organization’s objectives, culture, key performance indicators, and available resources. By
aligning the measurement system with organizational values and goals, organizations can foster a
culture of accountability, development, and high performance. Regularly reviewing and refining
the approach will ensure its continued effectiveness in promoting employee growth and
achieving organizational success.

The effectiveness of a measurement approach in performance management can be influenced

by various factors that affect how performance is assessed, monitored, and improved.
Understanding these factors is essential for designing and implementing a system that accurately
reflects employee contributions and supports organizational goals.

Here are the key factors affecting the measurement approach:

1. Organizational Culture
 • Performance Philosophy: Organizations with a culture that emphasizes continuous
improvement, feedback, and development may focus on forward-looking, developmental
metrics rather than punitive or corrective ones.
• Values and Norms: A company that values teamwork and collaboration might
emphasize qualitative performance metrics such as interpersonal skills, while a more
results-oriented culture could focus on hard data and objective targets.
• Openness to Feedback: In organizations where feedback is seen as constructive and
transparent, the measurement approach will likely emphasize ongoing feedback and 360-
degree reviews. In contrast, in hierarchical organizations, feedback may be more top-
down and less frequent.

2. Nature of Work

• Job Complexity: Measuring performance for simple, routine tasks may rely on easily
quantifiable metrics (e.g., number of units produced or customer calls handled). In
contrast, jobs that require creativity, problem-solving, or decision-making might require
more subjective or qualitative measures such as peer reviews or behavioral assessments.
• Individual vs. Team Roles: For roles that are highly collaborative, team-based
performance metrics may be more appropriate. For independent roles, individual
performance measurements such as KPIs or objectives are more relevant.
• Measurability of Output: Some roles have clear, measurable outputs (e.g., sales
figures), while others, like R&D or creative roles, may require more abstract or subjective
measures.

3. Goals and Objectives

• Alignment with Strategic Goals: If individual goals are not aligned with broader
organizational objectives, performance measurement will likely fail to reflect true value
contribution. It is critical that measurement approaches consider the alignment of
employee goals with the company's strategic direction.
• SMART Goals: The clarity and specificity of goals affect how easily performance can be
measured. If goals are vague or unrealistic, measurement can become inconsistent or
biased.

4. Data Availability and Accuracy

• Quantitative Data: Access to reliable, objective data is key to effective performance

measurement. If the data is inaccurate, outdated, or incomplete, it can lead to incorrect
assessments.
• Technology and Tools: The availability of advanced data analytics tools and
performance dashboards can significantly affect the measurement approach. Technology
can provide real-time tracking, automate reporting, and enhance the accuracy of
performance data.
• Transparency of Data: If performance data is not transparent and accessible, employees
may mistrust the system, leading to disengagement.
The Comparative and Absolute Systems in performance management refer to two distinct
approaches for evaluating employee performance. Understanding these systems can help
organizations select the right method for assessing their workforce. Here’s a detailed overview of
both systems:

1. Absolute System

The Absolute System evaluates an employee’s performance based on pre-established criteria or

standards, independent of other employees' performance. This method focuses on whether an
individual meets specific performance standards or competencies rather than comparing them to
peers.

Key Features:

• Defined Standards: Performance is assessed against clearly defined criteria, which may
include specific goals, competencies, or behavioral expecta<ons.
• Individual Performance: The evalua<on is focused on the individual’s performance and
contribu<ons, not rela<ve to others.
• Ra7ng Scales: Commonly uses ra<ng scales (e.g., 1 to 5) or checklists where managers
assess employees on various competencies or behaviors.

Advantages:

• Clear Expecta7ons: Employees know exactly what is expected of them, as the standards
are clearly defined.
• Objec7ve Assessment: Reduces bias by focusing solely on the individual’s performance
against established criteria.
• Promotes Personal Development: Highlights areas where employees can improve based
on defined performance standards.

Challenges:

• Lack of Context: Does not account for varying levels of difficulty among roles or tasks,
which can lead to percep<ons of unfairness.
• Poten7ally Limited Insight: Focus on individual performance may overlook team
dynamics and contribu<ons to group outcomes.
• Standardiza7on Issues: May be difficult to establish relevant and fair standards for all
roles, especially in diverse or rapidly changing environments.
Example:

An employee is evaluated on specific performance criteria, such as achieving sales targets,

quality of work, and adherence to company values. Each criterion is rated on a scale, and the
employee receives feedback based on these absolute standards.

2. Comparative System

The Comparative System evaluates an employee’s performance by comparing them to other

employees within the same organization or team. This method often ranks employees against one
another and is designed to identify the top and bottom performers.

Key Features:

• Peer Comparison: Employees are assessed based on their performance rela<ve to their
colleagues.
• Ranking: ONen involves ranking employees from best to worst based on their
performance levels, which can be done using methods such as forced ranking.
• Contextual Evalua7on: Takes into account the rela<ve performance in a compe<<ve
context, which can provide insight into performance in rela<on to team dynamics.

Advantages:

• Iden7fies Top Performers: Helps organiza<ons recognize high achievers and poten<ally
allocate resources or promo<ons effec<vely.
• Compe77ve Mo7va7on: Encourages employees to strive for higher performance levels
in comparison to their peers.
• Contextual Insight: Provides context regarding performance, helping to iden<fy who
excels or struggles within specific roles.

Challenges:

• Poten7ally Demo7va7ng: Employees may feel demoralized if they consistently rank low
compared to their peers, which could lead to disengagement.
• Limited Collabora7on: A strong focus on compe<<on can undermine teamwork and
collabora<on, as employees may priori<ze individual performance over group success.
• Subjec7ve Bias: Rankings can be influenced by personal biases or favori<sm, leading to
poten<al unfair evalua<ons.
Example:

Employees in a sales team are ranked based on their sales figures compared to their colleagues.
This ranking determines bonuses, promotions, or recognition, creating a competitive
environment.

Comparative Analysis

Feature Absolute System Compara7ve System

Individual performance against
Focus Performance rela<ve to peers
defined standards
Assessment Ranking or comparison among
Set criteria for each employee
Criteria employees
Based on specific competencies and Based on rela<ve performance and
Feedback Type
goals ranking
Clear expecta<ons, objec<ve Iden<fies top performers, fosters
Advantages
assessment compe<<on
Can be demo<va<ng, undermines
Challenges Lack of context, standardiza<on issues
collabora<on

Conclusion

The Absolute System focuses on individual performance against established standards,

providing clear expectations and fostering personal development. In contrast, the Comparative
System evaluates employees relative to their peers, emphasizing competition and potentially
identifying high achievers. The choice between these systems depends on organizational goals,
culture, and the desired outcomes of the performance management process. Many organizations
opt for a hybrid approach, integrating elements of both systems to maximize benefits and
minimize drawbacks.