PERFORMANCE

MANAGEMENT
Module 1
Performance Management
Overview
LEARNING OBJECTIVES

At the end of this module, the learner is expected to:

• Recognize the contribution of performance management in the

organization.
• Explain the basic principles of effective performance management.
• Identify key stakeholders in the performance management process.
PERFORMANCE MANAGEMENT

 It is a continuous process of identifying, measuring, and developing the

performance of individuals and teams and aligning performance with
the strategic goals of the organization.
 Two main components:
1. Continuous process. Performance management is ongoing. It
involves a neverending process of setting goals and objectives,
observing performance, and giving and receiving ongoing coaching and
feedback.
2. Alignment with strategic goals. Performance management requires
that managers ensure that employees’ activities and outputs are
congruent with the organization’s goals and, consequently, help the
organization gain a competitive advantage.
THE PERFORMANCE
MANAGEMENT CONTRIBUTION
 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 fairer and more
appropriate
 Organizational goals are made clear
 Employees become more competent
THE PERFORMANCE
MANAGEMENT CONTRIBUTION
 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 OF POORLY
IMPLEMENTED PERFORMANCE
MANAGEMENT
 Increased turnover
 Use of misleading information
 Lowered self-esteem
 Wasted time and money
 Damaged relationships
 Decreased motivation to perform
DISADVANTAGES OF POORLY
IMPLEMENTED PERFORMANCE
MANAGEMENT
 Employee burnout and job dissatisfaction
 Increased risk of litigation
 Varying and unfair standards and ratings
 Emerging biases
 Unclear ratings system
AIMS AND ROLES OF PM
SYSTEMS
1. Strategic Purpose. To help top management achieve strategic
business objectives. By linking the organization’s goals with individual
goals, the performance management system reinforces behaviors
consistent with the attainment of organizational goals.
2. Administrative Purpose. It is to furnish valid and useful information for
making administrative decisions about employees. Such administrative
decisions include salary adjustments, promotions, employee retention
or termination, recognition of superior individual performance,
identification of poor performers, layoffs, and merit increases.
3. Informational Purpose. It serves as an important communication
device in informing the employees about their performance, provides
them with information on specific areas that may need improvement.
AIMS AND ROLES OF PM
SYSTEMS
6. Developmental Purpose. Feedback is an important component of a
well-implemented performance management system. This feedback
can be used in a developmental manner. Managers can use feedback
to coach employees and improve performance on an ongoing basis.
7. Organizational Maintenance Purpose. Providing information to be
used in workforce planning
8. Documentational Purpose. Helps in collecting useful information like
performance data that can be used to validate newly proposed
selections instruments.
CHARACTERISTICS OF AN
IDEAL PM SYSTEM
1. Strategic Congruence. It means individual goals must be aligned with unit and
organizational goals.
2. Thoroughness. The system should be thorough regarding four dimensions. First,
all employees should be evaluated (including managers). Second, all major job
responsibilities should be evaluated (including behaviors and results). Third, the
evaluation should include performance spanning the entire review period, not just
the few weeks or months before the review. Finally, feedback should be given on
positive performance aspects as well as those that are in need of improvement.
3. Practicality. Easy to use and must be seen as outweighing the costs.
4. Meaningfulness. The standards and evaluations conducted for each job function
must be considered important and relevant. The evaluations must take place at
regular intervals and at appropriate moments.
5. Specificity. It should provide detailed and concrete guidance to employees about
what is expected of them and how they can meet these expectations.

6. Identification of effective and ineffective performance. The system should allow

for distinguishing between effective and ineffective behaviors and results.
CHARACTERISTICS OF AN
IDEAL PM SYSTEM
7. Reliability. should include measures of performance that are consistent and
free of error
8. Validity. It means measures are relevant (i.e., include all critical performance
facets), not deficient (i.e., do not leave any important aspects out).
9. Acceptability and fairness. Perceptions of fairness are subjective and the
only way to know if a system is seen as fair is to ask the participants about the
system.
10. Inclusiveness. The evaluation process must represent the concerns of all the
people who will be affected by the outcome.
11. Openness. the appraisal meeting consists of a two-way communication
process during which information is exchanged, not delivered from the
supervisor to the employee without his or her input.
CHARACTERISTICS OF AN
IDEAL PM SYSTEM
12. Correctability. When employees perceive an error has been made,
there should be a mechanism through which this error can be
corrected.
13. Standardization. This means that performance is evaluated
consistently across people and time.
14. Ethicality. Good systems comply with ethical standards. This means
that the supervisor suppresses her personal self-interest in providing
evaluations.
Who are the stakeholders in
Performance Management?
The stakeholders are:

HRD Professionals Customers

Employees