Performance management is the methodical and organized system for monitoring the results of work activities, collecting information and evaluating performance, and determining the achievement of goals. Properly using performance information can assist leaders in making staffing decisions, allocating resources and communicating whether department or organizational objectives have been met. The process includes performance plans, goal setting, performance evaluations, recognition and coaching.
Performance management is an ongoing organizational process that is conducted to maximize the productivity of employees with the overall intention of improving the organization’s effectiveness. It is strategic in nature and involves every person and all HR processes in the organization. All are directly tied to achieving the organization’s goals.
The performance management process involves all levels in an organization. Strategic goals set by the organization filter through the organization and affect the goals and activities of each employee. In addition, the performance management process gathers and updates current employee data to maintain the human resource information system (HRIS). The HRIS contains a skill bank of employee information that enables the HR department to determine if the organization has the right mix of skills and people to achieve the organization’s goals in an ever-changing world. This information is used in all areas of HR decision-making.
Employee performance management includes:
· Planning work and setting expectations,
· Continually monitoring performance,
· Developing the capacity to perform,
· Periodically rating performance in a summary fashion, and
· Rewarding good performance.
According to Dale Beach, “Appraisal is the systematic evaluation of the individual with regards to his or her performance on the job and his potential for development.”
“It is formal, structured system of measuring, evaluating job related behaviours and outcomes to discover reasons of performance and how to perform effectively in future so that employee, organization and society all benefits.”
Objectives of Performance Appraisal
1. Work Related Objectives
- To provide a control for work done
- To improve efficiency
- To help in assigning work and plan future work assignment; and
- To carry out job evaluation
2. Career Development Objectives
· To identify strong and weak points and encourage finding remedies for weak points through training;
· To determine career potential;
· To plan developmental( promotional or lateral) assignments; and
· To plan career goals
3. Objective Of Communication
· To provide adequate feedback on performance;
· To clearly establish goals, i.e what is expected of the staff members in terms of performance and future work assignments;
· To provide counseling and job satisfaction through open discussion on performance and
· To let employees assess where they stand within the organization in terms of their performance.
4. Organisational Objectives
· To serve as a basis for promotion or demotion
· To serve as a basis for allocating incentives
· To serve as a basis for determining transfers
· To serve as a basis for termination in case of reduction of staff.
Performance Appraisal Process
1. Objectives definition of appraisal
2. Job expectations establishment
3. Design an appraisal program
4. Appraise the performance
5. Performance Interviews
6. Use data for appropriate purposes
7. Identify opportunities variables
8. Using social processes, physical processes, human and computer assistance
Advantages of Performance Appraisal
It is said that performance appraisal is an investment for the company which can be justified by following advantages:
Promotion: Performance Appraisal helps the supervisors to chalk out the promotion programmes for efficient employees. In this regards, inefficient workers can be dismissed or demoted in case.
Compensation: Performance Appraisal helps in chalking out compensation packages for employees. Merit rating is possible through performance appraisal. Performance Appraisal tries to give worth to a performance. Compensation packages which includes bonus, high salary rates, extra benefits, allowances and pre-requisites are dependent on performance appraisal. The criteria should be merit rather than seniority.
Employees Development: The systematic procedure of performance appraisal helps the supervisors to frame training policies and programmes. It helps to analyse strengths and weaknesses of employees so that new jobs can be designed for efficient employees. It also helps in framing future development programmes.
Selection Validation: Performance Appraisal helps the supervisors to understand the validity and importance of the selection procedure. The supervisors come to know the validity and thereby the strengths and weaknesses of selection procedure. Future changes in selection methods can be made in this regard.
Communication: For an organization, effective communication between employees and employers is very important. Through performance appraisal, communication can be sought for in the following ways:
· Through performance appraisal, the employers can understand and accept skills of subordinates.
· The subordinates can also understand and create a trust and confidence in superiors.
· It also helps in maintaining cordial and congenial labour management relationship.
· It develops the spirit of work and boosts the morale of employees.
· All the above factors ensure effective communication.
Motivation: Performance appraisal serves as a motivation tool. Through evaluating performance of employees, a person’s efficiency can be determined if the targets are achieved. This very well motivates a person for better job and helps him to improve his performance in the future
Methods of Performance Appraisal
There are a number of methods that are used to evaluate employee's performance. It may be evaluated on the basis of his traits and attributes as well as on the basis of his work or results and objectives achieved by him. Thus his performance may be measured in terms of standards of his traits and general behaviour on the job or in terms of results and goals. Some of the common techniques are given below. Each method has its merits and demerits but one thing is clear that the technique employed has to evaluate mainly his job related performance. The appraisal methods can be classified as follows:
(a) Traditional methods
(b) Modern methods
Performance Appraisal Process
The starting point for the PA process is identifying specific performance goals. An appraisal system probably cannot effectively serve every desired purpose, so management should select the specific goals it believes to be most important and realistically achievable. For example, some firms may want to stress employee development, whereas other organizations may want to focus on pay adjustments. Too many PA systems fail because management expects too much from one method and does not determine specifically what it wants the system to accomplish. The next step in this ongoing cycle continues with establishing performance criteria (standards) and communicating these performance expectations to those concerned. Then the work is performed and the supervisor appraises the performance. At the end of the appraisal period, the appraiser and the employee together review work performance and evaluate it against established performance standards. This review helps determine how well employees have met these standards, determines reasons for deficiencies, and develops a plan to correct the problems. At this meeting, goals are set for the next evaluation period, and the cycle repeats.
· Become familiar enough with a staff member’s performance to provide an objective and constructive assessment. Observation will be your best source of information, along with the staff member’s own assessment and feedback from those served by the staff member’s work and other supervisory staff. Many staff members work in teams making input from team members another source of valuable information.
· Meet with the Staff Member
· Schedule time for a formal performance review at least annually with each staff member you supervise.
· Conduct the review at a time and place when you can give your undivided attention to the staff member.Then, don’t limit performance feedback to an annual, formal meeting. The performance development plan is an excellent tool for providing ongoing coaching and performance assessment. Frequent, brief meetings can keep performance focus fresh and allow for timely assessment and recognition.
· Complete the Process in a Timely Manner
· Prepare the Staff Performance Review Form normally within two week of meeting with the staff member.
· Keep Development in Mind
· Remember that the hires the best possible individuals. Your first task is to help the new staff
member learn the job and successfully meet the performance standards. The initial review period is
designed both as a learning time and as the last step in the selection process. Once competency is
established, the focus shifts to continued development of those skills and abilities to a consistently high level of excel.
Global best Practices
Maximizing, Innovation, Effectiveness and Efficiency
A Dozen Performance Appraisal and Performance Management Best Practices
· Think of Performance Management as an entire system, starting in interviews with potential employees and continuing through orientation, training, coaching and counseling, and recognizing peak performance.
· Stop communicating about performance appraisals and performance management as if it is merely an annual event. The only annual part of it is salary action and/or filing forms. Think of the performance appraisal as an ongoing workplace conversation.
· Train managers and employees on giving and receiving positive and negative feedback on an ongoing basis.
· Hold managers accountable for having ongoing conversations around work and goals.
· Actively seek to align individual goals with organizational goals.
· Encourage employee participation and ownership in the performance appraisal process. Create an environment where together the manager and employee can question, challenge and discuss goals and objectives to gain clarity.
· Use the performance management system, Armstrong advised, to link with the organization’s values. Values should be reflected in the organization’s core competencies and they should show up in interviewing as well as in performance appraisals.
· Link the performance management system with retention, development, and succession planning initiatives. This linkage explains why specific people advance.
· Get support at the senior level. If you don’t have support at the senior level, Armstrong noted, you’re not going to have a robust, effective performance management system . . . if you want a world-class performance management system that really does retain talent and increase productivity, you’ve got to get the c-suite onboard and they’ve got to talk it and walk it.
· Openly communicate to all employees how your compensation system works. If merit pools average 2 to 3 percent annually, for example, let everyone know this. Manage expectations around annual increases to control the rumor mill and misinformation.
· Where possible, have a second-level review of performance appraisals, either by HR or second-tier management.
· Understand the legal pitfalls associated with performance management, such as penalizing employees for taking legally-protected leave (e.g., FMLA leave), and allowing unlawful bias to infect performance appraisals.