Performance

Management and
Reward Systems
Coaching & Mentoring
• Mentoring is concerned about the general development and
psychological well being of a person, performance review, counseling,
or coaching (we shall use the word coaching for this process) focuses
on the analysis of performance on the job, and identification of
training needs for further improvement.
 Objectives of Coaching
• 1) Helping him to realise his potential as a manager.
• 2) Helping him to understand himself - his strengths and his weaknesses.
• 3) Providing him an opportunity to acquire more insight into his behaviour, and analyse
the dynamics of such behaviour.
• 4) Helping him to have better understanding of the environment.
• 5) Increasing his personal and inter-personal effectiveness through effective feedback.
• 6) Encouraging him to set goals for further improvement.
• 7) Encouraging him to generate alternatives for dealing with his problems and prepare an
action plan.
• 8) Helping him to review in a non-threatening way his progress in achieving various
objectives.
• 9) Providing empathetic atmosphere for sharing and discussing his tensions, conflicts,
concerns and problems
 Objectives of Mentoring
The main purpose of mentoring is to provide opportunity
to young people to share their concerns and get both moral support and guidance for
their development. It involves the following :
• 1) Establishing a relationship of trust
• 2) Modeling beahviorual norms for the young person
• 3) Listening to the person’s concerns and problems
• 4) Helping him to search alternative solutions for the problems
• 5) Sharing own relevant experiences
• 6) Responding to his emotional needs, without making him depend on the mentor
• 7) Developing long-lasting, personal, and informal relationship.
 Difference between Coaching,
Counseling and Mentoring
• The focus of a coach is to guide others by asking questions and
structuring a process for that individual to achieve his/her goals.
• In comparison, a mentor may also guide others in achieving their
goals but mentoring is less focused on performance and specific tasks.
Mentoring has a broader focus than coaching. Mentoring emphasizes
both the professional and personal development of the individual.
• Counseling seeks to explore the underlying dynamics of individuals
and their relationships. Counselors and coaches both ask questions
but counselors tend not to address tasks and performance. The goal
for counseling is to promote self-understanding and self-acceptance.
 Performance Management
Performance management is a much broader and a complicated function of HR, as it encompasses
activities such as joint goal setting, continuous progress review and frequent communication, feedback
and coaching for improved performance, implementation of employee development programmes and
rewarding achievements.

The process of performance management starts with the joining of a new incumbent in a system and
ends when an employee quits the organization.

Performance management can be regarded as a systematic process by which the overall performance of
an organization can be improved by improving the performance of individuals within a team framework.

A performance management process sets the platform for rewarding excellence by aligning individual
employee accomplishments with the organization’s mission and objectives and making the employee
and the organization understand the importance of a specific job in realizing outcomes.
 Objectives of Performance Management Practices
• Performance management aims at building a high performance culture for both the individuals and the teams so that
they jointly take the responsibility of improving the business processes on a continuous basis and at the same time raise
the competence bar by upgrading their own skills within a leadership framework.
• To enable the employees towards achievement of superior standards of work performance.
• To help the employees in identifying the knowledge and skills required for performing the job efficiently as this would
drive their focus towards performing the right task in the right way.
• Boosting the performance of the employees by encouraging employee empowerment, motivation and implementation of
an effective reward mechanism.
• Promoting a two way system of communication between the supervisors and the employees for clarifying expectations
about the roles and accountabilities, communicating the functional and organizational goals, providing a regular and a
transparent feedback for improving employee performance and continuous coaching.
• Identifying the barriers to effective performance and resolving those barriers through constant monitoring, coaching and
development interventions.
• Creating a basis for several administrative decisions strategic planning, succession planning, promotions and performance
based payment.
• Promoting personal growth and advancement in the career of the employees by helping them in acquiring the desired
knowledge and skills.
 Components of Performance Management System
• Performance Planning: Performance planning is the first crucial component of any performance management process
which forms the basis of performance appraisals. Performance planning is jointly done by the appraisee and also the
reviewee in the beginning of a performance session. During this period, the employees decide upon the targets and the
key performance areas which can be performed over a year within the performance budget., which is finalized after a
mutual agreement between the reporting officer and the employee.
• Performance Appraisal and Reviewing: The appraisals are normally performed twice in a year in an organization in the
form of mid reviews and annual reviews which is held in the end of the financial year. In this process, the appraisee first
offers the self filled up ratings in the self appraisal form and also describes his/her achievements over a period of time in
quantifiable terms. After the self appraisal, the final ratings are provided by the appraiser for the quantifiable and
measurable achievements of the employee being appraised. The entire process of review seeks an active participation of
both the employee and the appraiser for analyzing the causes of loopholes in the performance and how it can be
overcome. This has been discussed in the performance feedback section.
• Feedback on the Performance followed by personal counseling and performance facilitation: Feedback and counseling is
given a lot of importance in the performance management process. This is the stage in which the employee acquires
awareness from the appraiser about the areas of improvements and also information on whether the employee is
contributing the expected levels of performance or not. The employee receives an open and a very transparent feedback
and along with this the training and development needs of the employee is also identified. The appraiser adopts all the
possible steps to ensure that the employee meets the expected outcomes for an organization through effective personal
counseling and guidance, mentoring and representing the employee in training programmes which develop the
competencies and improve the overall productivity.
Components of Performance
Management System
• Rewarding good performance: This is a very vital component as it will determine the work motivation
of an employee. During this stage, an employee is publicly recognized for good performance and is
rewarded. This stage is very sensitive for an employee as this may have a direct influence on the self
esteem and achievement orientation. Any contributions duly recognized by an organization helps an
employee in coping up with the failures successfully and satisfies the need for affection.
• Performance Improvement Plans: In this stage, fresh set of goals are established for an employee and
new deadline is provided for accomplishing those objectives. The employee is clearly communicated
about the areas in which the employee is expected to improve and a stipulated deadline is also
assigned within which the employee must show this improvement. This plan is jointly developed by the
appraisee and the appraiser and is mutually approved.
• Potential Appraisal: Potential appraisal forms a basis for both lateral and vertical movement of
employees. By implementing competency mapping and various assessment techniques, potential
appraisal is performed. Potential appraisal provides crucial inputs for succession planning and job
rotation.
Difference between Performance Appraisal and
Performance Management
Performance Appraisal Performance Management
Focus is on top down assessment Stresses on mutual objective setting
through a process of joint dialogue

Performed annually Continuous reviews are performed

Usage of ratings is very common Usage of ratings is less common
Focus is on traits Focus is on quantifiable objectives, values
and behaviors

Monolithic system Flexible system

Are very much linked with pay Is not directly linked with pay
Benefits of Performance
Management System
• Organization’s Benefits : Improved organizational
performance, employee retention and loyalty, improved
productivity, overcoming the barriers to communication,
clear accountabilities, and cost advantages.
• Manager’s Benefits: Saves time and reduces conflicts,
ensures efficiency and consistency in performance.
• Employee’s Benefits: Clarifies expectations of the
employees, self assessment opportunities clarifies the job
accountabilities and contributes to improved performance,
clearly defines career paths and promotes job satisfaction.
Competency Management
• Competency based management systems are primarily employee centric performance
management systems and focuses upon how an organization achieves a desired
performance.
• Competency focused performance management systems can serve as a useful tool for
helping the employees in understanding the performance expectations and improving
the competencies.
• Competency based management are strategic in nature and influences almost every area
of human capital management which starts with the hiring of an employee and ends with
the retirement.
• It aims at standardizing and integrating all HR activities by relying upon competencies
which support fulfillment of organizational goals.
Integration of Competency with
Performance Management Process
• By identifying and defining the key competencies required for realizing the performance
goals/objectives: The key competencies are jointly defined by the manager and the
employee during the stage of setting performance plans, goals and objectives. These
competencies are ultimately assessed during the performance review period in
connection with the performance goals/objectives realized by the employees.
• By identifying the competencies which are required for performing an employee’s
job/role into the performance management process: In the case, the competencies are
identified from the competency profile from the employee’s role or job point of view and
also include the performance goals/objectives for being reviewed. The performance
goals/objectives deal with the aspect of what must be achieved over the entire period of
review and the competencies address the question of how an employee achieved the pre
determined performance goal by demonstrating an expected pattern of behavior.
Technology in PMS
Technology in performance management is brought using
computers, networks, specific apps, and mobile technology to
help performance management processing.
The result is improvement in efficiency and output of
performance management system.

Performance management often get bad rap due to ineffective

process, poor implementation, high cost, and inaccurate
appraisal.
Technology in performance management could make big
difference in the process, implementation, cost, and appraisal.
 • Technology could simplify the evaluation process.
• With technology, managers will easily monitor performance and
keep tracks the measures, objectives, and achievements.
• Collecting and broadcasting information is now very easy with
the use of technology.

Benefits of • Online networks and mobile technology are essential

instrumental to connect and communicate with others.

technolog • A structured performance evaluation process with possibility for

the employee to take part in evaluation process by creating

y in PMS employee-level goals that aligned with general business goals

will increase the sense of alignment of employees with
organization’s mission. Technology with performance
management system could make the documentation of these
goals fast and easy to evaluate
• Technology is also useful in the creation of analysis and reports.
It will help to calculate evaluation scores and show it in the
reports
Performance Management Software

Performance management software is a tool designed to help managers write

accurate job profiles and expectations, create relevant objectives that align with
the company’s goals and mission, document performance, and write appraisals.

The best performance management software will also improve employee

engagement through transparency, recognition, SMART goal-setting, and
feedback.

Each team member can see how they contribute to the organization’s mission
and how employee development programs align to business goals.
 • Coaching management
• Performance appraisal management (performance appraisal
module)
Features of • Goal-setting, alignment, and management
Performanc • Feedback management

e • Competency management and skill assessment

• Development planning
Manageme • Performance and productivity analytics
nt • Pay for performance

Softwares • Talent profiles

• Multi-rater functionality
• Mobile capabilities
• Reporting and analytics
 Trends in Performance Management tools

ASSESS, COACH, REPEAT AGILE GOALS END-TO-END TALENT

MANAGEMENT
 • PerformYard : It makes performance management easy
for everyone, with flexible features for HR and a simple
employee experience. Recreate your existing review
process online or build out a new performance
management strategy. This software supports continuous
feedback, 360 reviews, annual reviews, project based
Software reviews, recognition, client feedback, and any other
feedback. All your employee assessments now live in one
used for place. Support is always free and unlimited.

PMS • Oracle Fusion Cloud Human Capital Management:is a

complete solution connecting every human resource
process from hire to retire. This provides a consistent
experience across devices, enables one source of truth
for HR data to improve decision-making, and empowers
you with market-leading innovation to address your
needs today and into the future.
 • ClearCompany: is a performance management system
customized for your company to achieve better goal
alignment, increase employee engagement, and gain
tangible insights into your workforce.Their Performance,
Engagement and Goals platform enables you to
seamlessly design, automate and manage any type of
Software performance review. ClearCompany ensures that
employees and managers are aligned on key priorities,
used for goals and drivers of success.

PMS • BambooHR: is all-in-one HR software made for small and

medium businesses and the people who work in them.
Their software makes it easy to collect, maintain, and
analyze your people data, improve the way you hire
talent, onboard new employees, manage compensation,
and develop your company culture. It’s designed to set
you free to focus on what matters most—your people.
 • In global terms, performance management can be described as a
process which allows an international company or multinational
enterprise (MNE) to evaluate and constantly improve individual
and corporate performance in relation to pre-set goals and targets.
• International performance management is the evaluation of an
individual who works in a foreign subsidiary on a temporary basis
to transfer knowledge or develop global leadership skills. At its
best, international performance management should feed into the
global goals of the business.
Internation • international performance appraisal (IPA) can be regarded as a
al PMS strategic process that helps the MNE to continuously improve
global operations through their employees by matching up to
certain pre-set objectives.
• A MNE is not uniform across all of its subsidiaries and therefore, a
number of environmental contingencies must be considered in
relation to the various subsidiaries. These contingencies are the
mental distance between the parent and host country, entry
modes and the role of the subsidiaries
 • Environmental variations- Performance management systems rarely
work in the same way domestically and internationally.
Environmental variations including; different growth rates, the
immediate environment and differences in performance, usually
mean international performance appraisals need to be unique to
Challenges each expatriate manager.
• Time and distance- Improvements in technology make this less of an
in issue than it once was, but time differences and local infrastructure
will impact on performance and appraisals. This is particularly true of
Internation expats working in underdeveloped countries.
• Cultural adjustment- The employee’s ability to adjust to the
al PMS organisational culture within the subsidiary, as well as the wider
culture within their new country, is likely to impact performance. An
understanding of the local organisational culture by the HR team, the
management team and the employee will facilitate the creation of a
measurable international performance management system.
• Inconsistency of implementation- Like all performance development,
it will only be successful if implemented consistently in company
subsidiaries. Oversight of this may be a challenge if most Human
Resource functions are centralised to headquarters, meaning some
employees thrive while others are left directionless.
 Features for ideal Performance
Management System
• Clear metrics of success: Performance management system should provide easy-to-understand measures of success that allow
you to quickly determine how much progress an employee has made. Complex criteria make performance evaluation
challenging. In contrast, clear benchmarks based on SMART goals will help your team stay on track. Strong visuals will help make
employees’ progress crystal-clear as well.
• An automated, intuitive process: A great performance management system gives you automatic prompts and reminders so you’ll
never forget a task you need to complete. It also lets you sign documents via an e-signature instead of going through the hassle
of printing, signing, and scanning. Plus, it lets you customize key features such as questionnaires, so you’ll get exactly the
information you’re looking for. Performance management will become as streamlined and simple as can be!
• 360-degree feedback: A quality system lets you solicit 360-degree feedback from a broad range of people who work with each
employee. You’ll gain a balanced set of feedback that helps you better understand each individual’s distinct contributions and
challenges while reducing bias. Better yet, you can collect all that feedback electronically rather than having to sit down and
conduct in-person interviews with each participant — which saves you a huge amount of time. You’ll easily discover areas for
improvement and develop a better grasp of each employee’s strengths.
• Self-evaluation tools: The system should allow employees to complete self-evaluations periodically to assess their own progress.
Self-evaluations help people think critically about their performance and where they aim to improve. Furthermore, self-
evaluations encourage employees to take more ownership of their own growth, feeling more invested in managing their own
performance. In turn, managers will better understand how employees have been working to improve and where they need
more guidance.
 Features for ideal Performance
Management System
• Goal-setting support- Without frequent reminders about their goals, employees often lose sight of them — if they even
had clear goals in the first place. A quality system lets you set dynamic goals that you can modify over time, as employees’
ambitions and competencies change. Plus, you’ll be able to set both short- and long-term goals, as well as objectives and
key results (OKRs). Tracking employees’ progress toward key milestones will greatly boost motivation and engagement.
• Instant feedback: Through real-time feedback, managers can address a problem as soon as it arises. They can also give
specific feedback about ways an employee is excelling so that they’ll understand how to continue improving. Up-to-the-
minute feedback helps you eliminate unnecessary meetings, allowing you to provide feedback in an unobtrusive way
throughout the day. Giving frequent feedback will also promote a positive feedback culture, encouraging employees to
share (and ask for) constructive feedback with one another as well.
• A manager log: A great software program also gives managers a place to keep a regular log of how employees are
performing, giving them a handy reference on employee progress. In this log, managers can track important events in their
employees’ development so they’ll clearly remember these milestones.
• Excellent customer service: Select a provider that excels in customer service as well. When questions arise, you want to be
able to reach out and get an answer as quickly as possible, rather than waiting for days. Choose a provider with customer
service staff who are happy to walk you through any issues you experience so you can get on with the important business
of managing your employees!
 • Continuous performance management- The annual performance reviews rarely
provide an accurate representation of employee performance. To that end, many
organizations are transitioning away from annual reviews. This includes implementing
real-time, continuous feedback. Continuous feedback encourages employee

Trends in development and accelerates skill development. It also increases the communication
and trust between managers and direct reports.

Performanc • People analytics is no longer a want, it is a need- Having employee performance data
allows for more educated decisions to be made about your talent. Without data,
making strategic people decisions can be challenging. Organizations need to be able to
e develop their people. People analytics can provide professional services insight into
their employee’s strengths, weaknesses, and motivations, so better talent and training

Manageme decisions can be made.

• Transparency in leadership - A growing trend in performance management is

nt System transparency in leadership. For leaders in the workplace, transparency can mean
communicating less over email and through third-party communication, but rather
showing up more frequently and becoming more personally engaged with employees
via face-to-face and/or video interaction. Moreover, leaders should keep their
employees in the loop with good and bad news (without oversharing) and welcome
honest feedback, which will help build trust.
• Emphasis on employee experience - Employee experience is the journey an employee
takes within your organization. It includes every interaction that happens along the
employee life cycle - from the initial interview process to offboarding. Developing a
great employee experience can lead to staff feeling happier, more productive, and more
motivated. Creating a better employee experience comes down to two key factors:
leadership and workplace
• Use Uniform Evaluation Criteria: Eliminate some of the potential for ethical missteps
in your performance management system by using the same standard evaluation
criteria for all employees. Using different scoring matrices can be unethical because
you're judging people on different scales. Develop individual, objective goals and
measurements in advance of reviews so you can better gauge performance in an
unbiased manner. Develop standardized assessment forms and consider using a
numerical scoring system to help even the playing field among employees.
• Remove Personal Prejudice: Everyone has personal prejudices, although some are
more pronounced than others. The first step in eliminating personal feelings from
what should be an unbiased process is to acknowledge them. Otherwise, you may
unintentionally tap into these feelings when conducting performance evaluations.
• This unethical approach allows personal issues and preconceived notions to impact
staffers in an unfair manner. For example, if you know you tend to be harder on up-
and-coming professionals who remind you of yourself, this constitutes a personal
prejudice. Evaluating a staffer based on how you see yourself rather than on his
performance is not ethical.
• Eliminate the Friendship Factor: It can be difficult to be objective about employees
you consider personal friends, letting friendships overshadow professional
responsibilities is unethical. You may view friends in a better light than reality
presents, or feel you have a better understanding about their deficiencies.
This can make you justify and defend poor performance in a way you might not
necessarily do for an employee you don't know as well, which creates ethical issues
and is unfair to all staffers. It creates a non-objective review that can shortchange the
employee you favor, as he isn't given constructive criticism that will help him improve
his professional performance in the future.
• Defer Evaluations: If you don't feel you can be objective in a performance evaluation,
the ethical thing to do is defer the task to another manager or superior. This is
especially important if you have a dislike for a staffer, have a history of conflict or
are otherwise prejudiced against that person and unable to evaluate her in an
ethical and unbiased manner. If you can’t conduct a fair and accurate performance
evaluation, that staffer may file a complaint or otherwise challenge your evaluation.
This can call the ethics of your entire organization into question.