HRM544
PERFORMANCE
MANAGEMENT
CHAPTER 1
PERFORMANCE
MANAGEMENT AND
REWARD SYSTEMS
Prepared by: Ridhawati Zakaria
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Overview
1. Definition of Performance Management (PM)
2. The Performance Management Contribution
3. Disadvantages/Dangers of Poorly Implemented
PM Systems
4. Aims and Role of PM Systems (Purposes of PM
System
5. Characteristics of an Ideal PM System
6. Why Performance Management?
• Integration with Other Human Resources and
Development Activities
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Performance
• Performance is the achievement of quantified
objectives.
• ‘The accomplishment, execution, carrying out,
working out of anything ordered or
undertaken.’
Oxford English Dictionary
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Factors Influencing Individual Employee’s
Performance
Employee’s
Performance
Knowledge Work
Motivation
And skills Environment
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Definition of Performance Management
Continuous process of
• Identifying, Measuring and Developing
performance of individuals and teams and
Aligning performance with the strategic goals
of the organization
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Definition of Performance Management
• The system through which organizations set
work goals, determine performance
standards, assign and evaluate work, provide
performance feedback, determine training
and development needs and distribute
rewards.
(Briscoe and Claus, 2008)
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The Nature Of Performance Management
• Involves a continuing dialogue between
managers and the people they manage.
• The dialogue is based on goal achievement,
performance analysis and constructive
feedback, and leads to performance and
personal development plans.
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Performance Management
• To establish a high performance culture in which
individuals and teams take responsibility for the
continuous improvement of business processes and for
their own skills and contributions within a framework
provided by effective leadership.
• Its key purpose is to focus people on doing the right
things by achieving goal clarity.
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Contributions of Performance
Management
For Employees
1. Clarify definitions of
job
success criteria
2. Increase motivation to perform
3. Increase self-esteem
4. Enhance self-insight and development
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Contributions of Performance
Management
For Managers
1. Communicate supervisors’ views of
performance more clearly
2. Managers gain insight about subordinates
3. Better and more timely differentiation
between good and poor performers
4. Employees become more competent
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Contributions of Performance
Management
For Organization/HR Function
1. Clarify organizational goals
2. Facilitate organizational change
3. Fairer, more appropriate administrative
actions
4. Better protection from lawsuits
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Contributions of Performance
Management
In Addition:
1.Employee misconduct is minimized
2.Motivation, commitment, and intentions to stay
in the organization are enhanced
3.Voice behavior is encouraged
4.Employee engagement is enhanced
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Disadvantages/Dangers of Poorly-
implemented PM Systems
For Employees
1.Lowered self-esteem
2.Employee burnout and job dissatisfaction
3.Damaged relationships
4.Use of false or misleading information
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Disadvantages/Dangers of Poorly-
implemented PM Systems
For Managers
1.Increased turnover
2.Decreased motivation to perform
3.Unjustified demands on managers’ resources
4.Varying and unfair standards and ratings
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Disadvantages/Dangers of Poorly-
implemented PM Systems
For Organizations
1.Wasted time and money
2.Unclear ratings system
3.Emerging biases
4.Increased risk of litigation
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Aims and Role of PM Systems
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Overview
1. Strategic
2. Administrative
3. Informational
4. Developmental
5. Organizational maintenance
6. Documentational
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Strategic Purpose
Link individual goals with
organization’s goals
Communicate most crucial business
strategic initiatives
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Administrative Purpose
Provide information for making
decisions re:
Salary adjustments
Promotions
Retention or termination
Recognition of individual performance
Layoffs
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Informational Purpose
Communicate to Employees:
Expectations
What is important
How they are doing
How to improve
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Developmental Purpose
Performance feedback/coaching
Identification of individual strengths
and weaknesses
Causes of performance deficiencies
Tailor development of individual
career path
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Organizational Maintenance
Purpose
Plan effective workforce
Assess future training needs
Evaluate performance at
organizational level
Evaluate effectiveness of HR
interventions
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Documentational Purpose
Validate selection instruments
Document administrative decisions
Help meet legal requirements
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An Ideal PM System: 15 Characteristics
1. Strategically congruent
2. Contextually congruent
3. Thorough
4. Practical
5. Meaningful
6. Specific
7. Identifies effective/ ineffective performance
8. Reliable
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An Ideal PM System: 15 Characteristics
9. Valid
10. Acceptable and Fair
11. Inclusive
12. Open (No Secrets)
13. Correctable
14. Standardized
15. Ethical
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1. Strategically Congruent
• Consistent with organization’s strategy
• Aligned with unit and organizational goals
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2. Contextually Congruent
• Congruent with the organization’s culture
as well as the broader cultural context of
the region or country
– Example: A 360-degree feedback is not
effective where communication is not fluid
and hierarchies are rigid
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3. Thorough
• All employees are evaluated
• All major job responsibilities are
evaluated
• Evaluations cover performance for entire
review period
• Feedback is given on both positive and
negative performance
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4. Practical
• Available
• Easy to use
• Acceptable to decision makers
• Benefits outweigh costs
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5. Meaningful
• Standards are important and relevant
• System measures ONLY what employee
can control
• Results have consequences
• Evaluations occur regularly and at
appropriate times
• System provides for continuing skill
development of evaluators
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6. Specific
Concrete and detailed guidance to
employees
What’s expected
How to meet the expectations
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7. Identifies effective and ineffective
performance
• Distinguish between effective and
ineffective
– Behaviors
– Results
• Provide ability to identify employees with
various levels of performance
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8. Reliable
• Consistent
• Free of error
• Inter-rater reliability
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9. Valid
• Relevant (measures what is important)
• Not deficient (doesn’t measure
unimportant facets of job)
• Not contaminated (only measures what the
employee can control)
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10. Acceptable and Fair
• Perception of Distributive Justice
– Work performed Evaluation received
Reward
• Perception of Procedural Justice
– Fairness of procedures used to:
• Determine ratings
• Link ratings to rewards
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11. Inclusive
• Represents concerns of all involved
– When system is created, employees should help with
deciding
• What should be measured
• How it should be measured
– Employee should provide input on performance prior
to evaluation meeting
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12. Open (No Secrets)
• Frequent, ongoing evaluations and
feedback
• 2-way communications in appraisal
meeting
• Clear standards, ongoing communication
• Communications are factual, open, honest
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13. Correctable
• Recognizes that human judgment is
fallible
• Appeals process provided
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14. Standardized
• Ongoing training of managers to provide
• Consistent evaluations across
– People
– Time
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15. Ethical
• Supervisor suppresses self-interest
• Supervisor rates only where she has
sufficient information about the
performance dimension
• Supervisor respects employee privacy
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Why Performance Management?
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Integration with other Human Resources and
Development Activities
• PM provides information for:
– Development of training to meet organizational
needs
– Workforce planning
– Recruitment and hiring decisions
– Development of compensation systems
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Performance Management
is NOT
Performance Appraisal
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PM is NOT PA
• Performance Management
– Strategic business considerations
– Driven by line manager
– Ongoing feedback
• So employee can improve performance
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PM is NOT PA
• Performance Appraisal
– Driven by HR
– Assesses employee
• Strengths &
• Weaknesses
– Once a year
– Lacks ongoing feedback
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PM is NOT PA
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PM Around the World
PM used in United States, Mexico, Turkey,
India, Australia, China, and so on
Common across countries: Need to align
individual and organizational goals to enhance
the performance of individuals and groups
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PM Around the World
(continued)
Yet, different countries emphasize different
components of PM
• EX 1: PMs in Japan tend to emphasize behaviors to the
detriment of results
• EX 2: The current challenge among many
organizations in South Korea is how to reconcile a
merit-based approach with more traditional cultural
values
Prepared by: Ridhawati Zakaria
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Quick Review
1. Definition of Performance Management (PM)
2. The Performance Management Contribution
3. Disadvantages/Dangers of Poorly Implemented PM
Systems
4. Aims and Role of PM Systems
5. Characteristics of an Ideal PM System
6. Why Performance Management?
1.Integration with Other Human Resources and
Development Activities
Prepared by: Ridhawati Zakaria
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