PERFORMANCE MANAGEMENT

MEANING OF THE TERM PERFORMANCE

The term PERFORMANCE is both distinguishing and similar to the
term PRODUCTIVITY:
SIMILAR: - effective and efficient use of resources to achieve outcomes
DISTINGUISHING: - it is guided and assessed by multiple, equally
important standards of effectiveness, efficiency and equity.

DEFINITION OF PERFORMANCE MANAGEMENT

According
to
Armstrong
and
Baron
(1998),
Performance Management is both a strategic and
an
integrated
approach
to
delivering
successful results in organizations by
improving
the
performance
and
developing the capabilities of teams and
individuals.
The term performance management gained
its
popularity in early 1980s when total quality
management programs received utmost
importance
for achievement of superior standards and quality performance.

EVOLUTION OF PERFORMANCE MANAGEMENT

First Phase: The origin of performance management can be traced in the
early 1960s when the performance appraisal systems were in practice. .
During this period, Annual Confidential Reports (ACRs) was also
known as Employee service Records were maintained for controlling
the behaviors of the employees and these reports provided substantial
information on the performance of the employees.

Second Phase: This phase continued from late 1960s till early 1970s,
and the key hallmark of this phase was that whatever adverse remarks
were incorporated in the performance reports were communicated to the
employees so that they could take corrective actions for overcoming such
deficiencies.
Third Phase: In this phase the term ACR was replaced by performance
appraisal. One of the key changes that were introduced in this stage was
that the employees were permitted to describe their accomplishments in
the confidential performance reports, several new components were
considered by many organizations which could measure the productivity
and performance of an employee in quantifiable terms such as targets
achieved, etc.
Fourth Phase: This phase started in mid-1970s and its origin was in
India as great business tycoons like Larsen & Toubro, followed by State
Bank of India.
The system focused on performance planning, review and
development of an employee by following a methodical approach. In
the entire process, the appraise (employee) and the reporting officer
mutually decided upon the key result areas in the beginning of a year and
reviewed it after every six months.
In the review period various issues such as factors affecting the
performance, training needs of an employee, newer targets and also the
ratings were discussed with the appraise in a collaborative environment.
This phase was a welcoming change in the area of performance
management and many organizations introduced a new HR department
for taking care of the developmental issues of the organization.
Fifth Phase: This phase was characterized by maturity in approach of
handling peoples issues. It was more performance driven and emphasis
on development, planning and improvement. Utmost importance was
given to culture building, team appraisals and quality circles were
established for assessing the improvement in the overall employee
productivity
The performance management system is still evolving and in the near
future one may expect a far more objective and a transparent system.
SCOPE OF PERFORMANCE MANAGEMENT SYSTEM
Identifying the parameters of performance and stating them very
clearly;

Setting performance standards;

Planning in participative ways where
appropriate, performance of all
constituents;
Identifying
competencies
and
competency
gaps
that
contribute/hinder to performance;
Planning performance development
activities;
Creating ownership;
Recognizing and promoting performance culture;

OBJECTIVES OF PERFORMANCE MANAGEMENT

Performance management is the process of identifying, evaluating and
developing the work performance of employees so that the companys
goals and objectives are more effectively achieved. Effective performance
management is designed to enhance performance, identify performance
requirements, provide feedback relevant to those requirements and assist
with career development.
The primary objectives of performance management are:
to assist in the achievement of enhanced standards of work
performance of an employee or class of employees;
to assist employees to identify knowledge and skills to perform their
job efficiently;
for employees to work towards defined goals;
for employees to receive regular feedback on performance; and
for employees to achieve personal growth through acquiring
relevant knowledge and skills and attitudes.
The management of medical incapacity, inability to discharge duties
and disciplinary processes are separate from a companys performance
management system and are to be seen as separate.

Performance Management vs Performance Appraisal

The terms 'performance management' and 'performance appraisal' are
sometimes used synonymously, but they are different. Performance
management is a comprehensive, continuous and flexible approach to the
management of organisations, teams and individuals which involves the
maximum amount of dialogue between those concerned. Performance
appraisal is a more limited approach which involves managers making
top-down assessments and rating the performance of their subordinates
at
an
annual
performance
appraisal
meeting.

Performance appraisal

Performance
3

management
Top-down assessment

Joint
process
dialogue

Annual appraisal meeting

Continuous review with one

or more formal reviews

Use of ratings

Ratings less common

Monolithic system

Flexible process

Focus
on
objectives

quantified Focus
on
behaviours
objectives

Often linked to pay

Bureaucratic
paperwork
Owned
by
department

through

values
and
as
well
as

Less likely to be directly

linked to pay

complex Documentation kept to a

minimum
the

HR Owned by line managers

We have worked with some of the most advanced organizations in terms

of
Performance
Management
Most organizations have some type of employee appraisal or review
system and are experiencing the shortcomings of manual Appraisal
systems. In talking about Employee Performance Management, the
question we are asked most often is what is the difference between
Appraisal systems and Performance Management
Following is a process diagram that provides a graphical view of the major
differences between the two processes: