PERFORMANCE

MANAGEMENT

CHAPTER 2 &3
 PERFORMANCE IN PM
•  The action or process of carrying out or
accomplishing an action, task, or function
can be termed as performance.
• Performance management includes the
processes used to manage corporate
performance, the methodologies that
drive some of the processes and the
metrics used to measure performance
against strategic and operational
performance goals.
What are Performance Standards?

• Performance Standards are

the benchmark against which
performance is measured.
 PROCESS OF PM
• Prerequisites
• Performance Planning
• Performance Execution
• Performance Assessment
• Performance Review
• Performance Renewal & Re-contracting
 Major Determinants of Individual
Performance
 Organizational Strategy -Long and short
term goals and values
• Individual Attributes - Skills and abilities
• Objective Results
• Individual Behaviour
• Situational Constraints- Organizational
culture, Economic conditions
 APPROACHES TO PM
1) COMPARATIVE Approach
• Requires the rater to COMPARE an
individual’s performance with that of
others
• Uses overall assessment of an individual’s
performance
• Develop some RANKING of the
individuals within the group
COMPARATIVE Approach – RANKING
• Simple ranking –
Rank employees within their department
from highest to poorest performer
BEST TO WORST
• Alternation Ranking –
List of employees, cross the best and worst
employee
•  COMPARATIVE Approach - FORCED
DISTRIBUTION
• Also uses ranking format
Employees ranked in groups
• Employees put in predetermined
categories
Best workers, in between, worst
• COMPARATIVE Approach - PAIRED
COMPARISON
• Compare every employee with every
other employee
1 point for every higher performance
Total score obtained
• TIME CONSUMING
ATTRIBUTE Approach
• Focuses on extent to which individuals
have certain attributes
Characteristic or trait
• Define a set of traits for evaluation
Initiative, leadership, and competitiveness
ATTRIBUTE Approach-Graphic Rating
Scales
• List of traits evaluated by a five
point rating scale
• Legal defensibility
Subjective
Criticized appraisals – should
demonstrate that rating is
objectively related to actual work
behaviour
 ATTRIBUTE Approach - Mixed Standard
Scales

• Improved version
• Relevant performance dimensions
Statements representing good, average
and poor performance
•  BEHAVIORAL Approach
• Attempts to define the behaviours an
employee must exhibit to be effective in
the job
• Behaviors are defined and managers
assess the extent to which employees
exhibit them
 BEHAVIORAL Approach - Critical Incidents
• Requires managers to keep record of
specific examples of effective and
ineffective performance
• Provides specific feedback to employees
- what they do well and what they do
poorly
• Can be tied to the company’s strategy
• Individual approach – not being
compared to others
• BEHAVIORAL Approach - Behaviorally
Anchored Rating Scale (BARS)
• Builds on the critical incidents approach
Identify critical incidents that represent effective
and ineffective performance
Experts agree on behavioural anchors that will
serve as guide to ratters'
Anchors will serve as guide to managers
Rating becomes the employee’s score
• Bias on information recall
 BEHAVIORAL Approach - Behavioural
Observation Scale (BOS)
• Variation of a BARS
• Developed from critical incidents
Uses many behaviours to necessary for effective
performance
Requires managers to rate the frequency with
which the employee has exhibited each
behaviour during the rating period
Ratings are then averaged to compute an overall
performance rating
• BEHAVIORAL Approach - Behavioral
Observation Scale (BOS)
• Compared to BARS and graphic rating
scales
BOS is preferred for differentiating good
from poor performers
Maintains objectivity, providing feedback,
suggesting training needs and being easy
to use
BEHAVIORAL Approach - Organizational
Behavioural Modification (OBM)
• Entails managing the behaviour of employees
through a formal system of behavioural
feedback and reinforcement
• Components
1. Define a set of key behaviours necessary for job
performance
2. Use of measurement system to assess whether
these behaviours are exhibited
3. Manager informs employees of these behaviors
4. Feedback and reinforcement
 BEHAVIORAL Approach - Assessment
Centers
• Individuals usually perform a number of
simulated tasks
• Leaderless group discussions
• In-basket management
• Role playing
• Assessors observe the individual’s
behaviour and evaluate their skill or
potential as managers
• RESULTS Approach
• Focuses on managing the objective,
measurable results of a job or work group
• Results are the closest indicator of one’s
contribution to organizational
effectiveness
Management by objectives
Productivity Measurement and Evaluation
System
RESULTS Approach - Management by
Objectives
• Popular in both private and public
organizations
• Top management team first defines the
company’s strategic goals
Goals are passed on to the next layer of
management
Goal setting process cascades down
These goals are used as the standards by which
an individual’s performance is evaluated
•  RESULTS Approach - Management by
Objectives
• Components of the Goal
Specific
Difficult
Objective
RESULTS Approach - Management by
Objectives
• Effectiveness
Usually increases productivity
Productivity gains tend to be highest when
top management is committed
• Effectively links individual’s performance
with firm’s strategy
• Firm – Department – Individual - Rewards
•  RESULTS Approach - Productivity
Measurement and Evaluation System
(ProMES)
• Goal
Motivate employees to higher levels of
productivity
Measure and feedback productivity
information to personnel
RESULTS Approach - Productivity
Measurement and Evaluation System
(ProMES)
• STEPS
Identify what (product) the organization
expects to accomplish
Staff defines indicators of the product
Staff establishes the contingencies between
the amount of indicators and the level of
evaluation associated with that amount
Feedback
 QUALITY Approach
• Fundamental characteristics
Customer orientation
Prevention approach to errors
• Goal
Improving customer satisfaction
QUALITY Approach
• Expectations
Emphasize an assessment of both person and
system
Emphasize that managers and employees work
together to solve performance problems
Involve both internal and external customers in
setting standards and measuring performance
Use multiple sources to evaluate person and
system factors
QUALITY Approach
• Techniques
• Process flow analysis
Identify cause of delay/redundancy in the process
• Cause and Effect diagram
Identify cause/event that result in undesirable outcomes
• Pareto Chart
Highlight most important cause of a problem
• Control Charts
Collecting data at multiple points in time
• Histogram
• Scattergrams
 Performance Planning
• Performance planning define
expectations- the results to be
achieved and the skills,
knowledge, expertise, and
capabilities required to attain
these results.
(Armstrong 2000)
 METHODOLOGIES OF
PERFORMANCE PLANNING

• Key Performance Areas

• Key Result Areas
• Task and Target Identification
• Goal Setting Exercises
 SETTING PERFORMANCE
CRITERIA
All approaches and techniques used for
measuring and managing performance
must be evaluated against the criteria of :
-
• Strategic Congruence
• Validity
• Reliability
• Acceptability
• Specificity
• APPROACHES TO PERFORMANCE
PLANNING Two Approaches: 2
basic approaches to conducting a
performance planning discussion.
• 1) COLLABORATIVE APPROACH
• 2) TOP-DOWN APPROACH
Objectives of Performance
Analysis
• https://www.slideshare.net/
highcllaszbhrattinhellah/performance-
management-28409168