Performance Management

Performance management is the continuous process of identifying, measuring, and developing

the performance of individuals and teams and aligning performance with the strategic goals of
the organization. It plays a crucial role in improving organizational effectiveness and employee
development.

1. Performance Appraisal Methods

Performance appraisal is the systematic evaluation of employee performance and understanding

the abilities of a person for further growth and development.

Common Appraisal Methods:

a. 360-Degree Feedback – appraisal method where an employee receives confidential and

anonymous feedback from multiple sources.

 Involves feedback from supervisors, peers, subordinates, and sometimes clients.

 Example: A team leader at a software company in the Philippines receives feedback
from team members, fellow team leaders, and their manager. This provides a holistic
view of the leader’s performance.

Benefits of 360 degree:

 Encourages self-awareness and personal development
 Enhances communication and teamwork
 Reduces bias by collection multiple viewpoints

Challenges

Can be time consuming to implement

Risk of non-constructive feedback if anonymity isn’t protected
Needs a supportive culture to be effective
Supportive culture means an organizational environment where:
1. Trust is present – employee trust the feedback will be used for development, not
punishment.
- they believe the process is fair and confidential
2. Openness to feedback – people are open to giving and receiving honest,
constructive embarrassment.
- there’s no fear of retaliation or embarrassment.
3. Commitment to growth- organization values continuous improvement, both
individuals and teams.
- Leaders and managers model the behavior by participating and acting on feedback
4. Training and support – employees are trained on how to give and receive
feedback constructively.
 - there are coaches, mentors, or HR support available to help employees use the
feedback effectively
In short, a supportive culture ensures that 360-degree feedback leads to growth-not
conflict, fear, or blame.

b. Management by Objectives (MBO) – is a strategic management model that aims to improve

organizational performance by clearly defining objectives that are agreed upon by both
management and employees.

Key Features of MBO:

1. Goal Setting -managers and employees jointly set specific, measurable, achievable,
relevant, and time-bound (SMART) objectives,
2. Participation – employees are involved in the planning and decision-making process,
increasing motivation and commitment.
3. Alignment – individual goals to ensure everyone is working in the same direction.
4. Performance Review – regular evaluations are conducted to assess process toward
objectives.
5. Feedback- constructive feedback is given to help improve performance and make
necessary adjustment.

 Employees and managers set specific, measurable goals together and evaluate
performance based on goal achievement.
 Example: A sales executive is given a target of increasing monthly sales by 15%. At the
end of the quarter, their performance is evaluated based on whether the target was met.

c. Rating Scale Method – is a tool to evaluate performance, behavior, skills, or attitudes by

assessing a value- typically numerical or descriptive-to -a particular trait or standard.

Common types of Rating Scales:

1. Numerical Rating Scales (Likert Scale):

1 =Poor
2 = Fair
3 = Good
4 = Very Good
5 = Excellent
2. Descriptive Rating Scale – uses words instead of numbers
Ex.
 Unsatisfactory
 Needs Improvement
 Meets Expectations
 Exceeds Expectations
 Outstanding
3. Graphic Rating Scale – a line or bar where a mark is placed to indicate the level of
performance.
 4. Behaviorally Anchored Rating Scale (BARS) – combines numbers or specific examples
of behaviors for each level.
Purpose:
o Helps standardize evaluations
o Makes performance comparisons easier
o Encourages objective assessment

Criterion Rating (1-5) Comments

communication 4 Clear and concise most of
the time
teamwork 5 Always supportive and
collaborative
punctuality 3 Occasionally late to
meetings

Exceeds

 Employees are rated on a scale for various job traits (e.g., communication, punctuality,
quality of work).
 Example: A teacher is evaluated on a 1–5 scale for punctuality, teaching effectiveness,
and classroom management.

d. Behaviorally Anchored Rating Scales (BARS) -a type of performance appraisal tool that
combines elements of traditional rating scales and critical incident techniques. They
measure employee performance by linking numerical rating to specific behavioral
examples.

Key feature

 Combines elements of the rating scale with critical incidents to provide specific examples
for each level of performance.
 Example: A customer service representative might be rated on “problem-solving” where
a 5 means “resolves customer issues on first call without escalation,” and a 1 means
“frequently escalates basic issues.”

2. Goal Setting and Employee Motivation

Setting clear, attainable goals is key to employee motivation. The SMART goal framework
(Specific, Measurable, Achievable, Relevant, Time-bound) is often used.

Why Goal Setting Works:

 Provides direction and purpose.

 Enhances focus and persistence.
 Facilitates self-evaluation.
Example (Philippines-based):

A call center agent in Cebu is given a goal to reduce average call handling time by 10% over the
next month without compromising customer satisfaction. The agent is motivated because the
goal is clear and achievable and directly affects their performance bonus.

Link to Motivation Theories:

 Locke’s Goal-Setting Theory: Challenging and specific goals, with appropriate

feedback, lead to higher performance.

✅ Locke’s Goal-Setting Theory

Definition:
Locke’s Goal-Setting Theory says that clear, specific, and challenging goals — along with
proper feedback — lead to higher performance and better motivation.

📌 Key Principles of the Theory:

1. Clarity
➤ Goals should be clear and specific.
✅ Example: “Increase sales by 10%” is better than “Do your best.”
2. Challenge
➤ Goals should push the employee to grow — not too easy, but not impossible.
✅ Example: “Answer 30 calls a day” when the average is 25.
3. Commitment
➤ Employees must be committed to the goal. Involving them in goal-setting increases
this.
✅ Example: Letting a team member help define their target makes them more engaged.
4. Feedback
➤ Regular feedback helps employees know if they’re on track.
✅ Example: Weekly check-ins to discuss progress.
5. Task Complexity
➤ Complex goals should be broken down into smaller steps with guidance.
✅ Example: Breaking “create a full marketing plan” into research, strategy, and
execution steps.

🎯 Example in the Workplace:

Let’s say a call center agent sets the following goal:
“Improve call resolution rate to 90% within 3 months.”
 The goal is clear and measurable.
 It is challenging but achievable with training.
 The agent helped set the goal, so they are committed.
 The supervisor gives monthly feedback on progress.
➡️According to Locke, this goal will boost motivation and performance.

 Expectancy Theory (Vroom): Employees are motivated when they believe that their
effort will lead to good performance and desired rewards.
Victor Vroom - Expectancy Theory (Vroom)
Definition:
Expectancy Theory explains that people are motivated to work hard when they believe that
their effort will lead to good performance and that this performance will be rewarded with
something they value.

🔁 Formula:
Motivation = Expectancy × Instrumentality × Valence
Let’s break that down:
1. Expectancy
→ “If I try hard, I can succeed.”

The belief that effort will lead to better performance.

✅ Example: "If I study hard, I’ll get a good grade."
2. Instrumentality
→ “If I perform well, I will be rewarded.”

The belief that performing well will result in a reward.

✅ Example: "If I get good grades, I will receive a scholarship."
3. Valence
→ “I care about the reward.”

The value the person places on the reward.

✅ Example: "I really want that scholarship because it helps my family."
🎯 Simple Example in the Workplace:

Let’s say a sales agent is told:

“If you reach 10 sales this week, you’ll get a ₱2,000 bonus.”
 Expectancy: The agent believes they can make 10 sales with effort.
 Instrumentality: They trust that hitting the goal will actually result in getting the bonus.
 Valence: The bonus is meaningful — they want or need the money.

➡️If all three beliefs are strong, the employee will be highly motivated

3. Feedback and Coaching

Feedback and coaching are essential in helping employees improve performance and develop
professionally.

a. Feedback

 Should be timely, specific, and constructive.

 Can be positive (reinforcing good behavior) or corrective (highlighting areas for
improvement).
Example:
After observing a cashier at a supermarket making repeated errors in giving change, the
supervisor provides immediate feedback, showing the correct process and reinforcing the
importance of accuracy.

b. Coaching

 Involves ongoing, informal conversations aimed at improving skills and performance.

 Focuses on development, not just evaluation.

Example:
A newly hired nurse in a hospital in Manila is assigned a senior nurse as a coach. Through
weekly one-on-one meetings, they discuss challenges, clarify procedures, and set mini-goals for
improvement.

Conclusion

Effective performance management blends structured evaluations with continuous feedback and
support. It ensures that employees know what's expected of them, feel motivated to meet those
expectations, and have the tools and guidance to succeed.

Key Takeaway: Organizations that invest in clear appraisals, goal setting, and regular coaching
create a performance-driven culture that benefits both the employees and the business.

.Coaching vs. Feedback

Coaching Feedback
Long-term, developmental Can be one-time or recurring
Focused on skill growth Focused on performance review
Two-way conversation Often one-way but should be dialogic

Example:
In a BPO company in Taguig, a senior agent is assigned as a coach to train and support 3 new
hires for their first month. Through weekly sessions, the coach observes their calls, gives
feedback, and sets improvement goals.

Final Thoughts
Performance management is not a once-a-year appraisal—it is an ongoing process that includes:

 Setting goals that align with company strategy.

 Evaluating performance through fair, objective methods.
 Providing feedback and coaching to encourage continuous improvement.
When implemented effectively, performance management boosts productivity, enhances
employee engagement, and fosters a high-performance culture.