Chapter 1

Performance
Management

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 Overview
 Definition of Performance
Management (PM)
 The PM Contribution
 Disadvantages/Dangers of Poorly
Implemented PM Systems

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 Overview (continued)
 Purposes of PM Systems
 Characteristics of an Ideal PM
System
 Integration with Other Human
Resources and Development
Activities
 PM Around the World
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 Definition of PM
1. Continuous process of …
• Identifying
• Measuring
• Developing
… the performance of individuals and
teams
2. Aligning performance with the
strategic goals of the organization

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 Definition of PM (continued)
 Performance management (PM)

is NOT

performance appraisal (PA)

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 Definition of PM (continued)
PM PA
 Strategic business  Driven by HR
considerations
 Assesses employee
 Driven by line • Strengths
manager
• Weaknesses
 Ongoing feedback
 Once a year
• So employee can
improve performance  Lacks ongoing
feedback
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 Contributions of
Performance Management
 For Employees
 For Managers
 For Organization/HR Function

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 Contributions of Performance
Management for Employees
 Clarify definitions of
• Job
• Success criteria
 Increase motivation to perform
 Increase self-esteem
 Enhance self-insight and
development
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 Contributions of Performance
Management for Managers
 Communicate supervisors’ views of
performance more clearly
 Managers gain insight about
subordinates
 Better and more timely differentiation
between good and poor performers
 Employees become more competent

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 Contributions of Performance
Management for Organization/HR
Function
 Clarify organizational goals
 Facilitate organizational change
 Fairer, more appropriate
administrative actions
 Better protection from lawsuits

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 Disadvantages/Dangers of
Poorly Implemented
PM Systems

 For Employees
 For Managers
 For Organization/HR Function

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Disadvantages/Dangers of Poorly
Implemented PM Systems for
Employees
 Lowered self-esteem
 Employee burnout and job
dissatisfaction
 Damaged relationships
 Use of false or misleading
information
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Disadvantages/Dangers of Poorly
Implemented PM Systems for
Managers
 Increased turnover
 Decreased motivation to perform
 Unjustified demands on managers’
resources
 Varying and unfair standards and
ratings
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Disadvantages/Dangers of Poorly
Implemented PM Systems for
Organization/HR Function
 Wasted time and money
 Unclear ratings system
 Emerging biases
 Increased risk of litigation

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 Purposes of PM Systems

 Strategic
 Administrative
 Informational
 Developmental
 Organizational maintenance
 Documentation

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 Purposes of PM Systems
Strategic Purpose
 Link individual goals with
organization’s goals

 Communicate most crucial business

strategic initiatives

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 Purposes of PM Systems
Administrative Purpose
 Provide information for making
decisions regarding:
• Salary adjustments
• Promotions
• Retention or termination
• Recognition of individual performance
• Layoffs
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 Purposes of PM Systems
Informational Purpose
 Communicate to employees:
• Expectations

• What is important

• How they are doing

• How to improve

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 Purposes of PM Systems
Developmental Purpose
 Performance feedback/coaching
 Identification of individual strengths
and weaknesses

 Identification of causes of
performance deficiencies

 Tailor development of individual

career path
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 Purposes of PM Systems
Organizational Maintenance Purpose
 Plan effective workforce
 Assess future training needs
 Evaluate performance at
organizational level
 Evaluate effectiveness of HR
interventions
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 Purposes of PM Systems
Documentation 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 and ineffective
performance
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 An Ideal PM System:
15 Characteristics (continued)
8. Reliable
9. Valid
10. Acceptable and fair
11. Inclusive
12. Open (No Secrets)
13. Correctable
14. Standardized
15. Ethical
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 An Ideal PM System:
15 Characteristics
Strategically Congruent
 Consistent with organization’s
strategy

 Aligned with unit and

organizational goals

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 An Ideal PM System:
15 Characteristics
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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 An Ideal PM System:
15 Characteristics
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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 An Ideal PM System:
15 Characteristics
Practical
 Available

 Easy to use
 Acceptable to decision makers

 Benefits outweigh costs

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 An Ideal PM System:
15 Characteristics
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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 An Ideal PM System:
15 Characteristics
Specific
 Concrete and detailed guidance
to employees
• What’s expected
• How to meet the expectations

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 An Ideal PM System:
15 Characteristics
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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 An Ideal PM System:
15 Characteristics
Reliable
 Consistent
 Free of error
 Inter-rater reliability

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 An Ideal PM System:
15 Characteristics
Valid
 Relevant (i.e., measures what is
important)

 Not deficient (i.e., doesn’t measure

unimportant facets of job)

 Not contaminated (i.e., only

measures what the employee can
control)
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 An Ideal PM System:
15 Characteristics
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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 An Ideal PM System:
15 Characteristics
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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 An Ideal PM System:
15 Characteristics
Open (No Secrets)
 Frequent, ongoing evaluations and
feedback
 Two-way communications in
appraisal meeting
 Clear standards and ongoing
communication
 Communications are factual, open,
and honest
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 An Ideal PM System:
15 Characteristics
Correctable
 Recognizes that human judgment
is fallible

 Appeals process provided

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 An Ideal PM System:
15 Characteristics
Standardized
 Ongoing training of managers to
provide
 Consistent evaluations across:
• People
• Time

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 An Ideal PM System:
15 Characteristics
Ethical
 Supervisor suppresses self-interest
 Supervisor rates only where (s)he
has sufficient information about the
performance dimension

 Supervisor respects employee

privacy

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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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 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
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 Quick Review
 Definition of Performance Management (PM)
 The Performance Management Contribution
 Disadvantages/Dangers of Poorly Implemented PM
Systems
 Definition of Reward Systems
 Aims and Role of PM Systems
 Characteristics of an Ideal PM System
 Integration with Other Human Resources and
Development Activities
 PM Around the World
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