• Performance Management:“Strategic and integrated
approach to increasing the effectiveness of companies by
improving the performance of the people who work in
them and by developing the capabilities of teams and
- Armstrong and Baron
• It can be regarded as a continuous process for getting desired
• Is beneficial to all the major stakeholders of an organization by
clearly describes desired goals.
• It is the heart of any HR processes in an organization as it
influences the rest other HR functions or processes.
• Aligns the organization directly behind the CEO's goals
• Decreases the time it takes to create strategic or operational
changes by communicating the changes through a new set of
• Motivated workforce
• Optimizes incentive plans to specific goals for over
achievement, not just business as usual
• Improves employee engagement because everyone
understands how they are directly contributing to the
organizations high level goals
• Create transparency in achievement of goals
• Improved management control
• Flexible, responsive to management needs
• Displays data relationships
• Helps audit / comply with legislative requirement
• Simplifies communication of strategic goals scenario planning
• Provides well documented and communicated process
The major objectives of performance management are discussed
• To enable the employees towards achievement of superior
standards of work performance.
• To help the employees in identifying the knowledge and skills
required for performing the job efficiently as this would drive their
focus towards performing the right task in the right way.
• Boosting the performance of the employees by encouraging
employee empowerment, motivation and implementation of an
effective reward mechanism.
• Creating a basis for several administrative decisions strategic
planning, succession planning, promotions and performance based
• Promoting a two way system of communication between the
supervisors and the employees for clarifying expectations
about the roles and accountabilities.
• Identifying the barriers to effective performance and resolving
those barriers through constant monitoring, coaching and
• Promoting personal growth and advancement in the career of
the employees by helping them in acquiring the desired
knowledge and skills.
9. OBJECTIVE SETTING
Be sure the objective set is SMART
• Result Oriented
• Time bound
10. KEY QUESTIONS
• There are six basic key questions of PM-
1. WHY assess performance?
2. WHAT performance to assess?
3. HOW to assess performance?
4. WHO do assess performance?
5. WHEN to assess performance?
6. HOW to communicate performance assessment?
11. WHY assess performance
• Administer Salary & Wages
• Correct Performance/Behaviour
• Plan for Future (promotion, transfer, career development)
• Facilitate Decision-Making (counseling, terminations)
• Facilitate Human Resource Planning
• Create Culture
• Building Good Relationships
• Increase Organizational Loyalty
• Determine Effectiveness of Selection
• Placement Methods
12. WHAT performance to assess
Skills/Abilities/ with the
Which Result in
Needs/Traits of Organization to
13. HOW to assess performance
• Assessment Center
• Peer Review Panel
• Critical Events
• Upward Feedback
• 360 Degree
14. WHO do assess performance
• Superior Only
15. WHEN to assess performance
• Probation Period
• Annually (anniversary date, assigned date, set date for all)
• For Cause
• As needed
• Work Goals • Feedback
• Competencies • Coach
• Learning • Adjust goals
• At least annually
19. APPROACHES & TECHNIQUES
TRADITIONAL METHODS MODERN METHODS
1. Essay Appraisal method 1. Management By
2. Straight Ranking method Objectives
3. Paired Comparison 2. 360 Degree Appraisal
4. Critical Incidents method 3. 720 Degree Appraisal
5. Field Review 4. Assessment Centre
6. Checklist 5. Behaviorally Anchored
7. Graphic Rating Scale Rating Scale
8. Forced Distribution 6. Human Resource
20. TRADITIONAL METHOD
• Essay Appraisal Method- It is also known as “Free Form
Method”. Here, the senior/ boss is write a narrative essay
describing the qualities of his junior. He describe the strength
and weakness, analytical abilities etc. the essay ends with a
recommendation for future promotion or for future
• Straight Ranking Method- It is the oldest and simplest
techniques. Here, appraiser ranks the employees from best to
poorest on the basis of their overall performance.
• Paired Comparison- In this method each and every person is
the group, department or team is compared with every other
person in the team/group/department. The comparison is
made on certain criteria and finally ranks are given. This
method is superior because it compares each and every
person on certain qualities and provides a ranking on that
• Critical Incidents Method- In this method critical or
important incidents which have taken place on this job are
noted down along with employee’s behaviour and reaction in
all these situations. Both +ve and –ve incidents are
mentioned. This is followed by an analysis of the person, his
abilities and talent, recommendations for the future
incentives and promotions.
• Field Review- In this method, a senior member of the HR
department or a training officer discusses and interviews the
supervisors to evaluate and rate their respective subordinates.
A major drawback -very time consuming method.
• Checklist Method- The rater is given a checklist of the
descriptions of the behaviour of the employees on job. The
checklist contains a list of statements on the basis of which
the rater describes the on the job performance of the
• Graphic Rating Scale- In this method, an employee’s quality
and quantity of work is assessed in a graphic scale indicating
different degrees of a particular trait. The factors taken into
consideration include both the personal characteristics and
characteristics related to the on the job performance of the
• Forced Distribution- To eliminate the element of bias from
the rater’s ratings, the evaluator is asked to distribute the
employees in some fixed categories of ratings like on a normal
distribution curve. The rater chooses the appropriate fit for
the categories on his own discretion.
24. MODERN METHODS
• Management By Objectives- In this method all members of
the of the department starting from the lowest level
employee to the highest level employee together discus, fix
target goals to be achieved, plan for achieving these goals and
work together to achieve them. The seniors in the department
get an opportunity to observe their junior- group efforts,
communication skills, knowledge levels, interest levels etc.
based on this appraisal is done.
• Unique features and advantages of the MBO process-The principle
behind this is for employees to have a clear understanding of the
roles and responsibilities expected of them
1. Motivation – Involving employees in the whole process of goal
setting and increasing employee empowerment. This increases
employee job satisfaction and commitment.
2. Better communication and Coordination – Frequent reviews and
interactions between superiors and subordinates helps to
maintain harmonious relationships within the organization and
also to solve many problems.
3. Clarity of goals
4. Subordinates tend to have a higher commitment to objectives
they set for themselves than those imposed on them by another
5. Managers can ensure that objectives of the subordinates are
linked to the organization's objectives.
• 360 Degree Appraisal- In this method of appraisal and all
round approach is adopted. Feedback about the employee is
taken from the employee himself, his superiors, his juniors, his
colleagues, customers he deals with, financial institutions and
other people he deals with etc. This is one of the most popular
• 720 Degree Appraisal- It is a feedback after the main 360
degree appraisal, here the boss sits down with the employee
another time and gives him feedback and tips on achieving the
targets set. It provides two rounds (pre and post). The pre
intervention sets the baseline. Post intervention survey shows
the amount of improvement in the results.
• Assessment Centre- It is a place at which a person such as a
member of staff is assessed to determine their suitability for
• Behaviorally Anchored Ratings Scales- In this method the
appraisal is done to test the attitude of the employee towards
his job. Normally people with +ve approach or attitude view
and perform their job differently as compared to people with
a –ve approach.
• Human Resource Accounting Method- In this method the
expenditure on the employee is compared with the income
received due to the efforts of the employee. A comparison is
made to find out the utility of the employee to the
organization. The appraisal informs the employee about his
contribution to the company and what is expected in future.
Deviation Do something
from in different
Not do not expected/
• Lack of ability
• Low Motivation
• Poor work ethic
• Substance abuse
• Personal problems
• Lack of time
• Poor peer relationships
• Unfamiliarity with equipment or process.