Performance

Management
 BPM (video)

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WHAT IS PERFORMANCE MANAGEMENT?

COMMON MISCONCEPTIONS
What is your definition of performance management?
- Most people associate it with concepts such as:
● Appraisal
● Performance-related pay
● Targets and objectives
● Motivation and discipline
Yet, performance management is
much more than this

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A DEFINITION
• Performance management is
about getting results.
• It is concerned with getting the best
from people and helping them to
achieve their potential.
• It is an approach to achieving a
shared vision of the purpose and
aims of the organization.
• It is concerned with helping
individuals and teams achieve their
potential and recognize their role in
contributing to the goals of the
organization.

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What is Performance Management?
There are a wide range of definitions for:
1. performance objective,
2. performance goal,
3. performance measure,
4. performance measurement,
5. performance appraisal,
6. performance management, and
7. performance leadership.

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What is Performance Management?
1. Performance objective:
• This is a critical success factor in achieving the organization’s
mission, vision, and strategy, which if not achieved would
likely result in a significant decrease in customer satisfaction,
system performance, employee satisfaction or retention, or
effective financial management.

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What is Performance Management?
2. Performance goal:
• A target level of activity expressed as a tangible measure,
against which actual achievement can be compared.
3. Performance measure:
• A quantitative or qualitative characterization of performance.

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What is Performance Management?
4. Performance measurement:
A process of assessing progress toward achieving predetermined goals,
including information on the efficiency with which resources are transformed
into goods and services (outputs), the quality of those outputs (how well they
are delivered to clients and the extent to which clients are satisfied) and
outcomes (the results of a organization activity compared to its intended
purpose), and the effectiveness of operations in terms of their specific
contributions to organization objectives.
• Output measure:
A calculation or recording of activity or effort that can be expressed in a
quantitative or qualitative manner.
• Outcome measure:
An assessment of the results of a program compared to its intended
purpose.

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 What is Performance Management?
5. Performance appraisal:
Setting standards, informing employees, ratings and feedback.
Evaluating an employee’s current and/or past performance relative
to his or her performance standards.

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 WHY APPRAISAL?
• If you don’t know what you are supposed to be doing and,
more importantly for appraisal, if you don’t know how you are
doing, you could be running very hard, doing your very best
but going in the wrong direction.
• When putting effort into something as important as work, it is
essential for you to know what is required of you and how well
you are performing.

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 What is Performance Management?
6. Performance management:
The use of performance measurement information to effect positive
change in organizational culture, systems and processes, by helping
to set agreed-upon performance goals, allocating and prioritizing
resources, informing managers to either confirm or change current
policy to meet those goals, and sharing results of performance in
pursuing those goals.

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SHIFTS IN PERFORMANCE MANAGEMENT

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 Corporate Performance Management
„One cannot manage what cannot be measured!“

Vision Events

Goals/
Strategies Business Processes
Results

Compare

Act Decide Measure

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 7. Performance Leadership
• It seems a small number of organizations have moved
along a continuum of development, from 'Performance
Appraisal' to Performance Management' and now appear
to be taking a 'Leadership' approach.

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• Performance Leadership is about a more strategic approach to
individual performance that is achieved through clear and
effective articulation with other fundamental business systems,
including learning and development, capability development,
business planning and workforce planning.

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 CASE EXAMPLE
• Consider a sales organization which recognizes that
Problem customer service is vital in maintaining competitive
advantage. An extensive customer service training
program is completed, yet customer feedback
indicates that there has been little improvement.
• This is because targets and incentives were based on
volume of sales and not service. People will always
Reasons focus their efforts on the areas of work for which
they are rewarded.
• The reward system needs to be altered to reflect the
emphasis on service. It also needs to recognize the
contribution of all members of the team, including
Solution back-office support.

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 Performance Management Stages
(1)
Planning

(4) Performance (2)

Rewarding Managing
Management

(3)
Reviewing

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 Performance Management Stages
Let us agree what is expected of
(1) me
Planning (Performance Measures and
standards)

(4) Performance (2)

Rewarding Managing
Management

(3)
Reviewing

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 Performance Management Stages
Let us agree what is expected of
(1) me
Planning (Performance Measures and
standards)

(4) Performance (2)

Rewarding Managing
Management

(3) Provide training, coaching,

Reviewing support, motivation, healthy
work environment

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 Performance Management Stages
Let us agree what is expected of
(1) me
Planning (Performance Measures and
standards)

(4) Performance (2)

Rewarding Managing
Management

(3) Provide training, coaching,

Assess how I am doing and give Reviewing support, motivation, healthy
objective feedback accordingly work environment

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 Performance Management Stages
Let us agree what is expected of
Reward me for my contribution (1) me
materially and psychologically Planning (Performance Measures and
standards)

(4) Performance (2)

Rewarding Managing
Management

(3) Provide training, coaching,

Assess how I am doing and give Reviewing support, motivation, healthy
objective feedback accordingly work environment

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 (1) Performance Planning
• Performance Measures (Goals, Objectives, Targets, KPI's,
Competencies, etc.) for individual employees (at all levels)
are jointly discussed and agreed during one-on-one, face-
to-face meetings with their direct line managers.
• These are put into a formal, written Performance
Agreement for each staff member. (Performance
Agreements can also be drawn up for entire work teams in
organizations where teamwork is paramount.)

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 (2) Managing Performance
• During this stage, employees implement/execute their
agreed Objectives/KPI's.
• They manage their own performance, assisted by line
managers who should aim at removing performance
obstacles in the work environment and providing the
necessary resources, training and coaching.

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 (2) Reviewing Performance
• During formal Performance Appraisal/Review Interviews,
employees and their line managers discuss (and assess)
how well the agreed Objectives/KPI's had been achieved
and specified Competencies demonstrated.
• Problem areas are identified and corrective measures put
in place, including possible coaching and training that the
jobholder needs.

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 (4) Rewarding Performance
• The actual RATING of performance (how well each
Objective/KPI had been achieved and Competencies
demonstrated) forms part of the Performance
Appraisal/Review Interview. Rewarding people for good
performance takes the form of monetary incentives or
rewards (performance-based pay such as bonuses and/or
salary adjustments).
• However, the power of non-monetary rewards, such as
praise and recognition, should not be ignored and need to
enjoy much more emphases than it generally does.

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 Link Results and Process Measures

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 Corporate Performance
Management

Real cases

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 Jack Welch
CEO of General Electric
• “ I couldn’t do this job if I didn’t
have them.” …..on the importance of
his top management team.

• “ we spend all our time on people.

The day we screw up the people
thing, this company is over.”

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 Jack Welch, General Electric
Jack Welch, General Electric, was asked “What is your job?”
• Choose the right people
• Allocate the right money
• Transmit ideas from one group to another with the speed of light
• He was a communicator and facilitator for the work of others
• He held leaders accountable to the four E’s of leadership:
• High personal Energy
• The ability to Energize others
• The Edge to make tough decisions
• The ability to Execute strategy

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 Jack Welch, General Electric
• Wiped out bureaucratic management
• Launched the workout process:
• Employees and bosses made decisions together
• Taught people that they had a right to speak up
• Rewarded those with good ideas

Welch’s message to GE managers:

1. You own these businesses; take charge of them
2. Think for yourself
3. Fight the bureaucracy: hate it, kick it, break it
4. The key in this case is caring leadership and
empowerment of people

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Errors in Performance
Management
 Errors in Performance Management
• Similar-to-me
• Errors in distribution
• Leniency
• Strictness
• Central Tendency: A tendency to
rate all employees the same way,
such as rating them all average.
• Halo Effect: Occurs when a
supervisor’s rating of a
subordinate on one trait biases the
rating of that person on other
traits.

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Performance Appraisal (video)

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