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Performance
Management- The role of HR in the present scenario has undergone a
sea change and its focus is on evolving such functional
Appraisals strategies which enable successful implementation of
the major corporate strategies. Today, HR works towards
facilitating and improving the performance of the
employees by building a conducive work environment
and providing maximum opportunities to the employees
for participating in organizational planning and decision
making process. Today, all the major activities of HR are
driven towards development of high performance
leaders and fostering employee motivation.

Performance management is a much broader and a According to Armstrong and Baron (1998), Performance
complicated function of HR, as it encompasses Management is both a strategic and an integrated
activities such as joint goal setting, continuous approach to delivering successful results in
progress review and frequent communication, organizations by improving the performance and
feedback and coaching for improved performance, developing the capabilities of teams and individuals.
implementation of employee development
programmes and rewarding achievements.

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Opening Case……………………
Sally is a sales manager at a large pharmaceutical company.
The fiscal year will end in one week. She is overwhelmed with From Sally’s point of view there is no value in filling out
end‐of‐the‐year tasks, including reviewing the budget she is those seemingly meaningless forms. She does not see her
likely to be allocated for the following year, responding to subordinates in action because they are in the field
customer’s phone calls and supervising a group of 10 visiting customers most of the time. All that she knows
salespeople.Its very hectic time, probably the most hectic about their performance is based on sales figures, which
time of the year. depend more on the products offered and geographic
She receives a phone call from the human resources (HR) territory covered than the individual effort and
department, “Sally, we have not received your performance motivation of each sales‐person. And nothing happens
reviews for your 10 employees; they are due by the end of the in terms of rewards, regardless of her ratings.
fiscal year.”.
These are the lean times. Salary adjustments are based
Sally thinks, Öhh, those performance reviews……….what a on seniority rather than performance.
waste of my time!!

Definitions
She has less than days to turn in her forms. What will Performance management is a continuous process of
she do? She decides to follow the path of least resistance; identifying, measuring, and developing and
to please her employees and give everyone the maximum performance of individuals and teams and aligning
possible rating. In this way, Sally believes the employees performance with the strategic goals of the organization.
will be happy with their ratings and she will not have to Two components:
deal with complaints or follow‐up meetings. 1. Continuous process
Sally fills out the forms in less than 20 minutes and gets 2. Alignment with strategic goals
back to her “real job’”.
……………..Aguinis (2005:2)
IS IT A PERFORMANCE MANAGEMENT?????????

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Meaning of Performance 
Management
Cappelli (2008:196) wrote that: ‘When employees fail in   Performance means both behaviors and results. 
their jobs, part of the organization also fails.’ Behaviors emanate from the performer and transform 
performance from abstraction to action.
Performance management aims to eliminate or at least   Not just the instruments for results, behaviors are also 
significantly reduce this possibility. outcomes in their own right‐ the product of mental 
and physical effort applied to tasks‐ and can be judged 
apart from results.

Campbell (1990) suggested that performance is the  Performance management can be regarded as a proactive

outcome of three determinants: system of managing employee performance for driving
 Knowledge about facts and things the individuals and the organizations towards desired
 Knowledge about how things are done and the skills to 
performance and results. It’s about striking a
do them harmonious alignment between individual and
organizational objectives for accomplishment of
 Motivation to act, to expend effort and to persist
excellence in performance.

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Objectives…………
According to Lockett (1992), performance management  To enable the employees towards achievement of superior
aims at developing individuals with the required standards of work performance.
commitment and competencies for working towards the  To help the employees in identifying the knowledge and
shared meaningful objectives within an organizational skills required for performing the job efficiently as this
framework. Performance management frameworks are would drive their focus towards performing the right task
designed with the objective of improving both in the right way.
individual and organizational performance by  Boosting the performance of the employees by encouraging
identifying performance requirements, providing employee empowerment, motivation and implementation
regular feedback and assisting the employees in their of an effective reward mechanism.
career development.

 Promoting a two way system of communication between  Creating a basis for several administrative
the supervisors and the employees for clarifying decisions strategic planning, succession planning,
expectations about the roles and accountabilities,
promotions and performance based payment.
communicating the functional and organizational goals,
providing a regular and a transparent feedback for  Promoting personal growth and advancement in
improving employee performance and continuous the career of the employees by helping them in
coaching. acquiring the desired knowledge and skills.
 Identifying the barriers to effective performance and
resolving those barriers through constant monitoring,
coaching and development interventions.

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Formal monitoring systems Evolution of PM
It was evolved out of the work of Frederick Taylor and his  First Phase: The origin of performance management
followers before World War I. Rating for officers in the can be traced in the early 1960’s when the performance
US armed services was introduced in the 1920s, and this appraisal systems were in practice. During this
then spread to the UK, as did some of the factory‐based period, Annual Confidential Reports (ACR’s)which
American systems. was also known as Employee service Records were
Merit rating came to the fore n the USA and the UK in maintained for controlling the behaviors of the
the 1950s and 1960s, when it was sometimes re‐ employees and these reports provided substantial
christened ‘performance appraisal’. information on the performance of the employees. Any
Then Management by objectives came in 1960s and negative comment or a remark in the ESR or ACR used
1070s, and experiments were made simultaneously with to adversely affect the prospects of career growth of an
the critical incident technique and BARS. employee.

 The assessments were usually done for ten traits on a  The assessments were usually done for ten traits on a
five or a ten point rating scale basis. These traits were five or a ten point rating scale basis. These traits were
job knowledge, sincerity, dynamism, punctuality, job knowledge, sincerity, dynamism, punctuality,
leadership, loyalty, etc. The remarks of these reports leadership, loyalty, etc. The remarks of these reports
were never communicated to the employees and strict were never communicated to the employees and strict
confidentiality was maintained in the entire process. confidentiality was maintained in the entire process.
The employees used to remain in absolute darkness The employees used to remain in absolute darkness
due to the absence of a transparent mechanism of due to the absence of a transparent mechanism of
feedback and communication. This system had feedback and communication. This system had
suffered from many drawbacks. suffered from many drawbacks.

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 Second Phase: This phase continued from late 1960’s till  Third Phase: In this phase the term ACR was replaced
early 1970’s, and the key hallmark of this phase was that by performance appraisal. One of the key changes that
whatever adverse remarks were incorporated in the were introduced in this stage was that the employees
performance reports were communicated to the employees were permitted to describe their accomplishments in
so that they could take corrective actions for overcoming the confidential performance reports. The employees
such deficiencies. In this process of appraising the
were allowed to describe their accomplishments in the
performance, the reviewing officer used to enjoy a
discretionary power of overruling the ratings given by the
self appraisal forms in the end of a year.
reporting officer. The employees usually used to get a
formal written communication on their identified areas of
improvements if the rating for any specific trait used to be
below 33%.

 Besides inclusion of the traits in the rating scale,  Fourth Phase: This phase started in mid 1970’s and its
several new components were considered by many origin was in India as great business tycoons like
organizations which could measure the productivity Larsen & Toubro, followed by State Bank of India and
and performance of an employee in quantifiable terms many others introduced appreciable reforms in this
such as targets achieved, etc. Certain organizations field. In this phase, the appraisal process was more
also introduced a new section on training needs in the development driven, target based (performance
appraisal form. However, the confidentiality element based), participative and open instead of being treated
was still being maintained and the entire process as a confidential process. The system focused on
continued to be control oriented instead of being performance planning, review and development of an
development oriented. employee by following a methodical approach.

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 In the entire process, the appraisee (employee) and the  Fifth Phase: This phase was characterized by maturity
reporting officer mutually decided upon the key result in approach of handling people’s issues. It was more
areas in the beginning of a year and reviewed it after performance driven and emphasis was on
every six months. In the review period various issues development, planning and improvement. Utmost
such as factors affecting the performance, training importance was given to culture building, team
needs of an employee, newer targets and also the appraisals and quality circles were established for
ratings were discussed with the appraisee in a assessing the improvement in the overall employee
collaborative environment. productivity.
 This phase was a welcoming change in the area of 
performance management and many organizations
introduced a new HR department for taking care of
the developmental issues of the organization.

Emergence of Performance 
Management System
Two IPM researchers (Bevan and Thompson)  Practice writing SMART performance objectives:
commented on the emergence of performance  S – Specific.
management systems as integrating processes which  M – Measurable.
mesh various human resources management activities  A – Attainable.
with the business objectives of the organization.
 R – Realistic.
 Reward‐driven integration, which emphasizes the role  T – Timely
of performance pay.
 Development‐driven integration, which stresses the
importance of HRD.

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The Performance Management 
Cycle
 Plan: agreeing objectives and competence
requirements; identifying the behaviors required by
the organization; producing plans expressed in
performance agreements for meeting objectives and
improving performance; preparing personal
development plans to enhance knowledge, skills and
competence and reinforce the desired behaviors.
 Act: carrying out the work required to achieve
objectives by reference to the plans and in response to
new demands.

The Performance Management 
Contribution
 Motivation to perform is increased: knowledge about
 Monitor: Checking on progress in achieving objectives
how one is doing and recognition about one’s past
and responding to new demands; treating successes provide the fuel for future accomplishments.
performance management as a continuous process‐
’managing performance all the year round’‐ rather  Self‐esteem is increased: fulfills a basic human need to
than an annual appraisal event. be recognized and valued at work.
 Review: holding a review meeting for a ‘stocktaking’  Managers gain insight about subordinates: gaining
assessment of progress and achievements; and new insights into a person’s performance and
identifying where action is required to develop personality will help the manager build a better
performance as a basis for completing the cycle by relationship with that person.
moving into the planning stage.  The definitions of job and criteria are clarified: better
understanding about behaviors and results for
position.

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 Self‐insight and development are enhanced:  Employee become more competent: It’s a foundation
understanding the kind of development activities that for helping employees become more successful.
are of value to them as they progress through the  Employee misconduct is minimized: E.g, accounting
organization. irregularities, abusing overtime policies, giving
 Administrative actions are more fair and appropriate: inappropriate gifts to clients to secure business, using
rewards are distributed on a fair and credible basis. company resources for personal use.
Improve interpersonal relationships.  There is better protection from lawsuits: Equal
 Organizational goals are made clear: employee treatment to all employees.
understands the link between what she does and
organizational success.

 Differentiation between good and poor performers:  Voice behavior is encouraged: suggestions for changes
address performance problems on a timely basis. and improvements that are innovative, challenge the
 Organizational change is facilitated: once the new status quo, are intended to be constructive.
organizational direction is established, performance  Employee engagement is enhanced: A good PM system
management is used to align the organizational involved the employees. They feel committed,
culture with the goals and objectives of the passionate and empowered.
organization to make change possible. Training is
provided.
 Motivation, commitment and intentions to stay in the
organization are enhance.

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Dangers of poorly implemented 
PM Systems Strategy
 Increased turnover A business strategy is the means by which it sets out to 
 Use of misleading information achieve its desired ends (objectives). It can simply be 
 Lowered self‐esteem described as a long‐term business planning. Typically 
 Wasted time and money a business strategy will cover a period of about 3‐5 
 Damaged relationships
years (sometimes even longer).
 Decreased motivation to perform
 Employee burnout and job dissatisfaction
 Increased risk of litigation
 Unjustified demands on manager’s and employee’s 
resources
 Emerging biases and unclear ratings system

STRATEGY Performance Management 
Process by Herman Aguinis
In almost every case, it is ideal to retain customers than to
constantly chase new ones. And this is one major area where
business strategy is extremely necessary. In the absence of a
sound business plan, you will find it hard to generate
customer loyalty. Businesses that have no specific guidelines
on how to cater to existing customers risk alienating the later,
and a competitor can easily snatch them out of your hand just
by emphasizing on customer service.
 So, what you need to do is develop a robust system of
follow‐up where calls are made and emails are sent to
repeat customers not only to ensure that their products are
operating properly, but also to let them know that your
business cares for them.

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PM Process
 Performance planning
 Defining expectations
Performance management is an ongoing process.
 Objectives
Performance management does not take place just once
a year. Performance management includes many  Measuring performance
components which are closely related to each other poor  The continuing process of performance management
implementation of any of them has a negative impact on  Reviewing performance 
the performance of management system as a whole.  Providing feedback 
 Assessing performance
 Rating performance
 An alternative visual approach to rating
 Coaching
 documentation

1. Performance planning: It is concerned with setting the  Setting the direction: It is set by a plan based on the
direction, concluding performance agreements and joint exploration of what individuals are expected to
agreeing personal development plans. It covers what has do and know, and how they are expected to behave to
to be done, how it is done, and what is to be achieved. meet the requirements of their role and develop their
It is forward looking, focusing on what people have to do skills and competencies.
to achieve their potential, and stretching them to  The performance agreement: It is based on the joint
discover what they are capable of. discussion and agreement of expectations. It is
Important: Developing people‐helping them to learn‐ influenced by organizational plans or strategies which
providing them support to do well. result in cascading goals to be translated into
individual objectives.

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2. Defining Expectations: Expectations are defined as 
short to medium term targets, the extension of  3. Objectives: Objectives can be quantitative (numerical
knowledge and skills, upholding the core values of the  targets), achievement‐based (things to be done), or
organization and meeting behavioral requirements. qualitative (expectations of behavior). Objectives can be
Why? work‐related, referring to the achievement of role
When? requirements (results to be attained).
How? They can also be personal, taking the form of
developmental or learning objectives which are
What?
concerned with what individuals should do to enhance
their knowledge, skills and potential and to improve
their performance or change their behavior in specified
areas.

4. Measuring Performance: To improve performance you  Classification of performance measures:

have to know what current performance is. Finance
‘If you can’t measure it, you can’t manage it.’ Output
These could be straightforward performance measures Impact
referring quantified outputs. Reaction
It becomes more difficult when qualitative measures Time
have to be used which may refer to behaviors or
unquantifiable outcomes rather than defined results.
It is necessary to ensure that factual evidence is available
on which to base judgments.

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Measuring performance is relatively easy for those who 5. The continuing process of performance management:
are responsible for achieving quantified targets‐ for eg., A formal, often annual, review is still an important part
sales. of a performance management framework but it is not
More difficult in case of knowledge workers‐ Eg. the most important part.
Scientists…Case of Institute of Cancer Research. Performance should be regarded as an integral part of
the continuing process of management. Emphasis is on:
 Achievement of sustained improvements
 Continuous development of skills and capabilities
 Organisation is a ‘learning organisation’.

7. Providing Feedback: It provides an opportunity to

6. Reviewing Performance: Necessary to have review
recognize achievements or to indicate areas for
once or twice yearly. It is a means for considering the
improvement or development. It is based on evidence.
future in the light of an understanding of the past and
Refers to results, events, critical incidents and significant
present and answers the two fundamental questions of
behavior that have affected performance in specific way.
‘Where have we got to? And ‘where are we going’?
Feedback should be based on fact, not opinion, and
Reviews are stocktaking exercises which take note of should be presented in a way that enables individuals to
what has been happening in order to plan what is going recognize and accept its factual nature.
to happen.
Interpretations should start from the actual situation
The objectives of performance reviews are motivation, not from the subjective views.
development and communication.
Involve dialogue involving two way communication.

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Guidelines on providing feedback:
8. Assessing performance: Assessment of performance
 Provide feedback on actual events starts with a retrospective analysis of results and the
 Provide immediate feedback reasons for the level of achievement reached. Results are
 Describe, don’t judge assessed against agreed objectives.
 Refer to specific behaviors ‘Could the results be explained by the existence of
 Ask questions factors beyond the individual’s control?’
 Select key issues Exploring individual behavioral factors. This is best
conducted by reference to a competency framework
 Focus
supported by evidence‐examples of actual behavior as
 Provide positive feedback agreed by the manager and the individual which
 Self assessment after the feedback contribute to good or not so good performance.

Performance‐level : The rating format can either be

behavioral with examples of good or bad performers.
Five point rating scale:
9. Rating performance: There are arguments for the use A Outstanding performance in all respects
of rating as a summary of the assessment and to inform
B Superior performance, above normal
performance‐related or contribution‐related pay
decisions. But there are also powerful arguments against.
Arguments for rating: Useful to sum up judgments about C Good, all round performance to meet normal
people‐who are the exceptional performers or under‐ requirements of the job
performers and who are the reliable core performers‐ so D Performance not fully up to requirements Clear
that action can be taken ( developmental or some form weaknesses, require improvement
of non‐financial reward). E Unacceptable, Constant guidance is required and
Arguments against rating: Largely subjective ( depends performance of many aspects the job is below reasonable
on managers), Using single rating, qualitative aspects. standards.

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10. An alternative Visual approach to rating: Developed

by Ann Cummins of Humanus Consultancy for a client
in the financial services sectors. Involves agreement
between the manager and the individual on where the
latter should be placed on the matrix or grid.
It provides a snapshot of their overall contributions.
Assessment of contribution refers both to outputs and to
behaviors, attitudes and overall approach.

11. Coaching: Every time a manager delegates a new task

to someone, a coaching opportunity is created to help 12. Documentation: Performance management is not a
the individual learn any new skills or techniques that are form‐filling exercise.
needed to get the job done. Main purpose of any performance management forms is
Manager provides an individual with feedback after a to serve as working documents. Forms should record
task has been completed, there is an opportunity to help agreements on performance achievements and actions
that individual do better next time. to be taken to improve performance or develop
competence and skills.
The coaching process:
Designing forms, the aims should be to keep them as
 Making people aware of how well they are performing
simple and brief as possible while allowing ample ‘white
 Controlled delegation and increase learning space’ for comments. They should be self‐explanatory.
 Encouraging people to look at higher‐level problems
and how to tackle

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 Data: So‐called human capital is more difficult to

measure than other forms of capital it has often been PERFORMANCE 
neglected in management decision‐making.
Performance management generates a great deal of MANAGEMENT 
performance data which if captured and analyzed
appropriately could contribute to a
understanding of the value of people and their
greater VS
contribution and aid management, decision‐making.
Some organizations develop different types of PERFORMANCE 
documentation such as so‐called ‘dashboards’ or
performance indicators into which they can feed data for
measurement.
APPRAISAL

Performance Management Cycle
 Performance appraisal: the measurement and  Development Tool
assessment of an employee’s job performance
Administrative Tool
 Performance management: the integration of 
performance appraisal systems with other HRM systems for 
the purpose of aligning the employees’ work behaviors and 
results with the organization’s goals
 Example: link an employee’s pay increase to the employee’s 
job performance
 To do this, we have to measure the employee’s job performance
 Goal: Improve the organization by improving the employees’ 
work behaviors and results Source of figure: Adapted from Fisher, Schoenfeldt, & Shaw (2006), Figure 10.1, p. 421

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PA             V/S           PM
Performance appraisal Performance management
 Operational  Strategic
 Top‐down assessment  More likely to involve dialog
 Retrospective for corrections  Future‐oriented for growth
 Typically once or twice per   Ongoing or continuous 
year review, interspersed with 
formal reviews
 Often uses ratings or rankings  Less likely to involve ratings
 Rigid structure/system  Flexible process
 Not linked to business needs  Linked to business needs
 Usually takes a quantitative   Combines quantitative and 
approach qualitative approaches

Performance Appraisal
The main objective of the performance appraisal system
 Individual  Collective was to exercise control over the activities of the
 Often linked to   Not usually linked to  employees through disciplinary actions and
compensation compensation management of rewards and promotions. The
 Often very bureaucratic with   Less concerned with  supervisors were expected to rate their employees on
a focus on  documentation certain traits ranging between a scale of unsatisfactory to
paperwork/documents  Conducted by managers and  outstanding performance and these ratings were
 Usually housed in HR  supervisors susceptible to various errors like central tendency, bias,
department halo effect, etc.

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Performance Management 
benefits

PERFORMANCE 
APPRAISALS

Definition
 “Any system of determining how well an 
individual employee has performed during 
a period of time, frequently used as a basis  What objectives would you base PA upon ?
for determining merit increases.”

 “OBSERVE and  EVALUATE an employee 

in relation to PRE‐SET performance 
standards.”

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HR programs
Administrative 
Functions of Performance 
Communication uses
Appraisal
 Employee Development Tool (more)
Constructive  Organizational   Administrative Tool
criticism and Maintenance
guidance PA  Link rewards to performance
Objectives  Examples: pay increases, promotions, demotions, 
terminations, disciplinary actions, etc.
 Goal: Create incentives to motivate employees to increase 
Documentation
Pay scales &  their performance
Pay raise
 Evaluate HRM policies & programs
 Example: Evaluate a training program: Measure job 
Training and  Promotions performance before and after training to see if performance 
development improved

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Criteria for Effective Performance  Criteria for Effective Performance 
Appraisal Systems Appraisal Systems
 1. Validity: are we measuring the right thing?  3. Freedom from bias
 It does not illegally discriminate (race, sex, age, etc.)
 Are we really measuring job performance?
 It is free from rating errors (intentional or unintentional):
 We want to measure important (“relevant”) aspects of job   Leniency errors
performance, in a way that is free from extraneous or   Severity errors
contaminating influences, and that encompasses the whole   Central tendency errors
job (i.e., our measures of job performance are not “deficient”:   Halo errors
we aren’t leaving out important aspects of job performance)  4. Practicality
 The benefits the organization gets from using it should 
 2. Reliability: consistency of measurement outweigh the costs of developing & using it
 Example: inter‐rater reliability  Utility analysis

 If two people observe a particular employee’s job performance,   It should be relatively easy to use
do they agree in their rating of the employee’s performance?  It should be accepted by managers and employees

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Appraisal Process
THREE           AND ONE
Objectives of  Establish job 
Performance Appraisal Expectations WHO ?
SUPERVISORS DO EVALUATIONS


Design an Appraisal 
WHAT ?
Appraise Performance
Programme  COMPLETION OF JOB TASKS

 WHEN ?
 ANNUALY FOR PERMANENT EMPLOYEES 
Performance Interview Archive
Appraisal Data  NEW EMPLOYEES 3‐6 MONTHS

 HOW ?
Use appraisal data for   SPECIAL CARE & RESPECT
appropriate purposes

 Critical Incident Method :
METHODS OF PA  This method evaluates an employee on the basis of certain 
`events' or `episodes' known as critical incident. The 
1. Critical incident method underlying principle of this method is "there are certain 
significant acts in each employee's behaviour and 
2. Paired comparison analysis
performance, which can make all the difference between 
3. Graphic rating method success and failure on the job." Thus, in this method the 
4. CHECK LIST  method rater focusses his attention on all those factors, that can 
make a difference between performing a job in a 
5. Management by objective method noteworthy manner.
6. 360 degree performance appraisal method
7. Behavioral observation scales

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 Paired Comparison Method :
 In this method, each employee is compared with the other on one‐to‐one   Graphic or Linear Rating Scale :
basis. This method makes judgement easier as compared to ranking   This is the most commonly used method of evaluating an employee's 
method. The number of times the employee is rated as better in  performance. Here the Questionnaire consists of more than 2 answer 
comparisons with others determines his or her final ranking. The total  choices. The Questionnaire consists of set of questions covering aspects 
number of comparison can be ascertained by the following formula :  such as:
 where N stands for number of employees to be evaluated.  (i) Employee Characteristics (includes factors such as initiative, 
 The concept can be illustrated with the help of the following example. leadership, dependability, attitude, loyalty, creative ability, analytical 
ability etc.) (ii) Employee Contribution (includes factors such as 
 If the following five students Ashok (A), Bina (B), Chitra (C), Dinesh (D),  Quantity and Quality of work, Specific goals achieved, regularity, 
Eillen (E) have to be evaluated for the best student award, the total  attitude and approach towards supervisors and colleagues, etc.)
number of comparison would be = 10
 The following table highlights a typical graphic rating scale:
 A with B
 (1) Quality of Work o o o o
 A with C B with C
 Unsatisfactory Satisfactory Sometimes Consistently 
 A with D B with D C with D Superior Superior
 A with E B with E C with E D with E  (2) Dependability o o o o
 The number of times a student gets a better score, would be the basis for   Requires  Requires  Very little  No 
selecting the Best Student. This method is not appropriate if a large  Constant Occasional Supervision Supervision
number of students are required to be evaluated. Supervision follow‐up

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Modern Methods : 
 Check‐list Method :
 The main purpose of this method is to reduce the evaluator's   (a) MBO (Management by Objective or Joint Target 
burden of rating the employee. In this method a  Setting) :
dichotomous questionnaire (A question with two answer   This method was propounded by Alfred Sloans and 
choices namely `Yes' or `No') is used. A rater is required to  Donaldson Brown in 1920s. However, it was further 
put a tick mark against the respective column.
popularised by Peter Drucker in his book "The Practice 
 This questionnaire is prepared and scored by the HR  of Management" in 1954.
department. The main disadvantage of this method is the 
rater is not given the flexibility to add or delete the   According to George S. Odiorne, MBO can be described 
statements. A typical check list is given below : as "a process whereby the superior and the immediate 
 Table 3 : Check list for Students subordinate of an organisation jointly identify the 
 (1) Is the student regular common goals, define each individual's major areas of 
 (2) Is he/she disciplined responsibility in terms of results expected of him and 
 (3) Does he/she complete the assignment on time
use these measures as guides for operating the unit and 
assessing the contribution of each of its members."
 (4) Does he/she participate in extra‐curricular activities

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 In this method emphasis is laid on stating objectives for 
Key Result Areas (KRAs) in Quantifiable terms. For 
Five step MBO process example, in case of Research and Development 
Organizational
department, objective is stated in the following terms. i.e. 
Objectives to design a new product by 31st March, 2005.
Reviewed
 MBO is used as a performance appraisal technique, as it is 
Set
easy to measure whether the stated objectives have been 
Achievers
Rewarded
Employee achieved or not.
Objectives

Performance Progress
Evaluated Monitored

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 (d) 360‐ degree Appraisal Method :

 Where multiple raters are involved in evaluating   The 360‐degree degree appraisal 
performance, the technique is called 360‐degree  provides a broader perspective about an 
appraisal.  employee’s performance.   In addition, 
 The 360‐degree technique is understood as systematic 
collection of performance data on an individual or a,  the technique facilitates greater self‐
group derived from a number of stakeholders—the  development of the employee. It enables 
stakeholders being the immediate, team members 
customers peers and self.  an employee to compare his evaluation 
 In this method an employee's performance is evaluated  about self with perceptions of others. 
by his supervisor, subordinates, peers and customers (or  Though this method was developed to 
an outside expert). 
 All these appraisers provide information or feedback by 
bring about a degree of objectivity, it 
completing a questionnaire designed for this purpose. still suffers from subjectivity.

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 (b) BARS (Behaviourally Anchored Rating Scale) :

 In order to overcome the problem of judgmental evaluation, 
this method was conceived by some organisations. This 
method combines the benefits of Essay Method, Critical 
Incident and Rating scales.
 In this method the employee's behaviour and performance 
dimensions are analysed and used for evaluating the 
performance of the employee. The HR department is 
involved in the process of preparing the BARS. Based on the 
Employee's performance and behaviour, employees are 
anchored in different slots of good, average and poor. The 
rater is required to give corresponding ratings to the 
employee.

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Performance measurement and appraisal of 
Coca‐Cola Company

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Performance Measurement Stages of Dimensions of Performance

Coca-Cola
Business Plan 
Key result area #1
Achievement
Stage 1 Stage 2
Stage 3 Stage 4
Annual  Plan 
Reward and  Mid‐term 
Performance  performance  People development 
Review for the year
Recognition Review Key result area #2
weightage 20%
•Assess results •Set KRAs •Performance-linke •Review
d pay results
•Prepare current
year
•Finalize •Competency Key result area  Competencies 
current year •Recognize Top
development Development
development #3 weightage 60%
plan plan Performers plan

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Steps in the performance review process

Performance Appraisal of
Step 1: Associate 
Coca-Cola
Self Assessment

Step 5 : Rating 
Coca cola performance appraisal is annually. They
Step 2 : Admin manager 
Communication ,  Assessment &  appraise the employee due to their performance
Plan KRA for next  Alignment with 
year. Functional Manager about goals of the organization. They set the goals at
the start of the year and tell the employees about the
goal if the employees achieve this goal they appraise
the employees.
Step 4 : Calibration  Step 3: Performance 
meetings Review Discussion

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STEPS IN APPRAISING EMPLOYEES

PERFORMANCE OF COCA-COLA Define the job:
Means making sure that you and your sub ordinate
agree on his or her duties and job standard.

Appraise the performance:

Means comparing your subordinate's actual
performance to the standards that have been set.

Provide the feedback:

Means discuss the subordinate performance and
progress, and make plans for any development
required.

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Performance Management System and Appraisal •Differentiated ‘Rewards’ motivates and drives high
performers to achieve better results.
What is the big picture? Processes that are going to enable  How are they going to execute?
them

• Further, since 73% associates are in SP category, the

differentiation is critical to build and support high
Talent 
Strategy
Talent 
Assessment & 
Differentiated 
Reward & 
performance culture.
Segmentation Development 
Interventions
•For the purpose of Rewards :
Closely Aligned to Business Strategy

Measurement Driven  SP sub- categorized as SP-, SP and SP+;

 EP sub-categorized as EP and EP*.

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Recognizing & Managing Top Performers Accelerating Performance of Solid Performers

 Role Expansion  Build on their Strengths. Help them leverage what they are best at.

 Identify critical tasks for which performance needs to be enhanced

 Assignments to work on Regional/National issue taskforce.
 Create a Development Action Plan to enhance performance on critical
 Sponsorship to conferences, and visits to other countries (on rare
tasks
occasions).
 Assign Projects to utilize their skills & build confidence
 Advanced Learning and Development Opportunities
 Challenge with appropriate stretch objectives to enable peak
 Appreciation Letter / Certificates performance

 Recognition for accomplishments /OE Certification etc. etc  Facilitate problem‐solving so barriers to performance are removed
through Bottling HUB / Forum/ Buzz  Encourage progress and recognize contribution
 Differentiated Compensation  Ensure that they are fairly compensated.

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Managing Bottom Performers

Main parameters used as a base of reward system
 Prepare robust 30‐90 day Performance Improvement Plan (PIP) – include
specific, measurable actions with clear timelines
•Inflation rate factor
 Guiding Principles

– Longer for Senior people with newly identified performance issues. •Market potential (what of individuals worth according to
– Shorter for more junior people, or people with a history or pattern of his/her expertise, job experience etc.)
performance issues.

 Review & Take appropriate actions •Matching with his/her presence career path
– If PIP results completely on‐track, then align back to KRAs for the role.
•Personal development of an individual
– If results not on track, but demonstrates maturity and drive to improve
performance, revise PIP with shorter timelines (e.g. 30‐60days)
•Sales rewards
– If results not on track, and does not demonstrate enough drive to
improve performance, exit. – Failure, exit Guidelines

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Supporting practices Types of Rewards of Coca Cola

•Safety
•Re-creational activities Yearly Basis
• Employee salary increment
•Training and development
• Grade Jump
•Individual goal setting • Designation change
• Annual incentive Plan (AIP) (for business performance, but fixed)
Above parameters are used by Coca Cola to make their reward system  • Personal Progress report (PPR) (Annual Appraisal)
practices well in the market, object is to make their employees feel 
comfort, satisfied, motivated towards achievement of organizational  Monthly Basis
tasks, competent to perform to the extent to attain organizational mission  • Making the move (MTM, sales target achieve)
and vision terminologies and compete with outside rivals successfully.  • Monthly turn hall (extraordinary performance)
Because the management believes that if employees are loyal to the 
organization then they perform better to the way to overcome any  Quarterly Basis
competitive goal with accordance to desired results with remarkable  • Employee of the Quarter (EOQ, non sales)
customer satisfaction. 
• Sales Dangle context

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Recommendation Recommendation

Implications from Performance Measurement Appraisal system is an effective technique to

System: support and change culture of the organization
Coca Cola believes and follows the GROW and the WHALE optimistically; it would only be possible if the
DONE approach. The grow model helps the employee to system is equal for all employees of
understand where he wants to be and also what all he/she has to
organization. Therefore, company’s
accomplish/develop to reach from the current level. The PMS is a
continuous process as the review is not done annually or quarterly, management should utilize this system to all
but it’s a continuous process of performance measurement, employees so as to increase effectiveness and
management and improvement with daily and monthly reviews by productivity.
the manager.

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