MODULE IN HUMAN RESOURCE DEVELOPMENT AND MANAGEMENT

Module 5
Performance Management
Overview:
It is not enough to have a talented workforce in an organization. For the organization to meet its
objectives, the manager has to work close to the workforce so as to understand what is being done
correctly and wrongly. Moreover, his presents encourage workers as well as showing them how activities
are supposed to be done. Therefore, performance management is inevitable if the organization is to
succeed. Arguably, in this case, the term ‘performance’ is twofold; it encompasses behavior plus results.
In every organization, results and behavior go hand-in hand. This is where the importance of performance
management comes in handy, (Adiele, 2009). The term “performance management” is used to refer to a
constant, uninterrupted process of communication, illuminating job responsibilities, performance as well
as anticipations intended to create a clear and common understanding between the workforce and the
manager. Precisely, these are the entire activities that guarantee consistent achievement of organizational
goals in a successful and proficient manner. Notably, performance management may be centered on the
performance of a department, organization, process or employees as well as other areas, (Bustamante,
2009). It generally concentrates on behavior and results, which are the two crucial elements of
performance.

Outcomes:
At the end of this chapter, students must have:
1. defined performance
2. defined the elements included in the evaluation of employee performance
3. differentiated between objective and subjective performance measures
4. recalled common bias to avoid when evaluating performance

Lesson Subject Matter or Concepts to be learned

- Purpose of Performance Appraisal
- Performance Appraisal Methods
- Performance Management and Technology
- Trends, Challenges and Recent Developments in Performance Management
-
Module Strategy/method to be used: MODIFIED 4A’s of KOLB’S EXPERIENTAL LEARNING
Activate

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Acquire
Introduction
- Performance review is considered the most emotional issue in human resource management.
- If not handled properly, it can have adverse effects both to the subject employee and the company
as a whole.
- Foreign managers are baffled why Filipinos seemed to have a hard time conducting employees’
performance appraisals. The following reasons and realities can be cited:
1. We are not frank- much more, never brutally frank.
2. We do not want to hurt people or displease them.
3. We beat around the bush and will not say directly what we want.
4. We go for euphemisms instead of calling a spade of spade.
5. We sometimes say Yes when in fact we really mean is No.
- Employee Performance Management is about aligning the organizational objectives of a
corporation with the employees’ agreed measures, competency and skills requirements,
development plans and delivery of results. The emphasis is on continuing improvement in terms
of employees’ performance in order to achieve the overall corporate goals and objectives.
- Performance management is used to ensure that employees’ activities and outcomes are
congruent with the organization’s objectives. (Noe, et.al., 2000)
- Performance Management has four components:
1. Performance Planning- it is the formal process of discussing, identifying and planning the
organization as well as individual goals which an employee can and would achieve in a given
timeframe.
2. Managing Performance- it is the ongoing process which is designed to ensure that an
individual’s performance contributes to the aims and objectives of the organization.
3. Reviewing Performance- this is a key component of employee development. It is intended
to be fair and balanced.
4. Rewarding Performance- this is just as important as motivating and monitoring
performance. Rewards can go beyond just the financial aspect-other incentives can be given.
- Performance Appraisal is the process of judging past performance. It was also defined as the
observation and assessment of the employee performance against job related standards
determined by the organization over a certain period.(Eichel and Bender, 1984)
- Other definitions of performance appraisal are:
 The process of evaluating an employee’s job performance that is helpful to, and often
even essential to, accomplishing important goals of the organization. (Kondrasuk, 2012)
 Performance appraisals involve the similar idea of developing social and performance
norms. Monitoring the actions of employees in relation to the norms, assigned
responsibility for the actions, and then ultimately providing rewards or punishment based
on performance towards those norms. (Millman, Nason, Shu and Cieri, 2002)
 Other terms used for Performance Appraisal are: (Aggarwal and Thakur, 2013):
*Performance Review *Performance Measurement
*Performance Evaluation *Employee evaluation

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*Performance Assessment *Staff assessment and service training

Purpose of Performance Appraisal

- The following have been identified as the general uses of performance appraisal:
1. To provide feedback about strengths and weaknesses.
2. To distinguish between individuals to allocate rewards.
3. To evaluate and maintain the human resource systems of the organization
4. To create a paper trail or records of documentation
5. To provide a basis or justification for human resource decision such as rewards, career
planning, transfers, training, mentoring and termination.
When is Performance Appraisal Conducted?
- Annually
 Many organizations make an evaluation of employees’ performance at the end of the
year.
 Annual employee performance reviews appear to be standard in the most American
companies.
- Semi- annually
 A semi-annual is conducted for the employee to discuss with his manager any needed
correctional and remedial steps for his performance on an unofficial basis.
 The second one however, would be the official one held at the end of the year for the
employee to receive his appraisal results and know about the salary increases or
promotion he may receive.
- Others
 According , to the Chartered Institute of Personnel and Development (CIUPD), in UK,
87% of employees use some form of individual annual appraisals, 27% do them twice a
year and 10% more often than that. Some normally used them during the end of a project.
- Six Formal Meetings are to be conducted as components of the appraisal process (Aguinis, 2009).
These are:
*System Inauguration *Merit/Salary review
*Self-appraisal *Development plan
*Classical performance review * Objective setting
- Example of Performance Appraisal Steps (Kumari, 2012)
1. Establish performance standards for each position and criteria for evaluation
2. Establish performance evaluation policies on when to rate, how often to fate, and who should rate
3. Have the rater’s gather data on employee’s performance
4. Have raters and employees evaluate employee’s performance
5. Discuss the evaluation with the employees
6. Make decisions and file the evaluation.
- Other example of Performance Appraisal Steps (West Virginia Division of Personnel Handbook, 2005)
Step 1: The Initial Performance Planning Session- this involves meeting the employee
individually to describe levels of expectations
Step 2: The Mid-point Review- provide feedback to the employee during the primary performance
period

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Step 3: The Final Review Session- to review and rate the performance of each employee during
the entire performance rating period

Performance Interview Definitions:

- Formal process of evaluating employee performance (Keeping and Levy, 2000)
- Potentially important part of any organization’s performance appraisal system that function in
several ways providing such as providing feedbacks. (Cederblon, 1982)
- It is the formal meeting for the specific purpose of discussing the various aspects of performance
and the performance management system. (Aguinis, 2009)

What is the function of Performance Interview?

- Its two main purposes are:
1. Counseling and development
2. Evaluation and discussion
- It is about the employee’s performance which allow employees to improve their performances by
identifying performance problems encountered and to look for solution to overcome the problem.
It also helps to build good relationship between the employees and the management.
What is the importance of Performance Interview?
- Basically, it provides feedback to the central office which can be the basis for the coaching,
accountability-based performance appraisals, designing a human resource plan as it served as
development feedback mechanism.
- Feedback also eliminates surprises as staff members have a continuous discussion between staff
and management throughout the year.
Preparing for the Performance Interview:
- Manager and employee normally come up with a confidentiality agreement before the actual
interview is conducted.
- Agreement is kept by the manager and a copy is given to the concerned employee.
- The interview would cover past performance evaluation, identification of position to include
strengths and weaknesses, goals that will be agreed upon, and support to be given.
Sample of typical questions in the appraisal interviews are the following:
1. Which of the agreed upon goals were reached (this refers to past performance of the employees)?
What is the extent to which they were reached?
2. Which tasks were not performed in a satisfactory manner? What could be the reason for this?
3. How satisfied are you in terms of the cooperation given by your manager?
4. Which of the areas of cooperation is positive? Which area can still be improved?
5. How satisfied are you in terms of the cooperation you get from your coworkers? Was there
teamwork?
6. Which particular goals of your organization are particularly important to you? Do you have
suggestions to make your unit perform better?
7. Do your current tasks reflect your interests, skills and abilities?
8. How do you evaluate your career development so far?

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9. Which qualifications and training measures are necessary and should be provided for you to
achieve your career goals?
10. How do you intend to achieve it and what is your time frame?
- As these questions are being asked, the manager will take careful notes of the points raised by the
employee as these will be the basis in preparing agreement template to be agreed upon by both
parties.
- After a thorough discussion, both manager and employee will draw a confidential agreement
designed to develop the employee and example of this is hereunder presented: (insert here)

Performance Appraisal Methods

Two Types of Performance Appraisal Methods:

The Traditional
The New Approach
Approach

Traditional Approach
- This method is based on studying the personal qualities of the employees.(Aggarwal and Thakur,
2013)

The New Approach

- Performance appraisal is used for developmental and motivational purposes in the organization.
(Gurbuz and Dikmenli, 2007)

Difference between the two methods in terms of viewpoint (based from the table of Nili, Ardakani,
and Shekarchizadeh, 2012

Traditional Approach New Approach Features

Dedicated to judgement Dedicated to growth and General approach
development
Judgement and Performance Consulting nature and Role of evaluator
Management performance facilitator
Past performance Future performance Evaluation period
Control of the evaluated Growth, instruct and develop the Evaluation is the main objective
evaluated
Evaluation is from the Self- standardization Type of standards used
organization and top
management point of view
Performance control Performance is directed to Output-based system
growth, development and
improvement of employee
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Arrange for financial rewards Come up with a program in Continuing evaluation of results
for identified successful order to improve performance
employees

What are the Performance Appraisal Measurement Methods and Forms?

1. Ranking Method
- This is the simplest method as jobs are arranged from highest to lowest, in order to establish
value of such job to the organization.
- It can also be arranged according to the level of difficulties in performing it.
2. Graphic Rating Scale
- It is a scale that lists a number of traits and a range of performance for each employee.
- They are then rated identifying the score that best describes the employee’s performance for each
trait identified.
3. BARS Form (Behaviorally Anchored Rating Scale)
- This combines elements from the critical incident report and graphic rating scale approaches.
- The supervisor rates the employee according to the items on a numerical scale.

Developing a BARS Advantages

- Generate critical incidents - It is a more accurate gauge
- It develops performance dimensions - It sets clearer standards
- It allows re-allocation of incidents - It gives feedback
- It scales the incidents - Independent in dimensions
- It develops a final instrument - It is more consistent

4. Narrative Method
- Evaluator writes an explanation about the employee’s strengths and weaknesses, his previous
performance, and recommended areas of improvements at the end of the evaluation period.

5. MBO Method
- Employees are evaluated on how well they accomplished a specific set of objectives that have
been determined as critical in the completion of a given job.

6. Critical Incident Method

It is keeping a record of uncommonly good or bad and undesirable examples of an employee’s
work related to behavior and reviewing it with the employee at a scheduled appointment.
Examples of this in the workplace are as follows:
*Suicide *Threats of violence
*Homicide *Worksite accidents
*Robbery *Industrial and natural disasters
*Assault

7. Comparative Method
- This method of performance appraisal seeks to identify one worker’s level or standing compared to
another worker.
- Both are ranked and paired for comparison and forced distribution.

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8. Ranking Method
- Employees from the best to worst are ranked on a particular trait, choosing the highest, then the
lowest until all concerned employees are ranked.

9. Paired Comparison
- Each person is directly compared with all the others being rated.

10. Forced Distribution

- This method forces a set of percentage of all those being rated into a pre-determined performance
category.

The 360 Degree Feedback Mechanism

- This is known by a variety of names to include multisource assessment.
- It covers 360 degree feedback, multi-rater assessment, and three-dimensional or full-circle
appraisal
- It relies on the inputs of an employee’s superior, colleagues, subordinates, customers, supplier,
and sometimes, spouses.
- The information collected and feedback received are provided in full circular way from top down
and bottom-up.
- When done properly, 360 approaches are highly effective as a development tool.
- This feedback process gives opportunity for anonymous feedback to a co-worker that they might
be uncomfortable giving directly.

Limitations:
1. It is not a way to measure employee’s performance objectives (MBOs)
2. It is not a way to determine whether an employee is meeting basic job requirements.
3. It is not focused on basic technical and job-specific skills
4. It should not be used to measure objective things like attendance and sales quotas.

Types of Appraisers
1. Supervisor
- They are in the best position to evaluate employee’s performance especially those directly under
them.
- They are

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