The Performance Management Process

A conceptual model

A textbook performance management system (PMS), as conceived by Bevan and

Thompson (1991), exhibits the following features:
it has a shared vision of its objectves, or a mission statement, which it communicates
to all its employees;
it sets individual performance management targets, which are related both to
operatng-unit and wider organizatonal objectves;
it conducts regular, formal reviews of progress towards these targets;
it uses the review process to identfy training, development and reward outcomes;
it evaluates the efectveness of the whole process and its contributon to overall
performance to allow changes and improvements to be made.
 But Bevan and Thompson suggested that this textbook defniton placed too
much emphasis on a top-down approach (partcularly in objectve setng),
which can underplay the extent to which training, development and reward
systems are driven from the botom up:

This in turn, raises questons about how easily corporate objectves can be
integrated with individual goals, and the extent to which reward systems which
are introduced to support a PMS can frustrate the training and development
objectves of the process .
They also critcized the belief that a PMS model can ft all situatons and
suggested
that many process issues involved in making performance management
 A basic, practical model
Research conducted by Fletcher and Williams (1992) indicated that the majority of
organizatons that they looked at were a long way from operatng a sophistcated PMS.
For most of them, PMS was synonymous with performance appraisal, or with
performance-related pay (PRP) or both.
But, as Fletcher commented: There is, of course, much more to it than that.The real
concept of performance management is associated with an approach to creatng a
shared vision of the purpose and aims of the organizaton, helping each individual
employee understand and recognize their part in contributng to them, and in so doing
manage and enhance the performance of both individuals and the organizaton .
Fletcher and Williams s research suggested four underlying principles of efectve
performance management, namely that:
1 it is owned and driven by line management and not by the HR department;
2 there is an emphasis on shared corporate goals and values;
3 performance management is not a packaged soluton but something
that has to be developed specifcally and individually for each
partcular organizaton;
4 it should apply to all staf, not just part of the managerial group.
To this can be added a ffh principle, namely that some businesses
have found it benefcial to apply diferent processes to diferent parts
of their organizaton.
This can work, provided that the processes operate within the same
overall framework and are linked by explicit and shared corporate
goals and values.
 Performance management as a process
Probably the main critcism that has rightly been made about the applicaton of performance
management is that it has been introduced as a top-down, imposed and rigid system that seeks easy
solutons to complex problems, which it will inevitably fail to deliver.
It is much beter to regard performance management as a fexible process, not as a system. The use of
the term system implies a rigid, standardized and possibly bureaucratc approach that is inconsistent
with the concept of performance management as a fexible and evolutonary process applied by
managers working with their staf in accordance with the circumstances in which they are working.
As such, it involves managers and those whom they manage operatng as partners, but within a
framework that sets out how they can best work together.
This framework has to reduce the degree to which performance management is a top-down afair, and
it has to be congruent with the way in which any partcular organizaton functons.
Performance management has to ft process-based and fexible organizatons. In these circumstances
which are increasingly the norm it has to replace the type of appraisal system that only fts a
hierarchical and bureaucratc organizaton.
Overall, performance management needs to encourage a balanced approach with the following
features, as described by Vicky Wright and Liz Brading (1992):
• less focus on retrospectve performance assessment and more concentraton on future performance
planning and improvement;
• identfcaton and recogniton of the skills and capabilites associated with higher levels of performance;
• identfcaton and recogniton of outputs that are defned in qualitatve and not just quanttatve terms;
• a freer, upwardly managed process;
• a more coaching and counselling style of appraisal, with less emphasis on critcism;
• more focus on an individual s contributon to the success of the team as a whole, with some objectves
defned in these terms;
• concern for improving an individual s performance as much as assessing it;
• no forced distributon of performance ratngs (and so no win lose scenarios);
• possibly no formal ratngs given.
Although every organizaton wantng to introduce performance management should develop its own version
to suit its needs, it is useful to have a conceptual framework within which appropriate processes can be
developed and operated. This framework will help in deciding the approach to be adapted and, when the
decision has been made, it will provide guidance to managers, as well as the individuals and the teams they
manage, on what performance management actvites they will be expected to carry out.
Performance management can be described as a contnuous self renewing cycle, as
illustrated in Figure 2.1.The main actvites are:
• Role defniton in which the key result areas and capability requirements are agreed.
• The performance agreement (or contract) which defnes expectatons: what an individual
has to achieve in the form of objectves, how performance will be measured and the
capabilites needed to deliver the required results.This could be described as the
performance planning stage.
• The personal development plan which sets out the actons people intend to take to
develop themselves in order to extend their knowledge and skills, increase their levels of
capability, and improve their performance in specifed areas. This is the performance
development stage.
• Managing performance throughout the year which is the stage in which acton is taken to
implement the performance agreement and personal development plan as individuals
carry on with their day-to-day work and their planned learning actvites. It includes a
contnuous process of providing feedback on performance, conductng informal progress
reviews, updatng objectves and, where necessary, dealing with performance problems.
• Performance review which is the formal evaluaton stage when a review of performance
over a period takes place, covering achievements,
progress and problems, as the basis for a revised performance agreement and personal
development plan. It can also lead to performance ratngs Role defniton, the performance
agreement, managing performance and performance review actvites are described in more
detail in the next four sectons of this chapter. Personal development planning is described in
Chapter 16
 Role defnnion
The role defniton provides the framework for performance management.
It sets out three things.The frst is the purpose of the role, which summarizes the overall aim
namely what the role holder is expected to do and provides a foundaton for the performance
agreement.
The second is the key result areas or principal accountabilites, which defne the main output
areas of the role and provide the headings against which objectves and performance
standards are agreed.
The third aspect is key capabilites, which indicate what the role holder has to be able to do
and the behaviour required to perform the role efectvely.
These provide the basis for drawing up personal development plans and for assessing the
input aspect of performance what the individual brings to the role.
This in turn consttutes the capability profle for the role, which may refer to organizatonal
core capabilites as well as generic capability, or capability profles developed for similar roles.
It may also incorporate capabilites that are specifc to the role.
 Performance agreements
Performance agreements, also known as performance contracts, defne expectatons the
results to be achieved and the capabilites required to atain these results.
Agreements cover the following points:
• objectves and standards of performance the results to be achieved, defned in terms of
targets and standards;
• capability profle the capabilites required to carry out the role efectvely;
• performance measures and indicators to assess the extent to which objectves and
standards of performance have been achieved;
• capability assessment how levels of capability will be assessed, including discussions to
clarify expectatons by reference to the capability profle in the role defniton and
agreements on the sort of evidence that will be useful in assessing capability.
• core values or operatonal requirements the performance agreement may also refer to the
core values of the organizaton for quality, customer service, teamworking, employee
development, etc that individuals are expected to uphold in carrying out their work.
Certain general operatonal requirements may also be specifed in such areas as health and
 Managnng performance

Perhaps one of the most important concepts of performance management is that it is a

contnuous process that refects normal good management practces of setng directon,
monitoring and measuring performance, and taking acton accordingly.
Performance management should not be imposed on managers as something special they have
to do; it should be treated as a natural process that all good managers follow.
The sequence of performance management actvites as described in this chapter does no more
than provide a framework within which managers, individuals and teams work together in
whatever ways best suit them in order to gain beter understanding of what is to be done,
how it is to be done and what has been achieved.
This framework and the philosophy that supports it can form the basis for training newly
appointed or would-be managers in this key area of their responsibilites.
It can also help in improving the performance of managers who are not up to standard in this
respect.
 Performance revnews
Performance review discussions enable a perspectve to be obtained on past performance as
a basis for making plans for the future.
An overall view is taken of progress made. Examples are used to illustrate that overview, and
the analysis of performance concentrates not only on what has happened but also on why it
has happened, so that data are obtained for planning purposes.
Obtaining a historical perspectve through analysis is a necessary part of a performance
review, but reaching agreement about what should be done in the future is what really
maters.
Performance and development reviews provide those involved with the opportunity to refect
on past performance as a basis for making development and improvement plans.
The purpose of performance and development reviews is to enable those concerned to get
together so that they can engage in a dialogue about the individual s performance and
development and the support provided by the manager and such support is an essental part
of performance management
 They are not
occasions for top-down appraisals,although some feedback will be provided.
Neither are they interviews in which one person asks the questons
and the other provides the answers. They should be more like
free-fowing, open meetngs where views are exchanged so that agreed
conclusions can be reached. A performance and development review
should be regarded as a conversaton with a purpose,which is to reach
frm and agreed conclusions about the individual s development, and,
if applicable, any areas for improvement and how such improvements
will be achieved.
 Figure 2.2 Contributon of organizaton and individual to performance management

Organizatin Individual

Defnes mission, values, Understands and agrees

strategies and goals objectves

Defnes roles, standards, Understands and agrees roles,

capability requirements and standards, capability requirements
performance measures and measures

Monitors organizatonal, team

Monitors own performance
and individual performance

Develops team and individual

Develops own performance (self
performance. Supports self-
managed learning)
managed learning
 Organizatinal and individual cintributins
Performance management operates as a partnership between the organizaton
and each individual working in it, as shown in Figure 2.2 in which both partes
contribute to the defniton of objectves, tasks, standards, and performance
measures, monitoring progress and developing performance.
The next six chapters of this book describe in more detail the following
fundamental processes of performance management:
• performance agreements and plans;
• defning objectves;
• defning capability requirements;
• measuring performance;
• managing performance throughout the year;
• conductng performance reviews.