Module 3:

Performance management of individuals and organisation

Dr. Jagdeep Singh

Professor, School of Management
Presidency University, Bangalore.
Module 3: Performance management of individuals and
organisation
Things that needs to be managed; Performance management
form design; dealing with underperformers; guidelines on
providing feedback; formal performance review meetings;
Coaching; Dimensions of managing organisational
performance; measures of organisational performance (KPI,
Balance score card, dash boards) [Blooms Level: Application]
08 Sessions

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 Performance Management System

The performance management process is the process by which the

company manages its performance in line with its corporate and functional
strategies and objectives. The objective of this process is to provide a pro-active
closed loop system, where the corporate and functional strategies are deployed
to all business processes, activities, tasks and personnel, and feedback is
obtained through the performance measurement system to enable appropriate
management decisions (Bitici, Carrie and McDevitt, 1997).

Performance management as Performance management system

a system
It can be regarded as a natural A performance management system is a set
function of managing that of interrelated activities and processes that
involves the activities of are treated holistically as an integrated and
planning, monitoring, analysing key component of an organization’s
and reviewing. approach to managing performance through
people and developing the skills and
capabilities of its human capital, thus
enhancing organizational capability and the
achievement of sustained competitive
advantage.
 In Performance Management System
Things that need to be managed are:-

1.The communication of the aims of performance management

– how it works and the responsibilities of those involved;

2. The performance agreement process –

providing guidance on the use of role profiles and goal setting;

3. The performance review process –

ensuring that reviews of performance are carried out properly
and documented ;

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4. Personal development planning –
providing guidance and support in preparing and
implementing personal development plans;

5. Skills development –
providing coaching, mentoring and training in developing
performance management skills such as goal setting,
providing feedback, coaching and conducting performance
reviews;

6. Monitoring and evaluation –

monitoring the application of performance management,
evaluating its effectiveness and taking action to improve it
when necessary.

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Principles of effective performance Management
(Strebler, Bevan and Robertson, 2001)
1. Have clear aims and measurable success criteria.
2. Be designed and implemented with appropriate employee
involvement.
3. Be simple to understand and operate.
4. Have its effective use core to all management goals.
5. Allow employees a clear ‘line of sight’ between their
performance goals and those of the organization.
6. Focus on role clarity and performance improvement.
7. Be closely allied to a clear and adequately resourced training
and development infrastructure.
8. Make crystal clear the purpose of any direct link to reward
and build in proper equity and transparency safeguards.
9. Be regularly and openly reviewed against its success criteria.

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‘Best practices’ in performance management
(Ed Lawler)
• Ownership of performance management by line managers. The way line
managers handle performance management is a key to system effectiveness; they
need to take control.

• Training for both managers and individuals being appraised. Both managers and
employees need to understand the process, their roles and the skills and behaviours
important to the process. The training also contributes to the accuracy of the
ratings.

• Leadership by top management. Executives need to demonstrate their strong

commitment to the performance system and the importance of high performance.

• Performance goals that are driven by business strategy. Most companies rely on
individual goals with explicit ties to the strategy. The best practice relies on goals
jointly set by managers and employees. The linkage helps to justify the ratings.

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• Ongoing feedback from managers. Employees should receive regular feedback
on results and their performance throughout the year.

• Use of competencies, development planning and how individuals achieve their

results. The feedback should also focus on the individual’s strengths and
weaknesses and involve development planning to improve future performance.

• Ties between financial rewards and performance ratings. To manage the budget
for salary increases, managers need to differentiate among their people.

• Calibration meetings for managers to compare and level ratings. When

managers meet to discuss performance ratings, it strengthens the credibility and
validity of ratings and reinforces the perceived importance of the process.

• Use of e-HR appraisal systems to integrate performance management. Web-

enabled systems facilitate the integration of performance data with performance
plans and ratings. E-HR systems also make the process more than a year-end event.

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Performance Management Documentation
Before designing performance management forms it is necessary to
be quite clear about their purpose.

The following questions need to be answered:

• To what extent are these working documents for use by

managers and their staff?
• What information does the HR department need about the
outcome of performance reviews?
• How is the quality of performance reviews to be assured?
• How can employees be reassured that they will not become the
victims of prejudiced or biased reports?

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Performance management forms as working documents
The main purpose of any performance management forms is to serve as
working documents. For this reason the forms should be owned by the
manager and the individual (both parties should have a copy).

Any information the HR department needs on ratings (for performance

related pay or career-planning purposes) or requests for training should be
incorporated in a separate form for their use.

The employee can still be protected against unfair assessments and ratings
by providing for the manager’s manager (the ‘grandparent’) to see and
comment on the completed report.

These comments could be shown to the individual, who should have the
right to appeal through a grievance procedure if he or she is still unhappy
about the report.

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Information for the HR department

While designing form we should take care that following information

should be provided to HR dept.:

1. who the high flyers are – for development and career planning;
2. who are the people who are performing badly – to consider with
the line manager what action needs to be taken;
3. performance ratings for performance-related pay decisions;
4. recommendations on training to assess any common training
needs and to initiate training action;
5. about the performance of any individual who might be
considered for promotion, transfer or disciplinary action.

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Form Design
When designing performance management forms, the aim should be
to keep them as simple and brief as possible while allowing ample
‘white space’ for comments.

Like all good forms, they should be self-explanatory, but they may be
supplemented by notes for guidance. Although documentation
should be kept to a minimum, such documents as are used should be
well designed and presented.

A typical set of forms that do not include an overall performance

rating section is illustrated below :

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Performance Management Form

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 PERFORMANCE AND DEVELOPMENT REVIEW
Objectives Achievements

Competencies Actions taken

Development needs Actions taken

Comments by reviewer:

Signed: Date:
Comments by reviewee:

Signed: Date:

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 Web-enabled performance management
Web-enabled performance management ensures
widespread access and provides a standardized
format for collecting and storing performance
data. Web-based software can make it easy for Examples of web-enabled
performance management systems
managers and employees to record role profiles
and performance agreements, including Raytheon
performance improvement and personal The Raytheon web-enabled system
development plans and objectives, monitor incorporates a ‘performance
screen’ and a ‘performance and
progress against the plans, access performance
development summary’ as well as
documents online, and gather multi-source (360- 360-degree assessment tools.
degree appraisal) comments. The aim is reduce TRW Inc
paperwork and simplify the process. As reported by Neary (2002) TRW
Inc based their system on an
‘output form’ that included on Page
1 Biographical data and Pages 2–3
Performance summary

Online Performance Appraisals

https://www.elon.edu/u/fa/hr/online-performance-appraisals/ 15
 Dealing with Under-Performers
An old Army saying: ‘There are no bad soldiers, only bad officers.’
Managing under-performers should be a positive process that is based on
feedback throughout the year and looks forward to what can be done by
individuals to overcome performance problems and, importantly, how
managers can provide support and help.

As per Charles Handy (1989), this should be about ‘applauding success

and forgiving failure’. He suggests that mistakes should be used as an
opportunity for learning – ‘something only possible if the mistake is truly
forgiven because otherwise the lesson is heard as a reprimand and not as
an offer of help’.

Poor performance may be wholly or partly the fault of the system. When
looking at underperformance it is necessary to consider systemic as well
as individual problems.

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The five basic steps required to manage under-
performers are:
1.Identify and agree the problem. Analyse the feedback and, as far as possible,
obtain agreement from the individual on what the shortfall has been. Feedback
may be provided by managers but it can in a sense be built into the job.
2. Establish the reason(s) for the shortfall. When seeking the reasons for any
shortfalls the manager should not crudely be trying to attach blame. The aim
should be for the manager and the individual jointly to identify the facts that
have contributed to the problem. It is on the basis of this factual analysis.
3. Decide and agree on the action required. Action may be taken by the
individual, the manager or both parties.
4. Resource the action. Provide the coaching, training, guidance, experience or
facilities required to enable agreed actions to happen.
5. Monitor and provide feedback. Both managers and individuals monitor
performance, ensure that feedback is provided or obtained and analysed, and
agree on any further actions that may be necessary.

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Steps -Performance Management
Processes
1.Goal Setting

2.Provide Feed-Back

3.Performance Review

4.Analyzing and Assessing Performance

5. Coaching

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 1. Goal Setting
Setting goals or objectives (the terms are interchangeable) is the most important
activity during the performance planning and agreement stages of performance
management. But designing goals and implementation is crucial.

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Integrating goals
The integration of organizational and individual/team objectives is often
referred to as a process of ‘cascading objectives’. However cascading should
not be regarded as just a top down process. This is a bottom-up process and
the views of employees about what they believe they can achieve should be
noted and, as appropriate, higher-level objectives amended to take account of
them.

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Types of goals
The different types of goals and how they are set are described below.
On-going role or work goals
The definition of a key result area states that this is what the role holder is expected
to achieve in this particular aspect of the role.
Targets
Targets are objectives that define the quantifiable results to be attained as measured
in such terms as output, throughput, income, sales, levels of service delivery, cost
reduction, reduction of reject rates.
Tasks/projects
Objectives can be set for the completion of tasks or projects by a specified date or to
achieve an interim result.
Performance standards
A performance standard definition takes the form of a statement that performance
will be up to standard if a desirable, specified and observable result happens.
Behavioural
Competency frameworks may deal with areas of behaviour associated with core
values, for example teamwork, but they often convert the aspirations contained in
value statements.

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2. Feedback related to Goals
Feedback to individuals on how they are doing is one of the key performance
management processes. It can be provided by managers informally during the
year or formally at a performance review meeting in which it will play an
important part. It can be given by colleagues, subordinates or customers as part
of a 360-degree feedback system.

Feedback is the provision of information to people on how they have performed

in terms of results, events, critical incidents and significant behaviours.

The aim is for feedback to promote this understanding so that appropriate action
can be taken.
In systems engineering, feedback transmits information on performance from
one part of a system to an earlier part of the system in order to generate
corrective action or to initiate new action.

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 Guidelines on providing feedback
1. Build feedback into the job
To be effective feedback should be built into the job or provided soon after
the activity has taken place.
2. Provide feedback on actual events
Feedback should be provided on actual results or observed behaviour. It
should be backed up by evidence. It should not be based on supposition
about the reason for the behaviour.
3. Describe, don’t judge
The feedback should be presented as a description of what has happened; it
should not be accompanied by a judgment.
E.g. If you start by saying: ‘I have been informed that you have been rude to one of
our customers; we can’t tolerate that sort of behaviour,’ you will instantly create
resistance and prejudice an opportunity to encourage improvement.

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4. Refer to and define specific behaviours
Relate all your feedback to specific items of behaviour. Don’t indulge in
transmitting general feelings or impressions.
5. Define good work or behaviour
When commenting on someone’s work or behaviour define what you believe
to be good work or effective behaviour with examples.
6. Ask questions
Ask questions rather than make statements – ‘Why do you think this
happened?’; ‘On reflection is there any other way in which you think you could have
handled the situation?’; ‘How do you think you should tackle this sort of situation in
the future?’.
7. Select key issues
Select key issues and restrict yourself to them. There is a limit to how much
criticism anyone can take. If you overdo it, the shutters will go up and you
will get nowhere.

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8. Focus
Focus on aspects of performance the individual can improve. It is a waste
of time to concentrate on areas that are not concerned with.

9. Provide positive feedback

Provide feedback on the things that the individual did well in addition to
areas for improvement. People are more likely to work positively at
improving their performance and developing their skills if they feel
empowered by the process.

10. Provide constructive feedback

Focus on what can be done to improve rather than on criticism.

11. Ensure feedback leads to action

Feedback should indicate any actions required to develop performance or
skills.

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 360-degree Feedback
360-degree feedback, also known as multi-source feedback, was defined
by Ward (1997) as ‘the systematic collection and feedback of
performance data on an individual or group derived from a number of
the stakeholders on their performance’.

Benefits of 360-degree feedback (The Feedback Project, 2001)

• Increased employee self-awareness.
• Enhanced understanding of behaviours needed to increase individual and
organizational performance.
• The creation of development activities that are more specific to the
employee.
• Increased involvement of employees at all levels in the hierarchy.
• Increased delegation of self-development and learning to employees.

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3. Performance Reviews
Performance management is a continuous process that involves
informal reviews as required. It is the best way to manage
performance.

As Plachy and Plachy (1988) explained: ‘Performance review occurs

whenever a manager and an employee confirm, adjust, or correct
their understanding of work performance during routine work
contacts.’

The formal performance review meeting is the means

through which the five primary performance management elements
of agreement, measurement, feedback, reinforcement and dialogue
can be put to good use.

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The objectives of reviewing performance are as follows:

• Planning – to provide the basis for re-formulating the performance

agreement and the performance and development plans incorporated
in it.
• Motivation – to provide positive feedback, recognition, praise and
opportunities for growth; to clarify expectations; to empower people
by encouraging them to take control over their own performance,
learning and development.
• Learning and development – to provide a basis for self-managed
learning and the development through coaching and other learning
activities of the abilities relevant both to the current role and any future
role
• Communication – to serve as a two-way channel for communication
about roles, expectations (objectives and competency requirements),
relationships, work problems and aspirations.

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The performance review process (Strebler, Bevan and Robertson, 2001)

The performance review process should:

1. have clear aims and measurable success criteria;
2. be designed and implemented with appropriate employee involvement;
3. have its effective use to all managers’ performance goals;
4. allow employees a clear ‘line of sight’ between their performance goals
and those of the organization;
5. focus on clarity and performance improvement;
6. be closely allied to a clear and adequately resourced training and
development infrastructure;
7. make crystal clear the purpose of any direct link to reward and build in
proper equity and transparency standards;
8. be regularly and openly reviewed against its success criteria.

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4. Analysing and Assessing Performance is an
analytical and evidence based management process. Its purpose is to
provide an aid to decision making related to on pay, incentives,
rewards, promotion, retention etc.
As defined by Rousseau (2006): ‘Evidence-based management means
translating principles based on best evidence into organizational
practices.”
Analysis leads to some form of assessment, which is typically carried out by
rating and with other approaches as given below:
1. Rating scales
2. Forced distribution
3. Behaviourally anchored rating scales
4. Behavioural observation scales
5. Alternatives of Rating:
a)The critical incident technique
b) Visual methods of assessment
c) Overall analysis of performance

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5. Coaching
Coaching is a fundamental performance management activity that takes the
opportunities presented by the work itself and uses them to develop the
knowledge, skills, competencies and therefore the performance of people.
It is a personal (usually one-to-one) on-the-job approach to helping people
to develop their skills and levels of competence.

Coaching was defined by Ellinger, Ellinger and Keller (2003) as a day-to-day,

hands-on process of helping employees recognize opportunities to improve
their performance and capabilities.

Jarvis (2004) stated that coaching usually lasts for a short period and
focuses on specific skills and goals.
Coaching can be distinguished from mentoring and counselling.
Mentoring describes a relationship in which a more experienced individual uses
his or her greater knowledge. Counseling addresses the employee’s emotional
state and the causes of personal crises and problems.

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Techniques of coaching

Hallbom and Warrenton-Smith (2005) recommend the following coaching

techniques:

• Ask high-impact questions – ‘how’ and ‘what’ open-ended questions

that spur action rather than ‘why’ questions that require explanations.
• Help people to develop their own answers and action plans.
• Identify what people are doing right and then make the most of it rather
than just trying to fix problems – coaching is success driven.
• Build rapport and trust – make it safe for employees to express their
concerns and ideas.
• Get employees to work out answers for themselves – people often
resist being told what to do, or how to do it.

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 GROW model for Coaching

‘G’ is for the goal of coaching – this needs to be expressed in specific

measurable terms that represent a meaningful step towards future
development.

‘R’ is for the reality check – the process of causing as full a description
as possible of what the person being coached needs to learn.

‘O’ is for option generation – the identification of as many options,

solutions and actions as possible.

‘W’ is for wrapping up or ‘will do’ – when the coach should

summarize, wrap up and ensure that the individual being coached is
committed to action.

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 Managing Organizational Performance
The management of organizational performance is the continuing
responsibility of top management who plan, organize, monitor and control
activities and provide leadership to achieve strategic objectives and satisfy the
needs and requirements of stakeholders. Individual and team performance
management systems plays a prominent role in organizational development.

The dimensions of managing organizational performance

Sink and Tuttle (1990) stated that managing organizational performance includes
five dimensions:
• creating visions for the future;
• planning – determining the present organizational state, and developing strategies
to improve that state;
• designing, developing and implementing improvement interventions;
• designing, redesigning, developing, and implementing measurement and
evaluation systems;
• putting cultural support systems in place to reward and reinforce progress.

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 Measuring performance of Organizations
Managing organizational performance means measuring and monitoring
performance by the use of measures or metrics.

There are four principles as defined by Quinn (2003) governing the use of
performance measures or metrics:
• Measure the right things – the system must measure activities that
directly contribute to an organization’s performance.
• Clearly communicate what will be measured – measures that are ill
defined, and/or not communicated will not be used or understood.
• Consistently apply the measures – measures should be applied regularly
to all units of the organization; failure to do so will result in loss of support
for the system.
• Act on the measures – the measurement data must be used in a
constructive way. Not using the data or misapplying the data will have the
same results: a lack of support for the measurement system.

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Types of measures
Jack Welch, former CEO of the General Electric Company, was quoted by
Krames (2004) as saying that the three most important things you need to
measure in a business are customer satisfaction, employee satisfaction
and cash flow.

The European Foundation for Quality Management (EFQM) model has the
following elements:
• Leadership – how the behaviour and actions of the executive team and all
other leaders inspire, support and promote a culture of total quality
management.
• Policy and strategy – how the organization formulates, deploys and
reviews its policy and strategy and turns it into plans and actions.
• People management – how the organization realizes the full potential of
its people.
• Resources – how the organization manages resources effectively and
efficiently.

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• Processes – how the organization identifies, manages, reviews
and improves its processes.
• Customer satisfaction – what the organization is achieving in
relation to the satisfaction of its external customers.
• People satisfaction – what the organization is achieving in
relation to the satisfaction of its people.
• Impact on society – What the organization is achieving in
satisfying the needs and the expectations of the local, national and
international community at large.
• Business results – what the organization is achieving in relation to
its planned business objectives and in satisfying the needs and
expectations of everyone with a financial interest or stake in the
organization.

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Key performance indicators (KPIs)

Key performance indicators (KPIs) are the results or outcomes that are
identified as being crucial to the achievement of high performance and
provide the basis for setting objectives and measuring performance.

They must take account of the requirements of all stakeholders and

should add social responsibility to the list of business objectives.

A KPI is a special kind of metric. It measures something that is

strategically important to the organization.

For EX. as sales per square meter, added value per employee, rate of
stock turnover, cost per unit of output, time to market and levels of
employee engagement.

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Schiff (2008) put it: ‘A KPI is a metric that matters. You can have many
metrics, but an organization needs only a handful of KPIs.

The range of KPIs in different organizations is typically between six

and 12, with potentially dozens of supporting metrics. However, the
number depends on the type of organization and can be as low as
three or as high as 24.
KPI Scorecards
Scorecards record performance related to a set of KPIs. In effect, they
are report cards on the organization’s performance.

A KPI scorecard is a term used to describe a statistical record that

measures progress or achievement towards a set performance
indicator.
For example, they can show sales per squaremetre in a store,
comparing actuals with targets and analysing trends.

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The Balanced scorecard
The aim of the balanced scorecard as originally formulated by Kaplan and
Norton (1992, 1996) was to counter the tendency of companies to
concentrate on short-term financial reporting. They emphasized that ‘no
single measure can provide a clear performance target or focus
attention on the critical areas of the business. Managers want a
balanced presentation of both financial and operational measures.’

Their original concept of the scorecard required managers to answer

four basic questions, which means looking at the business from four
related perspectives as shown in Figure. i.e.

a)Customer Perspective
b)Innovation and learning Perspective
c)Internal Perspective
d)Financial Perspective

https://www.datapine.com/blog/kpi-scorecard-
examples-templates-to-track-performance/
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Figure 17.3 The balanced scorecard

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Dashboards
A dashboard is a business tool that provides a visual overview of the most
important KPIs and metrics in a company and updates them in real-time.
It is a graphical display, designed to convey key performance measures on
an organization’s intranet system to a wide audience so that they can be
assimilated and acted upon easily and swiftly.

As Dover (2004) remarked: ‘Dashboards are predominantly a data delivery

vehicle.’

Dashboards use dials, ‘traffic

light’ displays and graphs to
make performance information
available as and when
required. An example of a basic
dashboard with just three dials
is illustrated in Figure 17.4.

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Activities

1. KEY PERFORMANCE INDICATORS DEVELOPMENT FOR GOVERNMENT AGENCY.

https://puniversity.informaticsglobal.com:2282/ehost/detail/detail?vid=21&sid=41ff6170-e9b6-4fdc-bd4a-
bb122d67f0f7%40redis&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#AN=112080323&db=iih
2. The BSCBAS: a Balanced Scorecard-based appraisal system for improving the performance of software organizations
https://puniversity.informaticsglobal.com:2284/ehost/detail/detail?vid=9&sid=79885c14-6354-4c75-b688-
d41b0b230771%40redis&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#AN=90362050&db=iih

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