SPECIAL TOPIC

IN
HUMAN RESOURCE
MANAGEMENT
(Performance Management)

JIMUEL GALVEZ
MARIA MALOBAGO
BSBA HRM 4A

DR. ANALYN BANAGBANAG, DM-BM

Professor
 Table of Contents

Performance Management ……………………………………………………………….2

Stages of Performance Management ……………………………….…………………..3

Challenges in Performance Management ………………………………………………4

Purpose of Performance Management ………………………………………………….6

How Performance Management Applies to Other HR Systems……………………….9

References………………………………………………………………………………….12

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Peter Drucker is the Father of Management and most of his ideas and works greatly
contributes to the modern management practices.

Goals are the smaller scale of the mission, translating the broad purpose into
achievable targets. Objectives are the smaller scale of the vision, providing concrete
steps to realize the long-term aspirations.

Performance Management

Performance – the process of accomplishing an action, task, or function.

Management – the act or manner of managing; handling, directing, or controlling.

Performance Management is an ongoing, continuous process of communicating and

clarifying job responsibilities, priorities, performance expectations, and development
planning that optimize an individual's performance and aligns with organizational
strategic goals.

It can be described as a process by which organizations set goals, determine

standards, assign and evaluate work, and distribute rewards. In effect, it is used to
improve organizational, team and individual performance and development, including
activities designed to ensure that goals are consistently being met in an effective and
efficient manner in an on-going activity relating to all scenarios where people meet
for the purpose of attaining objectives.

Performance management, for our purposes, involving the assessment and

development of people at work, has emerged as one of the most important features
of today’s effective organizations. In an increasingly competitive work environment,
organizations need to get the best out of their human resources if they are to survive
and prosper. The failure of so many organizations to do just that raises serious and
sensitive questions about general management competence and the absence, or
faulty operation, of performance management and appraisal type systems.
Accordingly, students of HRM should be fully aware of the practice, potential, pitfalls,
and prescriptions in respect of performance management.

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4 Stages of the Performance Management Cycle

The concept of the performance management cycle first originates in Peter Drucker’s 1954
book called ‘Management by Objectives.’ His book explained how management must break
organizational goals into smaller individual and team goals that are also definite.

The most commonly cited performance management cycle is by Michael Armstrong in his
book ‘Handbook of Performance Management.’ In it, he described the four stages of a
performance appraisal cycle. They are plan, act, track, and review. Over the years, it has
been refined to tailor to the demand for the present needs of the organization.

The performance management cycle definition encompasses the following four stages:

 Planning
 Monitoring
 Developing and Reviewing
 Rating and Rewards

Planning

The planning stage involves setting clear, specific goals for employees that align with
the organization's objectives. Managers and employees collaborate to establish
SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals, ensuring
both organizational needs and individual development are addressed. This phase
also includes discussing training or development opportunities to support employees
in achieving their targets.

Monitoring

In the monitoring stage, managers track employee progress regularly, providing

feedback and support to ensure goals are on track. This continuous check-in
process, often through monthly or quarterly reviews, allows for early identification of
issues and adjustments to timelines or expectations when necessary. Effective
monitoring fosters accountability and keeps employees motivated.

Developing and Reviewing

The developing and reviewing stage focuses on assessing the employee’s growth
and performance throughout the cycle. Managers evaluate whether the employee
has gained new skills or knowledge and if additional training is needed. The review

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also includes a reflection on whether the goals were realistic, what enabled or
hindered success, and how processes can be improved for future cycles.

Rating and Rewards

In the rating and rewards stage, employee performance is evaluated based on their
achievements relative to the set goals. Managers provide ratings and take
appropriate actions, such as offering recognition, rewards, or corrective measures for
underperformance. This phase is crucial in reinforcing the value of employee
contributions and maintaining motivation for the next cycle.

Challenges in Performance Management

1. Poor System Design and Goal Alignment

A poorly designed performance management system, often borrowed from other

organizations, can fail to meet the unique needs of a company. Misaligned goals
between individuals and the organization create confusion and diminish
performance. To overcome this, the system must be tailored, ensuring goals are
specific, measurable, achievable, relevant, and time-bound (SMART), and aligned
with the company’s strategic direction.

2. Lack of Integration with Other HR Processes

Performance management systems often operate in isolation, disconnected from key

HR processes like recruitment, development, and succession planning. Without
integration, the system lacks cohesiveness, resulting in fragmented employee
experiences and inefficient management practices. Performance management must
be embedded into the broader HR framework to drive talent acquisition, learning,
and rewards effectively.

3. Inadequate Leadership Commitment

Leaders play a pivotal role in performance management by setting strategic

direction, monitoring progress, and fostering a performance-driven culture. When
leadership lacks commitment, it hinders system effectiveness, as employees and
managers are less likely to engage with the process. Leadership must actively
support and participate in performance management for it to be successful.

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4. Ineffective Feedback and Communication

Insufficient or inconsistent feedback leaves employees unclear about their

performance and hinders improvement. Poor communication of goals and
expectations further restricts employee growth. To address this, organizations need
regular, two-way communication that includes constructive feedback, formal reviews,
and continuous coaching. Tools like 360-degree feedback can also enhance
transparency.

5. Employee Resistance to Change

Introducing new performance management systems or tools often meets resistance

from employees, particularly if there’s a lack of understanding or perceived benefits.
Effective change management—through clear communication, gradual
implementation, and comprehensive training—can help overcome resistance and
ease the transition to new processes.

6. Inconsistent Performance Standards

Unclear or inconsistent performance criteria lead to unfair appraisals, frustration, and

loss of trust in the system. Standardizing performance metrics and holding
calibration sessions among managers can ensure that evaluations are fair,
transparent, and applied equally across teams and departments.

7. Insufficient Managerial Competence

Many managers lack the necessary skills to effectively implement performance

management systems. Key skills include setting clear objectives, providing feedback,
conducting performance reviews, and coaching employees. Leadership development
programs and management training are crucial to building these competencies,
which will enhance system consistency and effectiveness.

8. Limited Resources and Time Constraints

Performance management can be resource-intensive, requiring time, staffing, and

technology. Managers often struggle to balance these demands with other priorities,
leading to rushed or incomplete reviews. Organizations can address this by investing
in technology to automate tasks and streamline processes, enabling more efficient
performance evaluations.

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9. Poor Data Management and Analysis

Effective performance management relies on accurate and timely data to inform

decisions. Poor data management can lead to incorrect assessments and hinder
performance improvement. Implementing performance management software
ensures data is accurately collected, organized, and analyzed, enabling better
decision-making and continuous improvement.

Purpose of Performance Management

1. Align Goals

Ensure individual goals are connected to organizational objectives.

Emphasizes the importance of linking personal performance goals with the broader
goals of the organization. When employees understand how their work contributes to
the overall success of the company, it fosters a sense of purpose and direction. This
alignment also helps ensure that resources are utilized effectively, driving collective
progress toward shared objectives.

2. Provide Continuous Feedback

Foster a culture of real-time, constructive feedback.

Continuous feedback involves regular, informal check-ins where employees receive

guidance on their performance. This ongoing dialogue allows for immediate
correction of course and reinforcement of positive behaviors. It shifts the focus from
annual reviews to a more dynamic process, enabling employees to make
adjustments and improvements in real-time, which can enhance both their
performance and job satisfaction.

3. Enhance Engagement

Keep employees motivated and satisfied in their roles.

Engaged employees are more productive, creative, and committed to their work.
Performance management systems that prioritize engagement help create an
environment where employees feel valued and invested in. Strategies may include
recognition programs, opportunities for professional development, and fostering a

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positive workplace culture, all aimed at maintaining high levels of motivation and
satisfaction.

4. Encourage Teamwork

Promote collaboration and communication among team members.

Effective performance management recognizes that teamwork is essential for

success. Encouraging collaboration involves creating opportunities for team
members to work together on projects, share knowledge, and support one another.
This can include team-building exercises, collaborative goal-setting, and using
technology to facilitate communication, all aimed at building a strong, cohesive team.

5. Recognize Contributions

Acknowledge and reward employee efforts fairly and transparently.

Recognition is a powerful motivator. By regularly acknowledging and rewarding

employee contributions—whether through formal recognition programs or informal
praise—organizations can boost morale and reinforce desired behaviors. This
transparency fosters a culture of appreciation, where employees feel their efforts are
noticed and valued, leading to increased loyalty and commitment.

6. Support Development

Create personalized development plans to help employees grow.

Performance management should not only focus on evaluating past performance but
also on facilitating future growth. Personalized development plans help employees
identify their strengths and areas for improvement, guiding them toward professional
development opportunities such as training, mentoring, or new projects. This
commitment to growth can improve retention and job satisfaction.

7. Address Performance Issues

Identify and correct underperformance early on.

A proactive approach to managing performance issues allows organizations to

address challenges before they escalate. Regular feedback and performance
reviews can help managers identify patterns of underperformance, enabling them to
work with employees to find solutions, provide additional support, or implement

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corrective actions. This not only protects team dynamics but also contributes to
overall productivity.

8. Empower Leadership

Equip managers with the skills to coach and motivate their teams.

Managers play a crucial role in employee performance and engagement. By

providing training and resources, organizations can help leaders develop their
coaching skills, emotional intelligence, and ability to motivate diverse teams.
Empowered managers can create supportive environments, fostering trust and open
communication, which leads to better performance outcomes.

9. Prioritize Employee Well-being

Address mental health and well-being as part of performance discussions.

Employee well-being is increasingly recognized as integral to performance

management. Organizations that prioritize mental health and overall well-being
create a supportive workplace culture. This can involve regular check-ins, access to
mental health resources, and initiatives aimed at reducing stress. Addressing these
factors helps employees feel supported, leading to higher engagement and lower
turnover.

10. Drive Business Performance

Ultimately improve organizational results and reduce turnover.

The ultimate aim of performance management is to enhance organizational

effectiveness and efficiency. By aligning individual performance with business goals,
providing continuous feedback, and fostering a supportive culture, organizations can
improve their bottom line. Effective performance management leads to higher
employee retention, reduced turnover costs, and a more productive workforce,
driving long-term success.

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What are the "Different Systems of HR"?

HR is composed of multiple systems or functional areas, each handling different

aspects of managing human resources in an organization. These systems include,
but are not limited to:

1. Recruitment and Selection

2. Training and Development

3. Compensation and Benefits

4. Succession Planning

5. HR Information Systems (HRIS)

6. Employee Relations

7. Talent Management

8. Compliance and Risk Management

How Performance Management Applies to Other HR Systems

1. Recruitment and Selection

-Purpose of Performance Management: Helps identify what qualities and skills are
needed in candidates to meet the organization’s performance standards.

- Application: Insights from performance evaluations of current employees can

inform the recruitment process, ensuring that new hires possess the skills and
attributes necessary for high performance.

2. Training and Development

- Purpose of Performance Management: Identifies the skills gaps in employees

and ensures they receive the training they need to improve.

- Application: Performance reviews often highlight areas where employees need

development, allowing the HR training system to provide targeted programs for skill
enhancement, upskilling, or reskilling.

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3. Compensation and Benefits

- Purpose of Performance Management: Links employee performance with

rewards and compensation.

- Application: High-performing employees may be eligible for merit-based raises,

bonuses, or other incentives. Performance management helps determine who
deserves rewards based on measurable performance outcomes.

4. Succession Planning

- Purpose of Performance Management: Identifies high-potential employees who

can be groomed for leadership roles.

- Application: Performance data can reveal employees who consistently exceed

expectations and are ready for higher-level responsibilities, helping HR in creating a
succession plan for critical roles in the organization.

5. HR Information Systems (HRIS)

- Purpose of Performance Management: Streamlines data collection and analysis

of employee performance.

- Application: HRIS systems store performance data, which can be analyzed to

track trends in employee performance, monitor progress on goals, and provide
insights for future workforce planning.

6. Employee Relations

- Purpose of Performance Management: Ensures fair treatment of employees and

addresses underperformance.

- Application: Performance management helps in identifying employees who may

need guidance or improvement, facilitating a system where employee grievances or
issues related to underperformance can be addressed constructively.

7. Talent Management

- Purpose of Performance Management: Aligns individual performance with

broader talent strategies.

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 - Application: Performance management ensures that the organization is
identifying, nurturing, and retaining top talent by keeping track of performance
metrics, allowing HR to focus on growth opportunities and succession for high
performers.

8. Compliance and Risk Management

- Purpose of Performance Management: Ensures fairness and transparency in

performance assessments, reducing legal risks.

- Application: A structured performance management system ensures compliance

with labor laws and fair employment practices. It provides documentation for
promotions, terminations, and other employee actions, reducing the risk of disputes
or lawsuits.

What Does This Mean for HR Professionals?

To appreciate the purpose of performance management in the broader HR

landscape, HR professionals need to:

- Understand the interconnectivity between performance management and other HR

systems.

- Use performance management data to inform decision-making in areas like

recruitment, training, compensation, and employee development.

- Ensure that performance management is not just about evaluations, but about
strategically improving overall employee performance and aligning it with
organizational success.

In conclusion, performance management serves as a core function that feeds into

and supports multiple HR systems, ensuring that all aspects of HR—from hiring and
training to compensation and employee engagement—are aligned with
organizational goals and employee development strategies.

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Reference:

What is Performance Management? The Complete Guide

https://www.aihr.com/blog/what-is-performance-management/

McMahon, G. (2013) Performance Management: Chapter 7 in Human Resource

Management https://arrow.tudublin.ie/cgi/viewcontent.cgi?
article=1018&context=buschmanbk

Challenges in Implementing a Performance Management System

https://www.erm-academy.org/publication/risk-management-article/challenges-
implementing-performance-management-system/

Key Challenges of Performance Management (How To Solve Them)

https://www.neuroworx.io/magazine/challenges-of-performance-management/

Hearn, S. (2019). What Is The Purpose of Performance Management?

https://www.clearreview.com/what-is-purpose-of-performance-management/

Sabharwal, G. (2024) The Role and Purpose of Performance Management

https://www.getjop.com/blog/purpose-of-performance-management

Chellappa, S. (2024) The 4 Stages of Performance Management Cycle.

https://engagedly.com/blog/the-4-stages-of-a-performance-management-cycle/

Video Reference:

The 4 Stages of Performance Management Cycle

https://engagedly.com/blog/the-4-stages-of-a-performance-management-cycle/

What is Performance Management?

https://www.youtube.com/watch?v=78VaoiL9FoI

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