Definition of Performance Management

Hello students, welcome to the course “Performance Management”. Performance management is a branch of Human Resource Management. Performance management is an area which is evolving day by day. It is a Global concept, varying in all its dimensions from one part of the world to the other.

As the first step, we are going to brush up a little of what we have learned about HRM in the previous semesters. Let us first see the nature and importance of Human resource Management. It is like an introductory tour on how this subject has evolved and how it has gained so much of importance and talks about. It is not an over-night growth of understanding Human Resource as the assets of an organisation. It is a long journey from acquiring or procuring slaves, extracting and exploiting work from them in pre-historic pyramid days to Labour Welfare, trade unions, Industrial Revolution to participative management, empowerment and employees talked about as assets of company. It is essential to give a look to the basic before building higher. Is it not? So, we begin.

To begin with, we all know the 4m’s of organization. Yes. I know you know. But, still let me also spell it out for others who are new to this area. The resources of organization are money, material, machine and Men. In these M’s, the last M, that is Men play in all the other three areas. Men have to manage Money, Men have to procure materials, and again Men have to convert the material in to products through machines. And the interesting part is these men, who manages other m’s has to be managed again by men. Men and Management.

We call the people who deal with money as Finance dept, people procuring materials as Purchase dept, and the men with machines as Production dept. Now who take care of these men? There enters our role. Human Resource Management.Managing the human side, the 4th M of the organization.

Let me tell you a quote by a CEO of a Software company, “My employees are my most important assets. When they go home in the evening, my net worth drops to zero”. That clearly indicates the importance of Human resource.

Human Resource is the source of knowledge for the organization. It is the source of skill. It is the source of creative abilities. Talents.Growth. Employees keep the organization fresh and alive.

This important resource has to be managed carefully as they are not easily replaceable, like money or machines. Each employee is unique. One of its kinds. If a machine is obsolete or old, you can buy a new one, with the same efficiency or even more. But when an employee goes off, he goes with the experience and knowledge he gained from the organization. We lose something. Even though we can replace sometimes with a good one, still something we lose. There is a funny quote to stress the importance of recruiting and retaining the employees.

“If you offer peanut, you will get only monkeys”.

If you want good performing workers, then you should be ready to pay and try to retain them, as they are the real assets of the organization. This makes the business world focus on this side of management.

You can say it is the buzz word that keeps always the business people alert and vigil that they make sure they are not losing any of their trained, skilled, efficient human assets to any of their competitors. Now they understand that human resource is also valuable like their any other assets they show in balance sheet.

The dimension of the HR department reflects the size of the company. The number of employees in the company determine the number of staff in HR dept. Generally, if the Human resource is huge, then it pulls specialists or separate managers for each of the special function of Human Resource Management. For example, when recruitment becomes a continuous process then recruiters are appointed.

In case new projects need new jobs, then a job analyst is necessary to collect and examine information about jobs and prepare job descriptions.

Then if you need to develop new compensation plans and handle the employee benefit programmes, then you need a Compensation manager. If training and development is a must for your organization then you need a Training coordinator. The list goes on.

What we have to understand from this is the scope of Human Resource Management purely depends on the size of the organization and the concepts of HRM are evolving and relatively new always.

Let me tell you the interesting parts in the development of HRM.

The systematic development of HRM started with Industrial revolution in 19th century. Then it took off as Trade union movement. Then came the Social responsibility era, when Industrialists started adopting more humanistic approach towards workers. And around the beginning of the 20th century, Taylor changed the course by finding out ‘one best way of doing things based on time and motion studies, called as scientific management.

We can say the term Human relations started after this and took a shape of Behavioural science management, contrast to Human relations. Human relations concept assumed that happy workers are productive workers. But the Behavioural management era had many individual psychologists who contributed some of the wonderful theories like Maslow’s Motivation theory, Hertzberg theory, XY theory, etc.

Thus HRM evolved out of this. When there was large number of workers started working together, they felt a need that there should be someone to take care of recruiting, developing and to look after the welfare of employees. With the evolution of HRM, people were not merely treated as physiological beings but socio-psychological beings as a prime source of organizational effectiveness.

Ok, what we are going to do to keep this resource always flowing and efficient?

In Human Resource Management we will be doing the process of acquiring, training, appraising and compensating employees. Also we will attend to their labour relations, health and safety and fairness concerns.

Let me list out some of the technical termed functions for your understanding.

Conducting job analysis, that is determining the nature of each employees’ job

Planning needs and recruiting candidates

Selecting candidates

Training the selected candidates

Managing wages and salaries to the employees, what we call as compensating the employees.

Providing incentives and benefits

Appraising Performance

Communicating to and from employees

Building employee commitment

Training and development for managers as well as employees.

These are the main functions of HRM.

Some of the important characteristics of HRM are

Human Resource Management gives focus on the continuous development of the people. It is the expression of the unshakable belief an organization can improve only if the people working over there improves.

Human Resource Management is a proactive function, it anticipates future needs through HR planning and acts accordingly.

Human Resource Management takes into account its interfaces with all other parts of the organization.

Human Resource Management view is ever widening and scope includes all possibilities of improving organization and people.

Human Resource Management emphasizes on the satisfaction of higher needs for motivating people, such as autonomous work groups, challenging jobs, creativity etc.

Human Resource Management is based on better performance is a source of satisfaction and high morale.

So, now we move on to our main topic – performance Management. The basic understanding of HRM will now give us the knowledge to appreciate the importance of employee and their performance, and how the performance is vital to the growth of the organisation.

Performance

The first step is to know “performance”. The literary meaning of performance is “an act of staging or presenting a play, concert or other form of entertainment.” Also, performance goes synonymous with “accomplishment” and “Fulfillment”.

As we take the word performance for Business administration, we can define performance as “the accomplishment of a given task with the set standards, precision, quality and completeness”.

Popular industrial psychologist Campbell defines Performance as “behaviour of an individual towards the given task”.

Job and Performance

When we see the meaning of job, it goes as “special task”, “specific work”.

Even though Job and Performance are used in many ways, as two different actions or sometimes both together, like “job is performed”, “job performance has to be evaluated”, it can be considered that when an employee understands and accomplish a given job, he performs, a sort of good job. He improves, involves, fulfills and gets satisfaction when he performs the job, than just doing the job.

When we talk about the job of a singer, that is singing, we say “the singer performs”. The emphasis being the job artistically done, accomplished with heart and soul involved in the job, may be because he is passionate towards the singing.

Hence, the employee in an organisation can also perform the same way, like a singer performs, with involvement and quality improving by every day.

Performance Management

ok, now to the next step. What is Performance management?

SrinivasKandula defines performance management as “process of designing and executing motivational strategies, interventions and drivers with an objective to transform the raw potential of human resource into performance”.

We can say that “Performance Management is a systematic process by an Organisation to improve and evaluate the performance of its employees as individuals as well as groups.”

In broader view, an organisational goal can only be achieved with the people in the organisation aligning their goals to them. The individual’s goal often relates to the improvement of skills and knowledge he possess. If the individuals knowledge and skills can be improved through motivation or training or any other methods, the organisational performance increases and easier to attain the goal. The tough task is to make the employee understand the needs of his own self. A successful performance management is

Where the employee’s interests are understood by the employer and renders his helping hand to develop employee’s career as well as his performance and

The employee understanding the requirements of the organisation, cooperating and accepting the helping hand of employer to increase his performance levels and thus also his self.

Performance Management is conducted and understood on two classifications

Performance of the employees in the organisation, which we are studying in detail in this course

Performance of the organisation, which is often the net result of the total performance of all the employees put together.

Principles of Performance Management

Performance management can bring quality and effectiveness only when certain basic and fundamental principles are followed. These include:

Transparency

The system should be transparent, free from partiality, bias and discrimination among the employees. If not, the base of the system itself will not be strong to build anything above that. For example, work allocation, promotions, transfers, incentives, and bonus – if based on Performance management, then the system should be transparent and gives no room for employees to complaint.

Employee Empowerment

Participative and empowered employees take the responsibility well. They develop the belongingness towards the organisation. Recognizing and rewarding the employees brings them together to work and achieve.

Organisational Values and Culture

A fair treatment and ensuring due satisfaction to the employees, empathy and trust, respect and treating people equally – are all the foundations for the development of the Culture and values of the organisation, which reflects in overall output.

Amicable Workplace

A work environment which attracts the employee rather than expecting the week end to be away from the workplace is the principle. The workplace should be congenial, warm and amicable to the employees. This helps in improving the quality of work life and balancing the work life.

Characteristics of Performance Management

Performance management is a complex concept that encompasses different dimensions of the organisation and the people. Hence, the performance management has some pre requisites that should be included while designing a system.

Organisational Strategies and Goals

The Organisational vision, mission and objectives need to be clearly and precisely laid down and communicated to all the employees to make them realise what the organisation expects from them. The need of imparting the expected performance in a broader view is essential to create a platform for employees to set their personal goals along with the organisational goals.

Planning

A well planned act is half done by itself. Planning in detail the

Availability of human resources

Optimum utilization of resources

Proper placement of employees

Output needed to meet with the organisational goals

Output needed from each individual employee

Training needs

Motivation and rewards will be the major helping guide to achieve the expected result.

Leadership

The leadership plays an important role in the performance management system. Even though the system will try to put the people in the places of improvement, it comes to a point where the inner will of the employee will be the deciding authority to move on or not to move on.

Leadership is a simple solution, which can influence the followers, the employees, out of sheer respect, love, obedience, gratitude or adoration – whatever we may name it, which can influence the employee to decide on the positive side. The pull and charisma of the leader is very important to implement a system of performance management.

Standardization of Evaluation Methods

If the evaluation criteria and methods are not standardized, the management cannot say that they use them to hold the employees to a “standard.”

The aspects of performance that are to be measured must be uniform. Varying level of strictness or different methods of evaluation will only lead to lack of trust and faith on the system as well as on the organisation itself.

Cooperation, not Control

The performance managers should understand that the system of performance management is to nurture the growth and potentiality to performance still better and not to control or exercise authority by finding faults. They should be able to convince the employees too, the concept of performance management is to help them do better and not just simply to report their progress or regress.

Validity

Performance management systems should measure the valid tasks.

The confusion in role clarity

Assignment of substitutive tasks

Task assigned on the initiation of employee

Additional assignments

hard to hit targets

Voluntary assignments taken by the employee

All the above should be considered with due wieghtage and all the above should be carefully handled in cases of non-accomplishment of the tasks.

Trained Managers for Evaluation

No performance management system can succeed if the managers who conduct evaluations are inadequately trained. The managers should understand the sensitivity of the process, should have empathy, should have knowledge about the work process and necessities of the job, and should know the hardships and obstacles in accomplishing the task.

Scope of Performance Management

Employees are the most significant resource of an organisation. Performance management is the mirror that shows the commitment of the human capital to the organisation and to their assigned task. This system creates an opportunity for the top management to reward the excellent performance or reprimand unsatisfactory performance. This powerful system should be a tool to assess the overall performance of the organisation. This system not only show case the individual performance of the organisation, but it is also a tool to measure the developing steps of the organisation as a whole towards its missions.

The scope of the performance management includes the following:

Providing employees a better understanding of their role and responsibilities

Increase the confidence of the employees through recognizing their strengths

Identifying training needs to overcome the weak areas

Improve the relationships in the working areas

Improve communication between superior and subordinates

Improve teams and team spirit

Improve commitment

Succession planning through grooming subordinates to future managers

Providing space for personal reflections

Providing a platform for personal development

Providing assistance to achieve personal career goals

Providing a better work environment and work place

Providing counseling to make work life balance

Improving the overall organisational work culture

Creating qualitative work environment

And the list grows day by day. As proposed by management guru Marshall Goldsmith, organisations need to shift focus from performance ‘feedback’ to ‘feed forward’. The ‘feed forward’ approach emphasizes proactive and holistic performance management at individual, team and organisational levels.

Significance of Performance Management

Performance Management system is essentially evaluating and understanding the performance of the employees, but also it is an overall holistic process of a cycle of improving the performance of the individual human who has various interests, various potentialities, problems, ego, and thousand other traits. Hence, we can say that, performance management tries to analyze and find the competency of the employees, identify the areas of performance lack, planning with system to encourage and enhance the performance for improvement.

Performance Management plays the vital role of identifying and enhancing the potentials of employees to fulfill the needs and requirements of the jobs assigned to them as well as to move upward themselves in his career ladder.

Performance Management helps the overall organisation’s effectiveness and development by

Effective business environment

Improved HR activities

Motivation

Improved Work Culture

Sustainable work force

Optimal utilization and productivity from the work force

Scope for continuous learning

Quality Performance Management

The way people perceive Performance Management differs. In some organisations, it is treated as just an annual review, some managers think it as a monitoring system to measure the employee’s productivity, where as the reality is “the system that helps employees and the organisations to reach their best level and optimum potential”.

Traditional Performance management systems have failed misera-bly in many organizations due to lack of support from the employees side, who think they are underestimated, victimized, discriminated in the name of performance appraisals. The major drawback is that the traditional sys-tem focuses on performance appraisals only. It is thought more as

A ritual at a frequent interval that happens every year

A staff activity that interrupts the line activities (productivity)

A process that creates loss of time and cost

A process that generates unutilized reports

A process that creates grievances rising on all sides of the employees (a good performing employee thinks he is not properly rewarded and the non-performer thinks he is underestimated or appraised with biased view)

A process often used as fault finding tool by the superior

A system that decreases morale in the work place

A process that creates lack of trust among employees towards the employer

A Pay negotiating table than mere appraisal.Whereas the original idea was to create a mutual trust and respect between the superior and the subordinate which can foster performance excellence.

And, this is why, the companies have shrunk the idea of ‘performance appraisals’ to “incentive” decision appraisals, in reality. Hence, the concept has to grow to the other level, from not being mere appraisals, to a quality performance management system, where a continuous process of assessment and assistance to overcome the found flaws in the appraisal, and bridging the gap between the real performance and the desired performance.

In this purview, Performance management has seen many important developments in the recent decades of HRM. The turning point of understanding is in the importance in delivering the job effectively and qualitatively, not only quantitative and completion and that is what we call as quality performance management.