• What is performance management?

• Performance management is a set of processes and systems aimed at developing employees, so

they perform their job to the best of their ability.
• The goal is to help employees build on skills that enable them to perform better in their roles,
reach their potential, and boost their success while also accomplishing the strategic goals of the
organization.
• Effective performance management establishes a continuous conversation between employees,
managers, and HR.
• Performance management is an ongoing, continuous process that aims
• to align individual and team performance with organizational goals.
• It involves setting expectations, providing feedback, coaching, and supporting employees in their
professional development.
• Performance management focuses on the entire performance cycle, including goal setting,
performance monitoring, feedback, and improvement.
• Example: A manager regularly meets with their team members to discuss their progress, provide
guidance, and offer support. They set clear performance expectations and establish specific goals
aligned with the organization's objectives. Throughout the year, they monitor progress, provide
feedback and coaching, and identify opportunities for growth and development. The emphasis is
on fostering a collaborative and constructive relationship between the manager and employees to
enhance overall performance.
Key processes of performance management

3. Evaluate and recognize

[Link] and act with goal
through performance
management 2. Monitor with continuous
assessments
• Align employee performance management
• Assess performance
performance to the • Monitor the goals of
consistently and
objectives of the each employee to
accurately.
organization. ensure ongoing
• Recognize and reward
• Assign work that is alignment with
strong performers.
meaningful and organizational goals.
• Use data-driven
fulfilling to increase • Provide feedback and
insights from the
employee guidance to improve
system to quantify the
engagement. performance.
value your workforce
• Quickly adapt goals • Recognize good results
delivers to the
when business as they happen.
business.
priorities shift.
• The process involves the following:
• Establishing clear expectations,
• Setting individual objectives and goals that align with team and organizational goals,
• Providing ongoing feedback, and
• Evaluating results.
• Career decisions, including promotions, bonuses, and dismissals, are linked to the performance
management process.
Entire activities of
PMS
Performance Appraisal

• Performance Appraisal: Performance appraisal, also known as performance review or evaluation,

is a specific event or process that typically occurs annually or periodically.
• It involves assessing an employee's performance against predetermined criteria or standards and
providing feedback on their strengths, weaknesses, and areas for improvement.
• Performance appraisal is often used to make decisions regarding compensation, promotions, or
other organizational actions.
• Example: At the end of the year, an employee undergoes a performance appraisal with their
supervisor. The supervisor assesses the employee's achievements, skills, and behaviors based on
predetermined performance criteria. They provide feedback on the employee's performance,
highlighting strengths, identifying areas for improvement, and discussing future goals. The
performance appraisal may impact the employee's salary increase or eligibility for promotion.
Performance management Performance appraisals
Performance management involves setting goals, Performance appraisals, on the other hand, are
tracking progress, providing feedback, and taking conducted once per year or every other year. They
corrective action as needed. This process happens on don't involve much feedback or corrective action;
an ongoing basis, so employees can always be aware instead, they're more like a summary of the
of where they stand and what they need to do in employee's performance over time.
order to get better.

Performance management focuses on employee whereas performance appraisal focuses on evaluating

development, employee performance.
Performance management helps employees to performance appraisals are used to determine
improve their skills and become more productive. whether or not an employee has met the standards
set by the company.

The goal of a performance management system is to the goal of a performance appraisal process is simply
ensure that all employees have the tools they need in to evaluate employee performance.
order to succeed,
Performance management relies on feedback and performance appraisal relies on data from
communication between employees and their questionnaires or interviews.
managers,
Performance management is a continuous process, performance appraisal is a one-time event.
KRAs and KPIs
KRAs KPIs
KRAs define the major areas of responsibility and KPIs provide specific metrics and targets to measure
focus, the performance and progress within those areas.
They are high-level categories that outline the primary KPIs are specific, measurable metrics that are used to
focus areas and outcomes that need to be achieved. assess the performance and progress towards
achieving the desired outcomes within the defined
KRAs.
KRAs provide clarity on the main areas in which an They help in monitoring progress, identifying areas of
individual or team should direct their efforts. improvement, and making data-driven decisions.
• Marketing
KRAs KPIs
Brand Awareness Increase social media following by 20% within six months.
Increase website traffic by 40% year-over-year.
Customer Engagement Achieve a customer satisfaction score of 80% or higher in post-purchase
surveys.
Increase customer retention rate by 20% within the next year

Return on Investment Increase revenue from marketing campaigns by 15% year-over-year.

Decrease the cost per lead by 20% through optimization of advertising
channels.
KRAs KPIs
(KRA): Recruitment and Selection • Decrease time-to-fill for open positions by 20% compared to the
previous year.
• Increase the percentage of qualified candidates in the hiring process
to 80%.
• Maintain a satisfaction score of 90% or higher from hiring managers
regarding the recruitment process.
• Achieve a retention rate of 85% for new hires within the first year.
Employee Development and Training • Increase the percentage of employees who have completed at least
one training program by 15% annually.
• Increase employee engagement scores related to learning and
development initiatives by 10%.
• Ensure that at least 80% of employees have a development plan in
place.
Performance Management • Achieve a completion rate of 95% for performance
appraisals by the designated deadline.
• Increase the percentage of employees with
documented performance goals by 15% annually.
• Maintain a satisfaction score of 85% or higher from
managers and employees regarding the
performance management process.
• Improve the average rating on performance
reviews by 10% compared to the previous year.
Behavioually Rating anchored scale(BARS)

In a BARS, a set of performance dimensions or criteria are identified, which are typically relevant to
a specific job or role.
These dimensions can include skills, competencies, behaviors, or job-specific tasks.
For each dimension, a range of behavioral anchors or descriptors is developed. These anchors
represent different levels of performance, typically ranging from low to high or ineffective to highly
effective.
Example of how the Behaviourally Anchored Rating Scales (BARS) technique can be applied in a
performance management system for a sales role:
• Performance Criterion: Sales Closing Ability
Poor(Does not meet Fair (Below expectations) Good (Meets Excellent (Exceeds
expectations) expectations) expectations)

• Fails to actively listen to • Demonstrates limited • Actively listens to • Demonstrates

customer needs during understanding of customer needs and exceptional
the sales process. customer needs and tailors the sales understanding of
• Struggles to effectively preferences. approach accordingly. customer needs and
address customer • Occasionally addresses • Effectively addresses preferences.
objections and customer objections customer objections • Skillfully addresses
concerns. but lacks confidence. and provides customer objections
• Rarely attempts to • Inconsistently satisfactory responses. and resolves concerns
close the sale or ask for attempts to close the • Consistently attempts with ease.
the customer's sale or asks for the to close the sale and • Consistently and
commitment. customer's asks for the customer's effectively closes
commitment. commitment. sales, leading to a
high conversion rate.
• An Assessment Development Centre (ADC) is a methodology used in performance management
to assess an individual’s
• competencies, skills, and potential for a specific role or position within an organization.
• It typically involves a series of exercises, tests, and simulations designed to evaluate a person's
abilities and suitability for a particular job.
• The assessment is typically conducted by trained assessors who observe and evaluate
participants' behaviors and performance during the exercises.
• Example: Let us learn how to apply ADC in the hotel industry,
• Organizations can effectively evaluate candidates or existing employees for specific positions,
identify skill gaps, and develop tailored training and development plans in hotel Industry. This
helps in building a skilled and competent workforce, leading to improved guest satisfaction and
overall business performance.
Designations Exercises for assessment
Front Desk Supervisor Position Assessment: Exercise 1: Role-play scenario where participants are
required to handle guest check-in/check-out
processes, manage reservations, and handle guest
complaints effectively.
Assessment Criteria: Communication skills, customer
service orientation, problem-solving ability, attention
to detail, and conflict resolution skills.

Exercise 2: Group activity where participants work

together to develop strategies for handling peak
check-in periods and ensure a smooth guest
experience.
Assessment Criteria: Teamwork, leadership potential,
ability to delegate tasks, time management, and
decision-making skills.
Sales Manager Position Assessment: Exercise 1: Sales role-play
Assessment Criteria: Sales skills, persuasion and
negotiation abilities, relationship building, product
knowledge, and goal orientation.
Exercise 2: Presentation exercise
Assessment Criteria: Presentation skills,
communication effectiveness, ability to adapt
messaging to different audiences, and confidence.
In-tray exercise
Assessment Criteria: Time management,
organizational skills, attention to detail, and ability to
handle multiple tasks simultaneously.
Feedback and Development:
Management By objective

• Management by Objectives (MBO) is a management philosophy and approach that emphasizes

setting specific objectives or goals and aligning individual and team efforts towards achieving
those objectives.
• MBO was popularized by Peter Drucker in his 1954 book "The Practice of Management" and has
since been widely adopted by organizations across various industries.
• Management by Objectives (MBO) involves a collaborative process between managers and
employees to define goals, clarify expectations, and align individual performance with
organizational objectives.
• Management by Objectives (MBO) is a performance management approach that focuses on
setting specific, measurable, achievable, relevant, and time-bound (SMART) objectives for
employees.
• Here's how MBO works within a performance management system:
• Example of Using management by objective performance management system in hospital
industry
• Department: Nursing Department
• Objective: Improve patient satisfaction scores in the Surgical Ward by 20% within the next
quarter.
• Key Result Areas (KRAs):
• Objective 1: Increase responsiveness to patient needs by implementing hourly rounding practices.
• Objective 2: Enhance communication and information sharing with patients and their families by
implementing bedside shift reports.
• Objective 3: Improve pain management practices by implementing a standardized pain assessment
and management protocol.
• Monitoring and Measurement: Regularly monitor patient satisfaction scores, conduct patient
surveys, and track the implementation and adherence to the identified practices. Measure the
progress against the defined goal and KPIs.
• Performance Reviews: Managers meet with nursing staff to discuss progress, review data, provide
feedback, and identify areas for improvement. Address challenges and provide support to ensure
successful implementation of the objectives.
• [Link]
OKR
• OKRs have two important parts: The objective you want to achieve and the key results, which are
the way you measure achieving the objective.
• The OKR framework was popularized by Intel and later adopted by companies like Google,
LinkedIn, and Twitter.
• Objectives: are measurable, qualitative descriptions of what you want to achieve. Objectives
should be short, inspirational, and engaging. An objective should motivate and challenge the
team.
•
• Key results: are a set of metrics that measure your progress towards the objective. For each
objective, you should have a set of two to five key results. More than that and no one will
remember them.
• Example of an OKR (Objective Key Result) for an FMCG (Fast Moving Consumer Goods) company:
Objective: Increase market share for Product A in the category of dairy products
Key Results:
1. Increase revenue from Product A by 20% in the next quarter.
2. Expansion in distribution channels for Product A to 100 new stores within six months.
3. Achieve a customer satisfaction rating of 4 out of 5 for Product A based on customer surveys
conducted in the next 6 months.
4. Increase brand awareness for Product A by 15% through targeted marketing campaigns within
the next two years.
5. Reduce production costs by 5% through process optimization and efficiency improvements
within six months.
• A Behavior Observation Scale involves directly observing and documenting behaviors using
predetermined categories or scales.
• It typically focuses on capturing specific behaviors as they occur in real-time.
• The observations are often made by trained observers or researchers and are recorded based on
predefined criteria.
• The data collected through a BOS can provide insights into patterns of behavior, frequency of
occurrence, or changes in behavior over time. BOS is commonly used in research studies,
behavioral assessments, and observational studies.
• Behavior Observation Scale (BOS) is a method for systematically observing and recording
behaviors, while Behaviorally Anchored Rating Scale (BARS) is a performance appraisal method
that links specific behaviors to performance ratings. BOS focuses on capturing observed
behaviors, whereas BARS focuses on assessing performance based on predefined behavioral
indicators.
• Company A is technology firm that is experiencing challenges with its performance management
system. The current system is outdated and fails to effectively align employee performance with
organizational goals. The HR department has been tasked with implementing a new performance
management system to address these issues. They need to design a system that is fair, transparent,
and capable of driving employee engagement and performance improvement.
• How can HR design and implement an effective performance management system for Company A?