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What do you mean by performance?
The accomplishment of a given task measured against preset known standards of accuracy, completeness, cost, and speed. In a contract, performance is deemed to be the fulfilment of an obligation, in a manner that releases the performer from all liabilities under the contract.
Performance management
Performance Management (PM) includes activities that ensure that goals are consistently being met in an effective and efficient manner. Performance management can focus on the performance of an organisation, a department, employee, or even the processes to build a product or service, as well as many other areas.
This is used most often in the workplace, can apply wherever people interact — schools, churches, community meetings, sports teams, health setting, governmental agencies, social events and even political settings – anywhere in the world people interact with their 
environments to produce desired effects.
Armstrong and Baron (1998) defined it as a “strategic and integrated approach to increasing the effectiveness of companies by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors.” It may be possible to get all employees to reconcile personal goals with organisational goals and increase productivity and profitability of an organisation using this process. It can be applied by organisations or a single department or section inside an organisation, as well as an individual person. The performance process is appropriately named the self-propelled performance process (SPPP).
First, a commitment analysis must be done where a job mission statement is drawn up for each job. The job mission statement is a job definition in terms of purpose, customers, product and scope. The aim with this analysis is to determine the continuous key objectives and performance standards for each job position. Following the commitment analysis is the work analysis of a particular job in terms of the reporting structure and job description. If a job description is not available, then a systems analysis can be done to draw up a job description.
The aim with this analysis is to determine the continuous critical objectives and performance standards for each job. Today’s organisations seem to change much more rapidly than in the past. Consequently, many experts have strong reservations about the numerous measurements that must be taken in performance management. They assert that no sooner is a measurement identified than the measurement becomes obsolete because the organisation has changed substantially.
There are numerous measurements to consider when adopting a performance management system. However, the measurements themselves are not the major purpose of the performance management process. The purpose of the process is to provide a consistent frame of reference during ongoing feedback about performance, whether the organisation is entirely stable or in the midst of rapid change.
Measurements ensure that everyone involved is working and talking from the same script. The measurements themselves may change. However, organisation members should be able to recognise and explain the change. This assertion is true whether one is addressing the performance of an organisation, process, subsystem or employee. Consider the implications of the above assertion.
The assertion is saying, e.g., that when performance management is carried out with an employee, filling out the performance form and having the performance discussion is not the highlight of the performance process – the highlight has been occurring during the year when the supervisor and employee exchanged ongoing feedback about performance. Filling out the form and having the discussion are really measurements, too. If the performance process is done well, the performance review discussion should include absolutely no surprises for the employee. All feedback to him or her already should have occurred.
Frankly, many supervisors dread having to fill out the employee performance review forms. That is the time means they have to recount the employee’s activities during the year, try translate the activities to areas of knowledge and skills shown by the employee – they have to “reverse engineer” what’s been happening, mostly to fill out a form. They worry that they haven’t spent sufficient time noticing the employee’s behaviour, that they might be confronted and proven wrong.
They often believe that the employee has been doing just fine during the year, so why have to quit work now just to fill out a form. They worry that the employee may have high expectations that can’t be met by the performance process. That’s how many supervisors see the process – because the form and the various measurements that it recalls are too often seen as the end in themselves.
Objectives of performance management
The major objectives of performance management are discussed below:
Need for effective performance management and components
Managing the performance of the employees is one of the toughest challenges which the organisations are facing today as this completely depends upon the employee’s commitment, competence and clarity of performance. If managed efficiently through a well planned reward practice and feedback mechanism, a performance management system can serve as an important tool for employee motivation and development.
The need for the introduction of a robust system of performance management was felt during the period when the traditional performance appraisal mechanism started failing and its limitations were surfacing up. The performance appraisal system of the earlier period was missing objectivity as the diameters or the parameters for measuring performance were not clearly specified and the focus was on traits instead on behaviours or measurable targets.
As a result, the employee’s morale and motivation to work was adversely affected due to an absence of a transparent feedback mechanism and lack of employee involvement in the entire process of appraisal. A performance management system overcomes the drawbacks of the traditional performance appraisal system by maintaining a futuristic approach instead of assessing the past contributions of the employees for evaluating the performance of the employees.
Performance management is a strategic tool and is holistic in nature as it pervades in every activity of the organisation which is concerned with the management of individual, team and the overall organisational performance. The process is indispensable and very important for an organisation as it is concerned with establishing a culture in which the individuals and teams can excel by continuously improving in terms of skill sets and the business processes.
Performance management facilitates improvement of quality of relationship amongst the members of the organisation by encouraging sharing of expectations and building a climate of openness and mutuality. The significance of performance management has grown in recent times because most of the organisations are giving a lot of importance to employee development and talent management. Contemporary organisations are working towards grooming the competencies of the employees for maintaining a leadership in the competitive market and performing outstandingly.
Arvind Mills of Lalbhai Group realised the importance of strategic HRM practices and the implementation of a pro active performance management system in their organisation after facing serious threats from the business competitors. The company created a Manpower Planning and Resource Group which took the charge of preparing job descriptions and structuring the jobs for the employees and was responsible for implementing the recruitment and selection procedures.
An innovative online recruitment system was introduced which was known as Selection Information System, for fixing interviews, generating call letters, etc. This system was linked with the Compensation Information System and Training Information System. The training requirements of the employees were taken care by the Management and Organisational Development Group. The company also introduced MBO system, for setting smart goals for the employees which may motivate them for a superior performance.
1. Performance appraisal and reviewing: The appraisals are normally performed twice in a year in an organisation in the form of mid reviews and annual reviews which is held in the end of the financial year. In this process, the appraisee first offers the self filled up ratings in the self appraisal form and also describes his/her achievements over a period of time in quantifiable terms. After the self appraisal, the final ratings are provided by the appraiser for the quantifiable and measurable achievements of the employee being appraised. The entire process of review seeks an active participation of both the employee and the appraiser for analysing the causes of loopholes in the performance and how it can be overcome. This has been discussed in the performance feedback section.
2. Feedback on the performance followed by personal counselling and performance facilitation: Feedback and counselling is given a lot of importance in the performance management process. This is the stage in which the employee acquires awareness from the appraiser about the areas of improvements and also information on whether the employee is contributing the expected levels of performance or not. The employee receives an open and a very transparent feedback and along with this the training and development needs of the employee is also identified. The appraiser adopts all the possible steps to ensure that the employee meets the expected outcomes for an organisation through effective personal counselling and guidance, mentoring and representing the employee in training programmes which develop the competencies and improve the overall productivity.
3. Rewarding good performance: This is a very vital component as it will determine the work motivation of an employee. During this stage, an employee is publicly recognised for good performance and is rewarded. This stage is very sensitive for an employee as this may have a direct influence on the self esteem and achievement orientation. Any contributions duly recognised by an organisation helps an employee in coping up with the failures successfully and satisfies the need for affection.
4. Performance improvement plans: In this stage, fresh set of goals are established for an employee and new deadline is provided for accomplishing those objectives. The employee is clearly communicated about the areas in which the employee is expected to improve and a stipulated deadline is also assigned within which the employee must show this improvement. This plan is jointly developed by the appraisee and the appraiser and is mutually approved.
5. Potential appraisal: Potential appraisal forms a basis for both lateral and vertical movement of employees. By implementing competency mapping and various assessment techniques, potential appraisal is performed. Potential appraisal provides crucial inputs for succession planning and job rotation.
Basic tips of performance management
Talk to your people often: By building a great relationship with your people you will bring trust, honesty and information. this gives you a head start in performance management of your people.
Build feedback: On the job two-way feedback processes get rid of the nasty surprises that give performance management such a bad name. By building it in as a natural activity, you take the edge away.
Be honest: By being frank and honest, which the preparation work in building a great relationship has afforded you, both parties treat each other with respect and see each other as working for everyone’s benefit.
Notice great performance When you see good stuff, shout about it! Let people know. Celebrate successes and filter this into formal processes.
Have a system: Performance management is a process and needs some formality - especially for good personnel practice and record. This need not be complicated, but it needs to be organised and have timescales.
Keep it simple: But do keep it simple. If you have a relationship with your people that is strong anyway, you already know what they are about. Formal discussions can be friendly and simple, with formality kept to a minimum.
Be very positive: Celebrate great performance! Focus on what’s going well. It’s about successes and building on strengths, not spending ages on their weaknesses – that serves no one. Go with the positives!
Achieve their needs: Remember that we all have needs that we want fulfilling. By working with your people to create outcomes that will do this, you will strengthen your relationships and channel effort in a constructive direction.
Tackle discipline: Whilst it often happens, performance management is not about managing indiscipline. That has to be managed in a different way. By setting clear standards in your business that everyone understands and signs up to, discipline becomes much, much easier.
Learn from mistakes: As part of regular on-the-job and informal review, mistakes will come to light; things will go wrong. By using the ‘What went well? And ‘What could you do differently?’ format, the unsatisfactory performance becomes controllable and a positive step.
(The writer is the Managing Director & CEO, McQuire Rens & Jones (Pvt) Ltd. He has held Regional Responsibilities of two Multinational Companies of which one, Smithkline Beecham International, was a Fortune 500 company before merging to become GSK. He carries out consultancy assignments and management training in Dubai, India, Maldives, Singapore, Malaysia, Indonesia and Bangladesh. Nalin has been consultant to assignments in the CEB, Airport & Aviation Services and setting up the PUCSL. He is a much sought-after business consultant and corporate management trainer in Sri Lanka. He has won special commendation from the UN Headquarters in New York for his record speed in re-profiling and re-structuring the UNDP. He has lead consultancy assignments for the World Bank and the ADB. Nalin is an executive coach to top teams of several multinational and blue chip companies. He is a Director on the Board of Entrust Securities Plc.)
