HRM3706 Performance Management
STUDY UNIT 1 – Understanding Performance Management
1.1 Introduction
There are indeed valid reasons why many people feel that performance management has failed. However,
while we will indeed answer all these areas of contention, we propose a more professional, balanced and
scientific approach to performance management as the solution to the problem. If leadership has failed, it
does not mean that leadership as a concept has failed us. If your car has broken down, it does not mean that
the car is the problem; you are merely dealing with symptoms of the problem. Certain things are not working
and they need to be corrected. Hence, we will discuss the failure of performance management, but provide
reasons for these failures, while offering solutions to inadequate approaches to performance management
1.2 Objective of performance management
The main objective of performance management is to ensure that employees perform at the required
standards and at every level within the organisation
Different levels of performance management objectives
INDIVIDUAL OBJECTIVES
(1 employee)
• Clear performance goals
• Addressing areas of under-performance
• Powerful tool for employee engagement
• Catalyst for employee development ORGANISATIONAL OBJECTIVES
• Evidence on employee performance (All employees)
• Additional performance support • Cascading overall business goals
• Contributes to the goals of the organisation
TEAM OBJECTIVES • Ensuring good communication and feedback
(2 or more employees) • Assists with change management
• Promotes teamwork • High performance culture
• Linking pay to performance
DEPARTMENTAL OR UNIT OBJECTIVES • Monitoring and evaluation of performance
(typically, more than 10 employees)
• Improves relationships
• Clear guidance of how performance can be
managed
The main objectives of performance management are as follows:
• to provide a framework for cascading overall business goals to departmental, team and individual
objectives
• to ensure that each individual has a clear picture of how he or she contributes to the goals of the
organisation
• to promote teamwork between individuals, supporting one another to achieve goals
• to identify opportunities for addressing areas of underperformance at individual, team and
organisational level
• to serve as a mechanism for ensuring good communication and feedback about performance
• to become a powerful tool for employee engagement in driving improved performance, especially if
well implemented
• to serve as a catalyst for employee development and empowerment
• to assist with change management and other organisation development interventions
• to improve relationships between managers and employees
• to provide a system to capture the outcomes of a high-performance culture and thereby reinforce
good performance
• to serve as a repository of evidence on employee performance, which is important in follow-up, as
well as litigation and appeals
Page 1 of 5
Summary by L Petzer
, • to formalise approaches of linking pay to performance where appropriate
• to provide clear guidelines of how performance can be managed and improved
• to identify areas and people requiring additional performance support from management
• to serve as a useful framework for monitoring and evaluation of performance.
Aguinis (2019) has summarised these objectives into six distinct purposes of performance management.
Purposes of PM
Purposes of Performance Management
Strategic Linking individual performance to organisational goals assists organisations to
achieve their strategic goals
Administrative Information obtained during the performance management process can be used
to make important administrative decisions regarding employees, such as salary
increases, promotions, demotions, performance bonuses, etc
Informational Employees are provided with valuable information regarding their performance.
This information allows employees to understand in which areas their
performance may be lacking and also guides employees’ behaviour by effectively
communicating the expectations of the organisation and the manager
Developmental Managers provide employees with feedback on their performance, which is used
to develop the skills of the employees and to improve on areas of poor
performance. Managers act as coaches and provide ongoing feedback
Organisational The PM process informs the workforce planning process. Information is provided
Maintenance on the most effective allocation of human resources in relation to the needs
from within and outside of the organisation
Tracking Organisations can use information collected during performance management
for the purpose of effective tracking, which is necessary for recording important
administrative decisions, evidence of poor/exceptional performance,
developmental initiatives taken and evidence for disciplinary action
Source: Adapted from (Aguinis, 2019)
1.3 Criticism against performance management
The current approaches to performance management have been criticised in the literature. Criticism includes
a move to automated approaches, human biases and rater errors, inadequate feedback, time constraints etc.
Several authors such as Bersin (2019), Henkel (2020), Noe et al. (2020) and Stevenson (2019) have criticised
current approaches to performance management. The most common areas of criticism are the following:
▪ Traditional approaches to performance management are not relevant in the new world of work.
▪ Performance appraisals are subjective and do not really reflect the true performance of employees.
▪ Pay and performance are often linked, but the link cannot be justified from a scientific approach.
▪ Employees fear performance appraisals and therefore hide the truth about their performance.
▪ Managers struggle to provide honest feedback to employees and performance appraisals are
therefore watered down.
▪ The use of performance technology and applications in particular make face-to-face performance
appraisals obsolete.
▪ Once-a-year performance appraisals are inadequate to report on performance.
▪ Performance appraisals are subjective due to human error and bias.
▪ There are gaps between business performance, departmental performance and individual
performance.
▪ Line managers, employees and Human Resources (HR) departments are not collaborating sufficiently
in making performance management work.
▪ A lack of focus on competency models as the foundation of employee development contributes to
ineffective, inconsistent and superficial performance management.
▪ Inadequate feedback and support are provided to employees to perform
Page 2 of 5
Summary by L Petzer
STUDY UNIT 1 – Understanding Performance Management
1.1 Introduction
There are indeed valid reasons why many people feel that performance management has failed. However,
while we will indeed answer all these areas of contention, we propose a more professional, balanced and
scientific approach to performance management as the solution to the problem. If leadership has failed, it
does not mean that leadership as a concept has failed us. If your car has broken down, it does not mean that
the car is the problem; you are merely dealing with symptoms of the problem. Certain things are not working
and they need to be corrected. Hence, we will discuss the failure of performance management, but provide
reasons for these failures, while offering solutions to inadequate approaches to performance management
1.2 Objective of performance management
The main objective of performance management is to ensure that employees perform at the required
standards and at every level within the organisation
Different levels of performance management objectives
INDIVIDUAL OBJECTIVES
(1 employee)
• Clear performance goals
• Addressing areas of under-performance
• Powerful tool for employee engagement
• Catalyst for employee development ORGANISATIONAL OBJECTIVES
• Evidence on employee performance (All employees)
• Additional performance support • Cascading overall business goals
• Contributes to the goals of the organisation
TEAM OBJECTIVES • Ensuring good communication and feedback
(2 or more employees) • Assists with change management
• Promotes teamwork • High performance culture
• Linking pay to performance
DEPARTMENTAL OR UNIT OBJECTIVES • Monitoring and evaluation of performance
(typically, more than 10 employees)
• Improves relationships
• Clear guidance of how performance can be
managed
The main objectives of performance management are as follows:
• to provide a framework for cascading overall business goals to departmental, team and individual
objectives
• to ensure that each individual has a clear picture of how he or she contributes to the goals of the
organisation
• to promote teamwork between individuals, supporting one another to achieve goals
• to identify opportunities for addressing areas of underperformance at individual, team and
organisational level
• to serve as a mechanism for ensuring good communication and feedback about performance
• to become a powerful tool for employee engagement in driving improved performance, especially if
well implemented
• to serve as a catalyst for employee development and empowerment
• to assist with change management and other organisation development interventions
• to improve relationships between managers and employees
• to provide a system to capture the outcomes of a high-performance culture and thereby reinforce
good performance
• to serve as a repository of evidence on employee performance, which is important in follow-up, as
well as litigation and appeals
Page 1 of 5
Summary by L Petzer
, • to formalise approaches of linking pay to performance where appropriate
• to provide clear guidelines of how performance can be managed and improved
• to identify areas and people requiring additional performance support from management
• to serve as a useful framework for monitoring and evaluation of performance.
Aguinis (2019) has summarised these objectives into six distinct purposes of performance management.
Purposes of PM
Purposes of Performance Management
Strategic Linking individual performance to organisational goals assists organisations to
achieve their strategic goals
Administrative Information obtained during the performance management process can be used
to make important administrative decisions regarding employees, such as salary
increases, promotions, demotions, performance bonuses, etc
Informational Employees are provided with valuable information regarding their performance.
This information allows employees to understand in which areas their
performance may be lacking and also guides employees’ behaviour by effectively
communicating the expectations of the organisation and the manager
Developmental Managers provide employees with feedback on their performance, which is used
to develop the skills of the employees and to improve on areas of poor
performance. Managers act as coaches and provide ongoing feedback
Organisational The PM process informs the workforce planning process. Information is provided
Maintenance on the most effective allocation of human resources in relation to the needs
from within and outside of the organisation
Tracking Organisations can use information collected during performance management
for the purpose of effective tracking, which is necessary for recording important
administrative decisions, evidence of poor/exceptional performance,
developmental initiatives taken and evidence for disciplinary action
Source: Adapted from (Aguinis, 2019)
1.3 Criticism against performance management
The current approaches to performance management have been criticised in the literature. Criticism includes
a move to automated approaches, human biases and rater errors, inadequate feedback, time constraints etc.
Several authors such as Bersin (2019), Henkel (2020), Noe et al. (2020) and Stevenson (2019) have criticised
current approaches to performance management. The most common areas of criticism are the following:
▪ Traditional approaches to performance management are not relevant in the new world of work.
▪ Performance appraisals are subjective and do not really reflect the true performance of employees.
▪ Pay and performance are often linked, but the link cannot be justified from a scientific approach.
▪ Employees fear performance appraisals and therefore hide the truth about their performance.
▪ Managers struggle to provide honest feedback to employees and performance appraisals are
therefore watered down.
▪ The use of performance technology and applications in particular make face-to-face performance
appraisals obsolete.
▪ Once-a-year performance appraisals are inadequate to report on performance.
▪ Performance appraisals are subjective due to human error and bias.
▪ There are gaps between business performance, departmental performance and individual
performance.
▪ Line managers, employees and Human Resources (HR) departments are not collaborating sufficiently
in making performance management work.
▪ A lack of focus on competency models as the foundation of employee development contributes to
ineffective, inconsistent and superficial performance management.
▪ Inadequate feedback and support are provided to employees to perform
Page 2 of 5
Summary by L Petzer
